TIDMSHI
RNS Number : 4872Q
SIG PLC
19 June 2020
19 June 2020
SIG plc
Proposed Capital Raise of GBP 165 million to Strengthen the
Capital Structure, Provide Liquidity and Deliver the Group's New
Strategy
Further to its announcement on 29 May 2020, SIG plc ("SIG", the
"Company" or, together with its subsidiaries, the "Group")
announces a proposed capital raise of GBP165 million, alongside the
amendment of certain terms in respect of the Group's Revolving
Credit Facility and Private Placement Notes.
The proposed capital raise comprises:
-- an investment from CD&R Sunshine S.à r.l ("CD&R") of
GBP60 million, pursuant to which CD&R has committed to
subscribe for 240,000,000 New Ordinary Shares at an issue price of
25 pence per share (the "CD&R Investment"); and
-- a firm placing and placing and open offer of GBP105 million
(the "Firm Placing and Placing and Open Offer" and, together with
the CD&R Investment, the "Capital Raise") of, in aggregate,
347,901,900 New Ordinary Shares at an issue price of 30 pence per
New Ordinary Share (the "Issue Price").
CD&R has agreed to invest GBP20 million pursuant to the Firm
Placing as well as up to GBP14 million pursuant to the Placing and
Open Offer (subject to clawback by existing shareholders under the
Open Offer) at the Issue Price.
The Firm Placing and Placing and Open Offer are being conducted
by way of an accelerated bookbuild process (the "Bookbuild"), which
will be launched immediately following this announcement (the
"Announcement") and are subject to the terms and conditions set out
in the Appendix to this Announcement (which forms part of this
Announcement) (the "Appendix").
Jefferies International Limited ("Jefferies") and Peel Hunt LLP
("Peel Hunt") are each acting as Joint Bookrunner, Joint Sponsor
and Joint Financial Adviser to the Company. Lazard & Co.
Limited is acting as Lead Financial Adviser to the Company.
Key Points
The Capital Raise
-- Intention to raise gross proceeds of GBP165 million to
strengthen the Group's capital structure.
-- As part of the Capital Raise, CD&R, a leading global
investment manager, has agreed to invest up to GBP94 million, with
a guaranteed minimum investment of GBP80 million.
-- The Capital Raise is to be structured through two inter-conditional tranches:
o first tranche of GBP60 million being placed firm to CD&R
at 25 pence per New Ordinary Share; and
o second tranche of GBP105 million offered by way of the Firm
Placing and Placing and Open Offer, of which c.GBP60 million is to
be raised through the Firm Placing, and c.GBP44 million is to be
raised through the conditional Placing (subject to clawback by
existing shareholders under the Open Offer).
-- IKO Enterprises Limited, a company incorporated in Alberta,
Canada (together with its affiliates, "IKO"), is the Company's
largest shareholder and has confirmed that it is fully supportive
of the Company's new strategy and the Capital Raise and has
undertaken to take up its full allocation at the Issue Price as
part of the Firm Placing and Placing and Open Offer and vote in
favour of the Capital Raise at the General Meeting.
-- The Capital Raise is expected to raise GBP165 million in
gross proceeds, and c.GBP140 million in net proceeds, reflecting
fees associated with the Capital Raise, amendment of the debt
facilities and lender fees 1 .
-- Net proceeds will be used for the following purposes:
o improve liquidity;
o provide further resilience against the effects of the ongoing
COVID-19 pandemic on the Group's business;
o deliver the Company's new strategy;
o repay c.GBP48 million of outstanding principal of the Group's
Notes (as defined below) at par; and
o fund the unwind of various forms of government relief made
available to mitigate the effects of the COVID-19 pandemic.
-- 240,000,000 New Ordinary Shares will be issued in the first
tranche of GBP60 million being firm placed with CD&R at 25
pence per share.
-- 200,012,655 New Ordinary Shares will be issued in the Firm
Placing at the Issue Price to raise gross proceeds of c.GBP60
million and 147,889,245 New Ordinary Shares will be issued in the
Placing and Open Offer at the Issue Price to raise gross proceeds
of c.GBP44 million at the Issue Price.
-- Shareholders are being given the opportunity to subscribe for
New Ordinary Shares in the Open Offer pro rata to their existing
shareholdings at the Issue Price on the basis of:
1 New Ordinary Share for every 4 Existing Ordinary Shares
-- The Issue Price represents a discount of 10.6 % to the
closing price of 33.5 pence per Ordinary Share on 18 June 2020
(being the last Business Day before the publication of this
announcement).
-- In addition, Directors and Senior Management are expected to
subscribe for approximately c.GBP0.6 million in aggregate of New
Ordinary Shares at the Issue Price (the "Directors and Senior
Management Subscription") .
-- The Firm Placing and Placing and Open Offer (not including
the GBP60 million CD&R Investment and the Directors and Senior
Management Subscription) are fully underwritten by the Joint
Bookrunners.
-- The CD&R Investment, the Firm Placing and Placing and
Open Offer and the Directors and Senior Management Subscription are
conditional upon, among other things, the approval of SIG's
Shareholders at a general meeting of the Company which will take
place at 11 a.m. on 9 July 2020 (the "General Meeting").
1 Reflects approximately GBP153.1 million in net cash proceeds
from the Capital Raise (being gross proceeds of GBP165.0 million,
less estimated fees and expenses of approximately GBP11.9 million
in connection with the Capital Raise), as well as the payment of
debt advisory fees of GBP8.2 million, together with lender fees
relating to the Notes of GBP1.8 million and lender fees relating to
the RCF of GBP2.9 million
Amended Debt Facilities Agreements
-- Alongside the Capital Raise, the Company has agreed with the
lenders under its Revolving Credit Facility (the "RCF") and the
holders of its Private Placement Notes (the "Notes") a reset of
financial covenants and amendments to other terms and conditions in
order to provide the Group with the flexibility to execute its new
strategy with a more sustainable financial structure.
-- The Company is delighted to announce that on 18 June 2020 it
entered into amendment and restatement agreements in relation to
the RCF and the Notes, including the following changes:
Facilities
-- c. GBP234 million 2 of remaining facilities, with no
amortisation or scheduled repayments until May 2023 3
compromising:
-- GBP139 million (2) (,) 4 of Notes following repayment of
GBP48 million of outstanding principal, at par (from the proceeds
of the Capital Raise);
-- a GBP70 million term facility (representing existing RCF
drawings);
-- a GBP25 million revolving credit facility, following a
cancellation of existing commitments under the RCF; and
-- all amended debt facilities are unsecured and rank pari
passu.
Covenants
-- No leverage or interest cover covenants until March 2022 -
starting at <5.5x leverage and > 1.25x interest cover in
March 2022 and then adjusting to investment grade covenant levels
by March 2023 (<3x leverage 5 and >3x interest cover).
Previous covenants were <3x leverage and >3x interest
cover.
-- Minimum net worth, maximum net debt and minimum liquidity
covenants to apply throughout (save that maximum debt covenant to
apply only until February 2022).
-- Covenant reset and all other terms (other than those stated
above to be conditional on a successful Capital Raise) take effect
immediately. Failure by the Company to receive at least GBP125
million (gross) from the Capital Raise by 29 July 2020 would
constitute an "Equity Failure Event" which would result in an event
of default under the amended and restated facilities.
Current Trading
The Group has seen a gradual improvement in trading performance
throughout May and June 2020, particularly in the UK and Ireland
where branches continued to reopen during May as lockdown
eased.
Underlying revenue for May showed a steady recovery from its low
point in April 2020. Although this remained below the underlying
revenue achieved in March 2020, the Group's daily sales at the end
of May were largely in line with March levels.
The improvement in revenues has continued at the start of June
with the Group trading in line with pre-COVID-19 levels. While
revenues continued to be impacted by COVID-19 in some of the
Group's primary markets, the strength of trading is testament to
the capability and resilience of our operating companies which
returned to work quickly and effectively.
Although the improvement in trading performance is encouraging,
this has been influenced by a range of factors, including
re-stocking by customers as a result of previously subdued demand,
and it is unclear, given the relatively short period of trading
post-lockdown, whether this performance will be maintained going
forwards.
Profitability across the Group has also improved materially
during May 2020, with operating losses in the UK materially lower
than Management estimates at the time of the commencement of the
lockdown and the rest of the Group trading profitably (before
central costs). This has been driven by a combination of improved
trading performance, particularly in the UK and Ireland, decisive
cost actions by Management and continued governmental support.
2 FX rates as at 14 June 2020 USD:GBP 1.25, EUR:GBP 1.11.
3 Extensions of current maturities are conditional on a
successful Capital Raise.
4 Conditional on a successful Capital Raise, holders of the
Company's 2023 and 2026 Notes will be granted an option for these
Notes to be redeemed on 31 May 2023.
5 Reducing to 2.75x by June 2023 under the longer dated
facilities.
Bookbuild
The Firm Placing and Placing and Open Offer (excluding, for the
avoidance of doubt, the GBP60 million CD&R Investment and the
Directors and Senior Management Subscription) are fully
underwritten and are being conducted by way of the Bookbuild on the
Company's behalf by the Joint Bookrunners. The Bookbuild will open
with immediate effect following this Announcement. The Firm Placed
Shares and Open Offer Shares, when issued, will be fully paid and
will rank pari passu in all respects with the Existing Ordinary
Shares.
CD&R has agreed to purchase 66,666,667 New Ordinary Shares
at the Issue Price pursuant to the Firm Placing, representing an
investment of GBP20 million, and to purchase up to 46,666,667 New
Ordinary Shares at the Issue Price pursuant to the Placing and Open
Offer, representing an investment of up to GBP14 million (subject
to clawback by existing shareholders under the Open Offer). This is
in addition to the GBP60 million CD&R Investment pursuant to
the first tranche. On completion of the Capital Raise, CD&R is
expected to hold approximately 25% of SIG's Enlarged Share Capital
and the CD&R Relationship Agreement will become effective.
CD&R will be entitled to take two seats on the Board of SIG
provided they hold at least 20% of the total enlarged issued share
capital.
IKO, the Company's largest shareholder, has undertaken to take
up its full allocation as part of the Firm Placing and Placing and
Open Offer. IKO will receive an allocation of 65,416,667 New
Ordinary Shares at the Issue Price pursuant to the Firm Placing,
representing an investment of GBP19.6 million, and has provided an
undertaking to take up in full its entitlement under the open offer
of 21,865,427 New Ordinary Shares at the Issue Price, representing
a further investment of GBP6.6 million. On completion of the
Capital Raise, IKO is expected to hold approximately 14.8% of SIG's
Enlarged Share Capital.
The Bookbuild is expected to close no later than 4.00 p.m. on 19
June 2020, subject to acceleration. Timing of the closing of the
Bookbuild and allocations are at the discretion of the Joint
Bookrunners and the Company. Details of the results of the Firm
Placing and the conditional Placing will be announced as soon as
practicable after the close of the Bookbuild.
Placees, excluding IKO, will be required to agree to subscribe
for approximately 50% of their total subscriptions in the Firm
Placing, and the remaining 50% in the Placing and Open Offer.
If a Placee is entitled to participate in the Open Offer by
virtue of being a Qualifying Shareholder it will be able to apply
to subscribe for Open Offer Shares under the terms and conditions
of the Open Offer.
Your attention is drawn to the detailed terms and conditions of
the Firm Placing and Placing and Open Offer described in Appendix
II to this Announcement (which forms part of this
Announcement).
Capitalised terms used but not otherwise defined in the text of
this Announcement are defined in Appendix I of this
Announcement.
Expected Timetable of Principal Events
The times and dates set out in the expected timetable of key
events below, and mentioned throughout this Announcement, the
Application Form and any other document issued in connection with
the Capital Raise, are subject to change, and may be adjusted by
the Company in consultation with the Joint Bookrunners. The
timetable below also assumes that the Capital Raise Resolutions are
all passed at the General Meeting without adjournment. In the event
of any significant changes to the below expected timetable, details
of the new times and dates will be notified to the London Stock
Exchange and, where appropriate, Qualifying Shareholders.
If you have any queries on the procedures for application under
the Open Offer, you should contact Computershare Investor Services
PLC on 0370 707 1293 if calling from the UK or +44 370 707 1293 if
calling from outside the UK. The helpline is open between 8.30 a.m.
- 5.30 p.m., Monday to Friday excluding public holidays in England
and Wales. Please note that Computershare cannot provide any
financial, legal or tax advice and calls may be recorded and
monitored for security and training purposes.
References to times in this Announcement are to London time
unless otherwise stated.
Announcement of the Firm Placing and Placing and Open Offer 19 June 2020
Record Date for entitlements under the Open Offer Close of business on 17 June 2020
Announcement of the results of the Firm Placing and the Placing 19 June 2020
Publication of the Prospectus and Notice of General Meeting 19 June 2020
Ex-entitlement date for the Open Offer 22 June 2020
Posting of the Application Form to Qualifying Non-CREST
Shareholders(1) and Forms of Proxy 22 June 2020
Open Offer Entitlements enabled in CREST and credited to stock
accounts of Qualifying CREST
Shareholders(1) in CREST as soon as possible after 8.00 a.m. on 23 June 2020
Recommended latest time and date for requesting withdrawal of
Open Offer Entitlements from
CREST(2) 4.30 p.m. on 2 July 2020
Latest time and date for depositing Open Offer Entitlements
into CREST(2) 3.00 p.m. on 3 July 2020
Latest time and date for splitting of Application Forms (to
satisfy bona fide market claims
only)(2) 3.00 p.m. on 6 July 2020
Latest time and date for receipt of Forms of Proxy for use at
the General Meeting 11.00 a.m. on 7 July 2020
Latest time and date for receipt of completed Application Forms
and payment in full under
the Open Offer or settlement of relevant CREST instruction (as
appropriate) 11.00 a.m. on 8 July 2020
Announcement of the results of the Placing and Open Offer 9 July 2020
General Meeting 11.00 a.m. on 9 July 2020
Announcement of the results of the General Meeting 9 July 2020
Admission and commencement of dealings in New Ordinary Shares 8.00 a.m. on 10 July 2020
CREST Members' accounts credited in respect of New Ordinary
Shares in uncertificated form as soon as possible after 8.00 a.m. on 10 July 2020
Despatch of definitive share certificates for New Ordinary
Shares in certificated form(3) Within 14 days of Admission
_____________
Notes :
(1) The ability to participate in the Open Offer is subject to
certain restrictions relating to Shareholders with registered
addresses outside the United Kingdom, details of which are set out
in Part 8 ("Terms and Conditions of the Open Offer") of the
Prospectus, which is expected to be published later today.
(2) Different deadlines and procedures for applications may
apply in certain cases. For example, if you hold your Existing
Ordinary Shares through a CREST Member or other nominee, that
person may set an earlier date for application and payment than the
dates noted above.
(3) Temporary documents of title will not be issued.
LEI: 213800VDC1BKJEZ8PV53
Important Notice: This announcement contains inside information
for the purposes of Article 7 of Regulation (EU) No 596/2014. The
person responsible for arranging the release of this announcement
on behalf of the Company is Kulbinder Dosanjh.
Enquiries
SIG plc
+44 (0) 114 285
Andrew Allner, Chairman 6300
+44 (0) 114 285
Steve Francis, Chief Executive Officer 6300
Kath Kearney-Croft, Interim Chief Financial +44 (0) 114 285
Officer 6300
Lazard - Lead Financial Adviser
+44 (0) 20 7187
Cyrus Kapadia / Vasco Litchfield / Nick Fowler 2000
Jefferies International Limited - Financial
Adviser & Joint Broker
Ed Matthews / Philip Noblet / Lee Morton / +44 (0) 20 7029
Will Soutar 8000
Peel Hunt LLP - Financial Adviser & Joint Broker
+44 (0) 20 7418
Charles Batten / Nicholas How / Sam Cann 8900
FTI Consulting
Richard Mountain / Susanne Yule
Important notices
This announcement may contain certain forward-looking
statements, beliefs or opinions, with respect to the financial
condition, results of operations and business of the Company and
the Group. This announcement includes statements that are, or may
be deemed to be, "forward-looking statements". The words "believe,"
"estimate," "target," "anticipate," "expect," "could," "would,"
"intend," "aim," "plan," "predict," "continue," "assume,"
"positioned," "may," "will," "should," "shall," "risk", their
negatives and other similar expressions that are predictions of or
indicate future events and future trends identify forward-looking
statements. Forward-looking statements in this announcement
include, but are not limited to, statements about: the conditions
to the Capital Raise becoming effective being met, the Group's
ability to successfully execute, and the costs associated with, its
new strategy, and the current development and aftermath of the
COVID-19 pandemic. An investor should not place undue reliance on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors that are in many cases
beyond the control of the Company or the Group. By their nature,
forward-looking statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future. The Company cautions investors that
forward-looking statements are not guarantees of future performance
and that its actual results of operations and financial condition,
and the development of the industry in which it operates, may
differ materially from those made in or suggested by the
forward-looking statements contained in this announcement and/or
information incorporated by reference into this announcement. In
addition, even if the Company's or the Group's results of
operation, financial position and growth, and the development of
the markets and the industry in which the Group operates, are
consistent with the forward-looking statements contained in this
announcement, these results or developments may not be indicative
of results or developments in subsequent periods. The cautionary
statements set forth above should be considered in connection with
any subsequent written or oral forward- looking statements that the
Company, or persons acting on its behalf, may issue.
Lazard & Co., Limited (Lazard) and each of Jefferies
International Limited (Jefferies) and Peel Hunt LLP (Peel Hunt)
(together, in the case only of Jefferies and Peel Hunt, the Joint
Bookrunners), which are each authorised and regulated in the UK by
the FCA, are each acting exclusively for SIG plc and no one else in
connection with the contents of this announcement, the Capital
Raise or any other matters referred to in this announcement and
will not regard any other person as a client in relation to the
Capital Raise or any other matters referred to in this announcement
and will not be responsible to anyone for providing the protections
afforded to their clients nor for giving advice to any other person
in relation to the contents of this announcement, the Capital Raise
or any other matter or arrangement referred to in this
announcement. Neither Lazard nor the Joint Bookrunners are
responsible for the contents of this announcement.
Past performance of the Company cannot be relied on as a guide
to future performance. A variety of factors may cause the Company's
or the Group's actual results to differ materially from the
forward-looking statements contained in this announcement. The
Group and the Joint Bookrunners and any of their respective
directors, officers, employees, agents, affiliates and advisers
expressly disclaim any obligation to supplement, amend, update or
revise any of the forward-looking statements made herein, except
where required to do so under applicable law.
No statement in this announcement is intended as a profit
forecast, project, prediction or estimate and no statement in this
announcement should be interpreted to mean that earnings per share
of the Company for the current or future financial years would
necessarily match or exceed the historical published earnings per
share of the Company.
This announcement has been issued by and is the sole
responsibility of the Company. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by either
Joint Bookrunner, Lazard or by any of their respective affiliates,
directors, employees, advisers or agents as to, or in relation to,
the accuracy or completeness of this announcement or any other
written or oral information made available to any interested party
or its advisers, and any liability therefore is expressly
disclaimed.
No reliance may or should be placed by any person for any
purpose whatsoever on the information contained in this
announcement or on its accuracy or completeness. The information in
this announcement is subject to change.
This announcement, including the appendices, is for information
purposes only and is not intended to and does not constitute or
form part of any offer or invitation to sell, allot or issue, or
any offer or invitation to purchase or subscribe for, or any
solicitation to purchase or subscribe for, any securities in the
United States (including its territories and possessions),
Australia, its territories and possessions, Canada, Japan, South
Africa, Malaysia, New Zealand or in any jurisdiction to whom or in
which such offer or invitation is unlawful, nor does the fact of
its distribution form the basis of, or be relied upon in connection
with, or act as any inducement to enter into, any contract or
commitment whatsoever with respect to such securities, the Company
or otherwise.
Neither this announcement nor any copy of it nor the information
contained in it and any related materials is for publication,
distribution or release, in whole or in part, directly or
indirectly, in or into or from the United States (including its
territories and possessions, any State of the United States and the
District of Columbia) (subject to certain restrictions), Australia,
its territories and possessions, Canada, Japan, South Africa,
Malaysia, New Zealand or any other jurisdiction where to do so
would constitute a violation of the relevant laws of such
jurisdiction.
The distribution of this announcement and the offering of the
New Ordinary Shares may be restricted by law in certain
jurisdictions.
No action has been taken by the Company, the Joint Bookrunners
or any of their respective affiliates that would permit an offer of
the New Ordinary Shares or possession or distribution of this
announcement or any other offering or publicity material relating
to such New Ordinary Shares in any jurisdiction where action for
that purpose is required. Persons into whose possession this
announcement comes should inform themselves about and observe any
such restrictions. Any failure to comply with these restrictions
may constitute a violation of the securities laws of any such
jurisdiction.
The New Ordinary Shares have not been and will not be registered
under the U.S. Securities Act of 1933, as amended (the Securities
Act), or under any securities laws of any state or other
jurisdiction of the United States. The New Ordinary Shares may not
be offered, sold, taken up, exercised, resold, transferred or
delivered, directly or indirectly, into or within the United
States, except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and in compliance with any applicable securities laws of any state
or other jurisdiction of the United States. There will be no public
offer of the New Ordinary Shares in the United States. The New
Ordinary Shares are being offered: (i) outside the United States in
"offshore transactions" as defined in, and in accordance with,
Regulation S under the Securities Act (but not, for the avoidance
of doubt, to any holders of American depositary receipts); and (ii)
in the United States to persons reasonably believed to be
"qualified institutional buyers", as defined in Rule 144A under the
Securities Act (QIBs) who are subscribing for the New Ordinary
Shares in private placement transactions pursuant to an exemption
to the registration requirements of the Securities Act; or iii)
pursuant to another exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act, and in
compliance with any applicable securities laws of any state or
other jurisdiction of the United States. Prospective purchasers are
notified that the Company as issuer of the New Ordinary Shares is
relying upon an exemption from the registration requirements of
Section 5 of the Securities Act. The New Ordinary Shares may not be
offered or sold to, or for the account or benefit of, any holders
of American depositary receipts.
The New Ordinary Shares have not been approved or disapproved by
the U.S. Securities and Exchange Commission, or state securities
commission in the United States or any other regulatory authority
in the United States, nor have any of the foregoing authorities
passed upon or endorsed the merits of the Capital Raise or the
accuracy or adequacy of these terms and conditions. Any
representation to the contrary is a criminal offence in the United
States.
This announcement does not constitute a recommendation
concerning any investor's options with respect to the Capital
Raise. The price of shares and any income expected from them may go
down as well as up and investors may not get back the full amount
invested upon disposal of the shares. Past performance is no guide
to future performance. The contents of this announcement are not to
be construed as legal, business, financial or tax advice. Each
investor or prospective investor should consult his, her or its own
legal adviser, business adviser, financial adviser or tax adviser
for legal, financial, business or tax advice.
The New Ordinary Shares to be issued or sold pursuant to the
Firm Placing and Placing and Open Offer will not be admitted to
trading on any stock exchange other than the London Stock
Exchange.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
Information to Distributors
Solely for the purposes of the product governance requirements
contained within: (a) EU Directive 2014/65/EU on markets in
financial instruments , as amended (MiFID II); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the MiFID
II Product Governance Requirements), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product
Governance Requirements) may otherwise have with respect thereto,
the New Ordinary Shares to be issued in the Capital Raise have been
subject to a product approval process, which has determined that
the New Ordinary Shares are: (i) compatible with an end target
market of retail investors and investors who meet the criteria of
professional clients and eligible counterparties, each as defined
in MiFID II; and (ii) eligible for distribution through all
distribution channels as are permitted by MiFID II (the Target
Market Assessment). Notwithstanding the Target Market Assessment,
distributors should note that: the price of the New Ordinary Shares
may decline and investors could lose all or part of their
investment; the New Ordinary Shares to be issued in the Capital
Raise provide no guaranteed income and no capital protection; and
an investment in the New Ordinary Shares to be issued in the
Capital Raise is compatible only with investors who do not need a
guaranteed income or capital protection, who (either alone or in
conjunction with an appropriate financial or other adviser) are
capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses
that may result therefrom. The Target Market Assessment is without
prejudice to the requirements of any contractual, legal or
regulatory selling restrictions in relation to the Capital Raise .
Furthermore, it is noted that, notwithstanding the Target Market
Assessment, Jefferies and Peel Hunt will only procure investors who
meet the criteria of professional clients and eligible
counterparties.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take
any other action whatsoever with respect to, the New Ordinary
Shares.
Each distributor is responsible for undertaking its own Target
Market Assessment in respect of the New Ordinary Shares and
determining appropriate distribution channels.
Unless the context otherwise requires, all references to time
are to London time.
SIG plc
Proposed CD&R Investment and Firm Placing and Placing and
Open Offer of 347.9 million New Ordinary Shares at a price of 30
pence per New Ordinary Share
1. INTRODUCTION
SIG's board of directors (the Board) has today announced a
proposed capital raise of GBP165 million by way of the CD&R
Investment and a Firm Placing and Placing and Open Offer (the
Capital Raise). The capital raise would provide the Group with an
improved capital base from which to deliver the new strategy and
accelerate the return to profitable growth.
