TIDMQYM
RNS Number : 1677J
Quayle Munro Holdings PLC
12 July 2013
FOR IMMEDIATE RELEASE
The distribution of this Announcement in jurisdictions other
than the United Kingdom may be restricted by the laws of those
jurisdictions and therefore persons into whose possession this
announcement comes should inform themselves about, and observe, any
such restrictions. In particular, subject to certain exceptions,
this Announcement may not be distributed into or within the United
States, Canada, Australia, Japan, the Republic of Ireland, South
Africa or any other Restricted Jurisdiction. Any failure to comply
with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction.
12 July 2013
Quayle Munro Holdings PLC ("Quayle Munro" or the "Company")
Proposed Corporate Transactions
The Board of Quayle Munro announces that it will today post a
circular (the "Circular") to Shareholders convening a General
Meeting at 9.00 a.m. on 1 August 2013 to seek shareholder approval
to:
Cancel the admission of the Ordinary Shares to trading on
AIM
Re-register as a private limited company
Make a tender offer to purchase Ordinary Shares
Grant loans to Directors
Complete a Share Capital Reorganisation
Adopt New Articles of Association
Adopt a New Incentive Plan
All of the Proposals above are inter-conditional and in the
event that Shareholders fail to approve any of the Resolutions by
the requisite majority, none of the Proposals will be
implemented.
If the Resolution to approve the Cancellation is passed at the
General Meeting, it is proposed that Cancellation will take effect
at 8.00 a.m. on 14 August 2013.
1. Introduction
The Company today announces its intention to apply for the
cancellation of the admission to trading of the Company's Ordinary
Shares on AIM in conjunction with the making of the Tender Offer by
N+1 Singer to Qualifying Shareholders to purchase their Ordinary
Shares and the adoption of new management incentivisation
arrangements. This Announcement sets out the background to, and
reasons for, the Proposals, an explanation of why your Board
believes the Proposals to be in the best interests of Shareholders
as a whole and its recommendation to Shareholders to vote in favour
of the Proposals.
The implementation of the Proposals requires the approval of
Shareholders and a Notice of General Meeting accompanies the
Circular which convenes a General Meeting to be held at the offices
of the Company at 22 Berners Street London W1T 3LP on 1 August 2013
at 9.00 a.m. in order to propose the Resolutions to approve:
-- the Cancellation;
-- the Re-registration;
-- the purchase of Ordinary Shares pursuant to the Tender Offer
at a fixed price of 563 pence per Ordinary Share;
-- the grant of loans to two directors of the Company in
connection with the New Incentive Plan;
-- the adoption of the New Articles (in order to reflect the
proposed implementation of the New Incentive Plan);
-- the Share Capital Reorganisation required to effect the terms
of the New Incentive Plan; and
-- the grant to the Directors of authority to allot shares in
the capital of the Company on an ongoing basis.
Shareholders should note that the Resolutions required to effect
the Proposals are all inter-conditional and, in the event that
Shareholders fail to approve any of the Resolutions by the
requisite majority, none of the Proposals will be implemented. The
full text of the Resolutions is set out in the Notice of General
Meeting contained at the end of the Circular.
2. Background to and reasons for the Proposals
Quayle Munro was founded in 1980, obtained a full listing on the
Official List of the London Stock Exchange in 1993 and transferred
to AIM in 2003. It has approximately 400 Shareholders,
overwhelmingly private investors, of whom 303 Shareholders own
3,000 Ordinary Shares or less. There are no recognised
institutional shareholders and there is little liquidity in the
Company's Ordinary Shares, with market makers quoting prices in
units of only 100 Ordinary Shares. The average number of trades per
day over the 12 months prior to 10 July 2013, being the latest
practicable date prior to the date of this Announcement, was 0.5
and the average number of Ordinary Shares traded per month over the
12 months prior to 10 July 2013, being the latest practicable date
prior to the date of this Announcement, was approximately 9,000,
representing 0.20% of the issued share capital of the Company.
Furthermore, the costs of maintaining the admission to AIM are
estimated to be GBP140,000 annually without taking into account the
significant amount of additional Board and senior management time
taken up with publicly quoted company matters including the
production of lengthy interim and annual reports.
Moreover, as signalled in the half-year report for the period
ended 31st December 2012, the Company is proposing to introduce a
new and more transparent cash bonus and share scheme to be effected
by the implementation of the New Incentive Plan (as summarised in
paragraph 10 below) which will involve senior management purchasing
shares in the business. Given the need to create separate share
classes: first, to preserve entitlement to the whole of the Morris
investment attributable to the Ordinary Shares (as described below)
and, secondly, to apply employment restrictions on the C Shares to
be purchased by participants in the New Incentive Plan, the Board,
after taking professional advice, believes it is not practicable to
introduce the New Incentive Plan within a publicly quoted
entity.
After lengthy deliberation and discussion with the Company's
professional advisers, the Directors have therefore decided that
the Company should cancel the admission of the Ordinary Shares to
trading on AIM because the lack of liquidity, additional costs and
substantial management time involved in maintaining a quotation,
coupled with the need to introduce the New Incentive Plan, far
outweigh the benefits to Shareholders of maintaining a quotation on
AIM.
However, the Board recognises that not all Shareholders,
especially smaller Shareholders, are likely to wish to own Ordinary
Shares in an unquoted company with no externally validated trading
mechanism and that the register includes a large number of very
small holdings of a size which it is uneconomic to trade because of
the associated dealing costs. Accordingly, the Directors have
arranged the Tender Offer, to be made by N+1 Singer, to provide a
guaranteed liquidity event for those Shareholders who do not wish
to continue to own Ordinary Shares in the Company following the
Cancellation.
