RNS Number:7477B
Hercules Property Services PLC
6 April 2001
HERCULES PROPERTY SERVICES PLC
HERCULES ANNOUNCES THREE ACQUISITIONS FOR #15.55 MILLION AND PLACING AND OPEN
OFFER TO RAISE APPROXIMATELY #16.3 MILLION
Hercules Property Services PLC ("Hercules" or the "Company") today announces
that it has made three acquisitions for a total consideration of #15.55
million. The Company believes that the activities of these established
businesses will strengthen and broaden the property insurance and consultancy
services of the Group.
The cash required by the Company to fund the acquisitions is expected to be
funded by a placing and open offer to raise #16.3 million that has been
underwritten by Investec. All Qualifying Shareholders of Hercules will be
entitled to subscribe for Open Offer Shares at 555 pence per share on the
basis of: 1 Open Offer Share for every 10 Ordinary Shares held.
A #15 million loan facility has been put in place to fund the acquisitions in
the event that the resolution to approve the Placing and the Open Offer is not
approved by Shareholders. However, in the event that the resolution is passed,
this facility will be available to the Group for the funding of future
acquisitions.
Details of the acquisitions
Hercules has entered into:
- an unconditional agreement to acquire the goodwill and certain other assets
of Baker Lorenz, a London based property consultancy, for #5.75 million;
- an unconditional agreement to acquire the entire issued share capital of
Cadogan Insurance Services Limited, a London based property insurance broker
for #4.8 million;
- an unconditional agreement to acquire the goodwill and certain other assets
of Kounnis Brokers, a London based property insurance intermediary for #5
million in cash.
Reasons for the Acquisitions:
The Directors believe that the principal benefits of the acquisitions for
Hercules are that the three businesses:
- are established profitable businesses whose activities will strengthen and
broaden the property insurance and consultancy services of the Enlarged
Group;
- will increase recurring revenue for the Group;
- will offer increased cross selling opportunities for the Group;
- will strengthen the management and service capability of Dunlop Heywood, the
Group's existing property consultancy business;
- will create synergies from the integration of some of the operations of
Dunlop Heywood and Baker Lorenz.
Larry Lipman, chairman of the Company, commented:
"These acquisitions exactly fit Hercules' stated strategy of growing and
acquiring businesses in the property services markets where we have
competitive advantages. Like Farr, the Housing Association property insurance
intermediary we purchased last year, each of these businesses provide Hercules
with an excellent opportunity to expand in specific market niches within the
property services industry.
"Our experience is that established brands such as Cadogan, Kounnis and Baker
Lorenz will respond well to the strength of Hercules, benefiting particularly
from the cross-selling opportunities within the enlarged group. Our strong
focus on providing quality client care and a wide range of services to the
property owning communities is an important factor in the growth momentum
being enjoyed by Hercules.
"We have demonstrated our ability to grow both profitably and rapidly through
the Group's added value, and I remain confident that we will continue to do
so."
For further information:
Larry Lipman Hercules Property Services PLC 020 8202 7276
Jagjit Mundi Investec Henderson Crosthwaite 020 7597 5970
Philip Robinson
Dido Laurimore GCI Financial 020 7398 0800
HERCULES PROPERTY SERVICES PLC
PROPOSED ACQUISITIONS OF THE GOODWILL AND CERTAIN OTHER ASSETS OF EACH OF
BAKER LORENZ AND KOUNNIS BROKERS AND OF THE ENTIRE ISSUED SHARE CAPITAL OF
CADOGAN INSURANCE SERVICES LIMITED
PLACING OF 2,936,936 NEW ORDINARY SHARES AT 555P EACH
INCORPORATING AN OPEN OFFER OF 1,469,602 NEW ORDINARY SHARES
ON THE BASIS OF 1 NEW ORDINARY SHARE FOR EVERY 10 EXISTING ORDINARY SHARES
Introduction
Hercules announces that it has entered into unconditional agreements to
acquire the entire issued share capital of Cadogan Insurance Services Limited
and the goodwill and certain other assets of Kounnis Brokers and of Baker
Lorenz. The aggregate consideration payable for the Acquisitions will be
approximately #15.55 million.
