RNS Number:1932F
Basepoint PLC
17 December 2002
BASEPOINT PLC
CIRCULAR TO SHAREHOLDERS DATED 17 DECEMBER ("THE CIRCULAR").
PLACING, OPEN OFFER AND WAIVER OF MANDATORY OFFER REQUIREMENTS UNDER THE CITY
CODE ON TAKEOVERS AND MERGERS.
Basepoint plc ("Basepoint" or "the Company") announces that, subject to
shareholder approval, it has agreed to:
* the Placing by Teather & Greenwood Limited of 1,688,889 New Ordinary
Shares at a price of 90p per share to ACG Developments plc ("ACGD"), HACAS Group
plc ("HACAS") and other institutional investors;
* an Open Offer by Teather & Greenwood Limited to Qualifying Shareholders of
2,554,069 New Ordinary Shares at 90p per share on the basis of 1 New Ordinary
Share for every 3 Existing Ordinary Shares held, with an excess application
facility;
and
* the waiver of rule 9 of the City Code on Takeovers and Mergers whereby
ACGD, HACAS, DM Joseph, DN Taylor, JCC Ashby and JR Wollenberg would be required
to make a mandatory cash offer for the entire issued share capital of Basepoint.
Attached to this announcement is the full text of a letter from the Chairman of
Basepoint, Lord Lifford, which sets out the background to the proposals and
further details on them. The letter is a direct extract from the Circular. A
full list of definitions used in this letter and in this announcement can be
found in the Circular, which will be posted to shareholders today. Any
references to page numbers and sections in this letter are references to the
relevant pages and sections in the Circular.
The Open Offer expires at 3.00 p.m. on 10 January 2003. Application Forms in
relation to the Open Offer are personal to Qualifying Shareholders and may not
be transferred except to satisfy bona fide market claims. Qualifying
Shareholders who wish to accept the Open Offer should ensure that their
Application Form, which accompanies the Circular, is duly completed and returned
with the appropriate remittance to the Company's registrars no later than 3.00
p.m. on 10 January 2003.
An extraordinary general meeting will be held at 10.00 a.m. on 9 January 2003 at
the offices of the Company's nominated adviser, Smith & Williamson Corporate
Finance Limited, No 1 Riding House Street, London W1A 3AS, where the proposals
will be considered. Should all resolutions be passed, it is expected that
dealings in new ordinary shares issues pursuant to the proposals will commence
trading on the Alternative Investment Market of the London Stock Exchange on 17
January 2003. Notice of the extraordinary general meeting is set out in the
Circular.
Copies of the Circular are available from Smith & Williamson Corporate Finance
Limited, 1 Riding House Street, London W1A 3AS until 17 February 2003.
This announcement has been approved for the purposes of Section 21 FSMA 2000 by
Smith & Williamson Corporate Finance Limited which is regulated by the Financial
Services Authority.
Contacts:
Nicola Horton, Smith & Williamson Corporate Finance Limited, 020 7637 5377
David Boakes, Basepoint plc, 01962 842244
LETTER FROM THE CHAIRMAN
(Incorporated and registered in England & Wales under the Companies Act 1985
with Registered Number 2298266)
Registered Office:
9 Charlecote Mews
Staple Gardens
Winchester
Hampshire SO23 8SR
Directors:
The Viscount Edward James Wingfield Lifford - (Non-executive Chairman)
Robert John Cleaver - (Chief Executive)
Timothy David Boakes - (Director of Finance & Operations)
Robert Leonard Court - (Non-executive Director)
Derek Maurice Joseph - (Non-executive Director)
Brian Sarel Keys - (Non-executive Director)
Denis Newman Taylor - (Non-executive Director)
17 December 2002
To the holders of Ordinary Shares and, for information only, to holders of
options under the Option Scheme
Dear Shareholder
PLACING AND OPEN OFFER
WAIVER OF MANDATORY OFFER REQUIREMENTS UNDER THE CITY CODE
Introduction
It was announced today that the Company intends to raise up to #3.8 million (up
to #3.6 million net of expenses) through a Placing by Teather & Greenwood of
1,688,889 New Ordinary Shares at the Issue Price and an Open Offer to Qualifying
Shareholders of 2,554,069 New Ordinary Shares at the Issue Price. The Placing
and Open Offer is intended to help fund the development of further managed
business, innovation and enterprise centres and to provide the Company with
additional working capital.
