TIDMSTBR
RNS Number : 1584R
Southern Bear PLC
17 August 2010
17 August 2010
Southern Bear Plc
("Southern Bear" or the "Group")
GBP3.6 million Equity Fundraising
Southern Bear,the AIM quoted support services and fire prevention specialists,
today announces that conditional to Shareholder approval, the Group will be
raising GBP3.6 million by way of a Placing, Subscription and Open Offer of
90,000,000 New Ordinary Shares of 1p each at a price of 4p per share. The Group
has agreed to:
- Issue 15,875,000 New Ordinary Shares (firm) to the Subscribers under the
terms of the Subscription;
- Issue 53,150,259 Placing Shares which, to the extent not taken up by
Placees, will be subscribed for by Mr Wray;
- Make an Open Offer to Qualifying Shareholders to subscribe for up to
20,974,741 New Ordinary Shares, on the basis of 1 Offer Share for every 40
Existing Ordinary Shares, at the Offer Price, payable in full on acceptance. To
the extent not taken up by Qualifying Shareholders, the Offer Shares will be
subscribed for by Mr Wray;
- Issue the Deferred Consideration Shares;
- Undertake the Share Capital Reorganisation;
- Seek approval from Independent Shareholders for a waiver (being the
Waiver) granted by the Panel of the obligations under Rule 9 of the Takeover
Code which would otherwise apply to Mr Wray as a result of him acquiring New
Ordinary Shares pursuant to the Subscription and/or participation in the Open
Offer and upon the conversion of Loan Notes held by him; and
- Change the name of the Company to Environ Group (Investments) Plc.
The Proposals are conditional on the passing of the Resolutions by Shareholders
at the Annual General Meeting which is to be held at the offices of Memery
Crystal LLP, 44 Southampton Buildings, London WC2A 1AP on 9 September 2010 at
11.00 a.m., notice of which is set out at the end of the circular which has
today been posted to Shareholders and is also available from the Group's website
www.southernbeargroup.com. The full text of Part I of the document, together
with the placing, subscription and offer statistics and the timetable is
re-produced below.
Commenting on the Proposals, Mark Sims, Chief Executive of Southern Bear said:
"In order to repay the loan recently issued by the Group Chairman, Nigel Wray,
and to provide sufficient working capital for the business, we have launched a
deeply discounted issue to raise GBP3.6 million. The amount is being fully
subscribed for and underwritten by myself and other Group Director's, however we
are pleased to be able to give our Shareholders the opportunity to participate
in this fundraising as well."
"The Board of Directors is extremely optimistic about the future prospects for
the Group and remains focused on securing additional market share in the Support
Services sector and demonstrating Shareholder value as we move forward."
For further information, please contact:
Southern Bear plc
Steven Hancock - Executive Director
Tel: +44 (0) 01782 826939
Nominated Adviser:
Grant Thornton Corporate Finance
Gerry Beaney/Fiona Kindness/Adam Suggett
Tel: +44 (0) 20 7383 5100
Financial PR:
Bishopsgate Communications
Gemma O'Hara/Siobhra Murphy
Tel: +44 (0)20 7562 3358
PLACING, SUBSCRIPTION AND OPEN OFFER STATISTICS
Offer Price
4p
Number of Existing Ordinary Shares in issue on the Record Date
838,989,625
Number of New Ordinary Shares in issue immediately following
the Share Capital Reorganisation (but immediately before the issue
and allotment of the Deferred Consideration Shares, Subscription Shares,
Placing Shares and the Offer Shares)
20,974,741
Basis of the Open Offer
1 Offer Share for every
40 Existing Ordinary Shares
Number of New Ordinary Shares to be issued pursuant to the Placing,
Subscription and Open Offer
90,000,000
Number of Deferred Consideration Shares
26,156,302
Percentage of the Enlarged Share Capital represented by the
Placing Shares, Subscription Shares and the Offer Shares
65.6 per cent.
Gross proceeds of the Placing, Subscription and Open Offer
GBP3,600,000
Estimated net proceeds of the Placing, Subscription and Open Offer
GBP3,466,000
Market capitalisation of the Company at the Offer Price,
immediately following Admission
GBP5.5 million
AIM symbol of Existing Ordinary shares
STBR
AIM symbol following change of name
EVN
ISIN
GB00B50K2P36
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2010
Record Date for the Open Offer
close of business on Friday 13 August
Announcement of the Proposals and publication of
this document and the Application Form
Tuesday 17 August
Ex-entitlement date of the Open Offer
Tuesday 17 August
Open Offer Entitlements and Excess CREST Open Offer
Entitlements credited to stock accounts of Qualifying
CREST Shareholders
Wednesday 18
August
Recommended latest time and date for requesting
withdrawal of Open Offer Entitlements from CREST 4.30 p.m.
on Wednesday 1 September
Latest time and date for depositing Open Offer Entitlements into CREST
3.00 p.m.
on Thursday 2 September
Latest time and date for splitting Application Forms
(to satisfy bona fide market claims only)
3.00 p.m. on Friday 3 September
Latest time and date for acceptance of the Open Offer and
receipt of completed non-CREST Application Forms and
payment in full under the Open Offer or settlement of
relevant CREST instruction (if appropriate)
11.00 a.m. on Tuesday 7 September
Latest time and date for receipt of completed Forms of Proxy
to be valid at the Annual General Meeting
11.00 a.m. on Tuesday 7 September
Annual General Meeting
11.00 a.m. on Thursday 9 September
Record date for the Share Capital Reorganisation
Thursday 9 September
Admission and commencement of dealings in the
New Ordinary Shares on AIM
8.00 a.m. on Friday 10 September
New Ordinary Shares credited to CREST members' accounts
Friday 10 September
Despatch of definitive share certificates for
New Ordinary Shares in certificated form
by 24 September
PART 1
LETTER FROM THE SENIOR INDEPENDENT DIRECTOR OF
SOUTHERN BEAR PLC
(Incorporated in England and Wales with registered number 05341974)
Directors:
Registered Office:
Nigel Wray (Non-executive Chairman)
5 Furlong Parade
Mark Sims (Chief Executive Officer)
Burslem
Steven Hancock (Executive Director)
Stoke-on-Trent
Paul Richardson (Non-Executive Director)
Staffordshire
Janet Domin (Non-Executive Director)
ST6 3AX
Michael Clough (Finance Director)
Christopher Arnott (Non-Executive Director)
Neil Chapman (Non-Executive Director)
16 August 2010
To Qualifying Shareholders and, for information only, to holders of Warrants
Dear Investor,
Placing, Subscription and Open Offer of 90,000,000
New Ordinary Shares of 1p
each at 4p per share
Share Capital Reorganisation
Approval for waiver of
obligations under Rule 9 of the City Code on Takeovers and Mergers
Change of
Name
Issue of Deferred Consideration Shares
and
Notice of Annual General
Meeting
1. Introduction
The is pleased to announce that conditional on Shareholder approval it has
agreed to:
· issue 15,875,000 New Ordinary Shares (firm) to the Subscribers under
the terms of the Subscription;
· issue 53,150,259 Placing Shares which, to the extent not taken up by
Placees, will be subscribed for by Mr Wray;
· make an Open Offer to Qualifying Shareholders to subscribe for up to
20,974,741 New Ordinary Shares, on the basis of 1 Offer Share for every 40
Existing Ordinary Shares, at the Offer Price, payable in full on acceptance. To
the extent not taken up by Qualifying Shareholders, the Offer Shares will be
subscribed for by Mr Wray;
· issue the Deferred Consideration Shares;
· undertake the Share Capital Reorganisation;
· seek approval from Independent Shareholders for a waiver (being the
Waiver) granted by the Panel of the obligations under Rule 9 of the Takeover
Code which would otherwise apply to Mr Wray as a result of him acquiring New
Ordinary Shares pursuant to the Subscription and/or participation in the Open
Offer and upon the conversion of Loan Notes held by him; and
· change the name of the Company to Environ Group (Investments) Plc.
