TIDMTLA
RNS Number : 1795K
TLA Worldwide PLC
12 December 2018
12 December 2018
TLA Worldwide plc
("TLA" or the "Company", and together with its subsidiaries, the
"Group")
Posting of Circular and Notice of General Meeting
Further to the announcement on 3 December 2018, TLA Worldwide
plc, a leading athlete representation and sports marketing
business, announces that it has posted a circular to shareholders
("Circular") containing details of the proposed sale by its
subsidiaries, TLA Acquisitions Limited and TLA Acquisitions (Number
Two) Limited, of The Legacy Agency, Inc. and TLA Worldwide
Americas, Inc., to a newly-incorporated private company, GCM Sports
Holdings, Inc., a Delaware corporation, owned by Gatemore Partners
LP, a Guernsey-domiciled fund managed by Gatemore Capital
Management LLP (the "Proposed Sale") and a notice of General
Meeting.
Unless the context otherwise requires, capitalised terms in this
announcement shall have the same meaning ascribed to them in the
Circular.
The Proposed Sale falls within Rule 15 of the AIM Rules relating
to fundamental changes of business and, as such, is conditional on
inter alia the passing of the Resolution at the General Meeting.
However, following the Proposed Sale, the Continuing Group will
still be considered an operating business rather than an "AIM Rule
15 cash shell" (as defined in the AIM Rules) due to the
continuation of its Australian Business.
The General Meeting is to be held at the offices of DAC
Beachcroft LLP, 100 Fetter Lane, London, EC4A 1BN at 12 noon GMT on
27 December 2018.
Shareholders attention is drawn to paragraph 13 of the Circular
(Recommendation) which should read as follows (with the updates to
the Circular highlighted in bold):
13. Recommendation
On 30 November 2018, the Proposed Sale and Share Purchase
Agreement were unanimously approved at a board meeting of the
Company, at which each of the Independent Directors (including, for
the avoidance of doubt, Ian Robinson) was present. At that meeting,
it was resolved that the Proposed Sale should be announced as soon
as possible.
Once the Share Purchase Agreement had been signed, following its
approval at the board meeting on 30 November 2018 (at which Ian
Robinson was present), Ian Robinson requested an independent report
on the fairness and reasonableness of the Proposed Sale despite the
fact that no new information had come to light.
The Board did not commission an independent report on the
fairness and reasonableness of the Proposed Sale and at no point
did Ian Robinson request a formal report prior to the date of this
document or before the Share Purchase Agreement was entered into.
However, having engaged FTI to carry out a strategic review and
lead the open market sale process which led to the Proposed Sale,
the Company provided additional information to Ian Robinson in
connection with the process.
Despite the additional information having been provided by the
Company, Ian Robinson subsequently informed the Company that he is
unable to form a view that the Proposed Sale is in the best
interests of the Company and its Shareholders as a whole. He has
stated that:
"I am unable to form a view that this related party transaction
is in the best interests of the Company and its shareholders as a
whole. In the particular circumstances of this transaction I
believe the board should have received an independent written
assessment which would have provided a written formal opinion on
the fairness and reasonableness of this transaction."
On 3 December 2018, the Company issued an announcement which was
formally approved by Ken Wotton, Michael Principe and Dwight Mighty
(having received no objections from any of the Directors in
relation to its content or release). The announcement stated
that:
"The directors of the Company, excluding Mike Principe and Greg
Genske for the reasons set out below ("Relevant Directors"), having
consulted with the Company's Nominated Adviser, consider the Sale
to be fair and reasonable in so far as the Company's shareholders
are concerned for the reasons summarised below and to be further
explained in the Circular.
"Having considered possible alternatives for realising value
from the US Businesses, further details of which will be provided
in the Circular, the directors of the Company (other than the
Relevant Directors) concluded that the Sale is in the best
interests of the Company and its shareholders as a whole."
