TIDMBBB
RNS Number : 3789W
Bigblu Broadband PLC
23 April 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION (EU) NO 596/2014 AS IT FORMS PART OF UK
DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
("MAR") AND IS DISCLOSED IN ACCORDANCE WITH THE COMPANY'S
OBLIGATIONS UNDER ARTICLE 17 OF MAR.
Bigblu Broadband plc
('BBB' or the 'Company' or the 'Group')
Proposed Disposal of QCL Holdings Limited ("Quickline")
and
Notice of General Meeting
Second profitable asset disposal further demonstrates success of
Board's strategy
through sale of Quickline, valuing 100% of Quickline at up to
GBP92.1million
Significant return on BBB's original investment in Quickline
with proceeds providing balance sheet strength and an ongoing stake
in a business targeting to pass 500,000 premises
Bigblu Broadband plc (AIM: BBB.L), a leading provider of
alternative super-fast and ultra-fast broadband services, announces
that it has conditionally agreed to sell (the " Disposal") the
Company's holding in Quickline - the holding company for Quickline
Communications Limited - to global private markets investment firm
Northleaf Capital Partners ("Northleaf"). The Disposal values BBB's
shareholding in Quickline at up to GBP48.6 million, equivalent to
approximately 84 pence per BBB ordinary share*.
The consideration will be payable as follows:
-- Total cash consideration of up to GBP41.1 million of which
GBP31.1 million is payable on completion, with a further GBP10.1
million as deferred contingent consideration that is subject to
certain performance conditions being met by no later than 31 March
2022, or in certain circumstances, 31 May 2022; and
-- GBP5.6 million being satisfied in Loan Notes on Completion
(with an option to convert partially into equity) and an additional
award of Loan Notes (with an option to convert partially into
equity) of up to GBP1.8 million subject to the conditions of the
deferred contingent consideration also being met.
-- Should the above options be exercised, BBB would have an 8% stake in the ongoing business.
Upon completion, BBB's remaining operations will consist of its
Australasian operations (SkyMesh Pty Limited) and its Nordics
business (Bigblu Norge AS), (together, the " Continuing Group "
).
Highlights
-- The Disposal represents an excellent return for shareholders
of up to 5.8 times the cost of BBB's investment, realising not only
an immediate cash return but also a retained interest in the
business going forward.
-- BBB believes that partnering with Northleaf as a majority
shareholder will allow Quickline to achieve its growth strategy
across all aspects of its comprehensive business plan, including
its infrastructure, people and systems.
-- Quickline is targeting to pass 500,000 premises with its 5G
and increasingly Fibre to the Premise ("FTTP") network in the
coming years.
Group Strategy
-- The Board's strategic focus will continue to be on maximising
value and returns for shareholders;
-- BBB continues to see growth in customer numbers, revenue and
EBITDA over the comparable period last year;
-- BBB's balance sheet will be further strengthened by the cash
received following completion of the Disposal;
-- The Board has undertaken to review the steps needed to return
any surplus cash to shareholders within the current financial
year;
-- An on-going focus on closing the digital divide and providing
high-speed broadband solutions to rural areas in Australasia and
the Nordics where traditional bre options are either unsuitable or
uneconomic;
-- The Board will continue to consider investment opportunities
within the Continuing Group to fund further organic growth or
through strategic acquisition opportunities.
Andrew Walwyn, Chief Executive Officer of Bigblu Broadband plc,
commented:
" The management team has extensive experience in the sector and
a track record of building attractive assets and delivering
shareholder value. Through the sale of Quickline, BBB has once
again demonstrated its ability to maximise the value of its
interests in the high growth broadband connectivity market. This is
now the second time that the Board has realised excellent returns
for shareholders.
"BBB remains on a strong financial footing, enabling the Board
to consider appropriate means of returning surplus cash to
shareholders whilst also considering the opportunities within its
continuing operations so as to ensure the continued future growth
of shareholder value for BBB's shareholders."
Notice of General Meeting
The Disposal is of sufficient size relative to that of the
Existing Group to constitute a disposal resulting in a fundamental
change of business pursuant to Rule 15 of the AIM Rules and
completion is, therefore, conditional upon the approval of a simple
majority of Shareholders at a General Meeting of the Company, and
on certain regulatory approvals.
A Circular and notice convening the General Meeting, to be held
at The Old Rectory, 72 St. Marychurch Street, London SE16 4HZ at
10.00 a.m. on 12 May 2021 will be posted to Shareholders shortly
and will be available on the Company's website at www.bbb-plc.com.
The General Meeting will be convened to consider, and if thought
fit, approve the Resolution set out in the Circular and notice.
