AGM Information • Oct 8, 2020
AGM Information
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THIS DOCUMENT AND THE ACCOMPANYING FORM OF PROXY ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document and/or the action you should take, you should immediately consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised for the purposes of FSMA who specialises in advising on the acquisition of shares and other securities if you are in the United Kingdom or, if not, another appropriately authorised independent financial adviser.
If you have sold or otherwise transferred, or you sell or otherwise transfer, all of your registered holding of Shares, please immediately forward this document, together with the accompanying Form of Proxy, to the purchaser or transferee or to the stockbroker, bank or other agent through or by whom the sale or transfer was or is effected for onward delivery to the purchaser or transferee. If you have sold or otherwise transferred, or you sell or otherwise transfer, only part of your registered holding of Shares, please immediately contact your stockbroker, bank or other agent through or by whom the sale or transfer was effected.
(incorporated and registered in England and Wales with registered number 08860816)
and
This document should be read as a whole and in its entirety. Your attention is drawn to the letter from the Chairman of the Company which is set out in Part I of this document, which contains the unanimous recommendation of the Directors that Shareholders VOTE FOR the Resolutions to be proposed at the General Meeting.
Notice convening a General Meeting of the Company, to be held at 12 noon on 27 October 2020, is set out at the end of this document.
The action to be taken by Shareholders in respect of the General Meeting is set out on page 9 of this document. In light of the impact of the COVID-19 pandemic, and in line with the 2020 Act, Shareholders will not be given the opportunity to attend the General Meeting in person. Shareholders will have the right to vote on the resolutions to be considered at the General Meeting, provided that they appoint the Chairman of the meeting as their proxy. As such, you are urged to complete the accompanying Form of Proxy and return it in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received by post or, during normal business hours only, by hand, by the Registrar, Equiniti Limited, at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, by no later than 12 noon on 23 October 2020 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting).
A copy of this document will also be available from the Company's website www.gmsuae.com. Shareholders are encouraged to refer to the Company's website to review this document and any other communications from the Company in connection with the matters described in this document.
We strongly encourage you, where possible, to submit your Form of Proxy appointing the Chairman of the General Meeting as your proxy electronically in the event that: (i) there are delays in or suspension of the postal service; or (ii) Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA is closed as a result of COVID-19.
| 8 October 2020 |
|---|
| 12 noon on 23 October 2020 |
| 12 noon on 27 October 2020 |
Other than the date of this document, each of the times and dates in the table above is indicative only and may be subject to change. If any of the details contained in the timetable above should change, the revised times and dates will be notified by means of an announcement through a Regulatory Information Service. References to times in this document are to UK time unless stated otherwise.
We consider the health and wellbeing of our employees, Shareholders and other stakeholders must continue to be of paramount importance. This necessitates that we have suitable arrangements in place for the General Meeting as well as in our business operations. Our approach towards such arrangements must also take in to account the prevailing public health advice imposed by the UK Government in response to the COVID-19 pandemic. In light of the above, Shareholders will not be given the opportunity to attend the General Meeting in person.
We strongly encourage you, where possible, to submit your Form of Proxy appointing the Chairman of the General Meeting as your proxy electronically in the event that: (i) there are delays in or suspension of the postal service; or (ii) Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA is closed as a result of COVID-19.
Note:
If you have any questions on how to complete the Form of Proxy, please contact the Registrar, Equiniti Limited, on 0371 384 2030. If you are calling from overseas, please call on +44 (0) 121 415 7047. Calls from outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 8.30 a.m. – 5.30 p.m. (UK time), Monday to Friday, excluding public holidays in England and Wales. Please note that Equiniti Limited cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.
This document may include certain forward-looking statements, beliefs or opinions, including statements with respect to the Company's business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other various or comparable terminology or by discussions of strategy, plans, objectives, goals, future events or intentions. These statements are made by the Directors in good faith based on the information available to them at the date of this document and reflect the Directors' beliefs and expectations. By their nature these statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forwardlooking statements, including, without limitation, developments in the global economy, changes in regulation and government policies, spending and procurement methodologies and currency fluctuations.