Of the gross proceeds of the Placing and Open Offer, #1.5 million is being
raised from ACGD, which has given an Irrevocable Undertaking to subscribe for
833,333 New Ordinary Shares under the Placing, to subscribe for its full
entitlement under the Open Offer to 571,754 New Ordinary Shares, and to apply
for an additional 261,579 New Ordinary Shares under the Excess Application
Facility. To the extent that this additional application of 261,579 New Ordinary
Shares cannot be fulfilled under the terms of the Open Offer, ACGD will
subscribe for additional shares under the terms of its Irrevocable Undertaking.
#0.2 million is being raised from HACAS, which has given an Irrevocable
Undertaking to subscribe 138,889 New Ordinary Shares under the Placing, to
subscribe for its full entitlement under the Open Offer to 67,750 New Ordinary
Shares and to apply for an additional 15,583 New Ordinary Shares under the
Excess Application Facility. To the extent that this additional application of
15,583 New Ordinary Shares cannot be fulfilled under the terms of the Open
Offer, HACAS will subscribe for additional shares under the terms of its
Irrevocable Undertaking. Up to #18,000 is being raised from DM Joseph, who has
given an irrevocable undertaking to the Company to subscribe for his full
entitlement under the Open Offer to 6,208 New Ordinary Shares and to apply for
an additional 13,792 New Ordinary Shares under the Excess Application Facility.
Up to #18,000 is being raised from DN Taylor, who has given an irrevocable
undertaking to the Company to subscribe for his full entitlement under the Open
Offer to 6,666 New Ordinary Shares and to apply for an additional 13,334 New
Ordinary Shares under the Excess Application Facility. Up to #18,000 is being
raised from JCC Ashby, who has given an irrevocable undertaking to the Company
to subscribe for his full entitlement under the Open Offer to 3,333 New Ordinary
Shares and to apply for an additional 16,667 New Ordinary Shares under the
Excess Application Facility. #6,750 is being raised from JR Wollenberg, who has
given an irrevocable undertaking to the Company to subscribe for 7,500 New
Ordinary Shares out of his entitlement under the Open Offer to 8,333 New
Ordinary Shares.
Derek Joseph is a director of ACGD and a director and 20.4 per cent. shareholder
of HACAS. Denis Taylor is chief executive of ACGD. Both Derek Joseph and Denis
Taylor are directors of other subsidiaries of ACT Limited, ACGD's parent
company. Julian Ashby is chairman and Richard Wollenberg is a director of HACAS.
Julian Ashby is also a director of a number of HACAS's subsidiaries. ACGD,
HACAS, DM Joseph, DN Taylor, JCC Ashby and JR Wollenberg together constitute a
concert party. The subscriptions of the Concert Party may result in its interest
in the Ordinary Shares rising from 26.00 per cent. to up to 37.45 per cent.,
depending on the take up of the Open Offer by Qualifying Shareholders who have
not already given irrevocable undertakings to subscribe for New Ordinary Shares.
Under Rule 9 of the City Code, such an increase in the Concert Party's aggregate
interest would normally oblige it to make a general offer to all Shareholders to
acquire their Ordinary Shares. However in this instance, the Panel has agreed to
waive any such obligation if Shareholders (other than the Concert Party) approve
the waiver on a poll at the Extraordinary General Meeting. Without such approval
from Shareholders, the Placing and Open Offer cannot proceed.
If the waiver is approved by Independent Shareholders, following the Placing and
Open Offer (including, where relevant, the exercise of the Irrevocable
Undertakings) the Concert Party will hold more than 30 per cent. but less than
50 per cent. of the voting rights in the Company. Under Rule 9 of the City Code
if the Concert Party were to acquire any additional shares which would increase
its percentage of the voting rights in the Company, that would trigger an
obligation for it to make a general offer to all Shareholders to acquire their
Ordinary Shares.
The purpose of this document is to provide you with information on the Placing
and Open Offer and the proposed waiver by the Panel of Rule 9 of the City Code
and to seek your approval for the Placing and Open Offer and issue of shares
pursuant to the Irrevocable Undertakings and the waiver at the forthcoming
Extraordinary General Meeting.
A notice of the Extraordinary General Meeting is set out at the end of this
document.
