TIDMCEPS
RNS Number : 7730A
CEPS PLC
01 October 2020
CEPS PLC
("CEPS" or the "Company")
Aford Awards Limited ("AAL")
As part of a restructuring and exit for a minority shareholder,
CEPS announces that a new holding company has been formed, called
Aford Awards Group Holdings Limited ("AAGHL"), to facilitate the
purchase of CEPS' 70% owned subsidiary Aford Awards (Holdings)
Limited ("AAHL"), which holds 100% of Aford Awards Limited ("AAL"),
in order to (i) buy out the 30% minority shareholder in AAHL, Jon
Ford, under the terms of a put option agreed at the time of the
acquisition of AAL by CEPS in 2014, and (ii) to issue new shares
and loan notes to AAL's incoming management team (the
"Transaction").
Under the terms of an existing put option agreement, Jon Ford is
selling his 30,000 shares in AAHL (representing 30% of the issued
ordinary share capital of AAHL) to AAGHL and is stepping down as
Managing Director of AAL and director of AAHL. Paul Wood will be
joining AAL as Managing Director and Robert Ferguson, who is
already employed by AAL, has been promoted to Sales and Marketing
Director of AAL. Paul Wood and Robert Ferguson will be appointed as
directors of AAGHL and AAL.
CEPS is selling its 70% interest in AAHL to AAHGL, which will
consequently own 100% of both AAHL and AAL. As disclosed in the
report and accounts of the Company for the year ended 31 December
2019, AAL's EBITDA before exceptional items was GBP411,000.
Jon Ford will still be involved with AAL on a part-time
consultancy basis, but will be taking on new challenges outside the
Aford Awards group. CEPS is pleased to welcome Paul Wood as the
Managing Director of AAL and looks forward to working alongside
Paul Wood and Robert Ferguson to develop and grow the business.
AAGHL
On completion of the Transaction, AAGHL will have 100,000
ordinary shares of GBP1.00 each in issue, GBP150,000 of Acquisition
Loan Notes ("AAGHL Acquisition Loan Notes") and GBP500,000
Shareholder Loan Notes ("AAGHL Shareholder Loan Notes") in
issue.
CEPS is subscribing for GBP150,000 of AAGHL Acquisition Loan
Notes and GBP131,420 of the AAGHL Shareholder Loan Notes.
Furthermore, in consideration for the sale of its 70,000 ordinary
shares in AAHL (representing 70% of AAHL) to AAGHL, CEPS has been
issued with 75,000 ordinary shares in AAGHL (including the paying
up of the subscriber share), representing 75% of the issued share
capital of AAGHL following completion of the Transaction, and a
further GBP243,580 AAGHL Shareholder Loan Notes. CEPS will hold, in
aggregate, GBP375,000 AAGHL Shareholder Loan Notes.
Up to a further GBP500,000 will be paid as deferred
consideration to CEPS in the form of AAGHL Acquisition Loan Notes,
subject to the performance of AAL in financial years 2021 and
2022.
Paul Wood and Robert Ferguson will each subscribe for GBP62,500
AAGHL Shareholder Loan Notes and 12,500 ordinary shares in AAGHL at
par. They are each entering into new put option agreements with
CEPS which will give them the right to sell their shares in AAGHL
to CEPS between the fifth and twentieth anniversaries of completion
(in the case of Paul Wood) and between the tenth and twentieth
anniversaries of completion (in the case of Robert Ferguson), with
the sale price to be determined with reference to the profits of
AAGHL and its subsidiaries on a consolidated basis.
AAHL
Under the terms of the 2014 put option agreement, Jon Ford will
receive a cash payment of GBP381,420 for his 30,000 ordinary shares
in AAHL.
The existing GBP300,000 Shareholder Loan Notes in AAHL ("AAHL
Shareholder Loan Notes") issued in 2014 and currently held by CEPS
(GBP210,000) and Jon Ford (GBP90,000) will remain outstanding.
Details of the Loan Notes
As to the ranking of loan notes, the AAHL Shareholder Loan Notes
(issued in 2014) will be repaid first, followed by the AAGHL
Acquisition Loan Notes and then the AAGHL Shareholder Loan Notes.
All Vendor Loan Notes and Acquisition Loan Notes constituted by
AAHL in 2014 have been fully repaid.
The AAGHL Acquisition Loan Notes will bear interest at a rate of
6 per cent, and the AAGHL Shareholder Loan Notes will bear interest
at a rate of 7 per cent. The AAHL Shareholder Loan Notes will
continue to bear interest at a rate of 8 per cent.
AAHL Related Party Transaction
The sale of Jon Ford's 30,000 ordinary shares in AAHL to AAGHL
("Sale") is deemed to be a Related Party Transaction pursuant to
AIM Rule 13 as it is a transaction with a director of a subsidiary
of the Company. The directors of the Company, all of whom are
considered independent for the purposes of the Sale, having
consulted with the Company's nominated adviser, Cairn Financial
Advisers LLP, consider that the terms of the Sale are fair and
reasonable insofar as the Company's shareholders are concerned.
Director's Loan
David Horner, a director of the Company, has provided a loan
facility (the "Loan Facility") to the Company of GBP425,000 to fund
the GBP281,420 cost of the purchase of the AAGHL Acquisition Loan
Notes and AAGHL Shareholder Loan Notes by CEPS, and to provide
additional working capital during the current Covid-19
situation.
Director's Loan Related Party Transaction
The Loan Facility, which is unsecured, carries zero interest and
has no fixed repayment date, is deemed to be a Related Party
Transaction pursuant to AIM Rule 13 as David Horner is a director
of the Company. The directors of the Company who are considered
independent for the purposes of the Loan Facility (being the whole
Board save for David Horner), having consulted with the Company's
nominated adviser, Cairn Financial Advisers LLP, consider the terms
of the Loan Facility to be fair and reasonable insofar as the
Company's shareholders are concerned.
The announcement contains inside information for the purposes of
Article 7 of EU Regulation 596/2014.
Enquiries
CEPS PLC
David Horner, Chairman +44 1225 483030
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
/ Ludovico Lazzaretti +44 20 7213 0880
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