The Proposals are conditional on the passing of the Resolutions by Shareholders
at the Annual General Meeting, notice of which is set out at the end of this
document.
The purpose of this document is to provide you with information about the
background to and the reasons for the Proposals and to explain why the Board
considers the Proposals to be in the best interests of the Company and its
Shareholders as a whole.
In addition, this document sets out why the Independent Directors recommend that
you vote in favour of the Resolutions to be proposed at the Annual General
Meeting, notice of which is set out at the end of this document.
Shareholders should note that the Proposals (other than the Share Capital
Reorganisation and change of name) are inter-conditional. It is expected that
Completion will take place and Admission and trading on AIM of the Placing
Shares, Subscription Shares, Offer Shares and Deferred Consideration Shares will
commence on 10 September 2010.
2. Background to and reasons for the Proposals
Placing, Subscription and Open Offer
It was announced on 15 June 2010 that Mr Wray had provided the Company with a
short-term loan of GBP2,144,445.10 million. This was used by the Company to
repay the previous term loan with Clydesdale Bank Plc in full and so release the
bank's security over the Group such that the Subsidiaries are now free to make
alternative banking arrangements on more advantageous terms. It is now proposed
that part of the net proceeds of the Placing, Subscription and Open Offer are
used by the Company to repay in full the Wray Loan, to leave the Group
substantially debt free and in a stronger financial position moving forward.
The Company is now seeking to raise GBP3.6 million (before expenses of
approximately GBP134,000) from the Placing, Subscription and Open Offer; the net
proceeds of which will be used to repay the Wray Loan, pay costs and expenses of
the Company in connection with the Proposals and provide additional working
capital to the Group.
Although the aggregate gross proceeds of the Placing, Subscription and Open
Offer will be GBP3.6 million, the Open Offer itself is limited to GBP838,990 and
the Open Offer is not therefore a fully pre-emptive fundraising. However, in
order to give as many Shareholders as possible the opportunity to participate in
this fundraising and to limit the dilutive impact of the Placing and
Subscription, the Board has agreed to make the Open Offer to all Qualifying
Shareholders and enable them to apply for more than their pro rata share by way
of the Excess Application Facility.
In addition, in order to maximise the number of New Ordinary Shares available to
Shareholders, Mr Wray, Mr Sims and Mr Hancock who are each Directors and
Shareholders have undertaken not to take up their respective Open Offer
Entitlements. Messrs Sims and Hancock will be participating in the Subscription
and Mr Wray is underwriting the Placing and Open Offer in full by agreeing to
subscribe for any New Ordinary Shares not taken up under either the Placing or
the Open Offer.
Shareholders should note that their interest in the Company will be diluted even
if they take up their Open Offer Entitlement in full.
Share Capital Reorganisation
As at 13 August 2010, being the latest practicable date prior to the despatch of
this document, the Existing Ordinary Shares were trading at a mid-market price
of 0.65p, whilst the nominal value of the Existing Ordinary Shares is 0.5p. The
Company believes it would be impossible to generate sufficient interest in the
Placing, Subscription and Open Offer if it was priced at or near the current
mid-market price. Any appropriate discount to this mid price would mean that the
Placing, Subscription and Open Offer would have to be carried out at a price
below nominal value. Company law prohibits the issue of shares at a price less
than their nominal value, and so, in order to effect the Placing, Subscription
and Open Offer, the Share Capital Reorganisation is proposed whereby every 40
Existing Ordinary Shares are consolidated into one intermediate ordinary share
of 20p and that each such intermediate ordinary share is then subdivided into
one New Ordinary Share of 1p each and one New Deferred Share of 19p each, as is
described in more detail in paragraph 5 of this Part 1 below. The rights
attaching to the New Ordinary Shares following the Share Capital
Reorganisation, including voting and dividend rights, will be the same as those
attaching to the Existing Ordinary Shares.
The New Deferred Shares will have minimal rights which will be similar to the
Existing Deferred Shares and, as such, will have negligible commercial value. No
application will be made for the New Deferred Shares to be admitted to trading
on AIM or an other stock exchange. No share certificates will be issued for any
of the New Deferred Shares. There are no immediate plans to purchase or cancel
the New Deferred Shares.
No Shareholder will be entitled to a fraction of a share arising as a result of
the Share Capital Reorganisation and where, as a result of the Share Capital
Reorganisation, any Shareholder would otherwise be entitled to a fraction only
of a share in respect of their holding of Existing Ordinary Shares on 9
September 2010 (a "Fractional Shareholder") such fractions shall be aggregated
with the fractions of shares to which other Fractional Shareholders of the
Company may be entitled and shall be sold for the benefit of the Company. Any
Shareholder not holding a number of Existing Ordinary Shares which is exactly
divisible by 40 on 9 September 2010 will be entitled to receive part of the
proceeds of the sale in respect of his fractional entitlement, provided that the
proceeds of fractional entitlement to which the Fractional Shareholder is
entitled is equal to or exceeds GBP1.00. In such circumstances, the Company will
send a cheque to each Shareholder entitled to such proceeds to their address as
set out on the register of members of the Company on the 9 September 2010.
