TIDMHYVE
RNS Number : 6102Y
Providence Equity LLP
05 May 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
5 May 2023
Increased and Final* Offer for Hyve Group Plc: update on
financing
On 15 March 2023, the boards of Hyve Group plc ("Hyve") and
Heron UK Bidco Limited ("Bidco") announced (the "Rule 2.7
Announcement"), pursuant to Rule 2.7 of the City Code on Takeovers
and Mergers (the "Code"), that they had agreed the terms of a
recommended cash offer to be made by Bidco for the entire issued
and to be issued share capital of Hyve (the "Acquisition"). On 25
April 2023, Bidco announced an increased and final recommended cash
offer for Hyve at a price of 121 pence per Hyve Share. Terms
defined in the Rule 2.7 Announcement have the same meanings when
used in this Announcement.
On 6 April 2023 it was announced that Bidco had entered into a
financing commitment letter and related fee letter (the "Financing
Commitment Documents") in relation to the financing of the
Acquisition, in each case with certain funds (the "Hayfin Funds")
managed and/or advised by Hayfin Capital Management LLP .
On 5 May 2023, Bidco entered into a senior facilities agreement
with the Hayfin Funds and Deutsche Bank AG, London Branch ("DB")
(the "Senior Facilities Agreement"). The Senior Facilities
Agreement reflects and, in certain places, updates, the financing
terms committed to in the Financing Commitment Documents. A summary
of the terms of the Senior Facilities Agreement is attached as the
Appendix to this Announcement.
Copies of the Senior Facilities Agreement, certain related
documents and this Announcement will be available free of charge,
subject to certain restrictions relating to persons resident in
certain jurisdictions, on Bidco's website at
www.provequity.com/hyvegroupplc by no later than 12.00 p.m. on the
business day following the date of this Announcement.
*Bidco reserves the right to increase the Acquisition Price
and/or otherwise to improve the terms of the Acquisition if there
is an announcement on or after the date of this Announcement of an
offer or a possible offer for Hyve by a third party offeror or
potential offeror.
FURTHER INFORMATION
This Announcement is for information purposes only and is not
intended to and does not constitute, or form part of, an offer to
sell or an invitation to purchase any securities or the
solicitation of an offer to buy, otherwise acquire, subscribe for,
sell or otherwise dispose of any securities, pursuant to the
Acquisition or otherwise, nor shall there be any purchase, sale,
issuance or exchange of securities or such solicitation in any
jurisdiction in which such offer, solicitation, sale, issuance or
exchange would be unlawful prior to the registration or
qualification under the laws of such jurisdiction. The Acquisition
will be made solely by means of the Scheme Document or any document
by which the Acquisition is made, which contains the full terms and
conditions of the Acquisition, including details of how to vote in
respect of the Acquisition. This Announcement has been prepared for
the purpose of complying with English law and the Code and the
information disclosed may not be the same as that which would have
been disclosed if this Announcement had been prepared in accordance
with the laws of other jurisdictions.
Neither the content of any website referred to in this
Announcement nor the content of any website accessible from
hyperlinks is incorporated into, or forms part of, this
Announcement. Hyve shareholders may request a hard copy of this
Announcement by contacting Equiniti on +44 371 384 2030. Calls
outside the United Kingdom will be charged at the applicable
international rate. The helpline is open between 8.30 a.m. to 5.30
p.m., Monday to Friday, excluding public holidays in England and
Wales. Please note that Equiniti cannot provide any financial,
legal or tax advice and calls may be recorded and monitored for
security and training purposes. Hyve shareholders may also request
that all future documents, announcements and information to be sent
to them in relation to the Acquisition should be in hard copy form.
If a Hyve shareholder has received this Announcement in electronic
form, hard copies of this Announcement and any document or
information incorporated by reference into this Announcement will
not be provided unless such a request is made.
APPIX
Summary of the senior facilities agreement
On 5 May 2023, Bidco, the Hayfin Funds and DB (among others)
entered into the Senior Facilities Agreement concerning the debt
financing facilities described below with the Hayfin Funds and DB
(the "Mandated Lead Arrangers").
Under the terms of the Senior Facilities Agreement, the Mandated
Lead Arrangers have agreed to make available certain term loans
described more particularly below. The Senior Facilities Agreement
also sets out the mechanics for establishing additional facilities,
subject to the satisfaction of certain conditions (as set out in
the Senior Facilities Agreement), including (on or before the
Closing Date) an additional revolving facility (the "Uncommitted
Revolving Facility"). The Senior Facilities Agreement contemplates
that additional banks, financial institutions or other parties may
be appointed to provide all or part of the Uncommitted Revolving
Facility.
The facilities, amounts and documentation process
The debt financing facilities comprise (i) a senior secured term
loan facility in the principal amount of up to $107,000,000 (the
"USD Unitranche Facility"), (ii) a senior secured term loan
facility in the principal amount of up to EUR97,300,000 (the "EUR
Unitranche Facility" and together with the USD Unitranche Facility,
the "Unitranche Facilities") (ii) a senior secured term acquisition
facility in the principal amount of up to $55,000,000 (the
"Acquisition Facility"), (iii) a senior secured delayed draw term
facility in the principal amount of up to $37,000,000 (the "DDTL1")
and (iv) a senior secured delayed draw term facility in the
principal amount of up to $125,000,000 (the "DDTL2"). The
Unitranche Facilities, the Acquisition Facility, the DDTL1 and the
DDTL2 are referred to as the "Facilities".
The Facilities are available to be drawn down by certain members
of the Bidco Group, subject to satisfaction of the conditions
precedent set out in the Senior Facilities Agreement and as
summarised below.
