Proxy Solicitation & Information Statement • Nov 28, 2011
Proxy Solicitation & Information Statement
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If you have sold or otherwise transferred all of your Ordinary Shares in Chelverton Growth Trust PLC, you should pass this document, together with all of the accompanying documents, as soon as possible, to the purchaser or transferee or to the other person through whom the sale or transfer was effected for transmission to the purchaser or transferee. This Circular and all accompanying documents should not, however, be forwarded or transmitted in or into any Restricted Territories.
Merchant Securities Limited is acting for the Company in connection with the Proposals and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Merchant Securities Limited nor for providing advice in relation to the Proposals.
(Incorporated in England and Wales under the Companies Act 1985 with registered number 02989519) (ISIN GB0002621349)
by
Merchant Securities Limited to purchase up to 10 per cent. of the Ordinary Shares in issue of Chelverton Growth Trust PLC
and subsequent
Buyback Offer by
The Tender Offer and the Buyback Offer will each close at 3.00 p.m. on 22 December 2011 and will only be available to Shareholders on the Register at the close of business on 22 December 2011. Shareholders wishing to tender Ordinary Shares for purchase in the Tender Offer and Minority Shareholders wishing to participate in the Buyback Offer should ensure that their completed Tender/Buyback Forms are returned by post or by hand (during normal business hours) to Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL in all cases so as to arrive by no later than 3.00 p.m. on 22 December 2011. Shareholders who hold their Ordinary Shares in certificated form should also return their share certificate(s) and/or other documents of title covering the Ordinary Shares they are electing to tender or sell. Shareholders who hold Ordinary Shares in uncertificated form (that is, in CREST) should return the Tender/Buyback Form as described above and also arrange for the Ordinary Shares they are electing to tender or sell to be transferred into escrow as described in Part III and Part IV of this document.
Neither the Tender Offer nor the Buyback Offer is being made to Restricted Shareholders. In particular, the Tender Offer and Buyback Offer are not being made, directly or indirectly, in or into or by the use of mail by any means or instrumentality (including, without limitation, facsimile transmission, internet, telex and telephone) of interstate or foreign commerce, or any facility of a national securities exchange, of the United States of America, nor is it being made directly or indirectly in or into Canada, Australia, the Republic of South Africa, the Republic of Ireland or Japan and the Tender Offer and Buyback Offer cannot be accepted by any such use, means, instrumentality or facility or from within such states.
| Expected Timetable of Events 3 |
||
|---|---|---|
| Definitions | 4 | |
| Part I | Letter from the Chairman | 8 |
| Part II | Letter from Merchant Securities Limited | 14 |
| Part III | Terms and Conditions of the Tender Offer | 16 |
| Part IV | Terms and Conditions of the Buyback Offer | 28 |
| Part V | Taxation | 39 |
| Part VI | Additional Information | 41 |
| Expected Timetable of Events |
|---|
| ------------------------------ |
| Closing Date: latest time and date for receipt of Tender/Buyback Forms |
3.00p.m. on 22 December 2011 |
|---|---|
| Record Date for the Tender Offer and Buyback Offer | Close of business on 22 December 2011 |
| Date of the Company's AGM | 21 December 2011 |
| Calculation Date close of business on | 22 December 2011 |
| Result of Tender Offer and Buyback Offer announced | 28 December 2011 |
| Tender Price announced | 28 December 2011 |
| Balancing Ordinary Shares despatched through CREST | 23 January 2012 |
| Cheques despatched by | 23 January 2012 |
| Balancing Ordinary Share certificates despatched by | 23 January 2012 |
The following definitions apply throughout this document unless the context otherwise requires:
| "Act" | Companies Act 2006, as amended |
|---|---|
| "Administrator" | Capita Sinclair Henderson Limited |
| "AGM" | annual general meeting |
| "Articles of Association" |
the articles of association of the Company |
| "Basic Entitlement" | the entitlement of each Shareholder to tender up to 10 per cent. of Ordinary Shares registered in each Shareholder's name on the Record Date rounded down to the nearest whole number |
| "Board" or "Directors" | the directors of the Company |
| "Buyback Conditions" | the conditions of the Buyback Offer as specified in paragraph 2.1 of Part IV of this document |
| "Buyback Offer" | the invitation by the Company to Minority Shareholders (other than Related Parties and Restricted Shareholders) to offer all (but not some) of their Ordinary Shares for purchase on the terms and subject to the conditions set out in this document and the Tender/Buyback Form |
| "Business Day" | any day other than a Saturday, Sunday or public holiday in England and Wales |
| "Calculation Date" | as at the close of business on 22 December 2011, being the day as at which the Company calculates the Tender Price for the purposes of the Tender Offer and the Buyback Offer |
| "certificated" or "in certificated form" |
not in uncertificated form |
| "Closing Date" | 3.00 p.m. on 22 December 2011 |
| "Company" | Chelverton Growth Trust PLC |
| "Court" | the High Court of Justice in England and Wales |
| "CREST" | a paperless settlement procedure in the United Kingdom enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument or stock transfer form and in respect of which Euroclear is the operator |
| "CREST Manual" | the Reference Manual issued by Euroclear dated September 2010 |
| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) |
| "CREST sponsor" | a CREST participant admitted to CREST as a CREST sponsor, being a sponsoring system participant (as defined in the CREST Regulations) |
|---|---|
| "Euroclear" | Euroclear UK & Ireland Limited |
| "CTA 2010" | the Corporation Tax Act 2010 |
| ''Future Tender Offers'' |
as defined in the last paragraph under the section headed 'Introduction' of Part I of this Circular |
| ''FSMA" | the Financial Services and Markets Act 2000, as amended |
| "GM" | meeting of the Company as provided for in the Articles |
| ''ITA 2007'' | the Income Tax Act 2007 |
| ''London Stock Exchange'' |
London Stock Exchange plc |
| ''Manager'' | Chelverton Asset Management Limited |
| ''member account ID'' | the identification code or number attached to any member account in CREST |
| "Merchant Securities" | Merchant Securities Limited |
| "Minority Shareholders" |
Shareholders holding up to 4,000 Ordinary Shares following completion of the purchase of Ordinary Shares pursuant to the Tender Offer that are not Related Parties or Restricted Shareholders |
| ''Net Asset Value'' or ''NAV'' |
the total value of all of the assets of the Company less its liabilities as determined by the Board and calculated in accordance with the Company's accounting policies |
| ''Net Asset Value per Ordinary Share" |
the Net Asset Value divided by the number of Ordinary Shares (other than Ordinary Shares held in treasury) then in issue |
| ''Notice of AGM'' | the notice convening an AGM of the Company on 21 December 2011, as contained in the Company's Annual Report for the year ended 31 August 2011 which accompanies this Circular |
| ''Ordinary Shares'' | ordinary shares of £0.01 each in the capital of the Company |
| ''Overseas Shareholders'' |
Shareholders who are resident in, or citizens of, territories outside the United Kingdom and not resident in, or citizens of, any of the Restricted Territories |
| ''participant ID'' | the identification code or membership number used in CREST to identify a particular CREST member or other CREST participant |
|---|---|
| "the Proposals" or "Proposals" |
the Tender Offer and the subsequent Buyback Offer |
| ''Receiving Agent'' or ''Registrars'' |
Share Registrars Limited |
| ''Record Date'' | the close of business on 22 December 2011 |
| ''Register'' | the register of Shareholders |
| "Related Parties" | a related party as defined in Listing Rule 11.1.4 |
| ''Repurchase Agreement'' |