Background to and reasons for the Placing and Open Offer
Basepoint is an AIM quoted company with a market capitalisation of approximately
#6.86 million as at 13 December 2002. The Company has developed a profitable,
asset backed business in designing, developing and operating managed business,
innovation and enterprise centres (''MBECs'') in the private sector with the
support of local authorities. Basepoint's MBECs are designed to encourage new
and growing small businesses to locate in individual units of accommodation
within a community of similar businesses. MBECs provide good quality business
space to Basepoint's customers on flexible terms which help encourage
occupation. Basepoint's MBECs also provide a range of ancillary services,
including access to business advisory services and increasingly sophisticated
telecommunications, including broadband, to its customers.
At the time of Basepoint's admission to AIM in June 2000 the Company had 165
units in four managed enterprise centres and net assets of approximately #8
million. As reported in its most recent interim results, in August 2002 the
Company was operating from eight centres with a total of 435 units and had net
assets of approximately #13 million.
The Company has established a track record in the development of new centres and
the management of completed MBECs. The Company has developed a strategy to
maximise the benefit from its reputation and skills and to seek to expand the
overall profitability of the business without the continual need for new
capital. This strategy has three prongs comprising:
* The continuation of the existing model using the Company's own capital
together with bank borrowings to produce MBECs entirely owned and operated by
Basepoint.
* The development of new MBECs and management of completed MBECs in areas
where central and local government consider that economic regeneration is
essential. Basepoint plans to undertake the development, project management and
operation of centres on behalf of government agencies who would fund such
developments in their entirety. Under this model, Basepoint will expect to
obtain project development management fees and a revenue share from the
management of completed MBECs.
* The development of new MBECs and management of existing MBECs where
Basepoint owns only a minority stake in such MBECs. Basepoint will expect to
obtain a profit from the development of new centres together with a
proportionate share from the profitable operation of completed MBECs.
All three parts of the strategy will allow the Company to produce new MBEC
schemes in the present format but with a reduced level of capital commitment by
the Company. It is intended that the net proceeds of the Placing and Open Offer
will enable the Company to follow all three parts of its strategy and thus
enhance its ability to expand its portfolio of MBECs.
The Company has sought the fresh capital required to implement the strategy from
institutional investors, including existing Shareholders, by way of the Placing,
but, mindful of recent share price levels and the potential dilutive effect of
the Placing on Shareholders, the Board has decided that Qualifying Shareholders
should be invited to subscribe under the terms of the Open Offer on the basis of
one New Ordinary Share for every three Existing Ordinary Shares. In addition,
should not all Qualifying Shareholders take up their full entitlements to New
Ordinary Shares under the Open Offer, then the Excess Application Facility
affords those Qualifying Shareholders who wish to do so the opportunity to apply
for more New Ordinary Shares in addition to their entitlements.
Current trading and prospects
The Company's interim period ended on 31 August 2002 and the results for that
period were announced on 16 October 2002. Those results are set out in Part IV
of this document. Current trading continues to be satisfactory.
Details of the Placing and Open Offer
The Placing and Open Offer is intended to raise up to #3.8 million (up to #3.6
million net of expenses) by the issue of up to 4,242,958 New Ordinary Shares, of
which 1,688,889 New Ordinary Shares will be placed with ACGD, HACAS and other
institutional investors pursuant to the Placing. To the extent that Qualifying
Shareholders take up their full entitlements under the Open Offer, up to an
additional #0.25 million may be raised under the Irrevocable Undertakings by the
issue of up to 277,162 New Ordinary Shares.
Qualifying Shareholders will be given the opportunity to subscribe for 2,554,069
New Ordinary Shares under the Open Offer at the Issue Price, payable in full on
application, on the following basis:
1 New Ordinary Share for every 3 Existing Ordinary Shares
and so in proportion for any other number of Existing Ordinary Shares held at
the Record Date. Entitlements of Qualifying Shareholders will be rounded down to
the nearest whole number of New Ordinary Shares. The fractional entitlements
which would otherwise have arisen will not be allotted to Qualifying
Shareholders but will be aggregated and be available for subscription to
Qualifying Shareholders applying for additional shares under the Excess
Application Facility.
Qualifying Shareholders may apply for more than their pro rata entitlement under
the Open Offer using the Excess Application Facility. Qualifying Shareholders
may apply for any whole number of New Ordinary Shares, without limitation.
