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Sikanni Svcs Ltd Com Npv | TSXV:SKI | TSX Venture | Common Stock |
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RNS Number:3745P Silk Industries PLC 04 September 2003 SILK INDUSTRIES PLC Not for release, publication or distribution in whole or in part outside the United Kingdom Recommended Offer for Silk Industries PLC by Tayvin 300 Limited by means of a Scheme of Arrangement (under Section 425 of the Companies Act 1985) SUMMARY * The board of Tayvin 300 Limited and the Independent Director of Silk Industries PLC are pleased to announce that they have agreed the terms of a recommended offer to acquire the whole of the issued and to be issued share capital of Silk to be effected by way of a Scheme of Arrangement * Recommended offer of 42 pence in cash for each Silk Share with a Loan Note Alternative * The Offer values the fully diluted share capital of Silk at approximately #5.3 million * The Offer represents a premium of 58.5 per cent over the closing middle market price of 26.5 pence per Silk Share on 16 July 2003 (the last dealing day prior to the date on which Silk announced it was in talks as regards a possible offer) * Tayvin is a company established and formed for the purpose of making the Offer by the Management Team of Silk, headed by David Tooth, executive chairman of Silk * Silk announced on 28 August 2003 its preliminary results for the year ended 30 April 2003 Words and expressions used in this summary are defined in the attached announcement. This summary should be read in conjunction with the full text of the attached announcement. Enquiries: Sarah Kent, Brewin Dolphin Securities Limited 0161 214 5554 John L Jeremy, Independent Director, Silk Industries PLC 01787 467905 Brewin Dolphin Securities Limited, which is authorised and regulated by the Financial Services Authority, is acting for Silk and no one else in connection with the Scheme and will not be responsible to anyone other than Silk for providing the protections afforded to clients of Brewin Dolphin nor for giving advice in relation to the Scheme, the contents of this document or any arrangements referred to herein. Brewin Dolphin Securities Limited has approved and authorised the contents of this announcement for the purposes of section 21 of the Financial Services and Markets Act 2000. Taylor Vinters is acting for Tayvin and no one else in connection with the Scheme and will not be responsible to anyone other than Tayvin for providing the protections afforded to clients of Taylor Vinters nor for providing advice in relation to the Scheme, the contents of this document or any arrangements referred to herein. This announcement does not constitute an offer or an invitation to purchase any securities. The Offer will not be made, directly or indirectly, outside the United Kingdom and will not be capable of acceptance by any person resident in, or a national of, a jurisdiction outside the United Kingdom. Accordingly, copies of this announcement and any other documents relating to the Offer are not being and must not be mailed or otherwise distributed outside the United Kingdom and persons receiving such documents (including, without limitation, custodians, nominees and trustees) must not distribute or send them outside the United Kingdom. SILK INDUSTRIES PLC Recommended Offer for Silk by Tayvin by way of a Scheme of Arrangement 1. Introduction On 17 July 2003 the Company announced that it was in preliminary talks on a possible offer for the Company. Following those discussions, John Jeremy, the Independent Director of Silk Industries PLC and Tayvin 300 Limited, a company controlled by David Tooth, are pleased to announce that agreement has been reached on the terms of a recommended offer to acquire the entire issued and to be issued share capital of the Company to be effected by way of a Scheme of Arrangement. The Company also announced on 28 August 2003 its preliminary results for the year ended 30 April 2003. Definitions of certain expressions used in this announcement are set out in the Appendix to this announcement. 2. Terms of the Offer The Offer will be effected by way of a Scheme of Arrangement between Silk and the Scheme Shareholders under section 425 of the Companies Act. The Proposals are subject to the Conditions set out in paragraph 10 of this announcement. The Scheme involves, inter alia, the cancellation of Silk Shares and Silk Shareholders will be entitled to receive: for every 100 Silk Shares #42 in cash (equivalent to 42p per share) The Scheme includes a Loan Note Alternative whereby as an alternative to receiving the Cash Consideration, Scheme Shareholders will be entitled to elect to transfer some or all of their Scheme Shares to Tayvin in exchange for the issue of Loan Notes by Tayvin and cash on the following basis:- for every 100 Silk Shares #20 in cash and #45 nominal value of Loan Notes The Loan Note Alternative is subject to conditions, further details of which are set out in paragraph 11 below. With reference to the financial effects of the Proposals set out in paragraph 13 below and taking into account the risks associated with the Loan Notes, the consideration