NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY (IN WHOLE OR IN PART), IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A TAKEOVER
OFFER OR AN OFFER OF SECURITIES.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.
22 July 2020
UK MORTGAGES LIMITED
(a closed-ended investment company incorporated in Guernsey with
registration number 60440)
LEI
549300388LT7VTHCIT59
Strategic
Update
Further to the announcement of 14 July
2020, the Board of UK Mortgages Limited (the "Company" or
“UKML”) has completed its additional analysis of the benefits of
the Oat Hill No.2 securitisation (the “Securitisation”) and is
pleased to announce the following strategic update.
Background
The Company’s shareholders (“Shareholders”) granted approval in
August 2019 for proposals including
revised investment and share buyback policies. As signalled at that
time, the first opportunity to enact the revised share buyback
policy was the refinancing of the Oat Hill transaction anticipated
at the end of May 2020.
The Oat Hill transaction was not called at its first refinancing
call date of 27 May 2020 due to the
Covid-19 pandemic, but the Securitisation was successfully launched
and priced just six weeks later on 10 July
2020. The Securitisation was issued on terms which will
release a significant amount of capital and therefore allow the
Company to return to its previously stated proposal of using excess
capital to enable share buybacks whilst the Company’s share price
continues to trade at a discount to the NAV per share.
Additionally, in April 2020 in
anticipation of the take-up of the government’s Covid-19 mortgage
payment holiday scheme, the Company reassessed its dividend policy
and reduced quarterly payments to 0.375p while noting that it was
expected that the previous level of 1.125p per quarter would be
restored when the period of market dislocation had passed. The
Board, having been advised that the first cohort of mortgage
payment holidays is now coming to an end and indications are that
significant numbers of borrowers are recommencing payments, is
pleased to confirm that the Company is able to reinstate its prior
dividend policy.
Share Buyback Programme
The Securitisation was issued on terms which will release a
significant amount of capital, allowing the Company to be able to
commence buying back shares once the transaction settles at the end
of August 2020 (the “Settlement
Date”).
The Company announces that with effect from the Settlement Date
it expects to initiate a share buyback programme to purchase up to
the maximum of 14.99% of the Company’s issued shares, being the
maximum number of shares currently authorised by Shareholders, if a
discount of greater than 5% persists to the Company’s then
prevailing NAV per share.
Dividend Policy
In light of the portfolio performance observed as the UK
lockdown begins to ease and the successful Securitisation, the
Board announces that it intends to restore the Company’s dividend
to its target level of 4.5p annually per share, which represents a
dividend yield of 7.0% based on the closing share price on
20 July 2020.
The Board therefore currently intends to declare:
- an additional interim dividend in respect of the Company’s year
ended 30 June 2020 of 1.5p per share;
and
- four quarterly dividends of 1.125p per share in respect of the
Company’s current financial year to 30 June
2021.
Payment details will be announced in due course.
Possible Offer
On 20 July 2020, the Board noted
the announcement of the same day by M&G Investment Management
Ltd (“MAGIM”) (the “Possible Offer Announcement”), in its capacity
as manager of M&G Speciality Finance Fund (GBP) SCSp (the
“Fund”), regarding the possible cash offer by the Fund for the
entire issued and to be issued share capital of the Company (the
“Possible Offer”).
The Company confirms that on 15 July
2020 it received an unsolicited and conditional proposal
from MAGIM in relation to a possible cash offer at 67 pence per UKML share. Under the
proposal, Shareholders would be entitled to receive and retain the
0.375 pence per share dividend for
the fourth quarter of the Company's financial year ended
30 June 2020 (the "Fourth Interim
Dividend"). MAGIM stated in the Possible Offer Announcement
that any formal offer for UKML under the Takeover Code would be
conditional on, amongst other things, satisfactory completion of
diligence and the unanimous and unqualified recommendation by the
UKML Board of Directors. MAGIM reserves the right to waive
any or all of these pre-conditions to a firm offer, in whole or in
part. MAGIM further reserves the right to announce an offer
at a price below 67 pence per UKML
share in the event that (a) the Board of UKML agrees and recommends
an offer at the reduced price; (b) a third party announces a firm
intention to make an offer for UKML; (c) UKML announces, declares
or pays a dividend or any other distribution or return of capital
to its shareholders (other than the Fourth Interim Dividend) after
the Possible Offer Announcement (in which case MAGIM reserves
the right to reduce the offer price by an amount up to the amount
of such dividend, distribution or return of capital); or (d) UKML
announces a whitewash transaction pursuant to the Takeover Code.
Given today’s announcement of the Company’s intention to declare an
additional interim dividend of 1.5p per UKML share, the Company
draws the attention of Shareholders to the aforementioned
reservation (c), where MAGIM has reserved the right to reduce the
offer price by an amount of any dividend distribution or return of
capital.
The Board considered the proposal together with its financial
adviser, Numis Securities Limited, and unanimously rejected it on
19 July 2020, having concluded that
the terms materially undervalue the Company and its
prospects. The Board of UKML has received no further proposal
since the unanimous rejection and is not in discussions with MAGIM
at this time.
