Purplebricks Group PLC Proposed sale of business and assets to Strike Ltd (7212Z)

TIDMPURP

RNS Number : 7212Z

Purplebricks Group PLC

17 May 2023

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, 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.

This announcement contains inside information for the purposes of article 7 of Regulation 596/2014 as amended and transposed into UK law in accordance with the European Union (Withdrawal) Act 2018 ("UK MAR").

17 May 2023

Purplebricks Group plc

("Purplebricks" or the "Company")

Proposed sale of business and assets to Strike Limited ("Strike")

Completion of Strategic Review, Termination of Formal Sale Process

Proposed cancellation of admission to trading on AIM

Proposed re-registration as a private company and change of name

Board Changes

and

Publication of Circular and Notice of General Meeting

Purplebricks Group plc (AIM: PURP) announces the completion of its Strategic Review, termination of its Formal Sale Process and entry into a conditional agreement to effect the transfer of substantially all of its trading business and assets to Strike (other than certain excluded assets) through its subsidiary Strike Bidco Limited (the "Purchaser") for a consideration of GBP1 and the assumption of substantially all of the Company's liabilities (other than the excluded liabilities) by the Purchaser (the "Proposed Sale"). The Proposed Sale results in the Company's cash balance on Completion (up to a maximum of GBP5.5 million) being retained by the Company with the intention that the net cash proceeds after the deduction of certain costs and expenses to meet the excluded liabilities (the "Net Cash Proceeds"*) are distributed to Shareholders following and subject to completion of (i) the legal formalities around the transfer of assets and (ii) a members' voluntary liquidation.

The Proposed Sale is expected to deliver a small return to Purplebricks shareholders and preserves the Company's business and brand for the benefits of its consumer customers, employees, funding partners and other stakeholders.

Summary

-- Completion of the Company's Strategic Review and termination of Formal Sale Process, which concludes the offer period in respect of the Company (as defined in the Takeover Code).

-- The Board of Purplebricks launched the Strategic Review on 17 February 2023 to consider the options available to the Company considering both the value being offered to Shareholders, and the ability to deliver certainty for the Group and its stakeholders in a short timeframe . Following preliminary conversations around the potential for an equity fund raise and having received several credible expressions of interest in relation to the sale of the Company or some or all of the Group's business and assets, the Formal Sale Process was launched on 1 March 2023 to fully explore a potential sale of the Group.

-- After a period of engagement with a significant number of potential offerors and upon conclusion of several rounds of bidding designed to identify the most credible potential offerors, among other options, the Company received a proposal from Strike for the acquisition of the Company's business and assets. The Board did not consider the other potential offers provided either sufficient certainty or would be deliverable in the timeframe needed to resolve the Group's short term funding issues arising from the agreement with its pay later financing provider being close to expiry and the Company's cash balance declining.

-- However, the proposal from Strike offered the ability to conclude a transaction in the short term that results in the Company retaining a cash balance for distribution to shareholders ( as part of a distribution to shareholders after payment of certain transaction costs and expenses and after completing the transfer of assets that can only be passed to Strike post Completion (such as contracts requiring counterparty consent)) whilst also protecting the future of the Company's business, brand, existing customers in the process of selling their houses and those employees to be retained for the ongoing success of the business as well as providing greater certainty for funding partners and other supplier relationships.

-- The Proposed Sale will constitute a fundamental change of business for the purposes of Rule 15 of the AIM Rules as the Company will cease to own, control or conduct all of its existing trading business, activities and assets. It is also potentially deemed "frustrating" action under Rule 21.1 of the Takeover Code. As such, the Proposed Sale is conditional upon the approval of the Shareholders at the General Meeting. The Circular, setting out further details on the Proposed Sale and containing a notice to convene the General Meeting, is being sent to Shareholders later today. The General Meeting will be held at 9 a.m. on 2 June 2023.

-- The Board has also concluded that, on the basis that the Company would no longer have a trading business following Completion, it is in the best interests of the Company and the Shareholders to seek Shareholder approval to cancel the admission of the Company's Ordinary Shares to trading on AIM. Following cancellation of the Ordinary Shares on AIM, the Company proposes to re-register as a private company, thereby changing its name to Bricks Newco Limited and adopting the New Articles.

-- With effect from Completion of the Proposed Sale, Helena Marston is resigning from her role as CEO. The rest of the Company's Board (other than Dominique Highfield, the Company's CFO) have indicated their intention to step down following the cancellation of the Ordinary Shares to trading on AIM. All other employees will transfer to Strike, however it is anticipated that there will be reductions in headcount in the short term as part of a wider cost reduction in the business, which are expected to impact on the size of the field teams and certain central functions.