offered per Scheme Share to a Scheme Shareholder electing to receive the Loan Note Alternative would not materially differ from the 42 pence offered by way of the Cash Consideration. If Scheme Shareholders are considering making an election for the Loan Note Alternative, their attention is particularly drawn to the section below headed "Risks attached to the Loan Notes". Scheme Shareholders are strongly advised to consult a stockbroker, bank manager, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares or other securities. Scheme Shareholders are recommended to consider carefully, in the light of their investment objectives and having taken advice appropriate to their own financial circumstances, whether it would be appropriate to elect for the Loan Note Alternative. The Offer values the entire issued and to be issued share capital of Silk at approximately #5.3 million. The Cash Consideration represents a premium of 58.5 per cent over the closing middle market price of 26.5 pence per Silk Share on 16 July 2003 (the last dealing day prior to the date on which Silk announced it was in talks as regards a possible offer), and a premium of 69.4 per cent over the average closing middle market ex-dividend price of a Silk Share for the 30 days prior to 16 July 2003 (the last dealing day prior to the date on which Silk announced it was in talks as regards a possible offer). The Independent Director has noted the increase in the price of Silk Shares since the Company announced its preliminary results on 28 August 2003, in which the Chairman of the Company explained that an announcement detailing the Proposals would follow shortly thereafter. The Cash Consideration represents a premium of 33.5 per cent over the closing middle market price of 31.5p per Silk Share on 27 August 2003 (the last dealing date prior to the date on which Silk announced its preliminary results). 3. Independence of Silk Directors The directors of Silk at the date of this announcement are John Jeremy, David King, Clive Reeks and David Tooth. David Tooth and persons connected with him have conditionally agreed to transfer all their shares in the capital of Silk to Tayvin, the consideration for which will be the issue of B Loan Notes and shares in Tayvin to David Tooth and persons connected with him. David Tooth will be the Executive Chairman of Tayvin following implementation of the Scheme. Silk Shares held by David Tooth and persons connected with him are therefore excluded from the Scheme. David Tooth has agreed that as a result of his interest in Tayvin, he will not vote at the Court Meeting nor take part in any of the discussions of Silk concerning the Offer. Each of David King and Clive Reeks will be appointed non-executive directors of Tayvin following implementation of the Scheme under the terms of non-executive directors' agreements, summaries of which will be contained in the Scheme Circular. Accordingly, they have not taken part in any of the deliberations of the board of Silk concerning the Offer. In addition, both David King and Clive Reeks have indicated that they will be electing to receive Loan Notes in respect of their Scheme Shares as referred to below. However, they will have no interest in the share capital of Tayvin. 4. Directors' intentions The Independent Director has indicated to Tayvin that he will not be electing to receive the Loan Note Alternative and will therefore receive Cash Consideration in respect of his 50,000 Scheme Shares representing 0.4 per cent. of the issued share capital of Silk. In addition in order to facilitate the financing of the Cash Consideration of the Offer and to ensure that the condition of the Scheme relating to the minimum take up under the Loan Note Alternative is met (as referred to in paragraph 10 below), each of David King and Clive Reeks has indicated to Tayvin that he will elect to receive the Loan Note Alternative in respect of their entire holdings of Scheme Shares, which will amount to #1,846,856 in total of Loan Notes. 5. Recommendation In view of the involvement of certain Directors in Tayvin the Independent Director has taken sole responsibility for considering the Offer. The Independent Director, having been so advised by Brewin Dolphin, considers the terms of the Proposals to be fair and reasonable. In providing their advice, Brewin Dolphin have taken into account the Independent Director's commercial assessments. The Independent Director considers that the resolutions to be proposed at the Court Meeting and the EGM are in the best interests of the Independent Shareholders as a whole. Accordingly the Independent Director unreservedly recommends Scheme Shareholders to approve the Scheme at the Court Meeting and vote in favour of the Proposals at the Court Meeting and the EGM, as he intends to do in respect of his own holding of 50,000 Silk Shares, representing 0.4 per cent of the existing issued share capital of Silk and 0.5 per cent of the Scheme Shares entitled to vote at the Court Meeting. 