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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Asfare | LSE:ASF | London | Ordinary Share | GB0033997387 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 169.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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RNS Number:3874S
Asfare Group plc
06 March 2007
For Immediate Release 6 March 2007
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR
THEIR RESPECTIVE TERRITORIES AND POSSESSIONS
ASFARE GROUP PLC
PROPOSED #80.2 MILLION REVERSE TAKEOVER OF ASSETCO GROUP LIMITED
PROPOSED PLACING OF NEW ORDINARY SHARES TO RAISE #20.0 MILLION
AND
APPOINTMENT OF HOARE GOVETT AS NOMAD
Asfare Group plc ("Asfare" or the "Company"), a leading supplier of products and
services to the emergency and homeland security markets in the UK, announces
that it has entered into a conditional agreement to acquire the entire issued
share capital of AssetCo Group Limited ("AssetCo"), a leading provider of total
managed services to UK fire and rescue authorities, for a consideration of
approximately #80.2 million (the "Acquisition"). Of this amount, #70.2 million
will be satisfied by the issue of new shares at 145 pence per share to AssetCo's
ordinary shareholders and convertible preference shareholders and the remaining
#10.0 million will be paid in cash in respect of the AssetCo preference shares.
Furthermore, the Company has today conditionally placed 13,793,104 new shares at
145 pence each with institutional investors to raise approximately #20.0 million
before expenses.
By reason of the size of AssetCo relative to Asfare and the fundamental change
in Asfare's business, board and voting control, the Acquisition will be
classified as a reverse takeover under the AIM Rules. The Acquisition and the
Placing are conditional, inter alia, on shareholder approval.
Key points:
Information on AssetCo
*AssetCo is a leading provider of total managed services to UK fire and
rescue authorities.
*In 2001, AssetCo won the largest outsourced emergency services contract
worldwide, the 20-year contract for London Fire Brigade with current
estimated contract revenues of #400 million over the life of the contract.
*In 2006, AssetCo won a #60 million 20-year total managed services
contract with Lincoln Fire and Rescue.
The transaction
*#80.2 million consideration for AssetCo of which #70.2 million will be
satisfied by issue of new shares at 145 pence to AssetCo's ordinary
shareholders and convertible preference shareholders and the remaining #10.0
million will be paid in cash in respect of the AssetCo preference shares.
*Conditional placing of new shares in Asfare to raise approximately #20.0
million before expenses.
*The net proceeds of the placing will be used to satisfy the consideration
for the AssetCo preference shares, refinance existing debt obligations and
for working capital purposes.
*The market capitalisation of the Company at the placing price is #97.4
million.
*Upon Admission, Asfare will change its name to AssetCo plc.
Profit forecast and forecast net debt
*The Ongoing Directors estimate that the pro-forma forecast turnover,
EBITDA and profit before taxation and amortisation for the year ending 31
March 2007 for the enlarged group will be approximately #103.2 million,
#17.9 million* and #6.2 million* respectively.
*At 31 March 2007, the Ongoing Directors estimate that the Enlarged Group
will have net debt of approximately #52.7 million.
* Before transaction costs and the cost of share based payments.
Enlarged Group strategy
*Capitalise on AssetCo's first mover advantage in total managed services
for the fire and rescue service.
*Build on long term contracted client relationships and engage at
strategic planning level.
*Leverage off Asfare's and FSE's existing relationships to further organic
growth.
*Horizontally integrate into the supply chain through selective
acquisitions and strategic partnerships.
*Pull-through additional value added services into the existing client
base.
*Replicate total managed services model across other emergency services
agencies.
Proposed board
It is proposed that, on Admission, John Shannon, the Chief Executive Officer of
AssetCo, and Frank Flynn, the Chief Finance Officer of AssetCo, will join the
board of Asfare as Chief Executive Officer and Chief Finance Officer
respectively. It is also proposed that, following their management of Asfare
through a period of organic and acquisitive growth, Tony O'Neill and Tim
O'Connor will stand down from the board of Asfare following Admission.
Appointment of NOMAD
The board of Asfare is pleased to announce the appointment of Hoare Govett as
nominated adviser with immediate effect.
Tim Wightman, Chairman of Asfare, said:
"This transaction brings together two experienced and specialist UK fire
services companies and management teams. The fire market is moving towards
outsourced solutions where significant growth opportunities for the enlarged
group exist. AssetCo already has, through its contracts with the London and
Lincoln fire authorities, a highly successful and proven total managed services
solution."
John Shannon, Chief Executive Officer of AssetCo, said:
"The market for outsourcing is growing rapidly driven by the demands placed on
modern fire and rescue services. AssetCo has first mover advantage within the
fire and rescue market. We have proven success with London Fire Brigade, the
largest urban fire authority, and Lincoln Fire and Rescue, one of the largest
rural fire authorities. This transaction will enable us to use the combined
strengths of both AssetCo and Asfare to continue to build upon the leadership
position we have developed."
For more information please contact:
Asfare Group plc
Tim Wightman Tel: +44 (0)1789 262 664
AssetCo Group Limited Tel: +44 (0) 20 8515 3999
John Shannon
Frank Flynn
Hoare Govett Limited Tel: +44 (0) 20 7678 8000
John MacGowan
Sean Wegerhoff
Bertie Whitehead
Buchanan Communications Tel: +44 (0) 207466 5000
Tim Anderson
Isabel Podda
High resolution images are available for the media to view and download free of
charge from www.vismedia.co.uk.
Hoare Govett, which is regulated by the FSA, is acting as nominated adviser,
financial adviser and corporate broker exclusively for Asfare and no-one else in
connection with the matters set out in this announcement, the Admission Document
or any other document published in connection with the matters set out herein.
Its responsibilities as Asfare's nominated adviser under the AIM Rules for
Nominated Advisers will be owed solely to London Stock Exchange plc and are not
and will not be owed to Asfare or to any director or proposed director of Asfare
or to any other person. No representation or warranty, express or implied, is
made by Hoare Govett as to any of the contents of this announcement. Hoare
Govett is and will be acting for Asfare and no one else and will not be
responsible to anyone other than Asfare for providing advice in relation to the
Acquisition, the Placing or Admission or otherwise. Hoare Govett will not be
offering advice and will not be responsible for providing the protections
afforded to customers of Hoare Govett in relation to the matters described in
this announcement or in respect of the Acquisition, the Placing or any
acquisition of shares or securities in Asfare or otherwise.
The Placing is only made in the United Kingdom. This announcement does not
constitute an offer to sell or the solicitation of an offer to buy shares in any
jurisdiction in which such offer or solicitation is unlawful and in particular
is not an offer of securities for sale in the United States and the Ordinary
Shares have not been and will not be registered under the United States
Securities Act of 1933 or under the laws of any state, district or other
jurisdiction of the US or of Australia, Canada, Japan or the Republic of South
Africa or any of their respective territories and possessions and no regulatory
clearances in respect of the Ordinary Shares have been or will be applied for in
any such jurisdiction.
This summary should be read in conjunction with the full text of this
announcement.
Appendix I sets out the timetable of principal events and placing statistics.
Appendix II sets out the terms and conditions of the Placing.
Appendix III sets out the definitions used in this announcement.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR
THEIR RESPECTIVE TERRITORIES AND POSSESSIONS
ASFARE GROUP PLC
PROPOSED #80.2 MILLION REVERSE TAKEOVER OF ASSETCO GROUP LIMITED
PROPOSED PLACING OF NEW ORDINARY SHARES TO RAISE #20.0 MILLION
AND
APPOINTMENT OF HOARE GOVETT AS NOMAD
INTRODUCTION
The Company announces that it has entered into a conditional agreement to
acquire the entire issued share capital of AssetCo, a leading provider of total
managed services to the UK fire and rescue authorities, for a consideration of
approximately #80.2 million. Of this amount, #70.2 million will be satisfied by
the issue of the Consideration Shares at 145 pence per share to AssetCo's
ordinary shareholders and convertible preference shareholders and the remaining
#10.0 million will be paid in cash to Brook Henderson in respect of its holding
of AssetCo preference shares.
Furthermore, the Company has today conditionally placed 13,793,104 new shares
(the "Placing Shares"), at 145 pence each with institutional investors, raising
approximately #20.0 million before expenses. The Placing Shares are being issued
on a non-pre-emptive basis.
By reason of the size of AssetCo relative to Asfare and the fundamental change
in Asfare's business, board and voting control, the Acquisition is classified as
a reverse takeover under the AIM Rules. The AIM Rules require that completion of
the Acquisition is subject to the prior approval of Shareholders, which will be
sought at the EGM, and the publication of an AIM Admission document which is
being posted to Shareholders today. Furthermore, the Placing is conditional,
inter alia, on shareholder approval. In conjunction with the Acquisition, Asfare
proposes to change its name to AssetCo plc and make certain changes to its
capital.
In addition, because the Concert Party will, as a result of the Acquisition,
receive Ordinary Shares representing more than 30 per cent. of the Enlarged
Share Capital, the Company is seeking a waiver of Rule 9 of the Takeover Code,
which would otherwise require the Concert Party to offer to acquire those
Ordinary Shares that they do not own.
The Acquisition and the Placing are conditional, inter alia, upon the passing of
the Resolutions by Shareholders at the EGM.
Subject to the passing of the necessary resolutions at the EGM, trading in the
Existing Ordinary Shares will be cancelled and it is expected that the Enlarged
Share Capital will be admitted to trading on AIM on 30 March 2007.
INFORMATION ON ASSETCO
Introduction
The origins of the AssetCo business date back to 1995 when British Gas created a
subsidiary, The Leasing Group plc ("TLG"), to manage independently the fleet and
fleet-related equipment of British Gas (now National Grid).
In February 2001, TLG commenced a 20-year PFI contract for LFB (London Fire
Brigade) issued by LFEPA (London Fire and Emergency Planning Authority). This
was the largest outsourced emergency services equipment contract worldwide and
the first FRA total managed services contract in the UK to be outsourced. The
contract includes the procurement, supply, maintenance and lifecycle replacement
of LFB's fire appliances, specialist fire and rescue vehicles and operational
equipment. The contract also included a transfer of ownership of all vehicles
and 20,000 items of equipment, workshop staff (under TUPE), management of
existing workshops and all risk associated with operational processes and front
line vehicle and equipment availability from LFB to TLG.