A Prospectus containing further information on the Capital
Raising, including full details of how Shareholders can participate
in the Open Offer, is expected to be published later today.
2. SIG business and industry overview
SIG is a leading supplier of specialist building materials to
trade customers across the UK, Ireland and Mainland Europe, with
strong positions in its core markets as a specialist distributor of
insulation and interiors products and as a merchant of roofing and
exteriors products.
SIG plays an important role in the construction industry. For
its customers, SIG facilitates one-stop access to an extensive
product range, provides expert technical advice, breaks bulk
supplies into suitable quantities and coordinates often complex
delivery requirements, ensuring that customers are supplied with
what they need, when it is needed. For its suppliers, SIG provides
a channel through which suppliers can bring their products to a
highly fragmented market of smaller customers conveniently and
efficiently, extends product guidance and support, and provides
fulfilment capability to sites that are of insufficient scale to
supply direct. SIG is committed to delivering the highest levels of
customer service. As at 31 December 2019, the Group employed a
headcount of 6,452 employees (excluding Air Handling), across the
UK, Ireland, France, Germany, Poland and Benelux, comprising a high
proportion of specialist customer service staff.
The Group currently operates two core businesses:
-- Specialist Distribution (also known as distribution): The
Group is a leading supplier of insulation products and interiors
fit-out products in Europe, supplying customers with a
comprehensive range of over 250,000 products via an extensive
branch network of 200 sites as at 31 December 2019. The specialist
distribution business operates primarily in the UK, France and
Germany, which collectively represented 76% of the Group's
specialist distribution revenue in 2019, as well as in Ireland,
Poland and the Benelux area. The Group is either a market leader or
a significant market player in the countries in which it operates,
according to management estimates. The specialist distribution
business (including SIGD) represented 70% of the Group's total
underlying revenue in 2019.
-- Roofing Merchanting (also known as exteriors): The Group is a
leading specialist merchant of roofing products in the UK and
France, with a branch network of 225 sites as at 31 December 2019.
The roofing merchanting business (including SIGE) represented 30%
of the Group's total underlying revenue in 2019.
The Group is exposed to a well-balanced profile of end-markets.
The Group believes its focus towards non-discretionary RMI spend
mitigates some of the volatility existent in the new-build
industry. According to management estimates, in 2019, Specialist
Distribution had just under half of its sales from the RMI sector,
just under a quarter from the new residential sector, and the
remainder split between industrial projects and new non-residential
projects. During the same period, Roofing Merchanting had just
under half of its sales from the RMI sector, just over half from
new residential and new non-residential sectors, and the small
remainder from industrial projects.
3. History and previous strategies
3.1. 2009-2019: a decade of disposals, rationalisation, debt and cost reduction
The Group's operating profit margin remained largely stable from
2009 to 2018, due in part to the fact that from 2009 a series of
initiatives were implemented at the Group with the objective of
reducing cost and debt. Although these actions drove increases in
profit, they have masked gradual loss of share in certain markets,
as SIG's traditional differentiating strengths of customer
proximity, service and expertise have been eroded over time.
In the wake of the 2008 global financial crisis and
corresponding downturn in construction activity and a corresponding
decrease in the Group's revenues and operating profit, the Group
implemented a strategy focused on cost and debt reduction in order
to navigate the prevailing austerity. Non-core operations were
divested, management layers were reduced and branches were closed
or merged to create a leaner organisation with a significantly
reduced cost base. For example, between 2009 and 2013 the Group
reduced its headcount by approximately 3,700 and closed or merged
220 branches. This was supported by the raising of GBP325 million
of equity in 2009.
This strategy evolved further in 2014, with the Group taking
additional steps to reduce the cost of materials and service, more
in line with a commodity retail strategy rather than a specialist
product and service provider. Cost and debt reduction remained a
central focus, with the rationalisation of less profitable
products, customers and branches.
In 2017, the cost and debt reduction strategy was sustained
under the heading of a new operating model: realigning the Group to
more centralised functional structures in each operating company,
and thereby increasing operational efficiency, lowering inventory
levels and restoring profitability. Price increases were also
implemented in an effort to preserve margins. The revised 2017
strategy also prompted the closure or disposal of a number of
peripheral, non-core business activities, narrowing the Group's
focus while reducing indebtedness. Since the start of 2017, SIG has
sold or closed 19 businesses, most recently the sale of its Air
Handling business to France Air for an enterprise value of GBP187
million, generating a net cash inflow of GBP163 million, before
transaction costs, which completed in January 2020.
During this decade, sight was lost of customers, suppliers and
the morale of the Group's key commercial people.
3.2. Financial performance over the period 2016 to 2019
The Group's underlying revenue grew from GBP2,534 million in
2016 to GBP2,683 million in 2018 (including the results of the
Group's Air Handling business). Over the same period, underlying
profit before tax increased from GBP67.4 million to GBP75.3 million
(including the results of the Group's Air Handling business). Net
debt reduced from GBP299.2 million as at 31 December 2016 to
GBP189.4 million as at 31 December 2018, with covenant leverage
reducing from 2.6x to 1.7x over the same period . The reduction in
debt was partly achieved through more active working capital
management, including the use of non-recourse receivables factoring
facilities.
The Group continued to demonstrate an improvement in
profitability during the first half of 2019 as the levels of less
profitable stock keeping units (SKUs) were reduced and branches
were closed or merged . Underlying profit before tax increased from
GBP25.1 million in the first half of 2018 to GBP30.0 million in the
first half of 2019, with return on sales increasing from 2.5% to
2.9% over the same period.
However, this growth in profitability was a short-term gain that
masked underlying damage to the Group in certain geographies. In
the UK and Germany in particular, the prevailing cost and debt
reduction strategy had led to the erosion of key unique selling
points (USPs) for a fundamentally sales-led organisation, namely
customer proximity, service and expertise.
An aggressive branch rationalisation and headcount reduction
strategy, where the Group reduced the number of its trading sites
from 661 (including Air Handling) at the beginning of 2017 and its
headcount from 10,328 employees (including Air Handling) in January
2017, to 425 trading sites (excluding Air Handling) and a headcount
of 6,452 (excluding Air Handling) as at 31 December 2019, resulted
in weakened customer relationships , while the centralisation of
key commercial functions caused a lack of visibility, autonomy and
accountability at branch level.
These factors, alongside others, resulted in talent, customers
and ultimately sales moving to competitors, as well as a decline in
sales. This decline in sales accelerated during the second half of
2019 in the UK, exacerbated by increasing political and
macro-economic uncertainty leading up to the UK General Election,
with UK Distribution and UK Exteriors experiencing a like-for-like
reduction in sales of 26.1% and 12.5% respectively relative to the
same period in 2018. Over the same period, Germany experienced a
like-for-like reduction in sales of 5.0%.
The picture in SIG's other European markets, where
implementation of the Group's strategy had been more selective in
the operational changes adopted, were introduced gradually and had
been better adapted to local dynamics, was relatively more stable,
with full year 2019 like-for-like sales for the Group, excluding
the UK and Germany, up by 1.4% compared to the full year 2018.
The overall reduction in full year 2019 like-for-like Group
sales of 7.6% for continuing operations relative to the full year
2018 more than offset the Group's cost reduction initiatives in
impacting profitability, leading to SIG informing the market on 9
January 2020 that it expected full year underlying profit before
tax for 2019 to be approximately GBP42.0 million, compared to
GBP75.3 million for 2018 (in each case, including the results of
the Air Handling business).
4. New senior leadership
In the context of the deterioration of SIG's financial
performance towards the end of 2019, and the substantial completion
of the Group's operational restructuring and simplification, the
Board determined that it was appropriate to appoint new senior
leadership, focused on returning the business to profitable growth
and recapturing lost market share, particularly in the UK
distribution and German businesses.
Steve Francis was appointed as Director and the interim Chief
Executive Officer of the Group on 25 February 2020 and appointed on
a permanent basis on 24 April 2020. Steve is a widely experienced
CEO with a proven track record of driving rapid performance
improvement through strong customer relationships, excellence in
customer service and the creation of highly engaged teams.
Kath Kearney-Croft joined the Group in January 2020 initially to
provide support to the executive team during the leave of absence
of the former CEO, Meinie Oldersma, and was appointed as Director
and the interim Chief Financial Officer of the Group on 25 February
2020. Kath has extensive experience from a number of financial
leadership roles and was most recently Group Finance Director of
The Vitec Group plc.
A number of significant appointments have also been made to
strengthen leadership of the Group's operating companies, including
a new, highly experienced Managing Director for the Group's UK
businesses, whose leadership is to be merged as part of the UK plan
to recapture market share. Moreover, the leadership of the Group's
Benelux and Germany businesses is being merged to create another
strong business unit.
5. Analysis of previous actions leading to underperformance
Following the appointment of Steve Francis and Kath
Kearney-Croft, the Board conducted an in-depth review of the
factors leading to the deterioration in SIG's performance in the
second half of 2019.
The review concluded that although the cost and debt reduction
strategy implemented in 2017 had driven a temporary increase in
profitability in 2018, this masked a deterioration in SIG's core
USPs of customer proximity, service and expertise. The resulting
loss of customers and talent contributed to a reduction in market
share, particularly within the UK and German businesses.
Accordingly, in the UK between 2017 and 2019, the Group's key
competitors were able to grow their revenues while those of the
Group declined. The situation in SIG's other European operating
companies (France, Ireland, Poland and Benelux), which represented
40.9% of full year 2019 sales, was more positive, as implementation
of the Group's strategy had been more selective in the operational
changes adopted, and were introduced gradually and had been better
adapted to local dynamics.
The key findings were as follows:
-- Centralisation : Key commercial functions were centralised
within operating companies, without adequate support systems and
tools provided to enable effective decision-making at the local
team and branch levels. Branch managers lost visibility of key
sales tools such as rebate structures, impeding their ability to
retain and win customers in the market. Group-level systems were
rolled out across the operating companies, sometimes against a
local operating company's advice, contributing to loss of
efficiency.
-- Staff motivation and retention : The shift towards a
centralised structure undermined the autonomy of branch managers
and their teams, making the accountability of the branch unclear.
Coupled with other operational decisions that were perceived to
damage branch performance, staff morale was negatively impacted. A
number of key managers left to join competitors, often taking their
best teams and customers with them.
-- Price increases : In an effort to offset losses of market
share, prices were increased uniformly across a number of product
categories, including commodity products in some cases. These
increases did not take into consideration the sensitivity of sales
volumes to potential price changes, and had a direct adverse impact
on sales.
-- Generalist vs specialist : A number of initiatives were
implemented which compromised the specialist nature of SIG's
product and service offering. Branch experts were replaced with
generalists in an effort to reduce costs, and inventory was
optimised to minimise working capital, contributing to a
deterioration in customer service.
-- Functional model : The transition to a functional model
generated more siloed behaviour and encouraged internal rather than
external focus, further undermining customer relationships.
-- Branch rationalisation : The closure of branches across the
Group resulted in the loss of customers and sales. The branch
rationalisation strategy had assumed that sales from branches to be
closed would be absorbed by the remaining branches, enabling sales
to be maintained while reducing costs. However, this underestimated
the importance of customer relationships at the branch level, and
these closures instead resulted in a loss of customers to
competitors.
These SIG specific issues contributed to a loss of market share
in the UK and Germany, compounding a general deterioration in the
level of construction activity across key markets. The resulting
adverse impact on SIG's financial performance was significant,
accelerating in the second half of 2019.
Further, following the Company's full year trading update
published on 9 January 2020, the Company commissioned
PricewaterhouseCoopers LLP (PwC) to undertake an independent review
in light of the disparity between the forecast level of underlying
profit before tax for the financial year 2019 set out in the
Group's January 2020 trading update and market consensus of
forecast profit before that announcement. The evidence as presented
in PwC's report (the PwC Report) indicated a number of issues with
the 2019 forecasting process, with a principal shortcoming being in
the reporting to the Board of information received by the Group
from its businesses. Further, the evidence indicated that, in the
latter part of the second half of 2019 in particular, underlying
forecasts from certain of the Group's businesses were the subject
of material positive overlays at the Group level and, in addition,
the attendant risks to those underlying forecasts were both poorly
classified and poorly reported at the Group level, with the result
that the Board was unsighted as to the overall picture. The PwC
Report indicated that the issues identified were not adequately
communicated to the Board.
Moreover, the Company voluntarily notified the FCA of the
progress of the PwC review and has recently shared the PwC Report
with the FCA for its consideration. After receipt of the PwC
Report, in order to strengthen the Group's financial forecasting
and internal reporting, the Company appointed KPMG to work with the
Audit Committee to implement appropriate improvements to the
Company's forecasting systems, procedures and controls, including
those recommended in the PwC Report.
6. SIG's new strategy and medium term vision
6.1. SIG's new strategy: Re-connect, Re-energise and Re-set
Notwithstanding the issues summarised above, the Directors
believe based on feedback gathered from discussions with suppliers,
customers, senior employees and senior SIG alumni since new
management arrived, that it is clear that the Group's franchise in
Europe and the UK stands largely intact. The Directors believe SIG
remains a market leader and a valued and necessary partner in the
construction industry supply chain.
With the proposed strengthened capital structure in place, the
Company believes that the Group would be well-positioned for growth
with a strong leadership team at the helm and a new strategy
focused on recapturing market share through SIG's extensive network
of branches, passionate employees and strong customer base.
In order to return SIG to profitable growth and win back market
share, the Board has developed a new, customer-centric strategy
that reprioritises sales.
Fundamental to the new strategy is the recognition that SIG is a
sales-led organisation, where the ability to win and retain
customers is critical. The establishment of strong customer
relationships, by empowering and energising key account and branch
teams, and promoting an entrepreneurial spirit throughout the
organisation, is key to this objective.
In France, Benelux, Poland and Ireland, where the Group's
operational and financial performance has been more stable, the new
strategy seeks to empower the Group's operating companies to move
onto a growth footing.
In the UK and Germany, where the Group's operational and
financial performance has seen greater deterioration, the new
strategy focuses on first repairing the foundations of these
businesses, creating the appropriate platform from which market
share can be recaptured and profitable growth restored.
The Group's new strategy comprises seven key tenets:
(a) Local P&Ls within a "franchise-style" operating model,
supported by best in class operations and systems;
(b) Rebalance the strategic focus between growth and cost reduction;
(c) Strengthen sales-led culture by accelerating salesforce
rebuild and augmenting commercial leadership throughout the
organisation... "everyone sells";
(d) Gain market share through enhanced customer proximity and
service, including strengthening the branch network and augmenting
the digital offering;
(e) Generate economies of scale and of skill, including
re-establishing more strategic and Board-led supplier
partnerships;
(f) Re-establish specialist focus and expertise; and
(g) Leaner, smarter corporate functions; improve governance and financial discipline.
These will be supported by new strategic key performance
indicators tracking progress on each of the seven elements listed
above.
Through the implementation of these strategic initiatives and
select additions to the management team, alongside the proposed
Capital Raise, the Board is confident that SIG will return to
profitable growth and achieve its vision to be the leading B2B
distributor of specialist construction products in its key
markets.
Further details on the key tenets of the Group's new strategy
are set out below:
(a) Local P&Ls within a "franchise-style" operating model,
supported by best in class operations and systems;
The new strategy is underpinned by the transition to a
"franchise-style" operating model with local P&Ls, which seeks
to rebalance the role of the local teams, branches and the centre.
Key commercial functions were over-centralised within operating
companies under the 2017-2019 cost and debt reduction strategy,
resulting in a loss of autonomy and accountability at the front
line (regional, key account / branch level), demotivation of local
staff, slower decision-making and the inflation of central
costs.
In a business which is sales-led and an industry where local
customer relationships and understanding of market dynamics are
key, the re-empowerment of key account and branch teams is
fundamental to SIG's recovery. The revised operating model inherent
to the Group's new strategy is characterised by increased autonomy
and accountability at the key account manager and branch levels,
ensuring that local teams, branch managers and their staff have the
tools and incentives to retain and win customers through excellent
customer service and effective pricing.
The local teams and branches will be supported by lean central
functions with deep expertise, responsible for overseeing
performance, applying suitable controls, setting policy and
providing the training and guidance necessary to ensure a common
understanding and execution in accordance with the Company's
business philosophy: operational excellence and the highest
governance standards.
The Group's new strategy is founded on a clear vision and
culture. The Group has refreshed these and intends to ensure that
they are consistently owned and lived within each of the countries
in which the Group operates.
The Group's purpose and vision are summarised as follows:
-- Our purpose: Enable sustainable & safe living and working
environments in the communities in which we operate
-- Our vision: To be the leading B2B distributor of specialist
construction products in our key markets
o Applying our specialist knowledge, expertise and synergies of
omni-channel distributors in supply chain, sourcing, finance
management, reporting and sales
o Leveraging significant capacity to grow in different market
segments within the construction market, capturing adjacent
opportunities within Roofing and Interiors
o Being opportunist in external growth, respecting local brand
and history while integrating new businesses into our model
-- Our culture: Our culture is underpinned by our bold, flexible
and agile approach and we work together to do the right thing to
make a positive difference
-- Our key strengths:
o Employee Expertise: Our people are our competitive advantage,
with specialist product and market knowledge
o Proximity-led: Our leading branch network and omni channel
approach allows greater proximity to our customers
o High Quality Service: Our people go the extra mile to give our
customers the products they need at the time they need them
o Scale intelligence: Our scale in each of our operating
countries enables strong supplier partnerships
(b) Rebalance the strategic focus between growth and cost reduction
The Group's previous strategy encompassed aggressive
cost-cutting measures that sought to increase profits by growing
margins rather than revenue. Although this delivered a degree of
operational efficiencies in parts of the organisation, this
approach also contributed to an erosion of the Group's specialist
capabilities, loss of many key skilled employees and, ultimately, a
reduction in market share.
The Group's new strategy is founded on a sales-led approach and
a plan to recapture lost market share, striking greater balance
between cost reduction and revenue growth initiatives. The
resulting increase in revenue is expected to result in more
efficient use of the Group's existing cost base, rather than
necessitate significant additional costs to support this
growth.
The Group's strategic focus is summarised as follows:
Our strategic focus
We will achieve our vision through
o Nurturing passionate leadership throughout our business
o Growing our leading share in our chosen specialist markets
through excellence in Service, Proximity and Expertise
o Seeking new market opportunities in the construction industry
which suit our USPs and strategy and operating model
o Strengthening customer relationships through a consistent,
disciplined and proactive approach to sales force management and
training. We build sustainable, confident sales teams
o Becoming a primary customer to our key suppliers through
scale, coverage and an intimate knowledge of their business and our
markets
o Extracting economies of scale and skill through our modernised
supply chain and continuously searching for opportunities to
digitise our business
o We drive health and safety standards with determination,
energy and passion to achieve Zero Harm and act responsibly in our
impact on our communities and the environment
o Aim to consistently achieve a profit margin of 5% in operating
companies while reinvesting in business efficiency and
innovation
o Modernising our operating model, continuing our direction
towards:
o Driving an omni-channel customer and sales-led organisation
built around strong, local relationships and supported by our
network of specialists and well-invested national supply chains
utilising digitisation wherever possible;
o Delegating accountability for performance to local teams
supported by small divisional teams with deep functional expertise
(e.g. Procurement, category management, operations, systems and
digitisation);
o Ensuring lean and efficient Corporate and Group function,
which oversees performance, provides industry leadership &
vision, sets policy, apply suitable controls, provide guidance and
support and to ensure high governance standards
Over-and-above the significant growth that the Directors believe
can be delivered by a return to doing the basics well, the Board
sees considerable value creation potential in the medium term by
executing a disciplined consolidation strategy. A number of SIG's
end markets remain relatively fragmented and, as a leading player,
the Group has developed a clear pipeline of opportunities that are
ready to be advanced once the Group has returned to a position of
financial strength.
(c) Strengthen sales-led culture by accelerating salesforce
rebuild and augmenting commercial leadership throughout the
organisation... "everyone sells";
Fundamental to the Group's new strategy is a renewed focus on
strengthening customer relationships with a disciplined and
proactive approach to sales force management and training. Through
this, the Group will seek to build sustainable, winning sales teams
that have the necessary autonomy, incentives and support to
succeed. The creation of an entrepreneurial culture in which
"everyone sells" is central to this objective.
The successful implementation of SIG's new sales-led strategy is
highly dependent on the strength of the leadership team in place to
deliver it. Significant operational experience and capability was
already in place before 2020, particularly in France, Poland and
the Benelux countries, with a strong bench of operating company
Managing Directors and Financial Directors.
The leadership team has been augmented in 2020 through a number
of key appointments, including:
-- Steve Francis: CEO
-- Philip Johns: MD of newly merged management teams of the SIGD
and SIGE UK divisions, the Group's largest division and focus of
the Group's near-term market share recovery programme. Phil returns
with 30 years of industry experience, gained mostly in SIG
-- Kath Kearney-Croft: CFO (interim)
-- Ian Ashton: CFO (appointed with effect from 1 July 2020)
-- Further senior appointments to upgrade the Group's leadership
The central finance team has also been bolstered under Kath's
leadership, with additional internal as well as external support in
the near term.
The Group's revised people strategy represents a shift away from
a centralised control model towards a culture of entrepreneurship,
commitment and empowerment, led from the top. A key component of
this is the upskilling and nurturing of key staff throughout the
organisation, to ensure they have the capabilities and confidence
to lead teams effectively.
(d) Gain market share through enhanced customer proximity and
service, including strengthening the branch network and augmenting
the digital offering;
Due to the fragmented nature of the markets in which SIG
operates, proximity to the customer is fundamental to developing
relationships and growing sales.
The Group's extensive network of local teams and branches is
considered by the Board to be a key strength, and the development
and optimisation of this network, supported by tailored e-commerce
channels, will remain an important pillar of the Group's new
strategy.
In addition to maintaining and improving geographical coverage,
SIG's new strategy seeks to devolve greater accountability and
autonomy to the local teams and branches, empowering staff to win
in the market.
SIG intends to lead the industry in the adoption of e-commerce
and the development of digital intimacy, providing an additional
channel through which to strengthen relationships with customers
who demand and value it.
Although the disruption of the Group's end markets by online
sales to date remains limited, SIG recognises the importance of
remaining competitive in this space. Accordingly, over the past
several years, SIG has been investing in an enhanced digital
platform to complement telephone and branch sales and establish an
omni-channel offering. The Group will continue to take a measured
and phased approach, financing this investment from the Group's
normal annual investment budget, thereby balancing the Group's
capital at risk with the scale of the opportunity at each
stage.
(e) Generate economies of scale and of skill, including
re-establishing more strategic and Board-led supplier
partnerships;
SIG's scale is a clear differentiator relative to the majority
of its smaller competitors. The new strategy focuses on extracting
the benefits of this greater scale, without compromising the
importance of the "franchise-style" operating model.
Key areas of benefit include: (i) coordination of nationwide
supplier and customer contracts to achieve optimal rebate
structures and terms, a key focus area of the new strategy; (ii)
leveraging best practices across the Group, both within and across
geographies; and (iii) fulfilment of large-scale orders that
smaller competitors are unable to challenge for; and collaboration
between local teams and branches to generate cross-sales.
The Group plans to also make greater use of economies of skill
to complement its traditional economies of scale. The Group's size
and breadth enables it to develop and exploit superior knowledge
about the latest market trends and customer needs. The Company
believes that the significant technical knowledge and capabilities
involved in its specialist industry segment make it more difficult
for new entrants to replicate the Group's capabilities. This is
expected to enable the Group to form more strategic partnerships
with suppliers and key customers driven from jointly evolved
strategic business, product and supply chain innovation plans.
(f) Re-establish specialist focus and expertise
SIG's role as a specialist rather than commodity distributor has
historically been a key strength. By focusing on niche segments and
providing customers with a system of products, alongside deep
technical expertise, SIG has successfully differentiated its
offering from commodity providers and established strong market
positions across its end markets.
Although the Group's franchise remains strong, the cost
reduction strategy of recent years has resulted in a degree of
commoditisation within SIG's offering, with a loss of highly
skilled, technical staff and narrowing of the product range towards
higher volume but less specialist products. In the UK and, to a
lesser extent, Germany, this has contributed to a loss of market
share as the Group's differentiating strengths have been
eroded.
The Group's new growth strategy is focused on re-establishing
the Group's specialist focus and expertise, both in terms of the
products and systems offered, as well as the service and technical
knowledge provided.
The Group will seek to achieve this through refinement of its
product focus, leveraging technical expertise to deliver innovative
solutions to customers. Furthermore, a renewed focus on talent
attraction, development and retention is intended to support the
upskilling of the workforce, strengthening partnerships with both
customers and suppliers.
(g) Leaner, smarter corporate functions; improve governance and financial discipline
As SIG's centre has expanded under previous strategies, its role
in supporting the Group's operating companies has become confused.
As part of the transition to an effective "franchise-style"
operating model, an important focus of the Board is to redefine the
role of SIG plc. Rather than "command and control", the centre will
be repositioned as a lean enabler, providing the Group's operating
companies with the necessary resources, guidance and controls to
operate effectively within their local markets.