-- The Directors, taking into account the comprehensive exploration of sale options via the Formal Sale Process, the current trading performance of the Company, the liquidity position of the Company, the near term expiry of a key funding partner relationship and the potential challenges in securing, in the short term, the future ownership of the Group, have unanimously concluded that it is in the best interests of the Company to proceed with Proposed Sale.

-- Accordingly, the Directors intend to unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings and the shareholdings in which they are interested amounting, in aggregate, to 19,402,865 Ordinary Shares, representing approximately 6.3% of the Company's issued share capital.

-- The Company has also received an irrevocable undertaking to vote in favour of the Resolutions at the General Meeting from AVIV Group in respect of 81,384,638 Ordinary shares representing approximately 26.5% of the Company's issued share capital.

-- In addition, the Company has also received a letter of intent from JNE Master Fund LP in respect of 33,620,000 Ordinary Shares representing approximately 11% of the Company's issued share capital, confirming that it intends to vote in favour of the Resolutions at the General Meeting.

-- Accordingly, the Company has therefore received irrevocable undertakings and/or letters of intent in respect of a total 134,407,503 Ordinary Shares representing, in aggregate , approximately 43.8% of the Company's issued share capital on 16 May 2023 (being the last Business Day before the date of this Announcement), further details of which are set out below.

Rule 21 of the Takeover Code

Prior to the Company terminating the Formal Sale Process by way of this Announcement, all parties who had approached the Company were notified of the rejection of their approach with regard to making an offer for the Company and also of the termination of the Formal Sale Process.

As at the date of this Announcement, no firm proposal has been made to the Company by any potential offerors.

Rule 2.8 of the Takeover Code

Shareholders will be aware that on 10 May 2023, Strike released an announcement confirming that it did not intend to make an offer for the Company. This statement is subject to Rule 2.8 of the Takeover Code and under Rule 2.8(f) of the Takeover Code, Strike would be prohibited from purchasing, agreeing to purchase or make any statement which raises or confirmed the possibility that it is interested in purchasing assets which are significant in relation to the Company for a period of six months from 10 May 2023. With regard to reservation a) in the announcement made by Strike on 10 May 2023, the Board of the Company has agreed that this restriction may be set aside for the purposes of Strike and the Purchaser entering into the Asset Purchase Agreement.

Paul Pindar, Chairman of Purplebricks, commented:

"It is the unanimous opinion of the Board that the Proposed Sale to Strike is in the best interests of stakeholders and Shareholders should vote in favour of the Proposed Sale. This conclusion has been informed by the Strategic Review in which all options, including an equity fund raise, have been considered and an extensive Formal Sale Process, which involved inbound and outbound approaches from and to interested parties within and outside of the industry. I am disappointed with the financial value outcome, both as a 5% Shareholder myself and for Shareholders who have supported the Company under my and the Board's stewardship. However, there was no other proposal or offer which provided a better return for shareholders, with the same certainty of funding and speed of delivery necessary to provide the stability the Company needs.

On behalf of the entire Board I would like to thank Helena for her leadership of the business through the most challenging of times and wish her the very best for the future. She has implemented a difficult but necessary change agenda over the last 12 months which has laid the foundations for a more secure future."

Helena Marston, CEO of Purplebricks, commented:

"When I became CEO 12 months ago, my focus was a wholesale raising of standards within the business and to chart a course towards positive cash generation. This included delivering GBP21m of cost savings, stabilising lettings, new revenue streams, raising our prices and much improved financial transparency and control. We have achieved many of these goals, but my view and that of the Board in February was that we would be better placed to realise our full potential under private ownership. However, the Strategic Review and Formal Sale Process created increased uncertainty in the business resulting in a need to draw this process to conclusion, which has also been accentuated by the timing of expiry of our relationship which lets us provide pay later solution.

Taking the actions we did has allowed us to secure a solvent outcome, which protects the future of the business and the Purplebricks consumer driven brand, alongside the benefits of further investment. It has been a challenging and uncertain time but the passion and commitment of our people has been tremendous and I sincerely wish everyone the very best for the future."

Sir Charles Dunstone, Partner, Freston Ventures (Joint Major Shareholder of Strike), commented:

"We remain committed to the online model, which offers customers a much better experience at a far lower cost. This is a positive outcome for anyone looking to sell their home and save money doing so. Purplebricks has dramatically changed the industry by driving down the cost of estate agency and we aim to combine its significant brand recognition with an even more disruptive business model.

In bringing together the two brands, we will supercharge Strike's mission to democratise house selling by empowering customers to have more control over a process that has barely changed for 200 years.

At Freston Ventures we are focused on building household brands that are trusted by consumers across the UK. We believe there is a better way to sell your house and through this deal, we are developing the market-leading brand to deliver it."

