Stewart & Wight PLC The Terms of the Delisting and Tender Offer (1739S)

TIDMSTE

RNS Number : 1739S

Stewart & Wight PLC

21 June 2018

STEWART & WIGHT PLC

845 FINCHLEY ROAD, LONDON NW11 8NA

TEL: [phone] FAX: [phone]

ANNOUNCEMENT

21 June 2018

Proposed Cancellation of Admission of ordinary shares to the Official List

Further to the Company's announcement earlier today, a circular setting out the terms of the Tender Offer and details of the Delisting (together, the "Proposals") is being posted to Shareholders today (the "Circular"), including a Notice of General Meeting to be held at 11.00 a.m. on 17 July 2018. The Chairman's Letter in respect of the Proposals, as contained in the Circular, is set out below, together with the expected timetable of events. Terms used and not defined in this announcement bear the meaning given to them in the Circular.

DAVID CRAMER

Director

Dear Shareholder

PROPOSED CANCELLATION OF ADMISSION OF ORDINARY SHARES TO THE

OFFICIAL LIST AND TO TRADING ON THE LONDON STOCK EXCHANGE'S

MAIN MARKET FOR LISTED SECURITIES

TER OFFER FOR UP TO 335,812 SHARES

NOTICE OF GENERAL MEETING

   1             Introduction 

Today the Company announced its intention to seek Shareholders' approval at a General Meeting:

(a) to conduct a Tender Offer to buy the Company's Shares other than those held by the Majority Shareholders at a Tender Price of GBP5.90 per Share. This amounts to 335,812 Shares which represents approximately 21.5% of the total issued share capital of the Company; and

(b) to apply for the cancellation of the listing of the Shares on the Official List and their trading on the Main Market,

(together, the "Proposals").

My family control approximately 78.5% of the total Shares in issue. Many of the remaining Shareholders hold relatively small shareholdings which offer very little liquidity. The Shares traded on one day only during the period between 1 January 2018 and 18 June 2018 (being the Latest Practicable Date). As a result of this lack of liquidity it is extremely difficult for Shareholders to realise the value of their shareholdings and at the Latest Practicable Date, the share price stood at a discount of 21% to the recently published Net Asset Value per Share.

Whilst my family intends to continue the Company's policy of investing in high street retail properties, the market value of the Company's portfolio has deteriorated significantly over the past year and it may be some time before and if recovery takes place. In these circumstances, we recognise that Shareholders investment preference may favour a shorter term liquidity profile.

The percentage of the Shares in public hands is less than 25%, being the level at which the listing in Shares can be cancelled by the United Kingdom Listing Authority. Maintaining the listing of the Shares is costly and time consuming and the advantages to the Company of a continuing listing are elusive. Restoring the percentage shareholding in public hands to meet the Listing Rule requirements and thereby maintain the listing of the Shares is not practicable.

Having considered the lack of alignment between the long term interests of the Company and the interests of our loyal minority shareholder base and the risk of the listing of the Shares being cancelled, the Independent Director has reached agreement with the Majority Shareholders (being me and my family) that the Company should offer to buy back all of its Shares other than those held by the Majority Shareholders at a price of GBP5.90 per Share. The buyback is being funded by a loan from me to the Company on normal arms' length commercial terms and on an unsecured basis and interest-free basis and at the same time request that the listing of the Shares be cancelled.

The Tender Price represents a premium of 12.4% over the closing price of GBP5.25 per Share as at the Latest Practicable Date which also represents the same price at which the Shares were last traded on 21 March 2018, and represents a discount of approximately 7.1% to the recently reported Net Asset Value per Share at the last year end.

If the Tender Offer is taken up in full, the Majority Shareholders will become the sole Shareholders of the Company and the Listing of the Shares will be cancelled.

Shareholders (other than the Majority Shareholders) may tender all but not some only of their Shares pursuant to the Tender Offer.