The Directors consider the Disposal to be in the best interests
of the Company and the Shareholders as a whole. The Directors have
irrevocably undertaken to vote in favour of the Resolution in
respect of the 3,687,658 Ordinary Shares in which they are
beneficially interested, representing approximately 6.4 per cent.
of the issued ordinary share capital of the Company. Additional
undertakings and letters of intent over 33,142,896 Ordinary Shares,
representing a further 57.5 per cent. of the issued ordinary share
capital have been obtained from other shareholders
Therefore, the Company has received irrevocable undertakings and
letters of intent to vote in favour of the Resolution over a total
of 36,830,554 Ordinary Shares, representing approximately 64.0 per
cent. of the issued ordinary share capital of the Company.
THE BOARD STRONGLY URGES SHAREHOLDERS TO COMPLY WITH GOVERNMENT
PUBLIC HEALTH INSTRUCTIONS IN RESPECT OF THE COVID-19 PANDEMIC AND
SOCIAL CONTACT, PUBLIC GATHERINGS AND NON-ESSENTIAL TRAVEL. PLEASE
NOTE THAT THE COMPANY CURRENTLY INTS TO REFUSE ENTRY TO
SHAREHOLDERS WHO DO ATTEMPT TO ATT THE GENERAL MEETING IN ORDER TO
COMPLY WITH THOSE PUBLIC HEALTH INSTRUCTIONS.
Management Presentation
BBB's management team will be hosting a remote presentation to
review the sale of Quickline at a time and date to be confirmed. If
you are interested in attending, please contact Walbrook PR via
either
BigbluBroadband@walbrookpr.com or calling 020 7933 8780.
*based on the total maximum consideration that could be received
by Bigblu Broadband (including the full deferred contingent
consideration) of GBP48.6 million and a total issued share capital
of 57,589,857 ordinary shares as at 22 April 2021 (being the latest
practicable date prior to the publication of this document).
For further information:
Bigblu Broadband plc www.bbb-plc.com
Andrew Walwyn, Chief Executive Officer Via Walbrook PR
Frank Waters, Chief Financial Officer
Dom Del Mar, Corporate Development
finnCap (Nomad and Broker) Tel: +44 (0)20 7220
0500
Marc Milmo / Simon Hicks / Charlie Beeson
(Corporate Finance)
Tim Redfern / Richard Chambers (ECM)
Walbrook PR (PR / IR advisers) Tel: +44 (0)20 7933
8780 or
Nick Rome / Tom Cooper / Nicholas Johnson BigbluBroadband@walbrookpr.com
Torch Partners (Financial Adviser) Tel: +44 (0)20 7227
Rupert Robson / Tom Roberts / Michael Lord 8830
/ Gabriele Martini
About Bigblu Broadband plc:
Bigblu Broadband plc (AIM: BBB.L), is a leading provider of
alternative super-fast broadband solutions throughout Europe and
Australia. BBB delivers a portfolio of super-fast wireless
broadband products for consumers and businesses unserved or
underserved by fibre.
High levels of recurring revenue, increasing economies of scale
and Government stimulation of the alternative broadband market in
many countries provide a solid foundation for significant organic
growth as demand for alternative super-fast broadband services
increases around the world.
Acquisitive and organic growth have enabled BBB to grow rapidly
since inception in 2008 during which time the Company has completed
21 acquisitions across nine different countries. It is extremely
well positioned to continue growing as it targets customers that
are trapped in the 'digital divide' with limited fibre broadband
options.
BBB's range of solutions includes satellite, next generation
fixed wireless and 4G/5G delivering between 30 Mbps and 150 Mbps
for consumers, and up to 1 Gbps for businesses. BBB provides
customers ongoing services including hardware supply, installation,
pre and post-sale support billings and collections, whilst offering
appropriate tariffs depending on each end user requirements.
Importantly, as its core technologies evolve, and more
affordable capacity is made available, BBB continues to offer
ever-increasing speeds and higher data throughputs to satisfy
market demands for 'video-on- demand'. Its alternative broadband
offerings present a customer experience that is similar to that
offered by wired broadband and the connection can be shared in the
normal way with PCs, tablets and smart-phones via a normal wired or
wireless router.
