TIDMHUW
RNS Number : 2762L
Helios Underwriting Plc
30 September 2016
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY
OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA,
JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH
RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL
Neither this Announcement nor any part of it constitutes an
offer to sell, or the solicitation of an offer to buy, subscribe or
acquire new ordinary shares in the capital of the Company in any
jurisdiction in which such an offer or solicitation is unlawful or
would impose any unfulfilled registration, publication or approval
requirements on the Company and/or Stockdale.
30 September 2016
Helios Underwriting PLC
("Helios" or the "Company")
Proposed Placing and Open Offer
Helios today announces a proposed placing of up to 3.5 million
New Ordinary Shares to raise up to GBP5.25 million (gross of
expenses) at a price of GBP1.50 per share by way of an accelerated
book-building process. In addition, up to a further GBP3.2 million
may be raised by way of a conditional Open Offer to existing
shareholders on the basis of 1 New Ordinary Share for every 5
Existing Ordinary Shares.
Each of the Directors of Helios have indicated that they intend,
directly or indirectly, to participate in the Placing to a total of
approximately GBP650,000. Will Roseff, a substantial shareholder,
has also indicated that he intends to participate in the Placing up
to an amount of approximately GBP1.26 million. In addition, each of
the Directors and Will Roseff have undertaken not to take up their
Open Offer Entitlements.
Settlement and admission to trading on AIM of the Placing Shares
is expected to occur on or about 6 October 2016.
The accelerated book-building process is being carried out by
Stockdale Securities Limited acting as bookrunner in relation to
the Placing. The identity of Placees and the basis of the
allocations are at the discretion of Stockdale. The number of
Placing Shares will be agreed by Helios with Stockdale at the close
of the book-building process. Details of the number of Placing
Shares will be announced as soon as practicable after the close of
the book-building process, which is expected to occur later
today.
Appendix I to this Announcement (which forms part of this
Announcement) sets out the terms and conditions of the Placing.
Attention is also drawn to Appendix II to this Announcement
entitled "Risk Factors".
Helios intends to use the proceeds of the Placing and the Open
Offer to provide additional funding to continue to expand its
portfolio of capacity that participates on syndicates at
Lloyd's.
The Circular detailing the Open Offer and convening a general
meeting to seek the required shareholder authorities together with,
in the case of Qualifying Non-CREST Shareholders, the Application
Form in respect of the Open Offer, will be sent to Shareholders as
soon as reasonably practicable.
Today, Helios is also separately announcing its interim results
for the six months ended 30 June 2016.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation.
-Ends-
For further information, please contact:
Helios
Nigel Hanbury - Chief Executive 020 7863 6655 /
nigel.hanbury@huwplc.com
Arthur Manners - Chief Financial Officer 07754 965917
Stockdale Securities 020 7601 6100
Robert Finlay
Richard Johnson
David Coaten
Stockdale Securities Limited is acting exclusively for the
Company and no-one else in connection with the Placing and
Admission and will not regard itself as owing duties under the
rules and regulations of the Financial Conduct Authority to any
other person or regard any other persons as its client.
The distribution of this Announcement and the Placing of the
Placing Shares in certain jurisdictions may be restricted by law.
No action has been taken by the Company or Stockdale that would
permit an offering of such shares or possession or distribution of
this Announcement or any other offering or publicity material
relating to such shares in any jurisdiction where action for that
purpose is required. Persons into whose possession this
Announcement comes are required by the Company and Stockdale to
inform themselves about, and to observe, such restrictions.
No offering document, prospectus or admission document has been
or will be submitted to be approved by the FCA or submitted to the
London Stock Exchange in relation to the Placing. The Placing
Shares are being offered to a limited number of specifically
invited persons only and will not be offered in such a way as to
require a prospectus in the UK or in any other jurisdiction. This
Announcement contains no offer to the public within the meaning of
section 102B FSMA or otherwise.
1. Introduction
The Company today announces a proposed Placing to raise up to
GBP5.25 million (gross of expenses) through the issue of up to 3.5
million New Ordinary Shares, together with a conditional Open Offer
to raise up to approximately GBP3.2 million (before expenses)
through the issue of up to 2.1 million New Ordinary Shares, each at
an issue price of GBP1.50 per New Ordinary Share.
The Issue Price represents a discount of approximately 11.8 per
cent. to the Closing Price on 29 September 2016. Application will
be made to the London Stock Exchange for the New Ordinary Shares to
be admitted to trading on AIM.
Settlement and admission to trading on AIM of the Placing Shares
is expected to occur on or about 6 October 2016.
The accelerated book-building process is being carried out by
Stockdale Securities Limited acting as bookrunner (the
"Bookrunner") in relation to the Placing. The identity of Placees
and the basis of the allocations are at the discretion of
Stockdale. The number of Placing Shares will be agreed by Helios
with Stockdale at the close of the book-building process. Details
of the number of Placing Shares will be announced as soon as
practicable after the close of the book-building process, which is
expected to occur later today.
2. Overview of Helios
Helios provides a limited liability direct investment into the
Lloyd's insurance market and is quoted on AIM (ticker: HUW). Helios
trades within the Lloyd's insurance market and has a portfolio of
syndicate capacity of GBP32.7m, as at June 2016. The portfolio
provides a good spread of classes of business being concentrated in
property insurance and reinsurance.
3. Background to and reasons for the Placing and the Open Offer and use of proceeds
Helios' strategy of building the portfolio of syndicate capacity
continues to rely on the flow of limited liability vehicles
("LLVs") for sale at reasonable prices.
This acquisition strategy has increased the portfolio from
GBP12.9 million at the start of the 2013 underwriting year to
GBP32.7 million currently. During that period, the Company has have
acquired 16 companies for a total consideration of GBP19.4
million.
Helios will continue to use quota share reinsurance to reduce
the exposure of the portfolio and to assist in the financing of
acquisitions. Currently, reinsurers provide GBP13.3 million of
underwriting capital for the portfolio.
The net proceeds of the Placing and Open Offer would strengthen
the balance sheet and provide readily available funds to expand the
capacity portfolio by acquiring further LLV's.
4. Current trading and outlook
This morning, Helios announced its interim results for the six
months ended 30 June 2016: operating profit before goodwill,
impairment and tax of GBP605,000 (H1 2015: GBP73,000); earnings per
share of 6.4p (H1 2015: 2.9p): adjusted net tangible asset value
increased to 200p per share (H1 2015: 183p per share); and capacity
value rose to 130p per share (H1 2015: 112p per share).
During the first half of 2016, Helios we continued to build the
portfolio of capacity through the acquisition of two further LLVs.
These acquisitions have made significant contributions to the
capacity retained by Helios for both 2014 and 2015 underwriting
years.
The syndicates that the Group supports have announced overall
increases in the business to be underwritten for 2017 which is
expected to increase the Helios capacity fund by over GBP2
million.
5. Details of the Open Offer
The Board considers it important that Qualifying Shareholders
have the opportunity to participate in the fundraising, and the
Directors have concluded that the Open Offer is the most suitable
option available to the Company and its Shareholders.
Pursuant to the Open Offer, Qualifying Shareholders will be
given the opportunity to subscribe at the Issue Price for:
1 Open Offer Share for every 5 Existing Ordinary Shares
held on the Record Date. Assuming that the maximum number of
Open Offer Shares are issued, the Open Offer would raise gross
proceeds of approximately GBP3.2 million.
The Open Offer will be conditional, inter alia, on the passing
of the relevant resolutions at the general meeting of the Company,
which is expected to be convened during the latter half of October
2016. A detailed expected timetable of the principal events in
respect of the Open Offer will be announced as soon as practicable.
For the avoidance of doubt, it is intended that the Placing Shares
will not qualify for an entitlement under the Open Offer.
Each of the Directors and Will Roseff have undertaken not to
take up their Open Offer Entitlements. There will be no excess
entitlement facility under the Open Offer.
The ability to participate in the Open Offer is subject to
certain restrictions relating to Qualifying Shareholders with
registered addresses or located or resident in countries outside
the UK (particularly the Excluded Overseas Shareholders). Subject
to certain exceptions, Application Forms will not be despatched to,
and Open Offer Entitlements will not be credited to the stock
accounts in CREST of Shareholders with registered addresses in any
of the Restricted Jurisdictions.