The Independent Directors, other than Ian Robinson, have
considered the feasibility of such a report and concluded that it
would have been both impractical, not least considering the
impending expiry of the forbearance period granted by SunTrust on
31 December 2018, and of no additional value in the current
circumstances of the Existing Group. Their reasons include, but are
not limited to, its position with its bank. In order to ensure that
the Company receives full value for the US Businesses, the Company
appointed FTI as its financial adviser to assist in the sale
process for the US Businesses. FTI approached over 20 potential
purchasers, of which three made indicative offers for the US
Businesses. Two of these were subsequently withdrawn, one on the
basis that certain agents had left the US Businesses and the other
on the basis that employees within the US Businesses indicated that
they would also leave in the event that the US Businesses were sold
to the potential purchaser who had made that offer. This left the
offer from Gatemore as the only remaining viable offer for the US
Businesses. In the Independent Directors' opinion (excluding that
of Ian Robinson), having considered the sale process conducted by
FTI, the Independent Directors (other than Ian Robinson) believe
that the Proposed Sale will achieve the best value attainable for
the US Businesses. The Proposed Sale was also independently
approved by SunTrust, who was satisfied that it was the best offer
obtainable for the US Businesses in light of the current
circumstances. Based on the sale process undertaken by FTI and the
decline in the future financial prospects of both the Company and
the US Businesses, the Independent Directors (other than Ian
Robinson) have concluded that the Proposed Sale represents the best
value that the Company can obtain for the US Businesses at the
current time.
As such, the Independent Directors (other than Ian Robinson)
still consider the Proposed Sale to be in the best interests of the
Company and its Shareholders as a whole and accordingly unanimously
recommend Shareholders to vote, or procure the vote, in favour of
the Resolution to be proposed at the General Meeting.
Keith Sadler
Senior Independent Non-Executive Director
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
Copies of the Circular and the Notice of General Meeting are
available on the Group's website (www.tlaworldwide.com) and the
text of the Letter from the Senior Independent Non-Executive
Director of the Company is set out in the Appendix to this
announcement.
Enquiries:
TLA Worldwide plc
Keith Sadler, Senior Independent Non-Executive
Director +44 20 7618 9100
-----------------
Beaumont Cornish Limited (Nomad and Broker)
Roland Cornish, James Biddle +44 20 7628 3396
-----------------
Luther Pendragon
Harry Chathli, Alexis Gore +44 20 7618 9100
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About the Group
TLA is a leading, fully integrated talent representation, sports
marketing and event management company. The Group derives its
revenues from long-term agency relationships with many prominent US
and international sports stars (including Olympic medal winners),
broadcasters and media personalities associated with major sports
including the MLB, NFL, NBA, PGA TOUR, AFL and cricket. In
addition, it also provides a range of services in respect of media
consultancy, sports sponsorship and event creation and ownership.
The Group serves its clients from ten locations worldwide including
its offices in London, UK; New York, Newport Beach, Houston,
Charleston, San Francisco, USA; Melbourne, Perth, Adelaide and
Sydney, Australia. For more information, please visit
www.tlaworldwide.com.
APPIX
LETTER FROM THE SENIOR INDEPENT NON-EXECUTIVE DIRECTOR OF
TLA WORLDWIDE PLC
Directors: Registered
Office:
Keith Sadler, Senior Independent Non-Executive Director 100 Fetter
Michael Principe, Chief Executive Officer Lane
Gregory Genske, Executive Director London
Ian Robinson, Non-Executive Director EC4A 1BN
Ken Wotton, Non-Executive Director
11 December 2018
To holders of Ordinary Shares
Dear Shareholder,
Proposed Sale by TLA Acquisitions Limited and TLA Acquisitions
(Number Two) Limited of TLA Worldwide Americas, Inc. and The Legacy
Agency, Inc.
and
Notice of General Meeting
1. Introduction
On 3 December 2018, the Company announced the proposed sale of
its US Businesses for an enterprise value of $8.5 million,
comprising $6.175 million payable in cash and the assumption by the
Purchaser of $2.468 million of liabilities, including certain
earn-out liabilities. On 30 November 2018, two of the Company's
subsidiary companies, TLAA and TLAA2 each entered into the Share
Purchase Agreement pursuant to which they conditionally agreed to
sell all of the issued and outstanding shares of capital stock of
their respective wholly-owned subsidiaries, Legacy and TLA Americas
(including TLA Americas' wholly-owned subsidiary, Legacy New York)
to the Purchaser.
