TIDMFRAN
RNS Number : 2621A
Franchise Brands PLC
23 March 2017
THIS ANNOUNCEMENT, INCLUDING THE APPIX (THE "ANNOUNCEMENT") AND
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY
OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA,
CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE
LONDON STOCK EXCHANGE, NOR IS IT INTED THAT IT WILL BE SO
APPROVED.
The information contained within this Announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon
publication of this Announcement, this information is now
considered to be in the public domain.
23 March 2017
Franchise Brands plc
("Franchise Brands", "the Group" or "the Company")
Proposed acquisition of Metro Rod Limited ("Metro Rod"),
proposed placing by way of an accelerated bookbuild to raise up
to GBP20 million,
Notice of General Meeting
and restoration of trading on AIM
Franchise Brands today announces that terms have been
conditionally agreed for the proposed acquisition of the entire
issued share capital of Metro Rod for a total consideration of
GBP28 million (subject to adjustment based on the financial
position of Metro Rod at completion) ("the Acquisition").
The Company also announces its intention to conduct a placing
with certain institutional and other investors and the Directors to
raise gross proceeds of up to approximately GBP20 million at 67
pence per Ordinary Share in order to partially fund the Acquisition
(the "Placing"). The Placing is being conducted through an
accelerated bookbuilding process (the "Bookbuild") which will be
launched immediately following this Announcement.
Metro Rod is a leading provider of drain clearance and
maintenance services, delivered 24/7/365 on a largely reactive
basis by 40 regional Franchisees, with geographical coverage across
the majority of the UK. Founded in 1983, the Directors believe
Metro Rod has grown to become one of only five companies in the
drainage sector operating on a national basis. Metro Rod serves
national business customers across multiple sectors including
facilities management, retail, water utilities, social housing,
hospitality and insurance, as well as local businesses and other
customers in the private and public sectors.
The Directors believe the Acquisition represents a
transformational step in respect of Franchise Brands' strategy to
pursue the selective acquisition of franchise businesses that could
benefit from the Company's central services, such as marketing, and
also the experience of the Board and management team in developing
franchise businesses.
Highlights:
-- Metro Rod is a leading provider, profitable and a cash
generative business with an experienced management team,
a mature and stable franchise network and high customer
retention rates.
-- The Directors believe the Acquisition will be significantly
earnings enhancing for the Group as Metro Rod is being
purchased by the Group at a price the Directors consider
attractive and the combined businesses' strong cashflow
and balance sheet provide an opportunity to utilise debt
to finance the Acquisition.
-- The total consideration of GBP28 million (subject to adjustment
based on the financial position of Metro Rod at completion
of the Acquisition) for the Acquisition together with estimated
costs of approximately GBP1.8 million and additional working
capital will be funded by the issue of the Placing Shares
to raise up to approximately GBP20 million and new bank
facilities of up to GBP17 million.
-- The Directors believe that under the guidance of the Board,
and as part of a group focused entirely on the development
and growth of franchise businesses, the development of
Metro Rod may be accelerated through:
o providing additional sales and marketing support to
Franchisees in the
development of Commercial Accounts;
o further developing Key Accounts in sectors where Metro
Rod's penetration could
be increased on a relative basis;
o the development of the recently launched Metro Plumb
business through
investment in additional sales and marketing; and
o longer term, extending the "Metro" brand into other
B2B sectors.
-- The Acquisition represents an opportunity to leverage Franchise
Brands' and Metro Rod's complementary strengths in the
provision of shared services. For example, Franchise Brands
has significant expertise in marketing, which the Directors
believe will accelerate the development of Metro Rod's
existing business and the newly launched Metro Plumb business.
In contrast, Metro Rod has a substantial call centre capability,
whereas Franchise Brands currently outsources this function.
The Directors believe that combining the finance teams
will also provide the potential for an enhanced finance
function for the Enlarged Group.
-- The addition of Metro Rod to the Group will substantially
increase the size and scale of the Group's operations.
This will potentially allow certain functions that were
previously sub-scale to be optimised and certain outsourced
functions to be brought in-house over time.
-- Metro Rod increased operating profit before exceptional
items by approximately 52 per cent. from GBP2.1 million
in the financial year ended 30 April 2014 to GBP3.2 million
in the financial year ended 30 April 2016.
-- Metro Rod generates substantially all its income from fees
related to system sales, which the Directors believe will
improve the Enlarged Group's overall quality of income
and return from growing Franchisee turnover. It also operates
in a defensive sector, partly due to the emergency nature
of the demand for its services.
-- The Directors believe that the B2B expertise and operational
capabilities within Metro Rod, combined with the scale
of the Enlarged Group, will also allow the Board to evaluate
an increased range of future potential acquisition opportunities
in the B2B, as well as B2C, sectors.
Given the scale of the Acquisition when compared to the existing
Group, the transaction is a reverse takeover under the AIM Rules
and requires the Company to issue a new admission document and is
conditional, inter alia, on the approval by Shareholders of the
Resolutions to be proposed at a General Meeting. Accordingly, the
Company has published the admission document ("Admission
Document"), including details of the General Meeting and
Resolutions, which will be posted to Shareholders today and is
available on the Company's website at
www.franchisebrands.co.uk.
The Directors consider the Acquisition to be an excellent
opportunity for the Group and in the best interests of the Company
and Shareholders as a whole. Accordingly, the Directors recommend
unanimously that Shareholders vote in favour of the Resolutions to
be proposed at the General Meeting as they and certain other
Shareholders have irrevocably undertaken to do so in respect of
their beneficial holdings of Ordinary Shares, which represent
approximately 70.34 per cent of the Existing Ordinary Shares.
Allenby Capital is acting as nominated adviser and joint broker
to the Company and Dowgate Capital is acting as joint broker to the
Company in connection with the Acquisition, Placing and
Admission.
Restoration of trading on AIM
With the publication of the Admission Document today, trading in
the Company's Ordinary Shares on AIM will be restored at 7.30 a.m.
today.
Details of the Placing
In conjunction with the Acquisition, the Company proposes to
raise up to approximately GBP20 million, before expenses, through
the issue of the Placing Shares at the Placing Price. The Placing
Shares will represent approximately 38.4 per cent. of the Enlarged
Share Capital on Admission.
The Placing is being conducted by way of the Bookbuild. The
Bookbuild will open with immediate effect and is expected to close
no later than 6 p.m. (London time) today. The timing of the closing
of the Bookbuild and the making of allocations may be accelerated
or delayed at the discretion of Allenby Capital and Dowgate Capital
(together the "Joint Bookrunners"). The appendix to this
Announcement contains detailed terms and conditions ("Terms and
Conditions") applicable to the Placing and the Bookbuild. The
Placing is not underwritten.
By choosing to participate in the Placing and by making an oral
and/or written legally binding offer to acquire Placing Shares,
investors will be deemed to have read and understood this
Announcement (including the appendix) and the Admission Document in
its entirety, and to be making such offer on the terms and subject
to the conditions contained herein and to be making the
representations, warranties, undertakings and acknowledgements
contained in this Announcement (including the appendix).
The Placing is conditional, inter alia, upon the passing of the
Resolutions at the General Meeting and Admission. If the
Resolutions are passed and the other conditions set out in the
Acquisition Agreement (save for Admission), the Facilities
Agreement (save for Admission) and the Placing Agreement (save for
payment of the consideration to the Vendor and Admission) are met,
it is expected that the Enlarged Share Capital will be admitted to
trading on AIM with effect from 8.00 a.m. on 11 April 2017.
The Placing is being made on a non pre-emptive basis as the time
delay and costs associated with a pre-emptive offer are considered
by the Directors to be excessive for the Company's
requirements.
The Directors intend to subscribe, in aggregate, for 16,671,459
Placing Shares in the Placing at a cost of approximately GBP11.2
million. This represents approximately 56 per cent. of the gross
proceeds to be raised in the Placing and the Directors believe this
demonstrates their strong degree of confidence in the Enlarged
Group.
The Directors are treated as related parties of the Company
under the AIM Rules. The Directors' participation in the Placing is
therefore treated as a related party transaction pursuant to rule
13 of the AIM Rules. Accordingly, the Company's nominated adviser,
Allenby Capital, considers that the terms of the Directors'
participation in the Placing are fair and reasonable insofar as
Shareholders are concerned.
Defined terms used in this Announcement shall have the same
meaning (unless the context otherwise requires) as ascribed to them
in the "Definitions" and "Technical Glossary" section at the bottom
of this Announcement.
Stephen Hemsley, Executive Chairman of Franchise Brands plc,
commented:
"We are delighted to announce the proposed Acquisition of Metro
Rod, which represents a transformational step in respect of
implementing the Group's stated buy and build strategy.
"Metro Rod is a market leading, profitable and cash generative
business with an experienced management team, a mature and stable
franchise network and high customer retention rates. We believe
that Franchise Brands' significant marketing and franchise
management expertise will accelerate the development of Metro Rod's
existing business and its newly launched Metro Plumb business,
enabling the business and management team to thrive as part of
Franchise Brands."
Further details on Metro Rod, the Acquisition and the strategy
of the Enlarged Group are set out further below.
Enquiries:
Franchise Brands plc + 44 (0) 800 012 6462
Stephen Hemsley, Executive Chairman
Julia Choudhury, Corporate Development Director
MHP Communications +44 (0) 20 3128 8794
(Financial PR) franchisebrands@mhpc.com
Katie Hunt / Hannah Winter
Allenby Capital Limited +44 (0) 20 3328 5656
(Nominated Adviser and Joint Broker)
Jeremy Porter/ James Thomas / Liz Kirchner
Dowgate Capital Stockbrokers +44 (0)1293 517744
(Joint Broker)
James Serjeant / Neil Badger
IMPORTANT NOTICE
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS ANNOUNCEMENT (INCLUDING THE APPIX) AND THE TERMS AND
CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE
DIRECTED ONLY AT: (A) PERSONS WHO ARE IN A MEMBER STATE OF THE
EUROPEAN ECONOMIC AREA ("EEA") AND ARE "QUALIFIED INVESTORS" AS
DEFINED IN ARTICLE 2.1(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH
MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING
DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS
DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, PERSONS WHO ARE: (I)
"INVESTMENT PROFESSIONALS" WITHIN THE MEANING OF ARTICLE 19(5) OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION)
ORDER 2005 (THE "ORDER"); (II) PERSONS FALLING WITHIN ARTICLE 48
(CERTIFIED HIGH NET WORTH INDIVIDUALS) OF THE ORDER; (III) PERSONS
FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; (IV) PERSONS
FALLING WITHIN ARTICLE 50 (CERTIFIED SOPHISTICATED INVESTORS) OF
THE ORDER; (V) PERSONS FALLING WITHIN ARTICLE 50A (SELF-CERTIFIED
SOPHISTICATED INVESTORS) OF THE ORDER; OR (VI) PERSONS TO WHOM IT
MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER
BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT (INCLUDING THE APPIX) AND THE TERMS AND
CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY
PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS
SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND
WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT
DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT IS NOT AN OFFER OF OR
SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED
STATES OF AMERICA ("UNITED STATES").
THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR AS PART
OF A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. NO OFFERING OF SECURITIES IS BEING MADE IN THE
UNITED STATES. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY
PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN
RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL
NOT BE ACCEPTED.
THIS ANNOUNCEMENT, INCLUDING THE APPIX AND THE INFORMATION
CONTAINED HEREIN, IS FOR INFORMATION PURPOSES ONLY, IS NOT INTED TO
AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO
PURCHASE OR SUBSCRIBE FOR, UNDERWRITE, SELL OR ISSUE OR THE
SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE, SELL, ACQUIRE,
DISPOSE OF THE PLACING SHARES OR ANY OTHER SECURITY IN THE UNITED
STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA,
JAPAN OR IN ANY JURISDICTION IN WHICH, OR TO ANY PERSONS TO WHOM,
SUCH OFFERING, SOLICITATION OR SALE WOULD BE UNLAWFUL.
