RNS Number : 4441L
AssetCo PLC
12 January 2009
12 January 2009
AssetCo plc
Notice of General Meeting
AssetCo plc, (AIM : ASTO) the integrated support services business, announces today that it proposes to raise approximately �15 million
(before expenses) through the issue of preference shares by AssetCo Abu Dhabi, its wholly owned subsidiary, in order to support its
activities in Abu Dhabi. The Company will later today send a circular to shareholders seeking approval for the increase in the authorised
share capital and the authority for Directors to issue 24,509,802 warrants each exercisable at a price of 61.2 pence per Ordinary Share. A
General Meeting of the Company will be held at 800 Field End Road, South Ruislip, Middlesex HA4 0QH on Wednesday 28 January 2009 at 10.00
a.m.
As announced previously, the Board is actively pursuing development opportunities outside the UK and particularly in the Middle East
with the intention of securing long term integrated support service contracts.
The investment proceeds will be used to satisfy any pre-contract liquidity requirement relating to the working capital requirements of a
range of integrated support services which the Group has been negotiating to provide to the Fire and Rescue Service of the Abu Dhabi Police.
It is anticipated that during the course of 2009 evaluation work in respect of these services will continue. Any eventual contract is
not likely to contribute to Group earnings until the year ending 31 March 2011 and beyond. There can, however, be no guarantee that these
negotiations will lead to any contract award.
Commenting today, John Shannon, Chief Executive Officer said:
"We are pleased to have been able to secure this investment which allows us to progress our negotiations with the Abu Dhabi Police and
to specifically demonstrate our ability to comfortably address any potential long term contract liquidity requirement. We are confident that
we have excellent prospects in developing a long term working relationship with Abu Dhabi Police and delivering a significant level of
business.
Despite difficult market conditions, we continue to view the Company's prospects with confidence."
Enquiries:
AssetCo Tel: +44 (0) 20 8515 3999
John Shannon, Chief Executive Officer Frank
Flynn, Financial Director
James Collins, Investor Relations
RBS Hoare Govett Limited Tel: +44 (0) 20 7678 8000
Stephen Bowler
John MacGowan
Richard Crichton
Pelham PR Tel: +44 (0) 20 7743 76670
Alex Walters
Francesca Tuckett
Introduction
The Board announces today that it is proposing to raise approximately �15 million (before expenses) through the issue of Preference
Shares by AssetCo Abu Dhabi to the NAV Funds in order to support its activities in Abu Dhabi.
In association with the issue of the Preference Shares by AssetCo Abu Dhabi, the Company announces it will also be issuing 24,509,802
Warrants, each exercisable at a price of 61.2 pence per Ordinary Share. The exercise price represents a 20 per cent. premium to the closing
mid-market price of an existing Ordinary Share on 7 January 2009. In the event that the Warrants are exercised in full, the Ordinary Shares
issued on exercise will represent 25 per cent. of the Company's issued share capital, enlarged solely by the Ordinary Shares issued upon
exercise of the Warrants.
Background to and Reasons for the Proposals
As announced previously, the Board is actively pursuing development opportunities outside the UK and particularly in the Middle East
with the intention of securing long term integrated support service contracts.
The investment proceeds will be used to satisfy any pre-contract liquidity requirement relating to the working capital requirements of a
range of integrated support services which the Group has been negotiating to provide to the Fire and Rescue Service of the Abu Dhabi Police.
It is anticipated that during the course of 2009 evaluation work in respect of these services will continue. Any eventual contract is
not likely to contribute to Group earnings until the year ending 31 March 2011 and beyond. There can, however, be no guarantee that these
negotiations will lead to any contract award.
Accordingly, the Group proposes to raise approximately �15 million (before expenses) through the issue of the Preference Shares to the
NAV Funds. Under the terms of the Investment Agreement, the Group will initially have access to �5 million of the proceeds as a stand-by
facility to support its working capital requirements.
In association with the issue of the Preference Shares by AssetCo Abu Dhabi, the Company will also be issuing 24,509,802 Warrants, each
exercisable at a price of 61.2 pence per Ordinary Share, during the period between the second and fifth anniversaries of Completion. The
exercise price represents a 20 per cent. premium to the closing mid-market price of an existing Ordinary Share on 7 January 2009. In the
event that the Warrants are exercised in full, the Ordinary Shares issued on exercise will represent 25 per cent. of the Company's issued
share capital enlarged solely by the Ordinary Shares issued upon exercise of the Warrants.