By way of an example, if you currently hold 300 Existing Ordinary Shares, your
pro rata entitlement pursuant to the Open Offer is to 100 New Ordinary Shares.
The Excess Application Facility allows you to apply for any number of New
Ordinary Shares in addition to the 100 New Ordinary Shares representing your pro
rata entitlement.
If the number of New Ordinary Shares is insufficient for all Qualifying
Shareholders to be allotted the additional New Ordinary Shares they have applied
for under the Excess Application Facility, then such applications will be scaled
back as set out in the letter from Teather & Greenwood contained in Part II.
The New Ordinary Shares will be allotted 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 declared, made or paid
after the date of their issue.
It is expected that the proceeds of the Placing and Open Offer will be received
by the Company on or before 17 January 2003.
The Placing is conditional on the passing of the Resolutions at the
Extraordinary General Meeting, the Placing Agreement becoming unconditional in
all respects and not having been terminated in accordance with its terms prior
to Admission and on Admission becoming effective. The Open Offer is conditional
on the passing of the Resolutions at the EGM, the obligations of Teather &
Greenwood under the Placing Agreement with respect to the Open Offer becoming
unconditional in all respects prior to Admission and on Admission becoming
effective.
ACGD has given an Irrevocable Undertaking to the Company to subscribe for
833,333 New Ordinary Shares under the Placing, to subscribe for its full
entitlement under the Open Offer to 571,754 New Ordinary Shares and to apply for
an additional 261,579 New Ordinary Shares under the Excess Application Facility.
To the extent that this additional application of 261,579 New Ordinary Shares
cannot be fulfilled under the terms of the Open Offer, ACGD will subscribe for
additional shares under the terms of its Irrevocable Undertaking. HACAS has
given an Irrevocable Undertaking to subscribe for 138,889 New Ordinary Shares
under the Placing, to subscribe for its full entitlement under the Open Offer to
67,750 New Ordinary Shares and to apply for an additional 15,583 New Ordinary
Shares under the Excess Application Facility. To the extent that this additional
application of 15,583 New Ordinary Shares cannot be fulfilled under the terms of
the Open Offer, HACAS will subscribe for additional shares under the terms of
its Irrevocable Undertaking. DM Joseph has given an irrevocable undertaking to
the Company to subscribe for his full entitlement under the Open Offer to 6,208
New Ordinary Shares and ton apply for an additional 13,792 New Ordinary Shares
under the Excess Application Facility. DN Taylor has given an irrevocable
undertaking to the Company to subscribe for his full entitlement under the Open
Offer to 6,666 New Ordinary Shares and to apply for an additional 13,334 New
Ordinary Shares under the Excess Application Facility. JCC Ashby has given an
irrevocable undertaking to the Company to subscribe for his full entitlement
under the Open Offer to 3,333 New Ordinary Shares and to apply for an additional
16,667 New Ordinary Shares under the Excess Application Facility. JR Wollenberg
has given an irrevocable undertaking to the Company to subscribe for 7,500 New
Ordinary Shares out of his entitlement under the Open Offer to 8,333 New
Ordinary Shares.
The Independent Directors intend to participate in the Open Offer, subscribing
for, in aggregate, 207,778 New Ordinary Shares and raising, in aggregate,
#187,000 for the Company. Lord Lifford has given an irrevocable undertaking to
the Company to subscribe for 30,000 New Ordinary Shares out of his entitlement
under the Open Offer to 43,671 New Ordinary Shares; L Cleaver, RJ Cleaver's
wife, has given an irrevocable undertaking to the Company to subscribe for
16,667 New Ordinary Shares out of her entitlement under the Open Offer to
120,762 New Ordinary Shares (RJ Cleaver will not be taking up his entitlement to
1,833 New Ordinary Shares); TD Boakes has given an irrevocable undertaking to
the Company to subscribe for 16,667 New Ordinary Shares out of his entitlement
under the Open Offer to 42,011 New Ordinary Shares; RL Court has given an
irrevocable undertaking to the Company to subscribe for 33,333 New Ordinary
Shares out of his entitlement under the Open Offer to 45,062 New Ordinary Shares
and BS Keys has given an irrevocable undertaking to the Company to subscribe for
111,111 New Ordinary Shares out of his entitlement to 165,167 New Ordinary
Shares.