6. Background to the Offer and reasons for the Recommendation Silk operates in a mature market where core performance in recent years has been flat, having reduced from peak levels in the mid 1990s. As stated by David Tooth in his Chairman's Statement included in the preliminary results for the year to 30 April 2003, the outlook for the silk businesses remains unsettled. The return to tie wearing remains a feature of men's fashion, but that is balanced both by the continued acceptance in many spheres of a casual dress code and by depressed economic conditions. In addition Silk is extremely small for a company on the Official List and trading on the London Stock Exchange's main market. Only 43 per cent of the Silk Shares are held outside the control of the Board, or not linked to the Board through trusts. The Silk Shares held by outside shareholders are valued at #1.4 million (based on a share price of 26.5p per Silk Share as at 16 July 2003, the last dealing day prior to the date on which Silk announced it was in talks as regards a possible offer). There is very little trading in the Company's shares with only around 500 trades in the twelve months to the end of July 2003 with the average transaction below #1,500. This illiquidity and the low market capitalisation of the Company have been contributing factors in the lack of demand for Silk Shares from institutional investors who would see such an investment as carrying a disproportionately high risk. If such an investor were able to accumulate a sufficiently large investment to justify their management time, such a holding would represent a large percentage of the issued share capital of Silk. The Company has been on the Official List since 1995. Despite its listing, the lack of liquidity in the stock, the lack of interest from substantial investors and the relatively small market capitalisation of the Company has led the Independent Director to the conclusion that Silk does not fit happily in the quoted sector. The Independent Director is therefore of the view that it would be in the best interests of the Shareholders as a whole for a privatisation of the Company to take place in such a way as to facilitate an exit for Independent Shareholders at a satisfactory price. 7. Current trading and outlook The Company announced on 28 August 2003 its preliminary results for the year ended 30 April 2003. 8. Management and employees Apart from David Tooth, all of the Directors will resign from the Board when the Scheme has become effective. Tayvin has given assurances to the Independent Director that the existing employment rights, including pension rights, of the employees of Silk will be fully safeguarded. 9. Silk Share Option Schemes Under the rules of each of the Silk Share Option Schemes, upon a change of control of Silk, Optionholders will have a period of time in which they may exercise their options. Any shares issued to Optionholders upon exercise of their options will not be included in, and will therefore be outside, the Scheme. However, the amendments to the Articles of Association to be proposed at the EGM and referred to later in this announcement will provide that any person receiving Silk Shares after the Record Time is obliged to transfer them to Tayvin and receive the Cash Consideration which they would have received had their shares been part of the Scheme. Accordingly, the Loan Note Alternative will not be available to Silk Shares issued as a result of the exercise of options after the Record Time. There are no options granted pursuant to the Company's 1997 Unapproved Share Option Scheme. 10. Structure of the Proposals Introduction The Scheme, which requires Court approval, involves the cancellation of the Cancellation Shares and the issue of New Silk Shares (credited as fully paid) to Tayvin. At the same time, Silk Shareholders will receive (subject to valid elections under the Loan Note Alternative), cash on the basis set out in paragraph 2 above. The reserve arising on the cancellation of the Cancellation Shares will be applied in paying up New Silk Shares to be issued to Tayvin. Shareholders who elect to transfer some of their shares to Tayvin under the Loan Note Alternative will receive Loan Notes issued by Tayvin on the basis set out in paragraph 2 together with cash. The Meetings Before the Court's approval can be sought, the Scheme of Arrangement will require approval by Silk Shareholders (other than the Excluded Shareholders) at the Court Meeting and the passing of a special resolution by Silk Shareholders to implement the Scheme at the EGM. A Scheme Shareholder's entitlement to attend and vote at the Meetings and the number of votes which may be cast at them will be determined by reference to their holding of Silk Shares as shown in the register of members of Silk at the time specified in the notice of the relevant meeting. The Court Meeting The Court Meeting is to be held at the direction of the Court to seek the approval of the Scheme Shareholders (other than the Excluded Shareholders) for the Scheme. At the Court Meeting, voting will be by poll. Each member present in person or by proxy will be entitled to one vote for each Scheme Share held. The approval required at the Court Meeting is a majority in number of the Scheme Shareholders who vote either in person or by proxy, representing three-fourths or more in value