AGM Information • Nov 6, 2020
AGM Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to any matter referred to in this document or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended) immediately if you are in the United Kingdom, or another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom, without delay.
If you have sold or otherwise transferred all of your Ordinary Shares, please send this document, but not any accompanying Form of Proxy, at once to the purchaser or transferee or to the bank, stockbroker or other agent through whom or by whom the sale or transfer was made, for delivery to the purchaser or transferee. If you have sold or otherwise transferred only part of your Ordinary Shares, you should retain this document and consult with the stockbroker, bank or other agent through whom the sale or transfer was effected as to the action you should take. However, the distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe those restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction.
This document is not a prospectus but a circular relating to the Issue and the Related Party Transaction which has been prepared in accordance with the Listing Rules and approved by the FCA. This document does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, or otherwise dispose of, any securities or any solicitation of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, or otherwise dispose of, any securities.
Peel Hunt LLP ("Peel Hunt") is authorised and regulated by the FCA and is acting exclusively for the Company and for no-one else in connection with the matters set out in this document and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Peel Hunt or for affording advice in relation to the contents of this document or any matters referred to herein. Peel Hunt is not responsible for the contents of this document. This does not exclude or limit any responsibilities which Peel Hunt may have under FSMA or the regulatory regime established thereunder.
Goodbody Stockbrokers UC ("Goodbody") is authorised and regulated by the Central Bank of Ireland, and is also subject to regulation by the FCA. Goodbody is acting exclusively for the Company and for no-one else in connection with the matters set out in this document and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Goodbody or for affording advice in relation to the contents of this document or any matters referred to herein. Goodbody is not responsible for the contents of this document. This does not exclude or limit any responsibilities which Goodbody may have under FSMA or the regulatory regime established thereunder.
(Incorporated in England and Wales under company number 03140769)
and
Notice of General Meeting
This document should be read as a whole. Your attention is drawn to the Letter from the Chairman of The Rank Group Plc set out in Part 1 (Letter from the Chairman) of this document which contains the recommendation of the Board to vote in favour of each of the Resolutions to be proposed at the General Meeting.
Notice of a general meeting of the Company to be held at TOR, Saint-Cloud Way, Maidenhead, SL6 8BN, United Kingdom on 23 November 2020 at 11.30 a.m. is set out at the end of this document.
Please note that as a result of the constantly evolving COVID-19 situation and Her Majesty's Government's restrictions and guidance on, amongst other things, public gatherings and social distancing ("Government Measures"), the General Meeting will be held as a closed meeting and neither Shareholders nor their representatives will be able to attend in person. Shareholders are strongly encouraged to vote in favour of each of the Resolutions to be proposed at the General Meeting. Given the restriction on attendance, Shareholders should utilise electronic voting or submit a proxy vote in advance of the General Meeting. Shareholders who wish to appoint a proxy, in the current circumstances, should appoint the Chair of the meeting as their proxy rather than a named person who will NOT be permitted to attend.
To appoint a proxy or to give or amend an instruction to a previously appointed proxy via the CREST system, the CREST message (a "CREST Proxy Instruction") must be received by the Company's registrars, Equiniti Limited ("Equiniti") (ID RA19) by 11.30 a.m. on 21 November 2020, or not less than 48 hours before the time appointed for the holding of any reconvened meeting following an adjournment. If Ordinary Shares are not held directly, Shareholders are encouraged to arrange for their nominee to vote on their behalf and appoint a proxy via the CREST system. Alternatively, the Form of Proxy accompanying this document may be completed. To be valid, the Form of Proxy accompanying this document must be completed and returned, in accordance with the instructions printed on it, so as to be received by Equiniti at the address shown on the Form of Proxy or via www.sharevote.co.uk by 11.30 a.m. on 21 November 2020, or not less than 48 hours before the time appointed for the holding of any reconvened meeting following an adjournment.
Apart from the responsibilities and liabilities, if any, which may be imposed on Peel Hunt and Goodbody under FSMA or the regulatory regime established thereunder, no responsibility whatsoever is or will be accepted, and no representation or warranty, express or implied, is or will be made, by Peel Hunt or Goodbody in relation to the contents of this document, including its accuracy, completeness or verification or for any other statement made or purported to be made by the Company, or on the Company's behalf, or by Peel Hunt or Goodbody, or on their behalf, and nothing contained in this document is, or shall be, relied on as a promise or representation in this respect, whether as to the past or the future, in connection with the Company, the Proposals or the Ordinary Shares. Peel Hunt and Goodbody each disclaim to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this document or any such statement.
This document contains (or may contain) certain forward-looking statements with respect to the Company and certain of its goals and expectations relating to its future financial condition and performance which involve a number of risks and uncertainties. No forward-looking statement is a guarantee of future performance and actual results could differ materially from those contained in any forward-looking statements. All statements, other than statements of historical facts, contained in this document, including statements regarding the Group's future financial position, business strategy and plans, business model and approach and objectives of management for future operations, are forward-looking statements. Generally, the forward-looking statements in this document use words such as "aim", "anticipate", "target", "expect", "estimate", "plan", "goal", "believe", "will", "may", "could", "should", "future", "intend" "opportunity", "potential", "project", "seek" and other words having a similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of changes in interest rates and foreign exchange rates, changes in legislation, changes in customer habits and other factors outside the control of the Company, that may cause actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forwardlooking statements. All forward-looking statements contained in this document are based upon information available to the Directors at the date of this document and the posting or receipt of the document shall not give rise to any implication that there has been no change in the facts set forth herein since such date. The forward-looking statements in this document are based on the relevant Directors' beliefs and assumptions and information only as of the date of this document, and the forward-looking events discussed in this document might not occur. Accordingly, Shareholders should not place any reliance on any forward-looking statements. Except as required by law or regulation, the Directors undertake no obligation to publicly update any forwardlooking statements, whether as a result of new information, future earnings or otherwise.
