TIDMTRAF
RNS Number : 9881F
Trafalgar New Homes PLC
27 February 2018
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ("MAR"). With the publication of this announcement,
this information is now considered to be in the public domain.
27 February 2018
TRAFALGAR NEW HOMES PLC
("Trafalgar", the "Company" or "Group")
Proposed acquisition of Beaufort Homes Ltd, proposed change of
name and notice of General Meeting
Trafalgar (AIM: TRAF), the AIM quoted residential property
developer operating in southeast England, announces that it has
entered into a conditional agreement to acquire the entire issued
share capital of Beaufort Homes Limited ("Beaufort Homes") (the
"Acquisition"). The consideration for the Acquisition will be
satisfied through the issue of 186,815,190 ordinary shares in the
Company (the "Consideration Shares") to the owners of Beaufort
Homes. The Company will shortly be posting to shareholders a
circular (the "Circular") to convene a general meeting of
shareholders (the "General Meeting") at which the Company will
seek, inter alia, an increase in its share authorities to enable
the issue of the Consideration Shares.
Beaufort Homes was established in October 2016 and has signed a
number of option agreements for the acquisition of sites in
southeast England which, subject to securing planning permission,
would be developed into extra care and assisted living schemes. The
UK population is aging, leading to a growing demand for specialised
housing for the elderly, and an increasingly favourable planning
environment. Beaufort intends to develop units for purchase by
owners, who would then receive extra care in their own homes.
At the General Meeting, the Company will also be seeking
shareholder approval for a change in the Company's name to
Trafalgar Property Group plc, in order to more accurately reflect
the strategy of the enlarged group, as well as seeking approval for
a share capital reorganisation. Extracts from the Circular, which
include further details on Beaufort Homes, the Acquisition, the
proposed change of name and the share capital reorganisaiton are
included below. A copy of the Circular will shortly be made
available from the Company's website,
www.trafalgarnewhomes.co.uk.
Notice of general meeting
The general meeting will be held at the offices of Allenby
Capital Limited, 5 St. Helen's Place, London, EC3A 6AB at 10:00
a.m. on 16 March 2018.
Commenting on the acquisition, CEO, Chris Johnson, said: "The
Board believes that the acquisition of Beaufort Homes will be
transformational for the business. The team at Beaufort Homes has
an extensive track record and the acquisition, which brings with it
a number of exciting development opportunities, is a logical step
given the UK's growing retirement demographic and the increasing
demand for assisted living properties."
Enquiries:
Trafalgar New Homes Plc +44 (0) 1732 700
Christopher Johnson 000
Allenby Capital Ltd - Nominated
Adviser and Broker +44 (0) 20 3328
Jeremy Porter/James Reeve 5656
Yellow Jersey PR Limited +44 (0) 7747 788
Charles Goodwin / Abena Affum 221
Notes to Editors:
Trafalgar New Homes is the holding company of Combe Bank Homes,
a successful residential property developer operating in the
southeast of England. The founders of Combe Bank Homes have a long
track record of developing new and refurbished homes, principally
in Kent.
The Company's focus is on the select acquisition of land for
residential property development. The Company outsources all
development activities, for example the obtaining of planning
permission, design and construction, and uses fixed price build
contracts, enabling it to tightly control its development and
overhead costs.
Extracts from the Circular
The following has been extracted from, and should be read in
conjunction with, the Circular to shareholders, which will shortly
be made available for download from the Company's website,
www.trafalgarnewhomes.co.uk.
LETTER FROM THE CHAIRMAN
1. Introduction
On 27 February 2018 the Board announced that the Company has
conditionally agreed to acquire the entire issued share capital of
Beaufort Homes in consideration for the issue of the Consideration
Shares, in accordance with the Acquisition Agreement.
Beaufort Homes was established in October 2016 and has signed
option agreements for the acquisition of land and property for the
development of extra care and assisted living housing schemes,
subject to planning permission. The UK population is aging, leading
to a growing demand for specialised housing for the elderly.
Beaufort Homes intends to develop units for purchase by owners, who
would then be able to receive extra care in their own homes.
Further details on Beaufort Homes are set out in paragraph 3 of
this letter.
The consideration for the Acquisition, in accordance with the
Acquisition Agreement, is to be satisfied through the issue of the
Consideration Shares to the Sellers which will represent, in
aggregate, approximately 43.94 per cent. of the Enlarged Share
Capital. Further details on the Acquisition Agreement are set out
in paragraph 4 of this letter.
On completion of the Acquisition and from Admission, the Company
will have a market capitalisation of approximately GBP3.48 million
based on the market price of the Ordinary Shares of 0.82p per share
at the close of business on 23 February 2018, being the latest
practicable date prior to the date of the Acquisition
Agreement.
The Acquisition is conditional upon, inter alia, the Resolutions
(apart from Resolution 3) being passed at the General Meeting and
on the admission of the Consideration Shares to trading on AIM. If
the Resolutions are duly passed at the General Meeting and the
other conditions set out in the Acquisition Agreement are met, then
it is expected that the New Ordinary Shares and the Consideration
Shares will be admitted to trading on AIM with effect from 8.00
a.m. on 19 March 2018 and completion of the Acquisition will take
place concurrently.
