MWB Business Exchange Share Discussion Threads

[scburbs] 27/5/2011 13:42

Having sold part of my MBE holding because the deal was so bad I am wondering whether as well as independence issues the INDEPENDENT directors have failed in their obligation to release the existence of a possible competing bid to the market. Regus did due diligence in March! If they had release the news of a possible bid in March then MWB would have been unable to make the acquisition at the price they are proposing. Smellier and smellier.

"A confidentiality agreement between Regus and MBE was entered into on 15 March 2011 (the "NDA"). For this reason Regus has not been able to make public its intentions regarding MBE until now. Now that the Regus Offer has been publicly disclosed by MBE and MWB, Regus intends to request that the Independent Committee of Directors of MBE (the "Independent Committee") release it from the NDA to allow it fully to explain its position to all relevant stakeholders.

Regus notes the announcement made by MBE on 27 May 2011 and can confirm that over the weekend of 18 and 19 March 2011 it did indeed engage in an expedited and limited due diligence process in respect of MBE."

[moreforus] 27/5/2011 13:27

looks like they are all asleep tops

[bonio10000] 27/5/2011 13:27

Result for MWB holders.

[topinfo] 27/5/2011 13:24

DJ Regus PLC Response to announcement made by MWB Business Exch

TIDMRGU TIDMMBE TIDMMWB

RNS Number : 4549H

Regus PLC

27 May 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 OR REGULATIONS OF THAT JURISDICTION

27 May 2011

REGUS PLC (SOCIETE ANONYME) ("Regus")

Response to announcement made by MWB Business Exchange plc ("MBE")

This is an announcement falling under Rule 2.4 of the Takeover Code (the "Code"). It does not represent a firm intention to make an offer under Rule 2.5 of the Code. Accordingly, there can be no certainty that any offer will ultimately be made.

Regus notes the announcements made by MWB Group Holdings Plc ("MWB") and MBE on 27 May 2011 and confirms that it has indeed made an indicative offer to acquire the entire issued share capital of MBE for cash consideration of 92.36 pence per MBE share (the "Regus Offer").

The Regus Offer:

-- values MBE's issued share capital at approximately GBP60 million;

-- would provide MBE's shareholders with a premium of 103.0 per cent. to the closing price of 45.5 pence per MBE share on 27 April 2011, the day before the announcement of the recommended part-share, part-cash offer made by MWB for the shares in MBE not already held by MWB (the "MWB Offer") (MWB currently holds approximately 72 per cent. of the issued share capital of MBE);

-- would provide MBE's shareholders with a premium of 83.7 per cent. to the value of the MWB Offer as at 27 April 2011, the day before announcement of the MWB Offer (the MWB Offer was valued at 50.27 pence per MBE share on 27 April 2011); and

-- would provide MBE's shareholders with a premium of 85.4 per cent. to the value of the MWB Offer as at 26 May 2011 (the MWB Offer was valued at 49.82 pence per MBE share on 26 May 2011).

Background

A confidentiality agreement between Regus and MBE was entered into on 15 March 2011 (the "NDA"). For this reason Regus has not been able to make public its intentions regarding MBE until now. Now that the Regus Offer has been publicly disclosed by MBE and MWB, Regus intends to request that the Independent Committee of Directors of MBE (the "Independent Committee") release it from the NDA to allow it fully to explain its position to all relevant stakeholders.

Regus notes the announcement made by MBE on 27 May 2011 and can confirm that over the weekend of 18 and 19 March 2011 it did indeed engage in an expedited and limited due diligence process in respect of MBE.

Regus can also confirm that subsequent to the diligence process it did make a proposed offer for the entire issued share capital of MBE and that following the announcement of the MWB Offer, it re-confirmed its proposed offer to the Independent Committee on 8 May 2011.

