Wasps Finance PLC LAUNCH OF CONSENT SOLICITATION (1613B)

TIDMWAS1

RNS Number : 1613B

Wasps Finance PLC

06 October 2020

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014.

NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933 AS AMED) OR IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA) OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THE CONSENT SOLICITATION MEMORANDUM (AS DEFINED BELOW).

WASPS FINANCE PLC

LAUNCHES CONSENT SOLICITATION IN RESPECT OF ITS

GBP35,000,000 6.50 PER CENT. SECURED BONDS DUE 13 MAY 2022

(ISIN: XS1221940510, COMMON CODE: 122194051)

6 October 2020

Wasps Finance plc (the "Issuer") today announces that it, together with Wasps Holdings Limited and Arena Coventry Limited (together, the "Guarantors"), is inviting holders ("Bondholders") of its outstanding GBP35,000,000 6.50 per cent. Secured Bonds due 13 May 2022 (the "Bonds") (ISIN: XS1221940510, Common Code: 122194051), unconditionally and irrevocably guaranteed by the Guarantors, to modify certain terms and conditions of the Bonds (the "Conditions") and provisions of a trust deed dated 13 May 2015 (as supplemented on 19 January 2018), as amended or supplemented from time to time, (the "Trust Deed") made between the Issuer, the Guarantors, Arena Coventry (2006) Limited ("ACL2006") and U.S. Bank Trustees Limited (the "Trustee") by an Extraordinary Resolution pursuant to and in accordance with the Conditions and the Trust Deed (the "Consent Solicitation"), as summarised below and in more detail in a consent solicitation memorandum (the "Consent Solicitation Memorandum") to be made available to Bondholders shortly after the date hereof.

The Issuer and the Guarantors are inviting Bondholders to approve certain modifications to the Conditions.

The Consent Solicitation is made on the terms and subject to the conditions contained in the Consent Solicitation Memorandum. This announcement must be read in conjunction with the Consent Solicitation Memorandum, which contains important information which should be read carefully before any decision is made with respect to the Consent Solicitation.

An indicative timetable for the Consent Solicitation is set out below and in the Consent Solicitation Memorandum.

Capitalised terms used but not otherwise defined in this announcement shall have the meaning given to them in the Consent Solicitation Memorandum.

BACKGROUND TO THE CONSENT SOLICITATION

As previously announced by the Issuer to Bondholders on 2 July 2020, Wasps Holdings Limited ("Wasps Holdings") and its subsidiaries (together, the "Wasps Group") have been significantly impacted by COVID-19.

Prior to COVID-19, the Wasps Group had been making further financial and operational progress against its strategy: in the first nine months of the financial year, the Wasps Group successfully held 34 major exhibitions, Hotel Revenue Per Available Room increased by 8 per cent. and a new 10-year lease was signed with Grosvenor Casino. The Wasps Group also restructured aspects of the rugby department, which not only proved successful in reducing ongoing costs, but has led to a marked improvement of the playing performance and results of the team. However, the Ricoh Arena was temporarily closed in line with the Government's public health restrictions from 21 March this year and, as of the date of this letter, these restrictions to control COVID-19 remain in place for all of the Wasps Group's principal business activities and operations. The Wasps Group has been making plans for the gradual re-opening of the Ricoh Arena in a COVID-19 secure way; however, the Government announcement on 22 September, that the level of restrictions at both a national and local level will be increased for up to six months more, will further delay progress towards the re-commencement of operations. Although the re-opening of the Ricoh Arena will remain subject to change in light of evolving Government public health restrictions and guidance, the Wasps Group remains prepared with a comprehensive re-opening plan in place.

In response to COVID-19, the Wasps Group's key priority was, and continues to be, the health and safety of its employees and visitors to the Ricoh Arena. The Wasps Group reacted quickly to mitigate the impact that COVID-19 has had (and will continue to have) on its principal business activities and operations by introducing various financial and operational measures and initiatives to preserve cash, reduce costs and maintain liquidity.

The proposals (the "Proposals"), as further detailed below and in the section of the Consent Solicitation Memorandum entitled "Description of the Proposals", will help the Wasps Group to withstand the impact of COVID-19 and are aimed at restoring the Wasps Group's financial position as soon as possible and facilitating the Wasps Group's plans to refinance the Bonds on or by their scheduled maturity date in May 2022.

The Wasps Group fully intends to continue to meet its obligations under the Bonds to pay interest as it falls due and to refinance the Bonds on or by their scheduled maturity.