The contents of the Company's website, the contents of any website accessible from hyperlinks on the Company's website or any other website referred to in this document are not incorporated into, and do not form part of, this document.
| EXPECTED TIMETABLE | 4 |
|---|---|
| DIRECTORS AND ADVISERS | 5 |
| PART 1 – LETTER FROM THE CHAIRMAN | 6 |
| PART 2 – ADDITIONAL INFORMATION | 14 |
| PART 3 – DEFINITIONS | 18 |
| NOTICE OF GENERAL MEETING | 21 |
| 2020 | |
|---|---|
| Announcement of the Placing and the Retail Offer | 5 November |
| Announcement of the results of the Placing and the Retail Offer | 6 November |
| Publication and despatch of this document (including notice of General Meeting) and Form of Proxy for use at the General Meeting |
6 November |
| Latest time and date for receipt of Forms of Proxy and CREST Proxy Instructions |
11.30 a.m. on 21 November |
| General Meeting | 11.30 a.m. on 23 November |
| Announcement of the results of the General Meeting | 23 November |
| Admission and commencement in dealings in the New Ordinary Shares expected to commence |
8.00 a.m. on 24 November |
| CREST stock accounts expected to be credited for New Ordinary Shares |
as soon as practicable after 8.00 a.m. on 24 November |
| Share certificates for New Ordinary Shares expected to be despatched |
within 14 days of Admission |
The above times and/or dates may be subject to change and, in the event of such change, the revised times and/or dates will be notified to Shareholders by an announcement through a Regulatory Information Service.
All references to times in this document are to London times.
| Directors | Name Alexander Thursby John O'Reilly William Floydd Christopher Bell Steven Esom Susan Hooper Tang Hong Cheong Karen Whitworth |
Position Non-Executive Chairman Chief Executive Officer Chief Financial Officer Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director |
|---|---|---|
| Company Secretary | Luisa Wright | |
| Registered Office | TOR Saint-Cloud Way Maidenhead SL6 8BN United Kingdom |
|
| Auditors | Ernst & Young LLP | |
| Registrar | Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA United Kingdom |
|
| Joint sponsor and joint bookrunner to the Company |
Peel Hunt LLP Moor House 120 London Wall London EC2Y 5ET United Kingdom |
|
| Joint sponsor and joint bookrunner to the Company |
Goodbody Stockbrokers UC Ballsbridge Park Dublin 4 Ireland |
|
| Legal adviser to the Company as to English law |
CMS Cameron McKenna Nabarro Olswang LLP Cannon Place 78 Cannon Street London EC4N 6AF United Kingdom |
|
| Legal adviser to the sponsors and joint bookrunners |
Ashurst LLP London Fruit & Wool Exchange 1 Duval Square London E1 6PW United Kingdom |
(Incorporated in England and Wales under company number 03140769)
Directors
Alexander Thursby (Non-Executive Chairman) John O'Reilly (Chief Executive Officer) William Floydd (Chief Financial Officer) Christopher Bell (Non-Executive Director) Steven Esom (Non-Executive Director) Susan Hooper (Non-Executive Director) Tang Hong Cheong (Non-Executive Director) Karen Whitworth (Non-Executive Director)
Registered Office TOR Saint-Cloud Way Maidenhead SL6 8BN United Kingdom
6 November 2020
Dear Shareholder,
This letter sets out the Board's proposals to seek Shareholder approval for authority to allot 77,746,020 New Ordinary Shares on a non-pre-emptive basis in connection with the Issue described below and also for approval for the participation of certain members of the Hong Leong Group, controlling shareholders of the Company, in the Issue.
This letter explains the background to, and the reasons for, the Proposals, and sets out the reasons why your Directors (excluding Tang Hong Cheong, who has not taken part in the Board's decision to recommend the Resolutions due to the Related Party Transaction described further below) are recommending that you vote in favour of each of the Resolutions to be proposed at a General Meeting which is being convened to be held at 11.30 a.m. on 23 November 2020. The formal notice convening the General Meeting is set out at the end of this document.
The Resolutions that will be put to Shareholders at the General Meeting are to:
Rank entered the COVID-19 lockdown period with significant momentum to revenues and profits driven by its transformation strategy, a tightly controlled cost base and a strong balance sheet. For the eight-month (pre-COVID-19) period to 29 February 2020, like-for-like underlying operating profit was up 61 per cent. compared to the same period in the prior year. However, the lockdown had a material impact on the Company, given venues comprise a significant proportion of profits.
Throughout the COVID-19 pandemic, the Company has taken decisive action to preserve cash and protect its balance sheet. Despite the challenging trading environment, following the phased reopening of venues starting in July and August, the Company had begun to see encouraging performance.
However, given the combination of venues being closed from late March 2020 until July/ August 2020 and the assumptions made by management in its base case forecast, the Company anticipated the possibility of breaching its 31 December 2020 bank covenant test and, as announced on 10 September 2020, took action to address this possibility by securing a temporary waiver of its existing bank covenants in favour of a minimum liquidity test of £50 million (cash and available facilities) to be tested in September and December 2020 and March 2021.