SIG has also implemented a number of measures to improve the
Group's financial discipline, in terms of both the quality of
financial forecasting, as well as cost and cash management. This
has been a key focus area for Steve Francis and Kath Kearney-Croft
since joining the business, and revised processes and controls have
been put in place to ensure a more rigorous and reliable
forecasting process. The central finance team has also been
strengthened to facilitate these improvements.
Enhanced key performance indicator (KPI) reporting has already
been implemented to improve visibility of operational performance
and current trading, allowing informed decisions to be taken on a
timely basis.
Actions have also been undertaken to improve cost and working
capital discipline at the Group, by adding capability and enhancing
processes.
6.2. Market share recapture plan
The Group's market share recapture plan, particularly for SIG's
UK businesses, SIGD and SIGE, as well as for its Germany and
Benelux businesses, is built upon five key enablers:
(a) Merger of leadership of SIGD and SIGE
SIGD and SIGE will be merged utilizing a similar model to that
already deployed in SIG France, to form a single UK division with a
combined leadership team leveraging potential synergies in support
functions whilst maintaining separate commercial organisations and
footprints (primarily branches). The combined business will use a
new regional structure focused on promoting local entrepreneurship,
accountability and profit and loss responsibility.
SIGD and SIGE previously were supported by an in-house UK based
finance shared service centre in conjunction with an outsourced
off-shore finance team, creating a complex, inefficient structure
with sub-optimal service levels. Plans are in motion to integrate
the shared service centre into the UK businesses and to conduct a
full review of the performance of the outsourced off-shore finance
team.
Since 27 April 2020, the Group's UK businesses have been led by
Philip Johns. Philip was Managing Director of SIGE from 2006 to
2015, at which point he left the Group to become CEO of MKM
Building Supplies. He brings over 30 years of experience in the
construction industry, specialising in merchanting and
distribution. Philip's career includes 27 years at SIG. The
Directors believe he is uniquely well-placed to lead the UK market
share recapture element of the Group's new strategy. The Group's UK
business has also recently recruited three commercial leaders,
including Andy Williamson, who was formerly the IKO UK managing
director, David Hope, who was formerly a SIG UK sales director, and
Richard Burnley, who was formerly the SIGD South managing director
and the managing director of Kingspan insulation.
(b) Combined Germany/ Benelux Business Unit
A similar combined management approach to that being deployed in
the UK and France is being developed to combine the management of
the German and Benelux businesses. Accordingly in May 2020, Ronald
Hoozemans was appointed managing director of the combined business
unit. Ronald was Managing Director of SIG Benelux before this
appointment.
(c) A clearer understanding of "core" business
The Company is currently planning a review to refine the
definitions of the Group's marketplace, in the light of the new
strategy, and thereby revise and expand the definition of "core"
business. This is designed to facilitate the development of a more
expansive growth strategy in each of the Group's countries of
operation. The Company expects this review to highlight
opportunities, consistent with the Group's USPs (Expertise,
Proximity, Service) to widen its product offering and deepen its
geographic coverage.
(d) Energise sales and market share recovery & growth efforts
The Group plans to improve proximity to its customers by
identifying and filling gaps in the Group's geographical
coverage.
SIG will expand and upskill the sales force by restoring its
industry-leading bench-strength of specialist local expertise in
areas such as fire protection, energy efficiency and sustainable
materials. Salesforce productivity will also be increased though
enhanced sales management and training, supported by salesforce
management tools, disciplines and aligned incentives. Customer
reconnection will be a top priority.
The Group will support SIG representatives in all front line
functions, including warehouse employees, drivers, recruiters and
accounts teams.
The Group's progress to recapture market share is expected to be
accelerated through the acquisition of small add-on local
businesses within target product areas.
(e) Facilitate growth through better operations
A number of actions are underway in the Group's operations to
increase efficiency and service levels to boost the sales effort,
including:
-- pricing tools and training for key account and branch
managers, providing enhanced visibility and autonomy to set pricing
quickly and competitively;
-- improved product availability through the use of enhanced
systems and more accurate operational key performance indicators
such as stock availability;
-- enhanced on time and in full delivery; and
-- additional training which is being provided to the Group's
workforce in order to promote operational excellence and customer
service.
6.3. The Group's medium term vision
The Group has a robust plan in place to deliver a return to
profitable growth and achieve the Board's vision of establishing
SIG as the leading B2B distributor of specialist construction
products in its key markets.
In the medium term, the Group is targeting the following key
financial metrics:
-- Margin : target an operating margin of approximately 5%
within the Group's operating companies, and a Group operating
margin of approximately 3%, trending towards approximately 5% in
the longer-term
-- Leverage : covenant leverage of <1.5x
-- Dividend : dividend cover of 2.0-3.0x once appropriate leverage has been achieved
In summary, SIG remains a leading specialist supplier for the
building materials and construction industries in its key markets.
It is primed for growth under a strong, new management team, with a
robust plan in place and positive indications across all the
Group's operating companies. SIG remains exposed to a number of
high growth end-markets, with leading positions across Mainland
Europe. The traditional USPs that supported SIG in its markets
previously, provide opportunities for SIG to grow even further and
capitalise on the economic recovery following COVID-19.
The targets consist of forward-looking statements and are based
upon a number of assumptions (including the successful
implementation of the Group's new strategy). Such statements
provide no assurance of actual future results, and the Group's
actual results may differ materially from these targets due to a
variety of factors, some of which are outside the Group's control.
In addition, unanticipated events may adversely affect the actual
results that the Group achieves in future periods whether or not
its assumptions prove to be correct.
7. Impact of Covid-19, mitigating actions and industry dynamics
7.1. Impact of COVID-19
The sudden rise of the COVID-19 pandemic in early 2020 quickly
redirected focus from the implementation of the new strategy to
more immediate measures designed to mitigate its effects. This
required the rapid development of a coordinated and decisive
response, and the operational agility of local managers to
implement it. Collective actions across the Group's finance,
treasury, human resource, sales, procurement and operations
functions at branch, regional and Group management levels were
implemented in a coordinated and decisive fashion to mitigate the
operational and financial impact.
The ability of the organisation to respond effectively to the
pandemic through these measures demonstrates the Group's resilience
and capacity for organisational change, and points towards the
successful adoption of the new strategy as the Group emerges from
this period of business disruption.
As a result of government restrictions that were implemented to
mitigate the spread of COVID-19, large sections of SIG's
end-markets experienced a severe reduction in sales. In the UK and
Ireland during the closure period in April, the Group's businesses
experienced a reduction of 86% compared to pre-COVID levels,
represented by the national 14-day rolling daily average sales
between January and mid-March, reflecting the closure of the
majority of SIG's trading sites in response to government advice.
The Group had re-opened all but two of the UK and Ireland sites by
the end of May, resulting in national 14-day rolling daily average
sales recovering to 63% of pre-COVID average sales levels as sites
and the Group's customers began to re-open.
Trading activity suffered a temporary setback in France
following the short-term closure of all branches for three days in
mid-March, with the 14-day rolling average daily sales reduced to
32% of pre-COVID levels by early April. A staged reopening
throughout April and into May saw, on average, France trading at
56% of pre-COVID revenue levels in April 2020, recovering to 5%
above pre-COVID average sales levels by the end of May.
7.2. COVID-19 mitigating actions
In response to the challenges posed by the COVID-19 pandemic,
the Group has implemented a comprehensive set of actions to reduce
costs and manage liquidity. These actions include, but are not
limited to:
-- Employees : Over 2,000 employees were furloughed under the UK
government's scheme and the majority of trading sites across the UK
and Ireland were temporarily closed until mid-May when the majority
of sites were reopened in the UK. Remaining staff and senior
management agreed to take up to 20% temporary pay reductions, with
the salaries of Directors temporarily reduced by up to 50% from 1
April 2020 to 30 June 2020. In mid-May 2020, the Company
re-instated the executive Directors' pay from 50% to 80% at the
same time as other Group employees were returning to work on full
pay. The pay of executive and Non-Executive Directors is expected
to be increased to 100% from 1 July 2020. The furloughing of
employees, combined with other wage saving initiatives, has enabled
the Group to retain an incremental approximately GBP8 million of
cash in the year through 31 May 2020.
-- Government support : Relevant government support is being
accessed in all countries of operation, including employment
support, tax and social security deferrals, and the business is
assessing whether to apply for government loans (which are
currently being considered in the UK, France and Germany, in
coordination with the Group's existing financing arrangements). Tax
and social security deferrals have been implemented where available
in the UK (PAYE/NIC, VAT), in France (social charges, pension
contributions), Germany (VAT), Poland (corporation tax), Belgium
(VAT, payroll tax) and the Netherlands (VAT, payroll tax). In the
aggregate, use of government support schemes has enabled the Group
to defer approximately GBP19 million of cash payments in the year
through 31 May 2020.
-- Capital expenditure : Programmes that require significant
cash investment and/or do not provide near-term business benefits
have been paused, including major IT projects.
-- Customers : The Group has maintained a sharp focus on
proactively managing collections and monitoring overdue
payments.
-- Trade suppliers : The Group has conducted active discussions
with large trade suppliers, in order to maintain continuity of
supply while netting rebates and agreeing slower payment plans
where possible.
-- Non-trade suppliers : Deferral and term extension requests
are being managed across non-trade suppliers, with a significant
focus on IT and services and property, with property rates being
deferred on UK properties and 'empty' or 'retail' relief claims
submitted.
-- Landlords : UK landlords have been approached to request that
the June rent quarter payment is spread across the subsequent two
quarters. In other cases, lease extensions are being offered in
return for rent-free periods. The Group's business in Poland has
also approached landlords for rent reductions.
-- Fleet leases : Payment holidays have been requested from fleet lease providers.
-- Dividend : The Board took the decision not to declare a full
year 2019 dividend, nor to consider any return to shareholders of
the proceeds of recent disposals.
The decisive implementation of these mitigating actions has
helped to reduce cash outflows across the Group.
7.3. Industry dynamics beyond COVID-19 disruption
Despite short-term disruption, a number of structural drivers
underpin recovery in the construction sector and sustainable growth
in the medium to long term, providing a supportive backdrop for
SIG's return to profitable growth. The Board sees potential for
initial economic recovery as soon as late 2020 with potential for
all markets and sub-sectors to return to growth by 2022.
These include:
(a) Position in cycle
The construction sector was at a mid-point in its economic cycle
before the COVID-19 pandemic, rather than a cyclical high.
Furthermore, in the UK and Europe, construction investment has
lagged behind the wider economy since the mid-1980s, implying lower
likelihood of a need for overbuild correction once the situation
recovers.
(b) Structural housing shortage
Housing has not kept pace with the population across Europe and
the UK. Residential under-build remains a key social and political
factor across SIG's key geographies. This may result in further
public sector support for the sector, such as the possible
reintroduction of the UK's Help to Buy scheme, or an increase in
private investment.
(c) Fiscal stimulus
Construction is likely to be a prime area of fiscal stimulus
post COVID-19, as it provides a strong domestically geared
multiplier in addition to addressing the political imperatives
related to the residential housing industry. Moreover, the Company
believes that there has been a structural under-investment in
construction in the UK in particular, which may lead to additional
opportunities going forward. Furthermore, there is potential for
acceleration of pre-announced Government spending pledges,
particularly in relation to infrastructure and housing.
(d) Climate / Environmental, Social and Governance (ESG)
The commitment to reduce greenhouse gas emissions supports
greater activity in the construction of low-carbon buildings,
through new build or conversion. Energy efficiency linked product
verticals such as insulation and roofing are well positioned for
growth.
SIG is well positioned to benefit from these positive structural
drivers over the medium to long-term. The Group is an essential
coordinator within the construction supply chain throughout the UK,
Mainland Europe and Ireland, a market that is projected to be one
of the first to rebound under government stimulus packages.
8. Financing and liquidity
The Group closely monitors its funding position throughout the
year, including monitoring compliance with covenants and available
facilities to ensure it has sufficient headroom to fund operations.
The Group's covenant net debt as at 31 December 2019 was GBP168.5
million, compared with covenant EBITDA for 2019 of GBP78.4 million.
The Group's covenant leverage (the ratio of covenant net debt to
covenant EBITDA) was 2.1x as at the same date.
As at 26 March 2020, the Group reported that it had cash
resources of GBP135 million, following receipt of the sale proceeds
of the Air Handling business. As a result of strengthened cash
control measures, the Group was able to preserve its liquidity
position and as at 11 June 2020 the Group had cash resources of
GBP181.7 million, compared to GBP155.3 million as at 30 April 2020,
and a net debt position (pre-IFRS 16) of GBP85.4 million, compared
to GBP114.1 million as at 30 April 2020 . See paragraph 11.4
"Current trading liquidity" below for further details.
The cash control measures enacted by the Group (for example,
increasing creditor days) and reduction in trading revenues for the
year to May 2020 (reducing the amount of cash tied up as working
capital) have resulted in a net working capital cash benefit. The
unwind of these cash conservation measures, as well as the expected
growth in sales as the Group returns to growth, will also require
more working capital in the business, compared to its average
historic levels, both to improve the service to customers and to
support the Group's sales growth. This increase in working capital
requirement will be funded from the Group's available resources at
the time.
The Group's ability to maintain its liquidity position during
this period of extreme uncertainty is a reflection of the
effectiveness of the mitigating actions initiated by the Board, the
agility of the organisation and the experience of the managers who
enacted these measures throughout the Group.
Notwithstanding the effectiveness of these actions, the
prolonged impact of COVID-19 is anticipated to have significant
consequences on the Group's financial performance in 2020, both in
terms of profitability and cash. The effect on profitability and
net financial indebtedness is such that the Group anticipated that
it would have breached the covenants attached to the Revolving
Credit Facility Agreement and the Note Purchase Agreements at the
30 June 2020 testing date.
On arrival of the new CEO and interim-CFO in February 2020, and
before the COVID-19 impact, the Company undertook an extensive
review of its business and operating strategy. During these
reviews, it became clear that, with the Group's reduced size and
lower profitability, it would be necessary to re-set the financial
structure put in place some years beforehand as average net debt
levels remained high for the prospective profit levels in the
business.
The Board concluded that a capital raise would be required to
secure the continued support of the Group's RCF Lenders and
Noteholders, and to establish a capital structure appropriate for
the delivery of the Group's new strategy and growth plan.
Accordingly, in April 2020, alongside commencing preparations for
the Capital Raise, the Group entered into discussions with the RCF
Lenders and Noteholders in order to address the anticipated
covenant breach and determine a path through the current trading
environment that would be amenable to all stakeholders.
The conclusion of this dialogue was that the RCF Lenders and the
Noteholders have agreed to the Amendments and the Revised Covenants
under their respective finance documents as a means of providing
sufficient headroom for the Group to navigate a return to a
sustainable financial structure in accordance with its business
plan. In addition, conditional upon the Company's receipt of gross
proceeds of at least GBP125 million from the Capital Raise (i) the
maturity of the Revolving Credit Facility Agreement will be
extended from 27 May 2021 to 31 May 2023; (ii) the maturity of the
Company's 2020 and 2021 Notes will be extended to 31 May 2023 and
(iii) while the maturity of the Company's 2023 and 2026 Notes will
not be amended, the holders of these Notes will be granted an
option for these Notes to be redeemed on 31 May 2023 (with a
make-whole as calculated in accordance with the terms of the
relevant Notes). In addition, the Amended Debt Facilities
Agreements include a new event of default which will occur 10
business days after an Equity Failure Event. An Equity Failure
Event will occur if (among other events) the Company fails to
receive gross proceeds of at least GBP125 million from the Capital
Raise by 29 July 2020.
If an Equity Failure Event occurs the Company would need to
immediately re-engage with the RCF Lenders and Noteholders to
determine any basis upon which those creditors would be prepared to
continue to support the Group in the absence of any further capital
in the short term. Those creditors would need to consider, in that
context and on the basis of the Group's business plan, whether the
Group's capital structure remains sustainable and would enable the
Group to continue as a going concern.
9. Requirement for capital raise and use of proceeds
9.1. Requirement for capital raise
As noted above, in order to provide the Group with a
strengthened balance sheet from which it can implement its new
strategy, and to avoid an event of default under the Amended Debt
Facilities Agreements as a result of the occurrence of an Equity
Failure Event, the Board is proposing a capital raise seeking gross
proceeds of GBP165 million by way of the Capital Raise.
The Capital Raise is intended to deliver the Group's objectives
to:
(a) emerge from the COVID-19 crisis with the financial resources
required to deliver its new strategy, recapture market share and
strengthen the Group's position as a market leader across its
operating businesses;
(b) ensure access to capital that will provide the Group with
greater certainty, flexibility and balance sheet strength to pursue
future growth opportunities; and
(c) support the deleveraging of the Group's balance sheet, in
line with the Board's medium-term target of covenant leverage of
below 1.5x.
9.2. Use of proceeds
The Capital Raise is expected to raise GBP165 million in gross
proceeds, which will be used to improve liquidity, provide further
resilience against the effects of the ongoing COVID-19 pandemic on
the Group's business, deliver the Company's new strategy, repay
approximately GBP48 million of outstanding principal in respect of
the Notes and to fund the unwind of various forms of government
relief made available to mitigate the effects of the COVID-19
pandemic .
The overall effect is intended to give the Group the flexibility
to execute its new strategy with a more sustainable financial
structure. The Company believes that the proposed Capital Raise is
the optimal solution to address the Group's current challenges and
deliver on its renewed strategic potential.
Assuming successful completion of the Capital Raise, the Company
believes that the Group remains well positioned in the medium to
longer term. As a leading provider of specialist building materials
to trade customers across the UK, Ireland and Mainland Europe, the
Company is confident of returning the Group to profitable
growth.
10. Financial impact of the CAPITAL RAISE
Had the Capital Raise taken place as at the last balance sheet
date, being 31 December 2019, the effect on the Group's balance
sheet would have been an increase in cash of GBP92.2 million and a
decrease of GBP52.7 million in liabilities, reflecting
approximately GBP153.1 million in net cash proceeds from the
Capital Raise (being gross proceeds of GBP165 million, less
estimated fees and expenses of approximately GBP11.9 million in
connection with the Capital Raise), and the prepayment of GBP48.0
million in a nominal amount of the Notes (at par plus interest
accrued at the date of prepayment), as well as the payment of debt
advisory fees of GBP8.2 million, together with lender fees relating
to the Notes of GBP1.8 million and lender fees relating to the RCF
of GBP2.9 million. The Group's pro forma net assets would have been
GBP472.5 million.
11. Current trading and Outlook
11.1. Pre-COVID-19 period (January 2020 to February 2020)
The Group's underlying revenue for the two months ended 29
February 2020 was GBP296.0 million, down by GBP36.9 million from
the prior year (two months ended 28 February 2019: GBP332.9
million), a like-for-like decline of 11.1%. Trading in the UK and
Germany saw a continuation of the challenging trends seen in the
last quarter of 2019, whilst trading activity in the rest of Europe
was relatively stable.
Due to reduced sales volumes in key markets, gross profit margin
fell compared to the prior year period (two months ended 28
February 2019).
As reported in the Group's trading update on 26 March 2020, the
Group posted an underlying operating loss of GBP9.1 million (pre
IFRS 16) in the two months ended 29 February 2020.
11.2. COVID-19 lockdown period (March 2020 to April 2020)
As announced on 29 May 2020, the Group's underlying revenue for
the two months ended 30 April 2020 was GBP235.0 million, down by
GBP138.8 million from the prior year (two months ended 30 April
2019: GBP373.8 million). Revenues in the period were significantly
impacted by the COVID-19 outbreak, particularly in the UK, Ireland
and France.
On 30 March 2020, the Group announced that large parts of its UK
market had seen sales fall away rapidly, in common with the broader
construction industry. It was concluded that it was necessary and
appropriate to temporarily close UK operations. Trading sites in
Ireland were also temporarily closed due to restrictions
implemented by the Irish Government.
The UK and Ireland businesses remained open to service critical
and emergency projects only, such as for the NHS, energy and food
sectors. Revenue, during the closure period in April, reduced to
approximately GBP0.4 million per day on average, a reduction of
approximately 86% compared to pre-COVID-19 average sales levels (6
January 2020 to 13 March 2020) .
Trading activity suffered a temporary setback in France
following the short-term closure of all branches for three days in
mid-March, with the 14-day rolling average daily sales reduced to
approximately 32% of pre COVID-19 levels by early April. A staged
reopening throughout April saw, on average, France trading at
approximately 56% of pre COVID-19 average sales levels in
April.
The Group's operating companies in Germany, Poland and Benelux
were impacted by government measures to a lesser extent, where
trading continued from all sites and revenue fell to 82% of pre
COVID-19 levels in mid-April. By the end of April, these countries
saw activity back to pre COVID-19 average sales levels.
Similar to the first two months, the Group's gross profit margin
in March and April was negatively impacted by the decline in
overall sales, combined with a shift in mix away from the more
profitable roofing merchanting businesses in the UK and France.
During the period, the Group took decisive cost actions in
response to COVID-19 as well as accessing the government-supported
job retention schemes, resulting in a reduction in its operating
costs year-on-year.
11.3. Gradual lifting of COVID-19 lockdown restrictions (May 2020 to June 2020)
The Group has seen a gradual improvement in trading performance
throughout May and June 2020, particularly in the UK and Ireland
where branches continued to reopen during May as lockdown
eased.
In the UK and Ireland May revenues averaged approximately GBP1.3
million per day with 14-day rolling average daily sales recovering
to 63% of pre-COVID-19 average sales levels by the end of the
month, at which point all but two of the UK and Ireland sites had
re-opened. This positive revenue trend has continued into June.
France also demonstrated a strong recovery during May with
average sales of GBP2.1 million per day, notwithstanding that parts
of the French construction market were not fully open. Daily sales
were 5% above pre-COVID-19 average sales levels by the end of the
month, reflecting the release of pent-up demand during the lockdown
period, and signalling optimism for the early summer trading period
when sales are seasonally strongest. 14-day rolling average daily
sales have continued to improve in early June.
Sales in Germany, Poland and Benelux remained at pre-COVID-19
average sales levels during May, demonstrating stable demand after
trading through the lockdown period. Although the sales cycle in
these geographies mean revenue in the first few days of the month
are generally lower, there have been no signs of a reduction in
demand.
The Group's underlying revenue for May showed a steady recovery
from its low point in April 2020. Although this remained below the
underlying revenue achieved in March 2020, the Group's daily sales
at the end of May was largely in line with March levels. The
improvement in revenues has continued at the start of June with the
Group trading broadly in line pre-COVID-19 levels. While revenues
continued to be impacted by COVID-19 in some of the Group's primary
markets, the strength of trading is testament to the capability and
resilience of our operating companies to return to work quickly and
effectively.
Although the improvement in trading performance is encouraging,
this has been influenced by a range of factors, including
re-stocking by customers as a result of previously subdued demand,
and it is unclear, given the relatively short period of trading
post-lockdown, whether this performance will be maintained going
forwards.
Profitability across the Group has also improved materially
during May 2020, with operating losses in the UK materially lower
than management estimates at the time of the commencement of the
lockdown and the rest of the Group trading profitably (before
central costs). This has been driven by a combination of improved
trading performance, particularly in the UK and Ireland, decisive
cost actions by management and continued governmental support.
11.4. Current trading liquidity
The loss of revenues in 2020 is expected to impact
profitability, cash generation and therefore debt levels. The Group
has taken immediate and decisive action around cash conservation
and these measures have resulted in estimated cash savings of
approximately GBP27 million through 31 May 2020, comprising
approximately GBP8 million of wage savings under the furlough
schemes and other wage saving initiatives and a further
approximately GBP19 million of tax and other deferrals through the
use of government support schemes.
As at 11 June 2020 the Group had cash resources of GBP181.7
million, compared to GBP155.3 million as at 30 April 2020, and a
net debt position (pre-IFRS 16) of GBP85.4 million, compared to
GBP114.1 million as at 30 April 2020. While this improvement
reflects in part timing benefits of when payments fall due, it also
reflects improved levels of profitability, continued cost control
actions, utilisation of governmental programmes and intensive, but
careful, management of working capital. Whilst this improvement in
available liquidity is encouraging, the Group expects that some of
this positive cashflow will unwind over the remainder of 2020 as
governmental support decreases and certain cash payment deferrals,
including VAT and other taxes, are resolved.
The unwind of these cash conservation measures, as well as the
expected growth in sales as the Group returns to growth, will also
require more working capital in the business, compared to its
average historic levels, both to improve the service to customers
and to support the Group's sales growth. This increase in working
capital requirement will be funded from the Group's available
resources at the time.
11.5. Outlook
As a result of the impacts of declining revenues under the
previous strategy and COVID-19 on the construction industry across
Europe generally, management expects revenues for 2020 to be
approximately GBP500 million lower than 2019 as reported, post the
disposal of the Air Handling division. Management is targeting a
return to around 2019 levels of Group revenues (as reported, post
the disposal of the Air Handling division) in 2022.
