TIDMSIR
RNS Number : 2500J
Secure Income REIT PLC
08 September 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN,
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TO DISTRIBUTE THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE
RELEASE.
8 September 2016
Secure Income REIT Plc
("SIR" or the "Company" and together with its subsidiaries the
"Group")
Proposed GBP196 million acquisition of 55 Travelodge hotel
investments and GBP140 million placing of ordinary shares
The board of directors of Secure Income REIT Plc, the specialist
long term income REIT, is pleased to announce that it has agreed to
acquire 55 hotels with a weighted average unexpired lease term of
27 years with upwards only RPI linked rent reviews throughout the
term, let to Travelodge Hotels Limited, the UK's second largest
budget hotel brand (the "Travelodge Portfolio"), at a total cost of
GBP196.2 million including purchase costs reflecting a yield of 7%
(the "Acquisition").
To finance the Acquisition, the Company is proposing a placing
to institutional investors of up to 46.9 million new ordinary
shares in the Company (the "Placing Shares") targeting gross
proceeds of up to approximately GBP140 million (the "Placing" and,
together with the Acquisition, the "Transaction"). The placing
price will be 298.6 pence per share (the "Placing Price"), equal to
the 30 June 2016 EPRA NAV per share adjusted for the completion of
the Transaction. The balance of the consideration for the
Acquisition will be financed via a new GBP60 million seven year
non-recourse secured debt facility in respect of which the Company
has the lender's credit approval and is in advanced negotiations on
documentation.
The Acquisition will be earnings accretive to the Company with
the Travelodge Portfolio expected to produce GBP13.7 million of
rental income per annum initially, rising in line with the upwards
only RPI linked uplifts throughout the term. In addition, assuming
completion of the Transaction, the Company's Net LTV ratio will
reduce from 59.5% to 56.0%.
Following completion of the Acquisition, the Company's dividend
yield is expected to increase by 14%, growing from a current level
of 3.9% on 30 June 2016 EPRA NAV to 4.5% on the Placing Price. In
addition, the Company's long term contracted rental income with
fixed and RPI linked rent reviews should continue to result in
increased net rent every year and hence provides attractive
dividend growth prospects which the board of directors (the "Board"
or "Directors") estimates should equate to 6.5% per annum over the
first six years following the Transaction.
The Company has separately announced today its interim results
for the six months ended 30 June 2016. The Company's EPRA NAV at 30
June 2016 (prior to any adjustments for completion of the
Transaction) is GBP541.5 million or 300.2 pence per share, up 6.2%
since 31 December 2015 and its Adjusted EPRA EPS is 5.4 pence, near
double the reported 2.9 pence for the 6 month period to 31 December
2015.
Transaction highlights
The Board considers that the Travelodge Portfolio is highly
complementary to the Company's existing portfolio (the "Existing
Portfolio") and that the Transaction is consistent with the
Company's investment strategy. The Transaction highlights
include:
-- Agreement to acquire a portfolio of 55 hotel assets mainly
throughout England comprising 3,096 rooms for a total cost of
GBP196.2 million including acquisition costs. The agreement is
conditional only on completion of the Placing.
-- Initial contracted rental income is expected to be GBP13.7
million per annum offering further potential to grow earnings
through the Travelodge Portfolio's uncapped, upward only RPI linked
rent reviews. The purchase price represents an initial yield of 7%
which is expected to increase to 7.3% by October 2017 on completion
of the next scheduled rent reviews on 35% of the Travelodge
Portfolio rents.
-- Long leases on full repairing and insuring terms with a
weighted average unexpired lease term of 27 years without break. No
individual lease has an unexpired term of less than 22 years.
-- Each hotel is let to Travelodge Hotels Limited
("Travelodge"), the UK's second largest budget hotel brand which
reported revenues of GBP560 million and EBITDA of GBP105 million
for the year ended 31 December 2015.
-- Enhanced diversification through the Travelodge Portfolio
representing 15% by rent and 12% by gross asset value of the
Company's enlarged portfolio following the Acquisition.
-- Prestbury Investments LLP (the "Investment Adviser") and its
associates' (together "Prestbury") historic knowledge and
experience of the portfolio has been a key feature in sourcing and
structuring this off-market transaction.
-- Financed by way of an equity placing of up to approximately
GBP140 million (GBP137.5 million net of expenses) and a new GBP60
million seven year fixed rate non-recourse secured loan facility.
The initial loan to cost ratio for the new debt facility is c. 31%
which should reduce SIR's Net LTV ratio from 59.5% to 56.0%
immediately following the Acquisition, whilst retaining the
attractive geared return profile of the Company. The weighted
average term to maturity of all of the Company's debt facilities
following completion of the Transaction will be approximately 7.5
years.
-- Prestbury and the Board intend to invest a further GBP5.4
million in the Placing which would result in a total post
Transaction shareholding in the Company of over GBP104 million at
the Placing Price. With one of the largest management shareholdings
in the quoted UK real estate sector, Prestbury remains very
strongly aligned with shareholders' interests.
-- Based on the assumptions which are contained in Appendix V of
this Announcement (and referred to in this Announcement as the
"Assumptions"), the Transaction delivers anticipated shareholder
return accretion:
o dividend yield increasing by 14% from 3.9% to 4.5% (based on
30 June 2016 EPRA NAV and the Placing Price respectively);
o geared returns on the Travelodge Portfolio estimated at 13.5%
per annum, driving an expected total shareholder return (calculated
as the return on investment at the Placing Price and the estimated
future EPRA NAV plus dividend payments) over the next six years of
approximately 11%; and
o Company distributions growing at a compounded annual rate of
6.5% over the next six years.
The Transaction has been recently discussed in principle with a
number of the Company's larger shareholders and the Board has been
encouraged by the positive feedback received.
The Company's strategy to continue to deliver growth remains
unchanged, with a firm intention to further expand SIR's
multi-sector portfolio of long term income streams. Further equity
issues or vendor placings may be undertaken in the future where
transactions are accretive to total shareholder return.
SIR is unique among UK REITs in its focus on long term income
streams without any restriction as to property subsector. When
assessing potential acquisitions, the Board ensures that each
opportunity is reviewed against the following criteria:
-- its potential to enhance shareholder returns;
-- its potential to further the Company's diversification of assets and tenants; and
-- its potential to further reduce the Company's gearing.
The Board considers that there remain opportunities for further
growth from its current portfolio and from the Travelodge Portfolio
(together with the Existing Portfolio, the "Enlarged Portfolio"),
and from future acquisitions of conventional long lease property or
of ground rents.
Details of the Placing
The Company is proposing to issue up to 46,885,466 Placing
Shares, representing 26.0% of the Company's current issued share
capital, at the Placing Price of 298.6 pence per share, to raise
gross proceeds of up to approximately GBP140.0 million and net
proceeds of approximately GBP137.5 million. The Placing Price
reflects the 30 June 2016 EPRA NAV per share adjusted for the
completion of the Transaction, as shown in Appendix 1.
The Board and Prestbury intend to invest GBP5.4 million at the
Placing Price. Of that total, Prestbury intend to subscribe for
GBP5.3 million of new ordinary shares resulting in a
post-acquisition shareholding of over GBP104 million at the Placing
Price, maintaining its position as having one of the largest
management shareholdings in the quoted UK real estate sector.
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM ("Admission"). It
is expected that Admission will become effective and that
unconditional dealings in the Placing Shares will commence at 8.00
a.m. (London time) on, or around, 6 October 2016.
The Placing will be subject to the terms and conditions set out
in Appendix VI of this Announcement.
The Placing is conditional on the Placing Agreement becoming
wholly unconditional (save as to Admission) and not having been
terminated in accordance with its terms prior to Admission.
The Placing Shares will, when issued, be credited as fully paid
and will rank pari passu in all respects with the existing ordinary
shares, including the right to receive all dividends and other
distributions declared, made or paid after the date of issue,
including the next dividend which the Company expects to declare
with a record date in the fourth quarter of 2016.
The Placing Shares will be issued in registered form and may be
held in uncertificated form. The Placing Shares allocated will be
issued to Placees through the CREST system unless otherwise stated.
The Placing Shares will be eligible for settlement through CREST
with effect from Admission.
The number of Placing Shares to be issued will be agreed between
Stifel Nicolaus Europe Limited ("Stifel") and the Company,
following completion of the bookbuild. In the event that the number
of Placing Shares applied for under the Placing exceeds 46.9
million, it may be necessary to scale back applications under the
Placing. In such event, the Placing Shares will be allocated at the
discretion of the Company in consultation with Stifel. In the event
that the number of Placing Shares subscribed for is less than 46.9
million but more than 39.2 million, then the Company believes it
would be able to complete the Acquisition with its existing
resources although the return profile of the Group, as based on the
Assumptions, would change from that illustrated in this
Announcement (such changes are illustrated in Appendix V). The
Placing Agreement is conditional on applications being received in
respect of at least 39,216,343 Placing Shares.
Appendix VI to this Announcement (which forms part of this
Announcement) sets out the terms and conditions of the Placing (the
"Terms and Conditions"). Investors will be deemed to have read and
understood this Announcement in its entirety (including all
appendices) and to be making an offer on the Terms and Conditions
and providing the representations, warranties, acknowledgements and
undertakings contained in the Appendix VI.
Stifel is acting as sole bookrunner in respect of the Placing.
Qualified Investors (as defined in the Terms and Conditions) should
communicate their firm interest to their usual sales contact at
Stifel, providing a clear indication of the number of Placing
Shares which such Qualified Investor wishes to subscribe for under
the Placing.
Expected timetable of principal events
Placing opens 8 September 2016
Latest time and date for receipt of Placing 1.00 p.m. on 3 October
commitments 2016
Results of the Placing announced 4 October 2016
Admission and commencement of dealings 6 October 2016
in the Placing Shares
Placing Shares issued in uncertificated 6 October 2016
form expected to be credited to accounts
in CREST
Despatch of definitive share certificates As soon as possible
for the Placing Shares issued in certificated after
form 6 October 2016
Times and dates set out in the timetable above and mentioned
throughout this Announcement that fall after the date of
publication of this Announcement are indicative only and may be
subject to change without further notice. If any of the above times
and/or dates change, the revised times and/or dates will be
notified by an announcement through a Regulatory Information
Service.