* Net Cash Proceeds available to be returned to Shareholders is an estimate and will be dependent on a number of factors outlined in the additional information section below

Enquiries

 
 Purplebricks 
 Helena Marston (CEO) and Dominique Highfield    Via M7 Communications 
  (CFO)                                           Ltd 
 Zeus (Financial Adviser, Nominated Adviser 
  & Broker)                                      + 44 (0) 20 3829 5000 
 Jamie Peel, James Hornigold (Investment 
  Banking) 
 Benjamin Robertson (Corporate Broking) 
 PricewaterhouseCoopers LLP (Financial 
  Adviser)                                       [phone] 
 Jon Raggett 
 M7 Communications 
 Mark Reed                                       [phone] 
                                                  [e-mail] 
 Strike                                          [phone] 
 Via FieldHouse Associates                       [e-mail] 
 Teneo (Financial Adviser to Strike)             + 44 (0) 20 7260 2700 
 Chris Nicholls, Craig Lukins 
 

The person responsible for arranging for the release of this announcement on behalf of the Company is Dominique Highfield, Chief Financial Officer.

Additional information

Background to the Proposed Sale and reasons for Recommendation

On 17 February 2023, the Company announced a trading update for the financial year ending 30 April 2023 ("FY23") and the commencement of its Strategic Review. The Company announced, amongst other items, that the implementation of its turnaround plan laid out at its half year results for HY23 (the "Turnaround Plan") had taken place but involved more disruption to the sales field than originally envisaged in order to achieve the required cost savings and efficiency improvements. As a result of this disruption, instruction numbers achieved in Q3 FY23 were lower than the Board's expectations and as such, expectations for the full year were revised.

In addition to the trading update, the Company also announced the commencement of its Strategic Review, recognising that the potential of the Group may be better realised under an alternative ownership structure. Throughout the Strategic Review, consideration of all options available to the Company was given, including the potential for an equity fund raising and the sale of the Company or some or all of the Group's business and assets, changing the Group's payment processor for 'pay now' instructions and/or changing the basis of the Company's customer offering or the arrangements under which it offers pay later terms to its customers.

Following the launch of the Strategic Review, the Group received several credible expressions of interest that the Board wished to pursue in a co-ordinated fashion, alongside having the ability to engage with a wider range of potentially interested parties, in relation to a potential acquisition of the Company or some or all of the Group's business and assets. To facilitate this, on 1 March 2023, the Company announced an update to the Strategic Review and the launch of the Formal Sale Process.

Following launch of the Formal Sale Process, the Company engaged with a significant number of potential offerors, both via outbound and inbound approaches. The Formal Sale Process involved several rounds of bidding designed to identify the most credible potential offerors, considering both the value being offered to Shareholders and the ability to deliver certainty for the Group and its stakeholders in a short timeframe, taking into account the Company's cash and trading position and the upcoming expiry (and prospect of renewal) of the arrangements under which the Company is able to offer its 'pay later' terms (which account for c. 70% of the Group's revenues).

On 9 May 2023, the Company released a trading update for FY23 and an update on the Strategic Review and Formal Sale Process. The Company outlined that:

-- instruction levels for Q4 FY23 had not increased as previously anticipated, which is expected to impact on revenue and EBITDA for FY24;

-- in light of the Group's current financial position, the Group's payment processor for 'pay now' instructions had exercised its right to withhold a portion of remittances to the Group;

-- this withholding and reduction in anticipated instructions had impacted the Company's cash position, which as at 30 April 2023 was estimated to have stood at c. GBP9.1 million;

-- the Board expected that the previously anticipated return to cash generation in early FY24 is unlikely, given the trading performance of the Group and whilst the Strategic Review and resultant uncertainty around the future of the Group remain ongoing;

-- the Company had secured a short term extension to the contractual arrangements with the funding partner which enables the Group to offer its pay later terms to its customers, with such arrangements having been due to expire on 30 April 2023;

-- should the Group not be able to agree revised terms for the financing to support its pay later offering, or should those terms be disadvantageous to the Group or its customers, this would accelerate the Group's utilisation of its remaining cash reserves. Any further increased rate of withholding by the Group's payment processor for pay now instructions would also accelerate the Group's utilisation of its remaining cash reserves;

-- the Board believed it was necessary to conclude the Strategic Review and the Formal Sale Process promptly and in a manner that provided more certainty around the Group's future ownership, that provided the business with access to additional funding and resulted in a longer term extension to the finance for its pay later offering; and

-- in the view of the Board, a conclusion to the process was necessary in the interests of Shareholder value, and to create greater stability and clarity for the future of the Company, its employees, its funding partners and its customers.

The Directors have taken into account the comprehensive exploration of options as part of the Strategic Review, the current trading performance of the Company, the liquidity position of the Company and the near term expiry of its key funding partner relationships as well as the potential challenges in securing, in the short term, the future ownership of the Group.