On 22 September 2020, Her Majesty's Government (the "Government") announced that certain leisure businesses (including casinos and bingo halls) must be closed between 10 p.m. and 5 a.m. from 24 September 2020 (the "Curfew"), as part of the effort to address rising cases of COVID-19 in England. Given the importance of late-night trade to its business, particularly to Grosvenor, this restriction has negatively impacted Rank's trading since that date. On 31 October 2020, the Government announced a national lockdown in England from 5 November 2020 to 2 December 2020 (the "Lockdown") which will result in all of the Group's venues in England closing for that period.
As announced on 5 November 2020, the Group's like-for-like ("LFL") net gaming revenue ("NGR") was down 52 per cent. for the quarter ended 30 September 2020 ("Q1 2020"), with total NGR down 47 per cent. During Q1 2020 the decline in LFL NGR across the Group was as follows: Grosvenor venues by 74 per cent., Mecca venues by 45 per cent., International venues by 26 per cent. and Digital by 3 per cent. The impact of the Curfew is apparent in the Grosvenor venues, where average weekly revenue for the four weeks to 20 September 2020 was £4.3 million but fell to £2.8 million in the four weeks to 24 October 2020.
The Curfew, the Lockdown and other further measures from the Government, alongside a broader reduction in consumer confidence caused by the pandemic, is expected to continue to negatively impact the Company's liquidity position in the coming months, and the Group is no longer expecting to achieve monthly positive cash generation from its venues whilst the Lockdown remains in place.
Total cash and available facilities at the end of August 2020 was £125 million. During September, before the introduction of the Curfew on 24 September, the Group was operating at around cash break even, however total cash and available facilities decreased to £90 million following the expiration of an undrawn £30 million revolving credit facility.
The Company is, therefore, looking to further strengthen its balance sheet through the Issue, in order to maintain appropriate liquidity covenant headroom on its debt facilities under various trading scenarios, provide ample working capital to operate through this challenging environment, and enable the Company to continue to deliver on its transformation 2.0 programme. Conditional upon successful completion of the Issue, the Company's lending banks have agreed to extend the £50 million minimum liquidity test until March 2022. On 29 October 2020, the Company announced the conditional sale of its Blankenberge casino for £25 million to Kindred Group plc, subject to certain regulatory approvals.
Although a resolution to allot Ordinary Shares for an amount equal to approximately 10 per cent. of the issued share capital (excluding treasury shares) of the Company as at 6 October 2020 (being the latest practicable date prior to the despatch of the notice of the 2020 AGM) is to be proposed at the Company's 2020 AGM to be held on 11 November 2020, that resolution will not provide sufficient authority to allot all the New Ordinary Shares proposed to be issued in connection with the Issue. Accordingly, new authorities will be required to enable the Company to issue 77,746,020 New Ordinary Shares (representing approximately 19.9 per cent. of the issued share capital (excluding treasury shares) of the Company as at the Latest Practicable Date) in connection with the Issue.
The Hong Leong Group (further information about whom is provided in paragraph 5 below), which is interested in aggregate in approximately 56 per cent. of the Company's issued share capital, is supportive of the Board's proposal to proceed with the Issue and through RAL and GOL, members of the Hong Leong Group, (further information about which is provided in paragraph 5 below) have committed to subscribe for, in aggregate, 43,650,693 New Ordinary Shares (representing approximately 56 per cent. of the New Ordinary Shares to be allotted pursuant to the Issue), being such number of New Ordinary Shares as will enable them to maintain their respective proportionate shareholdings in the Company.
As the Issue is being conducted on a non pre-emptive basis, in accordance with the provisions of the Listing Rules, the subscription by these members of the Hong Leong Group for such number of New Ordinary Shares is considered to be a related party transaction and, as such, the Company is required to obtain approval from independent Shareholders for their participation in the Issue on this basis. Further information about the Related Party Transaction is set out in paragraph 5 below.
These members of the Hong Leong Group and their associates may not vote on Resolution 1. However, they have irrevocably undertaken to vote, or to procure that the Ordinary Shares in which they are interested will be voted, in favour of Resolutions 2 and 3 to be proposed at the General Meeting for the purpose of providing the Directors with authority to proceed with the Issue on the understanding that Shareholders independent of the Hong Leong Group agree to approve RAL's and GOL's participation in the Issue. The authority to be conferred by Resolutions 2 and 3, on which members of the Hong Leong Group are entitled and have agreed to vote (or to procure that the Ordinary Shares in which they are interested will be voted) will be expressed to be conditional upon the passing of Resolution 1 to approve the Hong Leong Group's participation in the Issue.
Earlier today the Company announced that it had conditionally raised gross proceeds of approximately £70 million through conditional subscriptions for 77,746,020 New Ordinary Shares (representing approximately 19.9 per cent. of the issued share capital (excluding treasury shares) of the Company as at the Latest Practicable Date) at the Issue Price, which price represents a premium of approximately 4.3 per cent. to the middle market price of the Ordinary Shares at the close of business on the Latest Practicable Date.
The Issue comprises the Placing and the Retail Offer.
The 77,746,020 New Ordinary Shares, when issued, will represent approximately 16.6 per cent. of the enlarged issued share capital of the Company. Shareholders not participating in the Issue will suffer a dilution of approximately 16.4 per cent. to their existing interests in the Company as a result of the Placing and a further dilution of approximately 0.3 per cent. to their existing interests in the Company as a result of the Retail Offer representing, in aggregate, a dilution of approximately 16.6 per cent. to their existing interests in the Company as a result of the Issue.