While those geographies that were less severely impacted by
COVID-19 are expected to recover faster, those which need strategic
improvements may take longer to see the impact of management
actions. The focus of the UK business through the second half of
2020 will be to continue to put the correct leadership structures
and people in place, and restructuring the organisation to better
position it to recapture market share. The planned combination of
the leadership teams in UK Distribution and UK Exteriors is
expected to reduce and simplify the central functions, resulting in
a potential reduction in operating costs within the UK businesses
of up to GBP4 million, after investments in front line sales to
drive growth. In Germany and Benelux, the consolidation of the
management structure is also intended to return Germany to growth
after recent underperformance. In France, where the Group has shown
resilience over the last few years, the business is expected to
recover to targeted levels of revenue faster given its strong
existing platform in the region.
Management remains focused on the overall levels of operating
cost in the business which, if properly controlled, can result in
significant operational gearing. The Group aims to grow its market
share over time to leverage its cost base, which the Group seeks to
supplement with improved processes and systems which the Board
believes will improve Group productivity. The new strategy will be
focused on growth with limited cost reductions outside the merging
of senior management and central support functions in the UK and
Germany and Benelux. Management's medium term target is to restore
an operating margin of approximately 5% within the Group's
operating companies and a Group operating margin of approximately
3%, trending towards approximately 5% in the longer term.
Depreciation and amortisation as a percentage of sales is
expected to remain in line with historical levels going forward,
capital expenditure is expected to run slightly ahead of
depreciation and as a percentage of sales return to historic levels
given management's strategic plan focusing on operational
improvements rather than requiring large capex investment.
The improvement in performance seen during May 2020 is
encouraging and ahead of management expectations at the time of the
commencement of the lockdown. However, there remains material
uncertainty around the sustainability of this performance and
trading conditions throughout the rest of 2020, particularly in
respect of COVID-19.
12. Dividend policy
The Group does not intend to pay a dividend for 2020, and will
limit the 2021 interim dividend to GBP3.0 million. Under the terms
of the Amended Debt Facilities Agreements, the 2021 final dividend
and all subsequent dividends will be conditional on the Group's
leverage being less than 2.25x in each case (including on a look
forward basis), and will be subject to the further conditions that:
(i) at the time the dividend is declared no default under the
Amended Debt Facilities Agreements is continuing or would result
from the payment of the dividend; (ii) at the time of payment of
such dividend, there are not any outstanding loans under the New
RCF; and (iii) the dividend is made in accordance with the
Company's most recently stated policy of maintaining a two to three
times dividend cover ratio.
13. Working Capital
13.1. Working Capital Statement
In the opinion of the Company, the Group does not have
sufficient working capital for its present requirements, that is,
for at least twelve months following the date of this
Announcement.
The Company has reached this opinion due to the fact that it
must raise gross proceeds of at least GBP125 million by 29 July
2020 in order to avoid an Equity Failure Event under each Amended
Debt Facilities Agreement. The Capital Raise relies heavily on the
GBP94 million CD&R Investment, GBP60 million of which is not
underwritten, in order to raise the minimum gross proceeds of
GBP125 million. If the Capital Raise succeeds in raising the
required GBP125 million, there will be no shortfall in working
capital for at least twelve months following the date of this
Announcement.
The CD&R Investment is subject to certain conditions which
are outside the control of the Group and which, if not met, would
result in the Capital Raise failing to occur in its present form
and on the basis presented in this Announcement. Specifically, the
CD&R Investment will not proceed if: (i) the Austrian
competition authorities were to commence an investigation in
connection with the CD&R Investment; or (ii) the CD&R
Subscription Agreement was otherwise to be terminated in accordance
with its terms. If the CD&R Investment does not proceed, the
Company will have triggered an Equity Failure Event under each
Amended Debt Facilities Agreement and the Capital Raise would not
occur in its present form and on the basis presented in this
Announcement, and Admission of the Shares to trading would not
occur. If the Capital Raise were otherwise to fail to proceed or to
raise gross proceeds of at least GBP125 million by 29 July 2020,
the Company will also have triggered an Equity Failure Event under
each Amended Debt Facilities Agreement. The occurrence of an Equity
Failure Event will lead to an Event of Default occurring under each
Amended Debt Facilities Agreement 10 business days thereafter.
13.2. Plan to rectify working capital shortfall
The Company proposes to rectify this anticipated shortfall in
working capital by completing the Capital Raise by 29 July 2020.
The Company is confident in its ability to rectify the working
capital shortfall in this manner due to the support the Company has
received for the Capital Raise in the form of the conditional
CD&R Investment and the agreement by IKO, the Company's largest
shareholder, to vote in favour of the Capital Raise Resolutions
that it is entitled to vote on, to acquire 65.4 million New
Ordinary Shares at the Issue Price in the Firm Placing and to take
up in full its Open Offer Entitlements.
13.3. Implications of a failure of the Company's plan to rectify working capital shortfall
If an Equity Failure Event occurs due to: (i) the Austrian
competition authorities commencing an investigation in connection
with the CD&R Investment; or (ii) the CD&R Subscription
Agreement otherwise being terminated in accordance with its terms;
or (iii) the Capital Raise otherwise failing to proceed or to raise
gross proceeds of at least GBP125 million by 29 July 2020, the
Company is required, no later than 5 business days thereafter, to
provide a deleveraging plan for the approval of the RCF Lenders and
the Noteholders. If the Event of Default occurring as a result of
the Equity Failure Event is not waived by the requisite majority of
the RCF Lenders and by each Noteholder, the RCF Lenders and the
respective Noteholders would be entitled to accelerate and demand
repayment in full of the amounts outstanding under the respective
the Amended Debt Facilities Agreements (including principal and
accrued interest). The principal amounts outstanding under the
Amended Debt Facilities Agreements as at the date of this
Announcement are GBP70 million under the Revolving Credit Facility
Agreement and EUR181 million and USD30 million in respect of the
Notes. The Group would then have an immediate liquidity need in an
amount equal to such amounts, net of any cash then on hand. In such
circumstances, the RCF Lenders and the Noteholders would also be
entitled to make demand against various Group companies who have
provided guarantees in respect of the Amended Debt Facilities
Agreements. Following any such demand, the Group does not expect to
have the funds available to repay such amounts at that time. In
such circumstances, in the absence of being able to successfully
agree or implement any of the alternatives discussed below, the
Group would be unable to continue as a going concern.
Alongside the provision of a deleveraging plan to the RCF
Lenders and Noteholders, the Company would immediately engage with
the RCF Lenders and Noteholders to determine any basis upon which
they may be prepared to continue to support the Group, if at all,
in the absence of CD&R's participation or of any further
capital being raised in the short term, as applicable. As a result,
if an Equity Failure Event occurs, the Group would first seek to
renegotiate the terms of the Amended Debt Facilities Agreements
with the RCF Lenders and the Noteholders to secure waivers of any
Equity Failure Event which had occurred and further accommodation
(including the ability to make further drawings under the Revolving
Credit Facility Agreement to meet the Group's liquidity
requirements) to enable the Group to continue to trade as a going
concern. However, the Group may be unable to obtain such waivers
and further accommodation from the RCF Lenders and/or the
Noteholders, either at all or without significant cost to the
Group.
If the RCF Lenders and/or the Noteholders did not agree to
waivers of the Equity Failure Event and to provide further
accommodation (including the ability to make further drawings under
the Revolving Credit Facility Agreement to meet the Group's
liquidity requirements) on commercially acceptable terms to enable
the Group to continue to trade as a going concern, the Group may
seek alternative sources of funding to refinance the amounts
outstanding under the Revolving Credit Facility Agreement and the
Notes.
If the Equity Failure Event results from the Capital Raise
failing to proceed or to raise gross proceeds of at least GBP125
million by 29 July 2020, the Company could take action to commence
another equity raise under a new prospectus with new shareholder
resolutions, or alternatively effect disposals of assets or a
merger or acquisition transaction involving the Company. However,
the Amended Debt Facilities Agreements restrict the Group's ability
to make any such disposals and enter into such merger or
acquisition transactions and the Group would need to receive the
approval of the RCF Lenders and the Noteholders to make any such
disposals or enter into such merger or acquisition transactions,
which approval could be withheld.
As any of the above options would require the participation,
agreement or approval of external parties, the Directors are not
confident that any such alternative courses of action could be
achieved in the limited time available on commercially acceptable
terms, or that they ultimately would be successful. If the Company
fails to secure any alternative funding on commercially acceptable
terms and/or is otherwise unable to successfully pursue any of the
above options on commercially acceptable terms, or at all, within
the required time, the Company will cease to be able to operate as
a going concern and the Board may, as a result, decide to place the
Company into administration or petition the court for the
compulsory liquidation of the Company, or the Company's creditors
may petition the court for the administration or compulsory
liquidation of the Company.
14. Principal terms of the Capital Raise
14.1. General
The Company intends to raise aggregate gross proceeds of
GBP104.4 million through the issue of 347.9 million New Ordinary
Shares at the Issue Price of 30 pence per New Ordinary Share by way
of the Firm Placing and Placing and Open Offer.
The Issue Price was set having regard to the prevailing market
conditions and the size of the Firm Placing and Placing and Open
Offer. The Issue Price represents a discount of approximately 10.6%
to the closing price per Ordinary Share of 33.5 pence on 18 June
2020 (the last Business Day before the announcement of the Firm
Placing and Placing and Open Offer). The Directors believe that it
is necessary to offer the New Ordinary Shares at a discount to
complete the Firm Placing and Placing and Open Offer, and
accordingly believe that such discount is in the best interests of
the Shareholders, and that the Issue Price (and the discount) is
appropriate for the Firm Placing and Placing and Open Offer.
The Firm Placing and Placing and Open Offer are conditional on,
among other things:
-- the Capital Raise Resolutions being passed by the
Shareholders at the General Meeting (or, with the Joint
Bookrunners' written consent, at any adjournment of it);
-- Admission becoming effective by not later than 8.00 a.m. on
27 July 2020 (or such later time and/or date as the Company and the
Joint Bookrunners may agree); and
-- each of the CD&R Subscription Agreement and the Sponsors
and Placing Agreement otherwise becoming unconditional in all
respects and not having been terminated in accordance with their
respective terms before Admission.
Accordingly, if any such conditions are not satisfied or, if
applicable, waived, the Firm Placing and Placing and Open Offer
will not proceed, any Open Offer Entitlements admitted to CREST
will thereafter be disabled and application monies under the Open
Offer will be refunded to the applicants, by cheque (at the
applicant's risk) in the case of Qualifying Non-CREST Shareholders
and by way of a CREST payment in the case of Qualifying CREST
Shareholders, without interest, as soon as practicable thereafter.
In these circumstances, the Firm Placing to the Firm Placees and
the Placing to the Conditional Placees will not proceed.
The New Ordinary Shares to be issued pursuant to the CD&R
Investment and the Firm Placing and Placing and Open Offer will,
following Admission, rank pari passu in all respects with each
other and with the Existing Ordinary Shares and will carry the
right to receive all dividends and distributions declared, made or
paid on or in respect of the Ordinary Shares after Admission.
The Capital Raise is expected to result in 590.0 million New
Ordinary Shares being issued (representing approximately 49.9% of
the Enlarged Share Capital).
Applications will be made to the FCA for the New Ordinary Shares
proposed to be issued in connection with the Capital Raise to be
admitted to the premium listing segment of the Official List and to
the London Stock Exchange for the New Ordinary Shares to be
admitted to trading on its Main Market for listed securities.
Subject to fulfilment of all conditions applicable to Admission, it
is expected that Admission will become effective, and dealings for
settlement in the New Ordinary Shares will commence, at 8.00 a.m.
on 10 July 2020.
A cash box structure will be used for the issue of the New
Ordinary Shares pursuant to the Capital Raise (other than the
Directors and Senior Management Subscriptions).
14.2. CD&R Investment
CD&R has agreed, subject to fulfilment of certain
conditions, to subscribe for New Ordinary Shares in the aggregate
amount of up to GBP94.0 million. Of this amount, GBP60.0 million
has been committed by CD&R in respect of New Ordinary Shares at
an issue price of 25 pence per share. Further subscriptions of up
to GBP34.0 million will be made by CD&R at the Issue Price
under the Firm Placing (for an aggregate subscription amount of
GBP20 million) and the Placing and Open Offer (for an aggregate
subscription amount of up to GBP14 million, subject to clawback by
Qualifying Shareholders under the Open Offer as outlined below).
The CD&R Investment is conditional upon, the satisfaction (or
waiver by CD&R) of certain conditions, including: (i) passing
of the Capital Raise Resolutions; (ii) the Austrian competition
authorities (Bundeswettbewerbsbehörde and Federal Cartel
Prosecutor) not having requested an investigation of CD&R's
proposed subscription for New Ordinary Shares which is expected to
be confirmed no later than 3 July 2020; and (iii) Admission
occurring by no later than 8 a.m. on 31 August 2020. The CD&R
Investment of GBP60 million in respect of New Ordinary Shares at an
issue price of 25 pence per share is not underwritten by the Joint
Bookrunners pursuant to the Sponsors and Placing Agreement.
Upon Admission, CD&R will hold approximately 25% of the
Enlarged Share Capital and the CD&R Relationship Agreement will
become effective, and remain effective for so long as CD&R is
entitled to exercise 10% or more of the votes to be cast on matters
at general meetings of the Company.
14.3. IKO Support
The Company's largest shareholder as at the date of this
Announcement, IKO Enterprises Limited (IKO), holding (together with
its affiliates) approximately 14.79% of the issued share capital of
the Company as at 18 June 2020 (being the latest practicable date
before publication of this Announcement) has agreed with the
Company in a deed of irrevocable undertaking dated 19 June 2020
that it irrevocably undertakes, conditional only on the Capital
Raise being announced and it receiving an allocation of 65.4
million New Ordinary Shares under the Firm Placing at the Issue
Price, to vote in favour of the Capital Raise Resolutions that it
is entitled to vote on and to take up in full its Open Offer
Entitlements. The ability of IKO to participate in the Firm Placing
is subject to independent shareholder approval due to IKO's status
as a related party for the purpose of Chapter 11 of the Listing
Rules. It has been agreed that IKO will not be subject to the
requirement to subscribe for 50% of its total subscriptions in the
Firm Placing and the remaining 50% in the Placing and Open Offer.
Instead, IKO will receive an allocation of GBP19.6 million in the
Firm Placing and intends to take up in full its Open Offer
Entitlements to ensure it maintains its current ownership
percentage of the Enlarged Share Capital.
The Firm Placing and Placing and Open Offer (including IKO's
participation) is underwritten by the Joint Bookrunners pursuant to
the Sponsors and Placing Agreement.
As a consequence of IKO's existing interest in the Company, its
agreed participation in the Firm Placing and Placing and Open Offer
is a related party transaction for the purposes of Chapter 11 of
the Listing Rules and will require the prior approval of
independent Shareholders by ordinary resolution. Such a resolution
has been included in the Resolutions in the Prospectus, which is
expected to be published later today. IKO (and its associates) will
not be entitled to vote on this resolution. The Board recognises
the value that IKO's support has added to the Capital Raise
(including CD&R's participation in the Capital Raise) and the
Board has agreed to facilitate IKO's participation in the Capital
Raise so that it does not suffer material dilution. The Board,
having been so advised by Jefferies International Limited and Peel
Hunt LLP in their capacities as Joint Sponsors, considers that this
related party transaction is fair and reasonable as far as the
Shareholders are concerned and is in the best interests of the
Shareholders as a whole. In providing advice to the Board, the
Joint Sponsors have taken into account the Board's commercial
assessments of the aforementioned related party transaction.
14.4. Firm Placing
The Company intends to raise GBP60.0 million (gross) through the
Firm Placing at the Issue Price of 30 pence per New Ordinary Share
to certain institutional investors. The Firm Placing comprises 200
million Firm Placed Shares (representing approximately 33.8% of the
Existing Ordinary Shares). The Firm Placed Shares will represent
approximately 16.9% of the Enlarged Share Capital following
Admission, taking into account the effects of the Capital
Raise.
The Firm Placees have agreed to subscribe for the Firm Placed
Shares at the Issue Price. The Firm Placing is not subject to
clawback in respect of valid applications for Open Offer Shares by
Qualifying Shareholders pursuant to the Open Offer. The Firm
Placing is subject to the same conditions and termination rights
which apply to the Placing and Open Offer.
The Firm Placing has been fully underwritten by the Joint
Bookrunners pursuant to the Sponsors and Placing Agreement. To the
extent that any Firm Placee procured by the Joint Bookrunners fails
to pay for any or all of the Firm Placed Shares which have been
allocated to it, each of the Joint Bookrunners has severally
agreed, on the terms and subject to the conditions set out in the
Sponsors and Placing Agreement, to subscribe for such Firm Placed
Shares in their agreed proportions.
Applications will be made to the FCA for the Firm Placed Shares
to be admitted to the premium listing segment of the Official List
and to trading on the London Stock Exchange's Main Market for
listed securities. Subject to fulfilment of all conditions
applicable to Admission and FCA approval, it is expected that
Admission will become effective, and dealings for settlement in the
Firm Placed Shares will commence, at 8.00 a.m. on 10 July 2020.
The Issue Price represents a discount of 3.5 pence
(approximately 10.6%) to the closing price per Ordinary Share of
33.5 pence on 18 June 2020, (being the last Business Day before the
announcement of the Firm Placing and Placing and Open Offer).
The Firm Placed Shares, when issued and fully paid, will be
identical to, and rank pari passu with, the Existing Ordinary
Shares in respect of all dividends or other distributions declared,
made or paid after Admission. Firm Placees will not be able to
participate in the Open Offer with respect to the Firm Placed
Shares.
Placees will be required to agree to subscribe for 50% of their
total subscriptions in the Firm Placing, and the remaining 50% in
the Placing and Open Offer. It has been agreed that IKO will not be
subject to this requirement. IKO will receive an allocation of
GBP19.6 million in the Firm Placing and has agreed to take up in
full its Open Offer Entitlements to ensure it maintains its current
ownership percentage of the Enlarged Share Capital.
14.5. The Placing and Open Offer
Under the Placing and Open Offer, the Company intends to issue
147.9 million Open Offer Shares (representing approximately 25% of
the Existing Ordinary Shares) at the Issue Price, raising GBP44.4
million (gross). The Open Offer Shares will represent approximately
12.5% of the Enlarged Share Capital following Admission, taking
into account the effects of the Capital Raise.
The Joint Bookrunners have, pursuant to the Sponsors and Placing
Agreement, conditionally placed all of the Open Offer Shares at the
Issue Price with institutional investors. The commitments of these
placees are subject to clawback in respect of valid applications
for Open Offer Shares by Qualifying Shareholders pursuant to the
Open Offer. The Placing and Open Offer is fully underwritten. To
the extent that any Conditional Placee procured by the Joint
Bookrunners fails to pay for any or all of the Open Offer Shares
which have been allocated to it, each of the Joint Bookrunners has
severally agreed, on the terms and subject to the conditions set
out in the Sponsors and Placing Agreement, to subscribe for such
Open Offer Shares in their agreed proportions.
Subject to the fulfilment of the conditions set out above and on
the terms and conditions of the Open Offer set out in the
Prospectus, which is expected to be published later today and, in
the case of Qualifying Non-CREST Shareholders, the Application
Form, Qualifying Shareholders are being given the opportunity to
subscribe for New Ordinary Shares pro rata to their existing
shareholdings at the Issue Price on the basis of:
1 New Ordinary Share for every 4 Existing Ordinary Shares
held by Qualifying Shareholders and registered in their name at
the close of business on the Record Date.
Fractions of Ordinary Shares will not be allotted and each
Qualifying Shareholder's entitlement under the Open Offer will be
rounded down to the nearest whole number. Qualifying Shareholders
with fewer than 4 Existing Ordinary Shares will therefore have no
entitlement under the Open Offer.
If you have sold or otherwise transferred all of your Existing
Ordinary Shares on or after the ex-entitlement date, you are not
entitled to participate in the Open Offer.
Qualifying Shareholders may apply for any whole number of New
Ordinary Shares up to their maximum entitlement which, in the case
of Qualifying Non-CREST Shareholders, is equal to the number of
Open Offer Entitlements as shown on their Application Form or, in
the case of Qualifying CREST Shareholders, is equal to the number
of Open Offer Entitlements standing to the credit of their stock
account in CREST. Qualifying Shareholders with holdings of Existing
Ordinary Shares in both certificated and uncertificated form will
be treated as having separate holdings for the purpose of
calculating their Open Offer Entitlements.
Application has been made for the Open Offer Entitlements to be
admitted to CREST. It is expected that the Open Offer Entitlements
will be admitted to CREST as soon as possible after 8.00 a.m. on 22
June 2020. The Open Offer Entitlements will also be enabled for
settlement in CREST as soon as possible after 8.00 a.m. on 22 June
2020.
The New Ordinary Shares are not being made available in whole or
in part to the public except under the terms of the Open Offer. The
Open Offer is not being made to Shareholders in the United States
or in Excluded Territories (subject to certain exceptions) or to
ADR Holders. Accordingly, Application Forms are not being sent to
and Open Offer Entitlements are not being credited to the accounts
of Shareholders in the United States or in Excluded Territories
(subject to certain exceptions) or to ADR Holders.
Shareholders should note that the Open Offer is not a rights
issue. Qualifying Shareholders should be aware that in the Open
Offer, unlike in a rights issue, any Open Offer Shares not applied
for will not be sold in the market on behalf of or placed for the
benefit of Qualifying Shareholders who do not apply under the Open
Offer, but will be subscribed for under the Placing for the benefit
of the Company. If any Qualifying Shareholder does not take up its
Open Offer Entitlements then, following the issue of the Open Offer
Shares pursuant to the Open Offer, its interest in the Company will
be diluted by approximately 49.9% (taking into account the dilutive
effects of the CD&R Investment and the Firm Placing and Placing
and Open Offer).
Qualifying CREST Shareholders should note that, although the
Open Offer Entitlements will be admitted to CREST and be enabled
for settlement, applications in respect of entitlements under the
Open Offer may only be made by the Qualifying Shareholder
originally entitled or by a person entitled by virtue of a bona
fide market claim raised by Euroclear's Claims Processing Unit.
Qualifying Non-CREST Shareholders should note that the Application
Form is not a negotiable document and cannot be traded.
Further information on the Open Offer and the terms and
conditions on which it is made, including the procedure for
application and payment, are set out in the Prospectus, which is
expected to be published later today and, where relevant, in the
Application Form.
For Qualifying Non-CREST Shareholders, completed Application
Forms, accompanied by full payment in accordance with the
instructions in the Prospectus, which is expected to be published
later today should be returned by post to Computershare, Corporate
Actions Projects, Bristol, BS99 6AH or by hand (during normal
business hours only) to Computershare, The Pavilions, Bridgwater
Road, Bristol, BS13 8AE so as to arrive as soon as possible and in
any event so as to be received no later than 11.00 a.m. on 7 July
2020. For Qualifying CREST Shareholders, the relevant CREST
instructions must be settled as explained in the Prospectus, which
is expected to be published later today by no later than 11.00 a.m.
on 8 July 2020.
Some questions and answers in relation to the Open Offer,
together with details of further terms and conditions of the Open
Offer, including the procedure for applications and payment and the
procedure in respect of entitlements not taken up, are set out in
the Prospectus, which is expected to be published later today and,
where relevant, the Application Form.
15. Effect of the Capital Raise
Upon Admission and assuming no further vesting or exercise of
awards under the Share Plans as further described in the
prospectus, which is expected to be published later today, the
Enlarged Share Capital is expected to be 1,181,556,977 Ordinary
Shares. On this basis, the New Ordinary Shares will represent
approximately 49.9% of the Enlarged Share Capital, and the Existing
Ordinary Shares will represent approximately 50.1% of the Enlarged
Share Capital.
Following the issue of the New Ordinary Shares to be allotted
pursuant to the Capital Raise, a Qualifying Shareholder that takes
up its Open Offer Entitlements in full will be diluted by 37.4% as
a result of the CD&R Investment and the Firm Placing. A
Shareholder that does not take up any Open Offer Shares under the
Open Offer (or that is a Shareholder in the United States or an
Excluded Territory that is not eligible to participate in the Open
Offer) will experience a dilution of 49.9% as a result of the
Capital Raise.
16. Related party transactions
The Company's largest shareholder, IKO Enterprises Limited ( IKO
), holding (together with its affiliates) approximately 14.79% of
the issued share capital of the Company as at 18 June 2020 (being
the latest practicable date before publication of this
Announcement) has agreed with the Company in a deed of irrevocable
undertaking dated 19 June that it irrevocably undertakes,
conditional only on the Capital Raise being announced and it
receiving an allocation of 65,416,667 New Ordinary Shares under the
Firm Placing at the Issue Price, to vote in favour of the Capital
Raise Resolutions that it is entitled to vote on and to take up in
full its Open Offer Entitlements. The ability of IKO to participate
in the Firm Placing is subject to independent shareholder approval
due to IKO's status as a related party for the purpose of Chapter
11 of the Listing Rules. Such a resolution has been included in the
Resolutions in the Prospectus, which is expected to be published
later today . IKO (and its associates) will not be entitled to vote
on this resolution.
In addition, the proposed one-off payment of GBP375,000 to Steve
Francis and his participation in the Capital Raise pursuant to the
Director and Senior Management Subscriptions will be classed as a
related party transaction for the purposes of Chapter 11 of the
Listing Rules, but as it is below the required threshold, it will
not require the prior approval of Shareholders for the purposes of
Chapter 11 of the Listing Rules.