The Board also recognises that many of the prospective
participants in the New Incentive Plan have had no involvement in
the development of value creation within the Company as it stands
today; and that a large store of potential future value is vested
within the Company's minority investment in Morris, the
housebuilder, which it has held since 1990. Accordingly, one
feature of the proposed Share Capital Reorganisation is that the
entitlement to participate in any future realisation of value in
relation to Morris (the "Morris Entitlement") will be ring-fenced
by the creation of a new class of shares, entitlement to which will
accrue only to those holders of existing Ordinary Shares at the
Record Date.
3. Cancellation of admission of Ordinary Shares to trading on AIM
Conditional on the passing of the Resolutions, the Directors
intend, having given in this announcement the requisite 20 Business
Days' notice, to cancel the admission of the Ordinary Shares to
trading on AIM. In accordance with the AIM Rules, the Cancellation
is conditional upon the consent of not less than 75 per cent. of
votes cast by Shareholders at the General Meeting. Such consent
will be sought through Resolution 5 which is being proposed at the
General Meeting and which is, in turn, inter-conditional upon the
passing of the other Resolutions. Assuming the Resolutions are all
passed, Cancellation is expected to become effective on 14 August
2013. As explained above, before effecting the Cancellation, the
Directors consider it appropriate to offer all Qualifying
Shareholders the opportunity to sell some, or all, of the Ordinary
Shares held by them for cash to the Company at a fixed price of 563
pence per Ordinary Share pursuant to the Tender Offer (further
details of which are set out in paragraph 5 of this
Announcement).
The principal effects that Cancellation will have on
Shareholders are:
-- there will no longer be a formal market mechanism enabling
Shareholders to trade their shares in the Company through the
market and the CREST facility will be cancelled. Shareholders who
currently hold Ordinary Shares in uncertificated form will receive
share certificates in due course following the Cancellation taking
effect. Share transfers may still be effected after the date of
cancellation by depositing a duly executed and stamped stock
transfer form together with an appropriate share certificate with
the company secretary at the registered office of the Company.
Shares in the Company will be capable of transfer, subject to
certain restrictions in the New Articles preventing their transfer
in certain circumstances which are described in paragraph 6
(below). Shares in the Company may also be more difficult to sell
compared to shares of companies quoted on AIM;
-- the Company will not be bound to announce material events on an ongoing basis;
-- the Company will no longer be required to comply with any of
the corporate governance requirements applicable to UK-quoted
companies;
-- the Company will no longer be subject to the Disclosure and
Transparency Rules and, among other things, will no longer be
required to disclose major shareholdings in the Company;
-- the Company will no longer be subject to the AIM Rules.
Shareholders will therefore no longer be afforded the protections
given by the AIM Rules. Such protections include the requirement to
be notified of certain events including, amongst other things,
substantial transactions (the size of which results in a 10 per
cent. threshold being reached under any one of the class tests),
related party transactions and the requirement to obtain
shareholder approval for reverse takeovers (the size of which
results in a 100 per cent. threshold being reached under any one of
the class tests) and fundamental changes in the Company's business;
and
-- the Proposals might have either positive or negative taxation
consequences for Shareholders. Shareholders who are in any doubt
about their tax position should consult their own professional
independent adviser immediately.
However, Shareholders should note, inter alia, that, if the
Cancellation takes effect:
-- the Company will remain subject to UK company law, which
mandates shareholder approval for certain matters, including the
issue of new shares on a non pre-emptive basis, subject to the New
Articles which permit the issue of shares on a non pre-emptive
basis in certain cases;
-- the Company will continue to communicate information about
the Company (including annual accounts) to its Shareholders, as
required by law;
-- an annual Share Dealing Market will be operated for
Shareholders, providing the opportunity for Shareholders to acquire
shares or to tender shares for sale at a valuation price determined
by the Company's auditors or an independent valuer; and
-- the Board intends to maintain the same oversight and
corporate governance standards as if the Company were to remain a
listed company. In particular, the Board will continue in its
present form with four independent Non-Executive Directors and an
independent Chairman, together with four Board Committees:
Nomination, Audit, Remuneration and Valuation. The Company will
also publicise and send out to shareholders an Annual Report
(including a full Remuneration Report) with the audited accounts
and hold two shareholder briefings each year, one in London
(alongside the Company's annual general meeting) and one in
Edinburgh.
Shareholders should be aware that, if the Cancellation takes
effect, they will at that time cease to hold shares in a quoted
company and the matters set out in the paragraph above will
automatically apply to the Company from the date of
Cancellation.
4. Re-registration as a private limited company
The Directors also propose that, conditional upon the passing of
the Resolutions and the Cancellation becoming effective, the
Company be re-registered as a private limited company. This will
reduce the costs and complexity of operating the Company and, in
particular, would be permitted, subject to shareholder approval, to
effect returns of capital to Shareholders without the need to apply
to a court of law.
The Takeover Code is issued and administered by the Takeover
Panel. The Takeover Code currently applies to the Company and will
continue to apply to the Company notwithstanding the Cancellation.
If the Company is successfully re-registered as a private company,
the Takeover Code will cease to apply to the Company on the expiry
of the 10 year period from the date of the Cancellation or, if
earlier, the date on which the Company is dissolved.
The Takeover Code and the Takeover Panel operate principally to
ensure that shareholders are treated fairly and are not denied an
opportunity to decide on the merits of a takeover and that
shareholders of the same class are afforded equivalent treatment by
an offeror. The Takeover Code also provides an orderly framework
within which takeovers are conducted. In addition, it is designed
to promote, in conjunction with other regulatory regimes, the
integrity of the financial markets.