The Company acknowledges that it is seeking to issue the New Ordinary Shares on a non preemptive basis and therefore consulted where possible with the Company's major shareholders ahead of the announcement of the Proposals. The Directors have concluded that the Issue is in the best interests of the Shareholders as a whole as the structure of the Issue minimises cost, time to completion and use of management time in a period of unprecedented uncertainty for the Group.
The Company has entered into a Placing Agreement with Peel Hunt and Goodbody on customary terms and conditions pursuant to which Peel Hunt and Goodbody agreed to use their respective reasonable endeavours (as agent for the Company) to procure placees for New Ordinary Shares through an accelerated bookbuild. Earlier today it was announced that 76,736,762 New Ordinary Shares had been placed by Peel Hunt and Goodbody on a conditional basis at the Issue Price with existing Shareholders, including but not limited to RAL and GOL, and new eligible institutional investors.
The obligations of Peel Hunt and Goodbody under the Placing Agreement in respect of the New Ordinary Shares placed by them are conditional upon, inter alia, each of the Resolutions being duly passed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 24 November 2020 (or such later time and/or date as the Company, Peel Hunt and Goodbody may agree, being not later than 30 November 2020).
The Placing Agreement contains certain customary warranties given by the Company to Peel Hunt and Goodbody in respect of the Placing as well as other matters relating to the Group and its business. The Placing Agreement also contains provisions entitling Peel Hunt and Goodbody to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised or if the conditions of the Placing Agreement are not satisfied, the Placing will not proceed.
The Company has agreed to pay Peel Hunt and Goodbody a placing commission together with reimbursement of certain costs and expenses incurred in connection with the Placing.
The Retail Offer was conducted via PrimaryBid and was conducted on a basis which did not require the Company to publish (and it has not published) a prospectus. Valid applications for 1,009,258 New Ordinary Shares were received under the Retail Offer at the Issue Price.
While the Placing has been structured as a non-pre-emptive offer so as to minimise cost, time to completion and use of management time, the Company values its retail investor base and has sought to provide those retail investors with an opportunity to participate in the Issue alongside other investors.
After consideration of the various options available to it, the Company believes that the separate Retail Offer, which gives retail investors the opportunity to participate in the Company's equity fundraising alongside the Placing is in the best interest of Shareholders, as well as wider stakeholders in the Company.
The net proceeds of the Retail Offer will be used alongside the net proceeds from the Placing, in line with the statements set out earlier in the document.
The Retail Offer is conditional upon the Placing. If the Placing does not proceed for any reason, the Retail Offer will lapse.
Applications have been made to the FCA and the London Stock Exchange for all the New Ordinary Shares to be issued under the Issue to be admitted to the premium listing segment of the Official List and to trading on the premium listing segment of the Main Market. The New Ordinary Shares issued pursuant to the Issue will rank pari passu with the Ordinary Shares then in issue (save for any dividends or other distributions declared, made or paid on the Ordinary Shares by reference to a record date prior to Admission). No fractions of New Ordinary Shares will be issued.
The New Ordinary Shares will be fungible with the Ordinary Shares already admitted to trading on the premium listing segment of the Main Market and will represent, over a period of 12 months, less than 20 per cent. of the number of Ordinary Shares already admitted to trading on the premium listing segment of the Main Market. Therefore, a prospectus will not be required to be prepared in relation to the Issue.
Section 551 of the Act provides that (subject to certain exceptions) the directors of a company may not allot shares without authority having been granted for such an allotment of shares by its shareholders.
Although, as noted above, at the Company's forthcoming 2020 AGM to be held on 11 November 2020 a resolution (resolution 14) will be proposed to authorise the Directors to allot Ordinary Shares for an amount equal to approximately 10 per cent. of the issued share capital (excluding treasury shares) of the Company as at 6 October 2020 (being the latest practicable date prior to the despatch of the notice of the 2020 AGM), that resolution will not provide sufficient authority to allot all of the New Ordinary Shares proposed to be issued in connection with the Issue. Accordingly, a new authority to allot shares is required in order to give effect to the Issue. Resolution 2, if passed, will give the Directors the authority to allot 77,746,020 New Ordinary Shares (representing approximately 19.9 per cent. of the issued share capital (excluding treasury shares) of the Company as at the Latest Practicable Date). This authority, if granted, will be granted specifically for the purpose of the Issue and, subject to the Issue proceeding, any authority to allot Ordinary Shares granted at the 2020 AGM will lapse.
In order for the Directors to issue New Ordinary Shares for cash pursuant to the Issue free of statutory pre-emption rights, such statutory pre-emption rights must be dis-applied. Shareholders are therefore being asked to approve Resolution 3 which, if passed, will dis-apply statutory pre-emption rights in respect of the New Ordinary Shares to be allotted pursuant to the Issue.
Resolution 3 will become effective only if Resolution 2 is also passed.
As noted above, the authority to be conferred by Resolutions 2 and 3 is expressed to be conditional upon the passing of Resolution 1 which will be proposed to approve the Hong Leong Group's participation in the Issue. Accordingly, if any of the three Resolutions is not passed, the Issue will not proceed.
If each of the Resolutions is passed, the Directors will be authorised to issue 77,746,020 New Ordinary Shares for cash on a non-pre-emptive basis pursuant to the Issue. The authorities conferred by Resolutions 2 and 3, if passed, will lapse (to the extent New Ordinary Shares are not allotted pursuant to them) 20 business days following the passing of those Resolutions.