As the current market price on AIM for the Ordinary Shares is
less than their nominal value, the opportunity is being taken to
reorganise the share capital by subdividing the Ordinary Shares of
1p into Ordinary Shares of 0.1p and Deferred Shares of 0.9p.
Further details of the Share Reorganisation are set out in
paragraph 9 below. The Directors are therefore proposing
resolutions at the General Meeting to renew authorities to issue
new Ordinary Shares pursuant to CA 2006 to reflect the Share
Reorganisation and the Acquisition.
Following the Acquisition, the Group will have two distinct
business divisions - Beaufort Homes and the Group's existing
business, trading as Combe Bank Homes. It is therefore proposed to
change the name of the Company to "Trafalgar Property Group plc".
The Enlarged Share Capital will continue to trade under the AIM
symbol "TRAF" and with ISIN GB00B0SP7491 and LEI
2138005RIYTPKQ386I20.
The Directors consider that the acquisition of Beaufort Homes by
the Company is an exciting opportunity and consider that the
Acquisition is in the best interests of the Company and
Shareholders as a whole. Accordingly, the Directors recommend that
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting. Shareholders should note that if any of the
Resolutions are not passed (apart from Resolution 3), the
Acquisition will not occur.
The purpose of this document is to provide you with the
background to the Acquisition and the Resolutions to be proposed at
the General Meeting, and to explain why the Directors consider the
Acquisition to be in the best interests of the Company and
Shareholders as a whole, and why the Directors recommend that
Shareholders should vote in favour of the Resolutions at the
General Meeting. Further details on the Resolutions are set out in
paragraph 11 of this letter.
2. Background to and reasons for the Acquisition
The UK population is expected to increase by approximately 3.3
million in the next decade, before reaching 70 million in 2029. The
UK population is expected to continue ageing over the next few
decades, with the numbers of those aged 85 and over expected to
double over the next 25 years. By 2041, it is projected that those
aged 60 and over will account for 29.9% of the total
population.
The Directors consider that this increase in the aging
population in the UK will lead to an increased demand for
specialised housing for the elderly and that the Acquisition
provides the Group with the opportunity to pursue development
opportunities in the assisted living sector, utilising the
significant experience of the Sellers.
The Board has been exploring opportunities to grow the Company
through acquisition and expand its long-term pipeline of property
development projects. The Directors consider that, with its growing
portfolio of property development opportunities and the experience
of its management in the assisted living sector, the acquisition of
Beaufort Homes by the Company is an exciting opportunity and in the
best interests of the Company and Shareholders as a whole.
3. Information on Beaufort Homes
Beaufort Homes was established in October 2016 by Dan Stocks and
Paul Treadaway, both of whom have an extensive history and
experience in land assembly and residential development. They have
been instrumental to date in securing sites under option for these
types of schemes.
The percentages of the UK population over 65, and over 85, are
increasing. The directors of Beaufort Homes consider that the
supply of specialised housing for the elderly is limited and is
predominantly arranged on a rental model. The directors of Beaufort
Homes consider that there is an opportunity to develop extra care
and assisted living for elderly owner-occupiers, and they intend to
initially focus on affluent urban areas in southwest London and
Surrey, with higher owner occupancy and where they consider there
to be higher growth in the over 65 years age bracket.
The principal models of housing and care for the elderly in the
UK are:
-- Residential care homes - providing a wide range of care
provision, driven by dependency. This is a licenced occupancy
rental model.
-- Retirement living - providing warden cover and monitored
alarms., This includes leasehold, rental and shared ownership
models, often in semi-rural "village" developments focused on the
active elderly in their 70s.
-- Assisted living and extra care - providing independently
owned apartments on a long leasehold ownership model with service
charges to cover the costs of domiciliary services. Additional care
services are provided through a 24/7 onsite care operator. This
model is appropriate for the over 80s, in urban and suburban
locations.
Beaufort Homes intends to develop properties on the "assisted
living and extra care" operating model. Domiciliary services
available under assisted living schemes can include the provision
of meals, a communal living space, cleaning services and health and
beauty services.
Beaufort Homes has entered into option agreements to acquire 13
properties and is in negotiations to enter into option agreements
to acquire further sites. In each case the exercise of the option
is subject to the grant of planning permission for the
redevelopment of the sites. The option agreements currently entered
into would create two sites for development into assisted living
schemes and one site for residential redevelopment (subject to the
grant of appropriate planning permissions). The three sites are as
follows:
Surbiton, Surrey
Beaufort Homes has options to acquire six adjacent properties
for an aggregate purchase price of GBP4.83 million, subject to
receiving planning permission. Plans have been drawn up for the
development of the site into a 70 unit assisted living scheme,
which has been submitted to the local authority as a pre-planning
application. The options are exercisable up until the expiry dates,
which range from 23 October 2018 to 31 October 2018.
