IWG PLC Convertible Bond Offering (2005H)

TIDMIWG TIDMTTM

RNS Number : 2005H

IWG PLC

02 December 2020

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OR IN OR INTO JAPAN, AUSTRALIA, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES OF THE SECURITIES WOULD BE PROHIBITED BY APPLICABLE LAW

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

For immediate release

2 December 2020

IWG plc

("IWG" or the "Company")

Convertible Bond Offering

IWG (LSE: IWG), the leading global operator of workspace brands, today announces the launch of an offering (the "Offering") of approximately GBP300 million of unsubordinated unsecured Guaranteed Convertible Bonds due 2027 (the "Bonds").

Current Trading

As announced in the Company's trading statement on 3 November 2020, IWG delivered a resilient performance during the third quarter, with strong cost savings and continued monthly cash generation resulting in a positive net cash position at the quarter end. The Company has experienced an improvement in sales activity and, given its robust revenue performance in the year to date, looks forward to entering 2021 as a stronger, more profitable business capable of increased cash flow generation supplemented with potential revenue recovery.

Rationale and use of proceeds

With its global footprint, IWG is well-positioned to benefit from the clear structural growth drivers of the flexible workspace market. Digital technology has enabled companies and people to quickly adapt to home working or working closer to home, which brings significant environmental and cost benefits. Corporate head offices will still have an important role to play in the world of work. The Company therefore believes that the future will be hybrid working, utilising a combination of all these ways of working, and this requires flexible workspace solutions.

Against this positive industry backdrop, the Company is executing on a pipeline of organic growth initiatives arising from expected increased future demand for flexible workspace in line with its stated strategy. In addition, the Company is now seeing an increasing number of attractive, and more realistically priced, M&A opportunities to accelerate the development of the business through the addition of brands, centres, services and technologies to the Company's existing portfolio and the realisation of integration efficiencies. Following the Company's successful equity placing in May 2020, the net proceeds from the issue of the Bonds will provide IWG with the additional financial flexibility to capitalise on these opportunities and also retain a strong financial position in the current market environment. The issue of the Bonds will also diversify the Company's sources of funding as well as further strengthen IWG's liquidity position and maturity profile and reduce its weighted average cost of capital.

The M&A opportunities under active consideration include a UK transaction, a bolt-on US acquisition, which is in the final stages of due diligence, and a number of other potential transactions across Europe, Asia and the US which are at varying stages of negotiation and due diligence. In aggregate, these current M&A opportunities would have a cash cost in excess of GBP300 million.

In addition, the wider pipeline of potential M&A opportunities continues to grow across all geographies. All such opportunities continue to be evaluated cautiously and assessed against the Company's disciplined financial framework and returns target.

Taking into account the gross proceeds of the transaction, IWG's pro forma liquidity headroom as at 30 September 2020 would be GBP 1,163.2 million before the deployment of funds.

In the context of the Offering, IWG and Estorn Limited (an entity owned by Mark Dixon which holds all the Ordinary Shares (as defined below) in respect of which he is the beneficial owner) will agree to a lock-up relating to equity and equity-related securities for a period commencing on pricing and ending 90 calendar days following the Issue Date (defined below), subject to certain exceptions.

Offering of Bonds

The Bonds are expected to be issued by IWG Group Holdings Sarl, a wholly owned indirect subsidiary of the Company incorporated in Luxembourg (the "Issuer") and the Issuer's obligations under the Bonds will be guaranteed by the Company.

The Bonds will be unsubordinated and unsecured obligations of the Issuer and will be subject to a negative pledge in respect of the Issuer, the Guarantor and certain of the Guarantor's other subsidiaries

The Bonds will be issued at par and are expected to carry a coupon of between 0.50% and 1.25% per annum payable semi-annually in arrear in equal instalments. The initial conversion price is expected to be set at a premium of between 35% and 40% above the volume weighted average price ("VWAP") of an Ordinary Share on the London Stock Exchange between launch and pricing of the Offering today. The conversion price will be subject to adjustment in certain circumstances in line with market practice.

Subject to shareholder approval and the Issuer's option to settle conversions in cash, ordinary shares of the Company (the "Ordinary Shares") or a combination thereof, the Bonds will be convertible into Ordinary Shares. The Bonds will be convertible only in limited circumstances prior to 2 June 2021, as described in the terms and conditions of the Bonds.

