Target Healthcare REIT Limited New Corporate Structure (0631D)

TIDMTHRL

RNS Number : 0631D

Target Healthcare REIT Limited

21 June 2019

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION IN PARTICULAR THE UNITED STATES, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (OTHER THAN THE UNITED KINGDOM, THE REPUBLIC OF IRELAND OR THE NETHERLANDS (AND, IN THE CASE OF THE NETHERLANDS, ONLY TO PROFESSIONAL INVESTORS)), CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND AND JAPAN

This announcement is an advertisement and not a prospectus. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in Target Healthcare REIT Limited or the new Target Healthcare REIT plc or securities in any other entity, in any jurisdiction, including the United States, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities. Any investment decision must be made exclusively on the basis of the Prospectus (as defined below) published by the new Target Healthcare REIT plc and any supplement thereto.

TARGET HEALTHCARE REIT LIMITED

New corporate structure

Target Healthcare REIT Limited (the "Company") today announces proposals to change the Group's corporate structure by establishing Target Healthcare REIT plc ("New THRL") a new English-incorporated parent company, at the head of the Group.

The Board believes that moving the Group's ultimate parent company to a UK domicile will align the Group with its UK tax jurisdiction, maintain and enhance its important relationships with UK local authorities and health services and help to reduce some of the Group's administration costs and regulatory complexities, which arise due to the requirement to operate in both Jersey and the UK.

The Scheme of Arrangement necessary to enact these proposals will not result in any material changes in the day-to-day conduct of the business of the Group, its strategy or its dividend policy. New THRL will have the same management team as the existing Company. As part of the proposals, New THRL is required to publish a Prospectus. In order to maximise efficiency and reduce potential future costs in drafting new documents, the Prospectus includes a placing programme which provides New THRL with the flexibility to issue new shares over the course of the next 12 months.

Further information on the proposals is contained below.

On the proposals, Kenneth MacKenzie, stated:

"As a leading landlord of care homes in the UK, we want to ensure that the Company has the most efficient operating structure possible as well as being aligned with all our stakeholders including our tenants and ultimate end users. Moving the domicile of the Company on-shore helps us to achieve this.

We have recently increased the size of our revolving credit facilities with HSBC Bank. Whilst our current deals in diligence will be funded by existing available capital, our further investment pipeline remains medium term in nature. Consequently, to ensure cost efficiency and operational flexibility, we will utilise many of the legal documents required by this transaction to establish a new Placing Programme. This will allow us to issue new shares more quickly, over the course of the next 12 months to fund these medium-term investment opportunities. I look forward to updating you further on the Group's developments later in the year."

Enquiries:

Target Fund Managers Limited (Investment Manager to the Company)

 
 Kenneth MacKenzie                                                       [phone] 
 Gordon Bland 
 Stifel Nicolaus Europe Limited 
 Mark Young                        [e-mail]                 [phone] 
 Tom Yeadon                        [e-mail]                 [phone] 
 Neil Winward                      [e-mail]               [phone] 
 
 FTI Consulting                    [e-mail]    [phone] 
 Dido Laurimore 
 Claire Turvey 
 
  Richard Gotla 
 

The proposal

The Company has today sent a circular together with a notice of a Jersey Court Meeting and an extraordinary general meeting (the "General Meeting") of the Company's shareholders in respect of the recommended proposals to introduce a new, UK incorporated, parent company, Target Healthcare REIT plc, to the head of the Group.

This proposal, which will require the approval of the Company's existing shareholders and the Royal Court of Jersey (the "Jersey Court"), will be effected by way of a scheme of arrangement under article 125 of the Companies (Jersey) Law 1991 (the "Scheme") pursuant to which New THRL will acquire the Company and become its ultimate parent company. The Company's existing shareholders will receive, as part of the Scheme, one new share in New THRL ("New Share") for every share they hold in the Company as at 6.00 p.m. on 6 August 2019, the Scheme Record Time. New THRL will replicate all of the existing arrangements and structure of the Company. It will, for example, have the same management, depositary and corporate governance arrangements alongside having the same investment, gearing and dividend policies. The New Shares will be admitted to the premium segment of the Official List and to trading on the main market of the London Stock Exchange ("Admission"). New THRL will also be a REIT for the purposes of UK taxation.

If the Scheme is approved by the Company's shareholders and sanctioned by the Jersey Court, it will be binding on all the Company's shareholders as well as on the Company itself. The Jersey Court Meeting and the General Meeting will both be held on 18 July 2019 at the offices of Dickson Minto, 16 Charlotte Square, Edinburgh EH2 4DF. The Jersey Court Meeting will start at 10.30 a.m. and the General Meeting will start at 10.45 a.m. (or as soon thereafter as the Jersey Court Meeting concludes or is adjourned).

The benefits of the Scheme

The Directors consider that the Scheme is in the best interests of Shareholders as a whole for the following reasons.

-- Whilst the Group is already UK tax resident, it will benefit from aligning the Company's place of incorporation with the Group's existing place of tax residence.

-- The Group's operations are directly and indirectly involved in providing services to UK local authorities and health services. A UK incorporated parent company is important in maintaining and enhancing those relationships.

-- As a result of the Scheme, the costs and regulatory complexity on the Group of complying with two separate regulatory regimes will be streamlined.

-- The administration of the Group will be more effective and efficient, due to the Investment Manager providing both administration and company secretarial services onshore.

Under the Scheme, New THRL has also today published a prospectus (the "Prospectus") in relation to the issue of its New Shares and Admission. Pursuant to the Prospectus, in the event the Scheme becomes effective, New THRL will have the ability to issue up to 125 million New Shares by way of a placing programme over the next 12 months (the "Placing Programme").