In the event that AssetCo Abu Dhabi has not entered into the Abu Dhabi Contract prior to the first anniversary of Completion and the
Preference Shares have been redeemed (with the consent of the NAV Funds not to be unreasonably withheld) and provided that the Abu Dhabi
Contract has still not been awarded three months after the date of redemption of the Preference Shares then the Company will be entitled to
cancel 16,339,868 Warrants. In the event that AssetCo Abu Dhabi has not entered into the Abu Dhabi Contract prior to the second anniversary
of Completion and the Preference Shares have been redeemed, 8,169,934 Warrants may then be cancelled.
If neither of the above events occur, the Preference Shares must be redeemed for cash at par on the fifth anniversary of Completion.
Accordingly, today the Company and its wholly-owned subsidiary, AssetCo Abu Dhabi, entered into the Investment Agreement with NAV and
the NAV Funds pursuant to which AssetCo Abu Dhabi agreed to issue 15,000,000 Preference Shares and the Company agreed to issue 24,509,802
Warrants, in each case to the NAV Funds. Pursuant to the terms of the Investment Agreement, for such time as the NAV Funds are the holders
of a minimum of 2,500,000 Preference Shares, the NAV Funds will benefit from a number of customary investor protections including the right
to appoint a non-executive director to the board of AssetCo Abu Dhabi.
In addition, it is proposed that, upon the passing of the Resolutions, AssetCo Abu Dhabi and the Company will enter into the Management
Agreement with ACMS pursuant to which AssetCo Abu Dhabi will retain ACMS to provide management and strategic consultancy services and advice
in connection with the funding and development of AssetCo Abu Dhabi in furtherance of the Abu Dhabi business and the securing of additional
contracts. AssetCo Abu Dhabi will pay ACMS a fee of �900,000 per annum for these services. Upon the redemption of any of the Preference
Shares or the transfer of any of the Preference Shares by the NAV Funds to the Company, the management fee shall be reduced in proportion to
the number of Preference Shares so redeemed or transferred.
The Investment Agreement is conditional, inter alia, on the passing of the Resolutions at the General Meeting.
The principal terms of the Investment Agreement, the Preference Shares, the Warrants and the Management Agreement are set out in the
appendix to this announcement.
Irrevocable undertakings
The Company has received irrevocable undertakings from the executive Directors of the Company to vote, or to procure the votes of
Ordinary Shares held, in favour of the Resolutions in respect of a total of 34,188,327 Ordinary Shares representing approximately 46.59 per
cent. of the existing Ordinary Shares.
In addition, the Company has received irrevocable undertakings from other Shareholders associated with NAV to vote, or to procure the
votes of Ordinary Shares held, in favour of the Resolutions in respect of a total of 4,048,500 Ordinary Shares representing approximately
5.52 per cent. of the existing Ordinary Shares.
Accordingly, AssetCo has received, in aggregate, irrevocable undertakings from Shareholders to vote, or to procure the votes of Ordinary
Shares held, in favour of the Resolutions in respect of a total of 38,236,827 Ordinary Shares representing approximately 52.11 per cent. of
the existing Ordinary Shares.
Recommendation
The Directors consider the Proposals to be in the best interests of the Company and its Shareholders as a whole. Your Directors
unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting as they have either irrevocably
undertaken or intend to do in respect of their own holdings which, in aggregate amount to 35,017,173 Ordinary Shares representing
approximately 47.72 per cent. of the Company's issued ordinary share capital.
