TIDMSHB
RNS Number : 9020C
Shaftesbury PLC
22 October 2020
NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF
AMERICA (SUBJECT TO CERTAIN LIMITED EXCEPTIONS), AUSTRALIA, CANADA
OR JAPAN OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO
DO SO. PLEASE SEE THE IMPORTANT NOTICE AT THE OF THIS
ANNOUNCEMENT.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A
PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL
CONSTITUTE AN OFFERING OF NEW SHARES. NEITHER THIS COMMUNICATION
NOR ANY PART OF IT SHALL FORM THE BASIS OF OR BE RELIED ON IN
CONNECTION WITH OR ACT AS AN INDUCEMENT TO ENTER INTO ANY CONTRACT
OR COMMITMENT WHATSOEVER. ANY DECISION TO PURCHASE, SUBSCRIBE FOR,
OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY NEW SHARES MUST
BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND
INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE PUBLISHED OR
DISTRIBUTED ELECTRONICALLY. COPIES OF THE PROSPECTUS WILL BE
AVAILABLE LATER TODAY ON THE WEBSITE OF SHAFTESBURY PLC AT WWW.
SHAFTESBURY .CO.UK.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014) ("MAR").
22 October 2020
SHAFTESBURY PLC
("Shaftesbury", the "Company" or "the Group")
Proposed Firm Placing, Placing and Open Offer and Offer for
Subscription
Shaftesbury has today announced its intention to raise gross
proceeds of approximately GBP297.0 million by way of a fully
underwritten Firm Placing and Placing and Open Offer. Up to a
further approximately GBP10.0 million in gross proceeds may also be
raised by way of an Offer for Subscription which is not
underwritten (the "Offer for Subscription", together with the Firm
Placing and Placing and Open Offer , the "Capital Raising").
The New Shares will be issued at an Issue Price of 400 pence per
New Share.
Highlights of the Share Issue
-- Issue of up to 37,147,884 New Shares through the Firm
Placing, raising gross proceeds of up to GBP148.6 million at the
Issue Price. The Firm Placed Shares are not subject to clawback and
are not part of the Placing and Open Offer
-- Issue of 37,102,116 New Shares through the Placing and Open
Offer, raising gross proceeds of GBP148.4 million at the Issue
Price
-- Under the Open Offer, Qualifying Shareholders will have an
Open Offer Entitlement of 7 Open Offer Shares for every 58 Existing
Shares held
-- The Firm Placing and Placing are being conducted by way of an
accelerated bookbuild process (the "Bookbuild"), which will be
launched immediately following this announcement and is subject to
the terms and conditions set out in the appendix to this
Announcement (which forms part of this Announcement) (the
"Appendix")
-- Issue of up to 2,500,000 New Shares through a
non-underwritten Offer for Subscription, in order to raise gross
proceeds of up to GBP10.0 million at the Issue Price. It is
expected that the Offer for Subscription will open on 23 October
2020 and allow interested parties an opportunity to subscribe for
New Shares
-- Total net proceeds of the Firm Placing, Placing and Open
Offer of approximately GBP285.0 million, which could be increased
by Offer for Subscription, to a net total of approximately GBP294.7
million
-- The Company has received commitments from shareholders
representing 52.2% of the issued share capital of the Company
undertaking to participate in the Firm Placing and Placing and Open
Offer by subscribing for an aggregate of at least 35 million New
Shares in the Firm Placing and Placing and Open Offer and to vote
in favour of all resolutions at the General Meeting (other than any
resolution which is required to approve that shareholder's
acquisition of New Shares pursuant to the Capital Raising) at the
General Meeting
J.P. Morgan Securities plc (which conducts its UK investment
banking activities as J.P. Morgan Cazenove) ("J.P. Morgan
Cazenove") and Liberum Capital Limited ("Liberum") are each acting
as Joint Bookrunner, Joint Underwriter and Joint Global Coordinator
(together the "Joint Underwriters"). Liberum is also acting as
Sponsor.
Commenting on the Capital Raise, Brian Bickell, Chief Executive
said:
"The Capital Raising announced today will ensure the Group
maintains the financial flexibility and resources to navigate the
unprecedented near-term operational challenges caused by the
Covid-19 pandemic, and that we will be well-placed to benefit from
the gradual return to more-normal patterns of life and activity
that have always made London's West End an unrivalled global
destination.
We are grateful for the support of our shareholders and new
investors, and particularly our cornerstone investors CapCo and
Norges, with whom we share a commitment to, and belief in, the
long-term prospects for the West End."
Background to, and reasons for, the Capital Raising
Shaftesbury has a virtually impossible-to-replicate real estate
portfolio that extends to 16 acres in the heart of London's West
End. In common with many city centres across the world, the
Covid-19 pandemic and the measures to contain it have had a
significant impact on London and the West End. The continuing
restrictions implemented by the Government, and the uncertainty
regarding their duration and extent, has had, and continues to
have, a material adverse effect on normal patterns of activity and
business in the West End. The Group has seen a material
deterioration in domestic and international footfall and trading
conditions faced by its food, beverage and retail occupiers. Office
occupiers, particularly those with direct or indirect exposure to
consumer-facing businesses, and residential tenants have also been
affected, but to a lesser extent. In turn, this has affected
occupiers' ability to meet both rental and other lease obligations
and occupancy levels across the portfolio.
Having assessed the Group's financial position in light of the
implications of the Covid-19 pandemic for its short- and
medium-term prospects, the Board has decided to issue equity by way
of a Firm Placing and Placing and Open Offer and Offer for
Subscription to help ensure the Group maintains a strong financial
base, is positioned to return to long-term growth as pandemic
issues recede and, should conditions improve, is able to invest
further in its exceptional portfolio.
Use of proceeds
The Group intends to use the net proceeds of the Firm Placing
and Placing and Open Offer of approximately GBP285.0 million to
prioritise the maintenance of a strong balance sheet and maintain
its liquidity as follows, set out in order of priority:
-- Maintain a strong balance sheet:
o The Board is focussed on eliminating short-term financing risk
while Covid-19 disruption and uncertainty continues to materially
affect the Group's operating performance. The Company intends,
subject to the completion of the Firm Placing and Placing and Open
Offer, to cancel the currently undrawn 1997 RCF of GBP125 million
early, and replenish that liquidity with a portion of the Firm
Placing and Placing and Open Offer net proceeds. This facility has
a contractual maturity in May 2022. In doing so, the Group will
benefit from:
-- removing the risks associated with expected requests for
further interest cover waivers until the contracted expiry of the
facility and the need to either renew or refinance this facility
during a period of uncertainty regarding near-term income cash
flows and property valuations; and
-- releasing GBP252 million of charged properties (based on the
valuation at 15 September 2020). This will increase the Group's
pool of uncharged assets to GBP686 million, based on the 15
September 2020 valuation, giving the Group greater protection
against the risk of failing to meet loan-to-value covenants in its
other Debt Facilities.
o The 2018 RCF, of GBP100 million, has a contracted maturity in
February 2023. This facility is currently fully drawn and GBP100
million of the net proceeds of the Firm Placing and Placing and
Open Offer will be used to repay these drawings, which will be
available to be re-drawn, provided that all requirements in the
loan agreement are complied with, including the financial
covenants. In view of the expected need to request income-related
covenant waivers under the 2018 RCF, until such time as operating
conditions improve, net proceeds of the Firm Placing and Placing
and Open Offer will ensure the Group retains sufficient liquidity
to repay drawings under this facility, or if appropriate, part
cancel or terminate the facility earlier than its contractual
maturity, in the event that such waivers are not granted, or are
subject to restrictions which the Board finds unacceptable.
o Up to GBP12 million would be set aside to fund deposits under
the Group's Term Loans as cash cures which are permitted under the
relevant loan agreements in the event the Group does not meet the
interest cover covenants in either of those facilities and the
Group does not have the benefit of a waiver at that point in time.
In the Company's reasonable worst case scenario for the working
capital statement in the Prospectus expected to be published later
today, through the use of cash cure mechanisms, the Group
anticipates meeting the interest cover covenants beyond the expiry
of the waivers it currently has in respect of those facilities for
the twelve months from the date of the Prospectus.
-- Maintain appropriate levels of liquidity by funding expected
short-term cash outflows from operating and financing activities:
In the Company's reasonable worst case scenario prepared for the
working capital statement, the Board expects a cash outflow from
operating activities and interest payments of approximately GBP45
million in the year ending 30 September 2021. In the absence of the
Firm Placing and Placing and Open Offer, this, together with its
investment commitments, would reduce liquidity available to the
Group below the level the Board considers appropriate. Accordingly,
if needed, the Group will use a portion of the net proceeds of the
Firm Placing and Placing and Open Offer to fund operating cash
outflows net of interest payments.
-- Fund investment in existing and future schemes, and ensure
vacant properties are refurbished to maximise their letting
prospects: The Group estimates that it will use up to GBP65 million
of the net proceeds to fund capital expenditure on improvement
schemes, including capital commitments, as at 15 September 2020, of
approximately GBP32 million in respect of current refurbishment and
reconfiguration schemes.
The Group will maintain its usual disciplined approach to
acquisitions. Until such time as current trading conditions improve
sufficiently that waivers are no longer required to maintain
certain of its Debt Facilities, the Board will prioritise its
prudent approach to maintaining liquidity. However, by exception,
should rare opportunities arise to secure particular, long-sought
acquisitions in its core ownership clusters, which will provide
valuable long-term compound benefits, the Group will consider
deploying its available liquidity. The continual review of the
Group's existing ownerships to identify and dispose of buildings no
longer considered core, has the potential to add to the Group's
available liquidity.
-- Maintain liquidity: The Group intends to use the balance of
the net proceeds (and any additional proceeds raised by way of the
Offer for Subscription) to maintain a prudent level of liquidity,
but should conditions improve, to provide some capacity for
portfolio investment.
In summary, the use of proceeds is as follows:
Use of proceeds(i) GBP million
Repay 2018 RCF (but associated liquidity remains available
to the Group subject to compliance with the 2018 RCF) 100
Potential cash cures to interest cover covenants in
the Group's term loans 12
Fund operating losses and financing costs in FY2021 45
Capital expenditure over FY2021 and FY2022 65
To maintain a prudent level of liquidity but should
conditions improve, provide some capacity for portfolio
investment 63
------------
Net proceeds 285
------------
(i) The planned early cancellation of the 1997 RCF, which is
currently undrawn, in connection with the successful completion of
the Capital Raising, will reduce available liquidity by GBP125
million.
In the current uncertain environment, the Board considers it
appropriate to retain a degree of flexibility as to the appropriate
best use of the net proceeds of the Firm Placing and Placing and
Open Offer and their deployment among the categories described
above, in light of its over-riding objective of maintaining the
Group's resilient capital structure.
Dividend policy
The Board has a policy of long-term, progressive growth in
dividends, which reflects the long-term trend in the Group's income
and adjusted EPRA earnings.
Following the outbreak of Covid-19, the Board announced on 24
March 2020 that, in view of the likely reduction in rent
collections and, in turn, adjusted EPRA earnings, it had taken the
decision not to declare an interim dividend to preserve liquidity.
A further announcement was made on 25 September 2020 that, in view
of current conditions and uncertain near-term outlook, no final
dividend would be declared in respect of the year ended 30
September 2020.
The Board intends to resume dividend payments as soon as it
considers prudent, maintaining its policy of sustainable dividend
growth over the long-term. The pace and resilience of the
post-pandemic recovery period, bearing in mind the Group's REIT
property income distribution obligations, will be a key factor in
the Board's near-term decisions on declaring dividends.
Director participation
Each Director who holds (and/or whose PCA holds) Existing Shares
has irrevocably undertaken to vote (and/or, where applicable, to
procure that his or her PCA votes), in favour of the Resolutions to
be proposed at the General Meeting to approve the Capital Raising
in respect of such holdings, amounting in aggregate to 3,650,538
Existing Shares, representing 1.2% of the issued share capital of
the Company as at the Latest Practicable Date.
In addition, the Directors intend to subscribe for up to 76,960
New Shares at the Issue Price.
Shareholders undertaking
CapCo which holds 80,721,003 Existing Shares as at the Latest
Practicable Date (representing approximately 26.3% of the Company's
issued ordinary share capital as at the Latest Practicable Date),
has given an undertaking to the Company pursuant to which it has
agreed to subscribe, and to procure that its affiliates subscribe,
for 8,130,008 New Shares at the Issue Price pursuant to the Firm
Placing and to take up their rights in respect of Existing Shares
to subscribe for 8,119,992 New Shares at the Issue Price as a
Conditional Placee pursuant to the Placing and Open Offer (subject
to such number of Conditional Placing Shares being reduced on a
share-for-share basis in the event that CapCo exercises its right
of offset in respect of its entitlement to New Shares under the
Open Offer) (representing gross proceeds of approximately
GBP65,000,000). CapCo has also agreed to procure that it shall and
it shall procure that its affiliates shall, vote in favour of all
resolutions (other than any resolution which is required to approve
CapCo's acquisition of New Shares pursuant to the Capital Raising)
at the General Meeting.
Norges which holds 79,680,278 Existing Shares as at the Latest
Practicable Date (representing approximately 25.9% of the Company's
issued ordinary share capital as at the Latest Practicable Date),
has given an undertaking to the Company pursuant to which it has
agreed to subscribe for 9,628,447 New Shares at the Issue Price
pursuant to the Firm Placing and to take up in full their rights in
respect of Existing Shares to subscribe for 9,616,585 New Shares at
the Issue Price pursuant to the Placing and Open Offer
(representing gross proceeds of approximately GBP76,980,128).
Norges has also agreed to vote in favour of all resolutions (other
than any resolution which is required to approve Norges'
acquisition of New Shares pursuant to the Capital Raising) at the
General Meeting.
The agreement of each of CapCo and Norges to participate in the
Capital Raising is subject to the terms of their respective
undertakings.
Publication of Prospectus
The Prospectus will, following publication, be sent to
Shareholders and made available on the Company's website,
www.shaftesbury.co.uk .
Any capitalised terms used but not otherwise defined in this
announcement have the meaning given to them in Appendix I.
For more information, please contact:
Shaftesbury PLC +44 207 333 8118
Brian Bickell, Chief Executive
Chris Ward, Finance Director
J.P. Morgan Cazenove (Joint Global Coordinator,
Joint Bookrunner, and Joint Underwriter) +44 207 742 4000
Bronson Albery
Barry Meyers
Paul Hewlett
Tara Morrison
Liberum Capital Limited (Sponsor, Joint
Global Coordinator, Joint Bookrunner and
Joint Underwriter) +44 203 100 2000
Richard Crawley
Jamie Richards
Louis Davies
Miquela Bezuidenhoudt
Blackdown Partners (Independent Adviser
to the Board of Shaftesbury PLC) +44 203 807 8484
Peter Tracey
Tom Fyson
RMS Partners +44 203 735 6551
Simon Courtenay
MHP Communications +44 203 128 8788
Reg Hoare / Oliver Hughes / Giles Robinson
shaftesbury@mhpc.com +44 203 128 8193
Expected Timetable of principal events(i)(ii)(iii)
Record Date for Open Offer Entitlements close of business
on Wednesday 21 October
2020
Announcement of the Capital Raising 7.00 a.m. on Thursday
22 October 2020
Ex-Entitlements Time for the Open Offer 8.00 a.m. on Thursday
22 October 2020
Publication of the Prospectus Thursday 22 October
2020
Announcement of the results of the Firm Before 5.00 p.m. on
Placing through a Regulatory Information Thursday 22 October
Service 2020
Posting of the Prospectus, Application Friday 23 October
Form (to Qualifying Non-CREST Shareholders 2020
only), Offer for Subscription Application
Form and Proxy Forms
Offer for Subscription opens Friday 23 October
2020
Open Offer Entitlements and Excess Open as soon as practicable
Offer Entitlements enabled in CREST and after 8.00 a.m. on
credited to stock accounts in CREST (Qualifying 23 October 2020
CREST Shareholders only)
Recommended latest time for requesting 4.30 p.m. on Tuesday
withdrawal of Open Offer Entitlements 10 November 2020
and Excess Open Offer Entitlements from
CREST(iv)
Latest time and date for depositing Open 3.00 p.m. on Wednesday
Offer Entitlements and Excess Open Offer 11 November 2020
Entitlements into CREST(v)
Latest time and date for splitting Application 3.00 p.m. on Thursday
Forms (to satisfy bona fide market claims 12 November 2020
only)
Latest time and date for receipt of Proxy 10.00 a.m. on Friday
Forms or electronic proxy appointments 13 November 2020
Record date for voting at the General 6.30 p.m. on Friday
Meeting 13 November 2020
Latest time and date for receipt of completed 11.00 a.m. on Monday
Application Forms and payments in full 16 November 2020
and settlement of CREST instructions (as
appropriate)
Latest time and date for receipt of completed 11.00 a.m. on Monday
Offer for Subscription Application Forms 16 November 2020
Announcement of the results of the Placing Tuesday 17 November
and Open Offer and Offer for Subscription 2020
through a Regulatory Information Service
General Meeting 10.00 a.m. on Tuesday
17 November 2020
Results of General Meeting announced through Tuesday 17 November
a Regulatory Information Service 2020
Admission and dealings in New Shares commence by 8.00 a.m. on Wednesday
on the London Stock Exchange 18 November 2020
New Shares credited to CREST stock accounts as soon as possible
(uncertificated holders only) after 8.00 a.m. on
Wednesday 18 November
2020
Expected date of despatch of definitive within 10 Business
share certificates for the New Shares Days of Admission
to be held in certificated form
Notes:
(i) The ability to participate in the Placing and Open Offer and
the Offer for Subscription is subject to certain restrictions
relating to persons with registered addresses or located or
resident in countries outside the UK, details of which will be set
out in Part IX (Terms and Conditions of the Firm Placing, the
Placing and Open Offer) and Part X (Terms and Conditions of the
Offer for Subscription) of the Prospectus to be published.
(ii) These times and dates and those mentioned throughout this
announcement and the Application Form are indicative only and may
be adjusted by the Company in consultation with the Sponsor and the
Joint Underwriters, in which event details of the new times and
dates will be notified to the FCA, the London Stock Exchange and,
where appropriate, Qualifying Shareholders.
(iii) Any reference to time in this announcement is to London
Time, unless otherwise specified.
(iv) If your Open Offer Entitlements and Excess Open offer
Entitlements are in CREST and you wish to convert them to
certificated form.
(v) If your Open Offer Entitlements and Excess Open Offer
Entitlements are represented by an Application Form and you wish to
convert them to uncertificated form.
Dealing codes
Ticker SHB
ISIN of the Existing Shares (and the New
Shares once admitted to trading) GB0007990962
ISIN of the Open Offer Entitlement GB00BLPJPH03
ISIN of the Excess Open Offer Entitlement GB00BLPJPJ27
SEDOL 0799096 (in respect of Ordinary Shares traded in
Sterling)
IMPORTANT NOTICE
This announcement has been issued by and is the sole
responsibility of the Company. This announcement is not a
prospectus but an advertisement and investors should not acquire
any Shares referred to in this announcement except on the basis of
the information contained in the Prospectus to be published by the
Company in connection with the Capital Raising. The information
contained in this announcement is for background purposes only and
does not purport to be full or complete. No reliance may or should
be placed by any person for any purpose whatsoever on the
information contained in this announcement or on its accuracy or
completeness. The information in this announcement is subject to
change.
Copies of the Prospectus when published will be available on the
Company's website at www.shaftesbury.co.uk provided that the
Prospectus is not, subject to certain exceptions, available
(through the website or otherwise) to Shareholders in the United
States or any other Excluded Territory. Neither the content of the
Company's website nor any website accessible by hyperlinks on the
Company's website is incorporated in, or forms part of, this
announcement. The Prospectus provides further details of the New
Shares being offered pursuant to the Capital Raising.
This announcement is for information purposes only and is not
intended to and does not constitute or form part of any offer or
invitation to purchase or subscribe for, or any solicitation to
purchase or subscribe for Shares in any jurisdiction. No offer or
invitation to purchase or subscribe for, or any solicitation to
purchase or subscribe for the New Shares will be made in any
jurisdiction in which such an offer or solicitation is unlawful.