Cautionary note regarding forward-looking statements
This document includes statements that are, or may be deemed to
be, "forward-looking statements". These forward-looking statements
can be identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "plans", "projects",
"anticipates", "expects", "intends", "may", "will", or "should" or,
in each case, their negative or other variations or comparable
terminology. These forward-looking statements include matters that
are not historical facts. They appear in a number of places
throughout this document and include statements regarding the
Directors' current intentions, beliefs or expectations concerning,
among other things, the Existing Group's results of operations,
financial condition, liquidity, prospects, growth, strategies and
the Existing Group's markets. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. Actual results and developments
could differ materially from those expressed or implied by the
forward-looking statements. Forward-looking statements may and
often do differ materially from actual results. Any forward-looking
statements in this document are based on certain factors and
assumptions, including 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
Existing Group's and the Continuing Group's operations, results of
operations, growth strategy and liquidity. Whilst the Directors
consider these assumptions to be reasonable based upon information
currently available, they may prove to be incorrect. Save as
required by law or by the AIM Rules, the Company undertakes no
obligation to publicly release the results of any revisions to any
forward-looking statements in this document that may occur due to
any change in the Directors' expectations or to reflect events or
circumstances after the date of this announcement.
Proposed disposal of QCL Holdings Limited
1. Introduction
The Board is pleased to announce today that it has conditionally
agreed to the sale of Bigblu Broadband's shareholding in Quickline
- the holding company for Quickline Communications Limited to
Bidco, - a newly incorporated special purpose company established
by Northleaf to acquire 100 per cent. of the fully diluted share
capital of Quickline. Bidco is ultimately controlled by Topco, a
newly incorporated special purpose company established by Northleaf
for the purposes of acquiring Quickline.
Pursuant to the terms of the Transaction, Bigblu Broadband will
receive a mix of cash and Bidco Loan Notes, with a headline equity
value of up to GBP48.6 million (equivalent to approximately 84
pence per Bigblu Broadband share[1], assuming the deferred
contingent consideration is paid in full) in respect of Bigblu
Broadband's current shareholding in Quickline, payable as
follows:
-- an initial cash payment of GBP31.1 million payable on Completion;
-- GBP5.6 million that will (subject to the mechanisms set out
in paragraph 3) be satisfied in Loan Notes that have a right to
convert 40% of such Loan Notes into Topco Shares representing
approximately 8.0 per cent. of the fully diluted share capital in
Topco at Completion; and
-- deferred contingent consideration of up to GBP10.1 million in
cash plus up to GBP1.8 million of additional Loan Notes that will
(subject to the mechanisms set out in paragraph 3 below) have a
right to convert 40% of such Loan Notes into Topco Shares. This
deferred contingent consideration will be payable subject to
certain performance conditions being met by no later than 31 March
2022, or in certain circumstances, 31 May 2022.
Under the terms of the Transaction, the maximum headline equity
value ascribed by Northleaf for 100 per cent. of Quickline's fully
diluted issued share capital is approximately GBP92.1 million
(assuming all of the deferred contingent consideration becomes
payable).
Upon Completion, Bigblu Broadband's remaining operations will
consist of its Australasian operations in Australia and New Zealand
(SkyMesh Pty Ltd) and the Nordics (Bigblu Norge AS) businesses,
(together, the "Continuing Group"). Bigblu Broadband will also
(subject to the mechanisms set out in paragraph 3 below) hold B
Loan Notes in Midco and shares in Topco with an aggregate value of
GBP5.6 million.
The Board believes that the Transaction provides Bigblu
Broadband with the opportunity to crystallise an excellent return
on the aggregate consideration paid by the Group for its
shareholding in Quickline whilst also retaining a minority exposure
to any potential upside in the ongoing Quickline business under
Northleaf's ownership and the anticipated continuing investment in
Quickline by Northleaf. Furthermore, the initial cash consideration
payable to Bigblu Broadband on Completion will provide Bigblu
Broadband with additional nancial exibility to support the
opportunities in the Continuing Group whilst also enabling the
Board of Bigblu Broadband to explore means of returning any surplus
cash to Shareholders within Bigblu Broadband's current financial
year.
The Transaction is of su cient size relative to that of the
Existing Group to constitute a disposal resulting in a fundamental
change of business pursuant to Rule 15 of the AIM Rules and
Completion is, therefore, conditional upon (amongst other things)
the approval of Shareholders at a General Meeting of Bigblu
Broadband.
The Directors consider the Transaction to be in the best
interests of Bigblu Broadband and its Shareholders as a whole and
accordingly will, in the circular to shareholders, unanimously
recommend that Shareholders vote in favour of the Resolution to be
proposed at the General Meeting. As they have irrevocably
undertaken to do in respect of the 3,687,658 Ordinary Shares in
which they are bene cially interested, representing approximately
6.4 per cent. of the issued ordinary share capital of Bigblu
Broadband.
Additional undertakings and letters of intent in respect of
33,142,896 Ordinary Shares, representing a further 57.5 per cent.
of the ordinary share capital have been obtained from certain of
the Company's shareholders.