of the Scheme Shares voted either in person or by proxy, at the Court Meeting. The EGM The EGM will be convened for the same date to consider and, if thought fit, pass a special resolution (which requires a vote in favour of not less than three fourths of the votes cast) necessary to enable effect to be given to the Scheme. It is also proposed to amend the Company's Articles of Association to ensure that any Silk Shares issued to any person other than Tayvin, and/or its nominees, on or after the Record Time will be automatically exchanged for cash on the same terms as Scheme Shares cancelled under the Scheme. Conditions to the Proposals The Proposals are conditional, inter alia upon: (a) the Scheme becoming effective by not later than 31 December 2003 or such later date as Silk and Tayvin may agree and the Court may approve, failing which the Scheme will lapse; (b) the approval by a majority in number of the Silk Shareholders who vote either in person or by proxy, representing three-fourths or more in value of the Silk Shares voted, either in person or by proxy, at the Court Meeting; (c) the passing of the special resolution required to approve or implement the Scheme at the EGM; (d) the sanctioning of the Scheme (with or without modification) and confirmation of the reduction of capital involved therein by the Court (in either case, with or without modification agreed to by Silk and Tayvin) and the delivery of an office copy of the Court Order to the Registrar of Companies in England and Wales and the registration of such Court Order by him; and (e) Elections under the Loan Note Alternative being received for at least #1,845,000 of Loan Notes. Scheme Shareholder's attention is drawn to paragraph 4 of this announcement which discloses the Director's intentions to elect for Loan Notes. Once the necessary approvals from Silk Shareholders (other than, in the case of the Court Meeting, the Excluded Shareholders) have been obtained and all conditions have been satisfied or (where applicable) waived, the Scheme will become effective following sanction by the Court upon registration of the Court Order by the Registrar of Companies in England and Wales. Once effective, the Scheme of Arrangement will be binding on all Scheme Shareholders, including those who did not vote, or who voted against it, at the Court Meetings and those who could not be traced. 11. The Loan Note Alternative As an alternative to receiving the Cash Consideration, Scheme Shareholders (other than Overseas Shareholders) will be entitled to transfer some or all of their Scheme Shares in exchange for Loan Notes and cash in each case subject to the terms and conditions of the Loan Note Alternative, on the following basis: Scheme Shareholders may elect to receive the Loan Note Alternative on the following basis: for every 100 Scheme Shares #20 cash and #45 nominal value of Loan Notes Attention is drawn to the section entitled "Financial effects of the Proposals" below which indicates that the consideration per Scheme Share for a Scheme Shareholder electing to receive the Loan Note Alternative would not materially differ from the 42 pence offered by way of the Cash Consideration. Scheme Shareholders have a guaranteed minimum entitlement to the Loan Note Alternative in respect of 55 Scheme Shares out of each 100 they so elect. Scheme Shareholders can elect to receive the Loan Note Alternative in respect of any number of Scheme Shares they hold. The maximum number of Loan Notes available under the Loan Note Alternative is #2,346,856 in aggregate value. If elections for the Loan Note Alternative would result in the issue of Loan Notes exceeding this amount, elections will be scaled down pro rata (but to no lower than each person's guaranteed minimum entitlement) and shares not transferred pursuant to the Loan Note Alternative will be cancelled for 42 pence per Scheme Share. The minimum amount of Loan Notes capable of issue is #1.00 in nominal value. Accordingly, if elections for the Loan Note Alternative are made in respect of Scheme Shares which would result in less than #1.00 in nominal value of Loan Notes being issued, such Scheme Shares will instead be cancelled for 42 pence per Scheme Share. The attention of Scheme Shareholders considering making an election for the Loan Note Alternative is particularly drawn to the section below headed "Risks attached to the Loan Notes". In addition, they are strongly advised to consult a stockbroker, bank manager, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares or other securities. Scheme Shareholders are recommended to consider carefully, in the light of their investment objectives and having taken advice appropriate to their own financial circumstances, whether it would be appropriate for them to elect for the Loan Note Alternative. Overseas Persons will not be entitled to elect to receive Loan Notes and will only be entitled to receive the Cash Consideration. 