RNS Number:0474E
Wigmore Group (The) PLC
13 October 2004
Further Investment by Burnbrae
Approval of Waiver of Obligation to make mandatory offer under Rule 9 of the
Takeover Code
The Board of Wigmore announces that the Company has agreed, conditional upon
Shareholder approval, to raise #1.0 million pursuant to the terms of the New
Investment Agreement with Burnbrae. #0.8 million will be raised by way of a
Placing of 666,666,666 Ordinary Shares at 0.12p per share with Burnbrae. In
addition, Burnbrae has agreed to subscribe for #200,000 of new Ordinary Shares
at 0.11p per share on 20 December 2004 (being the price previously agreed under
the original Investment Agreement) to allow the Company to reduce its bank
overdraft to the level agreed with HBOS under its current facility letter (the "
Overdraft Subscription").
By way of the Placing, the Overdraft Subscription and Burnbrae's recent
subscriptions for #700,000 of New Convertible Loan Notes, Burnbrae has increased
its funding commitment to the Company by #0.6 million beyond the aggregate it
had agreed to provide under the Investment Agreement that was announced on 7
July 2004. These funds will be used to provide additional working capital for
the Company. The Company has agreed to provide security to Burnbrae in respect
of the funds advanced, such security ranking behind HBOS.
Burnbrae will increase its stake in the Company from 26.49 per cent. to 59.70
per cent. of the Enlarged Issued Share Capital upon completion of the Proposals.
In the event that Burnbrae were to exercise all of its subscription rights, its
stake would increase to 77.36 per cent. of the Partially Diluted Share Capital.
Accordingly, an obligation would arise under Rule 9 of the City Code, for
Burnbrae to make a general offer for the Ordinary Shares not owned by them. The
Panel has agreed to a waiver or "Whitewash" of this obligation, subject to the
approval of the Independent Shareholders at the EGM.
As set out in more detail below, the current trading of the Company has been
more difficult than expected since the publication on 29 June 2004 of the
Company's Report and Financial Statements for the year ended 31 December 2003.
As a consequence the Group requires an increased level of funding. However,
Burnbrae has agreed to provide some of the additional funding required on the
terms set out in this announcement and in a document to be sent to Shareholders
today ("Circular"). The Board had initially intended to provide all Shareholders
with an opportunity to participate in the funding on the same terms offered to
Burnbrae in order to allow existing Shareholders an opportunity to mitigate the
dilutive effect of the refinancing. However, following discussions with Burnbrae
your Board has secured additional funding with lower expenses than would have
been possible pursuant to the underwritten rights issue announced on 7 July
2004.
The purpose of the Circular is to seek approval of the Proposals and it
therefore contains a notice convening an EGM in order to consider resolutions to
approve the Whitewash, to increase the Directors' authority to allot Ordinary
Shares and to disapply statutory preemption rights. Sir James Mellon is
Burnbrae's representative to the Board and is therefore precluded from giving a
recommendation to Shareholders in respect of the Resolutions.
Wigmore's Strategy
Speymill will continue to specialise in hotel and leisure refurbishment and new
build whilst the remainder of the Group will continue to develop into the
facilities management ("FM") and maintenance markets, servicing both social
landlords and substantial private sector clients.
Having made a number of significant acquisitions over the last three years, it
is the Board's intention to continue with a period of consolidation before
making any further acquisitions. The Directors believe that there are
significant savings to be made by further integration and rationalisation of
overheads, which may result in a limited reduction in the number of employees
retained by the Group. The Directors are in the process of preparing detailed
plans to achieve this and intend to appoint a management consultant to assist in
a full strategic review of the Group.
To date, little progress has been made in securing maintenance contracts with
Speymill's clients in the leisure industry. The Directors intend actively to
pursue these maintenance contracts as well as other opportunities for
cross-selling within the Group.
Use of proceeds and Working Capital
The Company intends to apply the proceeds of the Overdraft Subscription to repay
HBOS the sum of #200,000 on 20 December 2004, in accordance with the agreement
described more fully in the Circular. The proceeds of the Placing will be used
to provide working capital for the Group.
