TIDMSIN
29 March 2010
Replacement - Proposed Cancellation and Offer
The following announcement replaces the Company's previous announcement released
at 15.11 on Friday 25 March 2010. The Panel on Takeovers and Mergers has
requested certain additional information to be notified. The full amended
announcement is reproduced below.
Proposed Cancellation of Admission to AIM,
Proposed Re-registration as a Private Limited Company,
General Meetings
Cancellation of Share Premium Account
and
Offer To Buy Back 13,208,072 Shares of GBP0.01
At 7 pence per Spectrum Interactive Share
The following announcement incorporates extracts from the Chairman's letter
contained in a Circular which will be posted to the Company's Shareholders
today, relating to Spectrum Interactive's proposed cancellation of its AIM
listing:
1. Introduction
The Company announces that it is proposing to seek Shareholder approval to:
* cancel the admission of the Company's Shares to trading on AIM;
* re-register the Company as a private limited company; and
* make an Offer to Shareholders other than the Majority Group, conditional on
the De-listing and Re-registration occurring and no Cancellation Application
having been made by the applicable Condition Date, to buy back Spectrum
Interactive Shares in accordance with the provisions of the Act.
In light of the proposed De-listing and Re-registration and in order to afford
Shareholders an opportunity to realise their investment in the Company, the
Company is making the Offer to Qualifying Shareholders (that is all shareholders
other than the Majority Group) which is conditional on the De-listing,
Re-registration and on no Cancellation Application having been made or
successfully disposed of or withdrawn by the Condition Date.
The price payable under the Offer is 7 pence per share, which is a premium of
approximately 14.3 per cent. to the closing price of a Share on 25 March 2010,
being the last practicable date prior to the date of this announcement.
A circular will be sent later today to all Shareholders convening the General
Meetings and to explain the background to, and reasons for, the De-listing and
Re-registration and why the Directors unanimously consider the De-Listing and
the Re-registration to be in the best interests of the Company and its
Shareholders as a whole.
2. Recommendations
The Directors (other than myself and Yoav Kurtzbard who have abstained from
consideration of the merits of the Offer as we are deemed to be acting in
concert and as we are providing finance to the Company to enable it to make the
Offer), who have been so advised by Arbuthnot Securities consider that the
Resolutions and the Offer are fair and reasonable and in the best interests of
Shareholders and the Company as a whole and unanimously recommend that
Shareholders vote in favour of the Resolutions as they have irrevocably
undertaken to do in respect of their own shareholdings, amounting in aggregate
to 6,049,422 Shares, representing approximately 17.8 per cent. of the Existing
Issued Share Capital. In providing advice to the Board, Arbuthnot Securities has
taken into account the Directors' commercial assessments.
3. Background to and reasons for the De-listing
The Board wishes to effect the De-listing for the following reasons:
* Lack of Liquidity in Spectrum Shares
The Majority Group is interested in approximately 61.0 per cent. of the Existing
Issued Share Capital, and there has been very low trading volume in the
Company's shares since the Company's listing on AIM in April 2005.
* Administrative costs
The financial statements for the year ended 30 June 2009 note that
administrative costs in the period which they cover were approximately GBP5
million.
Administrative costs of between GBP100,000 and GBP150,000 will be saved by the
Company as a result of the De-listing and Re-registration. Such cost savings
include significant internal costs in ensuring ongoing compliance with the
Company's requirements as a publicly quoted company and professional fees
associated with the AIM quotation (including legal, accounting, broking and
Nominated Adviser costs). In addition, further administrative costs and
professional fees will be saved as a result of the Re-registration.
* Strategy
The Board believes that the Company can implement its current strategy with more
flexibility without the need to comply with the reporting and other requirements
imposed by the AIM Rules and free from short term concerns about share price
movements.
* Lighter regulatory burden
As a result of De-listing and Re-registration, the Company would be subject to a
less onerous regulatory and legislative regime than publicly quoted companies,
with attendant lower administrative costs. For instance, as a private company,
the Company would have more flexibility and be subject to less onerous company
administration procedures under the Act than apply to public companies.
As such, after careful consideration, your Board has therefore concluded that it
is in the best interests of the Company and Shareholders if the Company's
admission to trading on AIM is cancelled.
4. Background to and Reasons for the Offer
The De-listing will reduce significantly the liquidity and marketability of the
Company's Shares. After the De-listing there will be no guarantee that
Shareholders will be able to sell their Shares in the Company or, if they were
so able to do so, at an acceptable price.
In light of the De-listing and the Re-registration and in order to afford
Minority Shareholders with an opportunity to realise some or all of their
investment in the Company, the Company has determined to make the Offer.
The Offer price of 7 pence per Spectrum Interactive Share is a premium of
approximately 14.3 per cent. to the closing price of a Share on 25 March 2010,
being the last practicable date prior to the date of this announcement.