THE CONTENT OF THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY AN
AUTHORISED PERSON WITHIN THE MEANING OF THE FINANCIAL SERVICES AND
MARKETS ACT 2000 (AS AMED) ("FSMA"). RELIANCE ON THIS ANNOUNCEMENT
FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE
AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE PROPERTY
OR OTHER ASSETS INVESTED.
No action has been taken by the Company, Allenby Capital,
Dowgate Capital or any of their respective affiliates, that would,
or which is intended to, permit a public offer of the Placing
Shares in any jurisdiction or the possession or distribution of
this Announcement or any other offering or publicity material
relating to the Placing Shares in any jurisdiction where action for
that purpose is required. Any failure to comply with these
restrictions may constitute a violation of the securities laws of
such jurisdictions. Persons into whose possession this Announcement
comes shall inform themselves about, and observe, such
restrictions.
No prospectus will be made available in connection with the
matters contained in this Announcement and no such prospectus is
required to be published.
Allenby Capital Limited is authorised and regulated in the
United Kingdom by the Financial Conduct Authority ("FCA") and is
acting exclusively for the Company in connection with the
Acquisition, Placing and Admission and no one else and will not be
responsible to anyone other than the Company for providing the
protections afforded to its clients nor for providing advice to any
other person in relation to the Acquisition, Placing, Admission
and/or any other matter referred to in this Announcement.
Dowgate Capital Stockbrokers Limited is authorised and regulated
in the United Kingdom by the FCA and is acting exclusively for the
Company in connection with the Acquisition, Placing and Admission
and no one else and will not be responsible to anyone other than
the Company for providing the protections afforded to its clients
nor for providing advice to any other person in relation to the
Acquisition, Placing, Admission and/or any other matter referred to
in this Announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by Allenby Capital or Dowgate Capital or any
of their respective affiliates or any of their respective
directors, officers, employees, advisers or representatives
(collectively, "Representatives") as to or in relation to the
accuracy or completeness of this Announcement or any other written
or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefor is
expressly disclaimed.
This Announcement contains certain forward-looking statements,
beliefs or opinions, with respect to certain of the Company's
current expectations and projections about future prospects,
developments, strategies, performance, anticipated events or trends
and other matters that are not historical facts. These
forward-looking statements, which sometimes use words such as
"aim", "anticipate", "believe", "intend", "plan" "estimate",
"expect" and words of similar meaning, include all matters that are
not historical facts and reflect the Directors' beliefs and
expectations and involve a number of risks, uncertainties and
assumptions that could cause actual results and performance to
differ materially from any expected future results or performance
expressed or implied by the forward-looking statement. Statements
contained in this Announcement regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. The information contained
in this Announcement is subject to change without notice and,
except as required by applicable law, none of the Company, Allenby
Capital, Dowgate Capital nor any of their respective affiliates nor
any of their respective Representatives assumes any
responsibility or obligation to update, amend or revise publicly
or review any of the forward-looking statements contained in this
Announcement. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
Announcement. No statement in this Announcement is or is intended
to be a profit forecast or profit estimate or to imply that the
earnings of the Company for the current or future financial years
will necessarily match or exceed the historical or published
earnings of the Company. Past performance of the Company and Metro
Rod cannot be relied on as a guide to future performance and
persons reading this Announcement are cautioned not to place undue
reliance on such forward-looking statements.
The price of Ordinary Shares and any income from them may go
down as well as up and investors may not get back the full amount
invested on disposal of the Ordinary Shares.
The Placing Shares to be issued pursuant to the Placing will not
be admitted to trading on any stock exchange other than the AIM
market operated by the London Stock Exchange.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
BACKGROUND TO AND RATIONALE FOR THE ACQUISITION
The Board is pleased to inform Shareholders that terms have been
agreed for the proposed Acquisition of the entire issued share
capital of Metro Rod, a leading provider of drain clearance and
maintenance services, which are delivered on a largely reactive
basis by regional Franchisees. The total consideration for the
Acquisition is GBP28 million (subject to adjustment based on the
financial position of Metro Rod at completion of the Acquisition),
which together with estimated costs of approximately GBP1.8
million, will be satisfied in cash at completion of the
Acquisition.
It is proposed that the Consideration, associated costs and
additional working capital will be funded by the issue of the
Placing Shares to raise up to approximately GBP20 million and new
bank facilities of up to GBP17 million. Given the scale of the
Acquisition when compared to the existing Group, the transaction is
a reverse takeover under the AIM Rules and therefore requires the
Company to issue a new admission document and obtain Shareholder
approval for the Acquisition.
The Group's strategy, as outlined at the time of its IPO, was to
pursue the selective acquisition of franchise businesses that could
benefit from the Company's central services, such as marketing, and
also the experience of the Board and management team in developing
franchise businesses. The Group completed its first acquisition
since the IPO, of Barking Mad, in October 2016. The acquisition of
Barking Mad broadened Franchise Brands' portfolio of B2C service
businesses with a market leading brand which the Directors believe
has an attractive model for Franchisees, a strong management team
and a similar customer base to the Group's existing brands.
The Directors believe the Acquisition represents a
transformational step in respect of implementing the Group's stated
buy and build strategy. In particular, the Directors believe the
Acquisition represents an opportunity to enter the B2B franchising
market at a size and scale that is attractive strategically and at
an acquisition price that the Directors consider is significantly
accretive to Shareholders.
Furthermore, the Directors believe the range of potential future
acquisition opportunities for the Group is likely to be increased
as a result of the Acquisition, as both the B2B and B2C franchise
sectors would be within its scope. The Directors also believe the
Acquisition is likely to lead to an enhanced range of shared
services within the Enlarged Group which have the capability to be
leveraged across its range of brands and furthermore, will
potentially allow the Enlarged Group to optimise some activities
that were previously sub-scale.
Metro Rod is a well established and profitable business with an
experienced management team who have continued to grow the business
through several changes of ownership. However, the Directors
believe that under the guidance of the Board, and as part of a
group focused entirely on the development and growth of franchise
businesses, the development of Metro Rod may be accelerated.
The Board believes the Acquisition is positive for the Group for
the following reasons:
-- Significantly earnings-enhancing: The Directors believe
Metro Rod is being purchased by the Group at an attractive
price of approximately 8.8 times Operating Profit before
exceptional items for the year ended 30 April 2016, and
that the Acquisition will therefore be significantly earnings
enhancing for the Group. Metro Rod also benefits from a
strong cashflow, which, when combined with the existing
Group's robust cashflow and strong balance sheet, provides
an opportunity to utilise debt to finance the Enlarged
Group and further enhance earnings per share.
-- Potential for growth in earnings: The Directors believe
Metro Rod's earnings will grow as a result of the continued
development of the core business, development of the recently
launched Metro Plumb business and, longer term, the additional
extension of the "Metro" brand into other B2B sectors.
-- Defensive sector: Metro Rod's business model has historically
demonstrated resilience through changes in the economic
cycle. The Directors believe this is partly due to emergency
nature of the demand for its services.
-- Experienced management: Metro Rod has an experienced and
long standing management team who have continued to grow
the business through several changes of ownership. Under
the guidance of the experienced Board, and as part of a
group focused entirely on the development and growth of
franchise businesses, the Directors believe that this team
will thrive.
-- Quality of income: Metro Rod generates substantially all
its income from fees related to system sales and does not
rely on income from Franchisee recruitment or resales.
The Directors believe this will improve the Enlarged Group's
overall quality of income and improve the return to the
Enlarged Group from growing Franchisee turnover.
-- Opportunities to leverage shared services: The Directors
believe Franchise Brands and Metro Rod have complementary
strengths in the provision of shared services. For example,
Franchise Brands has significant expertise in marketing,
which the Directors believe will accelerate the development
of Metro Rod's existing business and the newly launched
Metro Plumb business. In contrast, Metro Rod has a substantial
call centre capability, whereas Franchise Brands currently
outsources this function. The Directors believe that combining
the finance teams will also provide the potential for an
enhanced finance function for the Enlarged Group.
-- Benefits of operational scale: The addition of Metro Rod
to the Group will substantially increase the size and scale
of the Group's operations. This will potentially allow
certain functions that were previously sub-scale to be
optimised and certain outsourced functions to be brought
in-house over time.
-- Increased range of future potential acquisition opportunities:
Metro Rod is predominantly a B2B business whereas the Group's
existing brands are B2C businesses. The Directors believe
that the B2B expertise and operational capabilities within
Metro Rod, combined with the scale of the Enlarged Group,
will also allow the Board to evaluate an increased range
of future potential acquisition opportunities in the B2B,
as well as B2C, sectors.
INFORMATION ON METRO ROD
History of Metro Rod
Metro Rod was founded in 1983 and has subsequently grown to
become, the Directors believe, one of only five companies in its
sector operating on a national basis. Since 2001, Metro Rod has
been part of a group of companies which in 2011 was renamed the
Enserve Group. The Enserve Group is a private group of businesses
providing infrastructure support services to the utilities sector.
The Enserve Group has been under private equity ownership since
2010, most recently by funds managed or advised by Rubicon Partners
LLP and Grovepoint Capital LLP.
Metro Plumb was launched by Metro Rod in February 2016 and
provides cold water plumbing services, primarily to Key Account
customers. All Metro Rod Franchisees were given the opportunity to
purchase Metro Plumb franchises covering their respective
territories and 30 of the existing 40 Metro Rod Franchisees have
done so. The Directors believe that Metro Plumb represents a
natural brand extension of the types of emergency response services
Metro Rod is able to provide whilst seeking to leverage its
existing infrastructure.
Kemac was established in 1993 and is a company owned operation
(and not franchised). It built its reputation on providing services
to the water utilities market and more recently, by providing
plumbing services. Kemac provides plumbing related services to
Thames Water and services to other water companies. Kemac also
operates six Metro Plumb territories, predominantly in and near the
Greater London area.
The Metro Rod business
Metro Rod is a leading provider of drain clearance and
maintenance services delivered on a largely reactive basis. The
services are predominantly provided by a total of 40 Franchisees
with geographical coverage across the majority of the UK.
Metro Rod serves national business customers across multiple
sectors including facilities management, retail, water utilities,
social housing, hospitality and insurance, as well as local
businesses and other customers in the private and public sectors.
Domestic customers form only a small part of Metro Rod's
business.
A focus of Metro Rod is to provide a 24/7/365 emergency response
service to customers through its
operating model of Key Accounts and Commercial Accounts. The
service is provided by regional Franchisees, who on average have
been with Metro Rod for 11 years, with extensive support from a
large head office team of approximately 140 people.
The Franchise Network
Metro Rod has a mature and stable franchise network. Since May
2013, it has had between 40 to 43
franchisees. The decrease to 40 Franchisees at present,
primarily reflects the consolidation of a number of franchise
territories.
The franchise is a management franchise in that the Franchisee
manages individuals who provide the service. There are over 300
engineers in the Metro Rod network. On average, Franchisees have
eight engineers and operate seven vans. The average length of
tenure of a Franchisee is approximately 11 years (the longest
tenure is currently 23 years).
Metro Rod typically resells two to three franchises every year
when Franchisees retire and/or are replaced and these area sales
represent a small additional source of revenue for Metro Rod.
Average gross revenue per Franchisee has grown steadily in
recent years to reach nearly GBP740,000 in the financial year ended
30 April 2016. No reliance is placed on a single Franchisee with
the largest accounting for 5 per cent. of total Key Account and
Commercial Account revenues.
Since February 2016, Kemac has operated the Metro Plumb
franchise territory areas in London, Reading and Guildford on
behalf of Metro Rod. Southampton, Bournemouth, Edinburgh and
Glasgow are vacant plumbing franchise areas with services currently
provided on a sub-contracted basis.
The Franchise Model
The Directors believe that the Metro Rod franchise model, which
includes Metro Plumb, is a collaborative and mutually dependent one
whereby the Franchisees fulfil work which is mostly procured by the
franchisor.
Franchisees are awarded the right to operate the brand in
geographically-defined territories on an exclusive basis.
