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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Quayle Munro | LSE:QYM | London | Ordinary Share | GB0002996717 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 590.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMQYM
RNS Number : 1677J
Quayle Munro Holdings PLC
12 July 2013
FOR IMMEDIATE RELEASE
The distribution of this Announcement in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. In particular, subject to certain exceptions, this Announcement may not be distributed into or within the United States, Canada, Australia, Japan, the Republic of Ireland, South Africa or any other Restricted Jurisdiction. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction.
12 July 2013
Quayle Munro Holdings PLC ("Quayle Munro" or the "Company")
Proposed Corporate Transactions
The Board of Quayle Munro announces that it will today post a circular (the "Circular") to Shareholders convening a General Meeting at 9.00 a.m. on 1 August 2013 to seek shareholder approval to:
Cancel the admission of the Ordinary Shares to trading on AIM
Re-register as a private limited company
Make a tender offer to purchase Ordinary Shares
Grant loans to Directors
Complete a Share Capital Reorganisation
Adopt New Articles of Association
Adopt a New Incentive Plan
All of the Proposals above are inter-conditional and in the event that Shareholders fail to approve any of the Resolutions by the requisite majority, none of the Proposals will be implemented.
If the Resolution to approve the Cancellation is passed at the General Meeting, it is proposed that Cancellation will take effect at 8.00 a.m. on 14 August 2013.
1. Introduction
The Company today announces its intention to apply for the cancellation of the admission to trading of the Company's Ordinary Shares on AIM in conjunction with the making of the Tender Offer by N+1 Singer to Qualifying Shareholders to purchase their Ordinary Shares and the adoption of new management incentivisation arrangements. This Announcement sets out the background to, and reasons for, the Proposals, an explanation of why your Board believes the Proposals to be in the best interests of Shareholders as a whole and its recommendation to Shareholders to vote in favour of the Proposals.
The implementation of the Proposals requires the approval of Shareholders and a Notice of General Meeting accompanies the Circular which convenes a General Meeting to be held at the offices of the Company at 22 Berners Street London W1T 3LP on 1 August 2013 at 9.00 a.m. in order to propose the Resolutions to approve:
-- the Cancellation; -- the Re-registration;
-- the purchase of Ordinary Shares pursuant to the Tender Offer at a fixed price of 563 pence per Ordinary Share;
-- the grant of loans to two directors of the Company in connection with the New Incentive Plan;
-- the adoption of the New Articles (in order to reflect the proposed implementation of the New Incentive Plan);
-- the Share Capital Reorganisation required to effect the terms of the New Incentive Plan; and
-- the grant to the Directors of authority to allot shares in the capital of the Company on an ongoing basis.
Shareholders should note that the Resolutions required to effect the Proposals are all inter-conditional and, in the event that Shareholders fail to approve any of the Resolutions by the requisite majority, none of the Proposals will be implemented. The full text of the Resolutions is set out in the Notice of General Meeting contained at the end of the Circular.
2. Background to and reasons for the Proposals
Quayle Munro was founded in 1980, obtained a full listing on the Official List of the London Stock Exchange in 1993 and transferred to AIM in 2003. It has approximately 400 Shareholders, overwhelmingly private investors, of whom 303 Shareholders own 3,000 Ordinary Shares or less. There are no recognised institutional shareholders and there is little liquidity in the Company's Ordinary Shares, with market makers quoting prices in units of only 100 Ordinary Shares. The average number of trades per day over the 12 months prior to 10 July 2013, being the latest practicable date prior to the date of this Announcement, was 0.5 and the average number of Ordinary Shares traded per month over the 12 months prior to 10 July 2013, being the latest practicable date prior to the date of this Announcement, was approximately 9,000, representing 0.20% of the issued share capital of the Company. Furthermore, the costs of maintaining the admission to AIM are estimated to be GBP140,000 annually without taking into account the significant amount of additional Board and senior management time taken up with publicly quoted company matters including the production of lengthy interim and annual reports.
Moreover, as signalled in the half-year report for the period ended 31st December 2012, the Company is proposing to introduce a new and more transparent cash bonus and share scheme to be effected by the implementation of the New Incentive Plan (as summarised in paragraph 10 below) which will involve senior management purchasing shares in the business. Given the need to create separate share classes: first, to preserve entitlement to the whole of the Morris investment attributable to the Ordinary Shares (as described below) and, secondly, to apply employment restrictions on the C Shares to be purchased by participants in the New Incentive Plan, the Board, after taking professional advice, believes it is not practicable to introduce the New Incentive Plan within a publicly quoted entity.
After lengthy deliberation and discussion with the Company's professional advisers, the Directors have therefore decided that the Company should cancel the admission of the Ordinary Shares to trading on AIM because the lack of liquidity, additional costs and substantial management time involved in maintaining a quotation, coupled with the need to introduce the New Incentive Plan, far outweigh the benefits to Shareholders of maintaining a quotation on AIM.
However, the Board recognises that not all Shareholders, especially smaller Shareholders, are likely to wish to own Ordinary Shares in an unquoted company with no externally validated trading mechanism and that the register includes a large number of very small holdings of a size which it is uneconomic to trade because of the associated dealing costs. Accordingly, the Directors have arranged the Tender Offer, to be made by N+1 Singer, to provide a guaranteed liquidity event for those Shareholders who do not wish to continue to own Ordinary Shares in the Company following the Cancellation.