Reflecting the above, the Board has prioritised proposals that would deliver short term certainty for the Group and its stakeholders, including in particular its consumer customer base, as well seeking to deliver an outcome that protected employee rights, offered a future for a proportion of employees and offered a favourable outcome for the Group's partners and suppliers. The Board considers that the Proposed Sale is in line with these objectives and as such, the Company has entered into the Asset Purchase Agreement. It should be noted that the timeframe for completion of an acquisition of all of the shares in the Company could be a lengthy period, in particular because of a requirement to obtain prior approval of the Financial Conduct Authority of the change in control of the Company. The Proposed Sale will be completed in a much shorter timeframe than a takeover of the Company.

Furthermore, in addition to considering some of the factors and objectives outlined above, as part of its assessment of the Proposed Sale, the Board has considered with its advisers the potential alternative implications of a failure to agree satisfactory terms for an extension to its pay later financing arrangements, the payment processor for pay now increasing its withholding of remittances, the potential accelerated utilisation of its cash reserves and wider uncertainties around its financial and trading outlook. Were such circumstances to arise, absent other financing solutions being identified or an alternative transaction being consummated to secure the future ownership of the Group in the short term, the prospect of the Company entering into administration or some other form of insolvency procedure would increase. In their assessment of such scenarios, the Board consider that the prospects for recovery of any value by Shareholders would be highly unlikely.

In terms of the anticipated future of the Company's business under the arrangements for the Proposed Sale, the Directors have considered the investment Strike intends to make in the Company's business, the opportunity for the future success of the business within Strike's group and the finance arrangements that the Purchaser has secured for the continued offering of the Company's pay later terms, which is a key part of the Group's consumer driven proposition.

The Directors understand Strike is of the view that the Proposed Sale ending the uncertainty around the Formal Sale Process and the Company's future ownership should bring stability to the business which may lead to increases revenue and the rate of new instructions. Strike nonetheless considers there will be a need to reduce costs in the business, with the extent of cost reductions required itself a function of the performance of the business. While there will be cost savings associated with the Company no longer being admitted to trading on AIM, Strike has also indicated such cost reductions will include reducing the employee base, which will impact on the size of the field teams and certain central functions. While this will require comprehensive planning, Strike has indicated it would like to complete this planning and initiate a redundancy consultation process, with the Company's assistance, that would likely involve all of the Company's employees as soon as practicable and possibly prior to Completion. Strike has however assured the Board that its firm intention is to grow the business, which will require continued employee support and that any employees affected by redundancy will be treated fairly and equitably, consistent with Strike's culture of respect. The Directors would also note that all of the advanced talks held by the Company with potential offerors have involved some proposals to reduce or otherwise change the Company's workforce.

Taking into account all of the factors above, the Directors believe that the Proposed Sale achieves the short term certainty the business requires and offers the best chance of a secure outcome for and respecting the rights of all of its stakeholders, including in particular its consumer customer base. Accordingly, the Directors intend to recommend that Shareholders vote in favour of all Resolutions to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own shareholdings of, in aggregate, 19,402,865 shares representing 6.3% of the total issued share capital.

The Board strongly hopes that Shareholders will understand its views as set out above and will vote in favour of the Proposed Sale and the Cancellation at the General Meeting. While further details will be set out in the Circular, Shareholders should be aware that if the Proposed Sale is not approved by Shareholders and does not proceed, the continued uncertainty around the Group's future ownership could have a significant impact on the Group's ability to operate as it currently does, in particular with regard to its continued ability to offer of its pay later terms and, in due course, the Company may not be able to meet is respective financial obligations as they fall due.

Details of the Proposed Sale

The Company has entered into the Asset Purchase Agreement on terms and conditions which effect the transfer of substantially all of the Purplebricks trading business and assets to the Purchaser (other than certain excluded assets) for a consideration of GBP1 and the assumption of substantially all of the Company's liabilities (other than the excluded liabilities) by the Purchaser. The obligations of the Purchaser under the Asset Purchase Agreement are guaranteed by Strike.

The principal terms of the Asset Purchase Agreement are as follows:

-- The cash consideration under the Asset Purchase Agreement payable by the Purchaser to the Company is GBP1 and the assumption of substantially all of the Company's liabilities (other than certain transaction costs and expenses) by the Purchaser. In addition, it should be noted that the Company is entitled to retain up to GBP5.5m in cash, depending on the cash position of the Group at Completion.

-- The Proposed Sale is only conditional upon the Proposed Sale Resolution and, namely, approval of the requisite majority of Shareholders at the General Meeting.

-- The Purchaser has agreed to an assumption of liabilities supported by broad indemnification provisions in favour of the Company, should any liabilities (save for the excluded liabilities for transaction costs and expenses) remain for the Company to pay.

