TIDMLSL
RNS Number : 5208R
LSL Property Services
04 November 2011
For Immediate Release 4(th) November 2011
LSL Property Services plc
("LSL")
Acquisition of Marsh & Parsons Limited
LSL to enter the prime London property market
LSL Property Services plc, a leading provider of residential
property services, is pleased to announce the proposed Acquisition
of Marsh & Parsons, a leading London estate agency operating a
premium brand in the mid-segment of the prime London property
market.
Further to this announcement, LSL intends to make available
today a Circular to its shareholders together with a notice of a
General Meeting to be held at 10am 22(nd) November 2011 at the
offices of LSL, 1 Sun Street, London, EC2A 2EP at which resolutions
will be proposed to approve: (i) the acquisition of Marsh &
Parsons and entry into an associated investment agreement; and (ii)
the establishment of the 2011 LSL Employee Benefit Trust. Paper
copies of the Circular are being posted to those Shareholders who
requested paper copies of all communications with LSL. All other
Shareholders will be able to access the Circular and other
documents via LSL's website: www.lslps.co.uk.
Copies of the Circular together with the notice of the General
Meeting, proxy card and letter to shareholders, will shortly be
available through the National Storage Mechanism hosted by
Morningstar plc on behalf of the UK Listing Authority. The
documents can also be accessed from LSL's website at:
www.lslps.co.uk
Transaction Highlights
-- LSL will acquire the entire issued share capital of Marsh
& Parsons for an enterprise value of GBP50.0m;
-- Marsh & Parsons is a leading London estate agency
operating a premium brand in the mid-segment of the prime London
property market with 13 offices in Central and South-West
London;
-- Marsh & Parsons is geographically complementary to LSL's
existing estate agency footprint and provides the wider LSL Group
with access to the prime London property market where volumes and
commission rates have been consistently strong in comparison with
other parts of the UK;
-- Marsh & Parsons will continue to operate independently
within the LSL Group following the Transaction;
-- In the year ended 31(st) December 2010 M&P reported sales
of GBP23.3m (2009: GBP17.0m) and profit before tax of GBP6.3m
(2009: GBP3.5m). Net assets as at 31(st) December 2010 were
GBP6.8m;
-- After accounting for cash and excess working capital of
approximately GBP3.1m, LSL will pay a total consideration of
GBP53.1m, to be satisfied by GBP45.1m in cash, GBP7.6m in loan
notes and GBP0.4m in Growth Shares for the entire issued share
capital of Marsh & Parsons;
-- The Directors believe LSL will gain a high quality, dynamic
and experienced management team, led by Peter Rollings (former
Managing director of Foxtons), which has grown revenue by 53% per
annum since 2005, despite extremely challenging market conditions,
and taken the business from a loss of GBP0.6m in 2005 to a profit
of GBP6.3m in 2010.
-- Marsh & Parsons Management Shareholders will remain with
the business and are incentivised to continue to grow the business
by reinvesting 50% of their net consideration (GBP6.5m) into Newco
by way of loan notes and Growth Shares;
-- The directors believe the Transaction will immediately be
cash positive and significantly earnings enhancing in 2012, the
first full year of ownership;
-- Completion is scheduled for 22(nd) November 2011 and is
subject to Shareholder approval at a General meeting to be held at
10am 22(nd) November 2011.
Roger Matthews, Chairman, commented
"I am delighted to announce the acquisition of Marsh &
Parsons which has an excellent geographic and strategic fit with
LSL. This is a unique opportunity for LSL to acquire a premium
central London estate agency brand and to gain a high quality and
experienced management team with a great track record. We look
forward to working with Peter Rollings and his team to deliver the
next stage of growth for Marsh & Parsons."
For further information, please contact:
Simon Embley, Group CEO
Steve Cooke, Group Finance Director
LSL Property Services plc 0207 382 0365
Tim Medak
Graham Swindells
Karen du Plessis
Ernst & Young LLP, Sponsor and Financial
Advisor 0207 951 2000
Richard Darby
Nicola Cronk
Buchanan Communications 0207 466 5000
Notes to Editors
LSL Property Services plc is one of the leading residential
property services companies in the UK and provides a broad range of
services to its clients who are principally mortgage lenders, as
well as buyers and sellers of residential properties. For further
information, please visit our website: www.lslps.co.uk.
Please see Appendix 2 for the definitions of any defined terms
contained in this announcement.
Acquisition of Marsh & Parsons Limited
1. Introduction:
The Board of LSL is pleased to announce that it has reached
agreement on the terms of the proposed acquisition of the entire
issued share capital of Marsh & Parsons by LSL PS Limited
(referred to in this announcement as Newco), a wholly owned
subsidiary of LSL.
Marsh & Parsons is a leading London estate agency operating
a premium brand in the mid-segment of the prime London property
market where sale volumes have been robust and commission rates
consistently strong in comparison with other parts of the UK. Marsh
& Parsons is headed by a highly experienced and successful team
which operates out of 13 offices in Central and South-West London,
including five offices in the Royal Borough of Kensington and
Chelsea. In the year ended 31(st) December 2010, Marsh &
Parsons reported sales of GBP23.3m and a profit before tax of
GBP6.3m. Net assets as at 31(st) December 2010 were GBP6.8m.
Marsh & Parsons is currently a subsidiary of Sherry
FitzGerald which owns 72% of the issued share capital, with the
remaining 28% being owned by the Marsh & Parsons Management
Shareholders. The Marsh & Parsons Management Shareholders will
remain with the business and, as part of their commitment, are
reinvesting 50% of the net consideration they receive (GBP6.5m)
into Newco. The enterprise value of the Acquisition is GBP50.0m.
After accounting for cash and excess working capital of
approximately GBP3.1m, Newco will pay the Marsh & Parsons
Shareholders a total consideration of GBP53.1m, to be satisfied by
GBP45.1m in cash, GBP7.6m in loan notes and GBP0.4m in Growth
Shares for the entire issued share capital of Marsh & Parsons.
Marsh & Parsons Management Shareholders will be incentivised to
grow the profitability of the business through the allocation of
the GBP0.4m of Growth Shares which can be sold to LSL at any time
between 31(st) March 2016 and 1(st) April 2020. The amount to be
paid by LSL to Marsh & Parsons Management Shareholders in
relation to Growth Shares is subject to the growth in future
profitability of Marsh & Parsons and is therefore unknown.
Further details of the Acquisition Agreement and Investment
Agreement are set out in Appendix 1 of this announcement.
LSL has a strong balance sheet with net debt of GBP6.2m at
30(th) June 2011. The Transaction is being funded using an existing
bank facility with Barclays Bank plc and Lloyds Banking Group. The
Transaction is expected to significantly enhance adjusted earnings
per share for Shareholders in 2012.
