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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Eurovestech | LSE:EVT | London | Ordinary Share | GB0002292810 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 6.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMTOL TIDMEVT
RNS Number : 1553B
ToLuna plc
14 February 2011
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION
EMBARGOED FOR RELEASE AT 07.00 ON 14 FEBRUARY 2011
14 February 2011
ACQUISITION
OF
TOLUNA PLC ("TOLUNA")
BY
ITWP ACQUISITIONS LIMITED ("ITWP")
to be implemented by way of a scheme of arrangement
under Part 26 of the Companies Act 2006
Summary of the Acquisition
-- The Independent Directors of ToLuna are pleased to announce the terms of a proposed acquisition of ToLuna by ITWP (the "Acquisition").
-- The Acquisition will be made by ITWP. ITWP is a newly incorporated company formed for the purpose of implementing the Acquisition. ITWP is supported by Verlinvest, a significant shareholder in ToLuna.
-- Following the completion of the Acquisition, ITWP intends to appoint Frederic-Charles Petit, Founder and Chief Executive of ToLuna, as a director of ITWP and to ask him to continue in his current role as leader of the executive management team of the ToLuna Group.
-- Under the terms of the Acquisition, the consideration per ToLuna Share comprises:
-- 102 pence in cash;
-- 116 ITWP Shares;
-- B Loan Notes with a nominal value of 79 pence; and
-- C Loan Notes with a nominal value of 23 pence.
-- A mix-and-match facility will be made available to allow ToLuna Shareholders to elect, subject to availability, to vary the proportions in which they receive cash, ITWP Shares and Loan Notes.
-- Because of the elections certain ToLuna Shareholders have irrevocably undertaken to make (as further described in the full text of this announcement), sufficient cash will be available to allow those ToLuna Shareholders who so elect to receive all of the consideration for their ToLuna Shares in the form of 320 pence in cash per ToLuna Share.
-- TOLUNA SHAREHOLDERS WHO DO NOT RETURN A FORM OF ELECTION ACCORDING TO THE INSTRUCTIONS WHICH WILL BE CONTAINED IN THE SCHEME DOCUMENT WILL BE DEEMED TO HAVE MADE AN ELECTION TO RECEIVE 320 PENCE IN CASH PER TOLUNA SHARE. THE FULL DETAILS OF THE MIX-AND-MATCH FACILITY ARE DESCRIBED IN SECTION 4 OF THE FULL TEXT OF THIS ANNOUNCEMENT.
-- The Independent Directors, who have been so advised by Merchant Securities, consider 320 pence in cash per ToLuna Share, which is available as an option under the mix-and-match facility as part of the terms of the Acquisition, to be fair and reasonable to ToLuna Shareholders. In providing the Independent Directors with advice, Merchant Securities has taken account of the commercial assessments of the Independent Directors.
-- The Independent Directors, accordingly, intend unanimously to recommend that all ToLuna Shareholders eligible to vote at the Meetings vote in favour of the resolutions to be proposed at such meetings and that all ToLuna Shareholders (other than those who have already made irrevocable undertakings to the contrary or who are party to the Contribution and Sale Agreements) elect to receive 320 pence in cash per ToLuna Share under the mix-and-match facility. The terms of this recommendation are described in section 6 of the full text of this announcement.
-- 320 pence per ToLuna Share represents a premium of:
-- 30.6 per cent. to the closing price per ToLuna Share of 245.00 pence on 11 February 2011, being the last business day prior to the Announcement Date; and
-- 27.7 per cent. to the average closing price per ToLuna Share of 250.61 pence for the three months ended 11 February 2011.
-- It is intended that the Acquisition will be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act, further details of which are contained in the full text of this announcement.
-- Implementation of the Scheme will be subject to a number of conditions including the passing of a resolution by a majority in number of those Scheme Shareholders present (in person or by proxy) and voting at the Court Meeting representing at least 75 per cent. in value of all ToLuna Shares eligible to vote on the Scheme and the passing of the ToLuna Resolutions and the Ordinary Resolution at the ToLuna General Meeting.
-- ITWP has received irrevocable undertakings from Eurovestech plc ("Eurovestech"), Invesco Asset Management Limited ("Invesco"), and the Independent Directors who hold ToLuna Shares to vote in favour of the Scheme (including the required resolutions) in respect of their entire beneficial holdings of ToLuna Shares amounting, in aggregate, to 30,120 964 ToLuna Shares. These shares represent approximately 59.6 per cent. of the existing issued share capital of ToLuna, or approximately 77.3 per cent. of the issued share capital of ToLuna excluding shares held by the parties to the Contribution and Sale Agreements which cannot be voted in the Scheme. Further details of these irrevocable undertakings are set out in Appendix 2 to this announcement.
-- It is expected that the Scheme Document will be posted to ToLuna Shareholders within 28 days of the date of this announcement and that the Scheme will become effective in during April 2011, subject to the satisfaction of regulatory and all other relevant conditions, including the conditions as set out in Appendix 1 to this announcement.
-- ITWP attaches great importance to the skills and experience of the existing ToLuna management and employees of ToLuna. ITWP has given assurances to the Independent Directors that, on the Acquisition becoming effective, the existing employment rights, including pensions rights, of all ToLuna Group employees will be observed. ITWP has no current intention to change the location of ToLuna Group's places of business.
Commenting on the Acquisition, Frederic de Mevius, Founder and Managing Director of Verlinvest, and Non-Executive Director of ToLuna, said:
"Verlinvest is excited to strengthen its involvement with ToLuna, a unique firm with a well-respected brand and excellent prospects. We have supported the business since becoming a shareholder in June 2009 and we believe that the business will continue to develop under the strategies being pursued by Frederic-Charles Petit. We are pleased to have received the Independent Directors' recommendation of the cash element of the offer and we are looking forward to further developing ToLuna's business."
Frederic-Charles Petit, Founder and Chief Executive Officer of ToLuna, said:
"It is great for ToLuna to have the support of Verlinvest for this transaction which is a great growth and long term investment opportunity for the group, which will benefit from significant new investment and an increased focus on technology-driven tools and solutions. We will accelerate the development of ToLuna's online offering to allow more clients to gain insights from access to ToLuna's unique global panel. I am also very pleased that Eurovestech and Invesco will continue to be supportive shareholders following the acquisition."
George Kynoch, Chairman of the Board of Directors of ToLuna, said:
"Since joining AIM in 2005, ToLuna has grown rapidly to become the leading independent provider of online panels. In this time, ToLuna has created significant value for its shareholders and this offer is the culmination of that progress."
Terms used in this summary but not defined herein shall have the meaning given to them in the full text of the announcement.
This summary should be read in conjunction with, and is subject to, the full text of this announcement including the Appendices.
Appendix 1 sets out the Conditions and certain further terms of the Acquisition. Appendix 2 contains details relating to the irrevocable undertakings given by Eurovestech, Invesco and certain of the Independent Directors including, in the case of Eurovestech and Invesco, the elections which they have undertaken to make under the mix-and-match facility. Part I of Appendix 3 contains details of the ITWP Shares and Loan Notes offered as consideration by ITWP in connection with the Acquisition. Part II of Appendix 3 contains risk factors which are relevant to the ITWP Shares and Loan Notes. Appendix 4 contains the definitions of certain terms used in this announcement.
Enquiries
Perella Weinberg Partners (sole financial adviser to ITWP and Verlinvest)
Tel: +44 (0)20 7268 2800
Philip Yates
Graham Davidson
James Triggs
Merchant Securities Limited (sole financial adviser and Nominated Adviser to ToLuna)
Tel: +44 (0)20 7628 2200
David Worlidge
Simon Clements
Bidhi Bhoma
Key Terms Of The Acquisition
1. Introduction
The Independent Directors of ToLuna are pleased to announce the terms of a proposed acquisition of ToLuna by ITWP (the "Acquisition").
The Acquisition will be made by ITWP, a newly incorporated company formed by Verlinvest for the purpose of implementing the Acquisition and with the financial support of Verlinvest, a significant shareholder in ToLuna.
Following the completion of the Acquisition Frederic-Charles Petit, Founder and Chief Executive of ToLuna, will be appointed as a director of ITWP and will continue in his current role as leader of the executive management team of the ToLuna Group.
2. The Acquisition
Under the terms of the Acquisition, each Scheme Shareholder at the Scheme Record Time will be entitled to receive:
For each ToLuna Share -- 102 pence in cash; -- 116 ITWP Shares; -- B Loan Notes with a nominal value of 79 pence; and -- C Loan Notes with a nominal value of 23 pence.
A mix-and-match facility will be made available to allow ToLuna Shareholders to elect, subject to availability, to vary the proportions in which they receive cash, ITWP Shares and Loan Notes.
Because of the elections certain ToLuna Shareholders have irrevocably undertaken to make (further details of which are described below), sufficient cash will be available to allow those ToLuna Shareholders who so elect to receive all of the consideration in respect of their ToLuna Shares in the form of 320 pence in cash per ToLuna Share.
TOLUNA SHAREHOLDERS WHO DO NOT RETURN A FORM OF ELECTION ACCORDING TO THE INSTRUCTIONS WHICH WILL BE CONTAINED IN THE SCHEME DOCUMENT WILL BE DEEMED TO HAVE MADE AN ELECTION TO RECEIVE 320 PENCE IN CASH PER TOLUNA SHARE.
The Independent Directors intend unanimously to recommend that all ToLuna Shareholders eligible to vote at the Meetings vote in favour of the resolutions to be proposed at such meetings and that all ToLuna Shareholders (other than those who have already made irrevocable undertakings to the contrary or who are party to the Contribution and Sale Agreements) elect to receive 320 pence in cash per ToLuna Share under the mix-and-match facility. The terms of this recommendation are described in section 6 of this announcement.
320 pence in cash per share represents a premium of:
-- 30.6 per cent. to the closing price per ToLuna Share of 245.00 pence on 11 February 2011, being the last business day prior to the Announcement Date; and
-- 27.7 per cent. to the average closing price per ToLuna Share of 250.61 pence for the three months ended 11 February 2011.
It is intended that the Acquisition will be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act, further details of which are contained in section 13 below.
Save to the extent cancelled pursuant to the Scheme, the ToLuna Shares will be acquired by ITWP fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights attaching to them including the right to receive and retain all dividends and distributions (if any) declared, made or payable after the date of this announcement.
The Acquisition will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and to be set out in the Scheme Document.