No representation or warranty is made that any of these statements will come to pass. Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this document speak only as of their respective dates, reflect the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations and growth strategy. Subject to the requirements of the FCA, the London Stock Exchange, the Listing Rules and the Disclosure Guidance and Transparency Rules (and/or any regulatory requirements) or applicable law, the Company explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this document that may occur due to any change in the Company's expectations or to reflect events or circumstances after the date of this document.
Any information contained in this document on the price at which shares or other securities in the Company have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.
This document is not a prospectus and it does not constitute or form part of any offer or invitation to purchase, acquire, subscribe for, sell, dispose of or issue, or any solicitation of any offer to sell, dispose of, purchase, acquire or subscribe for, any security.
A copy of this document, together with all information incorporated into this document by reference to another source, is and will be available for inspection on the Company's website at www.gmsuae.com from the time this document is published. For the avoidance of doubt, the contents of the websites referred to in this document are not incorporated into, and do not form part of, this document.
If and to the extent that any document or information incorporated by reference or attached to this document itself incorporates any information by reference, either expressly or impliedly, such information will not form part of this document, except where such information or documents are stated within this document as specifically being incorporated by reference or where this document is specifically defined as including such information.
In particular, information on or accessible through the Company's corporate website at www.gmsuae.com does not form part of, and is not incorporated into, this document.
If you have received this document in electronic form, you may request a hard copy of this document and/or any information incorporated into this document by reference to another source by contacting the Registrar, Equiniti Limited, at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, or between 8.30 a.m. and 5.30 p.m. (UK time), Monday to Friday (excluding public holidays in England and Wales), on 0371 384 2030 from within the UK or on +44 (0) 121 415 7047 if calling from outside the UK (calls from outside the UK will be charged at the applicable international rate), with your full name and the full address to which the hard copy may be sent (calls may be recorded and monitored for training and security purposes).
Certain terms used in this document, including capitalised terms and certain technical and other items, are defined and explained in the section titled "Definitions" in Part II of this document.
(a public limited company incorporated in England and Wales with registered number 08860816)
Directors Registered Office
Tim Summers (Executive Chairman) Mo Bississo (Non-Executive Director) David Blewden (Non-Executive Director) Dr Shona Grant (Non-Executive Director) Mike Turner (Non-Executive Director)
107 Hammersmith Road London W14 0QH United Kingdom
8 October 2020
Dear Shareholder
As you may know, on 9 June 2020, the Group and its consortium of lending banks (the "Lenders") finalised amendments to the Group's term debt facilities, which provided the Group's with access to working capital facilities, reprofiled debt repayments (including an extended final maturity date), and revised covenant tests to more sustainable levels (together, the "Debt Restructuring").
The Debt Restructuring provides a platform for the future success of the Company by giving the management team the time to fully implement its turnaround plan, including the delivery of lower operating costs and higher utilisation, through improved efficiencies, safe and reliable operations, and building strong customer and stakeholder relationships.
The terms of the Debt Restructuring, which are set out in more detail below, include two conditions, at least one of which must be met before the end of 2020 to prevent the Company from triggering an event of default. The Company must either:
Both these conditions require shareholder approval, as they relate to the future issuance of additional share capital of the Company. For the reasons explained in detail below, we are writing to you now to provide notice of a General Meeting to vote on the resolutions relating to the issuance of the Warrants.
The Directors unanimously recommend that you vote in favour of the resolutions to ensure that the Company is able to satisfy the condition to issue Warrants by the end of 2020, and thereby avoid triggering an event of default at the end of 2020. Were an event of default to be triggered and enforced, the Company could be put into administration and shareholders could lose the entire value of their investment.
If neither of the Term Loan Conditions Subsequent is satisfied by 31 December 2020, the Lenders will be entitled to enforce an event of default under the Common Terms Agreement. This would allow a majority of the Lenders, representing at least 66.67 per cent. of total commitments, to exercise their rights to demand immediate repayment of the outstanding debt and/or to enforce their rights over the security granted by the Group as part of the Debt Restructuring, either by enforcing security over assets and/or exercising the share pledge to take control of the business. As a result, the Company could be put into administration and shareholders could lose the entire value of their investment.