In aggregate, therefore, Bigblu Broadband and Bidco have
received irrevocable undertakings and letters of intents to vote in
favour of the Resolution in respect of, in aggregate, 36,830,554
Ordinary Shares representing approximately 64.0 per cent. of Bigblu
Broadband's issued share capital.
2. Background to and reasons for the Transaction
Quickline , a leading provider of fixed wireless broadband in
the UK, was acquired in August 2017 for a total consideration of
GBP8.4 million. At the time, the Board believed that the
acquisition of Quickline was an important strategic fit as Bigblu
Broadband sought to capitalise on the opportunity it believed
existed to deliver improved broadband connectivity in rural areas
of England.
Since this acquisition, Quickline has grown through deployment
of fixed wireless and fibre infrastructure, including through
securing government-backed subsidies (administered by Building
Digital UK ("BDUK") designed to support capital investment into
rural and semi-rural broadband projects.
Since August 2020, Quickline has won four BDUK Superfast
Programme tenders valued at approximately GBP30 million in
aggregate to provide coverage to approximately 30,000 premises
using both fibre and FWA technologies. Previously, Quickline was
selected by the DCMS in February 2020 to lead a GBP6.0 million 5G
project to boost rural connectivity in North Yorkshire. Finally,
Quickline is already an approved supplier of Rural Gigabit
Vouchers, which provide funding for up to GBP1,500 per residential
premise and GBP3,500 per business premise for new gigabit-capable
connections in rural areas, and is currently building via this
programme.
Quickline 's aim is to be the leading UK rural broadband
infrastructure provider, delivering innovative, flexible and hybrid
solutions that can address the millions of premises unlikely to be
served commercially by full fibre networks for many years to
come.
The Board considers that, under Bigblu Broadband's ownership,
Quickline has created a strong value proposition through a
combination of management experience and expertise in delivering
attractive FWA, 5G and FTTP projects, with investment in the future
infrastructure and capacity to be supported by BDUK Superfast
grants won, Rural Gigabit Vouchers and the DCMS's announced new
"Outside-in" subsidy scheme.
Whilst the Board believes that Quickline has a potentially
strong future as a subsidiary of a listed company, the Board
recognises that in order to fully capture the potential market
opportunity, significant future investment will be required to
enable it to fully deploy the FTTP and 5G fixed wireless
infrastructure technologies across its chosen markets. As a result,
the Board believes that Northleaf's offer, coupled with its plans
to provide Quickline with the significant additional investment
capital to support Quickline's strategy to pass 500,000 premises
with its 5G and increasingly Fibre to the Premise ("FTTP") network,
represents compelling value for the Company and its shareholders
given the balance of future opportunities and potential risks
facing the business.
The valuation achieved for Bigblu Broadband's shares in
Quickline of up to GBP48.6 million (representing the aggregate of
the initial cash payment of GBP31.1 million, deferred contingent
cash consideration of up to GBP10.1 million and up to GBP7.4
million in B Loan Notes and Topco Shares (assuming the exercise of
the put and call options summarised below) represents an excellent
return of up to 5.8x on the consideration paid by the Group for its
shareholding in Quickline. In the Board's view, the excellent
return achieved on the Transaction re ects the value created by the
strategic positioning of the Quickline business and is an
attractive opportunity for Bigblu Broadband to realise not only an
immediate cash return but also retain an ongoing interest in
Topco.
The immediate cash proceeds due to Bigblu Broadband on
Completion of GBP31.1 million from the Transaction will enable the
Board of Bigblu Broadband to explore means of returning capital to
shareholders. The cash will strengthen Bigblu Broadband's balance
sheet enabling the Board to consider how best to enhance value from
the Continuing Group and the Board has undertaken to review with
its advisers the steps needed to enable a return of any surplus
cash to shareholders, within the current financial year of the
Company (subject to the financial requirements of the Group at the
time and the requirements of the Act) if it is practical to do
so.
Information on Quickline
Quickline comprises QCL Holdings Limited, and its wholly owned
subsidiaries Quickline Communications Limited and Clannet Broadband
Limited.
Quickline was acquired in August 2017 for a total consideration
of GBP8.4 million. In August 2019, Bigblu Broadband announced an
GBP8.0 million private placement equity funding into Quickline at a
GBP15.0 million pre-money, debt-free, cash-free valuation basis
with the funding to be used to significantly accelerate the
roll-out of Quickline's FWA infrastructure.