12. Risks attached to the Loan Notes Further details of the Loan Notes are contained in paragraph 17. However, Scheme Shareholders (excluding Overseas Persons) are advised to consider the following factors before electing for the Loan Note Alternative: 1. the Loan Notes are not guaranteed, therefore there can be no assurance that the principal sum will ever be paid; 2. the Loan Notes will not be listed on any stock exchange, nor is it the intention of Tayvin to offer any trading facility for the Loan Notes; 3. save upon the death of the Loan Note holder, the Loan Notes will not be transferable in any circumstances; 4. the security for the Loan Notes will be subordinated to any security provided to the Bank; 5. the total bank debt of Tayvin (approximately #4,650,000 is being made available under the Bank Facility) will rank in priority to the Loan Notes. No redemption of Loan Notes will be made unless such redemption is a permitted payment under the terms of the Bank Facility arrangements. 6. the Loan Notes are not repayable as to principal before the date which is five years and three months after the Effective Date save that Loan Note holders may request for up to #50,000 (in aggregate) of Loan Notes to be redeemed each year on a pro rata basis, subject to the consent of both Tayvin and the Bank; 7. holders of Loan Notes do not have a right to appoint a director to the board of Tayvin and there is only an obligation on Tayvin to provide certain financial information on Tayvin to a Loan Note representative; 8. the value of the Loan Notes will be subject to similar market and trading risks as are faced by Silk currently; 9. there can be no assurances as to the tax treatment of the Loan Notes. Scheme Shareholders are recommended to seek their own tax advice; 10. the non-payment of interest under the Loan Notes may not constitute an event of default under the terms of the Loan Notes; and 11. the nature of the Loan Notes is such that they will rank behind the Bank in relation to all lending, both now and in respect of any future lending without limit. 13. Financial effects of the Proposals The following tables set out, for illustrative purposes only and on the bases and assumptions set out in the notes below, the financial effects of acceptance of the Proposals on capital value for a holder of one Silk Share, if the Proposals become effective: Shareholder who Shareholder who elects to elects to receive the receive the Cash Loan Note Consideration Alternative (p) (p) Value of the portion of the total consideration receivable under the Offer satisfied by cash 42.0 20.0 Estimated value of 45p nominal value of Loan - 22.0 Notes receivable under the Offer (at 48.9p per #1.00 - see Note 1 below) ------ ------ 42.0 42.0 Notes 1. The estimated value of the Loan Notes portion of the total consideration receivable under the offer is based on a Brewin Dolphin estimated value of 48.9p per #1 nominal value of Loan Notes had such Loan Notes been in issue as at 3 September 2003, being the latest practicable date prior to this announcement. 2. No account has been taken of any liability to taxation. 3. The table does not reflect the impact of the minimum nominal value of Loan Notes of #1.00 as set out in paragraph 11 of this letter. Taking into account the risks associated with the Loan Notes and by reference to the market conditions prevailing on 3 September 2003 (being the latest practicable date prior to the announcement), the value per Scheme Share for a Scheme Shareholder electing to receive Loan Notes would not materially differ from the 42 pence offered to Scheme Shareholders by way of Cash Consideration under the Offer. 14. Information on Tayvin, the interests of Tayvin in Silk and financing Tayvin is a private limited company which was incorporated in England and Wales on 17 February 2003 with registered number 04667190 and was established at the direction of the Management Team for the purpose of making an offer to acquire Silk. Tayvin has not carried on any business since incorporation or entered into any material obligation other than in connection with the Proposals. The board of Tayvin The directors of Tayvin as at the date of this announcement are as follows: David Tooth (Chairman) Doreen Clarke Steven Stewart Clayton Rosemarie Croft Andrew Henry Mark Hubert Thomas Charles Jeggo Tro Manoukian Stephen Nixon Ian Richard Stevenson Terence Welsh (also Company Secretary) It is intended that David King and Clive Reeks will be appointed as non-executive directors of Tayvin with effect from the Effective Date. Interests of Tayvin in Silk Tayvin will acquire 1 Silk Share prior to the implementation of the Scheme. Conditional upon the Scheme becoming effective, Tayvin has conditionally agreed to acquire 2,973,061 Silk Shares from David Tooth, Executive Chairman of Silk and persons connected or deemed to be connected to him in exchange for the issue of 1,950,000 ordinary shares of #1.00 each in Tayvin and #500,000 B Loan Notes. Bank facilities Tayvin has entered into a facility letter with the Bank for the provision of up to #3,350,000 to finance the Cash Consideration due under the Proposals and to provide for associated fees and expenses. It will not be available for the refinancing of existing debt or to provide working capital after completion of the acquisition. In addition Tayvin has also been provided with a working capital facility from the Bank of up to #1.3 million. It is a condition of the Scheme that elections from Scheme Shareholders in respect of at least #1,845,000 of Loan Notes must be received in order that Tayvin has sufficient cash available to fund the Cash Consideration. Taylor Vinters, who are advising Tayvin in relation to the legal aspects of the Offer, has confirmed that sufficient resources are available to Tayvin to satisfy full acceptance of the Offer. 