HMF Handmade

 

TIDMHMF 
 
RNS Number : 9878L 
Handmade PLC 
14 May 2010 
 
14th May 2010 
Handmade PLC 
("Handmade" or the "Company") 
Response to the Mandatory Cash Offer and Convertible Loan Note Offer 
 made by 
Almorah Services Limited 
On 29th April 2010, Almorah Services Limited ("Almorah") announced a mandatory 
offer (the "Mandatory Offer") to acquire all the issued share capital (the 
"Shares") of Handmade not already owned by it and an offer for all of the 
outstanding convertible loan notes in Handmade (the "CLNs") (the "CLN Offer"). 
Almorah subsequently posted an offer document (the "Offer Document") on 30th 
April 2010. 
 
Further to an announcement made by the Company on 5th May 2010, RNS number 
3772L, the board of directors of Handmade (the "Board") has today posted a 
response to the Offer Document by way of a circular to Handmade shareholders 
(the "Shareholders") (the "Circular"), an extract of which is set out below. The 
Circular is available on the Company website: http://www.handmadeplc.com. 
 
Extract from the Circular 
Response to the Mandatory Offer and CLN Offer by Almorah 
On 29th April 2010, Almorah announced the Mandatory Offer and the CLN Offer 
(collectively, the "Offers"). Almorah subsequently sent the Offer Document to 
the Company's Shareholders and CLN holders ("CLN Holders") setting out the 
detailed terms and conditions of the Offers on 30th April 2010. 
The Mandatory Offer 
The Mandatory Offer is at a price of 1p per Share. 
The Mandatory Offer became immediately unconditional as to acceptances on 
posting of the Offer Document as Almorah and persons acting in concert with it 
held more than 50 per cent. of the voting rights in Handmade at that time. On 
the date of the announcement, Almorah had acquired 39.68 per cent. of the Shares 
and had received irrevocable undertakings for a further 14.29 per cent. of the 
Shares. As a result, the closing date for the Mandatory Offer will be 21st May 
2010. 
The CLN Offer 
The CLN Offer is on the basis that that a CLN Holder is entitled either: 
(a)        to sell to Almorah the whole of the principal amount of the CLNs held 
by them for a consideration of GBP0.55 for each GBP1.00 in nominal value of CLNs 
held, inclusive of accrued interest to date ("Option 1"); or 
(b)        to waive their rights under the terms of the trust deed that would 
arise when the Mandatory Offer becomes or is declared unconditional in all 
respects (i) to redeem all (but not some only) of their CLNs at face value 
together with all accrued interest; and (ii) to convert all (but not some only) 
of their CLNs into new Shares at a discounted conversion rate as set out in the 
terms of the trust deed, and in the event of such waiver of their rights 
agreeing that the terms and conditions of the CLNs shall otherwise continue in 
full force and effect ("Option 2"). 
On announcement of the CLN Offer on 29th April 2010 Almorah had irrevocable 
commitments to accept Option 2 of the CLN Offer from CLN Holders comprising 
32.35 per cent. of the aggregate nominal amount of the outstanding CLNs. The CLN 
Offer will close on 21st May 2010 and may not be extended. 
The consequences to a CLN Holder of not taking up Option 1 or Option 2 are 
highlighted on page 7 of the Offer Document, an extract of which is set out as 
follows: 
"CLN Holders who do not wish to accept either Option 1 or Option 2 of the CLN 
Offer will, following completion of the Mandatory Offer, continue to hold their 
existing percentage of the total outstanding CLNs and accordingly continue to 
have the right (i) to redeem all (but not some only) of the CLNs at face value 
together with all accrued interest; or (ii) to convert all (but not some only) 
of their CLNs into new Shares at a discounted conversion rate as set out in the 
terms of the trust deed. If a CLN Holder opts to redeem his CLNs and the Company 
fails to pay the sums due this would constitute an event of default under the 
trust deed. However, enforcing the security in relation to any such default 
would be at the discretion of the trustee or at the direction of 75 per cent. of 
the CLN Holders." 
Acceptances to the Offers as at 13th May 2010 
As at 1.00 pm on 13th May 2010 Almorah had acquired a total of 53.98 per cent. 
of the Shares, including all of the Shares for which irrevocable undertakings 
had been received and had received valid acceptances to the Mandatory Offer for 
1.95 per cent. of the Shares. 
As at 1.00 pm on 13th May 2010 Almorah had acquired a total of 39.22 per cent. 
of the CLNs under Option 1, in addition to those CLN Holders that had 
irrevocably committed to accept Option 2 of the CLN Offer. In total, Almorah 
owns or has received irrevocable commitments in respect of 71.56 per cent. of 
the CLNs. 
Opinion of the Independent Directors with respect to the Offers 