The Tender Offer is being made by Stockdale Securities as principal on the basis that all Shares that it buys under the Tender Offer will subsequently be repurchased from it by the Company pursuant to the terms of the Repurchase Agreement and then cancelled.

Shareholders are not obliged to tender their Shares if they do not wish so. If the Resolutions are approved by the requisite majority and you do not tender your Shares pursuant to the Tender Offer you will not receive cash for your Shares and the listing of the Shares will be cancelled. You will then hold your Shares in an unlisted company. While the Shares will remain freely transferrable, it is likely that the liquidity and marketability of the Shares will, in the future, be even more constrained than at present and the value of such Shares may be adversely affected as a consequence.

In order for the Proposals to become effective, the Company is required to seek the approval of Shareholders as follows:

(c) in accordance with the UK Companies Act 2006 (the "Act") and in compliance with guidelines from the Investment Association, a company which intends to make an on-market purchase of its own shares must be authorised by a resolution passed by Shareholders representing not less than 75% of the total voting rights of the Shareholders who vote in person or by proxy at a general meeting of the Company (the "Buyback Resolution"); and

(d) in accordance with the Listing Rules, a company applying for a delisting must be authorised by a resolution passed by:

(i) not less than 75% of the of the total voting rights of the Shareholders who vote in person or by proxy at a general meeting of the Company; and

(ii) a simple majority of the votes attaching to the Shares of the Shareholders who are not Majority Shareholders who vote in person or by proxy at a general meeting of the Company (the "Delisting Resolution", and together with the Buyback Resolution, the "Resolutions").

Accordingly, the purpose of this Circular is to provide Shareholders with the background to the Proposals, to seek the requisite approval from Shareholders and to provide Shareholders with information regarding how to participate in the Tender Offer.

As at the Latest Practicable Date, the Majority Shareholders, holding in aggregate approximately 78.5% of the total Shares in issue, have irrevocably undertaken that they will: (i) vote in favour of the Resolutions; and (ii) will not, and shall procure that none of their duly appointed attorneys will not, tender any of their Shares as part of the Tender Offer.

Assuming that the Resolutions are passed by the requisite majority and that the Tender Offer is fully subscribed, the Shares purchased as part of the Tender Offer will be cancelled and the Majority Shareholders (including those Majority Shareholders who are also Directors) will become the sole Shareholders of the Company.

This Circular contains a Notice of General Meeting at which the Resolutions to approve the Proposals will be considered. If approved:

(e) the Delisting will take effect on the date of the Delisting, which is currently expected to occur on 14 August 2018 (20 Business Days following the passing of the Delisting Resolution); and

(f) the Tender Offer will become unconditional once the Conditions set out in paragraph 2.1 of Part 4 have been satisfied (or waived, as applicable) and is expected to close at 1.00 pm on 17 July 2018.

   2             Delisting 
   2.1           Background 

The Company does not meet the "free float" requirement of LR 6.14.1 of the Listing Rules. This stipulates that at least 25% of the shares in a company listed on the Official List must be held in "public hands". In calculating this percentage, shares held by Shareholders who are either directors or who own more than 5% of the share capital are excluded, as are other categories of shareholdings set out in LR 6.14.3. Under LR 9.2.15, the Company is required to comply with the "free float" requirement at all times. As at the Latest Practicable Date, only approximately 21.5% of the Shares were held in "public hands" (calculated in accordance with LR 6.14.1).

Consequently, pursuant to LR 5.2.2(2), the FCA may cancel the Company's listing or - in certain circumstances - allow a reasonable amount of time to restore the "public hands" shareholding to the required level.

In this context the Board has reviewed the Company's options, including an assessment of the practicalities of the Company attempting to restore the percentage shareholding to meet the Listing Rule requirements and thereby maintaining its listing.

   2.2           Board considerations 

When discussing the option of Delisting, the Board has considered the advantages and disadvantages of maintaining the listing of the Shares on the Official List. In the circumstances, and having regard to the Tender Offer, the Board believes that it is in the best interests of the Company and the Shareholders as a whole if the Delisting occurs as soon as possible and in accordance with the timetable set out in the Listing Rules and the London Stock Exchange's Admission and Disclosure Standards.