In this connection Shareholders should note that: (i) the Company's overdraft
facility with HBOS, which is repayable on demand, expires on 31 December 2004
and there is no assurance that this facility will be renewed by HBOS or provided
by another bank; (ii) based on its trading performance, the Company is likely to
be in breach of its covenants contained in the overdraft facility with HBOS;
(iii) there is no certainty that the funds subscribed pursuant to the Proposals
will provide adequate working capital for the Group.
Whether the Group has adequate working capital following completion of the
Proposals will depend upon a number of factors including, principally, the
Group's future trading performance and whether the Company is successful in
replacing its overdraft facility with HBOS or another bank.
The Independent Board strongly recommends Shareholders to approve the
Resolutions at the EGM. If the Resolutions are not approved, Burnbrae's New
Convertible Loan Notes will become repayable and the Overdraft Subscription and
Placing will not take place. In this eventuality, if the Board has not secured
an alternative refinancing solution, then the Board is likely to be required to
consider insolvency proceedings.
Enterprise Investment Scheme ("EIS")
Some Shareholders may have obtained EIS tax relief on their subscription for
shares in the Company. The Directors have been advised that the conditions
necessary for maintaining EIS qualifying status may not continue to be satisfied
following completion of the Proposals and, accordingly, EIS tax relief may be
withdrawn. If Shareholders are in any doubt as to their personal tax position
they should seek appropriate professional advice.
Information on Burnbrae
Burnbrae Limited is a private investment company based in the Isle of Man.
Burnbrae manages a portfolio of property and equity investments, including an
expanding chain of hotels operated by its subsidiaries, Sleepwell Hotels Limited
and Sleepwell Hotels UK Limited, which together manage over 900 hotel beds in
the United Kingdom and Isle of Man. Burnbrae is 100 per cent. owned by the
Jimsam Trust, of which Jim Mellon is the sole beneficiary.
Jim Mellon is also the founding and principal shareholder and non-executive
Director of Regent Pacific Group Limited which, as at 31 March 2004, had
approximately US$ 97 million of shareholder equity. Additionally, he is founding
and principal holder and non-executive Chairman of Charlemagne Capital Limited
which has approximately US$ 2.4 billion of assets under management. Earlier in
his career he worked for GT Management in the United States and in Hong Kong and
later became the co-founder and managing director of Thornton Management (Asia)
Limited based in Hong Kong and was a director of Tyndall Holdings plc. He is
currently a director of Fixed Odds Group Limited, BFS Absolute Trust PLC and of
a variety of other investment companies. Since 30 June 2003, the date to which
its last unaudited unconsolidated management accounts were prepared, Burnbrae
has continued to trade profitably and in line with expectations. The directors
of Burnbrae believe that the current economic climate and market conditions
provide opportunities for the growth of Burnbrae. The Circular sets out further
information on Burnbrae.
The City Code on Takeovers and Mergers
Under Rule 9 of the City Code ("Rule 9"), where any person or group of persons
acquires shares which, when taken together with shares already held by him or
shares held or acquired by persons acting in concert with him, carry 30 per
cent. or more of the voting rights of a company which is subject to the City
Code, that person is normally required to make a general offer in cash to all
shareholders at the highest price paid by him or any persons acting in concert
with him within the preceding twelve months.
On completion of the Proposals, Burnbrae will hold either:
(a) 1,121,212,121 Ordinary Shares representing 59.70 per cent. of the Enlarged
Issued Share Capital (assuming none of the existing options, Warrants and other
subscription rights over Ordinary Shares have been exercised); or
(b) 2,586,363,636 Ordinary Shares representing 63.65 per cent. of the Fully
Diluted Share Capital (assuming all options, Warrants and other subscription
rights over Ordinary Shares are exercised); or
(c) 2,586,363,636 Ordinary Shares representing 77.36 per cent. of the Partially
Diluted Share Capital (assuming all of Burnbrae's Warrants and other
subscription rights over Ordinary Shares but no other options, Warrants and
other subscription rights over Ordinary Shares are exercised). The earliest date
on which all of Burnbrae's Warrants and other subscription rights over Ordinary
Shares could be exercised would be immediately following the EGM.