TLG was acquired by a privately owned leasing company, Brook Henderson in
October 2002. Brook Henderson subsequently rebranded itself as AssetCo and
disposed of certain non-core assets, retaining other business interests and
client contracts including the contract with LFEPA.
Whilst under Brook Henderson's ownership, AssetCo completed the following
acquisitions:
Date of Company Cost Activity
acquisition name
September SVO #5.1m Conversion of standard vehicles to meet the
2003 enhanced vehicle specification requirements for
police authorities.
October Papworth #2.4m Design and build of vehicles for all emergency
2003 services agencies, including FRAs, police
authorities and ambulance services trusts.
October FMI #1.3m Fleet management services.
2003
November Fleet #11.0m Fleet managed services and contract hire.
2003 Solutions
Limited
On 5 October 2005, John Shannon led the management buy-in/buy-out ("BIMBO"),
backed by HBOS plc, of AssetCo's emergency and fleet-related business, including
Papworth, SVO and the Ireland fleet management operations, for a consideration
of #45 million.
The strategic rationale for the BIMBO was that FRAs, both locally and
nationally, were embarking upon a period of major change which presented a
significant opportunity for AssetCo. Additional statutory responsibilities had
been placed upon them through government legislation with emphasis on the need
for FRAs to adapt and change established practices and thinking. One of the main
elements of the modernisation agenda is that all FRAs in England and Wales are
now required to produce an annual action plan supporting incremental change in
delivery of services and usage of resources in order to meet the expectations of
central government as outlined in the National Framework Document.
In April 2006, AssetCo commenced a 20-year PPP contract for the Lincolnshire
Fire and Rescue Service ("LFR"). This was the second fully managed service
contract issued on behalf of an FRA and was for the procurement, supply,
maintenance and lifecycle replacement of LFR's fleet, fire and rescue vehicles
and operational equipment.
Since the BIMBO, AssetCo has entered into the following acquisitions:
Date of Company Cost Activity
acquisition name
December 2006 FSE #1.4m Distributor of hydraulic rescue equipment
Acquisition
agreed 23
November 2006
(completion
expected on
the day of
Admission) Simentra #0.5m Homeland security and civil contingency
planning
Since the BIMBO, the directors of AssetCo:
*have positioned AssetCo to capitalise on its first mover advantage in the
fire market through equipping the company with the capability and
competencies to win future total managed services contracts;
*have reduced the high fixed cost base to a more variable cost base,
thereby allowing increased flexibility to align AssetCo's cost base with its
operations;
*exited, or are in the process of exiting, from pre-BIMBO fleet management
contracts which had low margin returns;
*have relocated the main headquarters from an administrative centre in
Reading to an existing under-utilised operational facility in London,
thereby delivering significant operational and financial benefits; and
*have relocated the back office functions to Ireland to manage group
business support and deliver a lower cost base.
In December 2006, AssetCo secured #5.0 million of funding from J O Hambro which
enabled AssetCo, inter alia, to complete the acquisition of FSE.
The Ongoing Directors believe that the LFB and LFR contracts endorse AssetCo's
total managed services model and provide a template upon which FRAs and other
emergency services can base their service delivery.
With first mover advantage in the delivery of total managed services to the fire
market, the Ongoing Directors believe that AssetCo is well positioned to build a
significant and leading position in the provision of total managed services for
vehicles and equipment, equipment supply and specialist vehicle design and build
to the FRAs and other emergency services. The Ongoing Directors also believe
that with change and modernisation high on the agenda for all emergency
services, AssetCo is well placed to meet the needs for similar outsourced
requirements within ambulance service trusts and police authorities.
Accordingly, AssetCo's focus and capability is now predominantly geared towards
the fire market.
AssetCo has approximately 380 employees across five primary locations.
AssetCo's business
AssetCo is a leading provider of total managed services to UK fire and rescue
authorities. AssetCo also designs, builds and converts specialist vehicles and
equipment for emergency and mission critical service clients. The breadth of
AssetCo's capabilities allows it to provide clients with a service covering all
of their vehicle and operation equipment needs.
The directors of AssetCo believe that the company's success in the fire market
is not only attributable to the value and service it brings, but also in its
adoption of a partnering approach to operational solution design, an approach
compatible with the partnering philosophy advocated by the FRAs. In addition,
following the transfer of staff from LFB and LFR, AssetCo has direct knowledge,
skills and experience in running mission critical operational infrastructures,
which the directors of AssetCo believe is a key cultural and operational
differentiator to its competitors. A substantial number of AssetCo employees
have previously been employed in the fire service.
AssetCo Total Managed Services
AssetCo's total managed services model is built on long-term contracted
relationships and brings together the capabilities of AssetCo in order to
provide for its clients' vehicle and equipment needs. AssetCo creates an
interdependent partnering approach with its clients where both parties share
knowledge and work collaboratively to deliver improved availability for vehicles
and operational equipment, which the directors of AssetCo believe is essential
if the long term capability and expectations of the FRAs in meeting their
immediate and future Integrated Risk Management Plans ("IRMPs") are to be
realised.
AssetCo's total managed services model is designed to deliver value for money
solutions and be affordable (within budget) in the provision, supply,
maintenance and lifecycle management of all vehicles and operational equipment.
Transferring the ownership, risk and management of vehicles and equipment from
the FRAs to AssetCo enables the FRAs to concentrate on their core activities.
Risk transfer to AssetCo takes place under a contractual arrangement whereby
AssetCo provides guaranteed levels of vehicle and equipment availability across
defined territories, at defined locations. Through this risk transfer and
contractual arrangement, FRAs are able to equip themselves with a mechanism that
delivers their vehicle and equipment requirements and enables change to vehicle
and equipment inventories over the total contracted period thereby assisting
FRAs in fulfilling their future IRMP requirements.
Vehicles and equipment are designed to meet client performance and diversity
specification requirements and are regularly refreshed to incorporate new
technologies. AssetCo provides familiarisation training on new equipment
supporting the FRAs' statutory duty under the Fire and Rescue Services Act 2004
to maintain competency of their personnel.
The Ongoing Directors believe that AssetCo's total managed services model
provides clients with the following benefits:
*guaranteed levels of vehicle and equipment availability at the point of
need;
*early life replacements and refreshed technologies that enable faster
access to technologically advanced vehicles and equipment which assists
clients in meeting their statutory obligations under the Civil Contingency
Act 2004 and the Fire and Rescue Services Act 2004;
*flexible solutions, designed in partnership with FRAs to meet local
needs;
*release of front line staff from non-core activities thereby enabling
clients to meet the increased demand in delivering community safety
initiatives brought about by the modernisation agenda; and
*budgetary stability, assisting in eliminating the uncertainty of future
payments brought about by public sector planning cycles.
AssetCo's largest contract is the 20-year PFI contract with LFEPA for total
managed services of LFB vehicles and equipment. This was the first FRA total
managed services contract in the UK to be outsourced. The original stated
contract value was #292 million. The Proposed Directors estimate that the
current contract value is #400 million based on additional equipment added
through the PFI contract change procedure. The existing contract includes the
procurement, supply, maintenance and lifecycle replacement of LFB fire
appliances, specialist fire and rescue vehicles and operational equipment.
Following Admission, Asfare will be substituted as the guarantor, in place of
AssetCo, under the LFB contract.
Under the terms of the LFEPA contract, AssetCo is required to repair or replace
any critical vehicle or equipment item with a defect that renders it unavailable
to LFB within up to two hours of the defect being reported. Revenue abatements
are applied in the event of failure to meet this performance target. Over the
last five years, the level of revenue abatement applied by LFB has been less
than one per cent. of contract revenues. Further controls have been introduced
since the BIMBO to service delivery management, which the directors of AssetCo
expect to reduce revenue abatement costs further.
In April 2006, AssetCo commenced a 20-year PPP contract with LFR. This is a #60
million total managed services contract for the procurement, supply, maintenance
and lifecycle replacement of LFR's fleet, fire and rescue vehicles and
operational equipment. Services provided to LFR include managed services for
hoses and supply of general consumables, a new service which expands AssetCo's
offering over that which is provided as part of the PFI contract with LFEPA.
LFR's vehicles and equipment are currently on contract hire from a third party
supplier. As these vehicles and equipment reach contract end date, they will be
replaced with vehicles and equipment owned by AssetCo. This replacement
programme is due to commence in June 2007.
Under the terms of the LFR contract, AssetCo is required to repair or replace
any critical vehicle or item of equipment with a defect that renders it
unavailable within up to four hours of the defect being reported, with revenue
abatements being applicable in the event of failure. Since the start of the LFR
contract, there have been no revenue abatements.
During the six months ended 30 September 2006, total managed services revenue
(including the LFEPA and LFR contracts) was #9.1 million and gross margins were
33.1 per cent. (source: audited non-statutory financial statements).
The contracts secured by AssetCo represent the total managed services contract
for the largest urban fire brigade in Europe (LFB) and the largest total managed
services contract with a rural fire brigade in England (LFR). AssetCo now owns
and manages approximately 650 fire and rescue vehicles and appliances,
approximately 50,000 items of operational equipment and approximately eleven per
cent. of all of England's frontline and reserve pumping appliances. AssetCo has
the scalability, design, capability and the range of services required to meet
the needs of county, metropolitan and combined FRAs. The Proposed Directors
estimate that the replacement cost for all vehicles and equipment provided as
part of the total managed services to LFB and LFR is approximately #73 million.
AssetCo Engineering
AssetCo Engineering manages eight specialist vehicle and equipment workshops
servicing existing clients, including a dedicated emergency workshop covering
approximately seven acres in London.
AssetCo Engineering's workshops are an integral component in delivering the
vehicle and equipment availability service levels set out in the individual
client contracts. Engineers are emergency trained and have the specialist
knowledge and skills required to maintain vehicles and equipment unique to the
fire market.
AssetCo Engineering has also established a network of mobile technicians who
deliver fast and effective roadside repair to vehicles and equipment, and
provide engineering support to clients that operate in remote locations.
AssetCo Engineering's clients include AssetCo Total Managed Services, the UK
Ministry of Defence, HM Prison Service and various local authorities and health
authorities.
Services provided by AssetCo Engineering include:
*emergency workshop and equipment engineering services;
*collection and delivery of vehicles and equipment;
*testing and inspection of vehicles and equipment; and
*technical maintenance scheduling.
