TIDMPURP
RNS Number : 7212Z
Purplebricks Group PLC
17 May 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION.
This announcement contains inside information for the purposes
of article 7 of Regulation 596/2014 as amended and transposed into
UK law in accordance with the European Union (Withdrawal) Act 2018
("UK MAR").
17 May 2023
Purplebricks Group plc
("Purplebricks" or the "Company")
Proposed sale of business and assets to Strike Limited
("Strike")
Completion of Strategic Review, Termination of Formal Sale
Process
Proposed cancellation of admission to trading on AIM
Proposed re-registration as a private company and change of
name
Board Changes
and
Publication of Circular and Notice of General Meeting
Purplebricks Group plc (AIM: PURP) announces the completion of
its Strategic Review, termination of its Formal Sale Process and
entry into a conditional agreement to effect the transfer of
substantially all of its trading business and assets to Strike
(other than certain excluded assets) through its subsidiary Strike
Bidco Limited (the "Purchaser") for a consideration of GBP1 and the
assumption of substantially all of the Company's liabilities (other
than the excluded liabilities) by the Purchaser (the "Proposed
Sale"). The Proposed Sale results in the Company's cash balance on
Completion (up to a maximum of GBP5.5 million) being retained by
the Company with the intention that the net cash proceeds after the
deduction of certain costs and expenses to meet the excluded
liabilities (the "Net Cash Proceeds"*) are distributed to
Shareholders following and subject to completion of (i) the legal
formalities around the transfer of assets and (ii) a members'
voluntary liquidation.
The Proposed Sale is expected to deliver a small return to
Purplebricks shareholders and preserves the Company's business and
brand for the benefits of its consumer customers, employees,
funding partners and other stakeholders.
Summary
-- Completion of the Company's Strategic Review and termination
of Formal Sale Process, which concludes the offer period in respect
of the Company (as defined in the Takeover Code).
-- The Board of Purplebricks launched the Strategic Review on 17
February 2023 to consider the options available to the Company
considering both the value being offered to Shareholders, and the
ability to deliver certainty for the Group and its stakeholders in
a short timeframe . Following preliminary conversations around the
potential for an equity fund raise and having received several
credible expressions of interest in relation to the sale of the
Company or some or all of the Group's business and assets, the
Formal Sale Process was launched on 1 March 2023 to fully explore a
potential sale of the Group.
-- After a period of engagement with a significant number of
potential offerors and upon conclusion of several rounds of bidding
designed to identify the most credible potential offerors, among
other options, the Company received a proposal from Strike for the
acquisition of the Company's business and assets. The Board did not
consider the other potential offers provided either sufficient
certainty or would be deliverable in the timeframe needed to
resolve the Group's short term funding issues arising from the
agreement with its pay later financing provider being close to
expiry and the Company's cash balance declining.
-- However, the proposal from Strike offered the ability to
conclude a transaction in the short term that results in the
Company retaining a cash balance for distribution to shareholders (
as part of a distribution to shareholders after payment of certain
transaction costs and expenses and after completing the transfer of
assets that can only be passed to Strike post Completion (such as
contracts requiring counterparty consent)) whilst also protecting
the future of the Company's business, brand, existing customers in
the process of selling their houses and those employees to be
retained for the ongoing success of the business as well as
providing greater certainty for funding partners and other supplier
relationships.
-- The Proposed Sale will constitute a fundamental change of
business for the purposes of Rule 15 of the AIM Rules as the
Company will cease to own, control or conduct all of its existing
trading business, activities and assets. It is also potentially
deemed "frustrating" action under Rule 21.1 of the Takeover Code.
As such, the Proposed Sale is conditional upon the approval of the
Shareholders at the General Meeting. The Circular, setting out
further details on the Proposed Sale and containing a notice to
convene the General Meeting, is being sent to Shareholders later
today. The General Meeting will be held at 9 a.m. on 2 June
2023.
-- The Board has also concluded that, on the basis that the
Company would no longer have a trading business following
Completion, it is in the best interests of the Company and the
Shareholders to seek Shareholder approval to cancel the admission
of the Company's Ordinary Shares to trading on AIM. Following
cancellation of the Ordinary Shares on AIM, the Company proposes to
re-register as a private company, thereby changing its name to
Bricks Newco Limited and adopting the New Articles.
-- With effect from Completion of the Proposed Sale, Helena
Marston is resigning from her role as CEO. The rest of the
Company's Board (other than Dominique Highfield, the Company's CFO)
have indicated their intention to step down following the
cancellation of the Ordinary Shares to trading on AIM. All other
employees will transfer to Strike, however it is anticipated that
there will be reductions in headcount in the short term as part of
a wider cost reduction in the business, which are expected to
impact on the size of the field teams and certain central
functions.
-- The Directors, taking into account the comprehensive
exploration of sale options via the Formal Sale Process, the
current trading performance of the Company, the liquidity position
of the Company, the near term expiry of a key funding partner
relationship and the potential challenges in securing, in the short
term, the future ownership of the Group, have unanimously concluded
that it is in the best interests of the Company to proceed with
Proposed Sale.
