TIDMAVG
RNS Number : 4493L
Avingtrans PLC
03 October 2016
3 October 2016
Avingtrans plc
("Avingtrans" or the "Company")
Proposed Tender Offer and Notice of General Meeting
Further to the preliminary results announcement for the year
ended 31 May 2016 published on 27 September 2016, Avingtrans, which
designs, manufactures and supplies critical components, modules and
associated services to the energy, medical and industrial sectors,
is pleased to announce the terms of the proposed Tender Offer which
will return up to approximately GBP28 million to shareholders.
Under the Tender Offer, each Shareholder is entitled to have up
to 50% of his or her shareholding purchased at the Tender Price
(200p per Share) with the potential to tender a greater number of
Shares depending on the number of Shares tendered by other
Shareholders. The Tender Price represents a premium of 4.2% to the
closing mid-market price of 192p per Share on 30 September 2016,
being the last practicable date prior to the publication of the
Circular. The Tender Offer is being made available to all
Shareholders who are on the Register at the close of business on 4
November 2016, with the exception of holders in certain overseas
jurisdictions.
The Company requires the authority from Shareholders to purchase
Shares under the Tender Offer and this is being sought at a General
Meeting which is to be held at Shakespeare Martineau LLP, No 1
Colmore Square, Birmingham, B4 6AA at 11.30 a.m. on 8 November
2016. A circular which sets out the full details of the Tender
Offer is expected to be posted to Shareholders as soon as
practicable (the "Circular"). The Circular will also be available
on the Company's website (http://www.avingtrans.plc.uk).
The Tender Offer is being made by Numis, the Company's corporate
broker, as principal on the basis that all Shares that it buys
under the Tender Offer will be purchased from it by the
Company.
Further details of the Tender Offer are set out below.
Capitalised terms used, but not defined in this announcement
shall have the same meaning as set out in the Circular.
Expected timetable of events
Announcement of the Tender Offer and date of the Circular 3 October 2016
Tender Offer opens 3 October 2016
Closing Date - latest time and date for receipt of Tender Forms and settlement 1.00 p.m. on 4 November 2016
of TTE Instruction(s)
Record Date for the Tender Offer close of business on 4 November 2016
Latest time and date for receipt of Forms of Proxy for the General Meeting 11.30 a.m. on 6 November 2016
General Meeting 11.30 a.m. on 8 November 2016
Result of Tender Offer announced 8 November 2016
Completion of purchase of Shares under the Tender Offer 18 November 2016
Despatch of cheques for Tender Offer consideration in respect of certificated 21 November 2016
Shares sold
under the Tender Offer and any balance
certificates in respect of any unsold certificated Shares
CREST accounts credited with Tender Offer consideration and any unsold 21 November 2016
uncertificated Shares
Enquiries:
Avingtrans plc
Steve McQuillan, CEO
Stephen King, CFO 0115 949 9020
Numis Securities Limited (Nominated
Adviser and Joint Broker)
Tom Ballard (Corporate Broking)
Richard Thomas (Corporate Finance) 020 7260 1000
N+1 Singer (Joint Broker)
Shaun Dobson
Lauren Kettle 020 7496 3000
Newgate (Financial PR)
Adam Lloyd
Ed Treadwell 020 7653 9850
Further details of the Tender Offer
Introduction
The Tender Offer is being made available to all Shareholders who
are on the Register at the close of business on 4 November 2016,
with the exception of holders in certain overseas jurisdictions.
Shareholders can decide whether they want to tender some or all of
their Shares at a price of 200 pence per Share, representing a
premium of 4.2 per cent to the closing mid-market price of 192
pence per Share on 30 September 2016, being the last practicable
date prior to the publication of the Circular.
The Tender Offer is being made by Numis, the Company's corporate
broker, as principal on the basis that all Shares that it buys
under the Tender Offer will be purchased from it by the Company.