Following the drawdown of the full GBP8.0 million equity funding
for Quickline, Bigblu Broadband currently owns 56.9 per cent. of
the issued shares in Quickline. As part of the August 2019 equity
raise, a growth share scheme was put in place for the management
team of Quickline, which entitles the holders of Growth Shares to
10 per cent. of the excess value realised in the event of a sale of
Quickline or a liquidity event above a hurdle linked to the
post-investment value of Quickline (being GBP21.8 million) plus the
investors' capital preference (being 125 per cent. of capital
invested). The growth share scheme will crystallise as a result of
the Transaction announced today following which, Bigblu Broadband's
equity interest in Quickline will be approximately 52.7 per
cent.
For the year ended 30 November 2020, Quickline generated audited
revenue of approximately GBP3.7 million, audited adjusted EBITDA of
approximately GBP1.5 million, and had approximately 7,000 fixed
wireless customers. As at 30 November 2020, the audited net assets
of Quickline were approximately GBP6.1 million.
3. Principal terms of the Transaction
Transaction structure and total consideration
Quickline has been valued at an equity value of up to GBP92.1
million for 100 per cent. of the entire issued and to be issued
share capital of Quickline (assuming all of the deferred contingent
consideration becomes payable) or GBP69.6 million (assuming no
deferred contingent consideration is payable). The consideration is
based on a "locked box" completion mechanism based on the audited
November 2020 balance sheet.
Pursuant to the terms of the Share Sale Agreement, certain
Quickline shareholders (being Steven Jagger, Paul Howard, Bigblu
Broadband and funds managed on behalf of Harwood Capital) will
receive, in exchange for, in aggregate, 20 per cent. of the value
of Quickline (representing GBP18.4 million based on the maximum
potential consideration of GBP92.1 million), Bidco Loan Notes
capable of being exchanged for B Loan Notes (60%) and Midco Loan
Notes (40%), and then the Midco Loan Notes will be capable of being
exchanged for Topco Shares.
The Loan Notes carry an interest rate of 4.5% and are redeemable
on an exit event such as a sale or listing of Quickline.
The cash consideration of up to GBP73.7 million for 80 per cent.
of the aggregate shares shall be paid out as GBP55.7 million in
cash on Completion and deferred contingent cash consideration of up
to GBP18.0 million subject to certain performance conditions being
met by 31 March 2022, or in certain circumstances, 31 May 2022. Up
to 50 per cent. of the deferred contingent consideration is linked
to the number of premises passed by Quickline and the number of 5G
FWA masts installed, with up to 50 per cent. being dependent on
Quickline's continued success in delivering performance under
ongoing and potential new contracts for broadband delivery.
Steven Jagger (Founder and CTO of Quickline) will exchange his
entire shareholding in Quickline (excluding any Growth Shares held
by him which he will realise for cash) representing, in aggregate,
approximately 6 per cent. of Quickline's fully diluted issued share
capital, for Bidco Loan Notes, 60% of which will be exchangeable
for B Loan Notes and 40% of which will be exchangeable for Midco
Loan Notes which will then be exchangeable for Topco Shares. The
remaining Quickline Shareholders other than Paul Howard and holders
of growth Shares (being Bigblu Broadband and funds managed on
behalf of Harwood Capital) will each exchange approximately 15 per
cent. of their respective shareholdings in Quickline, representing,
in aggregate, approximately 13 per cent. of Bidco Loan Notes which
will similarly be exchangeable for B Loan Notes and Midco Loan
Notes, which in turn will be exchangeable for Topco Shares.
Paul Howard (the Quickline Chairman and a non-executive director
of Bigblu Broadband) has elected to sell for cash all of his
shareholding in Quickline, representing, in aggregate,
approximately 1 per cent. of Quickline's fully diluted issued share
capital, but is subject to an undertaking to reinvest such cash for
B Loan Notes and Topco Shares.
Pursuant to the terms of the Share Sale Agreement, Bigblu
Broadband has also agreed to pay Northleaf a break fee of
GBP500,000 in the event that the condition relating to shareholder
approval is not satisfied in circumstances where the Board of
Bigblu Broadband changed or qualified its unanimous recommendation
to Shareholders due to an alternative proposal having been received
in respect of Quickline or in respect of the whole issued share
capital of Bigblu Broadband.
Transaction consideration due to Bigblu Broadband
Prior to the Transaction, Bigblu Broadband owned approximately
56.9 per cent. of the issued shares in Quickline. As noted above,
the Transaction, will crystalise the growth share plan to the
management and staff of Quickline following which Bigblu Broadband
will own approximately 52.7 per cent. of Quickline's fully diluted
issued share capital.