The information contained in this announcement is not for release,
publication or distribution to persons in the United States or any
other Excluded Territory, and should not be distributed, forwarded
to or transmitted in or into any jurisdiction, where to do so might
constitute a violation of local securities laws or regulations.
This announcement is not an offer of securities for sale in the
United States. The New Shares have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act") or under any securities laws of any state or
other jurisdiction of the United States and may not be offered,
sold, taken up, exercised, resold, renounced, transferred or
delivered, directly or indirectly, into or within the United States
except pursuant to an applicable exemption from or in a transaction
not subject to the registration requirements of the Securities Act
and in compliance with any applicable securities laws of any state
or other jurisdiction of the United States. There will be no public
offer of the New Shares in the United States. The New Shares are
being offered and sold only (i) outside the United States in
reliance on Regulation S under the US Securities Act ("Regulation
S"); and (ii) in the United States, subject to certain limited
exceptions, either to persons reasonably believed to be "qualified
institutional buyers" ("QIBs") as defined in Rule 144A under the US
Securities Act ("Rule 144A") in reliance on Rule 144A or to QIBs
pursuant to an exemption from or transaction not subject to the
registration requirements of the US Securities Act. Prospective
investors are hereby notified that the offerors and sellers of the
New Shares may be relying upon the exemption from the provisions of
Section 5 of the US Securities Act provided by Rule 144A.
The distribution of this announcement into jurisdictions other
than the United Kingdom may be restricted by law, and, therefore,
persons into whose possession this announcement comes should inform
themselves about and observe any such restrictions. Any failure to
comply with any such restrictions may constitute a violation of the
securities laws of such jurisdiction. In particular, subject to
certain exceptions, this announcement, the Prospectus (once
published) and the Application Forms and Offer for Subscription
Application Forms (once printed) should not be distributed,
forwarded to or transmitted in or into the United States or any
other Excluded Territory.
This announcement does not constitute a recommendation
concerning any investor's options with respect to the Capital
Raising. The price and value of securities can go down as well as
up. Past performance is not a guide to future performance. The
contents of this announcement are not to be construed as legal,
business, financial or tax advice. Each Shareholder or prospective
investor should consult his, her or its own legal adviser, business
adviser, financial adviser or tax adviser for legal, financial,
business or tax advice.
This announcement includes forward-looking statements within the
meaning of the securities laws of certain applicable jurisdictions.
These forward-looking statements include, but are not limited to,
statements other than statements of historical facts contained in
this announcement, including, without limitation, those regarding
the Group's intentions, beliefs or current expectations concerning,
among other things, their future financial condition and
performance and results of operations; their strategy, plans,
objectives, prospects, growth, goals and targets; future
developments in the industry and markets in which the Group
participate or are seeking to participate; and anticipated
regulatory changes in the industry and markets in which the Group
operate. In some cases, these forward-looking statements can be
identified by the use of forward-looking terminology, including the
terms "aim", "anticipate", "believe", "continue", "could",
"estimate", "expect", "forecast", "guidance", "intend", "may",
"plan", "project", "should" or "will" or, in each case, their
negative, or other variations or comparable terminology.
By their nature, forward-looking statements are subject to known
and unknown risks, uncertainties and other factors because they
relate to events and depend on circumstances that may or may not
occur in the future, many of which are beyond the Group's control.
Shareholders and potential investors are cautioned that
forward-looking statements are not guarantees or assurances of
future performance and that the Group's actual financial condition,
results of operations, cash flows and distributions to shareholders
and the development of their financing strategies, and the
development of the industry in which they operate, may differ
materially from the impression created by the forward-looking
statements contained in this announcement. In addition, even if
their financial condition, results of operations, cash flows and
distributions to shareholders and the development of their
financing strategies, and the development of the industry in which
they operate, are consistent with the forward-looking statements
contained in this announcement, those results or developments may
not be indicative of results or developments in subsequent
periods.
Undue reliance should not be placed on these forward-looking
statements. These forward-looking statements are made as at the
date of this announcement and are not intended to give any
assurance as to future results. The Group will update this
announcement as required by applicable law, including the Listing
Rules, Prospectus Regulation Rules, MAR, the Disclosure Guidance
and Transparency Rules and the requirements of the LSE, but
otherwise the Group and the Joint Underwriters expressly disclaim
any obligation or undertaking to update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise. In light of these risks,
uncertainties and assumptions, the events described in the
forward-looking statements in this announcement may or may not
occur.
Notice to all investors
Before subscribing for any New Shares, persons viewing this
announcement should ensure that they fully understand and accept
the risks which will be set out in the Prospectus when published.
The value of Shares is not guaranteed and can fall as well as rise
due to stock market and currency movements. When you sell your
investment you may get back less than you originally invested. The
price and value of securities can go down as well as up, and
investors may get back less than they invested or nothing at all.
Potential investors should consult an independent financial advisor
as to the suitability of the securities referred to in this
advertisement for the person concerned. Any investment should be
long term in nature. Further details including relevant details of
all charges and minimum subscription amounts will be set out in the
prospectus, when published.
J.P. Morgan Securities plc (which conducts its UK investment
banking activities as J.P. Morgan Cazenove) is authorised in the
United Kingdom by the Prudential Regulation Authority (the "PRA")
and authorised and regulated in the United Kingdom by the FCA (as
defined below) and the PRA. Liberum Capital Limited is authorised
and regulated by the FCA. The Joint Underwriters are not acting for
anyone other than the Company and will not be responsible to anyone
(whether or not a recipient of this announcement) other than the
Company for providing the protections afforded to their clients or
for providing advice in relation to the Capital Raising or matters
referred to in this announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on any of the Joint Underwriters by the FSMA or the
regulatory regime established thereunder, or under the regulatory
regime of any jurisdiction where the exclusion of liability under
the relevant regulatory regime would be illegal, void or
unenforceable, none of the Joint Underwriters nor any of their
respective subsidiaries, branches, affiliates, associates,
directors, officers, employees or advisers accepts any duty,
liability or responsibility whatsoever (whether direct or indirect)
to any person for the contents of this announcement or makes any
representation or warranty, express or implied, as to the contents
of this announcement, including its accuracy, completeness,
verification or sufficiency or for any other statement made or
purported to be made by it, or on its behalf in connection with the
Company, the New Shares or Admission or the Capital Raising and
nothing in this electronic transmission or the attached document
is, or will be, relied upon as a promise or representation in this
respect, whether or not as to the past, present or future. The
Joint Underwriters and their respective subsidiaries, branches,
affiliates, associates, directors, officers, employees and advisers
each accordingly disclaim to the fullest extent permitted by law
all and any duty, liability and responsibility whether arising in
tort, contract, statute or otherwise (save as referred to above) in
respect of this announcement or any such statement or otherwise. No
representation or warranty, express or implied, is made by any of
the Joint Underwriters or any of their subsidiaries, branches,
affiliates, associates, directors, officers, employees and or
advisers as to the accuracy, completeness, verification or
sufficiency of the information set out in this announcement, and
nothing in this announcement will be relied upon as a promise or
representation in this respect, whether or not as to the past,
present or future.
No person has been authorised to give any information or to make
any representations other than those contained in this
announcement, the Prospectus, the Application Forms and the Offer
for Subscription Application Forms, and, if given or made, such
information or representations must not be relied on as having been
authorised by the Company, the Group, J.P. Morgan Cazenove or
Liberum. Subject to the Listing Rules, the Prospectus Rules and the
Transparency Rules of the Financial Conduct Authority and the
Disclosure Requirements (as such term is defined in the Listing
Rules), the issue of this announcement shall not, in any
circumstances, create any implication that there has been no change
in the affairs of the Company since the date of this announcement
or that the information in it is correct as at any subsequent
date.
In connection with the Capital Raising, the Joint Underwriters
and any of their respective affiliates, in accordance with
applicable legal and regulatory provisions and subject to the
Underwriting and Sponsor's Agreement, may engage in transactions in
relation to the New Shares and/or related instruments for their own
account for the purpose of hedging their underwriting exposure or
otherwise. In connection with the Capital Raising, the Joint
Underwriters and any of their respective affiliates, acting as
investors for their own accounts may acquire New Shares as a
principal position and in that capacity may retain, acquire,
purchase, sell, offer to sell or otherwise deal for their own
accounts in such New Shares and other securities of the Company or
related investments in connection with the Capital Raising or
otherwise. Accordingly, references in the Prospectus to the New
Shares being issued, offered, acquired, placed or otherwise dealt
in should be read as including any issue, offer, subscription,
acquisition, placing or dealing by each of the Joint Underwriters
and any of their affiliates acting as investors for their own
accounts. In addition, certain of the Joint Underwriters or their
affiliates may enter into financing arrangements (including swaps
or contracts for difference) with investors in connection with
which such Joint Underwriters (or their affiliates) may from time
to time acquire, hold or dispose of New Shares. The Joint
Underwriters may also coordinate a sell-down in the event that any
underwriting crystallises as a result of the Capital Raising.
Except as required by applicable law or regulation, the Joint
Underwriters and their respective affiliates do not propose to make
any public disclosure in relation to such transactions.
In the event that the Joint Underwriters acquire New Shares
which are not taken up by Qualifying Shareholders, the Joint
Underwriters may co-ordinate disposals of such shares in accordance
with applicable law and regulation. Except as required by
applicable law or regulation, the Joint Underwriters and their
respective affiliates do not propose to make any public disclosure
in relation to such transactions.
Information to Distributors
Solely for the purposes of the product governance requirements
contained within (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II "); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the MiFID
II Product Governance Requirements), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product
Governance Requirements) may otherwise have with respect thereto,
the Placing Shares have been subject to a product approval process,
which has determined that the Placing Shares are: (i) compatible
with an end target market of retail investors and investors who
meet the criteria of professional clients and eligible
counterparties, each as defined in MiFID II; and (ii) eligible for
distribution through all distribution channels as are permitted by
MiFID II (the "Target Market Assessment"). Notwithstanding the
Target Market Assessment, distributors should note that: the price
of the Placing Shares may decline and investors could lose all or
part of their investment; the Placing Shares offer no guaranteed
income and no capital protection; and an investment in the Placing
Shares is compatible only with investors who do not need a
guaranteed income or capital protection, who (either alone or in
conjunction with an appropriate financial or other adviser) are
capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses
that may result therefrom. The Target Market Assessment is without
prejudice to the requirements of any contractual, legal or
regulatory selling restrictions in relation to the Capital Raising.
Furthermore, it is noted that, notwithstanding the Target Market
Assessment, the Joint Underwriters will only procure investors who
meet the criteria of professional clients and eligible
counterparties.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take
any other action whatsoever with respect to the Placing Shares.
Each distributor is responsible for undertaking its own Target
Market Assessment in respect of the Placing Shares and determining
appropriate distribution channels.
Further information in relation to the Capital Raising
Introduction
The Board has considered a range of options to optimise the
Group's long-term capital structure including property disposals,
bond issuance, repayment of existing Debt Facilities and
alternative forms of capital raising including both debt and
equity. The Board concluded that:
-- while the short- and medium-term outlook for rental income
and property values remains uncertain, the Group should prioritise
maintaining a strong financial base and its liquidity, focusing on
debt and gearing levels; and
-- a material level of disposals to address financing risks
would not be in the long-term interests of the Group.
Accordingly, the Board has determined that it is in the
long-term interests of the Group to raise equity by way of the
Capital Raising.
This section sets out the background to, and reasons for, the
Capital Raising, including the Group's strategy, strengths, impact
of, and response to the Covid-19 pandemic, the financial impact of
the Capital Raising, the proposed use of proceeds, and explains why
the Board considers the Capital Raising to be in the best interests
of the Group and Shareholders as a whole and to seek your approval
of the Resolutions to be proposed at the General Meeting, which
will provide the Board with the authorities to carry out the
Capital Raising.
The Capital Raising is conditional on, among other things, the
passing of those Resolutions by Shareholders at the General
Meeting, which is scheduled to take place at 10.00 a.m. on 17
November 2020. A notice convening the General Meeting, together
with explanatory notes, will be set out in the Prospectus.
The Board unanimously recommends that Shareholders vote in
favour of the Resolutions to be proposed at the General Meeting, as
each of the Directors intends to do in respect of their own
beneficial holding of Shares.
Underwriting
Subject to the approval of the Resolutions, the Firm Placing and
Placing and Open Offer has been fully underwritten by J.P. Morgan
Securities plc (on behalf of its affiliate, J.P. Morgan Cazenove)
and Liberum pursuant to the terms and conditions of the
Underwriting and Sponsor's Agreement. The Offer for Subscription is
not underwritten.
Background to, and reasons for, the Capital Raising
The Company's purpose and strategy
The Company's purpose is to curate vibrant and thriving areas in
the heart of London's West End. At its core is a holistic approach
to patient, long-term curation of its Villages for the benefit of
its stakeholders, by providing distinctive and appealing
experiences for visitors, occupiers, their customers and residents.
The Company's long-term strategic objectives are to:
-- deliver long-term growth in rents and portfolio value;
-- grow recurring earnings and cash flow;
-- minimise the environmental impact of its operations;
-- deliver sustainable, long-term benefits for its stakeholders;
-- attract, develop and retain talented people; and
-- make a positive, long-lasting contribution to London's West End.
The Company achieves this through its long-term business
strategy, which has the following core elements:
-- investing exclusively in the heart of London's West End,
concentrating on iconic, high footfall locations close to its major
employment locations, transport hubs and visitor attractions. This
investment strategy was born out of the Group's experience in the
severe property and economic recession of 1990 to 1993. In contrast
to national conditions, the Group's then modest holdings in
Chinatown saw sustained tenant demand, and resilient rental levels
and cash flows. Capital values declined much less, and recovered
more quickly, than the wider London or UK market in that
challenging period. The Group saw similar economic performance in
the global financial crisis of 2007 to 2010;
-- establishing and extending ownership clusters in its chosen
locations, which enables the Company to implement a cohesive,
long-term management strategy to unlock rental and capital value
potential while compounding the benefits of individual improvements
it makes such as improved footfall and spending, and higher rental
tones, across the Group's nearby holdings;
-- focusing on uses which, in the West End, have a long history
of occupier demand exceeding availability of space. The Group's
mixed-use buildings typically include food, beverage, retail and
leisure uses on the lower floors (together, representing 67% of the
ERV of Group's wholly-owned portfolio at 15 September 2020) and
offices and residential on upper floors (together, 33% of the ERV
of the Group's wholly-owned portfolio at 15 September 2020). These
complementary uses provide an ecosystem of visitors, workers and
residents which provide footfall and life in its areas; and
-- adopting a long-term, holistic approach to the curation of
the Group's Villages to provide distinctive, welcoming environments
for its visitors, commercial occupiers and residents. The
combination of high footfall, ever-evolving curation and
competitively-priced space provides the Group's restaurants, cafés,
pubs and shops with an environment within which they can prosper.
This drives sustained occupier demand and high occupancy levels,
which supports the Group's ability to deliver long-term income
growth.
Key features of the management strategy include:
o clustering of property uses and selecting occupiers to ensure
the Group's distinctive, lively and popular destinations maintain
their enduring appeal to visitors, occupiers and residents. The
Group favours new concepts, independent operators and international
brands making their UK debut, and prefers mid-market, innovative
formats, rather than formulaic national chains;
o adopting a modern approach to leasing, including shorter lease
terms, trialling concepts and including turnover-related top ups in
new restaurant leases. This approach allows the Group to adapt to
ever-changing consumer trends and occupier requirements, whilst
offering occupiers greater flexibility and less onerous lease
commitments. From October 2020, the Group is offering all
commercial tenants the option to pay rents monthly, rather than
quarterly in advance;
o adapting the Group's buildings, through reconfiguration or
repurposing space, enabling the Group to provide accommodation
which meets both current occupier requirements and anticipates
market trends. When buildings become vacant, the Group considers
how the space can be repurposed to extend the building's useful
economic life and enhance its long-term income prospects;
o promoting the Group's locations to a wide audience by working
closely with occupiers to hold events, marketing and social media
campaigns, raising the profile and awareness of the Group's areas
with the aim of growing visitor numbers and spending; and
o improving the public realm in the Group's Villages. The
Group's experience is that creating safe and welcoming environments
is an important catalyst for long-term growth in footfall and
spending.
Shaftesbury's strengths
The Group's key strengths are as follows:
-- Location in London : London's pre-eminent position amongst
the world's leading cities continues to underpin the long-term
prospects for the Group's portfolio, which is located in the heart
of the West End, a vibrant and popular destination. In normal times
drawing exceptional local and domestic footfall, and attracting
visitors from around the world, the West End provides an all-round
experience, from its unrivalled concentration of entertainment and
cultural attractions, historic buildings and public spaces, to a
world-class variety of shopping and some of London's best and
most-innovative restaurants, cafés, bars and clubs. It is also a
location for a wide range of global, national and local businesses,
and a popular place to live. The Group's Villages are all close to
high profile locations (such as Regent Street, Oxford Street and
Leicester Square) and major Underground stations. Over the longer
term, the Group's portfolio is well-placed to benefit from
increased visits, spending and changing footfall patterns expected
once the Elizabeth Line is fully operational.
-- Structural resilience of London and the West End : The
largest city in Western Europe, London is a global creative,
financial and commercial centre and one of the world's most popular
visitor destinations. In 2017, its economy generated nearly 23% of
UK Gross Value Added (GVA).(1) London's global appeal brings
prosperity and gives it a broad and resilient economic base which
is not reliant solely on the fortunes of the wider UK economy.
In normal times, it is estimated the West End attracts in excess
of 200 million visits annually, comprising Londoners, a large
working population of over 700,000 across a wide range of sectors,
and exceptional numbers of domestic and international tourists.
Together, they provide a dynamic and prosperous seven-days-a-week
economy.
The broad-based economies of London and the West End have a long
history of structural resilience, having weathered many episodes of
near-term challenges and uncertainties. In the post-pandemic
recovery, the Board believes that these economic characteristics
will underpin the return to prosperity and sustained long-term
growth.
(1) Source: Office for National Statistics, ' Regional economic
activity by gross value added (balanced), UK: 1998 to 2017', dated
12 December 2018
-- Virtually impossible-to-replicate portfolio : The Group's
portfolio has taken 34 years to accumulate. The buildings the Group
seeks to acquire are typically in long-term private, rather than
institutional, ownership and existing owners are generally averse
to selling assets which are usually considered to offer security,
high occupancy, reliable cash flow and long-term growth prospects.
Consequently, it would be virtually impossible now to assemble and
replicate a portfolio such as the Group's in the West End.
-- Structural imbalance between supply of, and demand for, space
across the areas in which the Group invests: In the West End,
listed building and conservation area legislation and local
planning policies, together, limit the opportunity for large-scale
redevelopment to increase the supply of new accommodation
materially, particularly at lower-floor levels. Furthermore, the
policies of both the City of Westminster and the London Borough of
Camden discourage a material increase in restaurant and bar uses,
and new late-night trading and alcohol licences are rarely granted.
Against this backdrop of constrained supply of space, there is a
long history, in the West End, of sustained occupier demand from a
wide variety of national and international occupiers, for food,
beverage, retail and leisure accommodation, particularly in the
Group's carefully curated, affordable locations. Consequently, the
Group's portfolio has historically benefited from high occupancy
levels and growing income levels, which together underpin the
long-term prospects for rental growth.
-- Compound benefits of ownership clusters : Establishing and
extending ownership clusters in its chosen locations enables the
Company to implement a cohesive, long-term management strategy to
unlock rental and capital value potential while compounding the
benefits of individual improvements it makes, such as improved
footfall and spending, and higher rental tones, across the Group's
nearby holdings.
-- Mixed-use buildings with management flexibility : The Group's
portfolio of mostly smaller, mixed-use buildings provides
considerable management flexibility. This includes the ability to
improve, reconfigure and repurpose space, enabling the Group to
adapt its buildings to meet current and anticipate future market
trends in demand and occupier requirements.