Rule 9 also provides, inter alia, that, where any person, together with persons
acting in concert with him, holds shares carrying not less than 30 per cent. but
not more than 50 per cent. of a company's voting rights, and such person, or any
other person acting in concert with him, acquires additional shares carrying
voting rights of such company, that person is normally required to make a
general offer in cash to all shareholders of that company at the highest price
paid by him or any persons acting in concert with him within the preceding
twelve months.
The City Code also provides that, where any person, together with persons acting
in concert with him, holds more than 50 per cent. of a Company's voting rights,
no obligations will normally arise from any acquisitions by such person or any
person acting in concert with him of any further shares carrying voting rights
in the Company. Shareholders should note that the Resolutions, if passed, would
allow Burnbrae to hold more than 50 per cent. of the Company's voting rights.
The Panel has agreed, however, subject to Resolution 1 being passed on a poll by
Independent Shareholders at the Extraordinary General Meeting, to waive the
obligation for Burnbrae to make a general offer to Shareholders under Rule 9
which would otherwise arise upon issue of new Ordinary Shares and Warrants
pursuant to the Proposals and the CRULS, carrying up to a maximum of 77.36 per
cent. of the voting rights of the Company.
Further details of Burnbrae's holding of Ordinary Shares and its interests over
Ordinary Shares as they would be immediately following the Proposals are set out
in the Circular.
Extraordinary General Meeting
A notice convening the Extraordinary General Meeting to be held at the
registered office of the Company at 19 Cavendish Square, London W1A 2AW at 10.00
a.m. on 5 November 2004 is set out in the Circular.
At this meeting the following Resolutions will be proposed:
1. (to be passed on a poll by Independent Shareholders) to waive the requirement
under Rule 9 of the City Code that Burnbrae make an offer for the remaining
issued shares in the Company albeit that following the Placing it will own more
than 30 per cent. of the Ordinary Shares in the capital of the Company;
2. to authorise the Directors to allot shares; and
3. to authorise the Directors to allot shares for cash other than pro rata to
shareholders.
Irrevocable undertakings
Peter Hewitt, Fidelma Hewitt, Keith Lassman and George Brooksbank have
irrevocably undertaken to vote in favour of the Resolutions in respect of their
entire holdings (as set out in more detail in the Circular, representing in
aggregate 3.32 per cent. of the Company's current issued share capital).
Burnbrae has irrevocably undertaken to vote in favour of Resolutions 2 and 3 in
respect of its holding, as set out in the Circular, representing 26.49 per cent.
of the Company's current issued share capital.
Recommendation
The Independent Directors, who have been so advised by Nabarro Wells, consider
that the terms of the Proposals and the CRULS are fair and reasonable so far as
the Shareholders are concerned and are in the best interests of the Company and
its Shareholders as a whole. In providing advice to the Independent Directors,
Nabarro Wells has taken account of the commercial assessments of the Independent
Directors.
Accordingly in the Circular the Independent Directors unanimously recommend
Shareholders to vote in favour of the Resolutions to be proposed at the EGM, as
they have irrevocably undertaken to do, in respect of their own holdings of, in
aggregate, 34,227,816 Ordinary Shares representing approximately 3.32 per cent.
of the Company's current issued ordinary share capital.