The cash required by the Company to complete the Acquisitions of approximately
#16.2 million (including expenses incurred in connection with the Placing and
the Open Offer of approximately #1.2 million and the cash deposit required to
guarantee the Loan Notes of #3.5 million to be issued to Cadogan) is to be
funded by the proceeds of the Placing and the Open Offer which will be carried
out simultaneously with the Acquisitions to raise approximately #16.3 million.
The balance of the consideration will be satisfied through the issue of new
Ordinary Shares. The Placing and the Open Offer are conditional upon, inter
alia, the passing of an ordinary resolution to be put to Shareholders at an
extraordinary general meeting of the Company expected to be convened for 2 May
2001. In the event that the Resolution is not passed by Shareholders, the cash
required to complete the Acquisitions will be funded by a #15 million
committed credit facility made available to Hercules by Barclays Bank and the
existing cash resources of the Group. None of the Acquisitions are subject to
Shareholder approval due to their size.
Application has been made for the New Ordinary Shares to be admitted to the
Official List and to trading on the London Stock Exchange's markets for listed
securities. It is expected that Admission will become effective and that
dealings will commence in the Consideration Shares on 11 April 2001, in the
Placing Shares on 9 May 2001 and in the Subscription Shares on 11 May 2001.
The New Ordinary Shares will be issued credited as fully paid and will, on
issue, rank pari passu with the existing Ordinary Shares, save that they will
not rank for the interim dividend in respect of the six months ended 31
December 2000.
The Acquisitions
Cadogan
Cadogan is a property insurance broker operating in the West End of London
whose gross brokerage income in the year ended 30 April 2000 was approximately
#1.5 million (1999 - #1.2 million), resulting in a net profit before tax of
approximately #550,000 (1999 - #350,000). The net assets of Cadogan at 30
April 2000 were approximately #306,000.
In excess of 85 per cent. of Cadogan's income is derived from the placing of
property insurance. Of this figure approximately 80 per cent. relates to
commercial property, thus creating a balance with Hercules' existing insurance
broking business, Deacon, whose insurance placement is principally
residential.
Cadogan has in place agency agreements with major insurers including Royal Sun
Alliance Insurance plc and Zurich Insurance Company.
Hercules has agreed to purchase Cadogan for a total consideration of #4.8
million. #3.5 million of this will be satisfied by the issue to Cadogan of
Loan Notes on 11 May 2001 and #750,000 will be satisfied in cash payable into
a retention account on 11 May 2001, such cash to be released in equal
instalments upon and subject to the determination of Cadogan's profits for the
years ended 30 April 2002 and 30 April 2003. For every #1 that the profits
before tax for each of those periods are less than #850,000, #5.60 will be
released back to Hercules (subject to a limit of #375,000 in each of these
periods) with the balance released to the Cadogan Vendors, and for this
purpose any profit over #850,000 for 2001 may be carried forward and
consolidated with profits for 2002 (subject to a limit of #100,000). The
balance of #550,000 will be settled by the issue of the 91,401 Consideration
Shares on Completion at a price of 601.75p per share. The consideration will
be increased or reduced pound for pound in the event that the net current
assets of the business as at completion prove to be greater or less than
#175,000 subject to a maximum increase of #1,500,000. Any further
consideration payable as a result will be satisfied at the election of the
Cadogan Vendors either by the issue of further Loan Notes or by a cash
payment.
Both shareholders of Cadogan, David Oatley and Terry Hill, have agreed to sign
new three year service contracts with Cadogan in order to assist in the
running of the business following completion.