Evolving the mix of uses is an important factor in the long-term
growth of the Group's rental income and capital values. The Group's
strategy in recent years has been to grow the number of interesting
casual dining and leisure concepts in its popular and busy
locations through changes of use, repurposing less valuable retail
space, extending existing units or by acquisition. The Group's 317
restaurants, cafés, pubs and bars are important drivers of
footfall, dwell-time and trading in its Villages and, at 15
September 2020, accounted for 37% of the Group's ERV, up from 32%
at 30 September 2010. Over that same period, the proportion of ERV
from retail has fallen from 40% to 30%.
Similarly, the Group has in recent years repurposed its smallest
offices, which no longer met the needs of modern businesses, to
residential accommodation.
-- Limited capital expenditure requirements : The Group focuses
on uses which reduce its exposure to obsolescence. With its focus
on retail and leisure uses, which traditionally have been provided
in shell form and fitted out by occupiers, and by reusing and
adapting, rather than redeveloping its buildings, the Group's
capital expenditure is modest, an important factor in long-term
shareholder value creation. Typically, annual capital expenditure
is less than 1% of portfolio value. Often, the loss of income
during works being carried out is a significant part of the overall
cost of a scheme.
-- Experienced management team: With an average of 14.5 years of
experience working for the Company, Executive Directors and Senior
Managers have a forensic knowledge of the West End market and
experience of different property and economic cycles. Also, they
have considerable experience in dealing with, and adapting,
heritage buildings in the West End.
-- The Group curates its portfolio, making decisions based on
long-term strategic priorities rather than short-term gains:
Through patient assembly of its ownerships and its ever-evolving
strategy, the Group has a long record of delivering high occupancy,
sustainably growing the portfolio's rental potential, and,
crucially, converting this potential into contracted income. In
turn, this has driven sustained growth in earnings and dividends
.
Over the ten years to 30 September 2019, compound annual growth
in annualised current income, ERV, rental income and dividends per
share were as follows:
o annualised current income: 4.2%;
o ERV: 4.8%;
o rental income: 6.9%; and
o dividends per share: 5.3%.
During that period, average EPRA vacancy and underlying EPRA
vacancy across the wholly-owned portfolio represented 2.9% and
2.4%, respectively, of the portfolio total ERV.
-- Low appetite for financing risk : The Board adopts a prudent
approach to financing. Key aspects to its financing policy include
conservative leverage, diversified sources of finance and a spread
of debt maturities. The core of the Group's debt finance is
secured, long-term arrangements, consistent with the long-term
nature of its portfolio and income streams, and with the majority
of interest fixed. Working capital is provided through secured,
medium-term revolving credit facilities.
The Board aims to maintain:
o significant levels of available liquidity to cover contractual
commitments and afford the Group speed of execution when
acquisitions become available;
o a prudent Group loan-to-value ratio with headroom above
loan-to-value covenants in its Debt Facilities; and
o a pool of unsecured properties which could be used to top up
debt security if necessary, to comply with loan-to-value
covenants.
The Company's approach to managing financing risk has been, and
continues to be, a factor in constructive discussions with lenders
from the outset of the pandemic, particularly in obtaining waivers
for its interest cover covenants, which historically have been well
covered.
At 30 June 2020, the Group's loan-to-value ratio was 29.1%, up
from 26.7% and 23.9% at 31 March 2020 and 30 September 2019
respectively, largely due to decline in the portfolio valuation.
The valuation of the Group's wholly-owned properties at 15
September 2020 showed a further decline since 30 June 2020, from
GBP3,291.9 million to GBP3,135.8 million.
The Group's individual debt arrangements have specifically
charged assets as security, although the relative amounts of
collateral charged, compared with the amount of each facility, are
not uniform. However, through charging its unsecured properties,
which were valued at GBP434 million at 15 September 2020, the Group
estimates it could withstand a 34% decrease in valuations (from the
15 September 2020 valuation) before it reaches the limit of the
loan-to-value covenants in its borrowing arrangements.
The Company's reasonable worst case scenario, modelled for the
purpose of the working capital statement, assumes a further
valuation decrease of 25% from 15 September 2020 to the end of the
12 month period following the date of the Prospectus expected to be
published later today. Whilst the Company expects to remain
compliant with loan-to-value covenants under this scenario (either
by meeting the existing thresholds with the current level of
security or by providing uncharged properties as security),
significantly higher loan-to-value ratios will increase the Group's
financing risk beyond the Board's tolerance and may compromise
further covenant waiver and facility renewal negotiations.
-- Social responsibility: The Company has three key pillars to
its social responsibility strategy:
o Property: The Company reuses and improves, rather than
redevelops, the Group's heritage buildings. In doing so, it extends
their useful economic lives, enhances their environmental
performance and improves their income prospects.
o People : The Company focuses on strong relationships with its
tenants, local authorities and the local communities where it
operates. The Company's values recognise the importance it places
on being community minded and of playing an integral part in its
Villages.
o Employees : The Company operates an open and inclusive culture
in the workplace. At the heart of Shaftesbury is its team, who
share a passion and ambition for "making great places even better".
It is committed to building upon its working culture, developing a
diverse and inclusive team from the widest talent pools and
ensuring Shaftesbury is a great place to work .
-- Effective governance: The Board is committed to maintaining
the high standards of governance across all aspects of its business
it has demonstrated for many years. For the Board, governance is
not just about compliance but includes encouraging the right
behaviours, being open, transparent and engaged with the Group's
stakeholders, leading the strategic priorities, challenging and
adding value across the Group's activities.
Current trading and prospects in light of the Covid-19
pandemic
In the UK, Government restrictions began to be eased during the
summer. In late June, non-essential shops were permitted to
re-open, followed in July by restaurants, cafés, and pubs. However,
various social distancing measures have continued and large public
gatherings remained prohibited, preventing the re-opening of live
entertainment venues, clubs and events spaces. From August,
Government advice to work from home wherever possible was modified
to encourage a return to offices where suitable measures were in
place to ensure it was safe to do so.
In response to the sharp rise in UK infection rates in
September, the Government reintroduced restrictions including
localised lockdowns, extending self-isolation requirements for
arrivals from certain countries, territories or regions, a limit on
social gatherings, a 10pm curfew for food and beverage businesses,
and a reversal of their "return to the office" advice. On 12
October 2020, the Government announced a Covid-19 three-tier alert
system which, depending on infection rates, will determine the
extent of restrictions to be introduced locally or across wider
areas. London, as at the date of this announcement, has been
assessed as a Tier Two risk, meaning current restrictions will
continue but with further restrictions on social distancing indoors
and restrictions on households mixing in hospitality settings,
which is likely to significantly affect trading for food, beverage
and retail operators. In the event the assessment of risk is
changed to, for instance, Tier Three, the Group's pubs and bars
would be required to close, except where serving substantial meals,
but otherwise shops, restaurants and cafés would not be affected.
Restrictions on households mixing in hospitality settings in Tiers
Two and Three would be expected to result in a significant
reduction in trade.
Until the current Covid-19 pandemic situation is brought under
control, there is a risk that the Government may implement further
measures or tighten existing restrictions.
Covid-19 measures: first stages of West End recovery but
recently announced restrictions causing renewed uncertainty
With over 200 million visits annually, the West End's economy
has traditionally benefited from London's reputation as a leading
international destination, with a diverse economy spanning a broad
range of business sectors, along with world-class education and
research facilities, and cultural and leisure attractions. This
exceptional daily footfall has traditionally provided a prosperous,
seven-days-a-week trading environment for the leisure and retail
businesses which have chosen to locate here.
The effective closure of the West End, starting in February, had
an immediate and very challenging impact on all consumer-facing,
footfall-reliant businesses, which are inevitably cash-flow
sensitive. After the initial relaxation of Government restrictions
in June to August began to take effect, the West End saw a gradual
recovery in footfall, particularly noticeable in the vicinity of
Oxford Street and Regent Street, its major shopping streets, and
Soho and Leicester Square, its major dining and leisure
destinations. In Seven Dials, after a slower start, footfall
patterns recovered in line with these locations.
The improvement since July was initially due to a return of
local and domestic day visitors, and which was supplemented in
early September by a gradual return of the local office-based
workforce, until Government advice was reversed. Daily visits to
the West End are now around 40% of normal pre-pandemic volumes and
are concentrated in the lunchtime to early evening period. At
present, the UK's international business and leisure visitor
numbers are not expected to recover to pre-pandemic levels until
2024(2) , due to their reliance on long-haul markets.
The course of the pandemic in the short- and medium-term will
continue to dictate the extent of restrictions imposed by the UK
and other governments to contain the spread of the Covid-19 virus,
with implications for the global economy and the pace of recovery.
As an international destination, local trading conditions in the
West End will inevitably be affected by these macro
uncertainties.
(2) Source: Tourism Economics. City Tourism Outlook and Ranking:
Coronavirus Impacts and Recovery
Support for the Group's occupiers
The Company's focus since the beginning of the pandemic and
lockdown has been to help the Group's occupiers through this
challenging period by providing financial and other practical
support, alongside the Government's various initiatives such as
provision of financial support, business rate relief, employee
furloughing and the "Eat Out to Help Out" scheme. It is the Board's
belief that maintaining occupancy across the Group's portfolio,
wherever possible, will position the Group's business for sustained
recovery over the medium- and long-term, as the post-pandemic
recovery progresses.
Food and beverage, leisure and retail . After an extended period
of closure, most of the Group's 611 restaurants, cafés , pubs and
shops have now reopened. They have adapted their operations to
ensure effective social distancing measures are in place, and many
have adopted revised trading hours to reflect current footfall
patterns. Food and beverage businesses have benefited from the use
of outdoor seating, especially in the Group's permanently
pedestrianised streets and courtyards in Carnaby and Chinatown.
Elsewhere, Westminster City Council's temporary street closures and
time-limited permissions to use external seating have been extended
to the end of October. The temporary closure by Camden Council of
streets around Seven Dials outside servicing hours is presenting
the opportunity to trial a traffic-reduction scheme.
Despite the improvement in footfall during the summer, many of
the Group's occupiers, particularly retailers, continue to report
considerably lower turnover than in normal conditions, and it is
likely the return to the healthy trading volumes across the West
End, even when sustained, will be gradual. The Group has continued
its dialogue with occupiers to agree bespoke packages of rental and
other measures to support their recovery, including rent payment
plans, waivers, deferrals, lease restructuring, service charge
reductions and marketing initiatives.
In view of growing uncertainty surrounding the timing of the
return to more-normal footfall and trading conditions in the West
End, and the impact of the re-introduction of restrictions by the
Government, the Group has extended its support arrangements by a
further three months to the end of 2020. An extension of
restrictions, including an elevated risk of a local or London-wide
temporary closure of restaurants, cafés, pubs and bars, could have
a material impact on visitor footfall and spending across the
Group's locations, adversely affecting the operations and financial
viability of its tenants. The Group currently anticipates that
further measures to support its occupiers will be required and
their extent will depend on trading conditions in the important
period leading up to Christmas and the New Year, as well as the
prospects for the early months of 2021 and beyond.
Offices. The Group has over 225 office occupiers, many of which
are small and medium-sized enterprises (SMEs) operating in the
media, creative, fashion and technology sectors, and which often
have direct or indirect exposure to businesses which themselves
have been affected significantly by the pandemic, such as those in
retail, food and beverage, and the performing arts. Despite this,
rent collections were significantly less affected than from the
Group's retail, food and beverage tenants and, accordingly, limited
concessions have been granted on a case-by-case basis.
Residential. Typically, the Group's 622 apartments are occupied
by those seeking a base in the West End for either work or study,
and are particularly popular with younger people from overseas. As
a result of the lockdown restrictions, many tenants chose to return
overseas, leaving flats unoccupied. With the continuing
uncertainty, many of these overseas tenants chose not to return to
the UK for the time being and vacated permanently. In these
circumstances, the Group waived any commitments under their tenancy
agreements. Where appropriate, the Group is offering support to
residential tenants to assist them in meeting their rental
commitments.
Collection of rents falling due in the period 25 March 2020 to
28 September 2020
It is the Group's priority to continue to support its occupiers
through the period of pandemic disruption. In order to provide
certainty for those businesses, the Group's discussions and
agreements with them, initially focused on a six-month period from
25 March 2020 to 28 September 2020.
The table below summarises the collection of rents as at 25
September 2020 for contracted rent due in respect of the period
from 25 March 2020 to 28 September 2020:
Total
--------- ------- -------- ------------ ------------
F&B and
leisure Retail Offices Residential
GBPm GBPm GBPm GBPm GBPm
--------- ------- -------- ------------ ----- -----
Contracted rent due for
the period 25 March to
28 September 2020 22.7 18.0 9.5 7.1 57.3 100%
========= ======= ======== ============ ===== =====
Collected by 25 September
2020 5.0 7.5 6.7 5.7 24.9 44%
Amounts expected to be
subject to deferred collection
arrangements 5.2 1.9 0.2 - 7.3 13%
Contracted rents waived 8.8 3.9 0.4 0.1 13.2 22%
Rent outstanding at 25
September 2020 3.7 4.7 2.2 1.3 11.9 21%
The eventual recovery of amounts deferred and outstanding will
depend on tenants' ability to meet these commitments. The future
viability of their businesses will be influenced by
pandemic-related factors including the re-introduction of lockdown
and other measures which could adversely affect trading conditions
and the implications of a protracted recovery period.
From 1 October 2020 , the Group commenced providing commercial
occupiers with t he option to pay rent and service charges monthly
rather than quarterly in advance, in order help to align the
Group's revenue collection with the cash flows of its
occupiers.
In the Longmartin Joint Venture , by 25 September 2020, 77% of
rent for the two quarters to 28 September 2020 had been collected,
9% had been waived and 14 % remained outstanding. The higher
relative collection rate, compared with that for the wholly-owned
portfolio, mainly reflected the higher proportion of office rental
income from its portfolio.
Occupancy and occupier demand
The uncertain outlook for the national economy and consumer
spending is having a significant impact on business confidence and
investment, which is unlikely to improve materially until pandemic
concerns abate. Retailers, particularly those exposed to structural
changes in shopping habits nationally and internationally, which
were clearly evident before the onset of the pandemic, have been
accelerating their review of space requirements, both in terms of
location and size of shops. Similarly, over-extended food and
beverage chains continue to retrench their operations to focus only
on the most profitable locations and sites.
EPRA vacancy at 15 September 2020
Rental value of available to % of ERV of the wholly-owned
let vacant properties portfolio
F&B and 15 September 30 September
leisure Retail Offices Residential Total 2020 2019
-------- ------ ------- ----------- ----- -------------- --------------
GBPm GBPm GBPm GBPm GBPm % %
-------- ------ ------- ----------- ----- -------------- --------------
Under offer 0.8 0.6 0.2 0.2 1.8 1.3% 1.5%
Available-to-let 2.5 3.6 2.1 3.7 11.9 8.5% 1.9%
At 15 September
2020 3.3 4.2 2.3 3.9 13.7 9.8% 3.4%
======== ====== ======= =========== ===== ============== ==============
At 30 September
2019 1.4 3.2 0.8 0.1 5.5
-------- ------ ------- ----------- -----
Area of available to let vacant properties
('000 sq. ft.)
----------------------------------------------------------------
15 September
2020 45 48 38 72 203
30 September
2019 16 46 12 1 75
Although the West End has a long-term availability/demand
imbalance, the Group has seen a decline in portfolio occupancy over
this unprecedented period. Compared with the 10-year pre-Covid-19
average of 2.9%, EPRA vacancy increased by 6.1% to 9.8% during the
period from 1 October 2019 to 15 September 2020.
The increase in EPRA vacancy over the period affected all uses
and included an exceptional increase in vacant apartments (ERV:
GBP3.9 million), completion of refurbishment schemes, space handed
back by commercial tenants, and the continuing significant
reduction in letting activity since February 2020. Lettings and
lease renewals during this period amounted to GBP22.1 million,
compared with GBP33.5 million in the previous year.
Tenant insolvencies since the lockdown in March 2020 have
accounted for approximately 2% of ERV. The trend in the months
ahead will depend on footfall and trading levels following the
introduction of the latest Government restrictions.
Available-to-let commercial vacancy at 15 September 2020
comprised:
-- 21 restaurants and cafés (45,000 sq. ft.): total ERV of GBP3.3 million;
-- 34 shops (48,000 sq. ft.): total ERV of GBP4.2 million;
o 9 were larger shops (those with an ERV of greater than
GBP150,000): total ERV of GBP2.5 million; and,
o 25 were smaller shops: total ERV of GBP1.7 million; and
-- 43 office suites (38,000 sq. ft.): total ERV of GBP2.3 million.
Enquiries for commercial space continue but at a considerably
lower volume than the Company would normally expect. Generally,
occupiers in all sectors have been looking for greater flexibility
when entering into new leasing commitments and, in particular, a
rent suspension in the event of further lockdowns. In the case of
shops and food and beverage premises, a higher specification of
landlords' basic fit out, rather than taking space in shell
condition, is becoming market standard practice. The Group has
begun providing fully fitted out space in some of the Group's
office schemes.
Residential vacancy, which prior to the pandemic has been
minimal, was unusually high at 140 apartments with an ERV of GBP3.9
million at 15 September 2020. This rapid increase was mainly due to
occupiers from overseas returning home when government restrictions
were introduced, and the collapse in demand from long-stay
international business and leisure travellers.
Across the West End, many landlords who would usually let out
their flats short-term or let to serviced apartment operators, have
been attempting to find long-term tenants. This has resulted in a
near-term over-supply of apartments to let, causing downward
pressure on rents. Given the long-term structural shortage of
accommodation in West End, the Board believes that this is a
short-term challenge in respect of the Group's residential
portfolio.
Despite challenging market conditions, and the new vacancies in
a number of apartments, the Group has seen improved levels of
letting activity, with good interest for the Group's newer studios
and one-bedroom apartments. Demand for larger two-and three-bedroom
properties, which would normally attract interest from overseas
corporates, is much reduced and may not improve significantly in
the near term.
In the Longmartin Joint Venture, the Group's share of ERV from
available to let space at 15 September 2020 was GBP0.8 million (30
September 2019: GBP0.9 million).
Recent portfolio activity
The Group has always adopted a disciplined and focused approach
when considering additions to its portfolio. It has a long
experience of investing in the West End, gained over 34 years since
the Company was formed, and a forensic knowledge of its local
investment and occupational markets.
With the West End's broad-based economy global appeal and
resilience, in the long experience of the Group, existing private
owners are traditionally reluctant to sell other than in periods of
uncertainty or financial pressure. The unprecedented operational
disruption to West End footfall, trading, demand for space and
occupancy resulting from pandemic-related measures, is beginning to
unsettle current owners. The Group has recently announced three
strategic acquisitions in Carnaby and Soho, totalling GBP13.3
million:
-- the Group purchased a dilapidated, mixed-use building
fronting Kingly Street and Kingly Court in Carnaby, which had been
in the same ownership since 1982. The Group has sought to acquire
it since its purchase of the Carnaby Estate in 1997. Plans are
already being progressed for a refurbishment and reconfiguration
scheme extending to two adjoining buildings; and
-- two freeholds recently acquired in the Group's emerging
cluster in Berwick Street adjoin existing ownerships and will offer
the opportunity, in time, to reconfigure or add space.
Discussions continue with regard to the purchase of a long
leasehold interest at 90-104 Berwick Street but there can be no
certainty this acquisition will proceed.
The Company keeps the Group's portfolio under review to identify
and sell individual buildings which, through change of
circumstances, it no longer considers to be of core importance to
its long term strategy, and where disposals will not damage the
integrity and long-term value of its portfolio.
Use of Proceeds
The Group intends to use the net proceeds of the Firm Placing
and Placing and Open Offer of approximately GBP285.0 million to
prioritise the maintenance of a strong balance sheet and maintain
its liquidity as follows, set out in order of priority.
Maintain a strong balance sheet
The intention of the Board is to ensure the Group maintains a
strong financial base, is positioned to return to long-term growth
as pandemic issues recede and, should conditions improve, is able
to invest further in its exceptional portfolio.
