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).

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(END) Dow Jones Newswires

April 23, 2021 02:00 ET (06:00 GMT)