Application for Admission
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM and dealings on AIM
are expected to commence at 8.00 a.m. on 6 October 2016 (or such
later time and/or date as may be agreed between the Company and
Stockdale).
The Placing Shares will rank pari passu in all respects with the
Existing Ordinary Shares in issue at the date of this Announcement
and will carry the right to receive all dividends and distributions
declared, made or paid on or in respect of the Ordinary Shares
after Admission.
In issuing this announcement and structuring the Placing and the
Open Offer in this manner, the Company is relying on the exemption
from issuing a prospectus in section 85(5) and paragraph 9 of
Schedule 11A of FSMA and on paragraph 43 of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005 (as
amended).
6. Effect of the Placing and the Open Offer
Upon completion of the Placing and the Open Offer, the New
Ordinary Shares will represent approximately 34.6 per cent. of the
Enlarged Share Capital (assuming the maximum number of New Ordinary
Shares are issued pursuant to the Placing and the Open Offer).
7. The Placing Agreement
Stockdale has entered into the Placing Agreement with the
Company whereby Stockdale has agreed, as agent for and on behalf of
the Company, to use its reasonable endeavours to procure
subscribers for the Placing Shares at the Issue Price conditionally
upon, inter alia:
(a) the Placing Agreement becoming unconditional and not being
terminated by Stockdale in accordance with its terms; and
(b) Admission of the Placing Shares becoming effective by not
later than 8.00 a.m. on 6 October 2016 (or such later time and/or
date as Stockdale and the Company may agree, but not later than
8.00 a.m. on 21 October 2016).
Stockdale may in its absolute discretion waive the conditions
referred to above, other than that relating to Admission.
Under the Placing Agreement, certain warranties have been given
by the Company to Stockdale concerning, inter alia, the accuracy of
the Announcement, the affairs of the Company and certain taxation
and other matters, and certain indemnities have been given by the
Company in relation to Stockdale's involvement in the Placing and
Admission.
The Placing Agreement will be capable of being terminated by
Stockdale at its absolute discretion at any time before Admission,
if inter alia, (i) there has been a breach of any of the warranties
in the Placing Agreement; or (ii) there has occurred certain force
majeure events which in the reasonable opinion of Stockdale render
the Placing or Admission impracticable or inadvisable.
For the avoidance of doubt, Stockdale is not underwriting the
Placing
8. Share Incentive Scheme
With the Company now in a position to move on to the next phase
of its growth, the Board has concluded that it is now an
appropriate time to establish a suitable structure for employee and
director share incentives. The Company intends to adopt a share
incentive plan following the Placing. The plans will, in aggregate,
have a dilution limit of no more than 10 per cent. of the issued
ordinary share capital of the Company, from time to time, that
should be issued or issuable under all share incentive schemes
operated by the Group in any rolling ten-year period. Notifications
relating to the share option awards will be made in due course.
Initial awards made under the share incentive plan are not expected
to exceed 4 per cent. of issued ordinary share capital at such
time. Any awards will be subject to the vesting arrangements as
determined by the remuneration committee of the Board.
9. Related party transaction
All Directors of the Company, being Sir Michael Oliver,
Non-Executive Chairman, Nigel Hanbury, Chief Executive, Arthur
Manners, Finance Director, Jeremy Evans, Non-Executive Director,
Michael Cunningham, Non-Executive Director, and Andrew Christie,
Non-Executive Director, intend to participate, directly or
indirectly, in the Placing by subscribing an aggregate of 433,333
Placing Shares (approximately GBP650,000, in aggregate, at the
Issue Price). A substantial shareholder, Mr. Will Roseff, has also
expressed an intention to participate in the Placing by subscribing
an aggregate amount of up to 840,000 Placing Shares (approximately
GBP1.26m at the Issue Price). The Directors' and the substantial
shareholder's participation in the Placing each constitute a
related party transaction under the AIM Rules for Companies. In the
absence of independent Directors, Stockdale Securities Limited, the
Company's Nominated Adviser, considers the terms of the Directors'
and such shareholder's participations in the Placing to be fair and
reasonable insofar as Shareholders are concerned.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS IN RESPECT OF THE
PLACING
2016
Announcement of the Placing 30 September
Admission of the Placing Shares to 6 October
trading on AIM
New Ordinary Shares in uncertificated 6 October
form expected to be credited to accounts
in CREST (uncertificated holders only)
Expected despatch of definitive share By 20 October
certificates for the new Ordinary
Shares (certificated holders only)
Notes:
(1) Each of the times and dates set out in the above timetable
and mentioned in this Announcement is subject to change by the
Company (with the agreement of Stockdale Securities Limited), in
which event details of the new times and dates will be notified to
the London Stock Exchange and the Company will make an appropriate
announcement to a Regulatory Information Service.
(2) References to times in this announcement are to London times unless otherwise stated.
(3) A detailed expected timetable of the principal events in
respect of the Open Offer will be announced as soon as
practicable.
APPIX I
Terms and Conditions of Placing ("Terms and Conditions")
HELIOS UNDERWRITING PLC
Conditional placing by Stockdale Securities Limited of up to 3.5
million Placing Shares of 10p each in the Company at a price of
GBP1.50 per share to raise up to GBP5.25 million for the
Company.
Ordinary Shares ISIN: GB00B23XLS45 Ticker: HUW
IMPORTANT INFORMATION REGARDING THE PLACING FOR PLACEES ONLY
Eligible participants
Members of the public are not eligible to take part in the
Placing. This Appendix and the Terms and Conditions set out herein
are for information purposes only and are directed only at:
a) persons in member states of the European Economic Area who
are 'qualified investors' as defined in section 86(7) of the
Financial Services and Markets Act 2000, as amended, ("Qualified
Investors") being persons falling within the meaning of article
2(1)(e) of the Prospectus Directive (Directive 2003/71/EC and
amendments thereto, including Directive 2010/73/EU, to the extent
implemented in the relevant member state of the EEA) and any
implementing measure in each relevant member state of the European
Economic Area) (the "Prospectus Directive"); and
b) in the United Kingdom, Qualified Investors who are (i)
persons who have professional experience in matters relating to
investments and are deemed sufficiently expert or sufficiently
sophisticated to understand the risks involved and as such fall
within the definition of investment professionals as defined in
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the "Order"); (ii) are high net
worth companies, partnerships or the trustees of high value trusts
or unincorporated associations as defined in Article 49(2)(a) to
(d) (high net worth companies, unincorporated associations, etc) of
the Order; or (iii) are persons to whom it may otherwise be
lawfully communicated, (all such persons in (a) and (b) together
being referred to as "Relevant Persons").
This Appendix and the Terms and Conditions set out herein must
not be acted on or relied on by persons who are not Relevant
Persons. Any investment or investment activity to which this
Appendix and the Terms and Conditions set out herein relates is
available only to Relevant Persons and will be engaged in only with
Relevant Persons. This Appendix does not itself constitute an offer
for sale or subscription of any securities in the Company.
Each Placee should consult with its own advisers as to legal,
regulatory, tax, business and related aspects of an acquisition of
Placing Shares.
Book-building
Stockdale will today commence a book-building to determine
demand for participation in the Placing by Placees (the
"Bookbuild"). This Appendix gives details of the terms and
conditions of, and the mechanics of participation in, the Placing.
No commissions will be paid to placees ("Placees") or by Placees in
respect of any Placing Shares.
Stockdale shall be entitled to effect the Placing by such
alternative method to the Bookbuild as it may in its absolute
discretion (following consultation with Helios) determine including
by requiring Placees to enter into subscription arrangements
directly with Helios outside of the Bookbuild process.
Participation in, and principal terms of, the Placing
1. Stockdale is acting as bookrunner and agent of Helios.
2. Participation in the Placing will only be available to
persons who may lawfully be, and are, invited to participate by
Stockdale. Stockdale is entitled to enter bids in the Bookbuild as
principal.