The Board also recognises that many of the prospective participants in the New Incentive Plan have had no involvement in the development of value creation within the Company as it stands today; and that a large store of potential future value is vested within the Company's minority investment in Morris, the housebuilder, which it has held since 1990. Accordingly, one feature of the proposed Share Capital Reorganisation is that the entitlement to participate in any future realisation of value in relation to Morris (the "Morris Entitlement") will be ring-fenced by the creation of a new class of shares, entitlement to which will accrue only to those holders of existing Ordinary Shares at the Record Date.
3. Cancellation of admission of Ordinary Shares to trading on AIM
Conditional on the passing of the Resolutions, the Directors intend, having given in this announcement the requisite 20 Business Days' notice, to cancel the admission of the Ordinary Shares to trading on AIM. In accordance with the AIM Rules, the Cancellation is conditional upon the consent of not less than 75 per cent. of votes cast by Shareholders at the General Meeting. Such consent will be sought through Resolution 5 which is being proposed at the General Meeting and which is, in turn, inter-conditional upon the passing of the other Resolutions. Assuming the Resolutions are all passed, Cancellation is expected to become effective on 14 August 2013. As explained above, before effecting the Cancellation, the Directors consider it appropriate to offer all Qualifying Shareholders the opportunity to sell some, or all, of the Ordinary Shares held by them for cash to the Company at a fixed price of 563 pence per Ordinary Share pursuant to the Tender Offer (further details of which are set out in paragraph 5 of this Announcement).
The principal effects that Cancellation will have on Shareholders are:
-- there will no longer be a formal market mechanism enabling Shareholders to trade their shares in the Company through the market and the CREST facility will be cancelled. Shareholders who currently hold Ordinary Shares in uncertificated form will receive share certificates in due course following the Cancellation taking effect. Share transfers may still be effected after the date of cancellation by depositing a duly executed and stamped stock transfer form together with an appropriate share certificate with the company secretary at the registered office of the Company. Shares in the Company will be capable of transfer, subject to certain restrictions in the New Articles preventing their transfer in certain circumstances which are described in paragraph 6 (below). Shares in the Company may also be more difficult to sell compared to shares of companies quoted on AIM;
-- the Company will not be bound to announce material events on an ongoing basis;
-- the Company will no longer be required to comply with any of the corporate governance requirements applicable to UK-quoted companies;
-- the Company will no longer be subject to the Disclosure and Transparency Rules and, among other things, will no longer be required to disclose major shareholdings in the Company;
-- the Company will no longer be subject to the AIM Rules. Shareholders will therefore no longer be afforded the protections given by the AIM Rules. Such protections include the requirement to be notified of certain events including, amongst other things, substantial transactions (the size of which results in a 10 per cent. threshold being reached under any one of the class tests), related party transactions and the requirement to obtain shareholder approval for reverse takeovers (the size of which results in a 100 per cent. threshold being reached under any one of the class tests) and fundamental changes in the Company's business; and
-- the Proposals might have either positive or negative taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately.
However, Shareholders should note, inter alia, that, if the Cancellation takes effect:
-- the Company will remain subject to UK company law, which mandates shareholder approval for certain matters, including the issue of new shares on a non pre-emptive basis, subject to the New Articles which permit the issue of shares on a non pre-emptive basis in certain cases;
-- the Company will continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by law;
-- an annual Share Dealing Market will be operated for Shareholders, providing the opportunity for Shareholders to acquire shares or to tender shares for sale at a valuation price determined by the Company's auditors or an independent valuer; and
-- the Board intends to maintain the same oversight and corporate governance standards as if the Company were to remain a listed company. In particular, the Board will continue in its present form with four independent Non-Executive Directors and an independent Chairman, together with four Board Committees: Nomination, Audit, Remuneration and Valuation. The Company will also publicise and send out to shareholders an Annual Report (including a full Remuneration Report) with the audited accounts and hold two shareholder briefings each year, one in London (alongside the Company's annual general meeting) and one in Edinburgh.
Shareholders should be aware that, if the Cancellation takes effect, they will at that time cease to hold shares in a quoted company and the matters set out in the paragraph above will automatically apply to the Company from the date of Cancellation.
4. Re-registration as a private limited company
The Directors also propose that, conditional upon the passing of the Resolutions and the Cancellation becoming effective, the Company be re-registered as a private limited company. This will reduce the costs and complexity of operating the Company and, in particular, would be permitted, subject to shareholder approval, to effect returns of capital to Shareholders without the need to apply to a court of law.
The Takeover Code is issued and administered by the Takeover Panel. The Takeover Code currently applies to the Company and will continue to apply to the Company notwithstanding the Cancellation. If the Company is successfully re-registered as a private company, the Takeover Code will cease to apply to the Company on the expiry of the 10 year period from the date of the Cancellation or, if earlier, the date on which the Company is dissolved.
The Takeover Code and the Takeover Panel operate principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment by an offeror. The Takeover Code also provides an orderly framework within which takeovers are conducted. In addition, it is designed to promote, in conjunction with other regulatory regimes, the integrity of the financial markets.