The Board, having been so advised by Jefferies International
Limited and Peel Hunt LLP in their capacities as Joint Sponsors,
consider that these related party transactions outlined above are
each fair and reasonable as far as the Shareholders are concerned
and are each in the best interests of the Shareholders as a whole.
In providing advice to the Board, the Joint Sponsors have taken
into account the Board's commercial assessments of each
aforementioned related party transaction.
17. Action to be taken
Full details of the terms and conditions of the Open Offer and
the procedure for application and payment will be set out in the
Prospectus, which is expected to be published later today.
If you are in any doubt as to the action you should take, you
should immediately seek your own personal financial advice from an
appropriately qualified independent professional adviser.
18. Overseas Shareholders
Shareholders who have registered addresses outside the United
Kingdom, who are citizens or residents of countries other than the
United Kingdom, or who are holding Ordinary Shares for the benefit
of such persons (including, without limitation, nominees,
custodians and trustees) or have a contractual or legal obligation
to forward this Announcement or the Application Form to such
persons, should refer to the Prospectus, which is expected to be
published later today.
19. Admission to trading and dealing arrangements
Applications will be made to the FCA for the New Ordinary Shares
to be admitted to the premium listing segment of the Official List
and to the London Stock Exchange for the New Ordinary Shares to be
admitted to trading on its Main Market for listed securities. It is
expected that, subject to FCA approval, Admission will become
effective, and dealings for settlement in the New Ordinary Shares
will commence, at 8.00 a.m. on 10 July 2020.
No application is intended to be made for the Existing Ordinary
Shares or the New Ordinary Shares to be admitted to listing or
dealt in on any other exchange.
Subject to the satisfaction of the conditions of the Firm
Placing and Placing and Open Offer, the New Ordinary Shares to be
issued under the Firm Placing and Placing and Open Offer will be
registered in the names of the person to whom they are issued,
either:
-- in certificated form, with the relevant share certificate
expected to be dispatched by post, at the applicant's risk, within
fourteen days of Admission; or
-- in CREST, with delivery (to the designated CREST account) of
the New Ordinary Shares applied for expected to take place on 10
July 2020 (unless the Company exercises its right to issue New
Ordinary Shares in certificated form).
The results of the Firm Placing and Placing and Open Offer will
be announced on a Regulatory Information Service.
20. Additional information
You are recommended to read all the information contained in the
Prospectus, which is expected to be published later today and not
only rely on the information in this Announcement Shareholders and
investors should consider fully and carefully the risk factors
associated with the business of the Group and the Company's
securities.
21. Taxation
Information on UK taxation with regard to the Firm Placing and
Placing and Open Offer is set out in the Prospectus, which is
expected to be published later today. This information is intended
only as a general guide to the current tax position in the UK.
If you are in any doubt as to your own tax position, or are
subject to tax in a jurisdiction other than the United Kingdom, you
should consult your own independent professional adviser without
delay.
22. Employee share schemes
In accordance with the rules of the Share Plans set out in the
Prospectus, which is expected to be published later today, , the
number of Ordinary Shares subject to subsisting awards under such
plans and/or the exercise price (if any) may be adjusted to take
account of the issue of the New Ordinary Shares pursuant to the
Open Offer (but not the Firm Placing and Placing). Participants
will be contacted separately in due course with further information
as to how (if at all) their awards will be adjusted. Participants
in the SIP will be contacted with regard to the impact of the Open
Offer on the Ordinary Shares held for them under the SIP and the
actions (if any) that they may need to take.
23. The Resolutions and the General Meeting
You will find set out in the Prospectus, which is expected to be
published later today, a notice convening a general meeting of the
Company to be held as a closed meeting at 10 Eastbourne Terrace,
London, W2 6LG, United Kingdom at 11 a.m. on 9 July 2020. (the
General Meeting). This General Meeting is being held for the
purpose of considering and, if thought fit, passing the Capital
Raise Resolutions and the Additional Resolution. A summary and
explanation of the Capital Raise Resolutions and the Additional
Resolution are set out below, but please note that this does not
contain the full text of the Capital Raise Resolutions or the
Additional Resolution and you should read this in conjunction with
the Capital Raise Resolutions and the Additional Resolution in the
Notice of General Meeting in the Prospectus, which is expected to
be published later today.
The Capital Raise Resolutions will give the Directors authority
to:
(a) issue and allot the New Ordinary Shares in connection with the Capital Raise;
(b) issue and allot the New Ordinary Shares in respect of the
CD&R Investment at a discount of 10.7% to the closing price of
28 pence per Ordinary Share on the last business day before
announcement of the CD&R Investment and issue and allot the New
Ordinary Shares in respect of the Firm Placing and Placing and Open
Offer at a discount of 10.6% to the closing price of 33.5 pence per
Ordinary Share on the last business day before announcement of the
Firm Placing and Placing and Open Offer;
(c) issue and allot the New Ordinary Shares without complying
with the pre-emption rights in the Companies Act; and
(d) issue and allot New Ordinary Shares to IKO (and/or its
associates) in respect of its participation in the Firm Placing, as
the issue and allotment of New Ordinary Shares to IKO (and/or its
affiliates) would be a related party transaction under Chapter 11
of the Listing Rules, requiring Shareholder approval.
Each of the Capital Raise Resolutions are inter-conditional, so
all of the Capital Raise Resolutions must be passed by Shareholders
in order for the Capital Raise to proceed. The Board believes the
Capital Raise and passing of all of the Capital Raise Resolutions,
including the Capital Raise Resolution authorising a related party
transaction with IKO as outlined above, will promote the success of
SIG and is in the best interests of its Shareholders as a
whole.
In addition to the Capital Raise Resolutions, the Board has
recommended that, subject to Shareholder approval at the General
Meeting of an authorising ordinary resolution (the Additional
Resolution) and conditional on completion of the Capital Raise,
Steve Francis receive a one-off payment of GBP375,000 (the One-Off
Payment). The Additional Resolution, if passed, will give the
Directors authority to make the One-Off Payment. Mr. Francis has
agreed, subject to the Additional Resolution being passed, to
invest GBP150,000 of his own money in New Ordinary Shares as part
of the Capital Raise. The Additional Resolution is required as the
One-Off Payment would be outside the terms of the Directors'
Remuneration Policy approved by Shareholders on 7 November 2018. If
the Additional Resolution is not passed by Shareholders at the
General Meeting, Mr. Francis will not invest in New Ordinary Shares
as part of the Capital Raise. Mr Francis joined the Company as
interim-CEO on 25 February 2020 on an initial contract to 31
December 2020. His remuneration included the opportunity to earn a
bonus of up to 150% of salary based on the achievement of certain
objectives. He was appointed as permanent CEO on 24 April 2020.
During his time with the Company he has developed a compelling new
strategy for the Group, significantly strengthened the top team
with the appointment of new Managing Directors for the UK and
Germany and helped in the recruitment of a new Group CFO (Ian
Ashton), and is expected to have successfully led the Company
through the Capital Raise (including the CD&R Investment and
gaining the support of IKO). As a result the Company is expected to
be financially more soundly based and
in a position to execute its new growth strategy, thus providing
the opportunity for significant shareholder value creation. The
investment by Mr. Francis of GBP150,000 (if the Additional
Resolution is approved) will mean that he will be investing a very
meaningful proportion of the net payment amount in shares in the
Company, thus further aligning himself with Shareholder
interests.
The Capital Raise can proceed if the Additional Resolution is
not passed by Shareholders, but Mr. Francis will not be able to
participate in the Capital Raise in the manner outlined above in
such circumstances.
After completion of the Capital Raise, the Board plans to
consult with Shareholders on amendments to the directors'
remuneration policy, specifically with respect to long term
incentive plan arrangements.
The Company's issued share capital as at 18 June 2020 (being the
latest practicable date before publication of this Announcement)
was 591,556,982 Ordinary Shares.
The Company is closely monitoring developments relating to the
current outbreak of COVID-19, including the related public health
guidance and legislation introduced by the UK Government. At the
time of publication of this Announcement, the UK Government has
advised that large gatherings should not take place. In light of
these measures, the Company is planning for the General Meeting, at
which the Resolutions will be proposed, to be held as a closed
meeting. Shareholders will not be able to attend the meeting and
anyone seeking to attend will be refused entry. The Company will
make arrangements such that the legal requirements to hold the
meeting can be satisfied through the attendance of a minimum number
of Directors or employees (who are also Shareholders in the
Company) and the format of the meeting will be purely functional.
Although the General Meeting is to be held as a closed meeting, the
Resolutions will be voted on in accordance with the proxy votes
received from Shareholders. Shareholders are therefore strongly
encouraged to submit a proxy vote electronically in advance of the
meeting. Details on how to submit your proxy vote are set out in
the notes to the Notice of General Meeting. Given the current
restrictions on attendance, Shareholders are urged to appoint the
Chairman of the meeting as their proxy to ensure their vote will be
counted (rather than a named person who will not be permitted to
attend the meeting).
Arrangements have been made to provide a dial-in facility for
the General Meeting to allow Shareholders to listen to the General
Meeting remotely given that they will be unable to attend in
person. Please note that no facility will be available to
Shareholders to vote or to raise questions during the General
Meeting, and so Shareholders are (as outlined above) encouraged to
submit proxy votes in advance of the General Meeting.
Should any Shareholders wish to submit questions in advance of
the General Meeting, they are encouraged to do so by e-mail to
cosec@sigplc.com at any time between the date of this Announcement
and 5.00 p.m. on 3 July 2020, and the Company will endeavour to
provide answers to such questions during the course of the General
Meeting.
Details of how Shareholders can access the dial-in facility are
included in the Forms of Proxy issued to Shareholders.
The current situation is constantly evolving and the UK
Government may change current restrictions or implement further
measures relating to the holding of general meetings during the
affected period. Any changes to the General Meeting will be
communicated to Shareholders before the General Meeting through our
website and, where appropriate, by RIS announcement.
24. Importance of vote
Your attention is again drawn to the fact that the Capital Raise
is conditional and dependent upon, amongst other things, the
Capital Raise Resolutions being passed at the General Meeting.
Shareholders are asked to vote in favour of the Capital Raise
Resolutions at the General Meeting in order for the Capital Raise
to proceed. Shareholders are also asked to vote in favour of the
Additional Resolution at the General Meeting.
The Directors believe that the successful completion of the
Capital Raise will significantly strengthen the Group's balance
sheet and provide it with the capacity to continue to invest in
support of its strategic objectives, for the benefit of
Shareholders.
The Capital Raise is conditional on, among other things, the
Capital Raise Resolutions being passed at the General Meeting. If
the Capital Raise Resolutions are not approved by the requisite
percentage of members of the Company by 24 July 2020, the Capital
Raise will not be able to proceed and an equity failure event under
and as defined in each Amended Debt Facilities Agreement (an Equity
Failure Event) will occur. Even if the Capital Raise Resolutions
are passed, failure of the Capital Raise to proceed, or to raise
gross proceeds of at least GBP125 million by 29 July 2020, will
also constitute an Equity Failure Event.
Should the Capital Raise proceed and raise gross proceeds of at
least GBP125 million, no Equity Failure Event will be triggered and
the Company will have sufficient working capital for the next 12
months following the date of the Prospectus which is due to be
published later today
However, the Capital Raise relies heavily on the investment
contribution of CD&R, GBP60 million of which is not
underwritten, in order to raise the minimum gross proceeds of
GBP125 million. Moreover, in addition to the events set out above,
an Equity Failure Event will also occur and the Capital Raise would
not occur in its present form and on the basis presented in this
Announcement, and Admission of the Shares to trading would not
occur if: (i) the Austrian competition authorities
(Bundeswettbewerbsbehörde and the Federal Cartel Prosecutor)
commence an investigation in connection with CD&R's proposed
subscription for ordinary shares in the Company (and the decision
in that regard is expected to be known no later than 3 July 2020);
or (ii) the CD&R Subscription Agreement or the Sponsors and
Placing Agreement are terminated or fail to become effective in
accordance with their respective terms, in each case, before the
closing of the Capital Raise.
The occurrence of an Equity Failure Event will lead to an event
of default occurring under each Amended Debt Facilities Agreement
10 business days thereafter. If an Equity Failure Event occurs, the
Company is required, no later than 5 business days thereafter, to
provide a deleveraging plan for the approval of the RCF Lenders and
the Noteholders. Any deleveraging plan is required to include: (i)
the Company's up to date business plan produced on the basis of an
Equity Failure Event and the Company's assessment of the COVID-19
situation at the time of the production of such business plan; (ii)
the Company's proposed capital structure in light of such business
plan; (iii) the actions which the Company intends to pursue to
ensure a deleveraging of the Group's balance sheet (including any
disposals proposed to be made any member of the Group and the
assumed value range in respect of each such disposal); (iv) the
Company's requests of the RCF Lenders and Noteholders in light of
the same; and (v) the Company's proposals to grant security in
favour of the RCF Lenders, the Noteholders and trustee of the UK
defined benefit pension scheme (the Pension Scheme) on the basis of
principles to be agreed; and (vi) the Company's latest 13 week
cashflow forecast and the proposals to meet its immediate liquidity
requirements over the period of such forecast.
If an Event of Default occurring as a result of an Equity
Failure Event is not waived by the requisite majority of the RCF
Lenders and by each Noteholder, the RCF Lenders and the respective
Noteholders would be entitled to accelerate and demand repayment in
full of the amounts outstanding under the respective Amended Debt
Facilities Agreements (including principal and accrued interest).
The principal amounts outstanding under Amended Debt Facilities
Agreements as at the date of this Announcement are GBP70 million
under the Revolving Credit Facility Agreement and EUR181 million
and USD30 million in respect of the Notes. The Group would then
have an immediate liquidity need in an amount equal to such amounts
net of available of any cash then on hand. In such circumstances,
the RCF Lenders and the Noteholders would also be entitled to make
demand against various Group companies who have provided guarantees
in respect of the Amended Debt Facilities Agreements. Following any
such demand, the Group does not expect to have the funds available
to repay such amounts at that time. In such circumstances, in the
absence of being able to successfully agree or implement any of the
alternatives discussed below, the Group would be unable to continue
as a going concern.
Alongside the provision of a deleveraging plan to the RCF
Lenders and Noteholders, the Company would immediately engage with
the RCF Lenders and Noteholders to determine any basis upon which
they may be prepared to continue to support the Group, if at all,
in the absence of any further capital in the short term. As a
result, if the Capital Raise does not proceed or fails to raise
gross proceeds of at least GBP125 million by 29 July 2020 or an
Equity Failure Event occurs otherwise, the Group would first seek
to renegotiate the terms of the Amended Debt Facilities Agreements
with the RCF Lenders and the Noteholders to secure waivers of the
Equity Failure Events which had occurred and further accommodation
(including the ability to make further drawings under the Revolving
Credit Facility Agreement to meet the Group's liquidity
requirements) to enable the Group to continue to trade as a going
concern. However, the Group may be unable to obtain such waivers
and further accommodation from the RCF Lenders and/or the
Noteholders, either at all or without significant cost to the Group
in the form of additional fees payable to the RCF Lenders and the
Noteholders, increased coupon payments and/or additional
restrictions on
corporate actions (e.g. in respect of acquisitions and
disposals), which could adversely affect or delay implementation of
the Group's strategies. Without the proceeds of the Capital Raise ,
any amendments to the Amended Debt Facilities Agreements may only
serve as a short-term solution that would not fundamentally address
the Group's balance sheet and liquidity concerns in the longer
term.
If the RCF Lenders and/or the Noteholders did not agree to
waivers of the applicable Equity Failure Event and to provide
further accommodation (including the ability to make further
drawings under the Revolving Credit Facility Agreement to meet the
Group's liquidity requirements) on commercially acceptable terms to
enable the Group to continue to trade as a going concern, the Group
may seek alternative long-term committed debt facilities to
refinance the GBP70 million outstanding under the Revolving Credit
Facility Agreement and/or the EUR181 million and USD30 million
outstanding under the Notes, including any make-whole premiums
payable under the relevant Notes, and to provide access to further
funding to meet the Group's liquidity requirements and to enable
the Group to continue to trade as a going concern. The terms of any
such new facilities, if available at all, would likely be more
expensive and onerous than those which currently apply under the
Amended Debt Facilities Agreements. If alternative committed debt
facilities could not be secured on commercially acceptable terms,
or at all, then the Group could try to secure other forms of
funding, such as through a debt and equity restructuring, which may
result in a significant dilution of Existing Shareholders' equity
interests in the Company or, could result in Existing Shareholders
losing the entire value of their equity interests in the Company
and/or its operating businesses (for example as may be the case
were the Group's operating businesses transferred to a newly
established vehicle owned by the RCF Lenders and/or the Noteholders
via an administration of the Company). The Group could also take
action to effect disposals of assets (such as the disposal of one
or more of the Group's operating businesses to facilitate a
reduction of the Group's outstanding indebtedness) or a merger or
acquisition transaction involving the Company. However, the Amended
Debt Facilities Agreements restrict the Group's ability to make any
such disposals and enter into such merger or acquisition
transactions and the Group would need to receive the approval of
the RCF Lenders and the Noteholders to make any such disposals or
enter into such merger or acquisition transactions, which approval
could be withheld.
As any of the above options would require the participation,
agreement or approval of external parties, the Directors are not
confident that any such alternative courses of action could be
achieved in the limited time available on commercially acceptable
terms, or that they ultimately would be successful. If the Company
fails to secure any alternative funding on commercially acceptable
terms and/or is otherwise unable to successfully pursue any of the
above options on commercially acceptable terms, or at all, within
the required time, the Company will cease to be able to operate as
a going concern and the Board may, as a result, decide to place the
Company into administration or petition the court for the
compulsory liquidation of the Company, or the Company's creditors
may petition the court for the administration or compulsory
liquidation of the Company. If the Board is required to place the
Company into administration or liquidation, debts would become due
from the Group to its Pension Scheme under section 75 of the
Pensions Act 1995 which would result in the trustees of that scheme
having a substantially higher claim on the remaining assets of the
Group. Insolvency proceedings under the laws of the relevant
jurisdictions may also be commenced with respect to subsidiaries of
the Company which are guarantors under the Amended Debt Facilities
Agreements. This could result in Existing Shareholders losing part
of or all of their investment in the Company.
Accordingly, the Directors believe that the successful
completion of the Capital Raise represents the best option
available to the Group.
The Capital Raise does not require the passing of the Additional
Resolution to proceed.
If the Additional Resolution is not passed, the Capital Raise
can still proceed but the CEO will not be paid the One-Off Payment
and will not subscribe for New Ordinary Shares.
25. Directors' participation in the CAPITAL RAISE
Separate to the Firm Placing and Placing and Open Offer, certain
Directors and members of Senior Management have agreed to subscribe
for 2,098,095 New Ordinary Shares at the Issue Price in connection
with the Capital Raise, conditional upon Admission occurring.
As outlined above, if the Additional Resolution is passed Steve
Francis intends to invest GBP150,000 in New Ordinary Shares as part
of the Capital Raise pursuant to the Director and Senior Management
Subscriptions.
The other Directors participating in the Capital Raise pursuant
to the Director and Senior Management Subscriptions intend to
subscribe for New Ordinary Shares at the Issue Price as follows (in
each case rounded to the nearest pound):
-- Andrew Allner proposes to subscribe for New Ordinary Shares
for an investment amount ofGBP43,814;
-- Alan Lovell proposes to subscribe for New Ordinary Shares for
an investment amount of GBP45,000;
-- Kath-Kearney Croft proposes to subscribe for New Ordinary
Shares for an investment amount of GBP20,000;
-- Ian Ashton proposes to subscribe for New Ordinary Shares for
an investment amount of GBP50,000; and
-- Simon King proposes to subscribe for New Ordinary Shares for
an investment amount of GBP50,000.
Such subscriptions are not related party transactions requiring
Shareholder approval in accordance with Chapter 11 of the Listing
Rules due to their size.
Such subscriptions are not underwritten by the Joint Bookrunners
pursuant to the Sponsors and Placing Agreement However, due to the
small quantum of such subscriptions, the fact that they are not
underwritten does not materially impact the Capital Raise or, in
the Company's view, create a material risk of an Equity Failure
Event.
26. Board's recommendation and voting intentions
The Board believes the Capital Raise and passing of all of the
Resolutions will promote the success of SIG and is in the best
interests of its Shareholders as a whole. Accordingly, the
Directors unanimously recommend that Shareholders vote in favour of
the Resolutions to be proposed at the General Meeting, as the
Directors each have committed to do so in respect of their own
holdings.
The Board, having been so advised by Jefferies International
Limited and Peel Hunt LLP in their capacities as Joint Sponsors,
consider that each related party transaction in connection with the
Firm Placing and Placing and Open Offer is fair and reasonable as
far as the Shareholders are concerned and is in the best interests
of the Shareholders as a whole. In providing advice to the Board,
the Joint Sponsors have taken into account the Board's commercial
assessments of each aforementioned related party transaction.
Firm Placing and Placing and Open Offer Statistics
Closing price of Existing Ordinary Shares(1) 33.5 pence
Issue Price per New Ordinary Share 30 pence
Discount of Issue Price to closing price(1) 10.6%
1 New Ordinary Share for every 4 Existing Ordinary
Open Offer Entitlement Shares(2)
Number of Existing Ordinary Shares in issue as at 18 June
2020, being the latest practicable
date prior to the announcement of the Capital Raising 591,556,982
Number of New Ordinary Shares to be issued to CD&R
pursuant to the CD&R Investment 240,000,000
Number of Open Offer Shares to be issued pursuant to the
Placing and Open Offer 147,889,245
Number of Firm Placed Shares to be issued to Firm Placees
pursuant to the Firm Placing 200,012,655
Number of Ordinary Shares in issue immediately upon
completion of the Capital Raise(3) 1,181,556,977
Number of Firm Placed Shares being issued to Firm Placees
as a percentage of the Enlarged
Share Capital 16.9%
New Ordinary Shares as a percentage of the Enlarged Share
Capital 49.9%
Estimated gross proceeds of the Capital Raise GBP165 million
Estimated net proceeds of the Capital Raise receivable by
the Company after expenses associated
with the Capital Raise GBP153.1 million
Expected market capitalisation of the Company at the
Issue Price upon Admission GBP354.5 million
_____________
Notes :
(1) The closing price on the London Stock Exchange's Main Market
for listed securities on 18 June 2020, being the last Business Day
before the announcement of the Firm Placing and Placing and Open
Offer.
(2) Fractions of New Ordinary Shares will not be allotted to
Shareholders in the Open Offer and fractional entitlements under
the Open Offer will be rounded down to the nearest whole number of
New Ordinary Shares.
(3) On the assumption that no further Ordinary Shares are issued
as a result of the vesting or exercise of any awards under any
Share Plans between 18 June 2020 (being the latest practicable date
before the publication of this Announcement) and completion of the
Capital Raise.