3. The Bookbuild will establish the number of Placing Shares to
be issued and will be agreed between Stockdale and Helios following
completion of the Bookbuild. The Issue Price is GBP1.50 per Placing
Share. The number of Placing Shares will be announced on a
Regulatory Information Service following the completion of the
Bookbuild.
4. To bid in the Bookbuild, Placees should communicate their bid
by telephone to their usual sales contact at Stockdale. Each bid
should state the number of Placing Shares which the prospective
Placee wishes to subscribe for at the Issue Price. Bids may be
scaled down by Stockdale on the basis referred to in paragraph 9
below.
5. The books will open with immediate effect. The Bookbuild is
expected to close no later than 12.00 noon (London time) on 30
September 2016 but may be closed at such earlier or later time (not
being later than 5.00 p.m. on 4 October 2016) as Stockdale may, in
its absolute discretion, determine. Stockdale may, following
consultation with Helios, accept bids that are received after the
Bookbuild has closed. Helios reserves the right (upon the agreement
of Stockdale) to reduce or seek to increase the amount to be raised
pursuant to the Placing, in its absolute discretion.
6. Each prospective Placee's allocation will be confirmed orally
by Stockdale as agent of Helios following the close of the
Bookbuild. That oral confirmation will constitute an irrevocable
legally binding commitment upon that person (who will at that point
become a Placee) in favour of Stockdale and Helios to subscribe for
the number of Placing Shares allocated to it at the Issue Price on
the Terms and Conditions set out in this Appendix and in accordance
with Helios's articles of association.
7. Each prospective Placee's allocation and commitment will be
evidenced by a confirmation note issued to such Placee by
Stockdale. The terms of this Appendix will be deemed incorporated
in that confirmation note.
8. Each Placee will also have an immediate, separate,
irrevocable and binding obligation, owed to Helios and Stockdale as
agent of Helios, to pay Stockdale (or as it may direct) in cleared
funds, an amount equal to the product of the Issue Price and the
number of Placing Shares such Placee has agreed to subscribe and
Helios has agreed to allot and issue to that Placee.
9. Stockdale may choose to accept bids, either in whole or in
part and may scale down any bids for this purpose on such basis as
it may determine in its absolute discretion. Stockdale may also,
notwithstanding paragraphs 5 and 6 above, (i) allocate Placing
Shares after the time of any initial allocation to any person
submitting a bid after that time; and (ii) allocate Placing Shares
after the Bookbuild has closed to any person submitting a bid after
that time (following consultation with Helios).
10. A bid in the Bookbuild will be made on the terms and subject
to the conditions in this Announcement and will be legally binding
on the Placee on behalf of which it is made and except with the
consent of Stockdale will not be capable of variation or revocation
after the time at which it is submitted.
11. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made on the basis explained below under "Settlement - CREST
delivery - versus - payment".
12. All obligations under the Bookbuild and Placing will be
subject to fulfilment of the conditions referred to below under
"Conditions of the Placing" and to the Placing not being terminated
on the basis referred to below.
13. By participating in the Bookbuild, each Placee will agree
that its rights and obligations in respect of the Placing will
terminate only in the circumstances described below and will not be
capable of rescission or termination by the Placee.
14. To the fullest extent permissible by law and the Rules, none
of Stockdale, any holding company of Stockdale, any subsidiary of
Stockdale, any subsidiary of any such holding company, any branch,
affiliate or associate undertaking of any such company nor any of
their respective directors, officers, employees and advisers (each
an Affiliate) nor any person acting on their behalf shall have any
liability to Placees (or to any other person whether acting on
behalf of a Placee or otherwise). In particular, neither Stockdale
nor any of its Affiliates shall have any liability (including to
the fullest extent permissible by law, any fiduciary duties) in
respect of Stockdale's conduct of the Bookbuild or of such
alternative method of effecting the Placing as Stockdale shall in
its absolute discretion (following consultation with Helios)
determine.
Conditions of the Placing
The obligations of Stockdale under the Placing Agreement are
conditional on, amongst other things:
-- admission of the Placing Shares taking place by 8.00 a.m.
(London time) on 6 October 2016 (or such later time and/or date as
Helios and Stockdale may otherwise agree, being no later than 8.00
a.m. on 21 October 2016); and
-- the Placing Agreement becoming unconditional in all other
respects and not having been terminated by Stockdale in accordance
with its terms.
If any of the conditions contained in the Placing Agreement in
relation to the Placing are not fulfilled, or waived by Stockdale,
by the respective time or date where specified (or such later time
and/or date as Helios and Stockdale may agree) or the Placing
Agreement is terminated in accordance with its terms, the Placing
will not proceed. The Placee's rights and obligations hereunder in
relation to the Placing Shares shall cease and terminate at such
time and each Placee agrees that no claim can be made by the Placee
in respect thereof.
Stockdale may, at its discretion and upon such terms as it
thinks fit, waive compliance by Helios with the whole or any part
of any of Helios's obligations in relation to the conditions in the
Placing Agreement, save that the conditions in the Placing
Agreement relating to Admission taking place may not be waived. Any
such extension or waiver will not affect Placees' commitments as
set out in this Announcement.
None of Stockdale, Helios or any other person shall have any
liability to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision they
may make as to whether or not to waive or to extend the time and/or
the date for the satisfaction of any condition to the Placing nor
for any decision they may make as to the satisfaction of any
condition or in respect of the Placing generally, and by
participating in the Placing each Placee agrees that any such
decision is within the absolute discretion of Stockdale.
Right to terminate the Placing Agreement
The Placing Agreement may be terminated by Stockdale at any time
prior to Admission in certain circumstances including, among other
things, following a breach by the Company of the Placing Agreement
or on the occurrence of certain force majeure events.
Upon such termination, the parties to the Placing Agreement
shall be released and discharged (except for any liability arising
before or in relation to such termination) from their respective
obligations under or pursuant to the Placing Agreement subject to
certain exceptions.
By participating in the Placing, Placees agree that the exercise
by Stockdale of any right of termination or other discretion under
the Placing Agreement shall be within the absolute discretion of
Stockdale and that they need not make any reference to Placees and
that they shall have no liability to Placees whatsoever in
connection with any such exercise or failure so to exercise.
Agreement to subscribe Placing Shares
Conditional on:
-- Admission taking place by 8.00 a.m. (London time) on 6
October 2016 (or such later time and/or date as Helios and
Stockdale may otherwise agree, being no later than 8.00 a.m. on 21
October 2016);
-- the Placing Agreement becoming otherwise unconditional in all
respects and not having been terminated on or before Admission (or
such later time and/or date, not being later than 8.00 a.m. on 21
October 2016 as Stockdale and the Company may agree); and
-- Stockdale confirming to Placees their allocation of Placing Shares,
a Placee agrees to become a member of the Company and agrees to
subscribe for those Placing Shares allocated to it by Stockdale at
the Issue Price.
To the fullest extent permitted by law, each Placee acknowledges
and agrees severally, and not jointly nor jointly and severally,
that it will not be entitled to exercise any remedy of rescission
at any time. This does not affect any other rights the Placee may
have.
Contract
Following oral acceptance of a firm Placing participation,
Placees will receive a confirmation note following closing of the
Bookbuild and prior to Admission of the Placing Shares notifying
them of the number of Placing Shares they will receive, together
with a request for such Placee's CREST participant details and
contact details. Dealings in the Placing Shares will not be
permitted prior to Admission.
Oral acceptance of a Placing participation, on the terms and
subject to the conditions of these Terms and Conditions and the
Announcement (and subject to the Articles) will constitute a
binding contract, inter alia, to subscribe for that Placing
participation at the Issue Price.
Payment for Placing Shares
Each Placee must pay the Issue Price for the Placing Shares
issued to the Placee in the manner and by such time as directed by
Stockdale. If any Placee fails to pay as so directed and/or by the
time required by Stockdale, the relevant Placee's application for
Placing Shares may, at the discretion of Stockdale, be
rejected.
Placing Agreement
Stockdale as AIM nominated adviser and broker (as defined under
the AIM Rules for Companies) to the Company, has entered into the
Placing Agreement with the Company whereby Stockdale has agreed, as
agent for and on behalf of the Company, to use its reasonable
endeavours to procure subscribers for the Placing Shares at the
Issue Price conditionally upon, inter alia:
(a) the Placing Agreement becoming unconditional and not being
terminated by Stockdale in accordance with its terms; and
(b) Admission of the Placing Shares becoming effective by not
later than 8.00 a.m. on 6 October 2016 (or such later time and/or
date as Stockdale and the Company may agree, but not later than
8.00 a.m. on 21 October 2016).