The Regus Offer

Regus notes the Independent Committee's reasons for not recommending the Regus Offer. However:

-- Regus does not accept that its all cash offer, which is far superior to the MWB Offer recommended by the Independent Committee, fails to recognise the underlying fundamental value of MBE in the medium to long term. Regus believes that the Regus Offer is highly attractive to MBE shareholders because it represents a significant premium to both the pre-MWB Offer share price and the value of the MWB Offer;

-- Regus believes that the board of directors and shareholders of each of MBE and MWB should give serious consideration to supporting the Regus Offer;

-- Regus believes that the success of its all cash offer would be in the best interests of all stakeholders, including MBE's minority shareholders and MWB's shareholders as a whole. Regus notes that on 28 April 2011 MBE reported pre-tax losses of GBP2.8 million for the six months ended 31 December 2010 and GBP5.0 million for the twelve months ended 31 December 2010. Regus also notes that on 28 April 2011 MWB disclosed in its consolidated interim results for the period to 31 December 2010 that the net debt of the MWB group stood at GBP301.7 million;

-- Regus also notes that on 28 April 2011, MWB announced that it had extended its financial year end to 30 June 2011. Further, on that same day, MBE announced that it had also extended its financial year end. The reason given for these extensions was that MWB is in the advanced stages of concluding a debt refinancing involving the extension of all of the group's banking facilities (which are due to expire at the end of December 2011). Particularly in light of the MWB group's net debt position as noted above, Regus believes that its all cash offer could be of significant interest to the banks involved in this refinancing process; and

-- Regus remains committed to its offer for MBE.

Given MWB's 72 per cent. shareholding in MBE, the Regus Offer would, in due course, necessarily require MWB's support. However, Regus is hopeful that once MBE shareholders, MWB shareholders and the banks engaged in the refinancing process have had an opportunity to consider the Regus Offer, MWB's support will be forthcoming.

MWB representations

Regus is surprised by the representations made by MWB to the Independent Committee in respect of seeking to levy or impose new charges in relation to the provision of intra-group guarantees (or the tax benefit received by MBE as a result of the application of transfer pricing arrangements to the historic provision by MWB of such guarantees) and working capital support to MBE, as disclosed in MWB's and MBE's announcements of 27 May 2011.

Cancellation of trading in MBE shares on AIM

Regus notes a further representation made by MWB to the Independent Committee that if the scheme of arrangement to implement the MWB Offer does not become effective it intends to requisition a meeting of the shareholders of MBE for the purpose of passing a resolution to approve the cancellation of trading in MBE shares on AIM. Regus notes that any cancellation of trading in MBE shares would require the consent of not less than 75 per cent. of votes cast by MBE's shareholders in a general meeting and that MWB holds approximately 72 per cent. of MBE's issued share capital.

Next steps

A further announcement will be made if and when appropriate. There can be no assurance that Regus will make an offer for MBE.

Important notices

Given that some time has passed since the limited due diligence exercise carried out by Regus in March 2011, and due to the surprising and unexpected representations made by MWB to the Independent Committee in respect of seeking to levy or impose new charges in relation to the provision of intra-group guarantees (or the tax benefit received by MBE as a result of the application of transfer pricing arrangements to the historic provision by MWB of such guarantees) and working capital support to MBE (as disclosed in MWB's and MBE's announcements of 27 May 2011), Regus believes that it is necessary and prudent to include the following reservations in respect of the Regus Offer.

Regus reserves the right to make an offer at any time at a value below 92.36 pence per MBE share:

(i) with the recommendation of the board of directors of MBE;

(ii) to the extent that any dividend or other distribution or payment to shareholders is announced, declared, made or paid by MBE;

(iii) to the extent that any participant(s) in MBE's Long Term Incentive Scheme ("LTIS") become(s) entitled to any payment(s) under the LTIS as a result of the acquisition of MBE by Regus (on the basis of the disclosure made at paragraph 14 of the announcement regarding the MWB Offer, there should be no such payments);

(iv) to the extent that MBE has agreed or agrees to waive, cancel, forgive or release any indebtedness owed by MWB (or subsidiaries of MWB) to MBE;

(v) to the extent that MWB successfully levies against MBE any annual charge for the historic provision of guarantees to MBE in respect of the performance of MBE's obligations regarding the payment of rent to certain of its landlords;