The Takeover Code is based upon a number of General Principles which are essentially statements of standards of commercial behaviour. General Principle One states that all holders of securities of an offeree company of the same class must be afforded equivalent treatment and if a person acquires control of a company, the other holders of securities must be protected. This is reinforced by Rule 9 of the Takeover Code which requires a person, together with persons acting in concert with him, who acquires shares carrying voting rights which amount to 30 per cent. or more of the voting rights to make a general offer. A general offer will also be required where a person who, together with persons acting in concert with him, holds not less than 30 per cent. but not more than 50 per cent. of the voting rights, acquires additional shares which increase his percentage of the voting rights. Unless the Takeover Panel consents, the offer must be made to all other shareholders, be in cash (or have a cash alternative) and cannot be conditional on anything other than the securing of acceptances which will result in the offeror and persons acting in concert with him holding shares carrying more than 50 per cent. of the voting rights.
Shareholders should note that, if the Cancellation and the Re-registration become effective, they will not receive the benefit of the protections afforded by the Takeover Code after the expiry of 10 years from the date of the Cancellation (assuming the Company is still in existence).
5. Tender Offer
Summary of Tender Offer
As explained above, N+1 Singer has agreed to provide Qualifying Shareholders with the opportunity to sell their Ordinary Shares which N+1 Singer will purchase, as principal, pursuant to the Tender Offer. The Company has agreed that, upon receipt of written notice from N+1 Singer, it shall repurchase the Ordinary Shares acquired by N+1 Singer pursuant to the Tender Offer and any Ordinary Shares so purchased shall be taken into treasury and may be allocated to existing or future staff at the discretion of the Board. The Tender Offer is subject to the conditions set out in the Repurchase Agreement being fulfilled.
N+1 Singer has agreed to accept all valid tenders made by Qualifying Shareholders. Each Qualifying Shareholder who, as at the Record Date, holds a number of Ordinary Shares equal to or less than the Basic Entitlement must tender either all or none of such Ordinary Shares in order for such tenders to be valid. Each Qualifying Shareholder who holds more than the Basic Entitlement will be entitled to tender their Basic Entitlement and any number of Ordinary Shares in excess of this and any such valid tenders will be accepted in full. Shareholders holding more than the Basic Entitlement should note that they cannot tender less than their Basic Entitlement.
Shareholders should note that there is no obligation for Qualifying Shareholders to sell any of their Ordinary Shares. However, they should be aware that, following the Cancellation, the dealing opportunities offered pursuant to the Share Dealing Market will be more limited than if the Company retained its quoted status.
A letter from N+1 Singer containing further details relating to the Tender Offer and the terms and conditions of the Tender Offer is set out in Parts III and IV of the Circular (respectively). Under the terms of the Tender Offer, the price to be paid for each Ordinary Share subject to the Tender Offer is 563 pence.
Summary of Repurchase Agreement
On 12 July 2013, the Company entered into the Repurchase Agreement with N+1 Singer. Under the terms of the Repurchase Agreement the parties have agreed that, subject to:
(a) the Tender Offer becoming unconditional in all respects and not lapsing or terminating in accordance with its terms; and
(b) an amount equal to the Tender Price multiplied by the maximum number of Ordinary Shares capable of being tendered, plus a fee payable to N+1 Singer, and any costs associated with the Tender Offer being paid by the Company,
N+1 Singer shall purchase on-market at the Tender Price, the Ordinary Shares successfully tendered. The Company has agreed that, upon receipt of written notice from N+1 Singer, it shall repurchase the Ordinary Shares acquired by N+1 Singer pursuant to the Tender Offer.
6. New Articles of Association
Subject to the passing of the Resolutions, it will be necessary to adopt new Articles of Association more in keeping with the Company's new unquoted status and to incorporate changes necessary to reflect the implementation of the New Incentive Plan. A summary of the New Articles is set out in Part V of the Circular.
7. Share Dealing
Following the Cancellation, Shareholders, including directors and employees of the Company (and certain persons with whom they are connected), will be subject to certain transfer restrictions in relation to the A Shares, B Shares and C Shares that they hold, which will prevent them from trading freely in shares without the Board's consent. Shareholders who are not connected with directors and employees will continue to be entitled to transfer their shares freely subject to the requirement that they do not transfer shares to a person associated with the Company's competitors and that they may not make transfers that would (i) give rise to a change of control notification to the FCA or (ii) result in them (whether individually or together with any person acting in concert with them) being entitled to exercise more than 29.9% of the voting rights in the Company (unless pursuant to a drag along).
In order to provide additional liquidity for Shareholders following the Cancellation, the Company will procure the operation of an annual Share Dealing Market. Subject to the restrictions on participants in the New Incentive Plan described in paragraph 10 below, all Shareholders will be entitled to participate in the Share Dealing Market. Transfers pursuant to the Share Dealing Market shall take place at the prevailing "market value" of the shares determined by the Company's auditors (or an alternative independent valuer appointed by the Company) shortly prior to each annual dealing day. The rules governing the Share Dealing Market are contained in Schedule 1 to the New Articles.
8. Effect of the Proposals on the Existing Incentive Plans
Options and awards granted under the Existing Incentive Plans are over Ordinary Shares (together, the "Existing Awards"). As a consequence of the Share Capital Reorganisation, Ordinary Shares will cease to exist, as they will be subdivided into A Shares and B Shares. Consequently, each Existing Award will be amended or varied (as applicable) where practicable under the rules of the Existing Incentive Plans such that, following the Share Capital Reorganisation:
(a) for each Ordinary Share previously subject to the Existing Award, the varied or amended Existing Award will be over one A Share and one B Share; and
(b) the aggregate exercise price in relation to an Existing Award (if any) will remain the same (following its variation or amendment) as was the case immediately prior to the Share Capital Reorganisation, with the exercise price per A Share and B Share adjusted accordingly.