Bigblu Broadband's proportionate shareholding in Quickline will
be valued at up to GBP48.6 million, which will be satisfied by
total cash proceeds of up to approximately GBP41.1 million (being
the GBP31.1 cash to be paid on Completion and up to GBP10.1 million
assuming the full deferred contingent cash consideration is paid)
and Bidco Loan Notes of up to GBP7.4 million (being GBP5.6 million
on Completion and up to GBP1.8 million assuming the full deferred
contingent consideration is paid), 60% of which will be capable of
exchange for B Loan Notes and 40% of which will be able to be
exchanged for Midco Loan Notes and in turn exchanged for Topco
Shares.
The deferred contingent consideration is payable subject to
certain performance conditions being met by Quickline by no later
than 31 March 2022, or in certain circumstances, 31 May 2022. In
the event that no deferred contingent consideration is payable, the
headline equity value due to Bigblu Broadband is approximately
GBP36.7 million.
All Loan Notes will bear an interest rate of 4.5%. 60% of the
Bidco Loan Notes are the subject of put and call options that if
exercised will enable them to be converted into B Loan Notes, and
40% into Midco Loan Notes which are also the subject of put and
call options that if exercised will enable them to be converted
into Topco Shares with such shares representing for Bigblu
Broadband approximately 8.0 per cent. of the Topco issued share
capital following Completion. In the event that Bigblu Broadband
does not participate in future capital funding rounds, its
shareholding in Topco would be diluted.
Completion is conditional on (amongst other things) (i) the
Resolution being passed by the requisite majority at the General
Meeting (or any adjournment thereof), (ii) the written consent of 4
key Local Authority contract counterparties being obtained to the
change of control which would result from the Transaction.
Completion is expected to occur by the end of June 2021. If the
conditions referred to above have not been satisfied or waived
(with the Investor's agreement) by the date falling 6 months after
the date of the Share Sale Agreement ("Final Longstop Date") then
the agreement shall terminate without further notice.
At Completion, the Investor shall enter into the Shareholder
Agreement with Bigblu Broadband, the Harwood Parties, Steven Jagger
and Paul Howard which will govern the relationship amongst them as
shareholders and the future funding arrangements for Quickline.
Further information on the terms of the Shareholder Agreement is
set out in part 2B. Bigblu Broadband will, for so long as it and
Harwood Parties hold together not less than 10% of the issued share
capital of Quickline be entitled to appoint a director to the board
of Quickline, and for so long as they together hold not less than
5% of the share capital of Quickline, to appoint an observer.
4. Information on Northleaf
Northleaf is a global private markets investment firm with
approximately US$15 billion in commitments under management on
behalf investors, including public, corporate and multi-employer
pension plans, university endowments, foundations, financial
institutions, family offices and high net worth individuals.
Northleaf was formed in 2009 by the successful spin-out of TD
Capital Private Equity Investors, the independent private equity
investment arm of TD Bank Group. Northleaf's 150-person team,
headquartered in Toronto with offices in Melbourne, Montréal,
London, New York, Chicago and Menlo Park, is focused exclusively on
sourcing, evaluating and managing private market investments
globally. Northleaf currently manages more than 400 active private
equity, private credit and infrastructure investments in 40
countries.
5. Financial effects of the Transaction and use of the
proceeds
The Board will continue to evaluate opportunities to enhance
shareholder value from the Continuing Group which may include the
use of part of the net proceeds of the Transaction to pursue the
opportunities that the Board believes are available to the
Continuing Group. The net proceeds will also further strengthen the
Group's net cash position. Quickline's cash and debt balances will
remain within Quickline on Completion and the Continuing Group is
expected to have cash and cash equivalents immediately after
Completion of approximately GBP32.8 million.
Having assessed the investment and capital requirements of the
Continuing Group, the Board intends to return any surplus capital
to Shareholders within the current financial year of the Company
(subject to the financial requirements of the Group at the time and
the requirements of the Act) if practical to do so.
6. Strategy for the Continuing Group
Having significantly reduced debt and established a net cash
positive position, Bigblu Broadband is continuing to generate
operating cashflows from its Continuing Operations, whilst
continuing to see growth in customer numbers, revenue and EBITDA
over the comparable period in the previous financial year.
The Board has demonstrated its ability to maximise value and
returns for shareholders following the sale of its UK and European
satellite operations to Eutelsat SA (announced in July 2020 and
completed in September 2020) and now the proposed sale of Quickline
to Northleaf. Together, these two disposals have an aggregate
maximum consideration of GBP87.9 million (assuming full payment of
deferred contingent consideration) and a premium of approximately
124 per cent over the aggregate consideration paid for these
assets. Looking forward, the Continuing Group will continue to
focus on closing the digital divide and providing high-speed
broadband solutions to rural areas where traditional bre options
are either unsuitable or uneconomic whilst the Board will also
continue to consider how best to maximise value and returns for
shareholders from its remaining Australasian and Nordic assets.