Stephen Vaughan, Chief Executive Officer of Wasps Holdings Limited, commented:

"The Wasps Group had a good start to the year up until the impact of Covid-19 and the temporary closure of the Ricoh Arena in line with Government health restrictions from 21 March this year. Since then, we have taken a number of mitigating actions to preserve cash, reduce costs and maintain liquidity to limit the impact on the business. We are now asking bondholders to support the amendment to certain leverage and cashflow covenants attached to the Bond in light of the ongoing restrictions. The approval of these Proposals will also give the Wasps Group the flexibility to access additional liquidity, if required.

"We continue to tightly manage our costs and have a comprehensive reopening plan for when restrictions are lifted with extensive COVID-secure operating protocols. The Wasps Group fully intends to continue to meet all of its obligations under the Bonds. We firmly believe that the Proposals are in the best interests of all of our stakeholders, and will help the Wasps Group to emerge in a more robust financial position."

RATIONALE FOR THE PROPOSALS

The Issuer and the Guarantors are making the Consent Solicitation for the following reasons:

-- to amend the financial covenants under the Bonds to take into account the significant impact of COVID-19 on the Wasps Group and the on-going financial impact of operating in a COVID-19 environment;

-- to enable the Wasps Group to access additional liquidity that is required to allow it to continue to trade as a going concern while the Government's public health restrictions to control COVID-19 remain in place;

-- to enable the Wasps Group to improve its financial strength through the acceleration and implementation of its development plan for the Ricoh Arena and surrounding land and facilities; and

-- to facilitate the Wasps Group's plans to refinance the Bonds on or by their scheduled maturity date in May 2022,

as further detailed in the Consent Solicitation Memorandum.

PRELIMINARY RESULTS FOR THE FINANCIAL YEARED 30 JUNE 2020

The Wasps Group's auditors (Mazars LLP) are currently conducting their annual audit of the draft financial statements prepared by the Wasps Group for the financial year ended 30 June 2020. The following figures present selective consolidated financial information relating to the Wasps Group for the financial year ended 30 June 2020. As at the date hereof, this information has not been audited by Mazars LLP. Such information has been prepared in accordance with International Financial Reporting Standards and such accounting is consistent with the accounting policies of Wasps Holdings. Wasps Holdings expects such unaudited financial information to be substantially consistent with the audited consolidated financial statements of Wasps Holdings for such period, once the audit is complete.

This was the Wasps Group's fifth full year at the Ricoh Arena, and, over the year, the Wasps Group has continued to invest and mature as a business and build on the foundations established in the previous years. In the first nine-months of the financial year, the Wasps Group had been trading in line with expectations. It had held 34 major exhibitions, Hotel Revenue Per Available Room increased by 8 per cent. and a new 10-year lease was signed with Grosvenor Casino. However, the COVID-19 pandemic and the temporary closure of the Ricoh Arena since 21 March this year has had a significant effect on the financial performance of the Wasps Group. The main impact has been the significant reduction in the number of events that the Wasps Group has been able to hold at the Ricoh Arena during the course of the financial year ended 30 June 2020: although 34 major exhibitions were held during the first nine-months of the financial year, this still represents a significant reduction compared to the number of exhibitions held during the financial year ended 30 June 2019 (49). The impact of COVID-19 on the Wasps Group during the final three months of the financial year has led to a significant decline in the year-end financial performance across the Wasps Group.

Wasps Group Financial Highlights

The preliminary financial results for the Wasps Group summarised below reflect the impact of COVID-19 on the Wasps Group, combined with the prior year cash injection of GBP12.5 million of funds received by Wasps Holdings as part of the Premier Rugby Limited commercial deal with CVC Capital Partners and a GBP4.1 million increase in the valuation of the "P-Shares" that Wasps Holdings holds in Premier Rugby Limited:

-- as at 30 June 2020, full year revenue decreased year-on-year to GBP22.2 million, compared to GBP34.5 million for the year to 30 June 2019 (Wasps Holdings: GBP9.9 million (2019: GBP14.8 million); ACL: GBP3.0 million (2019: GBP5.1 million); and IEC Experience Limited: GBP9.3 million ( 2019: GBP14.6 million));

-- operating loss of GBP8.75 million, compared to an operating profit of GBP8.4 million in 2019;

-- EBITDA loss (operating loss before taxation, finance costs, depreciation and amortisation) of GBP6.5 million, compared to a profit of GBP10.7 million in 2019 (a decrease of GBP17.1 million from the financial year ended 30 June 2019);

-- valuation of the Ricoh Arena at GBP51 million and P-Shares at GBP13.9 million, unchanged from the 2019 valuations; and

-- consolidated senior net debt at GBP37.3 million (mainly owed to Wasps Finance), compared to GBP31.4 million in 2019.