Notwithstanding the Delisting, the Directors intend to continue as directors of the Company, subject to the relevant re-election provisions contained in the Articles.

   2.3           Matters to be taken into account in considering the Delisting 

If the Resolutions are approved at the General Meeting (the "GM"), the Company will apply formally to the UK Listing Authority for the Delisting. It is expected that the cancellation of admission of the Shares to the Official List will take effect from 8.00 am on 14 August 2018 (being 20 Business Days after the date on which the Delisting Resolution is passed in accordance with the Listing Rules), and that trading in the Shares on the Main Market will cease at the close of business on 13 August 2018.

In deciding whether or not to vote in favour of the Delisting Resolution, Shareholders should take into consideration, amongst other things, the following:

(a) if the Delisting occurs, it is likely that, thereafter, there will be no public market for the Shares and the opportunity for Shareholders to realise their investment in the Company by selling their Shares will be reduced even more;

(b) following the Delisting, the corporate governance, regulatory and financial reporting regime which applies to companies whose shares are admitted to the Official List and to trading on the Main Market will no longer apply. The Company may achieve costs and management time savings as a result of no longer being subject to the provisions of this regime; and

(c) the Company has received irrevocable undertakings to vote in favour of the Resolutions from Shareholders holding more than 75% of the Shares.

Shareholders should note in any event that if the Delisting is not approved by the Shareholders at the GM, the UK Listing Authority may cancel the listing of the Shares as the Company does not meet the continuing "free float" requirement under the Listing Rules. Notwithstanding this, it is the Board's preference that Shareholders should approve the Delisting.

   3             Tender Offer 
   3.1           Background 

Subject to the Resolutions being passed at the GM in accordance with English law, the Company will undertake a Tender Offer at the Tender Price to give Shareholders the opportunity to tender all but not some of their Shares for purchase by Stockdale Securities on behalf of the Company.

As part of the Tender Offer, the Company has entered into a back-to-back Repurchase Agreement with Stockdale Securities to purchase the Shares tendered pursuant to the Tender Offer, details of which are set out in section 6 of Part 2 of this Circular. Pursuant to the Tender Offer, Shares will be purchased out of distributable profits but will be funded by way of an interest-free loan on normal commercial terms and on an unsecured basis, details of which are set out at section 3.3, below. In the event that the Tender Offer is successful it is the Company's intention to cancel the tendered Shares.

The right to participate in the Tender Offer is subject to the restrictions set out in this Circular. The Tender Offer gives Shareholders an option to sell all but not some of their Shares ahead of the Delisting.

If the Tender Offer lapses or is terminated, the tendered Shares will be returned to the relevant Shareholders.

   3.2           Tender Price 

The Tender Price of GBP5.90 per Share represents, at the Latest Practicable Date:

-- a premium of 12.4% over the closing price of GBP5.25 per Share as at the Latest Practicable Date which also represents the same price at which the Shares were last traded on 21 March 2018; and

-- a discount of 7.1% to the recently reported Net Asset Value per Share of GBP6.35 as at 31 March 2018.

Subject to the passing of the Resolutions, payment of monies in respect of the Shares will be made by cheque on or around the week commencing 23 July 2018.

   3.3           Tender Offer Loan 

At this stage of the investment cycle, the Company has limited amounts of cash available with which to meet the funding requirements of the Tender Offer. As a result, Michael Conn, one of the Directors of the Company, has agreed to provide a loan to the Company in order that it may fund the Tender Offer. This loan is being made available to the Company on an interest free, unsecured basis and on normal commercial terms.

   3.4           Other details 

The Tender Offer is only available to Shareholders appearing on the register of members as at the Record Date and only in respect of Shares held by them at such time.