Waiver
Mr Wray has agreed, pursuant to the terms of his Subscription Letter, to
subscribe for all of the Offer Shares, subject to clawback to satisfy valid
applications from Qualifying Shareholders under the Open Offer. In addition, Mr
Wray has agreed to subscribe for any Placing Shares not taken up by other
parties.
Accordingly, in the event that no other Qualifying Shareholders were to take up
their entitlements to subscribe for Offer Shares under the Open Offer, and no
Placees participated in the Placing, an aggregate of 74,125,000 New Ordinary
Shares would be issued and allotted to Mr Wray under the Placing, Subscription
and the Open Offer, resulting in Mr Wray's aggregate shareholding being equal to
56.3 per cent. of the Enlarged Share Capital immediately following the Placing,
Subscription and Open Offer (before taking account of certain Loan Notes held by
Mr Wray which, if converted would increase his aggregate shareholding to 57.3
per cent. of the Enlarged Share Capital assuming that only the Loan Notes held
by Mr Wray were converted and that no other Loan Note holders converted their
respective Loan Notes).
Pursuant to the Whitewash Resolution, Independent Shareholders will be asked at
the Annual General Meeting to waive the obligation on Mr Wray which may
otherwise arise under Rule 9 of the Takeover Code as a result of his
subscription for New Ordinary Shares under the Placing, Subscription and the
Open Offer and upon the conversion of Loan Notes held by him, and which would
otherwise require Mr Wray to make a general offer to all remaining shareholders
to acquire their shares.
Issue of the Deferred Consideration Shares
It is proposed that GBP300,000 of deferred consideration due to the vendors of
IPCL, GBP300,000 of a working capital loan due to the vendors of Fenhams and
GBP400,000 in respect of a payment due to the vendors of BGC are each satisfied
by the issue of 25,000,000 New Ordinary Shares credited as fully paid at the
Offer Price. In addition, a further 1,156,302 New Ordinary Shares are to be
issued to the vendors of IPCL in respect of the further share consideration due
after the preparation of completion accounts.
Because each of the vendors of BGC, Fenhams and IPCL are directors of the
Company and/or one or more of the Subsidiaries they are each related parties for
the purposes of the AIM Rules. These transactions are discussed in more detail
in paragraph 4 of this Part 1 below. Your Board, with the exception of those
Directors with an interest in their respective transactions, believes that
satisfying these liabilities in shares rather than cash will strengthen the
Company's balance sheet and allow the Company to move forward on a much stronger
financial footing.
Each of the former vendors of BGC, Fenhams and IPCL have undertaken to the
Company not to dispose of their respective holdings of Deferred Consideration
Shares until the first anniversary of Admission other than with the prior
consent of the Company.
Change of name
It is proposed that the Company's name be changed to Environ Group (Investments)
plc. In the Directors' opinion, this more accurately reflects the businesses of
the Group going forward.
3. Principal terms of the Open Offer
The Company is proposing to raise GBP3.6 million (before expenses) by the issue
of 90,000,000 New Ordinary Shares of which a maximum of GBP838,990 will be
raised from the Open Offer, and the balance of GBP2,761,010 will be raised from
the Placing and Subscription. The balance of any Offer Shares not subscribed for
under the Open Offer will be subscribed for by Mr Wray at the Offer Price.
Therefore, 20,974,741 New Ordinary Shares in aggregate are available to
Qualifying Shareholders pursuant to the Open Offer at the Offer Price, payable
in full on acceptance. Any Offer Shares not subscribed for by Qualifying
Shareholders will first be available to Qualifying Shareholders under the Excess
Application Facility and then will be subscribed for by Mr Wray at the Offer
Price.
Pursuant to the Subscription Letter signed by Mr Wray, he has, inter alia,
conditionally agreed to the extent that Qualifying Shareholders do not apply for
all the Offer Shares during the period of the Open Offer and that Placees do not
subscribe for Placing Shares to subscribe himself (as principal) for any balance
of the Offer Shares and Placing Shares at the Offer Price.
Qualifying Shareholders may apply for Offer Shares under the Open Offer at the
Offer Price on the following basis:
1 Offer Share for every 40 Existing Ordinary Shares
and so in proportion for any number of Existing Ordinary Shares held on the
Record Date. Entitlements of Qualifying Shareholders will be rounded down to the
nearest whole number of Offer Shares. Fractional entitlements which would
otherwise arise will not be issued to the Qualifying Shareholders but will be
made available under the Excess Application Facility.
Not all Shareholders will be Qualifying Shareholders. Shareholders who are
located in, or are citizens of, or have a registered office in certain overseas
jurisdictions will not qualify to participate in the Open Offer. The attention
of overseas shareholders is drawn to paragraph 6 of Part 2 of this document.
Valid applications by Qualifying Shareholders will be satisfied in full up to
their Open Offer Entitlements as shown on the Application Form for certificated
shareholders. Applicants can apply for less or more than their entitlements
under the Open Offer but the Company cannot guarantee that any application for
Excess Shares under the Excess Application Facility will be satisfied as this
will depend in part on the extent to which other Qualifying Shareholders apply
for less than or more than their own Open Offer Entitlements. The Company may
satisfy valid applications for Excess Shares of applicants in whole or in part
but reserves the right not to satisfy any excess above any Open Offer
Entitlement. The Board may scale back applications made in excess of Open Offer
Entitlements on such basis as it reasonably considers to be appropriate.
In order to maximise the number of Offer Shares available for take-up by
Qualifying Shareholders under the Open Offer, Mr Wray, Mark Sims and Steven
Hancock have irrevocably undertaken not to take-up their respective Open Offer
Entitlements.
Application has been made for the Open Offer Entitlements to be admitted to
CREST. It is expected that such Open Offer Entitlements will be credited to
CREST on 18 August 2010. The Open Offer Entitlements will be enabled for
settlement in CREST until 11.00 a.m. on 7 September 2010. Applications through
the CREST system may only be made by the Qualifying CREST Shareholder originally
entitled or by a person entitled by virtue of bona fide market claims. The Offer
Shares must be paid in full on application. The latest time and date for receipt
of completed Application Forms or CREST Application and payment in respect of
the
Open Offer is 11.00 a.m. on 7 September 2010. The Open Offer is not being made
to certain Overseas Shareholders, as set out in paragraph 6 of Part 2 of this
document.
Qualifying Shareholders should note that the Open Offer is not a rights issue
and therefore the Offer Shares which are not applied for by Qualifying
Shareholders will not be sold in the market for the benefit of the Qualifying
Shareholders who do not apply under the Open Offer. The Application Form is not
a document of title and cannot be traded or otherwise transferred.
Further details of the Open Offer and the terms and conditions on which it is
being made, including the procedure for application and payment, are contained
in Part 2 of this document and on the accompanying Application Form.