the agreement dated 28 November 2011 between the Company and Merchant Securities relating to the repurchase by the Company on the London Stock Exchange of the Ordinary Shares purchased by Merchant Securities pursuant to the Tender Offer as summarised in paragraph 2 of Part VI of this document |
| ''Restricted Shareholders'' |
the Shareholders who are resident in, or citizens of, a Restricted Territory |
| ''Restricted Territories'' |
any of: Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa and the United States of America and any other jurisdiction into which the making of the Tender Offer, or the distribution of any of the documents relating to the Tender Offer would be contrary to local securities laws |
| ''Settlement Date'' | the date by which the consideration for Ordinary Shares purchased in the Tender Offer and the Buyback Offer will be despatched by cheque to the Shareholders entitled thereto, which is expected to be on 23 January 2012 |
| ''Shareholders'' | holders of Ordinary Shares |
|---|---|
| ''Sterling'' or ''£'' | the lawful currency of the United Kingdom |
| ''Tender/Buyback Form'' |
the tender/buyback form for use in connection with the Tender Offer and the subsequent Buyback Offer accompanying this document |
| ''Tender NAV'' | the NAV on the Calculation Date |
| ''Tender NAV per Ordinary Share'' |
the Tender NAV divided by the number of Ordinary Shares (other than Ordinary Shares held in treasury) in issue on the Calculation Date |
| ''Tender Offer'' | the invitation by Merchant Securities to Shareholders (other than Restricted Shareholders) to tender Ordinary Shares for purchase on the terms and subject to the conditions set out in this document and in the Tender/Buyback Form |
| "Tender Offer Conditions" |
the conditions of the Tender Offer as specified in paragraph 2.1 of Part III of this document |
| ''Tender Price'' | a price per Ordinary Share equal to 92.5 per cent. of the Tender NAV per Ordinary Share as at the Calculation Date |
| ''TFE Instruction'' | a transfer from escrow instruction (as defined by the CREST Manual issued by Euroclear) |
| "Treasury" | the holding of the Company's own issued Ordinary Shares that it has bought but not cancelled |
| ''TTE Instruction'' | a transfer to escrow instruction (as defined by the CREST Manual issued by Euroclear) |
| ''uncertificated'' or ''in uncertificated form" |
an Ordinary Share recorded on the Register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST |
| ''United Kingdom'' or ''UK'' |
the United Kingdom of Great Britain and Northern Ireland |
| ''UK Listing Authority'' |
the Financial Services Authority acting in its capacity as the competent authority for listing pursuant to Part VI of FSMA. |
Unless otherwise stated in this document, all references to statute or other forms of legislation shall refer to statutes or forms of legislation of the UK.
(Incorporated and registered in England and Wales under the Companies Act 1985, with registered number 02989519; an investment company within the meaning of section 833 of the Companies Act 2006)
Directors (all of whom are non executive): George Stevens David Horner Kevin Allen
Registered office: Beaufort House, 51 New North Road, Exeter EX4 4EP
28 November 2011
Dear Shareholder
Tender Offer by Merchant Securities Limited to purchase up to 10 per cent. of the Ordinary Shares in issue of Chelverton Growth Trust PLC and subsequent Buyback Offer by the Company to purchase Ordinary Shares held by certain Minority Shareholders
In order to provide shareholders with the opportunity to sell Ordinary Shares, the Directors have decided to implement this Tender Offer and subsequent Buyback Offer.
This document contains the formal terms of the Tender Offer and the Buyback Offer, together with details of how Shareholders (other than Restricted Shareholders) can tender Ordinary Shares for purchase, if they wish to do so. The Tender Offer and subsequent Buyback Offer are conditional, inter alia, on the passing of a resolution at the AGM of the Company on 21 December 2011 approving both the Tender Offer and the Buyback Offer. The Notice of AGM is contained in the Annual Report and Accounts which accompanies this document.
The current intention of the Board is to make further tender offers ("Future Tender Offers") in each subsequent calendar year, of up to 10 per cent. of the Ordinary Shares in issue at such times, on terms substantially similar to those applying to this Tender Offer. It is envisaged that such Future Tender Offers will be implemented on or around the date of the Company's AGM in the relevant year, and each such Future Tender Offer will be subject or pursuant to the approval by Shareholders at a general meeting. Although the above sets out the Board's current intentions, the Board will of course exercise its discretion as to whether any Future Tender Offer should be implemented and the terms thereof. In the event that a Future Tender Offer is made the terms attaching to this Tender Offer may also apply (but subject to such modifications as set out in the communication relating to the same) by incorporation.
The intention of the Board in implementing the Buyback Offer is to allow Minority Shareholders the opportunity to realise the commercial value of their entire shareholding by way of an economically viable exit.
The key points of the Tender Offer are as follows:
The Tender Offer is conditional, inter alia, on valid tenders being received in respect of at least one per cent. of the Company's issued share capital by the Closing Date.
Shareholders can choose:
Shareholders will be entitled to have up to 10 per cent. of their respective holdings purchased under the Tender Offer. Shareholders will be able to tender additional Ordinary Shares, but such tenders will only be satisfied, pro rata in proportion to the amount in excess of the Basic Entitlement tendered, to the extent that other Shareholders tender less than their Basic Entitlement.
Following completion of the Tender Offer, Minority Shareholders (i.e. those Shareholders holding up to 4,000 Ordinary Shares following the completion of the purchase of Ordinary Shares pursuant to the Tender Offer that are not Related Parties or Restricted Shareholders) will be entitled to sell all (but not some) of their Ordinary Shares to the Company pursuant to the terms of the Buyback Offer.
The key points of the Buyback Offer are as follows:
The Company was incorporated on 8 November 1994. The Company's objective is to provide capital growth through investment in companies listed on the Official List and traded on AIM with a market capitalisation at the time of investment of up to £50 million, and which are believed by the Manager to be at a "point of change". The Company also invests in unquoted investments where it is believed that there is a likelihood of the shares becoming listed or traded on AIM or the investee company being sold. The Company's investment objective is to increase net asset value per share at a higher rate than other quoted smaller company trusts and the FTSE All-Share Index. It is the Company's policy not to invest in any listed investment companies (including listed investment trusts).
As at 31 August 2011 the Company held 25 investments, of which the largest 20 companies in the portfolio represented 100 per cent. of Shareholders' funds.
For the 12 month period ended 31 August 2011, the Company's net asset value and share price rose by 24.09 per cent. and 27.54 per cent. respectively. These figures compare with the FTSE All Share Index and the FTSE AIM Index which rose by 3.85 per cent. and 11.75 per cent. respectively, over the same period.
Please refer to the Annual Report in respect of the year ended 31 August 2011 which accompanies this document for the Manager's Report and details on the key investments in the portfolio.
Shareholders on the Register on the Record Date will be invited to tender some or all of their Ordinary Shares to Merchant Securities who will, as principal, purchase at the Tender Price the Ordinary Shares validly tendered (subject to the overall limits of the Tender Offer) and, following the completion of all those purchases, sell the relevant Ordinary Shares on to the Company at the Tender Price by way of an on-market transaction. All transactions will be carried out on the London Stock Exchange and will be subject to the rules of the London Stock Exchange.