During the six months ended 30 September 2006, AssetCo Engineering's revenue was
#1.2 million and gross margins were 18.5 per cent. (source: audited
non-statutory financial statements).
AssetCo Specialist Vehicle Design and Build
Re-focused since the BIMBO, and with a strong heritage based on the Papworth and
SVO operations, AssetCo's specialist vehicle design, build and conversion
operation, located in Papworth, Cambridgeshire is one of the UK's leading
suppliers of emergency services vehicles.
AssetCo is an approved supplier of fire-pumping appliances to the fire market.
During 2007, AssetCo intends to build 130 fire-pumping appliances representing
over 55 per cent. of the UK's estimated new fire-pumping appliances expected to
be produced for 2007. AssetCo currently provides a range of fire rescue units
and operational service vehicles to LFB and LFR.
AssetCo is an NHS PASA (purchasing and supply agreement) framework approved
supplier for fast response (accident and emergency) vehicles and built over 100
ambulances in 2006. AssetCo designs and provides a specialist build service for
police vehicles. In 2006, over 2,000 vehicles were supplied by AssetCo to police
authorities in the UK.
AssetCo has recently been awarded a national framework agreement for the supply
of fire-pumping appliances to the fire and rescue service. The Ongoing Directors
intend to leverage off this agreement and increase further AssetCo's focus on
promoting capability in specialist design and build in the fire and rescue
market.
AssetCo Specialist Vehicle Design and Build provides clients with the following
benefits:
*turnkey vehicle design, development and manufacturing services;
*coordination of all supply chain and build activities, through to
commissioning and handover;
*modifications to vehicle body or standard features tailored to meet
specific needs; and
*installation of data and communication systems.
During the six months ended 30 September 2006, AssetCo Specialist Vehicle Design
and Build revenue was #6.4 million and gross margins were 10.6 per cent.
(source: audited non-statutory financial statements).
AssetCo Operational Equipment Services
Established since the BIMBO, AssetCo Operational Equipment Services currently
supplies operational equipment to over 70 per cent. of all UK FRAs. The Enlarged
Group will be the largest purchaser of fire appliances and fire equipment within
the UK and Republic of Ireland, supplying operational equipment products to all
FRAs in the UK.
The Ongoing Directors intend to develop further the Enlarged Group's operational
equipment capability to enhance the range of total managed services currently
provided through the selective acquisition of UK-based complementary businesses
and strategic partnerships.
AssetCo's Operational Equipment Services business provides clients with the
following benefits:
*reduced cost through the buying power of AssetCo;
*specialist procurement services that ensure only fire market compliant
products are supplied;
*increased equipment compatibility through integrating design
technologies; and
*use of "green" product technologies that assist in reducing the impact on
the environment.
AssetCo Business Support Services
Established since the BIMBO, AssetCo Business Support Services provides back
office support to emergency and other existing service critical clients. The
Ongoing Directors intend to market these services further as a standalone
business service support offering.
AssetCo provides a 24 x 7 x 365 call and client services centre for accident
management, vehicle and equipment hire and other service/user related queries.
Client services include:
*operational control and call centre management;
*vehicle and plant hire;
*vehicle and equipment breakdown and after sales management service; and
*finance and administration support services.
During the six months ended 30 September 2006, AssetCo Business Support Services
revenue was #1.9 million (source: audited non-statutory financial statements).
AssetCo Consulting
Established since the BIMBO, the Ongoing Directors intend that AssetCo
Consulting will provide independent advice on "best practice and best value" in
civil contingency planning.
AssetCo has agreed, conditional upon Admission, to acquire Simentra, a
specialist Northern Ireland based consultancy boutique, with a well established
brand in homeland security and civil contingency planning, for #0.45 million in
cash. Simentra's diverse team of experienced front line/first responders, who
have experience at all levels of emergency services operations, have spoken at
international conferences in this evolving and critical aspect of integrated
risk management.
Other operations
AssetCo provides a number of other services through operations acquired as part
of the BIMBO that are outside of the fire and rescue services sector. These
include the provision of vehicle contract hire services for Northern Ireland
Electricity, fleet management services for Scottish Water and spot hire
operations in the UK. AssetCo has exited the majority of its fleet management
contracts. Accordingly, the Ongoing Directors expect revenue from fleet
management to reduce substantially. The Ongoing Directors intend to review these
operations and consider the timing of any future exit from non-fire and rescue
service related contracts.
During the six months ended 30 September 2006, revenue from other operations was
#34.3 million and gross margins were 6.1 per cent. (source: audited
non-statutory financial statements).
AssetCo's markets
There are 59 FRAs in the UK, comprising of 47 in England, three in Wales, eight
in Scotland and one in Northern Ireland. Collectively, these FRA's total
estimated annual expenditure is #2.6 billion of public money in 2006/7 (source:
PKF). The Proposed Directors estimate that AssetCo's share of LFB's budgeted
expenditure for 2006/7 of #407 million will be approximately five per cent.
All FRAs are responsible for tending fires, delivering community fire safety and
responding to road traffic accidents, flooding and major emergencies. Day-to-day
management of the FRA is undertaken by the Chief Fire Officer who is responsible
to the community through a local authority member or members appointed to the
FRA.
There is significant variation in the scale of, and local circumstances facing,
FRAs. Some are predominantly rural authorities with relatively small populations
and others are mainly urban with large populations. Numbers of FRA staff range
from 25 in the Isle of Wight to nearly 7,000 in London.
Whilst other organisations have the depth of resource to continue to target this
market, the Ongoing Directors believe that AssetCo retains a significant
advantage by having won the first two outsourced fire contracts, demonstrated
capability in delivering tailored solutions to meet local FRA needs and
established a level of trust and confidence that is essential to the mission
critical service market.
Fire and rescue market drivers
The Fire and Rescue Services Act 2004 requires FRAs to develop and deliver the
strategic objectives of the National Framework Document. FRAs are also under
pressure to deliver savings under the Gershon Efficiency Review as well as to
undertake improvement planning and manage performance against service objectives
under the statutory basis of best value. Faced with uncertain levels of
government funding, and the recognition that the reform agenda and associated
agreement on pay and terms and conditions, has and will have significant
financial ramifications, AssetCo provides the capability and capacity to support
FRAs in seeking out alternative methods of supporting 'front end' service
delivery.
Following the 11 September 2001 attacks on the World Trade Center and
accelerated by the attacks of 7 July 2005 in London, the UK Government
established the CCCP. The aim of the CCCP is to enhance the country's
preparedness and resilience by improving the capability of the FRAs and other
organisations to respond to major and catastrophic incidents. As of July 2006,
the UK Government has invested approximately #200 million in vehicles and
equipment in support of this programme. The UK Government has also committed to
spend up to #16 million per annum to help meet the costs of crewing these new
vehicles and is working with the Chief Fire Officers association and the local
government association on the allocation of these funds.
The Ongoing Directors expect a requirement to be placed on the FRAs to perform
duties that go beyond their current statutory obligations to respond to fires,
special services and major incidents. In addition, FRAs will be required to plan
and prepare for catastrophic incidents identified by the CCCP in areas such as:
*chemical, biological, radiological and nuclear incidents;
*industrial and domestic accidents;
*chemical spills and collapsed buildings;
*natural disasters; and
*floods and earthquakes.
By order of the Secretary of State for Communities and Local Government,
responsibility for maintaining the CCCP vehicles and equipment will transfer
from the CLG to FRAs in Spring 2007. As an interim measure, the CLG has elected
to invite tenders for a one year contract for the maintenance only of CCCP
vehicles. This contract is targeted by the CLG to commence in Spring 2007.
The Ongoing Directors believe that a comprehensive managed service tender will
be issued to the private sector in March 2007. This will be for the provision of
support for FRAs in ensuring national capability is maintained through long term
capability management of CCCP vehicles and equipment.
The Ongoing Directors believe that, with its successful track record in winning
vehicle and equipment managed service contracts in the fire market, its
networked national infrastructure with the required skills and knowledge to
provide an interim solution, and with its established track record of delivering
mission critical operational infrastructures and long term capability management
across the UK, AssetCo is well positioned to secure both the interim and longer
term CCCP contracts described above.
Fire and rescue market size
Based on current prices, PKF estimates that the potential market size for UK
fire and rescue fleet services is approximately #172 million per annum. In
addition, the Ongoing Directors estimate that the potential market size relating
to the CCCP is approximately #10 million per annum. Therefore, the Ongoing
Directors believe that this implies a total addressable UK vehicle total managed
services market of #3.6 billion, including a market relating to the CCCP in
England of #200 million, based on typical 20-year contract agreements.
AssetCo currently holds both of the current total vehicle and equipment managed
service fire contracts, with an initial aggregate contract value of #17 million
per annum.
Market and new product development
AssetCo intends to expand its total managed services offering, particularly in
the areas of equipment managed service support. The Ongoing Directors intend to
utilise their experience in delivering improvements and efficiencies in the
provision and support of specialist equipment to the fire services market to
other emergency services agencies and organisations in the UK such as the UK
Ministry of Defence.
In addition, as a result of discussions with manufacturers and distributors of
specialist equipment, the Ongoing Directors believe that there is a significant
opportunity for specialist equipment "after care" service and support. The
Ongoing Directors believe that the development of an expanded and national
equipment managed service, with endorsement from specialist manufacturers and
distributors, could provide increased entry points into new clients and enables
further expansion into AssetCo's addressable market.
New markets
In addition to the FRAs, AssetCo already provides services and products into
both the UK police and ambulance sectors.
The UK police market consists of 43 police authorities which, as a result of the
Gershon Efficiency Review, are under pressure to deliver savings as well as to
undertake reviews of how to deliver efficiencies at a local level and deliver
improved community safety.
On 1 July 2006, the existing 29 UK ambulance trusts were merged to create 12 UK
regional ambulance trusts, with the objective of reducing bureaucracy and
committing more money to invest in front line vehicles and equipment. UK
ambulance trusts are being encouraged to adapt, change and seek alternative
means of improving services and reducing costs through partnerships with the
private sector.
The Ongoing Directors believe that, with increased cost pressure in each of the
emergency services and an increasing need to standardise products and leverage
existing infrastructure, opportunities exist to generate synergies and improve
services across the emergency services through adoption of the AssetCo total
managed services business model.