The Open Offer is conditional, inter alia, upon:
(i) the passing of all of the Resolutions (save for Resolutions 1 to 8 and
14 regarding ordinary business
and the change of name);
(ii) the Subscription Letters becoming or being declared unconditional in
all respects (save for the condition relating to Admission) and not having been
terminated in accordance with their terms prior to Admission; and
(iii) Admission becoming effective by no later than 8.00 a.m. on 10
September 2010 or such later time and/or date being no later than 30 September
2010) as GT and the Company may agree).
If any of the Resolutions (save for Resolutions 1-8 and 14 regarding ordinary
business and the change of name) are not passed, the New Ordinary Shares will
not be issued and all monies received by the Receiving Agent will be returned to
the applicants (at the applicants' risk and without interest) as soon as
possible thereafter. Any Open Offer Entitlements admitted to CREST will
thereafter be disabled.
The Placing Shares, Subscription Shares and Offer Shares will be issued free of
all liens, charges and encumbrances and will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares, including the
right to receive all dividends and other distributions declared, made or paid
after the date of their issue.
Intentions of the Directors in relation to Placing, Subscription and the Open
Offer
In addition to the underwriting of the Placing and Open Offer by Mr Wray, Messrs
Sims, Hancock and Clough have each indicated that they intend to take up shares
via the Subscription as follows:
Number of New
Name
Ordinary Shares GBP
Mark Sims
7,500,000 300,000
Steven Hancock
7,500,000 300,000
Michael Clough
500,000 20,000
As explained above, Mr Wray, Mark Sims and Steven Hancock have each irrevocably
undertaken not to take-up their respective Open Offer Entitlements.
4 Related Party Transactions
Directors and employees' subscriptions under the Placing, Subscription and Open
Offer
As at the date of this document, Mr Wray, a director of the Company and its
non-executive Chairman, is interested in 120,752,880 Existing Ordinary Shares
representing approximately 14.4 per cent. of the Existing Ordinary Shares. Mr
Wray is also the holder of Loan Notes having a value of GBP2,050,000 which would
convert into 133,809,524 Existing Ordinary Shares.
Mr Wray has conditionally agreed to subscribe for all of the Offer Shares,
subject to claw-back in favour of Qualifying Shareholders under the Open Offer
and all of the Placing Shares to the extent they are not taken up by other
Placees.
As noted in paragraph 3 above, Mr Sims, Mr Hancock and Mr Clough, all Directors
of the Company, have agreed to subscribe for a total of 15,500,000 New Ordinary
Shares under the Subscription.
Mr Wray, Mr Sims and Mr Hancock are all current Shareholders in the Company, and
therefore could take up shares under the Open Offer, however in order to
maximise the number of Offer Shares available for take-up to Qualifying
Shareholders under the Open Offer, Messrs Wray, Sims and Hancock have each
irrevocably undertaken not to take-up their respective Open Offer Entitlements.
Mr Clough is not currently a Shareholder and hence is participating by way of
Subscription rather than the Open Offer. In addition, Steve McAllister, an
employee of the Group, intends to subscribe for 375,000 Subscription Shares.
The issue of New Ordinary Shares to Mr Wray, Mr Sims, Mr Hancock and Mr Clough
constitutes a "Related Party Transaction" for the purposes of AIM Rule 13. Where
a company, whose shares are listed on AIM, enters into a Related Party
Transaction, AIM Rule 13 requires the independent directors of such company to
consider, having consulted with the Company's nominated adviser, whether the
terms of the transaction are fair and reasonable insofar as its shareholders are
concerned.
The Independent Directors (save Mr Sims, Mr Hancock and Mr Clough in respect of
their own respective subscriptions noted above) consider, having consulted with
GT in its capacity as the Company's Nominated Adviser, that the terms of the
related party transaction with Messrs Wray, Sims, Hancock and Clough are fair
and reasonable insofar as Shareholders are concerned.
Issue of Deferred Consideration Shares
It is proposed that GBP300,000 of deferred cash consideration due to the vendors
of IPCL together with an agreed number of 1,156,302 New Ordinary Shares in
respect of shares due on completion of the IPCL acquisition, GBP300,000 of a
working capital loan due to the vendors of Fenhams and GBP400,000 in respect of
a payment to the vendors of BGC are each satisfied by the issue of the Deferred
Consideration Shares credited as fully paid at the Offer Price in full and final
satisfaction of the Company's obligations in respect of the same.
Your Board, with the exception of those Directors having an interest in their
respective transactions (who have taken no part in approving such transactions),
believes that satisfying these liabilities in shares rather than cash and for
less than the amounts currently agreed will strengthen the Company's balance
sheet and allow the Company to move forward on a stronger financial footing.
IPCL
IPCL was acquired by the Company in December 2009 from Neil Chapman and Chris
Arnott ("the IPCL Vendors") for an initial consideration of GBP3.5 million
satisfied by a cash payment of GBP2.625 million and the issue of shares
equivalent to GBP875,000. Following the preparation of completion accounts, a
further payment was made of GBP298,980 in cash and 46,252,080 Existing Ordinary
Shares were to be issued, at a price of 1.25p per share, equating at that time
to GBP578,151. In addition, the Company was liable to pay deferred consideration
comprising of two payments of GBP250,000, to be paid in cash on the first and
second anniversaries of completion. It is now proposed that GBP300,000 of this
deferred consideration be satisfied by the issue of the Deferred Consideration
Shares credited as fully paid at the Offer Price. The balance of GBP200,000 of
this deferred consideration (together with an agreed amount of GBP8,000 in
respect of interest) will be paid to the IPCL vendors on 23 December 2010. The
additional 46,252,080 Existing Ordinary Shares noted above have not to date been
issued as the Company did not have the relevant authorities in place to allow
the Directors to issue such shares. It has therefore been agreed that, after
making adjustment for the Share Capital Reorganisation, this liability will be
satisfied by the issue of 1,156,302 New Ordinary Shares credited as fully paid
at the Offer Price.
The IPCL Vendors are directors of the Company and of IPCL, one of the
Subsidiaries and therefore are treated as related parties for the purposes of
the AIM Rules. The entering into the IPCL Supplemental Agreement is a related
party transaction.
The Directors (excluding the IPCL Vendors who are interested in this
transaction) consider, having consulted with GT, the Company's Nominated
Adviser, that the terms of the related party transaction with the IPCL Vendors
are fair and reasonable insofar as Shareholders are concerned.
Fenhams
Fenhams was acquired in August 2008. The original sale and purchase agreement
provided that the vendors, Paul Richardson and Janet Domin ("the Fenhams
Vendors"), were required to loan additional working capital to the new company.