THE PROPOSALS

The proposals that the Issuer and the Guarantors are inviting Bondholders to approve are as follows (together, the "Proposals"):

   (a)           to amend: 
   (i)         Condition (4)(d) (Interest Service Reserve Account and Approved Investments) to: 

(A) allow the Issuer to withdraw monies from the Interest Service Reserve Account on any Interest Payment Date falling on or after 13 November 2020 if the amount standing to the credit of the Interest Service Reserve Account exceeds the Required Account Balance and to amend the definition of the Required Account Balance such that it will be zero on or after 13 November 2020;

(B) remove the additional requirement for the Consolidated EBITDA to Consolidated Finance Costs as at and for the 12 month period ending the most recent Reporting Date to be at least 1.4 : 1.0 for the Issuer to be able to withdraw such amounts; and

(C) remove the reference to the account being closed at the option of the Issuer once the Release Conditions have been met;

   (ii)        Condition 4(e) (Financial Covenants) so that: 

(A) the Asset Cover Ratio requirement set out in Condition 4(e)(i) shall be split into two parts:

(1) a "Secured Asset Cover Ratio" of at least of 1.4 : 1.0 only in respect of Consolidated Secured Senior Debt of the Wasps Group. A definition of "Consolidated Secured Senior Debt" shall be added which includes all secured Financial Indebtedness of the Wasps Group other than any future COVID Funding and any Non-Recourse Debt (each as further described below)); and

(2) a "Total Asset Cover Ratio" of at least 1.1 : 1.0 in respect of the Consolidated Total Senior Debt of the Wasps Group. A definition of "Consolidated Total Senior Debt" shall be added which includes all secured and unsecured Financial Indebtedness of the Wasps Group other than any Non-Recourse Debt;

(B) the requirement for each Guarantor and ACL2006 to maintain a minimum ratio Consolidated EBITDA to Consolidated Finance Costs in respect of any Reporting Date falling on or after 30 June 2020 is removed and shall no longer apply; and

(C) the Consolidated Senior Debt limit set out in Condition 4(e)(iii) shall be split into two separate limits:

(1) a "Consolidated Secured Senior Debt" limit of GBP36.5 million only in respect of Consolidated Secured Senior Debt of the Wasps Group, which includes all secured Financial Indebtedness of the Wasps Group other than any future COVID Funding and any Non-Recourse Debt; and

(2) a "Consolidated Total Senior Debt" level of GBP50 million in respect of Consolidated Total Senior Debt of the Wasps Group, which includes all secured and unsecured Financial Indebtedness of the Wasps Group other than Non-Recourse Debt;

(iii) Condition 6(c) (Redemption at the option of the Issuer) to allow the Issuer to redeem the Bonds at a redemption price of 100% of their principal amount in respect of any redemption at the option of the Issuer occurring at any time after the Interest Period beginning on 13 November 2020 until the scheduled final maturity date;

(iv) Condition 19 to amend the definition of "Permitted Collateral Security Interest" to permit Wasps Holdings to grant Quasi Security upon any distributions or other amounts payable to Wasps Holdings under the PRL Licensing Agreement and/or the PRL Shareholders' Agreement as part of any COVID Funding made available to the Wasps Group by Premier Rugby Limited or the Government;

(v) Condition 19 to include a definition of "Non-Recourse Debt" to permit a special purpose company that is a Subsidiary of the Issuer, each Guarantor or ACL2006 to incur non-recourse debt for the purposes of any project or development of assets owned by such Subsidiary and provided that recourse of such debt is limited to such Subsidiary and its assets (subject to certain limited, customary exceptions); and

(vi) Condition 19 such that, on and from the date on which the Amended and Restated Trust Deed is duly executed:

(A) "Account Bank", "IECE Shares", "Permitted Collateral Security Interest" (as outlined above) , "Required Account Balance", and "Shareholder Loan" are amended in the form outlined in Annex 2 to the Consent Solicitation Memorandum to align with the amendments outlined above;

(B) the definitions of "Asset Cover Ratio", "Consolidated EBITDA", "Consolidated Finance Costs" and "Consolidated Senior Debt" are deleted in their entirety to align with the amendments outlined above; and

(C) new definitions, being, "Consolidated Secured Senior Debt", "Consolidated Total Senior Debt", "COVID Funding", "Non-Recourse Debt" (as outlined above), "PRL Licensing Agreement", "PRL Shareholders' Agreement", "Secured Asset Cover Ratio" and "Total Asset Cover Ratio" are added to Condition 19 to implement the amendments outlined above; and

(b) all consequential amendments to the Transaction Documents that are necessary or desirable in the opinion of the Issuer to implement the modifications described in paragraphs (a)(i) to (vi) above,

in each case, as further described in the section of the Consent Solicitation Memorandum entitled "The Consent Solicitation - Description of the Proposals".