The Transaction is a Class 1 transaction for LSL for the
purposes of the Listing Rules and is therefore conditional upon the
approval of Shareholders. The reason that the Transaction is a
Class 1 transaction is that the amount payable to Marsh &
Parsons Management Shareholders for their Growth Shares by LSL
depends on future profitability and is uncapped, therefore
triggering the consideration test as set out in the Listing Rules.
The other class tests, as set out in the Listing Rules, do not
trigger Class 1 status. Approval of the Shareholders is being
sought at a General Meeting of LSL to be held on 22(nd) November
2011 at 10am at the offices of LSL, 1 Sun Street, London, EC2A 2EP
for the purpose of approving the entry into the Acquisition
Agreement and the Investment Agreement, and establishing the 2011
EBT. The establishment of the 2011 EBT is conditional upon the
Shareholders approving the entry into of the Acquisition Agreement
and the Investment Agreement and is also subject to the approval of
the Shareholders at the General Meeting. The Notice of General
Meeting is set out in the Circular, which is being made available
to Shareholders in connection with the Transaction and the
convening of the General Meeting. The Circular is being posted to
those Shareholders who have requested paper copies of all
communications with LSL. All other Shareholders will be able to
access the Circular via LSL's website: www.lslps.co.uk.
Certain major shareholders of LSL, the Directors and certain
management shareholders of LSL, representing 53,206,680 of the
Ordinary Shares in aggregate, and 50.97% of the issued share
capital of LSL, have given irrevocable undertakings to vote in
favour of the Resolutions.
Of the 50.97% of committed shares referred to above, 13.67% are
held by Harris Associates L.P. ("Harris") and 7.01% are held by
Kames Capital ("Kames"). Each of Kames and Harris act as manager in
relation to shares held by certain of their clients and each has a
voting right in relation to such shares but neither Harris nor
Kames are the beneficial nor legal owner of such shares. The
irrevocable undertaking to vote in favour of the Resolutions
provided by Harris is given in respect of 14,336,077 Ordinary
Shares held by Harris, as manager, as at the date the irrevocable
was entered into, and the irrevocable undertaking to vote in favour
of the Resolutions provided by Kames is given in respect of
7,304,892 Ordinary Shares held by Kames, as manager, as at the date
the irrevocable was entered into however, the actual number of
shares in respect of which Harris and/or Kames may vote on the date
of the General Meeting may be greater or less, as the clients of
Harris and Kames are free to revoke the voting right and/or sell
their Ordinary Shares (or buy further Ordinary Shares) at any
time.
2. Background to and reasons for the Transaction:
The Directors believe that the Transaction has a compelling
strategic and financial rationale, with significant benefits for
Shareholders.
The Directors believe that in recent years LSL has delivered
excellent growth and achieved market leadership in both its
surveying and asset management businesses against the backdrop of a
very challenging housing market. Through a number of small
acquisitions it has also built a strong position in financial
services. In estate agency, the acquisition and subsequent
successful integration of Halifax Estate Agencies Limited provided
the LSL Group with a step change in its market position. The Estate
Agency Division has also invested in its people and created a new
call centre to grow market share with encouraging results to
date.
Throughout this period, LSL has acquired a number of businesses
and demonstrated a track record of successful integration,
retention of key management and delivering results in line with
expectations.
The London estate agency market has historically proven to
demonstrate more robust features through the property cycle. The
Acquisition provides LSL the opportunity to significantly increase
its exposure in this key geographical location, and provides a
vehicle to capitalise on further expansion opportunities in London
and, in the medium term, to benefit from the market recovery.
The Directors intend that, post Completion, Marsh & Parsons
continues to operate independently as a separate business and brand
within the LSL Group, which already operates a number of estate
agency brands and businesses.
The key benefits which flow from the Transaction are as
follows:
a. The Transaction provides LSL with a presence in the
mid-segment of the prime London estate agency market. Marsh &
Parsons is geographically complementary to LSL's existing estate
agency footprint and provides the wider LSL Group with greater
coverage of the UK property market.
b. The London property market has historically shown more robust
characteristics than the wider UK property market, though
transaction levels are still circa 40% lower than peak levels in
2007. The higher proportion of cash sales and greater participation
of foreign buyers provide the London property market with higher
levels of growth during stronger economic periods but also more
resilience against restricted mortgage availability and general
economic weakness. More generally, limited housing supply and
strong demand for properties from both domestic and foreign buyers
contribute to the inherent attractiveness of the London market.
c. The Marsh & Parsons business model is to drive revenue
across both residential sales and lettings in order to reduce
exposure to the natural cyclicality of the property market. This
has been achieved and revenue in 2010 was broadly evenly split
between residential sales and lettings.
d. Marsh & Parsons represents a trusted premium brand,
established for over 150 years, which enjoys excellent customer
satisfaction levels, enabling Marsh & Parsons to increase its
market share by 66% since 2005, including the period of the recent
market downturn.
e. The Directors believe LSL will gain a high quality, dynamic
and experienced management team with an outstanding record of
delivering strong and profitable growth against the backdrop of
challenging market conditions. The team is led by Chief Executive
Peter Rollings, who has over 25 years experience of successfully
growing estate agency businesses in the London market with both
Foxtons and Marsh & Parsons, and Liza-Jane Kelly, who has over
18 years in the property market including experience with Sherry
FitzGerald, Hamptons International and Marsh & Parsons. The
Marsh & Parsons Management Shareholders remain committed to and
will be reinvesting in the business.
f. The Marsh & Parsons Management Shareholders have exciting
growth plans for the business which builds on their recent track
record of doubling their number of offices. The next stage of the
business plan includes increasing market share across the existing
portfolio and further roll out of new offices across prime areas of
London together with further bolt on acquisition opportunities.
While Marsh & Parsons will operate independently within the LSL
Group, there will be opportunities for synergies. LSL has a strong
track record of encouraging its separately branded estate agency
businesses to share best practice and, in particular, there may be
opportunities for Marsh & Parsons to further develop certain
revenue streams. In addition, it is possible that some existing LSL
estate agency branches in London could be rebranded Marsh &
Parsons.
g. In a challenging London market, Marsh & Parsons has
demonstrated an excellent track record of delivery since 2005
through its investment in people, market, business model and brand.
During this period, its market share has increased by 66%, revenue
has increased by 53% per annum (compound annual average growth
rate) and the operating result has improved from a loss of GBP0.6m
in 2005 to a profit before tax of GBP6.3m in 2010. The business has
also delivered excellent cash conversion during this time with high
margins and relatively low levels of capital expenditure.
3. Information on Marsh & Parsons:
Headquartered in Hammersmith, Marsh & Parsons is a leading
premium brand London estate agency operating exclusively in the
prime London housing market of Central and South West London from
its thirteen offices. It was originally established in 1856 when
its founder, William T Marsh, established an estate agency on
Kensington High Street.