The Directors believe that the principal benefits to Hercules of the Cadogan
Acquisition will be:
- the acquisition of an established, profitable business, the activities of
which will strengthen Hercules' current insurance services provision;
- increased cross-selling opportunities;
- greater purchasing power in the insurance arm of the Enlarged Group's
business, potentially creating the possibility of extracting improved terms
from its insurance wholesalers;
- increased recurring revenue;
- strengthened management through the addition of Cadogan's experienced
management team; and
- a strengthened sales force, which will be available to promote the products
and services of the Enlarged Group.
Kounnis Brokers
Kounnis Brokers is a property insurance intermediary business formed to
service the insurance requirements of Kounnis Group PLC's own property
interests. However, in 1994 the insurance rates which had been negotiated were
offered to third parties. Today the partnership acts as an insurance
intermediary in respect of property with an insurable value in excess of #750
million. The Kounnis Vendors have warranted to Hercules that the gross written
premiums receivable by Kounnis Brokers in the 12 month period ended 31 March
2001 were not less than #2 million.
Kounnis Brokers currently has three staff. Two of Kounnis Brokers' partners,
Demetrios Kounnis and Gary Kounnis, have agreed to act as consultants for the
twelve and nine months respectively following Completion with a view to
achieving a smooth handover of the business. Two employees will be invited to
stay with the business.
Hercules is purchasing the goodwill and certain other assets of Kounnis
Brokers for #5 million in cash. The gross profit of Kounnis Brokers for the
year ended 30 April 2000 was #446,000. The cash and net assets of the
partnership not being acquired by Hercules will remain with the Kounnis
Vendors following completion. The Directors believe that the tangible net
assets which are the subject of the transaction are negligible.
The Directors believe that the principal benefits to Hercules of the Kounnis
Acquisition will be:
- the ability to significantly increase commission margins by transferring the
insurance arrangements in relation to properties insured by Kounnis Brokers
to the arrangement that Hercules has with its insurers;
- the acquisition of an established, profitable business, the activities of
which will increase the value of property under cover;
- greater purchasing power in the insurance arm of the Enlarged Group's
business, potentially creating the possibility of extracting improved terms
from its insurance wholesalers; and
- increased recurring revenue.
Baker Lorenz
Baker Lorenz is a commercial property consultancy partnership founded in 1972,
and is also an established firm of surveyors specialising in office
accommodation in London.
Following completion of the Baker Lorenz Acquisition, the Directors intend
that the business will be integrated with the Group's current commercial
property consultancy business, Dunlop Heywood, and will trade under the name
"Dunlop Heywood Baker Lorenz". Anthony Lorenz, David Kahn and Lloyd Simon have
agreed to join the board and executive committee of Dunlop Heywood as
executive vice-chairman, managing director and executive director
respectively, and Bob Dyson, Dunlop Heywood's existing managing director, has
agreed to become executive chairman of the board of directors of the merged
business.
The Baker Lorenz Vendors have warranted that net profits (before drawings) of
Baker Lorenz for the year ended 31 March 2001 will not be less than #2
million. Following completion, total salaries (excluding bonuses) for the four
partners who are joining the Group will be capped at #600,000 in total.
Hercules has agreed that Dunlop Heywood will purchase the goodwill and certain
other assets of Baker Lorenz for a total consideration of #5.75 million and
Hercules has agreed to provide Dunlop Heywood with an intra group loan for
working capital purposes of #250,000 if required. #4.1 million of the total
consideration payable will be paid in cash on the date of completion of the
Baker Lorenz Acquisition, with a further #900,000 being deferred on the basis
of three equal payments to be paid on each of the first, second and third
anniversaries of completion of the transaction. The remaining balance of
#750,000 will be satisfied in cash, which the Baker Lorenz Vendors have agreed
to apply in subscribing for 124,637 Subscription Shares at a price of 601.75p
per share. Such subscription will be conditional upon Admission. In the event
that Admission of the Subscription Shares does not occur, the Baker Lorenz
Vendors will be entitled to retain the #750,000 in cash.