Surbiton, Surrey
Beaufort Homes holds options to acquire five adjacent houses for
an aggregate purchase price of GBP6.6 million, subject to receiving
planning permission. This site is proposed to be developed into an
assisted living scheme comprising 65 units. A pre-planning
application has been submitted to the local authority in respect of
this scheme. The options are exercisable up until the expiry dates,
which range from 26 July 2018 to 31 October 2018.
Chessington, Surrey
Subject to receiving planning approval, Beaufort Homes has
options to acquire two properties for an aggregate consideration of
GBP1.325 million. Architects' drawings have been prepared for the
redevelopment of the site into 12 properties, comprising six
semi-detached houses and two maisonettes. A formal planning
application has recently been submitted on this basis. The options
are exercisable up until the expiry dates, which range from 2 May
2018 to 9 May 2018.
Financial information on Beaufort Homes
Based on Beaufort Homes' most recently available unaudited
management accounts, in the period from 17 October 2016 to 31
October 2017, Beaufort Homes did not record any revenue and
recorded a loss before taxation of GBP13,316. As at 31 October
2017, Beaufort Homes had gross assets of GBP25,444 and net
liabilities of GBP13,216.
The founders of Beaufort Homes
The founders of Beaufort Homes are:
Dan Stocks, aged 44
Dan has a diploma in Urban Property Surveying and a degree in
Building Surveying from Kingston University. From 1997, Dan spent
four years with a large southwest London estate agency where he
managed a portfolio of up to GBP20 million of properties. In 2001,
Dan joined a large multi-disciplinary firm of surveyors in the West
End, where his responsibilities included procuring and awarding
large "JCT Design and Build" contracts for new build and
refurbishment developments. Dan became a professional member of the
Royal Institution of Chartered Surveyors in 2002.
At Beaufort Homes, Dan is responsible for construction
procurement, contracts and developments, and will also be
responsible for management of the completed buildings.
On completion of the Acquisition, Dan will join the Board of the
Company as an executive director with responsibility for Beaufort
Homes' property construction and the ongoing maintenance of the
completed properties. He will enter into a new service agreement
with Beaufort Homes, for an initial period of one year and
thereafter, subject to termination upon six months' notice by
either party. The agreement provides for an annual salary of
GBP60,000.
Paul Treadaway, aged 67
Paul has over 35 years' experience in residential construction
and development. His career began as site agent for a number of
well-known house builders. He has held executive roles in a number
of companies, including Taylor Woodrow and Kent Homes, dealing with
private and social housing.
In 1996, Paul founded Wren Extra Care plc, which was
subsequently admitted to trading on AIM in 2006, specialising in
the retirement sector and in the emerging assisted living market.
Paul resigned from Wren Extra Care plc in 2010.
On completion of the Acquisition, Paul will continue in his
existing role within Beaufort Homes, with responsibility for land
acquisition. He will enter into a new service agreement with
Beaufort Homes, for an initial period of one year and thereafter,
subject to termination upon six months' notice by either party. The
agreement provides for an annual salary of GBP60,000.
4. Further details of the Acquisition Agreement
Under the Acquisition Agreement, the Company has agreed to
purchase the entire issued share capital of Beaufort Homes in
consideration for the issue of the Consideration Shares to the
Sellers, credited as fully paid up. At the closing mid-market price
of an Existing Ordinary Share of 0.82p on 23 February 2018, being
last practicable day before the Acquisition Agreement was entered
into, this values Beaufort Homes at GBP1.53 million. The
Acquisition Agreement is conditional, inter alia, upon the grant of
the Rule 9 Waiver and upon the passing by Shareholders of the
Resolutions (apart from resolution 3) at the General Meeting and
upon Admission.
Certain warranties and indemnities upon Beaufort Homes and its
assets have been given to the Company by the Sellers.
Pursuant to the Acquisition Agreement, each of Dan Stocks and
Paul Treadaway have agreed not to dispose of any of the
Consideration Shares for a period of one year from Admission and
thereafter to adhere to orderly market restrictions upon any
disposals for a further year, save in certain limited
circumstances.
5. Information on the Company, current trading and prospects
The Company trades through its wholly owned operating
subsidiary, Combe Bank Homes. Combe Bank Homes is a regional
property developer focused upon Kent, Surrey, Sussex and the M25
ring south of London.
The Company currently has two sites under construction and
building work is now fully complete on the following three other
sites: Edenbridge, Kent (three terraced houses); Hildenborough,
Kent (two substantial detached houses); and Burnside, Royal
Tunbridge Wells, Kent (six apartments).
The Company has completed the sale of one of the three houses at
Edenbridge and interest is being shown in the other two houses.
At the Hildenborough development, both of the detached houses
have been completed and one has been sold subject to contract at a
price of GBP900,000.
The Tunbridge Wells apartments are on the market with Savills.
The penthouse apartment has been sold for GBP580,000.
On the two sites that are currently under construction, building
work is nearing completion on the executive detached house at
Speldhurst, Royal Tunbridge Wells, Kent, and which is anticipated
to be put on the market in April 2018, and the build on the six
townhouses in Sheerness, Kent is scheduled for completion in May
2018.