The Proposed Sale falls within Rule 15 of the AIM Rules relating
to fundamental changes of business and, as such, is conditional on
inter alia the passing of the Resolution at the General Meeting.
However, following the Proposed Sale, the Continuing Group will
still be considered an operating business rather than an "AIM Rule
15 cash shell" (as defined in the AIM Rules) due to the
continuation of its Australian Business.
Accordingly, your approval to the Proposed Sale is being sought
at a General Meeting of the Company to be held at the offices of
DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN at 12 noon on
27 December 2018. The notice convening the General Meeting and
setting out the Resolution to be considered at it is set out at the
end of this document. A summary of the action you should take is
set out in paragraph 12 of this letter and on the Form of Proxy,
which accompanies this document.
Further details of the Proposed Sale and the Share Purchase
Agreement are set out below and in Part 2 of this document.
The purpose of this document is to give you further details of
the Proposed Sale, including the background to and reasons for it,
to explain why the Independent Directors (other than Ian Robinson
for the reasons set out in paragraph 13 of this letter) consider it
to be in the best interests of the Company and its Shareholders as
a whole and unanimously recommend that you vote in favour of the
Resolution to be proposed at the General Meeting.
The Company has received from certain Shareholders irrevocable
undertakings to vote in favour of the Resolution in respect of
holdings totalling in aggregate 46,962,335 Ordinary Shares,
representing approximately 32.74 per cent. of the Company's
existing issued share capital. This does not include an irrevocable
undertaking from Gatemore, which is the beneficial owner of 14.7
per cent. of the entire issued share capital of the Company and
associated with the Purchaser. However, it does include irrevocable
undertakings from certain Directors. Further details are set out in
paragraph 10 of this letter.
2. Information on TLA and the Sale Companies
Information on TLA
TLA is a leading, fully integrated talent representation, sports
marketing and event management company, with operations in the US
and Australia.
TLA derives its revenues from long term agency relationships
with many prominent US and international sports stars (including
Olympic medal winners), broadcasters and media personalities
associated with major sports including the MLB, NFL, NBA, PGA TOUR,
AFL and cricket. In addition, it also provides a range of services
in respect of media consultancy, sports sponsorship and event
creation and ownership, including soccer games in Australia. The
Group serves its clients from ten locations worldwide including its
offices in London, UK; New York, Newport Beach, Houston,
Charleston, San Francisco, USA; Melbourne, Perth, Adelaide and
Sydney, Australia.
Information on the Sale Companies
Together, the Sale Companies comprise the baseball and US sports
marketing business ("SMUS") of the Existing Group.
The baseball business represents over 200 player-clients and
advises the on-field activities of baseball players, including all
aspects of players' contract negotiations throughout their
careers.
SMUS represents athletes, coaches and commentators across a
range of sports including baseball, basketball, football, golf and
tennis. In addition, SMUS delivers corporate activation and
operates in the speaking engagement sector, for both sporting and
non-sporting individuals.
In the Company's unaudited interim results for the half year
ended 30 June 2018, the US Businesses made a contribution to
operating profits of approximately $0.2 million and had, as at that
date, net assets (before indebtedness owing to SunTrust) of
approximately $21.7 million (audited accounts to 31 December 2017:
approximately $1.8 million and approximately $21.6 million
respectively).
3. Current trading
On 4 September 2018, the Company issued a trading and business
update to the market. The Company announced that it had organised
fewer events in 2018 than expected due to certain anticipated
events not being successfully contracted and others failing to
secure venues or teams, which meant they were unable to proceed.
Additionally, the Company announced that its baseball
representation business was expected to generate lower profits than
previously forecasted which was primarily as a result of higher
ongoing operating costs. As a result, the Company stated that it
expects its results for the year ending 31 December 2018 to be
significantly below market expectations. The update also stated
that the Existing Group anticipated that its net debt for the 2018
full year would be significantly higher than previously expected
and, consequently, the Existing Group was likely to breach its
banking covenants with SunTrust.