Martin Moore, Independent Non-Executive Chairman of the Company,
commented:
"Today's proposed acquisition and placing are exciting for the
Company and indicative of the strong ambitions we have to grow the
business. This transaction delivers further upwards only RPI linked
income, which will be significantly accretive to earnings, enabling
us to continue to increase dividend payments and improve total
shareholder returns. Furthermore, the acquisition expands and
diversifies Secure Income REIT's asset base through the purchase,
at an attractive yield, of a portfolio of long lease assets in a
highly robust sector, let to the UK's second largest budget hotel
chain."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Secure Income REIT Plc
Nick Leslau
Mike Brown +44 20 7647
Sandy Gumm 7647
Stifel Nicolaus Europe Limited
Mark Young
David Arch +44 20 7710
Tom Yeadon 7600
FTI Consulting
Richard Sunderland +44 20 3727
Claire Turvey 1000
This Announcement, the interim results announcement and the related
shareholder presentation are available on the Company's website,
www.SecureIncomeREIT.co.uk.
Appendix I
Further INFORMATION ON THE TRANSACTION
Background to the Acquisition
The Board has in past announcements and reports stated its
belief that there are opportunities to deliver growth through
transactions that should increase total shareholder returns and
diversify the Company's exposure to various property subsectors,
assets and tenant credits. The Board considers that the Travelodge
Portfolio meets all these criteria. Furthermore, the Investment
Adviser has in depth knowledge of the Travelodge Portfolio and the
dynamics of the value branded hotel industry through prior
ownership of the properties (within a larger portfolio of
Travelodge hotels) from 2004 to 2014 in a private joint venture
partly owned by a business associated with Prestbury. The
Travelodge Portfolio is considered by the Board to be highly
complementary to the Existing Portfolio.
The Transaction has the following key features:
Long, inflation linked income
The assets within the Travelodge Portfolio are individually
leased on full repairing and insuring terms for a weighted average
unexpired term of 27 years. Upwards only, uncapped RPI linked rent
reviews are carried out every five years (on a staggered profile so
that not all reviews fall in the same year) throughout the
respective lease terms.
Following completion of the Acquisition, the weighted average
unexpired lease term across the Enlarged Portfolio would increase
from 23.1 years to 23.6 years from 30 June 2016.
Shareholder return enhancing
The annualised contracted rental income of the Travelodge
Portfolio on completion of the Acquisition is expected to be
GBP13.7 million, representing an initial yield of 7%. Based on the
Assumptions, the yield on cost is expected to increase to 7.3% by
October 2017 following completion of rent reviews on 35% of the
Travelodge Portfolio rents. The Company has credit approved terms
for a GBP60 million, seven year non-recourse fixed rate secured
loan facility to part finance the Acquisition. The interest rate
will be fixed at the time of completion of the Acquisition but is
expected to be approximately 2.75% per annum.
As a result of the incremental net returns from the Transaction,
the geared returns from the Enlarged Portfolio will enhance
shareholder returns such that, over an illustrative six year period
and on the basis of the Assumptions:
-- the dividend yield will increase by 14% from 3.9% to 4.5% on
30 June EPRA NAV and the Placing Price respectively;
-- dividends are anticipated to grow at a compounded annual growth rate of 6.5%; and
-- geared returns on the Travelodge Portfolio estimated at 13.5%
per annum should drive an expected total shareholder return over
the next six years of approximately 11% per annum.
Illustrative returns on the basis of the Assumptions over a six
year period from completion of the Transaction are as follows:
Illustrative Total Shareholder Returns (September 2016 - September
2022): Base Case TSR of 10.9%
--------------------------------------------------------------------------------------------
Pro Forma 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept
2017 2018 2019 2020 2021 2022
-------------------- ---------- -------- -------- -------- -------- -------- --------
EPRA NAV per
share (pence) 298.6 320.3 338.3 357.2 379.0 405.4 431.1
-------------------- ---------- -------- -------- -------- -------- -------- --------
Accumulated
Dividends (pence) - 12.3 27.2 42.9 59.5 77.3 96.8
-------------------- ---------- -------- -------- -------- -------- -------- --------
Net LTV 56% 54% 53% 51% 49% 48% 46%
-------------------- ---------- -------- -------- -------- -------- -------- --------
Note: There is no certainty that these illustrative returns will
be achieved.
The Travelodge Portfolio has predictable income characteristics,
consistent with the Existing Portfolio, meaning that it provides
good visibility of net income and therefore of growth prospects.
Consequently, it is possible to illustrate Total Shareholder
Returns over a range of valuation yield and inflation assumptions.
Illustrative returns on the basis of the Assumptions over a six
year period from completion of the Transaction are as follows:
Total Shareholder Return (September 2016 - September 2022)
-------------------------------------------------------------------------
Property Valuation RPI Curve Base case: RPI curve Zero or lower
Yield (net) +1% RPI curve -1% RPI
-------------------- ---------- ----------- ---------- --------------
-50 bps 14.3% 13.7% 13.0% 11.4%
-------------------- ---------- ----------- ---------- --------------
-25 bps 12.9% 12.3% 11.5% 9.9%
-------------------- ---------- ----------- ---------- --------------
Base case 5.4% 11.5% 10.9% 10.1% 8.4%
-------------------- ---------- ----------- ---------- --------------
+25bps 10.2% 9.5% 8.7% 7.0%
-------------------- ---------- ----------- ---------- --------------
+50 bps 8.9% 8.2% 7.4% 5.6%
-------------------- ---------- ----------- ---------- --------------
Note: The base case 10.9% Total Shareholder Return from 30
September 2016 to 30 September 2022 assumes investment at the
Placing Price and final valuation at EPRA NAV. It assumes a
constant valuation yield on the Enlarged Portfolio of 5.4% and no
changes in the Enlarged Portfolio composition or lease terms. There
is no certainty that these illustrative returns will be
achieved.
Key operating assets secured by a well capitalised business
Travelodge is the UK's second largest budget hotel brand and the
UK's biggest independent brand with 525 hotels and over 39,000
rooms under management as at 31 December 2015. It reported
approximately 18 million customers serviced during 2015.
Travelodge's geographic spread across the UK and long-standing
presence in the UK market has established it as one of the UK's
most recognised consumer brands.
Focused predominantly in the UK, Travelodge benefits from
operating in one of the world's largest hotel markets. The UK hotel
market has a long term track record of growth with a compound
annual growth rate in revenue per available room ("RevPAR") of 2.7%
over the past decade, notwithstanding the 2007-09 recession. The
value branded sector in the UK made up approximately 19% of UK
hotel supply in 2014 compared to 24% in France and 33% in the US,
implying scope for further growth.
Travelodge is owned by a consortium of investors comprising
GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs
Group with certain members of the Travelodge management team
holding 10.4% of the company via its equity incentive program.
GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs
Group, through a structure separate to the ownership of the
Travelodge business, are the ultimate vendors of the Travelodge
Portfolio which will be acquired by the Company through the
acquisition of unit trusts which hold the underlying
properties.
The Travelodge shareholder consortium invested heavily in the
business from 2012. Since that time, Travelodge has shown
significant operational and financial improvements including:
-- revenue up 12.6% from GBP497.2 million in the 12 months to 31
December 2014 to GBP559.6 million in the 12 months to 31 December
2015;
-- EBITDA up 58.8% from GBP66.2 million in 2014 to GBP105.1 million in 2015;
-- RevPAR up 11.7% like for like over the 12 month period to 31
December 2015, compared to the overall UK hotel market showing an
increase of 4.2%;
-- refinancing of the group's debt with a GBP390 million bond
issue in April 2016, lowering the cost and extending the term of
Travelodge's debt and achieving ratings from Moody's of B3 and
S&P of B-;
-- completion in 2015 of a GBP100 million modernisation
programme, refurbishing some 35,000 rooms including all hotels in
the Travelodge Portfolio, together with substantial investment in
the yield management system, online platform and marketing; and
-- significantly improved customer satisfaction ratings with
TripAdvisor cumulative average satisfaction scores increasing from
3.3 out of five stars as of 31 December 2013 to an average of four
stars as at 31 December 2015.
The Enlarged Portfolio
SIR's existing portfolio of 26 healthcare and leisure assets was
externally valued as at 30 June 2016 at GBP1.38 billion. Including
the Travelodge Portfolio at its contract price of GBP192.6 million
would result in an Enlarged Portfolio of 81 assets and a pro forma
value of GBP1.57 billion.
Key statistics for the Enlarged Portfolio
-- Contracted rental income of GBP92.4 million per annum at a combined initial yield of 5.4%.
-- 58% of rents subject to fixed annual uplifts and 42% subject to uplifts linked to RPI.
-- Weighted average unexpired lease term of 23.6 years from 30 June 2016
-- Rental income analysed by tenant/guarantor:
o 49% Ramsay Health Care Limited
o 34% Merlin Entertainments Plc
o 15% Travelodge Hotels Limited
o 2% Orpea SA
-- Portfolio analysis by value:
o 52% Ramsay hospitals
o 28% Merlin UK assets
o 12% Travelodge hotels
o 5% Merlin German assets
o 3% London psychiatric hospital
Strong covenants underpinning rents
-- Ramsay Health Care Limited is ranked in the top five private
healthcare operators in the world by revenue, and has a market
capitalisation as at 7 September 2016 of GBP9.3 billion. With
operations throughout Australia, France, South East Asia and the UK
the business has global spread, with UK operations accounting for
10% of group revenues and 10% of group EBITDA as reported in
Ramsay's 30 June 2016 financial statements.
-- Merlin Entertainments Plc, Europe's largest and the world's
second largest visitor attractions business by visitor numbers,
which has a market capitalisation as at 7 September 2016 of GBP4.9
billion. Also with extensive global reach, Merlin operates in North
America, Europe, Asia and Australia, with UK revenues accounting
for 36.5% of group revenues as reported in Merlin's 31 December
2015 financial statements.