In light of the foregoing considerations, the Company commenced preparations in ernest for a pre-emptive share offering, the purpose of which would have been to enable it to make the Minimum Prepayment by the end of 2020 (the "Share Offering"). However, on 18 September 2020, the Company received a letter from Seafox International Limited ("Seafox"), which owns approximately 29.9 per cent. of the Company's shares, requesting that the Company's non-executive directors, Mr. Mike Turner (Senior Independent Director and RemCo Chairman), Mr. David Blewden (Audit Committee Chairman), Mr. Mo Bississo and Dr. Shona Grant, voluntarily step down from the Board of GMS (the "Board") and that the Board appoint in their place three UAE-based individuals: Mr. Rashad Said Al Jarwan, Mr. Mansour Al Alami and Mr. Saeed Mer Abdulla Khoory (the "Seafox Nominees"). Seafox further stated that if the Company failed to implement its request by no later than 23 September 2020, it would requisition a General Meeting of Shareholders to remove Mr. Turner, Mr. Blewden, Mr. Bississo and Dr. Grant, and to appoint the Seafox Nominees to the Board.
The members of the Board (excluding Mr. Hassan Heikal and Mr. Hesham Halbouny, who as associates of Seafox did not participate in the Board's consideration of Seafox's request) concluded that the removal of any of the current Directors and the appointment of the Seafox Nominees as directors of the Company would not be in the best interests of the Company's shareholders. Accordingly, having taken advice from its financial advisor, Evercore LLP, and having sought feedback from its corporate brokers, B of A Securities and Canaccord Genuity Limited, the Board rejected Seafox's request on 21 September 2020.
On 22 September 2020, Seafox exercised its statutory right to require that the Directors convene a general meeting of the Company to consider resolutions to: (i) remove Mr. Turner, Mr. Blewden, Mr. Bississo and Dr. Grant as directors of the Company; and (ii) appoint the Seafox Nominees as directors of the Company (the "Seafox Requisition"). On 23 September 2020, the Company acknowledged receipt of the Seafox Requisition, noted that the Seafox Requisition contained a mixture of factual inaccuracies, irrelevant allegations and hyperbole, and advised Shareholders to take no action while it considered its response further.
On 7 October 2020, the two Seafox directors on the Board, Mr. Heikal and Mr. Halbouny, wrote to the Company to inform it that they were resigning from the Board with immediate effect, having previously been appointed to the Board on 4 August 2020 at a General Meeting requisitioned by Seafox. Within two hours of receiving their resignations, the Company received a letter from Seafox requesting that the Board requisition yet another General Meeting to re-appoint Mr. Heikal to the Board. Mr Halbouny did not indicate a desire to be re-appointed.
In order for the Share Offering to be successful, the future governance of the Company needs to be clear, stable and attractive to potential investors. As a result of the announcement of Seafox's proposed wholesale changes to the Board on 22 September 2020, the Company has not been able to meaningfully engage with potential investors, which is a critical preparatory step for the Share Offering. This situation has only been exacerbated by Seafox's actions on 7 October 2020.
Furthermore, the Board has sought clarity from Seafox's (former) representatives on the Board as to Seafox's position on the Share Offering. It has also sought clarity in writing from the Chairman of Mazrui International, Mr. Abdullah Mazrui, and the Chairman of Horizon Group, Mr. Rashid Al Suwaidi, who have previously voted in line with Seafox on governance resolutions at general meetings of the Company, as to their position. No such clarity has been received.
As a consequence, potential investors are unlikely to have visibility over the future governance of the Company before the resolution of the general meetings requisitioned by Seafox. Even afterwards, in view of the ongoing campaign of disruption undertaken by Seafox, it is unlikely to be sufficiently stable for the Share Offering to be successful.
As a result, the Board believes, having taken advice from its financial adviser and having sought feedback from its corporate brokers, that it is currently impracticable to proceed with the Share Offering and that, therefore, there is no reasonable prospect that the Share Offering can be completed prior to the end of 2020.
Therefore, to ensure that the Company is able to satisfy the requirement to effect the Warrant Issuance by the end of 2020 and ensure that an event of default is not triggered under the Common Terms Agreement, we are writing to you now to:
• provide notice that the General Meeting is to be held at 12 noon on 27 October 2020; and
• explain why the Directors unanimously recommend that you VOTE FOR the Resolutions.