From its inception, the firm has established itself as one of
the leading residential estate agents in Central London and it is
one of the longest established estate agents in the Royal Borough
of Chelsea and Kensington. Marsh & Parsons' thirteen offices
are based in Balham, Barnes, Battersea, Brook Green, Chelsea,
Clapham, Fulham, Holland Park, Kensington, Little Venice, North
Kensington, Notting Hill and Pimlico. There is also a virtual
office in Mayfair.
The customer offering is predominantly residential sales and
lettings services, but it also includes corporate relocation
services, property management, residential development, advisory
services and professional valuation services.
In June 2005, Marsh & Parsons was acquired by Sherry
FitzGerald (Ireland's largest estate agency group) under the
leadership of Peter Rollings (previously the Managing Director of
Foxtons) and Liza-Jane Kelly. Since then, Marsh & Parsons has
grown rapidly (turnover has increased from GBP10.4m in 2006 to
GBP23.3m in 2010) following the opening of new offices and the
acquisition and rebranding of Vanstons in 2007.
In 2010, Marsh & Parsons won the Sunday Times "Best Medium
Sized London Agency" award, as well as the "Best Medium Sized UK
Agency" award and the "Best Overall UK Estate Agency" award. It
holds memberships of both the Association of Residential Lettings
Agents (ARLA) and The Property Ombudsman (TPO).
Marsh & Parsons had 199 full time equivalent employees as at
30(th) June 2011 and the following is a summary of the profit and
loss statement for Marsh & Parsons for the three years ended
31(st) December:
2008 2009 2010
GBP000 GBP000 GBP000
Revenue 13,613 16,998 23,337
Operating (loss)/profit (459) 3,622 6,302
Net finance income /(expense) (246) (80) (47)
(Loss)/Profit before tax (705) 3,542 6,255
Gross assets of Marsh & Parsons as at 31(st) December 2010
were GBP14.0m.
4. Principal terms and conditions of the Acquisition:
Marsh & Parsons is currently a subsidiary of Sherry
FitzGerald which owns 72% of the entire issued share capital, with
the remaining 28% of the issued share capital being owned by the
Marsh & Parsons Management Shareholders. The enterprise value
of the Acquisition is GBP50.0m. After accounting for cash and
excess working capital of approximately GBP3.1m, Newco will pay the
Marsh & Parsons Shareholders a total consideration of GBP53.1m,
to be satisfied by GBP45.1m in cash, GBP7.6m in loan notes and
GBP0.4m in Growth Shares for the entire issued share capital of
Marsh & Parsons.
Newco is a newly incorporated company in which, immediately
following Completion, LSL will have all of the Economic Value and
the majority of the voting rights. Appendix 1 of this announcement
provides further details of the capital structure of Newco on
Completion.
Pursuant to the terms of the Acquisition Agreement, at
Completion, the Marsh & Parsons Management Shareholders, who
currently own 28% of Marsh & Parsons, which at the Transaction
price is valued at GBP14.9m, will be paid GBP6.9m in cash, with the
remainder of their consideration (being GBP8.0m) to be satisfied by
Newco by the issue of GBP7.6m in loan notes and GBP0.4m in Growth
Shares.
Further details of the Acquisition Agreement are set out in
Appendix 1 of this announcement.
The management of Marsh & Parsons is extremely important to
the business and therefore the Marsh & Parsons Management
Shareholders will enter into the Investment Agreement, together
with LSL, on Completion in relation to Newco. The Investment
Agreement is conditional upon, inter alia, the execution of the
Acquisition Agreement and upon such agreement becoming
unconditional in all respects subject only to the payment of the
Completion Consideration.
The Investment Agreement regulates the relationship between the
Marsh & Parsons Management Shareholders and LSL as shareholders
of Newco. It contains, inter alia, restrictive covenants and
compliance covenants to be given by the Marsh & Parsons
Management Shareholders relating to the conduct of the business of
Newco, Marsh & Parsons and its subsidiaries. Further details of
the Investment Agreement are set out in Appendix 1 of this
announcement.
The entry into of both the Acquisition Agreement and the
Investment Agreement is conditional upon inter alia, the approval
of the Shareholders at the General Meeting.
It is proposed that in addition to entering into the
Transaction, LSL establish the 2011 EBT, an employee benefit trust
whose beneficiaries shall be all the employees of the Enlarged
Group. It is intended that, in due course, members of the current
and future management team of Marsh & Parsons will also be
invited to apply for Growth Shares which will be held by the 2011
EBT, as part of a package of measures designed to incentivise all
of the current and future management of Marsh & Parsons.
Shareholder approval is sought for the establishment of the 2011
EBT. The establishment of the 2011 EBT is subject to the approval
of the Shareholders at the General Meeting and conditional upon the
Shareholders approving the entry into of both the Acquisition
Agreement and Investment Agreement.
Holders of Growth Shares will have the option to require LSL to
buy their Growth Shares at any time between 31(st) March 2016 and
1(st) April 2020, at their discretion, at a price determined by a
multiple of EBITDA in the previous financial year. As the price
payable depends on future profitability and certain preference
criteria, the amount payable is unknown. Details of the purchase
mechanism are provided in Appendix 1 of this announcement.
As stated above, as part of the Completion Consideration for the
Marsh & Parsons shares which will be acquired by Newco at
Completion, Newco will issue two classes of loan note to the Marsh
& Parsons Management Shareholders being (i) the Loan Notes; and
(ii) the LJK Loan Notes.
The Loan Notes will be issued for an aggregate nominal value of
GBP6.1m. These loan notes will accrue interest at 12% per annum on
a rolled-up basis and the Loan Notes held by Marsh & Parsons
Management Shareholders will be purchased (for an amount equal to
their face value plus accrued and unpaid interest) by LSL at the
same time as it purchases the Growth Shares from the Marsh &
Parsons Management Shareholders.
In addition to the Loan Notes, one of the Marsh & Parsons
Management Shareholders will be issued with an aggregate of GBP1.5m
worth of LJK Loan Notes in partial satisfaction of the
consideration for her Marsh & Parsons shares.
The Loan Notes and LJK Loan Notes are summarised in Appendix 1
of this announcement.
5. Irrevocable undertakings:
Certain major shareholders of LSL, the Directors and certain
management shareholders of LSL, representing 53,206,680 Ordinary
Shares in aggregate, and 50.97% of the issued share capital of LSL,
have given irrevocable undertakings to vote in favour of the
Resolutions.
Of the 50.97% of committed shares referred to above, 13.67% are
held by Harris Associates L.P. ("Harris") and 7.01% are held by
Kames Capital ("Kames"). Each of Kames and Harris act as manager in
relation to shares held by certain of their clients and each has a
voting right in relation to such shares but neither Harris nor
Kames are the beneficial nor legal owner of such shares. The
irrevocable undertaking to vote in favour of the Resolutions
provided by Harris is given in respect of 14,336,077 Ordinary
Shares held by Harris, as manager, as at the date the irrevocable
was entered into, and the irrevocable undertaking to vote in favour
of the Resolutions provided by Kames is given in respect of
7,304,892 Ordinary Shares held by Kames, as manager, as at the date
the irrevocable was entered into however, the actual number of
shares in respect of which Harris and/or Kames may vote on the date
of the General Meeting may be greater or less, as the clients of
Harris and Kames are free to revoke the voting right and/or sell
their Ordinary Shares (or buy further Ordinary Shares) at any
time.