Any other conditions relating to the Existing Awards will remain unchanged (e.g. vesting periods and conditions). The auditors (or other independent advisers) will be requested to confirm that the terms on which the Existing Awards will be varied or amended (as summarised above) will be, in their opinion, fair and reasonable.
The Proposals will have a further impact on awards made under the Quayle Munro Holdings PLC Executive Share Option Scheme 1993. This plan has been approved by HMRC and the exercise of Existing Awards under this plan would be subject to favourable tax treatment, provided certain statutory conditions were satisfied. The Share Capital Reorganisation will cause these statutory conditions to cease to be satisfied, and therefore the exercise of Existing Awards under the Quayle Munro Holdings PLC Executive Share Option Scheme 1993 will not benefit from the intended favourable tax treatment. It is not intended that holders of Existing Awards under the Quayle Munro Holdings PLC Executive Share Option Scheme 1993 will be compensated for the loss of the favourable tax treatment.
Where it is impracticable to amend or vary Existing Awards, replacement awards will be granted on the following terms:
-- the grant of replacement awards will be conditional on the cancellation of Existing Awards;
-- the number of A Shares and B Shares subject to replacement awards relative to the number of Ordinary Shares subject to Existing Awards will be determined in accordance with the terms of the Share Capital Reorganisation;
-- equivalent performance conditions will apply to the replacement awards, which (in the reasonable opinion of the Remuneration Committee of the Company) are not materially more difficult or easier to satisfy than the performance conditions attaching to the relevant Existing Award;
-- replacement awards (for the purpose of performance periods or vesting periods) will be treated as being granted on the same date and with the same life as the relevant Existing Award; and
-- replacement awards will otherwise be on substantially the same terms as the relevant Existing Awards, amended only as necessary to reflect the Proposals.
9. Share Capital Reorganisation
In order to adopt and implement the terms of the New Incentive Plan and to embed the rights of the existing Ordinary Shares to the Morris Entitlement it will be necessary to carry out the Share Capital Reorganisation to create the necessary classes of shares: (i) to be issued to participants pursuant to the New Incentive Plan; and (ii) to convert the Existing Ordinary Shares into A Shares and B Shares reflecting the Morris Entitlement.
It is proposed that, pursuant to the Share Capital Reorganisation, each Existing Ordinary Share of GBP0.10 each in issue immediately following the Cancellation becoming effective will be sub-divided into one A Share of GBP0.05 and one B Share of GBP0.05 (each having the rights attached to them set out in the New Articles).
The holders of new B Shares will be entitled to receive distributions from the Company in respect of all income and capital proceeds received by the Group which relate to the Group's holding of shares and subordinated loan stock in Morris. The new A Shares will be entitled to receive distributions from the Company funded by the Company's business other than its investment in Morris. The A Shares will be voting shares and the B Shares will be non-voting. The A Shares and B Shares will be "stapled" and must be transferred together in equal proportions.
C Shares will be issued to participants in the New Incentive Plan. They will have identical economic and voting rights to the A Shares, sharing in distributions of the Company's profits other than those that result from Morris. The C Shares will be subject to certain restrictions on their transfer and compulsory transfer provisions while they are held by New Incentive Plan participants.
The rights of the A Shares, B Shares and C Shares are set out in the New Articles, the key features of which are summarised in Part V of the Circular.
Following completion of the Share Capital Reorganisation, share certificates relating to the Existing Ordinary Shares will cease to be valid and the Company shall issue share certificates to Shareholders reflecting their entitlements to the A Shares and the B Shares.
10. New Incentive Plan
As described in the interim statement for the period ended 31 December 2012 and at subsequent presentations to Shareholders in London and Edinburgh in March this year, your Board has an almost entirely new group of independent Non-Executive Directors, all of whom have relevant experience in building successful advisory businesses and in making principal investments.
Working with the Chief Executive and the senior management team, the Directors have agreed a new strategy to grow the advisory business over the next few years by hiring established corporate finance professionals with strong franchises: first, in media and technology (in which we have an excellent established position) and, secondly, in other sectors which display similar characteristics. We have also decided to align our investment strategy with our advisory focus, namely to invest our non-core cash resources in unlisted, high growth businesses which operate in sectors where we have a strong advisory position and where we have a good relationship with the management of investee companies. In this way, we expect to broaden and grow our business substantially over the coming years.
In order to achieve these demanding targets, the Board considers that it is essential to put in place a simple, straightforward and transparent incentive scheme for our staff but which is also fair to Shareholders. Your Board is very mindful of the importance of striking a fair balance between staff and Shareholders, especially as together the Directors' shareholdings, together with the holdings of persons connected or associated with them or members of their family amount to 20.75 per cent. of the issued share capital of the Company. The Directors are therefore proposing the following:
Summary of the terms of the New Incentive Plan
The New Incentive Plan will comprise the issue of up to 1,955,000 new C Shares (equivalent to approximately 30 per cent. of the share capital of the Company excluding the B Shares) to members of the existing senior management team and to newly hired corporate finance professionals which the Company intends to attract. The allocation of C Shares among such senior employees will be determined by the Remuneration Committee.