The Company will convene an extraordinary general meeting of its shareholders (an "EGM") which is expected to be held on or around 21 December 2020 to seek shareholder approval to allot and issue Ordinary Shares on a non pre-emptive basis for the purpose of settling conversions of the Bonds (the "Shareholder Resolutions"). Notice of the EGM will be sent to IWG shareholders in due course.

The Issuer may, by giving notice to Bondholders (i) at any time from (but excluding) the date of an EGM to (and including) three London business days following the date of such EGM, if the Shareholder Resolutions have been presented but have not been passed at the EGM and (ii) at any time from (but excluding) 19 May 2021 to (and including) three London business days following 19 May 2021, if the Shareholder Resolutions have been presented and not been passed at a general meeting of IWG shareholders on or before 19 May 2021, redeem the Bonds at the greater of (a) 102% of the principal amount of the Bonds and (b) 102% of the fair bond value (to be determined in accordance with the terms and conditions of the Bonds), in each case with accrued interest.

Settlement and delivery of the Bonds is expected to take place on or about 9 December 2020 (the "Issue Date"). If not previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed at par on 9 December 2027. The Bonds may be redeemed at the option of the Bondholders at par plus accrued interest on 9 December 2025. The Issuer will have the option to redeem all outstanding Bonds on or after 22 January 2025, at par plus accrued interest, if the value of the Ordinary Shares underlying GBP100,000 in principal amount of the Bonds equals or exceeds GBP130,000 for at least 20 out of 30 consecutive dealing days, or at any time, if 15% or less of the principal amount of the Bonds remains outstanding. The final terms of the Bonds are expected to be announced later today.

Application is intended to be made for the Bonds to be admitted to trading on the unregulated open market (Freiverkehr) of the Frankfurt Stock Exchange no later than 60 days after the Issue Date.

Barclays Bank PLC and HSBC Bank plc are acting as Joint Global Coordinators and Joint Bookrunners for the Offering. Investec Bank plc, Bank of China and ING are acting as Co-Managers for the Offering. Rothschild & Co has provided financial advice to IWG in relation to the Offering.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, the person responsible for releasing this announcement is Tim Regan, Company Secretary of IWG plc .

ENQUIRIES:

 
 IWG plc                                           Tel: +41 (0) 41 
  Mark Dixon, Chief Executive Officer               723 2353 
  Eric Hageman, Chief Financial Officer 
  Neil Galloway, Executive Vice President 
  Tim Regan, Company Secretary 
  Paul Wilkinson, Group Treasurer 
  Wayne Gerry, Group Investor Relations Director 
 Barclays Bank PLC (Joint Global Coordinator       Tel: [phone] 
  and Joint Broker)                                 2323 
  Richard Probert / Tom Macdonald / Omar 
  Alghanim 
 HSBC Bank plc (Joint Global Coordinator           Tel: [phone] 
  and Joint Broker)                                 8888 
  Mark Dickenson / Sam McLennan / Ilyas Amlani 
 Investec Bank plc (Co-Manager and Joint           Tel: [phone] 
  Broker)                                           5970 
  James Rudd / Alex Wright 
 
  Rothschild & Co                                   Tel: [phone] 
  Alex Midgen / Sam Green                           5000 
 
  Brunswick 
  Nick Cosgrove / Oli Sherwood                      Tel: [phone] 
                                                    5959 
 

IMPORTANT NOTICE IN RELATION TO THE BONDS

NO ACTION HAS BEEN TAKEN BY THE ISSUER, THE GUARANTOR, THE JOINT BOOKRUNNERS AND THE CO-MANAGERS (TOGETHER, THE "MANAGERS") OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE BONDS OR POSSESSION OR DISTRIBUTION OF THIS PRESS RELEASE OR ANY OFFERING OR PUBLICITY MATERIAL RELATING TO THE BONDS IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS PRESS RELEASE COMES ARE REQUIRED BY THE ISSUER THE GUARANTOR AND THE MANAGERS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS.

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES. THIS PRESS RELEASE IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL.