6. Financial effects of the transaction:
Current volumes in the UK housing market are at less than 50% of
historical norms and the Directors have assumed that conditions are
unlikely to improve significantly for the foreseeable future. Based
on Bank of England mortgage approvals for house purchase data it is
expected that transaction volumes will be just below 550,000 for
2011 compared to normalised levels of 1.2m per annum. The Directors
retain a cautious view beyond 2011 given the continued shortage of
available mortgage finance and the general economic uncertainty,
particularly in the finance sector. Based upon these market
assumptions, the Directors believe that the Transaction will be
earnings enhancing in 2012, the first full year under which Marsh
& Parsons will be owned by LSL.
The net cash consideration for the Transaction of GBP45.1m will
be funded by using LSL's existing bank facility of GBP75.0m. The
Directors believe that following Completion LSL will remain
conservatively leveraged and that the LSL Group will retain
financial headroom and flexibility to enable it to take advantage
of further organic initiatives or acquisition opportunities in line
with its stated strategy.
7. Management and employees:
LSL has high regard for the quality of the management and
employees of Marsh & Parsons. Following the Transaction, LSL
will operate the Marsh & Parsons brand independently within the
LSL Group and LSL will have representation on the Marsh &
Parsons board. On Completion the LSL Group Chief Executive, the LSL
Group Finance Director and the LSL Group's Executive Director
responsible for the Estate Agency Division will join the board of
Marsh & Parsons, and Eileen Schroeder, Keith Gorny, Emilie
Thysse and Patrick Littlemore will resign from the board of Marsh
& Parsons.
The focus and commitment of the Marsh & Parsons Management
Shareholders has been pivotal to its success and the same team is
incentivised to remain with Marsh & Parsons following
Completion to deliver its growth strategy. The Marsh & Parsons
Management Shareholders and other members of its management team
will be heavily incentivised to continue to grow the business and
the Transaction includes provisions to retain Marsh & Parsons
Management Shareholders who will become shareholders of Newco and
party to the Investment Agreement. Further details of the
Acquisition Agreement and Investment Agreement are set out in
Appendix 1 of this announcement.
There will be no changes to the Board or senior management team
of LSL as a result of this Transaction.
8. Current trading, trends and prospects:
a) LSL
LSL, on 4(th) November, released its interim management
statement for the period commencing 1(st) July 2011. The material
sections of that interim management statement are set out in full
below:
"Since 1 July 2011, the housing market has improved slightly
with House Purchase Mortgage Approvals for quarter three up 8%
compared to the same period in 2010 (1) . However, for the 9 months
from January to September, House Purchase Mortgage Approvals are
flat year on year. Market data is not yet available for
October.
Against this backdrop, LSL's trading has been satisfactory for
the 4 months ended 31 October but has been more challenging during
October. Turnover for the 9 months ended 30 September 2011 compared
with the same period in 2010 and also for the 10 months ended 31
October 2011 was as follows:
To 30 September To 31 October
Group +3% +2%
Estate Agency +9% +8%
Surveying -7% -7%
Cash generation remains strong and net debt at 31 October 2011
was GBP9.4m (as at 31 October 2010 GBP13.7m). LSL remains on track
to be in a net cash position at the year end before the impact of
the Marsh and Parsons acquisition.
Estate Agency
Estate Agency has continued to make good progress with benefits
flowing from the investments made in branch management and 'The
Bridge' call centre. Estate Agency pipelines at 31 October 2011
were 9% higher than on 31 October 2010. The Estate Agency branches
are also building on the momentum generated earlier in the year
with further strong increases in lettings and financial services
income. In addition, a number of small lettings businesses have
been acquired during 2011 as the business continues to diversify
revenue streams.
The Asset Management business is performing well in an
environment where repossession volumes are lower than in 2010.
Surveying Division
Surveying has traded well despite low levels of mortgage
activity requiring physical survey valuations. As expected,
performance against key lender client prior year comparatives has
improved in quarter three with Surveying income 7% lower for the 10
months to 31 October compared to 9% lower for the 6 months to 30
June as reported in the interim results.
Surveying services for private buyers are continuing to build in
line with our expectations.
Outlook
Market conditions are challenging and uncertain and LSL has an
increasingly cautious view of 2012. The current housing market
continues to be impacted by the continued shortage of available
mortgage finance, the general economic uncertainty and the
increasing pressure on household budgets and consumer
confidence.
Against this difficult backdrop, LSL will continue to focus on
growing market share and profitability in Estate Agency, developing
surveying services for private buyers and capitalising on the
growth opportunities arising from the Marsh and Parsons
acquisition. The Group is well positioned to increase shareholder
value through delivery of these initiatives."
(1) Source: Bank of England
b) Marsh & Parsons
For the nine months ended 30(th) September 2011, Marsh &
Parsons delivered unaudited revenue of GBP20.2m (nine months ended
30(th) September 2010: GBP17.6m) and EBITDA of GBP6.1m (nine months
ended 30(th) September 2010: GBP5.3m), representing an EBITDA
margin of 30.1% (2010: 30.1%). Revenue in both the sales and
lettings divisions are higher than that achieved in the first nine
months of 2010.
9. General meeting:
Completion of the Transaction is subject to Shareholder approval
being obtained at the General Meeting which is to be convened at
10am 22(nd) November 2011. A copy of the Notice is available at
www.lslps.co.uk.
10. Recommendation & action to be taken:
The Board consider the Transaction and the establishment of the
2011 EBT to be in the best interests of Shareholders. Accordingly,
the Board unanimously recommends that Shareholders vote in favour
of the Resolutions. The Directors, who together own in aggregate
approximately 19.4% of the issued share capital of LSL, have
irrevocably undertaken to vote in favour of the Resolutions.
APPENDIX 1
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION
A. Summary of the key terms of the Acquisition Agreement
Under the terms of the Acquisition Agreement, Newco (a wholly
owned subsidiary of LSL) will pay the Marsh & Parsons
Shareholders GBP50.0m for the entire issued share capital of Marsh
& Parsons on a debt free basis. Newco is a newly incorporated
company, in which, immediately following Completion, LSL will have
all of the Economic Value and the majority of the voting
rights.