The C Shares will be subject to compulsory acquisition provisions which will allow the Board to direct that any New Incentive Plan participant transfers their C Shares to another person if the New Incentive Plan participant ceases to be a director or employee of the Group. The C Shares will also be subject to transfer restrictions which will require New Incentive Plan participants (or certain permitted transferees) to retain ownership of the shares for a minimum of 5 years.
The C Shares will be issued at their market value, up to 75% of which may be funded by a loan which will be made available by the Company to each senior employee in respect of the subscription price. The loans will be repayable in equal instalments over five years and shall bear interest at the HMRC official interest rate (currently 4% per annum).
Members of the senior management team who do not wish to acquire C Shares, by taking advantage of a loan from the Company, will be encouraged to acquire A Shares and B Shares, issued from treasury following the Tender Offer or through the Share Dealing Market. Such A Shares and B Shares shall not be subject to any additional restrictions when owned by senior employees over and above those set out in the New Articles and affecting all shareholders equally.
The rights attaching to the C Shares are set out in more detail in the summary of the New Articles set out in Part V of the Circular.
11. Loans to Directors
It is proposed that Andrew Adams and Simon Woolton, who are both executive directors of the Company, will be eligible to receive loans on the terms set out in paragraph 10 above to fund their participation in the New Incentive Plan. Loans to directors of the Company require the approval of Shareholders pursuant to section 197(3) of the 2006 Act. It is proposed that the maximum loan to be made to each of Andrew Adams and Simon Woolton will be GBP550,000 and GBP150,000 respectively. Accordingly, Resolution 2 has been proposed at the General Meeting to enable the Company to grant such loans. In accordance with section 197(3) of the 2006 Act, a memorandum of the terms of the loans will be available for inspection at the Company's registered office from the date of the Circular until the date of the General Meeting and will also be available for inspection at the General Meeting.
12. Additional Information
Current Trading
The advisory business closed the year to 30th June 2013 with revenues in line with the budget of GBP10.2 million (last year: GBP5.3 million), which vindicates the Board's optimism about the outlook at the time of our interim results statement in March 2013.
While the results for the Group are still subject to audit and will include the costs and expenses associated with the Share Capital Reorganisation, Tender Offer and Cancellation, the Board is confident that the year as a whole will be profitable after payment of accrued bonuses. On this basis, the Board expects that the Company will declare a final dividend of 22.0p per share, making a total of 33.0p per share for the year. The dividend will be payable to registered shareholders on or around the provisional record date of 25 October 2013.
Update on Morris
The Company holds a 22.96 per cent. stake in Morris which represents its largest investment, having been valued at GBP5.5 million in the Company's accounts as at 31 December 2012. As noted in the Company's Annual Report and Accounts for the financial year ended 30 June 2012, this valuation was based on discounting the net tangible assets of Morris by 44%, recognising the level of gearing within Morris as well as its status as a private company and the Company's position as a minority shareholder. The Company also holds GBP4.2 million of loan stock in Morris, which the Directors believe will continue to be fair valued at par, and which together with its 22.96 per cent. stake in Morris is therefore equivalent to 212 pence per Ordinary share on a fully diluted basis.
On 28 June 2013, Morris completed a refinancing of its existing debt facilities with a GBP185 million loan provided by affiliates of GSO Capital Partners LP. As part of this refinancing, Morris bought back a minority stake in the Group (none of which was held by Quayle Munro) at a price which implied an equity value for the whole of Morris of approximately GBP48 million. However, it is likely that the Company's investment in Morris will continue to be accounted for using a discount to net tangible assets.
Although UK quoted housebuilders on average currently trade at a substantial premium to tangible net assets, not only are most of these companies of significantly larger scale than Morris, but their valuations have historically also been highly volatile (trading below historical tangible net assets as recently as January 2012). By way of illustration, the impact on the Company's net assets of a 10% change in Morris' valuation would be 21 pence per Ordinary Share on a fully diluted basis.
The Company has indicated to the board of Morris that it remains fully committed to retaining its shareholding in Morris for the foreseeable future. It is emphasised that there can be no certainty as to the value that the Company would obtain should it look to realise its holding in Morris at any time in the future.
Grant of options
As set out in Christopher Kemball's service agreement signed on 14 November 2012 and, having satisfied the requirement to purchase the relevant number of 192,436 Ordinary Shares, the Board has agreed that Mr Kemball will be allocated 48,109 share options on 14 November 2013 being the first anniversary of his appointment. The options would have an exercise price of 410p per share (being the average mid-market closing share price for the 3 month period prior to the date of his appointment). Subject to the Share Capital Reorganisation occurring, Mr Kemball will instead be granted an option to acquire one A Share and one B Share for every option he would have otherwise received save that the exercise price will remain the same (apportioned between each A Share and B Share as appropriate). The options will be exercisable from 14 November 2013 to 13 November 2023.
13. General Meeting
A notice is set out at the end of the Circular convening the General Meeting to be held at the offices of the Company at 22 Berners Street London W1T 3LP on 1 August 2013 at 9.00 a.m.
14. Action to be taken by Shareholders
General Meeting
Your vote is important. Whether or not Shareholders plan to attend the General Meeting, they are encouraged to sign, date and return the enclosed Form of Proxy in accordance with the instructions contained therein so as to arrive at Capita Registrars as soon as possible and, in any event, no later than 9.00 a.m. on 30 July 2013, by posting the Form of Proxy or delivering it by hand (during normal business hours only) to Capita Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. If Shareholders hold their Ordinary Shares in uncertificated form (i.e. in CREST), they may appoint a proxy by completing and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by the Registrar (under CREST participant RA10) by no later than 9.00 a.m. on 30 July 2013.