The Tender Offer is subject to certain conditions, and may be terminated in certain circumstances as set out in paragraph 7 of Part III of this document.
Shareholders' attention is drawn to the letter from Merchant Securities set out in Part II of this document and to Part III of this document, which, together with the Tender/Buyback Form constitute the terms and conditions of the Tender Offer. Details of how Shareholders will be able to tender Ordinary Shares can be found in paragraph 3 of Part III of this document.
Minority Shareholders on the Register on the Record Date will be invited to sell all (but not some) of their Ordinary Shares to the Company who will purchase, as principal, at the Tender Price the Ordinary Shares eligible for sale by the Minority Shareholders and which are tendered by the Minority Shareholders. All transactions will be carried out on the London Stock Exchange and will be subject to the rules of the London Stock Exchange.
The Buyback Offer is subject to certain conditions, and may be terminated in certain circumstances as set out in paragraph 7 of Part IV of this document.
Shareholders should note that, once tendered, Ordinary Shares may not be sold, transferred, withdrawn from the offer, charged or otherwise disposed of other than in accordance with the Tender Offer and the Buyback Offer.
Shareholders who are in any doubt as to the contents of this document or as to the action to be taken should immediately consult their stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised under FSMA.
The Tender Offer and Buyback Offer are only available to Shareholders (other than Restricted Shareholders and, in the case of the Buyback Offer, Related Parties) in respect of the number of Ordinary Shares registered in those Shareholders' names on the shareholder register of the Company at close of business on the Record Date.
The costs relating to the Proposals, assuming the Tender Offer and the Buyback Offer are both fully subscribed, are expected to be approximately £25,000. The Tender Price will be 92.5 per cent. of the Tender NAV. On the basis that the Tender Offer and the Buyback Offer are fully subscribed, costs are estimated to be approximately 0.61 per cent. of the Tender Net Asset Value and as a result of the Tender Price being at a discount to the Tender NAV, Shareholders should therefore expect the effect on the Net Asset Value per Ordinary Share to be marginally positive. If the Tender Offer is not fully subscribed, the overall costs of the Tender Offer may be lower due to savings in stamp duty.
Any Ordinary Shares repurchased pursuant to the Company's buyback powers will not be held in treasury and will be cancelled upon completion of the Proposals.
Resolutions to renew the existing authority to reissue Ordinary Shares from treasury will be tabled at the AGM on 21 December 2011. Both the repurchase for cancellation and the use of treasury shares should assist the Manager in the objective of providing a discount management mechanism and enhancing the Net Asset Value of the Company's Ordinary Shares.
The Directors have determined certain policies in respect of the Manager's discretion in the use of treasury shares which are set out below.
The Manager will not repurchase Ordinary Shares into Treasury at a discount to Net Asset Value of less than 7.5 per cent. on the date of purchase. The number of Treasury shares that may be held for reissue at any one time will be limited to 10 per cent. of the shares in issue. Treasury shares will only be reissued at a higher price to which they were acquired and at a lower discount to which they were purchased.
Any shares held in Treasury at each financial year end that have not been sold will be cancelled.
Shareholders who sell Ordinary Shares in the Proposals may, depending on their individual circumstances, incur a liability to taxation. Individual and trustee Shareholders resident in the UK should be aware that HM Revenue & Customs (''HMRC'') may seek to treat part of the disposal proceeds of their Ordinary Shares as income.
The attention of Shareholders is drawn to Part V of this document which sets out a general guide to certain aspects of current UK law and HMRC practice.
The ability of the Company to qualify as an investment trust under Chapter 4 to Part 24 of the CTA 2010 should not be affected by the Proposals.
Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser.
The Board unanimously recommends that shareholders vote in favour of Resolution 10 set out in the Notice of AGM, as the Directors intend to do in respect of their own beneficial holdings totalling 1,339,619 shares (representing 10.12 per cent. of the Company's issued share capital).
Merchant Securities has received an irrevocable undertaking from George Stevens, Chairman, that he will be tendering his entire shareholding, being 669,694 shares (representing 5.06 per cent. of the Company's issued share capital). Merchant Securities has also received irrevocable undertakings from David Horner and Kevin Allen, Non-Executive Directors, that they will not be tendering any of their Ordinary Shares, being 669,925 shares in aggregate (representing 5.06 per cent. of the Company's issued share capital).
Related Parties and Restricted Shareholders will not be entitled to participate in the Buyback Offer.
Shareholders who wish to participate in the Tender Offer and Minority Shareholders who also wish to participate in the Buyback Offer should complete the Tender/Buyback Form in accordance with the instructions set out therein and return the completed Tender/Buyback Form by post or by hand (during normal business hours) to Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL to arrive as soon as possible after receipt of the Tender/Buyback Form and by no later than 3.00 p.m. on 22 December 2011. A reply-paid envelope for use in the United Kingdom is enclosed with the Tender/Buyback Form for your convenience.
The extent to which Shareholders participate in the Tender Offer and/or the Buyback Offer is a matter for each Shareholder to decide, and will be influenced by their own individual financial and tax circumstances and their investment objectives. Shareholders should seek advice from their own financial adviser authorised under FSMA.
At the Company's AGM in 2007, a resolution was passed amending the Company's Articles of Association and extending the life of the Company.
Unfortunately, due to an administrative oversight, the new Articles of Association adopted by the Company in 2008 did not contain the provisions approved in 2007 and, as a result, the board did not comply with the obligation (as per the Articles prior to the 2007 AGM) to convene an extraordinary general meeting of the Company on 30 November 2009 to consider a resolution to wind up the Company. A resolution to ratify the board's actions will be proposed at this year's AGM.
The new Articles of Association adopted by the Company in 2008 and 2010 altered the provisions relating to the life of the Company. These changes were not highlighted to the Company's shareholders at the time of adoption of these sets of Articles and the Company's Annual Report and Accounts in 2008, 2009 and 2010 did not properly describe the provisions of the Company's Articles relating to the life of the Company.
A resolution will be proposed at this year's AGM to ratify the adoption by the Company of the new Articles of Association in 2010. These Articles provide that if the Company has not been liquidated, unitised or reconstructed by the Company's AGM in 2014, the board will propose an ordinary resolution that the Company should continue as an investment trust for a further five year period.
Yours faithfully,
George Stevens Chairman
28 November 2011
Dear Sir or Madam
As explained in the letter from your Chairman in Part I of this document, Shareholders are being given the opportunity to tender some or all of their Ordinary Shares for purchase in the Tender Offer, subject to the scaling back of tenders in excess of the Basic Entitlement on the basis set out below and in Part III of this document. The purpose of this letter is to summarise the principal terms and conditions of the Tender Offer, which should be read in conjunction with the Company's report and accounts.
Merchant Securities accordingly hereby invites Shareholders on the Register on the Record Date to tender up to 10 per cent. of their holding of Ordinary Shares for purchase by Merchant Securities for cash at the Tender Price. The Tender Price will be equal to 92.5 per cent. of the Tender NAV per Ordinary Share on the Calculation Date.
Each Shareholder will be entitled to have accepted in the Tender Offer valid tenders in respect of their Basic Entitlement. In addition, Shareholders may tender Ordinary Shares in excess of their Basic Entitlement but such excess tenders will only be satisfied to the extent that other Shareholders have not tendered all or any part of their Basic Entitlement, as the case may be.