Australasia
SkyMesh is a leading Australian satellite broadband service
provider. It has over 45,000 customers in total and continues to
grow rapidly, targeting c.10,000 new customers per annum through
organic channels.
The Board has been exploring the opportunity to accelerate
Bigblu Broadband's presence into the wider Australasia region, with
New Zealand being the initial area of focus. It was therefore
delighted to announce the agreement with Kacific Broadband which
has provided SkyMesh with the opportunity to expand its reach into
New Zealand.
The Board will continue to explore all of the options open to it
to enhance the value of its interest in SkyMesh which could include
a possible disposal of the asset, continuing organic growth
complemented by acquisition opportunities or a possible IPO of the
business in Australia.
Nordics
The Nordics business has been focused on growing the Norwegian
Satellite market and there has been limited investment by the Group
in improving the fixed wireless network over the last couple of
years. There have been relatively high levels of customer churn in
this region due, in part, in the view of the Directors, to
relatively low broadband speeds where legacy infrastructure
exists.
Following the Transaction, the Board will consider accelerating
its current strategy of targeted investment to upgrade and extend
the existing fixed wireless infrastructure. The Board will also
continue to evaluate new opportunities to refine and enhance the
Group's fixed wireless service proposition in the Nordic market.
Recent new initiatives in this region include the launch of new
product satellite offerings across the region offering speeds of
50Mbps and unlimited capacity.
The Directors consider that the Group's ability to offer FWA and
satellite solutions in the Nordics means that there is potentially
significant scope to expand its presence and reach in this region.
The suite of competitive offerings and growing demand for working
from home solutions means that the target market continues to
increase in size. Market growth, alongside the operational
investment outlined above, provide the Directors with confidence of
stronger demand for its FWA solutions in Norway.
7. Irrevocable undertakings and letters of intent
The Directors have given irrevocable undertakings to Bigblu
Broadband and Bidco to vote in favour of the Resolution (and, where
relevant, to procure that such action is taken by the relevant
registered holders if that is not them), in respect of their entire
bene cial holdings totaling, in aggregate, 3,687,658 Ordinary
Shares, representing approximately 6.4 per cent. of Bigblu
Broadband's issued share capital.
Harwood Capital has given irrevocable undertakings to Bigblu
Broadband and Bidco to vote in favour of the Resolution (and, where
relevant, to procure that such action is taken by the relevant
registered holders if that is not them), in respect of its entire
bene cial holding totaling, in aggregate, 16,010,500 Ordinary
Shares, representing approximately 27.8 per cent. of Bigblu
Broadband's issued share capital.
Bigblu Broadband and Bidco have also received irrevocable
undertakings to vote in favour of the Resolution from each of
Steven Jagger, Simon Clifton, Richard Griffiths and LF Gresham
House UK Micro Cap fund in respect of, in aggregate, 28,598,452
Ordinary Shares representing, in aggregate, approximately 49.7 per
cent. of Bigblu Broadband's issued share capital. Bigblu Broadband
and Bidco have also received a letter of intent from BGF Investment
Management Limited in respect of 4,544,444 Ordinary Shares
representing approximately 7.9 per cent. of Bigblu Broadband's
issued share capital.
In aggregate, therefore, Bigblu Broadband and Bidco have
received irrevocable undertakings and a letter of intent to vote in
favour of the Resolution in respect of, in aggregate, 36,830,554
Ordinary Shares representing approximately 64.0 per cent. of Bigblu
Broadband's issued share capital.