On 28 September 2018, the Company released its unaudited interim
results for the half year ended 30 June 2018 in which the Company
announced that operating income had decreased by 6.6 per cent. to
$15.2 million (H1 2017: $16.3 million) and headline EBITDA had
decreased by 148 per cent. to a loss of $1.2 million (H1 2017:
(profit) $2.5 million). The decline in headline EBITDA was driven
by a 71 per cent. decrease in the sports marketing business to
$964,000 (H1 2017: $3.3 million), due to previously-forecasted
events having been cancelled or there having been difficulties in
securing teams and venues. In addition, the baseball representation
business had seen headline EBITDA decrease by 99.2 per cent. to
$13,000 (H1 2017: $1.7 million), driven mainly by higher
people-related costs.
The unaudited performance of the US Businesses (including
central costs) for the nine month period ended 30 September 2018
showed revenue of $15.847 million and EBITDA of $1.868 million.
These amounts include the revenue contribution of $7.5 million
relating to the baseball agents that have now left the US
Businesses. As set out in the Company's annual accounts for the
year ended 31 December 2017, the revenue for baseball is recognised
across the six months of the baseball season, beginning in April
and ending in September. Therefore, the underlying revenue for the
US Businesses will be reduced by the loss of these agents.
On 10 October 2018, the Company, the Sellers and the Sale
Companies entered into a forbearance agreement with SunTrust (the
"Forbearance Agreement") pursuant to which SunTrust agreed to
forbear from exercising remedies under the Credit Agreement with
respect to certain defaults by the Existing Group, including the
Existing Group's obligation to make certain payments of principal
and interest that were due in September 2018. The forbearance
period expires on 31 December 2018. The Forbearance Agreement
provides the Company with working capital headroom as a result of
the deferment of these past due principal and interest payments.
The Forbearance Agreement requires the Company to pursue a sale of
assets that would result in a substantial repayment of the loan by
31 December 2018.
Currently, the Existing Group is reliant on the ongoing support
of SunTrust. If the Proposed Sale is not approved by the
Shareholders at the General Meeting, then the Existing Group would
have failed to achieve the substantial repayment of the loan in the
short term sought by SunTrust under the Forbearance Agreement. In
this situation, there can be no assurance that SunTrust will not
exercise its remedies under the Credit Agreement. This could result
in acceleration of the maturity of the outstanding loans and
foreclosure.
In addition, if the Proposed Sale is not approved by the
Shareholders at the General Meeting, the Company would need to seek
an alternative source of financing to enable it to fund its
immediate working capital needs and there is no guarantee that such
funds would be available to the Company or permitted by SunTrust.
In the event that the Company does not obtain an alternative source
of financing, the Directors would then need to consider the best
path for the Company. Such considerations may include ceasing to
trade, entering into administration or another insolvency process,
in which event, the Directors expect that there would be a material
and adverse impact on the value of Shareholders' interests in the
Company.
The ongoing support of SunTrust will be required even if the
Proposed Sale completes. Whilst the Company will continue to own
and operate its Australian Business, the expectation is that this
business alone will be unable to support the anticipated level of
the Continuing Group's debt following Completion.
Pursuant to the terms of Michael Principe's employment agreement
with Legacy dated 8 December 2011 (as amended from time to time)
("Employment Agreement"), Mr Principe's employment with Legacy had
an initial five-year term but since 8 December 2016, it
automatically renews for an additional 12 month period each year
unless notice is served before a specified date. On 28 September
2018, Legacy served a notice of termination on Mr Principe with the
effect that the Mr Principe's employment would terminate on 8
December 2018. At the request of the Purchaser, Legacy and Michael
Principe subsequently agreed on 7 December 2018 that Mr Principe's
employment will be renewed on amended terms in light of the
Proposed Sale such that the Employment Agreement will remain
effective until the earlier of (i) the date on which a new
employment agreement is entered into by Mr Principe and Legacy
prior to 31 December 2018; and (ii) Completion. Mr Principe will
receive his salary on the same basis and is entitled to participate
in the pension plans referred to in the Employment Agreement. Mr
Principe will not be eligible to receive the annual bonus described
in the Employment Agreement or any compensation upon termination of
his employment with Legacy. In addition, the remaining provisions
of the Employment Agreement remain in full force and effect.
4. Background to and reasons for the Proposed Sale
On 17 September 2018, the Company announced the appointment of
Ian Gray to lead a strategic review of the business and the Board
identified the various options available to it. These options
included an equity fundraising from its existing or new
shareholders, closure of the US Businesses and run-off of the
debtor book, rescue refinancing at subsidiary or top company levels
and a Chapter 11 bankruptcy.