3. ITWP Shares and Loan Notes
ITWP has decided to offer, as part of the consideration for the Acquisition, 116 ITWP Shares for each ToLuna Share. The ITWP Shares will have proportional voting rights and will rank pari passu in all economic respects with the other shares in ITWP. The ITWP Shares will have a nominal value of 1 penny per ITWP Share.
ITWP has also decided to offer, as part of the consideration for the Acquisition, B Loan Notes and C Loan Notes. Any B Loan Notes and C Loan Notes (which ITWP has not already redeemed - see paragraph below) will be converted into ITWP Shares at a rate of one ITWP Share for each penny in nominal value of Loan Notes on the earlier of an Exit Event and 30 June 2012.
ITWP may, however, redeem the B Loan Notes and/or the C Loan Notes prior to an Exit Event or 30 June 2012. It is ITWP's current intention to redeem B Loan Notes in the amount of GBP25.0 million by 30 June 2011 (ITWP has procured a bank guarantee for this purpose). Neither the B Loan Notes nor the C Loan Notes will bear interest.
None of the ITWP Shares, B Loan Notes or C Loan Notes will be admitted to trading on AIM or any other stock exchange.
Further details about the ITWP Shares, the Loan Notes (including arrangements for their redemption) and the bank guarantees are set out in Part I of Appendix 3. Further details about the risk factors which are relevant to the ITWP Shares and Loan Notes are set out in Part II of Appendix 3.
4. Mix-and-match facility
A mix-and-match facility will be made available to allow ToLuna Shareholders to elect, subject to availability, to receive 320 pence in cash per ToLuna Share or a combination of cash, ITWP Shares and Loan Notes. The elections are subject to the following restrictions:
-- the total number of ITWP Shares to be issued by ITWP as consideration in relation to the Acquisition will not exceed 5,097,791,912;
-- the total maximum nominal value of B Loan Notes to be issued by ITWP as consideration in relation to the Acquisition will not exceed GBP35 000,000;
-- the total maximum nominal value of C Loan Notes to be issued by ITWP as consideration in relation to the Acquisition will not exceed GBP10 472,501.40; and
-- the total maximum amount of cash to be paid by ITWP to Scheme Shareholders as consideration in relation to the Acquisition will not exceed GBP44,825,411.64.
ToLuna Shareholders are recommended to consider carefully, in the light of their own investment objectives and having taken independent advice appropriate to their own financial circumstances, if they wish to elect for any equity in the form of unlisted ITWP Shares and/or Loan Notes.
ToLuna Shareholders may elect under the terms of the Acquisition to vary the proportions in which they receive cash consideration, ITWP Shares and Loan Notes. In respect of each of their ToLuna Shares, ToLuna Shareholders can elect to receive (instead of the consideration as described in section 2 of this announcement):
320 pence in cash; 320 ITWP Shares; 320 pence in nominal value of B Loan Notes; or 320 pence in nominal value of C Loan Notes.
ITWP's ability to satisfy elections for cash, ITWP Shares or Loan Notes under the mix-and-match facility will depend, inter alia, on countervailing elections being made by other ToLuna Shareholders. ITWP has already received irrevocable undertakings from certain ToLuna Shareholders to make elections under the mix-and-match facility sufficient to allow all other ToLuna Shareholders to receive 320 pence in cash per ToLuna Share if they so elect.
To the extent that other ToLuna Shareholders elect to receive their consideration in forms other than cash, the amount of ITWP Shares and Loan Notes received by Eurovestech and Invesco will be scaled back based on their shareholdings in ToLuna, their elections for ITWP Shares and Loan notes, the elections of other shareholders for ITWP Shares and Loan Notes and the amount of ITWP Shares and Loan Notes available under the Acquisition, and Eurovestech and Invesco will instead receive a portion of cash consideration for their ToLuna Shares.
TOLUNA SHAREHOLDERS WHO DO NOT RETURN A FORM OF ELECTION ACCORDING TO THE INSTRUCTIONS WHICH WILL BE CONTAINED IN THE SCHEME DOCUMENT WILL BE DEEMED TO HAVE MADE AN ELECTION TO RECEIVE 320 PENCE IN CASH PER TOLUNA SHARE. ITWP HAS INFORMED TOLUNA THAT AS A RESULT OF ELECTIONS THAT EUROVESTECH AND INVESCO HAVE COMMITTED TO MAKE, THERE WILL BE SUFFICIENT CASH AVAILABLE TO SATISFY IN FULL ANY ELECTIONS TO RECEIVE CASH CONSIDERATION MADE OR DEEMED TO BE MADE BY ANY OTHER TOLUNA SHAREHOLDER. THEREFORE, SHOULD ANY TOLUNA SHAREHOLDER NOT COMPLETE A FORM OF ELECTION HE WILL RECEIVE 320 PENCE IN CASH PER TOLUNA SHARE (SUBJECT TO THE SCHEME PROCEEDING AND EUROVESTECH AND INVESCO MAKING ELECTIONS IN ACCORDANCE WITH THEIR IRREVOCABLE COMMITMENTS AS DESCRIBED IN APPENDIX 2).
5. Background to and reasons for the Acquisition
Verlinvest is a Belgian family-owned investment holding company which undertakes private equity investments, either directly or indirectly through various subsidiaries. ToLuna is, in the view of Verlinvest, a perfect complement to Verlinvest's existing portfolio of investments in consumer product and service companies that capture long-term consumer trends and stay abreast of changing consumer behaviour.
Verlinvest has supported the growth and development of ToLuna since becoming a shareholder in July 2009, when it invested to support the acquisition of Greenfield Online ISS. Since this investment, ToLuna has continued to grow rapidly into an extremely attractive, globally diversified, unique company with a well-respected brand. Verlinvest believes it can continue to foster ToLuna's development through significant new investment and by providing new strategic direction.
ITWP believes that ToLuna is at a crucial stage of its development. Following the Acquisition, ITWP intends, with the support of Verlinvest, to take significant steps aimed at accelerating ToLuna's growth. ToLuna's core activities will continue to be developed and strengthened. Significant investment will be made in the business to support the accelerated development and commercial marketing of technology-driven tools and solutions, including ToLuna's QuickSurveys and online community toluna.com. This investment will also enable ToLuna to grow its business in geographic markets in which the market research industry is less mature, including in the Asia Pacific region.
As a result of pursuing this strategic direction, ITWP is targeting enhanced long-term revenue growth for ToLuna. Following the Acquisition, and as a result of the significant investment required to accelerate ToLuna's development, the risks associated with the short-term financial and operating performance of ToLuna are likely to increase significantly. As a result, ITWP believes the development of ToLuna under this strategy is much better suited to private ownership.
6. Recommendation
In connection with the Acquisition, the Independent Directors have given careful consideration to the fundamental value of ToLuna and the broader dynamics of the online sample and survey technology solutions industry. In addition, the Independent Directors have taken into account the factors set out in section 10 below. As a result, the Independent Directors, who have been so advised by Merchant Securities, believe that a value of 320 pence per ToLuna Share is fair and reasonable.
The Independent Directors, who have been so advised by Merchant Securities, consider that the value of the consideration for the Acquisition, comprising ITWP Shares, Loan Notes and cash, is difficult to determine, subject to significant uncertainty and may be less than 320 pence per ToLuna Share. Therefore, the Independent Directors are unable to state that they believe that the terms of the Acquisition are fair and reasonable.
However, the Independent Directors note that Invesco and Eurovestech have given ITWP irrevocable undertakings to elect to receive all of their consideration under the Acquisition solely in the form of ITWP Shares and Loan Notes. In the event that the Acquisition is implemented by way of the Scheme and Invesco and Eurovestech elect to receive all of their consideration in accordance with their irrevocable undertakings, then all other ToLuna Shareholders who are the subject of the Scheme will be able to receive 320 pence in cash per ToLuna Share under the mix-and-match facility. The Independent Directors, who have been so advised by Merchant Securities, consider that 320 pence in cash, which is available as an option under the mix-and-match facility, is fair and reasonable consideration for a ToLuna Share.
In providing advice to the Independent Directors, Merchant Securities has taken into account the commercial assessments of the Independent Directors.
Until such time as Invesco and Eurovestech deliver their elections to receive all of their consideration in accordance with their irrevocable undertakings, there can be no absolute certainty that the remaining ToLuna Shareholders will be able to receive 320 pence in cash per ToLuna Share. However, the Independent Directors recommend that all ToLuna Shareholders eligible to vote at the General Meeting vote in favour of the resolutions to be proposed at the meetings and that all ToLuna Shareholders (other than those who have already made irrevocable undertakings to the contrary) elect to receive 320 pence in cash per ToLuna Share under the mix-and-match facility in the expectation that Invesco and Eurovestech make elections in accordance with their irrevocable undertakings. In the event that Invesco and/or Eurovestech do not make an election in accordance with their irrevocable undertakings prior to the closing date for elections to be made under the Scheme, the Independent Directors will withdraw their recommendation and will not present the Scheme to the Court.
Richard Bernstein, one of the Independent Directors, is the chief executive of Eurovestech. Whilst Eurovestech accepts that the consideration it is receiving may have a value less than the consideration the other ToLuna Shareholders (apart from Invesco) are receiving, it is content to accept such consideration to facilitate a partial exit for itself, albeit on 30 June 2011, and a full exit in cash at a fair and reasonable value for other ToLuna Shareholders (apart from Invesco). Furthermore, the Acquisition allows Eurovestech to receive a minimum cash payment in June 2011 in excess of 50 per cent. of its current market capitalisation whilst retaining a reduced minority holding in an unlisted growing technology business that Eurovestech has been an investor in since ToLuna's inception in 2000.
Accordingly, the Independent Directors intend unanimously to recommend that all ToLuna Shareholders eligible to vote at the Meetings vote in favour of the resolutions to be proposed at the Meetings and that all ToLuna Shareholders (other than those who have already made irrevocable undertakings to the contrary) elect to receive 320 pence in cash per ToLuna Share under the mix-and-match facility (or, in the event that the Acquisition is implemented by means of an Offer, to accept the Offer and elect to receive 320 pence in cash per ToLuna Share under the mix-and-match facility) as all of the Independent Directors have irrevocably undertaken so to do in respect of their own aggregate beneficial holdings of 171,428 ToLuna Shares (representing approximately 0.3 per cent. of the current issued share capital of ToLuna).
The Independent Directors make no recommendation regarding any election under the mix-and-match facility other than the election for 320 pence in cash per ToLuna Share.