-- Accordingly, the Directors intend to unanimously recommend
Shareholders to vote in favour of the Resolutions to be proposed at
the General Meeting as they have irrevocably undertaken to do in
respect of their own beneficial holdings and the shareholdings in
which they are interested amounting, in aggregate, to 19,402,865
Ordinary Shares, representing approximately 6.3% of the Company's
issued share capital.
-- The Company has also received an irrevocable undertaking to
vote in favour of the Resolutions at the General Meeting from AVIV
Group in respect of 81,384,638 Ordinary shares representing
approximately 26.5% of the Company's issued share capital.
-- In addition, the Company has also received a letter of intent
from JNE Master Fund LP in respect of 33,620,000 Ordinary Shares
representing approximately 11% of the Company's issued share
capital, confirming that it intends to vote in favour of the
Resolutions at the General Meeting.
-- Accordingly, the Company has therefore received irrevocable
undertakings and/or letters of intent in respect of a total
134,407,503 Ordinary Shares representing, in aggregate ,
approximately 43.8% of the Company's issued share capital on 16 May
2023 (being the last Business Day before the date of this
Announcement), further details of which are set out below.
Rule 21 of the Takeover Code
Prior to the Company terminating the Formal Sale Process by way
of this Announcement, all parties who had approached the Company
were notified of the rejection of their approach with regard to
making an offer for the Company and also of the termination of the
Formal Sale Process.
As at the date of this Announcement, no firm proposal has been
made to the Company by any potential offerors.
Rule 2.8 of the Takeover Code
Shareholders will be aware that on 10 May 2023, Strike released
an announcement confirming that it did not intend to make an offer
for the Company. This statement is subject to Rule 2.8 of the
Takeover Code and under Rule 2.8(f) of the Takeover Code, Strike
would be prohibited from purchasing, agreeing to purchase or make
any statement which raises or confirmed the possibility that it is
interested in purchasing assets which are significant in relation
to the Company for a period of six months from 10 May 2023. With
regard to reservation a) in the announcement made by Strike on 10
May 2023, the Board of the Company has agreed that this restriction
may be set aside for the purposes of Strike and the Purchaser
entering into the Asset Purchase Agreement.
Paul Pindar, Chairman of Purplebricks, commented:
"It is the unanimous opinion of the Board that the Proposed Sale
to Strike is in the best interests of stakeholders and Shareholders
should vote in favour of the Proposed Sale. This conclusion has
been informed by the Strategic Review in which all options,
including an equity fund raise, have been considered and an
extensive Formal Sale Process, which involved inbound and outbound
approaches from and to interested parties within and outside of the
industry. I am disappointed with the financial value outcome, both
as a 5% Shareholder myself and for Shareholders who have supported
the Company under my and the Board's stewardship. However, there
was no other proposal or offer which provided a better return for
shareholders, with the same certainty of funding and speed of
delivery necessary to provide the stability the Company needs.
On behalf of the entire Board I would like to thank Helena for
her leadership of the business through the most challenging of
times and wish her the very best for the future. She has
implemented a difficult but necessary change agenda over the last
12 months which has laid the foundations for a more secure
future."
Helena Marston, CEO of Purplebricks, commented:
"When I became CEO 12 months ago, my focus was a wholesale
raising of standards within the business and to chart a course
towards positive cash generation. This included delivering GBP21m
of cost savings, stabilising lettings, new revenue streams, raising
our prices and much improved financial transparency and control. We
have achieved many of these goals, but my view and that of the
Board in February was that we would be better placed to realise our
full potential under private ownership. However, the Strategic
Review and Formal Sale Process created increased uncertainty in the
business resulting in a need to draw this process to conclusion,
which has also been accentuated by the timing of expiry of our
relationship which lets us provide pay later solution.
Taking the actions we did has allowed us to secure a solvent
outcome, which protects the future of the business and the
Purplebricks consumer driven brand, alongside the benefits of
further investment. It has been a challenging and uncertain time
but the passion and commitment of our people has been tremendous
and I sincerely wish everyone the very best for the future."
Sir Charles Dunstone, Partner, Freston Ventures (Joint Major
Shareholder of Strike), commented:
"We remain committed to the online model, which offers customers
a much better experience at a far lower cost. This is a positive
outcome for anyone looking to sell their home and save money doing
so. Purplebricks has dramatically changed the industry by driving
down the cost of estate agency and we aim to combine its
significant brand recognition with an even more disruptive business
model.
In bringing together the two brands, we will supercharge
Strike's mission to democratise house selling by empowering
customers to have more control over a process that has barely
changed for 200 years.
At Freston Ventures we are focused on building household brands
that are trusted by consumers across the UK. We believe there is a
better way to sell your house and through this deal, we are
developing the market-leading brand to deliver it."