-- Travelodge Hotels Limited being one of the UK's top two
budget hotel brands with 2015 revenues of GBP560 million and EBITDA
of GBP105.1 million and with a very significant competitive
advantage in the market by way of its strong brand recognition and
national network of hotels.
-- Orpea SA, a European leader in integrated long term and
post-acute care, listed on Euronext with a market capitalisation as
at 7 September 2016 of GBP4.0 billion.
Financial impact of the Transaction
Increase in expected shareholder returns
The incremental net income from the Travelodge Portfolio will
enhance both the Company's dividend yield and potential for capital
growth, and therefore total shareholder return. The Company's
dividend policy is to make quarterly cash distributions to
shareholders equal to the higher of the minimum REIT distribution
or one times Adjusted EPRA EPS (which is EPRA EPS adjusted to
exclude the distorting effect of the smoothing of fixed rental
uplifts over the entire term of the relevant leases, and excluding
material non-recurring items). Consistent with this policy,
following completion of the Transaction, the Board expects to
increase distributions by 13% from an annualised 11.75 pence per
share to 13.3 pence per share, with the record date for the first
increased dividend expected to be in the first quarter of 2017.
This equates to a dividend yield of 4.5% on the Placing Price. On
the basis of the Assumptions the illustrative six year compounded
dividend growth rate is expected to be 6.5%.
The expected rate of growth in the Company's dividend can be
sensitised across a range of RPI scenarios. On the basis of the
Assumptions, the Company would deliver a minimum compound annual
dividend growth rate of 4.3% if there is zero or negative RPI
throughout the period, and this would increase to 7.0% if the RPI
outcome is 100 basis points higher than suggested by the base case
RPI swap curve.
New secured credit facility
The Company has credit approved terms from M&G, a lender
that is new to the Group, and is in advanced stages of
documentation of a new GBP60 million secured fixed rate seven year
non-recourse credit facility. Following completion of the
Transaction, the Group's overall net debt position would be as
follows on a pro forma basis:
Unaudited 30 Travelodge facility Pro forma
June 2016
----------------------------- -------------- -------------------- ----------
Net Debt GBP819.7m* GBP60.0m GBP879.7m
----------------------------- -------------- -------------------- ----------
Net LTV (LTC for Travelodge
facility) 59.5% 30.5% 56.0%
----------------------------- -------------- -------------------- ----------
Weighted average term 8.0 years 7.0 years 7.7 years
to maturity from 30
June
----------------------------- -------------- -------------------- ----------
Weighted average fixed
interest rate 5.2% 2.75** % 5.1%
----------------------------- -------------- -------------------- ----------
Notes:
* Net Debt includes Euro denominated debt of GBP59.4m translated
at EUR1:GBP0.8278;
** Travelodge debt at a fixed rate assumed to be 2.75% per
annum. The interest rate will be fixed at drawdown just prior to
completion of the Acquisition. The assumed fixed rate is based on
an estimate of the relevant seven year swap rate of 0.75%.
Each of the Group's three existing debt facilities is within a
separate ring fenced structure with no cross collateralisation and
no recourse to the Company itself. The new facility will be
structured in the same way. There will be no financial covenant
default tests on 61% of the total debt, including the new facility,
until September 2019 and no financial covenant default tests on 39%
of the SIR group's debt through to October 2022.
The agreed terms of the new facility include financial covenant
headroom consistent with the existing facilities. The valuation of
the Travelodge Portfolio would have to fall relative to the
contract price by:
-- 22% to trigger retention of 50% of cash surpluses within the secured structure
-- 31% to trigger retention of 100% of cash surpluses within the secured structure
-- 38% to trigger a default on the loan to value covenant
Terms agreed include an unlimited right to cure a potential loan
to value default by way of a cash cure. The agreed interest cover
covenants also have significant headroom, with a fall in rental
income of over 50% being able to be tolerated before triggering a
covenant default.
Immediate reduction in group net LTV
The Transaction, once completed, would have the effect of
creating an immediate reduction in the Group's net LTV from 59.5%
to 56.0%. Furthermore, based on the Assumptions, the Transaction
would have the effect of accelerating the reduction in net LTV to
c. 50% by approximately two years with net LTV reducing to below
50% in less than four years.
Pro forma financial profile
Assuming completion of the Transaction and on the basis of the
Assumptions, the Group's pro forma EPRA NAV would be as
follows:
GBPm 30 June Equity Debt Financing Portfolio Pro Forma
2016 Placing Purchase
------------------------ -------- --------- --------------- ---------- ----------
Investment property* 1,378.5 - - 192.6 1,571.1
------------------------ -------- --------- --------------- ---------- ----------
Travelodge transaction
costs**** (1.4) - - 1.4 -
------------------------ -------- --------- --------------- ---------- ----------
Gross debt** (909.3) - (60.0) - (969.3)
------------------------ -------- --------- --------------- ---------- ----------
Prepaid finance
fees 13.2 - 1.3 - 14.5
------------------------ -------- --------- --------------- ---------- ----------
Cash 89.6 137.5 58.7 (196.2) 89.6
------------------------ -------- --------- --------------- ---------- ----------
Rent deposits - - - 1.7 1.7
------------------------ -------- --------- --------------- ---------- ----------
Other (29.1) - - - (29.1)
------------------------ -------- --------- --------------- ---------- ----------
EPRA NAV 541.5 137.5 - (0.5) 678.5
------------------------ -------- --------- --------------- ---------- ----------
EPRA NAV per Share
(pence)*** 300.2 p 298.6 p
------------------------ -------- --------- --------------- ---------- ----------
Notes:
*External valuation of existing portfolio at GBP1,378.5m at 30
June 2016 (GBP/EUR exchange rate of EUR1:GBP0.8278 on GBP85.6m of
German investment property) plus GBP192.6m Travelodge acquisition
at cost excluding purchase costs;
**Includes Euro denominated debt of GBP59.4m translated at
EUR1:GBP0.8278;
***Based on 180,344,240 shares currently in issue and
227,229,706 shares in issue following the Placing;
**** GBP1.4 million of costs relating to the Acquisition,
principally legal due diligence and documentation costs, had been
incurred by 30 June 2016 and have been charged to the income
statement in that period. Should the transaction not proceed,
GBP3.0 million of payments will be due to the vendors and further
due diligence and documentation costs of approximately a further
GBP1.0 million would be payable.
Appendix II
Further information
SIR is the only UK REIT which specialises in investing in long
term, secure income derived from real estate investments and
offering inflation protection without the restriction of a specific
sector specialisation. The Board believes that the Company's
investment strategy, which is designed to satisfy investors'
growing demand for high quality, safe, inflation protected income
returns, combined with the Company's tax efficient REIT status and
carefully managed capital structure, will allow it to produce
attractive, growing and sustainable total returns to
shareholders.
The Existing Portfolio
The Existing Portfolio is a freehold investment portfolio of 26
key operating assets including Alton Towers and Thorpe Park, which
are two of the three most visited theme parks in the UK, 19 private
hospitals in England and central London's only private psychiatric
hospital.
The external valuation of the Existing Portfolio was GBP1.38
billion as at 30 June 2016, reflecting a blended net initial
valuation yield of 5.3%. The annual passing rental income on the
Existing Portfolio was GBP78.5 million as at 30 June 2016 and has
since increased to GBP78.7 million following completion of the 2016
rent review cycle. The weighted average unexpired lease term of the
Existing Portfolio as at 30 June 2016 was over 23 years. There are
no break options in any lease, the shortest of which has an
unexpired term of 21 years.
All properties in the Existing Portfolio are fully let and 100%
of the current rental income is guaranteed by substantial
international businesses that the Board considers financially
strong. The guarantors are:
-- Ramsay Health Care Limited, guaranteeing 58% of annual passing rent as at 30 June 2016;
-- Merlin Entertainments plc, guaranteeing 39% of annual passing rent as at 30 June 2016; and
-- Orpea SA, guaranteeing 3% of annual passing rent as at 30 June 2016.
Prestbury and the Board
The Investment Adviser to the Company is Prestbury Investments
LLP. The Prestbury team comprises Nick Leslau, Mike Brown, Sandy
Gumm, Ben Walford and Tim Evans, a group of property and finance
professionals who between them have extensive experience in the UK
real estate market as one of the most successful management teams
in the quoted UK real estate sector over the last 30 years.
Prestbury has a close alignment to the interests of all
shareholders through its very significant shareholding in the
Company and it intends to invest a further GBP5.3 million in the
Placing. Its shareholding holding is therefore expected to amount
to over GBP104 million at the Placing Price, which is over 15% of
the Company's enlarged share capital and maintains its position as
one of the largest management shareholdings in the quoted UK real
estate sector.
The Company has an experienced non-executive Board chaired by
Martin Moore (CEO of M&G Real Estate Limited (previously
Prudential Property Investment Managers Limited) from 1996 to 2012
and past President of the British Property Federation), with three
further Directors independent of Prestbury (the "Independent
Directors") comprising Leslie Ferrar (non-executive Chairman of The
Risk Advisory Group; a non-executive member of the HMRC Risk and
Audit Committee; and a member of the Audit Committee for the
Sovereign Grant), Jonathan Lane (Senior Adviser to Morgan Stanley
and Chairman of EMEA Real Estate Investment Banking) and Ian Marcus
(Chairman of the Prince's Regeneration Trust and former Managing
Director and Chairman of Credit Suisse's European Real Estate
Investment Banking division). The Board also includes three
Directors from the Prestbury team: Nick Leslau, Mike Brown and
Sandy Gumm.
Investment strategy
The Company invests in long term, secure income streams from
real estate investments. A long term income stream is considered by
the Board to be one with, or a portfolio with, a weighted average
term to maturity in excess of 15 years at the time of acquisition.
Security of income is assessed with reference to both the extent of
rent cover from underlying earnings, the credit strength of tenants
and (where relevant) guarantors and the reversionary potential of
the assets.
