TIDMMRO
RNS Number : 6192C
Melrose Industries PLC
22 June 2021
22 June 2021
MELROSE INDUSTRIES PLC
Completion of Nortek Air Management disposal and Proposed Return
of Capital of approximately GBP730 million (15 pence per Existing
Ordinary Share)
Melrose Industries PLC ("Melrose", the "Group" or the "Company")
is pleased to announce the completion of the GBP2.62 billion
($3.625 billion) disposal of its Nortek Air Management Division
("Air Management") to Madison Industries LLC (the "Disposal") and
confirm the proposed return of approximately GBP730 million in cash
to Shareholders, equivalent to 15 pence per Existing Ordinary Share
(the "Proposed Return of Capital"). A circular seeking the approval
of Shareholders in respect of the Proposed Return of Capital will
be posted later today (the "Circular").
As previously announced, in addition to funding the Proposed
Return of Capital, the net Disposal proceeds will be used to
contribute approximately GBP100 million to the GKN UK defined
benefit pension schemes, so that the funding deficit will be less
than GBP200 million, as well as to reduce Group net debt, so that
the leverage in the Group adjusting for the Proposed Return of
Capital will be below 2x EBITDA as at 30 June 2021.
Acquired as part of the Nortek transaction in 2016, Air
Management represents the latest success story in a strong track
record for the Melrose strategy. The Disposal proceeds, plus more
than GBP700 million of cash generated by the Nortek businesses
under our ownership and the retention of the Ergotron and Nortek
Control businesses in the Group, means we are well placed to
achieve the targeted doubling of Shareholders' investment on the
Nortek acquisition.
As with previous disposals and in tune with the core Melrose
strategy of value return for Shareholders, the Board considers it
to be in the best interests of Shareholders to effect the Proposed
Return of Capital by way of (i) a court approved Reduction of
Capital, followed by (ii) a return of capital through the issue of
a new class of B2 Shares which the Company intends to redeem for
cash in order to return 15 pence per Existing Ordinary Share to
Shareholders; followed by (iii) a consolidation of the Company's
ordinary share capital in order to minimise any impact on the
market price of the Company's Shares whilst ensuring Shareholders
retain the same pro rata interest in the Company after completion
of the Proposed Return of Capital (the "Share Consolidation").
Further details are provided below and full details will be
contained in the Circular.
Trading Update
Ahead of Melrose's half year end on 30 June 2021, the Board is
pleased to confirm that the Group continues to trade in line with
expectations as outlined in its AGM Trading Statement published on
6 May 2021.
Both the Automotive and Powder Metallurgy Divisions have seen
recovery in the automotive sector, albeit currently tempered by the
impact of the global semi-conductor shortage. While it remains too
early to state with certainty, there are also some encouraging
signs for the Aerospace Division that the start of a recovery for
that sector is in sight.
Pleasingly, all these Divisions have been significantly cash
generative during Melrose ownership. Indeed, despite the effects of
COVID-19, since acquisition the GKN businesses have generated over
GBP0.5 billion of total free cashflow after all restructuring
costs. As Shareholders would expect in these unprecedented
circumstances, the Board is currently taking a conservative stance
in the Proposed Return of Capital and the payout is in line with
expectations. However, on the assumption these encouraging sector
recoveries continue, the Board expects to be able to make another
significant return of capital to Shareholders next year.
The Company also notes the disposal of Brush, a leading
independent provider of turbogenerators, transformers and
switchgear and associated services, last week for a net cash
consideration of GBP100 million. Brush is the final business to be
sold from the FKI acquisition in 2008, which has been a highly
successful investment for our Shareholders, providing a 2.6x return
on Shareholders' initial equity, equivalent to an IRR of 29%. We
thank the Brush management team for their hard work and wish the
business well in its next phase.
Simon Peckham, Chief Executive of Melrose, commented: "The Board
is delighted to have completed the sale of Air Management to
Madison Industries, who are committed to continuing the development
of this business. They will be a great owner and home for these
assets and we wish them well.
We have taken a conservative view for the level of the current
return of capital, but if markets continue to recover, we expect to
announce a further significant return next year. For now, Melrose
will proceed to return 15 pence per share to Shareholders, in line
with expectations. We believe Melrose is well positioned for the
next stage of its journey."
Further details on the Proposed Return of Capital and Share
Consolidation
The Proposed Return of Capital and Share Consolidation will
require approval from Shareholders at a general meeting, together
with a court hearing to confirm the requisite Reduction of
Capital.
Subject to those approvals, Shareholders will receive one B2
Share, with a nominal value of 15 pence, for every ordinary share
held on the record date for entitlement to B2 Shares, as set out in
the expected timetable below. The B2 Shares will not be admitted to
listing or dealing on any exchange. No share certificates will be
issued with respect to such B2 Shares and no CREST accounts will be
credited with such B2 Shares.
It is expected that Shareholders who are entitled to the B2
Shares will have such B2 Shares cancelled on redemption on 31
August 2021. Cheques representing the nominal value of the B2
Shares (15 pence per share) will be despatched or CREST accounts
credited with the proceeds, as appropriate, in respect of such B2
Shares on 14 September 2021.