* Net Cash Proceeds available to be returned to Shareholders is
an estimate and will be dependent on a number of factors outlined
in the additional information section below
Enquiries
Purplebricks
Helena Marston (CEO) and Dominique Highfield Via M7 Communications
(CFO) Ltd
Zeus (Financial Adviser, Nominated Adviser
& Broker) + 44 (0) 20 3829 5000
Jamie Peel, James Hornigold (Investment
Banking)
Benjamin Robertson (Corporate Broking)
PricewaterhouseCoopers LLP (Financial
Adviser) +44 (0) 20 7583 5000
Jon Raggett
M7 Communications
Mark Reed +44 (0) 7903 089 543
mark@m7communications.co.uk
Strike +44(0)1273 013432
Via FieldHouse Associates strike@fieldhouseassociates.com
Teneo (Financial Adviser to Strike) + 44 (0) 20 7260 2700
Chris Nicholls, Craig Lukins
The person responsible for arranging for the release of this
announcement on behalf of the Company is Dominique Highfield, Chief
Financial Officer.
Additional information
Background to the Proposed Sale and reasons for
Recommendation
On 17 February 2023, the Company announced a trading update for
the financial year ending 30 April 2023 ("FY23") and the
commencement of its Strategic Review. The Company announced,
amongst other items, that the implementation of its turnaround plan
laid out at its half year results for HY23 (the "Turnaround Plan")
had taken place but involved more disruption to the sales field
than originally envisaged in order to achieve the required cost
savings and efficiency improvements. As a result of this
disruption, instruction numbers achieved in Q3 FY23 were lower than
the Board's expectations and as such, expectations for the full
year were revised.
In addition to the trading update, the Company also announced
the commencement of its Strategic Review, recognising that the
potential of the Group may be better realised under an alternative
ownership structure. Throughout the Strategic Review, consideration
of all options available to the Company was given, including the
potential for an equity fund raising and the sale of the Company or
some or all of the Group's business and assets, changing the
Group's payment processor for 'pay now' instructions and/or
changing the basis of the Company's customer offering or the
arrangements under which it offers pay later terms to its
customers.
Following the launch of the Strategic Review, the Group received
several credible expressions of interest that the Board wished to
pursue in a co-ordinated fashion, alongside having the ability to
engage with a wider range of potentially interested parties, in
relation to a potential acquisition of the Company or some or all
of the Group's business and assets. To facilitate this, on 1 March
2023, the Company announced an update to the Strategic Review and
the launch of the Formal Sale Process.
Following launch of the Formal Sale Process, the Company engaged
with a significant number of potential offerors, both via outbound
and inbound approaches. The Formal Sale Process involved several
rounds of bidding designed to identify the most credible potential
offerors, considering both the value being offered to Shareholders
and the ability to deliver certainty for the Group and its
stakeholders in a short timeframe, taking into account the
Company's cash and trading position and the upcoming expiry (and
prospect of renewal) of the arrangements under which the Company is
able to offer its 'pay later' terms (which account for c. 70% of
the Group's revenues).
On 9 May 2023, the Company released a trading update for FY23
and an update on the Strategic Review and Formal Sale Process. The
Company outlined that:
-- instruction levels for Q4 FY23 had not increased as
previously anticipated, which is expected to impact on revenue and
EBITDA for FY24;
-- in light of the Group's current financial position, the
Group's payment processor for 'pay now' instructions had exercised
its right to withhold a portion of remittances to the Group;
-- this withholding and reduction in anticipated instructions
had impacted the Company's cash position, which as at 30 April 2023
was estimated to have stood at c. GBP9.1 million;
-- the Board expected that the previously anticipated return to
cash generation in early FY24 is unlikely, given the trading
performance of the Group and whilst the Strategic Review and
resultant uncertainty around the future of the Group remain
ongoing;
-- the Company had secured a short term extension to the
contractual arrangements with the funding partner which enables the
Group to offer its pay later terms to its customers, with such
arrangements having been due to expire on 30 April 2023;
-- should the Group not be able to agree revised terms for the
financing to support its pay later offering, or should those terms
be disadvantageous to the Group or its customers, this would
accelerate the Group's utilisation of its remaining cash reserves.
Any further increased rate of withholding by the Group's payment
processor for pay now instructions would also accelerate the
Group's utilisation of its remaining cash reserves;
-- the Board believed it was necessary to conclude the Strategic
Review and the Formal Sale Process promptly and in a manner that
provided more certainty around the Group's future ownership, that
provided the business with access to additional funding and
resulted in a longer term extension to the finance for its pay
later offering; and
-- in the view of the Board, a conclusion to the process was
necessary in the interests of Shareholder value, and to create
greater stability and clarity for the future of the Company, its
employees, its funding partners and its customers.
The Directors have taken into account the comprehensive
exploration of options as part of the Strategic Review, the current
trading performance of the Company, the liquidity position of the
Company and the near term expiry of its key funding partner
relationships as well as the potential challenges in securing, in
the short term, the future ownership of the Group.
Reflecting the above, the Board has prioritised proposals that
would deliver short term certainty for the Group and its
stakeholders, including in particular its consumer customer base,
as well seeking to deliver an outcome that protected employee
rights, offered a future for a proportion of employees and offered
a favourable outcome for the Group's partners and suppliers. The
Board considers that the Proposed Sale is in line with these
objectives and as such, the Company has entered into the Asset
Purchase Agreement. It should be noted that the timeframe for
completion of an acquisition of all of the shares in the Company
could be a lengthy period, in particular because of a requirement
to obtain prior approval of the Financial Conduct Authority of the
change in control of the Company. The Proposed Sale will be
completed in a much shorter timeframe than a takeover of the
Company.