Hong Leong, a company incorporated in Malaysia, is the holding company of the Hong Leong Group, a conglomerate with diversified business in banking and financial services, manufacturing and distribution, property development and investments, hospitality and leisure and principal investments with presence in various Asian countries, the United Kingdom, Europe and America. As at close of business on the Latest Practicable Date, the Hong Leong Group was in aggregate interested in approximately 56 per cent. of the issued share capital of the Company. This is comprised of:
RAL, a company incorporated in the Cayman Islands, is a wholly owned subsidiary of Guoco, of which Hong Leong's wholly-owned subsidiary, GOL, holds approximately 72 per cent. of the issued share capital. Guoco is a company incorporated in Bermuda whose shares are listed on The Stock Exchange of Hong Kong Limited. It is an investment holding and investment management company whose operating subsidiary companies and investment activities are principally located in Hong Kong, China, Singapore, Malaysia and the United Kingdom, focused on principal investments, property development and investments, hospitality and leisure and financial services.
GOL, a company incorporated in Bermuda, is a wholly owned subsidiary of Hong Leong.
Due to the size of the Hong Leong Group's aggregate interest in the Company's share capital, RAL and GOL are related parties of the Company under the Listing Rules.
Tang Hong Cheong, a Director of the Company, is also a director and the President and CEO of Guoco.
Pursuant to the Placing:
These commitments are conditional upon completion of the Placing occurring in accordance with the provisions of the Placing Agreement.
Therefore, pursuant to the Placing, members of the Hong Leong Group have committed to subscribe for, in aggregate, 43,650,693 New Ordinary Shares representing approximately 56 per cent. of the New Ordinary Shares proposed to be allotted pursuant to the Issue, which will enable the Hong Leong Group to maintain its proportionate interest in the Company.
As the Issue is not being conducted on a pre-emptive basis, under the Listing Rules the issue of New Ordinary Shares to the members of the Hong Leong Group, RAL and GOL, at this level are considered to be a related party transaction and, as such, the Company is required to obtain Shareholder approval for the participation of these members of the Hong Leong Group in the Issue, these participations being referred to in this document as the Related Party Transaction.
Accordingly, the Directors are proposing Resolution 1 at the General Meeting, the effect of which is to approve the Related Party Transaction. As Resolutions 2 and 3 to be proposed at the General Meeting are expressed to be conditional on the passing of Resolution 1, if Resolution 1 is not approved, the Issue will not proceed.
RAL and GOL have each undertaken not to vote, and to procure that the Ordinary Shares in which they are interested will not be voted, on Resolution 1 and will take all reasonable steps to ensure that any of their respective associates holding Ordinary Shares will also abstain from voting on Resolution 1.
Each of the Directors has agreed to participate in the Placing.
As at the Latest Practicable Date, the interests of the Directors and persons connected with the Directors, whether or not held through another party, in the share capital of the Company were, and as they are expected to be immediately following Admission are, as follows:
| Number of Ordinary Shares in issue as at the Latest Practicable Date |
Percentage of Ordinary Shares in issue as at the Latest Practicable Date |
Number of Ordinary Shares to be subscribed for pursuant to the Issue |
Number of Ordinary Shares in issue as at Admission |
Percentage of Ordinary Shares in issue as at Admission |
|
|---|---|---|---|---|---|
| Alexander Thursby | 0 | 0 | 25,000 | 25,000 | 0.005% |
| John O'Reilly | 252,500 | 0.065% | 50,248 | 302,748 | 0.065% |
| William Floydd | 25,000 | 0.006% | 20,000 | 45,000 | 0.010% |
| Christopher Bell | 20,614 | 0.005% | 9,000 | 29,614 | 0.006% |
| Steven Esom | 0 | 0 | 90,000 | 90,000 | 0.019% |
| Susan Hooper | 0 | 0 | 20,000 | 20,000 | 0.004% |
| Tang Hong Cheong | 130,000 | 0.033% | 70,000 | 200,000 | 0.043% |
| Karen Whitworth | 0 | 0 | 20,000 | 20,000 | 0.004% |
The Issue is conditional on the approval by Shareholders of each of the Resolutions to be proposed at the General Meeting which has been convened for 11.30 a.m. on 23 November 2020.
Resolution 1, which will be proposed as an ordinary resolution, will, if passed, permit the Company in accordance with the Listing Rules to allot 43,650,693 New Ordinary Shares in aggregate to members of the Hong Leong Group, RAL and GOL, as part of the Issue.
Resolution 2, which will be proposed as an ordinary resolution and which is conditional on the passing of Resolutions 1 and 3, will, if passed, give the Directors the authority to allot 77,746,020 New Ordinary Shares.
Resolution 3, which will be proposed as a special resolution and which is conditional on the passing of Resolutions 1 and 2, will grant the Directors authority to allot 77,746,020 New Ordinary Shares on a non-pre-emptive basis.
An ordinary resolution requires a simple majority of the votes cast by members entitled to vote and who are present in person or by proxy to be cast in favour of it in order for it to be passed.
A special resolution requires a majority of at least 75 per cent. of the votes cast by members entitled to vote and who are present in person or by proxy to vote in favour of it in order for it to be passed.
All Shareholders other than RAL, GOL and their respective associates, may vote on Resolution 1 to be proposed at the General Meeting. All Shareholders are entitled to vote on Resolutions 2 and 3 to be proposed at the General Meeting.
The formal notice convening the General Meeting is set out at the end of this document.
Shareholders will find enclosed with this document a Form of Proxy for use at the General Meeting.