ToLuna Shareholders are recommended to consider carefully, in the light of their own investment objectives and having taken independent advice appropriate to their own financial circumstances, if they wish to elect for any equity in the form of unlisted ITWP Shares and/or Loan Notes.
7. Irrevocable undertakings
ToLuna has received irrevocable undertakings (including those from the Independent Directors who hold ToLuna Shares) to vote in favour of the resolutions relating to the Acquisition at the Meetings, including the vote under Rule 16.2 as described in paragraph (b) of section 9 of this announcement, (or in the event that the Acquisition is implemented by means of an Offer, to accept or procure acceptance of the Offer) in respect of ToLuna Shares representing, in aggregate, 30,120,964 ToLuna Shares (being approximately 59.6 per cent. of the current issued share capital of ToLuna or approximately 77.3 per cent. of the issued share capital of ToLuna excluding shares held by the parties to the Contribution and Sale Agreements which cannot be voted in the Scheme).
Two major ToLuna Shareholders, Eurovestech and Invesco, have irrevocably undertaken to elect to receive their consideration in the proportions set out below:
-- in the case of Eurovestech, 1,051,828,838 ITWP Shares, GBP35,000,000 in nominal value of B Loan Notes and GBP2,187,046.02 in nominal value of C Loan Notes.
-- in the case of Invesco, 3,984,772,542 ITWP Shares and GBP8,285,455.38 in nominal value of C Loan Notes.
Immediately following the issue of their respective ITWP Shares, Eurovestech and Invesco will enter into the Shareholders' Agreement as holders of more than five per cent. of the ITWP Shares respectively. Further details concerning the Shareholders' Agreement are set out in Part I of Appendix 3.
The commitments given by Invesco and Eurovestech to vote in favour of the resolutions relating to the Acquisition at the Meetings may only be revoked if a third party bidder makes an offer to all ToLuna Shareholders to acquire their ToLuna Shares which, in the case of Invesco, represents an overall improvement to the terms of the Acquisition (in Invesco's reasonable opinion) and, in the case of Eurovestech, for a consideration in cash that exceeds 375 pence per ToLuna Share. The undertakings will cease to be binding if the Acquisition lapses or is withdrawn.
Further details of the irrevocable undertakings are given in Appendix 2 to this announcement.
8. Information relating to ITWP
(a) ITWP
ITWP is a newly incorporated company formed by Verlinvest in England and Wales under the Companies Act to effect the acquisition of ToLuna. ITWP has not traded prior to the date of this Announcement (except for entering into transactions relating to the Acquisition).
The Shareholders' Agreement covers certain aspects of the governance of ITWP including the sale and transfer of securities. Further details concerning the Shareholders' Agreement are set out in Part I of Appendix 3.
(b) Verlinvest
Verlinvest is a Belgian family-owned investment holding company which undertakes private equity investments, either directly or indirectly through various subsidiaries. Verlinvest was established in 1995 and is based in Brussels. It currently has around EUR350 million of assets under management.
(c) Arrangements between Verlinvest and ITWP
Under the terms of the Verlinvest Contribution Agreement, Verlinvest will receive 4,822,583,580 ITWP Shares and C Loan Notes with a nominal value of GBP10,027,498.60 in exchange for its contribution of ToLuna Shares to ITWP.
9. Management Arrangements
(a) Executive Management
Frederic-Charles Petit is the founder and Chief Executive Officer of ToLuna. He holds a Masters degree in comparative jurisprudence from New York University and a diploma in advanced studies in international economic law from the Sorbonne in Paris (D. E. A.). He practiced as a French lawyer in the corporate department of Allen & Overy's Paris office, before establishing the ToLuna Group in May 2000. Since founding ToLuna, he has led the development and growth of the business for over ten years. Following the Scheme becoming effective, Frederic-Charles Petit will be appointed as a director of ITWP and will continue in his role as Chief Executive of the ToLuna Group.
(b) Arrangements between Frederic-Charles Petit and ITWP
Under the terms of the FP Contribution Agreement and FP Share Purchase Agreement, Frederic-Charles Petit will receive consideration on different terms from other ToLuna Shareholders. Frederic-Charles Petit will receive different consideration in view of his role as ongoing manager of the business and consistent with the provisions of Rule 16 of the Code.
Frederic-Charles Petit will, pursuant to the terms of the FP Contribution Agreement, receive 919,074,240 ITWP Shares as consideration for contributing to ITWP 2,872,107 ToLuna Shares (with an agreed price of 320 pence per ToLuna Share). Frederic-Charles Petit will also, pursuant to the terms of the FP Share Purchase Agreement, receive GBP4 500,000 in nominal value of A Loan Notes as consideration for selling to ITWP 1,406,250 ToLuna Shares with an agreed price of 320 pence per ToLuna Share.
Frederic-Charles Petit will remain in place to operate the business once the Scheme becomes effective and will continue to be employed on the same terms as govern his current employment by ToLuna. ToLuna Shareholders will be asked at the ToLuna General Meeting to approve the FP Transactions described in this paragraph (b) by voting on the Ordinary Resolution. ToLuna Shareholders are being given an opportunity to vote on the FP Transactions in compliance with the requirements of Rule 16.2 (c) of the Code. Frederic-Charles Petit and Verlinvest will not be entitled to vote on the Ordinary Resolution and voting on this resolution will be by way of a poll.
For the purposes of Rule 16.2 of the Code, Merchant Securities considers the terms of the FP Transactions to be fair and reasonable in so far as the ToLuna Shareholders are concerned.
In addition, ITWP intends to provide equity incentive schemes to members of the ToLuna executive management team. These schemes are likely to include the distribution of additional share options in ITWP (or its subsidiaries) and a mechanism to provide additional compensation once certain thresholds of returns to other ITWP shareholders are reached. No further details of the equity incentive schemes have been decided upon and ITWP does not intend to enter into any such arrangements until the Scheme becomes effective.
10. Information relating to ToLuna
(a) Background
ToLuna enables organisations to generate valuable customer insight by combining its online market research panel and industry leading technology. ToLuna provides a comprehensive proven, scalable solution that enables companies to answer questions of their target audience quickly and efficiently. ToLuna leverages a unique approach to respondent recruitment and engagement with its online 'community' and proprietary respondent engagement methodologies and guarantees that the data clients receive is of the highest quality. Further, ToLuna provides one of the industry's leading technology suites, enabling hundreds of market research organizations and agencies worldwide to create surveys, manage panels and build online communities. ToLuna's products include PanelPortal(TM), AutomateSurvey(TM), IVR(TM) and QuickSurveys(TM). ToLuna has offices in the US, Canada, UK, France (headquarters), The Netherlands, Romania, Germany, India, Australia, Japan and China.
The ToLuna business was founded in 2000 by Frederic-Charles Petit, its current Chief Executive Officer. It is incorporated in England and Wales and currently trades on AIM under the ticker TOL.
(b) Current trading
ToLuna, the leading independent provider of online panels, communities and technology services to the market research industry, expects to report revenues for the year ended 31 December 2010 of GBP73.6 million, compared with GBP49.5 million in 2009. The revenues for 2010 include a full year contribution from Greenfield Online ISS which was acquired in July 2009. Although revenues were slightly below market expectations overall, Europe and Asia Pacific regions showed strong growth. Asia Pacific is one of the fastest growing regions for the global market research industry with Australia, India, Korea and Japan also becoming important markets for ToLuna. The revenue for the Europe region increased over pro forma revenues for 2009 by 10 per cent. and by 62 per cent. for the Asia Pacific region. However, US revenues suffered a decline of approximately 6 per cent. compared to proforma revenues for 2009. The ToLuna Group believes that the decline in US revenues has now been stemmed. The Group's revenues increased by 2 per cent. over the pro forma revenues for the Group for 2009.
The integration of Greenfield Online was completed in the first half of 2010 and since then significant changes have been made within the US operations, new initiatives are being undertaken and early in 2011 George Terhanian, previously with Harris Interactive, was appointed President of ToLuna USA, to reignite growth in the US. The ToLuna Directors expect the impact of these changes to be reflected in the second half of 2011.
ToLuna has again generated positive operational cash flows during the year and at the year end had net cash of more than GBP13 million.
11. ToLuna management, employees and locations
ITWP attaches great importance to the skills and experience of the existing ToLuna management and employees of ToLuna. ITWP has given assurances to the Independent Directors that, on the Scheme becoming effective, the existing employment rights, including pensions rights, of all ToLuna Group employees will be observed. ITWP has no current intention to change the location of ToLuna Group's places of business.
12. ToLuna Share Plans
The Acquisition will include any ToLuna Shares unconditionally allotted or issued before the Scheme Record Time (or until such earlier date as, subject to the Code, ITWP may decide), including those allotted or issued as a result of the exercise of options or vesting of awards under the ToLuna Share Plans.
Appropriate proposals will be made, on or shortly after the date of the Scheme Document, to the participants in the ToLuna Share Plans.
13. Structure of the Acquisition
It is intended that the Acquisition will be effected by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act. The Scheme is an arrangement between ToLuna and the Scheme Shareholders and is subject to the approval of the Court.
The purpose of the Scheme is to provide for ITWP to become the owner of the whole of the issued ordinary share capital of ToLuna. This is to be achieved by the cancellation of the Scheme Shares held by ToLuna Shareholders and the application of the reserve arising from such cancellation in paying up in full a number of new ToLuna Shares (which is equal to the number of Scheme Shares cancelled) and issuing them to ITWP, as a result of which Scheme Shareholders will receive consideration on the basis set out in section 2 of this announcement or in accordance with the elections made under the mix-and-match facility on the basis set out in section 4 of this announcement.
The Scheme requires the approval of Scheme Shareholders by the passing of a resolution at the Court Meeting, expected to be held in April 2011. The resolution must be approved by a majority in number of the Scheme Shareholders present and voting, either in person or by proxy, representing not less than 75 per cent. in value of the ToLuna Shares held by such Scheme Shareholders. Implementation of the Scheme will also require the passing of the ToLuna Resolutions (requiring the approval of ToLuna Shareholders representing at least 75 per cent. of the votes cast at the ToLuna General Meeting, which will be held immediately after the Court Meeting). In respect of the ToLuna Resolutions, the ToLuna Shareholders will be entitled to cast one vote for each ToLuna Share held.
Following the Meetings, the Scheme and the related reduction of ToLuna's share capital must be sanctioned by the Court and will only become effective upon delivery to the Registrar of Companies of a copy of the Scheme Court Order (sanctioning the Scheme) and of the Reduction Court Order (confirming the Reduction of Capital of ToLuna forming part of the Scheme) and the registration of such order. Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the ToLuna General Meeting.