Territories are identified by postcodes.
Metro Rod, as the brand owner, licenses the brand and
intellectual property to the Franchisee. The franchise agreement
provides that each Franchisee pays an initial franchise fee or
renewal fee to Metro Rod and an on-going MSF for the use of the
brand, the retention of the territory, and the provision of the
initial and ongoing services and support.
Metro Rod's franchise business model involves the provision of a
range of central support services to its Franchisees. An important
service is business management support, in particular the provision
of Key Account sales which account for approximately 60 per cent.
of the Franchisee's revenues.
Each Franchisee enters into a Franchise Agreement which grants
them the right to trade under the relevant brand for a five year
term. Subject to the Franchisee having substantially observed and
performed the terms of the Franchise Agreement (and certain other
conditions), the Franchisee is eligible to be awarded a renewal of
the agreement for a further five year term. Metro Rod is not
obliged to offer more than two renewal franchises. The franchisor
can only decline to renew or terminate on grounds set out in the
Franchise Agreement which include, amongst other things,
non-performance and reputational damage.
Franchisees are responsible for the purchase of their own
equipment and the hiring of specialist equipment for more complex
work. The standard MSF is 22.5 per cent. of gross revenue minus an
allowance for deductible items. The current franchise agreements
provide for a marketing contribution of 1 per cent. of gross
revenue. However, Metro Rod does not currently collect this from
the Franchisees.
Metro Rod's accounts department are responsible for all
invoicing on behalf of Franchisees for Key Accounts and Commercial
Accounts. Franchisees are paid for servicing Key Accounts
regardless of whether Metro Rod has received payment, and Metro Rod
bears the credit risk for these accounts.
Franchisees bear the credit risk for Commercial Accounts and are
paid, on average, after 45 days. Payment terms for Key Accounts are
typically 60 days, however the Franchisees are paid, on average,
after 45 days. This explains the working capital requirement for
Metro Rod which is unusual in a franchise business.
Customers
Metro Rod serves national business customers across multiple
sectors including facilities management, retail, water utilities,
social housing, hospitality and insurance, as well as local
businesses and other customers in the private and public sectors.
Customers include many large national and well-known companies.
Domestic customers form only a small part of Metro Rod's
business.
In the last three financial years, Metro Rod Franchisees have
carried out over 100,000 jobs per annum. In the financial year
ended 30 April 2016, more than 130,000 jobs were completed. Average
gross revenue per job in the financial year ended 30 April 2016 was
approximately GBP230 (excluding VAT). Total system sales were
approximately GBP32 million in the financial year ended 30 April
2016 (unaudited).
Statutory revenues for Metro Rod in the financial year ended 30
April 2016 were GBP21.4 million, and proforma revenues, which
include the contribution of Kemac, and other adjustments, were
GBP23.0 million. Of the proforma GBP23.0 million, GBP18.4 million
related to revenue from Key Accounts, GBP2.6 million from
Commercial Accounts and GBP1.8 million from Kemac. Key Account
sales relate to national customer accounts won and maintained by
the Metro Rod central sales team. Commercial Accounts relate to
work secured directly by the Franchisee primarily from commercial
customers within their franchise area as a result of their local
marketing initiatives.
Key Accounts
Metro Rod has over 360 Key Account customers. In the financial
year ended 30 April 2016, facilities
management customers accounted for approximately 51 per cent. of
total Key Account customer revenues and retail customers accounted
for approximately 12 per cent. Metro Rod has a high customer
retention rate. In the last three financial years, the retention
rate for Key Account customers was over 93 per cent.
Key Account customers include many large national and well-known
companies in the facilities management, hospitality, healthcare and
construction sectors. In the financial year ended 30 April 2016,
Metro Rod's top 10 Key Account customers accounted for 35 per cent.
of total revenue. As a result, the Directors believe there is
limited dependence on any one individual Key Account customer. The
largest customer accounts for approximately 9 per cent. of total
revenues and has been a customer for 12 years.
Key Account contracts are generally organised through a
framework or preferred supplier agreement, which have a typical
duration of one to three years. While the agreements do not
generally include volume guarantees, they document call-out rates,
which tend to be fixed through the duration of the agreements. The
call-out rates vary by customer. Key Account prices are set
nationally and are mandatory on all Franchisees.
To use Metro Rod's services, Key Account customers report an
issue to the 24/7/365 central call centre, which allocates a job to
the relevant Franchisee. The customer is invoiced by Metro Rod's
head office which also collects payment, retaining an approximate
margin of 22 per cent. While the MSF is set as 22.5 per cent., the
margin is 22 per cent. as Metro Rod allows Franchisees to exclude
certain allowable expenses in calculating the MSF. The remaining
approximately 78 per cent. is paid to the Franchisee, which is
treated as a direct cost to Metro Rod in its accounts. The full
invoice value is recorded as revenue by Metro Rod.
Commercial Accounts
Franchisees service approximately 2,000 Commercial Account
customers. Commercial Account sales are an important focus of
Franchisee business plans. However, Franchisees must service Key
Accounts ahead of Commercial Accounts.
There is no typical Commercial Account although they include
small and medium sized enterprises in the franchise territory,
local public sector institutions such as county councils, hospitals
and educational establishments and non-profit organisations such as
housing associations and charities. Key characteristics of a
quality commercial customer are: a repeat element to their
business; a high footfall on their premises; premises that are
sensitive to disruption from drainage problems; or customers that
have a budget allocated through public funding.
Metro Rod's head office is responsible for raising the sales
invoice in respect of Commercial Accounts on behalf of the
Franchisee and collecting payment. Following payment by the
customer, approximately 22 per cent. is retained by Metro Rod,
i.e., the MSF of 22.5 per cent. minus the allowance for deductible
items, and the remainder is passed on to the Franchisee providing
the service. Only the MSF is taken to statutory income by Metro Rod
and therefore Commercial Accounts effectively generate a 100 per
cent. gross profit margin.
THE MARKET FOR METRO ROD'S SERVICES
Drainage
The drain clearance and maintenance market is well established.
According to a report by the Department for Environment, Food and
Rural Affairs, in 2012 the UK had over 624,200 kilometres of sewers
and these collected approximately 11 billion litres of waste water
on a daily basis. According to Water UK, there are approximately
366,000 sewer blockages a year in the UK.
Drainage system blockages can be caused by a number of factors,
including a build-up of silt, sewage, general debris, fat, oil or
grease or blockages caused by materials or objects which are
unsuitable for flushing.
Structural problems with drains can be caused by subsidence,
tree root intrusion, pipe corrosion or
breakage. In addition, when there is heavy or prolonged
rainfall, flooding may occur and drains may be subjected to large
amounts of water, which can lead to blockages. These problems can
become
exacerbated if drains have not been properly cleaned out or
maintained. The UK's dated drainage system is also a contributing
factor.
The Key Accounts that Metro Rod services operate in large and
well established markets. They include facilities management
companies, retailers, water companies, social housing providers and
hospitality and construction companies. Approximately 80 per cent.
of Metro Rod's services are provided on a reactive basis and
therefore the Directors believe that consistency of availability of
the service and speed of completion is key. The latter is key when
drainage is critical to the business or sensitive to disruption,
for example businesses which have customer footfall. The Directors
also believe that price is a consideration for customers in these
sectors.
The Directors believe that Metro Rod is one of only five
companies in its field operating on a national basis. The other
four companies are Dyno Rod, Lanes for Drains, Ansa Drainage
Solutions and Drain Doctor. Summary information on each key
competitor is provided below.
-- Dyno Rod: Dyno Rod is part of the Dyno group of businesses,
which was founded in 1963 and acquired by Centrica plc
in 2004. Dyno is a 24/7/365 emergency response provider
of drainage, plumbing and heating services. It established
itself in the drainage market before moving into plumbing
and heating and serves both individual and commercial customers.
Dyno has approximately 45 franchisees nationwide. Within
Centrica plc, Dyno is part of British Gas and Scottish
Gas.
-- Lanes for Drains: Lanes for Drains provides a full range
of drainage clearance and maintenance services available
24/7/365 for domestic and commercial clients. According
to the business, it is the largest independent drainage
specialist in the UK, and operates from a network of regional
depots nationwide. Lanes for Drains is part of the Lanes
Group plc, a wastewater solutions provider which operates
across a range of sectors including drainage emergencies,
drainage maintenance, rehabilitation and renewal, consultancy
and waste management services.
-- Ansa Drainage Solutions: Ansa Drainage Solutions offers
a 24/7/365 drain clearing and maintenance services for
households and commercial clients, as well as a full range
of clean water distribution service for customers in the
infrastructure sector. In addition, Ansa Drainage Solutions
is a leading provider of outsourced drainage solutions
to the UK insurance and claims management industries. It
is part of the Independent Group (UK) Ltd, which provides
a range of services within the domestic, commercial and
insurance markets.
-- Drain Doctor: Drain Doctor is a full service plumbing and
drainage maintenance company. It provides a 24/7/365 drainage
clearance and repair service to domestic and commercial
customers and preventative maintenance plans for commercial
customers. It also provides cold water plumbing services
to domestic and commercial customers. Drain Doctor has
been established in the UK since 1994 and has approximately
45 franchisees nationwide. The master franchise licence
for Drain Doctor in the UK is ultimately owned by Dwyer
Group, a US holding company of 11 service-based franchise
organisations worldwide.
Plumbing
Plumbing is a large and mature market and encompasses a wide
range of services including central heating services, general
plumbing, industrial plumbing and renewable energy services.
According to IBIS World, in the UK:
-- the plumbing, heating and air conditioning installation
industry typically accounts for approximately 15 per cent.
of specialised construction trade activities;
-- the total value of the general plumbing market, measured
by revenue, is estimated to be GBP15.6 billion in 2016-2017;
-- the largest segment of the market is central heating services
(43.5 per cent.), an area which Metro Plumb does not yet
service; and
-- the size of the general plumbing market, which covers the
services Metro Plumb provides, is estimated to be GBP3.6
billion in 2016-2017.
In reality however, not all of this market would be available to
Metro Plumb as it is not Metro Rod's intention to enter certain
sectors such as the bathroom installation market.
According to IBIS World, the plumbing market in the UK is highly
fragmented with over 30,000 enterprises. Large national providers
who are active in this market place include Drain Doctor and Dyno
Plumbing (part of the Dyno range of services), which have been
referred to above, as well as HomeServe. These largescale providers
compete with Metro Plumb.
HomeServe provides a multi-service emergency repair offering to
domestic customers as part of an
insurance-based membership model. This service offering includes
drainage and plumbing as well as other services such as
electrical-related, gas and central heating and home security
emergencies and repairs. Services are performed by a combination of
employees, franchisees and sub-contractors.
Mitton Group and Pimlico Plumbers are examples of companies
which the Directors consider compete with Metro Rod on a regional
basis:
-- Mitton Group, a building service specialist, provides a
range of professional service solutions including preventive
planned maintenance and emergency call-out facilities.
Plumbing is one of the services provided together with
commercial heating, ventilation and air conditioning installations.
Mitton Group is a privately owned company based in West
Yorkshire;
-- according to Pimlico Plumbers, it is London's largest independent
plumbing and service company, providing a wide range of
services including plumbing, drains services, electrics,
appliances, carpentry, building and roofing. Plumbing services
are available on a 24/7/365 basis.
The majority of firms in the market are small, local
operators.
Overview of financial information on Metro Rod
The financial information set out below has been extracted
without material adjustment from the consolidated historical
financial information on Metro Rod for each of the three years
ended 30 April 2014, 2015 and 2016 and the six months ended 30
October 2016, as set out in the Admission Document:
Unaudited
six months
Year ended Year ended Year ended ended
30 April 30 April 30 April 30 October
2014 2015 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 17,125 19,572 21,416 12,016
Cost of Sales (11,890) (13,871) (15,039) (8,546)
Gross Profit 5,235 5,701 6,377 3,470
Operating Profit before
exceptional items 2,079 2,419 3,168 1,460
Earnings Before Interest,
Tax,
Depreciation, Amortisation
and
exceptional items 2,481 2,908 3,303 1,502
Profit Before Tax 2,079 2,368 2,402 1,441
This information refers to past performance. Past performance is
not a reliable indication of future results.