For the financial year ending 31 March 2018, the Company expects
contributions from sales at the Edenbridge and Burnside sites, but
with the bulk of the sales on the five sites contributing to the
financial results for the year ending 31 March 2019.
6. Strategy of the Enlarged Group
Following completion of the Acquisition, it is intended that
Combe Bank Homes and Beaufort Homes will be run as distinct
businesses. Combe Bank Homes will continue to develop residential
properties in the South East of England and Beaufort Homes will
continue to expand its land bank and development sites through the
identification of suitable land for assisted living schemes,
securing the land through option agreements and obtaining planning
permission.
Combe Bank Homes strategy
Combe Bank Homes will continue to consider development
opportunities in its chosen area of operation, to further its
residential development activity.
In addition to the continued development of the sites set out in
paragraph 5 above, Combe Bank Homes also has a strategic site at
Staplehurst, Kent under option. The Directors consider that this
site still presents an interesting opportunity and the planning
focus is now on achieving planning permission for an extra care or
assisted living scheme on the site. A formal planning application
is expected to be made in the near future.
Demand for new housing in the South East remains strong and
continues to benefit from the Government's Help to Buy scheme.
Whilst the uncertainty over the UK's future relationship with the
EU may impact parts of the market, the Directors believe that the
pressure to increase housing stock in the southeast of England is
likely to open up opportunities to bring strategic land through the
planning process. The Directors believe that areas without an up to
date local plan or with insufficient land supply offer the greatest
potential. With the support of the range of measures to encourage
house building set out in the recent Government budget, the Company
is seeking to take advantage of the opportunities that present
themselves.
Beaufort Homes strategy
Of the option agreements that Beaufort Homes has secured, a
planning application has been submitted by Beaufort Homes on one
site for residential redevelopment, and a "pre-app" process has
been started for assisted living schemes for its proposed two
larger sites, prior to the submission of formal planning
applications. Further sites are under consideration, with
negotiations ongoing with property owners to enter into option
agreements with Beaufort Homes.
Beaufort Homes' management has more than 50 years' experience in
land assembly, housing developments, construction and the growing
assisted living/extra care market. The Enlarged Group will
specialise in the identification of suitable sites within the M25
corridor and land opportunities in the affluent towns and villages
of the South East of England.
The Enlarged Group will have a dedicated land department to
identify further suitable sites, approach land owners and agree a
nominal option fee with each owner. The Enlarged Group will then
apply for planning and, when successful and if appropriate, will
exercise its option.
Typically, each assisted living scheme is expected to consist of
50-80 one and two-bedroom apartments, close to shops, transport and
local amenities. The approach to securing the land through option
agreements for development aims to minimise any potential financial
and other risks to the Enlarged Group if market conditions
falter.
The Directors believe the Enlarged Group will have the capacity
within its existing management and network to significantly
increase its development pipeline of assisted living schemes and
grow the Company organically. This will not, however, preclude the
Enlarged Group accelerating profitability by selective acquisitions
that would integrate with, and add significant value to, the
long-term aspirations of the Enlarged Group.
The development of the three schemes currently planned by
Beaufort Homes will be subject to the Enlarged Group securing
additional funding. The Enlarged Group will be able to progress
planning permission on these schemes to conclusion but will require
further funding to exercise the options over sites held by Beaufort
Homes. This funding may be secured as debt or equity, or a
combination of the two. Negotiations for the provision of funding
to facilitate the proposed development activities have already
commenced. The Company has appointed Holmes Property Ventures
Limited to advise on funding structures and to use its reasonable
endeavours to procure funding for the Enlarged Group following the
Acquisition. The Company is exploring the issue of a bond which
would be traded on the NEX Exchange or another market and is also
in discussions with a potential investor for the financing of the
two current assisted living schemes. Further announcements on these
initiatives will be made in due course. There can be no guarantee
that the Enlarged Group will be able to secure further funding on
terms that are acceptable to the Group or at all.
7. The Panel and the Takeover Code
The purpose of the Panel is to supervise and regulate takeovers
and other matters to which the Takeover Code applies. The Takeover
Code is issued and administered by the Panel. The Company is a
company to which the Takeover Code applies and as such its
shareholders are therefore entitled to the protections afforded by
the Takeover Code.
The Company is subject to the requirements of Rule 9 of the
Takeover Code, which requires that any person who acquires, whether
by a series of transactions over a period of time or not, an
interest (as defined in the Takeover Code) in shares which, taken
together with shares in which persons acting in concert with him
are interested, carry 30 per cent. or more of the voting rights of
a company which is subject to the Takeover Code will normally be
required to make a general offer to all of the remaining
shareholders to acquire their shares.
Similarly, when any person, together with any persons acting in
concert with him, is interested in shares which, in aggregate,
carry not less than 30 per cent. of the voting rights of such a
company but not more than 50 per cent. of such voting rights, a
general offer will normally be required if any further interests in
shares are acquired by any such person, or any person acting in
concert with him.
An offer under Rule 9 of the Takeover Code must be made in cash
and at the highest price paid by the person required to make the
offer, or any person acting in concert with him, for any interest
in shares in the company acquired during the 12 months prior to the
announcement of the offer.