Tender Offer
If you are a Qualifying Shareholder and wish to participate in the Tender Offer, you should follow the procedure for acceptance set out in paragraph 2 of Part II of the Circular and the further terms and conditions set out in paragraph 3 of Part III of the Circular.
15. Irrevocable Undertakings
The Company has received irrevocable undertakings in respect of holdings of Ordinary Shares representing 67.67 per cent. of the entire issued Ordinary Shares of the Company: (i) to vote or procure that Ordinary Shares held on their account are voted in favour of the Resolutions and (ii) not to tender the Ordinary Shares held by them or on their account under the Tender Offer. The Company has however agreed that, in relation to the irrevocable undertakings given by FE Special Investments Limited and ECF Investments Limited, such Shareholders shall be permitted to sell such number of Ordinary Shares as may be necessary to ensure that the Euro-China Fund L.P. maintains an aggregate beneficial holding of not less than 9.53 per cent. of the entire issued share capital of the Company. Details of the irrevocable undertakings received are as follows:
Hot Features
Premium
Name Ordinary Shares subject Percentage of issued share
to undertaking not capital
to participate in Tender
Offer(1)
-------------------------------- -------------------------- ---------------------------
Board Members and connected persons/Family Trusts
-----------------------------------------------------------------------------------------
Andrew Adams 86,659 1.90%
-------------------------------- -------------------------- ---------------------------
Anlyn Adams2 113,937 2.50%
-------------------------------- -------------------------- ---------------------------
Kleinwort Benson International
Trustees Limited,
as trustee of the
JPG Kemball Trust3 166,184 3.64%
-------------------------------- -------------------------- ---------------------------
Kleinwort Benson International
Trustees Limited,
as trustee of the
JPG Kemball 1991 Trust 26,250 0.58%
-------------------------------- -------------------------- ---------------------------
Carol Woolton4 20,417 0.45%
-------------------------------- -------------------------- ---------------------------
Peter Norris 180,446 3.96%
-------------------------------- -------------------------- ---------------------------
Peter Norris, as trustee
for the Norris Children's
Trust 62,292 1.37%
-------------------------------- -------------------------- ---------------------------
Peter Norris, as trustee
for the John Brown
Family Trust 45,787 1.00%
-------------------------------- -------------------------- ---------------------------
Ian McLean 14,583 0.32%
-------------------------------- -------------------------- ---------------------------
Lesley McLean5 1,000 0.02%
-------------------------------- -------------------------- ---------------------------
York Capital Limited6 229,079 5.02%
-------------------------------- -------------------------- ---------------------------
Employee Benefit Trusts
-----------------------------------------------------------------------------------------
RBC Cees Trustees
Limited, as trustee
for the Quayle Munro
Holdings PLC Employees'
Share Trust 205,721 4.51%
-------------------------------- -------------------------- ---------------------------
East of Scotland Investments
Limited 166,020 3.64%
-------------------------------- -------------------------- ---------------------------
Employees, senior management and connected persons
-----------------------------------------------------------------------------------------
Various 102,011 2.24%
-------------------------------- -------------------------- ---------------------------
Other parties
-----------------------------------------------------------------------------------------
Ian Jones 372,933 8.18%
-------------------------------- -------------------------- ---------------------------
Christine Jones 176,000 3.86%
-------------------------------- -------------------------- ---------------------------
Jo and Alison Elliot 497,058 10.90%
-------------------------------- -------------------------- ---------------------------
FE Special Investments
Limited 401,510 8.80%
-------------------------------- -------------------------- ---------------------------
ECF Investments Limited 33,333 0.73%
-------------------------------- -------------------------- ---------------------------
Anthony van Tulleken 146,863 3.22%
-------------------------------- -------------------------- ---------------------------
Kit van Tulleken 8,000 0.18%
-------------------------------- -------------------------- ---------------------------
Van Tulleken Foundation 8,121 0.18%
-------------------------------- -------------------------- ---------------------------
Christoffer van Tulleken 11,370 0.25%
-------------------------------- -------------------------- ---------------------------
Jonathan van Tulleken 11,370 0.25%
-------------------------------- -------------------------- ---------------------------
Total 3,086,944 67.67%
-------------------------------- -------------------------- ---------------------------
(1) Note: the number of Ordinary Shares referred to in this table includes shares held by the individuals referred to therein and/or corporate nominees holding Ordinary Shares on their account.
(2) Anlyn Adams is a connected person of Andrew Adams, a director of the Company. (3) The JPG Kemball Trust and the JPG Kemball 1991 Trust are family trusts associated with Christopher Kemball.
(4) Carol Woolton is a connected person of Simon Woolton, a director of the Company.
(5) Lesley McLean is a connected person of Ian McLean, a director of the Company. (6) York Capital Limited is an entity owned by a trust associated with the children of David Fitzsimons.
16. Overseas Shareholders
The Tender Offer is not available to Shareholders with an address in the United States, Canada, Australia, Japan, the Republic of Ireland, South Africa or any other Restricted Jurisdiction. Overseas Shareholders should note that they should satisfy themselves that they have fully observed any applicable legal requirements under the laws of their relevant jurisdiction if they tender Ordinary Shares in the Tender Offer.