Further details of the Scheme will be contained in the Scheme Document which is expected to be posted to ToLuna Shareholders within 28 days of the date of this announcement. It is anticipated that the Scheme will become effective during April 2011, subject to the satisfaction of regulatory and all other relevant conditions. The Scheme is subject to certain Conditions and certain further terms referred to in Appendix 1 of this announcement and to be set out in the Scheme Document. Further details on the timetable for the implementation of the Scheme will be set out in the Scheme Document.
ITWP reserves the right, subject to the prior consent of the Panel, to elect to implement the acquisition of the ToLuna Shares by way of an Offer. In such event, such takeover offer will be implemented on the same terms (subject to appropriate amendments as described in Part II of Appendix 1), so far as applicable, as those which would apply to the Scheme. Furthermore, if sufficient acceptances of such offer are received and/or sufficient ToLuna Shares are otherwise acquired, it is the intention of ITWP to apply the provisions of section 979 of the Companies Act to acquire compulsorily any outstanding ToLuna Shares to which such offer relates.
14. Financing of the Acquisition
The maximum amount of cash consideration payable by ITWP to Scheme Shareholders in relation to the Acquisition will be GBP44,825,411.64. This amount will be funded using Verlinvest's existing cash resources with which it has committed to fund ITWP for the purposes of the Acquisition.
ITWP has procured bank guarantees to support the redemption of a total amount of GBP29,500,000 in nominal value of A Loan Notes and B Loan Notes by 30 June 2011 (being, the redemption of all the A Loan Notes (in the total amount of GBP4,500,000) and B Loan Notes (in the total amount of GBP25,000,000). These guarantees are more fully described in Part I of Appendix 3. Perella Weinberg Partners is satisfied that sufficient financial resources are available to ITWP to satisfy in full the total maximum cash consideration of GBP44,825,411.64 that is payable under the Acquisition and to support the redemption of GBP29,500,000 in nominal value of A Loan Notes and B Loan Notes by 30 June 2011.
15. Cancellation of admission to trading on AIM
Upon or shortly after the Scheme becoming effective, the London Stock Exchange will be requested to cancel trading in ToLuna Shares on the AIM market of the London Stock Exchange.
On the Scheme Effective Date, share certificates in respect of the ToLuna Shares will cease to be valid and should be destroyed. In addition, entitlements to ToLuna Shares held within the CREST system will be cancelled on the Scheme Effective Date.
16. Implementation Agreement
ToLuna and ITWP have entered into an Implementation Agreement which contains, among other things, certain obligations and commitments in relation to implementation of the Acquisition. The Implementation Agreement also contains an inducement fee arrangement, a non-solicitation undertaking and a provision to give ITWP an opportunity to match any rival offers which are received. Further information regarding this agreement will be set out in the Scheme Document. A brief summary of the inducement fee arrangement, non-solicitation undertaking and right to match are set out below.
Inducement Fee and Break Fee
In consideration of ITWP making the Acquisition, ToLuna has agreed to pay to ITWP an inducement fee of the lesser of (i) GBP1,300,000; and (ii) the maximum amount of fee which ToLuna is permitted to pay under the Code (in each case inclusive of any amounts in respect of value added tax save to the extent that such value added tax is recoverable by ToLuna, in which event the inducement fee shall be exclusive of any amounts in respect of value added tax) (the "Inducement Fee").
The Inducement Fee will be payable if, after this announcement is released and prior to the Scheme lapsing or being withdrawn (subject to certain exceptions):
(a) an Alternative Proposal is the subject of an announcement under Rule 2.4 or Rule 2.5 of the Code and:
(i) such Alternative Proposal (whether or not recommended by the Independent Directors) becomes wholly unconditional, becomes effective or otherwise completes; or
(ii) that Alternative Proposal is referred to the competition authorities, lapses, and the relevant third party makes another Alternative Proposal which completes, or becomes effective or becomes or is declared unconditional in all respects within twelve months of the date of the this announcement,
(b) ToLuna is in breach of certain non-solicitation warranties given to ITWP pursuant to the Implementation Agreement; or
(c) all or any of the Independent Directors either: (i) fail unanimously to recommend the Acquisition in the Scheme Document in accordance with the recommendation contained in this announcement or (ii) withdraw or adversely modify or qualify their unanimous recommendation of the Acquisition contained in this announcement.
Nothing in the agreement obliges ToLuna to pay any amount which the Panel determines would not be permitted by Rule 21.2 of the Code.
Non-solicitation
ToLuna undertakes to ITWP that none of the Independent Directors shall directly or indirectly, solicit or otherwise seek to procure any Alternative Proposal or provide any information or assistance to any person contemplating or seeking an Alternative Proposal. This undertaking shall not prevent ToLuna from taking any action or omitting to take any action to the extent required by virtue of the fiduciary duties of the ToLuna Directors (acting in good faith) or under the provisions of the Code or to the extent required by law or any applicable regulatory body or by the rules and regulations of the London Stock Exchange.
ToLuna shall notify ITWP as soon as reasonably practicable on receipt of an Alternative Proposal which the Independent Directors determine they would be prepared to issue a recommendation in respect of (to the exclusion of the Acquisition) and which, if recommended by the ToLuna Directors, would be capable of announcement as a recommended offer in accordance with Rule 2.5 of the Code.
ToLuna has also agreed that it will promptly provide ITWP with the terms of such Alternative Proposal, including the value of any offer consideration.
Right to match
If ToLuna notifies ITWP of an Alternative Proposal which, in the ToLuna Directors would be prepared to recommend ("Superior Proposal"), ToLuna has agreed to provide ITWP with reasonable details of such approach and the terms proposed by the relevant third party. ToLuna has also agreed not to accept, recommend, approve or enter into any agreement to implement such Superior Proposal; or withhold, withdraw or adversely modify its recommendation in respect of the Scheme, until ITWP fails, within three Business Days of being notified of the Superior Proposal, to confirm to ToLuna that it intends to revise its offer.
Related Party Transaction
The entering into of the Implementation Agreement by ToLuna with ITWP, a company wholly-owned by Verlinvest, which is a substantial shareholder of ToLuna, is deemed to be a related party transaction under the AIM Rules. The Independent Directors consider, having consulted with Merchant Securities, that the terms of the Implementation Agreement are fair and reasonable so far as the ToLuna Shareholders are concerned.
17. Disclosure of interests in ToLuna
As at close of business on 11 February 2011, the last practicable date prior to the date of this announcement, other than as disclosed below, neither ITWP, nor any directors of ITWP, nor, so far as ITWP is aware, any person acting in concert with ITWP, has any interest in or right to subscribe for any relevant ToLuna securities.
(a) Verlinvest
As at close of business on 11 February 2011, the last practicable date prior to the date of this announcement, Verlinvest held interests in 7 266,667 ToLuna Shares.
(b) Frederic-Charles Petit
As at close of business on 11 February 2011, the last practicable date prior to the date of this announcement, Frederic-Charles Petit held interests in 4,278,357 ToLuna Shares.
In addition Frederic-Charles Petit held options over 542,857 ToLuna Shares, of which options over 276,190 were fully vested and immediately exercisable.
18. General
The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 and the further terms and conditions set out in the Scheme Document when issued. Appendix 2 contains details relating to the irrevocable undertakings given by Eurovestech, Invesco and certain of the Independent Directors including, in the case of Eurovestech and Invesco, the elections which they have undertaken to make under the mix-and-match facility. Part I of Appendix 3 contains details of the Loan Notes and ITWP Shares offered as consideration. Part II of Appendix 3 contains risk factors which are relevant to the ITWP Shares and Loan Notes. Appendix 4 contains the definitions of certain terms used in this announcement.
FURTHER INFORMATION
This announcement is not intended to, and does not, constitute or form part of an offer to sell, or otherwise dispose of, or constitute an invitation or the solicitation of an offer to purchase, subscribe for or otherwise acquire any securities or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise. The Acquisition will be made solely by means of the Scheme Document, which will contain the full terms and conditions of the Acquisition (including details of how to vote in respect of the Scheme). Any vote in respect of the Scheme should be made only on the basis of the information contained in the Scheme Document. ToLuna Shareholders are advised to read the formal documentation in relation to the Acquisition carefully, once it has been dispatched.
Please be aware that addresses, electronic addresses and certain other information provided by ToLuna Shareholders, persons with information rights and other relevant persons for the receipt of communications from ToLuna may be provided to ITWP during the offer period as required under Section 4 of Appendix 4 of the Code.
Perella Weinberg Partners UK LLP, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for ITWP and Verlinvest and for no one else in connection with the Acquisition and is not advising any other person or treating any other person as its client in relation thereto and will not be responsible to anyone other than ITWP and Verlinvest for providing the protections afforded to clients of Perella Weinberg Partners UK LLP, or for giving advice to any other person in relation to the Acquisition, the contents of this announcement or any other matter referred to herein. Neither Perella Weinberg Partners UK LLP nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Perella Weinberg Partners UK LLP in connection with this announcement, any statement contained herein or otherwise.
Merchant Securities Limited, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for ToLuna and for no one else in connection with the Acquisition and will not be responsible to any person other than ToLuna for providing the protections afforded to clients of Merchant Securities Limited, nor for providing advice in relation to the Acquisition, the content of this announcement or any matter referred to herein. Neither Merchant Securities Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Merchant Securities Limited in connection with this announcement, any statement contained herein or otherwise.
ITWP reserves the right to elect (with the consent of the Panel) to implement the Acquisition by means of an Offer. In such event, the Offer will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Scheme. If the Acquisition is implemented by means of an Offer, it will be made in accordance with the requirements of applicable law, including US securities laws, to the extent applicable.
OVERSEAS JURISDICTIONS
The distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and the availability of the Acquisition to ToLuna Shareholders who are not resident in the UK may be affected by the laws of the relevant jurisdictions. Therefore any persons who are subject to the law of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements.
This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside of England.
Notice to US investors in ToLuna
The Acquisition relates to the shares of a UK company, is subject to UK disclosure requirements (which are different from those of the US) and is proposed to be made by means of a scheme of arrangement provided for under English company law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement which differ from the disclosure requirements of the US tender offer rules. Financial information included in this announcement has been prepared, unless specifically stated otherwise, in accordance with accounting standards applicable in the UK and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. If ITWP exercises its right to implement the Acquisition by way of an Offer, the Offer will be made in compliance with applicable US laws and regulations.