On completion of the Baker Lorenz Acquisition the Baker Lorenz Vendors will
grant to Dunlop Heywood a lease of the trading premises of Baker Lorenz, being
the first and second floors and ground floor rear of 25 Hanover Square, London
W1. The lease will expire on 28 September 2002 and will be terminable on four
months notice by either party and will be at a rent of #125,000 per annum.
The net profit before drawings of Baker Lorenz for the year ended 31 March
2000 was approximately #2 million. The cash and net assets of the partnership
not being acquired by Dunlop Heywood will remain with the Baker Lorenz Vendors
following completion. The Directors believe that the tangible net assets, the
subject of the transaction, are not less than #5,000.
The Directors believe that the principal benefits to Hercules of the Baker
Lorenz Acquisition will be:
- the acquisition of an established, profitable business, the activities of
which will strengthen the professional consultancy services provided by
Hercules;
- enhancement of the Enlarged Group's ability to grow through cross-selling;
and
- strengthened management of Hercules' property consultancy business through
the addition of Baker Lorenz's experienced and entrepreneurial management
team.
The Directors expect that together the Acquisitions will be earnings enhancing
for Hercules in the next financial year. This statement should not be taken to
mean that the future earnings per Ordinary Share of Hercules will necessarily
be greater than historic earnings per Ordinary Share.
The Consideration Shares and the Subscription Shares will together represent
approximately 1.47 per cent. of the existing Ordinary Shares and will,
assuming completion of the Baker Lorenz Acquisition and the Cadogan
Acquisition, represent approximately 1.21 per cent. of the enlarged issued
Ordinary Share capital of the Company on Admission.
Bank Facilities
The Company has negotiated a committed credit facility of #15 million with
Barclays Bank. In the event that the Resolution is not passed at the EGM and
the Placing and the Open Offer do not proceed, the cash consideration required
to be paid in respect of the Acquisitions and the cash deposit required to
facilitate the guarantee of the Loan Notes will be funded in part from the
Company's existing cash resources and in part by this facility. If the Placing
and the Open Offer do proceed, the Facility will be used only to fund future
acquisitions by the Group.
The Facility has been put in place by the Company to fund the Acquisitions in
the event that the Placing and the Open Offer do not proceed. However, the
Directors believe that the preferred method of funding the Acquisitions would
be via the Placing and the Open Offer, in order to provide funding flexibility
for the Enlarged Group going forward.
Since completion of the Kounnis Acquisition is intended to take place prior to
the completion of the Placing and the Open Offer, the proceeds of the Placing
and the Open Offer will be used to refinance a short term overdraft facility
used to fund temporarily the consideration payable thereunder. As referred to
above, in the event that the Placing and the Open Offer do not proceed, the
Facility will be used to refinance this short term overdraft facility.
Details of the Placing and the Open Offer
General
The Company is proposing to raise approximately #16.3 million gross
(approximately #15.1 million net of expenses) through the Placing and the Open
Offer, which has been fully underwritten by Investec Bank. The net proceeds of
the Placing and the Open Offer will be used to fund the cash consideration
payable in respect of the Cadogan Acquisition and the Baker Lorenz
Acquisition, the cash deposit required to facilitate the guarantee of the Loan
Notes and the repayment of the short term overdraft facility referred to
above.
The Placing Shares, in aggregate, will represent approximately 19.98 per
cent. of the existing Ordinary Shares and will (assuming completion of the
Baker Lorenz Acquisition and the Cadogan Acquisition) represent approximately
16.45 per cent. of the enlarged issued Ordinary Share capital of the Company
on Admission.
The Placing and the Open Offer are conditional, inter alia, on:
(a) the passing of the Resolution;
(b) the Placing and Open Offer Agreement becoming unconditional, save
for Admission of the Placing Shares, by no later than 9 May 2001
(or such later date, being not later than 23 May 2001 as the Company
and Investec Bank may agree) and not having been terminated in
accordance with its terms;
(c) subject to what is stated below, the Acquisition Agreements being
completed in accordance with their respective terms (save for the
payment of the consideration and subject to Admission); and
(d) Admission of the Placing Shares.