The consideration payable pursuant to the Acquisition consists
of:
(i) "initial consideration" of GBP51,669,000;
(ii) "per diem consideration", which is linked to the "locked
box mechanism" (further details of which are summarised below) and
which is calculated based on the number of days that have elapsed
since 1(st) August 2011 to the date of Completion (the "initial
consideration" and "per diem consideration" together being the
"Completion Consideration"); and
(iii) "deferred claim consideration", which shall become payable
to the Marsh & Parsons Shareholders, in the event that Marsh
& Parsons recovers payment from a third party in respect of a
claim relating to Norland Square (being a claim made by Marsh &
Parsons in relation to the renewal of a lease at 57 Norland
Square). In such circumstances, Newco shall pay an amount equal to
any such payment received (less costs, expenses or tax actually
suffered thereon in recovering or obtaining such payment) in cash
to all Marsh & Parsons Shareholders, save in respect of
Liza-Jane Kelly and Peter Rollings, whose proportion of the
deferred claim consideration shall be satisfied by the issue of
Norland Square Loan Notes (in addition to those LJK Loan Notes
issued in partial satisfaction of the Completion Consideration,
further details of which are set out below).
The Completion Consideration shall be satisfied by Newco on
Completion in a number of ways, namely by:
(i) cash, payable to certain of the Marsh & Parsons Shareholders (excluding Liza-Jane Kelly);
(ii) the issue of the Loan Notes to the Marsh & Parsons Management Shareholders;
(iii) the issue of the LJK Loan Notes to Liza-Jane Kelly;
(iv) the issue of the Growth Shares to the Marsh & Parsons
Management Shareholders and Deferred Shares to Liza-Jane Kelly,
and;
(v) the payment of the retention of GBP950,000 in cash into a
joint retention account (further details of which are summarised
below).
There is provision for a cash retention of GBP950,000 of the
Completion Consideration payable to be paid into a retention
account on Completion, by way of security for Newco in respect of
any claims under the Acquisition Agreement. Such account will be
held in the joint names of Newco's and the Marsh & Parsons
Shareholder's solicitors and the retention will be held subject to
their joint instructions. In addition to the GBP950,000 cash
retention, Liza-Jane Kelly's proportionate contribution to the
retention (being an extra GBP50,000) will be satisfied by the issue
of LJK Loan Notes rather than cash. Such loan notes may be redeemed
within 12 months from the date of Completion and the cash will then
be paid into the retention account (see further paragraph C
below).
The provisions relating to the retention account provide that in
the event of any breach by the Marsh & Parsons Management
Shareholders of the Acquisition Agreement which becomes a settled
claim, LSL shall be entitled to receive 95% of the value of such
claim from the monies held in the retention account and shall be
entitled to set off 5% of the value of such claim from the LJK Loan
Notes (if Liza-Jane Kelly has not already received such notes and
transferred GBP50,000 into the retention account) in complete or
partial satisfaction of such settled claim. In the event that
Liza-Jane Kelly has already paid in the GBP50,000 (following
redemption of the LJK Notes) into the retention account, then LSL
shall be entitled to receive 100% of the value of such claim from
the monies held in the retention account (subject to a maximum
value of the retention, being GBP1.0m).
In the event that there are no unagreed claims outstanding
between the parties on 1(st) April 2013, then any monies remaining
in the retention account shall be released to the Marsh &
Parsons Shareholders.
In the event that there are any unagreed claims outstanding
between the parties on 1(st) April 2013, then a sum equal to the
estimated unagreed amount shall remain in the retention account
until such claim is agreed, settled or abandoned. Upon the last to
be agreed, settled or abandoned of any such unagreed claim, the
amount then standing to the credit of the retention account (if
any) shall be released to the Marsh & Parsons Shareholders.
Completion of the Acquisition Agreement is conditional upon the
approval of (a) the Shareholders at the General Meeting; and (b)
Newco not becoming aware of any third party interest over the Marsh
& Parsons shares prior to the date of Completion, other than
the interests which have already been disclosed to Newco and which
are to be released on Completion.
If such Shareholder approval is not obtained by 5pm on 30(th)
November 2011, the Marsh & Parsons Shareholders may either
postpone Completion until such later date as is agreed with Newco
or terminate the Acquisition Agreement. If condition (b) is not
satisfied, Newco may terminate the Acquisition Agreement. The date
of Completion is anticipated to be 22(nd) November 2011.
The Marsh & Parsons Shareholders shall procure that the
Marsh & Parsons Group is conducted in the ordinary course of
business and that it complies with pre Completion restrictions and
pre Completion obligations during the interregnum period and prior
to Completion. They also agree to consult and cooperate with the
Company during this period in relation to all material matters
concerning the running of the Marsh & Parsons business.
The Acquisition Agreement contains a "locked box" mechanism,
pursuant to which the Marsh & Parsons Shareholders jointly and
severally warrant to Newco that during the period between 31(st)
July 2011 (the date to which the management accounts of Marsh &
Parsons have been made up) and Completion, Marsh & Parsons has
not, inter alia, created any encumbrances over any of its assets or
transferred any of its assets; made any dividend, distribution or
other payment (save for those permitted); made any payment in
respect of its share capital; incurred any borrowings; or assumed
any liabilities or waived any debt due to Marsh & Parsons. In
the event that any such warranties are breached, the Marsh &
Parsons Shareholders agree to pay on demand an amount equivalent to
any loss, cost or expense incurred or suffered by Marsh &
Parsons or a subsidiary where such would not have occurred had such
warranties been true.
The Acquisition Agreement also provides:
1. for warranties (which are customary for an agreement of this
nature) to be provided by the Marsh & Parsons Shareholders in
relation to, inter alia, accounting, taxation, property,
employment, insurance, litigation, intellectual property and
trading matters;
2. for Newco to provide certain warranties (which are customary
for an agreement of this nature) to the Marsh & Parsons
Shareholders confirming constitutional authority to enter into the
Acquisition Agreement;
3. for indemnities (which are customary for an agreement of this
nature) to be provided by the Marsh & Parsons Shareholders to
protect against any liability arising from, inter alia:
3.1 any claims, losses, expenses, costs or fines suffered by any
member of the LSL Group which arises as a result of any terms and
conditions of business or other agreement ("Unenforceable
Agreement") with customers who were put into such terms and
conditions or who entered into such agreement prior to Completion
being held, alleged or threatened as being unenforceable;
3.2 any regulatory action in connection with an Unenforceable Agreement; and
3.3 any of the shares in Marsh & Parsons being subject to an
encumbrance which is not released on Completion;
4. that save in respect of claims relating to covenants
regarding the ownership and good title of Marsh & Parsons
shares, the transfer of such shares free from all encumbrances and
the sale and purchase of all such shares simultaneously, that the
aggregate liability of the Marsh & Parsons Shareholders in
respect of all claims under the Acquisition Agreement shall not
exceed an amount equal to sixty per cent of the sum of the
Completion Consideration;
5. that no amount shall be payable by the Marsh & Parsons
Shareholders unless and until the aggregate liability of the Marsh
& Parsons Shareholders under all qualifying warranty claims
exceeds GBP100,000 whereupon the Marsh & Parsons Shareholders
shall be liable for both the initial GBP100,000 and the excess;
6. that the Marsh & Parsons Shareholders shall not be liable
for any warranty claims following 31(st) March 2013 except in
respect of a claim under the tax warranties where the Marsh &
Parsons Shareholders will remain liable until the sixth anniversary
of Completion;
7. that the Marsh & Parsons Shareholders shall have no
liability for a claim under the indemnities unless written notice
is received from Newco on or before the second anniversary of
Completion; and
8. that the Marsh & Parsons Shareholders will provide non
compete and non solicitation covenants which will apply for a
period of 12 months post Completion (24 months in respect of
non-solicitation of Marsh & Parsons employees).