Stockdale may in its absolute discretion waive the conditions
referred to above, other than that relating to Admission.
Under the Placing Agreement, certain warranties have been given
by the Company to Stockdale concerning, inter alia, the accuracy of
the Announcement and the presentation to potential investors, the
affairs of the Company and certain taxation and other matters, and
certain indemnities have been given by the Company in relation to
Stockdale's involvement in the Placing and Admission.
The Placing Agreement may be terminated by Stockdale in certain
circumstances and as set out above under the heading, 'Right to
terminate the Placing Agreement'.
For the avoidance of doubt, Stockdale is not underwriting the
Placing.
Placing participation
Each Placee which confirms its agreement to Stockdale (acting as
agent on behalf of the Company) to purchase Placing Shares will be
bound by these Terms and Conditions and will be deemed to have
accepted them severally, and not jointly nor jointly and
severally.
Placing Shares are subscribed on the terms and subject to the
conditions and on the basis of these Terms and Conditions, the
Announcement and the Articles. Placing Shares are subscribed at the
Issue Price (free of commission) payable in cleared funds in full
and in accordance with the settlement obligations set out
below.
A Placee's participation in the Placing is conditional upon,
inter alia, the Placing Agreement becoming unconditional in all
respects and not being terminated by Stockdale in accordance with
its terms. In the event that the Placing Agreement does not become
unconditional in all respects or is terminated, the Placing will
not proceed and all funds delivered by a Placee pursuant to these
Terms and Conditions will be returned to the Placee at the Placee's
risk, without interest.
No commissions are payable to Placees in respect of their
participation in the Placing.
A Placee's Placing participation is expected to be free of stamp
duty and stamp duty reserve tax in accordance with the paragraph
entitled "Stamp Duty" below.
Dealings and Admission to trading on AIM
Application will be made to the London Stock Exchange for all of
the Placing Shares to be admitted to trading on AIM. Subject to the
fulfilment of the conditions of the Placing Agreement, it is
expected that Admission of the Placing Shares will become effective
and that dealings in the Placing Shares will commence at 8.00 a.m.
on 6 October 2016 (or such later time and/or date as the Company
and Stockdale may agree, not being later than 8.00 a.m. on 21
October 2016).
It is expected that, in relation to a Placee's Placing
participation, CREST accounts will be settled with Placing Shares
on a delivery-versus-payment basis on 6 October 2016.
The Placing Shares will be issued fully paid and, when issued,
will rank pari passu in all respects with the existing ordinary
shares of the Company in issue immediately prior to Admission, and
will rank in full for any dividends and other distributions
declared, paid or made on the enlarged ordinary share capital of
the Company after Admission.
Conditions and Termination
These Terms and Conditions, which are legally binding, confirm
the Issue Price and the Terms and Conditions on which each Placee
confirms its agreement to Stockdale on behalf of the Company to
participate in the Placing.
Stockdale will have the right to terminate the Placing
Agreement, exercisable at any time prior to Admission, in certain
circumstances, including if any warranties given by the Company in
the Placing Agreement are untrue, inaccurate or misleading in any
material respect or if a Specified Event occurs.
A Placee's rights and obligations under the Placing are not
conditional and will not be capable of termination or rescission by
a Placee in any circumstances, save in respect of fraud.
Each Placee severally, and not jointly nor jointly and
severally, irrevocably confirms its agreement with Stockdale and
the Company on the terms and subject to the conditions set out
herein or therein and subject to the Announcement, the Placing
Agreement and the Articles, to subscribe for those Placing Shares
allocated to it by Stockdale at the Issue Price and comply with
these Terms and Conditions.
Each Placee's individual and separate agreement to subscribe for
Placing Shares also constitutes an acknowledgment that its
commitment has been made solely on the basis of the information
contained in the Announcement and these Terms and Conditions and
that accordingly none of the Company, its Directors, or any person
acting on behalf of any of them shall have any liability to a
Placee for any information or representation other than as is
contained in the Announcement and these Terms and Conditions.
Each Placee's participation in the Placing is conditional upon,
inter alia, the Placing Agreement being executed and becoming or
being declared unconditional in all respects and not being
terminated by Stockdale in accordance with its terms.
If Placees do not provide any CREST details or if Placees
provide insufficient CREST details for the delivery of Placing
Shares to their CREST account, their Placing participation will be
delivered in certificated form provided payment has been made in
terms satisfactory to Stockdale and all other conditions in
relation to the Placing have been satisfied or waived.
The right is reserved to issue Placing Shares in certificated
form should Stockdale or the Company consider this to be necessary
or desirable. This right is only likely to be exercised in normal
circumstances in the event of any interruption, failure or
breakdown of CREST or any part of CREST or on the part of the
facilities and/or system operated by the Company's registrars in
connection with CREST.
The person named for registration purposes (which term shall
include the holder of the relevant CREST account) must be:
(a) the person procured by the Placee to subscribe for or
acquire the relevant Placing Shares; or
(b) the Placee itself; or
(c) a nominee of any such person, as the case may be.
Settlement - CREST delivery-versus-payment
Settlement will be effected on a matching
delivery-versus-payment basis within CREST from Stockdale's
settlement agent's CREST account (LAMAY).
Contract
Following oral acceptance of a firm Placing participation,
Placees will receive a confirmation note following closing of the
Bookbuild and prior to Admission of the Placing Shares notifying
them of the number of Placing Shares they will receive together
with a request for the Placee's CREST participant details and
contact details. Dealings in the Placing Shares will not be
permitted prior to Admission.
Oral acceptance of a Placing participation, on the terms and
subject to the conditions of these Terms and Conditions and the
Announcement (and subject to the Articles) will constitute a
binding contract, inter alia, to subscribe for that Placing
participation at the Issue Price.
Stamp Duty
Whilst Stockdale does not believe there to be any liability to
stamp duty or stamp duty reserve tax in respect of the issue of
Placing Shares, should any such stamp duty or stamp duty reserve
tax be payable it will be entirely for the Placee's account and
neither the Company nor Stockdale will have any liability in
respect thereof.
Money Laundering
To ensure compliance with the Money Laundering Regulations 2007
(as amended and supplemented from time to time), the money
laundering provisions of the Criminal Justice Act 1993, the
Anti-Terrorism Crime and Security Act 2001 and the Proceeds of
Crime Act 2002 (together with the provisions of the Money
Laundering Sourcebook of the Financial Conduct Authority and the
manual of guidance produced by the Joint Money Laundering Steering
Group in relation to financial sector firms), all together
"Relevant Anti-Money Laundering Procedures", Stockdale may, in its
absolute discretion, require verification of a Placee's identity to
the extent that the Placee has not already provided the same.
Pending the provision to Stockdale of evidence of identity, Placing
Shares may be retained and/or delivery may be delayed at
Stockdale's absolute discretion. If within a reasonable time after
a request for verification of identity Stockdale has not received
evidence satisfactory to it, it may, at its absolute discretion
terminate a Placing participation in which event the monies payable
on acceptance of the subscription will, if paid, be returned
without interest to the account of the drawee bank from which they
were originally debited.
Alternatively, if Placing Shares have already been allotted to a
Placee following payment of the subscription monies in respect
thereof, Stockdale may (at its discretion) sell them on the
Placee's behalf and hold the proceeds of sale (net of expenses) or
an amount equal to the original payment (whichever is the lower) on
trust for the Placee. In these circumstances neither Stockdale nor
the Company shall (save in the event of fraud or wilful default) be
responsible for, or have any liability for, any loss or damage
arising as a result.
Representations and Warranties
-- Stockdale is acting exclusively for the Company and no-one
else in connection with the Placing and Admission and will not
regard itself as owing duties under the rules and regulations of
the Financial Conduct Authority to any other person or regard any
other persons as its client.