The health and well-being of colleagues, Shareholders and the wider community in which the Company operates is, and will continue to be, a priority for the Board. The Board has considered carefully the impact on the General Meeting of the constantly evolving COVID-19 situation and Government Measures. As at the Latest Practicable Date, the Government Measures include a requirement to stay at home and restrictions on mixing of households. In light of this, the Board hopes that Shareholders will understand that the General Meeting will be held as a closed meeting, which means that Shareholders will NOT be permitted to attend in person. The Company will make arrangements such that the legal requirements to hold the General Meeting can be satisfied through the attendance of a minimum number of people and the format of the General Meeting will be purely functional.
To appoint a proxy or to give or amend an instruction to a previously appointed proxy via the CREST system, the CREST message (a "CREST Proxy Instruction") must be received by the Company's registrars, Equiniti Limited ("Equiniti") (ID RA19) by 11.30 a.m. on 21 November 2020, or not less than 48 hours before the time appointed for the holding of any reconvened meeting following an adjournment. If Ordinary Shares are not held directly, Shareholders are encouraged to arrange for their nominee to vote on their behalf and appoint a proxy via the CREST system. Alternatively, the Form of Proxy accompanying this document may be completed. To be valid, the Form of Proxy accompanying this document must be completed and returned, in accordance with the instructions printed on it, so as to be received by Equiniti at the address shown on the Form of Proxy or via www.sharevote.co.uk by 11.30 a.m. on 21 November 2020, or not less than 48 hours before the time appointed for the holding of any reconvened meeting following an adjournment.
The situation is constantly evolving, and Government Measures may change and impact further on arrangements for the General Meeting. If there are any changes to the arrangements for the General Meeting from those set out in this document, this will be communicated to Shareholders before the General Meeting through the Company's website (www.rank.com) and, where appropriate, by an RIS announcement.
RAL and GOL have each undertaken to vote, or procure the voting of, the 219,120,221 Ordinary Shares in which they are interested (representing approximately 56 per cent. of the issued share capital of the Company as at the Latest Practicable Date) in favour of Resolutions 2 and 3 to be proposed at the General Meeting.
The Directors (excluding Tang Hong Cheong, who is a director and the President and CEO of Guoco) have irrevocably undertaken to vote in favour of each of the Resolutions to be proposed at the General Meeting in respect of their holdings of Ordinary Shares, amounting to 298,114 Ordinary Shares in aggregate (representing approximately 0.08 per cent. of the issued share capital of the Company as at the Latest Practicable Date).
Tang Hong Cheong has irrevocably undertaken to vote in favour of Resolutions 2 and 3 to be proposed at the General Meeting in respect of his holding of Ordinary Shares, amounting to 130,000 Ordinary Shares (representing approximately 0.03 per cent. of the issued share capital of the Company as at the Latest Practicable Date).
The Board (excluding Tang Hong Cheong, who has not taken part in the Board's decision to recommend the Resolutions due to Resolutions 2 and 3 being expressed to be conditional upon approval of Resolution 1, which relates to the Related Party Transaction) considers, for the reasons described in paragraph 2 above, that the Proposals described in this document are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors (excluding Tang Hong Cheong) recommend that Shareholders vote in favour of each of the Resolutions to be proposed at the General Meeting.
In respect of the Related Party Transaction, the Board (excluding Tang Hong Cheong, who has not taken part in the Board's consideration of the Related Party Transaction), which has been so advised by Peel Hunt and Goodbody in their capacity as joint sponsors, considers that the issue of New Ordinary Shares as part of the Issue to the members of the Hong Leong Group, RAL and GOL, is fair and reasonable so far as Shareholders are concerned. In providing their advice to the Board, Peel Hunt and Goodbody have each taken into account the Board's commercial assessment of the effects of the Related Party Transaction.
Yours faithfully
Alexander Thursby Non-Executive Chairman
As at the Latest Practicable Date, so far as is known to the Company, the following persons held, directly or indirectly, a notifiable interest in the Company's voting rights:
| Person | Number of Ordinary Shares in issue |
Percentage of voting rights |
|---|---|---|
| *Hong Leong Company (Malaysia) Berhad | 219,350,221 | 56.15% |
| Columbia Threadneedle Investments | 37,688,409 | 9.65% |
| M&G Investment Management | 26,370,889 | 6.75% |
| Aberdeen Standard Investments | 18,141,923 | 4.64% |
| Aberforth Partners | 15,693,141 | 4.02% |
————— * The Hong Leong Group's interest is held as follows:
* 52.03% – RAL, a wholly-owned subsidiary of Guoco;
* 4.05% – GOL, Guoco's immediate parent company; and
* 0.06% – HL Management Co Sdn Bhd, a wholly-owned subsidiary of Hong Leong.
Tang Hong Cheong was appointed to the Board on 15 January 2019, for an initial period of three years, after which the appointment is renewable by mutual consent between the Company and Tang Hong Cheong at intervals of not more than three years. Tang Hong Cheong does not receive any payment for his role as a Non-Executive Director and his appointment is terminable without compensation.
Tang Hong Cheong's interest in the share capital of the Company is set out in the table below. Tang Hong Cheong does not hold any options.
| Number of Ordinary Shares in issue as at the Latest Practicable |
Percentage of Ordinary Shares in issue as at the Latest Practicable |
Number of Ordinary Shares in issue as at |
Percentage of Ordinary Shares in issue as at |
|
|---|---|---|---|---|
| Date | Date | Admission | Admission | |
| Tang Hong Cheong | 1 130,000 |
0.033% | 200,000 | 0.043% |
————— 1 Ordinary Shares held in personal capacity via a nominee account.
Details of compensation paid to key management are as follows:
| Year ended 30 June 2020 £m |
|
|---|---|
| Salaries and short-term employee benefits (including social security costs) | 2.7 |
| Termination benefits | 0.2 |
| Post-employment benefits Share-based payments |
0.2 0.7 |
| 3.8 |
Included in key management compensation are bonuses of £nil in respect of the year ended 30 June 2020.