Your Board unanimously recommends that you VOTE FOR the Resolutions for the following reasons:
In light of Seafox's recent actions, the Board believes that it is currently impracticable to proceed with the Share Offering and that, therefore, there is no reasonable prospect that the Share Offering can be completed prior to the end of 2020. If, as a result, the Minimum Prepayment condition is not satisfied and the Warrants are not delivered to the Lenders on or before 31 December 2020, a majority of the Lenders, representing at least 66.67 per cent. of total commitments under the Term Loan Facilities, will be entitled to exercise their rights to demand immediate repayment of the outstanding debt and/or to enforce their rights over the security granted by the Group as part of the Debt Restructuring, either by enforcing security over assets and/ or exercising the share pledge to take control of the business. As a result, the Company could be put into administration and shareholders could lose the entire value of their investment.
On 28 July 2020, the Agent on behalf of the Lenders wrote to GMS and confirmed that the Lenders "are not willing to renegotiate any of the terms [of the Common Terms Agreement] and expect the Company to perform all of its obligations under the Common Terms Agreement. This position continues to hold regardless of the composition of the Company's Board or the appointment of new directors (emphasis added)".
Consequently, to ensure that the Company does not trigger an event of default under the Common Terms Agreement, Shareholders should vote in favour of all of the Resolutions.
In order to pass the Resolutions, a supermajority of Shareholders voting in favour is required. It is therefore important that all Shareholders exercise their right to vote in favour to minimise the chance that the requisite voting threshold is not satisfied.
Set out at the end of this document is a notice convening the General Meeting of the Company to be held at 12 noon on 27 October 2020, at which the Resolutions will be proposed.
Resolution 1 is being proposed as an ordinary resolution and Resolution 2 is being proposed as a special resolution as set out in the notice of the General Meeting on page 12 of this document.
The Directors consider that the Resolutions are in the best interests of the Company or its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders VOTE FOR each of the Resolutions to be proposed at the General Meeting.
In light of the impact of the COVID-19 pandemic and the importance that the Company places on the health and wellbeing of our employees, Shareholders and other stakeholders, Shareholders will not be given the opportunity to attend the General Meeting in person.
The General Meeting will therefore be held in accordance with Paragraph 3 of Schedule 14 to the 2020 Act, with two or more Shareholders or their proxies, each of whom will be a Director or the Company Secretary, being connected by electronic means. Other Shareholders and their proxies will not have the right to attend the General Meeting in person or otherwise participate, other than by voting by appointing the Chairman of the General Meeting as their proxy.
Shareholders will find enclosed with the Notice in this document a Form of Proxy for use in connection with the General Meeting. You are urged to complete, sign and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received by post or, during normal business hours only, by hand, by the Registrar, Equiniti Limited, at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, as soon as possible and by no later than 12 noon on 23 October 2020 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).
We strongly encourage you, where possible, to submit your Form of Proxy appointing the Chairman of the General Meeting as your proxy electronically in the event that: (i) there are delays in or suspension of the postal service; or (ii) Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA is closed as a result of COVID-19.
Appointing a proxy in accordance with the instructions set out above will enable your vote to be counted at the General Meeting.
For the reasons given above, the Directors consider that the Resolutions are in the best interests of the Company or its Shareholders as a whole. Accordingly, the Board therefore unanimously recommends that Shareholders VOTE FOR each of the Resolutions to be proposed at the General Meeting.
Yours faithfully
Executive Chairman
The following definitions apply throughout this document and the accompanying Form of Proxy, unless the context requires otherwise.