The receipt of cash pursuant to the Acquisition by a US Holder as consideration for the cancellation of its ToLuna Shares pursuant to the Scheme may be a taxable transaction for United States federal income tax purposes and under applicable United States state and local, as well as foreign and other, tax laws. Each ToLuna Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him.
It may be difficult for US Holders to enforce their rights and claims arising out of United States federal securities laws, since ITWP and ToLuna are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US Holders may not be able to sue a non-United States company or its officers or directors in a non-United States court for violations of United States securities laws. Further, it may be difficult to compel a non-United States company and its affiliates to subject themselves to a United States court's judgement.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, ITWP or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, ToLuna Shares outside of the United States, other than pursuant to the Acquisition, until the date on which the Acquisition and/or Scheme becomes effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK will be reported to a Regulated Information Service and will be available on the London Stock Exchange website at londonstockexchange.com/exchange/news/market-news/market-news-home.html.
FORWARD-LOOKING STATEMENTS
This announcement (including information incorporated by reference in this announcement) includes "forward-looking statements". These statements are based on the current expectations of the management of ITWP and ToLuna and are naturally subject to uncertainty and changes in circumstances. The forward-looking statements contained herein include statements about the expected effects of the Acquisition, the expected timing and scope of the Acquisition and are not based on historical facts. As such, they are prospective in nature. Forward-looking statements include, without limitation, statements typically containing words such as "believes", "intends", "expects", "anticipates", "targets" "estimates" and words of similar import or variations of such words and phrases or statements that certain actions, events, or results "may", "could", "should", "would", "might" or "will" be taken, occur, or be achieved. Although ToLuna and ITWP believe that the expectations reflected in such forward-looking statements are reasonable, ToLuna and ITWP can give no assurance that such expectations will prove to have been correct. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Acquisition and additional factors such as: local and global political and economic conditions; foreign exchange rate fluctuations and interest rate fluctuations (including those from any potential credit rating decline) and legal or regulatory developments and changes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Neither ToLuna nor ITWP undertake any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
DEALING DISCLOSURE REQUIREMENTS
Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror which has announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offer is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of ToLuna, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Rule 2.10 disclosure
In accordance with Rule 2.10 of the Code, the current issued share capital of ToLuna comprises 50,522,827 ordinary shares of GBP0.01 each. The ISIN number for the ordinary shares is GB00B073PB75.
Publication on websites
In accordance with Rule 19.11 of the Code, a copy of this announcement will be available on ToLuna's website (www.ToLuna.com) by no later than 12 noon on 15 February 2011.
Appendix 1
CONDITIONS AND CERTAIN FURTHER TERMS OF THE ACQUISITION
Part 1
CONDITIONS OF THE ACQUISITION
1. The Acquisition will be conditional upon the Scheme becoming unconditional and becoming effective subject to the Code, by no later than 30 June 2011 or such later date (if any) as ITWP and ToLuna may, with the consent of the Panel, agree and (if required) the Court may allow.
2. The Scheme will be conditional upon:
(a) its approval by a majority in number, representing 75 per cent. or more in value, of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) present and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting;
(b) each resolution required or necessary for the approval of the Scheme or its implementation, to be set out in the notice of the ToLuna General Meeting in the Scheme Document, being duly passed by the requisite majority at the ToLuna General Meeting or at any adjournment of that meeting;
(c) the sanction of the Scheme with or without modification (but subject to any such modification being acceptable to ITWP), and the confirmation of the Reduction of Capital by the Court; and
(d) the delivery to the Registrar of Companies for registration of office copies of the Scheme Court Order, the Reduction Court Order and the Statement of Capital and, if the Court so orders for the Scheme to become effective, the registration by the Registrar of Companies of the Reduction Court Order and the Statement of Capital.
3. In addition, ITWP and ToLuna have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:
(a) no government or governmental, quasi-governmental, supranational, statutory, administrative or regulatory body or association, institution or agency (including any trade agency) or any court or other body (including any professional or environmental body) or person in any jurisdiction (each a "Relevant Authority") having decided to take, instituted or threatened any action, proceeding, suit, investigation, enquiry or reference or enacted, made or proposed and there not continuing to be outstanding any statute, regulation, order or decision that would or might be reasonably expected to:
(i) make the Acquisition or its implementation or the acquisition or the proposed acquisition of any shares in, or control of, ToLuna by ITWP or any member of the ITWP Group void, unenforceable or illegal or directly or indirectly prohibit or otherwise materially restrict, delay or interfere with the implementation of, or impose material additional conditions or obligations with respect to, or otherwise challenge, the Acquisition or its implementation or the acquisition or the proposed acquisition of any shares in, or control of, ToLuna by ITWP or any member of the ITWP Group;
(ii) require, prevent or materially delay the divestiture (or materially alter the terms of any proposed divestiture) by any member of the ITWP Group or the ToLuna Group of all or any substantial part of their respective businesses, assets or properties or impose any material limitation on their ability to conduct all or any part of their respective businesses and to own any of their respective assets or properties in each case to an extent which is material in the context of the ITWP Group taken as a whole or, as the case may be, the ToLuna Group taken as a whole;
(iii) impose any material limitation on, or result in any material delay in, the ability of any member of the ITWP Group to acquire or hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares or other securities (or the equivalent) in, or to exercise management control over, any member of the ToLuna Group or on the ability of any member of the ToLuna Group to hold or exercise effectively, directly or indirectly, all or any rights of ownership of shares or other securities (or the equivalent) in, or to exercise management control over, any other member of the ToLuna Group in each case to an extent which is material in the context of the ITWP Group taken as a whole or, as the case may be, the ToLuna Group taken as a whole;
(iv) require any member of the ITWP Group or of the ToLuna Group (other than pursuant to the Acquisition) to acquire or offer to acquire any shares or other securities (or the equivalent) in any member of the ToLuna Group or any member of the ITWP Group where such acquisition would be material in the context of the ITWP Group taken as a whole or, as the case may be, the ToLuna Group taken as a whole;
(v) impose any material limitation on the ability of any member of the ITWP Group or the ToLuna Group to integrate or co-ordinate its business, or any part of it, with the businesses or any part of the businesses of any other member of the ITWP Group and/or the ToLuna Group in each case in a manner which would be material in the context of the ITWP Group taken as a whole or, as the case may be, the ToLuna Group taken as a whole; or
(vi) otherwise materially and adversely affect the business, assets, financial or trading position or profits or prospects of any member of the ITWP Group or of the ToLuna Group to an extent which is material in the context of the ToLuna Group taken as a whole or, as the case may be, the ITWP Group taken as a whole,
and all applicable waiting and other time periods during which any such Relevant Authority could decide to take, institute or threaten any such action, proceeding, suit, investigation, enquiry or reference having expired, lapsed or been terminated;
(b) all necessary filings having been made and all appropriate waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated in each case in respect of the Acquisition or its implementation or the acquisition or the proposed acquisition of any shares in, or control of, ToLuna by ITWP and all authorisations, orders, grants, recognitions, confirmations, licences, consents, clearances, permissions and approvals ("Authorisations") necessary or appropriate in any jurisdiction for or in respect of the Acquisition or its implementation or the acquisition or the proposed acquisition of any shares in, or control of, ToLuna by ITWP being obtained in terms and in a form reasonably satisfactory to ITWP from appropriate Relevant Authorities or from any persons or bodies with whom any member of the ITWP Group or the ToLuna Group has entered into contractual arrangements (in each case where the absence of such authorisation would have a material adverse effect on the ToLuna Group taken as a whole) and such authorisations together with all authorisations necessary or appropriate for any member of the ToLuna Group to carry on its business (where such business is material in the context of the ToLuna Group taken as a whole) remaining in full force and effect and no intimation of any intention to revoke, suspend, restrict or modify or not to renew any of the same having been made and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;
(c) save as fairly disclosed to ITWP before the Announcement Date, there being no provision of any agreement, arrangement, licence or other instrument to which any member of the ToLuna Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or subject which, as a result of the Acquisition or its implementation or the acquisition or proposed acquisition by ITWP or any member of the ITWP Group of any shares in, or change in the control or management of, ToLuna or otherwise, would or could (to an extent which is materially adverse in the context of the ToLuna Group taken as a whole) reasonably be expected to result in:
(i) any material amount of monies borrowed by or any other material indebtedness (actual or contingent) of any such member of the ToLuna Group becoming repayable or capable of being declared repayable immediately or earlier than the stated repayment date or the ability of such member to borrow monies or incur any material indebtedness being withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any substantial part of the business property or assets of any such member of the ToLuna Group or any such security interest (whenever arising or having arisen) becoming enforceable;
(iii) any material assets or interest of any such member of the ToLuna Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged, other than in the ordinary course of trading;
(iv) the rights, liabilities, obligations, interests or business of any such member of the ToLuna Group in or with any other person, firm or company (or any agreements or arrangements relating to such interest or business) being terminated or materially and adversely affected;
(v) any such member of the ToLuna Group ceasing to be able to carry on business under any name under which it presently does so, where such a result would be material in the context of the ToLuna Group taken as a whole;
(vi) the value of any such member of the ToLuna Group or its financial or trading position or prospects being prejudiced or materially and adversely affected;
(vii) any such agreement, arrangement, licence or other instrument being terminated or materially and adversely modified or any onerous obligation arising or any material adverse action being taken or arising thereunder; or
(viii) the creation of any material liabilities (actual or contingent) by any such member,
and no event having occurred which, under any provision of any agreement arrangement, licence or other instrument to which any member of the ToLuna Group is a party or by or to which any such member or any of its assets may be bound or be subject, would or could reasonably be expected to result in any events or circumstances as are referred to in subparagraphs (i) to (viii) of this paragraph (g) in any case where such result would be material in the context of the ToLuna Group taken as a whole;