The Takeover Code is based upon a number of General Principles
which are essentially statements of standards of commercial
behaviour. General Principle One states that all holders of
securities of an offeree company of the same class must be afforded
equivalent treatment and if a person acquires control of a company,
the other holders of securities must be protected. This is
reinforced by Rule 9 of the Takeover Code which requires a person,
together with persons acting in concert with him, who acquires
shares carrying voting rights which amount to 30 per cent. or more
of the voting rights to make a general offer. A general offer will
also be required where a person who, together with persons acting
in concert with him, holds not less than 30 per cent. but not more
than 50 per cent. of the voting rights, acquires additional shares
which increase his percentage of the voting rights. Unless the
Takeover Panel consents, the offer must be made to all other
shareholders, be in cash (or have a cash alternative) and cannot be
conditional on anything other than the securing of acceptances
which will result in the offeror and persons acting in concert with
him holding shares carrying more than 50 per cent. of the voting
rights.
Shareholders should note that, if the Cancellation and the
Re-registration become effective, they will not receive the benefit
of the protections afforded by the Takeover Code after the expiry
of 10 years from the date of the Cancellation (assuming the Company
is still in existence).
5. Tender Offer
Summary of Tender Offer
As explained above, N+1 Singer has agreed to provide Qualifying
Shareholders with the opportunity to sell their Ordinary Shares
which N+1 Singer will purchase, as principal, pursuant to the
Tender Offer. The Company has agreed that, upon receipt of written
notice from N+1 Singer, it shall repurchase the Ordinary Shares
acquired by N+1 Singer pursuant to the Tender Offer and any
Ordinary Shares so purchased shall be taken into treasury and may
be allocated to existing or future staff at the discretion of the
Board. The Tender Offer is subject to the conditions set out in the
Repurchase Agreement being fulfilled.
N+1 Singer has agreed to accept all valid tenders made by
Qualifying Shareholders. Each Qualifying Shareholder who, as at the
Record Date, holds a number of Ordinary Shares equal to or less
than the Basic Entitlement must tender either all or none of such
Ordinary Shares in order for such tenders to be valid. Each
Qualifying Shareholder who holds more than the Basic Entitlement
will be entitled to tender their Basic Entitlement and any number
of Ordinary Shares in excess of this and any such valid tenders
will be accepted in full. Shareholders holding more than the Basic
Entitlement should note that they cannot tender less than their
Basic Entitlement.
Shareholders should note that there is no obligation for
Qualifying Shareholders to sell any of their Ordinary Shares.
However, they should be aware that, following the Cancellation, the
dealing opportunities offered pursuant to the Share Dealing Market
will be more limited than if the Company retained its quoted
status.
A letter from N+1 Singer containing further details relating to
the Tender Offer and the terms and conditions of the Tender Offer
is set out in Parts III and IV of the Circular (respectively).
Under the terms of the Tender Offer, the price to be paid for each
Ordinary Share subject to the Tender Offer is 563 pence.
Summary of Repurchase Agreement
On 12 July 2013, the Company entered into the Repurchase
Agreement with N+1 Singer. Under the terms of the Repurchase
Agreement the parties have agreed that, subject to:
(a) the Tender Offer becoming unconditional in all respects and
not lapsing or terminating in accordance with its terms; and
(b) an amount equal to the Tender Price multiplied by the
maximum number of Ordinary Shares capable of being tendered, plus a
fee payable to N+1 Singer, and any costs associated with the Tender
Offer being paid by the Company,
N+1 Singer shall purchase on-market at the Tender Price, the
Ordinary Shares successfully tendered. The Company has agreed that,
upon receipt of written notice from N+1 Singer, it shall repurchase
the Ordinary Shares acquired by N+1 Singer pursuant to the Tender
Offer.
6. New Articles of Association
Subject to the passing of the Resolutions, it will be necessary
to adopt new Articles of Association more in keeping with the
Company's new unquoted status and to incorporate changes necessary
to reflect the implementation of the New Incentive Plan. A summary
of the New Articles is set out in Part V of the Circular.
7. Share Dealing
Following the Cancellation, Shareholders, including directors
and employees of the Company (and certain persons with whom they
are connected), will be subject to certain transfer restrictions in
relation to the A Shares, B Shares and C Shares that they hold,
which will prevent them from trading freely in shares without the
Board's consent. Shareholders who are not connected with directors
and employees will continue to be entitled to transfer their shares
freely subject to the requirement that they do not transfer shares
to a person associated with the Company's competitors and that they
may not make transfers that would (i) give rise to a change of
control notification to the FCA or (ii) result in them (whether
individually or together with any person acting in concert with
them) being entitled to exercise more than 29.9% of the voting
rights in the Company (unless pursuant to a drag along).
In order to provide additional liquidity for Shareholders
following the Cancellation, the Company will procure the operation
of an annual Share Dealing Market. Subject to the restrictions on
participants in the New Incentive Plan described in paragraph 10
below, all Shareholders will be entitled to participate in the
Share Dealing Market. Transfers pursuant to the Share Dealing
Market shall take place at the prevailing "market value" of the
shares determined by the Company's auditors (or an alternative
independent valuer appointed by the Company) shortly prior to each
annual dealing day. The rules governing the Share Dealing Market
are contained in Schedule 1 to the New Articles.
8. Effect of the Proposals on the Existing Incentive Plans
Options and awards granted under the Existing Incentive Plans
are over Ordinary Shares (together, the "Existing Awards"). As a
consequence of the Share Capital Reorganisation, Ordinary Shares
will cease to exist, as they will be subdivided into A Shares and B
Shares. Consequently, each Existing Award will be amended or varied
(as applicable) where practicable under the rules of the Existing
Incentive Plans such that, following the Share Capital
Reorganisation:
(a) for each Ordinary Share previously subject to the Existing
Award, the varied or amended Existing Award will be over one A
Share and one B Share; and
(b) the aggregate exercise price in relation to an Existing
Award (if any) will remain the same (following its variation or
amendment) as was the case immediately prior to the Share Capital
Reorganisation, with the exercise price per A Share and B Share
adjusted accordingly.