| 2020 Act | the Corporate Insolvency and Governance Act 2020, an Act of Parliament that introduced new, temporary arrangements for the holding of general meetings of UK companies during the COVID-19 pandemic. |
|---|---|
| Act | the Companies Act 2006 (as amended from time to time). |
| Board or Directors | the directors of the Company whose names are set out on page 5 of this document. |
| Business Day | a day not being a Saturday, Sunday or public holiday in England on which clearing banks are open for business in the City of London. |
| Common Terms Agreement | the common terms agreement originally dated 29 November 2015 between, among others, the Company, and a group of banks for whom Abu Dhabi Commercial bank PJSC acts as agent (as amended and restated on 9 June 2020). |
| Company or GMS | Gulf Marine Services PLC. |
| Conventional Term Facility | the Group's conventional term credit facility. |
| Debt Restructuring | the restructuring of the Group's term loan facilities pursuant to the amendment and restatement of the Common Terms Agreement on 9 June 2020. |
| FCA | the Financial Conduct Authority. |
| Form of Proxy | the form of proxy for use by Shareholders in connection with the General Meeting and accompanying this document. |
| FSMA | the Financial Services and Markets Act 2000 (as amended from time to time). |
| General Meeting | the general meeting of the Company convened by the Directors in accordance with section 302 of the Act and to be held at 12 noon on 27 October 2020, or any adjournment thereof, notice of which is set out at the end of this document. |
| Group | the Company and its subsidiaries (as defined in Section 1159 of the Act) from time to time. |
| Islamic Term Facility | the Group's Islamic financing facility. |
| Lenders | the Group's consortium of lending banks. |
| Listing Rules | the Listing Rules, as published and amended from time to time by the FCA. |
| London Stock Exchange | London Stock Exchange plc. |
| Notice | the notice of the General Meeting set out in Part III of this document. |
| interest paid in kind in the form of increasing the outstanding principal amount of the Term Loan Facilities. |
|---|
| Equiniti Limited. |
| any of the services authorised by the FCA from time to time for the purpose of disseminating regulatory announcements. |
| the resolutions numbered 1 and 2 in the Notice to be proposed at the General Meeting, of which the resolution numbered 1 is being proposed as an ordinary resolution and the resolution numbered 2 is being proposed as a special resolution. |
| Seafox International Limited. |
| Rashad Said Al Jarwan, Mansour Al Alami and Saeed Mer Abdulla Khoory. |
| the ordinary shares of 10 pence each in the share capital of the Company. |
| the holders of Shares and "Shareholder" shall mean any one of them. |
| the Conventional Term Facility and the Islamic Term Facility. |
| the United Kingdom of Great Britain and Northern Ireland. |
(incorporated in England and Wales with registered number 08860816)
NOTICE IS HEREBY GIVEN that a general meeting (the "General Meeting") of Gulf Marine Services PLC (the "Company") will be held by electronic means at 12 noon on 27 October 2020 for the purpose of considering the resolutions below (each a "Resolution"), of which Resolution 1 will be proposed as an ordinary resolution and Resolution 2 will be proposed as a special resolution. The General Meeting will be held in accordance with Paragraph 3 of Schedule 14 to the Corporate Insolvency and Governance Act 2020, with two or more Shareholders or their proxies, each of whom will be a Director or the Company Secretary, being connected by electronic means.
1 THAT subject to and conditional upon Resolution 2 being duly passed, and in addition to all existing authorities, the directors of the Company be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for or convert any security into shares in the Company up to an aggregate nominal amount of £8,762,194.70 pursuant to or in connection with the Warrants, such authority to apply until 26 October 2025, but, in each case, so that the Company may, before such expiry, make offers and enter into agreements which would, or might, require shares to be allotted or rights to subscribe for or to convert any security into shares to be granted after the authority given by this resolution has expired;
2 THAT subject to and conditional upon Resolution 1 being duly passed, and in addition to all existing powers, the directors of the Company be given power pursuant to section 571 of the Companies Act 2006 to allot equity securities (as defined in section 560(1) of the Companies Act 2006) pursuant to the authority conferred by Resolution 1 above, as if section 561(1) of the Companies Act 2006 did not apply to any such allotment, such power to be limited to the allotment of equity securities pursuant to the authority granted by Resolution 2 up to an aggregate nominal amount of £8,762,194.70, such power to apply until 26 October 2025, but so that the Company may, before such expiry, make offers and enter into agreements which would, or might, require equity securities to be allotted after the power given by this resolution has expired.
By order of the Board
Tony Hunter Company Secretary
Dated: 8 October 2020
Registered office: 107 Hammersmith Road London W14 0QH United Kingdom
Registered in England and Wales with number 08860816
by sending a scanned copy of your completed proxy form to [email protected] or, in the case of shares held through CREST, via the CREST system (see note 11 below). For proxy appointments to be valid, they must be received by no later than 12 noon (UK time) on 23 October 2020. If you return more than one proxy appointment, the proxy appointment received last by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and conditions of use carefully. Electronic communication facilities for the receipt of any document or information on proxies are open to all Shareholders and those who use them will not be disadvantaged.
A copy of this Notice, and other information required by section 311A of the Act, can be found on the Company's website at http://www.gmsuae.com.
Donnelley Financial Solutions 34911
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