Keith Luxon, who is a director of Handmade, is part of the concert party to the 
Mandatory Offer and CLN Offer as he owns 363,000 Shares (through Kestin Limited) 
and is the investment adviser to the beneficial owner of MI Property Holdings 
Limited ("MI Property") and Satya Productions Limited ("Satya") and he also 
holds 4 per cent. of the issued share capital of Satya. Satya, MI Property and 
Keith Luxon (through Black Number 13 Limited ("BN13")) are acting in concert 
with Almorah in relation to the Mandatory Offer and CLN Offer. As a result of 
this conflict of interest, Keith Luxon does not take responsibility for the 
views of the Board of Handmade on the Offers. The views of the Board set out 
herein are those of the other directors of Handmade, namely Robert Benton, 
Antony Fraser, Simon Flamank, John Howkins and Nicholas Simunek (the 
"Independent Directors"). 
The Independent Directors have taken into account the financial position of 
Handmade in providing their opinion on the Mandatory Offer and CLN Offer. 
Almorah is currently supporting the working capital requirements of Handmade. It 
is the view of the Independent Directors that Handmade could go into 
administration if the financial support of Almorah was withdrawn. Despite a 
number of discussions that have been conducted by the Independent Directors, no 
other sources of finance have been secured by the Company and no competing offer 
for the Company has been forthcoming. 
In giving their opinion on the Mandatory Offer, the City Code on Takeovers and 
Mergers (the "City Code") requires the Independent Directors to give their views 
on certain matters including the effect of the Offers on the Company's 
interests, including specifically employment, and their views on Almorah's 
strategic plans for the Company and their likely repercussions on employment and 
the locations of the Company's places of business. 
In fulfilling these obligations under the City Code, the Independent Directors 
are required to comment on the details provided in the Offer Document. Of note 
in the Offer Document is that Almorah has given assurances that "the existing 
employment rights of the employees of Handmade will be fully maintained" and 
that the objective of Almorah is to "avoid the Company going into administration 
and accordingly Almorah intends to continue to support the Company's operations 
through its various subsidiary companies with the objective of remedying its 
financial position". 
Whilst detailed information on Almorah's plans has not been set out in the Offer 
Document, the opinion of the Independent Directors is being provided on the 
basis that assurances set out in the Offer Document are delivered upon by 
Almorah. 
Given the above, the Independent Directors, for the avoidance of doubt with the 
exception of Keith Luxon who has not been involved in the consideration of the 
Mandatory Offer, who have been so advised by IBIS Capital Limited ("IBIS 
Capital"), consider the terms of the Mandatory Offer to be fair and reasonable. 
In providing advice to the Independent Directors, IBIS Capital has relied upon 
the Independent Directors' commercial assessment of the transaction. 
The Independent Directors, for the avoidance of doubt with the exception of 
Keith Luxon who has not been involved in the consideration of the CLN Offer, who 
have been so advised by IBIS Capital, consider the CLN Offer to have been 
appropriately made and that the interests of the CLN Holders have been 
safeguarded in that they have received equality of treatment. 
The Directors are not in a position to recommend a course of action to the CLN 
Holders due to the lack of detailed information in the Offer Document in respect 
of the future intentions and prospects for the Company and consequently the lack 
of information on the implications of the options available to CLN Holders (as 
set out above). 
Recommended Course of Action 
The Independent Directors, for the avoidance of doubt with the exception of 
Keith Luxon who has not been involved in the consideration of the Offers, 
recommend Shareholders to accept the Mandatory Offer. The Independent Directors 
that own Shares will accept the Mandatory Offer. 
The Independent Directors are of the opinion that the CLN Holders should have 
regard to the matters that Almorah recommends that CLN Holders take into account 
when considering whether or not to accept the CLN Offer or which option to 
accept as set out in page 7 of the Offer Document, as well as the level of 
acceptances received for the CLN Offer to date and their own personal 
circumstances. 
Further enquiries: 
Handmade PLC 
Bob Benton, Chairman 
                                        020 7518 8230 
IBIS Capital 
David Brooks/Toby Ramsden 
                                   020 7070 7080 
Canaccord Genuity Limited 
Mark Williams/Andrew Chubb 
                                    020 7050 6500 
 