15. Inducement fee As an inducement to Tayvin to make the Offer, Silk has agreed to pay an inducement fee to Tayvin of up to #52,000 in the event that either a superior offer is received from a third party which becomes wholly unconditional or the recommendation of the Independent Director is withdrawn or adversely modified, or Tayvin's funders refuse to provide funding or if Scheme Shareholders fail to approve the Scheme at the Meetings (provided that no member of the Management Team entitled to vote fails to vote). 16. The Directors and the effect of the Scheme on their interests Except for David Tooth, the effect of the Scheme on the interests of the Directors does not differ from its effect on the like interests of any other Scheme Shareholders. It is intended that David King and Clive Reeks will be appointed as non-executive directors of Tayvin with effect from the Effective Date. In addition, both David King and Clive Reeks have indicated that they will be electing to receive Loan Notes in respect of their Scheme Shares as referred to in paragraph 4 of this announcement. They will have no interest in the share capital of Tayvin. 17. Particulars of the Loan Notes The Loan Notes, which will be governed by English law will be secured obligations of Tayvin and will be issued, credited as fully paid, in integral multiples of #1 nominal value. Fractions will be ignored and rounded downwards. The Loan Notes are not guaranteed or convertible. The maximum number of Loan Notes available under the Loan Note Alternative is #2,346,856 in aggregate value. The Loan Notes are not transferable and no application has been made, nor is intended to be made, for them to be listed or dealt with on any recognised investment exchange. The Loan Notes will bear interest from the date of issue to the relevant holder of Loan Notes, payable subject to any requirements to deduct tax therefrom, quarterly in arrears. The Loan Notes are to be redeemed in full in 2009 provided there is no event of default under the Bank Facility. They may also be repayable early (together with any interest) provided such payment is permitted under the Bank Facility. Holders of Loan Notes may request for up to #50,000 (in aggregate) of Loan Notes to be redeemed each year. Such redemption is subject to Tayvin having sufficient monies available to do so and subject to the prior written consent of the Bank. Any application for early repayment in excess of #50,000 (in aggregate) will be scaled down pro rata as between the holders of Loan Notes (but will be subject to any scaling back between B Loan Notes assuming that early repayment in respect of B Loan Notes has also been applied for as referred to below). The Company may, after 12 months from their date of issue, redeem any number of Loan Notes (in minimum amounts of #1,000). Any such redemption is subject to the Bank's prior written consent. The Loan Note holders do not have a right to appoint a director to the board of Tayvin. There is however an obligation upon Tayvin to provide certain financial information to the Loan Note representative. A majority in value of the Loan Note holders may change the Loan Note representative. Although the Loan Notes are to be secured by way of a debenture over the assets of Tayvin and over the assets of the Company, such debentures are fully subordinated to any security granted in favour of the Bank. The Bank will be granted a debenture over the Company and the assets of the Company, legal charges over the properties owned by the Company and also a cross-company guarantee between Silk and Tayvin and the assignment of the benefit of a key man insurance policy taken out over the life of David Tooth. In addition, the security may only be enforced with the prior written consent of the Bank. Tayvin has also entered into an inter-creditor agreement with the Bank under which the ranking priority as between the Bank and the holders of the Loan Notes and the B Loan Notes are determined. Under the terms of the agreement, the Loan Notes will rank pari passu with the B Loan Notes on any winding up of the Company but behind the Bank. The rights over the security granted by Tayvin and the Company under the Loan Notes are to be exercised by a security trustee. A majority in value of the Loan Note holders may change the security trustee at any time. Under the terms of the Bank Facility, no monies can be paid out to the Loan Note holders whilst there is either an event of default or a potential event of default. Not only will this include such events as the insolvency of Tayvin it would also relate to the breach of any financial covenant by Tayvin as a result of making such a payment. Tayvin has also created #500,000 worth of B Loan Notes. These are to be issued to Mr Tooth and his connected persons as part consideration for the transfer of such shares in the Company to Tayvin. The B Loan Notes are to rank pari passu with the Loan Notes in all respects save for the interest rate payable. The holders of B Loan Notes may apply for up to #20,000 (in aggregate) of Loan Notes to be redeemed each year. Such redemption is subject to Tayvin having sufficient monies available to do so and subject to the prior written consent of the Bank. Any application for early repayment in excess of #20,000 (in aggregate) will be scaled down pro rata as between the holders of B Loan Notes (but subject to any pro rata scaling back between the holders of Loan Notes assuming that early repayment in respect of Loan Notes has also been applied for). 