INFORMATION ON FRANCHISE BRANDS
Franchise Brands is a group of international multi-brand
franchisors with a combined network of over 400 Franchisees in 12
countries, but predominantly in the UK.
The Group's principal brands are ChipsAway, Ovenclean and
Barking Mad, all of which deliver services to individuals of a
similar socio-economic group through the Group's Franchisees. The
Group does not currently own or operate any franchises.
The business of the Group was founded in September 2008 by
Stephen Hemsley (Executive Chairman) and Nigel Wray (Non-Executive
Director), the Group's Controlling Shareholders, who have
substantial experience in franchising.
Since 2008, the Group has developed central support services
predominantly in the areas of marketing, franchise recruitment and
franchise support.
The Group's strategy is to increase its portfolio of franchise
brands through acquisition as well as grow its existing businesses.
In October 2016, the Group announced the completion of its first
acquisition since IPO, Barking Mad.
In addition to the co-founders, other members of the Board also
have considerable franchising experience as well as experience of
operating and growing profitable businesses. The Board also has
substantial experience of analysing, investigating, completing and
integrating acquisitions.
The Group is profitable and cash generative. The financial
information set out below has been extracted without material
adjustment from the consolidated historical financial information
on the Group for the year ended 31 December 2016 and FB Holdings
for each of the two years ended 31 December 2014 and 2015 as
referenced in the Admission Document:
Year ended Year ended Year ended
31 December 31 December 31 December
2014 2015 2016
GBP'000 GBP'000 GBP'000
Revenue 4,351 4,379 4,870
Cost of Sales (1,510) (1,487) (1,572)
Gross Profit 2,842 2,892 3,298
Operating Profit 924 1,122 791
EBITDA* 1,020 1,176 1,352
Profit for the period and comprehensive
income
attributable to equity holders
of the parent
company excluding exceptional items 713 888 979
*EBITDA represents profit before finance income, finance costs,
income tax expense and depreciation, amortisation, profit on
disposal of tangible assets and share based payment expense as
further adjusted to add back exceptional items.
This information refers to past performance. Past performance is
not a reliable indication of future results.
ENLARGED GROUP STRATEGY
The strategy of the Enlarged Group is to develop franchise
businesses that provide primarily services to individuals and
businesses. The execution of the strategy will be achieved through
organic growth and acquisition.
Metro Rod
The Enlarged Group intends to develop the Metro Rod business in
a number of areas, including:
-- providing additional sales and marketing support to Franchisees
in the development of Commercial Accounts;
-- further developing Key Accounts in sectors where Metro Rod's
penetration could be increased on a relative basis;
-- developing Metro Plumb through investment in additional
sales and marketing; and
-- longer term, extending the "Metro" brand into other B2B
service sectors.
Barking Mad
The Directors believe there is substantial scope to grow Barking
Mad's system sales by supporting Franchisees' growth through
leveraging the Group's established central support services, in
particular marketing. The Directors also believe there is an
opportunity over time to increase the number of franchised
territories from the current 77 territories to over 250
territories. The Group also intends to explore opportunities to
extend the Barking Mad brand in related segments of the market.
ChipsAway and Ovenclean
The Enlarged Group intends to continue to actively expand the
ChipsAway and Ovenclean franchise systems through recruiting new
Franchisees as well as improving Franchisee retention rates. The
Directors believe this will improve the quality of earnings by
increasing the contribution from recurring MSF income. The Enlarged
Group aims to continue to support existing Franchisees, in
particular existing ChipsAway Franchisees who wish to grow their
businesses through the development of CarCare Centres.
MyHome
During 2016, the Group continued to trial the MyHome brand to
establish if a full relaunch would be
economically worthwhile. The total costs incurred in 2016 were
GBP92,000. The Directors concluded that a full re-launch of the
domestic cleaning business would not be in Shareholders' long term
interest given the damage previously done to the brand and a number
of other parties using all or part of the MyHome name. These costs
will therefore not recur in future years. The Group's research did,
however, highlight other opportunities in the domestic services
sector, particularly for small repairs and maintenance. To test
this opportunity, the Group has a single franchisee operating under
the brand "The Handyman Van" using similar branding to MyHome. This
test will be cost neutral for the Group.
Acquisitions
The Enlarged Group intends to grow by acquisition focusing on
both B2B and B2C franchisee businesses where the Directors believe
that the Enlarged Group's financial and management resources can
add value, in particular to businesses which have the following
characteristics:
-- a market presence has been established, however, the businesses
have reached a level where the existing management cannot
grow them further;
-- sales and marketing resources are not economically available;
-- the next stage of growth will require the investment of
additional capital not available to the existing owners;
and
-- in addition to one or more of the requirements above, the
shareholders of the businesses wish to achieve a realisation
of their investment or convert their investment into a
more marketable form.
The Directors believe the acquisition of Metro Rod is a
transformational step in the Group's buy and build strategy, and
brings with it a number of exciting potential opportunities. The
Directors believe the development of these opportunities, which are
anticipated to include the need for investment in marketing and
information technology, as well as require significant senior
management time, should remain the near term focus of the Enlarged
Group.
CURRENT TRADING AND PROSPECTS
Franchise Brands
The Group announced its audited annual results for the financial
year ended 31 December 2016 on 23 March 2017.
Since 1 January 2017, the Group has continued to trade in line
with management expectations and the Board expects this to continue
through the rest of 2017.
The Directors believe that the Enlarged Group's prospects will
be enhanced by the Acquisition as well as the Group's recent
acquisition of Barking Mad. The Directors believe that the
integration of Barking Mad into the Group is progressing well and
that it is beginning to benefit from the Group's support services
particularly in the areas of marketing and IT.
A further update on the Enlarged Group's results for the
six-month period ending 30 June 2017 will be provided in the
Enlarged Group's next interim accounts, which will be published not
later than 30 September 2017.
The total number of ChipsAway and Ovenclean Franchisees in the
UK has increased by over 15 over the last year and with the
acquisition of Barking Mad, the total number of UK Franchisees as
at the date of the Admission Document stands at 395.
Metro Rod
Since 1 November 2016, Metro Rod has continued to trade in line
with the previous year despite very dry weather, particularly in
December 2016, which has had a negative effect on reactive drainage
services.
The Directors believe that under the guidance of the Board, and
as part of a group focused entirely on the development and growth
of franchise businesses, the development of Metro Rod can be
accelerated.
The total number of Franchisees within Metro Rod has remained
stable since 30 April 2016, at around 40.
PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION
Under the terms of the Acquisition Agreement, the Company has
conditionally agreed to acquire Metro Rod for a cash consideration
of GBP28 million, payable in full at completion of the Acquisition
(which takes place on Admission) subject to certain adjustments
based on the financial position of Metro Rod at completion.
The Acquisition Agreement contains customary warranties and
indemnities from the Vendor in favour of the Company subject to
certain limitations, in particular as to the maximum amounts which
may be claimed. The Company has taken out warranty and indemnity
insurance to provide additional protection in respect of any claims
that may arise under such warranties and indemnities.
FINANCIAL EFFECTS OF THE ACQUISITION
In the year ended 30 April 2016, Metro Rod recorded an Operating
Profit before exceptional items of
approximately GBP3.2 million. The Consideration therefore
represents a multiple of approximately 8.8 times Operating Profit
before exceptional items, which the Directors consider attractive
for a business where they believe they can add significantly to
sales and profit growth.
In addition to the Consideration, the Company will incur total
costs for the Acquisition, Placing and Admission of approximately
GBP1.8 million, resulting in a total funding requirement of GBP29.8
million. The Acquisition, Placing and Admission will be funded by
the Placing and the Term Loan.
It is anticipated that the net assets of Metro Rod at completion
of the Acquisition will be approximatelyGBP8 million, giving rise
to a maximum goodwill of GBP20 million. Consideration will be given
to the valuation of trademarks and other intangible assets in
calculating the final goodwill amount. Transaction costs will be
written off or charged against the share premium account arising on
the issue of new shares. In accordance with IFRS accounting
standards, the life of trademarks and intangible assets will be
assessed and will be subject to either amortisation or periodic
impairment reviews.
The Company also intends to repay the outstanding balance of the
Loan Notes, which stood at GBP0.4 million at 31 December 2016,
prior to Admission. Repayment of the Loan Notes will be funded from
the Group's existing cash resources. Repayment of the Loan Notes
will allow HSBC to be the only lender to the Enlarged Group (with
the exception of a small hire purchase debt of approximately GBP0.1
million).
Shareholders' funds at 31 December 2016 for the Company stood at
GBP3.9 million. The addition of GBP20 million of new equity capital
(less all transaction costs) will increase this to GBP22.1 million.
The Term Loan will be the only borrowings of the Enlarged Group at
completion of the Acquisition (with the exception of a small hire
purchase debt of approximately GBP0.1 million). The Company's cash
balances at 31 December 2016 were GBP2.6 million (after adjusting
for the repayment of the Loan Notes). Net capital gearing at
completion of the Acquisition will therefore be approximately 46
per cent.
Operating Profit before exceptional items of the Group in the
year to 31 December 2016 was GBP1.2 million and was GBP3.2 million
for Metro Rod in the year ended 30 April 2016, giving a total pro
forma Operating Profit before exceptional items in the last full
financial year for the Enlarged Group of GBP4.4 million. At
completion of the Acquisition, the ratio of net debt to Operating
Profit before exceptional items will therefore be 1.6 times.
THE BOARD
The Board currently consists of seven Directors who, between
them, have substantial experience of franchising, and the Board
composition will not change as a result of the Acquisition. Stephen
Hemsley and Nigel Wray have a longstanding and successful track
record in investing in and growing franchise businesses dating back
to 1999. The Directors also have considerable experience of
operating and growing profitable businesses and of investigating
acquisition targets.
In light of the acquisition of Barking Mad following the IPO,
the proposed acquisition of Metro Rod and the planned growth for
the Enlarged Group, the Directors intend to monitor the Board
composition over the coming year to ensure it remains suitable for
the needs of the Enlarged Group. Each of the Enlarged Group's
businesses has its own senior management team and finance function
that report (or are expected to report) into the Board.
BANKING AND LOAN ARRANGEMENTS
The Company has entered into the Facilities Agreement with HSBC
under which HSBC is to make available to the Company the Term Loan
and the RCF to support the Acquisition and provide working capital
finance to the Enlarged Group. The facilities are repayable within
five years of Admission. The facilities are secured by cross
guarantees and debentures executed by the Company and each of its
non-dormant subsidiaries ("Subsidiaries"). The Facilities Agreement
contains certain warranties and information, financial and general
undertakings, from the Company and its Subsidiaries in favour of
HSBC. HSBC has certain rights to terminate the Facilities Agreement
and demand immediate repayment of all moneys and liabilities upon
an occurrence of certain events of default as set out in the
Facilities Agreement.
INFORMATION ON THE PLACING
The Company is proposing to raise up to approximately GBP20
million (approximately GBP18.2 million net of expenses) by the
conditional placing of up to 29,850,747 Placing Shares pursuant to
the Placing at the Placing Price. The net proceeds of the Placing
will be used to satisfy part of the Consideration payable pursuant
to the Acquisition.
The Placing Shares will represent approximately 38.4 per cent.
of the Enlarged Share Capital on Admission and rank pari passu in
all respects with the Existing Ordinary Shares, including the right
to receive dividends and other distributions declared, made or paid
in respect of the Ordinary Shares. For the avoidance of doubt, the
Placing Shares will not be eligible to receive the final dividend
in respect of the financial year ended on 31 December 2016 as
proposed in the Group's annual results announcement.