Furthermore, in addition to considering some of the factors and
objectives outlined above, as part of its assessment of the
Proposed Sale, the Board has considered with its advisers the
potential alternative implications of a failure to agree
satisfactory terms for an extension to its pay later financing
arrangements, the payment processor for pay now increasing its
withholding of remittances, the potential accelerated utilisation
of its cash reserves and wider uncertainties around its financial
and trading outlook. Were such circumstances to arise, absent other
financing solutions being identified or an alternative transaction
being consummated to secure the future ownership of the Group in
the short term, the prospect of the Company entering into
administration or some other form of insolvency procedure would
increase. In their assessment of such scenarios, the Board consider
that the prospects for recovery of any value by Shareholders would
be highly unlikely.
In terms of the anticipated future of the Company's business
under the arrangements for the Proposed Sale, the Directors have
considered the investment Strike intends to make in the Company's
business, the opportunity for the future success of the business
within Strike's group and the finance arrangements that the
Purchaser has secured for the continued offering of the Company's
pay later terms, which is a key part of the Group's consumer driven
proposition.
The Directors understand Strike is of the view that the Proposed
Sale ending the uncertainty around the Formal Sale Process and the
Company's future ownership should bring stability to the business
which may lead to increases revenue and the rate of new
instructions. Strike nonetheless considers there will be a need to
reduce costs in the business, with the extent of cost reductions
required itself a function of the performance of the business.
While there will be cost savings associated with the Company no
longer being admitted to trading on AIM, Strike has also indicated
such cost reductions will include reducing the employee base, which
will impact on the size of the field teams and certain central
functions. While this will require comprehensive planning, Strike
has indicated it would like to complete this planning and initiate
a redundancy consultation process, with the Company's assistance,
that would likely involve all of the Company's employees as soon as
practicable and possibly prior to Completion. Strike has however
assured the Board that its firm intention is to grow the business,
which will require continued employee support and that any
employees affected by redundancy will be treated fairly and
equitably, consistent with Strike's culture of respect. The
Directors would also note that all of the advanced talks held by
the Company with potential offerors have involved some proposals to
reduce or otherwise change the Company's workforce.
Taking into account all of the factors above, the Directors
believe that the Proposed Sale achieves the short term certainty
the business requires and offers the best chance of a secure
outcome for and respecting the rights of all of its stakeholders,
including in particular its consumer customer base. Accordingly,
the Directors intend to recommend that Shareholders vote in favour
of all Resolutions to be proposed at the General Meeting, as they
have irrevocably undertaken to do in respect of their own
shareholdings of, in aggregate, 19,402,865 shares representing 6.3%
of the total issued share capital.
The Board strongly hopes that Shareholders will understand its
views as set out above and will vote in favour of the Proposed Sale
and the Cancellation at the General Meeting. While further details
will be set out in the Circular, Shareholders should be aware that
if the Proposed Sale is not approved by Shareholders and does not
proceed, the continued uncertainty around the Group's future
ownership could have a significant impact on the Group's ability to
operate as it currently does, in particular with regard to its
continued ability to offer of its pay later terms and, in due
course, the Company may not be able to meet is respective financial
obligations as they fall due.
Details of the Proposed Sale
The Company has entered into the Asset Purchase Agreement on
terms and conditions which effect the transfer of substantially all
of the Purplebricks trading business and assets to the Purchaser
(other than certain excluded assets) for a consideration of GBP1
and the assumption of substantially all of the Company's
liabilities (other than the excluded liabilities) by the Purchaser.
The obligations of the Purchaser under the Asset Purchase Agreement
are guaranteed by Strike.
The principal terms of the Asset Purchase Agreement are as
follows:
-- The cash consideration under the Asset Purchase Agreement
payable by the Purchaser to the Company is GBP1 and the assumption
of substantially all of the Company's liabilities (other than
certain transaction costs and expenses) by the Purchaser. In
addition, it should be noted that the Company is entitled to retain
up to GBP5.5m in cash, depending on the cash position of the Group
at Completion.
-- The Proposed Sale is only conditional upon the Proposed Sale
Resolution and, namely, approval of the requisite majority of
Shareholders at the General Meeting.
-- The Purchaser has agreed to an assumption of liabilities
supported by broad indemnification provisions in favour of the
Company, should any liabilities (save for the excluded liabilities
for transaction costs and expenses) remain for the Company to
pay.
-- Pending Completion, the Company is obliged to operate its
business in the ordinary course as carried on prior to the date of
the Asset Purchase Agreement. There are also certain restrictions
on the Company with regard to the operation of its business
including, amongst other things, disposing of (or creating an
encumbrance over) any assets which are subject to the sale and
entering into, amending or terminating a material contract.