The proceeds of the Facilities are to be applied as follows:
(A) in respect of the Unitranche Facilities, to
finance/refinance the consideration payable for the Acquisition,
the payment of fees, costs and expenses relating to the Acquisition
or any transaction document, to refinance/discharge/acquire
existing Hyve Group indebtedness and broken funding costs,
prepayment/redemption fees or premia, hedge termination amounts and
fees, costs and expenses related to that
refinancing/discharge/acquisition;
(B) in respect of the Acquisition Facility, to finance/refinance
any permitted acquisition or permitted joint venture (including
deferred consideration, earn-outs or similar arrangements, subject
to certain limitations where those payments relate to earn-outs
that will also be financed by the DDTL1), the payment of
fees/costs/expenses incurred in connection therewith, the
refinancing/discharge/acquisition of existing indebtedness of any
related entity acquired (and related broken funding costs,
prepayment/redemption fees or premia, hedge termination amounts and
fees, costs and expenses);
(C) in respect of the DDTL1, to finance certain earn-outs and
related fees, costs and expenses; and
(D) in respect of the DDTL2, to directly or indirectly
finance/refinance a particular acquisition, the
refinancing/repayment/acquisition/discharge of certain existing
indebtedness in connection with that acquisition and the
payment/refinancing of fees, costs and expenses incurred in
connection with the foregoing.
Repayment terms - maturity
Once drawn, the Facilities must be repaid as a bullet payment in
full on the date falling 7 years after the date on which the first
drawing is made under a Facility (the "Closing Date").
Prepayment and repayment terms - voluntary/mandatory
Bidco may voluntarily cancel and prepay the Facilities in whole
or in part at any time subject to giving three Business Days' prior
notice. Prepayment and cancellation rights shall apply (and/or may
be exercised by the applicable lenders) in respect of illegality,
change of control or a sale of all or substantially all of the
assets of the Bidco Group. Additionally, mandatory prepayment
rights shall apply (subject to various exceptions and exclusions)
in respect of the prepayment of net cash proceeds received from
certain disposals, acquisition related claims, insurance claims and
in the event of an IPO which does not constitute a change of
control.
Interest rates
The rate of interest payable on each loan drawn under the
Facilities is the aggregate of the applicable margin, plus the
applicable reference rate (being term SOFR for USD loans, Euribor
for Euro loans and compounded SONIA for Sterling loans).
Subject to the below, the margin in respect of the Facilities is
(in each case) 6.75% per annum.
Notwithstanding the foregoing, a margin rate of 7.25% shall
apply for each Facility from the Closing Date until 12 months
thereafter (the "Opening Margin Period"). After the end of the
Opening Margin Period, the highest margin rate will be 6.75% for
each Facility where total net leverage is greater than 4.25:1, with
a step-down to 6.50% where total net leverage is equal to or less
than 4.25:1 but greater than 4.00:1 and an additional step-down to
6.25% where total net leverage is equal to or less than 4.00:1.
Guarantees and security
The Mandated Lead Arrangers and lenders will receive the benefit
of guarantees and security in respect of each of the Facilities and
guarantees and security will initially be provided by both Heron UK
Finco Limited and Bidco. They will each guarantee the Facilities,
and provide security over shares in certain subsidiaries, certain
of their bank accounts and certain intra-group receivables, in
addition to a floating charge pursuant to certain security
documents (the "Initial Security Documents"). In due course after
the Closing Date, other members of the Bidco Group will also
provide guarantees and security as is customary for a transaction
of this nature.
Representations, warranties, undertakings and events of
default
The Senior Facilities Agreement contains representations and
warranties, a financial covenant, undertakings (both operational
and as regards certain information) and events of default that are
customary for a financing of this nature.
Representations and warranties have been made (subject to
various exceptions and materiality and other thresholds) regarding
status, binding obligations, non-conflict with other obligations,
power and authority, validity and admissibility in evidence,
governing law and enforcement, insolvency, no default, no
misleading information, financial statements, no proceedings
pending or threatened, no breach of laws, environmental laws,
taxation, ranking, good title to assets, legal and beneficial
ownership, intellectual property, centre of main interests,
pensions, holding company status of Heron UK Finco Limited and
Bidco and sanctions.
The Senior Facilities Agreement contains a financial covenant
based on total net leverage, commencing with the first financial
quarter date falling at least three full quarter periods after the
Closing Date (initially set at 8:00:1, and decreasing over time).
The Senior Facilities Agreement also contains operational general
undertakings (subject to various exceptions and materiality and
other thresholds) regarding, among other things, due
authorisations, compliance with laws, environmental compliance and
claims, tax, restrictions on mergers/change of
business/acquisitions/joint ventures, maintenance of holding
company status of Heron UK Finco Limited and Bidco, preservation of
assets, pari passu ranking, negative pledge, disposals, arm's
length dealings, restrictions on granting loans, incurring debt,
providing guarantees, making restricted payments and issuing share
capital. In addition, certain information undertakings have been
given with respect to the provision of financial statements and
budgets, compliance certificates, annual lender presentations and
various other miscellaneous items.
Events of default (subject to various exceptions, materiality
and other thresholds and grace periods) consist of non-payment,
breach of financial covenant/reporting obligations, breach of other
obligations and misrepresentations, cross-default, certain
insolvency events, unlawfulness and
invalidity/repudiation/rescission of certain finance documents,
breaches of intercreditor documentation and litigation events.
Conditions precedent
The Senior Facilities Agreement sets out a number of conditions
precedent to first utilisation (both documentary and otherwise)
which include, among other things, the delivery of the Initial
Security Documents and customary officer's certificates setting out
various confirmations in respect of applicable conditions being
satisfied.
The foregoing description is a high-level overview of key
indicative terms of the Senior Facilities Agreement and ancillary
documents.
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