The Existing Portfolio and the Travelodge Portfolio are
considered by the Board to offer attractive geared returns from
high quality real estate, with financially strong tenants with well
established brands in industry sectors with strong defensive
characteristics. The Board intends to build on the Group's
substantial Existing Portfolio through the Acquisition and through
accretive investment opportunities to deliver an attractive
proposition for investors, offering:
-- long term income streams secured on high quality real estate,
including the Existing Portfolio income which the Directors believe
is derived from large, financially secure, international, mature
businesses;
-- gearing appropriate to the underlying assets and the stage of the economic cycle;
-- the tax efficiency of a UK REIT;
-- a strategy overseen by a strong Board with extensive relevant experience;
-- exclusive access to all long lease transactions sourced by
Prestbury which fit the Group's investment policy; and
-- day to day management undertaken by the Prestbury team, one
of the best performing management teams in the quoted UK real
estate sector over the last 30 years, subject always to the
oversight of the Independent Directors.
Distribution policy
The UK REIT rules require that the Company distributes at least
90% of the Group's qualifying net income from its tax exempt
property business within 12 months of each financial year end, or
otherwise suffer a tax penalty. The Company's dividend policy is to
make quarterly cash distributions to shareholders equal to the
higher of the minimum REIT distribution or one times Adjusted EPRA
EPS cover. The Board expects the upwards only rental uplifts on the
Enlarged Portfolio, in combination with predictable administrative
expenses and a fixed cost of debt, will enable the Company to
increase its distributions annually in line with geared net
earnings.
Appendix III
The Travelodge Portfolio
The Travelodge Portfolio comprises 55 hotels. 26% of the
portfolio value is in three properties: Oxford Peartree, Edinburgh
Central and Manchester Central.
A further 25% is in the next eight largest properties:
-- Glasgow Central
-- Exeter M5
-- Milton Keynes Central
-- Southampton
-- Northampton Upton Way
-- Nottingham Riverside
-- Ely
-- Bristol
49% of value is in the remaining 44 properties in smaller lot
sizes which tend to be attractive to the private investor
market.
Tenure by value:
Freehold 60%
------------------------------ ----
999 years (virtual freehold) 9%
------------------------------ ----
100 - 165 years 7%
------------------------------ ----
80 - 95 years 17%
------------------------------ ----
40 - 80 years 7%
------------------------------ ----
Lot size by value:
No of properties
-------------------- ---- -----------------
GBP14 - 20 million 26% 3
-------------------- ---- -----------------
GBP5 - 8 million 25% 8
-------------------- ---- -----------------
GBP3 - 5 million 27% 14
-------------------- ---- -----------------
Up to 3 million 22% 30
-------------------- ---- -----------------
Location by value:
South East 35%
--------------- ----
South West 16%
--------------- ----
North West 15%
--------------- ----
Scotland 16%
--------------- ----
North 5%
--------------- ----
East Midlands 9%
--------------- ----
West Midlands 4%
--------------- ----
Property type by value:
City Centre 30%
--------------- ----
Edge of Town 18%
--------------- ----
City Roadside 24%
--------------- ----
Roadside 28%
--------------- ----
Recent comparable transactions
Sale Type Rooms Reported Yield
sale price (%)
(GBPm)
-------- ------------------------------- ----------------- ------ ------------ ------
Travelodge London Liverpool
Jul-16 Street Investment 142 42.3 4.6
-------- ------------------------------- ----------------- ------ ------------ ------
Travelodge Royal Scot
Jun-16 - Kings Cross Investment 408 70.0 4.2
-------- ------------------------------- ----------------- ------ ------------ ------
Travelodge Sites Portfolio
(Weston-super-Mare, Andover,
Apr-16 Stirling, Kings Lynn) Forward Funding 302 19.8 6.0
-------- ------------------------------- ----------------- ------ ------------ ------
Mar-16 Travelodge Hackney Site Investment 80 13.5 5.9
-------- ------------------------------- ----------------- ------ ------------ ------
Jan-16 Travelodge Crawley Investment 110 42.5 5.8
-------- ------------------------------- ----------------- ------ ------------ ------
Travelodge Sunbury M3
Dec-15 Hotel Investment 131 13.0 4.7
-------- ------------------------------- ----------------- ------ ------------ ------
Dec-15 Travelodge Teddington Investment 113 13.7 4.6
-------- ------------------------------- ----------------- ------ ------------ ------
Proposed Acquisition 3,096 192.6 7.0
----------------------------------------- ----------------- ------ ------------ ------
Notes: The table includes a sample of illustrative Travelodge
transactions that the Company is aware of. It does not purport to
show all the transactions involving Travelodge properties.
Appendix iV
Illustrative returns of the Travelodge portfolio
The Travelodge Portfolio returns can be illustrated as follows
on a range of valuation yields and RPI outcomes. These are net
rental returns before the Company's central and administrative
costs.
Six year portfolio IRR estimate
----------------------------------------------------------
RPI Assumptions
----- ---------------------------------------------------
RPI Curve Base Case RPI Curve Zero or lower
+1% RPI Curve -1% RPI
----- ---------- ----------- ---------- --------------
6.0% 16.3% 15.1% 13.9% 11.3%
----- ---------- ----------- ---------- --------------
6.5% 14.8% 13.5% 12.3% 9.7%
----- ---------- ----------- ---------- --------------
7.0% 13.3% 12.1% 10.8% 8.2%
----- ---------- ----------- ---------- --------------
7.5% 12.0% 10.7% 9.5% 6.8%
----- ---------- ----------- ---------- --------------
Note: There is no certainty that these estimated returns will be
achieved.
These illustrations assume that:
1 The Transaction completes on 30 September 2016;
2 The RPI swap curve as at 30 August 2016 has been employed,
showing average increases of 3.1% per annum over the period;
and
3 The interest rate on the new debt facility is assumed to be
2.75% per annum. The actual rate will be fixed at drawdown on the
basis of the seven year swap rate, assumed for these purposes to be
0.75%.
Appendix V
Assumptions
The illustrative returns in this Announcement are based on the
following assumptions:
-- The RPI swap curve at 30 August 2016 has been adopted to
estimate future RPI movements with average increases of 3.1% per
annum over the period.
-- Constant valuation yield at the 30 June 2016 external
valuation for the Existing Portfolio and valuation yield at
purchase for the Travelodge Portfolio.
-- Only fixed uplifts on Ramsay leases are included. The
potential for open market uplifts has been ignored.
-- Completion of the Acquisition on 30 September 2016 otherwise
no purchases or sales of properties and no lease variations.
-- Constant Euro exchange rate of EUR1:GBP0.8278.
-- Fixed rate of Acquisition debt assumed at 2.75% per annum.
This will be fixed at drawdown on the basis of the 7 year swap rate
assumed for these purposes to be 0.75%.
-- Incentive fee arrangements currently in place are not amended
at the Independent Directors' 2017 review.
-- The Investment Adviser contract continues on current terms
for four months from expiry in June 2022.
-- Earnings cover based on the adjusted earnings per share to
exclude increase in rental income from rental smoothing IFRS
adjustment.
-- Completion of Placing with gross proceeds of approximately
GBP140 million on 30 September 2016 and revaluation of the EPRA NAV
on 30 September 2022.
If the gross proceeds of the Placing total less than GBP140
million, but exceed GBP117.1 million then the Company may still
consider completing the Transaction using existing cash reserves.
In these circumstances the illustrative returns in this
Announcement would change. On the basis of a Placing size of
39,216,343 shares and using the existing assumptions in this
Appendix V, the illustrative pro forma EPRA NAV on completion of
the Transaction would be 298.8 pence per share, the LTV 57.4%, the
base case annual Total Shareholder Return over six years would be
11.2% whilst the expected dividend yield on the Placing Price would
increase to 4.6% and the dividend would be expected to grow at a
compound rate of 6.3% over the six years following completion of
the Transaction.
Appendix VI
Terms and conditions of the Placing
THE ANNOUNCEMENT, INCLUDING THESE APPICES (TOGETHER, THE
"ANNOUNCEMENT") AND THE INFORMATION CONTAINED HEREIN ARE RESTRICTED
AND ARE NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, IN WHOLE OR
IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH
THE SAME WOULD BE UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES
ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THE ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN
THIS APPIX VI ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED
ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA
WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E)
OF THE PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC (AND
AMMENTS THERETO, INCLUDING DIRECTIVE 2010/73/EU) AND INCLUDES ANY
RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE
"PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND (B) IN THE
UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE
PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING
WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000
(FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS
FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE
PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH
PERSONS IN (A) AND (B) TOGETHER BEING REFERRED TO AS "RELEVANT
PERSONS"). THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN
MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT
PERSONS. PERSONS DISTRIBUTING THE ANNOUNCEMENT MUST SATISFY
THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THIS APPIX AND THE TERMS AND CONDITIONS SET OUT
HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE
ENGAGED IN ONLY WITH RELEVANT PERSONS. THE ANNOUNCEMENT DOES NOT
ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY.
NEITHER STIFEL NOR THE COMPANY MAKES ANY REPRESENTATION TO ANY
PLACEES REGARDING AN INVESTMENT IN THE SECURITIES REFERRED TO IN
THE ANNOUNCEMENT.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, FINANCIAL, BUSINESS AND RELATED ASPECTS OF A PURCHASE OF
PLACING SHARES.
Persons who are invited to and who choose to participate in the
Placing by making an oral or written offer to subscribe for Placing
Shares, including any individuals, funds or others on whose behalf
a commitment to acquire Placing Shares is given (the "Placees"),
will be deemed to have read and understood the Announcement in its
entirety and to be making such offer on the terms and conditions,
and to be providing the representations, warranties,
acknowledgements, undertakings and agreements, contained in this
Appendix. In particular, each such Placee represents, warrants and
acknowledges to Stifel and the Company that:
1. 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;
2. in the case of a Relevant Person in a relevant member state
of the EEA who acquires any Placing Shares pursuant to the
Placing:
(a) it is a Qualified Investor; and
(b) if it is a financial intermediary, as that term is used in
Article 3(2) of the Prospectus Directive, any Placing Shares
acquired by it in the Placing 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 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 which has
implemented the Prospectus Directive to Qualified Investors, or in
circumstances in which the prior consent of Stifel has been given
to each such proposed offer or resale;
3. it (and any account referred to in paragraph 4 below) is either:
(a) not a US person within the meaning of Rule 902 of Regulation
S ("Regulation S") under the US Securities Act of 1933, as amended
(the "Securities Act") and is located outside the United States;
or
(b) a "qualified institutional buyer" ("QIB") (within the
meaning of Rule 144A ("Rule 144A") under the Securities Act) and,
in each case under this sub clause (b), it has duly executed an
investor letter in a form provided to it and delivered the same to
Stifel or one of its affiliates and to the Company;
4. 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,
acknowledgements and agreements contained in the Announcement;
and
5. it understands (or, if acting for the account of another
person, such person understands) the resale and transfer
restrictions set out in this Appendix.