Following the initial strategic review, the Company considered
the options which would have ordinarily been available to pursue
further. However, at that time, the Existing Group was in default
under the Credit Agreement pursuant to which the Existing Group
owed SunTrust an amount equal to $26,625,000 (plus accrued interest
and fees). In addition, the Existing Group was required to make
earn-out payments to certain vendors who remained within the
Existing Group and these had become due and payable. Although
SunTrust was permitted under the Credit Agreement to exercise the
rights available to it on the occurrence of an event of default,
the Existing Group negotiated the Forbearance Agreement with
SunTrust. Whilst this meant that SunTrust would refrain from
exercising its right to enforce its security, SunTrust only agreed
to enter into the Forbearance Agreement on the condition that,
amongst other things, the Existing Group agreed to diligently
pursue the sale of all or substantially all of the stock or assets
of the Sale Group, with the net proceeds of such sale exceeding $15
million and becoming payable on or before 31 December 2018. In
addition, the departure of key personnel and clients from the US
Businesses, with the imminent risk of further departures, also
resulted in the Company having limited alternative solutions. As
such, whilst the Board could have ordinarily considered other
options available to it in more detail, the only viable option
available to the Existing Group at that time was the sale of the US
Businesses, regard being had to the overdue payments owing to
SunTrust. As a result, on 24 September 2018, TLA announced that it
had appointed FTI as financial adviser to the Company to assist in
the sale process for the US Businesses following the receipt of a
number of preliminary approaches.
The sale process concluded with the Purchaser's offer (resulting
in the Proposed Sale) representing the best offer received by the
Existing Group for the US Businesses. In coming to this conclusion,
the Board considered the fact that certain agents of the US
Businesses had left the business which will materially affect
future year earnings and therefore have a direct effect on the
valuation of the US Businesses. The net sale proceeds from the
Proposed Sale will be used to contribute towards repaying the
Continuing Group's indebtedness to SunTrust pursuant to the
Forbearance Agreement.
Ian Gray has not been appointed to the board of directors of the
Company on the basis that the conclusion of the strategic review
was to sell the US Businesses and the Australian Business. As Ian
Gray has not been appointed to the Board, as announced on 17
September 2018, I remain the Interim Chairman of the Company.
5. Principal terms of the Proposed Sale
Pursuant to the terms of the Share Purchase Agreement, TLAA and
TLAA2 conditionally agreed to sell all of the issued and
outstanding shares of capital stock of their respective
wholly-owned subsidiaries, Legacy and TLA Americas (including TLA
Americas' wholly-owned subsidiary, Legacy New York), to the
Purchaser, based on an enterprise value of $8.5 million comprising
cash consideration of $6.175 million and the assumption of certain
indebtedness of the Sale Companies by the Purchaser amounting to
$2.468 million in aggregate.
Based on the adjusted revenue attributable to the US Businesses,
after deducting the revenue of the agents that have left the
Existing Group, the enterprise value for the US Businesses
represents a one times multiple being applied to turnover, which
the Independent Directors do not consider to be an unreasonable
multiple for a business of this nature in its distressed
circumstances. Other value measures, such an EBITDA multiple, are
not considered by the Independent Directors to be an appropriate
measure in accessing the Proposed Sale given the underlying
revenue, following the departure of the agents within the US
Businesses.
Completion is conditional upon certain closing conditions,
including (amongst others) the approval of the Resolution at the
General Meeting of the Company.
On and with effect from Completion, Michael Principe and Greg
Genske will resign as directors of the Company.
There are no financial arrangements in place, directly or
indirectly, between any of Greg Genske, Michael Principe, Dwight
Mighty, Ken Wotton, Ian Robinson, Keith Sadler or Ian Gray and the
Purchaser or its associates. Ian Gray is, however, a non-executive
director of DX (Group) Plc, a company in which Gatemore holds 35.63
per cent. of the entire issued share capital.
Further details of the Share Purchase Agreement are set out in
Part 2 of this document.