Under the Takeover Code, a concert party arises where persons
acting together pursuant to an agreement, arrangement or
understanding (whether formal or informal) co-operate to obtain or
consolidate control of, or to frustrate the successful outcome of,
an offer for a company subject to the Takeover Code. "Control"
means an interest or interests in shares carrying in aggregate 30
per cent. or more of the voting rights of a company, irrespective
of whether such interest or interests give de facto control.
The Sellers are presumed to be acting in concert for the
purposes of the Takeover Code. Further details of the Sellers,
being Paul Treadaway and Dan Stocks, are set out in paragraph 3 of
this letter.
Rule 9 Waiver
The Sellers are not currently interested in any Ordinary Shares,
but if the Resolutions are passed at the General Meeting and
following completion of the Acquisition and on Admission, the
Sellers would hold an aggregate interest in 186,815,190 Ordinary
Shares, representing in aggregate 43.94 per cent. of the Enlarged
Share Capital. The Seller's aggregate interest would be more than
30 per cent. of the Enlarged Share Capital, and as such would
prompt a mandatory offer under Rule 9 of the Takeover Code.
Under Note 1 of the Notes on Dispensations from Rule 9 of the
Takeover Code, the Panel may waive the requirement for a general
offer to be made in accordance with Rule 9 of the Takeover Code if,
inter alia, those shareholders of the company who are independent
of the person who would otherwise be required to make an offer, and
any person acting in concert with him ("Independent Shareholders"),
pass an ordinary resolution on a poll at a general meeting or by
way of a written resolution ("Whitewash Resolution") approving such
a waiver. Under Note 5 of the Notes on Dispensations from Rule 9 of
the Takeover Code, the Panel may waive the requirement for a
Whitewash Resolution to be considered at a general meeting (and for
a circular to be prepared in accordance with Section 4 of Appendix
1 to the Takeover Code) if Independent Shareholders holding more
than 50 per cent. of the Company's shares capable of being voted on
such a resolution confirm in writing that they would vote in favour
of the Whitewash Resolution were one to be put to Shareholders at a
general meeting.
The Company has obtained confirmation in writing (in the form
set out in Part 2 of this document) from Christopher Johnson, the
CEO of the Company and holder of 186,815,190 Ordinary Shares, being
78.40 per cent. of the Company's shares being capable of being
voted on such a resolution, that he would vote in favour of the
Whitewash Resolution were such a resolution to be put to
Shareholders at a general meeting. The Company has subsequently
approached the Panel and, in accordance with Note 5 of the
Dispensations from Rule 9 of the Takeover Code, successfully
obtained its permission to waive the requirement for a Whitewash
Resolution to be considered at a general meeting and has also now
received the Panel's confirmation that the Panel has granted a
waiver of the obligation on the Sellers to make a general offer
under Rule 9 of the Takeover Code to the extent that such
obligation would otherwise arise as a result of the issue of the
Consideration Shares.
The Seller's current shareholdings as at the date of this
document and their maximum potential shareholding on Admission,
assuming all Resolutions are passed, will be as follows:
Ordinary Consideration Total holding Percentage
Shares held Shares to of Ordinary of Enlarged
at the date be issued Shares on Share Capital
of this on Admission Admission on Admission
document
Paul Treadaway - 106,484,658 106,484,658 25.04
Dan Stocks - 80,330,532 80,330,532 18.89
Total - 186,815,190 186,815,190 43.94
As the Ordinary Shares which the Sellers would then be
interested in together carry 30 per cent. or more of the voting
rights in the Company and not more than 50 per cent of the voting
rights in the Company, no member of the Sellers could acquire an
interest in any further shares carrying voting rights in the
Company without being subject to the provisions of Rule 9 of the
Takeover Code. The Rule 9 Waiver will not prevent the Sellers or
any member of the Concert Part from making an offer under the
Takeover Code for the Ordinary Shares not already owned by them or
persons connected with them.
8. Interests of the Directors and Proposed Director in Ordinary Shares
The following table sets out the interests of the Directors and
the Proposed Director in Ordinary Shares on completion of the
Acquisition on Admission:
Existing Consideration Total Percentage
Ordinary Shares holding of Enlarged
Shares to be of Ordinary Share
held at issued Shares Capital
the date on Admission on Admission
of this
document
Christopher Johnson 186,815,803 - 186,815,803 43.94
James Dubois 1,500,000 - 1,500,000 0.35
Alex Johnson 1,868 - 1,868 0.00
Norman Lott 500,000 - 500,000 0.12
Dan Stocks - 80,330,532 80,330,532 18.89
Total 188,817,671 80,330,532 269,148,203 63.30
9. Share Reorganisation
The Companies Act 2006 prohibits the Company from issuing shares
at a price below their nominal value. As the current market price
of Ordinary Shares on AIM is below their current nominal value of
1p per ordinary share, it is proposed that each of the Existing
Ordinary Shares of 1p be subdivided into one Ordinary Share of 0.1p
and one Deferred Share of 0.9p, such Deferred Shares having the
rights and being subject to the restrictions attached to them as
set out in Resolution 2 in the Notice of General Meeting set out at
the end of this document. The Share Reorganisation is not intended
to change the market price of Ordinary Shares on AIM.