City Code on Takeovers and Mergers
Pursuant to Rule 9 of the City Code, when any person, or group of persons acting
in concert, acquires shares or rights over shares which, when taken together
with shares or rights over shares already held by such person or persons, carry
30 per cent. or more of the voting rights of a company which is subject to the
City Code, such person or persons, except with the consent of the Takeover
Panel, is or are required to make a general offer to all shareholders in that
company to acquire their shares.
As stated above, in aggregate 1,956,388 of the New Ordinary Shares (representing
up to 67.91 per cent. of the New Ordinary Shares) are to be subscribed for by
ACGD, HACAS, DM Joseph, DN Taylor, JCC Ashby and JR Wollenberg under the Placing
and Open Offer and the Irrevocable Undertakings. HACAS, DM Joseph, DN Taylor,
JCC Ashby and JR Wollenberg together constitute a concert party. ACGD's current
shareholding in the Company equates to 22.39 per cent. of the voting rights of
the Company, HACAS's current shareholding in the Company equates to 2.65 per
cent. of the voting rights of the Company, DM Joseph's current shareholding in
the Company equates to 0.24 per cent. of the voting rights of the Company, DN
Taylor's current shareholding in the Company equates to 0.26 per cent. of the
voting rights of the Company, JCC Ashby's current shareholding in the Company
equates to 0.13 per cent. of the voting rights of the Company and JR
Wollenberg's current shareholding in the Company equates to 0.33 per cent. of
the voting rights of the Company. The Concert Party's aggregate current interest
in the Existing Ordinary Shares equates to 26.00 per cent. of the voting rights
attaching to
such shares.
Following completion of the Placing and Open Offer and, if relevant, exercise of
the Irrevocable Undertakings, ACGD's interest in the voting rights of the
Company may increase from 22.39 per cent. to up to 32.08 per cent., HACAS's
interest may increase from 2.65 per cent. to up to 4.04 per cent., DM Joseph's
interest may increase from 0.24 per cent. to up to 0.37 per cent., DN Taylor's
interest may increase from 0.26 per cent. to up to 0.38 per cent., JCC Ashby's
interest may increase from 0.13 per cent. to up to 0.28 per cent. and JR
Wollenberg's interest may decrease from 0.33 per cent. to up to 0.31 per cent.,
depending on the take up of the Open Offer by Qualifying Shareholders who have
not already given irrevocable undertakings to subscribe for New Ordinary Shares.
The Concert Party's interest in the voting rights of the Company may therefore
rise from 26.00 per cent. to up to 37.45 per cent. Such an increase in the
Concert Party's aggregate interest in the Company's voting rights would normally
oblige it to make a general offer to all Shareholders to acquire their Ordinary
Shares. However, in this instance, the Panel has agreed to waive this obligation
if the Waiver Resolution is passed by the Independent Shareholders on a poll at
the Extraordinary General Meeting. To be passed, the Waiver Resolution will
require the approval of a simple majority of votes cast on the poll. ACGD,
HACAS, DM Joseph, DN Taylor, JCC Ashby and JR Wollenberg will not be voting on
the Waiver Resolution in respect of their Ordinary Shares.
If the waiver is approved by Independent Shareholders, following the Placing and
Open Offer and, if relevant, exercise of the Irrevocable Undertakings, the
Concert Party will hold more than 30 per cent. but less than 50 per cent. of the
voting rights in the Company. Under Rule 9 of the City Code if the Concert Party
were to acquire any additional shares which would increase its percentage of the
voting rights in the Company, that would trigger an obligation for it to make a
general offer to all Shareholders to acquire their Ordinary Shares.
Information on the Concert Party
ACGD
ACGD is an unlisted plc (company number 2365379) whose principal activity is
investment in commercial and residential property. ACGD is a wholly-owned
trading subsidiary of ACT Limited, a company limited by guarantee and registered
as a charity with the Charity Commission (charity number 1068617).
The Airways Charitable Trust was formed in 1994 and was incorporated as ACT
Limited (company number 3522188) in 1998. The objectives of ACT Limited are the
following:
* providing residential accommodation on terms appropriate to means;
* providing services, amenities and equipment to those who need them;
* adapting or altering residential accommodation to meet special needs;
* giving financial assistance to the poor in respect of costs and expenses
with their residences;
* providing financial assistance to charities, voluntary and other bodies
working to provide or develop treatment or care for beneficiaries;
* providing financial assistance towards the cost of holidays and
recreational breaks for beneficiaries and their carers.