Tenders in excess of the Basic Entitlement will be satisfied pro rata in proportion to the amount tendered over the Basic Entitlement, rounded down to the nearest whole number of Ordinary Shares.
The Tender Offer is made on the terms and subject to the conditions set out in Part III of this document and the Tender/Buyback Form, the terms of which will be deemed to be incorporated in this document and form part of the Tender Offer.
Shareholders who wish to tender Ordinary Shares should complete the Tender/Buyback Form in accordance with the instructions set out therein and return the completed Tender/Buyback Form by post or by hand (during normal business hours) to Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL, to arrive by no later than 3.00 p.m. on 22 December 2011.
Authorised and regulated by the Financial Services Authority. Member of the London Stock Exchange. A subsidiary of Merchant Securities Group plc. Registered in England at the above address. Registered No.1825671
Merchant Securities Limited, 51 – 55 Gresham Street, London EC2V 7HQ T +44 (0)20 7628 2200 F +44 (0)20 7375 9011 (Corporate Finance Secure Fax 020 7628 4473) E [email protected] www.merchantsecurities.co.uk
Shareholders who hold their Ordinary Shares in certificated form should also return the Ordinary Share certificate(s) and/or other document(s) of title in respect of the Ordinary Shares tendered with their Tender/Buyback Form. Shareholders who hold their Ordinary Shares in uncertificated form (that is, in CREST) should return the Tender/Buyback Form as described above and arrange for their Ordinary Shares to be transferred to escrow as described in paragraph 3 of Part III of this document and in the Tender/Buyback Form.
Shareholders should note that, once tendered, Ordinary Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.
Full details of the procedure for tendering Ordinary Shares are set out in Part III of this document and in the Tender/Buyback Form.
Tender/Buyback Forms which are received by the Receiving Agent after 3.00 p.m. on the Closing Date or which at that time are incorrectly completed or not accompanied by all relevant documents or instructions may be rejected and returned to Shareholders or their appointed agent, together with any accompanying Ordinary Share certificate(s) and/or other document(s) of title.
Merchant Securities reserves the right to treat as valid Tender/Buyback Forms which are not entirely in order and which are not accompanied (in the case of Ordinary Shares held in certificated form) by the relevant Ordinary Share certificate(s) and/or other document(s) of title or a satisfactory indemnity in lieu thereof.
The Tender Offer is conditional on the terms specified in paragraph 2 of Part III of this document.
The Tender Offer may be terminated in the circumstances described in paragraph 7 of Part III of this document.
Subject to the Tender Offer becoming unconditional, payment of the Tender Price due to Shareholders whose tenders have been accepted under the Tender Offer will be made by a Sterling cheque by 23 January 2012 (as set out in further detail in paragraph 4.3.1 of Part III of this document).
Your attention is drawn to the information contained in the rest of this document, including, in particular, the terms and conditions of the Tender Offer in Part III of this document and the terms and conditions of the Buyback Offer in Part IV of this document.
Yours faithfully,
Lindsay Mair Director, Corporate Finance
2.1.2 passing, at the AGM of the Company on 21 December 2011, of the Resolution numbered 10 in the Notice of AGM;
2.1.3 Merchant Securities being satisfied that the Company has paid an amount equal to the aggregate of the Tender Price for all successfully tendered Ordinary Shares into a designated account in accordance with the Repurchase Agreement;
Merchant Securities will not purchase any Ordinary Shares pursuant to the Tender Offer unless the Tender Offer Conditions have been satisfied. The Tender Offer Conditions, other than that contained in subparagraph 2.1.3 above, may not be waived by Merchant Securities. If any Tender Offer Conditions have not been satisfied (or waived where they are capable of waiver) prior to the close of business on 28 February 2012 the Tender Offer, if not then completed, will lapse.
To tender your Ordinary Shares, you must (whether or not your Ordinary Shares are in CREST) complete, sign and return the Tender/Buyback Form in accordance with the instructions printed on the Tender/Buyback Form which shall be deemed to form part of the Tender Offer.
If you hold Ordinary Shares in both certificated and uncertificated form, you should complete a separate Tender/Buyback Form for each holding. In addition, you should complete separate Tender/Buyback Forms for Ordinary Shares held in uncertificated form but under different member account IDs and for Ordinary Shares held in certificated form but under different designations. Additional Tender/Buyback Forms will be available from Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL, telephone number 01252 821390 (or if calling from outside the UK +44 1252 821390).
The completed and signed Tender/Buyback Form should be sent either by post or by hand (during normal business hours) to Share Registrars Limited or by hand only (during normal business hours) to Share Registrars Limited at Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL, so as to arrive no later than 3.00 p.m. on 22 December 2011. No Tender/Buyback Forms received after this time will be accepted. Reply paid envelopes are enclosed with the Tender/Buyback Forms. No acknowledgement of receipt of documents will be given and all documents sent to, from, by or on behalf of the Shareholder are sent at his/her own risk.
The completed and signed Tender/Buyback Form should be accompanied by the relevant Ordinary Share certificate(s) and/or other document(s) of title. If your Ordinary Share certificate(s) and/or other document(s) of title are not readily available (for example, if they are with your stockbroker, bank or other agent), the Tender/Buyback Form should nevertheless be completed, signed and returned as described above so as to be received by Share Registrars Limited not later than 3.00 p.m. on 22 December 2011 together with any Ordinary Share certificate(s) and/or other document(s) of title you may have available, accompanied by a letter stating that the (remaining) Ordinary Share certificate(s) and/or other document(s) of title will be forwarded as soon as possible thereafter and, in any event, not later than 3.00 p.m. on 22 December 2011.
The Registrars, acting as your agent, will effect such procedures as are required to transfer your Ordinary Shares to Merchant Securities under the Tender Offer.
If you have lost your Ordinary Share certificate(s) and/or other document(s) of title, you should write to the Company's Registrars, Share Registrars Limited, for a letter of indemnity in respect of the lost Ordinary Share certificate(s) which, when completed in accordance with the instructions given, should be returned to Share Registrars Limited at the address referred to at the beginning of this paragraph 3.2 so as to be received no later than 3.00 p.m. on 22 December 2011.
If the Ordinary Shares which you wish to tender are held in uncertificated form, you must complete and return the Tender/Buyback Form as described above. In addition, you should take (or procure to be taken) the action set out below to transfer (by means of a TTE Instruction) the number of Ordinary Shares which you wish to tender in the Tender Offer to an escrow balance, specifying Share Registrars Limited in its capacity as a CREST Receiving Agent under its participant ID (referred to below) as the escrow agent, as soon as possible and, in any event, so that the transfer to escrow settles not later than 3.00 p.m. on 22 December 2011.
If you are a CREST sponsored member, you should refer to your CREST sponsor before taking any action. Only your CREST sponsor will be able to send the TTE Instruction to CREST Co in relation to the Ordinary Shares which you wish to tender.