-- By agreeing to subscribe for Placing Shares, each Placee
which enters into a contract with Stockdale to subscribe for
Placing Shares will (for itself and any person(s) procured by it to
subscribe for Placing Shares and any nominee(s) for any such
person(s)) be deemed to represent and warrant severally, and not
jointly nor jointly and severally, to Stockdale and the Company
that:
-- it has read and understood this Announcement in its entirety
(including this Appendix) and acknowledges that its participation
in the Placing and its subscription for, and the issue of, the
Placing Shares will be governed by the terms of this Announcement
(including this Appendix);
-- it may lawfully acquire Placing Shares;
-- it is subscribing for the Placing Shares for its own account,
it does not have any contract, understanding or arrangement with
any person to sell, pledge, transfer, or grant a participation
therein to such person or any third person with respect to any
Placing Shares; save that if it is a private client stockbroker or
fund manager it confirms that in purchasing the Placing Shares it
is acting under the terms of one or more discretionary mandates
granted to it by private clients and is not acting on an execution
only basis or under specific instructions to purchase the Placing
Shares for the account of any third party;
-- it is not a national, citizen or resident of the USA, Canada,
Australia, South Africa or Japan or any other jurisdiction in which
this offer is or would be unlawful, and that it has not, and will
not offer, sell, renounce or deliver as principal or agent,
directly or indirectly, Placing Shares in, into or within the USA,
Canada, Australia, South Africa or Japan or any other jurisdiction
in, into or within which such action is or would be unlawful, or to
or for the benefit of any person who is a citizen of, or taxpayer
to, or is resident in any of those territories or to any person
purchasing such shares with a view to their re-offer, sale or
transfer in or into any such territory;
-- it is: if in the UK (i) a person who having professional
experience in matters relating to investments, is deemed
sufficiently expert or sufficiently sophisticated to understand the
risks involved and as such falls within the definition of
investment professionals as defined in Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005, as amended (the "Order"), (ii) a high net worth company,
partnership or the trustees of high value trusts or unincorporated
associations as defined in Article 49(2)(a) to (d) of that Order,
or (iii) it is a person who may lawfully receive these Terms and
Conditions and the Announcement (each a "Relevant Person"); or a
person who is a "Qualified Investor" within the meaning of the
Prospectus Directive (Directive 2003/71/EC and amendments thereto,
including Directive 2010/73/EU, to the extent implemented in the
relevant member state of the EEA) and any implementing measure in
each relevant member state of the European Economic Area. Any
investment or investment activity to which these Terms and
Conditions relate is only available to and will only be engaged in
with (i) in the UK, Relevant Persons; and (ii) in any other member
state of the EEA, Qualified Investors. Each Placee severally, and
not jointly nor jointly and severally, represents and warrants that
it is either a Relevant Person or a Qualified Investor;
-- it acknowledges and agrees that it has such knowledge and
experience in financial, business and international investment
matters as is required to evaluate the merits and risks of
subscribing for the Placing Shares and that it is experienced in
investing in securities of this nature and is aware that it may be
required to bear, and is able to bear, the economic risk of, and is
able to sustain, a complete loss in connection with the Placing and
that it has relied on its own investigation with respect to the
Placing Shares and the business, financial, regulatory, legal or
other position of the Company in connection with its decision to
subscribe for the Placing Shares and it acknowledges that it has
not received, and it is not relying on, any investigation that
Stockdale, or any of its Affiliates or any person acting on their
behalf may have conducted with respect to the Placing Shares or the
Company and none of such persons has made any warranties,
representations or statements to it, express or implied, with
respect thereto;
-- it is entitled to subscribe for the Placing Shares comprised
in its Placing participation under the laws of all relevant
jurisdictions which apply to it, that it has fully observed and
will fully observe such laws and has obtained all governmental,
regulatory and other consents which may be required thereunder and
complied with all necessary formalities and it has paid any issue,
transfer or other taxes due in connection with its acceptance in
any jurisdiction and that it has not taken any action or omitted to
take any action which will or may result in Stockdale or the
Company or any of their respective directors, officers, agents,
employees or advisers acting in breach of the legal and regulatory
requirements of any jurisdiction in connection with the Placing or
the Placee's acceptance of the Placing participation;
-- it acknowledges and agrees that its participation in the
Placing will be subject to the terms and conditions of the Placing
Agreement and the articles of association of the Company in force
both before and after Admission;
-- it acknowledges and agrees that the Placing Shares of the
Company will be admitted to AIM and the Company is therefore
required to publish certain business and financial information in
accordance with the AIM Rules for Companies and practices of the
London Stock Exchange (the "Exchange Information") which includes a
description of the nature of the Company's business and the
Company's most recent annual report and interim statements, the
admission document and the Company's announcements and circulars
published in the last 12 months and that it is able to obtain or
access this Exchange Information without undue difficulty;
-- it represents, warrants and agrees that the only information
on which it is entitled to rely and on which such Placee has relied
in committing itself to subscribe for the Placing Shares is
contained in this Announcement and any Exchange Information, and
any information previously published by the Company by notification
to a Regulatory Information Service or available on the Company's
website, such information (the "Company Information") being all
that it deems necessary to make an investment decision in respect
of the Placing Shares;
-- it has not relied on any information given or any
representations or statements made at any time by any person in
connection with the Placing, the Company, the Placing Shares or
otherwise, other than the information contained in the Announcement
and these Terms and Conditions and that in making its application
under the Placing it will be relying solely on the Company
Information;
-- it does not expect Stockdale to have any duties or
responsibilities towards it for providing protections afforded to
Stockdale's clients under the rules set out in The Financial
Conduct Authority Handbook (the "FCA Handbook") or under the
regulatory system (as defined in the Glossary to the FCA Handbook)
(the "Rules") or advising it with regard to the Placing Shares and
that it is not a client of Stockdale as defined by the Rules. It
agrees that any payment by it will not be treated as client money
governed by the Rules;
-- it represents and warrants that its participation in the
Placing would not give rise to an offer being required to be made
by it or any person with whom it is or it is deemed or presumed to
be, acting in concert pursuant to Rule 9 of the City Code on
Takeovers and Mergers;
-- any exercise by Stockdale of any right to terminate the
Placing Agreement shall be within Stockdale's absolute discretion
in accordance with its terms and that Stockdale shall not have any
liability to it whatsoever in relation to any decision to exercise
or not to exercise such right;
-- it is in Stockdale's absolute discretion to agree or not to
agree to extend the time or waive the requirement for the
satisfaction of all or any of the conditions of the Placing
Agreement in accordance with its terms and otherwise to adjust the
timetable for implementation of the Placing and Stockdale shall
have no liability or duty to Placees whatsoever in connection with
such extension or waiver. All times and dates referred to in these
Terms and Conditions or in the accompanying Announcement) are
therefore subject to adjustment in accordance with that
reservation;
-- it does not expect Stockdale to have any duty to it similar
or comparable to the "best execution", "suitability" and "risk
warning" rules in the Rules and that it is not relying on Stockdale
to advise whether or not the Placing Shares are in any way a
suitable investment for it;
-- it is not relying on any representations or warranties or
agreements by Stockdale or the Company or by any director, employee
or agent of Stockdale or the Company or any other person except as
set out in the Announcement or these Terms and Conditions;
-- it acknowledges and agrees that the content of this
Announcement is exclusively the responsibility of the Company and
that none of Stockdale, nor any of its Affiliates nor any person
acting on their behalf will be responsible for or shall have any
liability for any information, representation or statement
contained in this Announcement or for any Company Information and
none of Stockdale nor any of its Affiliates nor any person acting
on their behalf will be liable for any Placee's decision to
participate in the Placing based on any information, representation
or statement contained in this Announcement or otherwise provided
that nothing in this paragraph excludes the liability of any person
for any fraudulent misrepresentation made by that person;
-- it will (or will procure that its nominee will), if
applicable, make notification to the Company of the interest in its
ordinary shares in accordance with the Act and Chapter 5 of the
FCA's Disclosure Guidance and Transparency Rules;
-- it is not (and is not applying on behalf of) a person who
falls within the special charge to stamp duty reserve tax (broadly,
persons or nominees or agents for persons, whose business is or
includes using depository receipts or the provision of clearance
services) nor who attracts a higher rate of stamp duty (including,
without limitation, under section 67, 70, 93 or 96 of the Finance
Act 1986);
-- it is liable for all and any stamp duty or stamp duty reserve
tax and any related costs, fines, penalties and interest arising in
respect of the delivery and settlement in respect of the Placing
Shares comprised in its Placing participation;
-- it has complied with its obligations under the Relevant
Anti-Money Laundering Procedures and it acknowledges that it is a
term of its Placing participation that, to ensure compliance with
all the Relevant Anti-Money Laundering Procedures, Stockdale may,
in its absolute discretion, require verification of a Placee's
identity. Pending the provision to Stockdale of evidence of
identity, definitive certificates for the Placing Shares may be
retained at Stockdale's absolute discretion;
-- it is responsible for obtaining any legal and tax advice that
it deems necessary for the execution, delivery and performance of
its obligations in applying for Placing Shares, and that it is not
relying on the Company or Stockdale to provide any legal or tax
advice to it;
-- all notices, remittances and documents of title are sent to
it or its agent at its own risk;
-- agrees to indemnify on an after tax basis and hold the
Company and Stockdale and its agents harmless from any and all
costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the
representations, warranties, acknowledgements, agreements and
undertakings in this Appendix;
-- it acknowledges and agrees that Stockdale is entitled to
exercise any of its rights under the Placing Agreement or any other
right in its absolute discretion without any liability to Placees;
and
-- that it irrevocably appoints any director of Stockdale or the
Company as its agent for the purpose of executing and delivering to
the Company and/or its registrars any and all documents, and taking
such other action, on its behalf necessary to enable it to be
registered as the holder of any Placing Shares in its Placing
participation.