The balance which is now repayable and due to the Fenhams Vendors is GBP346,000.
It is now proposed that GBP300,000 of this liability be satisfied by the issue
of the Fenhams Deferred Consideration Shares credited as fully paid at the Offer
Price. The balance of the loan will be repaid by the Company in due course.
The Fenhams Vendors are now both directors of the Company and as such are
related parties for the purposes of the AIM Rules. The entering into of the
Fenhams Supplemental Agreement is deemed to be a related party transaction.
The Directors (excluding the Fenhams Vendors who are interested in the
transaction) consider, having consulted with GT, the Company's Nominated
Adviser, that the terms of the related party transaction with the Fenhams
Vendors are fair and reasonable insofar as Shareholders are concerned.
BGC
BGC was acquired by the Company in September 2007. Following the acquisition,
BGC entered into a significant contract with Kier Stoke Limited (a wholly owned
subsidiary of Kier Group plc). It has been agreed that a payment of GBP400,000
reflecting the value to the Group of this contract should be made to the vendors
of BGC, Mark Sims, Susan Sims, Steve Hancock and Dawn Hancock ("the BGC
Vendors") as the timing of the entering into of this contract meant that it was
not taken account of in the negotiations regarding consideration for the
acquisition. It is now proposed that this payment be satisfied by the issue to
the BGC Vendors of the BGC Deferred Consideration Shares credited as fully paid
at the Offer Price.
The BGC Vendors, are directors or associates of directors of the Company and as
such are related parties for the purposes of the AIM Rules and the entering into
of the BGC Supplemental Agreement is a related party transaction.
The Directors (excluding BGC Vendors who are interested in the transaction)
consider, having consulted with GT, the Company's Nominated Adviser, that the
terms of the related party transaction with the BGC Vendors are fair and
reasonable insofar as Shareholders are concerned.
5. Share Capital Reorganisation
In order to be able to issue New Ordinary Shares at a price lower than the
present nominal value and with the aim of generally widening the gap between the
nominal and market value of the Company's ordinary shares, it is proposed to
consolidate every 40 issued and unissued Existing Ordinary Shares into one
intermediate 20p ordinary share (an intermediate share), and to subdivide and
convert every issued and unissued intermediate share into one New Ordinary Share
of 1p each and one New Deferred Share of 19p. This will result in 20,974,741 New
Ordinary Shares, 20,974,741 New Deferred Shares and 165,999,996 Existing
Deferred Shares being in issue immediately following the Share Capital
Reorganisation but before the completion of the Placing, Subscription and Open
Offer and the issue of the Deferred Consideration Shares.
The Board believes, whether or not all of the Proposals proceed, that the Share
Capital Reorganisation will give the Company greater flexibility in the future
to effect a fundraising or acquisition to be satisfied by the issue of new
ordinary shares in the capital of the Company. The Board also believes that by
reducing the number of Ordinary Shares in issue and raising the market price,
there will be less volatility and a narrower dealing spread than currently
occurs. Subject to Shareholders approving Resolution 10 and Resolution 13, the
Share Capital Reorganisation will take place whether or not the other elements
of the Proposals proceed.
Each New Ordinary Share will have the same rights (including voting and dividend
rights and rights on a
return of capital) as each Existing Ordinary Share
prior to the Share Capital Reorganisation. Each New
Deferred Share shall have the similar rights (including the same voting and
dividend rights and rights on a return of capital) as each Existing Deferred
Share.
The New Deferred Shares will have minimal rights and will, effectively, be
worthless. No application will be made for the New Deferred Shares to be
admitted to trading on AIM or any other stock exchange. No share certificates
will be issued for any of the New Deferred Shares. There are no immediate plans
to purchase or cancel the New Deferred Shares but the Board does intend, at the
appropriate time, to cancel all of the Company's deferred shares by way of a
court-approved capital reduction. The Share Capital Reorganisation is
essentially a mathematical exercise and, fractions aside, should have no effect
on the value of each individual Shareholders' shareholding.
In accordance with the Articles the Directors will aggregate fractions arising
on the Share Capital Reorganisation and will sell, on behalf of the Shareholders
so entitled, the resulting New Ordinary Shares for the best price reasonably
obtainable and pay and distribute to and among such Shareholders the proportion
due of the net proceeds of such sale provided that where a Shareholder is
entitled to net proceeds of sale of less than GBP1.00, they will be retained for
the benefit of the Company.
The Loan Notes shall be adjusted, in accordance with their terms, by multiplying
the conversion price by 40 from 1.5 pence to 60 pence (in the case of the
December Loan Notes) and from 1.75 pence to 70 pence (in the case of the April
Loan Notes). The Warrants shall be adjusted, in accordance with their terms, by
multiplying the exercise price by 40 from 4 pence to GBP1.60 and dividing the
number of Warrants by 40 from 21,000,000 to 525,000. These adjustments will
result in Shareholders, the holders of the Warrants and the Loan Note Holders
being treated equally by the Share Capital Reorganisation.
Following the Share Capital Reorganisation, new share certificates in respect of
the New Ordinary Shares will be issued.
Resolutions 10 and 13 in the Notice sets out the details of the proposed Share
Capital Reorganisation.
6 Current trading and prospects
In February 2010 the Board announced the disposal of all of the engineering
subsidiaries that were owned by the Group, with the intention of enabling the
Group to realign its business strategy and focus its attention on the UK's
support services and fire protection/prevention markets. The Group now comprises
the three mainstream businesses of BGC, Fenhams and IPCL. The Directors expect
the reorganised Group to grow both organically and over the longer term by way
of strategic acquisition.
The Board has made the strategic decision to position Southern Bear so that it
is able to capitalise on the opportunities arising in the support services and
fire protection/prevention markets. Property maintenance in social housing,
tackling fuel poverty, carbon reduction programs, fire prevention measures and
fire risk assessment on existing commercial buildings are all subject to
legislative measures and are areas which the Board believe are growth sectors of
the economy and which are less effected by the economy generally or cuts in
public spending. The Group is also focusing on opportunities that will be
present in the renewable energy sectors.
Fenhams and BGC operate within the support services sector and undertake
building and mechanical services on behalf of its range of clients including,
plumbing, central heating, bathrooms, electrical, roofing, kitchens and disable
adaptation works. Clients include eaga plc and other local authority, housing
associations and private sector clients.