You should send (or, if you are a CREST sponsored member, procure that your CREST sponsor sends) a TTE Instruction to Euroclear, which must be properly authenticated in accordance with Euroclear's specification and which must contain, in addition to the other information that is required for the TTE Instruction to settle in CREST, the following details:
your member account ID. This must be the same member account ID as the member account ID that is shown on the Tender/Buyback Form;
your participant ID. This must be the same participant ID that is shown on the Tender/Buyback Form; the participant ID of the escrow agent, Share Registrars Limited, in its capacity as a CREST receiving agent, this is: 7RA36;
You should keep a separate record of this Tender/Buyback Form reference number for future reference; and the intended settlements date for the transfer to escrow. This should be as soon as possible after receipt of your Tender/Buyback Form and in any event no later than 3.00 p.m. on 22 December 2011.
After settlement of the TTE Instruction, you will not be able to access the Ordinary Shares concerned in CREST for any transaction or for charging purposes, notwithstanding that they will be held by Share Registrars Limited as your agent until completion or lapsing of the Tender Offer. If the Tender Offer becomes unconditional, Share Registrars Limited will transfer the Ordinary Shares which are accepted for purchase by Merchant Securities to itself as your agent for onward sale to Merchant Securities.
You are recommended to refer to the CREST Manual published by Euroclear for further information on the CREST procedures outlined above. For ease of processing, you are requested wherever possible, to ensure that a Tender/Buyback Form relates to only one transfer to escrow.
If no Tender/Buyback Form reference number, or an incorrect Tender/Buyback Form reference number, is included on the TTE Instruction, Merchant Securities may (but shall not be obliged to) treat any number of Ordinary Shares transferred to an escrow balance in favour of the escrow agent from the participant ID and member account ID identified in the TTE Instruction as relating to any Tender/Buyback Form which relates to the same participant ID and member account ID (up to the number of Ordinary Shares inserted or deemed to be inserted in the Tender/Buyback Form concerned).
You should note that Euroclear does not make available special procedures in CREST, for any particular corporate action. Normal system timings and limitations will therefore apply in connection with a TTE Instruction and its settlement. You should therefore ensure that all necessary action is taken by you (or by your CREST sponsor) to enable a TTE Instruction relating to your Ordinary Shares to settle prior to 3.00 p.m. on 22 December 2011. In connection with this, you are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
3.2.3 Deposits of Ordinary Shares into, and withdrawals of Ordinary Shares from, CREST normal procedures (including timings) apply in relation to any Ordinary Shares that are, or are to be, converted from uncertificated to certificated form, or from certificated to uncertificated form, during the course of the Tender Offer (whether such conversion arises as a result of a transfer of Ordinary Shares or otherwise). Shareholders who are proposing to convert any such Ordinary Shares are recommended to ensure that the conversion procedures are implemented in sufficient time to enable the person holding or acquiring the Ordinary Shares as a result of the conversion to take all necessary steps in connection with such person's participation in the Tender Offer (in particular, as regards delivery of Ordinary Share certificates and/or other documents of title or transfer to an escrow balance as described above) prior to 3.00 p.m. on 22 December 2011.
Notwithstanding the powers in paragraph 8.5 below, Merchant Securities reserves the right to treat as valid only Tender/Buyback Forms which are received entirely in order by 3.00 p.m. on 22 December 2011, which are accompanied (in the case of Ordinary Shares held in certificated form) by the relevant Ordinary Share certificate(s) and/or other document(s) of title or a satisfactory indemnity in lieu thereof or (in the case of Ordinary Shares held in uncertificated form) by the relevant TTE Instruction. The Record Date for the Tender Offer is the close of business on 22 December 2011.
Notwithstanding the completion of a valid Tender/Buyback Form, the Tender Offer may terminate or lapse in accordance with the Terms and Conditions set out in this Part III.
The decision of Merchant Securities as to which Ordinary Shares have been validly tendered shall be conclusive and binding on Shareholders who participate in the Tender Offer.
If you are in any doubt as to how to complete the Tender/Buyback Form or as to the procedures for tendering Ordinary Shares and you are a registered Shareholder, please contact Share Registrars Limited by telephone on (if calling from the UK) 01252 821390, or (if calling from overseas) +44 1252 821390. You are reminded that, if you are a CREST sponsored member, you should contact your CREST sponsor before taking any action.
4.3 If any tendered Ordinary Shares are not purchased because of an invalid tender, the termination of the Tender Offer or otherwise, relevant certificates evidencing any such Ordinary Shares and other documents of title, if any, will be returned or sent as promptly as practicable, without expense to, but at the risk of, the tendering Shareholder, or in the case of Ordinary Shares held in uncertificated form (that is, in CREST), the Receiving Agent will provide instructions to Euroclear to transfer all Ordinary Shares held in escrow balances by TFE instruction to the original available balances to which those Ordinary Shares relate.
Settlement of the consideration to which any Shareholder is entitled pursuant to valid tenders accepted by Merchant Securities whether the Ordinary Shares are held in certificated form (that is, not in CREST) or held in uncertified form (that is, in CREST) will be made by way of cheque. Cheques for the consideration due will be despatched by Share Registrars Limited by first class post to the person or agent whose name and address is set out in Box 1 (or, if relevant, Box 3 of the Tender/Buyback Form). All cash payments will be made in Sterling by cheque drawn on a branch of a UK clearing bank by 23 January 2012.
The payment of any consideration to Shareholders for Ordinary Shares pursuant to the Tender Offer will be made only after the relevant TTE Instruction has settled or (as the case may be) timely receipt by the Receiving Agent of certificates and/or other requisite documents evidencing such Ordinary Shares, a properly completed and duly executed Tender/Buyback Form and any other documents required by the Tender Offer.
Each Shareholder by whom, or on whose behalf, a Tender/Buyback Form is executed irrevocably undertakes, represents, warrants and agrees to and with Merchant Securities (for itself and as trustee for the Company) so as to bind him, his personal representatives, heirs, successors and assigns that:
5.2 such Shareholder has full power and authority to tender, sell, assign or transfer the Ordinary Shares in respect of which such offer is accepted (together with all rights attaching thereto) and, when the same are purchased by Merchant Securities, Merchant Securities will acquire such Ordinary Shares with full title guarantee and free from all liens, charges, encumbrances, equitable interests, rights of pre-emption or other third party rights of any nature and together with all rights attaching thereto on or after the Closing Date, including the right to receive all dividends and other distributions declared, paid or made after that date;
5.3 the execution of the Tender/Buyback Form will, subject to the Tender Offer becoming unconditional, constitute the irrevocable appointment of any director or officer of Merchant Securities as such Shareholder's attorney and/or agent (''attorney''), and an irrevocable instruction to the attorney to complete and execute all or any instruments of transfer and/or other documents at the attorney's discretion in relation to the Ordinary Shares referred to in sub-paragraph 5.1 above in favour of Merchant Securities or such other person or persons as Merchant Securities may direct and to deliver such instrument(s) of transfer and/or other documents at the discretion of the attorney, together with the Ordinary Share certificate(s) and/or other document(s) relating to such Ordinary Shares, for registration within six months of the Tender Offer becoming unconditional and to do all such other acts and things as may in the opinion of such attorney be necessary or expedient for the purpose of, or in connection with, the Tender Offer and to vest in Merchant Securities or its nominee(s) or such other person(s) as Merchant Securities may direct such Ordinary Shares;
5.9 the provisions of the Tender/Buyback Form shall be deemed to be incorporated into the terms and condition of the Tender Offer;
5.10 in the case of Ordinary Shares held in certificated form or held in uncertificated form (that is in CREST), the despatch of a cheque by the Receiving Agents in respect of the Tender Price to a Shareholder at his registered address or such other address as is specified in the Tender/Buyback Form will constitute a complete discharge by Merchant Securities of its obligations to make such payment to such Shareholder;
6.6 No acknowledgement of receipt of any Tender/Buyback Form, Ordinary Share certificate(s) and/or other document(s) of title will be given. All communications, notices, certificates, documents of title and remittances to be delivered by or sent to or from Shareholders (or their designated agents) will be delivered by or sent to or from such Shareholders (or their designated agents) at their own risk.