Any other conditions relating to the Existing Awards will remain
unchanged (e.g. vesting periods and conditions). The auditors (or
other independent advisers) will be requested to confirm that the
terms on which the Existing Awards will be varied or amended (as
summarised above) will be, in their opinion, fair and
reasonable.
The Proposals will have a further impact on awards made under
the Quayle Munro Holdings PLC Executive Share Option Scheme 1993.
This plan has been approved by HMRC and the exercise of Existing
Awards under this plan would be subject to favourable tax
treatment, provided certain statutory conditions were satisfied.
The Share Capital Reorganisation will cause these statutory
conditions to cease to be satisfied, and therefore the exercise of
Existing Awards under the Quayle Munro Holdings PLC Executive Share
Option Scheme 1993 will not benefit from the intended favourable
tax treatment. It is not intended that holders of Existing Awards
under the Quayle Munro Holdings PLC Executive Share Option Scheme
1993 will be compensated for the loss of the favourable tax
treatment.
Where it is impracticable to amend or vary Existing Awards,
replacement awards will be granted on the following terms:
-- the grant of replacement awards will be conditional on the
cancellation of Existing Awards;
-- the number of A Shares and B Shares subject to replacement
awards relative to the number of Ordinary Shares subject to
Existing Awards will be determined in accordance with the terms of
the Share Capital Reorganisation;
-- equivalent performance conditions will apply to the
replacement awards, which (in the reasonable opinion of the
Remuneration Committee of the Company) are not materially more
difficult or easier to satisfy than the performance conditions
attaching to the relevant Existing Award;
-- replacement awards (for the purpose of performance periods or
vesting periods) will be treated as being granted on the same date
and with the same life as the relevant Existing Award; and
-- replacement awards will otherwise be on substantially the
same terms as the relevant Existing Awards, amended only as
necessary to reflect the Proposals.
9. Share Capital Reorganisation
In order to adopt and implement the terms of the New Incentive
Plan and to embed the rights of the existing Ordinary Shares to the
Morris Entitlement it will be necessary to carry out the Share
Capital Reorganisation to create the necessary classes of shares:
(i) to be issued to participants pursuant to the New Incentive
Plan; and (ii) to convert the Existing Ordinary Shares into A
Shares and B Shares reflecting the Morris Entitlement.
It is proposed that, pursuant to the Share Capital
Reorganisation, each Existing Ordinary Share of GBP0.10 each in
issue immediately following the Cancellation becoming effective
will be sub-divided into one A Share of GBP0.05 and one B Share of
GBP0.05 (each having the rights attached to them set out in the New
Articles).
The holders of new B Shares will be entitled to receive
distributions from the Company in respect of all income and capital
proceeds received by the Group which relate to the Group's holding
of shares and subordinated loan stock in Morris. The new A Shares
will be entitled to receive distributions from the Company funded
by the Company's business other than its investment in Morris. The
A Shares will be voting shares and the B Shares will be non-voting.
The A Shares and B Shares will be "stapled" and must be transferred
together in equal proportions.
C Shares will be issued to participants in the New Incentive
Plan. They will have identical economic and voting rights to the A
Shares, sharing in distributions of the Company's profits other
than those that result from Morris. The C Shares will be subject to
certain restrictions on their transfer and compulsory transfer
provisions while they are held by New Incentive Plan
participants.
The rights of the A Shares, B Shares and C Shares are set out in
the New Articles, the key features of which are summarised in Part
V of the Circular.
Following completion of the Share Capital Reorganisation, share
certificates relating to the Existing Ordinary Shares will cease to
be valid and the Company shall issue share certificates to
Shareholders reflecting their entitlements to the A Shares and the
B Shares.
10. New Incentive Plan
As described in the interim statement for the period ended 31
December 2012 and at subsequent presentations to Shareholders in
London and Edinburgh in March this year, your Board has an almost
entirely new group of independent Non-Executive Directors, all of
whom have relevant experience in building successful advisory
businesses and in making principal investments.
Working with the Chief Executive and the senior management team,
the Directors have agreed a new strategy to grow the advisory
business over the next few years by hiring established corporate
finance professionals with strong franchises: first, in media and
technology (in which we have an excellent established position)
and, secondly, in other sectors which display similar
characteristics. We have also decided to align our investment
strategy with our advisory focus, namely to invest our non-core
cash resources in unlisted, high growth businesses which operate in
sectors where we have a strong advisory position and where we have
a good relationship with the management of investee companies. In
this way, we expect to broaden and grow our business substantially
over the coming years.
In order to achieve these demanding targets, the Board considers
that it is essential to put in place a simple, straightforward and
transparent incentive scheme for our staff but which is also fair
to Shareholders. Your Board is very mindful of the importance of
striking a fair balance between staff and Shareholders, especially
as together the Directors' shareholdings, together with the
holdings of persons connected or associated with them or members of
their family amount to 20.75 per cent. of the issued share capital
of the Company. The Directors are therefore proposing the
following:
Summary of the terms of the New Incentive Plan
The New Incentive Plan will comprise the issue of up to
1,955,000 new C Shares (equivalent to approximately 30 per cent. of
the share capital of the Company excluding the B Shares) to members
of the existing senior management team and to newly hired corporate
finance professionals which the Company intends to attract. The
allocation of C Shares among such senior employees will be
determined by the Remuneration Committee.