In carrying out these objectives, ACT Limited can give preference to those who
are or have been employed in or otherwise connected to the civil aviation
industry and their relations and dependants.
In 1996 the Airways Charitable Trust received a large donation of residential
and commercial property, enabling it to become self-funding. These property
assets are held and managed in trading subsidiary companies wholly owned by ACT
Limited. These subsidiary companies operate on a commercial basis in order to
maximise returns to ACT Limited by way of gift aid payments. As well as ACGD,
ACT Limited's subsidiaries comprise the following companies:
ACG Services Limited - provides management services to the ACT group
Gatehouse Properties Limited - property management administrators and surveyors
ACG Rented Properties plc - owns and manages residential property for rental
The Airways Housing Trust plc - owns and manages residential and commercial
property for rental
Airways Unit Trust Managers Limited - not trading
Airways Homes IV Assured Tenancies plc - not trading
ACGD is the largest of ACT Limited's subsidiaries, accounting for approximately
47.5 per cent. of the turnover generated by all ACT Limited's subsidiaries,
after consolidation adjustments, in the financial year ended 31 March 2002, and
for 39.5 per cent. of ACT Limited's net assets at 31 March 2002. ACT Limited,
whose accounts are prepared under the requirements of the Charity Commission's
Statement of Recommended Practice, reported in its consolidated statement of
activity for the financial year ended 31 March 2002 total incoming resources of
#2,973,576 and net income for the year of #730,338. ACT Limited reported fund
balances of #46,409,716 as at 31 March 2002.
Financial information on ACGD is contained in Part V of the document and
additional information is contained in Part VII.
ACT Limited is controlled by its trustees and directors, who are predominantly
board members, retired board members, employees and retired employees of British
Airways plc. Additional information on ACT Limited and its trustees and
directors is contained in Part VII of this document.
HACAS
HACAS is an AIM quoted company (company number 3377774) with a market
capitalisation of approximately #30.25 million as at 13 December 2002. HACAS's
primary operating market is the soci housing sector, which comprises housing
associations, local authority and other public sector housing providers together
with the related government departments, regulators, trade bodies, suppliers and
funders. This sector comprises about a quarter of the UK's housing stock. HACAS
provides consultancy and outsourcing services to the social housing sector and
also carries out research for government
departments and regulators.
Financial information on HACAS is contained in Part VI of this document, and
additional information is contained in Part VII.
Derek Maurice Joseph (aged 53)
Derek Joseph is managing director of HACAS. He leads HACAS Chapman Hendy's
financial services team, specialising in financial and legal structures. He is
chairman of an AIM-quoted telecoms group, The Celltalk Group plc, and a
non-executive director of a number of quoted and private companies, particularly
in the property and start-up business sectors. He is an adviser to a number of
bodies, including government and local authorities, on housing and economic
matters. Derek has written a number of books and other publications, including
New Structures for Housing Finance and The Use of Treasury Vehicles for
Financing Social Housing.
Additional information on DM Joseph is contained in Part VII of this document.
Denis Newman Taylor (aged 49)
Denis Taylor is Chief Executive of ACGD. A fellow of the Royal Institute of
Chartered Surveyors, Denis has over twenty years' experience in the development
and management of commercial property and has previously been Head of Property
at British Airways Plc and Vice President Real Estate for Vivendi Universal.
Additional information on DN Taylor is contained in Part VII of this document.
Julian Charles Corbett Ashby (aged 55)
Julian Ashby is chairman of HACAS and chairman of its principal operating
subsidiary HACAS Chapman Hendy, a consultancy practice specialising in the
social housing sector. He has acted as chief executive and chairman of many
housing associations. Julian is the author of a number of publications,
including Partnerships and Practicalities, In Control: the Voluntary Board
Members Manual and No time to lose! - key issues for board members of 'transfer'
organisations. He was formally a visiting fellow at the London School of
Economics.
Additional information on JCC Ashby is contained in Part VII of this document.
John Richard Wollenberg (aged 54)
Richard Wollenberg is the chairman and chief executive of The Cardiff Property
plc, quoted on the Official List. Richard has over 20 years' experience in
property investment and development and is actively involved in corporate
acquisitions and flotations. He is a non-executive director of HACAS Group plc
and The Celltalk Group plc.