6.7 All powers of attorney and authorities on the terms conferred by or referred to in this Part III or in the Tender/Buyback Form are given by way of security for the performance of the obligations of the Shareholders concerned and are irrevocable in accordance with section 4 of the Powers of Attorney Act 1971.
If the Company (acting through the Directors) shall, at any time prior to Merchant Securities effecting the purchase as principal of the tendered Ordinary Shares pursuant to the Repurchase Agreement, notify Merchant Securities in writing that in their opinion (i) as a result of any change in national or international financial, economic, political or market conditions, the cost of realisation of assets to fund the Tender Offer has become significantly more expensive since the date of this document; or (ii) in its reasonable opinion the completion of the purchase of Ordinary Shares in the Tender Offer could have unexpected adverse fiscal or other consequences (whether by reason of a change in legislation or practice or otherwise) for the Company or its Shareholders if the Tender Offer were to proceed, Merchant Securities and/or the Company shall be entitled at their complete discretion by a public announcement and the Company's subsequent written notice to Shareholders to withdraw the Tender Offer, and in such event the Tender Offer shall cease and determine absolutely.
9.5 If, in connection with making the Tender Offer, notwithstanding the restrictions described above, any person (including, without limitation, custodians, nominees and trustees), whether pursuant to a contractual or legal obligation or otherwise, forwards this document, the Tender/Buyback Form or any related offering documents in or into a Restricted Territory or uses the mails of, or any means or instrumentality (including, without limitation, facsimile transmission, telex, internet and telephone) of interstate or foreign commerce of, or any facility of a national securities exchange in, a Restricted Territory in connection with such forwarding, such person should (i) inform the recipient of such fact; (ii) explain to the recipient that such action may invalidate any purported acceptance by the recipient; and (iii) draw the attention of the recipient to this paragraph 9.
The terms of the Tender Offer shall have effect subject to such non-material modifications or additions as the Company and Merchant Securities may from time to time approve in writing. The times and dates referred to in this document may be amended by agreement between the Company and Merchant Securities.
The Company will not purchase any Ordinary Shares pursuant to the Buyback Offer unless the Buyback Conditions have been satisfied. The Buyback Conditions may not be waived by the Company. If any Buyback Conditions have not been satisfied prior to the close of business on 28 February 2012 the Buyback Offer, if not then completed, will lapse.
To sell your Ordinary Shares, if you are a Minority Shareholder, you must (whether or not your Ordinary Shares are in CREST) complete, sign and return the section of the Tender/Buyback Form relating to the Buyback Offer in accordance with the instructions printed on the Tender/Buyback Form which shall be deemed to form part of the Buyback Offer.
If you hold Ordinary Shares in both certificated and uncertificated form, you should complete a separate Tender/Buyback Form for each holding. In addition, you should complete separate Tender/Buyback Forms for Ordinary Shares held in uncertificated form but under different member account IDs and for Ordinary Shares held in certificated form but under different designations. Additional Tender/Buyback Forms will be available from Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL, telephone number 01252 821390 (or if calling from outside the UK +44 1252 821390).
The completed and signed Tender/Buyback Form should be sent either by post or by hand (during normal business hours) to Share Registrars Limited or by hand only (during normal business hours) to Share Registrars Limited at Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL, so as to arrive no later than 3.00 p.m. on 22 December 2011. No Tender/Buyback Forms received after this time will be accepted. Reply paid envelopes are enclosed with the Tender/Buyback Forms. No acknowledgement of receipt of documents will be given and all documents sent to, from, by or on behalf of the Shareholder are sent at his/her own risk.
The completed and signed Tender/Buyback Form should be accompanied by the relevant Ordinary Share certificate(s) and/or other document(s) of title. If your Ordinary Share certificate(s) and/or other document(s) of title are not readily available (for example, if they are with your stockbroker, bank or other agent), the Tender/Buyback Form should nevertheless be completed, signed and returned as described above so as to be received by Share Registrars Limited not later than 3.00 p.m. on 22 December 2011 together with any Ordinary Share certificate(s) and/or other document(s) of title you may have available, accompanied by a letter stating that the (remaining) Ordinary Share certificate(s) and/or other document(s) of title will be forwarded as soon as possible thereafter and, in any event, not later than 3.00 p.m. on 22 December 2011.
The Registrars, acting as your agent, will effect such procedures as are required to transfer your Ordinary Shares to the Company under the Buyback Offer.
If you have lost your Ordinary Share certificate(s) and/or other document(s) of title, you should write to the Company's Registrars, Share Registrars Limited, for a letter of indemnity in respect of the lost Ordinary Share certificate(s) which, when completed in accordance with the instructions given, should be returned to Share Registrars Limited at the address referred to at the beginning of this paragraph 3.2 so as to be received no later than 3.00 p.m. on 22 December 2011.
If the Ordinary Shares which you wish to sell as part of the Buyback Offer are held in uncertificated form, you must complete and return the Tender/Buyback Form as described above. In addition, you should take (or procure to be taken) the action set out below to transfer (by means of a TTE Instruction) the number of Ordinary Shares which you wish to sell as part of the Buyback to an escrow balance, specifying Share Registrars Limited in its capacity as a CREST Receiving Agent under its participant ID (referred to below) as the escrow agent, as soon as possible and, in any event, so that the transfer to escrow settles not later than 3.00 p.m. on 22 December 2011.
If you are a CREST sponsored member, you should refer to your CREST sponsor before taking any action. Only your CREST sponsor will be able to send the TTE Instruction to CREST Co in relation to the Ordinary Shares which you wish to tender.
You should send (or, if you are a CREST sponsored member, procure that your CREST sponsor sends) a TTE Instruction to Euroclear, which must be properly authenticated in accordance with Euroclear's specification and which must contain, in addition to the other information that is required for the TTE Instruction to settle in CREST, the following details:
You should keep a separate record of this Tender/Buyback Form reference number for future reference; and the intended settlements date for the transfer to escrow. This should be as soon as possible after receipt of your Tender/Buyback Form and in any event no later than 3.00 p.m. on 22 December 2011.
After settlement of the TTE Instruction, you will not be able to access the Ordinary Shares concerned in CREST for any transaction or for charging purposes, notwithstanding that they will be held by Share Registrars Limited as your agent until completion or lapsing of the Buyback Offer. If the Buyback Offer becomes unconditional, Share Registrars Limited will transfer the Ordinary Shares which are accepted for purchase by the Company to itself as your agent for onward sale to the Company.
You are recommended to refer to the CREST Manual published by Euroclear for further information on the CREST procedures outlined above. For ease of processing, you are requested wherever possible, to ensure that a Tender/Buyback Form relates to only one transfer to escrow.