-- these Terms and Conditions and any contract which may be
entered into between a Placee and Stockdale pursuant hereto, and
any non-contractual obligations arising out of or in connection
with such agreements, shall be governed by and construed in
accordance with the laws of England and that it submits to the
exclusive jurisdiction of the English Courts as regards any claim,
dispute or matter arising out of or relating to these Terms and
Conditions or any such contract, save that enforcement proceedings
in respect of the obligation to make payment for the Placing
Shares) may be taken by the Company or Stockdale in any
jurisdiction;
The above confirmations, acknowledgements and agreements will
survive completion of the Placing. Stockdale shall be entitled to
exercise any of its rights under the Placing Agreement or any other
right in its absolute discretion without any liability to Placees
including, without limitation, the extension of any time limit,
waiver in full or in part of any condition or term in the Placing
Agreement or the termination of the Placing Agreement if any
condition therein has not been satisfied.
To the extent that a Placee fails to pay Stockdale the
subscription monies relating to its participation in the Placing in
accordance with the settlement arrangements set out above, then
Stockdale shall be entitled to:
(a) delete its name from the list of Placees; or
(b) notify the Placee that its Placing participation will remain
on such list but will be sold by Stockdale on its behalf and
Stockdale shall proceed immediately to sell such shares at such
price as Stockdale may determine (which may be less than the Issue
Price), in which event the sale proceeds received, net of costs of
sale (including any taxes) shall be paid to Stockdale as agent for
the Company. To the extent that such net proceeds are less than the
aggregate Issue Price in relation to its final Placing
participation, a Placee shall continue to be liable for such
difference and Stockdale or the Company may demand and seek payment
of the same from it. By a Placee's acceptance of these Terms and
Conditions, it hereby appoints Stockdale as its agent to sign all
documents required to give effect to this paragraph.
Neither the Announcement nor these Terms and Conditions
constitute an offer to sell, or the solicitation of an offer to
buy, subscribe or acquire Placing Shares in any jurisdiction in
which such an offer or solicitation is unlawful or would impose any
unfulfilled registration, publication or approval requirements on
the Company and/or Stockdale. The Placing Shares have not been and
will not be registered or qualified for sale under the securities
laws of the USA or any of its states or possessions, Canada,
Australia, South Africa or Japan. Accordingly, the Placing Shares
may not be offered or sold, directly or indirectly, in, into or
within the USA or to US Persons (as defined below) or within or to
persons in or resident in or citizens of, or taxpayers to, the USA,
Canada, Australia, South Africa or Japan or any other jurisdiction
in or into which such actions are or would be unlawful, and neither
the Announcement nor these Terms and Conditions may be distributed
in or into or within the USA, Canada, Australia, South Africa or
Japan or any other jurisdiction in which such distribution is or
would be unlawful, except in the case of the USA, pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act of 1933, as
amended. By making an oral confirmation of a firm Placing
participation, a Placee confirms, represents and warrants
severally, and not jointly nor jointly and severally, that it is
not a US Person or a person resident in Canada, Australia, South
Africa or Japan or any other jurisdiction in which this offer is or
would be unlawful, and it is not acquiring Placing Shares on behalf
of, or with a view to re-sale directly or indirectly to any US
Person or a person resident in Canada, Australia, South Africa or
Japan or any other jurisdiction in which such actions are or would
be unlawful, or to any other person whom it has reason to believe
is purchasing or subscribing for such Placing Shares for the
purposes of such re-offer or re-sale. "US Person" means a citizen
or resident of the USA, a citizen or partnership or other entity
created or organised in or under the laws of the USA or any
sub-division thereof or therein and any estate or trustee which is
subject to US federal income taxation regardless of its source.
Any decision in connection with any proposed purchase of Placing
Shares must be made solely on the basis of the information
contained in the Announcement and these Terms and Conditions. Any
presentation materials supplied to Placees were for their own
information and may not be reproduced, further distributed to any
other person or published, in whole or in part, for any purposes
whatsoever. In particular, they must not be distributed to any
person with an address in the USA, its territories or possessions,
or Canada, Australia, South Africa or Japan or to any national or
resident of the USA, Canada, Australia, South Africa and Japan or
any corporation, partnership, or other entity created or authorised
under the laws of the USA, Canada, Australia, South Africa and
Japan. Any such distribution could result in a violation of the
laws of the USA, Canada, Australia, South Africa or Japan.
Any presentation and accompanying materials distributed by the
Company were directed solely at persons who are either Relevant
Persons and/or Qualified Investors and it is not intended that they
should be acted upon in any way and nor should they be disclosed in
any way to any person who is not a Relevant Person or a Qualified
Investor.
No offering document, prospectus or admission document has been
or will be submitted to be approved by the FCA or submitted to the
London Stock Exchange in relation to the Placing. The Placing
Shares are being offered to a limited number of specifically
invited persons only and will not be offered in such a way as to
require a prospectus in the UK or in any other jurisdiction. This
Announcement contains no offer to the public within the meaning of
section 102B FSMA or otherwise. Placees' commitments will be made
solely on the basis of the information contained in this
Announcement and the Terms and Conditions, and subject to the
further terms set forth in the contract note to be provided to
individual prospective Placees.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Announcement should seek appropriate advice before taking
any action.
Any indication in this Announcement of the price at which the
Ordinary Shares have been bought or sold in the past cannot be
relied upon as a guide to future performance. No statement in this
Announcement is intended to be a profit forecast and no statement
in this Announcement should be interpreted to mean that earnings
per share of the Company for the current or future financial years
would necessarily match or exceed the historical published earnings
per share of the Company.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into or forms part of this Announcement.
Any forward looking statements, including any projections,
contained in this Announcement, any presentation and presentation
materials are for the internal planning purposes of the Company and
its senior management only, have not been commented or reported on
by the Company's auditors and accordingly may not necessarily be on
a basis that is consistent with the Company's accounting policies.
Actual results may differ substantially from figures used for
planning purposes only. By their nature forward looking statements
involve risk and uncertainty because they relate to future events
and circumstances. Forward looking statements are not guarantees of
future performance and the development of the markets and the
industry in which the Group operates, may differ materially from
those described in, or suggested by, any forward looking statements
contained in this Announcement, any presentation and presentation
materials. In addition, even if the development of the markets and
the industry in which the Group operates are consistent with such
forward looking statements, those developments may not be
indicative of developments in subsequent periods. A number of
factors could cause developments to differ materially from those
that may be expressed or implied by the forward looking statements
including, without limitation, general economic and business
conditions, industry trends, competition, changes in regulation or
government, changes in business strategy, political and economic
uncertainty and other factors. Accordingly, any such forward
looking statements or projections should not be relied on in any
manner whatsoever.