The Deferred Shares will not entitle their holders to receive
notice of or to attend or vote at any general meeting of the
Company, or to receive any dividend or other distribution. On a
return of capital on a winding up or dissolution of the Company,
the holders of the Deferred Shares shall be entitled to receive an
amount equal to the nominal amount paid up thereon, but only after
the holders of Ordinary Shares have received GBP100,000 per
Ordinary Share. The holders of Deferred Shares are not entitled to
any further right of participation in the assets of the Company.
The Company shall have the right to purchase the Deferred Shares in
issue at any time for no consideration. As such, the Deferred
Shares effectively have no value. Share certificates will not be
issued in respect of the Deferred Shares, and they will not be
admitted to trading on AIM or any other market.
The ISIN for the Existing Ordinary Shares is GB00B0SP7491 and
will not change as a result of the Share Reorganisation.
10. Proposed change of name
Following the Acquisition, there will be two distinct business
divisions of the Enlarged Group. It is proposed that the name of
the Company be changed to "Trafalgar Property Group plc", to
reflect its position as the parent company of the Enlarged Group.
The Enlarged Share Capital will continue to trade under the AIM
Symbol "TRAF" following the change of name.
11. General Meeting
A General Meeting of the Company will be held at the offices of
Allenby Capital Limited, 5 St. Helen's Place, London EC3A 6AB at
10.00 a.m. on 16 March 2018, at which the following resolutions
will be proposed:
(a) Resolution 1: an ordinary resolution to approve the Share Reorganisation;
(b) Resolution 2: a special resolution to approve the amendment
of the Articles of Association to include the rights attaching to
the Deferred Shares;
(c) Resolution 3: a special resolution to approve the change of
name of the Company to Trafalgar Property Group plc;
(d) Resolution 4: an ordinary resolution to change the
Directors' general authorities to allot securities under section
551 CA 2006; and
(e) Resolution 5: a special resolution to change the Directors'
authorities to allot securities for cash under section 570 CA
2006.
The Directors currently have authority to allot securities both
generally and for cash up to an aggregate nominal value of
GBP1,190,900 generally, and GBP370,000 for cash, until the annual
general meeting to be held in 2018. Following the Share
Reorganisation, it is appropriate that these authorities should be
reduced, and it is proposed that the Directors should be authorised
to allot securities generally for up to an aggregate nominal value
of GBP506,000, and to allot securities for cash up to an aggregate
nominal amount of GBP191,000. The general authority will be used as
to GBP186,815.19 in nominal value in connection with the
Acquisition. Both authorities will allow for the issue of
securities for up to approximately GBP106,000 in nominal value to
advisers in connection with any successful fundraising as referred
to in paragraph 6 above and will provide residual authorities
equivalent to approximately 50% of the Enlarged Share Capital
generally and 20% of the Enlarged Share Capital for issues for
cash.
Shareholders should note that if any of the Resolutions are not
passed (apart from resolution 3), the Acquisition will not
occur.
12. Action to be taken by Shareholders
Shareholders will find enclosed with this document a form of
proxy for use at the General Meeting, which should be returned by
no later than 10.00 a.m. on 14 March 2018 for the General Meeting
to be held on 16 March 2018.
Whether or not you intend to be present at the meeting, you are
requested to complete, sign and return the form of proxy to the
Company's registrars, Neville Registrars Limited, Neville House, 18
Laurel Lane, Halesowen, West Midlands B63 3DA as soon as possible
but, in any event, so as to arrive by no later than 48 hours before
the time and date of the meeting. The completion and return of a
form of proxy will not preclude you from attending the meeting and
voting in person should you wish to do so.
13. Irrevocable Undertakings
The Directors have given irrevocable undertakings to the Company
to vote in favour of all the Resolutions in respect of their own
beneficial holdings of, in aggregate, 188,817,671 Ordinary Shares,
representing 79.21 per cent. of the current issued ordinary share
capital of the Company.
14. Recommendation
The Directors consider the Acquisition to be in the best
interests of the Shareholders and the Company as a whole.
Accordingly, the Directors, who consider the Resolutions to be
proposed at the General Meeting to be in the best interests of the
Company and its Shareholders as a whole, unanimously recommend that
Shareholders vote in favour of the Resolutions, as they intend to
do in respect of the 188,817,671 Ordinary Shares (representing
approximately 79.21 per cent. of the issued share capital) held in
aggregate by them.
LETTER IN RELATION TO THE RULE 9 WAIVER
The Takeover Panel
10 Paternoster Square
London
EC4M 7DY
Dear Sirs
RE: TRAFALGAR NEW HOMES PLC ("THE COMPANY")
Introduction
I, Christopher Charles Johnson, confirm that I have been made
aware of the proposed transaction whereby the Company has
conditionally agreed to acquire the entire issued share capital of
Beaufort Homes Limited in consideration for the issue of
186,815,190 new ordinary shares in the Company ("the Proposed
Transaction").