The Group expects its rental income and occupancy levels to
continue to be adversely affected throughout the current financial
year and into the following year. This has, and will, put pressure
on the interest cover covenants in its Revolving Credit Facilities
and Term Loans. It has, to date, arranged waivers with respect to
the interest cover covenants with its lenders as follows:
Amount (GBPm)
Debt facility and type of facility Debt maturity Interest cover covenant Waiver expiry
1997 RCF(1) GBP125 million May 2022 1.5:1 30 December 2020
revolving credit
facility
2018 RCF(2) GBP100 million February 2023 1.5:1 31 January 2021
revolving credit
facility
CLL Facility GBP134.8 million May 2029 1.4:1 20 July 2021
Agreement term loan
AV Facility GBP250 million March 2030 (GBP130 1.5:1 20 April 2021
Agreement term loan million)
August 2035 (GBP120
million)
Note:
1. to be cancelled early following the Capital Raising
2. to be repaid with the net proceeds of the Firm Placing and
Placing and Open Offer, but remains available to re-draw.
The Group has recently secured an extension of the CLL Facility
interest cover covenant waiver to 20 July 2021 and discussions
continue with the providers of the 1997 RCF, 2018 RCF and the AV
Facility. However, there can be no assurance that further
extensions, which are likely to be required across the Debt
Facilities until the rental income outlook improves, will be
granted.
The 1997 RCF and 2018 RCF have interest cover waivers until 31
December 2020 and 31 January 2021, respectively. These facilities
provide short-term liquidity for the Group. Currently, the 2018 RCF
is fully drawn and the 1997 RCF is undrawn, although the Group
expects that, unless the Firm Placing and Placing and Open Offer
completes or the Company takes other action, it would make drawings
against this facility in the coming year. The Group will need to
renew or refinance the 1997 RCF on or before its contractual
maturity. There is no assurance that the Group will be able to do
so, either on acceptable terms, or at all while visibility over
near-term income may be low.
The Group anticipates requiring an extension to the 1997 RCF's
current interest cover waiver when it expires and is in discussions
with the provider of this facility. However, this extension is not
yet agreed and is unlikely to cover periods later than June 2021.
Should this extension be secured, the Group anticipates it may need
further extensions which it cannot rely upon to be granted,
especially given the short period to maturity of the facility in
May 2022. Without extensions to the interest cover covenant, there
is a risk that the Group may be required to repay drawings under
the facility, which would reduce liquidity, and if the Group did
not have sufficient liquidity at that point in time, there is a
risk of default and cross default to the Bonds and the 2018 RCF.
The Board therefore believes that it is in the best interests of
the Company to eliminate these risks by replacing the liquidity
provided by the 1997 RCF with equity pursuant to the Firm Placing
and Placing and Open Offer. In doing so, the Group would release
GBP252 million of collateral, as at the 15 September 2020 valuation
date, currently charged against the 1997 RCF.
Of the net proceeds of the Firm Placing and Placing and Open
Offer, GBP100 million will be used to repay the 2018 RCF, which
will be available to be re-drawn, provided that all requirements in
the loan agreement are complied with, including the financial
covenants. The Firm Placing and Placing and Open Offer is also
intended to provide the Group with sufficient working capital to
avoid being reliant on an extension to the 2018 RCF's interest
cover covenant (or any further extensions) by providing the Group
with the option of cancelling all, or part, of that facility should
it be necessary or desirable to do so, while maintaining a prudent
level of liquidity. If the Group cancels all or part of that
facility, the Group would have more unsecured property to offer its
remaining lenders, if needed.
Under the terms of the CLL Facility Agreement and AV Facility
Agreement, the Group can remedy interest cover ratio shortfalls
with cash deposits although there are restrictions on the number of
times these remedies can be used, and such use would be subject to
available liquidity. In the Company's reasonable worst case
scenario modelled for the working capital statement, the Group
expects that it will meet its obligations under the CLL Facility
Agreement and AV Facility Agreement during the 12 months from the
date of the Prospectus expected to be published later today through
the waivers it currently has in place and, subsequently, by, if
necessary, placing funds (on a limited number of occasions) on
deposit with the lenders to enable it to meet the interest cover
covenants. In its modelling for the Company's reasonable worst case
scenario for the working capital statement, the Board has assumed
up to GBP12 million of liquidity will be required for cash deposits
to remedy interest cover shortfalls. Currently, the Group is in
discussions to extend the interest cover covenant waiver from the
provider of the AV Facility; should this be agreed, the amount
required for the interest cover cash deposits may fall by up to
approximately GBP7 million.
The Group was compliant with its financial covenants under the
Bonds at 31 March 2020 and has remained compliant with the terms of
the covenants at 30 September 2020. However, the Board will
continue to monitor the covenants in light of the impact of the
Covid-19 pandemic and take available action if required.
At 30 June 2020, the Group's loan-to-value ratio was 29.1%, up
from 26.7% and 23.9% at 31 March 2020 and 30 September 2019
respectively, largely due to decline in the portfolio valuation.
The valuation of the Group's wholly-owned properties at 15
September 2020 showed a further decline since 30 June 2020, from
GBP3,291.9 million to GBP3,135.8 million.
At 15 September 2020, the Group had unsecured properties valued
at GBP434 million. Whilst the relative amounts of collateral
charged against each debt arrangement, compared with the amount of
each facility, are not uniform, through charging these unsecured
properties, the Board estimates the Group could withstand a further
34% decrease in valuations (from the 15 September 2020 valuation)
before the Group reaches the limit of the loan-to-value covenants
in its Debt Facilities.
The Company's reasonable worst case scenario, modelled for the
working capital statement, assumes a valuation decrease of 25% from
15 September 2020 to the end of the 12 month period following the
date of the Prospectus expected to be published later today. The
Group expects to remain compliant with loan-to-value covenants
under this scenario (either by meeting the existing thresholds with
the current level of security or by providing uncharged properties
as security). This would result in significantly higher
loan-to-value ratios which would increase the Group's financing
risk beyond the Board's tolerance and may compromise further
interest covenant waiver and facility renewal negotiations. The
Firm Placing and Placing and Open Offer will allow the Group to
cancel the currently undrawn 1997 RCF of GBP125 million early,
releasing GBP252 million of charged properties and increasing the
Group's pool of uncharged assets to GBP686 million (both figures as
at 15 September 2020). The Group estimates this will increase the
loan-to-value covenant headroom from 34% to 42%, giving greater
protection against the risk of failing to meet these covenants.
To ensure the Group maintains appropriate levels of liquidity by
funding expected short-term cash outflows from operating and
financing activities
At 30 June 2020, the Group's available liquidity was GBP227.8
million, comprising cash and cash equivalents of GBP127.8 million
and GBP100 million undrawn under the 1997 RCF. Between then and 30
September 2020, the Group repaid drawings of GBP25 million under
the 1997 RCF and there were other cash outflows of approximately
GBP31 million including for acquisitions amounting to GBP13.3
million, capital expenditure, and operating cash flows net of
finance costs. At 30 June 2020, the Group had capital commitments
in respect of improvement schemes totalling GBP38.2 million. At 15
September 2020, the amount had decreased to approximately GBP32
million. Discussions continue with regard to the purchase of a
strategic long leasehold interest at 90-104 Berwick Street but
there can be no certainty this acquisition will proceed.
The Group's focus through the challenging period of pandemic
disruption has been, and will continue to be to help its occupiers
by providing financial and other practical support. The Board
believes that maintaining occupancy across its portfolio, wherever
possible, will position the business for sustained recovery over
the medium- and long-term, as the post-pandemic recovery
progresses. The Board expects a gradual recovery to pre-pandemic
levels of footfall and trading, which in the near term will
continue to weigh on rent collections and occupancy levels across
the West End. In the Company's reasonable worst case scenario for
the working capital statement included in the Prospectus expected
to be published later today the Group expects a cash outflow from
operating activities net of finance costs of approximately GBP45
million in the year ending 30 September 2021, before a gradual
recovery in the following year. The Board considered this against
the backdrop of available liquidity of GBP227.8 million at 30 June
2020. In the absence of the Firm Placing and Placing and Open
Offer, the expected cash outflows from operating losses, financing
costs, capital expenditure, acquisitions since 30 June 2020, and
the potential purchase of 90-104 Berwick Street would reduce
available liquidity below the minimum level the Board considers
appropriate for the Group to meet its continuing operating and
capital expenditure commitments, especially given the likely need
for further interest cover covenant waivers which may not be
granted.
In addition, absent the Firm Placing and Placing and Open Offer,
if interest cover covenant waivers cannot be extended, the Group
would not have sufficient liquidity to repay drawings under both
the 1997 and 2018 RCFs.
To fund investment in existing and future schemes, and ensure
vacant properties are refurbished to maximise their letting
prospects
Of the net proceeds of the Firm Placing and Placing and Open
Offer, up to GBP65 million will be used to fund capital expenditure
over the coming two years including capital commitments, as at 15
September 2020, of approximately GBP32 million in respect of
current refurbishment and reconfiguration schemes, to continuing
its strategy of improving the Group's existing portfolio, enabling
it to provide accommodation which meets both current occupier
requirements and anticipates market trends.
To maintain liquidity
The Group intends to use the balance of the net proceeds to
maintain a prudent level of liquidity, but should conditions
improve, to provide some capacity for portfolio investment.
The financial effect of the Capital Raising
The completion of the Firm Placing and Placing and Open Offer
would increase the Group's liquidity by approximately GBP285.0
million. Assuming the successful completion of the Firm Placing and
Placing and Open Offer, the Group's net debt would decline to
GBP672.0 million on a pro forma basis as at 30 June 2020.
A pro forma statement of net assets illustrating the
hypothetical effect of the Firm Placing and Placing and Open Offer
on the Group's net assets as at 30 June 2020 as if the Firm Placing
and Placing and Open Offer had been undertaken at that date is set
out in the Prospectus. This information is unaudited and has been
prepared for illustrative purposes only. It shows that net proceeds
from the Firm Placing and Placing and Open Offer of GBP285.0
million would lead to a pro-forma movement in net assets from
GBP2,466.2 million to GBP2,751.2 million as at 30 June 2020 and a
corresponding movement in total assets from GBP3,566.4 million to
GBP3,751.4 million. At 30 June 2020, the Group's LTV ratio was
29.1%. On a pro forma basis, adjusting for the proceeds of the Firm
Placing and Placing and Open Offer, it would be 20.4%. On a pro
forma basis, adjusting for the proceeds of the Firm Placing and
Placing and Open Offer, and the decrease in investment property
valuation from 30 June 2020 to 15 September 2020, amounting to
GBP156.1 million, the Group's LTV ratio was 21.4%.
The Capital Raising
The Company is proposing to raise proceeds of approximately
GBP285.0 million (net of fees, costs and expenses) (excluding any
proceeds from the Offer for Subscription ) by way of:
i. a Firm Placing of 37,147,884 New Shares. The New Shares
issued will not carry an entitlement to participate in the Open
Offer; and
ii. a Placing and Open Offer of 37,102,116 New Shares,
In addition, the Company is proposing to raise proceeds of up to
GBP10 million (GBP9.7 million net of commissions) by way of an
Offer for Subscription of up to 2,500,000 New Shares. The New
Shares issued will not carry an entitlement to participate in the
Open Offer.
In each case, the New Shares shall be issued at an Issue Price
of 400 pence per New Share. The New Shares, when issued and fully
paid, will rank pari passu in all respects with the Existing
Shares, including the right to receive dividends or distributions
made, paid or declared after the date of issue of the New Shares,
save in respect of any dividend or distribution with a record date
falling before the date of issue of the New Shares. The Firm
Placing and Placing and Open Offer are fully underwritten by the
Joint Underwriters on the terms and subject to the conditions of
the Underwriting and Sponsor's Agreement. The Offer for
Subscription is not underwritten.
The Board has considered the best way to structure the proposed
equity capital raising in light of the Group's current financial
position. The decision to structure the equity capital raising by
way of a combination of a Firm Placing, a Placing and Open Offer
and an Offer for Subscription takes into account a number of
factors, including the total net proceeds to be raised and the
Board's view (having sought advice) that it provides a lower level
of market risk than a rights issue in the current market
environment. The Board believes that the Firm Placing will enable
the Company to satisfy demand from current Shareholders wishing to
increase their equity positions in the Company as well as potential
new investors. Further, the Offer for Subscription will allow an
opportunity for other potential investors, including employees and
retail investors, to become shareholders in the Company. The Board
has sought to balance the dilution to existing Shareholders arising
from the Firm Placing and Offer for Subscription with the benefit
of bringing in substantial investors with firm commitments to
ensure the success of the Capital Raising. As a result, 50.0% of
the New Shares being issued ( excluding the impact of the Offer for
Subscription, 48.3% assuming full take up under the Offer for
Subscription) will be available to existing Shareholders through
the Open Offer on a pro rata basis. The Board is seeking the
approval of Shareholders, by way of the Resolutions at the General
Meeting, to the proposed Capital Raising.
Applications have been or will be made to the FCA for the New
Shares to be admitted to the premium segment of the Official List
and to the London Stock Exchange for the New Shares to be admitted
to trading on the Main Market. It is expected that Admission of the
New Shares will become effective and that dealings in the New
Shares will commence on the London Stock Exchange by 8.00 a.m.
(London time) on 18 November 2020.
The Existing Shares are admitted to CREST. It is expected that
all of the New Shares, when issued and fully paid, will be capable
of being held and transferred by means of CREST.
Issue Price
The Firm Placing, the Placing and Open Offer and Offer for
Subscription will each be made at an Issue Price of 400 pence per
New Share. The Issue Price of 400 pence per New Share represents a
discount of 19.7% to the LSE Closing Price of 498 pence per Share
on 21 October 2020 (being the Business Day prior to the
announcement of the Capital Raising). The Issue Price (and
discount) have been set by the Directors following their assessment
of the prevailing market conditions and anticipated demand for the
New Shares. The Board, having taken advice from its advisers,
believes that the Issue Price (including the discount) is
appropriate in the circumstances.
Firm Placing
The Company proposes to issue 37,147,884 Firm Placing Shares to
Firm Placees at the Issue Price, on a non-pre-emptive basis. The
Firm Placing will not be subject to clawback to satisfy Open Offer
Entitlements and Excess Open Offer Entitlements taken up by
Qualifying Shareholders.
Pursuant to the Underwriting and Sponsor's Agreement, the Joint
Underwriters have severally agreed to use reasonable endeavours to
procure subscribers for the Firm Placing Shares at the Issue Price.
To the extent that: (i) the Joint Underwriters fail to procure
subscribers in the Firm Placing for the underwritten Firm Placing
Shares (including in the event that a prospective Firm Placee fails
to take up any or all of the Firm Placing Shares which have been
allocated to it or which it has agreed to take up at the Issue
Price); and/or (ii) any Firm Placees procured other than by the
Joint Underwriters fails to subscribe for any or all of the
underwritten Firm Placing Shares allotted to it in the Firm Placing
(including in the event that such prospective Firm Placee fails to
take up any or all of the underwritten Firm Placing Shares which
have been allocated to it or which it has agreed to take up at the
Issue Price), then each of the Joint Underwriters has agreed, on
the terms and subject to the conditions set out in the Underwriting
and Sponsor's Agreement, severally (and not jointly or jointly and
severally) to subscribe for such Firm Placing Shares at the Issue
Price in its agreed proportion.
Placing and Open Offer
Under the Open Offer, Qualifying Shareholders are being given
the opportunity to subscribe for New Shares pro rata to their
current holdings on the basis of:
7 New Shares for every 58 Existing Shares
held by them and registered in their name on the Record Date
(and so in proportion to any other number of Existing Shares then
held) on the terms and subject to the conditions set out in the
Prospectus expected to be published later today (and, in the case
of Qualifying Non-CREST Shareholders, the Application Form).
Qualifying Shareholders may apply for any whole number of Open
Offer Shares up to their Open Offer Entitlements. Fractions of Open
Offer Shares will not be allotted and each Qualifying Shareholder's
Open Offer Entitlements will be rounded down to the nearest whole
number. Any fractional entitlements to Open Offer Shares will be
aggregated and made available under the Excess Application
Facility. Accordingly, Qualifying Shareholders with fewer than 58
Existing Shares will not be entitled to take up any Open Offer
Shares but may be able to apply for Excess Open Offer Shares under
the Excess Application Facility. Holdings of Existing Shares in
certificated and uncertificated form will be treated as separate
holdings for the purpose of calculating Open Offer
Entitlements.
Pursuant to the Underwriting and Sponsor's Agreement, the Joint
Underwriters have also severally agreed to use reasonable
endeavours to procure Conditional Placees to subscribe for New
Shares not validly taken-up by Qualifying Shareholders under the
Open Offer ("Non-Taken Up Shares"). To the extent that: (i) the
Joint Underwriters fail to procure subscribers in the Placing for
such underwritten Non-Taken Up Shares (and/or to the extent that
any Conditional Placee so procured fails to subscribe for any or
all of the Non-Taken Up Shares allocated to it in the Placing
(including by defaulting in paying the Issue Price in respect of
the underwritten Non-Taken Up Shares so allocated to it or which it
has agreed to subscribe at the Issue Price); and/or (ii) any
Conditional Placee procured other than by the Joint Underwriters
fails to subscribe for any or all of the Non-Taken Up Shares
allocated to it in the Placing (including by defaulting in paying
the Issue Price in respect of such Non-Taken Up Shares allocated to
it), then each of the Joint Underwriters has agreed, on the terms
and subject to the conditions set out in the Underwriting and
Sponsor's Agreement, severally (and not jointly or jointly and
severally) to subscribe for such Open Offer Shares at the Issue
Price in its agreed proportion.
Excess Application Facility
Qualifying Shareholders are also being given the opportunity to
apply for Excess Open Offer Shares at the Issue Price through the
Excess Application Facility. The total number of Open Offer Shares
is fixed and will not be increased in response to any applications
under the Excess Application Facility. Fractions of Excess Open
Offer Shares will not be issued under the Excess Application
Facility and entitlements to apply for Excess Open Offer Shares
will be rounded down to the nearest whole number. If applications
under the Excess Application Facility are received for more than
the number of Excess Open Offer Shares available following take up
of Open Offer Entitlements, applications will be scaled back at the
Company and the Joint Underwriters' absolute discretion.
Applications under the Excess Application Facility shall be
allocated in such manner as the Directors and the Joint
Underwriters may determine, at their absolute discretion, and no
assurance can be given that your application for Excess Open Offer
Shares will be met in full or in part or at all.
Impact of not applying for New Shares
Any New Shares which are not applied for under the Open Offer
will be allocated to Conditional Placees pursuant to the Placing.
Pursuant to the Underwriting and Sponsor's Agreement, the Joint
Underwriters have severally agreed to use reasonable endeavours to
procure conditional subscribers (subject to clawback to satisfy
Open Offer Entitlements and Excess Open Offer Entitlements taken up
by Qualifying Shareholders) for the New Shares at the Issue Price.
If the Joint Underwriters are unable to procure subscribers for any
New Shares that are not taken up by Qualifying Shareholders
pursuant to the Open Offer (including in the event that a
prospective Conditional Placee fails to take up any or all of the
Firm Placing Shares which have been allocated to it or which it has
agreed to take up at the Issue Price), then each of the Joint
Underwriters has agreed, on the terms and subject to the conditions
set out in the Underwriting and Sponsor's Agreement, severally (and
not jointly or jointly and severally) to subscribe for such New
Shares at the Issue Price in its agreed proportion.
Shareholders should be aware that the Open Offer is not a rights
issue. As such, Qualifying Non-CREST Shareholders should note that
their Application Forms are not negotiable documents and cannot be
traded. Qualifying CREST Shareholders should note that, although
the Open Offer Entitlements and Excess Open Offer Entitlements will
be admitted to CREST, and be enabled for settlement, the Open Offer
Entitlements and Excess Open Offer Entitlements will not be
tradeable or listed and applications in respect of the Open Offer
may only be made by the Qualifying Shareholder originally entitled
or by a person entitled by virtue of a bona fide market claim. New
Shares for which application has not been made under the Open Offer
(including the Excess Application Facility) will not be sold in the
market for the benefit of those who do not apply under the Open
Offer (including the Excess Application Facility) and Qualifying
Shareholders who do not apply to take up their entitlements will
have no rights, and will not receive any benefit, under the Open
Offer. Any Open Offer Shares which are not applied for under the
Open Offer (including the Excess Application Facility) will be
allocated to Conditional Placees pursuant to the Placing.