Financial information on AssetCo
Prior to the BIMBO, the AssetCo Group did not exist in its current form but was
part of a larger group. The BIMBO brought together a number of subsidiaries and
contracts. In addition, AssetCo has withdrawn from all except one of the fleet
management contracts acquired as part of the BIMBO.
The selected consolidated financial information on the AssetCo Group
(post-BIMBO) set out below, as at and for the six months ended 31 March 2006 and
30 September 2006 respectively, is presented in accordance with UK GAAP.
Six months Six months
ended ended 30
31 March September
2006 2006
#'000 #'000
Revenue 62,119 52,941
========== ==========
EBITDA(1) 7,780 8,147
========== ==========
Operating profit 1,584 2,522
Interest (1,699) (1,292)
---------- ----------
(Loss)/profit before taxation (115) 1,230
Taxation 302 113
---------- ----------
Profit after taxation 187 1,343
========== ==========
Net assets 3,258 4,601
========== ==========
Net debt(2) 68,645 52,786
========== ==========
(1) Earnings before interest, taxation, depreciation and amortisation.
(2) Net debt excludes the AssetCo preference shares of #10 million.
Turnover decreased in the six months to 30 September 2006 as build consultancy
for the UK utility contracts was reduced and AssetCo exited the majority of its
fleet management contracts during this period. As both of these activities were
high volume but low margin, the effect of exiting these businesses improved
margins. In addition, since the BIMBO, there has been an ongoing review of all
costs in AssetCo which resulted in further improved margins. A continuous
improvement programme has been put in place to review all aspects of the AssetCo
Group with the aim of achieving further margin improvement. Profit before tax
improved from a loss of #115,000 in the six months ended 31 March 2006 to a
profit of #1,230,000 in the six months ended 30 September 2006 after charging #1
million for goodwill amortisation in each period.
Net debt has decreased from #68.6 million to #52.8 million due to exiting the
majority of the fleet management contracts, which reduced debt by #14.3 million
and the net repayment of #1.5 million of other loans.
INFORMATION ON ASFARE
Asfare, a leading supplier of products and services to the emergency and
homeland security markets in the UK, was incorporated in July 2003 and was
admitted to trading on AIM in December 2003. Asfare supplies operational
equipment products and services to more than 90 per cent. of the UK FRAs. Asfare
comprises two divisions:
*the search and rescue division; and
*the protection and detection division.
The search and rescue division comprises AS Fire and Rescue and Collins Youldon.
AS Fire and Rescue is an established manufacturer of an extensive range of
ladders, gantries and ancillary equipment sold under several brand names to
emergency and rescue services in the UK and internationally. AS Fire and
Rescue's principal customers are FRAs, airports, police forces and AssetCo with
exports comprising approximately 15 per cent. of turnover. AS Fire and Rescue
has successfully launched a new lightweight roller shutter which is proving
attractive to the European markets. De-mount systems and beam gantries are also
being developed, particularly focused on the utility and European markets. The
Directors believe that the establishment of AS Security Equipment BV in February
2006 will be a catalyst for sales into European markets with significant growth
expectations in the next two years. Within AS Fire and Rescue, the Directors are
exploring opportunities in the Malaysian and Australasian markets and expect
there to be significant opportunities in these regions in 2007 and 2008.
Collins Youldon, acquired by Asfare in June 2006, manufactures hose reels, cable
drums and a range of related products for both the fire-fighting and the oil
tanker industries. Collins Youldon is the largest supplier of vehicle mounted
hose reels in the UK, with exports comprising approximately 37 per cent. of
turnover. Collins Youldon recently recruited a new managing director, who is
undertaking a review of potential new areas of product development.
The sole trading entity in the protection and detection division is Todd
Research, acquired by Asfare in November 2005, which manufactures advanced
package screening units. In 2005, Todd Research launched a full upgrade to its
premium product range including colour X-ray image and powder detection
capability. Further developments in 2006 included a remote access and network
functionality for the premium range and a 'Basix' range targeting SMEs for entry
level scanning. Todd Research has increased
its direct sales approach through the recruitment of a focused salesman to
develop the existing customer base to include more facilities management
companies and to look beyond the traditional blue chip companies and government
agencies, targeting high profile retail outlets, hotels and schools.
Financial information on Asfare
The selected financial information set out below, as at and for the three years
ended 31 March 2006, is
presented in accordance with UK GAAP.
Pro forma
(unaudited)
Year ended Year ended Year ended
31 March 31 March 31 March
2004 2005 2006
#000 #000 #000
Revenue 4,389 3,925 4,905
========== ========== ==========
EBITDA(1) 837 387 646
========== ========== ==========
Operating (loss)/profit (360) 190 456
Interest (41) (81) (98)
---------- ---------- ----------
(Loss)/profit before
taxation (401) 109 358
Taxation (165) 10 (45)
---------- ---------- ----------
(Loss)/profit after taxation (566) 119 313
========== ========== ==========
Net assets 2,885 2,962 3,966
========== ========== ==========
Net debt 1,033 693 1,329
========== ========== ==========
(1) Earnings before interest, taxation, depreciation, amortisation and
exceptional items.
In order to enable useful comparison of the Group's performance pro forma
information has been set out for the year ended 31 March 2004. The pro forma
results for the year ended 31 March 2004 represent the actual consolidated
results of Asfare from the date of incorporation together with the results of
Speed 5019 Limited and its subsidiaries from 1 April 2003 until its acquisition
by the Company on 12 December 2003.
The financial information set out above includes the trading results for AS Fire
and Rescue and Todd Research since the date it was acquired on 11 November 2005.
Turnover for the year ended 31 March 2006 amounted to #4,905,000, a growth of 25
per cent. above turnover of #3,925,000 in the previous year (pro-forma 2004:
#4,389,000). AS Fire and Rescue's turnover increased in the year to 31 March
2006 by 4 per cent. to #4,092,000 over the prior year and Todd Research recorded
#813,000 in sales. Gross margins in the year ended 31 March 2006 were 57.8 per
cent. (2005: 52.9 per cent., 2004: 54.2 per cent.). The AS Fire and Rescue gross
margin was improved by the mix of sales and higher margin products, particularly
in the second half of the year. Todd Research's gross margin was improved as
more of the new product range was sold.
BACKGROUND TO AND REASONS FOR THE ACQUISITION AND THE PLACING
The Ongoing Directors intend to increase the Enlarged Group's share of existing
client expenditure by providing an enlarged service offering and by
cross-selling into the existing client bases of Asfare and AssetCo. Organic
growth is planned through the sale of additional products and enhanced services,
including total managed services and consultancy. The Enlarged Group will have
all the FRAs as clients.
The Directors and the Proposed Directors believe that the Acquisition brings
together two experienced and specialist UK fire services companies and
management teams and will:
*demonstrate the Enlarged Group's commitment to the UK fire market;
*establish the attractiveness of the Enlarged Group as a strategic partner
for other key fire market suppliers;
*provide the Enlarged Group with increased purchasing power within the
total fire product supply market in the UK; and
*reduce operating costs through integrated Enlarged Group support services
functions.
In addition, the Ongoing Directors believe that the Acquisition will provide
clients of the Enlarged Group with the following benefits:
*a service-led solution based on value, not cost;
*increased client choice and flexibility through an expanded range of
products and total managed services;
*integrated supply chain management, able to deliver products and total
managed services from a single source supplier; and
*integrated technologies that are able to deliver technically advanced
vehicles and operational equipment.
As a larger listed company with a balance sheet strengthened by the net proceeds
from the Placing the Directors and the Proposed Directors believe the Enlarged
Group will gain an enhanced profile within its chosen markets which will assist
it in winning new contracts in the future, particularly in the fire services
market.
The recruitment, retention and reward of employees is a critical factor in the
future success of the Enlarged Group. The Directors and the Proposed Directors
believe that the Acquisition and the Placing will help the Enlarged Group to
continue to recruit and retain skilled staff and thereby continue to grow.
STRATEGY OF THE ENLARGED GROUP
The Ongoing Directors' objectives are to:
*capitalise on AssetCo's first mover advantage in total managed services
for the fire and rescue service;
*build on long term contracted client relationships and engage at
strategic planning level;
*leverage off Asfare's and FSE's existing relationships to further organic
growth;
*horizontally integrate into the supply chain through selective
acquisitions and strategic partnerships;
*pull-through additional value added services into the existing client
base; and
*replicate the total managed services model across other emergency
services agencies.
PROFIT FORECAST FOR THE YEAR ENDING 31 MARCH 2007 AND FORECAST NET DEBT AT 31
MARCH 2007
The Ongoing Directors estimate that pro-forma turnover, EBITDA before
transaction costs and the cost of share based payments and profit before
taxation, amortisation, transaction costs and the cost of share based payments
for the Enlarged Group for the year ending 31 March 2007 will be approximately
#103.2 million, #17.9 million and #6.2 million respectively. This is based on
the aggregate of the forecast turnover (after the elimination of pro-forma
intercompany sales of #1.1 million), EBITDA before transaction costs and the
cost of share based payments and profit before taxation, amortisation,
transaction costs and the cost of share based payments for the year ending 31
March 2007 for each of Asfare and AssetCo.
The Ongoing Directors estimate that the Enlarged Group will have net debt of
approximately #52.7 million at 31 March 2007, comprising acquisition debt of
#21.3 million, asset finance (emergency) of #25.7 million, asset finance
(non-emergency) of #11.0 million and working capital of #1.0 million, less cash
balances of #6.3 million. Net debt excludes the AssetCo preference shares of #10
million.
CURRENT TRADING AND PROSPECTS
The Ongoing Directors believe that the UK fire market is relatively
underdeveloped and offers significant growth potential for total managed
services.
AssetCo
AssetCo has won both of the fully outsourced fire vehicle and equipment managed
services contracts (each being for 20 years) that the UK fire services have
awarded to date. The UK fire services sector is increasingly moving towards
outsourcing and the Ongoing Directors are confident that the Enlarged Group is
well positioned to win additional fire service contracts.
AssetCo is currently working on proposals in relation to total managed services
provision for ten FRAs, expected by the Ongoing Directors to be awarded over the
next three years, with potential contract values, in aggregate, of approximately
#24 million per annum (#480 million over a 20-year contracted period). In
conjunction with the CCCP, the Ongoing Directors believe that contract awards
with a value of approximately #34 million per annum could be made between 2007
and 2009.