(d) except as disclosed in the Annual Report and Accounts or as publicly announced to a Regulatory Information Service by or on behalf of ToLuna or as otherwise fairly disclosed to ITWP before the Announcement Date or as permitted under the Implementation Agreement, no member of the ToLuna Group having since 30 June, 2010:
(i) issued or agreed to issue or authorised the issue of additional shares of any class, or securities convertible into, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities or transferred or sold any shares out of treasury save as between ToLuna and wholly-owned subsidiaries of ToLuna prior to the Announcement Date or upon the exercise of rights to subscribe for ToLuna Shares pursuant to options granted under any ToLuna Share Plans prior to the Announcement Date or the granting of awards under those plans in the ordinary course of business in a manner consistent with past practice;
(ii) recommended, declared, paid or made any bonus, dividend or other distribution, whether payable in cash or otherwise, other than a distribution by any wholly-owned subsidiary of ToLuna;
(iii) implemented or authorised any merger or demerger or acquired or disposed of or transferred, mortgaged or charged, or created any other security interest over, any asset or any right, title or interest in any asset which in any case is material;
(iv) implemented or authorised any reconstruction, amalgamation, scheme or other similar transaction or arrangement (other than in the ordinary course of business);
(v) purchased, redeemed or repaid any of its own shares or other securities or reduced or made or authorised any other change in its share capital, otherwise than upon the exercise of rights to subscribe for ToLuna Shares pursuant to options granted under any ToLuna Share Plans prior to the Announcement Date or the granting of awards under those plans in the ordinary course of business in a manner consistent with past practice;
(vi) made or authorised any change in its loan capital or issued or authorised the issue of any debentures or (other than in the ordinary course of business and save as between ToLuna and wholly-owned subsidiaries of ToLuna) incurred or increased any indebtedness or contingent liability of any aggregate amount which is material;
(vii) entered into, varied or terminated, or authorised the entry into, variation or termination of, any contract, commitment or arrangement (whether in respect of capital expenditure or otherwise) which is outside the ordinary course of business or which is of a long term, onerous or unusual nature or magnitude or which involves an obligation of a nature or magnitude which is material;
(viii) entered into any contract, commitment or arrangement which would be restrictive on the business of any member of the ToLuna Group or the ITWP Group (other than to a nature and extent which is normal in the context of the business concerned) where such restriction is material;
(ix) been unable or deemed unable, or admitted in writing that it is unable, to pay its debts as they fall due or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;
(x) commenced negotiations with any of its creditors or taken any step with a view to rescheduling or restructuring any of its indebtedness or entered into a composition, compromise, assignment or arrangement with any of its creditors whether by way of a voluntary arrangement, scheme of arrangement, deed of compromise or otherwise;
(xi) (other than in respect of a member of the ToLuna Group which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up (voluntary or otherwise), dissolution or reorganisation (or for any analogous proceedings or steps in any jurisdiction) or for the appointment of a liquidator, provisional liquidator, receiver, administrator, administrative receiver, trustee or similar officer (or for the appointment of any analogous person in any jurisdiction) of all or any of its assets and revenues;
(xii) waived, compromised, settled, abandoned or admitted any dispute, claim or counter-claim whether made or potential and whether by or against any member of the ToLuna Group which together or separately is material;
(xiii) made any alteration to its articles of association;
(xiv) entered into or varied the terms of, or terminated or given notice of termination of, any service agreement or arrangement with any director or senior executive of any member of the ToLuna Group;
(xv) agreed to provide, or agreed to modify the terms of, any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by any member of the ToLuna Group; or
(xvi) entered into any contract, commitment or arrangement or passed any resolution or made any offer (which remains open for acceptance) with respect to, or proposed or announced any intention to effect or propose, any of the transactions, matters or events referred to in this condition;
and for the purpose of this condition "material" shall mean material in the context of the ToLuna Group taken as a whole;
(e) since 30 June, 2010 (except as disclosed in the Annual Report and Accounts or as publicly announced to a Regulatory Information Service by or on behalf of ToLuna before the Announcement Date or fairly disclosed to ITWP prior to the Announcement Date):
(i) no adverse change having occurred in the business, assets, financial or trading position or profits or prospects of any member of the ToLuna Group which is material in the context of the ToLuna Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings in any jurisdiction having been threatened, announced, instituted or remaining outstanding by, against or in respect of any member of the ToLuna Group or to which any member of the ToLuna Group is a party (whether as claimant or defendant or otherwise) and no investigation by any Relevant Authority or other investigative body against or in respect of any member of the ToLuna Group having been threatened, announced, instituted or remaining outstanding by, against or in respect of any member of the ToLuna Group which would or might reasonably be expected materially and adversely to affect the ToLuna Group taken as a whole; and
(iii) no contingent or other liability having arisen which would or might reasonably be expected materially and adversely to affect any member of the ToLuna Group taken as a whole;
(f) ITWP not having discovered (except to the extent otherwise disclosed in the Annual Report and Accounts or as publicly announced to a Regulatory Information Service by or on behalf of ToLuna before the Announcement Date or fairly disclosed to ITWP prior to the Announcement Date):
(i) that any financial, business or other information disclosed at any time by any member of the ToLuna Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make the information contained therein not misleading which in any case is material and adverse to the financial or trading position of the ToLuna Group taken as a whole;
(ii) that any member of the ToLuna Group is subject to any liability, contingent or otherwise, which is not disclosed in the Annual Report and Accounts, and which is material in the context of the ToLuna Group taken as a whole;
(iii) that any member of the ToLuna Group has failed to comply with any applicable legislation or regulations of any jurisdiction or any notice or requirement of any Relevant Authority with regard to the storage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous or harmful substance or any substance likely to impair the environment or harm human or animal health or otherwise relating to environmental matters or that there has otherwise been any such storage, disposal, discharge, spillage, release, leak or emission (whether or not the same constituted non-compliance by any person with any such legislation or regulation, and whenever the same may have taken place), any of which non--compliance would be likely to give rise to any liability (whether actual or contingent) or cost on the part of any member of the ToLuna Group and which is material in the context of the ToLuna Group taken as a whole; or
(iv) there is or is likely to be any obligation or liability (whether actual or contingent) to make good, repair, re-instate or clean up any property now or previously owned, occupied, operated or made use of or controlled by any past or present member of the ToLuna Group under any environmental legislation, regulation, notice, circular or order of any Relevant Authority in any jurisdiction and which is material in the context of the ToLuna Group taken as a whole.
Conditions 3(a) to (f) inclusive must be fulfilled, be determined by ITWP to be or remain satisfied or (if capable of waiver) be waived by ITWP immediately preceding the Scheme Court Hearing, failing which the Scheme shall lapse.
To the extent permitted by law and subject to the requirements of the Panel, ITWP reserves the right to waive all or any of Conditions 3(a) to (f) inclusive, in whole or in part. ITWP shall be under no obligation to waive or treat as fulfilled any such Conditions by any date earlier than the date specified above in Condition 1 notwithstanding that the other Conditions (or any of them) may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that such Conditions may not be capable of fulfilment.
If ITWP is required by the Panel to make an offer or offers for any ToLuna Shares under Rule 9 of the Code, ITWP may make such alterations to the Conditions as are necessary to comply with that Rule.
Part 2
CERTAIN FURTHER TERMS OF THE ACQUISITION
1. ITWP reserves the right to elect (with the consent of the Panel) to implement the Acquisition by way of an Offer as it may determine in its absolute discretion. In such event, such offer will be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the change in method of effecting the Acquisition, which may include changing the consideration structure under the terms and conditions of the Acquisition and (without limitation and subject to the consent of the Panel) an acceptance condition set at a level which would result in ITWP holding a number of shares in ToLuna carrying no less than 75 per cent. (or such lesser percentage, being more than 50 per cent., as ITWP may decide) of the voting rights attached to all ToLuna shares including, for this purpose, any such voting rights attaching to ToLuna Shares that are unconditionally allotted or issued before the takeover offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise.
2. The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.
3. The Acquisition will be governed by English law and be subject to the jurisdiction of the English courts and to the conditions set out in this document and in the formal Scheme Document.
Appendix 2
Irrevocable Undertakings
The following holders of ToLuna Shares have given irrevocable undertakings: (i) to vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the ToLuna General Meeting, including the vote under Rule 16.2 as described in paragraph (b) of section 9 of this announcement; and (ii) if the Acquisition is subsequently structured as an Offer, to accept any such offer made by ITWP:
Percentage of issued share capital excluding shares held by Percentage of Verlinvest and issued share Frederic-Charles Name Number of shares capital of ToLuna Petit ToLuna Shareholders Invesco 15,041,619 29.8% 38.6% Eurovestech 14,907,917 29.5% 38.2% Non-executive directors Richard Bernstein 100,000 0.2% 0.3% Perry Crosthwaite 71,428 0.1% 0.2% Total 30,120,964 59.6% 77.3%
Eurovestech and Invesco have irrevocably undertaken to elect to receive their consideration in the proportions set out below:
-- in the case of Eurovestech, 1,051,828,838 ITWP Shares, GBP35,000,000 in nominal value of B Loan Notes and GBP2,187,046.02 in nominal value of C Loan Notes.
-- in the case of Invesco, 3,984,772,542 ITWP Shares and GBP8,285,455.38 in nominal value of C Loan Notes.
To the extent that other ToLuna Shareholders elect to receive their consideration in forms other than cash, the amount of ITWP Shares and Loan Notes received by Eurovestech and Invesco will be scaled back based on their shareholdings in ToLuna, their elections for ITWP Shares and Loan notes, the elections of other shareholders for ITWP Shares and Loan Notes and the amount of ITWP Shares and Loan Notes available under the Acquisition, and Eurovestech and Invesco will instead receive a portion of cash consideration for their ToLuna Shares.
On issue of the ITWP Shares, Eurovestech and Invesco will enter into the Shareholders' Agreement as holders of more than 5 per cent. of the ITWP Shares respectively. The Shareholders' Agreement covers certain aspects of the governance of the company including the sale and transfer of securities.
The commitments to vote in favour of the resolutions relating to the Acquisition at the Meetings may only be revoked if a third party bidder makes an offer to all ToLuna Shareholders to acquire their ToLuna Shares which, in the case of Invesco, represents an overall improvement to the terms of the Acquisition (in Invesco's reasonable opinion) and, in the case of Eurovestech, for a consideration in cash that exceeds 375 pence per ToLuna Share. The undertakings will cease to be binding if the Acquisition lapses or is withdrawn.
In the event that:
(a) Invesco revokes its commitment to vote in favour of the resolutions relating to the Acquisition at the Meetings due to a third party bidder making an offer to all ToLuna Shareholders to acquire their ToLuna Shares and Invesco does not otherwise vote in favour of such resolutions; or
(b) Invesco fails to vote in favour of the resolutions relating to the Acquisition at the Meetings.