B. Summary of the key terms of the Loan Note Instrument
The Loan Notes will be issued by Newco to the Marsh &
Parsons Management Shareholders in partial satisfaction of the
Completion Consideration due to them pursuant to the
Acquisition.
Save in respect of a Loan Note Holder who is deemed to be a "bad
leaver" (as such term is defined in the paragraph below), interest
shall accrue on the Loan Notes from the date of issue at a rate of
12% per annum. In each 365 day period the accrued but unpaid
interest on the Loan Notes shall be rolled up and shall be paid in
full by Newco on 31(st) December 2020 or such earlier date on which
the Loan Notes are redeemed.
A "bad leaver" includes any of the Marsh & Parsons
Management Shareholders who ceases to be employed/engaged by Newco
by reason of:
(i) resignation (other than by way of normal retirement age or
due to his personal incapacity as a result of illness or injury
which renders him permanently unable to perform his duties as a
director, employee or consultant (as the case may be), or due to
his mental illness or injury (save where such illness or injury is
as a direct result from abuse of alcohol or drugs); or
(ii) summary dismissal for gross misconduct; or
(iii) personal bankruptcy; or
(iv) any person who is determined by the board of Newco (acting
reasonably) to have breached the restrictive covenant clause of the
Investment Agreement.
In the event that a Loan Note Holder is a "bad leaver", then
interest shall accrue on the Loan Notes at a rate of 2% per annum
(and not 12% per annum) at all times.
Unless previously redeemed, Newco shall redeem the whole of the
outstanding principal amount of the Loan Notes together with any
accrued but unpaid interest (after any necessary tax deductions) up
to but excluding the date of redemption, on the earlier of:
1. 31(st) December 2020; or
2. the first to occur of either:
(i) the original Loan Note Holder transferring full legal and
beneficial title to all of his shares in Newco in accordance with
the articles of association of Newco; or
(ii) a sale of the entire issued share capital of Newco; or
(iii) where the Note Holder is a "bad leaver", who leaves prior
to 1(st) January 2016, the earlier of:
(a) 30(th) April 2016; or (b) the completion of an event
described in 2. (ii) above; or
(c) any date notified to Newco by a director of Newco appointed
by LSL; or
(iv) where the note holder is a "bad leaver" and who leaves on
or after 1(st) January 2016, the earlier of:
(1) the date another note holder transfers full legal and
beneficial title to all his shares in Newco in accordance with the
articles of association of Newco; or
(2) any date notified by an investor director of Newco; or
(3) a sale of the entire issued share capital of Newco; or
(4) 31(st) December 2020; or
(v) where the Loan Note Holder is not a "bad leaver", the date
on which any shares held by him are due to be unconditionally
acquired by LSL in accordance with the articles of association of
Newco.
There is a right of set off in the Loan Note Instrument which
enables Newco to set off against the Loan Notes (including any
accrued but unpaid interest), at any time following the date that
is 12 months from the date of Completion, the amount of any sums
due from that Loan Note Holder arising from a breach by such holder
of any terms of the Acquisition Agreement and/or the Investment
Agreement.
C. Summary of the key terms of the LJK Loan Note Instrument
The LJK Loan Notes will be issued by Newco to Liza-Jane Kelly
in:
(i) partial satisfaction of the Completion Consideration; and
(ii) satisfaction of her proportion of the retention monies
(referred to in paragraph A of this Appendix 1 above).
Interest shall accrue on the LJK Loan Notes from the date of
issue at a rate of 2% per annum until such loan notes are redeemed.
The redemption date is the first anniversary of the date of issue
of the LJK Loan Notes.
Upon redemption of the LJK Loan Notes, a sum equivalent to
Liza-Jane Kelly's proportion of the retention monies shall be paid
into the retention account to be dealt with in accordance with the
joint instructions on such account.
D. Summary of the key terms of the Norland Square Loan Note Instrument
The Norland Square Loan Notes will be issued by Newco to Peter
Rollings and Liza-Jane Kelly in full satisfaction of any deferred
claim consideration due to them pursuant to the Acquisition.
Interest shall accrue on the Norland Square Loan Notes from the
date of issue at 2% per annum until they are redeemed. Redemption
shall be;
(i) in the case of Norland Square Loan Notes issued within 6
calendar months of the date of Completion, the first anniversary of
the date of Completion; or
(ii) in the case of Norland Square Loan Notes issued after the
date which is 6 calendar months after the date of Completion, the
date falling 6 months after the date of issue of the Norland Square
Loan Notes.
E. Summary of the key terms of the 2011 EBT
The 2011 EBT may subscribe for shares in the Enlarged Group
(including Ordinary Shares or Growth Shares) or may purchase shares
in the market in order to satisfy awards made to employees. In
respect of shares acquired by subscription, the subscription price
to be paid by the 2011 EBT will be the market value of the shares
(such as Ordinary Shares or Growth Shares) on the day that the
awards are made.
The trustee of the 2011 EBT will be Kleinwort Benson (Jersey)
Trustees Limited, an independent trustee company based in
Jersey.
The beneficiaries of the 2011 EBT will include employees and
former employees of the Enlarged Group and certain of their
relatives, other than those employees or relatives that are tax
resident in Jersey. The benefits under the 2011 EBT will not be
pensionable.
By the terms of the trust instrument, the trustee has absolute
discretion to apply the trust fund for the benefit of the
beneficiaries in such manner as the trustee thinks fit. In
particular, the 2011 EBT:
(a) may acquire and hold shares in the Enlarged Group (including
Ordinary Shares and Growth Shares) on behalf of beneficiaries;
(b) may grant options over or transfer shares in the Enlarged
Group (including Ordinary Shares and Growth Shares) to
beneficiaries;
(c) may transfer the trust fund to trustees of other settlements
for the benefit of the same class of beneficiaries; and
(d) may pay taxes.
The duration of the 2011 EBT is eighty years.