-- The Purchaser will be entitled to terminate the Asset
Purchase Agreement if at any time prior to Completion there has
been a material breach of the warranties or pre-completion
undertakings given by the Company or if there is an insolvency
event in relation to the Company.
It is anticipated that, following Completion, there will be a
transitional period ("Transitional Period") needed to move the
business and assets to the Purchaser. Following Completion and any
transfers of business and assets which transfer after Completion,
the Company intends to distribute the Net Cash Proceeds to
Shareholders. Further details on the intended distribution of the
Net Cash Proceeds are set out below and will be set out in the
Circular.
As the Proposed Sale will include a transfer of substantially
all of the trade and assets of the Group, the losses attributable
to the Proposed Sale are equal to the loss after tax presented in
the Group's Annual Report and Accounts for the financial year
ending 30 April 2022 of GBP42.0 million.
Information on Strike and the Purchaser
Strike is an online estate agent providing property sales,
mortgages, and conveyancing services to customers, and operates
throughout England.
The Purchaser is a wholly-owned subsidiary of Strike which has
been incorporated in order to carry out the Proposed Sale.
Rule 21 of the Takeover Code - frustrating action
As noted above, following the launch of the FSP the Company
received a number of proposals.
Prior to the Company terminating the Formal Sale Process by way
of this Announcement, all parties who had approached the Company
were notified of the rejection of their approach with regard to
making an offer for the Company and also of the termination of the
Formal Sale Process.
As at the date of this Announcement, no firm proposal has been
made to the Company by any potential offerors. If the Company
receives an approach from any interested party at any time prior to
the General Meeting confirming that they are interested in making a
potential offer for the Company, the Company will inform
shareholders without delay by way of RIS announcement. In the event
that such an announcement is made, any potential offeror, will be
subjected to a deadline in accordance with Rule 2.6(a) of the
Takeover Code such that by not later than 5.00pm (London time) on
the 28th day following the date of the announcement by the Company
in which such potential offeror is first identified, such potential
offeror must either announce a firm intention to make an offer for
the Company in accordance with Rule 2.7 of the Takeover Code or
announce that it does not intend to make an offer, in which case
the announcement will be treated as a statement to which Rule 2.8
of the Takeover Code applies. Any such deadline may be extended
with the consent of the Panel in accordance with Rule 2.6(c) of the
Takeover Code.
During the Formal Sale Process, however, the Directors did not
consider that indications of interest received provided either
sufficient certainty or deliverability in the timeframe needed to
resolve the Group's short term funding issues, in the context of
its key funding partner agreements being close to expiry and the
Company's cash balance declining, as outlined above. The Directors
will continue to apply such criteria in its assessment of any
further proposals that are received.
Based on the exploration of sale options conducted as part of
the Formal Sale Process, and that such process has been running
since 1 March 2023, the Directors currently consider that it is
unlikely that any proposals that may be under consideration by any
potential offerors would lead to a firm offer for the Company that
could be made in a timely manner or deliver more certainty to
Shareholders than, or value to Shareholders in excess of, the
Proposed Sale.
Given the impact of Completion of the Proposed Sale on the
ability of any potential offeror to make an offer for the Company
in its current state, the Proposed Sale is potentially deemed
"frustrating" action under the Takeover Code. Accordingly, it is a
requirement of Rule 21.1 of the Takeover Code that the Proposed
Sale is conditional upon the approval of Shareholders in General
Meeting. As noted above, the Circular incorporating the Notice of
General Meeting and with further details for the purposes of Rule
21 of the Takeover Code, is being sent to Shareholders later
today.
Return to Shareholders and use of Net Cash Proceeds
As noted above, the Directors intend that the Net Cash Proceeds
will be distributed to Shareholders. It is anticipated that any
distribution will be conducted through a members' voluntary
liquidation of the Company following the Transitional Period.
Timing of return to Shareholders
The Directors intend that the Net Cash Proceeds will be returned
to Shareholders as soon as reasonably practicable. However, prior
to such return being implemented, (i) certain legal formalities
will need to be completed during the Transitional Period and (ii)
the members' voluntary liquidation will need to be carried out to
effect the return to Shareholders. While the timing of the return
of the Net Cash Proceeds will depend on completion of these
matters, the current expectation is that such return will not be
capable of being effected before Q1 2024 at the earliest. The
timing of the return to Shareholders will depend on a number of
factors such as (i) the complexity of the business transfer; (ii)
the resolution of liabilities which cannot effectively be
transferred to the Purchaser without the cooperation of third
parties, in particular where the Company remains a named party to
Court proceedings; (iii) the resolution of any new matters which
may be brought to the appointed liquidators' attention following
commencement of the liquidation; (iv) the timing of submission of
the Company's pre-liquidation corporation tax returns and other
indirect tax returns; and (v) timely receipt of tax clearance to
close the liquidation from HM Revenue & Customs.
Amount of return to Shareholders and factors impacting such
return
Under the terms of the Asset Purchase Agreement, as noted above,
substantially all of the Company's assets and liabilities will be
transferred to and assumed by the Purchaser, other than certain
excluded assets and the excluded liabilities.