No consent fee will be payable in connection with the Consent Solicitation.

MEETING OF BONDHOLDERS

Notice (the "Notice") of a meeting (the "Meeting") of the Bondholders to be held via video conference will start at 10:00 a.m. (London time) on 29 October 2020 will, shortly following publication of this announcement, be published in accordance with the Trust Deed.

At the Meeting, Bondholders will be asked to consider and, if thought fit, pass an extraordinary resolution as set out in the Notice (the "Extraordinary Resolution"), which will provide, among other things, for the Trustee to be authorised and requested to concur in and execute the Amended and Restated Trust Deed which will implement the Proposals and effect the modifications to the Conditions.

If the Extraordinary Resolution is passed, the proposed modifications to the Conditions will be binding on all Bondholders, including those Bondholders who do not vote in respect of, or vote against, the Proposals.

INDICATIVE TIMETABLE FOR THE CONSENT SOLICITATION

 
 Event                                         Date and Time 
--------------------------------------------  -------------------------------- 
 Announcement of the Consent Solicitation      6 October 2020 
  and the Proposals 
  Notice of Meeting delivered to the 
  Clearing Systems for communication 
  to Direct Participants and published 
  via the Regulatory News Service 
  of the London Stock Exchange. 
 
 Voting Deadline                               10:00 a.m. (London time) 
  Deadline for Bondholders to deliver           on 27 October 2020 
  or procure delivery on their behalf 
  to the Tabulation Agent of a Consent 
  Instruction in favour of the Extraordinary 
  Resolution. This will also be the 
  latest time for Bondholders to deliver 
  or procure delivery on their behalf 
  to the Tabulation Agent of a valid 
  instruction revoking previously 
  submitted Consent Instructions. 
 Deadline for appointing a proxy               10:00 a.m. (London time) 
  in respect of the Bonds                       on 27 October 2020 
  The latest time for appointing a 
  proxy (other than the Tabulation 
  Agent) to attend and vote at the 
  Meeting in person. 
 Meeting                                       10:00 a.m. (London time) 
  Time and date of the Meeting.                 on 29 October 2020 via 
                                                a video conference as 
                                                initiated by the Issuer's 
                                                counsel, Ashurst LLP, 
                                                expected to be via GoToMeeting 
 Announcement and publication of               As soon as reasonably 
  results of Meeting                            practicable after the 
  Announcement of the results of the            Meeting has concluded 
  Meeting.                                      and, in any event, within 
                                                14 days of the Meeting. 
 

The above times and deadlines are subject to the right of the Issuer and the Guarantors to extend, amend (other than the terms of the Extraordinary Resolution), waive any condition of or terminate the Consent Solicitation at any time (subject to applicable law and as provided in the Consent Solicitation Memorandum). Bondholders are advised to check with any broker, dealer, commercial bank, custodian, trust company or other nominee through which they hold Bonds whether such broker, dealer, commercial bank, custodian, trust company or other nominee would require receiving any notice or instructions prior to the deadlines set out above.

GENERAL

Details of how to participate in the Consent Solicitation are set out in the Consent Solicitation Memorandum. Bondholders may obtain a copy of the Consent Solicitation Memorandum by contacting the Tabulation Agent, the contact details of which are set out immediately below.

Notices throughout the Consent Solicitation will be published in accordance with the Trust Deed and all applicable rules and regulations as follows:

(a) a notice in Euroclear Bank SA/NV and Clearstream Banking S.A. for communication to Direct Participants; and/or

   (b)           an announcement released on the London Stock Exchange plc's regulatory news service, 

and by any other means as the Issuer may, in its absolute discretion, consider appropriate.

CONTACT INFORMATION

Requests for further information in relation to the Consent Solicitation should be directed to the Wasps Group:

Wasps Holdings Limited

Ricoh Arena

Judds Lane

Longford

Coventry CV6 6AQ

England

c/o Aldwick Advisory Services Limited:

   E-mail:                  [e-mail] 
   Telephone:           [phone] 
   Attention:             Ian Dixon 

Requests for copies of the Consent Solicitation Memorandum and information in relation to the procedures for submission of a Consent Instruction should be directed to the Tabulation Agent:

Lucid Issuer Services Limited

Tankerton Works

12, Argyle Walk

London WC1H 8HA

   E-mail:                  [e-mail] 
   Telephone:           [phone] 
   Attention:             David Shilson / Owen Morris 

Media enquiries should be directed to Wasps Holdings' PR advisers:

Tulchan Group

2nd Floor

85 Fleet Street

London EC4Y 1AE

   Email:                    [e-mail] 
   Telephone:           [phone] 
   Attention:             Elizabeth Snow 

MARKET ABUSE REGULATION

The information contained in this announcement is inside information as stipulated under the Market Abuse Regulation (EU) No. 596 /2014. Upon publication of this announcement, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of the Issuer is Nick Eastwood, Deputy Chairman of Wasps Holdings Limited.

