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RNS Number : 9556X
Stafford Capital Partners Limited
16 August 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION
FOR IMMEDIATE RELEASE
16 August 2018
LETTER FROM STAFFORD BIDCO
(Registered under the laws of England and Wales with registered
company number 11438559)
Directors: Registered office:
Stephen Addicott Fourth Floor
Vince Cao 24 Old Bond Street
Geoffrey Norman London
Angus Whiteley W1S 4AW
United Kingdom
16 August 2018
To: Phaunos Shareholders and, for information only, to persons
with information rights
Dear Phaunos Shareholder,
All-Cash Offer
for
Phaunos Timber Fund Limited ("Phaunos" or the "Company")
by
Mahogany Bidco Limited ("Stafford Bidco")
a company ultimately controlled by
Stafford Capital Partners Limited ("Stafford")
Response to Phaunos defence document
1. Introduction
Stafford notes the publication earlier this week of Phaunos'
defence document (the "Defence Document") in response to the offer
document that was published on 31 July 2018 in relation to the
all-cash Offer for Phaunos by Stafford Bidco (the "Offer
Document"). Unless otherwise stated, defined terms used but not
defined in this announcement have the meanings set out in the Offer
Document.
Nothing in the Defence Document changes Stafford's view that its
all-cash Offer represents an excellent opportunity for Shareholders
to realise their investment in Phaunos.
The asset realisation values presented by the Phaunos Board in
the Defence Document are based on non-binding indicative bids for
part of the portfolio. They are subject to due diligence, foreign
exchange movements, confirmation of financing and regulatory
approval. They cannot be directly compared with Stafford's all-cash
offer for 100 per cent. of the portfolio in a single transaction.
Stafford's all-cash offer of US$0.49 per Phaunos Share provides
Phaunos Shareholders with certainty of value and payment within an
expected timeframe of less than 3 months from today.
2. Phaunos Board's Updated Valuation Expectations
Stafford notes the changes to the Phaunos Board's views on value
since the release of the Company's 2017 Final Results on 30 April
2018:
30 April 2018 14 August 2018
"Breakup NAV" US$0.51 US$0.51
------------------ ------------------
"Updated Asset US$0.45 - US$0.57 US$0.54 - US$0.60
Realisation Range"(1)
------------------ ------------------
The Break-Up NAV of US$0.51 per Phaunos Share represents the Net
Asset Value calculated on a "break-up" basis, as presented by the
Phaunos Board. It takes into account discounts applied to asset
values where assets will be sold before their commercial or
biological maturity, alongside provisions for matters such as tax
on repatriation of asset disposals, and certain costs for
completion of the liquidation process(2) . The unaudited pro-forma
Break-Up NAV, as presented by the Phaunos Board on 14 August 2018,
is comparable to the audited Break-Up NAV of US$0.51 per Phaunos
Share as at 31 December 2017.
The Break-Up NAV of US$0.51 per Phaunos Share does not take into
account the time value of money, nor the fees and expenses of
approximately GBP2,985,000 - GBP3,590,000 associated with advisory
and legal costs in responding to Stafford's Offer.
The Updated Asset Realisation Range is based on non-binding,
conditional bids which remain subject to due diligence. For these
reasons Stafford does not consider that these ranges can be
compared with Stafford's Offer.
As stated in the Defence Document on Page 19, "... the
assumptions applied by Phaunos in developing this range of possible
realisation values may change and, as such, it is possible that the
ultimate realisation value of the portfolio could fall outside of
the range set out above."
Accordingly, there can be no certainty for Phaunos Shareholders
that the Phaunos Board will over time achieve a return within, or
even close to, its Updated Asset Realisation Range.