The ordinary share capital will then be consolidated on the
basis of 9 New Ordinary Shares of 160/21 pence each (the "New
Ordinary Shares") for every 10 Existing Ordinary Shares held at the
Record Time for entitlement to the B2 Shares and Share
Consolidation, being 6.00 p.m. on 27 August 2021. The Share
Consolidation will reduce the number of Ordinary Shares in Melrose
which Shareholders own, but not the proportion (subject to
allowance for fractional entitlements). The aim of this is to
ensure, so far as possible, the market price of an ordinary share
following the Share Consolidation remains approximately the same
before and after the Proposed Return of Capital and to maintain
comparability of historical and future per share data.
The ratio used for the Share Consolidation has been set by
reference to the closing middle market price of 156.35 pence on 18
June 2021 (being the latest practicable date prior to completion).
Fractional entitlements arising from the Share Consolidation shall
be aggregated and sold in the market on behalf of the relevant
Shareholders. The aggregate proceeds of sale of such fractional
entitlements, net of commission, shall be donated by Melrose to
charities chosen by the Board.
Following the Share Consolidation, application will be made for
the New Ordinary Shares to be admitted to the Official List and to
trading on the main market for listed securities of the London
Stock Exchange, with dealings expected to commence on 31 August
2021 ("Admission"). The New Ordinary Shares will be equivalent in
all material respects to Existing Ordinary Shares, including their
dividend, voting and other rights. The Company will apply for the
New Ordinary Shares to be admitted to CREST with effect from
Admission so that general market transactions in the New Ordinary
Shares may be settled within the CREST system. If Shareholders
currently hold Existing Ordinary Shares in uncertificated form, the
Existing Ordinary Shares under ISIN GB00BZ1G4322 will be disabled
by 8.00 a.m. on 31 August 2021 and on, or soon after, 8.00 a.m. on
31 August 2021 their CREST account will be credited with New
Ordinary Shares under ISIN GB00BNR5MZ78.
Unless otherwise defined in this announcement, defined terms
used have the meaning given to them in the associated circular that
will be posted to Shareholders shortly.
Expected timetable of principal events: (1 2)
Time and Date
Publication and posting of this Circular,
the Notice of General Meeting and the Form of Proxy ..............................................
22 June 2021
Latest time and date for receipt of Forms of Proxy,
CREST Proxy Instructions and registration of online votes
from Shareholders in respect of the General Meeting ...........................
10:00 a.m. on 7 July 2021
General Meeting* ...................................................................................
10:00 a.m. on 9 July 2021
Capital Reduction Record Time**.........................................................
6:00 p.m. on 6 August 2021
Court Hearing to confirm Capital Reduction............................................................
10 August 2021
Registration of Court Order and effective date of Capital Reduction***..................
24 August 2021
ALL SUBSEQUENT DATES AND TIMES DEP UPON THE CAPITAL REDUCTION
BECOMING EFFECTIVE
Filing of interim accounts with Companies House..................................................
25 August 2021
Existing Ordinary Share register closed and Existing Ordinary
Shares
disabled in CREST.............................................................................
4:30 p.m. on 27 August 2021
Record Time for entitlement to B2 Shares and Share Consolidation.
6:00 p.m. on 27 August 2021
Cancellation of listing of Existing Ordinary Shares.............................
8:00 a.m. on 31 August 2021
New Ordinary Shares admitted to the Official List and trading
on the London Stock Exchange, ex entitlement to B2 Shares...........
8:00 a.m. on 31 August 2021
B2 Shares issued equal to number of Existing Ordinary Shares
held at the Record Time.....................................................................
8:00 a.m. on 31 August 2021
CREST accounts credited with New Ordinary Shares.......................
8:00 a.m. on 31 August 2021
B2 Shares redeemed and cancelled..................................................
8:00 a.m. on 31 August 2021
Despatch of share certificates in respect of New Ordinary Shares..................
14 September 2021
Despatch of cheques and CREST accounts credited in respect
of proceeds from sale of fractional entitlements arising as a
result of the Share Consolidation.....................................................................
14 September 2021
Despatch of cheques and CREST accounts credited in respect
of proceeds from the redemption of the B2 Shares.........................................
14 September 2021
Notes:
(1) All references in this announcement to times are to London
time unless otherwise stated.
(2) The timetable may be subject to change. If any of the above
times and/or dates should change, the new times and/or dates will
be notified to the Financial Conduct Authority and announced to
Shareholders through a Regulatory Information Service.
* A 14-day notice period for the General Meeting is considered
by the Company to be appropriate given the strong Shareholder
support (99.89%) received at the General Meeting held on 6 May 2021
for the disposal of Air Management. Further, a Court approved
Capital Reduction is required prior to making the Return of Capital
to Shareholders, and so the notice period of the General Meeting
takes into account the additional time required in the timetable
for the Court Hearing, together with the Court's summer recess.
** This date is subject to changes that might be imposed by the
Court.
*** This date and all subsequent dates will depend on, amongst
other things, the date on which the Court confirms the Capital
Reduction and the period of time required to obtain registration of
the Court Order by the Registrar of Companies. Based on current
guidance from Companies House, Melrose has assumed filing of the
Court Order will take 14 calendar days from the date of the Court
Order. If in fact Companies House re-introduces a same-day service
or otherwise expedites or delays the filing, the Company may change
the timetable and will announce such change through a Regulatory
Information Service.
Enquiries:
Investor Relations: +44 (0) 7974 974690
ir@melroseplc.net
Montfort Communications - Financial +44 (0) 20 3514
PR: 0897
Nick Miles +44 (0) 7739 701634
+44 (0) 7921 881
Charlotte McMullen 800
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END
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