The Company notes that in accordance with Rule 2.6(a) of the
Takeover Code, MAGIM has until 5.00pm
on 17 August 2020, being 28 days
after the date of the Possible Offer Announcement , to either
announce a firm intention to make an offer for the Company in
accordance with Rule 2.7 of the Takeover Code or announce that it
does not intend to make an offer for the Company, in which case the
announcement will be treated as a statement to which Rule 2.8 of
the Takeover Code applies. This deadline will only be extended with
the consent of the Company and the Takeover Panel in accordance
with Rule 2.6(c) of the Takeover Code.
The Possible Offer Announcement does not amount to an
announcement of a firm intention to make an offer under Rule 2.7 of
the Takeover Code and there can be no certainty that any offer will
be forthcoming. Shareholders are urged to take no action.
This statement is being made by the Company without the prior
agreement or approval of MAGIM.
Enquiries:
UK Mortgages Limited
Christopher Waldron (Chairman)
020 7260
1000
Numis Securities Limited, Financial Adviser and Corporate
Broker
Hugh
Jonathan
020 7260 1000
Nathan Brown
Stuart Ord
Sources & Bases of Information
All prices for UKML shares have been derived from the Daily
Official List of the London Stock Exchange and represent the
closing price on the relevant date.
Further information
The Company’s dividend guidance in this announcement is a target
only and not a profit forecast and there can be no assurance that
this target will be met.
This announcement is not intended to and does not constitute an
offer to buy or the solicitation of an offer to subscribe for or
sell or an invitation to purchase or subscribe for any securities
or the solicitation of any vote in any jurisdiction. The release,
publication or distribution of this announcement in whole or in
part, directly or indirectly, in, into or from certain
jurisdictions may be restricted by law and therefore persons in
such jurisdictions should inform themselves about and observe such
restrictions.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by
the Financial Conduct Authority, is acting exclusively for UK
Mortgages Limited and no one else in connection with the matters
set out in this announcement and will not regard any other person
as its client in relation to the matters in this announcement and
will not be responsible to anyone other than UK Mortgages Limited
for providing the protections afforded to clients of Numis, nor for
providing advice in relation to any matter referred to herein.
Forward looking statements
This announcement, oral statements made regarding the Possible
Offer, and other information published by UK Mortgages Limited may
contain statements which are, or may be deemed to be,
“forward-looking statements”. Forward-looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections of the management of
UK Mortgages Limited about future events, and are therefore subject
to risks and uncertainties which could cause actual results to
differ materially from the future results expressed or implied by
the forward-looking statements. The forward-looking statements
contained in this announcement include statements relating to the
expected timing and scope of the possible. Often, but not always,
forward-looking statements can be identified by the use of
forward-looking words such as “plans”, “expects” or “does not
expect”, “is expected”, “is subject to”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does not
anticipate”, or “believes”, or variations of such words and phrases
or statements that certain actions, events or results “may”,
“could”, “should”, “would”, “might” or “will” be taken, occur or be
achieved. Although UK Mortgages Limited believe that the
expectations reflected in such forward-looking statements are
reasonable, UK Mortgages Limited can give no assurance that such
expectations will prove to be correct. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking statements. Such
forward-looking statements should therefore be construed in the
light of such factors. Neither UK Mortgages Limited, nor any of its
associates or directors, officers or advisers, provides any
representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in
this announcement will actually occur. You are cautioned not to
place undue reliance on these forward-looking statements. Other
than in accordance with its legal or regulatory obligations
(including under the UK Listing Rules and the Disclosure and
Transparency Rules of the FCA), UK Mortgages Limited is under no
obligation, and expressly disclaims any intention or obligation, to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Dealing Disclosure Requirements
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person’s interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day
following the commencement of the offer period and, if appropriate,
by no later than 3.30 pm
(London time) on the 10th business
day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the
relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person’s interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the
extent that these details have previously been disclosed under Rule
8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm
(London time) on the business day
following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel’s website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel’s Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on website and availability of hard copies
A copy of this announcement and the documents required to be
published by Rule 26 of the Code will be made available on UK
Mortgages Limited’s website at
www.twentyfouram.com/funds/uk-mortgages-fund/ by no later than 12
noon (London time) on the business
day following the date of this announcement. For the avoidance of
doubt, the contents of the website are not incorporated into and do
not form part of this announcement.
In accordance with Rule 30.3 of the Code, a person so entitled
may request a hard copy of this Announcement, free of charge, by
contacting Numis on +44 (0) 20 7260 1000. For persons who receive a
copy of this Announcement in electronic form or via a website
notification, a hard copy of this Announcement will not be sent
unless so requested. In accordance with Rule 30.3 of the Code, a
person so entitled may also request that all future documents,
announcements and information be sent to them in relation to the
Acquisition should be in hard copy form.
MAR
The information contained within this announcement is deemed by
UKML to constitute inside information as stipulated under the
Market Abuse Regulation.
Upon the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain.