TIDMMJH
RNS Number : 7190V
MJ Hudson Group PLC
11 April 2023
MJ Hudson Group plc
(the "Company", "Group" or "MJ Hudson")
Proposed Sale of Data & Analytics and Business Outsourcing
Divisions,
Cancellation of Admission of Ordinary Shares to Trading on
AIM,
Amendments to the Company's articles of association
and
Notice of General Meeting
MJ Hudson Group plc (AIM:MJH), announces that, on 6 April 2023,
it has conditionally agreed to sell its Data & Analytics (which
includes the Company's Investment Advisory business) and Business
Outsourcing Divisions, being substantially all of the Group's
remaining operating divisions, to Apex Consolidation Entity Ltd,
being a company within the Apex Group and an affiliate of Genstar
Capital Partners LLC.
The aggregate cash consideration for the transaction is up to
approximately GBP40 million on a debt free basis (the "Disposal")
payable as set out below.
The Business Outsourcing Division includes multiple regulated
entities which will require certain mandatory and suspensory
regulatory consents for a change of ownership. The Disposal will
therefore be completed in stages to facilitate early completion of
the unregulated Data & Analytics Division. The sale of the Data
& Analytics Division is expected to complete following
Shareholder approval at the General Meeting, whilst completion and
the sale of the Business Outsourcing Division is expected to
complete at various times following receipt or waiver of the
Regulatory Consent(s) relevant to that part of the Business
Outsourcing Division.
Further steps may need to be considered in relation to the
remaining group structure in order to optimise the return to the
Group stakeholders.
Consideration:
The total consideration shall be apportioned as follows:
-- Data & Analytics Division: up to GBP15 million payable on
the completion of the sale of the Data & Analytics
Division,
-- Business Outsourcing Division: a total of up to approximately
GBP25 million payable in tranches on the completion of the
constituent parts of the sale of the Business Outsourcing Business
as follows:
o GBP13 million for the Irish business;
o GBP4 million for the Luxembourg business;
o GBP4 million for the Guernsey business; and
o GBP4 million for the Jersey business
The consideration for the sale of both the Data & Analytics
Division and the Business Outsourcing Division will be subject to
Holdback Amounts as outlined in the appendix to the
announcement.
Application of Proceeds:
As at 31 March 2023, the Group owed approximately GBP33.7
million under its facilities and overdrafts with its Senior Lender
and it is expected that further funding will be required to the
point of completion of the sale of the Business Outsourcing
Division. The majority of the consideration will therefore be
applied to reducing the debt owed to the Senior Lender.
While there are a number of potential outcomes, given the level
of creditors of the business expected at the point of final
completion of the Business Outsourcing Sale, it should be noted
that it is highly unlikely that there will be a substantial, or
any, amount available to Shareholders following payment of all
creditors and costs.
Shareholder consent to the transaction under the AIM Rules:
Upon final completion of the sale of the Business Outsourcing
Division following receipt (or waiver) of all the Regulatory
Consents, the Company will be regarded as an AIM Rule 15 cash
shell, having ceased to own, control or conduct all or
substantially all, of its existing trading business, activities or
assets. The Disposal is therefore conditional on the consent of
Shareholders at the General Meeting and certain other conditions.
The General Meeting is expected to be convened on 3 May 2023.
Cancellation of Admission
In addition, the Company is seeking Shareholders' approval to
cancel the admission of its Ordinary Shares to trading on AIM. In
accordance with Rule 41 of the AIM Rules, the Company has noti ed
the London Stock Exchange of the proposed Cancellation. Assuming
the passing of Resolutions 1 and 2, it is expected that
Cancellation will occur on 12 May 2023.
Amendment to the Articles
The following are the proposed procedural amendments to the
articles of association of the Company, to reduce the time required
to hold EGMs:
-- to remove the requirement for 72 hours' notice to hold Board
meetings pursuant to Article 124 (subject to notice having been
given to the Directors) given this period was felt to be
impractical by the Directors;
-- to reduce the period by which notices of EGMs / AGMs are
deemed to be served pursuant to Article 162. The amendment proposes
that notice will be deemed served on the day following posting of
the relevant circular, as opposed to on the fifth day following
posting, which the Board considered unnecessarily extended the time
it took for the Company to call such meetings. Following the
amendment, such meetings shall be capable of being held in the more
usual period of 14 clear days' notice from the date of notice;
and
-- to remove the defined term "Holder" given this term is not
used in the articles of association and so which is a tidying
amendment.
Other steps to re-organise the Group
In addition, as part of the reorganisation of the Group, the
Company intends to give notice to the SRA of the proposed closure
of its legal business and certain further steps may need to be
considered in relation to the remaining group structure in order to
optimise any return to the Group stakeholders.
General Meeting & Importance of the vote
The General Meeting will be held at Forum 4, Grenville Street,
St. Helier, Jersey JE4 8TQ, Channel Islands at 2 p.m. on 3 May 2023
at which the following Resolutions will be proposed:
-- Resolution 1 (to approve the Disposal)
-- Resolution 2 (to approve the proposed Cancellation)
-- Resolution 3 (to approve certain amendments to the Existing Articles).
A circular incorporating a notice of general meeting is being
provided to Shareholders today with information on the background
to, and reasons for, the Disposal, the proposed Cancellation and
the proposed amendments to the Existing Articles, to explain why
the Directors consider the Disposal, the proposed Cancellation and
the proposed amendments to the Existing Articles to be in the best
interests of the Company and Shareholders.
A copy of the Circular will be posted to Shareholders on 11
April 2023 and will be available on the Company's website at
https://mjhudson.com/investors/ shortly.
Shareholders should note that, in the event that the Resolution
1 is not passed, no part of the Disposal will occur and the Company
will not have sufficient certainty of funds to continue as a going
concern. In such situation, it is the view of the Board that there
is a significant risk that the Company's creditors would take
action to put the whole or parts of the Group into an insolvency
process, as the Board does not believe that there is any
alternative funding available or purchaser for the assets on equal
or better terms.
The Directors recommend that Shareholders vote in favour of all
the Resolutions to be proposed at the General Meeting, as the
Directors intend to do in respect of their own beneficial holdings
of, in aggregate, 6,076,508 Ordinary Shares, representing
approximately 2.99 per cent. of the Company's existing issued
ordinary share capital.
The Company has received irrevocable undertakings to vote, or
procure a vote in favour of Resolution 1 from certain institutional
and other Shareholders in respect of, in aggregate, 60,715,557
Ordinary Shares representing approximately 29.85 per cent. of the
Company's existing issued ordinary share capital;
The Company has also received letters of intent to vote, or
procure a vote, in favour of Resolution 1 from certain
institutional and other Shareholders in respect of, in aggregate,
31,348,356 Ordinary Shares representing approximately 15.41 per
cent. of the Company's existing issued ordinary share capital;
For further information, please contact:
MJ Hudson Group plc
Geoff Miller, Executive Chairman
Cenkos Securities plc (Nomad and Broker)
Giles Balleny
Stephen Keys
Callum Davidson
+44 20 7397 8900
Buchanan (PR Adviser)
Chris Lane
Jack Devoy
George Cleary
+44 20 7466 5000
mjhudson@buchanan.uk.com
About Apex Group Ltd.
Apex Group is a global financial services provider, delivering
the broadest range of solutions in the industry via its
single-source solution model. Apex Group has continually improved
and evolved its breadth of service capabilities and delivers a full
suite of solutions to asset managers, capital markets, family
offices and institutional investors; including digital banking,
custody, depositary, ManCo services, fund administration, corporate
solutions and a pioneering ESG Ratings and Advisory service for
private companies. Apex has over 12,000 employees across more than
80 offices in 38 countries.
Extract from the Circular
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the Disposal and the proposed 11 April 2023
Cancellation pursuant to AIM Rule 41
Publication of this document 11 April 2023
Posting of this document 11 April 2023
Latest time and date for receipt of Forms 2 p.m. on 2 May 2023
of Proxy for the
General Meeting
General Meeting 2 p.m. on 3 May 2023
Completion of the Data & Analytics Sale 11 May 2023
Cancellation of the Ordinary Shares from 12 May 2023
trading on AIM
Completion of the Business Outsourcing Sale Expected late 2023*
Each of the times and dates refer to London (UK) time and are
subject to change by the Company (with the agreement of Cenkos), in
which case details of the new times and dates will be notified to
the London Stock Exchange and the Company will, if appropriate,
make an announcement through a Regulatory Information Service.
Certain of the events in the above timetable are conditional upon,
inter alia, the approval of one or more of Resolutions to be
proposed at the General Meeting. References to times in this
document are to London (UK) time.
*Completion of the Business Outsourcing Sale is expected to
complete at various times following the receipt (or waiver) by the
Company of the relevant Regulatory Consent(s) relevant to that part
of the Business Outsourcing Division.
1. Introduction
The Company today announced that it has conditionally agreed to
sell its Data & Analytics Division and its Business Outsourcing
Division, being substantially all of the Group's remaining
operating divisions, to Apex Consolidation Entity Ltd, being a
company within the Apex Group and an affiliate of Genstar Capital
Partners LLC (the "Buyer") for an aggregate cash consideration of
up to approximately GBP40 million on a debt free basis (the
"Disposal"). Completion of the Disposal is subject to Shareholder
approval. Certain defined terms used in this document are explained
in the section headed 'Definitions'.
The Business Outsourcing Division includes multiple regulated
entities which will require certain mandatory and suspensory
regulatory consents for a change of ownership. The Disposal will
therefore be completed in stages to facilitate early completion on
the unregulated Data & Analytics Division. The sale of the Data
& Analytics Division is expected to complete shortly following
Shareholder approval at the General Meeting ("Data & Analytics
Sale"), whilst completion and the sale of the Business Outsourcing
Division is expected to complete at various times following receipt
or waiver of the Regulatory Consent(s) relevant to that part of the
Business Outsourcing Division ("Business Outsourcing Sale").
The total consideration shall be apportioned between the Data
& Analytics Sale and the Business Outsourcing Sale such that a
total of up to approximately GBP15 million will be allocated to the
Data & Analytics Division (the "Data & Analytics
Consideration") and a total of up to approximately GBP25 million to
the Business Outsourcing Division payable in tranches on the
completion of the constituent parts of the Business Outsourcing
Sale (the "Business Outsourcing Consideration") as follows: GBP13
million for the Irish business; GBP4 million for the Luxembourg
business; GBP4 million for the Guernsey business; and GBP4 million
for the Jersey business.
The majority of the consideration will be applied to reducing
the debt owed to the Senior Lender. While there are a number of
potential outcomes, it should be noted that it is highly unlikely
that there will be a substantial, or any, amount available to
Shareholders following payment of all creditors and costs.
Upon final completion of the Business Outsourcing Sale following
receipt (or waiver) of all the Regulatory Consents, the Company
will be regarded as an AIM Rule 15 cash shell, having ceased to
own, control or conduct all or substantially all, of its existing
trading business, activities or assets. The Disposal is therefore
conditional on the consent of Shareholders at the General Meeting
and certain other conditions.
In addition, as part of the reorganisation of the Group, the
Company intends to give notice to the SRA of the proposed closure
of its legal business and certain further steps may need to be
considered in relation to the remaining group structure in order to
optimise any return to the Group stakeholders.
The Company is seeking Shareholders' approval to cancel the
admission of its Ordinary Shares to trading on AIM. In accordance
with Rule 41 of the AIM Rules, the Company has noti ed the London
Stock Exchange of the proposed Cancellation. Assuming the passing
of Resolutions 1 and 2, it is expected that Cancellation will occur
in 12 May 2023.
Shareholders should note that, in the event that Resolution 1 is
not passed, no part of the Disposal will occur and the Company will
not have sufficient certainty of funds to continue as a going
concern. In such situation, it is the view of the Board that there
is a significant risk that the Company's creditors would take
action to put the whole or part of the Group into an insolvency
process, as the Board does not believe that there is any
alternative funding available or purchaser for the assets on equal
or better terms.
The purpose of this document is to provide you with information
on the background to, and reasons for, the Disposal, the proposed
Cancellation and the proposed amendments to the Existing Articles,
to explain why the Directors consider the Disposal, the proposed
Cancellation and the proposed amendments to the Existing Articles
to be in the best interests of the Company and Shareholders and why
the Directors recommend that Shareholders vote in favour of all the
Resolutions to be proposed at the General Meeting, as the Directors
intend to do in respect of their own beneficial holdings of, in
aggregate, 6,076,508 Ordinary Shares, representing approximately
2.99 per cent. of the Company's existing issued ordinary share
capital.
The Company has received irrevocable undertakings to vote, or
procure a vote in favour of Resolution 1 from certain institutional
and other Shareholders in respect of, in aggregate, 60,715,557
Ordinary Shares representing approximately 29.85 per cent. of the
Company's existing issued ordinary share capital.
The Company has also received letters of intent to vote, or
procure a vote, in favour of Resolution 1 from certain
institutional and other Shareholders in respect of, in aggregate,
31,348,356 Ordinary Shares representing approximately 15.41 per
cent. of the Company's existing issued ordinary share capital.
2. Background to, and reasons for, the Disposal
Introduction
On 17 October 2022, the Company announced that it had been in
discussions with its auditors in relation to the treatment of
revenue recognition on one major contract and certain costs
included in Adjusted EBITDA and that, as a consequence, it was
unlikely to be in a position to meet prior guidance. The Company
later announced on 12 December 2022 that the Board had become aware
of additional issues, including in relation to the reporting of
historical trading of the business in relation to FY 2022, the full
impact of which remains unclear. The Group applied to suspend
trading of the Ordinary Shares on AIM, pending clarification. The
Board confirmed that it had appointed an external accounting and
financial services firm to assist it.
On 16 January 2023, the Board confirmed that it had received
inbound indications of interest for certain divisions of the
business and had engaged restructuring and M&A advisers to look
at a potential sale of one or a number of its business lines. At
this point, the Board was looking at reducing costs, strengthening
the balance sheet and working closely with its key
stakeholders.
On 13 February 2023, the Group announced the resignation of its
external auditors and two days later it announced the resignation
of its founder and CEO Matthew Hudson.
The Group's restructuring and M&A advisers, Alvarez &
Marsal Europe LLP, assisted in undertaking an accelerated M&A
process to seek to protect the value in the business and they
identified and contacted a number of potential purchasers for some
or all of the Company's business units, which resulted in a high
level of initial interest. The requirement for speed ruled out a
number of bidders who had initially expressed interest.
On 10 March 2023, the Group exchanged on the sale of its UK Fund
Management Business for GBP1.0 million in cash plus GBP15,000 each
month for three months following exchange and GBP30,000 each month
thereafter until completion, to be paid on completion. On
completion, the inter-company loans between the Group and the UK
Fund Management Business entities will be reorganised and
extinguished. Completion will take place once regulatory approval
from the Financial Conduct Authority is received.
Disposal of the Data & Analytics and Business Services
Divisions and AIM Rule 15
The Company today announced that it has entered into a binding
conditional sale and purchase agreement for substantially all of
the subsidiaries and assets of the Group to the Buyer for a maximum
aggregate cash consideration of up to approximately GBP40 million
on a debt free basis.
The Data & Analytics Sale is conditional upon the
Reorganisation Condition being effected and upon Shareholder
approval of Resolution 1 at the General Meeting. Completion of the
Data & Analytics Sale is therefore expected to occur five
Business Days following the passing of Resolution 1 at the General
Meeting. Upon Completion of the Data & Analytics Sale, the
Buyer will pay GBP12 million and will retain GBP3 million as part
of the Holdback Amount.
The Business Outsourcing Sale is split into four separate
parcels of corporate entities, being the Guernsey parcel, the
Jersey parcel, the Irish parcel and the Luxembourg parcel. The sale
of each of these parcels within the Business Outsourcing Sale is
conditional upon the same Shareholder approval condition as the
Data & Analytics Sale. In addition, the sale of each of the
parcels is also subject to obtaining the Regulatory Consents
relevant to that parcel. Upon Completion of the sale of a parcel,
the Buyer will pay the consideration apportioned to that parcel
(being GBP13 million for the Irish parcel; GBP4 million for the
Luxembourg parcel; GBP4 million for the Guernsey parcel; and GBP4
million for the Jersey parcel) less a deduction equal to 18% of the
consideration payable for the parcels within the Business
Outsourcing Sale, which will be applied towards the Holdback
Amount.
While the Board is confident that all of the appropriate
Regulatory Consents will be granted, there can be no guarantee that
this is the case.
The assets being sold as part of the Disposal are the
following:
Data & Analytics: ESG consulting, Custodian Bank
Benchmarking, IR & Marketing, Investment Advisory and
Quantitative Solutions. The operating profit attributable to the
Data & Analytics assets being sold for the audited year ended
30 June 2021 was approximately GBP1.5m and operating profit for the
unaudited year ended 30 June 2022 was approximately GBP2.6m. The
value of the Data & Analytics Business on the Group's balance
sheet, as at June 2021, was approximately GBP(0.1) million.
Business Outsourcing: the Irish and Luxembourg ManCo businesses
and the Channel Islands based Fund Administration and Fiduciary
businesses. The operating profit attributable to the Business
Outsourcing assets being sold for the audited year ended 30 June
2021 was approximately GBP1.5m and operating profit for the
unaudited year ended 30 June 2022 was approximately GBP3.1m. The
value of the Business Outsourcing Business on the Group's balance
sheet, as at June 2021, was approximately GBP3.7 million.
Use of proceeds of the sale
The consideration payable pursuant to the Disposal is up to
approximately GBP40 million on a debt free basis. Of this the Data
& Analytics Consideration of up to approximately GBP15 million
is expected to be payable in early May 2023, with the Business
Outsourcing Consideration of up to approximately GBP25 million
payable in tranches following the receipt of the relevant
Regulatory Consent(s) referred to above. The consideration payable
is subject to deductions from the Holdback Amount. One of the
Sellers will enter into a transitional services agreement which
will deal with the provision of certain services on a transitional
basis to the various businesses following their sale. The
employment of certain employees (including some of the Directors)
of the Sellers will transfer to the Buyer.
As at 31 March 2023, the Group owed approximately GBP33.7
million under its facilities and overdrafts and it is expected that
further funding will be required to the point of completion of the
sale of the Business Outsourcing Division. The majority of the
Consideration will therefore be applied to reducing Remaining
Group's debt . While there are a number of potential outcomes,
given the level of creditors of the business expected at the point
of final completion of the Business Outsourcing Sale, it should be
noted that it is unlikely that there will be a substantial amount
available to Shareholders following payment of all creditors and
costs, if any.
In accordance with AIM Rule 15, the Disposal constitutes a
fundamental change of business of the Company. The Disposal is
therefore conditional on the approval of Shareholders at the
General Meeting.
On completion of the Disposal, the Company will cease to own,
control or conduct all or substantially all of its existing trading
business, activities or assets. The Company will therefore become
an AIM Rule 15 cash shell. As there is no intention by the
Directors to make an acquisition or acquisitions which constitute a
reverse takeover under AIM Rule 14 (including seeking re-admission
as an investing company (as defined under the AIM Rules)) on or
before the date falling six months from completion of the Business
Outsourcing Sale or be re-admitted to trading on AIM as an
investing company under the AIM Rules (which requires the raising
of at least GBP6 million), the Directors are seeking Shareholder
approval for Cancellation, as detailed below.
3. Background to, and reasons for, the proposed Cancellation
In light of the conditional agreement entered into today to
effect the Disposal, the Board expects that following completion of
the Data & Analytics Sale and, in due course subject to
Regulatory Approval, the Business Outsourcing Sale, the Company
will become an AIM Rule 15 cash shell with no trading business.
Furthermore, as noted above, it is expected that obtaining all the
Regulatory Consents will take a number of months. During this
period, the Company is not likely to be able to make suitable use
of being admitted to AIM as it is expected that the Ordinary Shares
will remain suspended due to it being unlikely to be in a position
to publish its FY 2022 audited accounts. Under the AIM Rules, if
the Company remains suspended for six months following its
suspension on 12 December 2022, the admission of its shares to AIM
will be cancelled in any event.
The Directors believe It is therefore in the best interests of
the Company and its Shareholders to seek Shareholders' approval to
cancel the admission of the Ordinary Shares to trading on AIM. In
accordance with Rule 41 of the AIM Rules, the Company has noti ed
the London Stock Exchange of the proposed Cancellation. Assuming
the passing of Resolutions 1 and 2 and completion of the Data &
Analytics Sale, it is expected that Cancellation will occur on or
around 12 May 2023.
Pursuant to Rule 41 of the AIM Rules, Resolution 2 (relating to
the Cancellation) requires the approval of not less than 75 per
cent. of the votes cast by Shareholders (whether present in person
or by proxy) at the General Meeting. Resolution 2 is conditional
upon: (i) Resolution 1 being approved; and (ii) the completion of
the Data & Analytics Sale.
The Directors have conducted a review of the bene ts and
disadvantages to the Company and its Shareholders in retaining its
admission to trading on AIM. The Directors believe that the
Cancellation is in the best interests of the Company and its
Shareholders as a whole. Following the Disposal, the Company will
have no trading business and limited cash resources. Maintaining
the Company's admission to trading on AIM requires signi cant
management time, legal and regulatory obligations, and comes with
material nancial costs (such as professional fees, London Stock
Exchange fees and other costs associated with being an AIM-traded
company) that the Directors believe are disproportionate to the
bene ts to the Company.
4. Process for, and principal effects of, the Cancellation
Under the AIM Rules, the Company is required to give at least 20
clear Business Days' notice of the Cancellation. Pursuant to Rule
41 of the AIM Rules, the Cancellation is also conditional upon the
approval of not less than 75 per cent. of the votes cast by
Shareholders (whether present in person or by proxy) at the General
Meeting. The Notice of General Meeting contains Resolution 2 which
proposes that admission to trading of the Ordinary Shares on AIM be
cancelled. Additionally, Cancellation will not take effect until at
least five clear Business Days have passed following the passing of
Resolution 2 (and only if the Data & Analytics Sale
completes).
Assuming the passing of Resolutions 1 and 2 and completion of
the Data & Analytics Sale, it is expected that Cancellation
will occur on or around 12 May 2023. Shareholders should note that
Cancellation will not take place if Resolutions 1 and 2 are not
both duly passed at the General Meeting. Resolution 2 is
conditional upon: (i) Resolution 1 being duly approved; and (ii)
the completion of the Data & Analytics Sale.
Following Cancellation and up to the eventual liquidation the
Company may seek to implement a matched bargain facility so that
there will be a market for Shareholders to effect transactions in
the Ordinary Shares following Cancellation. However, no matched
bargain facility is currently in place and there can be no
certainty that a matched bargain facility will be put in place or
that, if it is, it will remain for any extended period following
Cancellation.
The principal effects of the Cancellation will be that:
-- there will be no public market on any recognised investment
exchange or multilateral trading facility for the Ordinary Shares
and, consequently, there can be no guarantee that a Shareholder
will be able to purchase or sell any Ordinary Shares;
-- while the Ordinary Shares will remain freely transferable, it
is likely that the liquidity and marketability of the Ordinary
Shares will, in the future, be more constrained than at present and
the secondary market value of such Ordinary Shares may be adversely
affected as a consequence;
-- in the absence of a formal market and quote, it may be more
difficult for Shareholders to determine the market value of their
investment in the Company at any given time;
-- the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM will no
longer apply;
-- the levels of disclosure and corporate governance within the
Group may not be as stringent as those for a Company quoted on AIM;
however the Company will continue to be subject to the City Code
for a period of at least ten years from the date of
Cancellation;
-- Shareholders will no longer be afforded the protections given
by the AIM Rules, such as the requirement to be notified of certain
events and the requirement that the Company seek Shareholder
approval for certain corporate actions, where applicable, including
substantial transactions, financing transactions, reverse
takeovers, related party transactions and fundamental changes in
the Company's business, including certain acquisitions and
disposals;
-- in order to increase the cost saving by becoming a private
company, following the Cancellation, the Company will no longer be
obligated to produce and publish half-yearly reports and related
financial statements;
-- the Company will cease to have a nominated adviser and broker;
-- whilst the Company's CREST facility will remain in place
following the Cancellation, the Company's CREST facility may be
cancelled in the future and, in that event, although the Ordinary
Shares will remain transferable, they will cease to be transferable
through CREST. In this instance, Shareholders who hold Ordinary
Shares in CREST will receive share certificates; and
-- the Cancellation may have taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax
position should consult their own professional independent tax
adviser.
Shareholders should be aware that if the Cancellation takes
effect, they will at that time cease to hold shares in a quoted
company and will become Shareholders in an unquoted company which
will be likely significantly to reduce the marketability and
liquidity of the Ordinary Shares and the principal effects referred
to above will automatically apply to the Company from the date of
the Cancellation.
The above considerations are not exhaustive, and Shareholders
should seek their own independent advice when assessing the likely
impact of the Cancellation on them.
5. General Meeting
Set out at the end of this document is the notice of the General
Meeting to be held at Forum 4, Grenville Street, St. Helier, Jersey
JE4 8TQ, Channel Islands at 2 p.m. on 3 May 2023 at which the
following Resolutions will be proposed:
-- Resolution 1 (to approve the Disposal)
-- Resolution 2 (to approve the proposed Cancellation)
-- Resolution 3 (to approve certain amendments to the Existing Articles)
Resolution 1 is being proposed as an ordinary resolution and
will require approval by more than 50 per cent. of those votes cast
(by persons present in person or by proxy) at the General Meeting.
Resolution 2 is being proposed as a 'shareholder consent'
resolution and, in accordance with the requirements of Rule 41 of
the AIM Rules for Companies and article 52.2 of the Company's
articles of association, will require approval by at least 75 per
cent. of those votes cast (by persons present in person or by
proxy) at the General Meeting. Resolution 3 is being proposed as a
special resolution and will require approval by at least two thirds
of those votes cast (by persons present in person or by proxy) at
the General Meeting.
Completion of the Disposal (and any part of it) is conditional,
inter alia, on Shareholders passing Resolution 1. If Shareholders
do not pass Resolution 1, completion of the Disposal (or any part
of it) will not proceed.
Completion of the Cancellation is conditional, inter alia, on
Shareholders passing Resolution 1 and Resolution 2. If Shareholders
do not pass both Resolution 1 and Resolution 2, the Cancellation
will not proceed.
Amending the Existing Articles is conditional only on passing
Resolution 3 and, if that Resolution is passed, the proposed
amendments will become effective immediately. A summary of the
proposed principal changes to the Existing Articles is set out in
Part III of this document and a document showing these changes (and
all other proposed changes) and a clean copy of the Amended
Articles will be available at:
www.mjhudson.com/investors/shareholder-information/ until the
conclusion of the General Meeting.
6. Action to be taken
The Resolutions are set out in the Notice of General Meeting at
the end of this document.
Shareholders can submit their vote electronically using the link
www.signalshares.com. Shareholders can use this service to vote or
appoint a proxy electronically by logging into their Signal shares
account, or register if they have not previously done so, by no
later than 2.00 p.m. on 2 May 2023 (or, in the case of an
adjournment of the General Meeting, not less than 24 hours before
the time fixed for the holding of the adjourned General Meeting (at
the discretion of the Directors, excluding any part of a day that
is not a Business Day)).
Shareholders who have elected to vote by post will have received
a hard copy Form of Proxy for the General Meeting with this
document.
If you hold your Ordinary Shares in uncertificated form (that
is, in CREST) you may vote using the CREST proxy voting service in
accordance with the procedures set out in the CREST manual (please
also refer to the accompanying notes to the Notice of the General
Meeting set out at the end of this document). Proxies submitted via
CREST must be received by the Company's agent (ID: RA10) by no
later than 2 p.m. on 2 May 2023 (or, in the case of an adjournment
of the General Meeting, not less than 24 hours before the time
fixed for the holding of the adjourned General Meeting (at the
discretion of the Directors, excluding any part of a day that is
not a Business Day)).
Appointing a proxy in accordance with the instructions set out
above will enable your vote to be counted at the General Meeting in
the event of your absence. Completing a Form of Proxy, voting
electronically or using the CREST proxy voting service will not
prevent you from attending, speaking and voting at the General
Meeting, or any adjournment of it, in person should a Shareholder
wish to do so.
If Shareholders need help with voting, they should contact the
Company's Registrar, Link Group, on tel: 0371 664 0391. Calls are
charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 9.00 a.m. to 5.30 p.m.,
Monday to Friday (excluding public holidays in England and Wales),
or by email at shareholderenquiries@linkgroup.co.uk.
7. Recommendation
The Board believes that the Resolutions, Disposal, Cancellation
and amendments to the Existing Articles are in the best interests
of the Company and the Shareholders as a whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolutions to be proposed at the General
Meeting, as all of the Directors holding Ordinary Shares intend to
do in respect of their own beneficial holdings of, in aggregate,
6,076,508 Ordinary Shares representing approximately 2.99 per cent.
of the Company's existing issued ordinary share capital.
The Company has received irrevocable undertakings and letters of
intent to vote, or procure a vote, in favour of Resolution 1 in
respect of, in aggregate, 92,063,913 Ordinary Shares representing
approximately 45.27 per cent. of the Company's existing issued
ordinary share capital.
PART II
SUMMARY OF KEY TERMS AND CONDITIONS OF THE SPA
The SPA is made between the Sellers and the Buyer and relates to
the Data & Analytics Sale and the Business Outsourcing
Sale.
The Data & Analytics Sale is conditional upon the
Reorganisation Condition being effected and upon Shareholder
approval of Resolution 1 at the General Meeting. Completion of the
Data & Analytics Sale is therefore expected to occur five
Business Days following the passing of Resolution 1 at the General
Meeting. Upon Completion of the Data & Analytics Sale, the
Buyer will pay GBP12 million and will retain GBP3 million as part
of the Holdback Amount (approximately).
The Business Outsourcing Sale is split into four separate
parcels of corporate entities, being the Guernsey parcel, the
Jersey parcel, the Irish parcel and the Luxembourg parcel. The sale
of each of these parcels within the Business Outsourcing Sale is
conditional upon Shareholder approval of Resolution 1 at the
General Meeting. In addition, the sale of each of the parcels is
also subject to obtaining the Regulatory Consents relevant to that
parcel and the relevant regulator not imposing adverse conditions
as such Regulatory Consents. Upon Completion of the sale of a
parcel, the Buyer will pay the consideration apportioned to that
parcel (being GBP13 million for the Irish parcel; GBP4 million for
the Luxembourg parcel; GBP4 million for the Guernsey parcel; and
GBP4 million for the Jersey parcel) less a deduction equal to 18%
of the consideration payable which will be applied towards the
Holdback Amount (approximate numbers).
If the relevant Regulatory Consents for the sale of a parcel are
not received by 31 December 2023, the sale of that parcel will
lapse. The Buyer has a right to terminate the SPA in so far as it
relates to any parcel if any of the companies contained within that
parcel is the subject of an insolvency event during the period from
the date of the SPA until completion of the sale of that parcel
(the "Interim Period").
During the Interim Period the Sellers are obliged to use funding
available to them to continue to operate and provide services to
the companies which are the subject of the SPA. There are the usual
positive and negative obligations placed upon the Sellers for the
duration of the Interim Period in relation to the target
companies.
The Sellers are providing fundamental, commercial and tax
warranties to the Buyer, together with specific indemnities in
relation to certain known risk items and in relation to the
provision of services under the transitional services agreement.
The Sellers' liability under the SPA is limited to the Holdback
Amount and is subject to other usual Sellers' liability
protections.
The Holdback Amount is to be available to the Buyer to meet
claims under the warranties, tax covenant and indemnities. The
Holdback Amount (less the sum of any agreed or not yet determined
claims) will be payable to the Sellers on 30 September 2024 and any
sums relating to claims not determined at that point will continue
to be held back until such claims can be determined.
PART III
SUMMARY OF THE PROPOSED PRINCIPAL CHANGES TO THE EXISTING
ARTICLES
The following are the proposed procedural amendments to the
articles of association of the Company, to reduce the time required
to hold EGMs:
-- to remove the requirement for 72 hours' notice to hold Board
meetings pursuant to Article 124 (subject to notice having been
given to the Directors) given this period was felt to be
impractical by the Directors;
-- to reduce the period by which notices of EGMs / AGMs are
deemed to be served pursuant to Article 162. The amendment proposes
that notice will be deemed served on the day following posting of
the relevant circular, as opposed to on the fifth day following
posting, which the Board considered unnecessarily extended the time
it took for the Company to call such meetings. Following the
amendment, such meetings shall be capable of being held in the more
usual period of 14 clear days' notice from the date of notice;
and
-- to remove the defined term "Holder" given this term is not
used in the articles of association and so which is a tidying
amendment.
A document showing these changes (and all other proposed
changes) and a clean copy of the Amended Articles is available at:
www.mjhudson.com/investors/shareholder-information/ until the
conclusion of the General Meeting.