18. De-listing and cancellation of trading If the Scheme becomes effective, Tayvin intends to procure the making of an application by Silk for the cancellation of the listings of Silk Shares on the Official List of the UK Listing Authority and on the London Stock Exchange's market for listed securities and to re-register Silk as a private company under the relevant provisions of the Act. It is expected that such cancellations will take effect no earlier than 20 business days after the date on which the Scheme becomes effective. 19. General The Scheme Circular containing the full details of the Proposals and the Form of Proxy and Forms of Election will be posted to Silk Shareholders as soon as practicable. It is currently anticipated that the Court Meeting and the EGM will be held at the end of October 2003, with the Court hearing anticipated in early November. Full details of the expected timetable will be contained in the Scheme Document. The definitions of certain expressions and words used in this announcement are contained in the Appendix. Save as disclosed in this announcement, neither Tayvin, nor anyone acting or deemed to be acting in concert with Tayvin, owns or controls any Silk Shares or rights over such shares. The availability of the Offer to persons who are citizens, nationals or residents of countries outside the UK may be affected by the laws of the relevant jurisdictions. Persons who are citizens, nationals or residents of countries outside the UK should inform themselves of, and observe, any applicable legal requirements. This announcement does not constitute an offer or an invitation to purchase any securities. The Offer will not be made, directly or indirectly outside the United Kingdom. Accordingly, copies of this announcement and any other document relating to the Offer, are not being, and must not be, mailed or otherwise distributed or sent outside the United Kingdom. The directors of Tayvin accept responsibility for the information contained in this announcement, relating to Tayvin, the directors of Tayvin, members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the directors of Tayvin (who have taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. The directors of Silk accept responsibility for the information contained in this announcement which relates to Silk, the directors of Silk, members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the directors of Silk (who have taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. Enquiries: Sarah Kent 0161 214 5554 Brewin Dolphin John L Jeremy 01787 467905 Independent Director Brewin Dolphin Securities Limited, which is authorised and regulated by the Financial Services Authority, is acting for Silk and no one else in connection with the Scheme and will not be responsible to anyone other than Silk for providing the protections afforded to clients of Brewin Dolphin nor for giving advice in relation to the Scheme, the contents of this document or any arrangements referred to herein. Brewin Dolphin Securities Limited has approved and authorised the contents of this announcement for the purposes of section 21 of the Financial Services and Markets Act 2000. Taylor Vinters is acting for Tayvin and no one else in connection with the Scheme and will not be responsible to anyone other than Tayvin for providing the protections afforded to clients of Taylor Vinters nor for providing advice in relation to the Scheme, the contents of this document or any arrangements referred to herein. The Offer will not be made, directly or indirectly, outside the United Kingdom and will not be capable of acceptance by any person resident in, or a national of, a jurisdiction outside the United Kingdom. Accordingly, copies of this announcement and any other documents relating to the Offer are not being and must not be mailed or otherwise distributed outside the United Kingdom and persons receiving such documents (including, without limitation, custodians, nominees and trustees) must not distribute or send them outside the United Kingdom. APPENDIX Definitions The following definitions apply throughout this document unless the context otherwise requires: "Act" Companies Act 1985 as amended "Bank" the Governor and Company of Bank of Scotland "Bank Facility" the loan facility to be made available to Tayvin by the Bank "B Loan Notes" 9.5% redeemable secured B loan notes 2009 to be issued by Tayvin "Brewin Dolphin" Brewin