If no Tender/Buyback Form reference number, or an incorrect Tender/Buyback Form reference number, is included on the TTE Instruction, the Company may (but shall not be obliged to) treat any number of Ordinary Shares transferred to an escrow balance in favour of the escrow agent from the participant ID and member account ID identified in the TTE Instruction as relating to any Tender/Buyback Form which relates to the same participant ID and member account ID (up to the number of Ordinary Shares inserted or deemed to be inserted in the Tender/Buyback Form concerned).
You should note that Euroclear does not make available special procedures in CREST, for any particular corporate action. Normal system timings and limitations will therefore apply in connection with a TTE Instruction and its settlement. You should therefore ensure that all necessary action is taken by you (or by your CREST sponsor) to enable a TTE Instruction relating to your Ordinary Shares to settle prior to 3.00 p.m. on 22 December 2011. In connection with this, you are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
3.2.3 Deposits of Ordinary Shares into, and withdrawals of Ordinary Shares from, CREST normal procedures (including timings) apply in relation to any Ordinary Shares that are, or are to be, converted from uncertificated to certificated form, or from certificated to uncertificated form, during the course of the Buyback Offer (whether such conversion arises as a result of a transfer of Ordinary Shares or otherwise). Shareholders who are proposing to convert any such Ordinary Shares are recommended to ensure that the conversion procedures are implemented in sufficient time to enable the person holding or acquiring the Ordinary Shares as a result of the conversion to take all necessary steps in connection with such person's participation in the Buyback Offer (in particular, as regards delivery of Ordinary Share certificates and/or other documents of title or transfer to an escrow balance as described above) prior to 3.00 p.m. on 22 December 2011.
Notwithstanding the powers in paragraph 8.5 below, the Company reserves the right to treat as valid only Tender/Buyback Forms which are received entirely in order by 3.00 p.m. on 22 December 2011, which are accompanied (in the case of Ordinary Shares held in certificated form) by the relevant Ordinary Share certificate(s) and/or other document(s) of title or a satisfactory indemnity in lieu thereof or (in the case of Ordinary Shares held in uncertificated form) by the relevant TTE Instruction. The Record Date for the Buyback Offer is the close of business on 22 December 2011.
Notwithstanding the completion of a valid Tender/Buyback Form, the Buyback Offer may terminate or lapse in accordance with the Terms and Conditions set out in this Part III.
The decision of the Company as to which Ordinary Shares have been validly sold under the Buyback Offer shall be conclusive and binding on Minority Shareholders who participate in the Buyback Offer.
If you are in any doubt as to how to complete the Tender/Buyback Form or as to the procedures for selling Ordinary Shares and you are a registered Shareholder, please contact Share Registrars Limited by telephone on (if calling from the UK) 01252 821390, or (if calling from overseas) +44 1252 821390. You are reminded that, if you are a CREST sponsored member, you should contact your CREST sponsor before taking any action.
Settlement of the consideration to which any Shareholder is entitled pursuant to valid purchases pursuant to the Buyback Offer accepted by the Company whether the Ordinary Shares are held in certificated form (that is, not in CREST) or held in uncertified form (that is, in CREST) will be made by way of cheque. Cheques for the consideration due will be despatched by Share Registrars Limited by first class post to the person or agent whose name and address is set out in Box 1 (or, if relevant, Box 3 of the Tender/Buyback Form). All cash payments will be made in Sterling by cheque drawn on a branch of a UK clearing bank by 23 January 2012.
The payment of any consideration to Shareholders for Ordinary Shares pursuant to the Buyback Offer will be made only after the relevant TTE Instruction has settled or (as the case may be) timely receipt by the Receiving Agent of certificates and/or other requisite documents evidencing such Ordinary Shares, a properly completed and duly executed Tender/Buyback Form and any other documents required by the Buyback Offer.
Each Minority Shareholder by whom, or on whose behalf, a Tender/Buyback Form is executed for the purposes of participating in the Buyback Offer, irrevocably undertakes, represents, warrants and agrees to and with the Company so as to bind him, his personal representatives, heirs, successors and assigns that:
5.1 the execution of the Tender/Buyback Form, by the insertion of the word "BUYBACK" in box 1A for the purposes of participating in the Buyback Offer shall constitute an offer to sell to the Company the relevant Minority Shareholder's entire holding of shares in the Company, in each case, on and subject to the terms and conditions set out or referred to in this document and the Tender/Buyback Form and that, once lodged, such offer shall be irrevocable;
5.8 such Shareholder has not received or sent copies or originals of this document or the Tender/Buyback Form or any related documents to a Restricted Territory and has not otherwise utilised in connection with the Buyback Offer, directly or indirectly, the mails or any means or instrumentality (including, without limitation, facsimile transmission, internet, telex and telephone) of interstate or foreign commerce or of any facility of a national securities exchange, of any Restricted Territory, that the Tender/Buyback Form has not been mailed or otherwise sent in, into or from any Restricted Territory and that such Shareholder is not accepting the Buyback Offer from any Restricted Territory;
5.9 the provisions of the Tender/Buyback Form shall be deemed to be incorporated into the terms and condition of the Buyback Offer;
6.6 No acknowledgement of receipt of any Tender/Buyback Form, Ordinary Share certificate(s) and/or other document(s) of title will be given. All communications, notices, certificates, documents of title and remittances to be delivered by or sent to or from Minority Shareholders (or their designated agents) will be delivered by or sent to or from such Minority Shareholders (or their designated agents) at their own risk.
6.7 All powers of attorney and authorities on the terms conferred by or referred to in this Part IV or in the Tender/Buyback Form are given by way of security for the performance of the obligations of the Shareholders concerned and are irrevocable in accordance with section 4 of the Powers of Attorney Act 1971.
If the Company (acting through the Directors) shall, at any time prior to effecting its purchase of the Ordinary Shares pursuant to the Buyback Offer, consider in its opinion (i) as a result of any change in national or international financial, economic, political or market conditions the cost of realisation of assets to fund the Buyback Offer has become significantly more expensive since the date of this document; or (ii) in its reasonable opinion the completion of the purchase of Ordinary Shares in the Buyback Offer could have unexpected adverse fiscal or other consequences (whether by reason of a change in legislation or practice or otherwise) for the Company or its Shareholders if the Buyback Offer were to proceed, the Company shall be entitled in its complete discretion by a public announcement and the Company's subsequent written notice to Shareholders to withdraw the Buyback Offer, and in such event the Buyback Offer shall cease and determine absolutely.
9.1 The provisions of this paragraph 9 and any other terms of the Buyback Offer relating to Restricted Shareholders may be waived, varied or modified as regards specific Shareholders or on a general basis by the Company but only if the Company is satisfied that such a waiver, variance or modification will not constitute or give rise to a breach of applicable securities or other laws.
The terms of the Buyback Offer shall have effect subject to such non-material modifications or additions as the Company may from time to time approve in writing. The times and dates referred to in this document may be amended by the Company.
The following comments are intended only as a general guide to certain aspects of current UK law and HM Revenue & Customs (''HMRC'') published practice, and do not constitute tax advice. They are of a general nature and apply only to Shareholders who are resident or ordinarily resident in the UK (except where otherwise indicated) and who hold their Ordinary Shares beneficially as an investment. They do not address the position of certain classes of Shareholders such as dealers in securities, nor to investors who are exempt from UK tax or who hold their Ordinary Shares in an investment wrapper such as a PEP or ISA.