Additional information on JR Wollenberg is contained in Part VII of this
document.
As potential controllers of the Company, the Concert Party's intentions
following completion of the Placing and Open Offer and, if relevant, exercise of
the Irrevocable Undertakings are to continue the Company's existing business
activities and to make no major changes to the business, including any
redeployment of its fixed assets, or the employment of its staff. The Concert
Party has given assurances to the Independent Directors that the existing
rights, including any pension rights, of the employees of the Company will be
fully safeguarded.
Related Parties and Board deliberations
The Concert Party's subscription of New Ordinary Shares constitutes a related
party transaction under the AIM Rules. Derek Joseph is a director of ACGD and a
director and 20.4 per cent. shareholder of HACAS. Denis Taylor is chief
executive of ACGD. Both Derek Joseph and Denis Taylor are directors of other
subsidiaries of ACT Limited, ACGD's parent company.
The Independent Directors are of the opinion, having consulted with Smith &
Williamson Corporate Finance, Basepoint's nominated adviser, that the terms of
the Concert Party's subscription are fair and reasonable so far as Shareholders
are concerned.
Derek Joseph and Denis Taylor have taken no part in the Board deliberations
relating to the waiver of the requirement to make a mandatory offer under the
City Code and have undertaken not to vote on the Waiver Resolution at the
Extraordinary General Meeting in respect of their beneficial holdings of 18,625
Ordinary Shares and 20,000 Ordinary Shares respectively.
Action to be taken
Open Offer
Qualifying Shareholders who wish to apply for New Ordinary Shares under the Open
Offer should follow the procedure for application set out in the letter from
Teather & Greenwood contained in Part II. The attention of Qualifying
Shareholders is also drawn to the instructions printed on the Application Form.
Qualifying Shareholders who do not wish to apply for New Ordinary Shares under
the Open Offer need take no further action.
Extraordinary General Meeting
Shareholders will find enclosed with this document a Form of Proxy for use at
the Extraordinary General Meeting. Whether or not Shareholders intend to be
present at the Extraordinary General Meeting, they are requested to complete and
return the Form of Proxy, in accordance with the instructions printed thereon,
as soon as possible and in any event so as to be received by Capita IRG Plc,
P.O. Box No. 25, Beckenham, Kent BR3 4BR not later than 10.00 a.m. on 7 January
2003. Completion and return of the Form of Proxy will not prevent Shareholders
from attending the Extraordinary General Meeting and voting in person should
they wish to do so.
Further Information
Your attention is drawn to the further information set out in Parts II to VII of
this document and the Risk Factors set out in Part III.
Recommendations
The Open Offer Resolution
The Directors consider that the Open Offer Resolution, which gives the Directors
the necessary authority to issue the New Ordinary Shares pursuant to the Placing
and Open Offer and the Irrevocable Undertakings and replaces the authorities to
allot shares in the Company and to allot equity securities for cash other than
on a pre-emptive basis to existing shareholders previously granted at the
general meeting of the Company held on 16 July 2002, to be in the best interests
of the Company and Shareholders as a whole and unanimously recommend that you
vote in favour of the Open Offer Resolution as they intend to do in respect of
their holdings of Ordinary Shares which amount, in aggregate, to 1,294,146
Ordinary Shares, representing 16.89 per cent. of the Existing Ordinary Shares.
The Waiver Resolution
The Independent Directors, who have been so advised by Smith & Williamson
Corporate Finance, consider the waiver of the mandatory offer requirement of
Rule 9 of the City Code for ACGD, HACAS, DM Joseph, DN Taylor, JCC Ashby and JR
Wollenberg to be fair and reasonable to Basepoint and the Shareholders as a
whole. In providing advice to the Independent Directors, Smith & Williamson
Corporate Finance has taken into account the commercial assessments of the
Independent Directors. The Independent Directors unanimously recommend that you
vote in favour of the Waiver Resolution, as they intend to do in respect of
their holdings of Ordinary Shares which amount, in aggregate, to 1,255,521
Ordinary Shares, representing 16.39 per cent. of the Existing Ordinary Shares
and 22.14 per cent. of the Ordinary Shares in respect of which votes are capable
of being cast on the Waiver Resolution.
Yours sincerely
Lord Lifford
Chairman
END
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