Key management is defined as the directors of the Group and the management team.
Guoco, a company incorporated in Bermuda, and listed on the Hong Kong stock exchange has a controlling interest in the Company. The ultimate parent undertaking of Guoco is Hong Leong which is incorporated in Malaysia. As at the Latest Practicable Date, the Hong Leong Group owned approximately 56 per cent. of the Company's share capital, including approximately 52 per cent. through Guoco's wholly-owned subsidiary, RAL, the Company's immediate parent undertaking, and approximately 4 per cent. through Hong Leong's wholly-owned subsidiary, GOL.
The following transactions with subsidiaries occurred in the year ended 30 June 2020:
| Year ended 30 June |
|
|---|---|
| 2020 £m |
|
| Interest payable to subsidiary undertaking | (11.6) |
During the year, Rank Group Finance Plc, a subsidiary of the Company, provided additional cash to the Company of £32.5 million.
Save for (i) the deterioration in the Company's trading position as a result of the COVID-19 lockdown period (with venues being closed from late March 2020 until July/August 2020), the 10 p.m. to 5 a.m. Curfew on certain leisure businesses (including casinos and bingo halls) announced by the Government on 22 September 2020 and the Lockdown and (ii) the temporary waiver of the Company's existing bank covenants in favour of a minimum liquidity test of £50 million (cash and available facilities) to be tested in September and December 2020 and March 2021 and the agreement by the Company's lending banks to extend this £50 million minimum liquidity test until March 2022 (conditional upon successful completion of the Issue), each as described in further detail above in paragraph 2 of Part 1 (Letter from the Chairman), there has been no significant change in the financial or trading position of the Group since 30 June 2020, being the date to which the latest audited consolidated financial information of the Group was published.
Set out below is a summary of each contract (not being contracts entered into in the ordinary course of business) entered into by members of the Group (i) within the two years immediately preceding the date of this document and which are or may be material to the Group and (ii) which contain any provision under which any member of the Group has any obligation or entitlement which is material to the Group as at the date of this document, in each case (i) and (ii) which is information which Shareholders would reasonably require to make a properly informed assessment of how to vote on the Resolutions to be proposed at the General Meeting:
On 5 November 2020, the Company entered into the Placing Agreement with Peel Hunt and Goodbody pursuant to which: (i) Peel Hunt and Goodbody were appointed to act as joint sponsors to the Company in connection with the Related Party Transaction, and (ii) Peel Hunt and Goodbody were appointed to act as joint bookrunners (the "Joint Bookrunners") to the Company in connection with the Placing.
(a) The Joint Bookrunners have agreed severally (and not jointly or jointly and severally) subject to certain conditions, to use reasonable endeavours (as agent for the Company) to procure placees for the New Ordinary Shares at the Issue Price.
The Group has total banking facilities of approximately £183.1 million, comprising (i) a term loan of approximately £128.1 million and (ii) revolving credit facilities of approximately £55 million, provided by National Westminster Bank plc, Santander UK plc and Barclays Bank plc.
The Financing Agreements require the Group to meet two financial covenant tests biannually: (i) a net debt to earnings before interest, tax, depreciation, amortisation and separately disclosed items ("EBITDA") ratio of no more than 3 times, and (ii) an EBITDA to interest charge of no less than 3 times, at 30 June and 31 December.
On 28 August 2020, the Group secured a covenant waiver for both the financial covenant tests at the 31 December 2020 testing date as the Group anticipated a breach due to forecasted impact of the COVID-19 pandemic on the Group's EBITDA and net debt.
On 31 October 2020, the Group secured an extension to the existing waiver to cover the 30 June and 31 December 2021 testing dates, conditional on the successful completion of the Issue and compliance with other conditions of a customary nature.
No Ordinary Shares were held in treasury as at the Latest Practicable Date.
New Ordinary Shares will be issued in registered form. CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument. The Articles permit the holding of shares under the CREST system. Settlement of transactions in the New Ordinary Shares may take place within the CREST system if any Shareholder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able to do so. Shareholders applying for New Ordinary Shares may elect to receive New Ordinary Shares in uncertificated form if such investor is a systemmember (as defined in the CREST Regulations) in relation to CREST. Where New Ordinary Shares are to be held in certificated form, share certificates for the New Ordinary Shares will be sent to the registered member.
Each of Peel Hunt and Goodbody has given and not withdrawn its written consent to the inclusion herein of references to its name in the form and context in which they appear.