Allenby Capital and Dowgate Capital have each conditionally
agreed, pursuant to the Placing Agreement and as agent for the
Company, to use their reasonable endeavours to procure
institutional and other subscribers for the Placing Shares at the
Placing Price. The Placing has not been underwritten and is
conditional, inter alia, upon the passing of the Resolutions,
Admission and the Placing Agreement not being terminated by 8.00
a.m. on 11 April 2017 (and in any event no later than 8.30 a.m. on
28 April 2017). The Placing Agreement contains certain warranties
and indemnities from the Company in favour of Allenby Capital and
Dowgate Capital in relation, inter alia, to the accuracy of the
information contained in the Admission Document and certain matters
relating to the Group and Metro Rod. Allenby Capital and Dowgate
Capital each have certain rights to terminate the Placing Agreement
prior to Admission, including for in the opinion of Allenby Capital
or Dowgate Capital (acting in good faith) a material breach of
warranty or the occurrence of certain force majeure events as would
be likely in the opinion of Allenby Capital and Dowgate Capital
(acting in good faith) to materially prejudice the success of the
Placing, Acquisition and Admission.
ADMISSION TO AIM
Pursuant to rule 14 of the AIM Rules, an application will be
made for the Company's Existing Ordinary Shares to be re-admitted
to trading and the Placing Shares to be admitted to trading on AIM.
It is expected that the last day of trading on AIM of the Existing
Ordinary Shares will be on 10 April 2017 and that Admission will
become effective and dealings in the Enlarged Share Capital will
commence on 11 April 2017.
GENERAL MEETING
A notice convening a general meeting of the Company, to be held
at the offices of Gateley Plc, One Paternoster Square, London EC4M
7DX on 10 April 2017 at 10.00 a.m., will be set out at the end of
the Admission Document.
At the General Meeting, the following resolutions will be
proposed:
(a) to approve the Acquisition;
(b) to authorise the Directors to: (i) allot Ordinary Shares in
connection with the Placing and (ii) allot Ordinary Shares up to a
maximum nominal value of GBP129,553, representing approximately 33
per cent. of the Enlarged Share Capital; and
(c) to authorise the Directors to allot Ordinary Shares for cash
otherwise than on a pro rata basis to Shareholders: (i) in
connection with the Placing; and (ii) up to a maximum nominal value
of GBP58,299, representing approximately 15 per cent. of the
Enlarged Share Capital.
The resolutions in (a) and (b) will be proposed as ordinary
resolutions and the resolution in (c) will be proposed as a special
resolution. To be passed, the resolutions in (a) and (b) require a
majority of the votes cast at the General Meeting, in person or by
proxy, and the resolution referred to in (c) requires a majority of
not less than 75 per cent. of the votes cast at the General
Meeting, in person or by proxy. The Resolutions are
interconditional and so, if one of them is not passed at the
General Meeting, none of them will be deemed to have been
passed.
RECOMMATION AND IRREVOCABLE UNDERTAKINGS
The Directors consider the Acquisition to be an excellent
opportunity for the Group and in the best interests of the Company
and Shareholders as a whole. Accordingly, the Directors recommend
unanimously that Shareholders vote in favour of the Resolutions to
be proposed at the General Meeting as they and certain other
Shareholders have irrevocably undertaken to do so in respect of
their beneficial holdings of Ordinary Shares, which represent
approximately 70.34 per cent of the Existing Ordinary Shares.
APPIX
FURTHER DETAILS OF THE PLACING
TERMS AND CONDITIONS
THIS ANNOUNCEMENT AND THE INFORMATION IN IT IS RESTRICTED AND IS
NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER
JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES
ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS
WHO ARE IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA") AND
ARE "QUALIFIED INVESTORS" AS DEFINED IN THE PROSPECTUS DIRECTIVE
AND (B) RELEVANT PERSONS. THIS APPIX AND THE TERMS AND CONDITIONS
SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE
NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO
WHICH THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE
IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY
WITH RELEVANT PERSONS. THIS APPIX DOES NOT ITSELF CONSTITUTE AN
OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
THIS ANNOUNCEMENT IS NOT AN OFFER OF OR SOLICITATION TO PURCHASE OR
SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE SECURITIES
REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR AS PART
OF A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. NO OFFERING OF SECURITIES IS BEING MADE IN THE
UNITED STATES. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY
PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN
RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL
NOT BE ACCEPTED.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING
SHARES. THE PRICE OF SHARES IN THE COMPANY AND INCOME FROM THEM (IF
ANY) MAY GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE
FULL AMOUNT INVESTED ON DISPOSAL OF THEIR SHARES.
Persons who have been or who are invited to and who have chosen
or choose to participate in the Placing, by making or having made
(or on whose behalf there is or has been made) an oral or written
offer to subscribe for Placing Shares, will be deemed to have read
and understood the Announcement, including this Appendix, in its
entirety and to have made such offer on the terms and conditions,
and to have provided the representations, warranties,
acknowledgements, and undertakings contained in this Appendix. In
particular, each such Placee represents, warrants and acknowledges
to the Company and to the Joint Bookrunners that:
1. it is a Relevant Person (as defined above) and undertakes
that it will acquire, hold, manage or dispose of any Placing Shares
that are allocated to it solely for the purposes of its
business;
2. in the case of any Placing Shares acquired by it as a
financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the Placing Shares acquired by it in the
Placing have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons in any
Member State of the EEA which has implemented the Prospectus
Directive other than Qualified Investors or in circumstances in
which the prior consent of the Joint Bookrunners has been given to
the offer or resale; or (ii) where Placing Shares have been
acquired by it on behalf of persons in any member state of the EEA
other than Qualified Investors, the offer of those Placing Shares
to it is not treated under the Prospectus Directive as having been
made to such persons; and
3. (i) it is not in the United States, and (ii) it is not acting
for the account or benefit of a person in the United States, (iii)
it has not received any offer, or a solicitation of an offering, to
buy the Placing Shares within the United States and (iv) it did not
initiate any buy order to purchase Placing Shares whilst in the
United States.
The Company and the Joint Bookrunners are relying upon the truth
and accuracy of the foregoing undertakings, representations,
warranties, acknowledgements and agreements.
This Announcement does not constitute an offer, and may not be
used in connection with an offer, to sell or issue or the
solicitation of an offer to buy or subscribe for Placing Shares in
any jurisdiction in which such offer or solicitation is or may be
unlawful. This Announcement and the information contained herein is
not for publication or distribution, directly or indirectly, to
persons in the United States, Canada, Australia, the Republic of
South Africa, Japan or in any jurisdiction in which such
publication or distribution would be unlawful. Persons into whose
possession this Announcement may come are required by the Company
to inform themselves about and to observe any restrictions of
transfer of this Announcement. No public offer of securities of the
Company is being made in the United Kingdom, the United States or
elsewhere.
In particular, the Placing Shares referred to in this
Announcement have not been and will not be registered under the
Securities Act or any laws of or with any securities regulatory
authority of any state or other jurisdiction of the United States,
and may not be offered, sold, pledged or otherwise transferred
within the United States except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and the securities laws of any state or other
jurisdiction of the United States. The Placing Shares are being
offered and sold only outside the United States in accordance with
Regulation S under the Securities Act.
The relevant clearances have not been, nor will they be,
obtained from the securities commission of any province or
territory of Canada; no prospectus has been lodged with or
registered by the Australian Securities and Investments Commission
or the Japanese Ministry of Finance or the South African Reserve
Bank; and the Placing Shares have not been, nor will they be,
registered under or offered in compliance with the securities laws
of any state, province or territory of Canada, Australia, the
Republic of South Africa or Japan. Accordingly, the Placing Shares
may not (unless an exemption under the relevant securities laws is
applicable) be offered, sold, resold or delivered, directly or
indirectly, in or into Canada, Australia, the Republic of South
Africa, Japan or any other jurisdiction outside the United
Kingdom.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Appendix or the Announcement of which it forms part should
seek appropriate advice before taking any action.
In this Appendix, unless the context otherwise requires,
"Placee" means a Relevant Person (including individuals, funds or
others) on whose behalf a commitment to subscribe for Placing
Shares has been given.
Details of the Placing Agreement and the Placing Shares
The Joint Bookrunners have entered into the Placing Agreement
with the Company under which each of the Joint Bookrunners have, on
the terms and subject to the conditions set out therein, undertaken
to use its reasonable endeavours to procure subscribers for the
Placing Shares to raise up to GBP20,000,000.49 gross at Placing
Price. The Placing is not being underwritten by the Joint
Bookrunners or any other person.
The Placing Agreement contains customary warranties given by the
Company to the Joint Bookrunners as to matters relating to the
Company and its business and a customary indemnity given by the
Company to the Joint Bookrunners in respect of liabilities arising
out of or in connection with the Placing. The Placing is
conditional upon, amongst other things, the Acquisition Agreement
and Facilities Agreement becoming unconditional in all respects
(save for Admission) and the Resolutions being passed by the
requisite majorities.
An admission document explaining the background to and reasons
for the Placing and the Acquisition, and containing the notice of
General Meeting will be sent to shareholders. A copy of the
admission document and the notice of General Meeting will is
available from the Company's website at:
www.franchisebrands.co.uk.
The Placing is also conditional upon Admission becoming
effective and the Placing Agreement not being terminated in
accordance with its terms.
The number of Placing Shares will be determined following
completion of the Bookbuild as set out in this Announcement.
The Placing Shares will, when issued, be credited as fully paid
and will rank pari passu in all respects with the Existing Ordinary
Shares, including the right to receive all dividends and other
distributions (if any) declared, made or paid on or in respect of
the Ordinary Shares after the date of issue of the Placing Shares.
For the avoidance of doubt, the Placing Shares will not be eligible
to receive the final dividend in respect of the financial year
ended 31 December 2016 as proposed in the Group's annual report and
accounts today.
The Company, except pursuant to the Placing, has agreed not to
allot, issue or grant any rights in respect of any of its Ordinary
Shares in the period from the date of this Announcement until 12
months after Admission without Allenby Capital's prior written
consent.
Application for admission to trading
Application will be made to London Stock Exchange for Admission.
It is expected that settlement of any such shares and Admission
will become effective on or around 11 April 2017 and that dealings
in the Placing Shares will commence at that time.
Bookbuild
The Joint Bookrunners will today commence the Bookbuildto
determine demand for participation in the Placing by potential
Placees at the Placing Price. This Appendix gives details of the
terms and conditions of, and the mechanics of participation in, the
Placing. No commissions will be paid to Placees or by Placees in
respect of any Placing Shares.
The Joint Bookrunners and the Company shall be entitled to
effect the Placing by such alternative method to the Bookbuild as
they may, in their sole discretion, determine.
Participation in, and principal terms of, the Placing
1. The Joint Bookrunners are arranging the Placing as agents
for, and joint brokers of, the Company.
2. Participation in the Placing is only available to persons who
are lawfully able to be, and have been, invited to participate by
the Joint Bookrunners. The Joint Bookrunners and their respective
affiliates are entitled to participate in the Placing as
principals.
3. The Bookbuild will establish the number of Placing Shares to
be issued at the Placing Price, which will be agreed between the
Joint Bookrunners and the Company following completion of the
Bookbuild. The number of Placing Shares will be announced on a
Regulatory Information Service following the completion of the
Bookbuild.
4. To bid in the Bookbuild, Placees should communicate their bid
by telephone to their usual sales contact at the relevant Joint
Bookrunner. Each bid should state the number of Placing Shares
which the prospective Placee wishes to subscribe for at the Placing
Price. Bids may be scaled down by the Joint Bookrunners on the
basis referred to in paragraph 8 below.
5. The timing of the closing of the Bookbuild will be at the
discretion of the Joint Bookrunners. The Company reserves the right
(upon agreement with the Joint Bookrunners) to reduce or seek to
increase the amount to be raised pursuant to the Placing, in its
absolute discretion.
6. Each Placee's allocation will be confirmed to Placees orally,
or by email, by the relevant Joint Bookrunner whom they contact
following the close of the Bookbuild and a trade confirmation or
contract note will be dispatched as soon as possible thereafter.