IBIS Capital Limited ("IBIS Capital") (which is regulated in the United Kingdom 
by the Financial Services Authority) is acting exclusively for Handmade as 
financial adviser and no one else (including the recipients of this 
announcement) in connection with the arrangements that are the subject matter of 
this announcement and will not be responsible to anyone other than Handmade for 
providing the protections afforded to customers of IBIS Capital or for advising 
any other person in connection with the arrangements that are the subject matter 
of this announcement. 
Canaccord Genuity Limited ("Canaccord") (which is regulated in the United 
Kingdom by the Financial Services Authority) is acting exclusively for Handmade 
as nominated adviser and broker and no one else (including the recipients of 
this announcement) in connection with the arrangements that are the subject 
matter of this announcement and will not be responsible to anyone other than 
Handmade for providing the protections afforded to customers of Canaccord or for 
advising any other person in connection with the arrangements that are the 
subject matter of this announcement. 
Neither IBIS Capital nor Canaccord makes any representation, express or implied, 
with respect to the accuracy or completeness of any information contained in 
this announcement and accept no responsibility for, nor does either firm 
authorise, the contents of, or the issue of this announcement, or any other 
statement made or purported to be made by Handmade, or on its behalf, in 
connection with Handmade or any of the other arrangements that are the subject 
matter of this announcement and, accordingly, each disclaims all and any 
liability whatsoever whether arising out of tort, contract or otherwise which 
they might otherwise have in respect of this announcement or any other 
statement. 
The release, publication or distribution of this announcement in jurisdictions 
other than the United Kingdom may be subject 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 laws of any such 
jurisdiction. The announcement has been prepared in accordance with English law 
and the Code and information disclosed may not be the same as that which would 
have been prepared in accordance with the laws of jurisdictions outside England. 
Disclosure requirements of the Code 
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any 
class of relevant securities of an offeree company or of any paper offeror 
(being any offeror other than an offeror in respect of which it has been 
announced that its offer is, or is likely to be, solely in cash) must make an 
Opening Position Disclosure following the commencement of the offer period and, 
if later, following the announcement in which any paper offeror is first 
identified. An Opening Position Disclosure must contain details of the person's 
interests and short positions in, and rights to subscribe for, any relevant 
securities of each of (i) the offeree company and (ii) any paper offeror(s). An 
Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made 
by no later than 3.30 pm (London time) on the 10th business day following the 
commencement of the offer period and, if appropriate, by no later than 3.30 pm 
(London time) on the 10th business day following the announcement in which any 
paper offeror is first identified. 
Relevant persons who deal in the relevant securities of the offeree company or 
of a paper offeror prior to the deadline for making an Opening Position 
Disclosure must instead make a Dealing Disclosure. Under Rule 8.3(b) of the 
Code, any person who is, or becomes, interested in 1% or more of any class of 
relevant securities of the offeree company or of any paper offeror must make a 
Dealing Disclosure if the person deals in any relevant securities of the offeree 
company or of any paper offeror. A Dealing Disclosure must contain details of 
the dealing concerned and of the person's interests and short positions in, and 
rights to subscribe for, any relevant securities of each of (i) the offeree 
company and (ii) any paper offeror, save to the extent that these details have 
previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom 
Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the 
business day following the date of the relevant dealing. 
If two or more persons act together pursuant to an agreement or understanding, 
whether formal or informal, to acquire or control an interest in relevant 
securities of an offeree company or a paper offeror, they will be deemed to be a 
single person for the purpose of Rule 8.3. 
Opening Position Disclosures must also be made by the offeree company and by any 
offeror and Dealing Disclosures must also be made by the offeree company, by any 
offeror and by any persons acting in concert with any of them (see Rules 8.1, 
8.2 and 8.4). Details of the offeree and offeror companies in respect of whose 
relevant securities Opening Position Disclosures and Dealing Disclosures must be 
made can be found in the Disclosure Table on the Takeover Panel's website at 
www.thetakeoverpanel.org.uk, including details of the number of relevant 
securities in issue, when the offer period commenced and when any offeror was 
first identified. If you are in any doubt as to whether you are required to make 
an Opening Position Disclosure or a Dealing Disclosure, you should contact the 
Panel's Market Surveillance Unit on +44 (0)20 7638 0129. 
Please note that any address, electronic address and certain other information 
provided for the receipt of communications from the offeree company may be 
provided to an offeror during the offer period as required under Section 4 of 
Appendix 4 of the Code. 
'Interests in securities' arise, in summary, when a person has long economic 
exposure, whether conditional or absolute, to changes in the price of 
securities. In particular, a person will be treated as having an 'interest' by 
virtue of the ownership or control of securities, or by virtue of any option in 
respect of, or derivative referenced to, securities. 
This information is provided by RNS 
The company news service from the London Stock Exchange 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 OUPLLFSEEDISLII 
 

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