Offer for Subscription
Up to 2,500,000 New Shares are available under the Offer for
Subscription at the Issue Price, representing gross proceeds of up
to approximately GBP10.0 million (approximately GBP9.7 million net
of fees, costs and expenses). The Offer for Subscription is only
being made in the United Kingdom but, subject to applicable law,
the Company may allot New Shares on a private placement basis to
applicants in other jurisdictions. The Offer for Subscription is
not underwritten. The Offer for Subscription is separate to, and
does not form part of, the Firm Placing and Placing and Open Offer.
New Shares may be issued pursuant to the Offer for Subscription
regardless of whether the Offer for Subscription is subscribed in
full.
Dilution
If a Qualifying Shareholder who is not a Placee does not take up
any of their Open Offer Entitlements (assuming he or she or it does
not participate in the Offer for Subscription), such Qualifying
Shareholder's holding, as a percentage of the Enlarged Issued Share
Capital, will be diluted by 19.5% (excluding the impact of the
Offer for Subscription) or 20.0% (assuming full take up under the
Offer for Subscription) as a result of the Capital Raising.
If a Qualifying Shareholder who is not a Placee takes up their
Open Offer Entitlements in full (assuming he or she or it does not
participate in the Excess Application Facility or in the Offer for
Subscription), such Qualifying Shareholder's holding, as a
percentage of Enlarged Share Capital, will be diluted by 9.7%
(excluding the impact of the Offer for Subscription) or 10.3%
(assuming full take up under the Offer for Subscription) as a
result of the Capital Raising.
Subject to certain limited exceptions, shareholders in Excluded
Territories will not be able to participate in the Open Offer nor
in the Offer for Subscription and will therefore experience
dilution as a result of the Capital Raising (subject to any
participation in the Firm Placing and Placing).
Shareholders who are otherwise not Qualifying Shareholders will
not be able to participate in the Open Offer and will therefore
experience dilution as a result of the Capital Raising.
Conditionality
The Capital Raising is conditional upon:
i. all of the Resolutions being passed by Shareholders at the General Meeting;
ii. the undertakings from CapCo and Norges being duly executed
and not having been breached or terminated prior to Admission;
iii. the Underwriting and Sponsor's Agreement having become
unconditional in all respects (save for the condition relating to
Admission) and not having been rescinded or terminated in
accordance with its terms prior to Admission; and
iv. Admission occurring not later than 8.00 a.m. on 18 November
2020 or such later time and/or date (being not later than 2
December 2020) as the Company and the Joint Underwriters may
agree.
If any condition is not satisfied or, if applicable, waived or
if the Underwriting and Sponsor's Agreement is rescinded or
terminated in accordance with its terms prior to Admission, then
the Capital Raising will not take place. In such circumstances,
application monies will be returned (at the applicant's risk)
without payment of interest, as soon as practicable thereafter.
Shareholder undertakings
CapCo which holds 80,721,003 Existing Shares as at the Latest
Practicable Date (representing approximately 26.3% of the Company's
issued ordinary share capital as at the Latest Practicable Date),
has given an undertaking to the Company pursuant to which it has
agreed to subscribe, and to procure that its affiliates apply to
subscribe, for 8,130,008 New Shares at the Issue Price pursuant to
the Firm Placing and to take up their rights in respect of Existing
Shares to subscribe for 8,119,992 New Shares at the Issue Price as
a Conditional Placee pursuant to the Placing and Open Offer
(subject to such number of Conditional Placing Shares being reduced
on a share-for-share basis in the event that CapCo exercises its
right of offset in respect of its entitlement to New Shares under
the Open Offer) (representing gross proceeds of approximately
GBP65,000,000). CapCo also agreed to procure that it shall and it
shall procure that its affiliates shall, vote in favour of all
resolutions (other than any resolution which is required to approve
CapCo's acquisition of New Shares pursuant to the Capital Raising)
at the General Meeting.
Norges which holds 79,680,278 Existing Shares as at the Latest
Practicable Date (representing approximately 25.9% of the Company's
issued ordinary share capital as at the Latest Practicable Date),
has given an undertaking to the Company pursuant to which it has
agreed to subscribe for 9,628,447 New Shares at the Issue Price
pursuant to the Firm Placing and to take up in full their rights in
respect of Existing Shares to subscribe for 9,616,585 New Shares at
the Issue Price pursuant to the Placing and Open Offer
(representing gross proceeds of approximately GBP76,980,128).
Norges has also agreed to vote in favour of all resolutions (other
than any resolution which is required to approve Norges'
acquisition of New Shares pursuant to the Capital Raising) at the
General Meeting.
The agreement of each of CapCo and Norges is subject to the
terms of their respective undertakings.
Action to be taken in respect of the Open Offer
The latest time for acceptance by Qualifying Shareholders under
the Open Offer is expected to be 11.00 a.m. (London time) on 16
November 2020, unless otherwise announced by the Company.
If you are in any doubt as to what action you should take, you
are recommended to seek your own personal financial advice
immediately from your stockbroker, bank manager, solicitor,
accountant, fund manager or other independent financial adviser
authorised under the FSMA if you are resident in the United Kingdom
or, if you are not, from another appropriately authorised
independent financial adviser.
Action to be taken in respect of the Offer for Subscription
The latest time for applications under the Offer for
Subscription is expected to be 11.00 a.m. (London time) on 16
November 2020, unless otherwise announced by the Company.
If you are in any doubt as to what action you should take, you
are recommended to seek your own personal financial advice
immediately from your stockbroker, bank manager, solicitor,
accountant, fund manager or other independent financial adviser
authorised under the FSMA if you are resident in the United Kingdom
or, if you are not, from another appropriately authorised
independent financial adviser.
Overseas Persons
Subject to certain exceptions, neither this announcement, the
Prospectus expected to be published later today, the Application
Form nor the Offer for Subscription Application Form will be sent
to Qualifying Non-CREST Shareholders with registered addresses, or
who are resident, in any of the Excluded Territories, nor will the
CREST stock account of Qualifying CREST Shareholders with
registered addresses, or who are resident, in any of the Excluded
Territories be credited with Open Offer Entitlements or Excess Open
Offer Entitlements. Any person with a registered address outside
the United Kingdom or who is resident in an Excluded Territory who
obtains a copy of this announcement, the Prospectus expected to be
published later today or an Application Form is required to
disregard it or them, except with the consent of the Company.
Notwithstanding any other provision of this announcement, the
Prospectus expected to be published later today, the Application
Form or the Offer for Subscription Application Form the Company and
the Joint Underwriters reserve the right to permit any Shareholder
on the Register of Members at the Record Date to take up its, his
or her rights if it is established to the satisfaction of the
Company and the Joint Underwriters that the transaction in question
will not violate applicable laws.
In particular, persons who have registered addresses in or who
are resident in, or who are citizens of, countries other than the
United Kingdom should consult their professional advisers whether
they require any governmental or other consents or need to observe
any formalities to enable them to take up their entitlements in the
Open Offer.
Working capital statement
The Company is of the opinion that, taking into account the net
proceeds of the Firm Placing and Placing and Open Offer and
available facilities, the Group will have sufficient working
capital for its present requirements, that is, for at least the
next 12 months from the date of publication of the Prospectus
expected to be published later today.
Impact of the Covid-19 pandemic
In preparing this working capital statement, the Company is
required to identify, define and consider a reasonable worst case
scenario, which has involved making certain assumptions regarding
the Covid-19 pandemic and its potential impact on the Group.
The Covid-19 pandemic has had, and is anticipated to continue to
have, a significant impact on the Group's near-term performance.
Given the considerable uncertainties as to the continuing potential
future impact of the Covid-19 pandemic on the Group and its
business, the Board believes that it is appropriate to provide
additional disclosure of the key Covid-19 assumptions underpinning
the Company's reasonable worst case scenario, while also noting
that changes in these assumptions could have a material impact on
the financial performance and financial position of the Group.
Reasonable worst case assumptions relating to the Covid-19
pandemic
In preparing its reasonable worst case scenario, the Company has
made assumptions regarding the need for more severe Covid-19
containment measures adversely affecting footfall and trading in
the West End, occupancy in the Group's property portfolio and a
slower recovery than assumed in the Company's base case scenario.
The reasonable worst case therefore includes certain Covid-19
related sensitivities, as set out in the following key
assumptions:
-- Continuing Government social distancing measures with a
gradual return of West End footfall and improvement in trading
conditions from July 2021;
-- A decline in total rent collection to 25% of contracted rent
from 1 October 2020 to 30 June 2021, rising to 35% and 45% in the
quarters ending 30 September 2021 and 31 December 2021
respectively;
-- EPRA vacancy at 20% of ERV throughout the period from 1
October 2020 to 31 December 2021;
-- An increase in irrecoverable property costs of GBP4.0 million
for the period from 1 October 2020 to 30 September 2021;
-- ERV decline (on all new letting events) in the year ending 30
September 2021 of 20%, with a further decline of 10% in the year
ending on 30 September 2022; and
-- A decrease in the valuation of the Group's wholly-owned
portfolio and the Longmartin Joint Venture properties of 25% from
15 September 2020 to the end of the 12 month period following the
date of the Prospectus.
Basis of preparation of the working capital statement
The working capital statement included in the Prospectus
expected to be published later today has been prepared in
accordance with the ESMA recommendations, and the technical
supplement to the FCA Statement of Policy published on 8 April 2020
relating to the Covid-19 pandemic.
Directors' intentions and recommendation
Each Director who holds (and/or whose PCA holds) Existing Shares
has irrevocably undertaken to vote (and/or, where applicable, to
procure that his or her PCA votes), in favour of the Resolutions to
be proposed at the General Meeting to approve the Capital Raising
in respect of such holdings, amounting in aggregate to 3,650,538
Existing Shares, representing 1.2% of the issued share capital of
the Company as at the Latest Practicable Date.
In addition, the Directors have irrevocably undertaken to
subscribe for (or procure their PCAs to subscribe for) up to 76,960
New Shares at the Issue Price
General Meeting
In light of the COVID-19 outbreak, the Board take the well-being
of the Company's employees and Shareholders very seriously. The UK
Government has introduced measures to deal with the coronavirus
crisis which include guidance on social distancing and restrictions
on non-essential travel and public gatherings, which affect the
manner in which the General Meeting can be conducted.
The Board regrets that to ensure Shareholders' safety,
Shareholders will not be permitted to attend the General Meeting in
person. Any person attempting to attend the General Meeting in
person will be refused admission. In order to comply with relevant
legal requirements, the General Meeting will be convened with the
minimum necessary quorum. This will be facilitated by the
Company.
Further details will be set out in the Prospectus when
published.
Importance of your vote
Your attention is again drawn to the fact that the Capital
Raising is conditional and dependent upon, amongst other things,
the Resolutions, all of which are inter-conditional, being passed
at the General Meeting.
Shareholders are asked to vote in favour of all of the
Resolutions at the General Meeting in order for the Capital Raising
to proceed. Having assessed the Group's financial position in light
of the implications of the Covid-19 pandemic for its short- and
medium-term prospects, the Board believes that the Capital Raising
will help ensure the Group maintains a strong financial base, is
positioned to return to long-term growth as pandemic issues recede,
and, should conditions improve, is able to invest further in its
exceptional portfolio. The Group intends to use the net proceeds of
the Firm Placing and Placing and Open Offer of approximately
GBP285.0 million to maintain a strong balance sheet, support its
liquidity and fund expected short-term cash outflows from operating
and financing activities and enable the Group to invest in its
exceptional portfolio. See "Use of Proceeds".
The Board has considered a range of options to optimise the
Group's long-term capital structure including property disposals,
bond issuance, repayment of existing Debt Facilities and
alternative forms of capital raising including both debt and
equity. The Board concluded that:
-- while the short- and medium-term outlook for rental income
and property values remains uncertain, the Group should prioritise
maintaining a strong financial base and its liquidity, focusing on
debt and gearing levels; and
-- a material level of disposals to address financing risks
would not be in the long-term interests of the Group.
Related to this analysis, if the Firm Placing and Placing and
Open Offer do not complete, the Company is of the opinion that it
will not have sufficient working capital for its present
requirements, that is, for at least the next 12 months from the
date of publication of the Prospectus, and would need to take
alternative actions to provide liquidity. The Group would endeavour
to reach agreements with the lenders under the Debt Facilities (the
"Lenders") for further waivers and/or restructured or otherwise
amended facilities. While the Company believes that its
relationships with its Lenders would help achieve acceptable
agreements with them in such circumstances, a belief supported by
the waivers it has been able to obtain to date, there can be no
assurance that the Group would ultimately be successful in doing
so, not least because of the potentially different trading
environment the Group might find itself in at that time. Either in
the absence of any such agreement with its Lenders, or potentially
as conditions to reaching such agreement, the Group would also
reduce or eliminate the discretionary portion of its capital
expenditure plans and would consider selling properties within its
portfolio to raise cash in order to rectify working capital
shortfalls as they arose, including any such shortfalls associated
with prepaying all or some of the Debt Facilities (and any accrued
but unpaid interest and prepayment penalties). The Company
believes, however, that in such a scenario, and in light of
uncertainty in property markets, the Group could find it
challenging to raise sufficient cash either absolutely, or in time,
to avoid the shortfalls associated with prepaying all or some of
the Debt Facilities (and any accrued but unpaid interest and
prepayment penalties). If the Group is not successful in achieving
any of the options set out above, the Group would not have
sufficient funds available to repay the obligations under the Debt
Facilities as they fall due, and, enforcement action by the
Lenders, by way of insolvency proceedings or other actions, would
likely result in Shareholders losing all of the value of their
investment in the Group.
The Firm Placing and Placing and Open Offer is important because
the Company cannot guarantee that it will be granted extensions to
interest cover covenant waivers from the providers of its Debt
Facilities. The availability of liquidity provided by the 1997 RCF
and the 2018 RCF will be subject to the further grant of waivers by
lenders in the period to their contractual maturities and there can
be no guarantee that these will be granted. The prospects for
obtaining any such waivers would also be damaged in the absence of
adequate assurance that waivers under the other Debt Facilities
were either not required or would be given. In the absence of the
Firm Placing and Placing and Open Offer, if the applicable interest
cover covenant waivers are not extended, the Group will lose the
liquidity available under the 1997 RCF on 31 December 2020 (when
the existing waiver in respect of that facility expires) and the
lender under the 2018 RCF will become entitled to declare that
GBP100 million currently drawn (if not repaid or otherwise
cancelled) on that facility plus accrued and unpaid interest is
immediately due and payable following 31 January 2021 (when the
existing waiver in respect of that facility expires) whereupon
these amounts will need to be repaid. In the absence of the Firm
Placing and Placing and Open Offer, the Company does not anticipate
being able to repay these amounts and such a situation. Any failure
and/or inability to pay these amounts when due could result in a
cross default or other breach under other Debt Facilities, in
accordance with their terms.
Interest cover covenant waivers in respect of the CLL Facility
Agreement and the AV Facility Agreement expire on 20 July 2021 and
20 April 2021 respectively and there can be no assurance that those
waivers would be extended. Cure rights in respect of the interest
cover covenants are available a limited number of times by
depositing an amount of cash in a secured bank account to top up
the relevant rental income shortfall or, in respect of the AV
Facility Agreement, such facility agreement also allows for the
prepayment of the loans outstanding thereunder (subject to the
payment of a prepayment premium) by an amount necessary to reduce
the interest payable to ensure compliance.
In the absence of the Firm Placing and Placing and Open Offer,
however, the Group would not have the liquidity that would be
needed for any such cash deposits or prepayments to remedy the
interest cover ratio shortfalls. Under the Company's reasonable
worst case scenario for its working capital statement, the Company
anticipates needing GBP11.9 million for such cash deposits in order
to remedy the anticipated interest cover ratio shortfalls. If the
waivers in respect of the CLL Facility Agreement and the AV
Facility Agreement are not extended, in the absence of the
liquidity to make the requisite cash deposits, the Group may need
further liquidity that it would not have in the amount of GBP384.8
million plus any accrued, unpaid interest and prepayment premiums,
less amounts held on deposit with the providers of the term loans,
to be able to repay the CLL Facility Agreement and the AV Facility
Agreement to avoid the resulting events of default under those
facilities. Amounts held on deposit under the CLL Facility
Agreement and the AV Facility Agreement currently stand at GBP11.1
million. Any failure and/or inability to pay the amounts under
these facilities when due may well also result in an event of
default arising under other Debt Facilities,in accordance with
their terms.
If the Group does not cancel the 1997 RCF and replenish its
liquidity with the net proceeds of the Firm Placing and Placing and
Open Offer, the Group would also not be able to release the
security over the properties currently charged under the 1997 RCF
and the Group would not therefore be able to use those properties
to secure its obligations under one or more of its other Debt
Facilities if it needs to, in order to withstand a decrease in
valuations that risks breaching the limit of the loan-to-value
covenants in its Debt Facilities. The Company's reasonable worst
case scenario, modelled for the working capital statement, assumes
a further valuation decrease of 25% from 15 September 2020 to the
end of the 12 month period following the date of the Prospectus.
Whilst the Group expects to remain compliant with loan-to-value
covenants under this scenario (either by meeting the existing
thresholds with the current level of security or by providing
currently uncharged properties as security), significantly higher
loan-to-value ratios will increase the Group's financing risk
beyond the Board's tolerance and may compromise further interest
cover waiver negotiations. Any failure and/or inability to pay the
amounts under these facilities when due may well also result in an
event of default arising under other Debt Facilities, in accordance
with their terms.
Accordingly, the Board has determined that it is in the
long-term interests of the business to raise equity by way of the
Capital Raising.
Recommendation
The Board believes that the Capital Raising and the Resolutions
are in the best interests of the Company and its Shareholders as a
whole and unanimously recommends that you vote in favour of the
Resolutions. Each Director who holds (and/or whose person closely
associated holds) Existing Shares has irrevocably undertaken to
vote (and/or, where applicable, to procure that their person
closely associated votes), in favour of the Resolutions.
The impact on the Group of the Covid-19 pandemic has been, and
will continue to be, significant in the near term, presenting
operational and financial challenges. The injection of equity
through the Capital Raising will enable the Group to maintain a
resilient capital structure, support its liquidity and invest in
its exceptional portfolio.
Whilst the extent and duration of Government restrictions to
control the Covid-19 pandemic, and the pace of future recovery of
footfall and trading in the West End, are uncertain, the Board
believes that the exceptional long-term qualities of the Group's
virtually impossible-to-replicate portfolio, and its strengthened
finances, will provide a solid base for medium-term recovery.
Together with the benefit of the Group's long-term, evolving
management strategy, implemented by an experienced and innovative
management team, the Board remains confident in the long-term
prospects for this business.