The C Shares will be subject to compulsory acquisition
provisions which will allow the Board to direct that any New
Incentive Plan participant transfers their C Shares to another
person if the New Incentive Plan participant ceases to be a
director or employee of the Group. The C Shares will also be
subject to transfer restrictions which will require New Incentive
Plan participants (or certain permitted transferees) to retain
ownership of the shares for a minimum of 5 years.
The C Shares will be issued at their market value, up to 75% of
which may be funded by a loan which will be made available by the
Company to each senior employee in respect of the subscription
price. The loans will be repayable in equal instalments over five
years and shall bear interest at the HMRC official interest rate
(currently 4% per annum).
Members of the senior management team who do not wish to acquire
C Shares, by taking advantage of a loan from the Company, will be
encouraged to acquire A Shares and B Shares, issued from treasury
following the Tender Offer or through the Share Dealing Market.
Such A Shares and B Shares shall not be subject to any additional
restrictions when owned by senior employees over and above those
set out in the New Articles and affecting all shareholders
equally.
The rights attaching to the C Shares are set out in more detail
in the summary of the New Articles set out in Part V of the
Circular.
11. Loans to Directors
It is proposed that Andrew Adams and Simon Woolton, who are both
executive directors of the Company, will be eligible to receive
loans on the terms set out in paragraph 10 above to fund their
participation in the New Incentive Plan. Loans to directors of the
Company require the approval of Shareholders pursuant to section
197(3) of the 2006 Act. It is proposed that the maximum loan to be
made to each of Andrew Adams and Simon Woolton will be GBP550,000
and GBP150,000 respectively. Accordingly, Resolution 2 has been
proposed at the General Meeting to enable the Company to grant such
loans. In accordance with section 197(3) of the 2006 Act, a
memorandum of the terms of the loans will be available for
inspection at the Company's registered office from the date of the
Circular until the date of the General Meeting and will also be
available for inspection at the General Meeting.
12. Additional Information
Current Trading
The advisory business closed the year to 30th June 2013 with
revenues in line with the budget of GBP10.2 million (last year:
GBP5.3 million), which vindicates the Board's optimism about the
outlook at the time of our interim results statement in March
2013.
While the results for the Group are still subject to audit and
will include the costs and expenses associated with the Share
Capital Reorganisation, Tender Offer and Cancellation, the Board is
confident that the year as a whole will be profitable after payment
of accrued bonuses. On this basis, the Board expects that the
Company will declare a final dividend of 22.0p per share, making a
total of 33.0p per share for the year. The dividend will be payable
to registered shareholders on or around the provisional record date
of 25 October 2013.
Update on Morris
The Company holds a 22.96 per cent. stake in Morris which
represents its largest investment, having been valued at GBP5.5
million in the Company's accounts as at 31 December 2012. As noted
in the Company's Annual Report and Accounts for the financial year
ended 30 June 2012, this valuation was based on discounting the net
tangible assets of Morris by 44%, recognising the level of gearing
within Morris as well as its status as a private company and the
Company's position as a minority shareholder. The Company also
holds GBP4.2 million of loan stock in Morris, which the Directors
believe will continue to be fair valued at par, and which together
with its 22.96 per cent. stake in Morris is therefore equivalent to
212 pence per Ordinary share on a fully diluted basis.
On 28 June 2013, Morris completed a refinancing of its existing
debt facilities with a GBP185 million loan provided by affiliates
of GSO Capital Partners LP. As part of this refinancing, Morris
bought back a minority stake in the Group (none of which was held
by Quayle Munro) at a price which implied an equity value for the
whole of Morris of approximately GBP48 million. However, it is
likely that the Company's investment in Morris will continue to be
accounted for using a discount to net tangible assets.
Although UK quoted housebuilders on average currently trade at a
substantial premium to tangible net assets, not only are most of
these companies of significantly larger scale than Morris, but
their valuations have historically also been highly volatile
(trading below historical tangible net assets as recently as
January 2012). By way of illustration, the impact on the Company's
net assets of a 10% change in Morris' valuation would be 21 pence
per Ordinary Share on a fully diluted basis.
The Company has indicated to the board of Morris that it remains
fully committed to retaining its shareholding in Morris for the
foreseeable future. It is emphasised that there can be no certainty
as to the value that the Company would obtain should it look to
realise its holding in Morris at any time in the future.
Grant of options
As set out in Christopher Kemball's service agreement signed on
14 November 2012 and, having satisfied the requirement to purchase
the relevant number of 192,436 Ordinary Shares, the Board has
agreed that Mr Kemball will be allocated 48,109 share options on 14
November 2013 being the first anniversary of his appointment. The
options would have an exercise price of 410p per share (being the
average mid-market closing share price for the 3 month period prior
to the date of his appointment). Subject to the Share Capital
Reorganisation occurring, Mr Kemball will instead be granted an
option to acquire one A Share and one B Share for every option he
would have otherwise received save that the exercise price will
remain the same (apportioned between each A Share and B Share as
appropriate). The options will be exercisable from 14 November 2013
to 13 November 2023.
13. General Meeting
A notice is set out at the end of the Circular convening the
General Meeting to be held at the offices of the Company at 22
Berners Street London W1T 3LP on 1 August 2013 at 9.00 a.m.
14. Action to be taken by Shareholders
General Meeting
Your vote is important. Whether or not Shareholders plan to
attend the General Meeting, they are encouraged to sign, date and
return the enclosed Form of Proxy in accordance with the
instructions contained therein so as to arrive at Capita Registrars
as soon as possible and, in any event, no later than 9.00 a.m. on
30 July 2013, by posting the Form of Proxy or delivering it by hand
(during normal business hours only) to Capita Registrars, PXS, The
Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. If
Shareholders hold their Ordinary Shares in uncertificated form
(i.e. in CREST), they may appoint a proxy by completing and
transmitting a CREST Proxy Instruction in accordance with the
procedures set out in the CREST Manual so that it is received by
the Registrar (under CREST participant RA10) by no later than 9.00
a.m. on 30 July 2013.