As announced in September 2009, both Fenhams and BGC were successful with their
invitations to tender to provide contracting services for the "Warm Front 2
scheme" from eaga plc ("eaga"). The Warm Front Scheme is funded by the UK
government, and is designed to eradicate fuel poverty in England by providing a
package of insulation and heating improvements. The scheme has an allocated
budget for each financial year and has so far assisted over two million
households.
Fenhams' original appointment to work under the Warm Front 1 contract to deliver
central heating/boiler
replacement and repair measures was in 4 regional
areas. In 2005, Fenhams won delivery rights in 18 newareas, and after being
awarded the Warm Front 2 contract, now controls a total of 35 regional areas
stretching from the Scottish border to the South Coast.
BGC has provided services to eaga since 2005, having been initially appointed to
operate within four regional areas. Significantly, BGC has now been appointed to
operate across 13 regional areas of the Midlands and North West and will be
undertaking the following specialist works: 'Gas, Electrical, Oil & Solid Fuel
Central Heating' and 'Hot Water Installations & Repairs'.
Since 2005, sales revenue of Warm Front works completed by BGC on behalf of eaga
is in the region of GBP14.0 million. BGC's new contract award further increases
the Company's services to eaga from 4 prior to September 2009 to 13 regional
areas - which is expected to significantly increase the levels of sales revenue,
along with the underlying profitability of the business. BGC's appointment is
initially for one year with options to extend year-on-year, for a total contract
period of four years.
The Group is in the process of diversifying the products and services it offers
to its customers. For example, BGC has recently won contracts to deliver
building adaptations for disabled and elderly people, property re-roofing and
bathroom replacement programs.
In December 2009, the Board announced the acquisition of IPCL. IPCL delivers a
FIRAS approved service to its clients who include many of the UK's blue chip
construction companies such as Sir Robert McAlpine, Severfield Rowen, Bovis and
Amec. IPCL are specialists in fire and corrosion protection and undertake
spraying of intumescent coatings to building structures and fire boarding/fire
stopping amongst other disciplines. The Board believes that this acquisition has
strengthened the Group's product and service offering and has the potential to
significantly enhance revenue streams. In particular, the UK is legislated,
amongst others, by the Regulatory Reform (Fire Safety) Act 2005, which provides
for the fire safety of new build and existing commercial premises. The Board
expects this market to expand significantly as insurers are increasingly
demanding proper fire protection certification of buildings.
However, as announced on 26 February 2010, the Group has experienced difficult
trading conditions resulting in sales and profits being significantly below
market expectations for the year ended 31 March 2010. The audited financial
results of the Group for the year ended 31 March 2010, which are announced on 17
August 2010, show turnover and loss after tax for the period of GBP19.1 million
and GBP(17.2) million respectively.
The trading difficulties, which are mainly attributable to the postponement of
sales orders from customers of the Group, has meant that revenues and profits
are deferred to the current financial year ending 31 March 2011. Furthermore,
the lengthy adverse UK winter weather conditions also resulted in several orders
not being fulfilled prior to 31 March 2010. The Company also incurred
exceptional costs associated with the disposal of several of the Group's
subsidiaries (as announced on 23 and 26 February 2010) and a large exceptional
write down in respect of a goodwill impairment review on the carrying value of
the Group's continuing businesses.
Nevertheless, the Board considers that the financial position of the Group
remains sound and that it is well prepared for the challenges and significant
opportunities that lie ahead. The Board has reviewed a rolling cash flow
forecast and, with the surplus funds available from the Placing, Subscription
and Open Offer and the respective Subsidiaries' ability to raise finance in
their own right, the Board believes that the Group has sufficient working
capital for its present requirements.
Strategy
The Group is now firmly focused on the support services market. The Group's
strategy is to focus on opportunities that are driven by UK legislation and
therefore in the opinion of the Board less affected by the economy in general or
cuts in public spending and in doing so provide a sound platform for the three
remaining subsidiaries to prosper. The Group is well placed to provide extensive
UK coverage with BGC operating across the Midlands/North West and both Fenhams
and IPCL enjoying extensive coverage of the UK.
When the right opportunities arise, the Group will be looking to make strategic
acquisitions that complement the existing Subsidiaries, are streamlined with the
support services sector and add shareholder value to the Group.
The Company announced on 4 August 2010 that it had appointed Seymour Pierce
Limited as its sole broker and is looking forward to the future with confidence.
7. Background to and reasons for the Waiver
General
The Takeover Code governs, inter alia, transactions which may result in the
change of control of a public company.
Under Rule 9 of the Takeover Code, any person who acquires an interest in shares
(as defined in the Takeover Code) which, taken together with shares in which he
is already interested and in which persons acting in concert with him are
interested, carry 30 per cent. or more of the voting rights of a company which
is subject to the Takeover Code, is normally required to make a general offer to
all the remaining shareholders to acquire their shares (which includes the
Company).
Similarly, when any person, together with persons acting in concert with him, is
interested in shares which in aggregate carry not less than 30 per cent. of the
voting rights of such company but not carrying more than 50 per cent. of such
voting rights, a general offer will normally be required if any further interest
in shares is acquired by such person.
An offer under Rule 9 must be in cash and at the highest price paid by the
person required to make the offer, or any person acting in concert with him, for
any interest in shares acquired during the 12 months prior to the announcement
of the offer.
Under the Takeover Code, a concert party arises where persons acting together
pursuant to an agreement or understanding (whether formal or informal) actively
co-operate to obtain or consolidate control of a company or to frustrate the
successful outcome of an offer for a company. Control means the holding, or
aggregate holdings, of interests in shares carrying 30 per cent. or more of the
voting rights of the company, irrespective of whether the holding or holdings
give de facto control.
Mr Wray is currently beneficially interested in 120,752,880 Existing Ordinary
Shares, (representing 14.4 per cent. of the existing voting shares of the
Company) together with Loan Notes having an aggregate nominal value of
GBP2,050,000 which could convert into a maximum of 133,809,524 Existing Ordinary
Shares. Mr Wray is not acting in concert with anyone else in relation to the
Company.