Asfare
In the six months ended 30 September 2006, Asfare's turnover doubled to #3.6
million from the same period in the prior year, growing both organically and
through acquisition. The Directors believe that the strength of Asfare's order
book and the continuing improvement in its markets provide a sound platform for
continued growth. The Directors believe the prospects beyond the current
financial year are strong as Collins Youldon and Todd Research begin to benefit
from the market opportunities and synergies of being part of the existing Asfare
Group.
The Enlarged Group
The Ongoing Directors are confident in the underlying financial and trading
prospects of the Enlarged Group for the current financial year and the financial
year ending 31 March 2008.
USE OF PROCEEDS OF THE PLACING
The Ongoing Directors intend to use the net proceeds of the Placing as follows:
*#10.0 million to provide the Company with funds to satisfy the cash
consideration due to Brook Henderson under the terms of the Acquisition
Agreements;
*#3.5 million to refinance existing debt obligations; and
*#3.5 million for working capital purposes.
DIVIDEND POLICY
The Ongoing Directors intend to adopt a progressive dividend policy taking into
account the earnings potential of the Enlarged Group and the growth and
development opportunities available to it, while maintaining appropriate levels
of dividend cover. The Board will continue to review the appropriateness of its
dividend policy as the Enlarged Group develops.
SHARE OPTION PLANS
The Company operates the Share Option Plans to incentivise directors and
employees of the Enlarged Group. The Ongoing Directors intend to grant options
under the Share Option Plans over Ordinary Shares following Completion of the
Acquisition. These options will have an option exercise price equal to the
Placing Price. Immediately following Admission, the Company intends to grant
options over an aggregate of 1,381,205 Ordinary Shares to certain employees of
the AssetCo Group.
DIRECTORS AND PROPOSED DIRECTORS
It is proposed that, on Admission, John Shannon will join the Board as Chief
Executive Officer and Frank Flynn will join the Board as Chief Financial
Officer. It is also proposed that, following their management of Asfare through
a period of organic and acquisitive growth, Tony O'Neill and Tim O'Connor will
stand down from the Board following Admission and Tim O'Connor will step down as
Company Secretary. In addition, David Chisnall will step down as Deputy Chairman
but will remain on the Board as a non-executive director. In addition, the
Ongoing Directors intend to appoint a further non-executive director with
significant fire industry experience during 2007.
Further details of the Proposed Directors are set out below:
Marcus John Shannon, proposed Chief Executive Officer
John Shannon (aged 41) led the BIMBO of the AssetCo Group in October 2005. He
acquired Star Rentals Limited in 1997 and by January 2000, following the
acquisition of the Lex Transfleet subsidiary in Northern Ireland, Chart Hire
Services Limited, had formed Northern Ireland's largest independent commercial
vehicle hire company, FMI. Upon selling FMI to AssetCo he became a board member
of AssetCo and managing director of AssetCo (Ireland) Limited, AssetCo Emergency
Limited and AssetCo Vehicles Limited. Until 1996, he worked in Bank of Ireland's
Corporate and International Banking division, prior to which he worked at KPMG.
He holds a BSc (Hons) in Marine Biology, is a fellow of the
Institute of Chartered Accountants in Ireland, a fellow of the Institute of
Logistics and Transport, a member of the Institute of Bankers and holds an MBA.
Raymond Francis Flynn, proposed Chief Financial Officer
Frank Flynn (aged 43) is currently Finance Director of the AssetCo Group and was
part of the BIMBO team that acquired the AssetCo Group in October 2005. In the
four years leading up to the BIMBO, he was an associate partner at
PricewaterhouseCoopers ("PwC") with specific focus on realising shareholder
value. He was responsible for activities in PwC's Omagh and Derry offices and
managed human resources for Northern Ireland Assurance, a division of PwC
employing over 300 people. He also managed a portfolio of audit clients. Prior
to this, he worked for three years within the corporate finance division of the
Industrial Development Board for Northern Ireland. He also spent six years with
Crescent Capital / Hambro Northern Ireland Venture Capital Fund as an investment
manager and was a non-executive director of UP Holdings Limited and Toughglass
Limited. He holds a BSc (Hons) in Business and Accountancy, is a fellow of the
Institute of Chartered Accountants in Ireland and was a licensed Insolvency
Practitioner.
THE TAKEOVER CODE
The terms of the Acquisition give rise to certain considerations under the
Takeover Code.
The Takeover Code is issued and administered by the Panel. The Company is
subject to the Takeover Code and therefore its shareholders are entitled to the
protections afforded by the Takeover Code.
Under Rule 9 of the Takeover Code, any person who acquires, whether by a series
of transactions over a period of time or not, an interest in shares which (taken
together with shares in which he is already interested and 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, is normally
required to make a general offer in cash to all other shareholders of that
company to acquire the balance of the shares not held by such a person (or group
of persons acting in concert).
Similarly, when any person, together with persons acting in concert with him, is
interested in shares which in aggregate carry 30 per cent. or more 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.
An offer under Rule 9 must be in cash and at the highest price paid during the
twelve months prior to the announcement of the offer for any interests in shares
in the company acquired by any person required to make the offer or any person
acting in concert with them.
The parties shown in the table below are deemed to be acting in concert for the
purposes of the Takeover Code (the "Concert Party") as a result of their
positions as directors of AssetCo and their collective participation in the
BIMBO.
Consideration Percentage
holding
Shares of Enlarged
Share Capital
John Shannon 26,963,327 40.1
Frank Flynn 7,137,351 10.6
Denis Mellon 2,775,637 4.2
David Smith 2,775,637 4.2
Pelham Olive 2,428,682 3.6
Peter Lewin 346,955 0.5
---------- ---------
42,427,589 63.2
========== =========
The table above shows the interest of the Concert Party assuming that the
Acquisition and the Placing is completed and assuming that all the Placing
Shares are issued, that no further Ordinary Shares are issued by the Company
prior to the issue of the Ordinary Shares.
After completion of the Acquisition and the Placing, the Concert Party's
interest in shares carrying voting rights in the Company will represent, in
aggregate, 63.2 per cent. of the voting rights attaching to the Enlarged Share
Capital.
The Panel has agreed however to waive the obligation to make a general offer
that would otherwise arise on the members of the Concert Party as a result of
the Acquisition, subject to approval of the Shareholders.
PLACING AGREEMENT
The Company is proposing to raise in aggregate approximately #20.0 million
(before expenses) through a conditional placing of 13,793,104 Placing Shares at
the Placing Price with institutional investors pursuant to the Placing
Agreement.
The New Ordinary Shares will, when issued and fully paid, rank pari passu in all
respects with Existing Ordinary Shares and will, once allotted, rank in full for
all dividends and other distributions declared, made or paid on the share
capital of the Company in respect of the period after such allotment. It is
expected that dealings in the Existing Ordinary Shares and the New Ordinary
Shares will commence on AIM on 30 March 2007 (or such later date as shall be
determined by Hoare Govett and the Company, being not later than 13 April 2007).
Completion of the Placing will be subject to satisfaction of conditions
contained in the Placing Agreement including Admission occurring and becoming
effective by 8.00 a.m. on 30 March 2007 or such later time and/or date as may be
determined in accordance with the Placing Agreement (not being later than 3.00
p.m. on 13 April 2007) and to the Placing Agreement not having been terminated.
LOCK-IN AND ORDERLY MARKETING ARRANGEMENTS
The Proposed Directors and the AssetCo Senior Managers have undertaken to the
Company and Hoare Govett (subject to certain limited exceptions, including
disposals by way of acceptance of a takeover offer or the granting of an
irrevocable commitment to accept a takeover offer for the entire issued share
capital of the Company) not to dispose of any of their Ordinary Shares (and to
procure that no persons connected with them dispose of any Ordinary Shares)
during the period from Admission up to publication of the Company's annual
report and accounts for the year ending 31 March 2008. The Ongoing Directors and
the AssetCo Senior Managers have also agreed with the Company and Hoare Govett
that, for as long as Hoare Govett is the Company's nominated adviser (subject to
certain conditions), they shall effect, insofar as they are able, any disposal
of such shares through Hoare Govett.
EXTRAORDINARY GENERAL MEETING
A notice convening the EGM to be held at 11.00 a.m. on Thursday 29 March 2007 at
the offices of Nabarro, Lacon House, 84 Theobald's Road, London, WC1X 8RW, will
be despatched to Shareholders today.
The Company has received irrevocable undertakings which amount to an aggregate
of 1,705,555 Ordinary Shares representing 34.3 per cent. of the issued share
capital of the Company to vote in favour of the Resolutions.
Appendix I
Timetable of principal events and placing statistics
Timetable of principal events
Latest time and date for receipt of forms of proxy in 11.00 a.m. on
respect of the EGM 27 March 2007
Extraordinary General Meeting 11.00 a.m. on
29 March 2007
Completion of the Acquisition and Placing 30 March 2007
Admission effective and dealings in the New Ordinary 30 March 2007
Shares to commence on AIM and new name effective
CREST stock accounts credited in respect of New Ordinary 30 March 2007
Shares
Despatch of definitive share certificates Shares to be by 13 April 2007
held in certificated form
Placing statistics
Placing Price 145 pence
Number of Existing Ordinary Shares 4,971,112
Number of Placing Shares 13,793,104
Number of Consideration Shares 48,434,483
Enlarged Share Capital 67,198,699
Market capitalisation of the Company at the Placing Price(1) #97.4 million
Placing Shares as a percentage of the Enlarged Share Capital 20.5 per cent.
Consideration Shares as a percentage of the Enlarged Share 72.1 per cent.
Capital
Estimated net proceeds of the Placing receivable by the Company #17.0 million
(2)
Notes:
1. Market capitalisation has been calculated based on the number of Ordinary
Shares in issue immediately following Admission multiplied by the Placing Price.
2. Net proceeds are stated after the deduction of estimated total expenses of
approximately #3.0 million.
