Polar Capital Holdings PLC Crystallisation of Business Unit & Issue of Shares (0949U)
November 20 2019 - 7:30AM
UK Regulatory
TIDMPOLR
RNS Number : 0949U
Polar Capital Holdings PLC
20 November 2019
Polar Capital Holdings plc
20 November 2019
Partial Crystallisation of Business Unit and issue of shares
Polar Capital Holdings plc ("Polar Capital" or the "Company")
announces the partial crystallisation of a set of Preference Shares
held by Andrew Holliman and Richard Wilson, co-heads of the Polar
Capital North America Team and managers of the Polar Capital North
American Fund. This partial crystallisation is expected to be
immediately earnings enhancing for shareholders. Based on the
results for the financial year ended 31 March 2019, the impact of
the crystallisation would have been an earnings enhancement of
around 1p per share(1) .
Background
As set out at the time of the Company's admission to AIM, Polar
Capital has structured its fund management operations in such a way
that the fund management teams are placed in separate business
units. Each business unit is a separate profit centre and the fund
managers responsible receive each year a payment which comprises a
share of their unit's core operating profit (operating profit
before performance fees and related distributions) and performance
fees.
In addition to the remuneration structure described above, each
fund management team is offered the prospect of an interest in the
capital of the Company through the purchase of an individual class
of preference shares in Polar Capital Partners Limited, a wholly
owned subsidiary of the Company. These preference shares have been
structured in such a way as to become convertible upon the
occurrence of certain events, known as crystallisation events, into
cash or, at the option of the Company, ordinary shares at a ratio
that is intended to be earnings enhancing for the Group. At the
election of the holders of the preference shares, they may
crystallise all or part of their preference shares, or retain the
balance, if any, for a further crystallising event at a subsequent
date.
From the effective date of crystallisation, the fund managers
concerned cease to be eligible to receive a proportion of their
share of the business unit's core operating profit which has been
crystallised and simultaneously going forward will receive a
proportionally reduced interest in their performance fees.
North American Team business unit crystallisation
Andrew Holliman and Richard Wilson have elected to crystallise
one third of their preference shares in relation to the Polar
Capital North American Fund.
Under the terms of the preference shares the partial
crystallisation value is calculated as at 31 March 2019 and either
satisfied in cash, or at the option of the Company, by issue of new
ordinary shares. The Company has elected to satisfy the
consideration by the issue of new ordinary shares.
The partial crystallisation is in relation to the
crystallisation period ended 31 March 2019. The initial
crystallisation value is to be satisfied by the issue of up to
1,442,064 new ordinary shares, in tranches as described below. This
value is re-calculated at each of the first, second, and third
anniversaries of 31 March 2019, based on the profits of the
business unit in the 12 months ended on the respective anniversary.
If the result of the re-calculation provides for a smaller cash or
share consideration, then the amounts paid or shares issued to the
owners of the preference shares are adjusted accordingly. The
effect of such re-calculation is to adjust downwards any
consideration and there can never be an increase in the
Crystallisation Value. In return for this delivery of new ordinary
shares, the North American team will be forfeiting one third of the
interest in their core operating profit in relation to the Polar
Capital North American Fund for the financial year ended 31 March
2019.
Under the terms of the preference shares 10 percent of the new
ordinary shares are issued immediately with the balance of 30
percent of the new ordinary shares due (subject to the
re-calculation described above) on or as soon as practicable after
each crystallisation anniversary.
As a result, the Company will issue a total of 144,206 new
ordinary shares in respect of this partial crystallisation which
will rank pari passu with the Company's existing ordinary shares at
the time of issue.
The Company's current issued share capital is 96,464,735
ordinary shares and following admission of the new ordinary shares
the total ordinary shares in issue will be 96,608,941.
Mr Holliman and Mr Wilson retain two-thirds of their class of
preference shares which remain convertible upon certain future
events and reflect the continued economic interest that the
managers have in the North American business unit.
(1) Presented for illustrative purposes based on the year end
results for 31 March 2019 and assuming the partial crystallisation
occurred as at 31 March 2019.
For further information please contact:
Polar Capital +44 (0)20 7227 2700
Gavin Rochussen (Chief Executive)
John Mansell (Executive Director)
Samir Ayub (Finance Director)
Numis Securities Limited - Nomad and Joint Broker +44 (0)20 7260 1000
Charles Farquhar
Stephen Westgate
Kevin Cruickshank (QE)
Peel Hunt LLP - Joint Broker +44 (0)20 7418 8893
Guy Wiehahn
Andrew Buchanan
Camarco +44 (0)20 7757 4995
Ed Gascoigne-Pees
Monique Perks
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END
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