City Of London Group PLC Related Party Transaction (0821W)
July 30 2018 - 1:01AM
UK Regulatory
TIDMCIN
RNS Number : 0821W
City Of London Group PLC
30 July 2018
City of London Group plc
("COLG" or the "Company")
Related Party Transaction
Acquisition of Acorn to Oaks Financial Services
COLG is pleased to announce that on 27th July 2018, it entered
into a formal agreement to acquire 100% of the shares of Acorn to
Oaks Financial Services Limited ("A2O") (the "Acquisition").
A2O is a financial services intermediary business focussing on
SME and landlord insurance products. A2O made a profit of
GBP177,000 for the financial year ending 31 March 2018 and had
gross assets of GBP402,000 as at that date. A2O complements CAML
and will help grow its lending business and that of Echo Financial
Services Limited once it has obtained its banking licence.
The Acquisition constitutes a related party transaction under
Rule 13 of the AIM Rules as Jason Oakley, his wife Claire Oakley
and a vehicle controlled by Mr and Mrs Oakley (together the
"Founders") own 92% of the shares of A2O. Mrs Oakley is a director
and is the Chief Executive of A2O. Mr Oakley is deemed to be a
related party of COLG under AIM Rules as he is a director of a
wholly-owned subsidiary of COLG.
A2O has a number of related party introducer agreements in
place. These include the following companies where either Mr Oakley
and / or Mrs Oakley are directors: Oakland Residential Management
Limited, and A2O Finance Limited.
COLG is paying an initial consideration of GBP1.4 million (the
"Initial Consideration") and a further earn-out consideration of up
to GBP5m may be payable (the "Earn-Out").
The Initial Consideration is made up of a) the consideration
payable to the Founders, which will be satisfied by way of
zero-coupon loan notes that can be converted into new shares in
COLG following the preparation of the annual accounts for the
financial year-ending 31 March 2021; and b) the consideration
payable to the other shareholders of A2O, which will be satisfied
by way of new shares in COLG.
The share conversion calculation for the Initial Consideration
is based on a price per share of 140.341p, being the 30-day average
price to 26 July 2018.
The Earn-Out will be calculated as six-times the average annual
profit before tax over the three years ending 31 March 2021, less
the Initial Consideration, subject to a maximum of GBP5 million.
The share conversion calculation for any Earn-Out will be based on
the market price when the Earn-Out amount has been determined. This
will be determined following the preparation of the annual accounts
for the financial year-ending 31 March 2021.
The acquisition requires FCA approval.
The independent directors of the Company, having consulted with
Peel Hunt LLP in its capacity as the Company's nominated adviser
for the purposes of the AIM Rules, consider the terms of the
Acquisition to be fair and reasonable insofar as the Company's
shareholders are concerned.
Michael Goldstein, CEO of City of London Group, commented:
"We are pleased to announce that COLG has entered into an
agreement to acquire A2O, pending FCA approval. A2O fits perfectly
into our sweetspot by focussing on SMEs and having a strong
regional network. We are confident that this acquisition will be an
important factor in helping to grow the lending side of the
business."
For further information:
City of London Group plc +44 (0)20 7490 8100
Michael Goldstein (Chief Executive Officer)
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0)20 7418 8900
James Britton
PRO (Financial PR adviser) +44 (0)20 7284 6969
Marc Cohen
Jonny Garfield
Notes to Editors:
City of London Group is a forward-thinking organisation focused
on serving the UK SME market. While grounded with traditional
values, through the strength and depth of expertise in its
expanding team, it is now primed for future growth through its
three-pronged strategy.
The Group's expertise covers equity release, finance for the SME
sector, and secured lending. The Group has experience with
commercial banking and mortgages, and access to funding
arrangements such as commercial, SME, bridging and development
finance, home reversion plans, and asset and loan finance.
COLG ensures its services are always delivered with a personal
touch, so clients know that they are more than a customer and have
a partner that will work with them as they look towards the
future.
www.cityoflondongroup.com
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END
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