Investec Bank and the Company reserve the right to proceed with the Placing
and the Open Offer in the event that not all of the Acquisitions complete in
accordance with their respective terms.
The Placing
Pursuant to the Placing, which has been arranged by Investec Henderson
Crosthwaite as agent for the Company, the Placing Shares have been
conditionally placed with institutional and certain other investors at the
Issue Price.
Of the Placing Shares, 1,467,334 are being placed firm pursuant to the Firm
Placing (representing 49.96 per cent. of the Placing Shares) and are not being
offered to Shareholders whilst the remainder, being the 1,469,602 new Ordinary
Shares, are being offered to Shareholders under the Open Offer.
The Placing Shares will be issued credited as fully paid and will, on issue,
rank pari passu with the existing Ordinary Shares, save that they will not
rank for the interim dividend in respect of the six months ended 31 December
2000. No temporary documents of title will be issued.
The Open Offer
Investec Henderson Crosthwaite, as agent for the Company, has conditionally
placed the Open Offer Shares with institutional and certain other investors at
the Issue Price subject to recall (save for those Open Offer Shares in respect
of which irrevocable undertakings not to take up have been received, as
described below) to satisfy valid applications by Qualifying Shareholders
pursuant to the Open Offer.
Qualifying Shareholders will be invited by Investec Henderson Crosthwaite, as
agent for the Company, to subscribe under the Open Offer for the Open Offer
Shares at the Issue Price free of expenses, pro rata to their existing
shareholdings, on the basis of
1 new Ordinary Share for every 10 existing Ordinary Shares
held on the Record Date and so in proportion for any greater or smaller number
of existing Ordinary Shares then held. The amount due in respect of each
application for Open Offer Shares will be payable in full on application.
Entitlements to Open Offer Shares will be rounded down to the nearest whole
Open Offer Share. Fractional entitlements will not be allotted to Qualifying
Shareholders but will be aggregated and placed for the benefit of the Company
under the terms of the Placing and Open Offer Agreement. The maximum
entitlement of a Qualifying Shareholder to Open Offer Shares will be indicated
on the Application Form to be sent to Shareholders. Each Application Form will
be personal to the Qualifying Shareholder named on the form and may not be
assigned, transferred or split except to satisfy bona fide market claims.
Applications for Open Offer Shares in excess of such maximum entitlement will
be treated as applications for the maximum pro rata entitlement. Any Open
Offer Shares not taken up under the Open Offer will be subscribed for pursuant
to the terms of the Placing and otherwise in accordance with the Placing and
Open Offer Agreement.
Current trading and prospects
In December 2000 the Group completed the acquisition of FIIB, which owns FARR,
a specialist UK housing insurance intermediary. The Directors look forward to
the positive impact of FARR being reflected in Hercules' full year figures and
believe that FARR brings synergies to Hercules' existing insurance
intermediary, Deacon. FARR continues to maintain customer service through
offering claims on line and providing industry specific consulting. FARR has
also won a number of new accounts since the acquisition.
Deacon has continued to exceed expectations, and the directors are pleased
with its significant growth in premiums.
The residential property management companies, DGA and Simmonds, have now
moved into the Group's new head office in Stanmore, Middlesex, and the
Directors are looking forward to the benefits of having the two businesses
under one roof. Both businesses have continued to grow through the acquisition
of new clients and through intra-group business.
Dunlop Heywood, the commercial property consultancy, has recently achieved a
number of new business wins. The Directors also recognise that the opportunity
exists to introduce the Group's other services to its customers, with the
potential to produce significant returns in the future.
Harman Healy, the commercial auctioneer and property manager, achieved its
highest ever value of sales in the calendar year to 31 December 2000. The
business has also been successful in acquiring management clients for itself
and insurance clients for the Group.