The relevant Joint Bookrunner's oral or emailed confirmation will
give rise to an irrevocable, legally binding commitment by that
person (who at that point becomes a Placee), in favour of the Joint
Bookrunners and the Company, under which it agrees to acquire by
subscription the number of Placing Shares allocated to it at the
Placing Price and otherwise on the terms and subject to the
conditions set out in this Appendix and in accordance with the
Company's articles of association. Except with the Joint
Bookrunners' consent, such commitment will not be capable of
variation or revocation.
7. The Company will make a further announcement following the
close of the Bookbuild detailing the number of Placing Shares to be
issued at the Placing Price.
8. Subject to paragraphs 4 and 5 above, the Joint Bookrunners
may choose to accept bids, either in whole or in part, on the basis
of allocations determined at their discretion (in agreement with
the Company) and may scale down any bids for this purpose on such
basis as it may determine. The Joint Bookrunners may also,
notwithstanding paragraphs 4 and 5 above, subject to the prior
consent of the Company: (a) allocate Placing Shares after the time
of any initial allocation to any person submitting a bid after that
time; and (b) allocate Placing Shares after the Bookbuild has
closed to any person submitting a bid after that time.
9. A bid in the Bookbuild will be made on the terms and subject
to the conditions in the Announcement (including this Appendix) and
will be legally binding on the Placee on behalf of which it is made
and, except with the Joint Bookrunners' consent, will not be
capable of variation or revocation from the time at which it is
submitted.
10. Except as required by law or regulation, no press release or
other announcement will be made by the Joint Bookrunners or the
Company using the name of any Placee (or its agent), in its
capacity as Placee (or agent), other than with such Placee's prior
written consent.
11. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made at the same time, on the basis explained below under
"Registration and Settlement".
12. All obligations of the Joint Bookrunners under the Placing
will be subject to fulfilment of the conditions referred to below
under "Conditions of the Placing" and to the Placing not being
terminated on the basis referred to below under "Right to terminate
under the Placing Agreement".
13. By participating in the Placing, each Placee agrees that its
rights and obligations in respect of the Placing will terminate
only in the circumstances described below and will not be capable
of rescission or termination by the Placee.
14. To the fullest extent permissible by law and the applicable
rules of the FCA, neither of the Joint Bookrunners nor any of their
respective affiliates shall have any liability to Placees (or to
any other person whether acting on behalf of a Placee or otherwise
whether or not a recipient of these terms and conditions) in
respect of the Placing. Each Placee acknowledges and agrees that
the Company is responsible for the allotment of the Placing Shares
to the Placees and the Joint Bookrunners shall have no liability to
the Placees for the failure of the Company to fulfil those
obligations. In particular, neither of the Joint Bookrunners nor
any of their respective affiliates shall have any liability
(including to the extent permissible by law, any fiduciary duties)
in respect of the Joint Bookrunners' respective methods of
effecting the Placing.
Conditions of the Placing
The obligations of each Joint Bookrunner under the Placing
Agreement in respect of the Placing Shares are conditional on,
inter alia:
(a) the Acquisition Agreement (i) not having lapsed or been
terminated and (ii) having become unconditional in all respects
(save for (a) Admission and (b) any conditions relating to the
Placing Agreement having become unconditional or not having
terminated prior to Admission) and having been completed in
accordance with its terms (save for payment of the consideration to
the Vendor pursuant to the Acquisition Agreement);
(b) the Facilities Agreement (i) not having lapsed or been
terminated and (ii) having become unconditional in all respects
(save for (a) Admission and (b) any conditions relating to the
Placing Agreement having become unconditional or not having
terminated prior to Admission) and having been completed in
accordance with its terms;
(c) the passing (without any amendment, save as agreed by
Allenby Capital and the Company acting reasonably) of the
Resolutions at the General Meeting;
(d) in the opinion of the Joint Bookrunners (acting in good
faith), none of the warranties on the part of the Company contained
in the Placing Agreement becoming untrue, inaccurate or misleading
at the date the Placing Agreement is signed or at any time up to
and including Admission with reference to the facts and
circumstances which shall then exist, which in any such case is
material in the context of the Placing, Acquisition and Admission;
and
(e) Admission taking place not later than 8.00 a.m. on 11 April
2017 (or such later time or date as the Joint Bookrunners agree,
not later than 8.30 a.m. on 28April 2017).
If: (i) any of the conditions contained in the Placing Agreement
are not fulfilled or waived by the Joint Bookrunners as applicable,
by the respective time or date where specified (or such later time
or date as the Joint Bookrunners may agree, not being later than
8.30 a.m. on 28 April 2017); (ii) any of such conditions becomes
incapable of being fulfilled; or (iii) the Placing Agreement is
terminated in the circumstances specified below, the Placing will
lapse and the Placees' rights and obligations hereunder in relation
to the Placing Shares shall cease and terminate at such time and
each Placee agrees that no claim can be made by the Placee in
respect thereof.
The Joint Bookrunners may, at their discretion and upon such
terms as they think fit, waive, or extend the period for,
compliance by the Company with the whole or any part of any of the
Company's obligations in relation to the conditions in the Placing
Agreement save that certain of the conditions (including conditions
relating to the Resolutions and Admission referred to in paragraphs
(c) and (e) respectively) may not be waived. Any such extension or
waiver will not affect Placees' commitments as set out in this
Announcement.
Neither the Joint Bookrunners, the Company nor any of their
respective affiliates, agents, directors, officers or employees
shall have any liability to any Placee (or to any other person
whether acting on behalf of a Placee or otherwise) in respect of
any decision they may make as to whether or not to waive or to
extend the time and/or date for the satisfaction of any condition
to the Placing nor for any decision they may make as to the
satisfaction of any condition or in respect of the Placing
generally and by participating in the Placing each Placee agrees
that any such decision is within the absolute discretion of the
Joint Bookrunners.
Right to terminate the Placing Agreement
Either of the Joint Bookrunners is entitled, at any time before
Admission, to terminate the Placing Agreement by giving notice to
the Company in certain circumstances, including, inter alia:
(a) in the opinion of that Joint Bookrunner (acting in good
faith) a breach by the Company of any of its obligations under the
Placing Agreement which is material in the context of the
Acquisition, the Placing and Admission;
(b) in the opinion of that Joint Bookrunner (acting in good
faith), any of the warranties given to the Joint Bookrunners in the
Placing Agreement not being, or having ceased to be true, accurate
and not misleading by reference to the facts subsisting at the time
in a way that is material in the context of the Acquisition, the
Placing and Admission;
(c) in the opinion of that Joint Bookrunner (acting in good
faith), there has been a development or event (or any development
or event involving a prospective change of which the Company is, or
might reasonably be expected to be, aware) which will or is likely
to have a material adverse effect on the operations, condition
(financial or otherwise), prospects, management, results of
operations, financial position, business or general affairs of the
Enlarged Group taken as a whole, whether or not foreseeable and
whether or not arising in the ordinary course of business; or
(d) the occurrence of a force majeure event which, in the
opinion of the Joint Bookrunners (acting in good faith) would be
likely to materially prejudice the success of the Acquisition, the
Placing and Admission.
The rights and obligations of the Placees will not be subject to
termination by the Placee or any prospective Placee at any time or
in any circumstances. By participating in the Placing, Placees
agree that the exercise by the Joint Bookrunners of any right of
termination or other discretion under the Placing Agreement shall
be within the absolute discretion of the Joint Bookrunners and that
they need not make any reference to Placees and that neither of the
Joint Bookrunners nor any of their respective affiliates, agents,
directors, officers or employees shall have any liability to
Placees whatsoever in connection with any such exercise.
No Prospectus
The Placing Shares are being offered to a limited number of
specifically invited persons only and have not been nor will be
offered in such a way as to require the publication of a prospectus
in the United Kingdom or in any other jurisdiction. No prospectus
has been or will be submitted to be approved by the FCA in relation
to the Placing, and Placees' commitments will be made solely on the
basis of the information contained in the Announcement (including
this Appendix), the Admission Document and the business and
financial information that the Company is required to publish in
accordance with the AIM Rules on or prior to the date of this
Announcement (the "Exchange Information"). Each Placee, by
accepting a participation in the Placing, agrees that the content
of this Announcement and the Admission Document is exclusively the
responsibility of the Company and the Directors and confirms that
it has neither received nor relied on any other information (other
than the Exchange Information), representation, warranty, or
statement made by or on behalf of the Company or the Joint
Bookrunners or any other person and neither the Joint Bookrunners
nor the Company nor any other person will be liable for any
Placee's decision to participate in the Placing based on any other
information, representation, warranty or statement which the
Placees may have obtained or received and, if given or made, such
information, representation, warranty or statement must not be
relied upon as having been authorised by the Joint Bookrunners, the
Company, or their respective affiliates, officers, directors,
employees or agents. Each Placee acknowledges and agrees that it
has relied on its own investigation of the business, financial or
other position of the Company in accepting a participation in the
Placing. Neither the Company nor the Joint Bookrunners are making
any undertaking or warranty to any Placee regarding the legality of
an investment in the Placing Shares by such Placee under any legal,
investment or similar laws or regulations. Each Placee should not
consider any information in this Announcement or the Admission
Document to be legal, tax or business advice. Each Placee should
consult its own solicitor, tax adviser and financial adviser for
independent legal, tax and financial advice regarding an investment
in the Placing Shares. Nothing in this paragraph shall exclude the
liability of any person for fraudulent misrepresentation.
Registration and Settlement
Following the close of the Bookbuild, each Placee allocated
Placing Shares in the Placing will be sent a trade confirmation or
contract note in accordance with the standing arrangements in place
with the relevant Joint Bookrunner, stating the number of Placing
Shares allocated to it at the Placing Price, the aggregate amount
owed by such Placee to the relevant Joint Bookrunner (in GBP) and a
form of confirmation in relation to settlement instructions.
Each Placee will be deemed to agree that it will do all things
necessary to ensure that delivery and payment is completed as
directed by the relevant Joint Bookrunner in accordance with the
standing CREST settlement instructions which they have in place
with the relevant Joint Bookrunner.
Settlement of transactions in the Placing Shares (ISIN:
GB00BD6P7Y24) following Admission will take place within the system
administered by Euroclear UK & Ireland Limited ("CREST")
provided that, subject to certain exceptions, the Joint Bookrunners
reserve the right to require settlement for, and delivery of, the
Placing Shares (or a portion thereof) to Placees by such other
means that they deem necessary if delivery or settlement is not
possible or practicable within CREST within the timetable set out
in this Announcement or would not be consistent with the regulatory
requirements in any Placee's jurisdiction.
It is expected that settlement will be on 11 April 2017 on a
T+13 basis in accordance with the instructions set out in the form
of confirmation.
Interest is chargeable daily on payments not received from
Placees on the due date in accordance with the arrangements set out
above at the rate of two percentage points above LIBOR as
determined by the Joint Bookrunners.
Each Placee is deemed to agree that, if it does not comply with
these obligations, the Joint Bookrunners may sell any or all of the
Placing Shares allocated to that Placee on such Placee's behalf and
retain from the proceeds, for the Joint Bookrunners' account and
benefit (as agents for the Company), an amount equal to the
aggregate amount owed by the Placee plus any interest due. The
relevant Placee will, however, remain liable for any shortfall
below the aggregate amount owed by it and may be required to bear
any stamp duty or stamp duty reserve tax or securities transfer tax
(together with any interest or penalties) which may arise upon the
sale of such Placing Shares on such Placee's behalf. By
communicating a bid for Placing Shares, each Placee confers on the
relevant Joint Bookrunner such authorities and powers necessary to
carry out any such sale and agrees to ratify and confirm all
actions which the Joint Bookrunners lawfully take in pursuance of
such sale.
If Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the form of
confirmation or contract note is copied and delivered immediately
to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or
that of its nominee or in the name of any person for whom a Placee
is contracting as agent or that of a nominee for such person, such
Placing Shares should, subject as provided below, be so registered
free from any liability to UK stamp duty or stamp duty reserve tax
or securities transfer tax. Neither of the Joint Bookrunners nor
the Company will be liable in any circumstances for the payment of
stamp duty, stamp duty reserve tax or securities transfer tax in
connection with any of the Placing Shares. Placees will not be
entitled to receive any fee or commission in connection with the
Placing.