Appendix II
Terms and conditions of the Placing
THIS ANNOUNCEMENT, INCLUDING THE APPENDIX IS NOT FOR RELEASE, OR PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR THEIR RESPECTIVE TERRITORIES
AND POSSESSIONS
IMPORTANT INFORMATION FOR PLACEES ONLY
Eligible participants in the Placing
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
ANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE
DIRECTED ONLY AT PERSONS WHO 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") OR ARE PERSONS FALLING
WITHIN ARTICLE 49(2) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS
ETC") OF THE ORDER OR TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED AND ARE
PERSONS WHO FALL WITHIN PARAGRAPH (7) OF SECTION 86 OF THE FINANCIAL SERVICES
AND MARKETS ACT 2000 (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT
PERSONS"). THIS ANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SET
OUT HEREIN AND ITS CONTENTS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE
NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS
ANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN
RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT AND THIS APPENDIX MUST
SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. THIS ANNOUNCEMENT AND THIS
APPENDIX DO NOT CONSTITUTE AN OFFER, OR FORM PART OF, ANY OFFER TO PURCHASE OR
SUBSCRIBE FOR ANY SECURITIES IN ASFARE GROUP PLC (THE "COMPANY"). THE NEW
ORDINARY SHARES TO BE ISSUED BY THE COMPANY THAT ARE THE SUBJECT OF THE PLACING
REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US
SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS, AND ABSENT REGISTRATION MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR AS A PART OF
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED
STATES.
Persons who are invited to and who choose to participate in the Placing
("Placees") by making an oral offer to subscribe for Placing Shares, will be
deemed to have read and understood this Announcement (including this Appendix)
in its entirety and to be making such offer on the terms and conditions
contained in this Appendix, and to be providing the representations, warranties,
agreements, acknowledgements and undertakings, in each case as contained in this
Appendix.
In particular, each Placee represents, warrants and acknowledges that it:
1. is a Relevant Person; and
2. is outside the United States and is acquiring the Placing Shares in an
"offshore transaction" (within the meaning of Regulation S under the Securities
Act).
This Announcement (including this Appendix) 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 Placing Shares in the United States, Australia,
Canada, Japan or the Republic of South Africa and their respective territories
and possessions or in any other jurisdiction in which such offer or solicitation
is or may be unlawful and the information contained herein is not for
publication or distribution to persons in the United States, Australia, Canada,
Japan or the Republic of South Africa and their respective territories and
possessions or any jurisdiction in which such publication or distribution is
unlawful. Any failure to comply with these restrictions may constitute a
violation of US, Australian, Canadian, Japanese or South African securities
laws. Persons receiving this Announcement (including, without limitation,
custodians, nominees and trustees) must not distribute, mail or send it in, into
or from the United States, or use the United States mails, directly or
indirectly, in connection with the Placing, and by so doing may invalidate any
related purported application for Placing Shares. The Placing Shares have not
been and will not be registered under the Securities Act or under the securities
laws of any state or other jurisdiction of the United States, and, subject to
certain exceptions from the appropriate requirements of such jurisdiction, may
not be offered or sold, resold or delivered, directly or indirectly in or into
the United States. No public offering of the Placing Shares is being made in the
United States. The Placing Shares are being offered and sold outside the United
States in reliance on Regulation S. Until the expiration of 40 days after the
closing of the Placing, an offer or sale of the Placing Shares within the United
States by a dealer whether or not participating in the Placing may violate the
registration requirements of the Securities Act if such offer or sale is made
otherwise than in accordance with Rule 144A of the Securities Act.
The distribution of this Announcement (including this Appendix) and the Placing
and/or issue of Ordinary Shares (as defined below) in certain other
jurisdictions may be restricted by law. No action has been taken by the Company
or Hoare Govett that would permit an offer of Ordinary Shares or possession or
distribution of this Announcement (including this Appendix) or any other
offering or publicity material relating to such Ordinary Shares in any
jurisdiction where action for that purpose is required. Persons into whose
possession this Announcement (including this Appendix) comes are required by the
Company and Hoare Govett to inform themselves about and to observe any such
restrictions.
Details of the Placing Agreement and the Placing Shares
Hoare Govett has entered into a conditional Placing Agreement with the Company
and others whereby Hoare Govett has, on the terms and subject to the conditions
set out therein, agreed to use its reasonable endeavours as agent for and on
behalf of the Company to procure Placees for the Placing Shares at 145 pence per
share and, failing which, to subscribe itself for the Placing Shares at the
Placing Price.
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 25 pence each of the
Company, including the right to receive all dividends and other distributions
declared, made or paid in respect of such Ordinary Shares after the date of
issue of the Placing Shares.
Application for admission to trading
Application will be made to the London Stock Exchange for Admission of the
Enlarged Share Capital on AIM. It is expected that Admission will take place and
dealings in the Enlarged Share Capital will commence on 30 March 2007.
Bookbuilding process
Hoare Govett has conducted a bookbuilding process (the "Bookbuilding Process")
to determine demand for participation in the Placing. 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
their agreement to subscribe for any Placing Shares.
To the fullest extent permissible by law, neither Hoare Govett nor any holding
company thereof, nor any subsidiary, branch or affiliate of Hoare Govett or any
such holding company (each an "Affiliate") shall have any liability to Placees
(or to any other person whether acting on behalf of a Placee or otherwise) in
connection with the Placing or the Bookbuilding Process. In particular, neither
Hoare Govett nor any Affiliate thereof shall have any liability in respect of
its conduct of the Bookbuilding Process.
Participation in, and principal terms of, the Bookbuilding Process
By having participated in the Bookbuilding Process and the Placing, Placees will
be deemed to have read and understood this Announcement (including this
Appendix) in its entirety and to be participating and making an offer for
Placing Shares at the Placing Price on the terms and conditions, and to be
providing the representations, warranties, acknowledgements and undertakings,
contained in this Appendix.
Hoare Govett (whether through itself or its Affiliates) is arranging the Placing
as an agent of the Company.
A bid in the Bookbuilding Process will be made on the terms and conditions in
this Appendix and will not be capable of variation or revocation after the close
of the Bookbuilding Process.
Any allocation will be confirmed orally to persons who have participated in the
Bookbuilding Process and a contract note setting out settlement instructions
will be dispatched as soon as possible thereafter. Hoare Govett's oral
confirmation will constitute a legally binding commitment upon such person (who
will at that point become a Placee) to subscribe for the number of Placing
Shares allocated to that Placee at the Placing Price set out in this
Announcement and otherwise on the terms and conditions set out in this Appendix
and in accordance with the Company's memorandum and articles of association.
Each Placee's obligations will be owed to the Company and to Hoare Govett
through whom such Placee submitted its offer. Each Placee will also have an
immediate, separate, irrevocable and binding obligation, owed to Hoare Govett,
to pay to it (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 subscribe for.
All obligations under the Placing will be subject to fulfilment of the
conditions referred to below under "Conditions of the Placing".
Conditions of the Placing
The Placing is conditional on the Placing Agreement becoming unconditional in
all respects and not having been terminated in accordance with its terms. The
obligations of Hoare Govett under the Placing Agreement are conditional, inter
alia, upon:
(a) the Resolutions to be proposed at the Extraordinary General Meeting of the
Company to be convened for this purpose on 29 March 2007 having been passed
thereat without any amendment; and
(b) Admission taking place by no later than by 8.00 a.m. on 30 March 2007.
If (a) any of the conditions contained in the Placing Agreement are not
fulfilled or waived by Hoare Govett by the respective time or date where
specified (or such later time or date as Hoare Govett and the Company may agree
but not later than 3.00 p.m. on 13 April 2007) or (b) the Placing Agreement is
terminated in the circumstances specified below, the Placing will lapse and the
Placees' rights and obligations hereunder shall cease and terminate at such time
and each Placee agrees that no claim can be made by or on behalf of the Placee
(or any person on whose behalf the Placee is acting) in respect thereof.
By participating in the Bookbuilding Process and/or the Placing, each Placee
agrees that its rights and obligations cease and terminate only in the
circumstances described above and will not be capable of rescission or
termination by it.
Hoare Govett may, at its discretion and upon such terms as it thinks fit, waive
compliance by the Company with, or extend the time and/or date for fulfilment by
the Company of, the whole or any part of any of the Company's obligations in
relation to the conditions in the Placing Agreement. Any such extension or
waiver will not affect Placees' commitments as set out in this Announcement.
Hoare Govett and the Company shall have no liability to any Placee (or to any
other person whether acting on behalf of a Placee or otherwise) in respect of
any decision Hoare Govett 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 it may make as to the satisfaction of any condition or in
respect of the Placing generally.
Right to terminate under the Placing Agreement
Hoare Govett may, at any time before Admission, terminate the Placing Agreement
in accordance with the terms of the Placing Agreement by giving notice to the
Company in certain circumstances, including the occurrence of a force majeure
event or a material adverse change in the financial or trading condition of the
Enlarged Group.
If the obligations of Hoare Govett under the Placing Agreement are terminated in
accordance with its terms, the rights and obligations of each Placee in respect
of the Placing as described in this Announcement (including this Appendix) shall
cease and terminate at such time and no claim can be made by any Placee in
respect thereof.
By participating in the Placing, each Placee agrees with Hoare Govett that the
exercise by Hoare Govett of any right of termination or other discretion under
the Placing Agreement shall be within the absolute discretion of Hoare Govett
and that Hoare Govett need not make any reference to any such Placee and that
Hoare Govett shall have no liability whatsoever to any such Placee (or to any
other person whether acting on behalf of a Placee or otherwise) in connection
with the exercise of such rights.
No prospectus
No prospectus, admission document or other offering document has been or will be
submitted to be approved by the FSA in relation to the Placing and the Placees'
commitments will be made solely on the basis of the information contained in
this Announcement (including this Appendix), any information published by or on
behalf of the Company in accordance with the AIM Rules, the annual report and
accounts and interim financial statements of the Company which can be found in
the "Financial" section in the Company's website http://www.asfare.com (the
"Website Information") and the Admission Document. Each Placee, by accepting a
participation in the Placing, agrees and confirms that it has neither received
nor relied on any other information, representation, warranty or statement made
by or on behalf of Hoare Govett or the Company and neither the Company nor Hoare
Govett will be liable for any Placee's decision to participate in the Placing
based on any other information, representation, warranty or statement. Each
Placee acknowledges and agrees that it has relied on its own investigation of
the business, financial and trading position of the Enlarged Group in accepting
a participation in the Placing. 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: GB0033997387) following
Admission will take place within the CREST system, subject to certain
exceptions. Hoare Govett reserves the right to require settlement for and
delivery of the Placing Shares to Placees by such other means that it deems
necessary if delivery or settlement is not possible or practicable within the
CREST system within the timetable set out in this Announcement (including this
Appendix) or would not be consistent with the regulatory requirements in any
Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent a contract note
(the "Contract Note") stating the number of Placing Shares allocated to it, the
Placing Price, the aggregate amount owed by such Placee to Hoare Govett and
settlement instructions. ABN AMRO Bank N.V. (London Branch) is acting as Hoare
Govett's settlement agent and Placees should settle against CREST ID: 521,
account designation "AGENT". It is expected that such Contract Notes will be
despatched today, 6 March 2007 and that the trade date will be 6 March 2007.