The following definitions apply in this announcement, unless the context
otherwise requires:
"the Act" the Companies Act 1985, as amended;
"Admission" the admission of the Placing Shares to
trading on AIM;
"AIM" the Alternative Investment Market of the
London Stock Exchange;
"AIM Rules" the AIM Rules for companies published by the
London Stock Exchange from time to time;
"Burnbrae" Burnbrae Limited, a company incorporated in
the Isle of Man, the shareholder in the
Company which is to be the subject of the
Whitewash, further details of which are set
out in the Circular;
"City Code" The City Code on Takeovers and Mergers;
"the Company" or
"Wigmore" The Wigmore Group plc;
"Convertible Loan Notes" the unsecured four per cent. convertible
redeemable loan notes 2007 with a nominal
value of #300,000 issued pursuant to a Loan
Note Instrument dated 6 July 2004 between the
Company and Burnbrae;
"Deferred Shares" deferred shares of 0.99p each in the capital
of the Company;
"Directors" or "Board" the board of directors of the Company;
"EGM" or "Extraordinary
General Meeting" the extraordinary general meeting of the
Company to be held at 19 Cavendish Square,
London W1A 2AW at 10.00 a.m. on 5 November
2004 or any adjournment of that meeting,
notice of which is set out in the Circular;
"Enlarged Issued
Share Capital" the issued ordinary share capital of the
Company immediately following completion of
the Proposals;
"Fully Diluted
Share Capital" the Enlarged Issued Share Capital as
increased by the exercise by Burnbrae of all
of its Warrants and other subscription rights
over Ordinary Shares, as listed in paragraph
4.1.2 of Part 3 and on the assumption that
all other parties exercise in full their
Warrants, options or other subscription
rights over Ordinary Shares;
"Group" Wigmore and its wholly owned subsidiaries;
"HBOS" Halifax Bank of Scotland, the Company's
bankers;
"Independent Directors" the Directors with the exception of Sir James
Mellon;
"Independent Shareholders" the Shareholders other than Burnbrae;
"Investment Agreement" the agreement dated 6 July 2004, between the
Company (1) Burnbrae (2) and the Directors
(3), a summary of which is set out in the
Circular, the outstanding terms of which are
replaced by the New Investment Agreement;
"London Stock Exchange" the London Stock Exchange Plc;
"Nabarro Wells" Nabarro Wells & Co. Limited;
"New Convertible Loan
Notes" or "CRULS" the unsecured 7.2 per cent. convertible
redeemable oan notes 2004 with a nominal
value of #700,000 issued to Burnbrae pursuant
to Loan Note Instruments dated 23 August 2004
and 30 September 2004 between the Company and
Burnbrae;
"New Investment
Agreement" the agreement dated 13 October 2004, between
the Company (1), Burnbrae (2) and the
Directors (3) which contains details of the
Proposals, which is summarised in the
Circular;
"Overdraft Subscription" the subscription by Burnbrae for 181,818,182
new Ordinary Shares at 0.11p per share;
"Ordinary Shares" the ordinary shares of 0.01p each in the
capital of the Company;
"Panel" The Panel on Takeovers and Mergers;
"Partially Diluted
Share Capital" the Enlarged Issued Share Capital as
increased by the exercise by Burnbrae of all
of its Warrants and other subscription rights
over Ordinary Shares, as listed in paragraph
4.1.2 of Part 3 on the assumption that no
other party exercises any of their Warrants,
options or other subscription rights over
Ordinary Shares;
"Placing" the placing of the Placing Shares at 0.12p
per share;
"Placing Shares" the 666,666,666 new Ordinary Shares which are
being placed firm as described in this
announcement;
"Proposals" the Placing, the Overdraft Subscription and
the grant of Warrants as described in the New
Investment Agreement;
"Resolutions" the resolutions set out in the notice of
Extraordinary General Meeting set out in the
Circular;
"Shareholders" the holders of Ordinary Shares;
"Share Option Scheme" the Wigmore Group Plc Enterprise Management
Incentive Scheme 2001, details of which are
set out in the Circular;
"Warrants" warrants to subscribe for Ordinary Shares;
"Whitewash" the waiver granted by the Panel conditionally
on the approval of the Independent
Shareholders by the passing of resolution 1
at the EGM of any obligation of Burnbrae to
make a mandatory offer for the Company which
would otherwise arise under Rule 9 of the
City Code, further details of which are set
out in the Circular.
For further information please contact:
Peter Hewitt, Executive Chairman 01293 423 301
Robert Lo, Nabarro Wells & Co. Limited 020 7710 7400
Note to Editors:
The Wigmore Group PLC (LSE: WGT) is a focussed support services group deriving
its business from a mixture of term contracts with good covenants, after-sale
housing services, domestic and commercial building insurance solutions, and
speciality contracting. It provides business to business building and
maintenance services to both the public and private sectors as well as fast
track design, construction and property refurbishment services to the leisure
and hotel sector throughout the UK.
www.wigmoregroup.com
The Wigmore Group plc has three principal subsidiaries:
www.speymill.com
www.fnpm.co.uk
www.dfblanchard.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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