The attention of Shareholders who are not resident in the United Kingdom is drawn to the section headed "Overseas Shareholders" in Part III of the Circular.
17. Taxation
The Board has been advised that the Cancellation and the Re-registration should not have any direct effect on Shareholders' current liabilities to income, capital gains and inheritance tax under UK law. Nevertheless, Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the United Kingdom should consult their professional adviser.
A general summary of the UK taxation implications of the Tender Offer is set out in further detail in Part IV of the Circular.
18. Recommendations
It is the Directors' overriding objective to build a well respected and market leading corporate finance house with a broad range of specialist advisory skills, thereby significantly increasing its professional revenue and profitability. This should lead to growth of investment value and of shareholders' capital and dividends.
After much careful thought and advice your new Board and senior management firmly believe that the Proposals are essential to grow a successful and high-quality advisory business for the benefit of shareholders and staff.
The Directors believe that the Proposals are in the best interests of Shareholders and the Directors, having been so advised by N+1 Singer, consider the terms of the Proposals as a whole to be fair and reasonable.
Similarly, the Directors believe that the cancellation of the admission to trading of the Company's Ordinary Shares on AIM is in the best interests of Shareholders as a whole.
The Directors therefore unanimously recommend that you vote in favour of the Resolutions as they, and persons connected or associated with them or members of their family, intend to do in respect of their respective interests in 946,364 Ordinary Shares in aggregate, representing approximately 20.75 per cent. of the Ordinary Shares currently in issue. The Directors and persons connected or associated with them, or members of their family have also undertaken not to accept the Tender Offer in respect of their respective interests in 946,364 Ordinary Shares in aggregate representing approximately 20.75 per cent. of the Ordinary Shares currently in issue.
The Directors and N+1 Singer make no recommendation to Shareholders in relation to participation in the Tender Offer itself. Whether or not Shareholders decide to tender all or any of their Ordinary Shares will depend, among other things, on their view of the Company's prospects and their own individual circumstances, including their tax position. Shareholders are recommended to consult their duly authorised independent advisers and make their own decision.
Enquiries:
Quayle Munro Christopher Kemball +44 (0) 77 6887 8529 Andrew Adams +44 (0) 20 7907 4200 Simon Woolton +44 (0) 20 7907 4200 N+1 Singer Sandy Fraser Jonny Franklin-Adams Alex Wright +44 (0) 20 7496 3000 Smithfield John Kiely +44 (0) 20 7360 4900
Important Information
N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as nominated adviser, broker and financial adviser to the Company in connection with the matters described in this announcement. Persons receiving this Announcement should note that N+1 Singer will not be responsible to anyone other than the Company for providing the protections afforded to customers of N+1 Singer or for advising any other person on the arrangements described in this Announcement. N+1 Singer has not authorised the contents of, or any part of, this Announcement and no liability whatsoever is accepted by N+1 Singer for the accuracy of any information or opinions contained in this Announcement or for the omission of any information. N+1 Singer, as nominated adviser and broker to the Company, owes certain responsibilities to the London Stock Exchange which are not owed to the Company or the Directors.
Forward Looking Statements
This Announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company and certain plans and objectives of the Board. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the Board in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, and the factors described in the context of such forward-looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements.
Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Announcement. The Company assumes no obligation to update or correct the information contained in this Announcement, whether as a result of new information, future events or otherwise, except to the extent legally required.
The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them, and publication of this Announcement shall not give rise to any implication that there has been no change in the facts set out in this Announcement since such date. Nothing contained in this Announcement shall be deemed to be a forecast, projection or estimate of the future financial performance of the Company except where expressly stated.
DEFINITIONS
The following definitions apply throughout this Announcement unless the context otherwise requires:
"2006 Act" the UK Companies Act 2006;
"A Shares" A ordinary shares of GBP0.05 each in the
capital of the Company created pursuant
to the Share Capital Reorganisation and
having the rights set out in the New Articles;
"AIM" AIM, a market operated by the London Stock
Exchange;
"AIM Rules" the AIM Rules for Companies published
by the London Stock Exchange from time
to time;
"B Shares" B ordinary shares of GBP0.05 each in the
capital of the Company created pursuant
to the Share Capital Reorganisation and
having the rights set out in the New Articles;
"Basic Entitlement" the basic entitlement of Qualifying Shareholders
to tender up to 2,500 Ordinary Shares
held by that Qualifying Shareholder which
will be accepted in full by N+1 Singer
subject to the terms and conditions set
out in Part III of the Circular;
"Board" the board of directors of the Company
as constituted from time to time;
"Business Day" any day other than a Saturday, Sunday
or bank holiday in the United Kingdom;
"C Shares" C ordinary shares of GBP0.05 each in the
capital of the Company having the rights