A Shareholder who sells Ordinary Shares in the Tender Offer should be treated, for the purposes of UK taxation, as having made a disposal. Accordingly, and subject to the comments in the remainder of this Part V, a UK resident Shareholder may, depending on their personal circumstances, be liable to capital gains tax (or, in the case of a corporate Shareholder, corporation tax on chargeable gains) in respect of any gain arising on sale. Shareholders who are not resident or ordinarily resident in the UK for taxation purposes will not normally be liable to UK capital gains tax, with the exception of individual Shareholders who are considered "temporary non-residents". Any such Shareholders, together with Shareholders who are subject to tax in a jurisdiction other than the UK and those in any doubt as to the potential tax consequences resulting from a disposal of their Ordinary Shares should take appropriate professional advice before accepting the Tender Offer.
The Company has not submitted a clearance application to HMRC under either Part 13 to ITA 2007 (Tax Avoidance) or Part 15 to CTA 2010 (Transactions in securities) seeking confirmation that HMRC will not issue a notice counteracting a tax advantage obtained by a Shareholder as a consequence of the disposal of Ordinary Shares as part of the Tender Offer. Based on their published practice, HMRC are unlikely to issue a counteraction notice in the context of the Tender Offer, however were they to do so the effect of any such notice would be to treat some or all of the disposal proceeds received by a Shareholder as distributions of income for tax purposes rather than as capital gains.
It is a defence to a counteraction notice for a Shareholder to show that the transaction in question was carried out for bona fide commercial reasons and did not involve as one of its main objects the obtaining of a tax advantage. Accordingly, the provisions relating to counteraction notices are not thought to apply generally in the context of the Tender Offer and will not, in any case, apply to UK individuals who are not liable to income tax at a rate which is greater than the basic rate or who hold their Ordinary Shares in a PEP or ISA, nor to investors who are exempt from UK tax or who are not UK resident. Shareholders are, however, advised to take independent advice as to the potential application of Part 13 to ITA 2007 (Tax Avoidance) and Part 15 to CTA 2010 (Transactions in securities) in the light of their own particular circumstances.
Stamp duty at the rate of 0.5 per cent. of the Tender Price on the Ordinary Shares repurchased will be payable by the Company as a result of the Tender Offer. The Tender Price will be 92.5 per cent. of the Tender NAV and costs including any stamp duty which is incurred will be deducted from the remaining 7.5 per cent. of the Tender NAV.
The UK tax treatment of a Minority Shareholder who sells Ordinary Shares in the Buyback Offer will depend on whether that Minority Shareholder is an individual or a corporate.
An individual Minority Shareholder will be treated, for the purposes of UK taxation, as having disposed of their Ordinary Shares (ordinarily that disposal will result in the Minority Shareholder realising neither a gain nor a loss, however this will be determined ultimately by the price at which the Ordinary Shares were acquired) and as having received a distribution (calculated by reference to the amount by which the aggregate Tender Price that the Minority Shareholder receives for his Minority Shares exceeds the amount accepted by HMRC to represent a return of the Minority Shareholder's capital).
An individual Minority Shareholder may, depending on his personal circumstances, be liable to income tax on the distribution received once a notional (non-refundable) tax credit equal to oneninth of the net distribution, which should be available to Minority Shareholders, has been taken into account, as set out in the following paragraph.
The liability of an individual Minority Shareholder paying tax at the basic rate (currently 10 per cent. of the distribution paid) will be offset by the tax credit such that the relevant Minority Shareholder will have no further tax liability to pay on the distribution. An individual Minority Shareholder liable to tax at the higher rate or the additional higher rate (32.5 per cent. and 42.5 per cent. of the distribution paid) will, once the tax credit has been taken into account, be required to account for tax on 22.5 per cent. or 32.5 per cent. of the gross distribution respectively. Trustees of trusts liable to tax at the dividend rate for trusts (currently 42.5 per cent. of the distribution paid) will be required to account for tax on 32.5 per cent. of the gross distribution once the tax credit has been taken into account.
A corporate Minority Shareholder who sells Ordinary Shares in the Buyback Offer should be treated, for the purposes of UK taxation, as having made a disposal. Accordingly, a corporate Minority Shareholder may be required to account for corporation tax on chargeable gains realised on sale, which will be calculated by reference to the aggregate Tender Price that Minority Shareholder receives for its Ordinary Shares.
Stamp duty at the rate of 0.5 per cent. of the Tender Price on the Ordinary Shares repurchased as part of the Buyback will be payable by the Company as a result of the Tender Offer, however that liability will not fall on the Ordinary Shareholders who are referred to paragraph 8.3 of Part IV above.
If you are in any doubt as to your taxation position you should take appropriate professional advice without delay. The information relating to taxation set out above is a general guide and is not exhaustive. It is based on law and practice currently in force in the UK which is subject to change.
The Company has a general authority granted by special resolution passed on 16 December 2010, to purchase shares up to 2,206,502 Ordinary Shares or if less 14.99 per cent. of the issued ordinary share capital of the Company. Subject to market conditions, the Board will consider using this general authority from time to time to make on-market share repurchases in order to return further capital to Shareholders.
Shareholders should also note that for any share buybacks conducted pursuant to this general authority, the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is, in respect of a share contracted to be purchased on any day, the higher of (i) an amount equal to 105 per cent. of the average of the middle market quotations for Ordinary Shares taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the contract of purchase is made; and (ii) the price stipulated by Article 5 (1) of the Buy-back and Stabilisation Regulation (ECNo. 2273/2003). The minimum price will not be below the nominal value of £0.01 per Ordinary Share. Purchases of Ordinary Shares pursuant to this general share buyback authority will be financed out of the Company's distributable reserves.
Purchases of Ordinary Shares under the share buyback authority will only be made through the market and otherwise in accordance with guidelines established from time to time by the Board.
The Company may utilise such general share buyback authority by either a single purchase or a series of purchases, as and when market conditions are appropriate, with the aim of maximising the benefit to the remaining Shareholders.
Repurchase Agreement
The Repurchase Agreement between the Company and Merchant Securities is dated 28 November 2011. Under this agreement, the parties agree that, subject to the Tender Offer becoming unconditional in all respects and not lapsing or terminating in accordance with its terms, Merchant Securities shall, as principal, purchase, on-market, at the Tender Price, Ordinary Shares successfully tendered up to a maximum of 10 per cent. of the Ordinary Shares in issue.
The Company has agreed that, as soon as practicable following the purchase by Merchant Securities of all Ordinary Shares which it has agreed to purchase under the terms of the Repurchase Agreement (and in any event by no later than the business day following such sale and purchase), the Company will purchase from Merchant Securities such Ordinary Shares at the Tender Price.
The agreement also contains representations and warranties from the Company in favour of Merchant Securities and incorporates an indemnity in favour of Merchant Securities in respect of any liability which it may suffer in relation to its performance under the Tender Offer.
Merchant Securities has agreed that it will not vote in respect of any Ordinary Shares it holds pursuant to the Repurchase Agreement.
Copies of the following documents will be available for inspection at the offices of Speechly Bircham LLP, 6 New Street Square, London EC4A 3LX during normal business hours on weekdays (Saturdays, Sundays and public holidays excepted) from the date of this document until the completion, lapse or termination of the Tender Offer:
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