Definitions and Glossary
Appendix I: Definitions
The following definitions apply throughout this Announcement,
except the terms and conditions in Appendix II, unless the context
requires otherwise:
2020 Notes notes issued pursuant to a note purchase agreement dated 31 October
2013 (as amended), EUR
30 million 3.71% Senior Guaranteed Notes, Series A, due 31 October
2020
2021 Notes notes issued pursuant to a note purchase agreement dated 31 October
2013 (as amended), EUR
20 million 3.88% Senior Guaranteed Notes, Series B, due 31 October
2021
2023 Notes notes issued pursuant to a note purchase agreement dated 31 October
2013 (as amended),EUR
30 million 4.23% Senior Guaranteed Notes, Series C, due 31 October
2023 and notes issued pursuant
to a note purchase agreement dated 31 October 2013 (as amended) EUR
20 million 4.23% Senior
Guaranteed Notes, Series D, due 31 October 2023
2026 Notes notes issued pursuant to a note purchase agreement dated 17 June
2016 (as amended), EUR 20
million 2.83% Senior Guaranteed Notes, Series A, due 12 August 2026,
notes issued pursuant
to a note purchase agreement dated 17 June 2016 (as amended), EUR 61
million 2.83% Senior
Guaranteed Notes, Series B, due 12 August 2026, notes issued
pursuant to a note purchase agreement
dated 17 June 2016 (as amended), EUR 20 million 2.83% Senior
Guaranteed Notes, Series C, due
12 August 2026
Additional Resolution means resolution number 5 to be proposed at the General Meeting set
out in the Notice of General
Meeting
Admission admission of the New Ordinary Shares to be issued pursuant to the
Capital Raise to the premium
listing segment of the Official List and to trading on the London
Stock Exchange's Main Market
for listed securities
ADRs American Depositary Receipts, a negotiable U.S. certificate
representing ownership of shares
in the Company; each ADR evidences a single American Depositary
Share representing 50 Ordinary
Shares of the Company
ADR Holders the holders of any ADRs from time to time and ADR Holder means any
one of them
Amendments amendments under the Debt Facilities Agreements
Amended Debt Facilities Agreements the Debt Facilities Agreements as amended and restated on 18 June
2020
Amended Revolving Credit Facility meaning given to it in the Prospectus that is due to be published
later today
American Depositary Shares the securities represented by the rights and interests in the
Ordinary Shares deposited under
the Deposit Agreement, granted to ADR Holders pursuant to the terms
and conditions of the
Deposit Agreement and evidenced by the ADRs issued pursuant to the
Deposit Agreement
Annual Exemption has the meaning given to it in paragraph 13 ("UK Taxation") of Part
16 ("Additional Information")
of the Prospectus, which is expected to be published later today
Application Form the application form which will accompanying the Prospectus, which
is expected to be published
later today, on which Qualifying Non-CREST Shareholders who are
registered on the register
of the Company at the Record Date may apply for Open Offer Shares
under the Open Offer
Articles the existing articles of association of the Company
Audit Committee the audit committee of the Board, as constituted from time to time
Awards awards that may be granted under the Share Plans
Board the board of directors of the Company from time to time
Brexit the United Kingdom's exit from the European Union
Business Day a day (other than Saturday, Sunday or a public holiday) on which
banks are generally open
for business in the City of London for the transaction of normal
banking business
Capital Raise means the CD&R Investment together with the Firm Placing and Placing
and Open Offer and the
Director and Senior Management Subscriptions
Capital Raise Resolutions means resolutions 1 to 4 (being the resolutions authorising the
Capital Raise) to be proposed
at the General Meeting set out in the Notice of General Meeting in
the prospectus which is
expected to be published later today
CD&R means CD&R Sunshine S.à r.l., a company incorporated in
Luxembourg, whose registered
office is at 15, Boulevard F.W. Raiffeisen, L-2411 Luxembourg
CD&R Investment the amount of GBP60.0 million committed by CD&R in respect of New
Ordinary Shares at an issue
price of GBP0.25 per share
CD&R Relationship Agreement means the relationship agreement dated 29 May 2020 between the
Company and CD&R
CD&R Subscription Agreement means the subscription agreement dated 29 May 2020 between the
Company and CD&R, as amended
and restated on 19 June 2020
certificated or certificated form recorded on the relevant register of the share or security concerned
as being held in certificated
form in physical paper (that is, not in CREST)
Chairman Andrew Allner
Chief Executive Officer or CEO Steve Francis
Interim Chief Financial Officer or CFO Katharina Kearney-Croft
Chief Financial Officer (elect) or CFO (elect) Ian Ashton
City Code the City Code on Takeovers and Mergers
Code the U.S. Internal Revenue Code of 1986
Companies Act the Companies Act 2006, as amended
Company SIG plc
Conditional Placees such persons who have agreed to subscribe for Open Offer Shares
issued in connection with
the Placing subject to clawback to satisfy valid applications by
Qualifying Shareholders under
the Open Offer
CREST the electronic transfer and settlement system for the paperless
settlement of trades in listed
securities operated by Euroclear
CREST Member a person who has been admitted to Euroclear as a system-member (as
defined in the CREST Regulations)
CREST Regulations the Uncertificated Securities Regulations 2001 (SI 2001 No. 01/378)
CREST Sponsor a CREST participant admitted to CREST as a CREST Sponsor
CREST Sponsored Member a CREST Member admitted to CREST as a sponsored member
Debt Facilities Agreements the Revolving Credit Facility Agreement and the Note Purchase
Agreements, each a Debt Facilities
Agreement
Deposit Agreement deposit agreement between, among others, the Company and the
Depositary dated 30 March 2009
and as amended on 8 December 2014
Director and Senior Management Subscriptions the subscriptions for New Ordinary Shares by certain Directors and
Senior Management
Directors the Executive Directors and Non-Executive Directors of the Company,
including the Incoming
Directors
Disclosure Guidance and Transparency Rules the disclosure guidance and transparency rules of the FCA
EBITDA earnings before interest, tax, depreciation and amortisation
Enlarged Share Capital the ordinary shares of the Company which are expected to be in issue
following completion
of the Capital Raise, comprising the Existing Ordinary Shares and
the New Ordinary Shares
Equity Failure Event an equity failure event under and as defined in each Amended Debt
Facilities Agreement
Euroclear Euroclear UK and Ireland Limited, the operator (as defined in the
CREST Regulations) of CREST
European Economic Area the European Union, Iceland, Norway and Liechtenstein
European Union or EU an economic and political union of 27 member states which are
located in Europe
Event of Default An event of default under and as defined in each Amended Debt
Facilities Agreement
Exchange Notes notes to be received by the lenders of the Extended Term Loans at
their option in exchange
for the Extended Term Loans
Exchange Act the Securities Exchange Act of 1934
Excluded Territories Australia, its territories and possessions, Canada, Japan, South
Africa, Malaysia, New Zealand
and any other jurisdiction where the offer, sale or advertisement of
the New Ordinary Shares
would breach applicable law and Excluded Territory means any one of
them
Excluded Territory Shareholder any Shareholder located or resident in an Excluded Territory
Executive Directors Steve Francis and Kath Kearney-Croft and, from 1 July 2020, Ian
Ashton
Existing Ordinary Shares the 591,556,982 Ordinary Shares in issue as at 18 June 2020 (being
the latest practicable
date before the publication of this Announcement)
Existing Shareholder any holder of Existing Ordinary Shares
FCA the UK Financial Conduct Authority
Firm Placed Shares the 200,012,655 New Ordinary Shares which are to be allotted and
issued to Firm Placees by
the Company pursuant to the Firm Placing (excluding, for the
avoidance of doubt, New Ordinary
Shares issued to CD&R under the CD&R Investment)
Firm Placees such persons who have agreed to subscribe for Firm Placed Shares
pursuant to the Firm Placing
Firm Placing the placing by the Joint Bookrunners on behalf of the Company of the
Firm Placed Shares to
Firm Placees pursuant to the Sponsors and Placing Agreement to Firm
Placees
Form of Proxy the form of proxy for use at the General Meeting
FSMA the UK Financial Services and Markets Act 2000, as amended
GDP gross domestic product
General Meeting the general meeting of the Company to be held as a closed meeting
11:00 a.m. on 9 July 2020
Group SIG plc and its subsidiaries
Historical Financial Information the Group's audited consolidated financial statements for the years
ended 31 December 2017,
31 December 2018 and 31 December 2019, prepared in accordance with
IFRS as adopted by the
European Union
HMRC Her Majesty's Revenue and Customs
IFRS International Financial Reporting Standards
IKO or IKO Enterprises Limited IKO Enterprises Limited, a company incorporated in
Alberta, Canada, and its affiliates
Incoming Directors Ian Ashton and Simon King
Issue Price 30 pence per New Ordinary Share
JerseyCo a company incorporated in Jersey under registered number 131685
JerseyCo Subscriber Jefferies International Limited
Joint Bookrunners Jefferies International Limited and Peel Hunt LLP
Joint Sponsors Jefferies International Limited and Peel Hunt LLP
LIBOR London Interbank Offered Rate
Listing Rules the listing rules made by the FCA pursuant to Part VI of FSMA
London Stock Exchange London Stock Exchange plc
Main Market the main market for listed securities of the London Stock Exchange
Market Abuse Regulation Regulation (EU) No. 596/2014 of the European Parliament and the
Council of 16 April 2014 on
market abuse
Member State member state of the EU
MiFID II EU Directive 2014/65/EU on markets in financial instruments, as
amended
MiFID II Product Governance Requirements MiFID II together with: (i) Articles 9 and 10 of Commission
Delegated Directive (EU) 2017/593
supplementing MiFID II; and (ii) local implementing measures
Money Laundering Regulations Money Laundering Regulations 2017
New Ordinary Shares the 590,000,000 new Ordinary Shares proposed to be issued and
allotted by the Company pursuant
to the Capital Raise
New RCF the GBP25,000,000 revolving credit facility under the Amended
Revolving Credit Facility Agreement
Nominations Committee the nominations committee of the Board, as constituted from time to
time
Non-Executive Directors Andrew Allner, Alan Lovell, Kate Allum, Ian Duncan, Gillian Kent
Note Purchase Agreements a series of note purchase agreements dated 13 October 2013 and 17
June 2016, respectively
(as amended from time to time)
Noteholders the holders of the Notes
Notes the 2020 Notes, 2021 Notes, 2023 Notes and 2026 Notes
Notice of General Meeting the notice convening the General Meeting
Official List the Official List maintained by the FCA
One-Off Payment the one-off payment of GBP375,000 to Steve Francis that the
Additional Resolution will authorise,
if approved.
Open Offer the offer to Qualifying Shareholders, constituting an invitation to
apply for the Open Offer
Shares at the Issue Price and on the terms and subject to the
conditions set out in the Prospectus,
which is expected to be published later today, and in the case of
Qualifying Non-CREST Shareholders,
the Application Form
Open Offer Entitlement the pro rata entitlement of Qualifying Shareholders to subscribe for
1 Open Offer Share for
every 4 Existing Ordinary Shares registered in their name as at the
Record Date, on and subject
to the terms of the Open Offer
Open Offer Shares the New Ordinary Shares which have been conditionally placed with
Conditional Placees subject
to clawback by Qualifying Shareholders pursuant to the Open Offer
Ordinary Shares ordinary shares of GBP0.10 each in the capital of the Company, which
do not include ADRs
Overseas Shareholders Shareholders with registered addresses outside the United Kingdom or
who are citizens or residents
of countries outside the United Kingdom
Panel the Panel on Takeovers and Mergers established under the City Code
Placee a Firm Placee or a Conditional Placee
Placing the placing by the Joint Bookrunners on behalf of the Company of the
Open Offer Shares to
Conditional Placees pursuant to the Sponsors and Placing Agreement
(subject to clawback to
satisfy valid applications by Qualifying Shareholders under the Open
Offer)
Placing and Open Offer the placing by the Joint Bookrunners on behalf of the Company of the
Open Offer Shares (subject
to clawback to satisfy valid applications by Qualifying Shareholders
under the Open Offer)
pursuant to the Sponsors and Placing Agreement to Conditional
Placees and the subsequent offer
of such Open Offer Shares to Qualifying Shareholders
PRA Prudential Regulation Authority
Prospectus means the prospectus (when published), comprising a circular and a
prospectus relating to
the Company for the purpose of the Capital Raising and Admission
Prospectus Regulation or PR Regulation (EU) No 2017/1129
Prospectus Regulation Rules the Prospectus Regulation rules made by the FCA under Part VI of
FSMA relating to offers of
transferrable securities to the public and admission of
transferrable securities to trading
on a regulated market
QIB "qualified institutional buyer" as defined in Rule 144A under the
Securities Act
Qualifying CREST Shareholders Qualifying Shareholders holding Ordinary Shares in uncertificated
form on the Record Date
Qualifying Non-CREST Shareholders Qualifying Shareholders holding Ordinary Shares in certificated form
on the Record Date
Qualifying Shareholders holders of Ordinary Shares on the register of members of the Company
at the Record Date with
the exclusion of (a) subject to certain exceptions, any Excluded
Territory Shareholders, (b)
ADR Holders and (c) Shareholders resident in the United States other
than those who are reasonably
believed to be QIBs and who deliver to the Company a signed investor
letter
RCF the revolving credit facility entered into under the Revolving
Credit Facility Agreement
RCF Lenders the lenders under the Revolving Credit Facility Agreement
Record Date 6.00 p.m. on 17 June 2020
Receiving Agent Computershare Investor Services PLC or Computershare
Registrars Computershare Investor Services PLC
Regulation S Regulation S under the Securities Act
Regulatory Information Service or RIS one of the regulatory information services authorised by the FCA to
receive, process and disseminate
regulatory information from listed companies
Relevant Member State each Member State of the European Economic Area that has implemented
the Prospectus Regulation
Remuneration Committee the remuneration committee of the Board, as constituted from time to
time
Remuneration Policy the Company's most recent remuneration policy approved by members of
the Company pursuant
to section 439A of the Companies Act 2006
Resolutions the Capital Raise Resolutions and the Additional Resolution
Revised Covenants (i) initially, commencing with the month ending 30 June 2020, a
revised consolidated net worth
covenant and new consolidated net borrowings and liquidity
covenants, each of which are to
be tested monthly until (and including) 28 February 2022: and (ii)
thereafter, commencing
with the quarter ending 31 December 2021, consolidated net worth,
leverage and interest cover
covenants
Revolving Credit Facility Agreement a multicurrency revolving credit facility agreement dated 1 October
2014 (as amended and restated
from time to time)
Rule 144 Rule 144 under the Securities Act
Rule 144A Rule 144A under the Securities Act
SDRT stamp duty reserve tax
SEC the U.S. Securities and Exchange Commission
Securities Act the U.S. Securities Act of 1933, as amended
Senior Management Steve Francis, Kath Kearney-Croft, Julien Monteiro, Marcin Szcygie ,
Ronald Hoozemans, Kevin
Windle, Philip Johns, Clare Taylor, Andrew Watkins, Kulbinder
Dosanjh
Shareholders holders of Ordinary Shares
Share Plans the employee share incentive plans
SIGD SIG Distribution, the Group's UK distribution division
SIGE SIG Exteriors, the Group's UK exteriors and roofing division
Sponsors and Placing Agreement the sponsors, firm placing, placing and open offer agreement dated
on or around the date of
this Announcement between the Company and the Joint Bookrunners
relating to the Capital Raise
Subscription and Transfer Agreements the subscription and transfer agreement and the initial subscription
and put and call option
agreement, each entered into between the Company, the JerseyCo
Subscriber and JerseyCo on
the date of this Announcement
Subscription Letters the subscription letters dated on or prior to the date of this
Announcement entered into between
the Company and each of the Directors and members of the Senior
Management who are participating
in the Director and Senior Management Subscriptions
Target Market Assessment a product approval process, which has determined that the New
Ordinary Shares are: (i) compatible
with an end target market of retail investors and investors who meet
the criteria of professional
clients and eligible counterparties, each as defined in MiFID II;
and (ii) eligible for distribution
through all distribution channels as are permitted by MiFID II
Transparency Rules the transparency rules and corporate governance rules made by the
FCA under Part VI of FSMA
Treaty the income tax treaty between the United States and the United
Kingdom as currently in force
UK Corporate Governance Code UK Corporate Governance Code, published by the Financial Reporting
Council in July 2018
uncertificated or uncertificated form a share or other security recorded on the relevant register of the
share or security concerned
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 Kingdom or UK the United Kingdom of Great Britain and Northern Ireland
United States or U.S. the United States of America, its territories and possessions, any
state of the United States
of America and the District of Columbia
U.S. GAAP U.S. Generally Accepted Accounting Principles
U.S. GAAS U.S. Generally Accepted Auditing Standards
US$ the lawful currency of the United States
APPIX: II TERMS AND CONDITIONS OF THE FIRM PLACING AND
PLACING
IMPORTANT INFORMATION ON THE FIRM PLACING AND PLACING FOR
INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM
PLACING OR THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING
DISTRIBUTED TO, PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN
ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS
PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE
PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE:
(A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA") AND
THE UNITED KINGDOM, PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE
MEANING OF ARTICLE 2(E) OF REGULATION (EU) 2017/1129 (THE
"PROSPECTUS REGULATION") ("QUALIFIED INVESTORS"); (B) IF IN THE
UNITED KINGDOM, PERSONS WHO FALL WITHIN THE DEFINITION OF
"INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS
AMED (THE "ORDER") OR ARE PERSONS FALLING WITHIN ARTICLE 49(2) OF
THE ORDER AND WHO ARE QUALIFIED INVESTORS; OR (C) ANY OTHER PERSON
TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED AND, IN EACH
CASE, WHO HAVE BEEN INVITED TO PARTICIPATE IN THE FIRM PLACING
AND/OR THE PLACING BY THE JOINT BOOKRUNNERS (ALL SUCH PERSONS
TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR
RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO
HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST
SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS
AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES
CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN
THE COMPANY.
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES
ACT") OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF
THE UNITED STATES AND THE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY IN, INTO OR WITHIN
THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THERE WILL BE
NO PUBLIC OFFERING OF THE SECURITIES IN THE UNITED STATES.
EACH INVITED PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO
LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF
PLACING SHARES (AS SUCH TERM IS DEFINED IN THE ANNOUNCEMENT OF
WHICH THESE TERMS AND CONDITIONS FORM PART).
See Appendix III for the meaning of any defined terms in these
terms and conditions.
If a Relevant Person indicates to the Joint Bookrunners that it
wishes to participate in the Firm Placing and/or the Placing by
making an oral or written offer to acquire Firm Placing Shares
pursuant to the terms of the Firm Placing and/or Open Offer Shares
pursuant to the terms of the Placing it will be deemed to have read
and understood each of: (i) these terms and conditions; (ii) the
announcement of which these terms and conditions form part; and
(iii) the Placing Proof in their entirety, to be making such offer
to participate in accordance with these terms and conditions and to
be providing the representations, warranties, indemnities,
agreements and acknowledgements contained in these terms and
conditions. In particular, each such Placee represents, warrants,
undertakes and acknowledges to the Company and the Joint
Bookrunners that:
it is a Relevant Person and undertakes that it will acquire,
hold, manage and dispose of any of the Placing Shares that are
allocated to it for the purposes of its business only;
in the case of a Relevant Person in the United Kingdom who
acquires any Placing Shares pursuant to the Equity Placings, it is
a person who has professional experience in matters relating to
investments and who falls within the definition of "investment
professionals" in Article 19(5) of the Order or who falls within
Article 49(2) of the Order and it is a Qualified Investor;
in the case of a Relevant Person in a member state of the EEA
who acquires any Placing Shares pursuant to the Equity Placings, it
is a Qualified Investor;
it is acquiring the Placing Shares for its own account or is
acquiring the Placing Shares for an account with respect to which
it exercises sole investment discretion and has the authority to
make and does make the representations, warranties, indemnities,
agreements and acknowledgements, contained in these terms and
conditions;
in the case of any Placing Shares acquired by it as a financial
intermediary, as that term is used in Article 5(1) of the
Prospectus Regulation, that: (i) the Placing Shares acquired by it
in the Equity Placings will not be acquired on a non-discretionary
basis on behalf of, nor will they be acquired with a view to their
offer or resale to, persons in a member state of the EEA or the UK
other than Qualified Investors, or in circumstances which may give
rise to an offer of securities to the public other than an offer or
resale in a member state of the EEA or the UK to Qualified
Investors, or in circumstances in which the prior consent of the
Joint Bookrunners has been given to each such proposed offer or
resale; or (ii) where the Placing Shares have been acquired by it
on behalf of persons in any member state of the EEA or the UK other
than Qualified Investors, the offer of those Placing Shares to it
is not treated under the Prospectus Regulation as having been made
to such persons;
it understands (or, if acting for the account of another person,
such person understands) the resale and transfer restrictions set
out in these terms and conditions; and
it is and, at the time the Placing Shares are acquired, will be
either: (A) outside the United States, and subscribing the Placing
Shares in an offshore transaction in accordance with Rule 903 and
Rule 904 of Regulation S; or (B) inside the United States and a
"qualified institutional buyer" that is acquiring shares in a
transaction not involving any public offering that is exempt from
the registration requirements of the Securities Act, in each case,
for its own account or purchasing the Placing Shares for an account
with respect to which it exercises sole investment discretion, and
has signed and returned a US Open Offer Investor Letter or US
Placing Investor Letter, as applicable.
These terms and conditions do not constitute an offer to sell or
issue or the invitation or solicitation of an offer to buy Placing
Shares in the United States or any other jurisdiction where to do
so may be unlawful, including, without limitation, Australia, its
territories and possessions, Canada, Japan, South Africa, Malaysia,
New Zealand, or any other Excluded Territory.
These terms and conditions and the information contained herein
are not for release, publication or distribution, directly or
indirectly, in whole or in part, to persons in the United States or
any other jurisdiction where to do so may be unlawful, including,
without limitation, Australia, its territories and possessions,
Canada, Japan, South Africa, Malaysia, New Zealand or any other
Excluded Territory.
In particular, the Placing Shares referred to in these terms and
conditions have not been and will not be registered under the
Securities Act or the securities laws of any state or other
jurisdiction of the United States and the Placing Shares may not be
offered, sold, resold, pledged or otherwise transferred, directly
or indirectly, in, into or within the United States, except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and in
accordance with any applicable state securities laws. There will be
no public offering of the Placing Shares in the United States.
Subject to certain exceptions, no offering of the Placing Shares
will be made in the United States. The Placing Shares have not been
approved or disapproved by the US Securities and Exchange
Commission, or state securities commission in the United States or
any other regulatory authority in the United States, nor have any
of the foregoing authorities passed upon or endorsed the merits of
the Equity Placings or the accuracy or adequacy of these terms and
conditions. Any representation to the contrary is a criminal
offence in the United States.
The distribution of these terms and conditions and the offer
and/or placing of Placing Shares in certain other jurisdictions may
be restricted by law. No action has been taken by the Joint
Bookrunners or the Company that would permit an offer of the
Placing Shares or possession or distribution of these terms and
conditions or any other offering or publicity material relating to
the Placing Shares in any jurisdiction where action for that
purpose is required, save as mentioned above. Persons into whose
possession these terms and conditions come are required by the
Joint Bookrunners and the Company to inform themselves about and to
observe any such restrictions.
Each Placee's commitments will be made solely on the basis of
the information set out in this announcement and the Placing Proof.
Each Placee, by participating in the Equity Placings, agrees that
it has neither received nor relied on any other information,
representation, warranty or statement made by or on behalf of
either of the Joint Bookrunners or the Company and none of the
Joint Bookrunners, the Company, or any person acting on such
person's behalf nor any of their respective Affiliates has or shall
have liability for any Placee's decision to accept this invitation
to participate in the Equity Placings based on any other
information, representation, warranty or statement. Each Placee
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company in
accepting a participation in the Equity Placings. Nothing in this
paragraph shall exclude the liability of any person for fraudulent
misrepresentation.
No undertaking, representation, warranty or any other assurance,
express or implied, is made or given by or on behalf of either
Joint Bookrunner any of their respective Affiliates, their
respective directors, officers, employees, representatives, agents,
advisers, or any other person, as to the accuracy, completeness,
correctness or fairness of the information or opinions contained in
the Placing Proof and the Prospectus (when published), this
announcement or for any other statement made or purported to be
made by any of them, or on behalf of them, in connection with the
Company or the Equity Placings and no such person shall have any
responsibility or liability for any such information or opinions or
for any errors or omissions. Accordingly, save to the extent
permitted by law, no liability whatsoever is accepted by either
Joint Bookrunner or any of their respective directors, officers,
employees or Affiliates or any other person for any loss howsoever
arising, directly or indirectly, from any use of this announcement
or such information or opinions contained herein or otherwise
arising in connection with the Placing Proof and the Prospectus
(when published).
These terms and conditions do not constitute or form part of,
and should not be construed as, any offer or invitation to sell or
issue, or any solicitation of any offer to purchase any Placing
Shares or any other securities or an inducement to enter into
investment activity, nor shall these terms and conditions (or any
part of them), nor the fact of their distribution, form the basis
of, or be relied on in connection with, any investment activity. No
statement in this announcement is intended to be nor may be
construed as a profit forecast and nor should any such statement be
interpreted to mean that the Company's profits or earnings per
share for any future period will necessarily match or exceed
historical published profits or earnings per share of the
Company.
Proposed Firm Placing of Firm Placing Shares and Placing of Open
Offer Shares subject to clawback in respect of valid applications
by Qualifying Shareholders pursuant to the Open Offer
Placees are referred to these terms and conditions, this
announcement and the Placing Proof containing details of, among
other matters, the Equity Placings. These terms and conditions,
this announcement and the Placing Proof have been prepared and
issued by the Company, and each of these documents is the sole
responsibility of the Company.
The issue of the Placing Shares is to be effected by way of a
cash box placing. The Company will allot the Placing Shares to
Placees in consideration for the transfer to the Company by
Jefferies of certain shares in a Jersey incorporated subsidiary of
the Company, certain of which shares in the Jersey company
Jefferies shall be obliged to subscribe for using the proceeds of
the Equity Placings.
Applications will be made to the FCA for admission of the
Placing Shares to listing on the premium listing segment of the
Official List of the FCA and to the London Stock Exchange for
admission of the Placing Shares to trading on its main market for
listed securities.
Firm Placing
The Firm Placing Shares are not subject to clawback and do not
form part of the Placing and Open Offer. The Firm Placing is
subject to the same conditions and termination rights which apply
to the Placing and Open Offer.
The Joint Bookrunners have severally agreed, pursuant to the
Placing Agreement, as agent for the Company, to use reasonable
endeavours to procure Firm Placees for the Firm Placing Shares at
the Offer Price. The Firm Placing is being fully underwritten by
the Joint Bookrunners on, and subject to, the terms of the Placing
Agreement. To the extent that the Joint Bookrunners fail to procure
Firm Placees for any Firm Placing Shares, or any Firm Placee fails
pay for any Firm Placing Shares which have been allocated to it in
the Firm Placing, the Joint Bookrunners have severally agreed, on
the terms and subject to the conditions in the Placing Agreement,
to take up such Firm Placing Shares at the Offer Price.
Subject to the conditions below being satisfied, it is expected
that Admission will become effective on 10 July 2020 and that
dealings in the Firm Placing Shares will commence at 8.00 a.m. on
the same day. The Firm Placing Shares, when issued and fully paid,
will be identical to, and rank pari passu with, the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid on the Existing Ordinary
Shares by reference to a record date on or after Admission.