Eurovestech will pay ITWP a sum not exceeding GBP1,300,000 to compensate it for its abortive costs (as long as the payment of such fee is lawful and is not determined by the Panel to be prohibited by the Code). This fee will not, however, be payable in the event that:
(a) the Acquisition is declared wholly unconditional or otherwise completes in accordance with the Code; or
(b) ITWP receives a sum from ToLuna of no less than GBP1,300,000 as part of the Inducement Fee.
Appendix 3
PART i
ITWP SHARES, LOAN NOTES, GUARANTEES AND SHAREHOLDERS' AGREEMENT
1. ITWP SHARES
The ITWP Shares will have a nominal value of 1 penny per share, will be issued credited as fully paid, will have proportional voting rights, will rank pari passu in all respects with the existing ITWP Shares and will be entitled to all dividends and other distributions declared or paid by ITWP after the Scheme becomes effective. ITWP Shares will not be admitted to trading on AIM or any other stock exchange.
2. Loan Notes and guarantees
ITWP has decided to offer part of the consideration in the form of Loan Notes. These Loan Notes will not bear interest and it is ITWP's current intention to redeem some or all of the Loan Notes before 30 June 2011. After 30 June 2012, any Loan Notes which remain outstanding will be compulsorily converted into ITWP shares, subject to conditions, at a rate of one ITWP Share for each 1 penny in nominal value of Loan Notes. Upon the occurrence of an Exit Event, all Loan Notes will compulsorily convert into ITWP Shares at a rate of one ITWP Share for each 1 penny in nominal value of Loan Notes. In addition to the Loan Notes, there will be a class of A Loan Notes, redeemable in full on the earlier of an Exit Event, 30 June 2011 or ITWP giving the A Loan Noteholders requisite notice of redemption. The A Loan Notes will rank senior and in priority to the B Loan Notes, which will in turn rank senior and in priority to the C Loan Notes. The A Loan Notes will be issued to Frederic-Charles Petit as described in paragraph (b) of section 9 of this announcement.
Verlinvest and Eurovestech will agree to work together with ITWP to use reasonable endeavours (but without recourse to the shareholders of ITWP) to secure sufficient external debt financing to redeem some or all of the Loan Notes by 30 June 2011. ITWP commits to redeem by 30 June 2011 (i) all of the A Loan Notes (i.e. in the total amount of GBP4,500,000) and (ii) B Loan Notes in the amount of GBP25,000,000 (the "First Redemption").
Verlinvest will procure that ITWP is provided with debt and/or equity funding to the extent that external debt financing is not available to ITWP to pay all amounts payable under the First Redemption. Verlinvest will also procure that irrevocable bank guarantees for a total amount of GBP29,500,000 be provided in favour of ITWP to guarantee ITWP's payment obligations under the First Redemption. To the extent that (i) Verlinvest provides debt and/or equity funding to ITWP and/or (ii) such guarantees are called upon then Verlinvest will be issued Senior Loan Notes in an amount equal to any amounts it provides in debt and/or equity financing and/or which are called under the guarantees (in addition to the GBP10,027,498.60 of C Loan Notes to be issued to Verlinvest). The Senior Loan Notes are to rank senior and in priority to the B Loan Notes and the C Loan Notes (subject to the commitment of ITWP in respect of the First Redemption).
Any cash raised (save for any cash raised in relation to the acquisition of ToLuna Shares issued pursuant to the ToLuna Share Plans) as a result of a debt refinancing by ITWP in excess of the amount required to fund the First Redemption that is sufficient to redeem all (and not part only) of any B Loan Notes that are not redeemed on the First Redemption shall be applied to redeem all (and not part only) of the outstanding B Loan Notes (the "Second Redemption").
Any cash raised (save for any cash raised in relation to the acquisition of ToLuna Shares issued pursuant to the ToLuna Share Plans) as a result of a debt refinancing by ITWP in excess of the amounts required to fund (a) the First Redemption; and (b) the Second Redemption that is sufficient to redeem all (and not part only) of the C Loan Notes shall be applied to redeem all (and not part only) of the C Loan Notes (the "Third Redemption").
ITWP may, at any time, elect redeem all of the B Loan Notes or, if all B Loan Notes have been redeemed, all of the C Loan Notes. If only part of a class of Loan Notes (i.e. a part of the B Loan Notes or a part of the C Loan Notes) are to be redeemed, ITWP shall redeem the relevant Loan Notes on a pro rata basis as between the holders of those Loan Notes.
Subject to the rights described above and save for any cash raised in relation to the acquisition of ToLuna Shares issued pursuant to the ToLuna Share Plans, the proceeds of any other debt or equity funding obtained by ITWP shall be applied to redeeming the Loan Notes in order of seniority on a pro rata basis as between the holders of those Loan Notes.
3. sHAREHOLDERS' AGREEMENT AND ARTICLES OF ASSOCIATION
On issue of the ITWP Shares to them, Eurovestech and Invesco will enter into the Shareholders' Agreement as holders of more than five per cent. of the ITWP Shares respectively. The parties to the Shareholders' Agreement at that time are to be ITWP, Verlinvest, Frederic-Charles Petit, Eurovestech and Invesco.
Director provisions
The number of directors which certain shareholders shall be entitled to nominate for appointment is as follows:
(a) Verlinvest may nominate for appointment three persons as directors;
(b) Frederic-Charles Petit may be appointed as a director for so long as he holds at least 50,000,000 ITWP Shares and is chief executive officer or is otherwise a member of senior management. If Frederic-Charles Petit holds at least 175,000,000 ITWP Shares and is not chief executive officer or otherwise a member of senior management and provided he is not already a director of ITWP then he may nominate one person for appointment as a director;
(c) on the date of the Shareholders' Agreement any person (other than Verlinvest and Frederic-Charles Petit) who holds ITWP Shares representing not less than seven per cent. of the shares in ITWP may appoint one person as a director provided that no more than six directors are appointed as directors of ITWP in total; and
(d) in the event that:
(i) a director ceases to be a director as a result of his appointer ceasing to hold ITWP Shares representing not less than seven per cent. of the shares in ITWP or a director who is removed is not replaced by his appointing shareholder within seven business days, or
(ii) any person holds ITWP Shares representing not less than seven per cent. of the shares in ITWP (other than Verlinvest, Frederic-Charles Petit and any shareholder whose appointee continues to be a director of ITWP in accordance with paragraph (c) above) following any transfer of ITWP Shares or following any change in ownership of the share capital of ITWP,
then the person holding the largest number of ITWP Shares in excess of seven per cent. and who is party to the Shareholders' Agreement may nominate one person as a director of ITWP subject always to the maximum number of directors of ITWP.
The quorum for board meetings is two directors, of whom at least one is a director appointed by Verlinvest for so long as Verlinvest and its affiliates hold 35 per cent. or more of ITWP Shares.
Share transfer and pre-emption provisions
No party to the Shareholders' Agreement may transfer any ITWP Shares or Loan Notes unless such transfer is a Permitted Transfer under ITWP's articles of association. ITWP's articles of association provide that a Permitted Transfer is, amongst other things, (i) a transfer by an individual to a family member or to the trustees of a family trust, and (ii) a transfer to an affiliate provided that the transferee enters into a deed of adherence to the Shareholders' Agreement and the transferor and the transferee remain jointly and severally liable in respect of the transferred shares.
Subject to the above restrictions, share transfers shall be subject to general pre-emption rights in favour of other shareholders in ITWP.
Drag-along rights, tag-along rights and Exit Events
At any time prior to an Exit Event, other than in the case of a Permitted Transfer, no person shall transfer any ITWP Shares unless an offer has been made to all other shareholders in ITWP to acquire the same proportion of their ITWP Shares as that being proposed by the proposed transferor on the same terms as those applying to the proposed transfer.
At any time whilst Verlinvest and its affiliates hold at least 35 per cent. of the ITWP Shares and they propose to transfer all of such shares to any other person, all other shareholders shall, if so required by Verlinvest, transfer all (and not only part) of their ITWP Shares to the proposed transferee on the same terms as those applying to the proposed transfer, provided that: (i) if such proposed transfer is made to an affiliate of Verlinvest that Verlinvest will only be able to exercise its rights where at least 50 per cent. of the other shareholders consent to such a transfer, or (ii) the consideration the other shareholders will receive in connection with the proposed transfer is in the form of cash or securities which are listed and admitted to trading on a recognised investment exchange, or (iii) the other shareholders receive consideration in cash at the date of the proposed transfer with an element of deferred consideration by way of earn out payable in cash or consideration readily convertible to cash within a period of 18 months from the date of the proposed transfer, and, in each case, the consideration receivable by the other shareholders does not represent less than 100 pence for each ITWP Share (subject to adjustment on any capitalisation issue).
It is the intention of the parties that an Exit Event is achieved within five years of the date the initial investors are entered in the register of members as the holders of ITWP Shares. The articles of association prescribe the manner in which the shareholders may bring about an Exit Event should such an Exit Event not have been achieved within the intended period.
Reserved Matters
Certain actions of ITWP will require the prior approval of Verlinvest for so long as Verlinvest and its affiliates together hold at least 35 per cent. of the ITWP Shares. These actions include, amongst other things, altering ITWP's articles of association, any change to the nature and scope of the business of any group company of ITWP, issuing any new shares, declaring or paying any dividends and the transfer of ITWP Shares representing less than 20 per cent. of ITWP Shares in issue at the date of the transfer provided such transfers are not Permitted Transfers.
PART II
ITWP SHARES AND LOAN NOTES RISK FACTORS
1. Neither the ITWP Shares nor the Loan Notes will not be listed on any stock exchange, nor is it the current intention to offer any trading facility for the ITWP Shares or the Loan Notes.
2. It is envisaged that pursuant to the Shareholders' Agreement, Verlinvest, Eurovestech, Invesco and Frederic-Charles Petit will each have governance rights as regards ITWP, including the right to appoint director(s) of ITWP upon the Scheme becoming effective.
3. ITWP Shares and Loan Notes will not be transferable except in limited circumstances.
4. The holders of ITWP Shares and the holders of the Loan Notes will not enjoy any minority protections or other rights save for those rights reflected in Part I of this Appendix 3 to or as described in the Scheme Document and for those rights prescribed by applicable law.
5. The value of the ITWP Shares and the Loan Notes will be subject to the same market and trading risks as are faced by ToLuna currently, including the risk in the trading performance of ToLuna.
6. Shareholders in ITWP may be required in the future to sell their ITWP Shares under the terms of a "drag along" provision in the articles of association of ITWP.