The Hercules Group's trading in the current financial year is in line with the
Company's expectations and will reflect the impact of a full 12 months
contribution from Deacon and a significant contribution from FARR. In light of
the Acquisitions and current trading, the Directors are enthusiastic about the
current and future financial and trading prospects of the Enlarged Group.
Hercules will continue to seek strategic acquisition opportunities as and when
they arise.
Share undertakings
Safeland and Safeland Holdings Corporation have given irrevocable undertakings
to the Company not to take up the total of 213,137 Open Offer Shares to which
they will be entitled under the Open Offer. Such Open Offer Shares have been
conditionally placed firm at the Issue Price by Investec Henderson
Crosthwaite, acting as agent for the Company, with institutional and certain
other investors.
Larry Lipman has irrevocably undertaken to the Company that he will not take
up the 5,175 Open Offer Shares to which he will be entitled under the Open
Offer. Such Open Offer Shares have been conditionally placed firm by Investec
Henderson Crosthwaite, acting as agent for the Company with institutional and
certain other investors. Paul Davis has irrevocably undertaken to take up the
198 Open Offer Shares to which he will be entitled under the Open Offer.
Both Safeland and Safeland Holdings Corporation have undertaken that (save in
certain limited circumstances) they will not dispose of any of their interests
in Ordinary Shares until the announcement of the Group's preliminary results
for the year ended 30 June 2001 without the prior written consent of the
Company and Investec Bank.
In addition, Robert Plumb has agreed to subscribe for 10,000 new Ordinary
Shares pursuant to the Placing. Such Shares will not be subject to clawback
under the Open Offer.
Prospectus
It is expected that a prospectus, accompanied by an Application Form for use
in connection with the Open Offer, setting out the details of the proposals
and including a notice of the Extraordinary General Meeting, will be posted to
Shareholders later today.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2001
Record Date for the Open Offer 30 March
Completion of the Cadogan Acquisition 6 April
Time and date of Admission and commencement of
dealings in the Consideration Shares 8.00 a.m. on 11 April
Latest time and date for splitting Application Forms
(to satisfy bona fide market claims only) 3.00 p.m. on 27 April
Completion of the Kounnis Acquisition 30 April
Latest time and date for receipt of completed Forms
of Proxy 11.00 a.m. on 30 April
Latest time and date for receipt of completed
Application Forms and payment in full under the
Open Offer 3.00 p.m. on 1 May
Extraordinary General Meeting 11.00 a.m. on 2 May
Time and date of Admission and commencement of
dealings in the Placing Shares 8.00 a.m. on 9 May
Time and date of delivery in CREST of the
Placing Shares to be held in uncertificated form 8.00 a.m. on 9 May
Completion of the Baker Lorenz Acquisition 11 May
Time and date of Admission and commencement of
dealings in the Subscription Shares 8.00 a.m. on 11 May
Definitive share certificates in respect of the
Placing Shares to be held in certificated form to be
despatched by 16 May
DEFINITIONS
The following definitions apply throughout this announcement unless the
context otherwise requires:
"Acquisitions" together, the Baker Lorenz Acquisition,
the Kounnis Acquisition and the Cadogan
Acquisition
"Acquisition Agreements" together, the Baker Lorenz Acquisition
Agreement, the Kounnis Acquisition
Agreement and the Cadogan Acquisition
Agreement
"Admission" the admission of the New Ordinary
Shares (save where it is used in
conjunction with the Consideration
Shares and/or the Subscription Shares
when it shall mean admission of those
shares) to (i) the Official List and
(ii) trading on the London Stock
Exchange's markets for listed
securities becoming effective in