Potential voting rights of Mr Wray
Upon Completion, and following the issue and allotment of the Deferred
Consideration Shares, the potential
voting rights attributable to the
interests of Mr Wray assuming both minimum and maximum take up under
the
Placing, Subscription and Open Offer (and taking account of the Loan Note
Conversion) are as follows:
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| | | | | Number | | |
| | | | | of | | |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| | Current | | Take-up | shares | | % |
| | | | | | | (assuming |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| | shareholding | | under | assuming | | only |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| | (as adjusted | | Placing, | convertible | Revised | Mr Wray's |
| | for the | | Subscription | loan notes | fully | Loan |
| | Share | | | | | |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| | Capital | | and | are | diluted | Notes |
| | | | Open | fully | | were |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| | Reorganisation) | % | Offer | converted | shareholding | converted) |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| Minimum | 3,018,822 | 14.4 | Nil | 3,345,238 | 6,364,060 | 4.5 |
| subscription | | | | | | |
| by Mr Wray | | | | | | |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
| Maximum | 3,018,822 | 14.4 | 74,125,000 | 3,345,238 | 80,489,060 | 57.3 |
| subscription by | | | | | | |
| Mr Wray | | | | | | |
+------------------+-----------------+------+--------------+-------------+--------------+------------+
Following completion of the Placing, Subscription and the Open Offer and the
issue and allotment of the
Deferred Consideration Shares, and adjusting for
the proposed Share Capital Reorganisation, Mr Wray will
potentially be
interested in up to 80,489,060 New Ordinary Shares representing approximately
57.3 per cent.of the voting rights attached to the Enlarged Share Capital
assuming only the Loan Notes held by Mr Wray's were converted and no other Loan
Note holders converted their respective Loan Notes.
It is a condition of Mr Wray's Subscription Letter that he would not subscribe
for New Ordinary Shares if, as a result of such subscription, and upon the issue
to Mr Wray of New Ordinary Shares arising upon the conversion of Loan Notes held
by him, he became bound to make a Rule 9 Offer. The Independent Directors
believe that it is in the Company's best interests to carry out the Placing,
Subscription and Open Offer and given that they could not occur otherwise under
the condition applying in Mr Wray's Subscription Letter, the Independent
Directors have decided to seek the waiver from the Panel.
The Panel has agreed to waive the obligation of Mr Wray to make a general offer
that would otherwise arise as a result of the Placing, Subscription and Open
Offer, subject to the approval of Independent Shareholders. Accordingly,
Resolution 9 is being proposed at the Annual General Meeting and will be taken
on a poll. Mr Wray will not be entitled to vote on the Whitewash Resolution.
If, following completion of the Placing, Subscription and Open Offer and the
issue and allotment of the Deferred Consideration Shares (subject to the take up
of Open Offer Entitlements by Qualifying Shareholders under the Open Offer), Mr
Wray were to hold more than 30 per cent. of the Company's voting share capital
but not more than 50 per cent. of the Company's voting share capital then any
further increase in his shareholdings would be subject to the provisions of Rule
9 of the Takeover Code.
If, following completion of the Placing, Subscription and Open Offer and the
issue and allotment of the Deferred Consideration Shares (subject to the take up
of Open Offer Entitlements by Qualifying Shareholders under the Open Offer) Mr
Wray were to hold more than 50 per cent. of the Company's voting share capital,
then he would be able to increase his holding of shares in the Company without
incurring any further obligation under Rule 9 to make a general offer.
Intentions of Mr Wray following Completion
The Board and Mr Wray do not intend that any changes will be introduced to the
Company's business as a result of the Proposals. In addition, Mr Wray has
confirmed that, as a result of the Proposals, he has no intention to change the
strategic plans for the Company, the locations of the Company's places of
business or the continued employment of its employees and management, including
any material change in the conditions of employment nor will there be any
redeployment of the fixed assets of the Company.
8. Overseas Shareholders
The attention of Qualifying Shareholders who have registered addresses outside
the United Kingdom, or who are citizens or residents of countries other than the
United Kingdom, or who are holding Existing Ordinary Shares for the benefit of
such persons, (including, without limitation, custodians, nominees, trustees and
agents) or who have a contractual or other legal obligation to forward this
document or the Application Form to such persons, is drawn to the information
which appears in paragraph 6 of Part 2 of this document.
In particular, Qualifying Shareholders who have registered addresses in or who
are resident in, or who are citizens of, countries other than the UK (including
without limitation the United States of America), should consult their
professional advisers as to whether they require any governmental or other
consents or need to observe any other formalities to enable them to take up
their entitlements under the Open Offer.
9. Terms of the Placing and Subscription
The Subscribers have conditionally agreed subscribe for 15,875,000 Subscription
Shares under the Subscription on the terms and subject to the terms of the
conditions in the Subscription Letters. In addition, Mr Wray has agreed to
subscribe for all of the 20,974,741 Offer Shares, subject to claw-back in favour
of Qualifying Shareholders under the Open Offer and all of the 53,150,259
Placing Shares subject to claw-back in favour of Placees.
The principal conditions to the Placing and Subscription are:
(a) the passing of all of the Resolutions (save for Resolutions 1-8 and 14
regarding ordinary business and the change of name) at the Annual General
Meeting;
(b) the Open Offer having become unconditional in all respects (save for any
condition which relates to the Subscription Letters having become unconditional
or to Admission);
(c) the Subscription Letters becoming unconditional in all respects; and
(d) Admission of the New Ordinary Shares occurring not later than 8.00 a.m.
on 10 September 2010 (or such later time and/or date as the Company and GT may
agree being no later than 8.00 a.m. on 30 September 2010).
10. Information on Nigel Wray
Nigel William Wray (aged 62) of PO Box 49777, London, N20 2AS, is a private
individual who was appointed non-executive Chairman of the Company in January
2010. He is the Chairman of Saracens Rugby Club, non-executive director of
Domino's Pizza UK & Irl Plc, Prestbury Investment Holdings Limited, Play
Holdings Limited, Networkers International (UK) Plc, English Wines Group Plc,
Seymour Pierce Holdings Limited and several other private companies. Further
information Mr Wray is set out in Part 4 of this document.
11. New Incentive Scheme
The Board believes that the Group's three businesses are all entrepreneurially
led and that the relevant management of each business should be incentivised by
the proposed issue of New Ordinary Shares, upon reaching certain agreed targets,
such that the interests of the management and Shareholders are therefore closely
aligned.
It is therefore the Board's intention to adopt incentive scheme arrangements to
allow certain members of the Board to be granted awards by way of New Ordinary
Shares dependent upon the levels of profit before tax achieved by their
respective businesses. Specific financial hurdles and other conditions relating
to the share awards are currently still under discussion.
It is proposed that the powers of the Board to grant these awards would be
operated through, and on the recommendation of, the Company's remuneration
committee.
When such incentive scheme is finalised or adopted by the Company, details will
be announced to shareholders.
In addition, Michael Clough (Finance Director) and Steve McAllister do not
currently have any share based incentive arrangements in place. It is proposed
that once the Annual General Meeting has been held, option agreements will be
entered into with Messrs Clough and McAllister. Details have yet to be agreed
and will be notified to Shareholders in due course.