The Company requires the authority from Shareholders to purchase
any such Shares and this is being sought at the General Meeting to
be held at Shakespeare Martineau LLP, No 1 Colmore Square,
Birmingham, B4 6AA at 11.30 a.m. (or, if later, the conclusion of
the annual general meeting of the Company to be held at 11.00 a.m.
on 8 November 2016) on 8 November 2016. The Board is making no
recommendation to Shareholders in relation to participation in the
Tender Offer. However, Shareholders should note that the Directors
who hold Shares intend to tender such amount that will ensure that
their percentage holding in the Company's issued share capital is
to a material extent maintained following the Tender Offer. The
Board is unanimously recommending Shareholders to vote in favour of
the Resolution to be proposed at the General Meeting, as the
Directors intend to do in respect of their own beneficial holdings
of Shares.
Further, Nigel Wray has expressed his intention to tender, as a
minimum, such number of Shares that will ensure that his percentage
holding in the Company's issued share capital is to a material
extent maintained following the Tender Offer.
Background to the Tender Offer
On 4 May 2016, the Group announced the proposed disposal of its
Aerospace Division ("Sigma Components") to Anthony Bidco Limited, a
company controlled by funds managed by Silverfleet Capital Partners
LLP, for an enterprise value of GBP65 million which, after
adjustment for debt and working capital and associated transaction
costs, resulted in the Company receiving proceeds of approximately
GBP52 million (before escrow arrangements) (the "Disposal"). In
that announcement, the Board set out that a substantial portion of
those proceeds would be returned to Shareholders.
The Disposal was a consequence of a strategic review of the
Group and its prospects during 2015. This review involved the Board
and the Divisional Managing Directors, as well as external
advisors. It resulted in four key concepts and outcomes:
1. The Company has a successful track record of growing
businesses from start-up, developing them internationally, and
crystallising value through their sale at an appropriate stage in
their development, as demonstrated by the successful sale of
JenaTec in 2012.
2. Following the successful conclusion of the acquisition of the
Rolls-Royce pipe business in March 2016, the Board felt that it had
achieved the majority of the targets which it had set for the
Aerospace Division and it was the right stage in its development to
consider a disposal of the business.
3. Subject to achieving an attractive valuation for the
Aerospace Business, the Board believed that shareholder value would
be maximised over the mid to long term by disposing of the
Aerospace Division and returning part of the proceeds from the
disposal to Shareholders, with the Company also reinvesting part of
the proceeds into strengthening the Group's position in the Energy
sector in particular and potentially other high value engineering
sectors.
4. The Board believes that the successful contract win by the
Energy and Medical business with Sellafield in May 2015 (of the
initial tranche of 3M3 nuclear waste disposal containers)
demonstrated the significant business opportunities available in
this market, if the Group were able to put more resource into this
sector.
Over the last few years, the Group grew the Aerospace Division
to become an international leader in its chosen niche markets. This
development was underpinned by a number of synergistic
acquisitions, which enabled the Aerospace Division to build a
strong brand and market position and to produce improved
performance. Thus, the Group has realised significant value for
Shareholders through the Disposal, at a considerable premium to the
cost of the original component parts. The Disposal followed a
concentrated sale process which produced a number of bids from a
select group of relevant industry and financial suitors from the
UK, Europe, the USA and Asia.
The Disposal completed on 27 May 2016 and immediately following
completion the Company had net cash in excess of GBP47 million. The
Disposal of the Aerospace Division represented the second major
shareholder value enhancing transaction by the Group, following the
disposal of JenaTec in 2012.
On 30 June 2016, the Company announced that it intended to
return almost GBP28 million to Shareholders by way of a tender
offer. The balance of the net proceeds of the Disposal are to be
used to pursue the Group's new strategy of investing in the Energy
and Medical markets served by its Metalcraft and Maloney Metalcraft
businesses, and more specifically to strengthen Metalcraft's
position in the nuclear sector and to pursue other related
opportunities in the engineering sector. The Board believes that
further consolidation strategies are foreseeable, both in markets
where the Group has an existing footprint, and in other compatible
high value engineering niches. This is a familiar blueprint, but it
is capable of delivering significant returns, if well executed.