-- Pending Completion, the Company is obliged to operate its business in the ordinary course as carried on prior to the date of the Asset Purchase Agreement. There are also certain restrictions on the Company with regard to the operation of its business including, amongst other things, disposing of (or creating an encumbrance over) any assets which are subject to the sale and entering into, amending or terminating a material contract.

-- The Purchaser will be entitled to terminate the Asset Purchase Agreement if at any time prior to Completion there has been a material breach of the warranties or pre-completion undertakings given by the Company or if there is an insolvency event in relation to the Company.

It is anticipated that, following Completion, there will be a transitional period ("Transitional Period") needed to move the business and assets to the Purchaser. Following Completion and any transfers of business and assets which transfer after Completion, the Company intends to distribute the Net Cash Proceeds to Shareholders. Further details on the intended distribution of the Net Cash Proceeds are set out below and will be set out in the Circular.

As the Proposed Sale will include a transfer of substantially all of the trade and assets of the Group, the losses attributable to the Proposed Sale are equal to the loss after tax presented in the Group's Annual Report and Accounts for the financial year ending 30 April 2022 of GBP42.0 million.

Information on Strike and the Purchaser

Strike is an online estate agent providing property sales, mortgages, and conveyancing services to customers, and operates throughout England.

The Purchaser is a wholly-owned subsidiary of Strike which has been incorporated in order to carry out the Proposed Sale.

Rule 21 of the Takeover Code - frustrating action

As noted above, following the launch of the FSP the Company received a number of proposals.

Prior to the Company terminating the Formal Sale Process by way of this Announcement, all parties who had approached the Company were notified of the rejection of their approach with regard to making an offer for the Company and also of the termination of the Formal Sale Process.

As at the date of this Announcement, no firm proposal has been made to the Company by any potential offerors. If the Company receives an approach from any interested party at any time prior to the General Meeting confirming that they are interested in making a potential offer for the Company, the Company will inform shareholders without delay by way of RIS announcement. In the event that such an announcement is made, any potential offeror, will be subjected to a deadline in accordance with Rule 2.6(a) of the Takeover Code such that by not later than 5.00pm (London time) on the 28th day following the date of the announcement by the Company in which such potential offeror is first identified, such potential offeror must either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Takeover Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Takeover Code applies. Any such deadline may be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Takeover Code.

During the Formal Sale Process, however, the Directors did not consider that indications of interest received provided either sufficient certainty or deliverability in the timeframe needed to resolve the Group's short term funding issues, in the context of its key funding partner agreements being close to expiry and the Company's cash balance declining, as outlined above. The Directors will continue to apply such criteria in its assessment of any further proposals that are received.

Based on the exploration of sale options conducted as part of the Formal Sale Process, and that such process has been running since 1 March 2023, the Directors currently consider that it is unlikely that any proposals that may be under consideration by any potential offerors would lead to a firm offer for the Company that could be made in a timely manner or deliver more certainty to Shareholders than, or value to Shareholders in excess of, the Proposed Sale.

Given the impact of Completion of the Proposed Sale on the ability of any potential offeror to make an offer for the Company in its current state, the Proposed Sale is potentially deemed "frustrating" action under the Takeover Code. Accordingly, it is a requirement of Rule 21.1 of the Takeover Code that the Proposed Sale is conditional upon the approval of Shareholders in General Meeting. As noted above, the Circular incorporating the Notice of General Meeting and with further details for the purposes of Rule 21 of the Takeover Code, is being sent to Shareholders later today.

Return to Shareholders and use of Net Cash Proceeds

As noted above, the Directors intend that the Net Cash Proceeds will be distributed to Shareholders. It is anticipated that any distribution will be conducted through a members' voluntary liquidation of the Company following the Transitional Period.

Timing of return to Shareholders

The Directors intend that the Net Cash Proceeds will be returned to Shareholders as soon as reasonably practicable. However, prior to such return being implemented, (i) certain legal formalities will need to be completed during the Transitional Period and (ii) the members' voluntary liquidation will need to be carried out to effect the return to Shareholders. While the timing of the return of the Net Cash Proceeds will depend on completion of these matters, the current expectation is that such return will not be capable of being effected before Q1 2024 at the earliest. The timing of the return to Shareholders will depend on a number of factors such as (i) the complexity of the business transfer; (ii) the resolution of liabilities which cannot effectively be transferred to the Purchaser without the cooperation of third parties, in particular where the Company remains a named party to Court proceedings; (iii) the resolution of any new matters which may be brought to the appointed liquidators' attention following commencement of the liquidation; (iv) the timing of submission of the Company's pre-liquidation corporation tax returns and other indirect tax returns; and (v) timely receipt of tax clearance to close the liquidation from HM Revenue & Customs.

Amount of return to Shareholders and factors impacting such return

Under the terms of the Asset Purchase Agreement, as noted above, substantially all of the Company's assets and liabilities will be transferred to and assumed by the Purchaser, other than certain excluded assets and the excluded liabilities.