12. Annual General Meeting
You will find set out at the end of this document, a notice convening an Annual
General Meeting of the Company to be held at 11.00 a.m. on 9 September 2010 for
the purpose of considering, and if thought fit, passing the Resolutions which
are summarised as follows:
(a) Resolution 1 is an ordinary resolution to receive and adopt the
statement of accounts, for the year ended 31 March 2010, together with the
reports of the Directors and auditors thereon.
(b) Resolution 2 is an ordinary resolution to re-elect Steven Hancock, who
retires by rotation, as a director.
(c) Resolutions 3 to 7 are ordinary resolutions, to elect Nigel Wray,
Michael Clough, Janet Domin, Christopher Arnott and Neil Chapman who were
appointed since the date of the last annual general meeting of the Company, as
Directors.
(d) Resolution 8 is an ordinary resolution, to re-appoint RSM Tenon Audit
Limited as auditors of the Company to hold office until the conclusion of the
next general meeting of the Company at which audited accounts are laid before
the Company and to authorise the directors to fix their remuneration.
(e) Resolution 9 is an ordinary resolution to approve the Waiver. This
resolution will be taken on a poll of the Independent Shareholders voting in
person and by proxy at the Annual General Meeting;
(f) Resolution 10, which is conditional on the passing of Resolution 12, is
an ordinary resolution to, consolidate every 40 Existing Ordinary Shares (both
issued and unissued) into one intermediate ordinary share of 20p and then to
sub-divide each such intermediate share into one New Ordinary Share and one New
Deferred Share;
(g) Resolution 11 is an ordinary resolution to authorise the Directors to
allot relevant securities up to an aggregate nominal amount of GBP1,436,564,
being equal to 143,656,400 New Ordinary Shares;
(h) Resolution 12 is a special resolution to authorise the Directors to
issue and allot the New Ordinary Shares pursuant to the Placing, Subscription
and the Open Offer, on a non-pre-emptive basis, and to authorise further issues
and allotments of shares in the capital of the Company;
(i) Resolution 13 is a special resolution to approve the amendment of the
Articles (and the Memorandum of Association which, under the Act, is deemed to
be part of the Articles) to include provisions in relation to the rights
attaching to the New Deferred Shares and the Share Capital Reorganisation; and
(j) Resolution 14 is a special resolution to approve the change of the
registered name of the Company to Environ Group (Investments) Plc.
As a result of the factors set out in paragraph 6 of this Part 1, the net assets
of the Company are now less than half of its called share capital. The Directors
are therefore obliged to convene a general meeting of the Company to consider
whether any, and if so what, steps should be taken to deal with the situation.
The Directors propose that this be dealt with at the AGM.
The Directors believe that they have already taken steps to rectify the
situation. The Placing, Subscription and Open Offer will improve net assets
considerably and will improve the working capital position. They also intend, if
possible, to consolidate the Group's investments in the Company and anticipate
trading profitability will improve the net asset position.
13. Additional Information
The attention of Shareholders is drawn to the information contained in Parts 2,
3, 4 and 5 of this document which provides additional information on the Open
Offer and the Group.
14. Action to be taken In respect of the Annual General Meeting
You will find enclosed with this document a Form of Proxy for use by
Shareholders at the Annual General Meeting. Whether or not you intend to be
present at the Annual General Meeting, you are requested to complete and return
the Form of Proxy in accordance with the instructions printed thereon. To be
valid, completed Forms of Proxy must be received by Capita Registrars, PXS, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in
any event not later than 11.00 a.m. on 7 September 2010 being 48 hours before
the time appointed for holding the Annual General Meeting. Completion of a Form
of Proxy will not preclude you from attending the meeting and voting in person
if you so choose.
If you hold shares in CREST, you may appoint a proxy by completing and
transmitting a CREST Proxy Instruction to Capita (CREST participant RA10) so
that it is received by no later than 11.00 a.m. on 7 September 2010.
In respect of the Open Offer
Qualifying non-CREST Shareholders wishing to apply for Offer Shares or the
Excess Shares must complete the enclosed non-CREST Application Form in
accordance with the instructions set out in paragraph 3.1 of Part 2 of this
document and on the accompanying non-CREST Application Form and return it with
the appropriate payment to Capita Registrars, Corporate Actions, The Registry,
34 Beckenham Road, Beckenham, Kent BR3 4TU, so as to arrive no later than 11.00
a.m. on 7 September 2010.
If you do not wish to apply for any Offer Shares under the Open Offer, you
should not complete or return the Application Form. Shareholders are
nevertheless requested to complete and return the Form of Proxy.
If you are a Qualifying CREST Shareholder, no Application Form will be sent to
you. Qualifying CREST Shareholders will have Open Offer Entitlements and Excess
CREST Open Offer Entitlements credited to their stock accounts in CREST. You
should refer to the procedure for application set out in paragraph 3.2 of Part 2
(Terms and Conditions of the Open Offer) of this document. The relevant CREST
instructions must have settled in accordance with the instructions in paragraph
3.2 of Part 2 (Terms and Conditions of the Open Offer) of this document by no
later than 11.00 a.m. on 7 September 2010.
Qualifying CREST Shareholders who are CREST sponsored members should refer to
their CREST sponsors regarding the action to be taken in connection with this
document and the Open Offer.
15. Recommendation
The Independent Directors (to the extent they are not participating in the
relevant Proposals), who have been so advised by GT, consider the terms of the
Open Offer, the Placing, the Subscription, the issue of the Deferred
Consideration Shares and the Waiver to be fair and reasonable and in the best
interests of the Independent Shareholders and the Company as a whole. In
providing advice to the Independent Directors, GT has taken into account the
Independent Directors' commercial assessments.
The Board (with the exception of Mr Wray who has not been involved in Board
discussions as regards the Proposals other than as regards discussions
pertaining to the Share Capital Reorganisation and Change of Name) believes that
the Proposals are in the best interests of the Company and the Shareholders as a
whole. Accordingly, the Independent Directors unanimously recommend, whether or
not you intend to take up your Open Offer Entitlements, that you vote in favour
of the Resolutions to be proposed at the Annual General Meeting as they intend
to do so in respect of their 286,765,250 Existing Ordinary Shares, representing
approximately 34.2 per cent. of the Existing Ordinary Shares.
In addition, Mr Wray has indicated that he intends to vote in favour of the
Resolutions (save for the Whitewash Resolution) in respect of his 120,752,880
Existing Ordinary Shares, representing approximately 14.4 per cent. of the
Existing Ordinary Shares.
Yours faithfully
Steven Hancock
for and on behalf of
the Independent Directors
Definitions used in this announcement are as set out in the circular to
shareholders which is being posted today and is available on the Group's
website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGGUCGRUPUGQQ
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