The Announcement does not constitute an offer or invitation to
underwrite, subscribe for or otherwise acquire or dispose of any
securities or investment advice in any jurisdiction, including,
without limitation, the United Kingdom, the United States,
Australia, Canada, Japan or South Africa. No public offer of
securities of the Company is being made in the United Kingdom, the
United States or elsewhere.
In particular, the Placing Shares referred to in the
Announcement have not been and will not be registered under the
Securities Act or with any securities regulatory authority of any
state or other jurisdiction of the United States, and the Company
has not been registered as an investment company under the US
Investment Company Act of 1940, as amended. None of this
Announcement, the Placing Shares, nor any document related to this
Announcement or the Placing Shares, have been approved or
disapproved by the US Securities and Exchange Commission, any state
securities commission or other regulatory authority in the United
States, nor have any of the foregoing authorities passed upon or
endorsed the merits of the Placing or the accuracy or adequacy of
the Announcement. Any representation to the contrary is unlawful.
The Placing Shares are being offered and sold (i) outside the
United States in accordance with Regulation S and (ii) within the
United States only to QIBs pursuant to Rule 144A or another
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
The relevant clearances have not been, and nor will they be,
obtained from the securities commission of any province or
territory of Canada; no prospectus has been lodged with and/or
registered by, the Australian Securities and Investments Commission
or the Japanese Ministry of Finance; and the Placing Shares have
not been, nor will they be, registered under or offered in
compliance with the securities laws of any state, province or
territory of Australia, Canada, Japan or South Africa. Accordingly,
the Placing Shares may not (unless an exemption under the relevant
securities laws is applicable) be offered, sold, resold or
delivered or otherwise transferred, directly or indirectly, in or
into the United States, Australia, Canada, Japan, South Africa or
any other jurisdiction outside the United Kingdom.
The information set out in the Announcement is not intended, and
should not considered, as "advice" as defined in the Financial
Advisory and Intermediary Services Act 2002, nor does it purport to
describe all of the considerations that may be relevant to a
prospective investor.
The Announcement constitutes objective information about the
Company and the Placing Shares and nothing contained in it should
be construed as constituting any form of investment advice or
recommendation, guidance or proposal of a financial nature in
respect of any investment issued by the Company or any transaction
in relation to the Company or the Placing Shares. Any investor
contemplating making an investment in the Placing Shares should
determine its own investment objectives and experience, and any
other factors which may be relevant to it in connection with such
investment, and should consult its professional advisers in this
regard.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Appendix or the Announcement of which it forms part should
seek appropriate advice before taking any action.
Each Placee, by applying to participate in the Placing, agrees
that the content of the Announcement is exclusively the
responsibility of the Company and confirms that it has neither
received nor relied on any other information, representation,
warranty, or statement made by or on behalf of the Company, the
Investment Adviser or Stifel or any other person and neither
Stifel, the Company, the Investment Adviser nor any other person
will be liable for any Placee's decision to participate in the
Placing based on any other information, representation, warranty or
statement that the Placees may have obtained or received. 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 Placing. Nothing in
this paragraph shall exclude the liability of any person for
fraudulent misrepresentation.
These terms and conditions are being provided by Stifel which is
acting as agent for and on behalf of its affiliate Stifel Nicolaus
& Company, Inc., a U.S. SEC registered broker-dealer pursuant
to a Rule 15a-6 intra-group company agreement.
Details of the Placing Agreement and the Placing Shares
Stifel has entered into a placing agreement with the Company and
the Investment Adviser under which Stifel, as agent of the Company,
on the terms and subject to the conditions set out therein, has
agreed to use reasonable endeavours to procure Placees to subscribe
for the Placing Shares.
The Placing Shares will, when issued, be credited as fully paid
and will rank pari passu in all respects with the existing ordinary
shares of 10 pence each in the capital of the Company including the
right to receive all future dividends and distributions declared,
made or paid after the date of sale. The Placing Shares are
expected to be issued on 6 October 2016. The Placing will be made
on a non pre-emptive basis.
Application for listing and admission to trading
Application will be made for the Placing Shares to be admitted
to trading on AIM. It is expected that dealings in the Placing
Shares will commence no later than 8.00 a.m. on 6 October 2016 (the
"Closing Date").
Bookbuild
Stifel will today commence the bookbuilding process in respect
of the Placing (the "Bookbuild") to determine demand for
participation in the Placing by Placees. This Appendix gives
details of the terms and conditions of, and the mechanics of
participation in, the Placing. No commissions will be paid to
Placees or by Placees in respect of any Placing Shares.
Stifel and the Company shall be entitled to effect the Placing
by such alternative method to the Bookbuild as they may, in their
sole discretion, determine.
Participation in, and principal terms of, the Placing
1. Participation in the Placing will only be available to
persons who may lawfully be, and are, invited to participate by
Stifel. Stifel and its affiliates are entitled to enter bids in the
Bookbuild as principal.
2. The Placing Price will be 298.6 pence per Placing Share.
3. The number of Placing Shares to be issued will be agreed
between Stifel and the Company, following completion of the
Bookbuild. The number of Placing Shares to be issued will be
announced through a Regulatory Information Service following the
completion of the Bookbuild (the "Placing Results
Announcement").
4. To bid in the Bookbuild, prospective Placees should
communicate their bid by telephone to their usual sales contact at
Stifel. Each bid should state the number of Placing Shares which
the prospective Placee wishes to acquire at the Placing Price. Bids
may be scaled down by Stifel on the basis referred to in paragraph
7.
5. The Bookbuild is expected to close no later than 1pm (London
time) on 3 October 2016 but may be closed earlier or later at the
discretion of Stifel and the Company. Stifel may, in agreement with
the Company, accept bids that are received after the Bookbuild has
closed.
6. Each prospective Placee's allocation will be confirmed to the
Placee orally by Stifel following the close of the Placing, and a
trade confirmation will be dispatched as soon as possible
thereafter. Stifel's oral confirmation to such Placee will
constitute an irrevocable legally binding commitment upon such
person (who will at that point become a Placee) in favour of Stifel
and the Company, under which the Placee agrees to acquire the
number of Placing Shares allocated to it at the Placing Price on
the terms and conditions set out in this Appendix and in accordance
with the Company's constitutional documents.
7. Subject to paragraphs 4 and 5, Stifel may choose to accept
bids, either in whole or in part, on the basis of allocations
determined by the Company at its discretion (in consultation with
Stifel) and may scale down any bids for this purpose on such basis
as they may determine. The acceptance of bids shall be at Stifel's
absolute discretion. Stifel may also, notwithstanding paragraphs 4
and 5, subject to the prior consent of the Company, (i) allocate
Placing Shares after the time of any initial allocation to any
person submitting a bid after that time and (ii) allocate Placing
Shares after the Bookbuild has closed to any person submitting a
bid after that time. The Company reserves the right to reduce or
seek to increase the amount to be raised pursuant to the
Placing.
8. A bid in the Bookbuild will be made on the terms and subject
to the conditions in the Announcement and will be legally binding
on the Placee on behalf of which it is made and, except with
Stifel's consent, will not be capable of variation or revocation
after the time at which it is submitted. Each Placee will also have
an immediate, separate, irrevocable and binding obligation, owed to
Stifel and the Company, to pay to Stifel (or as it may direct) in
cleared funds an amount equal to the product of the Placing Price
and the number of Placing Shares such Placee has agreed to acquire.
Each Placee's obligations under this paragraph will be owed to the
Company and to Stifel.
9. Except as required by law or regulation, no press release or
other announcement will be made by Stifel or the Company using the
name of any Placee (or its agent) in its capacity as Placee (or
agent), other than with such Placee's prior written consent.
10. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made at the same time, on the basis explained below under
"Registration and Settlement".
11. All obligations under the Bookbuild and Placing will be
subject to fulfilment or (where applicable) waiver of the
conditions referred to below under "Conditions of the Placing" and
to the Placing not being terminated on the basis referred to below
under "Right to terminate under the Placing Agreement".
12. By participating in the Bookbuild, each Placee agrees that
its rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee.
13. To the fullest extent permissible by law, neither Stifel nor
any of its affiliates shall have any liability to Placees (or to
any other person whether acting on behalf of a Placee or
otherwise). In particular, neither Stifel nor any of its affiliates
nor the Company shall have any liability (including, to the extent
permissible by law, any fiduciary duties) in respect of Stifel's
conduct of the Bookbuild or of such alternative method of effecting
the Placing as Stifel, its affiliates and the Company may
agree.