APPIX I -
1997 RCF the Revolving Credit Facility Agreement entered into between the
Company and Shaftesbury Covent
Garden Limited (as borrowers) and National Australia Bank Limited
(as lender) and originally
dated 25 February 1997 (as amended, novated, supplemented,
extended and/or restated from time
to time and as most recently amended and restated on 12 February
2018)
2018 RCF Revolving Credit Facility Agreement entered into between the
Company and Shaftesbury Covent
Garden Limited (as borrowers), Lloyds Bank plc and Wells Fargo
Bank, NA, London Branch (as
mandated lead arrangers and lenders) and Lloyds Bank plc (as agent
and security agent) and
dated 12 February 2018 (as amended, novated, supplemented,
extended and/or restated from time
to time
Admission admission of the New Shares to the premium listing segment of the
Official List, and trading
on the London Stock Exchange's main market for listed securities
Application Form the personalised application form on which Qualifying Non-CREST
Shareholders may apply for
the New Shares under the Open Offer
AV Facility Agreement the Facility Agreement between Shaftesbury AV Limited (as
borrower) and Aviva Commercial Finance
Limited (as lender, agent and security agent) originally dated 17
March 2015 (as amended,
novated, supplemented, extended and/or restated from time to time
and as most recently amended
and restated on31 July 2015 and further amended on 21 July 2020)
Board the board of directors of the Company
Bonds the GBP285,000,000 guaranteed first mortgage bonds issued by
Shaftesbury Carnaby PLC on 7
October 2016 and which are due in 2031 and the GBP290,000,000
guaranteed first mortgage bonds
issued by Shaftesbury Chinatown PLC on 7 September 2017 and which
are due in 2027
Business Day a day (other than a Saturday, Sunday or public holiday) on which
banks are open for general
business in London
CapCo Capital & Counties Properties PLC
Carnaby the area centred on Carnaby Street, London W1 and the eleven
surrounding streets bounded by
Kingly Street, Great Marlborough Street, Marshall Street and Beak
Street
CLL Facility Agreement the Facility Agreement between Shaftesbury CL Limited (as
borrower) and Canada Life Limited
(as lender) dated 17 April 2014 (as amended, novated,
supplemented, extended and/or restated
from time to time)
Closing Price 498 pence
Covent Garden the area comprising the districts of Seven Dials, Coliseum and the
Opera Quarter in London
WC2
CREST the relevant system (as defined in the CREST Regulations) for the
paperless settlement of
trades in listed securities in the United Kingdom, of which
Euroclear Limited is the operator
(as defined in the CREST Regulations)
Crest Members a person who has been admitted by Euroclear as a system-member (as
defined in the CREST Regulations)
Directors the executive directors and the non-executive Directors of the
Company as at the date of this
announcement
Debt Facilities the Bonds, the Term Loans and/or the Revolving Credit Facilities
Disclosure Guidance and Transparency Rules the disclosure guidance and transparency rules made by the FCA
under Part 6 of the FSMA
EPRA the European Public Real Estate Association - a real estate
industry body which has issued
Best Practice Recommendations with the intention of improving the
transparency, comparability
and relevance of the published results of listed real estate
companies in Europe
Excess Application Facility the facility for Qualifying Shareholders (other than persons who
have registered address in,
who are incorporated in, registered in or otherwise resident or
located in, the United States
or any other Excluded Territory) to apply for Excess Shares in
excess of their Open Offer
Entitlements
Excess Open Offer Entitlements in respect of each Qualifying Shareholder who has taken up his or
her Open Offer Entitlement
in full, the entitlement (in addition to the Open Offer
Entitlement) to apply for Excess Shares,
up to the number of Open Offer Shares, pursuant to the Excess
Application Facility, which
may be subject to scaling down at the absolute discretion of the
Board in consultation with
the Joint Underwriters
Excess Shares New Shares which may be applied for by Qualifying Shareholders in
addition to their Open Offer
Entitlements pursuant to the Excess Application Facility
Excluded Territory the United States, the Commonwealth of Australia, its territories
and possessions, Canada,
Japan, the Republic of South Africa and Switzerland, and any other
jurisdiction where the
extension or availability of the Open Offer or the Offer for
Subscription would breach any
applicable law of regulation
Existing Shares in relation to a particular date, the Shares existing as at that
date, or otherwise, the Shares
in issue at the date of the Prospectus, as required by the context
FCA the Financial Conduct Authority
Firm Placed Shares in aggregate, 37,147,884 New Shares which the Company is proposing
to allot and issue pursuant
to the Firm Placing
Firm Placees any persons who have agreed or shall agree to subscribe for Firm
Placed Shares pursuant to
the Firm Placing
Firm Placing the subscription by the Firm Placees for the Firm Placed Shares
Firm Placing and Offer for Subscription Resolution the special resolution to be proposed at the General Meeting to
provide the Directors with
the necessary authority and power to allot equity securities as if
section 561 of the Companies
Act did not apply to such allotment in order to undertake the Firm
Placing and the Offer for
Subscription, to apply until the conclusion of the Annual General
Meeting of the Company to
be held in 2020
Form of Proxy or Proxy Form the form of proxy for use at the General Meeting which accompanies
the Prospectus
FSMA the Financial Services and Markets Act 2000 (as amended)
General Meeting the general meeting of the Company to be held at the Company's
registered office at 22 Ganton
Street, Carnaby, London, E1F 7FD on 17 November 2020 at 10.00
a.m.,
Group the Company and its subsidiary undertakings and, where the context
requires, its associated
undertakings
IFRS International Financial Reporting Standards as adopted by the EU
Issue Price 400 pence per Share
Latest Practicable Date the latest practicable date prior to the publication of the
Prospectus, being 20 October 2020
Listing Rules the listing rules made by the FCA pursuant to Part 6 of the FSMA
London Stock Exchange London Stock Exchange plc
London's West End or the West End an area of central London to the west of the City of London
located around Oxford Circus,
Piccadilly Circus, Tottenham Court Road, Leicester Square and
Covent Garden
Longmartin Joint Venture Longmartin Properties Limited, which is owned in equal parts by
the Company and The Mercers'
Company, and whose registered number is 05291183 and whose
registered office is 22 Ganton
Street, Carnaby, London,W1F 7FD
New Shares the new Shares to be issued by the Company pursuant to the Capital
Raising
Norges Norges Bank
Offer for Subscription Application Form the application form on which Shareholders and other investors may
apply for Offer for Subscription
Shares under the Offer for Subscription
Open Offer the conditional invitation to Qualifying Shareholders to subscribe
for the Open Offer Shares
at the Issue Price on the terms and subject to the conditions set
out in Prospectus and, in
the case of Qualifying Non-CREST Shareholders only, the
Application Form
Open Offer Entitlements entitlements to subscribe for the Open Offer Shares, allocated to
a Qualifying Shareholder
pursuant to the Open Offer
PCA means a person closely associated as defined in the Market Abuse
Regulation (EU) No 596/2014
Placing the conditional placing, by the Joint Underwriters, as agent of
and on behalf of the Company,
of the Open Offer Shares subject to clawback pursuant to the Open
Offer, on the terms and
subject to the conditions contained in the Underwriting and
Sponsor's Agreement
Prospectus the prospectus and circular issued by the Company in respect of
the Capital Raising, together
with any supplements or amendments thereto
Prospectus Regulation the Prospectus Regulation (EU) 2017/1129 and amendments thereto
Prospectus Regulation Rules the prospectus rules made by the FCA under Part 6 of the FSMA
Qualifying CREST Shareholders Qualifying Shareholders holding Shares in uncertificated form
Qualifying non-CREST Shareholders Qualifying Shareholders holding Shares in certificated form
Qualifying Shareholders Shareholders on the register of members of the Company on the
Record Date with the exclusion
of persons with a registered address or located or resident in the
United States or any Excluded
Territory
Record Date close of business on 21 October 2020
REIT Real Estate Investment Trust-a tax regime which in the United
Kingdom exempts participants
from corporation tax both on UK rental income and gains arising on
UK investment property
sales, subject to certain requirements as set out in the Finance
Act 2006
Resolutions the New Share Issue Resolutions and the Firm Placing and Offer for
Subscription Resolution
Revolving Credit Facilities or RCFs the 2018 RCF and/or the 1997 RCF
Shareholders holders of Shares
Shares ordinary shares of GBP0.25 each in the capital of the Company
Term Loans the AV Facility Agreement and/or the CLL Facility Agreement
Underwriting and Sponsor's Agreement the underwriting and sponsors' agreement dated 22 October 2020
between and among the Company,
the Sponsor and the Joint Underwriters
Village the distinctive destination established by the Group, over time,
by applying its business
strategy of acquiring identifiable clusters of properties and
"Villages" means all of the
Group's Villages. The Group's established Villages are situated in
Carnaby, Soho, Fitzrovia,
Chinatown and Covent Garden
APPIX II - TERMS AND CONDITIONS OF THE FIRM PLACING AND THE
PLACING
IMPORTANT INFORMATION ON THE FIRM PLACING AND PLACING FOR
INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM
PLACING OR THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING
DISTRIBUTED TO: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC
AREA ("EEA"), PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE
MEANING OF ARTICLE 2(E) OF THE PROSPECTUS REGULATION ("QUALIFIED
INVESTORS"); (B) IF IN THE UNITED KINGDOM, PERSONS WHO ARE
QUALIFIED INVESTORS AND FALL WITHIN THE DEFINITION OF "INVESTMENT
PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND
MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMED (THE
"ORDER") OR ARE PERSONS FALLING WITHIN ARTICLE 49(2) OF THE ORDER;
(C) IF IN THE UNITED STATES, PERSONS REASONABLY BELIEVED TO BE
"QUALIFIED INSTITUTIONAL BUYERS" ("QIBS") WITHIN THE MEANING OF
RULE 144A UNDER THE U.S. SECURITIES ACT OF 1933, AS AMED (THE
"SECURITIES ACT"); OR (D) ANY OTHER PERSON TO WHOM IT MAY OTHERWISE
LAWFULLY BE COMMUNICATED; AND, IN EACH CASE, WHO HAVE BEEN INVITED
TO PARTICIPATE IN THE FIRM PLACING AND THE PLACING BY THE JOINT
UNDERWRITERS (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS
"RELEVANT PERSONS").
THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR
RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO
HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST
SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS
AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES
CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN
THE COMPANY. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION OF THE UNITED STATES AND THE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR
INDIRECTLY IN, INTO OR WITHIN THE UNITED STATES, EXCEPT PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS. THERE WILL BE NO PUBLIC OFFERING OF THE
SECURITIES IN THE UNITED STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN THE PLACING
SHARES (AS SUCH TERM IS DEFINED BELOW).
Unless otherwise defined in these terms and condi ti ons,
capitalised terms used in these terms and condi ti ons shall have
the meaning given to them in this announcement.
If a person indicates to the Joint Underwriters that it wishes
to par ti cipate in the Firm Placing or the Placing (together, the
"Equity Placings") by making an oral or written offer to subscribe
for the Firm Placed Shares pursuant to the Firm Placing and Open
Offer Shares pursuant to the terms of the Placing (together, the
"Placing Shares") (each such person, a "Placee") it will be deemed
(i) to have read and understood these terms and condi ti ons in
this Appendix and the announcement of which it forms part and the
dra ft prospectus dated 22 October 2020 prepared by, and rela ti ng
to, the Company (the "Placing Proof") in their en ti rety, (ii) to
be participating and making such offer on the terms and condi ti
ons contained in this Appendix, and (iii) to be providing the
representa ti ons, warran ti es, indemni ti es, agreements,
undertakings and acknowledgements, contained in this Appendix.
In par ti cular, each such Placee represents, warrants, agrees
and acknowledges to the Company and the Underwriters that,
1. it is a Relevant Person and undertakes that it will subscribe
for, acquire, hold, manage and dispose of any of the Placing Shares
that are allocated to it for the purposes of its business only;
2. in the case of any Placing Shares subscribed for by it as a
financial intermediary, as that term is used in Article 5(1) of the
Prospectus Regulation, that (i) the Placing Shares acquired by
and/or subscribed for by it in the Equity Placings will not be
acquired and/or subscribed for on a non-discretionary basis on
behalf of, nor will they be acquired or subscribed for with a view
to their offer or resale to, persons in a member state of the EEA
or the UK other than Qualified Investors, or in circumstances which
may give rise to an offer of securities to the public other than an
offer or resale, in a member state of the EEA which has implemented
the Prospectus Regulation, to Qualified Investors, or in
circumstances in which the prior consent of the Joint Underwriters
has been given to each such proposed offer or resale; or (ii) where
the Placing Shares have been acquired or subscribed for by it on
behalf of persons in any member state of the EEA or the United
Kingdom other than Qualified Investors, the offer of those Placing
Shares to it is not treated under the Prospectus Regulation as
having been made to such persons;
3. it is and, at the time the Placing Shares are acquired, will
be, either (i) outside the United States, and acquiring the Placing
Shares in an offshore transaction in compliance with the provisions
of Regulation S under the Securities Act ("Regulation S") for its
own account or purchasing the Placing Shares for an account with
respect to which it exercises sole investment discretion; or (ii) a
QIB. These terms and conditions do not constitute an offer to sell
or issue or the invitation or solicitation of an offer to buy or
acquire the Placing Shares in the United States, Australia, Canada
or Japan, or any other jurisdiction where the extension or
availability of the Equity Placing would breach any applicable laws
or regulations, and "Excluded Territories" shall mean any of them;
and
4. it understands (or, if acting for the account of another
person, such person understands) the resale and transfer
restrictions set out in this Appendix.
These terms and condi ti ons and the informa ti on contained
herein are not for release, publica ti on or distribu ti on,
directly or indirectly, in whole or in part, in or into the United
States or any other Excluded Territory, subject to certain excep ti
ons.
In par ti cular, the Placing Shares referred to in these terms
and condi ti ons have not been and will not be registered under the
Securi ti es Act or the securi ti es laws of any state or other
jurisdic ti on of the United States and the Placing Shares may not
be offered, sold, transferred or delivered, directly or indirectly
in, into or within the United States, except pursuant to an exemp
ti on from, or in a transac ti on not subject to, the registra ti
on requirements of the Securi ti es Act and applicable state securi
ti es laws. There will be no public offering of the Placing Shares
in the United States. Subject to certain excep ti ons, no offering
of the Placing Shares will be made in the United States. The
Placing Shares have not been approved or disapproved by the U.S.
Securi ti es and Exchange Commission, or state securi ti es
commission in the United States or any other regulatory authority
in the United States, nor have any of the foregoing authori ti es
passed upon or endorsed the merits of the Equity Placings or the
accuracy or adequacy of these terms and condi ti ons. Any
representa ti on to the contrary is a criminal offence in the
United States.
The distribu ti on of these terms and condi ti ons and the offer
and/or placing of Placing Shares in certain other jurisdic ti ons
may be restricted by law. No ac ti on has been or will be taken by
the Joint Underwriters or the Company that would, or is intended
to, permit an offer of the Placing Shares or possession or distribu
ti on of these terms and condi ti ons or any other offering or
publicity material rela ti ng to the Placing Shares in any jurisdic
ti on where any such ac ti on for that purpose is required, save as
men ti oned above. Persons into whose possession these terms and
condi ti ons come are required by the Joint Underwriters and the
Company to inform themselves about and to observe any such restric
ti ons.
Each Placee's commitments will be made solely on the basis of
the informa ti on set out in this announcement (including the
Appendix) and the Placing Proof which will be provided to each
Placee. Each Placee, by par ti cipa ti ng in the Equity Placings,
agrees that it has neither received nor relied on any other informa
ti on, representa ti on, warranty or statement made by or on behalf
of any of the Joint Underwriters or the Company or any of their
respective affiliates. None of the Joint Underwriters, the Company,
or any person ac ti ng on such person's behalf nor any of their
respec ti ve affiliates has or shall have liability for any
Placee's decision to accept this invita ti on to par ti cipate in
the Equity Placings based on any other informa ti on, representa ti
on, warranty or statement. Each Placee acknowledges and agrees that
it has relied on its own inves ti ga ti on of the business,
financial or other posi ti on of the Company in accep ti ng a par
ti cipa ti on in the Equity Placings. Nothing in this paragraph
shall exclude the liability of any person for fraudulent
misrepresenta ti on.
No undertaking, representa ti on, warranty or any other
assurance, express or implied, is made or given by or on behalf of
any of the Joint Underwriters or any of their respec ti ve
affiliates, or any of their respec ti ve directors, officers,
employees, agents, advisers, or any other person, as to the
accuracy, completeness, correctness or fairness of the information
or opinions contained in the Placing Proof or this announcement or
for any other statement made or purported to be made by any of
them, or on behalf of them, in connection with the Company or the
Equity Placings and no such person shall have any responsibility or
liability for any such information or opinions or for any errors or
omissions. Accordingly, save to the extent permitted by law, no
liability whatsoever is accepted by any of the Joint Underwriters
or any of their respective directors, officers, employees or
affiliates or any other person for any loss howsoever arising,
directly or indirectly, from any use of this announcement or such
information or opinions contained herein or otherwise arising in
connection with the Placing Proof.
These terms and condi ti ons do not cons ti tute or form part
of, and should not be construed as, any offer or invita ti on to
sell or issue, or any solicita ti on of any offer to purchase or
subscribe for, any Placing Shares or any other securi ti es or an
inducement or recommendation to enter into investment ac ti vity,
nor shall these terms and condi ti ons (or any part of them), nor
the fact of their distribu ti on, form the basis of, or be relied
on in connec ti on with, any investment ac ti vity. No statement in
these terms and condi ti ons is intended to be nor may be construed
as a profit forecast and no statement made herein should be
interpreted to mean that the Company's profits or earnings per
share for any future period will necessarily match or exceed
historical published profits or earnings per share of the
Company.
Proposed Firm Placing of Firm Placed Shares and Placing of Open
Offer Shares subject to clawback in respect of valid applica ti ons
by Qualifying Shareholders pursuant to the Open Offer
Placees are referred to these terms and condi ti ons, this
announcement and the Placing Proof containing details of, inter
alia, the Equity Placings. These terms and condi ti ons, this
announcement and the Placing Proof have been prepared and issued by
the Company, and each of these documents is the sole responsibility
of the Company.
The Equity Placings consist of a Placing and Open Offer of
37,102,116 Open Offer Shares and a Firm Placing of 37,147,884 Firm
Placed Shares. Qualifying Shareholders are being given the
opportunity to apply for the Open Offer Shares at the Issue Price
on and subject to the terms and conditions of the Open Offer, pro
rata to their holdings of Existing Shares on the Record Date. Open
Offer Shares will also be made available to Qualifying Shareholders
under the Excess Applica ti on Facility. Frac ti onal entitlement
of Open Offer Shares will be rounded down to the nearest whole
number.
The Joint Underwriters have agreed, pursuant to the Underwriting
and Sponsor's Agreement, to use reasonable endeavours to procure
subscribers for the Firm Placed Shares and Open Offer Shares, as
agent for the Company, at the Issue Price. Placees for Open Offer
Shares in the Placing are subject to clawback to satisfy valid
application by Qualifying Shareholders under the Open Offer. The
Firm Placed Shares are not subject to clawback and do not form part
of the Placing and Open Offer. The Firm Placing and Placing and
Open Offer have been fully underwritten by the Joint Underwriters
on, and subject to, the terms and conditions of the Underwriting
and Sponsor's Agreement.
With effect from the comple ti on of the ins ti tu ti onal
Bookbuild, to the extent that any Placee fails to take up any or
all of the Placing Shares which have been allocated to it or which
it has agreed to take up at the Issue Price, the Joint Underwriters
have agreed, on the terms and subject to the condi ti ons in the
Underwriting and Sponsor's Agreement, to each take up 50 per cent.
of such Placing Shares at the Issue Price.
Applica ti on will be made to the Financial Conduct Authority
(the "FCA") and to the London Stock Exchange plc (the "London Stock
Exchange") for the Placing Shares to be admitted to the premium
segment of the official list of the FCA (the "Official List") and
to trading on the London Stock Exchange's main market for listed
securi ti es (together, "Admission").
Subject to the condi ti ons below being sa ti sfied, it is
expected that Admission will become effec ti ve on 18 November 2020
and that dealings for normal se tt lement in the Open Offer Shares
will commence at 8.00 a.m. on the same day. The Placing Shares,
when issued and fully paid, will be iden ti cal to, and rank pari
passu with, the Exis ti ng Shares, including the right to receive
all dividends and other distributions declared, made or paid on the
Existing Shares by reference to a record date on or after
Admission.
Placees should note that Firm Placed Shares do not carry any
entitlement to participate in the Open Offer.
The Firm Placing and Placing and Open Offer are condi ti onal,
inter alia, upon:
1. the Resolutions being passed by Shareholders at the General Meeting ;
2. the undertakings from CapCo and Norges being duly executed
and not having been breached or terminated prior to Admission;
3. the Underwriting and Sponsor's Agreement having become or
been declared unconditional in all respects (save for the condition
relating to Admission) and the Underwriting and Sponsor's Agreement
not having been terminated by the Joint Underwriters in accordance
with its terms prior to Admission; and
4. Admission occurring not later than 8:00 a.m. on 18 November
2020 (or such later time or date as the Company and the Joint
Underwriters may agree, being not later than 2 December 2020).