The Energy and Medical division has made steady progress in its
recovery from the oil and gas sector downturn. During the financial
year ended 31 May 2016, the Group sold the freehold of the Maloney
Metalcraft building at Aldridge for GBP1.1 million, net of costs,
limiting the Group's exposure to a continuingly depressed oil and
gas market. Pre-production activities commenced on the GBP47
million, ten year contract with Sellafield, for the provision of
3M3 (three-metre-cubed) nuclear waste boxes, although there have
been some changes to the phasing of the production start-up.
Metalcraft is well-placed to be a key partner for Sellafield in
this programme, over the next 30 years. The Group has also won two
GBP3 million contracts with Bruker and Rapiscan, both of which
marked important developments in the diversification of the Energy
and Medical division and improved the prospects for the Chengdu and
Buckingham units. In addition, on 29 September 2016, the Company
announced that Metalcraft had signed a contract with Wuhan Zhongke
Niujin Magnetic Resonance Technology Co. in Wuhan, China, which is
estimated to be worth GBP9 million over ten years.
The Board believes that a focus on the exciting prospects in the
Energy sector, as well as a secure existing platform in the Medical
and Biomedical equipment markets, will provide Shareholders with
the potential to achieve further value growth, in addition to the
proceeds to be returned to Shareholders from the Disposal.
The Board believes that, for the reasons set out above it is
appropriate to return approximately GBP28 million to Shareholders
via the Tender Offer. The mechanism of a tender offer gives
Shareholders the flexibility to either realise a return by allowing
the Company to purchase a portion of their shares for cash, or to
retain a potentially larger relative holding in the Company so that
they might further benefit from any future capital growth.
The Board anticipates that following the Tender Offer, and
assuming full take-up, the Company will have net cash of
approximately GBP20 million. These funds will be used to bolster
the Group's Energy and Medical division's organic growth prospects
and to proactively seek new opportunities to build shareholder
value through acquisitions.
This represents a continuation of the Group's proven "buy and
build" in regulated engineering niche markets, where the Board can
see potential consolidation opportunities, which can lead to
significantly increased shareholder returns over the medium to long
term. The Disposal and its precursor acquisitions clearly
demonstrated the Group's ability to build strong brands and value
from smaller constituent parts and its well-developed deal-making
skills that ensure it does not overpay for assets. The Group also
continues to invest in skills and has completed its investments in
new IT systems, as part of an on-going journey towards world-class
manufacturing capability.
The Tender Offer
The Tender Offer is being made by Numis to all Shareholders
(other than certain Overseas Shareholders). Full details of the
Tender Offer, including the terms and conditions on which it is
being made, are set out in Part III of the Circular and, in
relation to Shareholders holding Shares in certificated form, on
the Tender Form to be sent to Shareholders who hold their Shares in
certificated form.
The Tender Offer is conditional on the passing of the Resolution
set out in the notice of General Meeting at the end of the Circular
and the satisfaction of the other Conditions specified in Part III
of the Circular.
The Tender Offer involves the following:
-- The Tender Offer is being made to Shareholders (other than
certain Overseas Shareholders) by Numis for the purchase of up to
14,000,000 Shares. Under the Tender Offer, each Shareholder is
entitled to have up to 50 per cent of his or her shareholding
purchased by Numis at the Tender Price (200 pence per Share)
together with potentially further purchases depending on the number
of Shares tendered by other Shareholders.
-- The Tender Offer is being made at a premium of 4.2 per cent
to the closing mid-market price on 30 September 2016.
-- Shareholders (other than certain Overseas Shareholders) will
be able to decide to tender none, some or all of their Shares
within the overall limits of the Tender Offer.
-- Tenders in excess of a Shareholders' Basic Entitlement will
only be accepted to the extent that other Shareholders tender less
than their Basic Entitlement or do not tender any Shares.