Shareholders' attention is drawn to the letter from Stockdale Securities set out in Part II of this Circular and to Part 4 of this Circular which, together with the Tender Form, constitute the terms and conditions of the Tender Offer. Details of how Shareholders will be able to tender Shares can be found in section 3 of Part 4 of this Circular.

The Company will, if the Buyback Resolution to approve such authority is passed at the GM in accordance with English law, be authorised to make on-market purchases of up to 335,812 Shares, representing all of the Shares other than those held by the Majority Shareholders and approximately 21.5% of the Company's total issued share capital. If approved, such authority will expire on the earlier of:

(a) the completion by the Company of the repurchase from Stockdale Securities of the Shares tendered pursuant to the Tender Offer and pursuant to the terms of the Repurchase Agreement;

   (b)        the withdrawal of the Tender Offer by the Company; 

(c) the Tender Offer lapsing in accordance with the terms and conditions set out in this Circular; or

(d) the date of the next annual general meeting of the Company or 17 October 2019 save that, the Company may, prior to the expiry of this authority, make a contract or contracts to purchase Shares under this authority which will or may be completed or executed wholly or partly after such expiry and may make a purchase of Shares pursuant to any such contract or contracts as if the authority conferred hereby had not expired.

Shareholders are not obliged to tender any Shares and those Shareholders who do not wish to tender their Shares in the Tender Offer should not return the Tender Form or share certificate. Once submitted, a Tender Form is irrevocable and cannot be withdrawn without the consent of the Company. Shareholders should note that, once tendered, Shares may not be switched, sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Whether or not Shareholders decide to tender any Shares is a matter for each Shareholder and will depend, among other things, on their view of the Delisting, the Company's prospects and their individual circumstances, including their tax position. In making their own decisions Shareholders are recommended to consult their own financial and tax adviser.

   4             General Meeting 

In order for the Proposals to become effective, the Resolutions must first be approved by the requisite majority of Shareholders at the General Meeting. The GM has been convened for 11.00 am on 17 July 2018 to be held at Blinkhorns, 27 Mortimer Street, Fitzrovia, London, W1T 3BL for the purpose of considering and, if thought fit, approving the Resolutions.

The Company will propose that Resolutions regarding the on-market purchase of the Shares not held by the Majority Shareholders and the Delisting be approved by Shareholders at the GM, as set out in the Notice of General Meeting.

The Resolutions are set out in the Notice of General Meeting, which you will find at the end of this Circular. To be passed:

(a) the Buyback Resolution must be authorised by a resolution passed by Shareholders representing not less than 75% of the total voting rights of the Shareholders who vote in person or by proxy at the GM; and

   (b)        the Delisting Resolution must be authorised by a resolution passed by: 

(i) not less than 75% of the of the total voting rights of the Shareholders who vote in person or by proxy at the GM; and

(ii) a simple majority of the votes attaching to the Shares of the Shareholders who are not Majority Shareholders who vote in person or by proxy at the GM.

If the Resolutions are approved:

(c) the Delisting will take effect on the date of the Delisting, which is currently expected to occur on 14 August 2018 (being 20 Business Days following the passing of the Delisting Resolution); and

(d) the Tender Offer will become unconditional once the Conditions set out in paragraph 2.1 of Part 4 have been satisfied (or waived, as applicable) and is expected to close at 1.00 pm on 17 July 2018.

   5             Irrevocable Undertakings 

The Majority Shareholders, holding, in aggregate, approximately 78.5% of the Shares in issue, have irrevocably undertaken that they will: (i) vote in favour of the Resolutions; and (ii) will not, and shall procure that none of their duly appointed attorneys will not, tender any of their Shares as part of the Tender Offer. Assuming that the Resolutions are passed by the requisite majority and that the Tender Offer is fully subscribed, the Shares purchased as part of the Tender Offer will be cancelled and the Majority Shareholders (including those Majority Shareholders who are also Directors) will become the sole Shareholders of the Company.