In particular, the cash in hand and at bank at Completion of up to GBP5.5 million is excluded from the terms of Proposed Sale and will be retained by the Company. The exact amount of cash retained will depend on trading in the period prior to the Proposed Sale and the cash retained will be used to pay existing excluded liabilities on or shortly after Completion and subsequently satisfy the excluded liabilities as they arise following the Proposed Sale with the excess (i.e. the Net Cash Proceeds) being returned to Shareholders.

It is currently anticipated that the Net Cash Proceeds will be approximately GBP2 million. The exact amount however of the Net Cash Proceeds available to be returned to Shareholders in a members' voluntary liquidation will be dependent on a number of factors, including:

-- the amount of cash in hand and at bank at Completion which depends, amongst other things, on trading performance in the period up to Completion and whether such trading performance could be negatively impacted, including as a result of any disruption in the Company resulting from this Announcement;

-- in respect of the Asset Purchase Agreement, the ability to recover from the Purchaser under the assumption of liabilities and indemnification provision; and

-- the timing of the members' voluntary liquidation and the process to its completion, including whether any presently unknown creditors seek to make claims, which may draw out the time and cost of the process even if any amounts claimed are recovered from the Purchaser under the Asset Purchase Agreement.

Accordingly, as a result of these factors, the amount of the Net Cash Proceeds to be returned to Shareholders could be more or less than is currently anticipated and, in the event that the gross amount of cash retained at Completion is less than GBP5.5m or unanticipated liabilities arise which cannot be recovered, it is possible that Shareholders would not receive the amount anticipated or any return at all.

While there may be uncertainty as to the exact amount of the Net Cash Proceeds, as noted above the Directors have unanimously concluded that the Proposed Sale is in the best interest of the Company, its Shareholders and other stakeholders.

Irrevocable Undertakings

The Directors who hold Ordinary Shares have irrevocably undertaken to vote (or, in respect of Ordinary Shares where their interest is solely beneficial, procure the exercise of all such voting rights) in favour of the Resolutions in respect of a total 19,402,865 shares representing approximately 6.3% of Purplebricks' issued share capital on 16 May 2023 (being the last Business Day before the date of this Announcement).

In addition, the Company has received an irrevocable undertaking to vote in favour of the Resolutions from AVIV Group in respect of a total 81,384,638 Ordinary Shares representing approximately 26.5% of Purplebricks' issued share capital on 16 May 2023 (being the last Business Day before the date of this Announcement).

Furthermore, the Company has received a letter of intent to vote in favour of the Resolutions from JNE Master Fund LP in respect of a total 33,620,000 Ordinary Shares representing approximately 11% of Purplebricks' issued share capital on 16 May 2023 (being the last Business Day before the date of this Announcement).

The Company has therefore received irrevocable undertakings and/or letters of intent in respect of a total 134,407,503 Ordinary Shares representing approximately 43.8% of Purplebricks' issued share capital on 16 May 2023 (being the last Business Day before the date of this Announcement). The Directors and AVIV Group have also irrevocably undertaken on similar terms to the Purchaser's holding Company, Strike, as has JNE Master Fund LP with regard to its letter of intent.

The irrevocable undertakings shall cease to be binding if the General Meeting has not taken place by 2 June 2023.

The Cancellation

The Directors have concluded that, as the Company would no longer be a trading business on Completion, it is in the best interests of the Company and its Shareholders to seek Shareholders' approval to cancel the admission of the Company's Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the proposed Cancellation.

Assuming the passing of the Cancellation Resolution, which will be conditional upon the passing of the Proposed Sale Resolution and Completion, it is expected that the Cancellation will take place on 16 June 2023.

Pursuant to Rule 41 of the AIM Rules, the Cancellation Resolution requires the approval of not less than 75% of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting.

The Directors have considered the benefits and disadvantages to the Company and Shareholders in retaining its admission to trading on AIM. The Directors believe that the Cancellation is in the best interests of the Company and Shareholders as a whole. Following the Proposed Sale, the Company will have no trading business and limited cash resources which the Company intends to distribute to Shareholders through a members' voluntary liquidation. Furthermore, given the time it takes to conclude a members' voluntary liquidation and the significant expense the Company would incur as a quoted company through that time, a members' voluntary liquidation would be adversely affected if the Company remained as a public company and its shares admitted to trading on AIM. The Cancellation would preserve cash in the Company and assist in maximising any distribution made through a members' voluntary liquidation.