THIS PRESS RELEASE AND THE OFFERING WHEN MADE ARE ONLY ADDRESSED TO, AND DIRECTED IN, THE UNITED KINGDOM AND MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE "EEA") AT PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF THE PROSPECTUS REGULATION ("QUALIFIED INVESTORS"). FOR THESE PURPOSES, THE EXPRESSION "PROSPECTUS REGULATION" MEANS REGULATION (EU) 2017/1129.

SOLELY FOR THE PURPOSES OF THE PRODUCT GOVERNANCE REQUIREMENTS CONTAINED WITHIN: (A) EU DIRECTIVE 2014/65/EU ON MARKETS IN FINANCIAL INSTRUMENTS, AS AMENDED ("MIFID II"); (B) ARTICLES 9 AND 10 OF COMMISSION DELEGATED DIRECTIVE (EU) 2017/593 SUPPLEMENTING MIFID II; AND (C) LOCAL IMPLEMENTING MEASURES (TOGETHER, THE "MIFID II PRODUCT GOVERNANCE REQUIREMENTS"), AND DISCLAIMING ALL AND ANY LIABILITY, WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE, WHICH ANY "MANUFACTURER" (FOR THE PURPOSES OF THE MIFID II PRODUCT GOVERNANCE REQUIREMENTS) MAY OTHERWISE HAVE WITH RESPECT THERETO, THE BONDS HAVE BEEN SUBJECT TO A PRODUCT APPROVAL PROCESS, WHICH HAS DETERMINED THAT: (I) THE TARGET MARKET FOR THE BONDS IS ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ONLY, EACH AS DEFINED IN MIFID II; AND (II) ALL CHANNELS FOR DISTRIBUTION OF THE BONDS TO ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ARE APPROPRIATE. ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THE BONDS (A "DISTRIBUTOR") SHOULD TAKE INTO CONSIDERATION THE MANUFACTURERS' TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO MIFID II IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE BONDS (BY EITHER ADOPTING OR REFINING THE MANUFACTURERS' TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.

THE TARGET MARKET ASSESSMENT IS WITHOUT PREJUDICE TO THE REQUIREMENTS OF ANY CONTRACTUAL OR LEGAL SELLING RESTRICTIONS IN RELATION TO ANY OFFERING OF THE BONDS.

FOR THE AVOIDANCE OF DOUBT, THE TARGET MARKET ASSESSMENT DOES NOT CONSTITUTE: (A) AN ASSESSMENT OF SUITABILITY OR APPROPRIATENESS FOR THE PURPOSES OF MIFID II; OR (B) A RECOMMENDATION TO ANY INVESTOR OR GROUP OF INVESTORS TO INVEST IN, OR PURCHASE, OR TAKE ANY OTHER ACTION WHATSOEVER WITH RESPECT TO THE BONDS.

THE BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA OR THE UNITED KINGDOM. FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF MIFID II; OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II. CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014, AS AMENDED (THE "PRIIPS REGULATION") FOR OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA OR THE UNITED KINGDOM HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA OR THE UNITED KINGDOM MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.

IN ADDITION, IN THE UNITED KINGDOM THIS PRESS RELEASE IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS (I) WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") AND QUALIFIED INVESTORS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER, AND (II) TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS PRESS RELEASE MUST NOT BE ACTED ON OR RELIED ON (I) IN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EEA, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PRESS RELEASE RELATES IS AVAILABLE ONLY TO (A) RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM AND (B) QUALIFIED INVESTORS IN MEMBER STATES OF THE EEA.