DEFINITIONS
"Act" the Companies Act 2006 (as amended);
"AIM" the AIM market operated by the London Stock
Exchange;
-----------------------------------------------------
"AIM Rules" the AIM Rules for Companies and guidance notes
published by the London Stock Exchange from
time to time;
-----------------------------------------------------
"B Loan Notes" Loan notes issued by Midco to Paul Howard
for cash and to sellers other than the holders
of Growth Shares in exchange for Bidco Loan
Notes;
-----------------------------------------------------
"Bidco" QCL Bidco Limited, a company incorporated
and registered in England and Wales with registered
number 13349416;
-----------------------------------------------------
"Bidco Loan Notes" the 4.5% unsecured Loan Notes 2051 of Bidco
issued in partial satisfaction of the consideration
payable for the shares in Quickline to be
sold under the Transaction;
-----------------------------------------------------
"Company" or "Bigblu Bigblu Broadband plc, a company incorporated
Broadband" and registered in England and Wales with registered
number 09223439;
-----------------------------------------------------
"Completion" completion of the sale of the entire issued
and to be issued share capital of Quickline
in accordance with the Share Sale Agreement;
-----------------------------------------------------
"Continuing Group" the Company and its subsidiary undertakings
following Completion;
-----------------------------------------------------
"Directors" or "Board" the directors of the Company;
-----------------------------------------------------
"DCMS" the Department for Digital, Culture, Media
and Sport;
-----------------------------------------------------
"Existing Group" the Company and its subsidiary undertakings
as at the date of this announcement (including,
without limitation, Quickline and its subsidiary
undertakings);
-----------------------------------------------------
"FCA" the Financial Conduct Authority;
-----------------------------------------------------
"finnCap" finnCap Ltd, the Company's nominated adviser
and broker;
-----------------------------------------------------
"FSMA" the Financial Services and Markets Act 2000
(as amended);
-----------------------------------------------------
"FTTP" fibre to the premises;
-----------------------------------------------------
"FWA" fixed wireless access;
-----------------------------------------------------
"General Meeting" the general meeting of the Company to be held
at The Old Rectory, 72 St. Marychurch Street,
London SE16 4HZ at 10.00 a.m. on 12 May 2021,
notice of which will be set out at the end
of the Circular;
-----------------------------------------------------
"Growth Shares" G1 Shares in the capital of Quickline held
by certain managers of Quickline (including
Steven Jagger and Paul Howard);
-----------------------------------------------------
"Harwood Parties" North Atlantic Value GP 4 Limited, and Harwood
Capital Nominees Limited;
-----------------------------------------------------
"Investor" NCP UK Fibre Aggregator Partnership, a Canadian
general partnership controlled by Northleaf;
-----------------------------------------------------
"Loan Notes" any and all of the Bidco Loan Notes, B Loan
Notes and Midco Loan notes;
-----------------------------------------------------
"London Stock Exchange" London Stock Exchange plc;
-----------------------------------------------------
"Midco" QCL Midco Limited, a company incorporated
and registered in England and Wales with registered
number 13346904;
-----------------------------------------------------
"Midco Loan Notes" the Rollover Loan notes issued by Midco capable
of conversion into shares in Topco;
-----------------------------------------------------
"Northleaf" Northleaf Capital Partners (Canada) Ltd.,
acting on behalf of infrastructure investment
vehicles managed by it or its affiliates;
-----------------------------------------------------
"Notice of General the notice convening the General Meeting which
Meeting" will be set out at the end of the Circular;
-----------------------------------------------------
"Ordinary Shares" the ordinary shares of 15 pence each in the
capital of the Company;
-----------------------------------------------------
"Quickline" QCL Holdings Limited, a company incorporated
and registered in England and Wales with registered
number 11734097 and its subsidiary undertakings;
-----------------------------------------------------
"Register" the register of members of the Company maintained
by Share Registrars Limited;
-----------------------------------------------------
"Resolution" the ordinary resolution set out in the Notice
of General Meeting;
-----------------------------------------------------
"Share Sale Agreement the conditional share sale agreement dated
" 22 April 2021 between the Company, North Atlantic
Value GP 4 Limited, Harwood Capital Nominees
Limited, Paul Howard, Steven Jagger and Bidco;
-----------------------------------------------------
"Shareholders" holders of Ordinary Shares;
-----------------------------------------------------
"Shareholder Agreement" the shareholder and subscription agreement
to be entered into by, inter alia, the parties
to the Share Sale Agreement and the Investor;
-----------------------------------------------------
"SME" small and medium-sized enterprises;
-----------------------------------------------------
"Superfast Broadband" a broadband connection with a download speed
of 24Mb or above;
-----------------------------------------------------
"Topco" QCL Topco Limited, a company incorporated
and registered in England and Wales with registered
number 13344204;
-----------------------------------------------------
"Topco Shares" Ordinary shares of GBP0.10 issued in Topco;
-----------------------------------------------------
"Torch" Torch Partners IB Limited, Bigblu Broadband's
financial adviser;
-----------------------------------------------------
"Transaction" the proposed disposal by the Company of its
shareholding in Quickline pursuant to the
Share Sale Agreement;
-----------------------------------------------------
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern
Ireland;
-----------------------------------------------------
1 based on the total maximum consideration that could be
received by Bigblu Broadband (including the full deferred
contingent consideration) of GBP48.6 million and a total issued
share capital of 57,589,857 ordinary shares as at 22 April 2021
(being the latest practicable date prior to the publication of this
document).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCDKBBNNBKBKQB
(END) Dow Jones Newswires
April 23, 2021 02:00 ET (06:00 GMT)
Bigblu Broadband (LSE:BBB)
Historical Stock Chart
From Mar 2024 to Apr 2024
Bigblu Broadband (LSE:BBB)
Historical Stock Chart
From Apr 2023 to Apr 2024