(vi) to the extent that MWB successfully levies against MBE any charge in respect of the tax benefit received by MBE as a result of the application of the transfer pricing arrangements to the historic provision by MWB of guarantee support; and

(vii) to the extent that MWB successfully imposes charges of commercial interest rates and fees against MBE for historic working capital support,

(in the case of each of (v) to (vii) above, as stated in the announcements made by MWB and MBE on 27 May 2011)

Given the time since it conducted its due diligence, and in particular because Regus would like to understand further on what basis MWB is even able to proceed with levying new charges, interest and fees as stated in the surprising and unexpected representations made by MWB in today's announcements, Regus believes that it would be prudent to include one pre-condition to its offer. The Regus Offer is therefore subject to the pre-condition that Regus be granted access by MBE to refresh its due diligence, unless Regus determines that it is willing to waive this pre-condition.

However, this announcement does not constitute an announcement of a firm intention to make an offer under Rule 2.5 of the Code and, accordingly, shareholders of MBE are advised that there can be no certainty that any offer to acquire MBE shares will be made even if this pre-condition is satisfied or waived.

Enquiries:

Investec Investment Banking (Financial adviser Tel: [phone]

[scburbs] 27/5/2011 13:22

Clarification that it is a real approach from Regus.

[yump] 27/5/2011 09:09

I wonder if this other indicative offer is 'manufactured' for some reason as there is no mention of who its from ?

I suppose there is one positive, which is that the MWB share price isn't at a peak, so it doesn't involve exchanging shares in something that's low, for something that's over-inflated.

[bonio10000] 27/5/2011 09:06

Why would you pay the cash value for a loss-making business?

[scburbs] 27/5/2011 08:39

The market value of rental guarantees from over leveraged basket cases is somewhat higher than you might expect! Of course a purchaser would just agree to take this obligation over so other than as smoke this is less than tenuous. I am thinking of paying Greece a few million a year to guarantee my residential mortgage!

[scburbs] 27/5/2011 08:25

Independent Directors, Comedians, Fraudsters. Seemingly disparate groups? Can the case for reformation of the role of the "independent" director be put any clearer than this RNS?

"The Independent Business Exchange Directors have resolved that they would not recommend a cash sale of Business Exchange at the Indicative Offer price [92.36p!] as, in their opinion, a cash offer at this price would not reflect the underlying fundamental value of Business Exchange in the long term."



Now I don't disagree with this statement per se as I was certainly expecting to exit north of £1! However, I feel there may be a degree of incongruity with what they are actually doing instead!

[druinsky] 05/5/2011 18:13

yeah. lol.

[bonio10000] 05/5/2011 09:51

What are they going to bid for? a minority shareholding?

[druinsky] 04/5/2011 21:57

rival bid from Conygar (CIU) would be nice :-)

[scburbs] 04/5/2011 21:52

Jeffian,

Having only recently bought MBE shares I am perhaps not as annoyed with being screwed as I would be if I wasn't making a small profit. However, I was expecting to make a large profit.

CBS is an interesting example I had not come across before. It is still the independent directors role which is the problem (as directors who are not independent can't vote), but I think the point you are making is that the majority shareholders can go and find themselves some other "independent" directors!

"The Directors of CBS (excluding Derrick Collin) ('Independent Directors')
announce that they have entered into an agreement to sell Brulines, the
Company's sole trading subsidiary, to Uniplexor Limited ('Uniplexor'), a company controlled by Derrick Collin, Chief Executive of CBS ('Disposal')."



"Comprehensive Business Services plc announces that, it has today received a
requisition notice, in accordance with Section 368 of the Companies Act 1985,
from Merrill Lynch on behalf of N.Y. Nominees Limited, who have an interest in
3,029,462 Ordinary 50 pence shares representing 45.63 per cent. of the issued
Ordinary share capital of the Company. The requisition notice requires the
Company to convene an Extraordinary General Meeting to consider resolutions to
remove Adrian Bradshaw and Peter Mountford as directors of the Company."