Conditions of the Placing
Stifel's obligations under the Placing Agreement are conditional
on, inter alia:
1. Admission of the Placing Shares occurring not later than 8.00
a.m. (London time) on 6 October 2016 or such other date as may be
agreed between the Company and Stifel, not being later than 31
October 2016;
2. the publication by the Company of the Placing Results
Announcement through a Regulatory Information Service as soon as
reasonably practicable following execution of a terms of sale
between the Company, the Investment Adviser and Stifel;
3. the Company allotting and issuing, subject only to Admission,
the Placing Shares to the Placees procured by Stifel;
4. the Company and the Investment Adviser having complied with
all their respective obligations and undertakings and having
satisfied all conditions to be satisfied by any of them under the
Placing Agreement on or prior to Admission;
5. the representations, warranties and undertakings on the part
of the Company and the Investment Adviser contained or referred to
in the Placing Agreement being true, accurate and not misleading on
and as of the date hereof, the allocation date and Admission, as
though they had been given and made on the relevant date by
reference to the facts and circumstances then subsisting, and no
matter having arisen prior to the Closing Date which might
reasonably be expected to give rise to a claim under the indemnity
set out in the Placing Agreement;
6. the Unit Purchase Agreement (being the unit purchase sale
agreement between the Company and the current owners of the
Travelodge Portfolio in relation to the acquisition) remaining in
full force and effect and not having lapsed or been terminated
prior to Admission, none of the representations, warranties and
agreements of the parties thereto ceasing to be true, accurate and
not misleading on and as of the date hereof, the allocation date
and Admission, each of the parties having complied with all their
respective obligations and undertakings thereunder and all
conditions to be satisfied by any of them (other than Admission)
thereunder having been satisfied or waived and (subject to certain
limited exceptions) no event having arisen at any time prior to
Admission which gives any party to the Unit Purchase Agreement a
right to terminate it;
7. in the opinion of Stifel there being or there having been no
material adverse change in, or any development involving a
prospective material adverse change in or affecting, the condition
(financial, operational, legal or otherwise), earnings, management,
business affairs or prospects of the Company or the Group taken as
a whole, whether or not arising in the ordinary course of business
since the execution of the Placing Agreement; and
8. valid applications being received under the Placing in
respect of at least 39,216,343 shares.
If: (i) any of the conditions contained in the Placing Agreement
in relation to the Placing Shares, including those described above,
are not fulfilled or (where applicable) waived by Stifel by the
respective time or date where specified (or such later time or date
as the Company and Stifel may agree); or (ii) the Placing Agreement
is terminated in the circumstances specified below, the Placing
will lapse and the Placee's rights and obligations hereunder in
relation to the Placing Shares shall cease and terminate at such
time and each Placee agrees that no claim can be made by the Placee
against either the Company or Stifel in respect thereof.
The Placing is not conditional upon completion of the
Acquisition. Therefore, subject to the conditions of the Placing
being satisfied or, where applicable, waived and the Placing
Agreement not being terminated, Admission will become effective and
the net proceeds of the Placing will be received by the Company
before completion of the Acquisition.
Stifel may, at its discretion and upon such terms as it thinks
fit, waive compliance with the whole or any part of any of the
obligations in relation to the conditions in the Placing Agreement,
save that the above conditions relating to Admission of the Placing
Shares taking place, the publication of the Placing Results
Announcement and the Company's allotment and issue of the Placing
Shares may not be waived. Any such extension or waiver will not
affect Placees' commitments as set out in the Announcement.
Neither Stifel nor the Company 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 it may make as to whether
or not to waive or to extend the time and/or date for the
satisfaction of any condition to the Placing nor for any decision
they may make as to the satisfaction of any condition or in respect
of the Placing generally and by participating in the Placing each
Placee agrees that any such decision is within the absolute
discretion of Stifel and the Company.
Right to terminate under the Placing Agreement
Stifel may, at any time on or before the Closing Date, terminate
the Placing Agreement by giving notice to the Company in certain
circumstances, including, inter alia:
1. any matter or circumstance arises as a result of which it is
reasonable to expect that any of the conditions will not be
satisfied or (to the extent capable of being waived) waived by
Stifel by the required time(s) (if any) and continue to be
satisfied at the Closing Date or have become incapable of
satisfaction; or
2. there has been a breach by the Company or the Investment
Adviser of any of the representations, warranties, undertakings or
covenants respectively contained in or given pursuant the Placing
Agreement or any of the representations, warranties or undertakings
is not or has ceased to be, true, accurate and not misleading;
or
3. the Company or the Investment Adviser has not complied with
all its obligations and undertakings under the Placing Agreement
which fall to be performed or satisfied on or prior to the Closing
Date; or
4. it shall come to the notice of Stifel that any statement
contained in any of the placing documents (or any amendment or
supplement thereto) is or has become untrue or inaccurate in any
material respects or incomplete or misleading or any matter has
arisen, which would, if the Placing were made at that time,
constitute, in the opinion of Stifel, a material omission from the
placing documents, or any of them (or any amendment or supplement
to any of them) or there is, in the opinion of Stifel, a material
omission from any of the placing documents or a material omission
from or misleading inaccuracy in the Company's publicly available
information; or
5. in the opinion of Stifel there shall have been a material
adverse change in, or any development involving a prospective
material adverse change in or affecting, the condition (financial,
operational, legal or otherwise), earnings, management, business
affairs or prospects of the Company or the Group taken as a whole,
whether or not arising in the ordinary course of business since the
execution of the Placing Agreement; or
6. there has occurred any material adverse change in the
financial markets in the United States, the United Kingdom, any
other member state of the EEA or the international financial
markets, any outbreak of hostilities or escalation thereof, any act
of terrorism or war or other calamity or crisis or any change or
development involving a prospective change in national or
international political, financial or economic conditions, exchange
rates or exchange controls, in each case the effect of which is
such as to make it, in the judgement of Stifel, impracticable or
inadvisable to market the Placing Shares or to enforce contracts
for the subscription of the Placing Shares; or
7. trading in any securities of the Company has been suspended
or limited by the London Stock Exchange on any exchange or
over-the-counter market, or if trading generally on the NYSE Amex
Equities, the New York Stock Exchange, the NASDAQ System or the
London Stock Exchange has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of such exchanges or by such
system or by order of the SEC, the Financial Industry Regulatory
Authority, the FCA or any governmental or self-regulatory
authority, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the
United States, the United Kingdom or any other member state of the
EEA; or
8. a banking moratorium has been declared by the authorities of
any of the United States, the United Kingdom, any other member
state of the EEA or the State of New York; or
9. there has occurred an adverse change or a prospective adverse
change since the date the Placing Agreement in the United States or
United Kingdom taxation affecting the Placing Shares or the issue
thereof or exchange controls have been imposed by the United
States, the United Kingdom or any other member state of the
EEA.
Following Admission of the Placing Shares, the Placing Agreement
shall not be capable of rescission or termination to the extent
that it relates to the Placing or the issue of the Placing
Shares.
If any of the obligations of Stifel with respect to the Placing
are terminated in the manner contemplated above, the rights and
obligations of each Placee shall cease and terminate at such time
and no claim can be made by any Placee in respect thereof. The
rights and obligations of the Placees shall terminate only in the
circumstances described in these terms and conditions and will not
be subject to termination by the Placee or any prospective Placee
at any time or in any circumstances.
By participating in the Placing, Placees agree that the exercise
by Stifel of any right of termination or other discretion under the
Placing Agreement shall be within the absolute discretion of Stifel
and that they need not make any reference to Placees and that they
shall have no liability to Placees whatsoever in connection with
any such exercise.
Lock-up
The Company has undertaken to Stifel that from the date of the
Placing Agreement until the date falling 90 days after Admission,
it will not, without the prior written consent of Stifel, directly
or indirectly, offer, issue, allot, lend, mortgage, assign, charge,
pledge, sell or contract to sell or issue, issue options in respect
of, or otherwise dispose of, directly or indirectly, or announce an
offering or issue of, any Shares (or any interest therein or in
respect thereof) or any other securities exchangeable for or
convertible into, or substantially similar to, Shares or enter into
any transaction with the same economic effect as, or agree to do,
any of the foregoing provided that the Company may issue Shares
pursuant to the terms of the Investment Advisory Agreement without
the prior written consent of Stifel.
No Prospectus
No offering document or prospectus has been or will be published
or submitted to be approved by the FCA or submitted to the London
Stock Exchange in relation to the Placing and no such prospectus is
required (in accordance with the Prospectus Directive) to be
published.
Placees' commitments will be made solely on the basis of the
information contained in the Announcement. Each Placee, by
accepting a participation in the Placing, agrees that the content
of the Announcement is exclusively the responsibility of the
Company and confirms that it has neither received nor relied on any
other information, representation, warranty, or statement made by
or on behalf of the Company, the Investment Adviser or Stifel or
any other person and none of Stifel, the Company nor the Investment
Adviser nor any other person will be liable for any Placee's
decision to participate in the Placing based on any other
information, representation, warranty or statement which the
Placees may have obtained or received. 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 Placing. The Company is not making any
undertaking or warranty to any Placee regarding the legality of an
investment in the Placing Shares by such Placee under any legal,
investment or similar laws or regulations. Each Placee should not
consider any information in the Announcement to be legal, tax,
financial or business advice. Each Placee should consult its own
lawyer, tax adviser, financial adviser and business adviser for
legal, tax, financial and business advice regarding an investment
in the Placing Shares. Nothing in this paragraph shall exclude the
liability of any person for fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN:
GB00BLMQ9L68) following Admission will take place on a delivery
versus payment basis within the system administered by Euroclear UK
& Ireland Limited ("CREST").
Stifel 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 or practicable (including within the CREST system) or
would not be consistent with the regulatory requirements in the
Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent
a trade confirmation in accordance with the standing arrangements
in place with Stifel stating the number of Placing Shares allocated
to it at the Placing Price, the aggregate amount owed by such
Placee to Stifel and settlement instructions. Each Placee agrees
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 that it has in place with
Stifel.
It is expected that settlement of Placing Shares will be on 6
October 2016 on a T+2 basis with the trade date being 4 October
2016 in accordance with the instructions set out in the trade
confirmation.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above LIBOR as
determined by Stifel and the Company.
Each Placee is deemed to agree that, if it does not comply with
these obligations, the Stifel may sell any or all of the Placing
Shares allocated to that Placee on such Placee's behalf and retain
from the proceeds, for the Company's account and benefit, an amount
equal to the aggregate amount owed by the Placee plus any interest
due. 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 (together with any
interest or penalties) which may arise upon the sale of such
Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the trade confirmation
is copied and delivered immediately to the relevant person within
that organisation.