Copies of the following documents will be available for inspection during normal business hours on any weekday (public holidays excepted) at the registered office of the Company at TOR, Saint-Cloud Way, Maidenhead, SL6 8BN, United Kingdom and at the venue of the General Meeting, TOR, Saint-Cloud Way, Maidenhead, SL6 8BN, United Kingdom, and on the Company's website (www.rank.com), up to and including the date of the General Meeting:
In this document the words and expressions listed below have the meanings set out opposite them, except where the context otherwise requires:
| "2020 AGM" | the annual general meeting of the Company for 2020 convened to be held on 11 November 2020 |
|---|---|
| "Act" | the Companies Act 2006, as amended from time to time |
| "Admission" | admission of the New Ordinary Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities becoming effective |
| "Articles" | the articles of association of the Company in force at the date of this document |
| "Company" or "Rank" | The Rank Group Plc, a company incorporated in England and Wales, with company number 03140769 |
| "certificated" or "in certificated form" |
means an Ordinary Share, title to which is recorded in the Register of Members as being held in certificated form (that is, not in CREST) |
| "CREST" | the relevant system as defined in the CREST Regulations in respect of which Euroclear is the operator (as defined in the CREST Regulations) in accordance with which securities may be held in uncertificated form |
| "CREST Manual" | the manual, as amended from time to time, produced by Euroclear describing the CREST system and supplied by Euroclear to users and participants thereof |
| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (SI 2001 No.2001/ 3755), as amended |
| "Directors" or "Board" | the board of directors of the Company |
| "Disclosure Guidance and Transparency Rules" |
the disclosure guidance and transparency rules as set out in the FCA's handbook of rules and guidance, as amended |
| "EU" | European Union |
| "Euroclear" | Euroclear UK & Ireland Limited |
| "FCA" | the UK Financial Conduct Authority |
| "Financing Agreements" | the term loan and revolving credit facilities provided by National Westminster Bank plc, Santander UK plc and Barclays Bank plc to the Group |
| "Form of Proxy" | the personalised form of proxy provided with this document for use by Shareholders in connection with the General Meeting |
| "FSMA" | the Financial Services and Markets Act 2000 as amended or re enacted from time to time |
| "General Meeting" | the general meeting of the Company to be held at TOR, Saint Cloud Way, Maidenhead, SL6 8BN, United Kingdom on 23 November 2020 at 11.30 a.m., for the purpose of approving the Resolutions |
| "GOL" | GuoLine Overseas Limited, a company incorporated in Bermuda, and a wholly owned subsidiary undertaking of Hong Leong |
| "Goodbody" | Goodbody Stockbrokers UC, as sponsor and joint bookrunner |
| "Group" | the Company and its subsidiaries and subsidiary undertakings |
| "Guoco Group" | Guoco and its subsidiaries and subsidiary undertakings |
|---|---|
| "Hong Leong" | Hong Leong Company (Malaysia) Berhad, a company incorporated in Malaysia |
| "Hong Leong Group" | Hong Leong and its subsidiaries and subsidiary undertakings |
| "Issue" | the Placing and the Retail Offer |
| "Issue Price" | 90 pence per New Ordinary Share |
| "Latest Practicable Date" | 5 November 2020, being the latest practicable date prior to the date of this document for ascertaining certain information contained herein |
| "Listing Rules" | the listing rules made by the FCA under section 73A of FSMA |
| "London Stock Exchange" | London Stock Exchange plc |
| "Main Market" | the main market for listed securities operated by the London Stock Exchange |
| "New Ordinary Shares" | new Ordinary Shares to be issued pursuant to the Issue |
| "Official List" | the official list maintained by the FCA |
| "Ordinary Shares" | ordinary shares of nominal value 138/9 pence each in the capital of the Company |
| "Peel Hunt" | Peel Hunt LLP, as sponsor and joint bookrunner |
| "Placing" | the non-pre-emptive placing of the Placing Shares |
| "Placing Agreement" | the placing and sponsor agreement between the Company, Peel Hunt and Goodbody dated 5 November 2020 |
| "Placing Shares" | 76,736,762 New Ordinary Shares to be issued by the Company at the Issue Price and subscribed for pursuant to the Placing |
| "Proposals" | the issue of New Ordinary Shares pursuant to the Issue and the Related Party Transaction |
| "RAL" | Ranks Assets Limited, a company incorporated in the Cayman Islands, and a wholly owned subsidiary undertaking of Guoco |
| "Register of Members" | the register of members of the Company |
| "Regulatory Information Service" or "RIS" |
a service authorised by the FCA to release regulatory announcements to the London Stock Exchange |
| "Related Party Transaction" | the proposed transaction with members of the Hong Leong Group, RAL and GOL, described in paragraph 5 of Part 1 (Letter from the Chairman) of this document |
| "Resolution 1" | the ordinary resolution to be proposed at the General Meeting to authorise the allotment of 43,650,693 New Ordinary Shares in aggregate to members of the Hong Leong Group, RAL and GOL, under the Issue |
| "Resolution 2" | the ordinary resolution to be proposed at the General Meeting to grant the Directors authority to allot up to 77,746,020 New Ordinary Shares under the Issue |
| "Resolution 3" | the special resolution to be proposed at the General Meeting to dis-apply statutory pre-emption rights otherwise applicable to the allotment of up to 77,746,020 New Ordinary Shares under the Issue |
| "Resolutions" | the resolutions to be proposed at the General Meeting in connection with the Proposals |
| "Retail Offer" | the retail offer via PrimaryBid |
|---|---|
| "Shareholder" | a holder of Ordinary Shares |
| "UK" or "United Kingdom" | the United Kingdom of Great Britain and Northern Ireland |
Notice is hereby given that a General Meeting of The Rank Group Plc (the "Company") will be held at TOR, Saint-Cloud Way, Maidenhead, SL6 8BN, United Kingdom on 23 November 2020 at 11.30 a.m., to consider and, if thought fit, approve the following resolutions, in the case of Resolutions 1 and 2 as ordinary resolutions and in the case of Resolution 3 as a special resolution:
By Order of the Board
Dated 6 November 2020
Registered Office TOR Saint-Cloud Way Maidenhead SL6 8BN United Kingdom
If more than one proxy appointment is returned in respect of the same holding of shares, either by paper or electronic communication, the proxy received last by Equiniti before the latest time for the receipt of proxies will take precedence.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first named being the most senior).
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, a shareholder's proxy will vote or abstain from voting at his or her discretion. A proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the General Meeting.
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