DISCLAIMER AND CONSENT SOLICITATION RESTRICTIONS

The Consent Solicitation Memorandum contains important information which should be read carefully before any decision is made in respect of the Proposals, as defined and more fully described herein.

If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice, including in respect of any tax consequences, immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 as amended (if you are in the United Kingdom) or from another appropriately authorised independent financial adviser (if you are not).

Investors who wish to vote and whose Bonds (or interests in Bonds) are held in the name of a broker, dealer, commercial bank, custodian, trust company or other nominee institution (including through CDIs in CREST) must contact such nominee promptly and instruct or make arrangements with such nominee to vote in accordance with the customary procedures of the Clearing Systems on behalf of the Bondholders. The deadlines set by any such nominee and each Clearing System for the submission of a Consent Instruction in connection with the Extraordinary Resolution may be earlier than the relevant deadlines specified above and in the Consent Solicitation Memorandum.

Before making a decision with respect to the Consent Solicitation, Bondholders should carefully consider all of the information in the Consent Solicitation Memorandum and, in particular, the risk factors described therein.

No person is authorised in connection with the Consent Solicitation to give any information or to make any representation not contained in the Consent Solicitation Memorandum and any information or representation not contained in the Consent Solicitation Memorandum must not be relied upon as having been authorised by the Issuer, the Guarantors, the Trustee, Elavon Financial Service DAC, UK Branch (the "Principal Paying Agent") or the Tabulation Agent. The Principal Paying Agent and the Tabulation Agent are agents of the Issuer and the Guarantors and owe no duty to any holder of the Bonds. The Consent Solicitation Memorandum is only issued to and directed at Bondholders for the purposes of considering the Extraordinary Resolution. No other person may rely upon its contents, and it should not be relied upon by Bondholders for any other purpose. None of the Issuer, the Guarantors, the Trustee, the Principal Paying Agent or the Tabulation Agent, or any of their respective directors or employees, makes any recommendation as to whether Bondholders should approve the Proposals described in the Consent Solicitation Memorandum.

The distribution of the Consent Solicitation Memorandum in certain jurisdictions may be restricted by law. Persons into whose possession the Consent Solicitation Memorandum comes must inform themselves about and observe any such restrictions.

United States

The Consent Solicitation is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). The matters contemplated by the Consent Solicitation do not constitute or form a part of any offer or solicitation to purchase or subscribe for any securities in the United States. Any such securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities Act"). Any such securities may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as such term is defined in Regulation S under the Securities Act), except pursuant to an exemption from the registration requirements of the Securities Act. No public offering of securities will be made in the United States or in any other jurisdiction where such an offering is restricted or prohibited.

United Kingdom

The Consent Solicitation may only be communicated to persons in the United Kingdom in circumstances where section 21(1) of the Financial Services and Markets Act 2000 does not apply. Accordingly, the Consent Solicitation Memorandum is only for circulation to persons inside the United Kingdom who fall within one of the following categories:

   (a)           a person who is a holder of any Bonds; or 

(b) any other person also falling within Article 43(2) or within Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or falling within the definition of "investment professionals" (as defined in Article 19(5) of the Order).

The Consent Solicitation Memorandum is only available in the United Kingdom to such persons, and the transactions contemplated herein will be available only to, and may be engaged in only with, such persons.

General

In addition to the representation referred to above in respect of the United States, each holder of Bonds participating in the Consent Solicitation will also be deemed to give certain other representations as set out in the Consent Solicitation Memorandum. Any Consent Instruction from a Bondholder that is unable to make these representations will not be accepted. Each of the Issuer, the Guarantors, the Trustee, the Principal Paying Agent and the Tabulation Agent reserves the right, in each of its absolute discretion, to investigate whether any such representation given by a Bondholder is correct and, if such investigation is undertaken and, as a result, the Issuer and the Guarantors determine (for any reason) that such representation is not correct, such Consent Instruction may not be accepted.

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October 06, 2020 02:00 ET (06:00 GMT)