7. Holders of ITWP Shares and Loan Notes will not be afforded the same level of protections and disclosure of information that they currently benefit from as ToLuna Shareholders as a company whose shares are traded on AIM.
8. The B Loan Notes and C Loan Notes will be compulsorily converted into ITWP Shares at a rate of one ITWP Share for each 1 penny in nominal value on the earlier of an Exit Event and 30 June 2012. ITWP may, however, redeem the B Loan Notes and the C Loan Notes prior to an Exit Event or 30 June 2012.
appendix 4
Definitions
The following definitions apply throughout this announcement, unless otherwise stated or the context requires otherwise.
"Acquisition" the proposed acquisition by ITWP of the existing issued and to be issued share capital of ToLuna, on the terms and subject to the conditions set out in this announcement and to be set out in the Scheme Document (and, where the context so requires, any subsequent revision, variation, extension or renewal of such acquisition) together with the other matters relevant thereto to be considered at the Court Meeting and the ToLuna General Meeting and related arrangements regarding the Contribution Shares; "A Loan Notes" the A loan notes to be issued by ITWP; "A Loan Noteholders" all the holders of the A Loan Notes from time to time; "AIM Rules" the rules published by the London Stock Exchange, which set out the rules and responsibilities in relation to AIM traded companies; "Alternative Proposal" a proposed offer, scheme of arrangement, merger, acquisition, recapitalisation or other business combination relating to any direct or indirect acquisition of thirty per cent. or more of the ToLuna Shares or all or a substantial part of the business or assets of the ToLuna Group proposed by any third party which is not a concert party of ITWP, whether in one transaction or a series of transactions; "Announcement Date" 14 February 2011; "Annual Report and the annual audited report and accounts of ToLuna Accounts" for the year ended 31 December 2009; "authorisations" all authorisations, orders, grants, recognitions, confirmations, licences, consents, clearances, permissions and approvals; "B Loan Notes" the B loan notes to be issued by ITWP; "business day" a day on which the London Stock Exchange is open for the transaction of business; "C Loan Notes" the C loan notes to be issued by ITWP; "Code" the City Code on Takeovers and Mergers of the United Kingdom (as amended); "Companies Act" the Companies Act 2006 (as amended); "Conditions" the conditions to the Acquisition which are set out in Part I of Appendix 1 to this announcement; "Contribution and the FP Contribution Agreement, the FP Share Sale Agreements" Purchase Agreement and the Verlinvest Contribution Agreement; "Court" the High Court of Justice of England and Wales; "Court Meeting" the meeting of Scheme Shareholders to be convened pursuant to an order of the Court pursuant to Part 26 of the 2006 Act for the purpose of considering and, if thought fit, approving the Scheme (with or without modification), and any adjournment thereof; "Exit Event" a flotation on a main or secondary stock exchange, refinancing, trade sale or merger or similar operation such that the Shareholders realise all or, at their option, some of their initial equity investment (subject to any customary lock-up terms which may be required to facilitate an initial public offering); "FP Contributed 2,872,107 of the ToLuna Shares beneficially Shares" owned by Frederic-Charles Petit which shall be contributed to ITWP in accordance with the terms of the FP Contribution Agreement; "FP Contribution the conditional deed dated 14 February 2011 and Agreement" entered into between ITWP and Frederic-Charles Petit pursuant to which ITWP has agreed to acquire the FP Contributed Shares conditional on, inter alia, the Scheme becoming effective; "FP Purchased Shares" 1,406,250 of the ToLuna Shares beneficially owned by Frederic-Charles Petit which shall be sold to ITWP in accordance with the terms of the FP Share Purchase Agreement; "FP Share Purchase the conditional deed dated 14 February 2011 and Agreement" entered into between ITWP and Frederic-Charles Petit pursuant to which ITWP has agreed to purchase the FP Purchased Shares conditional on, inter alia, the Scheme becoming effective; "FP Transactions" the transactions to be undertaken pursuant to the FP Contribution Agreement and the FP Share Purchase Agreement; "FSA" the United Kingdom Financial Services Authority; "FSMA" the Financial Services and Markets Act 2000; "Independent Directors" the directors of ToLuna other than Frederic de Mevius and Frederic-Charles Petit; "Implementation the implementation agreement between ITWP and Agreement" ToLuna dated 14 February 2011; "Inducement Fee" has the meaning given to it in paragraph 16 of this announcement; "ITWP" ITWP Acquisitions Limited, a company incorporated in England and Wales (with registered number 07493527) with its registered office at 20-22 Bedford Row, London, WC1R 4JS; "ITWP Group" ITWP and its associated undertakings and any other undertakings in which ITWP and such undertakings (aggregating their interests) have a substantial interest; "ITWP Shares" ordinary shares of 1 penny each in the capital of ITWP; "Loan Notes" together, the B Loan Notes and the C Loan Notes; "Listing Rules" the rules and regulations made by the FSA in its capacity as the UK Listing Authority under FSMA, and contained in the UK Listing Authority's publication of the same name; "Loan Notes" the B Loan Notes and the C Loan Notes; "London Stock Exchange" London Stock Exchange plc; "Meetings" the Court Meeting and/or the ToLuna General Meeting as the case may be; "Merchant Securities Merchant Securities Limited; " "Offer" a takeover offer (as defined in section 974 of the Companies Act) which ITWP may elect (with the consent of the Panel) to make for the issued and to be issued share capital of ToLuna not already owned by ITWP in accordance with the Implementation Agreement; "Ordinary Resolution" the ordinary resolution to be proposed at the ToLuna General Meeting in accordance with the requirements of the Code to approve certain arrangements between ITWP and Frederic-Charles Petit; "Panel" the Panel on Takeovers and Mergers; "Perella Weinberg Perella Weinberg Partners UK LLP; Partners" "Reduction Court the order of the Court confirming the Reduction Order" of Capital under section 648 of the Companies Act; "Reduction of Capital" the reduction of ToLuna's share capital by the cancellation and extinguishing of the Scheme Shares provided for by the Scheme pursuant to section 648 of the Companies Act; "Regulatory Information any of the services set out in Appendix 3 to the Service" Listing Rules; "Relevant Authority" government or governmental, quasi-governmental, supranational, statutory, administrative or regulatory body or association, institution or agency (including any trade agency) or any court or other body (including any professional or environmental body) or person in any jurisdiction; "Scheme" the proposed scheme of arrangement under Part 26 of the Companies Act between ToLuna and Scheme Shareholders, with or subject to any modification, addition or condition thereto approved or imposed by the Court and agreed to by ITWP; "Scheme Court Hearing" the hearing at which the Scheme Court Order is sought; "Scheme Court Order" the order of the Court sanctioning the Scheme under section 899 of the Companies Act; "Scheme Document" the document to be despatched to ToLuna Shareholders following the date of this announcement containing, amongst other things, the terms and conditions of the Scheme and the notices of the Meetings; "Scheme Effective the date on which the Scheme becomes effective; Date" "Scheme Record Time" 6.00 p.m. on the Business Day immediately preceding the date on which the Scheme becomes effective pursuant to its terms; "Scheme Shareholders" the holders of Scheme Shares; "Scheme Shares" all ToLuna Shares: (i) in issue at the date of the Scheme Document; and (ii) (if any) issued after the date of the Scheme Document and before the Voting Record Time; and (iii) (if any) issued at or after the Voting Record Time but on or before the Scheme Record Time either on terms that the original or any subsequent holders thereof shall be bound by the Scheme or in respect of which the holders thereof have agreed in writing to be bound by the Scheme, but excluding any ToLuna Shares beneficially owned by any member of the ITWP Group, Verlinvest or Frederic-Charles Petit; "Senior Loan Notes" the unsecured senior loan notes to be issued by ITWP; "Shareholders' Agreement" the shareholders' agreement to be entered into in respect of ITWP; "Statement of Capital" the statement of capital (approved by the Court) showing with respect to ToLuna's share capital, as altered by the Reduction Court Order confirming the Reduction of Capital, the information required by section 649 of the Companies Act; "subsidiary", "subsidiary have the meanings given by the Companies Act, undertaking", "undertaking" other than paragraph 20(1)(b) of Schedule 4A to and "associated that Act which shall be excluded for this undertaking" purpose, and "substantial interest" means a direct or indirect interest in 10 per cent. or more of the equity share capital (as defined in that Act) of any undertaking; "ToLuna" ToLuna plc, a company incorporated in England and Wales (with registered number 05395024) with its registered office at 29 Curzon Street, London, W1J JTZ; "ToLuna Directors" the directors of ToLuna; "ToLuna General the general meeting of ToLuna to be convened in Meeting" connection with the Acquisition and any adjournment thereof; "ToLuna Group" ToLuna, its subsidiaries and subsidiary undertakings; "ToLuna Resolutions" the special resolutions to approve, amongst other things, the cancellation of the existing issued share capital of ToLuna and such other matters as may be necessary to implement the Scheme in the form set out in the Scheme Document; "ToLuna Shareholders" the holders of ToLuna Shares, from time to time; "ToLuna Shares" ordinary shares of GBP0.01 each in the capital of ToLuna; "ToLuna Share Plans" the ToLuna 2005 Unapproved Share Option Plan; "United Kingdom" the United Kingdom of Great Britain and Northern or "UK" Ireland; "United States" the United States of America, its territories or "US" and possessions, any state of the United States of America, the District of Columbia and all other areas subject to its jurisdiction; "UK Listing Authority" the Financial Services Authority in its capacity as the competent authority under the Financial Services and Markets Act 2000; "US Holders" the holders of ToLuna Shares who are resident in the United States; "Verlinvest" Verlinvest SA, a private limited liability company incorporated under the laws of Belgium under number 455030364 and with its registered office at Place E. Flagey 18 - B-1050 Brussels; and "Verlinvest Contribution the conditional deed dated 14 February 2011 and Agreement" entered into between ITWP and Verlinvest pursuant to which ITWP has agreed to acquire the Verlinvest Shares conditional on, inter alia, the Scheme becoming effective; "Verlinvest Shares" the 7,266,667 ToLuna Shares beneficially owned by Verlinvest; and "Voting Record Time" the time and date specified in the Scheme Document by reference to which entitlement to vote on the Scheme will be determined, expected to be 6.00 p.m. on the day which is two days before the date of the Court Meeting or, if the Court Meeting is adjourned, 6.00 p.m. on the day which is two days before the date of such adjourned Court Meeting.
Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.
All times referred to in this announcement are London times.
This information is provided by RNS
The company news service from the London Stock Exchange
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