6. Information on the Purchaser
The Purchaser is a corporation incorporated under the laws of
Delaware, USA and is a wholly-owned subsidiary of Gatemore Partners
LP, a Guernsey-domiciled fund, which is managed and owned by
Gatemore Capital Management LLP ("Gatemore"). Gatemore is an
independent multi-asset investment firm operating out of offices in
London and Paris.
7. Related party transaction
The Purchaser is associated with Gatemore which, as of 11
September 2018, is TLA's largest shareholder and is interested in
14.7 per cent. of the entire issued share capital of the Company.
Accordingly, the Proposed Sale is a related party transaction for
the purposes of Rule 13 of the AIM Rules.
Michael Principe, Chief Executive Officer, is expected to have a
continued role in the US Businesses and Greg Genske is the Head of
Baseball for the US Businesses. Accordingly, they are not being
treated as independent for the purposes of Rule 13 of the AIM Rules
and were not involved in the negotiations or decision-making
process relating to the Proposed Sale.
The Independent Directors (other than Ian Robinson for the
reasons set out in paragraph 13 below) consider, having consulted
with Beaumont Cornish (the Company's nominated adviser), that the
terms of the Proposed Sale are fair and reasonable insofar as the
Shareholders are concerned.
In coming to this decision, the Independent Directors (other
than Ian Robinson) have taken into account the following:
-- the guidance provided by its nominated adviser, Beaumont
Cornish, who have relied upon the commercial assessments of the
Proposed Sale by the Independent Directors;
-- FTI, the Company's financial adviser appointed to assist in
the sale process in relation to the US Businesses, having carried
out a thorough and competitive auction and negotiation process, the
result of which has been the Proposed Sale as the best offer
received by the Existing Group for the US Businesses;
-- the US Businesses' and the Existing Group's recent trading
history, further details of which are set out in paragraph 3 of
this letter;
-- the fact that the US Businesses rely on strong relationships
between individuals within the US Businesses and its clients means
that staff retention is important to maintain existing client
relationships and ultimately, retain those clients;
-- the risk of any prolonged sale process both to the Continuing
Group and to the execution of the Proposed Sale and the risk of not
being able to find a new purchaser in the event the Proposed Sale
does not proceed to Completion;
-- the Existing Group's financial indebtedness owing to SunTrust
and the terms of the Credit Agreement pursuant to which SunTrust's
consent is required for the purposes of any disposal above a
certain threshold;
-- the likelihood that in the event the Proposed Sale does not
proceed to Completion on or before 31 December 2018, SunTrust may
exercise its remedies under the Credit Agreement with respect to
certain defaults by the Existing Group (such remedies including
acceleration of the outstanding loans and foreclosure, further
details of which are set out above in paragraph 3 of this letter)
and therefore the risk that the Company may cease to trade, enter
into administration or another insolvency process, in which event,
the Independent Directors expect that there would be a material and
adverse impact on the value of Shareholders' interests in the
Company;
-- the net sale proceeds from the Proposed Sale will be used to
contribute towards reducing the Existing Group's indebtedness to
SunTrust;
-- the Proposed Sale is subject to shareholder approval at the
General Meeting which is not a requirement under Rule 13 of the AIM
Rules (Related Party Transactions); and
-- alternatives to the Proposed Sale, such as an equity
fundraising, a closure of the US Businesses and run-off of the
debtor book, rescue refinancing at subsidiary or top company levels
or a Chapter 11 bankruptcy, have been considered by the Company.
However, regard being had to the nature of the Existing Group's
business as a 'people business' and the Existing Group's
indebtedness owing to SunTrust and the expiry of the forbearance
period on 31 December 2018, it has been concluded that these would
be impractical, risk further agent departures (thereby potentially
further affecting value and future earnings) and would not result
in a better deal for the Existing Group. As such, it would not
therefore be in the interests of the Shareholders as a whole to
pursue these alternative options at the risk of the Proposed Sale
not proceeding to Completion.
8. Financial effects of the Proposed Sale and use of the proceeds
It is expected that net proceeds of the Proposed Sale on
Completion, after payment of transaction costs and escrow, will be
approximately $4.5 million. In addition, upon Completion, the Board
intends to use the net sale proceeds from the Proposed Sale to
contribute towards repaying the Continuing Group's indebtedness to
SunTrust.