Tender Offer
If you are a Qualifying Shareholder and wish to participate in
the Tender Offer, you should follow the procedure for acceptance
set out in paragraph 2 of Part II of the Circular and the further
terms and conditions set out in paragraph 3 of Part III of the
Circular.
15. Irrevocable Undertakings
The Company has received irrevocable undertakings in respect of
holdings of Ordinary Shares representing 67.67 per cent. of the
entire issued Ordinary Shares of the Company: (i) to vote or
procure that Ordinary Shares held on their account are voted in
favour of the Resolutions and (ii) not to tender the Ordinary
Shares held by them or on their account under the Tender Offer. The
Company has however agreed that, in relation to the irrevocable
undertakings given by FE Special Investments Limited and ECF
Investments Limited, such Shareholders shall be permitted to sell
such number of Ordinary Shares as may be necessary to ensure that
the Euro-China Fund L.P. maintains an aggregate beneficial holding
of not less than 9.53 per cent. of the entire issued share capital
of the Company. Details of the irrevocable undertakings received
are as follows:
Name Ordinary Shares subject Percentage of issued share
to undertaking not capital
to participate in Tender
Offer(1)
-------------------------------- -------------------------- ---------------------------
Board Members and connected persons/Family Trusts
-----------------------------------------------------------------------------------------
Andrew Adams 86,659 1.90%
-------------------------------- -------------------------- ---------------------------
Anlyn Adams2 113,937 2.50%
-------------------------------- -------------------------- ---------------------------
Kleinwort Benson International
Trustees Limited,
as trustee of the
JPG Kemball Trust3 166,184 3.64%
-------------------------------- -------------------------- ---------------------------
Kleinwort Benson International
Trustees Limited,
as trustee of the
JPG Kemball 1991 Trust 26,250 0.58%
-------------------------------- -------------------------- ---------------------------
Carol Woolton4 20,417 0.45%
-------------------------------- -------------------------- ---------------------------
Peter Norris 180,446 3.96%
-------------------------------- -------------------------- ---------------------------
Peter Norris, as trustee
for the Norris Children's
Trust 62,292 1.37%
-------------------------------- -------------------------- ---------------------------
Peter Norris, as trustee
for the John Brown
Family Trust 45,787 1.00%
-------------------------------- -------------------------- ---------------------------
Ian McLean 14,583 0.32%
-------------------------------- -------------------------- ---------------------------
Lesley McLean5 1,000 0.02%
-------------------------------- -------------------------- ---------------------------
York Capital Limited6 229,079 5.02%
-------------------------------- -------------------------- ---------------------------
Employee Benefit Trusts
-----------------------------------------------------------------------------------------
RBC Cees Trustees
Limited, as trustee
for the Quayle Munro
Holdings PLC Employees'
Share Trust 205,721 4.51%
-------------------------------- -------------------------- ---------------------------
East of Scotland Investments
Limited 166,020 3.64%
-------------------------------- -------------------------- ---------------------------
Employees, senior management and connected persons
-----------------------------------------------------------------------------------------
Various 102,011 2.24%
-------------------------------- -------------------------- ---------------------------
Other parties
-----------------------------------------------------------------------------------------
Ian Jones 372,933 8.18%
-------------------------------- -------------------------- ---------------------------
Christine Jones 176,000 3.86%
-------------------------------- -------------------------- ---------------------------
Jo and Alison Elliot 497,058 10.90%
-------------------------------- -------------------------- ---------------------------
FE Special Investments
Limited 401,510 8.80%
-------------------------------- -------------------------- ---------------------------
ECF Investments Limited 33,333 0.73%
-------------------------------- -------------------------- ---------------------------
Anthony van Tulleken 146,863 3.22%
-------------------------------- -------------------------- ---------------------------
Kit van Tulleken 8,000 0.18%
-------------------------------- -------------------------- ---------------------------
Van Tulleken Foundation 8,121 0.18%
-------------------------------- -------------------------- ---------------------------
Christoffer van Tulleken 11,370 0.25%
-------------------------------- -------------------------- ---------------------------
Jonathan van Tulleken 11,370 0.25%
-------------------------------- -------------------------- ---------------------------
Total 3,086,944 67.67%
-------------------------------- -------------------------- ---------------------------
(1) Note: the number of Ordinary Shares referred to in this table includes shares held by the individuals referred to therein and/or corporate nominees holding Ordinary Shares on their account.
(2) Anlyn Adams is a connected person of Andrew Adams, a director of the Company. (3) The JPG Kemball Trust and the JPG Kemball 1991 Trust are family trusts associated with Christopher Kemball.
(4) Carol Woolton is a connected person of Simon Woolton, a director of the Company.
(5) Lesley McLean is a connected person of Ian McLean, a director of the Company. (6) York Capital Limited is an entity owned by a trust associated with the children of David Fitzsimons.
16. Overseas Shareholders
The Tender Offer is not available to Shareholders with an
address in the United States, Canada, Australia, Japan, the
Republic of Ireland, South Africa or any other Restricted
Jurisdiction. Overseas Shareholders should note that they should
satisfy themselves that they have fully observed any applicable
legal requirements under the laws of their relevant jurisdiction if
they tender Ordinary Shares in the Tender Offer.
The attention of Shareholders who are not resident in the United
Kingdom is drawn to the section headed "Overseas Shareholders" in
Part III of the Circular.