The 2011 EBT will not hold more than 5% of the issued Ordinary
Shares without Shareholder approval and the trustees of the 2011
EBT will not exercise any voting rights in respect of Ordinary
Shares and Growth Shares held in the 2011 EBT from time to time
except for Ordinary Shares and Growth Shares which are beneficially
owned by any beneficiary of the 2011 EBT and in relation to which
the 2011 EBT has received voting instructions from the
beneficiary.
LSL (or other Group Companies) will fund the 2011 EBT to enable
it to acquire Growth Shares. A copy of the deed relating to the
2011 EBT will be made available for inspection at the offices of
DLA Piper UK LLP, Princes Exchange, Princes Square, Leeds, LS1 4BY
during usual business hours on any weekday from the date of
publication of this announcement (public holidays excepted) until
the close of the General Meeting and will also be available at the
General Meeting for at least 15 minutes before and during the
General Meeting.
F. Summary of the key terms of the Investment Agreement:
The Investment Agreement is conditional upon:
(i) the Acquisition Agreement and related documents being
executed by the parties to them and becoming unconditional in all
respects subject only to the payment of the Completion
Consideration;
(ii) Peter Rollings subscribing for 85,426 B1 Growth Shares and
170,492 C Growth Shares and Liza-Jane Kelly subscribing for 62,826
B2 Growth Shares, 35,483 C Growth Shares and 10,000 Deferred
Shares, the subscription monies in respect of which shall be
satisfied by applying GBP0.4m of the Completion Consideration due
to them under the Acquisition Agreement in exchange for the
acquisition of the shares in Marsh & Parsons;
(iii) the issue of GBP5,083,368 Loan Notes to Peter Rollings,
GBP1,062,405 Loan Notes to Liza-Jane Kelly and GBP1,494,026 LJK
Loan Notes to Liza-Jane Kelly; and
(iv) the fulfilment of certain preconditions set out in the
Investment Agreement (including, inter alia, the appointment of
Liza-Jane Kelly and Peter Rollings to the board of Newco and the
adoption of the new articles of association of Newco).
Subject to the completion of items (i) to (iv) above, LSL agrees
to subscribe for 1,108,273 A Shares and 500,000 Deferred Shares on
completion of the Investment Agreement, all such shares having the
rights as set out in the articles of association of Newco.
Following completion of the Investment Agreement, Michael Baulk
(who shall be appointed as chairman of Newco) shall subscribe for
19,500 C Shares and such shares shall be issued and allotted to
Michael Baulk credited as fully paid upon receipt of the sum of
GBP19,500 from the same. In addition, the 2011 EBT shall subscribe
for 143,000 C Growth Shares and such shares shall be issued and
allotted to 2011 EBT and these shares, in due course, shall be
distributed to current and future management of Marsh & Parsons
in accordance with the planned incentive arrangements.
The Investment Agreement also provides:
1. for warranties (which are customary for an agreement of this
nature) to be provided by the Marsh & Parsons Management
Shareholders in relation to, inter alia, personal warranties (which
are customary for an agreement of this nature) regarding authority
and good standing to enter into the agreement, warranties (which
are customary for an agreement of this nature) relating to Newco's
authority and good standing to enter into the agreement, conduct of
Newco prior to the date of the Investment Agreement and
non-insolvency of Newco and warranties (which are customary for an
agreement of this nature) as to the accuracy of information
produced by or for the Marsh & Parsons Management
Shareholders;
2. that for so long as the Marsh & Parsons Management
Shareholders hold any Growth Shares, LSL and the Marsh &
Parsons Management Shareholders undertake to procure that Newco and
its subsidiaries shall be managed subject to certain restrictions
(which are customary for an agreement of this nature), which can
only be carried out with the prior consent of a majority of the
board of Newco or with investor consent (as appropriate);
3. that the maximum aggregate liability of each of the Marsh
& Parsons Management Shareholders for breach of the warranties
shall be limited by the amount set opposite each persons' name in
schedule 1 to the Investment Agreement. The Marsh & Parsons
Management Shareholders shall not be liable for any breach of
warranty unless the amount of such claim (when aggregated with any
other claims by LSL) exceeds GBP35,000. In the case of dishonest
concealment or fraud, the limitations shall not apply;
4. that Newco undertakes to LSL to provide LSL with all relevant
financial and accounting information and to keep LSL informed of
the progress of its business and affairs;
5. that Newco undertakes to LSL to comply with certain positive
covenants and negative covenants relating to the proper running of
the business that are customary for an agreement of this
nature;
6. that the Marsh & Parsons Management Shareholders each
covenant with LSL and Newco, inter alia, to devote the whole of his
working time, attention and skill to the Marsh & Parsons
business, keep all information confidential and not to damage the
goodwill of the business and each agrees to be bound by
non-competition and non-solicitation covenants for a period of
three years after the date of Completion or, if earlier, upon the
expiry of a period of one year following a transfer of all his
shares in Newco. They also each agree to procure the compliance of
the obligations imposed by the Investment Agreement upon Newco and
to comply with their own obligations as shareholders of Newco;
7. that at least one director appointed by LSL must be present
at board meetings of Newco in order for any such meeting to be
quorate; and
8. that any person wishing to become a shareholder of Newco must
enter into a deed of adherence to the Investment Agreement and
agree to be bound by its terms.
G. Retention of Marsh & Parsons management team
It is intended that, in due course, members of the current and
future Marsh & Parsons management team will be invited to apply
for "C" Growth Shares held by the 2011 EBT as part of a package of
measures designed to incentivise all of the current and future
management of Marsh & Parsons.
Holders of Growth Shares will have the option to sell their
Growth Shares to LSL for cash during the first 6 months of each
calendar year between 1(st) January 2016 and 30(th) June 2020 at
their discretion at a price determined by an agreed formula
("Price"). The calculation of the Price will be made with reference
to the time that has elapsed since Completion and the audited
accounts of Marsh & Parsons in respect of the financial period
ended immediately prior to the date of sale.
The Hurdle Value will be GBP78.0m as at 31(st) December 2015 and
it will be increased by circa 10% per annum for each completed year
post such period. The Price will be calculated by multiplying the
actual EBITDA of Marsh & Parsons (as shown in the audited
accounts for Marsh & Parsons in respect of the immediately
preceding financial year) by an agreed multiple and adding the net
cash generated in Marsh & Parsons from the date of Completion
to the exit date. The agreed multiple applied to the EBITDA of
Marsh & Parsons in calculating the Price will range from 6.5 to
8.0 based on incremental levels of EBITDA.
As stated above, as part of the consideration for the Marsh
& Parsons shares which will be acquired by Newco at Completion,
Newco will issue loan notes to the Marsh & Parsons Management
Shareholders of an aggregate nominal value of GBP7.6m. The Loan
Notes and the LJK Loan Notes will accrue interest at 12% and 2%
respectively per annum on a rolled-up basis and the Loan Notes and
LJK Loan Notes held by Marsh & Parsons Management Shareholders
will be purchased (for an amount equal to their face value plus
accrued and unpaid interest) by LSL at the same time as it
purchases the Growth Shares from the Marsh & Parsons Management
Shareholders.