A COPY OF THIS PRESS RELEASE HAS BEEN DELIVERED TO THE JERSEY REGISTRAR OF COMPANIES IN ACCORDANCE WITH ARTICLE 5 OF THE COMPANIES (GENERAL PROVISIONS) (JERSEY) ORDER 2002, AND THE REGISTRAR HAS GIVEN, AND HAS NOT WITHDRAWN, CONSENT TO ITS CIRCULATION. THE JERSEY FINANCIAL SERVICES COMMISSION HAS GIVEN, AND HAS NOT WITHDRAWN, ITS CONSENT UNDER ARTICLE 2 OF THE CONTROL OF BORROWING (JERSEY) ORDER 1958 TO THE ISSUE OF SHARES IN THE GUARANTOR. THE JERSEY FINANCIAL SERVICES COMMISSION IS PROTECTED BY THE CONTROL OF BORROWING (JERSEY) LAW 1947 AGAINST LIABILITY ARISING FROM THE DISCHARGE OF ITS FUNCTIONS UNDER THAT LAW. IT MUST BE DISTINCTLY UNDERSTOOD THAT, IN GIVING THESE CONSENTS, NEITHER THE REGISTRAR OF COMPANIES NOR THE JERSEY FINANCIAL SERVICES COMMISSION TAKES ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE ISSUER OR THE GUARANTOR OR FOR THE CORRECTNESS OF ANY STATEMENTS MADE, OR OPINIONS EXPRESSED, WITH REGARD TO EITHER OF THEM. THE GUARANTOR HAS TAKEN ALL REASONABLE CARE TO ENSURE THAT THE FACTS STATED IN THIS PRESS RELEASE ARE TRUE AND ACCURATE IN ALL MATERIAL RESPECTS, AND THAT THERE ARE NO OTHER FACTS THE OMISSION OF WHICH WOULD MAKE MISLEADING ANY STATEMENT IN THIS PRESS RELEASE, WHETHER OF FACTS OR OF OPINION. THE GUARANTOR ACCEPTS RESPONSIBILITY ACCORDINGLY. COPIES OF THIS PRESS RELEASE ARE NOT BEING, AND MUST NOT BE, MAILED, OR OTHERWISE FORWARDED, DISTRIBUTED, SENT IN, OR OTHERWISE CIRCULATED IN JERSEY, CHANNEL ISLANDS.

ANY DECISION TO PURCHASE ANY OF THE BONDS SHOULD ONLY BE MADE ON THE BASIS OF AN INDEPENDENT REVIEW BY A PROSPECTIVE INVESTOR OF THE ISSUER'S AND THE GUARANTOR'S PUBLICLY AVAILABLE INFORMATION. NEITHER THE MANAGERS NOR ANY OF THEIR RESPECTIVE AFFILIATES ACCEPT ANY LIABILITY ARISING FROM THE USE OF, OR MAKE ANY REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF, THIS PRESS RELEASE OR THE ISSUER'S AND THE GUARANTOR'S PUBLICLY AVAILABLE INFORMATION. THE INFORMATION CONTAINED IN THIS PRESS RELEASE IS SUBJECT TO CHANGE IN ITS ENTIRETY WITHOUT NOTICE UP TO THE ISSUE DATE.

POTENTIAL INVESTORS WHO ARE IN ANY DOUBT ABOUT THE CONTENTS OF THIS PRESS RELEASE SHOULD CONSULT THEIR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER FINANCIAL ADVISER. IT SHOULD BE REMEMBERED THAT THE PRICE OF SECURITIES AND THE INCOME FROM THEM CAN GO DOWN AS WELL AS UP.

EACH PROSPECTIVE INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT IT MUST BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE BONDS OR THE ORDINARY SHARES TO BE ISSUED OR TRANSFERRED AND DELIVERED UPON CONVERSION OF THE BONDS AND NOTIONALLY UNDERLYING THE BONDS (TOGETHER WITH THE BONDS, THE "SECURITIES"). NONE OF THE ISSUER, THE GUARANTOR OR THE MANAGERS MAKE ANY REPRESENTATION AS TO (I) THE SUITABILITY OF THE SECURITIES FOR ANY PARTICULAR INVESTOR, (II) THE APPROPRIATE ACCOUNTING TREATMENT AND POTENTIAL TAX CONSEQUENCES OF INVESTING IN THE SECURITIES OR (III) THE FUTURE PERFORMANCE OF THE SECURITIES EITHER IN ABSOLUTE TERMS OR RELATIVE TO COMPETING INVESTMENTS.

THE MANAGERS ARE ACTING ON BEHALF OF THE ISSUER AND THE GUARANTOR AND NO ONE ELSE IN CONNECTION WITH THE BONDS AND WILL NOT BE RESPONSIBLE TO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF THE MANAGERS OR FOR PROVIDING ADVICE IN RELATION TO THE SECURITIES.

Each of the Issuer, the Guarantor, the MANAGERS and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any statement contained in this PRESS RELEASE whether as a result of new information, future developments or otherwise.

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December 02, 2020 02:00 ET (07:00 GMT)