Each Placee agrees that it will do all things necessary to ensure that delivery
and payment is completed in accordance with the settlement instructions set out
in the Contract Note.
It is expected that settlement will be on 30 March 2007 in accordance with the
instructions set out in the Contract Note.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above and in the Contract Note
at the rate of 2 percentage points above the base rate of Barclays Bank Plc.
Each Placee is deemed to agree that if it does not comply with these
obligations, Hoare Govett may sell any or all of the Placing Shares allocated to
that Placee on such Placee's behalf and retain from the proceeds, for Hoare
Govett'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 Contract Note is copied and delivered immediately
to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its
nominee or in the name of any person for whom a Placee is contracting as agent
or that of a nominee for such person, such Placing Shares should, subject as
provided below (and in particular subject to paragraph 14 below), be so
registered free from any liability to UK stamp duty or stamp duty reserve tax.
No Placee (or any nominee or other agent acting on behalf of a Placee) will be
entitled to receive any fee or commission in connection with the Placing.
Representations and warranties
By participating in the Bookbuilding Process and/or the Placing, each Placee
(and any person acting on such Placee's behalf):
1. represents and warrants that it has read this Announcement (including this
Appendix) in its entirety and acknowledges that its participation in the Placing
will be governed by the terms of this Appendix;
2. represents and warrants that it has received this Announcement (including
this Appendix) solely for its use and has not redistributed or duplicated it;
3. represents and warrants that it has not received a prospectus, admission
document or other offering document in connection with the Placing other than
the Admission Document and acknowledges that no prospectus, admission document
or other offering document has been prepared in connection with the Placing
other than the Admission Document;
4. acknowledges that neither of Hoare Govett nor any of its Affiliates nor any
person acting on behalf of Hoare Govett or its Affiliates nor the Company and
its affiliates has provided, and will not provide it with any material regarding
the Placing Shares or the Enlarged Group other than this Announcement (including
this Appendix); nor has it requested Hoare Govett, any of its Affiliates or any
person acting on behalf of Hoare Govett or any of its Affiliates to provide it
with any such information;
5. acknowledges that the content of this Announcement (including this Appendix)
is exclusively the responsibility of the Company and that neither Hoare Govett,
nor any of its Affiliates nor any person acting on behalf of Hoare Govett or its
Affiliates has or shall have any liability for any information, representation
or statement contained in this Announcement (including this Appendix) 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 this Announcement
(including this Appendix) or otherwise. Each Placee represents, warrants and
agrees that when making its investment decision to purchase the Placing Shares
it has relied only on information contained in this Announcement (including this
Appendix), any information published by or on behalf of the Company in
accordance with the AIM Rules, the Website Information and the Admission
Document, such information being all that it deems necessary to make an
investment decision in respect of the Placing Shares and that it has relied on
its own investigation with respect to the Placing Shares and the Enlarged Group
in connection with its decision to subscribe for the Placing Shares and
acknowledges that it is not relying on any investigation that Hoare Govett, any
of its Affiliates or any person acting on behalf of Hoare Govett or its
Affiliates may have conducted with respect to the Placing Shares or the Enlarged
Group and none of such persons has made any representations to it, express or
implied, with respect thereto;
6. acknowledges that it has not relied on any information relating to the
Enlarged Group contained in any research reports prepared by Hoare Govett, any
of its Affiliates or any person acting on behalf of Hoare Govett or its
Affiliates and understands that neither Hoare Govett, nor any of its Affiliates
nor any person acting on behalf of Hoare Govett or its Affiliates: (i) has or
shall have any liability for public information or any representation; (ii) has
or shall have any liability for any additional information that has otherwise
been made available to such Placee, whether at the date of publication, the date
of the announcement or otherwise; and (iii) makes any representation or
warranty, express or implied, as to the truth, accuracy or completeness of such
information, whether at the date of publication, the date of the announcement or
otherwise;
7. represents and warrants that it, or the beneficial owner, as applicable, is
entitled to subscribe for and/or purchase Placing Shares under the laws of all
relevant jurisdictions which apply to it, or the beneficial owner, as
applicable, and that it has fully observed such laws and obtained all such
governmental and other guarantees and other consents in either case which may be
required thereunder and complied with all necessary formalities (including any
applicable foreign exchange rules);
8. represents and warrants that it has the power and authority to carry on the
activities in which it is engaged, to subscribe for the Placing Shares and to
execute and deliver all documents necessary for such subscription;
9. represents and warrants that it (or if acquiring the Placing Shares as
fiduciary or agent for any investor account, such investor) will be the
beneficial owner of such Placing Shares and that the beneficial owner of such
Placing Shares will not at the time the Placing Shares are acquired be a
resident of Australia, Canada, Japan or the Republic of South Africa or their
respective territories or possessions;
10. acknowledges that the Placing Shares have not been and will not be
registered under the Securities Act or under the securities laws of any of the
States of the United States, or under the securities legislation of Australia,
Canada, Japan or the Republic of South Africa and their respective territories
and possessions and, subject to certain exceptions, may not be offered, sold,
taken up, renounced or delivered or transferred, directly or indirectly, within
those jurisdictions;
11. represents and warrants that it is not a resident of or located in the
United States or acting in a non-discretionary basis for a person in the United
States and is purchasing the Placing Shares in an "offshore transaction" in
accordance with Regulation S under the Securities Act;
12. acknowledges (and confirms that each beneficial owner of the Placing Shares
has been advised) that the Placing Shares have not been and will not be
registered under the Securities Act or under any applicable state securities
laws, nor approved or disapproved by the US Securities and Exchange Commission,
any state securities commission in the United States or any other United States
regulatory authority;
13. represents and warrants that if it is a pension fund or investment company,
its purchase of Placing Shares is in full compliance with applicable laws and
regulations;
14. represents and warrants that the allocation, allotment, issue and delivery
to it, or the person specified by it for registration as holder, of Placing
Shares will not give rise to a 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 subscribed for by it in connection with
arrangements to issue depositary receipts or to transfer Placing Shares into a
clearance system;
15. represents and warrants that it has complied with its obligations in
connection with money laundering and terrorist financing under the Proceeds of
Crime Act 2002, the Terrorism Act 2000 and the Money Laundering Regulations 2003
(the "Regulations") 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;
16. represents and warrants that it and any person acting on its behalf is a
person falling within Article 19(2) and/or 49(2) of the Order and is a person
who falls within paragraph (7) of section 86 of the FSMA;
17. 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 prior to Admission
except in circumstances which have not resulted and which will not result in an
offer to the public in the United Kingdom within the meaning of the Prospectus
Rules made by the FSA pursuant to Part VI of the FSMA;
18. 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;
19. represents and warrants that it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the Placing Shares in, from or otherwise involving the United
Kingdom;
20. represents and warrants that it and any person acting on its behalf is
entitled to subscribe for 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 participating 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 set out or referred to
in this Announcement (including this Appendix) and to make the foregoing
representations, acknowledgments, warranties and agreements) and will honour
such obligations;
21. undertakes that it (and any person acting on its behalf) will make payment
for the Placing Shares allocated to it in accordance with this Announcement
(including this Appendix) and the Contract Note on the due time and date set out
herein, failing which the relevant Placing Shares may be placed with other
subscribers or sold as Hoare Govett may in its sole discretion determine and
without liability to such Placee;
22. acknowledges that neither Hoare Govett, nor any of its Affiliates nor any
person acting on behalf of Hoare Govett or its Affiliates is making any
recommendations to it, advising it regarding the suitability of any transactions
it may enter into in connection with the Placing nor providing advice in
relation to the Placing nor the exercise or performance of any of Hoare Govett's
rights and obligations thereunder including any rights to waive or vary any
conditions or exercise any termination right;
23. undertakes that the person who it specifies for registration as holder of
the Placing Shares will be (i) itself or (ii) its nominee, as the case may be.
Neither Hoare Govett nor the Company will be responsible for any liability to
stamp duty or stamp duty reserve tax resulting from a failure to observe this
requirement. Placees acknowledge that the Placing Shares will be credited to the
CREST stock account of ABN AMRO Bank N.V. (London branch) (CREST ID: 521,
account designation "AGENT") who will hold them as nominee for the subscribers
of such shares until settlement in accordance with its standing settlement
instructions;
24. acknowledges that the Placing is conditional, inter alia, upon approval by
the Company's shareholders of the Resolutions set out in the notice convening an
Extraordinary General Meeting of the Company to be held on 29 March 2007;
25. acknowledges that any agreements entered into by it pursuant to these terms
and conditions shall be governed by and construed in all respects 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 courts of
England as regards any claim, dispute or matter arising out of any such
contract, except that enforcement proceedings in respect of the obligation to
make payment for the Placing Shares (together with any interest chargeable
thereon) may be taken by the Company or Hoare Govett in any jurisdiction in
which the relevant Placee is incorporated or in which any of its securities have
a quotation on a recognised stock exchange;
26. acknowledges that Hoare Govett may (at its absolute discretion) satisfy its
obligations to procure Placees by itself agreeing to become a Placee in respect
of some or all of the Placing Shares or by nominating any connected or
associated person to do so;
27. agrees that the Company, Hoare Govett and others will rely upon the truth
and accuracy of the foregoing representations, warranties, acknowledgements and
undertakings which are given to Hoare Govett on its own behalf and on behalf of
the Company and are irrevocable; and
28. agrees to indemnify and hold the Company and Hoare Govett harmless from any
and all costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach by it (or any person
on whose behalf it is acting) 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.
No UK stamp duty or stamp duty reserve tax should be payable to the extent that
the Placing Shares are issued into CREST to, or to the nominee of, a Placee who
holds those shares beneficially (and not as agent or nominee for any other
person) within the CREST system and registered in the name of such Placee or
such Placee's nominee provided that the Placing Shares are not issued to a
person whose business is or includes issuing depositary receipts or the
provision of clearance services or to an agent or nominee for any such person.