17. Taxation
The Board has been advised that the Cancellation and the
Re-registration should not have any direct effect on Shareholders'
current liabilities to income, capital gains and inheritance tax
under UK law. Nevertheless, Shareholders who are in any doubt as to
their tax position or who are subject to tax in a jurisdiction
other than the United Kingdom should consult their professional
adviser.
A general summary of the UK taxation implications of the Tender
Offer is set out in further detail in Part IV of the Circular.
18. Recommendations
It is the Directors' overriding objective to build a well
respected and market leading corporate finance house with a broad
range of specialist advisory skills, thereby significantly
increasing its professional revenue and profitability. This should
lead to growth of investment value and of shareholders' capital and
dividends.
After much careful thought and advice your new Board and senior
management firmly believe that the Proposals are essential to grow
a successful and high-quality advisory business for the benefit of
shareholders and staff.
The Directors believe that the Proposals are in the best
interests of Shareholders and the Directors, having been so advised
by N+1 Singer, consider the terms of the Proposals as a whole to be
fair and reasonable.
Similarly, the Directors believe that the cancellation of the
admission to trading of the Company's Ordinary Shares on AIM is in
the best interests of Shareholders as a whole.
The Directors therefore unanimously recommend that you vote in
favour of the Resolutions as they, and persons connected or
associated with them or members of their family, intend to do in
respect of their respective interests in 946,364 Ordinary Shares in
aggregate, representing approximately 20.75 per cent. of the
Ordinary Shares currently in issue. The Directors and persons
connected or associated with them, or members of their family have
also undertaken not to accept the Tender Offer in respect of their
respective interests in 946,364 Ordinary Shares in aggregate
representing approximately 20.75 per cent. of the Ordinary Shares
currently in issue.
The Directors and N+1 Singer make no recommendation to
Shareholders in relation to participation in the Tender Offer
itself. Whether or not Shareholders decide to tender all or any of
their Ordinary Shares will depend, among other things, on their
view of the Company's prospects and their own individual
circumstances, including their tax position. Shareholders are
recommended to consult their duly authorised independent advisers
and make their own decision.
Enquiries:
Quayle Munro
Christopher Kemball +44 (0) 77 6887 8529
Andrew Adams +44 (0) 20 7907 4200
Simon Woolton +44 (0) 20 7907 4200
N+1 Singer
Sandy Fraser
Jonny Franklin-Adams
Alex Wright +44 (0) 20 7496 3000
Smithfield
John Kiely +44 (0) 20 7360 4900
Important Information
N+1 Singer, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting as nominated
adviser, broker and financial adviser to the Company in connection
with the matters described in this announcement. Persons receiving
this Announcement should note that N+1 Singer will not be
responsible to anyone other than the Company for providing the
protections afforded to customers of N+1 Singer or for advising any
other person on the arrangements described in this Announcement.
N+1 Singer has not authorised the contents of, or any part of, this
Announcement and no liability whatsoever is accepted by N+1 Singer
for the accuracy of any information or opinions contained in this
Announcement or for the omission of any information. N+1 Singer, as
nominated adviser and broker to the Company, owes certain
responsibilities to the London Stock Exchange which are not owed to
the Company or the Directors.
Forward Looking Statements
This Announcement contains certain forward-looking statements
with respect to the financial condition, results of operations and
business of the Company and certain plans and objectives of the
Board. These forward-looking statements can be identified by the
fact that they do not relate only to historical or current facts.
Forward-looking statements often use words such as "anticipate",
"target", "expect", "estimate", "intend", "plan", "goal",
"believe", "will", "may", "should", "would", "could" or other words
of similar meaning. These statements are based on assumptions and
assessments made by the Board in light of their experience and
their perception of historical trends, current conditions, expected
future developments and other factors they believe appropriate. By
their nature, forward-looking statements involve risk and
uncertainty, and the factors described in the context of such
forward-looking statements in this Announcement could cause actual
results and developments to differ materially from those expressed
in or implied by such forward-looking statements.
Should one or more of these risks or uncertainties materialise,
or should underlying assumptions prove incorrect, actual results
may vary materially from those described in this Announcement. The
Company assumes no obligation to update or correct the information
contained in this Announcement, whether as a result of new
information, future events or otherwise, except to the extent
legally required.
The statements contained in this Announcement are made as at the
date of this Announcement, unless some other time is specified in
relation to them, and publication of this Announcement shall not
give rise to any implication that there has been no change in the
facts set out in this Announcement since such date. Nothing
contained in this Announcement shall be deemed to be a forecast,
projection or estimate of the future financial performance of the
Company except where expressly stated.