Representations, Warranties and Further Terms
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) for the benefit of the Company and
Stifel:
1. represents and warrants that it has read and understood the
Announcement, including this Appendix, in its entirety and that its
subscription of the Placing Shares is subject to and based upon
only the terms, conditions, representations, warranties,
acknowledgments, agreements and undertakings and other information
contained herein;
2. acknowledges that no offering or admission document or
prospectus has been prepared or published in connection with the
placing of the Placing Shares and represents and warrants that it
has not received a prospectus or other offering or admission
document in connection therewith;
3. acknowledges that the content of the Announcement is
exclusively the responsibility of the Company and that none of
Stifel, its affiliates or any person acting on behalf of them has
or shall have any liability for any information, representation or
statement contained in the Announcement or any information
previously published by or on behalf of the Company and will not be
liable for any Placee's decision to participate in the Placing
based on any information, representation or statement contained in
the Announcement or otherwise;
4. acknowledges that the ordinary shares in the capital of the
Company are admitted to trading on AIM and that the Company is
therefore required to publish certain business and financial
information in accordance with law and that it is able to obtain or
access such information, or comparable information concerning any
other publicly traded company, in each case without undue
difficulty;
5. acknowledges that none of Stifel, its affiliates nor any
person acting on behalf of any of them has or shall have any
liability for any publicly available or filed information or any
information, representation, warranty or statement relating to the
Company or its business contained therein or otherwise, provided
that nothing in this paragraph excludes the liability of any person
for fraudulent misrepresentation made by that person;
6. represents and warrants that it is not, and at the time the
Placing Shares are acquired will not be, a resident of Australia,
Canada, Japan or South Africa;
7. acknowledges that the Placing Shares have not been and will
not be registered or qualified for offer and sale and, subject to
certain exceptions, may not be offered, sold, or delivered or
transferred, directly or indirectly, within United States,
Australia, Canada, Japan or South Africa and agrees not to reoffer,
resell, pledge or otherwise transfer the Placing Shares except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act;
8. represents and warrants that the issue to it, or the person
specified by it for registration as holder, of Placing Shares will
not give rise to liability under any of sections 67, 70, 93 or 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 depositary receipts or to
transfer Placing Shares into a clearance system;
9. represents and warrants that it has complied with its
obligations under the Criminal Justice Act 1993, the Market Abuse
Regulation and in connection with money laundering and terrorist
financing under the Proceeds of Crime Act 2002 (as amended), the
Terrorism Act 2000, the Terrorism Act 2006, the Money Laundering
Regulations 2007 (the "Regulations") and the Money Laundering
Sourcebook of the FCA and, if making payment on behalf of a third
party, that satisfactory evidence has been obtained and recorded by
it to verify the identity of the third party as required by the
Regulations;
10. if a financial intermediary, as that term is used in Article
3(2) of the Prospectus Directive, represents and warrants that the
Placing Shares purchased by it in the Placing 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 which has implemented the Prospectus
Directive other than Qualified Investors, or in circumstances in
which the prior consent of Stifel has been given to the offer or
resale;
11. represents and warrants that it has not offered or sold and
will not offer or sell any Placing Shares to persons in the United
Kingdom, except to Qualified Investors or otherwise in
circumstances which have not resulted and which will not result in
contravention of section 85(1) of the FSMA;
12. represents and warrants that it has not offered or sold and
will not offer or sell any Placing Shares to persons in the EEA
prior to Admission except to Qualified Investors or otherwise in
circumstances which have not resulted in and which will not result
in the requirement to publish a prospectus in any member state of
the EEA within the meaning of the Prospectus Directive;
13. represents and warrants that 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 the FSMA) relating to
the Placing Shares in circumstances in which section 21(1) of the
FSMA does not require approval of the communication by an
authorised person;
14. represents and warrants that it has complied and will comply
with all applicable provisions of the FSMA and the Market Abuse
Regulation with respect to anything done by it in relation to the
Placing Shares in, from or otherwise involving, the United
Kingdom;
15. represents and warrants that if it resides in a member state
of the EEA it is a Qualified Investor within the meaning of the
Prospectus Directive;
16. represents and warrants that if it resides in the United
Kingdom it is a Qualified Investor within the meaning of the
Prospectus Directive and a person (a) who has professional
experience in matters relating to investments and is an "Investment
Professional" falling within article 19(5) (investment
professionals) of the Order, or (b) who falls within article
49(2)(a) to (d) (high net worth companies, unincorporated
associations etc.) of the Order;
17. represents and warrants that 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 Placing 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 and
conditions set out or referred to in the Announcement) and will
honour such obligations;
18. undertakes that it (and any person acting on its behalf)
will make payment for the Placing Shares allocated to it in
accordance with this Appendix on the due time and date set out
herein and it has obtained all necessary consents and authorities
to enable it to give its commitment so to subscribe, failing which
the relevant Placing Shares may be placed with other Placees or
sold as Stifel may in its sole discretion determine and without
liability to such Placee, who will remain liable for any amount by
which the net proceeds of such sale falls short of the product of
the Placing Price and the number of Placing Shares allocated to it
and may be required to bear any stamp duty, stamp duty reserve tax
or other similar taxes (together with any interest or penalties due
pursuant to the terms and conditions set out or referred to in the
Announcement) which may arise upon the placing or sale of such
Placee's Placing Shares on its behalf;
19. acknowledges that none of Stifel, nor any of its affiliates,
nor any person acting on behalf of any of them, is making any
recommendations to it, nor advising it regarding the suitability of
any transactions it may enter into in connection with the Placing
and that participation in the Placing is on the basis that it is
not and will not be a client of Stifel and that Stifel does not
have any duty or responsibility to it for providing the protections
afforded to its clients or customers or for providing advice in
relation to the Placing nor in respect of any representations,
warranties, acknowledgements, undertakings or indemnities contained
in the Placing Agreement nor for the exercise or performance of any
of its rights and obligations thereunder including any rights to
waive or vary any conditions or exercise any termination right;
20. undertakes that the person whom it specifies for
registration as holder of the Placing Shares will be (i) itself or
(ii) its nominee, as the case may be. Neither Stifel nor the
Company will be responsible for any liability to stamp duty, stamp
duty reserve tax or any similar tax resulting from a failure to
observe this requirement. Each Placee and any person acting on
behalf of such Placee agrees to participate in the Placing and it
agrees to indemnify the Company and Stifel on an after tax basis in
respect of the same on the basis that the Placing Shares will be
allotted to the CREST account of Stifel or its affiliate or agent
who will hold them as nominee on behalf of such Placee until
settlement in accordance with its standing settlement
instructions;
21. acknowledges that any agreements entered into by it pursuant
to these terms and conditions, and all non-contractual or other
obligations arising out of or in connection with them, shall be
governed by and interpreted in accordance with English law and it
submits (on behalf of itself and on behalf of any person 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 (including any dispute regarding the existence,
validity or termination of such contract or relating to any non
contractual or other obligation arising out of or in connection
with 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 either the
Company or Stifel 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;
22. agrees to indemnify on an after tax basis and hold the
Company, Stifel and its affiliates harmless from any and all costs,
claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the
representations, warranties, acknowledgements, agreements and
undertakings in this Appendix and further agrees that the
provisions of this Appendix shall survive after completion of the
Placing;
23. it is either:
(a) not a US person within the meaning of Rule 902 of Regulation
S (a "US Person") and is located outside the United States; or
(b) a QIB and, in each case under this sub clause (b), it has
duly executed an investor letter in a form provided to it and
delivered the same to Stifel or one of its affiliates and to the
Company;
24. understands and acknowledges (and each account for which it
is acting has been advised and understands and acknowledges) that
the Placing Shares have not been and will not be registered under
the Securities Act or the securities laws of any state of the
United States, and that they may not be offered, sold, resold,
transferred or delivered to, directly or indirectly, in the United
States or to any US Person, other than in limited
circumstances;
25. understands and agrees that the Placing Shares are being
offered in a transaction not involving any public offering within
the meaning of Section 4(a)(2) of the Securities Act, and that it
is not purchasing the Placing Shares as a result of any general
solicitation or general advertising within the meaning of Rule 502
under the Securities Act or as a result of any directed selling
efforts (as defined in Rule 902 of Regulation S);
26. is acquiring the Placing Shares for its own account, or, for
the account of one or more other persons (which, in the case of US
Persons or persons located in the United States, are QIBs) for
which it is acting as duly authorized fiduciary or agent with sole
investment discretion with respect to each such account, and in
each case with full authority to make the acknowledgments,
representations and agreements herein with respect to each such
account (including delivery of a duly executed investor letter as
contemplated by paragraph 23(b) above), in each case for investment
and not with a view to any resale or distribution;
27. unless it has received the written consent of the Company,
it is not and will not be, acquiring the Placing Shares with the
assets of or on behalf of, (i) an "employee benefit plan" as
described in section 3(3) of the U.S. Employee Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the
provisions of title I of ERISA, (ii) a "plan" to which section 4975
of the U.S. Internal Revenue Code of 1986, as amended (the "Code")
applies or (iii) an entity whose underlying assets are deemed to
include the assets of an employee benefit plan or plan described in
(i) or (ii) above, (b) if it is a non-U.S. plan, "governmental
plan" or "church plan", the purchase and holding of the Placing
Shares or any interest therein does not violate any law or
regulation that is substantially similar to ERISA or Section 4975
of the Code or any statute, regulation, administrative decision,
policy or other legal authority applicable to such non-U.S. plan,
governmental plan or church plan and the purchase and holding of
the Placing Shares or any interest therein will not result in the
assets of the Company being deemed to include the assets of such
non-U.S. plan, governmental plan or church plan and (c) it will not
sell or otherwise transfer any such securities or interest to any
person without first obtaining the same foregoing representations,
warranties and covenants from that person.