[jeffian] 04/5/2011 13:34

yump,
What was even worse was that I recently discovered via the trade press that, having sold out of Brulines for the second time and made another small fortune, our friend DC has actually set up a competitor! I asked new Brulines management how on earth they paid him out without a 'non-compete' agreement. No reply.

I suppose the lesson not to deal in companies with a controlling shareholder is even more apt if he happens to have a criminal record*!

8-(

* Edit: Ahem, 'spent conviction' if M'Learned Friends are looking in.

[yump] 04/5/2011 12:39

jeffian

Now you've gone and ruined my day as I had successfully forgotton about "Derek Collin at Comprehensive Business Services" !

Will be on a small loss here, but nothing compared to that scumbag company.

[jeffian] 04/5/2011 10:23

It's not the independence of the ID's that's the problem IMHO, scburbs, it's the fact that, other than embarrassing majority holders, they have no real power. In the examples above, Monsoon only ended up with a half-decent takeout because shareholders dug in their heels and resisted but in the other cases the Independents were simply ridden over (in the case of CBS actually voted off the Board!). The point made above is valid - if there is a controlling shareholder, expect to get screwed at some point!

[scburbs] 04/5/2011 10:08

The problem stems more from the role of the Independent Directors on all of these takeovers (are they really independent?).

They think that they can absolve themselves of any responsibility for the price if they get an advisor to prepare a valuation showing the offer as being fair value! Advisors are notoriously bad at valuations anyway and you can general prepare a wide range of valuations using slightly different assumptions.

In this case the Independent Directors even go as far as recognising that the offer does not represent fair value!

"Business Exchange's depressed share price provides an unhelpful valuation benchmark."

It does indeed, but that is no reason to sell the company for 10% more than this unhelpful valuation benchmark!

[jeffian] 04/5/2011 09:27

They usually do -
Peter Simon at Monsoon (dividend stopped and attempt to take it private via a convoluted 'tender offer' which got around Takeover Code regulations).....
Derek Collin at Comprehensive Business Services who took it private claiming it had run out of working capital - only to re-float it later as Brulines with a Prospectus showing an unbroken 5-year profit record....
Peter Hearn at OPD who built up a controlling stake with others not deemed to be a 'concert party' (despite one being his sister and others long-term business associates!) before taking it private at considerably less than he paid for shares in the market.....
The list is endless, I'm afraid.

[yump] 04/5/2011 07:22

scburbs
Although I almost never use it, that deserves an LOL !

Agree with you, holding shares in a company with a majority shareholder that is publicly floated is a risk, but only if the majority shareholder behaves like a hoody.

[scburbs] 29/4/2011 12:04

Just because you know there is someone standing behind you doesn't mean that it is no issue to bend over, despite what you may have been told.

[bonio10000] 29/4/2011 10:58

Buy RGU then.

I don;t see the issue. You buy into a company with a 75% shareholder, then you should be aware this might happen.

Grow a pair and get over it.

[scburbs] 29/4/2011 10:47

Bonio1000, I agree that it was always a risk, but the rest of your post doesn't make sense. Of course it is an issue!

In what way will be holding shares in MWB which will be a higly leveraged regional hotel business with a serviced office offshoot be equivalent to holding shares in a pure serviced office business? MBE was a much better investment proposition than MWB (ignoring the majority shareholder risk which clearly allows the trampling of corporate governance). MWB post takeover will be a very poor proxy for MBE pre-takeover.

[bonio10000] 29/4/2011 09:57

Always a risk if you held shares in MBE and not MWB directly, given MWB's shareholder.

Nothing to stop MBE holders selling and buying into MWB, so not an issue as far as I see it.

[yump] 28/4/2011 20:34

Yes, nice time to pick up shares in a company that is probably on the upturn, when its share price is depressed.

And folks get the jitters about the conduct of Far East companies.

Plenty of examples in the UK, including half the banking sector.

I suppose it gives them total control, but can you imagine them selling a business if it starts to generate oodles of cash ?