Rule 9 of the Takeover Code
I understand that, under Rule 9 of the Takeover Code ("the
Code"), if any person acquires an interest in shares which, when
taken together with shares in which he and persons acting in
concert with him are already interested, carry 30% or more of the
voting rights of a company which is subject to the Code, that
person is normally required to make a general offer in cash to all
shareholders in the company at the highest price paid by him or any
person acting in concert with him for an interest in such shares
within the preceding 12 months.
I also understand that Rule 9 also provides that if any person,
together with persons acting in concert with him, is interested in
shares which in the aggregate carry not less than 30% of the voting
rights of a company which is subject to the Code but does not hold
shares carrying more than 50% of such voting rights, and such
person, or any person acting in concert with him, acquires an
interest in any other shares which increases the percentage of
shares carrying voting rights in such company in which he is
interested, that person is normally required to make a general
offer in cash to all shareholders in the company at the highest
price paid by him or any person acting in concert with him for an
interest in such shares within the preceding 12 months.
Proposed transaction
I understand that, in connection with the Proposed Transaction
the vendors of Beaufort Homes, being Paul Treadaway and Daniel
Stocks (the "Vendors"), would be issued with a total of 186,815,190
ordinary shares in the Company, representing approximately 43.94
per cent. of the as enlarged share capital of the Company, and as
the Vendors do not currently hold any ordinary shares in the
Company, this would represent their aggregate maximum shareholding
and voting rights in the Company on completion of the Proposed
Transaction. The Proposed Transaction is subject to, inter alia,
the passing of resolutions at a general meeting of shareholders to
provide the directors of the Company with authorities under the
Companies Act 2006 to allot securities.
Waiver of Rule 9 obligation
I understand that, under Note 1 on the Notes on the
Dispensations from Rule 9, the Takeover Panel ("the Panel") will
normally waive the requirement for a general offer to be made in
accordance with Rule 9 (a "Rule 9 offer") if, inter alia, those
shareholders of the company who are independent of the person who
would otherwise be required to make an offer and any person acting
in concert with him and do not have any interest in the proposed
transaction which may compromise their independence ("the
Independent Shareholders") pass an ordinary resolution on a poll at
a general meeting ("a Whitewash Resolution") approving such a
waiver. I also understand that the Panel may waive the requirement
for a Whitewash Resolution to be considered at a general meeting
(and for a circular to be prepared in accordance with Section 4 of
Appendix 1 to the Code) if Independent Shareholders holding more
than 50% of the company's shares capable of being voted on such a
resolution confirm in writing that they would vote in favour of the
Whitewash Resolution were one to be put to the shareholders of the
company at a general meeting.
Confirmations and Acknowledgements
I hereby confirm the following:
1. that I am the beneficial owner of 186,815,803 ordinary shares
in the issued share capital of the Company, representing 78.40% of
the Company's issued share capital carrying voting rights, and I
have absolute discretion over the manner in which these shares are
voted. These shares are held free of all liens, pledges, charges
and encumbrances;
2. that (a) save for the fact that following the Proposed
Transaction we will both be shareholders in the Company, there is
no connection between me and the Vendors, (b) I do not have any
interest or potential interest, whether commercial, financial or
personal, in the outcome of the Proposed Transaction, and (c) I am
an Independent Shareholder of the Company as defined above; and
3. that, in connection with the Proposed Transaction:
(a) I consent to the Panel granting a waiver from the obligation
for the Vendors to make a Rule 9 offer to the shareholders of the
Company;
(b) subject to Independent Shareholders of the Company holding
more than 50% of the shares capable of being voted on a Whitewash
Resolution to approve the waiver from the obligation for the
Vendors to make a Rule 9 offer giving confirmations in writing in a
similar form to this letter, I consent to the Panel dispensing with
the requirement that the waiver from such obligation be conditional
on a Whitewash Resolution being approved by Independent
Shareholders of the Company at a general meeting; and
(c) I would vote in favour of a Whitewash Resolution to waive
the obligation for the Vendors to make a Rule 9 offer were one to
be put to the Independent Shareholders of the Company at a general
meeting.
In giving the confirmations referred to above, I
acknowledge:
1. that, if the Panel receives such confirmations from
Independent Shareholders of the Company holding more than 50% of
the shares capable of being voted on a Whitewash Resolution, the
Panel will approve the waiver from the obligation for the Vendors
to make a Rule 9 offer without the requirement for the waiver
having to be approved by Independent Shareholders of the Company at
a general meeting;
2. that if no general meeting is held to approve the Whitewash
Resolution to waive the obligation for the Vendors to make a Rule 9
offer:
(a) there will not be an opportunity for any other person to
make any alternative proposal to the Company conditional on such
Whitewash Resolution not being approved by Independent Shareholders
of the Company;
(b) there will not be an opportunity for other shareholders in
the Company to make known their views on the Proposed Transaction;
and
(c) there will be no requirement for the Company either (i) to
obtain and make known to its shareholders competent independent
advice under Rule 3 of the Code on the Proposed Transaction and the
waiver of the obligation for the Vendors to make a Rule 9 offer or
(ii) to publish a circular to shareholders of the Company in
compliance with Appendix 1 of the Code in connection with this
matter.