Representations, Warranties and Further Terms
By participating in the Placing, each Placee (and any person
acting on such Placee's behalf) makes the following
representations, warranties, acknowledgements, agreements and
undertakings (as the case may be) to each of the Joint Bookrunners
(for itself and on behalf of the Company):
1. that it has read and understood this Announcement (including
the Appendix) and the Admission Document, in their entirety and
that its subscription for Placing Shares is subject to and based
upon all the terms, conditions, representations, warranties,
acknowledgements, agreements and undertakings and other information
contained herein and undertakes not to redistribute or duplicate
this Announcement;
2. that its obligations are irrevocable and legally binding and
shall not be capable of rescission or termination by it in any
circumstances;
3. that the exercise by the Joint Bookrunners of any right or
discretion under the Placing Agreement shall be within the absolute
discretion of the Joint Bookrunners and the Joint Bookrunners need
not have any reference to it and shall have no liability to it
whatsoever in connection with any decision to exercise or not to
exercise any such right and each Placee agrees that it has no
rights against the Joint Bookrunners or the Company, or any of
their respective officers, directors or employees, under the
Placing Agreement pursuant to the Contracts (Rights of Third
Parties Act) 1999;
4. that the content of this Announcement and the Admission
Document is exclusively the responsibility of the Company and the
Directors, and that none of the Joint Bookrunners, their respective
affiliates, officers, directors, employees or any person acting on
its or their behalf has or shall have any liability for any
information, representation or statement contained in this
Announcement or the Admission Document or any information
previously or concurrently published by or on behalf of the
Company, and will not be liable for any Placee's decision to
participate in the Placing based on any information, representation
or statement contained in this Announcement, the Admission Document
or otherwise. Each Placee further represents, warrants and agrees
that the only information on which it is entitled to rely and on
which such Placee has relied in committing itself to acquire the
Placing Shares is contained in this Announcement (including the
Appendix) and the Admission Document and any other Exchange
Information, such information being all that it deems necessary to
make an investment decision in respect of the Placing Shares and
that it has neither received nor relied on any other information
given or representations, warranties or statements made by the
Joint Bookrunners, the Company or any of their respective
affiliates, directors, officers or employees or any person acting
on behalf of any of them, or, if received, it has not relied upon
any such information, representations, warranties or statements
(including any management presentation that may have been received
by any prospective Placee or any material prepared by their
respective Research Departments of the Joint Bookrunners (the views
of such Research Departments not representing and being independent
from those of the Company and the respective Corporate Finance
Departments of the Joint Bookrunners and not being attributable to
the same)), and neither the Joint Bookrunners nor the Company will
be liable for any Placee's decision to accept an invitation to
participate in the Placing based on any other information,
representation, warranty or statement. Each Placee further
acknowledges and agrees that it has relied solely on its own
investigation of the business, financial or other position of the
Company in deciding to participate in the Placing and it will not
rely on any investigation that the Joint Bookrunners, their
affiliates or any other person acting on its or their behalf has or
may have conducted;
5. that none of the Joint Bookrunners, any of their affiliates,
directors, officers, employees or any person acting on behalf of it
or them has or shall have any liability for the Exchange
Information, any publicly available or filed information or any
representation relating to the Company, provided that nothing in
this paragraph excludes the liability of any person for fraudulent
misrepresentation made by that person;
6. that it has neither received nor relied on any inside
information concerning the Company in accepting this invitation to
participate in the Placing;
7. neither it nor, as the case may be, its clients expect the
Joint Bookrunners to have any duties or responsibilities to such
persons similar or comparable to the duties of "best execution" and
"suitability" imposed by the FCA's Conduct of Business Source Book,
and that the Joint Bookrunners are not acting for it or its
clients, and that the Joint Bookrunners will not be responsible for
providing the protections afforded to customers of the Joint
Bookrunners or for providing advice in respect of the transactions
described herein;
8. (i) it is not in the United States, and (ii) it is not acting
for the account or benefit of a person in the United States, (iii)
it has not received any offer, or a solicitation of an offering, to
buy the Placing Shares within the United States and (iv) it did not
initiate any buy order to purchase Placing Shares whilst in the
United States;
9. each Placee acknowledges that (a) the Placing Shares have not
been, and will not be, registered under the Securities Act, (b) the
Company has not been, and will not be, registered under the US
Investment Company Act of 1940 and (c) the Placing Shares may not
be offered, sold, pledged or otherwise transferred or delivered
within the United States or to, or for the account or benefit of,
any US Person as defined in Regulation S of the Securities Act ("US
Person");
10. that it is not acquiring the Placing Shares with a view to
the offer, sale, resale, transfer, delivery or distribution,
directly or indirectly, of such Placing Shares in or into the
United States;
11. that it is not a national or resident of Canada, Australia,
the Republic of South Africa or Japan or a corporation, partnership
or other entity organised under the laws of Canada, Australia, the
Republic of South Africa or Japan and that it will not offer, sell,
renounce, transfer or deliver directly or indirectly any of the
Placing Shares in Canada, Australia, the Republic of South Africa
or Japan or to or for the benefit of any person resident in Canada,
Australia, the Republic of South Africa or Japan and each Placee
acknowledges that the relevant exemptions are not being obtained
from the Securities Commission of any province of Canada, that no
document has been or will be lodged with, filed with or registered
by the Australian Securities and Investments Commission, the South
African Reserve Bank or Japanese Ministry of Finance and that the
Placing Shares are not being offered for sale and may not be,
directly or indirectly, offered, sold, transferred or delivered in
or into Canada, Australia, the Republic of South Africa or
Japan;
12. that it has not, directly or indirectly, distributed,
forwarded, transferred or otherwise transmitted, and will not,
directly or indirectly, distribute, forward, transfer or otherwise
transmit, any presentation or offering materials concerning the
Placing or the Placing Shares to any persons within the United
States or to any US Persons;
13. that it is entitled to subscribe for Placing Shares under
the laws of all relevant jurisdictions which apply to it and that
it has fully observed such laws and obtained all governmental and
other consents which may be required thereunder or otherwise and
complied with all necessary formalities and that it has not taken
any action which will or may result in the Company or the Joint
Bookrunners or any of their respective affiliates, directors,
officers, employees or agents acting in breach of any regulatory or
legal requirements of any territory in connection with the Placing
or its acceptance;
14. that it has obtained all necessary consents and authorities
to enable it to give its commitment to subscribe for the Placing
Shares and to perform its subscription obligations;
15. that it has only communicated or caused to be communicated
and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within
the meaning of section 21 of FSMArelating to the Placing Shares in
circumstances in which section 21(1) of FSMA does not require
approval of the communication by an authorised person;
16. that it is either: (a) a person of a kind described in
paragraph 5 of Article 19 (persons having professional experience
in matters relating to investments and who are investment
professionals) of the Order; or (b) a person of a kind described in
Article 48 (certified high net worth individuals) of the Order; or
(c) a person of the kind described in Article 50 (certified
sophisticated investors) of the Order; or (d) a person of the kind
described in Article 50A (self-certified sophisticated investors)
of the Order; or (e) a person of a kind described in paragraph 2 of
Article 49 (high net worth companies, unincorporated associations,
partnerships or trusts or their respective directors, officers or
employees) of the Order; or (f) a person to whom it is otherwise
lawful to offer the opportunity to participate in the Placing;
17. that it is a qualified investor (as defined in section 86(7)
of FSMA);
18. that it is a "professional client" or an "eligible
counterparty" within the meaning of Chapter 3 of the FCA's Conduct
of Business Sourcebook and it is purchasing Placing Shares for
investment only and not with a view to resale or distribution;
19. that it will (or will procure that its nominee will) if
applicable, make notification to the Company of the interest in its
ordinary shares in accordance with the Disclosure Guidance and
Transparency Rules published by the FCA;
20. that it is not, and it is not acting on behalf of, a person
falling within subsections (6), (7) or (8) of sections 67 or 70
respectively or subsections (2) and (3) of section 93 or subsection
(1) of section 96 of the Finance Act 1986;
21. that it is not relying on any representations or warranties
or agreements by the Company, the Joint Bookrunners or by any of
their respective affiliates, directors, officers, employees or
agents or any other person except as set out in the express terms
of this Announcement (including the Appendix) and the Admission
Document;
22. that it will not deal or cause or permit any other person to
deal in all or any of the Placing Shares which it is subscribing
for under the Placing unless and until Admission becomes
effective;
23. to appoint irrevocably any director of either Joint
Bookrunner as its agent for the purpose of executing and delivering
to the Company and/or its registrars any document on its behalf
necessary to enable it to be registered as the holder of the
Placing Shares;
24. that, as far as it is aware it is not acting in concert
(within the meaning given in the City Code on Takeovers and
Mergers) with any other person in relation to the Company;
25. that this Announcement does not constitute a securities
recommendation or financial product advice and that neither of the
Joint Bookrunners nor the Company has considered its particular
objectives, financial situation and needs;
26. that it (and any person acting on its behalf) will make
payment to the Joint Bookrunners for the Placing Shares allocated
to it in accordance with this Announcement on the due time and date
set out herein, failing which the relevant Placing Shares may be
placed with other subscribers or sold as the Joint Bookrunners may
in their sole discretion determine and without liability to such
Placee and it will remain liable and will indemnify the Joint
Bookrunners on demand for any shortfall below the net proceeds of
such sale and the placing proceeds of such Placing Shares and may
be required to bear the liability for any stamp duty or stamp duty
reserve tax or security transfer tax (together with any interest or
penalties due pursuant to or referred to in these terms and
conditions) which may arise upon the placing or sale of such
Placee's Placing Shares on its behalf;
27. that none of the Joint Bookrunners, any of their affiliates,
directors, officers, employees, agents, or any person acting on
behalf of any of them, is making any recommendations to it,
advising it regarding the suitability of any transactions it may
enter into in connection with the Placing and that participation in
the Placing is on the basis that it is not and will not be treated
for these purposes as a client of the Joint Bookrunners and that
the Joint Bookrunners do not have any duties or responsibilities to
it for providing the protections afforded to its clients or
customers or for providing advice in relation to the Placing nor in
respect of any representations, warranties, undertakings or
indemnities contained in the Placing Agreement nor for the exercise
or performance of any of their rights and obligations thereunder
including any rights to waive or vary any conditions or exercise
any termination right;
28. that it will indemnify and hold the Company and the Joint
Bookrunners and their respective affiliates, directors, officers,
employees and agents harmless from any and all costs, claims,
liabilities and expenses (including legal fees and expenses)
arising out of or in connection with any breach of the
representations, warranties, acknowledgements, agreements and
undertakings in this Appendix and further agrees that the Company
and the Joint Bookrunners will rely on the truth and accuracy of
the foregoing confirmations, warranties, acknowledgements and
undertakings and, if any of the foregoing is or becomes no longer
true or accurate, the Placee shall promptly notify the Joint
Bookrunners and the Company. All confirmations, warranties,
acknowledgements and undertakings given by the Placee, pursuant to
this Announcement (including this Appendix) are given to each of
the Joint Bookrunners for itself and on behalf of the Company and
will survive completion of the Placing and Admission;
29. that time shall be of the essence as regards obligations
pursuant to this Appendix;
30. that it is responsible for obtaining any legal, tax and
other advice that it deems necessary for the execution, delivery
and performance of its obligations in accepting the terms and
conditions of the Placing, and that it is not relying on the
Company or the Joint Bookrunners to provide any legal, tax or other
advice to it; and
31. that all dates and times in this Announcement (including
this Appendix) may be subject to amendment and that the Joint
Bookrunners shall notify it of such amendments.