-- All Shares validly tendered by any Shareholder up to their
Basic Entitlement will be accepted in full.
-- The Tender Form to be completed by Shareholders who hold
their Shares in certificated form contains a box to enable those
Shareholders who wish to tender their Basic Entitlement to do so
(Box 2A). If you hold your Shares in certificated form and you tick
this box, the Receiving Agent will calculate your Basic Entitlement
on the Record Date. If you wish to tender a different number of
Shares to your Basic Entitlement, insert such number of Shares in
the alternate box provided on the Tender Form (Box 2B).
-- Shareholders who hold their Shares in uncertificated form
(i.e. in CREST) and who wish to tender their Basic Entitlement
should send a TTE instruction through CREST to the member account
set out in paragraph 3.3.1 of Part III of the Circular. The
Receiving Agent will calculate your Basic Entitlement on the Record
Date and return any excess Shares. If you wish to tender a
different number of Shares to your Basic Entitlement, you should
send a TTE Instruction through CREST to the same member account
specifying such number of Shares that you wish to tender.
-- If the total number of Shares validly tendered by all
Shareholders equates to a number greater than 14,000,000 Shares,
tenders will be accepted in the order set out below:
-- all Shares validly tendered by any Shareholder up to their
Basic Entitlement will be accepted in full; and
-- all Shares validly tendered by Shareholders in excess of
their Basic Entitlements will be satisfied at the discretion of the
Board. The number of Shares to be purchased in the Tender Offer
will not, in any event, exceed 14,000,000 Shares.
-- All successfully tendered Shares purchased by Numis will be
repurchased from Numis by the Company and will be immediately
cancelled and will not rank for any future dividends. For the
avoidance of doubt, Shares on the Register at 28 October 2016 will
rank for the final dividend for the financial year ended 31 May
2016 which will be paid on 9 December 2016.
-- Any rights of Shareholders who choose not to tender their
Shares will be unaffected, however, the reduction in the Company's
issued share capital may result in a reduction in the liquidity of
the Shares in the secondary market.
Taxation
Shareholders who sell Shares pursuant to the Tender Offer
should, subject to the potential application of Chapter 1 of Part
13 ITA 2007 (in respect of individual Shareholders) and Part 15 of
CTA 2010 (in respect of corporate Shareholders), be treated as
having sold their Shares in the normal way. Shareholders may,
depending on their individual circumstances, incur a liability to
taxation on capital gains. UK individual and corporate Shareholders
should be aware that HMRC may seek to treat part or the whole of
the disposal proceeds of their Shares as income under Chapter 1 of
Part 13 ITA 2007 and Part 15 of CTA 2010 respectively. Further
information on the UK taxation consequences of the Tender Offer is
set out in Part IV of the Circular. 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.
Overseas Shareholders
Shareholders with registered or mailing addresses outside the
UK, or who are citizens or nationals of, or resident in, a
jurisdiction other than the UK, should read paragraph 9 of Part III
of the Circular and the relevant provisions of the Tender Form. It
is the responsibility of all Overseas Shareholders to satisfy
themselves as to the observance of any legal requirements in their
jurisdiction, including, without limitation, any relevant
requirements in relation to the ability of such holders to complete
and return a Tender Form.
Repurchase Agreement
Under the terms of the Repurchase Agreement, the Company will
acquire, through an on-market purchase, all of the Exit Shares at
an aggregate price equal to the amount paid by Numis for the Exit
Shares. Further details of the Repurchase Agreement are set out in
paragraph 2 of Part V of the Circular.
The Company will also be liable to pay Numis's fees, costs and
expenses under the terms of Numis's engagement by the Company in
connection with the Tender Offer.