Any arrangements to issue or transfer the Placing Shares into a depositary
receipts system or a clearance service or to hold the Placing Shares as agent or
nominee of a person to whom a depositary receipt may be issued or who will hold
the Placing Shares in a clearance service, or any arrangements subsequently to
transfer the Placing Shares, may give rise to UK stamp duty and/or stamp duty
reserve tax, for which neither the Company nor Hoare Govett will be responsible
and the Placee to whom (or on behalf of whom, or in respect of the person for
whom it is participating in the Placing as an agent or nominee) the allocation,
allotment, issue or delivery of Placing Shares has given rise to such UK stamp
duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp
duty reserve tax forthwith and to indemnify on an after-tax basis and to hold
harmless the Company and Hoare Govett in the event that any of the Company and/
or Hoare Govett has incurred any such liability to UK stamp duty or stamp duty
reserve tax.
In addition, Placees should note that they will be liable to pay any capital
duty, stamp duty and all other stamp, issue, securities, transfer, registration,
documentary or other duties or taxes (including any interest, fines or penalties
relating thereto) payable outside the UK by them or any other person on the
subscription by them for any Placing Shares or the agreement by them to
subscribe for any Placing Shares.
All times and dates in this Announcement (including this Appendix) may be
subject to amendment. Hoare Govett shall notify the Placees and any person
acting on behalf of the Placees of any changes. This Announcement (including
this Appendix) has been issued by the Company and is the sole responsibility of
the Company.
Hoare Govett, which is authorised and regulated by the FSA, is acting
exclusively for the Company and for no one else solely in connection with the
Placing and will not be responsible to anyone other than the Company for
providing the protections afforded to the customers of Hoare Govett or for
providing advice in relation to the Placing.
When a Placee or person acting on behalf of the Placee is dealing with Hoare
Govett, any money held in an account with Hoare Govett 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 FSA 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 Hoare Govett's money in accordance with the client
money rules and will be used by Hoare Govett in the course of its own business;
and the Placee will rank only as a general creditor of Hoare Govett.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser.
Appendix III
Definitions
The following definitions apply throughout this announcement, unless the context
requires otherwise:
"Acquisition" the proposed acquisition of the entire issued share capital of
AssetCo pursuant to the Acquisition Agreements;
"Acquisition the conditional agreements dated 5 March 2007 between the
Agreements" Vendors and the Company;
"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;
"AIM" the AIM market of the London Stock Exchange;
"AIM Rules" the AIM Rules for Companies published by the London Stock
Exchange and those other rules of the London Stock Exchange
which govern the admission of securities to trading on, and the
regulation of, AIM;
"ambulance a National Health Service trust providing ambulance services
services trust" for a specified region;
"Asfare" or the Asfare Group plc, a company registered in England and Wales
"Company" with registration number 4966347, whose registered office is at
Commercial Road, Totton, Southampton SO40 3AE;
"Asfare Group" the Company and its existing subsidiary undertakings;
or the "Group"
"AS Fire and AS Fire and Rescue Equipment Limited;
Rescue"
"AssetCo" AssetCo Group Limited, a company registered in Northern Ireland
with registration number NI053848, whose registered office is
at 34 Roughfort Road, Mallusk, Newtownabbey, BT36 4RE;
"AssetCo Group" AssetCo and its existing subsidiary undertakings;
"AssetCo Senior Denis Mellon and David Smith;
Managers"
"Board" the board of directors of the Company;
"Brook Brook Henderson Group Limited, a company registered in England
Henderson" and Wales with registration number 4450947 and whose registered
office is at Brook Henderson House, 173 to 175 Friar Street,
Reading, RG1 1HE;
"CCCP" Civil Contingency Capability Programme;
"certificated" a share which is not in uncertificated form (that is, a share
or "in not held in CREST);
certificated
form"
"Chief Fire individual responsible for the day-to-day operational command
Officer" of an FRA;
"Civil an Act of Parliament, which received Royal Assent in November
Contingencies 2004, intended to deliver a single framework for civil
Act 2004" protection in the United Kingdom;
"CLG" the Communities and Local Government, a department of the UK
Government;
"Collins Collins Youldon, a division of AS Fire and Rescue Limited;
Youldon"
"Completion" completion of the Acquisition Agreements, which is expected to
occur on the day of Admission;
"Concert Party" John Shannon, Frank Flynn, Denis Mellon and David Smith, each
of 34 Roughfort Road, Mallusk, Newtownabbey, BT36 4RE and
Pelham Olive and Peter Lewin, both of Brook Henderson House,
173 to 175 Friar Street, Reading, RG1 1HE;
"Consideration the 48,434,483 Ordinary Shares to be issued pursuant to the
Shares" Acquisition Agreements;
"CREST" the electronic settlement system operated by CRESTCo, which
facilitates the transfer of title to securities in
uncertificated form;
"CRESTCo" CRESTCo Limited, a company incorporated under the laws of
England and Wales and the operator of CREST;
"CREST the Uncertificated Securities Regulations 2001 (SI 2001 No.
Regulations" 3755) as amended from time to time and such other regulations
as are applicable to CRESTCo;
"Directors" Tim Wightman, David Chisnall, Tony O'Neill, Tim O'Connor and
Adrian Bradshaw;
"EBITDA" earnings before interest, taxation, depreciation and
amortisation;
"Enlarged Group" the Company together with its subsidiaries and subsidiary
undertakings, as enlarged by the Acquisition;
"Enlarged Share the number of ordinary shares in the capital of the Company in
Capital" issue immediately following Admission, consisting of the
Existing Ordinary Shares and the New Ordinary Shares;
"Existing the Ordinary Shares in issue at the date of this announcement;
Ordinary Shares"
"Extraordinary the extraordinary general meeting of the Company, convened for
General Meeting" 11.00 a.m. on 29 March 2007;
or "EGM"
"FMI" Fleet Management Ireland Limited;
"FRA" Fire and Rescue Authority;
"FRS" Fire and Rescue Service;
"FSA" the Financial Services Authority;
"FSE" Fire Safety Equipment Limited;
"FSMA" the Financial Services and Markets Act 2000, as amended;
"Gershon the HM Treasury report entitled "Releasing Resources to the
Efficiency Front Line - Independent Review of Public Sector Efficiency"
Review" published on 14 July 2004;
"HBOS" HBOS plc and any member of the HBOS Group;
"Hoare Govett" Hoare Govett Limited;
"IRMP" Integrated Risk Management Plan: a risk managed assessment of
local response to incidents prepared by each FRA;
''J O Hambro'' funds managed or advised by North Atlantic Value LLP, part of
the J O Hambro Capital Management Group, being North Atlantic
Smaller Companies Investment Trust plc, discretionary
investment management clients of North Atlantic Value LLP, Oryx
International Growth Fund Limited and Oryx International Growth
Fund Limited - C Shares;
"LFB" the London Fire Brigade;
"LFR" the Lincolnshire Fire and Rescue Service;
"LFEPA" the London Fire and Emergency Planning Authority;
"London Stock London Stock Exchange plc or its successor;
Exchange"
"National The Fire and Rescue National Framework 2006-08, published by
Framework the Office of the Deputy Prime Minister on 6 April 2006;
Document"
"New Ordinary the Placing Shares and the Consideration Shares;
Shares"
"NHS PASA" the National Health Service Purchasing and Supply Agency, an
executive agency of the Department of Health, established on 1
April 2000, to act as a strategic advisor to the National
Health Service on procurement issues;
"Ongoing Messrs. Wightman, Chisnall, Bradshaw and the Proposed
Directors" Directors;
"Ordinary ordinary shares of 25 pence each in the capital of the Company;
Shares"
"Panel" the UK Panel on Takeovers and Mergers;
"Papworth" AssetCo Papworth Limited, a company registered in England and
Wales with registered number 3048528 and whose registered
office is at 800 Field End Road, South Ruislip, Middlesex, HA4
0QH;
"PFI" Private Finance Initiative;
"PKF" PKF (UK) LLP;
"Placing" the conditional placing of 13,793,104 Placing Shares pursuant
to the Placing Agreement;
"Placing the agreement dated 6 March 2007 between the Company, Hoare
Agreement" Govett, the Directors, the Proposed Directors and the AssetCo
Senior Managers;
"Placing Price" 145 pence per Ordinary Share;
"Placing Shares" the 13,793,104 new Ordinary Shares to be issued by the Company
for cash at the Placing Price pursuant to the Placing;
"Proposed John Shannon and Frank Flynn;
Directors"
"PPP" Public Private Partnership;
"Resolutions" the resolutions to be proposed at the EGM;
"Securities Act" the United States Securities Act of 1933, as amended;
"Shareholders" holders of Ordinary Shares;
"Share Option the Unapproved Share Option Plan and the Enterprise Management
Plans" Incentive Share Option Plan;
"Simentra" Simentra Limited;
"Speed 5019 a subsidiary of AS Fire and Rescue and holding company of
Limited" Asfare No.1 Limited, Fire Guns Limited and Sacol Group 1990
Limited, acquired by the Asfare Group plc in December 2003;
"SVO" Special Vehicle Operations Limited (now AssetCo SVO Limited);
"Takeover Code" the City Code on Takeovers and Mergers issued from time to time
by or on behalf of the Panel;
"Todd Research" Todd Research Limited;
"uncertificated" a share or shares recorded on the register of members as being
or "in held in uncertificated form in CREST, entitlement to which by
uncertificated virtue of the CREST Regulations, may be transferred by means of
form" CREST;
"United Kingdom" the United Kingdom of Great Britain and Northern Ireland;
or "UK"
"United States" the United States of America, its territories and possessions,
or "US" any state of the United States of America and the District of
Columbia; and
"Vendors" Denis Mellon, Peter Lewin, Pelham Olive, David Smith, John
Shannon, Frank Flynn, J O Hambro, Brook Henderson, Gerald
Andrews, Damian Murphy, Lou Gill, Stephen Bristow, Dermot
McDermott, Mark Clisset, Tom Joyce, Gareth White, Michael
Lavender, Jeffrey Stone, Lyndon Plant, Jonathan Reid and
William Campbell Walters.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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