The principal effects of the Cancellation will be that:

-- the liquidity and marketability of Ordinary Shares is likely to be reduced as there will be no public market in the Ordinary Shares and no price for Ordinary Shares will be quoted by any market maker. As such, while the Ordinary Shares will continue to be freely transferable, interests in Ordinary Shares are unlikely to be readily capable of sale and, even where a buyer is identified, it may be difficult to place a fair or market value on any such sale;

-- the Company would no longer be required to comply with the ongoing obligations set out in the AIM Rules (or to have a nominated adviser and broker), including the requirements to disclose material events, such as interim or final results, substantial transactions or other developments to the market, and Purplebricks Shareholders would no longer have the ability to vote on certain matters prescribed by the AIM Rules, thereby removing the layer of protection in respect of the interests of Purplebricks Shareholders afforded by the AIM Rules;

-- in order to increase the cost saving by becoming a private company, following the Cancellation, the Company will no longer be obligated to produce and publish half-yearly reports and related financial statements or hold an annual general meeting;

-- whilst the Company's CREST facility will remain in place following the Cancellation, the Company's CREST facility may be cancelled in the future and, in that event, although the Ordinary Shares will remain transferable, they will cease to be transferable through CREST. In this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and

-- the Cancellation may have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

Shareholders should be aware that if the Cancellation takes effect, they will at that time cease to hold shares in a quoted company and will become Shareholders in an unquoted company which will be likely to reduce the liquidity of the Ordinary Shares and the principal effects referred to above will automatically apply to the Company from the date of the Cancellation. Upon the Cancellation becoming effective the Board do not propose to implement a matched bargain facility.

The above considerations are not exhaustive and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

Implications of a failure to approve the Cancellation

The Directors strongly believe that for the reasons referred to above the Company should seek the Cancellation and subsequently a solvent wind-up. In the event that the Proposed Sale is completed but the Cancellation is not approved and does not occur, as an AIM Rule 15 cash shell, if the Company does not make an acquisition or acquisitions constituting a reverse takeover under the AIM Rules within six months of becoming an AIM Rule 15 cash shell, then the Ordinary Shares would be suspended from trading on AIM.

Board changes

Helena Marston will resign as Chief Executive Officer with effect from Completion.

Dominique Highfield, the Group's current Chief Financial Officer, will continue to act as a director of the Company during the Transitional Period in order to oversee the arrangements under the Asset Purchase Agreement and discharge any obligations of the Company to the Purchaser during this time.

To assist Dominique in this process, ensuring that an independent director remains on the board to safeguard the interests of the Company's shareholders up to and in the appointment of the liquidators and recognising the expertise required in this area, the Non-Executive Directors are proposing to appoint a new director with experience in business transfers and company dissolutions. The Non-Executive Directors will seek to identify an appropriate candidate in the period prior to the Cancellation occurring.

Ensuring the Transitional Arrangements are concluded in the manner described above will require significant time commitments and specific expertise. As the Non-Executive Directors were appointed to the Board as a result of their industry expertise and PLC experience and in light of the different Board requirements moving forward, they will therefore be resigning from the Board with effect from Cancellation.

Further details of and background to the board changes that will occur as part of the Proposed Sale will be set out in the Circular.

Change of name

The proposed change of name to Bricks Newco PLC is to reflect the transfer of the trade, assets and "Purplebricks" brand name to Strike and is an obligation under the Asset Purchase Agreement.

Re-registration as a private company

Given that the Company's Shares will no longer be admitted to trading on AIM or any other public market following the Cancellation and to facilitate the return of the Net Cash Proceeds to Shareholders, the Directors consider that converting the Company to a private company is more appropriate than retaining the Company's status as a public company.

Further details of the proposed re-registration will be set out in the Circular.

About Purplebricks

Purplebricks is a leading technology-led estate agency business, based in the UK. Purplebricks combines highly experienced and professional Local Property Partners and innovative technology to help make the process of selling, buying or letting more convenient, transparent and cost effective. Purplebricks shares are traded on the London Stock Exchange AIM market.

Important information

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

This announcement (including any information incorporated by reference in this announcement) contains statements about the Company that are or may be deemed to be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, may be forward looking statements.

These forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers should not rely on such forward-looking statements, which speak only as of the date of this announcement. The Company disclaims any obligation or responsibility to update publicly or review any forward-looking or other statements contained in this announcement, except as required by applicable law.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdictions.

Notice related to financial advisers

Zeus Capital Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Purplebricks and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Purplebricks for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

PricewaterhouseCoopers LLP is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is acting exclusively for the Purplebricks and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Purplebricks for providing the protections afforded to its clients nor for providing advice in relation to the subject matter of this announcement.

Teneo is acting exclusively for Strike in connection with the Proposed Sale and will not be responsible to anyone other than Strike for providing the protections offered to clients of Teneo or for providing advice in relation to the Proposed Sale, the contents of this announcement or any matters referred to in this announcement. Teneo is authorised and regulated in the United Kingdom by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. Teneo is registered in England and Wales with Company Number 13192958 and its registered office is 6 More London Place, London SE1 2DA.