3. Phaunos Board's Updated Timing Expectations
Stafford also notes the changes to the Phaunos Board's views on
timing since the release of the Company's 2017 Final Results on 30
April 2018:
30 April 2018 14 August 2018
Timing for
completion 14 to 20 months from end 6 to 9 months(4)
of the Asset April 2018(3)
Realisation
Process
June 2019 to December 2019 February 2019 to
May 2019
----------------------------- -----------------------
Wind-down Q1 2020 and perhaps beyond Q2 2020 with a proviso
of Company that this may not
be completed
----------------------------- -----------------------
The Phaunos Board have provided no supporting information for
the reduction in the timeframe of Asset Realisation Process. They
state that they expect OIO approval to be provided within 3 to 6
months despite the OIO providing information that the average
timeframe for decisions on applications associated with sensitive
land is 132 working days (i.e. approximately 6 months). This is
consistent with Stafford's experience that OIO applications on
complex transactions typically take at least nine months to
process, noting that the OIO does not give priority to individual
applications except in exceptional circumstances, for example, to
accommodate other statutory timeframes(5) . As noted in the Offer
Document, the OIO has informed Stafford that it intends to process
its application in relation to the Offer on an urgent basis.
The Company estimates that the due diligence process, which is
stated to focus on legal, accounting, tax, forestry and other
commercial matters, will take between 60 - 120 days, although no
starting date for due diligence is given. Stafford believes that
interested parties may only be prepared to incur the substantial
costs of due diligence if the Offer from Stafford lapses or is
withdrawn. This could mean that due diligence may only commence in
early October 2018.
Given the above, Stafford considers that the Phaunos Board's
updated timing for the Asset Realisation Process, and by
implication the distribution of sale proceeds, is highly optimistic
and possibly misleading, and would encourage all Phaunos
Shareholders to compare the certainty of the Offer against the
limited assurances presented by the Phaunos Board in relation to
the Asset Realisation Process.
In light of the above, Stafford firmly believes that the Offer
represents an excellent opportunity for Phaunos Shareholders to
realise in cash, their full investment within an expected timeframe
of less than 3 months from today, and accordingly encourages all
Phaunos Shareholders to accept the Offer by taking the action set
out below.
ACCEPTANCES OF THE OFFER MUST BE RECEIVED
BY 1.00 P.M. (LONDON TIME) ON 21 AUGUST 2018
Action to be taken
If you hold your Phaunos Shares, or any of them, in certificated
form (that is, not in CREST), to accept the Offer, you should
complete, sign and return the Form of Acceptance along with your
share certificate(s) and/or any other appropriate documents of
title by post to Computershare as soon as possible but, in any
event, by no later than 1.00 p.m. (London time) on 21 August
2018.
If you hold your Phaunos Shares, or any of them, in
uncertificated form (that is, in CREST), you should follow the
procedure for Electronic Acceptance through CREST so that the
relevant TTE instruction settles as soon as possible but, in any
event, by no later than 1.00 p.m. (London time) on 21 August
2018.
Further details on the procedures for acceptance of the Offer
are set out in the Offer Document.
If you have any questions about the Offer Document or are in any
doubt as to how to complete the Form of Acceptance (if you hold
Phaunos Shares in certificated form), or if you want to request a
hard copy of the Offer Document (and/or any information
incorporated into it by reference from another source), please
contact the Receiving Agent, Computershare, on 0370 707 1011 (from
within the UK) or on +44 370 707 1011 (if calling from outside the
UK). Lines are open from 8.30 a.m. to 5.00 p.m. (London time)
Monday to Friday (excluding UK public holidays). Calls may be
recorded and randomly monitored for security and training purposes.
The helpline cannot provide advice on the merits of the Offer nor
give any financial, legal or tax advice.
Yours faithfully
Stephen Addicott
Director
Mahogany Bidco Limited
Enquiries:
Stafford +44 (0) 20 7535 4915
Stephen Addicott
Lancea LLP (Financial Adviser to Stafford and Stafford Bidco) +44 (0) 20 3301 8000
Peter Thickett
Important notice
Lancea LLP, which is authorised and regulated by the Financial
Conduct Authority in the United Kingdom, is acting exclusively for
Stafford and Stafford Bidco and for no one else in connection with
the Offer and will not be responsible to anyone other than Stafford
and Stafford Bidco for providing the protections afforded to its
clients or for providing advice in connection with the Offer.