Conditional Placing and Open Offer
The Joint Bookrunners have severally agreed, pursuant to the
Placing Agreement, as agent for the Company, to use reasonable
endeavours to procure Conditional Placees for the Open Offer Shares
at the Offer Price. The commitments of the Conditional Placees in
the Placing in respect of the Open Offer Shares are subject to
clawback in respect of valid applications for Open Offer Shares by
Qualifying Shareholders pursuant to the Open Offer. The Placing is
being fully underwritten by the Joint Bookrunners on, and subject
to, the terms and conditions of the Placing Agreement. To the
extent that there are Open Offer Shares for which valid
applications have not been received from Qualifying Shareholders
and the Joint Bookrunners fail to procure Conditional Placees for
such Open Offer Shares or if any Conditional Placee procured by the
Joint Bookrunners fails to pay for such Open Offer Shares which
have been allocated to it in the Placing, the Joint Bookrunners
have severally agreed, on the terms and subject to the conditions
in the Placing Agreement, to take up such Open Offer Shares at the
Offer Price.
Qualifying Shareholders are being given the opportunity to apply
for the Open Offer Shares at the Offer Price on and subject to the
terms and conditions of the Open Offer, pro rata to their holdings
of Existing Ordinary Shares on the Record Date. Fractions of New
Ordinary Shares will not be allotted and each Qualifying
Shareholder's entitlement to apply for Open Offer Shares under the
Open Offer will be rounded down to the nearest whole number.
The New Ordinary Shares issued under the Placing and Open Offer,
when issued and fully paid, will be identical to, and rank pari
passu with, the Existing Ordinary Shares, including the right to
receive all dividends and other distributions declared, made or
paid on the Existing Ordinary Shares after Admission.
Subject to the conditions below being satisfied, it is expected
that Admission will become effective on 10 July 2020 and that
dealings in the Open Offer Shares will commence at 8.00 a.m. on the
same day.
Conditionality of the Equity Placings
The Equity Placings are conditional, inter alia, upon:
(i) the Resolutions being passed by Shareholders, save for the
Additional Resolution, at the General Meeting;
(ii) the Strategic Investment Agreement having become wholly
unconditional, save for any condition relating to Admission;
(iii) Admission becoming effective by not later than 8.00 a.m.
on 10 July 2020 (or such later time and/or date (being not later
than 8.00 a.m. on 27 July 2020) as the Company and the Joint
Bookrunners may agree); and
(iv) the Placing Agreement having become unconditional in all respects.
The full terms and conditions of the Open Offer will be
contained in Part 8 of the Prospectus to be issued by the Company
in connection with the Firm Placing and Placing and Open Offer and
Admission. The Prospectus to be issued by the Company will be
approved by the FCA under section 87A of the FSMA and made
available to the public in accordance with Rule 3.2 of the
Prospectus Regulation Rules made under Part VI of the FSMA.
Bookbuild of the Equity Placings
The Joint Bookrunners are conducting the Bookbuild to determine
demand for participation in the Equity Placings. The Joint
Bookrunners will seek to procure Placees as agent for the Company
as part of the Bookbuild pursuant to the terms of the Placing
Agreement. These terms and conditions give details of the terms and
conditions of, and the mechanics of Placee participation in, the
Equity Placings.
The Joint Bookrunners and the Company shall be entitled to
effect the Equity Placings by such alternative method to the
Bookbuild as they may agree between them.
Principal terms of the Bookbuild
a. By participating in the Equity Placings, Placees will be
deemed to have read and understood this announcement, these terms
and conditions and the Placing Proof in their entirety and to be
participating and making an offer for any Placing Shares on these
terms and conditions, and to be providing the representations,
warranties, indemnities, agreements, acknowledgements and
undertakings, contained in these terms and conditions.
b. The Joint Bookrunners are arranging the Equity Placings
severally, and not jointly, nor jointly and severally, as agents of
the Company.
c. Participation in the Equity Placings will only be available
to persons who are Relevant Persons and who may lawfully be and are
invited to participate by either of the Joint Bookrunners. The
Joint Bookrunners and their respective Affiliates are entitled to
enter bids as principal in the Bookbuild.
d. To bid in the Bookbuild, Placees should communicate their bid
by telephone or in writing to their usual sales contact at either
Joint Bookrunner. Each bid should state the aggregate number of
Firm Placing Shares and Open Offer Shares which the Placee wishes
to acquire or the total monetary amount which it wishes to commit
to acquire New Ordinary Shares, in each case at the Offer Price.
Bids may be scaled down by the Joint Bookrunners on the basis
referred to in paragraph (l) below.
e. Allocations of Placing Shares will be made in a combination
that reflects an approximately 1:1 ratio of Firm Placing Shares to
Open Offer Shares, save with respect to the participation of IKO,
which will receive an agreed allocation of GBP19.6 million of Firm
Placing Shares, and separately intends to take-up its full Open
Offer Entitlements in the Open Offer.
f. The Bookbuild is expected to close no later than noon on 19
June 2020 but may close earlier or later, at the discretion of the
Joint Bookrunners and the Company. The timing of the closing of the
books and allocations will be agreed between the Joint Bookrunners
and the Company. The Joint Bookrunners may, in agreement with the
Company, accept offers to acquire Placing Shares that are received
after the Bookbuild has closed.
g. An offer to acquire Placing Shares in the Bookbuild will be
made on the basis of these terms and conditions (which shall be
deemed to be incorporated in such offer) and the Placing Proof and
will be legally binding on the Placee by which, or on behalf of
which, it is made and will not be capable of variation or
revocation.
h. Subject to paragraph (f) above, the Joint Bookrunners reserve
the right not to accept an offer to acquire Placing Shares, either
in whole or in part, on the basis of allocations agreed with the
Company and may scale down any offer to acquire Placing Shares for
this purpose.
i. If successful, each Placee's allocation will be confirmed to
it by the Joint Bookrunners following the close of the Bookbuild.
Oral or written confirmation (at the Joint Bookrunners' discretion)
from the Joint Bookrunners to such Placee confirming its allocation
will constitute a legally binding commitment upon such Placee (who
at that point will become a Placee), in favour of the Joint
Bookrunners and the Company to acquire the number of Placing Shares
allocated to it (and in the respective numbers of Firm Placing
Shares and Open Offer Shares (subject to clawback) so allocated) on
the terms and conditions set out herein (which shall be deemed to
be incorporated in such legally binding commitment). Each Placee
will have an immediate, separate, irrevocable and binding
obligation, owed to the Joint Bookrunners, to pay to the Joint
Bookrunners (or as the Joint Bookrunners may direct) as agents for
the Company in cleared funds an amount equal to the product of the
Offer Price and the sum of the number of Firm Placing Shares and,
once apportioned after clawback (in accordance with the procedure
described in the paragraph entitled "Placing Procedure" below), the
Open Offer Shares, which such Placee has agreed to acquire.
j. Each Placee's allocation and commitment together with
settlement arrangements will be confirmed by an electronic contract
note and/or electronic trade confirmation issued to such Placee by
one of the Joint Bookrunners in due course. The contract note or
trade confirmation will include the payment and settlement
procedures to be followed by Placees in connection with their
acquisition of the Placing Shares.
k. The Company will make a further announcement following the
completion of the Bookbuild. It is expected that such announcement
will be made as soon as practicable after the close of the
Bookbuild.
l. The Joint Bookrunners reserve the right not to accept bids or
to accept bids, either in whole or in part, on the basis of
allocations determined by the Joint Bookrunners and the Company.
The Joint Bookrunners may scale down any bids as they may determine
to be necessary or desirable, subject to agreement with the
Company. The acceptance of bids shall be at the Joint Bookrunners'
absolute discretion, subject to agreement with the Company.
m. Irrespective of the time at which a Placee's allocation(s)
pursuant to the Equity Placings is/are confirmed, settlement for:
(i) all Firm Placing Shares to be acquired pursuant to the Firm
Placing will be required to be made at the time specified; and (ii)
all Placing Shares to be acquired pursuant to the Placing will be
required to be made at the later time specified, on the basis
explained below under the paragraph entitled "Registration and
Settlement".
n. By participating in the Bookbuild, each Placee agrees that
its rights and obligations in respect of the Firm Placing and/or
the Placing will terminate only in the circumstances described
below and will not be capable of rescission or termination by the
Placee. All obligations under the Equity Placings will be subject
to the fulfilment of the conditions referred to below under the
paragraph entitled "Conditions of the Equity Placings and
Termination of the Placing Agreement".
o. To the fullest extent permissible by law, neither Joint
Bookrunner nor the Company any of their respective Affiliates nor
any of its or their respective Affiliates' agents, directors,
officers or employees, respectively, shall have any liability to
Placees (or to any other person whether acting on behalf of a
Placee or otherwise). In particular, neither Joint Bookrunner nor
any of their respective Affiliates nor any of its or their
respective Affiliates' agents, directors, officers or employees,
respectively, shall have any liability (including, to the extent
permissible by law, any fiduciary duties) to Placees (or to any
person whether acting on behalf of a Placee or otherwise) in
respect of the Joint Bookrunners' conduct of the Bookbuild or of
such alternative method of effecting the Equity Placings as the
Joint Bookrunners and the Company may agree.
Conditions of the Equity Placings and Termination of the Placing
Agreement
Placees will only be called on to complete their agreed
acquisitions of Placing Shares if the obligations of the Joint
Bookrunners under the Placing Agreement have become unconditional
in all respects and the Joint Bookrunners have not terminated the
Placing Agreement prior to Admission.
The Joint Bookrunners' obligations under the Placing Agreement
in respect of the Firm Placing and the Placing and Open Offer are
conditional upon, inter alia:
(a) the Prospectus being approved pursuant to the Prospectus
Regulation Rules by the FCA not later than 5.00 p.m. on 22 June
2020 (or such later time and/or date as the Joint Bookrunners may
agree with the Company);
(b) Admission occurring not later than 8.00 a.m. on 10 July 2020
(or such later time and/or date (being not later than 8.00 a.m. on
27 July 2020) as the Company and the Joint Bookrunners may
agree);
(c) the passing without amendment of the Resolutions, save for
the Additional Resolution, at the General Meeting on 9 July 2020
(or at any adjournment thereof, or such later date as the Company
and the Joint Bookrunners may agree) and the Resolutions remaining
in force;
(d) the Strategic Investment Agreement having become wholly
unconditional, save for any condition relating to Admission and the
Placing Agreement;
(e) the warranties given by the Company to the Joint Bookrunners
as contained in the Placing Agreement being true, accurate and not
misleading on and as of the date of the Placing Agreement and at
all times between the date of the Placing Agreement and Admission,
by reference to the facts and circumstances from time to time
subsisting;
(f) the Amendment and Restatement Agreement, the Covenant
Waivers and Tax Deferrals having been entered into by the parties
thereto and having, and continuing to have, full force and effect
and not having been terminated, varied, modified, supplemented and
not lapsing prior to Admission and no right to terminate or
rescind, the Amended Facilities, the Covenant Waivers and/or Tax
Deferrals having arisen, in each case a Joint Bookrunner considers
(in good faith) (a) would make it impracticable or inadvisable to
proceed with the Capital Raising on the terms and in the manner
contemplated by the Placing Agreement; or (b) would otherwise be
material in the context of the Group, the underwriting of the New
Ordinary Shares or Admission;
(g) there not having occurred, in the good faith opinion of a
Joint Bookrunner, a material adverse change (as such term is
defined in the Placing Agreement) at any time prior to Admission,
whether or not foreseeable at the date of the Placing Agreement;
and
(h) no matter referred to in Article 23 of the Prospectus
Regulation and/or Article 18 of Regulation (EU) 2019/979 arising
between the time of publication of the Prospectus and the time of
Admission and no supplementary prospectus being required to be
published by or on behalf of the Company before Admission in each
case, which a Joint Bookrunner considers (in good faith) to be
material in the context of the Group, the Capital Raising or
Admission;
(i) the Placing Agreement can be terminated in certain
circumstances at any time before Admission by either Joint
Bookrunner by giving notice to the Company, including (but not
limited to): (a) where any of the relevant Conditions in the
Placing Agreement are not satisfied at the required times (unless
waived by the Joint Bookrunners); (b) the occurrence, in the good
faith opinion of a Joint Bookrunner, of a material adverse change
(as such term is defined in the Placing Agreement); or (c) the
occurrence of certain events.
If any Condition has not been satisfied, has not been waived by
the Joint Bookrunners or has become incapable of being satisfied
(and is not waived by the Joint Bookrunners as described below) or
if the Placing Agreement is terminated, all obligations under these
terms and conditions will automatically terminate. By participating
in the Equity Placings, each Placee agrees that its rights and
obligations hereunder are conditional upon the Placing Agreement
becoming unconditional in all respects in respect of the Firm
Placing (in respect of Firm Placing Shares acquired under the Firm
Placing) and/or in respect of the Placing (in respect of Open Offer
Shares acquired under the Placing) and that its rights and
obligations will terminate only in the circumstances described
above and will not be capable of rescission or termination by it
after oral or written confirmation by the Joint Bookrunners (at the
Joint Bookrunners' discretion) following the close of the
Bookbuild.
The Joint Bookrunners may in their absolute discretion in
writing waive fulfilment of certain of the Conditions in the
Placing Agreement or extend the time provided for fulfilment of
such Conditions. Any such extension or waiver will not affect
Placees' commitments as set out in these terms and conditions.
By participating in the Equity Placings each Placee agrees that
the exercise by the Company or either Joint Bookrunner of any right
or other discretion under the Placing Agreement shall be within the
absolute discretion of the Company and each Joint Bookrunner (as
the case may be) and that neither the Company nor either Joint
Bookrunner need make any reference to such Placee (or to any other
person whether acting on behalf of any Placee or otherwise) and
that neither the Company nor either Joint Bookrunner shall have any
liability to such Placee (or to any other person whether acting on
behalf of any Placee or otherwise) whatsoever in connection with
any such exercise.
Neither the Company nor either Joint Bookrunner shall have any
liability to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision made by
the Joint Bookrunners as to whether or not to waive or to extend
the time and/or date for the fulfilment of any condition in the
Placing Agreement and/or whether or not to exercise any such
termination right.
Withdrawal Rights
Placees acknowledge that their acceptance of any of the Placing
Shares is not by way of acceptance of the public offer made in the
Prospectus and (if applicable) the Application Form/US Open Offer
Investor Letter or the US Placing Investor Letter (as applicable)
but is by way of a collateral contract and as such Article 23(2) of
the Prospectus Regulation does not entitle Placees to withdraw in
the event that the Company publishes a supplementary prospectus in
connection with the Capital Raising or Admission. If, however, a
Placee is entitled to withdraw, by accepting the offer of a placing
participation, the Placee agrees to confirm their acceptance of the
offer on the same terms immediately after such right of withdrawal
arises.
Placing Procedure
Placees shall acquire the Firm Placing Shares and Open Offer
Shares to be issued pursuant to the Equity Placings (subject to
clawback to satisfy valid applications by Qualifying Shareholders)
and any allocation of the Firm Placing Shares and Open Offer Shares
(subject to clawback to satisfy valid applications by Qualifying
Shareholders) to be issued pursuant to the Equity Placings will be
notified to them on or around 9 July 2020 (or such other time
and/or date as the Company and the Joint Bookrunners may
agree).
Placees will be called upon to acquire, and shall acquire, the
Open Offer Shares only to the extent that valid applications by
Qualifying Shareholders:
(a) under the Open Offer are not received by 11.00 a.m. on 8 July 2020; or
(b) have otherwise not been deemed to be valid in accordance
with the terms and conditions of the Open Offer set out in the
Prospectus and the Application Form/US Open Offer Investor Letter
or US Placing Investor Letter (as applicable).
Payment in full for any Firm Placing Shares and Open Offer
Shares so allocated in respect of the Equity Placings at the Offer
Price must be made by 8.00 a.m. on 10 July 2020 (or such other date
as shall be notified to each Placee by the relevant Joint
Bookrunner). The Joint Bookrunners will notify Placees if any of
the dates in these terms and conditions should change, including as
a result of delay in the posting of the Prospectus, the Application
Forms, the US Investor Open Offer Investor Letter or the US Placing
Investor Letter (as applicable) or the production of a
supplementary prospectus or otherwise.
Registration and Settlement
Settlement of transactions in the Placing Shares following
Admission will take place within the CREST system, subject to
certain exceptions. The Joint Bookrunners and the Company reserve
the right to require settlement for, and delivery of, the Placing
Shares to Placees by such other means that they deem necessary if
delivery or settlement is not possible within the CREST system
within the timetable set out in the Placing Proof and/or Prospectus
or would not be consistent with the regulatory requirements in the
Placee's jurisdiction. Each Placee will be deemed to agree that it
will do all things necessary to ensure that delivery and payment is
completed in accordance with either the standing CREST or
certificated settlement instructions which they have in place with
the relevant Joint Bookrunner.
Settlement for the Equity Placings will be on a T+1 and delivery
versus payment basis and settlement is expected to take place on or
around 10 July 2020. Each Placee is deemed to agree that if it does
not comply with these obligations, the Joint Bookrunners may sell
any or all of the Placing Shares allocated to it on its behalf and
retain from the proceeds, for its own account and benefit, an
amount equal to the aggregate amount owed by the Placee. By
communicating a bid for Placing Shares, each Placee confers on the
Joint Bookrunners all such authorities and powers necessary to
carry out any such sale and agrees to ratify and confirm all
actions which the Joint Bookrunners lawfully take in pursuance of
such sale. The relevant Placee will, however, remain liable for any
shortfall below the aggregate amount owed by it and may be required
to bear any stamp duty or stamp duty reserve tax which may arise
upon any transaction in the Placing Shares on such Placee's
behalf.
Acceptance
By participating in the Equity Placings, a Placee (and any
person acting on such Placee's behalf) irrevocably acknowledges,
confirms, undertakes, represents, warrants and agrees (as the case
may be) with the Joint Bookrunners and the Company, the
following:
1. in consideration of its allocation of a placing
participation, to acquire at the Offer Price any Placing Shares
comprised in its allocation which it is required to acquire
pursuant to these terms and conditions, subject in respect of the
Open Offer Shares only to clawback of the Open Offer Shares in
respect of valid applications from Qualifying Shareholders in the
Open Offer;
2. it has read and understood this announcement (including these
terms and conditions) and the Placing Proof in their entirety and
that it has neither received nor relied on any information given or
any investigations, representations, warranties or statements made
at any time by any person in connection with Admission, the Equity
Placings, the Company, the New Ordinary Shares, or otherwise, other
than the information contained in this announcement (including
these terms and conditions) and the Placing Proof that in accepting
the offer of its placing participation it will be relying solely on
the information contained in this announcement (including these
terms and conditions) and the Placing Proof, receipt of which is
hereby acknowledged, and undertakes not to redistribute or
duplicate such documents;
3. its oral or written commitment will be made solely on the
basis of the information set out in this announcement (including
these terms and conditions) and the Placing Proof, such information
being all that such Placee deems necessary or appropriate and
sufficient to make an investment decision in respect of the Placing
Shares and that it has neither received nor relied on any other
information given, or representations or warranties or statements
made, by either Joint Bookrunner or the Company, or any of their
respective Affiliates and neither Joint Bookrunner nor the Company
nor any of their respective Affiliates or any person acting on
behalf of any such person will be liable for any Placee's decision
to participate in the Firm Placing and/or the Placing based on any
other information, representation, warranty or statement;
4. the contents of this announcement, these terms and conditions
and the Placing Proof are exclusively the responsibility of the
Company and it agrees that neither Joint Bookrunner nor any of
their respective Affiliates nor any person acting on behalf of any
of such persons will be responsible for or shall have liability for
any information, representation or statements contained therein or
any information previously published by or on behalf of the
Company, and neither Joint Bookrunner, any of their respective
Affiliates nor any person acting on behalf of any such person will
be responsible or liable for a Placee's decision to accept its
placing participation;
5. (i) it has not relied on, and will not rely on, any
information relating to the Company contained or which may be
contained in any research report or investor presentation prepared
or which may be prepared by either Joint Bookrunner or any of their
respective Affiliates or any person acting on behalf of any such
person; (ii) neither Joint Bookrunner nor any of their respective
Affiliates nor any person acting on behalf of any of such persons
has or shall have any responsibility or liability for public
information relating to the Company; (iii) neither Joint Bookrunner
nor any of their respective Affiliates nor any person acting on
behalf of any of such persons has or shall have any responsibility
or liability for any additional information that has otherwise been
made available to it, whether at the date of publication of such
information, the date of these terms and conditions or otherwise;
and that (iv) neither Joint Bookrunner nor any of their respective
Affiliates nor any person acting on behalf of any of such persons
makes any representation or warranty, express or implied, as to the
truth, accuracy or completeness of any such information referred to
in (i) to (iii) above, whether at the date of publication of such
information, the date of this announcement or otherwise;
6. it has made its own assessment of the Company and has relied
on its own investigation of the business, financial or other
position of the Company in deciding to participate in the Equity
Placings, and has satisfied itself concerning the relevant tax,
legal, currency and other economic considerations relevant to its
decision to participate in the Firm Placing and/or the Placing;
7. it is acting as principal only in respect of the Equity
Placings or, if it is acting for any other person: (i) it is duly
authorised to do so and has full power to make the acknowledgments,
representations and agreements herein on behalf of each such
person; (ii) it is and will remain liable to the Company and the
Joint Bookrunners for the performance of all its obligations as a
Placee in respect of the Equity Placings (regardless of the fact
that it is acting for another person); (iii) it is a Relevant
Person and undertakes that it will acquire, hold, manage or dispose
of any Placing Shares that are allocated to it for the purposes of
its business; and/or if it is a financial intermediary, as that
term is used in Article 5(1) of the Prospectus Regulation, that (a)
the Placing Shares acquired by it in the Equity Placings will not
be acquired on a non-discretionary basis for, or on behalf of, nor
will they be acquired with a view to their offer or resale to,
persons in a member state of the EEA or the UK other than Qualified
Investors, or in circumstances which may give rise to an offer of
securities to the public other than an offer or resale, in a member
state of the EEA to Qualified Investors, or in circumstances in
which the prior consent of the Joint Bookrunners has been given to
each such proposed offer or resale; or (b) where the Placing Shares
have been acquired by it on behalf of persons in any member state
of the EEA or the United Kingdom other than Qualified Investors,
the offer of those Placing Shares to it is not treated under the
Prospectus Regulation as having been made to such persons
8. if it has received any "inside information" (as defined in
the market abuse regulation No. 596/2014) about the Company in
advance of the Equity Placings, it has not: (i) dealt in the
securities of the Company; (ii) encouraged or required another
person to deal in the securities of the Company; or (iii) disclosed
such information to any person, prior to the information being made
generally available;
9. it has complied with its obligations in connection with money
laundering and terrorist financing under the Regulations and, if it
is making payment on behalf of a third party, it has obtained and
recorded satisfactory evidence to verify the identity of the third
party as may be required by the Regulations;
10. it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person;
11. it is not acting in concert (within the meaning given in the
City Code on Takeovers and Mergers) with any other Placee or any
other person in relation to the Company;
12. it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the Placing Shares in, from or otherwise involving the
United Kingdom;
13. that a communication that the Equity Placings or the book is
"covered" (i.e. indicated demand from investors in the book equals
or exceeds the amount of the securities being offered) is not any
indication or assurance that the book will remain covered or that
the Equity Placings and securities will be fully distributed by the
Joint Bookrunners. Each of the Joint Bookrunners reserve the right
to take up a portion of the securities in the Equity Placings as a
principal position at any stage at their sole discretion, inter
alia, to take account of the Company's objectives, MiFID II
requirements and/or their allocation policies;
14. it and any person acting on its behalf is entitled to
acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has all necessary capacity and has
obtained all necessary consents and authorities to enable it to
commit to this participation in the Equity Placings and to perform
its obligations in relation thereto (including, without limitation,
in the case of any person on whose behalf it is acting, all
necessary consents and authorities to agree to the terms set out or
referred to in these terms and conditions);
15. unless otherwise agreed by the Company (in agreement with
the Joint Bookrunners), it is not, and at the time the Placing
Shares are acquired will not be, subscribing for and on behalf of a
resident of the United States (subject to certain exceptions listed
below in "Selling Restrictions") or any other jurisdiction where to
do so may be unlawful, including, without limitation of Australia,
its territories and possessions, Canada, Japan, South Africa,
Malaysia, New Zealand or any other Excluded Territory and further
acknowledges that the Placing Shares have not been and will not be
registered under the securities legislation of any Excluded
Territory and, subject to certain exceptions, may not be offered,
sold, transferred, delivered or distributed, directly or
indirectly, in or into those jurisdictions;
16. it agrees that the Joint Bookrunners shall have no duties or
responsibilities towards it for providing protections afforded to
clients under the Rules or advising it with regard to the Placing
Shares and that it is not, and will not be, a client of either
Joint Bookrunner as defined by the Rules. Likewise, any payment by
it will not be treated as client money governed by the Rules;
17. any exercise by a Joint Bookrunner of any right to terminate
the Placing Agreement or of other rights or discretions under the
Placing Agreement or the Equity Placings shall, subject to the
applicable terms of the Placing Agreement, be within that Joint
Bookrunner's absolute discretion and neither Joint Bookrunner shall
have any liability to any Placee whatsoever in relation to any
decision to exercise or not to exercise any such right or the
timing thereof;
18. neither it, nor the person specified by it for registration
as a holder of Placing Shares is, or is acting as nominee(s) or
agent(s) for, and that the Placing Shares will not be allotted to,
a person/person(s) whose business either is or includes issuing
depository receipts or the provision of clearance services and
therefore that the issue to the Placee, or the person specified by
the Placee for registration as holder, of the Placing Shares will
not give rise to a liability under any of sections 67, 70, 93 and
96 of the Finance Act 1986 (depositary receipts and clearance
services) and that the Placing Shares are not being acquired in
connection with arrangements to issue depository receipts or to
issue or transfer Placing Shares into a clearance system;
19. it has the funds available to pay for, and will make payment
to the Joint Bookrunners (or as the Joint Bookrunners may direct)
for, the Placing Shares allocated to it in accordance with the
terms and conditions of this announcement on the due times and
dates set out in this announcement, failing which the relevant
Placing Shares may be sold to or placed with other persons on such
terms as the Joint Bookrunners determine in their absolute
discretion without liability to the Placee and on the basis that
such Placee will remain liable for any shortfall below the net
proceeds of such sale and the placing proceeds of such Placing
Shares and may be required to bear any stamp duty or stamp duty
reserve tax (together with any interest or penalties due pursuant
to the terms set out or referred to in this announcement) which may
arise upon the sale of such Placee's Placing Shares on its
behalf;
20. the person who it specifies for registration as holder of
the Placing Shares will be (i) itself or (ii) its nominee, as the
case may be, and acknowledges that the Joint Bookrunners and the
Company will not be responsible for any liability to pay stamp duty
or stamp duty reserve tax (together with interest and penalties)
resulting from a failure to observe this requirement; and each
Placee and any person acting on behalf of such Placee agrees to
participate in the Equity Placings on the basis that the Placing
Shares will be allotted to a CREST stock account of one of the
Joint Bookrunners who will hold them as nominee on behalf of the
Placee until settlement in accordance with its standing settlement
instructions with it;
21. where it is acquiring Placing Shares for one or more managed
accounts, it is authorised in writing by each managed account to
acquire Placing Shares for that managed account;
22. if it is a pension fund or investment company, its
acquisition of any Placing Shares is in full compliance with
applicable laws and regulations;
23. it has not offered or sold and will not offer or sell any
New Ordinary Shares to persons in any member state of the EEA or
the United Kingdom prior to Admission except to persons whose
ordinary activities involve them acquiring, holding, managing or
disposing of investments (as principal or agent) for the purpose of
their business or otherwise in circumstances which have not
resulted and will not result in an offer to the public in any
member state of the EEA or the United Kingdom within the meaning of
the Prospectus Regulation;
24. to provide the Joint Bookrunners with such relevant
documents as they may reasonably request to comply with requests or
requirements that either they or the Company may receive from
relevant regulators in relation to the Equity Placings, subject to
its legal, regulatory and compliance requirements and
restrictions;
25. any agreements entered into by it pursuant to these terms
and conditions shall be governed by and construed in accordance
with the laws of England and Wales and it submits (on its behalf
and on behalf of any Placee on whose behalf it is acting) to the
exclusive jurisdiction of the English courts as regards any claim,
dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make
payment for the Placing Shares (together with any interest
chargeable thereon) may be taken by the Joint Bookrunners in any
jurisdiction in which the relevant Placee is incorporated or in
which any of its securities have a quotation on a recognised stock
exchange;
26. to fully and effectively indemnify and hold harmless the
Company and the Joint Bookrunners and each of their respective
Indemnified Persons from and against any and all losses, claims,
damages, liabilities and expenses (including legal fees and
expenses) (i) arising from any breach by such Placee of any of the
provisions of these terms and conditions and (ii) incurred by any
Indemnified Person arising from the performance of the Placee's
obligations as set out in these terms and conditions;
27. in making any decision to acquire Placing Shares: (i) it has
knowledge and experience in financial, business and international
investment matters as is required to evaluate the merits and risks
of subscribing the Placing Shares; (ii) it is experienced in
investing in securities of this nature and is aware that it may be
required to bear, and is able to bear, the economic risk of, and is
able to sustain a complete loss in connection with, the Equity
Placings; (iii) it has relied on its own examination, due diligence
and analysis of the Company and its Affiliates taken as a whole
(including the markets in which the Group operates) and the terms
of the Equity Placings (including the merits and risks involved);
(iv) it has had sufficient time to consider and conduct its own
investigation with respect to the offer and purchase of the Placing
Shares, including the legal, regulatory, tax, business, currency
and other economic and financial considerations relevant to such
investment; and (v) will not look to the Joint Bookrunners, any of
their respective Affiliates or any person acting on their behalf
for all or part of any such loss or losses it or they may
suffer;
28. the Joint Bookrunners and the Company and their respective
Affiliates and others will rely upon the truth and accuracy of the
foregoing representations, warranties, acknowledgments and
undertakings which are irrevocable;
29. that its allocation (if any) of Placing Shares will
represent a maximum number of Placing Shares to which it will be
entitled, and required, to acquire, and that the Joint Bookrunners
or the Company may call upon it to acquire a lower number of
Placing Shares (if any) in particular as a result of clawback of
Open Offer Shares pursuant to the Open Offer but in no event in
aggregate more than the aforementioned maximum;
30. it acknowledges and agrees that neither Joint Bookrunner nor
the Company owes any fiduciary or other duties to it in respect of
any representations, warranties, undertakings or indemnities in the
Placing Agreement;
31. it acknowledges that it irrevocably appoints any director or
authorised signatories of the Joint Bookrunners as its agent for
the purposes of executing and delivering to the Company and/or its
registrars any documents on its behalf necessary to enable it or
the Placees to be registered as the holder of any of the Placing
Shares agreed to be taken up by it under the Equity Placings;
32. its commitment to acquire Placing Shares will continue
notwithstanding any amendment that may in future be made to the
terms and conditions of the Firm Placing and/or the Placing, and
that Placees will have no right to be consulted or require that
their consent be obtained with respect to the Company's or the
Joint Bookrunners' conduct of the Firm Placing and/or the Placing;
and
33. each of the Joint Bookrunners and their respective
Affiliates may have engaged in transactions with, and provided
various commercial banking, investment banking, financial advisory
transactions and services in the ordinary course of their business
with the Company and/or its affiliates for which they would have
received customary fees and commissions. Each of the Joint
Bookrunners and their respective Affiliates may provide such
services to the Company and/or its affiliates in the future.