General Meeting
Under CA 2006, the Company will require the authority from
Shareholders to purchase Shares under the Tender Offer. A notice
convening a General Meeting of the Company, which is to be held at
Shakespeare Martineau LLP, No 1 Colmore Square, Birmingham, B4 6AA
on 8 November 2016 at 11.30 a.m. (or, if later, the conclusion of
the annual general meeting of the Company to be held at 11.00 a.m.
on 8 November 2016), is set out at the end of the Circular. At this
meeting, the Resolution will be proposed to authorise the Company
to make the repurchase of Shares which is necessary to enable the
Tender Offer to be implemented. The Resolution will be proposed as
a special resolution requiring the approval of 75 per cent of the
votes cast at the General Meeting.
Takeover Code
As a public company which has its registered office and place of
management and control in the United Kingdom, the Company is
subject to the Takeover Code. Under Rule 9 of the Takeover Code,
any person who acquires an interest (as such term is defined in the
Takeover Code) in shares which, taken together with the shares in
which he and persons acting in concert with him are interested,
carry 30 per cent or more of the voting rights in a company which
is subject to the Takeover Code is normally required to make a
general offer to all of the remaining shareholders to acquire their
shares.
Similarly, when any person, together with persons acting in
concert with him, is interested in shares which in aggregate carry
not less than 30 per cent but does not hold shares carrying more
than 50 per cent of the voting rights of such a company, a general
offer will normally be required if any further interests in shares
are acquired by any such person. Such an offer would have to be
made in cash at a price not less than the highest price paid by
him, or by any member of the group of persons acting in concert
with him, for any interest in shares in the company during the 12
months prior to the announcement of the offer.
Under Rule 37.1 of the Takeover Code, when a company purchases
its own voting shares, a resulting increase in the percentage of
shares carrying voting rights in which a person or group of persons
acting, or presumed to be acting, in concert is interested will be
treated as an acquisition for the purpose of Rule 9. A shareholder
not acting in concert with the directors will not normally incur an
obligation to make a general offer under Rule 9 if, as a result of
the purchase of its own shares by a company, he comes to exceed the
percentage limits set out in Rule 9. However, this exception will
not normally apply when a shareholder (or any relevant member of a
group of persons acting in concert) not acting, or presumed to be
acting, in concert with any one or more of the directors has
acquired an interest in shares at a time when he had reason to
believe that such a purchase of its own shares by the company would
take place.
Numis will purchase, as principal, voting shares under the
Tender Offer which could result in Numis acquiring an interest in
Shares carrying 30 per cent or more of the voting rights of the
Company. Promptly following such purchase, under the terms of the
Repurchase Agreement, Numis will sell all the Exit Shares to the
Company and the Company will buy and thereafter cancel all such
Shares.
Accordingly, a waiver has been obtained from the Panel on
Takeovers and Mergers in respect of the application of Rule 9 to
the purchase by Numis of the voting shares under the Tender
Offer.
Further, Nigel Wray has expressed his intention to tender, as a
minimum, such number of Shares that will ensure that his percentage
holding in the Company's issued share capital is to a material
extent maintained following the Tender Offer.
Recommendation
The Board unanimously recommends Shareholders to vote in favour
of the Resolution to be proposed at the General Meeting, as they
intend to do in respect of their own aggregate direct beneficial
holdings of 3,353,111 Shares, representing 11.9 per cent of the
issued share capital of the Company as at 30 September 2016 (being
the latest practicable date prior to the publication of the
Circular).
The Directors can make no recommendations to Shareholders in
relation to participation in the Tender Offer. However,
Shareholders should note that the Directors who hold Shares intend
to tender such amount that will ensure that their percentage
holding in the Company's issued share capital is to a material
extent maintained following the Tender Offer.
In each case acceptance by Numis of an application under the
Tender Offer in excess of 50 per cent of the applicant's holding is
subject to there being capacity to purchase those Shares in
accordance with the terms of the Tender Offer.
Whether or not Shareholders decide to tender all or any of their
Shares will depend on, among other things, their view of the
Company's prospects and their own individual circumstances,
including their tax position.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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