accordance with the Listing Rules and
the Standards respectively
"Application Form" the application form relating to the
Open Offer to be sent to Qualifying
Shareholders
"Baker Lorenz" the partnership, comprising the Baker
Lorenz Vendors, which carries on the
business of property consultants under
the name "Baker Lorenz"
"Baker Lorenz Acquisition" the proposed acquisition of the
goodwill and certain other assets of
Baker Lorenz, pursuant to the Baker
Lorenz Acquisition Agreement
"Baker Lorenz Acquisition Agreement" the agreement relating to the Baker
Lorenz Acquisition constituted by the
acceptance on 6 April 2001 by Dunlop
Heywood and the Company of the offer to
sell the goodwill and certain other
assets of Baker Lorenz made by the
Baker Lorenz Vendors in the Baker
Lorenz Offer Letter
"Baker Lorenz Offer Letter" the letter constituting an offer to
sell the goodwill and certain other
assets of Baker Lorenz delivered by the
Baker Lorenz Vendors to the Company and
Dunlop Heywood and dated 6 April 2001
"Baker Lorenz Vendors" Anthony Lorenz, David Kahn, Lloyd Simon
and Chris Froshaug
"Barclays Bank" Barclays Bank PLC
"Cadogan" Cadogan Insurance Services Limited
"Cadogan Acquisition" the proposed acquisition of the entire
issued share capital of Cadogan,
pursuant to the Cadogan Acquisition
Agreement
"Cadogan Acquisition Agreement" the agreement dated 6 April 2001 and
made between the Cadogan Vendors and
the Company
"Cadogan Vendors" David Charles Oatley and Robert Terence
Hill
"Company" or "Hercules" Hercules Property Services PLC
"Completion" completion of the Cadogan Acquisition,
expected to take place on 6 April 2001,
completion of the Kounnis Acquisition,
expected to take place on 30 April 2001
and completion of the Baker Lorenz
Acquisition, expected to take place on
11 May 2001
"Consideration Shares" the 91,401 new Ordinary Shares to be
issued to the Cadogan Vendors pursuant
to the Cadogan Acquisition Agreement
"CREST" the relevant system (as defined in the
Uncertificated Securities Regulations
1995 (SI 199 No. 95/3272)) in respect
of which CRESTCo Limited is the
Operator (as defined in such
Regulations)
"Deacon" Deacon Insurance Services (Holdings)
Limited, a wholly owned subsidiary of
the Company
"DGA" David Glass Associates PLC, a wholly
owned subsidiary of the Company
"Directors" or "Board" the directors of Hercules
"Dunlop Heywood" Dunlop Heywood & Co Limited, a wholly
owned subsidiary of the Company
"Enlarged Group" the Hercules Group as enlarged by the
Acquisitions
"existing Ordinary Shares" the 14,696,027 Ordinary Shares in issue
as at the date of this announcement
"Extraordinary General Meeting" or
"EGM" the extraordinary general meeting of
the Company convened for 11.00 am on 2
May 2001 or any adjournment thereof
"Facility" the debt facility to be provided by
Barclays Bank pursuant to the agreement
dated 6 April 2001 between the Company
and Barclays Bank
"FARR" the FARR Insurance division of Farr plc
"Farr plc" Farr plc, a wholly owned subsidiary of
FIIB
"Firm Placed Shares" 1,467,334 new Ordinary Shares which
have been placed firm by Investec
Henderson Crosthwaite
"Firm Placing" the conditional placing by Investec
Henderson Crosthwaite of the Firm
Placed Shares on behalf of the Company
pursuant to the Placing and Open Offer
Agreement
"FIIB" FIIB Limited, a wholly owned subsidiary
of the Company
"Harman Healy" Harman Healy Limited, a wholly owned
subsidiary of the Company
"Hercules Group" or "Group" Hercules, its subsidiaries and its
subsidiary undertakings as at the date
of this announcement
"Investec Bank" Investec Bank (UK) Limited of 2 Gresham
Street, London EC2V 7QP
"Investec Henderson Crosthwaite" Investec Henderson Crosthwaite, a
division of Investec Bank
"IRG" Capita IRG Plc
"Issue Price" 555p per new Ordinary Share
"Kounnis Acquisition" the proposed acquisition of the
goodwill and certain other assets of
Kounnis Brokers, pursuant to the