Stockdale confirms that, in relation to the arrangements
referred to herein, it is acting in the provision of corporate
finance services to the Company for its own account, within the
meaning of the Rules, and Stockdale is an authorised person for the
purposes of the Financial Services and Markets Act 2000 (as
amended).
Stockdale is acting as broker and bookrunner to the Company in
relation to the Placing and Admission. Stockdale will receive a
commission in relation to its services to the Company in the
Placing. As stated above, a Placee will not be treated as a client
of Stockdale in respect of transactions entered into under these
Terms and Conditions. The value of shares and the income derived
therefrom may go down as well as up. Past performance of
investments is not a guarantee of future returns. An investment
will be made on the basis of the contents of these Terms and
Conditions and the Announcement.
Please note that all references to times and dates in these
Terms and Conditions are references to UK time. All times and dates
in these Terms and Conditions and the Announcement may be subject
to amendment. Stockdale shall notify Placees of any changes.
Terms and expressions defined in the Announcement (unless
expressly provided to the contrary) have the same meaning in these
Terms and Conditions.
APPIX II
RISK FACTORS
The nature of the insurance underwriting business, the
regulatory regime applicable to corporate members of Lloyd's and
the consequence of past years' underwriting losses at Lloyd's will
give rise to a number of specific risk factors. The following list
is not exhaustive but is intended to draw investors' attention to
certain aspects of the risks involved.
Underwriting of insurance risks
The underwriting of insurance risks is, by its nature, a
high-risk business. The Group's insurance business assumes the risk
of loss from persons or organisations that are directly exposed to
an underlying loss. Insurance risk arises from this risk transfer
due to inherent uncertainties about the occurrence, amount and
timing of insurance liabilities. Underwriting risk comprises four
elements:
(a) Event risk - the risk that individual risk losses or
catastrophes lead to claims that are higher than anticipated in
plans and pricing;
(b) Cycle risk - the risk that business is written without full
knowledge as to the (in)adequacy of rates, terms and
conditions;
(c) Pricing risk - the risk that the level of expected loss is
understated in the pricing process; and
(d) Expense risk - the risk that the allowance for expenses and
inflation in pricing is inadequate.
As part of its overall risk mitigation and capital management
strategy, the Group purchases quota share reinsurance to seek to
mitigate its insurance risk. The Group's stop loss programme
complements the Group's quota share reinsurance seeking to protect
the Group's capital from adverse results from the portfolio of
syndicate participations. However, the Group's reinsurance may not
mitigate all these underwriting risks.
Unpredictable and multiple losses
The portfolio of Helios' syndicate participations expose it to
claims arising out of unpredictable natural and other catastrophic
events, such as hurricanes, windstorms, tsunamis, severe winter
weather, earthquakes, floods, fires and explosions, as well as
"man-made" disasters, such as acts of war, terrorism, piracy and
political instability, the emergence of latent risks, changes in
law and the interpretation of law or precedent (including in
relation to the measurement of damages), as well as social and
political changes, and fluctuations in the global investment
markets and the capacity of the global insurance market. The
incidence and severity of catastrophes are inherently unpredictable
and the Group's losses from such catastrophes could be substantial.
Although the Group attempts to manage its exposure to such events
through the selection of the syndicates in which it participates, a
single catastrophic event could affect multiple geographic zones or
the frequency or severity of catastrophic events could exceed its
estimates.
Cyclicality of insurance business
The insurance and reinsurance business historically has been a
cyclical industry with significant fluctuations in operating
results due to competition, catastrophic events, general economic
and social conditions and other factors. This cyclicality has
produced periods characterised by intense price competition due to
excessive underwriting capacity (soft market conditions) as well as
periods when shortages of capacity resulted in much more favourable
premium levels (hard market conditions). Accordingly, the
performance of the Group's business is likely to be affected by
this cyclicality to a certain extent.
Funds at Lloyd's
As members of Lloyd's, relevant members of the Group are
required to contribute funds of an approved form that are lodged
and held in trust at Lloyd's as security for a member's
underwriting activities, known as "funds at Lloyd's" ("FAL"). A
member's funds at Lloyd's may contain only those assets that
Lloyd's prescribes as acceptable assets, which include debt
securities, bonds and other money and capital market instruments,
shares, cash and cash equivalents, letters of credit and
guarantees. In addition, the Group is also required to contribute
funds to the Lloyd's central fund. To the extent that Lloyd's
suffers a material exposure in its asset base when compared with
its liabilities, members may at any such time as required by
Lloyd's be called upon to invest further capital into Lloyd's
portfolio of funds, including both the FAL and the central fund
which, as a result, may cause the Group to incur a material
increase in its operating expenses and, as a result, a material
adverse impact on its financial results and financial
condition.
Changes implemented to the list of acceptable assets for
purposes of FAL may also adversely impact the Group, as, the Group
would be required to post different assets, which may be more
expensive to obtain and maintain or which may place an undue
restriction on the Group's capital resources.
Lloyd's also has the power to reduce the Group's underwriting
capacity or to prohibit the Group from underwriting if at any time
the value of the Group's total funds at Lloyd's falls by more than
10% from the funds required at the last "coming into line" exercise
and such shortfall is not made up by the Group. "Coming into line"
refers to a bi-annual procedure currently undertaken in June and
November each year which requires members of Lloyd's to demonstrate
that they have sufficient eligible assets to meet their current
underwriting liabilities and to support future underwriting before
they may underwrite for the next following year of account. Any
such event is likely to have a material adverse effect on the
Group's reputation, financial condition and results of
operations.
Performance of Syndicates
Investors should be aware that the categories of business
written and the structure of the syndicate's reinsurance programme,
and accordingly risks and rewards vary from syndicate to syndicate.
Should a syndicate as constituted for a given year of account make
a loss upon closure, or if a syndicate as constituted for a given
year of account has funding difficulties, its managing agent may
make a cash call on its members for the year of account concerned
which, if not met promptly from other funds, can be satisfied by
drawing down on the members' FAL. Cash calls for "working capital"
can also be made early in the year of account by the managing agent
of a syndicate, for example to meet liquidity pressures. There is
no guarantee that the Company would have the funds needed to meet
such liabilities in which case it may be necessary for the Company
to raise additional capital via equity or debt.
Failure of loss limitation methods
Managing agents will seek to limit the exposure of their managed
syndicates to insurance and reinsurance losses through a number of
loss limitation methods including internal risk management and
security procedures as well as through the purchase of outwards
reinsurance protection.
Notwithstanding the risk mitigation and underwriting controls
employed by syndicates, one or more catastrophic or other loss
events or a greater frequency of losses than expected could result
in claims that substantially exceed the expectations of the Group,
and which could have a material adverse effect on the financial
condition or results of operations of the Group, possibly to the
extent of eliminating the funds at Lloyd's supporting the
underwriting of the Group's corporate members and any statutory
surplus.
Reinsurance protection
As part of its overall risk mitigation and capital management
strategy, the Group purchases stop loss and quota share reinsurance
to seek to protect the Group's capital from losses from its
syndicate portfolio. Market conditions beyond the Group's control
determine the availability and cost of appropriate reinsurance and
the receipt of future reinsurance recoveries. Additionally, a
change in regulation could affect the availability or price of
reinsurance.
Any significant changes in reinsurance pricing may result in the
Group being forced to incur additional expenses for reinsurance,
reducing its capacity on syndicates, having to obtain reinsurance
on less favourable terms or not being able to or choosing not to
obtain reinsurance thereby exposing the Group to increased retained
risk. Any of these could have a material adverse effect on the
Group's financial condition and results of operations.
Capital requirements
The Solvency II Directive was implemented on 1 January 2016.