I consider myself to be a sophisticated investor in relation to
equity investments. I confirm that I have had the opportunity to
take independent financial advice before signing this letter.
I confirm that I will not sell, transfer, pledge, charge, or
grant any option or other right over, or create any encumbrance
over, or otherwise dispose of my shares in the Company until after
the conclusion of the proposed general meeting to approve the
Proposed Transaction.
Yours faithfully
Christopher Charles Johnson Date: 26 February 2018
SHARE CAPITAL AND STATISTICS
Number of Existing Ordinary Shares
at the date of this document 238,375,190
Number of New Ordinary Shares
in issue following the Share
Reorganisation 238,375,190
Number of Consideration Shares 186,815,190
Enlarged Share Capital following
the Acquisition 425,190,380
Consideration Shares as a percentage
of the Enlarged Share Capital 43.94%
DEFINITIONS
"Acquisition" the proposed acquisition of Beaufort
Homes Limited on the terms of
the Acquisition Agreement;
"Acquisition Agreement" the conditional share purchase
agreement dated 26 February 2018
entered into between the Company
and the Sellers, the terms of
which are summarised in paragraph
4 of Part I of this document;
"AIM" the market of that name operated
by London Stock Exchange plc;
"AIM Rules" the AIM Rules for Companies published
by London Stock Exchange plc
from time to time;
"Admission" admission of the Enlarged Share
Capital to trading on AIM and
such admission becoming effective
in accordance with Rule 6 of
the AIM Rules;
"Allenby" Allenby Capital Limited;
"Beaufort Homes" Beaufort Homes Limited;
"Board" or "Directors" the board of directors of the
Company;
"CA 2006" the Companies Act 2006, as amended;
"Combe Bank Homes" Combe Bank Homes Limited, a company
incorporated in England and Wales
and with company number 06003791;
"Company" or "Trafalgar" Trafalgar New Homes plc, a company
incorporated in England and Wales
and with company number 04340125;
"Consideration the 186,815,190 New Ordinary
Shares" Shares to be issued to the Sellers
pursuant to the Acquisition;
"CREST" the electronic settlement system
for UK and Irish securities operated
by Euroclear UK & Ireland Limited;
"CREST Regulations" the Uncertificated Securities
Regulations 2001, as amended;
"Deferred Shares" the deferred shares of 0.9p each
of the Company to be created
pursuant to the Share Reorganisation;
"Enlarged Group" the Group as enlarged by the
Acquisition;
"Enlarged Share the issued ordinary share capital
Capital" of the Company immediately following
the Acquisition, comprising the
New Ordinary Shares and the Consideration
Shares;
"Existing Ordinary the 238,375,190 Ordinary Shares
Shares" of 1p each in the capital of
the Company in issue as at the
date of this document;
"form of proxy" the form of proxy accompanying
this document for use by Shareholders
at the General Meeting;
"General Meeting" the general meeting of the Company
to be held on 16 March 2018,
notice of which is set out at
the end of this document;
"Group" the Company and its subsidiaries;
"ISIN" International Security Identification
Number
"LEI" Legal Entity Identifier;
"New Ordinary the 238,375,190 ordinary shares
Shares" of 0.1p each in the capital of
the Company in issue immediately
following the Share Reorganisation;
"Ordinary Shares" the ordinary shares in the capital
of the Company from time to time;
"Panel" the Panel on Takeovers and Mergers;
"Proposed Director" Daniel Stocks, who is also a
Seller;
"Record Date" 6.00 p.m. on 16 March 2018 (or
such later date as the Directors
may determine and communicate
to Shareholders by an appropriate
announcement to a Regulatory
Information Service) being the
date by reference to which the
Share Reorganisation is calculated;
"Regulatory Information any information service authorised
Service" from time to time by the UK's
Financial Conduct Authority for
the purpose of disseminating
regulatory announcements;
"Resolutions" the resolutions which are set
out in the notice of General
Meeting;
"Rule 9 Waiver" the waiver by the Panel of any
obligation which would otherwise
be imposed on the Sellers under
Rule 9 of the Takeover Code,
as a result of the issue of the
Consideration Shares to the Sellers;
"Sellers" the sellers of Beaufort Homes,
further details of which appear
in paragraph 7 of Part 1 of this
document;
"Shareholders" the holders of Ordinary Shares
from time to time;
"Share Reorganisation" the proposed subdivision of each
Ordinary Share of 1p into one
Ordinary Share of 0.1p and one
deferred share of 0.9p;
"Takeover Code" the City Code on Takeovers and
Mergers;
"UK" or "United the United Kingdom of Great Britain
Kingdom" and Northern Ireland, its territories
and dependencies; and
"uncertificated" recorded on the relevant register
or "in uncertificated of the share or security concerned
form" as being held in uncertificated
from in CREST and title to which,
by virtue of the CREST Regulations,
may be transferred by means of
CREST.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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