The full terms and condi ti ons of the Open Offer will be
contained in the Prospectus to be issued by the Company in connec
ti on with the Capital Raising and Admission. The Prospectus to be
issued by the Company will be approved by the FCA under sec ti on
87A of the FSMA and made available to the public in accordance with
Rule 3.2 of the Prospectus Rules made under Part VI of the
FSMA.
Bookbuild of the Equity Placings
Commencing today, the Joint Underwriters will be conduc ti ng a
bookbuilding process in respect of the Equity Placings
("Bookbuild") to determine demand for par ti cipa ti on in the
Equity Placings at the Issue Price. The Joint Underwriters will
seek to procure Placees as agent for the Company as part of this
Bookbuild. These terms and condi ti ons give details of the terms
and condi ti ons of, and the mechanics of par ti cipa ti on in, the
Equity Placings.
Principal terms of the Bookbuild
By participating in the Equity Placings, Placees will be deemed
(i) to have read and understood this announcement, these terms and
conditions in this Appendix and the Placing Proof in their entirety
and (ii) to be participating and making an offer for any Placing
Shares on the terms and conditions contained in this Appendix, and
(iii) to be providing the representations, warranties, indemnities,
agreements, undertakings and acknowledgements, contained in this
Appendix.
(a) The Joint Underwriters are arranging the Equity Placings
severally, and not jointly, nor jointly and severally, as agents of
the Company.
(b) Participation in the Equity Placings will only be available
to persons who are Relevant Persons and who may lawfully be, and
are, invited to participate by any of the Joint Underwriters. The
Joint Underwriters and their respective affiliates are entitled to
offer to subscribe for Placing Shares as principal in the
Bookbuild.
(c) Any offer to subscribe for Placing Shares should state the
aggregate number of Firm Placed Shares and Open Offer Shares that
the Placee wishes to subscribe for at the Issue Price. The number
of Firm Placed Shares and Open Offer Shares that each Placee
receives will be determined by the Joint Underwriters following
consultation with the Company.
(d) Allocations of Placing Shares will be made in a combination
that reflects an approximately 1:1 ratio of Firm Placed Shares to
Open Offer Shares.
(e) The Bookbuild is expected to close no later than 4.00pm on
22 October 2020 but may close earlier or later, at the discretion
of the Joint Underwriters and the Company. The timing of the
closing of the books and allocations will be agreed between the
Joint Underwriters and the Company following completion of the
Bookbuild (the "Allocation Policy"). The Joint Underwriters may, in
agreement with the Company, accept offers to subscribe for Placing
Shares that are received after the Bookbuild has closed.
(f) An offer to subscribe for Placing Shares in the Bookbuild
will be made on the basis of these terms and conditions and the
Placing Proof and will be legally binding on the Placee by which,
or on behalf of which, it is made and will not be capable of
variation or revocation after the close of the Bookbuild.
(g) Subject to paragraph [(e)] above, the Joint Underwriters
(after consultation with the Company) reserve the right not to
accept an offer to subscribe for Placing Shares, either in whole or
in part, on the basis of the Allocation Policy and may scale down
any offer to subscribe for Placing Shares for this purpose.
(h) If successful, each Placee's allocation will be confirmed to
it by the Joint Underwriters following the close of the Bookbuild.
Oral or written confirmation (at the Joint Underwriters'
discretion) from the Joint Underwriters to such Placee confirming
its allocation will constitute a legally binding commitment upon
such Placee, in favour of the Joint Underwriters and the Company to
acquire the number of Placing Shares allocated to it (and in the
respective numbers of Firm Placed Shares and Open Offer Shares
(subject to clawback) so allocated) on the terms and conditions set
out herein. Each Placee will have an immediate, separate,
irrevocable and binding obligation, owed to the Joint Underwriters,
to pay to the Joint Underwriters (or as the Joint Underwriters may
direct) as agent for the Company in cleared funds an amount equal
to the product of the Issue Price and the sum of the number of Firm
Placed Shares and, once apportioned after clawback (in accordance
with the procedure described in the paragraph entitled "Placing
Procedure" below), the Open Offer Shares, which such Placee has
agreed to acquire.
(i) The Company will make a further announcement following the
close of the Bookbuild detailing the Issue Price and the number of
Placing Shares to be issued (the "Placing Results Announcement").
It is expected that such Placing Results Announcement will be made
as soon as practicable after the close of the Bookbuild.
(j) Subject to paragraphs [(g)] and [(h)] above, the Joint
Underwriters reserve the right not to accept bids or to accept
bids, either in whole or in part, on the basis of allocations
determined at the Joint Underwriters' discretion and may scale down
any bids as the Joint Underwriters may determine, subject to
consultation with the Company. The acceptance of bids shall be at
the Joint Underwriters' absolute discretion, subject to
consultation with the Company.
(k) Irrespective of the time at which a Placee's allocation(s)
pursuant to the Equity Placings is/are confirmed, settlement for
all Placing Shares to be acquired pursuant to the Firm Placing will
be required to be made at the time specified and all Placing Shares
to be acquired pursuant to the Placing will be required to be made
at the later time specified, on the basis explained below under the
paragraph entitled "Registration and Settlement".
(l) Commissions are payable to Placees in respect of the
Placing. No commissions are payable to Placees in respect of the
Firm Placing.
(m) By participating in the Bookbuild, each Placee agrees that
its rights and obligations in respect of the Firm Placing and/or
the Placing will terminate only in the circumstances described
below and will not otherwise be capable of rescission or
termination by the Placee. All obligations under the Equity
Placings will be subject to the fulfilment of the conditions
referred to below under the paragraph entitled "Conditions of the
Equity Placings and Termination of the Underwriting and Sponsor's
Agreement".
Condi ti ons of the Equity Placings and Termina ti on of the
Underwriting and Sponsor's Agreement
Placees will only be called on to acquire the Placing Shares if
the obliga ti ons of the Joint Underwriters under the Underwriting
and Sponsor's Agreement have become uncondi ti onal in all respects
and the Joint Underwriters have not terminated the Underwriting and
Sponsor's Agreement prior to Admission.
The Joint Underwriters' obliga ti ons under the Underwriting and
Sponsor's Agreement in respect of the Firm Placing and the Placing
and Open Offer are condi ti onal upon, inter alia:
(a) the Company having complied with all of its undertakings,
covenants and obligations under the Underwriting and Sponsor's
Agreement and under the terms or conditions of the Capital Raising
(to the extent that such obligations fall to be performed prior to
Admission);
(b) the Prospectus being approved by the FCA as a circular and
prospectus not later than 5.00 p.m. on the date of the Underwriting
and Sponsor's Agreement (or such later time and/or date as the
Company and the Joint Underwriters may agree in writing);
(c) Admission occurring not later than 8.00 a.m. on 18 November
2020 or such later time and/or date as the Company and the Joint
Underwriters may agree (being not later than 2 December 2020);
(d) each condition to enable the New Shares to be admitted as a
participating security in CREST (other than Admission) being
satisfied on or before Admission;
(e) the representations, warranties and undertakings on the part
of the Company as contained in the Underwriting and Sponsor's
Agreement being true and accurate in all respects and not
misleading in any respect on the date of the Underwriting and
Sponsor's Agreement, on the date on which the Company despatches
the Prospectus and the Application Forms, on the date of any
Supplementary Prospectus, on the last time and date for receipt of
completed Application Forms and payment in full and settlement of
CREST instructions in respect of the Open Offer and the Offer for
Subscription, and immediately prior to Admission, as if they had
been repeated by reference to the facts and circumstances then
existing;
(f) the passing of the Resolutions (without amendment) at the
General Meeting on 17 November 2020 ( or with the Joint
Underwriters' consent, at any adjournment of such meeting );
(g) in the opinion of the Joint Underwriters (acting in good
faith and having consulted with the Company to the extent
reasonably practicable), there having been no material adverse
change in, or any development reasonably likely to result in a
material adverse change in or affecting, the condition (financial,
operational, legal or otherwise), prospects, earnings, net asset
value, funding position, management, business affairs, solvency or
operations of the Group taken as a whole, whether or not arising in
the ordinary course of business at any time prior to Admission
(whether or not foreseeable at the date of the Underwriting and
Sponsor's Agreement);
(h) each of the undertakings received from CapCo and Norges
being duly executed and becoming unconditional subject only to
Admission and not having been terminated immediately prior to
Admission and neither CapCo or Norges having notified the Company
or either of the Joint Underwriters that they do not intend to
comply with the terms of their respective undertakings;
(i) no matter referred to in Article 23 of the Prospectus
Regulation or LR 10.5.4R(2) of the Listing Rules having arisen
between the publication of the Prospectus and Admission, and no
supplementary prospectus being published by or on behalf of the
Company before Admission,
(all such condi ti ons included in the Underwriting and
Sponsor's Agreement being together the "Condi ti ons ").
Either of the Joint Underwriters shall be entitled, in its
absolute discretion, to terminate the Underwriting and Sponsor's
Agreement at any time prior to Admission, by notice in writing to
the Company if in its good faith opinion the effect of certain
events, including but not limited to the following, makes it
impracticable or inadvisable to market the New Shares or to proceed
with the Capital Raising in the manner contemplated in the offer
documents, or which may prejudice the success of the Capital
Raising:
(a) the Company's application, either to the FCA or the London
Stock Exchange, for Admission is withdrawn by the Company or
refused by the FCA or the London Stock Exchange (as
appropriate);
(b) any statement contained in any offer document is, or has
become, untrue, inaccurate or misleading in any respect, or any
matter has arisen, which would, if such offer document has been
issued at that time constitute an omission from such offer document
, and which the Joint Underwriters (or either of them) consider in
their sole judgement to be (singly or in the aggregate) material in
the context of the Capital Raising and/or the underwriting of the
Underwritten Shares and/or the issue of the New Shares and/or
Admission;
(c) in the good faith opinion of the Joint Underwriters (or
either of them) there has been a material adverse change, whether
or not foreseeable at the date of the Underwriting and Sponsor's
Agreement; or
(d) there shall have occurred or it is reasonably likely that
there will occur any material adverse change in the international
financial, securities or banking markets, any outbreak or
escalation of hostilities or any change in political, financial or
economic conditions, or any material adverse change or a
prospective material adverse change in tax law or regulation in the
United States, the United Kingdom or any member state of the
EEA.
If any Condi ti on has not been sa ti sfied or waived by the
Joint Underwriters as described below or if the Underwriting and
Sponsor's Agreement is terminated, all obliga ti ons under these
terms and condi ti ons will automa ti cally terminate. By par ti
cipa ti ng in the Equity Placings, each Placee agrees that its
rights and obliga ti ons hereunder are condi ti onal upon the
Underwriting and Sponsor's Agreement becoming uncondi ti onal in
all respects in respect of the Firm Placing (in respect of Firm
Placed Shares subscribed for) and/or in respect of the Placing (in
respect of Open Offer Shares subscribed for under the Placing) and
that its rights and obliga ti ons will terminate only in the
circumstances described above and will not be otherwise capable of
rescission or termina ti on by it a ft er oral or wri tt en
confirma ti on by the Joint Underwriters (at the Joint
Underwriters' discre ti on) following the close of the
Bookbuild.
The Joint Underwriters may in their absolute discre ti on in wri
ti ng waive fulfilment of certain of the Condi ti ons in the
Underwriting and Sponsor's Agreement or extend the ti me provided
for fulfilment of such Condi ti ons. Any such extension or waiver
will not affect Placees' commitments as set out in these terms and
condi ti ons.
By par ti cipa ti ng in the Equity Placings each Placee agrees
that the exercise by the Company or any of the Joint Underwriters
of any right or other discre ti on under the Underwriting and
Sponsor's Agreement shall be within the absolute discre ti on of
the Company and each of the Joint Underwriters (as the case may be)
and that neither the Company nor any of the Joint Underwriters need
make any reference to such Placee (or to any other person whether
ac ti ng on behalf of any Placee or otherwise) and that neither the
Company nor any of the Joint Underwriters shall have any liability
to such Placee (or to any other person whether ac ti ng on behalf
of any Placee or otherwise) whatsoever in connec ti on with any
such exercise or failure so to exercise.
To the fullest extent permissible by law, none of the Joint
Underwriters, nor the Company, shall have any liability to any
Placee (or to any other person whether ac ti ng on behalf of a
Placee or otherwise). In particular, neither the Joint Underwriters
nor any of its affiliates shall have any liability (including to
the extent permissible by law, any fiduciary duties) in respect of
their conduct of the Bookbuild or of such alternative method of
effecting the Equity Placings as the Joint Underwriters and the
Company may agree.
Withdrawal Rights
Placees acknowledge that their acceptance of any of the Placing
Shares is not by way of acceptance of the public offer made in the
Prospectus and (if applicable) the Applica ti on Form but is by way
of a collateral contract and as such sec ti on 87Q of the FSMA does
not en ti tle Placees to withdraw in the event that the Company
publishes a supplementary prospectus in connec ti on with the Firm
Placing and Placing and Open Offer and Offer for Subscription or
Admission. If, however, a Placee is en ti tled to withdraw, by
accep ti ng the offer of a placing par ti cipa ti on, the Placee
agrees to confirm their acceptance of the offer on the same terms
immediately a ft er such right of withdrawal arises. Please note
that, in any event, withdrawal rights will not apply once Admission
of the Placing Shares has occurred.
Placing Procedure
Placees shall acquire or subscribe for the Firm Placed Shares
and Open Offer Shares to be issued pursuant to the Equity Placings
(a ft er clawback) and any alloca ti on of the Firm Placed Shares
and Open Offer Shares (subject to clawback) to be issued pursuant
to the Equity Placings will be no ti fied to them on or around 22
October 2020 (or such other ti me and/or date as the Company and
the Joint Underwriters may agree in writing).
Placees will be called upon to subscribe for, and shall
subscribe for, the Open Offer Shares only to the extent that valid
applica ti ons by Qualifying Shareholders under the Open Offer are
not received by 11.00 a.m. on 16 November 2020 (or by such later ti
me and/or date as the Company and the Joint Underwriters may agree)
or if applica ti ons have otherwise not been deemed to be valid in
accordance with the Prospectus and the Applica ti on Form.
Payment in full for any Firm Placed Shares and Open Offer Shares
so allocated in respect of the Equity Placings at the Issue Price
must be made by no later than 16 November 2020 (or such other date
as shall be no ti fied to each Placee by the relevant Joint
Underwriter) on the closing date for the Firm Placing and the
closing date for the Open Offer, respec ti vely (or such other ti
me and/or date as the Company and the Joint Underwriters may
agree). The Joint Underwriters will no ti fy Placees if any of the
dates in these terms and condi ti ons should change, including as a
result of delay in the pos ti ng of the Prospectus, the Applica ti
on Forms or the credi ti ng of the Open Offer En ti tlements in
CREST or the produc ti on of a supplementary prospectus or
otherwise.
Registra ti on and Se tt lement
Se tt lement of transac ti ons in the Placing Shares following
Admission will take place within the CREST system, subject to
certain excep ti ons. The Joint Underwriters and the Company
reserve the right to require se tt lement for, and delivery of, the
Placing Shares to Placees by such other means that they deem
necessary if delivery or se tt lement is not possible within the
CREST system within the ti metable set out in the Placing Proof
and/or Prospectus or would not be consistent with the regulatory
requirements in the Placee's jurisdic ti on. Each Placee will be
deemed to agree that it will do all things necessary to ensure that
delivery and payment is completed in accordance with either the
standing CREST or cer ti ficated se tt lement instruc ti ons which
they have in place with the relevant Joint Underwriter, including
providing its settlement details in order to enable instruction to
be successfully matched in CREST.
Se tt lement for the Equity Placings will be on a delivery
versus payment basis and se tt lement is expected to take place on
or around 18 November 2020. Each Placee is deemed to agree that if
it does not comply with these obliga ti ons, the Joint Underwriters
may sell any or all of the Placing Shares allocated to it on its
behalf and retain from the proceeds, for its own account and
benefit, an amount equal to the aggregate amount owed by the
Placee. By communica ti ng a bid for Placing Shares, each Placee
confers on the Joint Underwriters all such authori ti es and powers
necessary to carry out any such sale and agrees to ra ti fy and
confirm all ac ti ons which the Joint Underwriters lawfully take in
pursuance of such sale. The relevant Placee will, however, remain
liable for any shor tf all below the aggregate amount owed by it
and may be required to bear any stamp duty or stamp duty reserve
tax (together with any interest or penalties) which may arise upon
any transac ti on in the Placing Shares on such Placee's
behalf.