DEFINITIONS
The following definitions apply throughout this document unless
the context requires otherwise:
"Adjusted EBITDA" the profits/losses of the relevant Group
segment before interest, tax, depreciate
and amortisation and also before share
based payments expenses, unallocated group
expenses and discontinued business losses
"AIM" the market of that name, operated by the
London Stock Exchange
"AIM Rules" together, the AIM Rules for Companies
and/or the AIM Rules for Nominated Advisers
(as the context requires)
"AIM Rules for Companies" the AIM Rules for Companies published
by the London Stock Exchange, as amended
from time to time
"AIM Rules for Nominated the AIM Rules for Nominated Advisers published
Advisers" by the London Stock Exchange, as amended
from time to time
"Amended Articles" the articles of association of the Company
immediately following Resolution 3 being
duly passed
"Board" or "Directors" the directors of the Company from time
to time
"Business Day" any day on which banks are generally open
in England and Wales for the transaction
of business, other than a Saturday, Sunday
or public holidays in England and Wales
"Business Outsourcing the Business Outsourcing division comprised
Division" of various subsidiary undertakings of
the Company, and whose businesses are
the Irish and Luxembourg ManCo businesses
and the Channel Islands based Fund Administration
and Fiduciary businesses
"Business Outsourcing the sale of the Business Outsourcing Division
Sale" by the relevant Seller(s) to the Buyer
"Buyer" Apex Consolidation Entity Limited, being
part of the Apex Group and an affiliate
of Genstar Capital Partners LLC
"Cancellation" the proposed cancellation of the admission
to trading on AIM of the Ordinary Shares,
subject to, amongst other things, Resolutions
1 and 2 being duly passed, and in accordance
with Rule 41 of the AIM Rules
"Cenkos" Cenkos Securities plc, the Company's nominated
adviser and broker, incorporated in England
& Wales with company registration number
05210733
"Company" MJ Hudson Group Plc, a company incorporated
in Jersey with company number 129535
"Completion" completion of the sale of: (i) the Business
Outsourcing Division; (ii) the Data &
Analytics Division; and/or (iii) both
of the foregoing (as the context requires)
"Consideration" the maximum aggregate cash consideration
to be paid in accordance with the terms
of the Disposal comprising up to approximately
GBP40 million
"CREST Manual" the rules governing the operation of CREST
as published by Euroclear
"CREST Regulations" the Uncertificated Securities Regulations
2001 (SI 2001/3755) and the Companies
Uncertificated Securities (Jersey) Order
1999 as amended from time to time, and
any applicable rules made under those
regulations
"Data & Analytics Consideration" a total of approximately GBP15 million
payable in respect of the Data & Analytics
Sale
"Data & Analytics Division" the data & analytics division comprised
of various subsidiary undertakings of
the Company, and whose businesses are
ESG consulting, Custodian Bank Benchmarking,
IR & Marketing, Investment Advisory and
Quantitative Solutions
"Data & Analytics Sale" the sale of the Data & Analytics Division
by the relevant Seller(s) to the Buyer
"Disposal" the proposed disposal of the Data & Analytics
Division and Business Outsourcing Division
"Euroclear" Euroclear UK & International Limited,
the operator of CREST
"Existing Articles" the articles of association as at the
date of this document
"Financial Conduct Authority" the UK Financial Conduct Authority
or "FCA"
"Form of Proxy" the form of proxy relating to the General
Meeting being sent to Shareholders (where
applicable) with this document
"FSMA" the UK Financial Services and Markets
Act 2000 (as amended)
"General Meeting" or the General Meeting of the Company to
"GM" be held at Forum 4, Grenville Street,
St. Helier, Jersey JE4 8TQ, Channel Islands
at 2.00 p.m. on 3 May 2023, notice of
which is set out at the end of this document
"Group" the Company and its subsidiary undertakings
"Holdback Amount" an amount of up to GBP7.5 million to be
withheld by the Buyer from the Consideration
and to be released to the Sellers on 30
September 2024, subject to deductions
for Buyer claims
"Jersey Companies Law" the Companies (Jersey) Law 1991 (as amended)
"London Stock Exchange" London Stock Exchange plc
"MAR" Regulation (EU) 596/2014 as it forms part
of UK domestic law by virtue of the European
Union (Withdrawal) Act 2018 (as amended)
"Notice of General Meeting" the notice convening the General Meeting
set out at the end of this document
"Ordinary Shares" ordinary shares of no par value in the
capital of the Company
"Registrar" Link Market Services (Jersey) Limited
"Regulatory Consents" the consents required from each of the
Central Bank of Ireland, the Commission
de Surveillance du Secteur Financier of
Luxembourg, the Jersey Financial Services
Commission, the Guernsey Financial Services
Commission and the Guernsey Competition
Regulatory Authority in respect of the
relevant parcel of the Business Outsourcing
Sale
" Remaining Group" the Company and its subsidiary undertakings
immediately after completion of the Disposal
"Reorganisation Condition" the removal of certain subsidiary entities
from the perimeter of the Disposal and
the reorganisation and write off or settlement
of certain intercompany debts owing by
the entities within the Disposal perimeter
to the Remaining Group as part of a series
of transactions to be agreed between the
Sellers and the Buyer
"Resolutions" the resolutions proposed to be passed
by Shareholders at the General Meeting,
as set out in the Notice of General Meeting
at the end of this document , and a reference
to a "Resolution" shall be construed accordingly
"Sellers" MJH Group Holdings Limited and certain
other subsidiary undertakings of the Company
"Senior Lender" Santander UK plc
"Share Purchase Agreement" the conditional agreement dated 6 April
or "SPA" 2023 between (i) the Sellers; and (ii)
the Buyer relating to the Disposal, details
of which are set out in this document
"Shareholders" holders of the Ordinary Shares
"UK" or "United Kingdom" the United Kingdom of Great Britain and
Northern Ireland
"GBP" or "Sterling" pounds sterling, the lawful currency of
the United Kingdom
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END
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