In particular, the cash in hand and at bank at Completion of up
to GBP5.5 million is excluded from the terms of Proposed Sale and
will be retained by the Company. The exact amount of cash retained
will depend on trading in the period prior to the Proposed Sale and
the cash retained will be used to pay existing excluded liabilities
on or shortly after Completion and subsequently satisfy the
excluded liabilities as they arise following the Proposed Sale with
the excess (i.e. the Net Cash Proceeds) being returned to
Shareholders.
It is currently anticipated that the Net Cash Proceeds will be
approximately GBP2 million. The exact amount however of the Net
Cash Proceeds available to be returned to Shareholders in a
members' voluntary liquidation will be dependent on a number of
factors, including:
-- the amount of cash in hand and at bank at Completion which
depends, amongst other things, on trading performance in the period
up to Completion and whether such trading performance could be
negatively impacted, including as a result of any disruption in the
Company resulting from this Announcement;
-- in respect of the Asset Purchase Agreement, the ability to
recover from the Purchaser under the assumption of liabilities and
indemnification provision; and
-- the timing of the members' voluntary liquidation and the
process to its completion, including whether any presently unknown
creditors seek to make claims, which may draw out the time and cost
of the process even if any amounts claimed are recovered from the
Purchaser under the Asset Purchase Agreement.
Accordingly, as a result of these factors, the amount of the Net
Cash Proceeds to be returned to Shareholders could be more or less
than is currently anticipated and, in the event that the gross
amount of cash retained at Completion is less than GBP5.5m or
unanticipated liabilities arise which cannot be recovered, it is
possible that Shareholders would not receive the amount anticipated
or any return at all.
While there may be uncertainty as to the exact amount of the Net
Cash Proceeds, as noted above the Directors have unanimously
concluded that the Proposed Sale is in the best interest of the
Company, its Shareholders and other stakeholders.
Irrevocable Undertakings
The Directors who hold Ordinary Shares have irrevocably
undertaken to vote (or, in respect of Ordinary Shares where their
interest is solely beneficial, procure the exercise of all such
voting rights) in favour of the Resolutions in respect of a total
19,402,865 shares representing approximately 6.3% of Purplebricks'
issued share capital on 16 May 2023 (being the last Business Day
before the date of this Announcement).
In addition, the Company has received an irrevocable undertaking
to vote in favour of the Resolutions from AVIV Group in respect of
a total 81,384,638 Ordinary Shares representing approximately 26.5%
of Purplebricks' issued share capital on 16 May 2023 (being the
last Business Day before the date of this Announcement).
Furthermore, the Company has received a letter of intent to vote
in favour of the Resolutions from JNE Master Fund LP in respect of
a total 33,620,000 Ordinary Shares representing approximately 11%
of Purplebricks' issued share capital on 16 May 2023 (being the
last Business Day before the date of this Announcement).
The Company has therefore received irrevocable undertakings
and/or letters of intent in respect of a total 134,407,503 Ordinary
Shares representing approximately 43.8% of Purplebricks' issued
share capital on 16 May 2023 (being the last Business Day before
the date of this Announcement). The Directors and AVIV Group have
also irrevocably undertaken on similar terms to the Purchaser's
holding Company, Strike, as has JNE Master Fund LP with regard to
its letter of intent.
The irrevocable undertakings shall cease to be binding if the
General Meeting has not taken place by 2 June 2023.
The Cancellation
The Directors have concluded that, as the Company would no
longer be a trading business on Completion, it is in the best
interests of the Company and its Shareholders to seek Shareholders'
approval to cancel the admission of the Company's Ordinary Shares
to trading on AIM. In accordance with Rule 41 of the AIM Rules, the
Company has notified the London Stock Exchange of the proposed
Cancellation.
Assuming the passing of the Cancellation Resolution, which will
be conditional upon the passing of the Proposed Sale Resolution and
Completion, it is expected that the Cancellation will take place on
16 June 2023.
Pursuant to Rule 41 of the AIM Rules, the Cancellation
Resolution requires the approval of not less than 75% of the votes
cast by Shareholders (whether present in person or by proxy) at the
General Meeting.
The Directors have considered the benefits and disadvantages to
the Company and Shareholders in retaining its admission to trading
on AIM. The Directors believe that the Cancellation is in the best
interests of the Company and Shareholders as a whole. Following the
Proposed Sale, the Company will have no trading business and
limited cash resources which the Company intends to distribute to
Shareholders through a members' voluntary liquidation. Furthermore,
given the time it takes to conclude a members' voluntary
liquidation and the significant expense the Company would incur as
a quoted company through that time, a members' voluntary
liquidation would be adversely affected if the Company remained as
a public company and its shares admitted to trading on AIM. The
Cancellation would preserve cash in the Company and assist in
maximising any distribution made through a members' voluntary
liquidation.