Kounnis Acquisition Agreement
"Kounnis Acquisition Agreement" the agreement relating to the Kounnis
Acquisition constituted by the
acceptance on 6 April 2001 by the
Company of the offer to sell the
goodwill and certain other assets of
Kounnis Brokers made by the Kounnis
Vendors in the Kounnis Offer Letter
"Kounnis Brokers" a partnership, comprising the Kounnis
Vendors, which carries on the business
of insurance broking under the names
"Kounnis Brokers" and "Kounnisure
Direct"
"Kounnis Offer Letter" the letter constituting an offer to
sell the goodwill and certain other
assets of Kounnis Brokers delivered by
the Kounnis Vendors to the Company and
dated 6 April 2001
"Kounnis Vendors" Demetrios Kyriacou Kounnis, Constantino
Demetrios Kounnis, Gary Kyriacos
Kounnis and Kounnis Group PLC
"LIBOR" London Inter-Bank Offer Rate, as such
term is defined in the instrument
constituting the Loan Notes
"Listing Rules" the rules and regulations made by the
UK Listing Authority under Part IV of
the Financial Services Act 1986 as
amended from time to time
"Loan Notes" #3,500,000 variable rate guaranteed
loan notes 2007 to be issued by the
Company bearing interest at a rate of
45 basis points below LIBOR per annum,
guaranteed by Barclays Bank, to be
issued pursuant to the Cadogan
Acquisition Agreement
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" Ordinary Shares which are to be issued,
pursuant to the Placing, the Open
Offer, the Cadogan Acquisition
Agreement and the Baker Lorenz
Acquisition Agreement
"Official List" the Official List of the UK Listing
Authority
"Open Offer" the conditional open offer being made
by Investec Henderson Crosthwaite, as
agent for the Company, to Qualifying
Shareholders to subscribe for the Open
Offer Shares at the Issue Price and on
the terms and conditions set out in
this document and in the Application
Form
"Open Offer Shares" new ordinary shares of 5p each in the
capital of the Company which have been
conditionally placed (subject to
clawback to satisfy valid applications
by Qualifying Shareholders) by Investec
Henderson Crosthwaite pursuant to the
Placing and Open Offer Agreement, such
term to also include those new Ordinary
Shares in respect of which irrevocable
undertakings not to take up have been
received
"Ordinary Shares" ordinary shares of 5p each in the
capital of the Company
"Placing" the conditional placing by Investec
Henderson Crosthwaite on behalf of the
Company of the Placing Shares pursuant
to the Placing and Open Offer Agreement
" Placing Shares" the Firm Placed Shares and the Open
Offer Shares
"Placing and Open Offer Agreement" the agreement dated 6 April 2001 and
made between (1) the Company and (2)
Investec Bank relating to the Placing
and the Open Offer
"Qualifying Shareholders" Shareholders on the register of members
of Hercules on the Record Date (except
for certain overseas Shareholders)
"Record Date" the record date for the Open Offer,
being the close of business on 30 March
2001
"Resolution" the special resolution to be proposed
at the EGM
"Safeland" Safeland plc
"Shareholders" holders of Ordinary Shares
"Simmonds" Simmonds & Partners Limited, a wholly
owned subsidiary of the Company
"Standards" the requirements contained in the
publication "Admission and Disclosure
Standards" issued by the London Stock
Exchange containing, inter alia, the
admission requirements to be observed
from 1 May 2000 by companies seeking
admission to trading on the London
Stock Exchange's markets for listed
securities as amended from time to time
"Subscription Shares" the 124,637 new Ordinary Shares to be
subscribed for by the Baker Lorenz
Vendors pursuant to the Baker Lorenz
Acquisition Agreement
"UK Listing Authority" the Financial Services Authority acting
in its capacity as the competent
authority for the purpose of Part IV of
the Financial Services Act 1986 as
amended from time to time
ENl
COMSSLSMMSFSEIL
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