Each Placee (and any person acting on such Placee's behalf)
further represents, warrants and undertakes to each of the Joint
Bookrunners (for itself and for the benefit of the Company) and
acknowledges that:
1. (i) it has complied with and will continue to comply with any
obligations it has under MAR; (i) it has complied with its
obligations under the Criminal Justice Act 1993 and Part VIII of
FSMA; (ii) in connection with money laundering and terrorist
financing, it has complied with its obligations under the Proceeds
of Crime Act 2002 (as amended), the Terrorism Act 2000 (as
amended), the Terrorism Act 2006 and the Money Laundering
Regulations 2007; and (iii) it is not a person: (a) with whom
transactions are prohibited under the Foreign Corrupt Practices Act
of 1977 or any economic sanction programmes administered by, or
regulations promulgated by, the Office of Foreign Assets Control of
the U.S. Department of the Treasury; (b) named on the Consolidated
List of Financial Sanctions Targets maintained by HM Treasury of
the United Kingdom; or (c) subject to financial sanctions imposed
pursuant to a regulation of the European Union or a regulation
adopted by the United Nations (together, the "Regulations"); and,
if making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the
identity of the third party as required by the Regulations and has
obtained all governmental and other consents (if any) which may be
required for the purpose of, or as a consequence of, such purchase,
and it will provide promptly to the Joint Bookrunners such
evidence, if any, as to the identity or location or legal status of
any person which the Joint Bookrunners may request from it in
connection with the Placing (for the purpose of complying with such
Regulations or ascertaining the nationality of any person or the
jurisdiction(s) to which any person is subject or otherwise) in the
form and manner requested by the Joint Bookrunners on the basis
that any failure by it to do so may result in the number of Placing
Shares that are to be purchased by it or at its direction pursuant
to the Placing being reduced to such number, or to nil, as the
Joint Bookrunners may decide in their sole discretion;
2. it will not make any offer to the public of those Placing
Shares to be subscribed by it for the purposes of the Prospectus
Rules made by the FCA pursuant to Commission Regulation (EC) No.
809/2004;
3. it will not distribute any document relating to the Placing
Shares and it will be acquiring the Placing Shares for its own
account as principal or for a discretionary account or accounts (as
to which it has the authority to make the statements set out
herein) for investment purposes only and it does not have any
contract, understanding or arrangement with any person to sell,
pledge, transfer or grant a participation therein to such person or
any third person in respect of any Placing Shares; save that that
if it is a private client stockbroker or fund manager it confirms
that in purchasing the Placing Shares it is acting under the terms
of one or more discretionary mandates granted to it by private
clients and it is not acting on an execution only basis or under
specific instructions to purchase the Placing Shares for the
account of any third party;
4. these terms and conditions and any agreements entered into by
it pursuant to these terms and conditions shall be governed by and
construed in accordance with the laws of England and Wales and it
submits (on behalf of itself and on behalf of any person on whose
behalf it is acting) to the exclusive jurisdiction of the English
courts as regards any claim, dispute or matter arising out of any
such contract, except that enforcement proceedings in respect of
the obligation to make payment for the Placing Shares (together
with any interest chargeable thereon) may be taken by the Company
or the Joint Bookrunners in any jurisdiction in which the relevant
Placee is incorporated or in which any of its securities have a
quotation on a recognised stock exchange;
5. any documents sent to Placees will be sent at the Placees'
risk. They may be sent by post to such Placees at an address
notified to the relevant Joint Bookrunner; and
6. the Company, the Joint Bookrunners and their respective
affiliates will rely upon the truth and accuracy of each of the
foregoing representations, warranties, acknowledgements and
undertakings which are given to each of the Joint Bookrunners (for
itself and on behalf of the Company) and are irrevocable.
The agreement to settle a Placee's subscription (and/or the
subscription of a person for whom such Placee is contracting as
agent) free of stamp duty and stamp duty reserve tax depends on the
settlement relating only to a subscription by it and/or such person
direct from the Company for the Placing Shares in question. Such
agreement assumes that the Placing Shares are not being subscribed
for in connection with arrangements to issue depositary receipts or
to transfer the Placing Shares into a clearance service. If there
are any such arrangements, or the settlement relates to any other
subsequent dealing in the Placing Shares, stamp duty or stamp duty
reserve tax may be payable, for which neither the Company nor the
Joint Bookrunners will be responsible, and the Placee to whom (or
on behalf of whom, or in respect of the person for whom it is
participating in the Placing as an agent or nominee) the
allocation, allotment, issue or delivery of Placing Shares has
given rise to such UK stamp duty or stamp duty reserve tax
undertakes to pay such UK stamp duty or stamp duty reserve tax
forthwith and to indemnify on an after-tax basis and to hold
harmless the Company and the Joint Bookrunners in the event that
any of the Company and/or the Joint Bookrunners has incurred any
such liability to UK stamp duty or stamp duty reserve tax. If this
is the case, each Placee should seek its own advice and notify the
Joint Bookrunners accordingly.
In addition, Placees should note that they will be liable for
any stamp duty and all other stamp, issue, securities, transfer,
registration, documentary or other duties or taxes (including any
interest, fines or penalties relating thereto) payable outside the
UK by them or any other person on the subscription by them for any
Placing Shares or the agreement by them to subscribe for any
Placing Shares.
Each Placee, and any person acting on its behalf, acknowledges
that the Joint Bookrunners owe no fiduciary or other duties to any
Placee in respect of any representations, warranties, undertakings
or indemnities in the Placing Agreement.
Each Placee and any person acting on its behalf, acknowledges
and agrees that the Joint Bookrunners or any of its respective
affiliates may, at their absolute discretion, agree to become a
Placee in respect of some or all of the Placing Shares.
DEFINITIONS
Except where the context otherwise requires, the following
definitions shall apply throughout this Announcement:
"Acquisition" the proposed acquisition by the Company
of the entire issued share capital of
Metro Rod pursuant to the terms of the
Acquisition Agreement;
"Acquisition Agreement" the conditional agreement dated 22 March
2017 made between (i) the Company and
(ii) the Vendor relating to the Acquisition,
details of which are set out in paragraph
8.1.2 of Part VII of the Admission Document;
"Admission" the admission of the Enlarged Share Capital
to trading on AIM becoming effective
in accordance with Rule 6 of the AIM
Rules;
"AIM" the market of that name operated by the
London Stock Exchange;
"AIM Rules" the AIM Rules for Companies published
by the London Stock Exchange, as amended
from time to time;
"Allenby Capital" Allenby Capital Limited;
"Barking Mad" Barking Mad Limited, a subsidiary of
the Company, incorporated on 27 April
2001 in England and Wales, with the company
number 04207457;
"Board" the board of directors of the Company
from time to time;
"ChipsAway" ChipsAway International Ltd, a subsidiary
of the Company, incorporated on 26 August
1994 in England and Wales, with the company
number 02962763;
"Company" or "Franchise Franchise Brands plc, a company incorporated
Brands" on 15 July 2016 in England and Wales
with the company number 10281033;
"Consideration" the consideration payable to the Vendor
in respect of the Acquisition, further
details of which are set out in paragraph
8.1.2 of Part VII of the Admission Document;
"Controlling Shareholders" Stephen Hemsley and Nigel Wray;
"Directors" the directors of the Company;
"Dowgate Capital" Dowgate Capital Stockbrokers Limited;
"Enlarged Group" the Group as enlarged by the Acquisition;
"Enlarged Share Capital" the issued share capital of the Company
as upon Admission comprising the Existing
Ordinary Shares and the Placing Shares
(assuming the Placing is subscribed for
in full);
"Enserve Group" Enserve Group Limited, a company incorporated
on 17 September 1996 in England and Wales,
with the company number 03250709;
"Existing Ordinary Shares" the 47,881,286 Ordinary Shares in issue
at the date of this Announcement;
"Facilities Agreement" the conditional facilities agreement
dated 22 March 2017 made between (1)
the Company, (2) HSBC and (3) the Subsidiaries,
relating to a GBP12 million term loan
and GBP5 million revolving credit facility,
details of which are set out in paragraph
8.1.5 of Part VII of the Admission Document;
"FB Holdings" FB Holdings Limited, a subsidiary of
the Company, a company incorporated on
9 September 2008 in England and Wales
with company number 06693122 (which was
formerly called Franchise Brands Worldwide
Limited) and its subsidiaries;
"General Meeting" or the general meeting of the Company to
"GM" be held at the offices of Gateley Plc,
One Paternoster Square, London EC4M 7DX
on 10 April 2017 at 10.00 a.m. and any
adjournments thereof to be held for the
purpose of considering and, if thought
fit, passing the Resolutions;
"Group" the Company and the Subsidiaries;
"HSBC" HSBC Bank plc;
"IFRS" international financial reporting standards;
"IPO" the initial public offering of the Company's
shares and the initial admission of such
Ordinary Shares to trading on AIM on
5 August 2016;
"Kemac" a business division of Metro Rod involving
specialist support services for water
companies;
"Loan Notes" the loan notes issued pursuant to the
Loan Note Instrument;
"Loan Note Instrument" the loan note instrument issued by the
Company on 1 August 2016, further details
of which are set out in paragraph 13
of Part VII of the Admission Document;
"London Stock Exchange" London Stock Exchange plc;
"Metro Rod" Metro Rod Limited, a company incorporated
on 15 June 2001 in England and Wales
with the company number 04235803;
"MyHome" MyHome Marketing Limited, a subsidiary
of the Company, incorporated on 6 January
2010 in England and Wales with the company
number 07117588;
"Operating Profit before profit in any given period after charging
all expenses including
exceptional items" interest, depreciation and amortisation,
but before any exceptional items and
corporation tax;
"Ordinary Shares" ordinary shares of GBP0.005 each in the
capital of the Company;
"Placees" proposed subscribers for Placing Shares
at the Placing Price in the Placing;
"Placing" the proposed conditional placing of the
Placing Shares at the Placing Price with
Placees pursuant to the Placing Agreement;
"Placing Agreement" the conditional agreement dated 22 March
2017 between (1) the Company, (2) Allenby
Capital and (3) Dowgate Capital relating
to the Placing, further details of which
are set out in paragraph 11 of Part VII
of the Admission Document;
"Placing Price" 67 pence per Placing Share;
"Placing Shares" the up to 29,850,747 new Ordinary Shares
to be issued by the Company and subscribed
for by Placees pursuant to the Placing,
conditional on Admission;
"RCF" the GBP5 million revolving credit facility
under the Facilities Agreement;
"Resolutions" the resolutions to be proposed at the
General Meeting, details of which are
set out in the notice of GM to be set
out in the Admission Document;
"Shareholders" holders of Ordinary Shares in the Company
from time to time;
"Term Loan" the GBP12 million term loan under the
Facilities Agreement;
"United Kingdom" or the United Kingdom of Great Britain and
"UK" Northern Ireland;
"VAT" value added tax; and
"Vendor" the vendor of Metro Rod, being Enserve
Group.
TECHNICAL GLOSSARY
"24/7/365" a service which is provided 24 hours
per day, 7 days per week and every day
of the year;
"B2B" business to business;
"B2C" business to consumer;
"CarCare Centres" fixed site workshops with additional
equipment which enable throughput of
vehicles and also allow larger paint
and dent repairs to be carried out than
Franchisees can undertake on a mobile
basis. CarCare Centres currently operated
by Franchisees range in size from 1,200
square feet to just under 11,000 square
feet;
"Commercial Accounts" commercial accounts won directly by the
Franchisee within their franchise area;
"Franchise Agreements" the agreements entered into by the relevant
member of the Enlarged Group and Franchisees
pursuant to which the Franchisees are
to operate their franchise;
"Franchisee" a person who operates a franchise under
the terms of a Franchise Agreement from
time to time;
"Key Accounts" customer accounts where Metro Rod has
entered into a contract in relation to
the supply of services either because
of the high contract value or where services
are to be provided by more than one Franchisee;
"MSF" management service fee; and
"system sales" total aggregate sales of Franchisees
and (if applicable) Company or Metro
Rod owned operations of services to third
party customers.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQSEDEFEFWSEID
(END) Dow Jones Newswires
March 23, 2017 03:01 ET (07:01 GMT)
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