Acceptance
By par ti cipa ti ng in the Equity Placings, a Placee (and any
person ac ti ng on such Placee's behalf) irrevocably acknowledges,
confirms, undertakes, represents, warrants and agrees (as the case
may be) with the Joint Underwriters and the Company, the following
(provided that Norge's and Capco's agreement to participate in the
Capital Raising is subject to the terms of their irrevocable
undertakings):
1. in considera ti on of its alloca ti on of a placing par ti
cipa ti on, to subscribe at the Issue Price for any Placing Shares
comprised in its alloca ti on for which it is required to subscribe
pursuant to these terms and condi ti ons, subject to clawback of
the Open Offer Shares in respect of valid applica ti ons from
Qualifying Shareholders in the Open Offer;
2. it has read and understood this announcement (including these
terms and conditions) and the Placing Proof in their entirety and
that it has neither received nor relied on any information given or
any investigations, representations, warranties or statements made
at any time by any person in connection with Admission, the Equity
Placings, the Company, the New Shares, or otherwise, other than the
information contained in this announcement (including these terms
and conditions) and the Placing Proof that in accepting the offer
of its placing participation it will be relying solely on the
information contained in this announcement (including these terms
and conditions) and the Placing Proof, receipt of which is hereby
acknowledged, and undertakes not to redistribute or duplicate such
documents;
3. its oral or written commitment will be made solely on the
basis of the information set out in this announcement and the
Placing Proof which will be provided to each Placee, such
information being all that such Placee deems necessary or
appropriate and sufficient to make an investment decision in
respect of the Placing Shares and that it has neither received nor
relied on any other information given, or representations or
warranties or statements made, by or on behalf of any of the Joint
Underwriters or the Company nor any of their respective affiliates
and none of the Joint Underwriters or the Company nor any of their
respective affiliates has or shall have liable for any Placee's
decision to participate in the Equity Placings based on any other
information, representation, warranty or statement;
4. the content of this announcement, these terms and conditions
and the Placing Proof are exclusively the responsibility of the
Company and agrees that none of the Joint Underwriters nor any of
their respective affiliates nor any person acting on behalf of any
of such persons will be responsible for or shall have liability for
any information, representation or statements contained therein or
any information previously published by or on behalf of the
Company, and none of the Joint Underwriters or the Company, or any
of their respective affiliates or any person acting on behalf of
any such person will be responsible or liable for a Placee's
decision to accept its placing participation;
5. (i) it has not relied on, and will not rely on, any
information relating to the Company contained or which may be
contained in any research report or investor presentation prepared
or which may be prepared by any of the Joint Underwriters or any of
their affiliates; (ii) none of the Joint Underwriters, their
affiliates or any person acting on behalf of any of such persons
has or shall have any responsibility or liability for public
information relating to the Company; (iii) none of the Joint
Underwriters, their affiliates or any person acting on behalf of
any of such persons has or shall have any responsibility or
liability for any additional information that has otherwise been
made available to it, whether at the date of publication of such
information, the date of these terms and conditions or otherwise;
and that (iv) none of the Joint Underwriters, their affiliates or
any person acting on behalf of any of such persons makes any
representation or warranty, express or implied, as to the truth,
accuracy or completeness of any such information referred to in (i)
to (iii) above, whether at the date of publication of such
information, the date
of this announcement or otherwise;
6. it has made its own assessment of the Company and has relied
on its own investigation of the business, financial or other
position of the Company in deciding to participate in the Equity
Placings, and has satisfied itself concerning the relevant tax,
legal, currency and other economic considerations relevant to its
decision to participate in the Firm Placing and/or the Placing;
7. it is acting as principal only in respect of the Equity
Placings or, if it is acting for any other person (i) it is duly
authorised to do so and has full power to make the
acknowledgements, representations and agreements herein on behalf
of each such person, (ii) it is and will remain liable to the
Company and the Joint Underwriters for the performance of all its
obligations as a Placee in respect of the Equity Placings
(regardless of the fact that it is acting for another person);
8. it is a Relevant Person and undertakes that it will acquire,
hold, manage or dispose of any Placing Shares that are allocated to
it for the purposes of its business; and/or if it is a financial
intermediary, as that term is used in Article 5(1) of the
Prospectus Regulation, that (i) the Placing Shares acquired by
and/or subscribed for by it in the Equity Placings will not be
acquired and/or subscribed for on a non-discretionary basis on
behalf of, nor will they be acquired or subscribed for with a view
to their offer or resale to, persons in a member state of the EEA
or the UK other than Qualified Investors, or in circumstances which
may give rise to an offer of securities to the public other than an
offer or resale, in a member state of the EEA which has implemented
the Prospectus Regulation, to Qualified Investors, or in
circumstances in which the prior consent of the Joint Underwriters
has been given to each such proposed offer or resale; or (ii) where
the Placing Shares have been acquired or subscribed for by it on
behalf of persons in any member state of the EEA or the United
Kingdom other than Qualified Investors, the offer of those Placing
Shares to it is not treated under the Prospectus Regulation as
having been made to such persons;
9. if it has received any confidential price sensitive
information about the Company in advance of the Equity Placings, it
has not (i) dealt in the securities of the Company; (ii) encouraged
or required another person to deal in the securities of the
Company; or (iii) disclosed such information to any person, prior
to the information being made generally available;
10. it has complied with its obligations in connection with
money laundering and terrorist financing under the Proceeds of
Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and
the Money Laundering, Terrorist Financing and Transfer of Funds
(Information on the Payer) 2017 Regulations and the Criminal
Justice (Money Laundering and Terrorism Financing) Act 2010 and any
related or similar rules, regulations or guidelines, issued,
administered or enforced by any government agency having
jurisdiction in respect thereof (the "AML Regulations") and, if it
is making payment on behalf of a third party, it has obtained and
recorded satisfactory evidence to verify the identity of the third
party as may be required by the AML Regulations;
11. it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person;
12. it is not acting in concert (within the meaning given in the
City Code on Takeovers and Mergers) with any other Placee or any
other person in relation to the Company;
13. it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the Placing Shares in, from or otherwise involving the
United Kingdom;
14. it and any person acting on its behalf is entitled to
acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has all necessary capacity and has
obtained all necessary consents and authorities to enable it to
commit to this participation in the Equity Placings and to perform
its obligations in relation thereto (including, without limitation,
in the case of any person on whose behalf it is acting, all
necessary consents and authorities to agree to the terms set out or
referred to in these terms and conditions);
15. unless otherwise agreed by the Company (after agreement with
the Joint Underwriters), it is not, and at the time the Placing
Shares are subscribed for and purchased will not be, subscribing
for and on behalf of a resident of the United States or any other
Excluded Territory and further acknowledges that the Placing Shares
have not been and will not be registered under the securities
legislation of any Excluded Territory and, subject to certain
exceptions, may not be offered, sold, transferred, delivered or
distributed, directly or indirectly, in or into those
jurisdictions;
16. it does not expect the Joint Underwriters to have any duties
or responsibilities towards it for providing protections afforded
to clients under the rules of the FCA Handbook (the "Rules") or
advising it with regard to the Placing Shares and that it is not,
and will not be, a client of any of the Joint Underwriters as
defined by the Rules. Likewise, any payment by it will not be
treated as client money governed by the Rules;
17. any exercise by the Joint Underwriters of any right to
terminate the Underwriting and Sponsor's Agreement or of other
rights or discretions under the Underwriting and Sponsor's
Agreement or the Equity Placings shall be within the Joint
Underwriters' absolute discretion and neither of the Joint
Underwriters shall have any liability to it whatsoever in relation
to any decision to exercise or not to exercise any such right or
the timing thereof;
18. neither it, nor the person specified by it for registration
as a holder of Placing Shares is, or is acting as nominee(s) or
agent(s) for, and that the Placing Shares will not be allotted to,
a person/person(s) whose business either is or includes issuing
depository receipts or the provision of clearance services and
therefore that the issue to the Placee, or the person specified by
the Placee for registration as holder, of the Placing Shares will
not give rise to a liability under any of sections 67, 70, 93 and
96 of the Finance Act 1986 (depositary receipts and clearance
services) and that the Placing Shares are not being acquired in
connection with arrangements to issue depository receipts or to
issue or transfer Placing Shares into a clearance system;
19. the person who it specifies for registration as holder of
the Placing Shares will be (i) itself or (ii) its nominee, as the
case may be, and acknowledges that the Joint Underwriters and the
Company will not be responsible for any liability to pay stamp duty
or stamp duty reserve tax (together with interest and penalties)
resulting from a failure to observe this requirement; and each
Placee and any person acting on behalf of such Placee agrees to
participate in the Equity Placings on the basis that the Placing
Shares will be allotted to a CREST stock account of one of the
Joint Underwriters who will hold them as nominee on behalf of the
Placee until settlement in accordance with its standing settlement
instructions with it;
20. where it is acquiring Placing Shares for one or more managed
accounts, it is authorised in writing by each managed account to
acquire Placing Shares for that managed account;
21. if it is a pension fund or investment company, its
acquisition of any Placing Shares is in full compliance with
applicable laws and regulations;
22. it has not offered or sold and will not offer or sell any
New Shares to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes
of their business or otherwise in circumstances which have not
resulted and which will not result in an offer to the public in the
United Kingdom within the meaning of section 85(1) of the FSMA;
23. it has not offered or sold and will not offer or sell any
New Shares to persons in any member state of the EEA prior to
Admission except to persons whose ordinary activities involve them
acquiring, holding, managing or disposing of investments (as
principal or agent) for the purpose of their business or otherwise
in circumstances which have not resulted and will not result in an
offer to the public in any member state of the EEA within the
meaning of the Prospectus Regulation;
24. participation in the Equity Placings is on the basis that,
for the purposes of the Equity Placings, it is not and will not be
a client of either of the Joint Underwriters and that none of the
Joint Underwriters have any duties or responsibilities to it for
providing the protections afforded to their clients nor for
providing advice in relation to the Equity Placings nor in respect
of any representations, warranties, undertakings or indemnities
contained in the Underwriting and Sponsor's Agreement or the
contents of these terms and conditions;
25. to provide the Joint Underwriters with such relevant
documents as they may reasonably request to comply with requests or
requirements that either they or the Company may receive from
relevant regulators in relation to the Equity Placings, subject to
its legal, regulatory and compliance requirements and
restrictions;
26. any agreements entered into by it pursuant to these terms
and conditions and any non-contractual obligations arising out of
or in connection with such agreement shall be governed by and
construed in accordance with the laws of England and Wales and it
submits (on its behalf and on behalf of any Placee on whose behalf
it is acting) to the exclusive jurisdiction of the English courts
as regards any claim, dispute or matter (including non-contractual
matters) arising out of any such contract, except that enforcement
proceedings in respect of the obligation to make payment for the
Placing Shares (together with any interest chargeable thereon) may
be taken by the Joint Underwriters in any jurisdiction in which the
relevant Placee is incorporated or in which any of its securities
have a quotation on a recognised stock exchange;
27. to fully and effectively indemnify and hold harmless the
Company and the Joint Underwriters and each of their respective
affiliates (as defined in Rule 501(b) under the Securities Act) and
each person, if any, who controls any Joint Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the US
Exchange Act of 1934, as amended, and any such person's respective
affiliates, subsidiaries, branches, associates and holding
companies, and in each case their respective directors, employees,
officers and agents (each, an "Indemnified Person") from and
against any and all losses, claims, damages, liabilities and
expenses (including legal fees and expenses) (i) arising from any
breach by such Placee of any of the provisions of these terms and
conditions and (ii) incurred by any Indemnified Person arising from
the performance of the Placee's obligations as set out in these
terms and conditions;
28. in making any decision to subscribe for the Placing Shares,
(i) it has knowledge and experience in financial, business and
international investment matters as is required to evaluate the
merits and risks of acquiring the Placing Shares; (ii) it is
experienced in investing in securities of this nature and is aware
that it may be required to bear, and is able to bear, the economic
risk of, and is able to sustain a complete loss in connection with,
the Placing; (iii) it has relied on its own examination, due
diligence and analysis of the Company and its affiliates taken as a
whole (including the markets in which the Group operates) and the
terms of the Equity Placings (including the merits and risks
involved); (iv) it has had sufficient time to consider and conduct
its own investigation with respect to the offer and purchase of the
Placing Shares, including the legal, regulatory, tax, business,
currency and other economic and financial considerations relevant
to such investment and (v) will not look to the Joint Underwriters,
any of their respective affiliates or any person acting on their
behalf for all or part of any such loss or losses it or they may
suffer;
29. the Joint Underwriters and the Company and their respective
affiliates and others will rely upon the truth and accuracy of the
foregoing representations, warranties, acknowledgments and
undertakings which are irrevocable; and
30. its commitment to acquire Placing Shares will continue
notwithstanding any amendment that may in future be made to the
terms and conditions of the Firm Placing and/or the Placing, and
that Placees will have no right to be consulted or require that
their consent be obtained with respect to the Company's or the
Joint Underwriters' conduct of the Firm Placing and/or the
Placing.
Please also note that the agreement to allot and issue Placing
Shares to Placees (or the persons for whom Placees are contracting
as agent) free of stamp duty and stamp duty reserve tax in the UK
relates only to their allotment and issue to Placees, or such
persons as they nominate as their agents, direct from the Company
for the Placing Shares in question. Such agreement assumes that
such Placing Shares are not being acquired in connection with
arrangements to issue depositary receipts or to transfer such
Placing Shares into a clearance service. If there were any such
arrangements, or the settlement related to other dealing in such
Placing Shares, stamp duty or stamp duty reserve tax may be
payable, for which neither the Company nor the Joint Underwriters
would be responsible and Placees shall indemnify the Company and
the Joint Underwriters on an after-tax basis for any stamp duty or
stamp duty reserve tax paid by them in respect of any such
arrangements or dealings. Furthermore, each Placee agrees to
indemnify on an after-tax basis and hold each of the Joint
Underwriters and/or the Company and their respective affiliates
harmless from any and all interest, fines or penalties in relation
to stamp duty, stamp duty reserve tax and all other similar duties
or taxes to the extent that such interest, fines or penalties arise
from the unreasonable default or delay of that Placee or its agent.
If this is the case, it would be sensible for Placees to take their
own advice and they should notify the relevant Joint Underwriter
accordingly. In addition, Placees should note that they will be
liable for any capital duty, stamp duty and all other stamp, issue,
securities, transfer, registration, documentary or other duties or
taxes (including any interest, fines or penalties relating thereto)
payable outside the UK by them or any other person on the
acquisition by them of any Placing Shares or the agreement by them
to acquire any Placing Shares.
Selling Restric ti ons
By par ti cipa ti ng in the Equity Placings, a Placee (and any
person ac ti ng on such Placee's behalf) irrevocably acknowledges,
confirms, undertakes, represents, warrants and agrees (as the case
may be) with the Joint Underwriters and the Company, the
following:
1. it is not a person who has a registered address in, or is a
resident, citizen or national of, a country or countries, in which
it is unlawful to make or accept an offer to subscribe for Placing
Shares;
2. it has fully observed and will fully observe the applicable
laws of any relevant territory, including complying with the
selling restrictions set out herein and obtaining any requisite
governmental or other consents and it has fully observed and will
fully observe any other requisite formalities and pay any issue,
transfer or other taxes due in such territories;
3. if it is in the United Kingdom, it is a Qualified Investor
(i) who has professional experience in matters relating to
investments and who falls within the definition of "investment
professionals" in Article 19(5) of the Order or who falls within
Article 19(5) of the Order; or(ii) who falls within Article 49(2)
of the Order;
4. if it is in a member state of the EEA, it is a "qualified
investor" within the meaning of Article 2(e) of the Prospectus
Regulation;
5. it is a person whose ordinary activities involve it (as
principal or agent) in acquiring, holding, managing or disposing of
investments for the purpose of its business and it undertakes that
it will (as principal or agent) acquire, hold, manage or dispose of
any Placing Shares that are allocated to it for the purposes of its
business;
6. it is and, at the time the Placing Shares are purchased, will
be either (i) outside the United States, purchasing in an offshore
transaction pursuant to Regulation S or (ii) a QIB that makes each
of the representations, warranties, acknowledgements and agreements
set out in paragraph 9 below;
7. none of the Placing Shares has been or will be registered
under the Securities Act or with any securities regulatory
authority of any state or other jurisdiction of the United
States;
8. none of the Placing Shares may be offered, sold, taken up or
delivered directly or indirectly, in whole or in part, into or
within the United States except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States;
9. if it is in the United States, (i) it is, and at the time of
any purchase of the Placing Shares will be, a QIB and is acquiring
the Placing Shares for its own account or, if it is acquiring the
Placing Shares as a fiduciary or agent for one or more investor
accounts, each such account is a QIB, it has investment discretion
with respect to each account, and it has full power and authority
to make (and it does make) the representations, warranties,
undertakings, agreements and acknowledgements herein on behalf of
each such account, (ii) any Placing Shares it acquires will be for
its own account (or for the account of a QIB) for investment
purposes and not with a view to resale or distribution within the
meaning of the US securities laws, subject to the understanding
that the disposition of its property shall at all times be and
remain within its control; (iii) it acknowledges the Placing Shares
have not been and will not be registered under the US Securities
Act, and that they may not be offered, sold or exercised, directly
or indirectly, in the United States, other than in accordance with
the terms and conditions set out in this announcement and that the
Placing Shares are "restricted securities" within the meaning of
Rule 144(a)(3) under the US Securities Act; (iv) if in the future
it or any other QIB for which it is acting or any other fiduciary
or agent representing such investor decides to offer, sell,
transfer, assign, pledge or otherwise dispose of any Placing
Shares, it will do so only (a) pursuant to an effective
registration statement under the US Securities Act, (b) to a QIB in
a transaction meeting the requirements of Rule 144A under the US
Securities Act, (c) outside the United States in an "offshore
transaction" pursuant to Rule 904 under Regulation S (and not in a
pre-arranged transaction resulting in the resale of such Placing
Shares into the United States) or (d) otherwise pursuant to an
exemption from, or in
a transaction not subject to, the registration requirements of
the US Securities Act and, in each case, in accordance with any
applicable securities laws of any state or territory of the United
States and of any other jurisdiction; (v) it is not acquiring the
Placing Shares and as a result of any general solicitation or
general advertising (as those terms are defined in Regulation D
under the US Securities Act) or any directed selling efforts (as
that term is defined in Regulation S) and that its purchase of the
Placing Shares is not part of a plan or scheme to evade the
registration requirements of the US Securities Act; (vi) it (a) has
such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its
investments in the Placing Shares, and (b) and any accounts for
which it is acting, are able to bear the economic risk, and sustain
a complete loss, of such investment in Placing Shares, and it is
aware that there is a substantial risk incident to the purchase
thereof; (vii) the information contained or incorporated by
reference in this document has been prepared in accordance with the
requirements of the London Stock Exchange, the laws of the United
Kingdom, including without limitation any financial information and
any description of the risks and uncertainties regarding the Group,
may be materially different from any disclosure that would be
provided in a US registered offering. In particular, but without
limitation, it acknowledges that the financial information
available as part of this document has been prepared in accordance
with IFRS, and thus may not be comparable to financial statements
of US companies prepared in accordance with US generally accepted
accounting principles; (viii) it will base its investment decision
on this announcement and it has not duplicated, distributed,
forwarded, transferred or otherwise transmitted this announcement
(including electronic copies thereof) to any other person within
the United States; (ix) any information regarding the Company which
it may access in compliance with applicable securities laws speaks
only as of the date of its public release, that it may not be
complete or correct as of any time after that date, and that
neither of the Joint Underwriters has made any representations,
express or implied, to it with respect to the Company, the Placing
Shares or the accuracy, completeness or adequacy of any financial
or other information concerning the Company and/or the Placing
Shares, nor have either of the Joint Underwriters nor any of their
affiliates made any representations, express or implied, that there
are no material misstatements or omissions in any information
regarding the Company which it may access in compliance with
applicable securities laws. It acknowledges that it has not relied
on any information contained in any research reports prepared by
the Joint Underwriters or any of their respective affiliates; (x)
it has made its own independent investigation and appraisal of the
business, results, financial condition, prospects,
creditworthiness, status and affairs of the Group and has made its
own investment decision to acquire the Placing Shares solely on the
basis of such independent investigation and appraisal. It
understands that there may be certain consequences under US and
other tax laws resulting from an investment in the Placing Shares,
and it will make such investigation and consult such tax and other
advisors with respect thereto as it deems appropriate; (xi) it
understands that the Placing Shares will be "restricted securities"
within the meaning of Rule 144(a)(3) under the US Securities Act
and that no representation can be made as to the availability of
the exemption provided by Rule 144 under the US Securities Act for
the resale of the Placing Shares. It agrees that for so long as the
Placing Shares are "restricted securities" (as so defined), they
may not be deposited into any American depositary receipt facility
established or maintained by a depositary bank, other than a
restricted depositary receipt facility, and that such Placing
Shares will not settle or trade through the facilities of the
Depository Trust Company, the New York Stock Exchange or any other
US exchange or clearing system; (xii) it understands and
acknowledges that the Company shall have no obligation to recognise
any offer, sale, pledge or other transfer made other than in
compliance with the restrictions on transfer set forth and
described herein and that the Company may make notation on its
records or give instructions to any transfer agent of the Placing
Shares in order to implement such restrictions; and (xiii) it
understands that the foregoing representations, warranties,
undertakings, agreements and acknowledgements are required in
connection with United States and other securities laws and that
the Company, its affiliates, the Joint Underwriters and their
respective affiliates, and others are entitled to rely upon the
truth and accuracy of and its compliance with the representations,
warranties, undertakings, agreements and acknowledgements contained
herein. It agrees that if any of the representations, warranties,
undertakings, agreements and acknowledgements made herein are no
longer accurate or have not been complied with, it will promptly
notify the Company and the Joint Underwriters; and
10. it (on its behalf and on behalf of any Placee on whose
behalf it is acting) has (a) fully observed the laws of all
relevant jurisdictions which apply to it; (b) obtained all
governmental and other consents which may be required; (c) fully
observed any other requisite formalities; (d) paid or will pay any
issue, transfer or other taxes; (e) not taken any action which will
or may result in the Company or the Joint Underwriters (or any of
them) being in breach of a legal or regulatory requirement of any
territory in connection with the Equity Placings; (f) obtained all
other necessary consents and authorities required to enable it to
give its commitment to subscribe for the relevant Placing Shares;
and (g) the power and capacity to, and will, perform its
obligations under the terms contained in these terms and
conditions.
Miscellaneous
If a Placee is en ti tled to par ti cipate in the Open Offer by
virtue of being a Qualifying Shareholder it will be able to apply
to subscribe for Open Offer Shares under the terms and condi ti ons
of the Open Offer.
The Company and the Joint Underwriters reserve the right to
treat as invalid any applica ti on or purported applica ti on for
Placing Shares that appears to the Company, the Joint Underwriters
or their respective agents to have been executed, effected or
dispatched from the United States or an Excluded Territory or in a
manner that may involve a breach of the laws or regula ti ons of
any jurisdic ti on or if the Company, the Joint Underwriters or
their respective agents believe that the same may violate
applicable legal or regulatory requirements or if it provides an
address for delivery of the share cer ti ficates of Placing Shares
in, or in the case of a credit of Open Offer En ti tlements to a
stock account in CREST, to a CREST member whose registered address
would be in, an Excluded Territory or the United States, or any
other jurisdic ti on outside the United Kingdom in which it would
be unlawful to deliver such share cer ti ficates or make such a
credit.
When a Placee or person ac ti ng on behalf of the Placee is
dealing with any of the Joint Underwriters, any money held in an
account with any of the Joint Underwriters on behalf of the Placee
and/or any person ac ti ng on behalf of the Placee will not be
treated as client money within the meaning of the rules and regula
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Times
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IOEFIFFRIELFFII
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October 22, 2020 02:28 ET (06:28 GMT)
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