Copies of these undertakings will be available for inspection on request at the registered office of the Company during normal business hours on any Business Day (Saturdays, Sundays and public holidays excepted) during the period up to and including the day of the GM. Copies will also be made available on the Company's website (www.stewartandwightplc.co.uk).

   6             Recommendation 

The Board considers that the passing of the Resolutions is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the GM as the Directors intend to do in respect of their beneficial holdings amounting, in aggregate, to 1,089,960 Shares, representing approximately 70% of the Shares in issue as at 18 June 2018 (being the last practicable date prior to the publication of this document).

The Directors make no recommendations to Shareholders in relation to participation in the Tender Offer.

If you are in doubt about what action to take or need advice in relation to the Tender Offer, you should consult an independent financial adviser, authorised under the Financial Services and Markets Act 2000, without delay.

The Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

   7             Action to Be Taken 

General Meeting

You will find enclosed with this Circular a Form of Proxy for use at the General Meeting. Whether or not you intend to be present at the GM and whether or not you wish to tender any of your Shares under the Tender Offer, you are requested to complete and sign the Form of Proxy in accordance with the instructions printed thereon and to return it to Stewart & Wight Plc, 845 Finchley Road, London, NW11 8NA as soon as possible and, in any event, so as to be received not later than 11.00 am on 13 July 2018. Completion and return of the Form of Proxy will not preclude you from attending the GM and voting in person if you wish to do so.

Only Shareholders who hold Shares at the close of business on the Record Date may participate in the Tender Offer.

Tender Offer

Shareholders wishing to tender Shares for purchase under the Tender Offer should ensure that in respect of Shares tendered (which may be all but not some of their Shares), their completed Tender Form(s), along with their share certificate(s), are returned by post or by hand (during normal business hours only) to Link Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU so as to be received no later than 1.00 pm on 17 July 2018.

A Tender Form once lodged may not be withdrawn without the consent of the Company. Further details of the procedures for tendering Shares and settlement are set out in Part 4 of this Circular.

Shareholders who do not wish to sell any Shares under the Tender Offer should not submit a completed Tender Form.

Yours faithfully

Michael Conn

Chairman

   8             Indicative Timetable 
 
 Announcement of the Tender        21 June 2018 
  Offer and cancellation of 
  listing 
 Circular, Notice of Meeting,      21 June 2018 
  Form of Proxy, and Tender 
  Forms posted to Shareholders 
 Latest time and date for          11.00am on 13 July 2018* 
  receipt of completed Forms 
  of Proxy 
 General Meeting                   11.00am on 17 July 2018 
 Latest time and date for          1.00pm on 17 July 2018 
  receipt of the Tender Forms 
  and share certificates in 
  relation to the Tender Offer 
 Announcement of results           17 July 2018 
  of the General Meeting 
 Tender Offer Record Date          Close of business on 
                                    17 July 2018 
 Announcement of results           18 July 2018** 
  the Tender Offer 
 Purchase of shares under          18 July 2018** 
  the Tender Offer 
 Despatch of cheques for           On or around week commencing 
  the Tender Offer consideration    23 July 2018** 
  in respect of Shares sold 
  under the Tender Offer 
 Last day of dealing in Shares     13 August 2018 
 Cancellation of Listing           14 August 2018 
 

All references to times of day in this Circular are to London time unless otherwise stated. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service.

* Please note that the latest time for receipt of the Forms of Proxy in respect of the General Meeting is 48 hours (excluding days which are not Business Days) prior to the time allotted for the relevant meeting.

   **                Assuming the relevant Buyback Resolution is approved at the GM. 

For enquiries about buying and selling shares in Stewart and Wight Plc please contact Mr

Neil Morss ,Walker Crips Stockbrokers Limited, Old Change House, 128 Queen Victoria Street,

London ,EC4V 4BJ.Telephone:[phone]

Registered office as above. Registered in England No. 57142

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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June 21, 2018 09:00 ET (13:00 GMT)