Enquiries:
AssetCo Tel: +44 (0) 20 8515 3999
John Shannon, Chief Executive Officer Frank
Flynn, Financial Director
James Collins, Investor Relations
RBS Hoare Govett Limited Tel: +44 (0) 20 7678 8000
Stephen Bowler
John MacGowan
Richard Crichton
Pelham PR Tel: +44 (0) 20 7743 76670
Alex Walters
Francesca Tuckett
APPENDIX
PRINCIPAL TERMS OF THE INVESTMENT AGREEMENT, THE PREFERENCE SHARES, THE WARRANTS AND THE MANAGEMENT AGREEMENT
The Investment Agreement
The principal terms of the Investment Agreement are as follows:
* it is conditional upon the passing of the Resolutions and Completion is expected to take place on 28 January 2009 following the
passing of the Resolutions. In the event that the agreement is not completed before 20 February 2009, it will lapse
* the NAV Funds have agreed on Completion to subscribe �15 million for the issue of 15,000,000 Preference Shares in the capital of
AssetCo Abu Dhabi
* whilst the Preference Shares remain outstanding, the proceeds from the issue of the Preference Shares and all generated profits
must be retained in AssetCo Abu Dhabi exclusively for the purpose of funding the development of the Abu Dhabi business. However, the terms
of the Investment Agreement allow up to �5 million of the proceeds to be lent to the Company for a period of 12 months from Completion : the
loan to the Company carries interest at the rate of 6 per cent. per annum and, in the event that �5 million is drawn under the loan, the
Company undertakes to make a partial repayment of �1.5 million on or before 30 June 2009 and agrees to repay the balance of the loan on or
before the first anniversary of Completion
* on Completion, the Company will issue the Warrants to the NAV Funds on the terms of the Warrant Instrument detailed below
* the Company has given certain warranties to the NAV Funds about the affairs of the Company and AssetCo Abu Dhabi : claims for the
breach of these warranties are limited to the amounts subscribed by the NAV Funds and any claims must be made within 18 months of Completion
* for such time as the NAV Funds are the holders of a minimum of 2,500,000 Preference Shares, the NAV Funds will be entitled to
customary institutional investor protections, including the right for the NAV Funds (i) to appoint a non-executive director (the "Investor
Director") of AssetCo Abu Dhabi and (ii) to receive management accounts, annual budgets and business plans and other financial information
of AssetCo Abu Dhabi. In addition, there are a number of material matters affecting AssetCo Abu Dhabi which cannot be carried out without
the consent of NAV or the Investor Director including varying its share capital, selling its business, entering administration or winding
itself up
* AssetCo guarantees to the NAV Funds the due and punctual performance by AssetCo Abu Dhabi of its obligations to redeem the
Preference Shares and agrees that, if AssetCo Abu Dhabi fails to comply with those obligations, AssetCo will itself pay or otherwise procure
that AssetCo Abu Dhabi pays the sums due to the NAV Funds on redemption
Preference Shares
The principal terms of the Preference Shares, which will be subscribed for on Completion, are as follows:
* the Preference Shares are not entitled to any dividend payment
* the Preference Shares are entitled to repayment of capital on a winding up or sale in preference to the ordinary shares of AssetCo
Abu Dhabi
* the Preference Shares are transferrable to other funds managed by NAV and to any party which the board of AssetCo Abu Dhabi
(acting reasonably) does not consider to be a direct or indirect competitor of the Company
* in the event that AssetCo Abu Dhabi has not entered into the Abu Dhabi Contract prior to the first anniversary of Completion, it
may redeem the Preference Shares at par with the consent of NAV (on behalf of the NAV Funds) such consent not to be unreasonably withheld
* in the event that AssetCo Abu Dhabi has still not entered into the Abu Dhabi Contract prior to the second anniversary of
Completion, it may redeem the Preference Shares at par
* the Preference Shares will become redeemable at par in the event that a group of persons acting in concert (as defined in the City
Code of Takeovers and Mergers) acquires more than 30 per cent. of the issued share capital of the Company
* if the Preference Shares have not been redeemed previously, they must be redeemed on the fifth anniversary of Completion for cash
at par
Warrants
The principal terms of the Warrants, which will be issued on Completion, are set out in the Warrant Instrument to be issued by the
Company on Completion and are as follows:
* each Warrant carries the right to subscribe for one Ordinary Share in AssetCo at an exercise price of 61.2 pence per Ordinary
Share during the period between the second and fifth anniversaries of Completion
* the amounts payable on exercise of the Warrants by the NAV Funds may be discharged by the transfer of the Preference Shares to the
Company
* in the event that AssetCo Abu Dhabi has not entered into the Abu Dhabi Contract prior to the first anniversary of Completion and
the Preference Shares have been redeemed (with the consent of NAV (on behalf of the NAV Funds) not to be unreasonably withheld), and