The Proposed Sale will result in the Group reviewing goodwill of
the US Businesses at its financial year. This is expected to result
in a material loss on disposal of the US Businesses.
9. Strategy for the Continuing Group
Further to the Company's announcement on 3 December 2018, TLA is
continuing to make good progress regarding the sale of its
Australian Business.
If such a sale of the Australian Business (the "Australian
Sale") proceeds, this transaction will also require approval of
Shareholders under Rule 15 of the AIM Rules. If the Proposed Sale
and the Australian Sale both complete, then the Company will become
an "AIM Rule 15 cash shell" (as defined in the AIM Rules). Further
information in this regard will be provided as and when
appropriate.
It is intended that the entire net sales proceeds from both the
Proposed Sale and the proposed sale of the Australian Business will
be used to discharge the indebtedness to SunTrust in full which, in
turn, would leave a modest cash balance in TLA.
10. Irrevocable undertakings
Certain Shareholders have given irrevocable undertakings to the
Company to vote in favour of the Resolution to be proposed at the
General Meeting (and, where relevant, to procure that such action
is taken by the relevant registered holders if that is not one of
them) in respect of their beneficial holdings totalling, in
aggregate, 46,962,335 Ordinary Shares, representing approximately
32.74 per cent. of the Company's entire issued share capital. This
does not include an irrevocable undertaking from Gatemore, which is
associated with the Purchaser and is interested in 14.7 per cent.
of the entire issued share capital of the Company.
Insofar as they are interested in Ordinary Shares, the Directors
have given irrevocable undertakings to the Company to vote in
favour of the Resolution (and, where relevant, to procure that such
action is taken by the relevant registered holders if that is not
them), in respect of their entire beneficial holdings totalling, in
aggregate, 11,171,839 Ordinary Shares, representing approximately
7.79 per cent. of the Company's issued share capital.
11. The General Meeting
You will find set out at the end of this document a notice
convening the General Meeting to be held on 27 December 2018 at the
offices of the Company's solicitors, DAC Beachcroft LLP, 100 Fetter
Lane, London EC4A 1BN at 12 noon, at which the Resolution will be
proposed.
The Resolution, which will be proposed at the General Meeting as
an ordinary resolution, is to approve the Proposed Sale and to
authorise the Directors to take all steps necessary or desirable to
complete the Proposed Sale.
In order for the Resolution to be passed, a simple majority is
required.
Shareholders should read the Notice of General Meeting at the
end of this document for the full text of the Resolution and for
further details about the General Meeting.
Shareholders have the right to attend, speak and vote at the
General Meeting (or, if they are not attending the meeting, to
appoint someone else as their proxy to vote on their behalf) if
they are on the Register at the Voting Record Time (namely 12 noon
on 21 December 2018). Changes to entries in the Register after the
Voting Record Time will be disregarded in determining the rights of
any person to attend and/or vote at the General Meeting. If the
General Meeting is adjourned, only those Shareholders on the
Register 48 hours before the time of the adjourned General Meeting
(excluding any part of a day that is not a Business Day) will be
entitled to attend, speak and vote or to appoint a proxy.
The number of Ordinary Shares a Shareholder holds as at the
Voting Record Time will determine how many votes a Shareholder or
his proxy will have in the event of a poll.
12. Action to be taken
A Form of Proxy for use at the General Meeting accompanies this
document. The Form of Proxy should be completed and signed in
accordance with the instructions thereon and returned to the
Company's registrars, Neville Registrars Limited, Neville House,
Steelpark Road, Halesowen B62 8HD, as soon as possible, but in any
event so as to be received by no later than 12 noon on 21 December
2018 (or, if the General Meeting is adjourned, 48 hours (excluding
any part of a day that is not a Business Day) before the time fixed
for the adjourned meeting).
If you hold your Ordinary Shares in uncertificated form in
CREST, you may vote using the CREST Proxy Voting service in
accordance with the procedures set out in the CREST Manual. Further
details are also set out in the notes accompanying the Notice of
General Meeting at the end of this document. Proxies submitted via
CREST must be received by Neville Registrars Limited (ID 7RA11) by
no later than 12 noon on 21 December 2018 (or, if the General
Meeting is adjourned, 48 hours (excluding any part of a day that is
not a Business Day) before the time fixed for the adjourned
meeting).