set out in the New Articles;
"certificated" or "in where a security is not held in uncertificated
certificated form" form (i.e. not in CREST);
"Capita Registrars" Capita Registrars, a trading name of Capita
Registrars Limited;
"Cancellation" the proposed cancellation of admission
of the Ordinary Shares to
trading on AIM;
"Circular" the Circular;
"Closing Date" 1:00 p.m. 2 August 2013;
"Company" Quayle Munro Holdings PLC;
"Conditions" the conditions to the Tender Offer set
out in Part III of the Circular;
"CTA 2010" the Corporation Tax Act 2010, as amended;
"CREST" the relevant system (as defined in the
CREST Regulations) in respect of which
Euroclear is the Operator (as defined
in the CREST Regulations);
"CREST Regulations" The Uncertificated Securities Regulations
2001 (SI2001/3755) as amended;
"Disclosure and Transparency the latest edition of the "Disclosure
Rules" and Transparency Rules" issued made by
the FCA under Part VI of FSMA;
"Euroclear" Euroclear UK and Ireland Limited, the
operator of CREST;
"Existing Incentive the Quayle Munro Holdings PLC Executive
Plans" Share Option Scheme 1993, the Quayle Munro
Holdings PLC 2008 Unapproved Share Option
Scheme and the Quayle Munro Holdings PLC
Joint Share Ownership Plan;
"Existing Ordinary Shares" the Ordinary Shares in the Company immediately
following completion of the Tender Offer;
"FCA" the Financial Conduct Authority of the
United Kingdom
"Form of Proxy" the form of proxy enclosed with the Circular
for use by Shareholders in connection
with the General Meeting;
"FSMA" the Financial Services and Markets Act
2000;
"General Meeting" the General Meeting of the Company convened
for 9.00 a.m. on 1 August 2013, notice
of which is set out at the end of the
Circular;
"HMRC" HM Revenue & Customs of the United Kingdom;
"ITA" Income Taxes Act 2007, as amended;
"London Stock Exchange" London Stock Exchange plc;
"Morris" Morris Group Limited;
"Morris Entitlement" As defined on paragraph 2 of Part I of
this announcement;
"N+1 Singer" Nplus1 Singer Advisory LLP, nominated
adviser and broker to the Company, and
any of its affiliates, trading as "N+1
Singer";
"New Articles" the new articles of association of the
Company to be adopted pursuant to Resolution
4 (a summary of which is set out at Part
V of the Circular);
"New Incentive Plan" the proposed new management incentive
plan to be adopted by the Company conditional
upon, and following, the Cancellation
(the terms of which are summarised at
paragraph 10 of Part I of the Circular);
"Notice" the notice of General Meeting set out
at the end of the Circular;
"Ordinary Shares" ordinary shares of GBP0.10 each in the
capital of the Company;
"Overseas Shareholder" a Shareholder whose address in the Company's
register of members is outside the UK;
"Proposals" the Tender Offer, the Cancellation, the
approval of loans to Directors, the Share
Capital Reorganisation, the Re-registration
and the adoption of New Articles and New
Incentive Plan;
"Qualifying Shareholders" Shareholders who are entitled to participate
in the Tender Offer, being shareholders
who hold Ordinary Shares at the Record
Date save for:
(i) Shareholders located in a Restricted
Jurisdiction; or
(ii) Shareholders who have irrevocably
undertaken not to accept the Tender Offer.
"Receiving Agent" Capita Registrars Limited;
"Record Date" 5.00 p.m. on 2 August 2013;
"Registrar" Capita Registrars Limited;
"Regulatory Information any of the services approved by the London
Service" Stock Exchange plc for the distribution
of AIM announcements and included within
the list maintained on the website of
the London Stock Exchange plc;
"Remuneration Committee" the remuneration committee of the Company
currently comprising: David Fitzsimons,
Christopher Kemball, Ian McLean and Peter
Norris;
"Repurchase Agreement" the agreement dated 12 July 2013 between
the Company and N+1 Singer for the repurchase
by the Company of the Ordinary Shares
purchased by N+1 Singer pursuant to the
Tender Offer (or otherwise a corresponding
number of Ordinary Shares) by way of an
on-market purchase;
"Re-registration" the proposed re-registration of the Company
as a private company pursuant to section
97 of the 2006 Act
"Resolutions" the resolutions to be proposed at the
General Meeting as set out in the Notice;
"Restricted Jurisdiction" the United States, Canada, Australia,
the Republic of Ireland, South Africa
or Japan or any other jurisdiction where
the mailing of the Circular into such
jurisdiction would constitute a violation
of the laws of such jurisdiction;
"Share Capital Reorganisation" the sub-division of the Company's ordinary
share capital into A Shares and B Shares
and the creation of the C Shares as described
in paragraph 9 of Part I of this announcement;
"Share Dealing Market" the annual share dealing market to be
operated on behalf of the Company pursuant
to which Shareholders will be able to
buy and sell shares in the Company following
the Cancellation, further details of which
are set out in Part VI;
"Shareholders" holders of Ordinary Shares and the term
"Shareholder" shall mean any one of them;
"Takeover Code" the City Code on Takeovers and Merger;
"Takeover Panel" the Panel on Takeovers and Mergers;
"Tender Form" the form enclosed with the Circular for
use by Shareholders in connection with
the Tender Offer;
"Tender Offer" the tender offer to Qualifying Shareholders
to be made by N+1 Singer on the terms
and subject to the conditions set out
in Part III of the Circular and also,
in the case of certificated Ordinary Shares,
the Tender Form;
"Tender Price" 563 pence per Ordinary Share;
"uncertificated" or Ordinary Shares which are recorded on
"in uncertificated form" the register of members of the Company
as being held in uncertificated form in
CREST and title to which, by virtue of
the CREST Regulations, may be transferred
by means of CREST;
"United States" the United States of America, its territories
and possessions, any state of the United
States of America and the District of
Columbia.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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