28. in the case of any Placee located in the United States or
which is a US Person, acknowledges and agrees that there may be
certain consequences under United States and other tax laws
resulting from an investment in the Placing Shares, and it has made
such investigation and has consulted its own independent advisers
or otherwise has satisfied itself concerning, without limitation,
the effects of United States federal, state and local income tax
laws and foreign tax laws generally and the US Employee Retirement
Income Security Act of 1974, the US Investment Company Act of 1940
and the Securities Act;
29. acknowledges and agrees that it has had access to such
financial and other information, if any, regarding the Company and
the Placing Shares as it has requested in connection with its
investment decision to purchase Placing Shares. It acknowledges
that neither the Company, the Investment Adviser nor Stifel, nor
any person representing or otherwise acting on behalf of the
Company, the Investment Adviser or Stifel has made any
representation, express or implied, to it with respect to the
Company or the Placing other than (in the case of the Company and
its affiliates only) the information (i) contained in this
Announcement, (ii) published by the Company by notification through
a Regulatory Information Service on or prior to the date of this
Announcement, or (iii) contained in annual audited accounts or
interim financials published by the Company (including for the year
ended 31 December 2015 and six months ended 30 June 2016), and upon
which it is relying solely in making its investment decision with
respect to the Placing Shares. It acknowledges that it has not
relied on any information contained in any research reports
prepared by Stifel or any of its affiliates;
30. represents and warrants that it is a corporation,
partnership or other entity having such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its investment decision to receive or purchase
the Placing Shares, and it and each of the discretionary accounts
for which it is receiving or purchasing Placing Shares (i) in the
normal course of business, invest in or purchase securities similar
to the Placing Shares, (ii) is a highly sophisticated investor that
has such knowledge and experience in financial and business matters
as to be capable of evaluating such securities, (iii) has made its
own independent investigation and appraisal of the business
results, financial condition, prospects, creditworthiness, status
and affairs of the Company, and is not entitled to rely on any
investigation that any other person may have conducted with respect
to the Placing Shares or the Company, (iv) has evaluated the merits
and risks of its investment in the Placing Shares, (v) has
satisfied itself concerning legal, regulatory, tax, business and
financial considerations in connection herewith to the extent it
deems necessary and it and any accounts for which it is acting are
each able to bear the economic risk of it or their investment in
the Placing Shares, (vi) will not look to the Company, its
directors, officers or affiliates or to Stifel for all or part of
any such loss or losses it or they may suffer, (vii) is able to
sustain a complete loss on its or their investment in the Placing
Shares, (viii) has no need for liquidity with respect to its or
their investment in the Placing Shares and (ix) has no reason to
anticipate any change in its or their circumstances, financial or
otherwise, which may cause or require any sale or distribution by
it of all or any part of the Placing Shares;
31. agrees not to deposit any of the Placing Shares it may
acquire into any unrestricted depositary receipt facility
established or maintained by a depositary bank, unless, subject to
the terms of any applicable deposit agreement, at the time of
deposit such Placing Shares are no longer "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act;
32. understands and acknowledges that an investment in the
Placing Shares involves a considerable degree of risk and no US
federal or state or non-US agency has made any finding or
determination as to the fairness for investment or any
recommendation or endorsement of any such investment;
33. acknowledges that the Company, Stifel, their respective
affiliates and others will rely upon the truth and accuracy of the
foregoing acknowledgements, representations, warranties and
agreements and agrees that if it is purchasing Placing Shares as a
fiduciary or agent for one or more investor accounts, it represents
and warrants that it has sole investment discretion with respect to
each such account and that it has full power to, and does, make the
acknowledgements, representations, warranties and agreements made
herein on behalf of such account;
34. represents and warrants that it has neither received nor
relied on any confidential price sensitive information concerning
the Company in accepting this invitation to participate in the
Placing; and
35. if it is a pension fund or investment company, its purchase
of Placing Shares is in full compliance with applicable laws and
regulations.
The foregoing representations, warranties, confirmations,
acknowledgements and undertakings (as the case may be) are given
for the benefit of the Company and Stifel and are irrevocable.
In addition, Placees should note that they will be liable for
any 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 subscription by them of any
Placing Shares or the agreement by them to subscribe for any
Placing Shares.
Each Placee, and any person acting on behalf of the Placee,
acknowledges and agrees that Stifel does not owe any fiduciary or
other duties to any Placee in respect of any representations,
warranties, undertakings or indemnities in the Placing
Agreement.
Each Placee and any person acting on behalf of the Placee
acknowledges and agrees that Stifel or any of its affiliates may,
at its absolute discretion, agree to become a Placee in respect of
some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is
dealing with Stifel, any money held in an account with Stifel 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 Stifel' money in accordance
with the client money rules and will be used by Stifel in the
course of its own business and the Placee will rank only as a
general creditor of Stifel.
If the Company or Stifel or their respective affiliates request
any information about a Placee's agreement to subscribe for Placing
Shares and/or any evidence supporting the representations and
warranties given above, such Placee shall (and it undertakes to)
promptly disclose such information or evidences (as applicable to
them).
All times and dates in the Announcement may be subject to
amendment. Stifel shall notify the Placees and any person acting on
behalf of the Placees of any changes.
IMPORTANT INFORMATION
The content of this Announcement has been prepared by and is the
sole responsibility of the Company.
This Announcement is only being distributed to and is only
directed at (i) persons who are outside the United Kingdom or (ii)
investment professionals falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (the "Order") or (iii) high net worth entities, and other
persons to whom it may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order (all such persons together
being referred to as "relevant persons"). The Placing Shares are
only available to, and any invitation, offer or agreement to
subscribe or otherwise acquire such securities will be engaged in
only with, relevant persons. Any person who is not a relevant
person should not act or rely on this Announcement or any of its
contents.
The information contained in this Announcement is for background
purposes only and does not purport to be full or complete. No
reliance may be placed for any purpose on the information contained
in this Announcement or its accuracy, fairness or completeness.
This Announcement does not constitute, or form part of, any
offer or invitation to sell or issue, or any solicitation of any
offer to purchase or subscribe for any shares or other securities
of the Company in any jurisdiction, including the United States,
Canada, Japan, South Africa or Australia or in any jurisdiction in
which such offer or sale would be unlawful prior to registration,
exemption from registration or qualification under the securities
laws of any jurisdiction. The Placing and the distribution of this
Announcement and other information in connection with the Placing
in certain jurisdictions may be restricted by law and persons into
whose possession this Announcement, any document or other
information referred to herein comes should inform themselves about
and observe any such restriction. Any failure to comply with these
restrictions may constitute a violation of the securities laws of
any such jurisdiction. Neither this Announcement nor any part of it
nor the fact of its distribution shall form the basis of or be
relied on in connection with or act as an inducement to enter into
any contract or commitment whatsoever.
The Placing timetable may be influenced by a range of
circumstances, including market conditions. Acquiring investments
to which this Announcement relates may expose an investor to a
significant risk of losing all of the amount invested. Persons
considering making such an investment should consult an authorised
person specialising in advising on such investments.
This Announcement does not constitute a recommendation
concerning the Placing. The value of the Company's shares can
decrease as well as increase. Potential investors should consult a
professional adviser as to the suitability of the Placing for the
person concerned. Past performance cannot be relied upon as a guide
to future performance.
This Announcement is not for distribution, directly or
indirectly, in whole or in part, in or into the United States
(including its territories and possessions, any state of the United
States and the District of Columbia), Canada, Japan, South Africa
or Australia or any other jurisdiction where it is unlawful to
distribute this Announcement. In particular, this announcement is
not an offer of securities for sale in the United States.
The Placing 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, and may not be offered or sold
in 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. Any
offering of the Placing Shares to be made in the United States will
be made only to a limited number of "qualified institutional
buyers" as defined in Rule 144A under the Securities Act pursuant
to an exemption from the registration requirements of the
Securities Act in a transaction not involving any public offering
and outside the United States in offshore transactions in
accordance with Regulation S under the Securities Act. There will
be no public offer of the Placing Shares in any jurisdiction,
including in the United States, Canada, Japan, South Africa or
Australia.
The Placing Shares have not been registered under the applicable
securities laws of Canada, Japan, South Africa or Australia and,
subject to certain exceptions, may not be offered or sold within
Canada, Japan, South Africa or Australia or to any national,
resident or citizen of Canada, Japan, South Africa or
Australia.
The Announcement contains forward-looking statements. These
statements relate to the future prospects, developments and
business strategies of the Company. Forward-looking statements are
identified by the use of such terms as "believe", "could",
"envisage", "estimate", "potential", "intend", "may", "plan",
"will" or variations or similar expressions, or the negative
thereof. The forward-looking statements contained in the
Announcement are based on current expectations and are subject to
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by those statements. If
one or more of these risks or uncertainties materialise, or if
underlying assumptions prove incorrect, the Company's actual
results may vary materially from those expected, estimated or
projected. Given these risks and uncertainties, certain of which
are beyond the Company's control, potential investors should not
place any reliance on forward-looking statements. These
forward-looking statements speak only as at the date of the
Announcement. Except as required by law, the Company undertakes no
obligation to publicly release any update or revisions to the
forward-looking statements contained in the Announcement to reflect
any change in events, conditions or circumstances on which any such
statements are based after the time they are made.
Stifel, which is authorised and regulated in the United Kingdom
by the Financial Conduct Authority, is acting as sole bookrunner
and nominated adviser connection with the matters referred to
herein, and will not be responsible to anyone other than the
Company for providing the protections afforded to its clients, nor
for providing advice in relation to the contents of the
Announcement or any transaction or arrangement referred to
herein.
Apart from the responsibilities and liabilities, if any, which
may be imposed on Stifel by the FSMA or the regulatory regime
established thereunder, Stifel does not accept any responsibility
whatsoever, and makes no representation or warranty, express or
implied, in relation to the contents of the Announcement, including
its accuracy, completeness or verification or for any other
statement made or purported to be made by it, or on behalf of it,
the Company, the Directors, Prestbury or any other person in
connection with the Company, the Placing, the shares or the matters
referred to herein, and nothing in this Announcement is or shall be
relied upon as a promise or representation in this respect, whether
as to the past or future. Stifel accordingly disclaims all and any
liability whether arising in tort, contract or otherwise (save as
referred to above), which it might otherwise have in respect of the
Announcement or any such statement.
Certain figures contained in this Announcement, including
financial information, have been subject to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this Announcement may not conform exactly
with the total figure given.
Neither the content nor the Company's website accessible by
hyperlinks on the Company's website is incorporated in, or forms
part of, this Announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCBIGDCUBGBGLR
(END) Dow Jones Newswires
September 08, 2016 02:01 ET (06:01 GMT)
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