In the event that a holder of any Growth Shares is employed by
Marsh & Parsons and ceases to be employed before transferring
his Growth Shares to LSL, the treatment of his Growth Shares varies
by reference to the circumstances of his departure.
If the individual is a "bad leaver" (as such term is described
in paragraph B of this Appendix 1 above) then he will (at the
discretion of Newco) be required to offer his entire holding of
Growth Shares for sale at the lower of:
(i) the price originally subscribed for such Growth Shares to the 2011 EBT; and
(ii) the Price.
A person who leaves for any other reason ("Leaver") shall be
obliged to transfer his Growth Shares (at the discretion of Newco)
for sale at the higher of:
(i) the price originally subscribed for such Growth Shares; and
(ii) the Price.
APPENDIX 2
SCHEDULE OF DEFINITIONS
"2011 EBT" the 2011 LSL employee benefit trust, the key terms of
which are summarised in Appendix 1 of this announcement
"A Shares" the A ordinary shares of GBP0.001 each in Newco
"Acquisition" the proposed acquisition by Newco of the entire
issued share capital of Marsh & Parsons pursuant to the
Acquisition Agreement and the Investment Agreement
"Acquisition Agreement" the conditional share sale and purchase
agreement in respect of the Acquisition dated 4(th) November 2011
between, inter alia, the Marsh & Parsons Shareholders and Newco
relating to the Acquisition, the principal terms of which are
described in Appendix 1 of this announcement
"B1 Growth Shares" the B ordinary shares of GBP0.001 each in
Newco, designated as B1 shares
"B2 Growth Shares" the B ordinary shares of GBP0.001 each in
Newco, designated as B2 shares
"Board" the board of directors of LSL
"C Growth Shares" the C ordinary shares of GBP0.001 each in Newco
"Circular" the circular document sent to LSL shareholders on
4(th) November 2011 describing the Transaction (including proposed
acquisition of Marsh & Parsons)
"Completion" completion of the Transaction
"Completion Consideration" together the initial consideration
and the per diem consideration payable pursuant to the terms of the
Acquisition Agreement, both of which are summarised in Appendix 1
of this announcement
"Directors" the directors of LSL
"Deferred Shares" the deferred ordinary shares of GBP0.001 each in Newco
"EBITDA" earnings before interest, taxes, depreciation and
amortisation
"Economic Value" entitlement to receive dividends if any are
available and their share of the equity value of Newco should the
business be sold or liquidated
"Enlarged Group" the LSL Group following Completion
"Ernst & Young" Ernst & Young LLP, reporting accountants
and sponsor to LSL
"Estate Agency Division" includes LSL's core estate agency,
lettings, financial services, LPA fixed charge receiver and
repossessions asset management businesses
"Executive Directors" means the executive Directors
"FSA" Financial Services Authority
"FSMA" Financial Services and Markets Act 2000
"Form of Proxy" the form of proxy accompanying the Circular to
be used by Shareholders in relation to the General Meeting
"Foxtons" Foxtons Limited, a company registered in England and
Wales with the number 01680058
"General Meeting" a general meeting of LSL to be held at 10 am
on 22(nd) November 2011 for the purpose of approving the
Resolutions
"Growth Shares" means B1 Growth Shares, B2 Growth Shares and C
Growth Shares in Newco
"Hurdle Value" means GBP53.0m as at 31(st) December 2011 plus
circa 10% per annum
"Investment Agreement" the conditional agreement to be entered
into on Completion between (1) Marsh & Parsons Management
Shareholders (2) LSL (3) Newco, the principle terms of which are
summarised in Appendix 1 of this announcement
"LJK Loan Notes" the GBP1.5m loan notes issued by Newco which
carry 2% interest, constituted by the LJK Loan Note Instrument
"LJK Loan Note Instrument" the loan note instrument to be
entered into by Newco on Completion in relation to the LJK Loan
Notes
"Loan Note Holder" means a holder of Loan Notes
"Loan Notes" the GBP6,145,773 12% fixed rate unsecured loan
notes 2020, constituted by the Loan Note Instrument
"Loan Note Instrument" the loan note instrument to be entered
into by Newco on Completion in relation to the Loan Notes
"London Stock Exchange" the London Stock Exchange plc
"LPA" Law of Property Act 1925
"LSL" or "Company" LSL Property Services plc, a company
registered in England and Wales with the number 05114014
"LSL Group" or "Group" LSL and its subsidiary companies (and
Group Company means any one of them)
"Marsh & Parsons" Marsh & Parsons Limited, a company
registered in England and Wales, company number 05377981
"Marsh & Parsons Group" Marsh & Parsons and its subsidiary companies
"Marsh & Parsons Management Peter Rollings and Liza-Jane Kelly
Shareholders"
"Marsh & Parsons Shareholders" Sherry FitzGerald, Peter Rollings and Liza-Jane Kelly
"Newco" LSL PS Limited, a company registered in England and
Wales with company number 07815928, being a wholly owned subsidiary
of LSL, incorporated for the purpose of acquiring the entire issued
share capital of Marsh & Parsons under the terms of the
Acquisition Agreement
"Newco Shares" shares in Newco, being A Shares and the Growth Shares
"Norland Square Loan Notes" the loan notes issued by Newco which
carry 2% interest, constituted by the Norland Square Loan Note
Instrument
"Norland Square Loan Note the loan note instrument to be entered into by Newco on
Instrument" Completion in relation to the Norland Square Loan
Notes
"Notice of General Meeting" the notice of General Meeting set
out at the end of the Circular
"Ordinary Shares" 0.2p ordinary shares in LSL
"Resolutions" a resolution to approve the Transaction and a
resolution to establish the 2011 EBT to be proposed at the General
Meeting, as set out in the Notice of General Meeting
"Shareholders" the shareholders of LSL
"Sherry FitzGerald" Sherry FitzGerald Holdings Limited, a
company registered in the Republic of Ireland with company number
368520
"Surveying Division" LSL's surveying and valuations businesses
"Transaction" entry into the Acquisition Agreement by Newco and
Marsh & Parsons Shareholders and entry into the Investment
Agreement by LSL and Marsh & Parsons Management
Shareholders
"UKLA" the UK Listing Authority
"Unenforceable Agreement" as defined in Appendix 1 of this announcement
"Vanstons" Vanstons Limited a company registered in England and
Wales, company number 02277731
Ernst & Young LLP, which is authorised and regulated by the
Financial Services Authority, is acting for LSL Property Services
plc and for no-one else in connection with the contents of this
document and will not be responsible to anyone other than LSL
Property Services plc for providing the protections afforded to
clients of Ernst & Young LLP, or for providing advice in
relation to the contents of this document or any matters referred
to herein.
This information is provided by RNS
The company news service from the London Stock Exchange
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