Please also note that the agreement to allot and issue Placing
Shares to Placees (or the persons for whom Placees are contracting
as agent) free of stamp duty and stamp duty reserve tax in the UK
relates only to their allotment and issue to Placees, or such
persons as they nominate as their agents, direct from the Company
for the Placing Shares in question. Such agreement assumes that
such Placing Shares are not being acquired in connection with
arrangements to issue depositary receipts or to transfer such
Placing Shares into a clearance service. If there were any such
arrangements, or the settlement related to other dealing in such
Placing Shares, stamp duty or stamp duty reserve tax may be
payable, for which neither the Company nor the Joint Bookrunners
would be responsible and Placees shall indemnify the Company and
the Joint Bookrunners on an after-tax basis for any stamp duty or
stamp duty reserve tax paid by them in respect of any such
arrangements or dealings. Furthermore, each Placee agrees to
indemnify on an after-tax basis and hold each of the Joint
Bookrunners and/or the Company and their respective Affiliates
harmless from any and all interest, fines or penalties in relation
to stamp duty, stamp duty reserve tax and all other similar duties
or taxes to the extent that such interest, fines or penalties arise
from the unreasonable default or delay of that Placee or its agent.
If this is the case, it would be sensible for Placees to take their
own advice and they should notify the relevant Joint Bookrunner
accordingly. In addition, Placees should note that they will be
liable for any capital duty, stamp duty and all other stamp, issue,
securities, transfer, registration, documentary or other duties or
taxes (including any interest, fines or penalties relating thereto)
payable outside the UK by them or any other person on the
acquisition by them of any Placing Shares or the agreement by them
to acquire any Placing Shares.
Selling Restrictions
By participating in the Equity Placings, a Placee (and any
person acting on such Placee's behalf) irrevocably acknowledges,
confirms, undertakes, represents, warrants and agrees (as the case
may be) with each of the Joint Bookrunners and the Company, the
following:
1. it is not a person who has a registered address in, or is a
resident, citizen or national of, a country or countries, in which
it is unlawful to make or accept an offer to acquire Placing
Shares;
2. it has fully observed and will fully observe the applicable
laws of any relevant territory, including complying with the
selling restrictions set out herein and obtaining any requisite
governmental or other consents and it has fully observed and will
fully observe any other requisite formalities and pay any issue,
transfer or other taxes due in such territories;
3. if it is in the United Kingdom, it is a qualified investor
who has professional experience in matters relating to investments
and who falls within the definition of "investment professionals"
in Article 19(5) of the Order or who falls within Article 49(2) of
the Order;
4. if it is in a member state of the EEA or the United Kingdom,
it is a "qualified investor" within the meaning of Article 2(e) of
the Prospectus Regulation;
5. if it is located or resident in Canada, it has received a
copy of the Canadian Offering Memorandum prepared by the Company
for use in Canada, it satisfies the eligibility requirements
described therein, and has complied with the terms and conditions
set forth therein;
6. it is a person whose ordinary activities involve it (as
principal or agent) in acquiring, holding, managing or disposing of
investments for the purpose of its business and it undertakes that
it will (as principal or agent) acquire, hold, manage or dispose of
any Placing Shares that are allocated to it for the purposes of its
business; and
7. it is and, at the time the Placing Shares are purchased, will
be either: (A) outside the United States, purchasing in an offshore
transaction within the meaning of, and pursuant to, Regulation S;
or (B) inside the United States and (i) a "qualified institutional
buyer" that is acquiring shares in a transaction not involving any
public offering that is exempt pursuant to an exemption from the
registration requirements of the Securities Act, and (ii) has
signed and returned a US Open Offer Investor Letter or US Placing
Investor Letter (as applicable);
8. none of the Placing Shares have been or will be registered
under the Securities Act or with any securities regulatory
authority of any state or other jurisdiction of the United States;
and
9. it (on its behalf and on behalf of any Placee on whose behalf
it is acting) has: (a) fully observed the laws of all relevant
jurisdictions which apply to it; (b) obtained all governmental and
other consents which may be required; (c) fully observed any other
requisite formalities; (d) paid or will pay any issue, transfer or
other taxes; (e) not taken any action which will or may result in
the Company or either Joint Bookrunner being in breach of a legal
or regulatory requirement of any territory in connection with the
Equity Placings; (f) obtained all other necessary consents and
authorities required to enable it to give its commitment to acquire
the relevant Placing Shares; and (g) the power and capacity to, and
will, perform its obligations under the terms contained in these
terms and conditions.
Miscellaneous
If a Placee is entitled to participate in the Open Offer by
virtue of being a Qualifying Shareholder it will be able to apply
to subscribe for Open Offer Shares under the terms and conditions
of the Open Offer.
The Company reserves the right to treat as invalid any
application or purported application for Placing Shares that
appears to the Company or its agents to have been executed,
effected or dispatched from the United States or any Excluded
Territory or in a manner that may involve a breach of the laws or
regulations of any jurisdiction or if the Company or its agents
believe that the same may violate applicable legal or regulatory
requirements or if it provides an address for delivery of the share
certificates of Placing Shares in, or in the case of a credit of
Open Offer Entitlements to a stock account in CREST, to a CREST
member whose registered address would be in, the United States, any
other Excluded Territory or any other jurisdiction outside the
United Kingdom in which it would be unlawful to deliver such share
certificates or make such a credit.
When a Placee or person acting on behalf of the Placee is
dealing with either of the Joint Bookrunners, any money held in an
account with either of the Joint Bookrunners on behalf of the
Placee and/or any person acting on behalf of the Placee will not be
treated as client money within the meaning of the rules and
regulations of the FCA made under the FSMA. The Placee acknowledges
that the money will not be subject to the protections conferred by
the client money rules; as a consequence, this money will not be
segregated from the Joint Bookrunners' money in accordance with the
client money rules and will be used by each Joint Bookrunner in the
course of its own business; and the Placee will rank only as a
general creditor of the relevant Joint Bookrunner.
Times
Unless the context otherwise requires, all references to time
are to London time. All times and dates in these terms and
conditions may be subject to amendment. The Joint Bookrunners will
notify Placees and any persons acting on behalf of the Placees of
any changes.
APPIX III: DEFINITIONS TO THE TERMS AND CONDITIONS OF THE FIRM
PLACING AND PLACING
The following definitions apply only to the terms and
conditions.
"Admission" admission of the New Ordinary Shares
to be issued pursuant to the Capital
Raising to trading on the premium listing
segment of the Official List and to
the London Stock Exchange's Main Market
for listed securities;
"Additional Resolution" resolution 5 in the GM Notice;
"ADRs" American Depositary Receipts, a negotiable
U.S. certificate representing ownership
of shares in the Company; each ADR
evidences a single American Depositary
Share representing 50 Ordinary Shares
of the Company;
"ADR Holders" the holders of any ADRs from time to
time and ADR Holder means any one of
them;
"Affiliates" (a) in respect of each Joint Bookrunner,
any other person that, directly or
indirectly through one or more intermediaries,
controls, or is controlled by, or is
under common control with, such person
and specifically includes subsidiaries,
branches, associated companies and
holding companies and the subsidiaries
of such holding companies, branches,
associated companies and subsidiaries;
and for these purposes "controlling
person" means any person who controls
any other person; "control" (including
the terms "controlling", "controlled
by" and "under common control with")
means the possession, direct or indirect,
of the power to direct or cause the
direction of the management, policies
or activities of a person whether through
the ownership of securities, by contract
or agency or otherwise; and the term
"person" is deemed to include a partnership;
and (b) in respect of the Company an
undertaking which is its subsidiary
undertaking or parent or a subsidiary
undertaking of that parent undertaking;
in relation to the sections that relate
to US securities laws, the meaning
given to it in Rule 405 or Rule 501(b)
under the Securities Act (as applicable
in the context used);
"Amendment and Restatement the amendment and restatement agreement
Agreement" dated 18 June 2020 between, amongst
others, the Company, the lenders and
Lloyds Bank plc as agent under Group's
existing revolving credit facility
amending and restating the terms of
the Group's existing revolving credit
facility to, amongst other things,
extend the term to 31 May 2023, split
the facility into a term facility and
a revolving credit facility and reduce
the total commitments;
"Application Form" the application form accompanying the
Prospectus on which Qualifying Non-CREST
Shareholders who are registered on
the register of the Company at the
Record Date may apply for Open Offer
Shares under the Open Offer;
"Bookbuild" the accelerated bookbuild by which
the Firm Placing and the Placing are
being conducted;
"Business Day" a day (other than Saturday, Sunday
or a public holiday) in England and
Wales;
"Capital Raising" the Firm Placing and the Placing and
Open Offer;
"Company" SIG plc;
"Conditional Placee" any person that has been procured by
the Joint Bookrunners to acquire the
Open Offer Shares issued in connection
with the Placing subject to clawback
to satisfy valid applications by Qualifying
Shareholders under the Open Offer;
"Conditions" all conditions to the obligations of
the Joint Bookrunners included in the
Placing Agreement;
"Covenant Waivers" means: (i) the agreement between the
Company and the holders of its Private
Placement Notes dated 28 May 2020 to,
amongst other things, waive any current
or future default or event of default
arising under the consolidated net
worth covenants contained in the Private
Placement Notes during the waiver period;
and (ii) the agreement between the
Company and Lloyds Bank plc as agent
dated 28 May 2020 to, amongst other
things, waive any default or event
of default under the Group's existing
revolving credit facility arising as
a result of any breach, default or
event of default under the consolidated
net worth covenants contained in the
Private Placement Notes during the
waiver period.;
"CREST" the electronic transfer and settlement
system for the paperless settlement
of trades in listed securities operated
by Euroclear;
"CREST member" a person who has been admitted to Euroclear
as a system-member (as defined in the
CREST Regulations;
"Directors" the directors of the Company, and 'Director'
means any one of them;
"EEA" the European Economic Area, being the
European Union, Iceland, Norway and
Liechtenstein;
"Equity Placings" the Firm Placing and the Placing;
"Euroclear" Euroclear UK and Ireland Limited, the
operator (as defined in the CREST Regulations)
of CREST;
"Excluded Territories" Australia, its territories and possessions,
Canada (subject to certain exceptions),
Japan, South Africa, Malaysia, New
Zealand and any other jurisdiction
where the offer, sale or advertisement
of the New Ordinary Shares would breach
applicable law and "Excluded Territory"
means any one of them;
"Excluded Territory Shareholder" any Shareholder located or resident
in an Excluded Territory;
"Existing Ordinary Shares" the 591,556,982 Ordinary Shares in
issue as at 18 June 2020 (being the
latest practicable date prior to publication
of this announcement);
"FCA" the Financial Conduct Authority;
"FCA Handbook" the FCA's Handbook of Rules and Guidance,
as amended from time to time;
"Firm Placee" any person that has agreed to acquire
Firm Placing Shares pursuant to the
Firm Placing;
"Firm Placing" the placing by the Joint Bookrunners,
as agents of and on behalf of the Company,
of the Firm Placing Shares with Firm
Placees on the terms and subject to
the conditions contained in the Placing
Agreement and this announcement;
"Firm Placing Shares" the 200,012,655 New Ordinary Shares
which are to be issued pursuant to
the Firm Placing;
"FSMA" the Financial Services and Markets
Act 2000, as amended;
"General Meeting" the general meeting of the Company
to be held on 9 July 2020, or any adjournment
thereof, to consider and, if thought
fit, to approve the Resolutions;
"Group" the Company and its subsidiary undertakings
from time to time;
"Indemnified Person" each of the Company, the Joint Bookrunners
and each of its or their respective
Affiliates and each of its and their
respective subsidiaries, branches,
directors, officers, employees, representatives
and agents (in each case whether present
or future) of each of the Company,
the Joint Bookrunners and each of their
respective Affiliates;
"IKO" IKO Enterprises Limited;
"Jefferies" Jefferies International Limited;
"Joint Bookrunners" Jefferies and Peel Hunt;
"Listing Rules" the listing rules made by the FCA under
FSMA as amended from time to time;
"London Stock Exchange" London Stock Exchange plc;
"MIFID II" EU Directive 2014/65/EU on markets
in financial instruments, as amended;
"New Ordinary Shares" 347,901,900 new Ordinary Shares proposed
to be issued by the Company pursuant
to the Capital Raising;
"Offer Price" 30 pence per New Ordinary Share;
"Official List" the Official List maintained by the
FCA;
"Open Offer" the invitation to Qualifying Shareholders
to subscribe for the Open Offer Shares
at the Offer Price on the terms and
subject to the conditions to be set
out in the Prospectus and in the case
of Qualifying Non-CREST Shareholders
only, the Application Form/US Investor
Letter (as applicable);
"Open Offer Entitlements" the pro rata entitlement of Qualifying
Shareholders to subscribe for one Open
Offer Share for every four Existing
Ordinary Shares registered in their
name as at the Record Date, on and
subject to the terms of the Open Offer;
"Open Offer Shares" the 147,889,245 New Ordinary Shares
which have been conditionally placed
with Conditional Placees subject to
clawback by Qualifying Shareholders
pursuant to the Open Offer;
"Ordinary Shares" an ordinary share in the capital of
the Company (including, if the context
requires, the New Ordinary Shares),
being an ordinary share of GBP0.10
each in the capital of the Company;
the "Order" the Financial Services and Markets
Act 2000 (Financial Promotion) Order
2005, as amended;
"Peel Hunt" Peel Hunt LLP;
"Placee" any Firm Placee and/or Conditional
Placee, as the case may be;
"Placing" the conditional placing, by the Joint
Bookrunners, on behalf of the Company,
of the Open Offer Shares with Conditional
Placees subject to clawback to satisfy
valid applications by Qualifying Shareholders
under the Open Offer pursuant to the
terms and subject to the conditions
contained in in the Placing Agreement
and this announcement;
"Placing Agreement" the placing and open offer agreement
dated 19 June 2020 between the Company
and the Joint Bookrunners relating
to the Firm Placing and Placing and
Open Offer;
"Placing Proof" for the purposes of the Firm Placing
and the Placing the draft prospectus
dated 19 June 2020 prepared by, and
relating to, the Company;
"Placing Shares" the Firm Placing Shares and the Open
Offer Shares;
"Private Placement Notes" the private placement notes issued
by the Company to institutional investors
as described in paragraph 12.2 of Part
16 of the Prospectus;
"Prospectus" the prospectus (when published), comprising
a circular and a prospectus relating
to the Company for the purpose of the
Capital Raising and Admission;
"Prospectus Regulation the prospectus regulation rules made
Rules" by the FCA pursuant to Part VI of FSMA
(as set out in the FCA Handbook), as
amended from time to time;
"Qualified institutional "qualified institutional buyer" as
buyer" or "QIB" defined in Rule 144A of the Securities
Act;
"Qualified Investor" persons in the European Economic Area
and the United Kingdom who are "qualified
investors" within the meaning of Article
2(e) of EU Regulation 2017/1129 and,
additionally in the United Kingdom,
qualified investors who: (i) fall within
the definition of "investment professionals"
contained in Article 19(5) of the Order;
or (ii) are persons falling within
Article 49(2)(a) to (d) (high net worth
companies, unincorporated associations,
etc.) of the Order; or (iii) fall within
another exemption to the Order;
"Qualifying CREST Shareholders" Qualifying Shareholders holding Ordinary
Shares in uncertificated form on the
Record Date;
"Qualifying Non-CREST Qualifying Shareholders holding Ordinary
Shareholders" Shares in certificated form on the
Record Date;
"Qualifying Shareholders" holders of Ordinary Shares on the register
of members of the Company at the Record
Date with the exclusion of (a) subject
to certain exceptions, Overseas Shareholders
with a registered address or located
or resident in any Excluded Territory,
(b) ADR Holders and (c) Shareholders
resident in the United States other
than those who are reasonably believed
to be qualified institutional buyer
and who deliver to the Company a signed
investor letter;
"Record Date" 5.30 p.m. on 17 June 2020;
"Regulations" the Proceeds of Crime Act 2002, the
Terrorism Act 2000, the Terrorism Act
2006 and the Money Laundering, Terrorist
Financing and Transfer of Funds (Information
on the Payer) Regulations 2017 and
the Criminal Justice (Money Laundering
and Terrorism Financing) Act 2010 and
any related or similar rules, regulations
or guidelines, issued, administered
or enforced by any government agency
having jurisdiction in respect thereof;
"Regulation S" Regulation S under the Securities Act;
"Resolutions" the resolutions to be proposed at the
General Meeting as set out in the 'Notice
of the General Meeting';
"Rules" the rules of the FCA Handbook;
"Securities Act" the US Securities Act of 1933, as amended;
"Shareholders" holders of Ordinary Shares;
"Strategic Investor" CD&R Sunshine S.à r.l., a company
incorporated in Luxembourg, whose registered
office is at 15, Boulevard F.W. Raiffeisen,
L-2411 Luxembourg;
"Strategic Investment the subscription agreement entered
Agreement" into between the Company and the Strategic
Investor dated 29 May 2020 pursuant
to which the Strategic Investor has
agreed to subscribe, and the Company
has agreed to allot, the Strategic
Investment Shares, contemporaneously
with the allotment of the New Ordinary
Shares;
"Strategic Investment" the proposed subscription of in the
Strategic Investment Shares pursuant
to the terms of the Strategic Investment
Agreement;
"Strategic Investment Ordinary Shares in the amount of GBP60
Shares" million in aggregate to be allotted
and issued by the Company to the Strategic
Investor in relation to the Strategic
Investment;
"Tax Deferrals" the tax and social security deferrals
agreed with the relevant authority
by the Company implemented in the UK
(PAYE, NIC, VAT), in France (social
charges, pension contributions), Germany
(VAT), Poland (corporation tax), Belgium
(VAT, payroll tax) and the Netherlands
(VAT and payroll tax) as announced
by the Company on 29 May 2020;
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland;
"US" or "United States" the United States of America, its territories
or "United States of America" and possessions, any State of the United
States and the District of Columbia;
and
"US Open Offer Investor the investor representation letter
Letter" in relation to the Open Offer to be
executed and returned to the Company
by Qualifying Shareholders who are
in the United States and are QIBs;
and
"US Placing Investor Letter" the investor representation letter
in relation to the Equity Placings
to be executed and returned to the
Joint Bookrunners by placees located
in the United States and who are QIBs.
Unless otherwise indicated in this announcement, all references
to "GBP", "GBP", "pounds", "pound sterling", "sterling", "p",
"penny" or "pence" are to the lawful currency of the UK
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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
IOEQKLBFBQLZBBD
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June 19, 2020 02:53 ET (06:53 GMT)
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