The investment pipeline and Placing Programme

Target Fund Managers Limited (the "Investment Manager") has continued to invest the Group's existing cash reserves as well as utilising the new revolving credit facilities with HSBC Bank plc, which have been recently increased from GBP40 million to GBP80 million in aggregate. The Company's portfolio now consists of 62 purpose built care homes including three forward funding projects with a market value of approximately GBP483.6 million(1) .

The Group also has a number of investment opportunities progressing through its diligence processes and if all of these potential acquisitions complete as anticipated, the Group's available resources (consisting of both equity and debt capital) will be fully utilised in the second half of 2019. However, the timetable for potential completion remains uncertain and the opportunities remain subject to detailed due diligence and refinement of terms. For these reasons, the Group is seeking to establish the Placing Programme to provide the operational flexibility to raise new equity relatively quickly to fund these acquisitions without incurring the additional costs and timetable delays involved in drafting a new prospectus.

Indicative timetable

An indicative timetable of principal events is as follows:

 
 Latest time and date for receipt      10.30 a.m. on 16 July 2019 
  of completed BLUE Forms of Proxy 
  for the Jersey Court Meeting 
 Latest time and date for receipt      10.45 a.m. on 16 July 2019 
  of completed PINK Forms of Proxy 
  for the General Meeting 
                                      ------------------------------- 
  Jersey Court Meeting                 10.30 a.m. on 18 July 2019 
                                      ------------------------------- 
 General Meeting                       10.45 a.m. on 18 July 2019 
                                      ------------------------------- 
 The following dates are subject 
  to change: 
                                      ------------------------------- 
 Jersey Court's sanction hearing       10.00 a.m. on 6 August 2019 
  to sanction the Scheme 
                                      ------------------------------- 
 Last day of dealings in, and          6 August 2019 
  for registration of transfer 
  of, ordinary shares in the Company 
                                      ------------------------------- 
 Record Time for the Scheme            6.00 p.m. on 6 August 2019 
                                      ------------------------------- 
 Effective Date of the Scheme          7 August 2019 

                                      ------------------------------- 
 Dealings in the Company's ordinary    7.30 a.m. 7 August 2019 
  shares suspended 
                                      ------------------------------- 
 Admission and dealings in the         8.00 a.m. on 7 August 2019 
  new shares of New THRL 
                                      ------------------------------- 
 Crediting of CREST accounts in        8.00 a.m. on 7 August 2019 
  respect of the New Shares of 
  New THRL 
                                      ------------------------------- 
 Cancellation of the listing of        8.00 a.m. on 7 August 2019 
  the ordinary shares in the Company 
  on the premium segment of the 
  Official List and trading on 
  the LSE's Main Market 
                                      ------------------------------- 
 Share certificates in respect         Week commencing 19 August 2019 
  of the New Shares of New THRL 
  despatched 
                                      ------------------------------- 
 

(1) - As at 31 March 2019 the Company's portfolio comprised 61 assets valued at GBP477.1 million. Subsequently the Company has acquired a care home in Formby, Merseyside for consideration of GBP6.5 million.

Notes:

Copies of the Prospectus and Circular will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM and on the Company's website at http://www.targethealthcarereit.co.uk.

Terms used and not defined in this announcement bear the meaning given to them in the Prospectus published today, 21 June 2019.

The Company's legal entity identifier (LEI): 2138008VQQ5Y9QXMX749

New THRL's legal identifier (LEI): 213800RXPY9WULUSBC04

Important Information

The information contained in this announcement is given at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment from time to time. The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service this information is now considered to be in the public domain.

This announcement does not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The new shares in New THRL have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from or in a transaction not subject to the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of the New Shares in the United States.

The contents of this announcement, which have been prepared by and are the sole responsibility of Target Healthcare REIT Limited have been approved by Target Fund Managers Limited as a financial promotion solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 . However, this announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, any securities in any jurisdiction. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, any securities will be made in any jurisdiction in which such an offer or solicitation is unlawful. The information contained in this announcement is not for release, publication or distribution to persons in the United States, any member state of the European Economic Area (other than the United Kingdom, the Republic of Ireland and the Netherlands (and, in the case of the Netherlands, only to professional investors)) Canada, Australia, the Republic of South Africa, New Zealand or Japan, and should not be distributed, forwarded to or transmitted in or into any jurisdiction, where to do so might constitute a violation of local securities laws or regulations.

Dickson Minto W.S, which is authorised and regulated by the Financial Conduct Authority, is acting only for the Company and New THRL in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Dickson Minto W.S. or advice to any other person in relation to the matters contained herein.

Stifel Nicolaus Europe Limited, which is authorised and regulated by the Financial Conduct Authority, is acting only for the Company and New THRL in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Stifel Nicolaus Europe Limited or advice to any other person in relation to the matters contained herein.

None of the Company, New THRL, Target Fund Managers Limited, Dickson Minto W.S. or Stifel Nicolaus Europe Limited, or any of their respective affiliates, accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, New THRL or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, New THRL, Target Fund Managers Limited, Dickson Minto W.S. and Stifel Nicolaus Europe Limited, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (OTHER THAN THE UNITED KINGDOM, THE REPUBLIC OF IRELAND OR THE NETHERLANDS (AND, IN THE CASE OF THE NETHERLANDS, ONLY TO PROFESSIONAL INVESTORS)), CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

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June 21, 2019 07:15 ET (11:15 GMT)