This announcement is for information purposes only and is not
intended to and does not constitute, or form part of, an offer,
invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of any
securities, or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Offer or otherwise, nor shall there
be any sale, issuance or transfer of securities of Phaunos in any
jurisdiction in contravention of applicable law. The Offer is being
made solely by means of the Offer Document and, in respect of
Phaunos Shares held in certificated form, the Form of Acceptance,
which contains the full terms and conditions of the Offer,
including details of how to accept the Offer. Any approval,
decision or other response to the Offer should be made only on the
basis of the information in the Offer Document and, in respect of
Phaunos Shares held in certificated form, the Form of Acceptance.
Phaunos Shareholders are strongly advised to read the formal
documentation in relation to the Offer and to consult their
independent professional adviser immediately regarding any
applicable tax consequences of the Offer.
Cautionary notes regarding forward-looking statements
This announcement, oral statements made regarding the Offer, and
other information published by Stafford contain statements which
are, or may be deemed to be, "forward-looking statements".
Forward-looking statements are prospective in nature and are not
based on historical facts, but rather on current expectations and
projections of the management of Stafford about future events, and
are therefore subject to risks and uncertainties which could cause
actual results to differ materially from the future results
expressed or implied by the forward-looking statements.
The forward-looking statements contained in this announcement
include, among others, statements relating to the potential
exposure of Phaunos to market risks and statements expressing
management's expectations, beliefs, estimates, forecasts,
projections and assumptions.
Although Stafford believes that the expectations reflected in
such forward-looking statements are reasonable, Stafford can give
no assurance that such expectations will prove to be correct. By
their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking
statements. Such forward-looking statements should therefore be
construed in the light of such factors. All forward-looking
statements contained in this announcement are expressly qualified
in their entirety by the cautionary notes contained or referred to
in this section, and you are cautioned not to place undue reliance
on these forward-looking statements.
Neither Stafford nor any of its associates or directors,
officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in
any forward-looking statements in this announcement will actually
occur.
Other than in accordance with their legal or regulatory
obligations, Stafford is under no obligation, and Stafford
expressly disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
No statement in this announcement is intended as a profit
forecast or profit estimate.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the
extent that these details have previously been disclosed under Rule
8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing
Disclosure.
Rule 26 disclosure
In accordance with Rule 26 of the Code, a copy of this
announcement will be available at www.staffordcp.com by no later
than 12 noon (London time) on 17 August 2018.
The content of the website referred to in this announcement is
not incorporated into and does not form part of this
announcement.
Availability of hard copies
You may request a hard copy of this announcement by contacting
the Receiving Agent, Computershare, on 0370 707 1011 (from within
the UK) or on +44 370 707 1011 (if calling from outside the UK).
You may also request that all future documents, announcements and
information to be sent to you in relation to the Offer should be in
hard copy form. A hard copy of this announcement will not be sent
to you unless so requested.
Copies of this announcement, the Offer Document and any other
document relating to the Offer may not be mailed, distributed,
forwarded or otherwise transmitted or made available in, into or
from any jurisdiction where this would violate applicable law
(including by custodians, nominees and trustees).
Information relating to Phaunos Shareholders
Please be aware that addresses, electronic addresses and certain
information provided by Phaunos Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Phaunos may be provided to Stafford Bidco
during the Offer Period as required under Section 4 of Appendix 4
of the Code as required to comply with Rule 2.11(c) of the
Code.
(1) On a going-concern basis
2 2017 Final Results
3 Page 25, 2017 Final Results
4 Assumed to commence from the date of Phaunos Board Defence
document (14 August 2018)
5https://www.linz.govt.nz/overseas-investment/applying-for-consent-purchase-new-zealand-assets/how-oio-assesses-your-application/assessment-timeframes
This information is provided by RNS, the news service of the
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Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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