Definitions

The following definitions apply throughout this document unless the context otherwise requires:

 
 Act                       the Companies Act 2006 
 AIM                       the market of that name operated by the London 
                            Stock Exchange 
 AIM Rules                 the AIM Rules for Companies as published 
                            by the London Stock Exchange from time to 
                            time 
 Articles                  the articles of association of the Company, 
                            as in force from time to time 
 Asset Purchase            the agreement between the Company, Strike 
  Agreement                 and the Purchaser for the transfer of substantially 
                            all of the assets and liabilities of the 
                            Company to effect the Proposed Sale 
 AVIV Group                AVIV Group GmbH, a subsidiary of Axel Springer 
                            S.E. 
 Cancellation              the cancellation of admission to trading 
                            of the Ordinary Shares on AIM in accordance 
                            with Rule 41 of the AIM Rules, subject to 
                            passing of the Cancellation Resolution 
 Cancellation Resolution   the resolution to approve the Cancellation 
                            as set out in the Notice of General Meeting 
 Change of Status          the resolution to change the name of the 
  Resolution                Company, re-register as a private company 
                            and the adoption of the New Articles as set 
                            out in the Notice of General Meeting 
 Circular                  the circular to be sent to Shareholders with 
                            further background on the Proposed Sale and 
                            incorporating Notice of the General Meeting 
 Completion                completion of the Proposed Sale in accordance 
                            with the Asset Purchase Agreement 
 Company or Purplebricks   Purplebricks Group plc 
 Directors or Board        the directors of the Company as at the date 
                            of this Circular 
 excluded liabilities           outstanding and future liabilities which 
                                 are excluded from the liabilities the Purchaser 
                                 is assuming under the Asset Purchaser Agreement 
                                 being (in summary): 
                                 (i) certain outstanding costs and expenses 
                                 (including professional fees) incurred or 
                                 to be incurred by the Group in connection 
                                 with the Strategic Review, the Formal Sale 
                                 Process, the Proposed Sale (other than in 
                                 respect of costs for which the Company is 

                                 indemnified by the Purchaser), the proposed 
                                 return of proceeds to Shareholders and voluntary 
                                 liquidation and other non-ordinary course 
                                 corporate matters which were scheduled for 
                                 payment on Completion of the Proposed Sale 
                                 or are incurred after Completion; and 
                                 (ii) liabilities owed to the Directors (other 
                                 than Dominique Highfield), including as a 
                                 result of them ceasing to be employed or 
                                 engaged by the Company, and the costs associated 
                                 with providing directors' and officers' liability 
                                 insurance for the Directors. 
 Existing Ordinary         the 306,806,039 Ordinary Shares in issue 
  Shares                    as at the date of this document 
 FSP or Formal             the formal sale process launched by the Company 
  Sale Process              on 1 March 2023 
 General Meeting           the General Meeting of the Company to be 
                            held at 9 a.m. on 2 June 2023 
 Group                     the Company, its subsidiaries and its subsidiary 
                            undertakings 
 London Stock Exchange     London Stock Exchange plc 
 Net Cash Proceeds         the net cash proceeds available to be distributed 
                            to Shareholders following Completion and 
                            the deduction of certain costs and expenses 
                            to meet the excluded liabilities 
 New Articles              the new articles of association to be adopted 
                            at the General Meeting 
 Ordinary Shares           ordinary shares of 1 pence each in the capital 
                            of the Company 
 Proposed Sale             the proposed transfer of substantially all 
                            of the Purplebricks trading business and 
                            assets (other than the excluded assets and 
                            liabilities) for a consideration of GBP1 
                            and the assumption of substantially all of 
                            the Company's liabilities 
 Proposed Sale             the resolution set out in the Notice of General 
  Resolution                Meeting to approve the Proposed Sale for 
                            the purposes of rule 15 of the AIM Rules 
                            and Rule 21 of the Takeover Code 
 Purchaser                 Strike Bidco Limited 
 PwC                       PricewaterhouseCoopers LLP 
 Regulatory Information    has the meaning given to it in the AIM Rules 
  Service 
 Resolutions               the Proposed Sale Resolution, the Cancellation 
                            Resolution and the Change of Status Resolutions 
                            set out in the Notice of General Meeting 
 Shareholders              holders of Ordinary Shares 
 Strategic Review          the strategic review launched by the Company 
                            on 17 February 2023 
 Takeover Code             the City Code on Takeovers and Mergers, as 
                            issued from time to time by or on behalf 
                            of the Takeover Panel 
 Takeover Panel            the Panel on Takeovers and Mergers 
 Teneo                     Teneo Financial Advisory Limited 
 Zeus                      Zeus Capital Limited 
 

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May 17, 2023 03:53 ET (07:53 GMT)