The completion and return of a Form of Proxy or the use of the
CREST Proxy Voting Service will not preclude Shareholders from
attending the General Meeting and voting in person should they so
wish.
13. Recommendation
On 30 November 2018, the Proposed Sale and Share Purchase
Agreement were unanimously approved at a board meeting of the
Company, at which each of the Independent Directors (including, for
the avoidance of doubt, Ian Robinson) was present. At that meeting,
it was resolved that the Proposed Sale should be announced as soon
as possible.
Once the Share Purchase Agreement had been signed, following its
approval at the board meeting on 30 November 2018 (at which Ian
Robinson was present), Ian Robinson requested an independent report
on the fairness and reasonableness of the Proposed Sale despite the
fact that no new information had come to light.
The Board did not commission an independent report on the
fairness and reasonableness of the Proposed Sale and at no point
did Ian Robinson request a formal report prior to the date of this
document or before the Share Purchase Agreement was entered into.
However, having engaged FTI to carry out a strategic review and
lead the open market sale process which led to the Proposed Sale,
the Company provided additional information to Ian Robinson in
connection with the process.
Despite the additional information having been provided by the
Company, Ian Robinson subsequently informed the Company that he is
unable to form a view that the Proposed Sale is in the best
interests of the Company and its Shareholders as a whole. He has
stated that:
"I am unable to form a view that this related party transaction
is in the best interests of the Company and its shareholders as a
whole. In the particular circumstances of this transaction I
believe the board should have received an independent written
assessment which would have provided a written formal opinion on
the fairness and reasonableness of this transaction."
On 3 December 2018, the Company issued an announcement which was
formally approved by Ken Wotton, Michael Principe and Dwight Mighty
(having received no objections from any of the Directors in
relation to its content or release). The announcement stated
that:
"The directors of the Company, excluding Mike Principe and Greg
Genske for the reasons set out below ("Relevant Directors"), having
consulted with the Company's Nominated Adviser, consider the Sale
to be fair and reasonable in so far as the Company's shareholders
are concerned for the reasons summarised below and to be further
explained in the Circular.
"Having considered possible alternatives for realising value
from the US Businesses, further details of which will be provided
in the Circular, the directors of the Company (other than the
Relevant Directors) concluded that the Sale is in the best
interests of the Company and its shareholders as a whole."
The Independent Directors, other than Ian Robinson, have
considered the feasibility of such a report and concluded that it
would have been both impractical, not least considering the
impending expiry of the forbearance period granted by SunTrust on
31 December 2018, and of no additional value in the current
circumstances of the Existing Group. Their reasons include, but are
not limited to, its position with its bank. In order to ensure that
the Company receives full value for the US Businesses, the Company
appointed FTI as its financial adviser to assist in the sale
process for the US Businesses. FTI approached over 20 potential
purchasers, of which three made indicative offers for the US
Businesses. Two of these were subsequently withdrawn, one on the
basis that certain agents had left the US Businesses and the other
on the basis that employees within the US Businesses indicated that
they would also leave in the event that the US Businesses were sold
to the potential purchaser who had made that offer. This left the
offer from Gatemore as the only remaining viable offer for the US
Businesses. In the Independent Directors' opinion (excluding that
of Ian Robinson), having considered the sale process conducted by
FTI, the Independent Directors (other than Ian Robinson) believe
that the Proposed Sale will achieve the best value attainable for
the US Businesses. The Proposed Sale was also independently
approved by SunTrust, who was satisfied that it was the best offer
obtainable for the US Businesses in light of the current
circumstances. Based on the sale process undertaken by FTI and the
decline in the future financial prospects of both the Company and
the US Businesses, the Independent Directors (other than Ian
Robinson) have concluded that the Proposed Sale represents the best
value that the Company can obtain for the US Businesses at the
current time.
As such, the Independent Directors (other than Ian Robinson)
still consider the Proposed Sale to be in the best interests of the
Company and its Shareholders as a whole and accordingly recommend
Shareholders to vote, or procure the vote, in favour of the
Resolution to be proposed at the General Meeting.
Keith Sadler
Senior Independent Non-Executive Director
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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