Solvency II introduces a harmonized EU-wide insurance regulatory
regime. In particular, it imposes a risk-based capital regime, sets
out requirements for the governance, risk management and regulatory
supervision of insurers and introduces certain disclosure and
transparency requirements. Each syndicate's Solvency Capital
Requirement ("SCR") under Solvency II is determined in accordance
with the syndicate's internal model. It is a regulatory requirement
that the model captures all material risks that have been
identified. However, it is subject to the limitations of all
complex models and is subject to the accuracy, completeness and
integrity of the data input into the model. It is also necessary
for estimates, assumptions and judgments to be made by the
syndicate's management where data are incomplete or ambiguous.
Accordingly the SCR, as modelled by the syndicate's internal model,
may not provide an accurate projection of the capital that the
syndicate will, in fact, need in the future.
The Lloyd's market
The Group relies on the efficient functioning of the Lloyd's
market. If, for whatever reason, members were to be restricted or
otherwise unable to write insurance through the Lloyd's market, it
could have a material adverse effect on the Group's business and
results of operations. In particular, any damage to the brand or
reputation of Lloyd's, whether such damage is caused by financial
mismanagement, fraudulent activity or otherwise, or any loss of any
international licences in relation to the insurance or reinsurance
business may have a material adverse effect on the Group's ability
to write new business and/or its reputation. In addition, any
increase in tax levies imposed on Lloyd's participants in the
relevant jurisdictions around the world in which they offer
insurance or reinsurance or any challenge to the amount of tax paid
by such Lloyd's participants may result in the Group incurring a
higher tax charge.
The PRA is the prudential regulator for Lloyd's and has
responsibility for promoting the financial security and soundness
of Lloyd's and its members. Lloyd's is required by the PRA to
establish and maintain appropriate controls over the risks
affecting the funds of members which it holds centrally and to
assess the capital needs of each member operating on its market, in
order to satisfy an annual solvency test for the PRA. Were the PRA
to impose more stringent requirements on Lloyd's this may result in
higher capital requirements or a restriction on trading activities
for its members, including entities within the Group. If Lloyd's
fails to satisfy its solvency test in any year, the PRA may require
Lloyd's to cease trading and/or its members to cease or reduce
their underwriting exposure, which may result in a material adverse
effect to the Group's reputation, financial condition and results
of operations.
Value of capacity
The Board attributes a value to the Group's portfolio of
syndicate capacity in determining the adjusted net asset value per
Ordinary Share ("Humphrey Value"). This value of the capacity is
based on the weighted average price of the capacity traded in the
Lloyd's capacity auctions which is dependent on the demand for
capacity in these auctions. If the weighted average prices for
syndicates reduce significantly, it is likely that adjusted net
asset value per Ordinary Share will reduce and that the Board will
have to impair the value of the capacity held on the Group's
balance sheet. This may have a material adverse effect on the
financial results of the Group.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context otherwise requires:
Act the Companies Act 2006, as
amended;
Admission admission of the Placing Shares
to trading on AIM and such
admission becoming effective
in accordance with the AIM
Rules for Companies;
AIM the AIM market operated by
the London Stock Exchange;
AIM Rules for Companies the rules of AIM as set out
in the publication entitled
'AIM Rules for Companies' published
by the London Stock Exchange
from time to time;
Announcement this announcement (including
the appendices to this announcement)
Application Form the application form to be
used by Qualifying Non-CREST
Shareholders in connection
with the Open Offer;
Articles the articles of association
of the Company
certificated or the description of a share
in certificated or other security which is
form not in uncertificated form
(that is not in CREST);
Circular the circular in respect of
the Open Offer, including a
notice of general meeting,
expected to be posted to Shareholders
in early October 2016;
Closing Price the closing middle market quotation
of an Ordinary Share as published
by the London Stock Exchange;
Company or Helios Helios Underwriting PLC a company
incorporated in England and
Wales with registered number
05892671 and having its registered
office at 5th Floor 40 Gracechurch
Street, London, United Kingdom,
EC3V 0BT;
CREST the relevant system (as defined
in the CREST Regulations) in
respect of which Euroclear
is the Operator (as defined
in the CREST Regulations);
CREST member a person who has been admitted
by Euroclear as a system member
(as defined in the CREST Regulations);
CREST participant a person who is, in relation
to CREST, a system participant
(as defined in the CREST Regulations);
CREST Proxy Instruction the appropriate CREST message
made to appoint a proxy, properly
authenticated in accordance
with Euroclear's specifications;
CREST Regulations the Uncertificated Securities
Regulations 2001;
Enlarged Share the issued share capital of
Capital the Company immediately following
Admission, assuming the Placing
Shares and the maximum number
of Open Offer Shares are allotted;
EU the European Union;
Euroclear Euroclear UK & Ireland Limited;
Excluded Overseas other than as agreed by the
Shareholders Company and Stockdale or as
permitted by applicable law
and regulation, Shareholders
who are located or have registered
addresses in a Restricted Jurisdiction;
Existing Ordinary the 10,621,297 Ordinary Shares
Shares in as at the date of this Announcement;
FCA the Financial Conduct Authority;
FSMA the UK Financial Services and
Markets Act 2000, as amended;
Group the Company and its subsidiary
undertakings at the date of
this announcement (as defined
in sections 1159 and 1160 of
the Act);
Issue Price GBP1.50 per New Ordinary Share;
London Stock Exchange London Stock Exchange plc;
New Ordinary Shares up to 5,624,259 new Ordinary
Shares to be issued by the
Company pursuant to the Placing
and the Open Offer;
Open Offer the conditional invitation
by the Company to Qualifying
Shareholders to apply to subscribe
for Open Offer Shares at the
Issue Price on the terms and
subject to the conditions to
be set out in the Circular
in respect of the Open Offer
and in the case of Qualifying
Non-CREST Shareholders only,
the Application Form;
Open Offer Entitlements an entitlement to subscribe
for Open Offer Shares, allocated
to a Qualifying Shareholder
under the Open Offer;
Open Offer Shares the 2,124,259 New Ordinary
Shares to be offered to Qualifying
Shareholders under the Open
Offer;
Overseas Shareholders Shareholders with registered
addresses outside the UK or
who are citizens of, incorporated
in, registered in or otherwise
resident in, countries outside
the UK;
Ordinary Shares ordinary shares of 10 pence
each in the capital of the
Company;
Placees the persons who are invited
to and who choose to participate
in the Placing by agreeing
to subscribe for Placing Shares
in accordance with the Terms
and Conditions;
Placing Shares the up to 3,500,000 Placing
Shares to be issued by the
Company under the Placing;
Placing the placing of the Placing
Shares with the Placees pursuant
to the Placing Agreement;
Placing Agreement the agreement dated 29 September
2016 between the Company and
Stockdale Securities Limited
relating to the Placing;
Qualifying CREST Qualifying Shareholders whose
Shareholders Existing Ordinary Shares on
the register of members of
the Company on the Record Date
are in uncertificated form;
Qualifying Non-CREST Qualifying Shareholders whose
Shareholders Existing Ordinary Shares on
the register of members of
the Company on the Record Date
are held in certificated form;
Qualifying Shareholders holders of Existing Ordinary
Shares on the register of members
of the Company at the Record
Date with the exception (subject
to certain exceptions) of Excluded
Overseas Shareholders;
Record Date the record date for the Open
Offer, which is expected to
be announced shortly;
Regulatory Information has the meaning given in the
Service AIM Rules for Companies;
Restricted Jurisdictions each of Australia, Canada,
Japan, South Africa, the United
States and any other jurisdiction
in which the making of the
Open Offer would be unlawful;
Shareholders holders of Existing Ordinary
Shares;
Stockdale Stockdale Securities Limited,
a company incorporated in England
and Wales with registered number
00762818 and having its registered
office at Beaufort House, 15
St. Botolph Street, London,
EC3A 7BB;
uncertificated recorded on a register of securities
maintained by Euroclear in
accordance with the CREST Regulations
as being in uncertificated
form in CREST and title to
which, by virtue of the CREST
Regulations, may be transferred
by means of CREST;
UK or United Kingdom the United Kingdom of England,
Scotland, Wales and Northern
Ireland;
US or USA or United the United States of America,
States its territories and possessions,
any state of the United States
of America and the District
of Columbia; and
GBP or sterling sterling, the legal currency
pounds of the United Kingdom.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
September 30, 2016 02:02 ET (06:02 GMT)
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