provided that the Abu Dhabi Contract has still not been awarded three months after the date of redemption of the Preference Shares then the
Company will be entitled to cancel 16,339,868 Warrants
* in the event that AssetCo Abu Dhabi has not entered into the Abu Dhabi Contract prior to the second anniversary of Completion and
the Preference Shares have been redeemed, the Company will be entitled to cancel 8,169,934 Warrants
* in the event of a change of control of the Company at any time while the Warrants are outstanding, all Warrants will become
immediately exercisable
* the Warrants are subject to adjustment in the event of a reorganisation of the share capital of the Company
* the Warrants will be transferable to other funds managed by NAV or to other parties, subject to the Board receiving prior
notification of the transferee. No transfer will be permitted where the proposed transferee is, in the opinion of the Board (acting
reasonably) a direct or indirect competitor of the Company
* no application is being made for the Warrants to be admitted to trading on AIM
Management Agreement
The principal terms of the Management Agreement, which will be entered into on Completion, are as follows:
* AssetCo Abu Dhabi will retain ACMS to provide management and strategic consultancy services and advice in connection with the
funding and development of AssetCo Abu Dhabi in furtherance of the Abu Dhabi business and the securing of additional contracts, including
advice and assistance in developing the annual business plan in relation to AssetCo Abu Dhabi and researching opportunities for further
development of the Abu Dhabi business
* AssetCo Abu Dhabi will pay ACMS a fee of �900,000 per annum, payable in two equal instalments on 30 June and 31 December in each
year
* upon the redemption of any of the Preference Shares or the transfer of any of the Preference Shares by the NAV Funds to the
Company, the management fee shall be reduced in proportion to the number of Preference Shares so redeemed or transferred
* the term of the Management Agreement is from Completion to the date on which all of the Preference Shares have either been
redeemed or transferred to the Company by the NAV Funds
* AssetCo guarantees to ACMS the due and punctual performance by AssetCo Abu Dhabi of its obligations to pay the management fees to
ACMS and AssetCo agrees that, if AssetCo Abu Dhabi fails to comply with those obligations, AssetCo will itself pay or otherwise procure that
AssetCo Abu Dhabi pays the sums due to ACMS in respect of the management fees
* ACMS shall not be required to devote any fixed amount of time for the provision of services under the Management Agreement
DEFINITIONS
"Abu Dhabi Contract" the ten year contract or contracts to provide a range
of integrated support services to the Fire and Rescue
Service of the Abu Dhabi Police
"ACMS" AC Management Services Limited, a company
incorporated in Bermuda, which will be owned by the
NAV Funds
"Act" the Companies Act 1985 (as amended)
"AIM" the AIM market operated by London Stock Exchange plc
"AIM Rules" the AIM Rules for Companies published by the London
Stock Exchange
"AssetCo Abu Dhabi" AssetCo (Abu Dhabi) Limited, a subsidiary of the
Company incorporated in Bermuda, which will issue the
Preference Shares to the NAV Funds
"Board" or "Directors" the directors of the Company
"Company" or "AssetCo" AssetCo plc
"Completion" the date on which the NAV Funds subscribe for the
Preference Shares
"General Meeting" the general meeting of the Company convened for 10.00
a.m. on 28 January 2009
"Group" the Company and its subsidiaries
"Investment Agreement" the conditional investment agreement dated 12 January
2009 between the NAV Funds, NAV, the Company and
AssetCo Abu Dhabi, pursuant to which the NAV Funds
have agreed to subscribe for the Preference Shares,
as detailed in the appendix to this announcement
"Management Agreement" the agreement for the provision of management and
consultancy services to be entered into between
AssetCo
"NAV" North Atlantic Value LLP
"NAV Funds" certain client funds managed or advised by NAV
"Ordinary Shares" the ordinary shares of 25 pence each in the capital
of the Company
"Preference Shares" the zero-dividend redeemable preference shares of �1
each in the capital of AssetCo Abu Dhabi
"Proposals" the proposals to increase the authorised share
capital and to grant authorities to the Directors to
issue and allot the Warrants as described in the
appendix to this announcement
"Resolutions" the resolutions to be proposed at the General Meeting
"Shareholders" holders of issued Ordinary Shares
"Warrants" 24,509,802 warrants entitling the registered holder
of each warrant to subscribe for one new Ordinary
Share at 61.2 pence per Ordinary Share during the
period between the second and fifth anniversaries of
Completion
"Warrant Instrument" the warrant instrument constituting the Warrants, as
detailed in the appendix to this announcement
This information is provided by RNS
The company news service from the London Stock Exchange
END
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