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context otherwise requires:
"2006 Act" the UK Companies Act 2006;
"A Shares" A ordinary shares of GBP0.05 each in the
capital of the Company created pursuant
to the Share Capital Reorganisation and
having the rights set out in the New Articles;
"AIM" AIM, a market operated by the London Stock
Exchange;
"AIM Rules" the AIM Rules for Companies published
by the London Stock Exchange from time
to time;
"B Shares" B ordinary shares of GBP0.05 each in the
capital of the Company created pursuant
to the Share Capital Reorganisation and
having the rights set out in the New Articles;
"Basic Entitlement" the basic entitlement of Qualifying Shareholders
to tender up to 2,500 Ordinary Shares
held by that Qualifying Shareholder which
will be accepted in full by N+1 Singer
subject to the terms and conditions set
out in Part III of the Circular;
"Board" the board of directors of the Company
as constituted from time to time;
"Business Day" any day other than a Saturday, Sunday
or bank holiday in the United Kingdom;
"C Shares" C ordinary shares of GBP0.05 each in the
capital of the Company having the rights
set out in the New Articles;
"certificated" or "in where a security is not held in uncertificated
certificated form" form (i.e. not in CREST);
"Capita Registrars" Capita Registrars, a trading name of Capita
Registrars Limited;
"Cancellation" the proposed cancellation of admission
of the Ordinary Shares to
trading on AIM;
"Circular" the Circular;
"Closing Date" 1:00 p.m. 2 August 2013;
"Company" Quayle Munro Holdings PLC;
"Conditions" the conditions to the Tender Offer set
out in Part III of the Circular;
"CTA 2010" the Corporation Tax Act 2010, as amended;
"CREST" the relevant system (as defined in the
CREST Regulations) in respect of which
Euroclear is the Operator (as defined
in the CREST Regulations);
"CREST Regulations" The Uncertificated Securities Regulations
2001 (SI2001/3755) as amended;
"Disclosure and Transparency the latest edition of the "Disclosure
Rules" and Transparency Rules" issued made by
the FCA under Part VI of FSMA;
"Euroclear" Euroclear UK and Ireland Limited, the
operator of CREST;
"Existing Incentive the Quayle Munro Holdings PLC Executive
Plans" Share Option Scheme 1993, the Quayle Munro
Holdings PLC 2008 Unapproved Share Option
Scheme and the Quayle Munro Holdings PLC
Joint Share Ownership Plan;
"Existing Ordinary Shares" the Ordinary Shares in the Company immediately
following completion of the Tender Offer;
"FCA" the Financial Conduct Authority of the
United Kingdom
"Form of Proxy" the form of proxy enclosed with the Circular
for use by Shareholders in connection
with the General Meeting;
"FSMA" the Financial Services and Markets Act
2000;
"General Meeting" the General Meeting of the Company convened
for 9.00 a.m. on 1 August 2013, notice
of which is set out at the end of the
Circular;
"HMRC" HM Revenue & Customs of the United Kingdom;
"ITA" Income Taxes Act 2007, as amended;
"London Stock Exchange" London Stock Exchange plc;
"Morris" Morris Group Limited;
"Morris Entitlement" As defined on paragraph 2 of Part I of
this announcement;
"N+1 Singer" Nplus1 Singer Advisory LLP, nominated
adviser and broker to the Company, and
any of its affiliates, trading as "N+1
Singer";
"New Articles" the new articles of association of the
Company to be adopted pursuant to Resolution
4 (a summary of which is set out at Part
V of the Circular);
"New Incentive Plan" the proposed new management incentive
plan to be adopted by the Company conditional
upon, and following, the Cancellation
(the terms of which are summarised at
paragraph 10 of Part I of the Circular);
"Notice" the notice of General Meeting set out
at the end of the Circular;
"Ordinary Shares" ordinary shares of GBP0.10 each in the
capital of the Company;
"Overseas Shareholder" a Shareholder whose address in the Company's
register of members is outside the UK;
"Proposals" the Tender Offer, the Cancellation, the
approval of loans to Directors, the Share
Capital Reorganisation, the Re-registration
and the adoption of New Articles and New
Incentive Plan;
"Qualifying Shareholders" Shareholders who are entitled to participate
in the Tender Offer, being shareholders
who hold Ordinary Shares at the Record
Date save for:
(i) Shareholders located in a Restricted
Jurisdiction; or
(ii) Shareholders who have irrevocably
undertaken not to accept the Tender Offer.
"Receiving Agent" Capita Registrars Limited;
"Record Date" 5.00 p.m. on 2 August 2013;
"Registrar" Capita Registrars Limited;
"Regulatory Information any of the services approved by the London
Service" Stock Exchange plc for the distribution
of AIM announcements and included within
the list maintained on the website of
the London Stock Exchange plc;
"Remuneration Committee" the remuneration committee of the Company
currently comprising: David Fitzsimons,
Christopher Kemball, Ian McLean and Peter
Norris;
"Repurchase Agreement" the agreement dated 12 July 2013 between
the Company and N+1 Singer for the repurchase
by the Company of the Ordinary Shares
purchased by N+1 Singer pursuant to the
Tender Offer (or otherwise a corresponding
number of Ordinary Shares) by way of an
on-market purchase;
"Re-registration" the proposed re-registration of the Company
as a private company pursuant to section
97 of the 2006 Act
"Resolutions" the resolutions to be proposed at the
General Meeting as set out in the Notice;
"Restricted Jurisdiction" the United States, Canada, Australia,
the Republic of Ireland, South Africa
or Japan or any other jurisdiction where
the mailing of the Circular into such
jurisdiction would constitute a violation
of the laws of such jurisdiction;
"Share Capital Reorganisation" the sub-division of the Company's ordinary
share capital into A Shares and B Shares
and the creation of the C Shares as described
in paragraph 9 of Part I of this announcement;
"Share Dealing Market" the annual share dealing market to be
operated on behalf of the Company pursuant
to which Shareholders will be able to
buy and sell shares in the Company following
the Cancellation, further details of which
are set out in Part VI;
"Shareholders" holders of Ordinary Shares and the term
"Shareholder" shall mean any one of them;
"Takeover Code" the City Code on Takeovers and Merger;
"Takeover Panel" the Panel on Takeovers and Mergers;
"Tender Form" the form enclosed with the Circular for
use by Shareholders in connection with
the Tender Offer;
"Tender Offer" the tender offer to Qualifying Shareholders
to be made by N+1 Singer on the terms
and subject to the conditions set out
in Part III of the Circular and also,
in the case of certificated Ordinary Shares,
the Tender Form;
"Tender Price" 563 pence per Ordinary Share;
"uncertificated" or Ordinary Shares which are recorded on
"in uncertificated form" the register of members of the Company
as being held in uncertificated form in
CREST and title to which, by virtue of
the CREST Regulations, may be transferred
by means of CREST;
"United States" the United States of America, its territories
and possessions, any state of the United
States of America and the District of
Columbia.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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