The principal effects of the Cancellation will be that:
-- the liquidity and marketability of Ordinary Shares is likely
to be reduced as there will be no public market in the Ordinary
Shares and no price for Ordinary Shares will be quoted by any
market maker. As such, while the Ordinary Shares will continue to
be freely transferable, interests in Ordinary Shares are unlikely
to be readily capable of sale and, even where a buyer is
identified, it may be difficult to place a fair or market value on
any such sale;
-- the Company would no longer be required to comply with the
ongoing obligations set out in the AIM Rules (or to have a
nominated adviser and broker), including the requirements to
disclose material events, such as interim or final results,
substantial transactions or other developments to the market, and
Purplebricks Shareholders would no longer have the ability to vote
on certain matters prescribed by the AIM Rules, thereby removing
the layer of protection in respect of the interests of Purplebricks
Shareholders afforded by the AIM Rules;
-- in order to increase the cost saving by becoming a private
company, following the Cancellation, the Company will no longer be
obligated to produce and publish half-yearly reports and related
financial statements or hold an annual general meeting;
-- whilst the Company's CREST facility will remain in place
following the Cancellation, the Company's CREST facility may be
cancelled in the future and, in that event, although the Ordinary
Shares will remain transferable, they will cease to be transferable
through CREST. In this instance, Shareholders who hold Ordinary
Shares in CREST will receive share certificates; and
-- the Cancellation may have taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax
position should consult their own professional independent tax
adviser.
Shareholders should be aware that if the Cancellation takes
effect, they will at that time cease to hold shares in a quoted
company and will become Shareholders in an unquoted company which
will be likely to reduce the liquidity of the Ordinary Shares and
the principal effects referred to above will automatically apply to
the Company from the date of the Cancellation. Upon the
Cancellation becoming effective the Board do not propose to
implement a matched bargain facility.
The above considerations are not exhaustive and Shareholders
should seek their own independent advice when assessing the likely
impact of the Cancellation on them.
Implications of a failure to approve the Cancellation
The Directors strongly believe that for the reasons referred to
above the Company should seek the Cancellation and subsequently a
solvent wind-up. In the event that the Proposed Sale is completed
but the Cancellation is not approved and does not occur, as an AIM
Rule 15 cash shell, if the Company does not make an acquisition or
acquisitions constituting a reverse takeover under the AIM Rules
within six months of becoming an AIM Rule 15 cash shell, then the
Ordinary Shares would be suspended from trading on AIM.
Board changes
Helena Marston will resign as Chief Executive Officer with
effect from Completion.
Dominique Highfield, the Group's current Chief Financial
Officer, will continue to act as a director of the Company during
the Transitional Period in order to oversee the arrangements under
the Asset Purchase Agreement and discharge any obligations of the
Company to the Purchaser during this time.
To assist Dominique in this process, ensuring that an
independent director remains on the board to safeguard the
interests of the Company's shareholders up to and in the
appointment of the liquidators and recognising the expertise
required in this area, the Non-Executive Directors are proposing to
appoint a new director with experience in business transfers and
company dissolutions. The Non-Executive Directors will seek to
identify an appropriate candidate in the period prior to the
Cancellation occurring.
Ensuring the Transitional Arrangements are concluded in the
manner described above will require significant time commitments
and specific expertise. As the Non-Executive Directors were
appointed to the Board as a result of their industry expertise and
PLC experience and in light of the different Board requirements
moving forward, they will therefore be resigning from the Board
with effect from Cancellation.
Further details of and background to the board changes that will
occur as part of the Proposed Sale will be set out in the
Circular.
Change of name
The proposed change of name to Bricks Newco PLC is to reflect
the transfer of the trade, assets and "Purplebricks" brand name to
Strike and is an obligation under the Asset Purchase Agreement.
Re-registration as a private company
Given that the Company's Shares will no longer be admitted to
trading on AIM or any other public market following the
Cancellation and to facilitate the return of the Net Cash Proceeds
to Shareholders, the Directors consider that converting the Company
to a private company is more appropriate than retaining the
Company's status as a public company.
Further details of the proposed re-registration will be set out
in the Circular.
About Purplebricks
Purplebricks is a leading technology-led estate agency business,
based in the UK. Purplebricks combines highly experienced and
professional Local Property Partners and innovative technology to
help make the process of selling, buying or letting more
convenient, transparent and cost effective. Purplebricks shares are
traded on the London Stock Exchange AIM market.
Important information
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise.
This announcement (including any information incorporated by
reference in this announcement) contains statements about the
Company that are or may be deemed to be forward looking statements.
Without limitation, any statements preceded or followed by or that
include the words "targets", "plans", "believes", "expects",
"aims", "intends", "will", "may", "anticipates", "estimates",
"projects" or words or terms of similar substance or the negative
thereof, may be forward looking statements.
These forward-looking statements are not guarantees of future
performance. Such forward-looking statements involve known and
unknown risks and uncertainties that could significantly affect
expected results and are based on certain key assumptions. Many
factors could cause actual results to differ materially from those
projected or implied in any forward-looking statements. Due to such
uncertainties and risks, readers should not rely on such
forward-looking statements, which speak only as of the date of this
announcement. The Company disclaims any obligation or
responsibility to update publicly or review any forward-looking or
other statements contained in this announcement, except as required
by applicable law.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be 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 law of any such jurisdictions.