Dolphin Securities Limited "Cancellation Scheme Shares other than the Loan Note Elected Shares in Shares" issue at the Record Date "Cash 42 pence payable by Tayvin for each Scheme Share cancelled Consideration" "Companies Act" the Companies Act 1985, as amended "Conditions" the conditions to the implementation of the Proposals (including the Scheme) "Court" the High Court of Justice in England and Wales "Court Meeting" the meeting of Scheme Shareholders, other than the Excluded Shareholders, (and any adjournment thereof) convened pursuant to an order of the Court pursuant to section 425 of the Companies Act, for the purpose of considering and, if thought fit, approving the Scheme (with or without amendment) "Directors" or the directors of Silk at the date of this announcement "Board" "Effective Date" the date on which the Scheme becomes effective in accordance with its terms "EGM" or the extraordinary general meeting of Silk to be held "Extraordinary immediately after the Court Meeting General Meeting" "Excluded Tayvin, the members of the Management Team and their Shareholders" connected persons "Independent John L Jeremy Director" "Independent the Silk Shareholders, other than members of the Management Shareholders" Team or persons connected with them and Tayvin "Loan Notes" 6% redeemable secured A loan notes 2009 to be issued by Tayvin pursuant to the Loan Note Alternative "Loan Note the alternative whereby Scheme Shareholders (other than Alternative" Overseas Persons) may elect to receive, subject to certain terms and conditions, Loan Notes in exchange for some or all of their Scheme Shares under the Scheme instead of receiving the Cash Consideration to which they would otherwise be entitled upon the cancellation of their Scheme Shares under the Scheme if appropriate (subject to scaling back) "Loan Note Elected Scheme Shares (if any) in respect of which (a) valid Shares" elections have been made under the Loan Note Alternative in accordance with its terms and (b) Loan Notes are to be issued in accordance with the Loan Note Alternative "Loan Note Form of the form of election and authority relating to the Loan Note Election" Alternative "London Stock London Stock Exchange plc Exchange" "Management Team" Kenneth A Shapiro together with the directors of Tayvin at the date of this announcement "Meetings" the Court Meeting and the EGM "New Silk Shares" new Silk Shares to be issued by Silk to Tayvin as part of the Scheme. "Offer" proposed acquisition by Tayvin of all the issued and to be issued share capital of Silk by means of the Scheme, subject to the Conditions "Official List" the Official List of the UK Listing Authority "Optionholders" holders of options granted pursuant to the Silk Share Option Schemes "Overseas Persons" Silk Shareholders on the register of members of Silk at the or "Overseas Record Time with a registered address outside the United Shareholders" Kingdom or whom Silk reasonably believes to be a citizen, resident or national of a jurisdiction outside the United Kingdom "Proposals" the proposals to be considered at the Meetings, including the proposed acquisition of Silk by Tayvin of all the issued and to be issued share capital of Silk by means of the Scheme "Record Time" 6.00 pm on the business day immediately preceding the date of the commencement of the hearing by the Court of the petition to sanction the Scheme "Scheme" or "Scheme the proposed scheme of arrangement under section 425 of the of Arrangement" Act between the Company and Scheme Shareholders, with or subject to any modification thereof or in addition thereto or condition approved or imposed by the Court and agreed by Silk and Tayvin "Scheme Circular" the document to be sent to Silk Shareholders containing details of the Proposals including the Scheme and convening the Meetings "Scheme the holders of Scheme Shares Shareholders" "Scheme Shares" Silk Shares in issue on the date of the document; (if any) issued after the date of this document and prior to the Record Time; (if any) issued at or after the Record Time and prior to the Record Time either on terms that the original or any subsequent holder thereof shall be bound by the Scheme or in respect of which the holder thereof shall have agreed to be bound by the Scheme; and excluding Silk Shares held by David Tooth and persons connected with him. "Silk" or Silk Industries PLC (incorporated in England and Wales under "Company" company number 2322023) "Silk Share Option the 1997 Sharesave Scheme, the Share Option Scheme and the Schemes" 1997 Unapproved Share Option Scheme "Silk holders of Silk Shares Shareholders" "Silk Shares" ordinary shares of 10 pence in the capital of the Company "Tayvin" Tayvin 300 Limited, registered in England and Wales with registered number 04667190 "United Kingdom" or the United Kingdom of Great Britain and Northern Ireland "UK" "UK Listing the Financial Services Authority in its capacity as Authority" competent authority for the purposes of the Financial Services and Markets Act 2000 This information is provided by RNS The company news service from the London Stock Exchange END OFBBCGDCCDGGGXX
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