Notice related to financial advisers
Zeus Capital Limited, which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom, is acting
exclusively for Purplebricks and for no one else in connection with
the subject matter of this announcement and will not be responsible
to anyone other than Purplebricks for providing the protections
afforded to its clients or for providing advice in connection with
the subject matter of this announcement.
PricewaterhouseCoopers LLP is authorised and regulated in the
United Kingdom by the Financial Conduct Authority and is acting
exclusively for the Purplebricks and for no one else in connection
with the subject matter of this announcement and will not be
responsible to anyone other than Purplebricks for providing the
protections afforded to its clients nor for providing advice in
relation to the subject matter of this announcement.
Teneo is acting exclusively for Strike in connection with the
Proposed Sale and will not be responsible to anyone other than
Strike for providing the protections offered to clients of Teneo or
for providing advice in relation to the Proposed Sale, the contents
of this announcement or any matters referred to in this
announcement. Teneo is authorised and regulated in the United
Kingdom by the Institute of Chartered Accountants in England and
Wales for a range of investment business activities. Teneo is
registered in England and Wales with Company Number 13192958 and
its registered office is 6 More London Place, London SE1 2DA.
Definitions
The following definitions apply throughout this document unless
the context otherwise requires:
Act the Companies Act 2006
AIM the market of that name operated by the London
Stock Exchange
AIM Rules the AIM Rules for Companies as published
by the London Stock Exchange from time to
time
Articles the articles of association of the Company,
as in force from time to time
Asset Purchase the agreement between the Company, Strike
Agreement and the Purchaser for the transfer of substantially
all of the assets and liabilities of the
Company to effect the Proposed Sale
AVIV Group AVIV Group GmbH, a subsidiary of Axel Springer
S.E.
Cancellation the cancellation of admission to trading
of the Ordinary Shares on AIM in accordance
with Rule 41 of the AIM Rules, subject to
passing of the Cancellation Resolution
Cancellation Resolution the resolution to approve the Cancellation
as set out in the Notice of General Meeting
Change of Status the resolution to change the name of the
Resolution Company, re-register as a private company
and the adoption of the New Articles as set
out in the Notice of General Meeting
Circular the circular to be sent to Shareholders with
further background on the Proposed Sale and
incorporating Notice of the General Meeting
Completion completion of the Proposed Sale in accordance
with the Asset Purchase Agreement
Company or Purplebricks Purplebricks Group plc
Directors or Board the directors of the Company as at the date
of this Circular
excluded liabilities outstanding and future liabilities which
are excluded from the liabilities the Purchaser
is assuming under the Asset Purchaser Agreement
being (in summary):
(i) certain outstanding costs and expenses
(including professional fees) incurred or
to be incurred by the Group in connection
with the Strategic Review, the Formal Sale
Process, the Proposed Sale (other than in
respect of costs for which the Company is
indemnified by the Purchaser), the proposed
return of proceeds to Shareholders and voluntary
liquidation and other non-ordinary course
corporate matters which were scheduled for
payment on Completion of the Proposed Sale
or are incurred after Completion; and
(ii) liabilities owed to the Directors (other
than Dominique Highfield), including as a
result of them ceasing to be employed or
engaged by the Company, and the costs associated
with providing directors' and officers' liability
insurance for the Directors.
Existing Ordinary the 306,806,039 Ordinary Shares in issue
Shares as at the date of this document
FSP or Formal the formal sale process launched by the Company
Sale Process on 1 March 2023
General Meeting the General Meeting of the Company to be
held at 9 a.m. on 2 June 2023
Group the Company, its subsidiaries and its subsidiary
undertakings
London Stock Exchange London Stock Exchange plc
Net Cash Proceeds the net cash proceeds available to be distributed
to Shareholders following Completion and
the deduction of certain costs and expenses
to meet the excluded liabilities
New Articles the new articles of association to be adopted
at the General Meeting
Ordinary Shares ordinary shares of 1 pence each in the capital
of the Company
Proposed Sale the proposed transfer of substantially all
of the Purplebricks trading business and
assets (other than the excluded assets and
liabilities) for a consideration of GBP1
and the assumption of substantially all of
the Company's liabilities
Proposed Sale the resolution set out in the Notice of General
Resolution Meeting to approve the Proposed Sale for
the purposes of rule 15 of the AIM Rules
and Rule 21 of the Takeover Code
Purchaser Strike Bidco Limited
PwC PricewaterhouseCoopers LLP
Regulatory Information has the meaning given to it in the AIM Rules
Service
Resolutions the Proposed Sale Resolution, the Cancellation
Resolution and the Change of Status Resolutions
set out in the Notice of General Meeting
Shareholders holders of Ordinary Shares
Strategic Review the strategic review launched by the Company
on 17 February 2023
Takeover Code the City Code on Takeovers and Mergers, as
issued from time to time by or on behalf
of the Takeover Panel
Takeover Panel the Panel on Takeovers and Mergers
Teneo Teneo Financial Advisory Limited
Zeus Zeus Capital Limited
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END
UPDGPUUAAUPWUMM
(END) Dow Jones Newswires
May 17, 2023 03:53 ET (07:53 GMT)
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