5. The Offer
Spectrum Interactive hereby offers to acquire, on the terms and subject to the
conditions set out in the Shareholder circular, 13,208,072 Shares being all
Spectrum Interactive Shares other than those owned by the Majority Group. The
Offer values each Spectrum Interactive Share at 7 pence. Acceptance in full
would result in an aggregate payment of GBP924,565.04 by the Company to
participating Shareholders. Shareholders may accept the Offer in respect of all
or any number of their Shares.
Minority Shareholders should note that the percentage of Spectrum Interactive
Shares held by the Majority Group will increase and the percentage of Spectrum
Interactive Shares held by the remaining Minority Shareholders will decrease if
the Offer is accepted by any Minority Shareholders.
Please note that there will be no requirement for Minority Shareholders to
accept the Offer if they wish to remain as Shareholders in the Company. A number
of employees wish to maintain their equity stake in the Company's business and,
accordingly, have given irrevocable undertakings not to accept the Offer in
respect of any of their holdings of Shares.
6. Financing of the Offer
Full acceptance of the Offer would result in a maximum cash consideration of
GBP924,565.04 being payable by Spectrum Interactive to Minority Shareholders. The
Company will fund the cash consideration and fees payable under the Offer from
its own cash resources, from an additional senior loan of GBP560,000 from the Bank
of Scotland plc pursuant to a facility letter dated 25 March 2010 and from the
subscription for up to GBP240,000 convertible secured loan notes by Simon Alberga
and Yoav Kurtzbard pursuant to a loan agreement dated 25 March 2010.
The principal terms of the BoS Loan are:
* Security: existing fixed and floating charge
* Interest: 4% over LIBOR
* Arrangement fee 2% of principal loan
* Repayment by equal monthly installments over three years
The principal terms of the Directors' Loan are as follows:-
* Security: fixed and floating charge subordinated to debt owed to Bank of
Scotland
* Interest: 5% over LIBOR
* Term: three-years, extendable by a further two years at the option of the
noteholders
* Conversion: convertible into ordinary shares at any time at the option of
the noteholders at a price per share equivalent to a 15 per cent. premium to
the Offer price
Young Associates Limited, a related party to Simon Alberga and Yoav Kurtzbard,
will receive an advisory fee of GBP15,000 in connection with the structuring and
negotiation of the transactions set out above and the funding for the Offer.
Arbuthnot Securities has confirmed that sufficient resources are available to
the Company to satisfy full acceptance of the Offer.
7. Share dealing after De-listing
Shares will remain freely transferable after De-listing. To the extent that
Shareholders are unable or unwilling to hold Shares in the Company following the
De-listing becoming effective, or wish to realise their investment in the
Company beyond their allocated participation in the Offer, such Shareholders
should consider selling their interests prior to the Delisting becoming
effective.
In accordance with Rule 41 of the AIM Rules, cancellation of the Company's
listing on AIM will not take effect until at least twenty Business Days have
passed following the announcement of the proposed De-Listing. If the De-Listing
Resolution is passed at the First General Meeting, it is proposed that
De-listing will take effect at 7.00 a.m. on 28 April 2010.
In the event that the De-listing proceeds, there will be no market facility for
dealing in the Shares and no price will be publicly quoted for Shares as from
close of business on 27 April 2010. As such, interests in Shares are unlikely to
be readily capable of sale and where a buyer is identified, it may be difficult
to place a fair value on any such sale.
8. Risks associated with retaining an interest in the Company following the
De-listing
The Directors draw to the attention of Shareholders the following factors which
should be taken into account in assessing whether or not to retain their
interests in Shares in the event that the De-listing is approved and becomes
effective:
* as indicated above, there will be no market facility for dealing in the
Shares and no price will be publicly quoted for Shares. As such, interests
in Shares are unlikely to be readily capable of sale and where a buyer is
identified, it will be difficult to place a fair value on any such sale;
* as shareholders in an unquoted company, Shareholders will no longer have the
protections afforded by the AIM Rules and will only be able to rely on the
protections afforded to minority shareholders under general English law;
* the Company will no longer be subject to the rules relating to disclosure of
interests in Shares set out in the DTR, such that it may be difficult to
ascertain the ownership of Shares from time to time; and
* the levels of transparency and corporate governance within the Company are
unlikely to be as stringent as for a company quoted on AIM.
The above considerations are non-exhaustive and Shareholders should seek their
own independent advice when assessing the likely impact of the De-listing on
them.
9. Information on the Majority Group
The Majority Group consists of Lord Young of Graffham, the David Young
Charitable Trust, Simon Alberga (and his family trust), Yoav Kurtzbard (and his
family trust), Mark Lewarne and Philip Congdon. Lord Young, Simon Alberga and
Yoav Kurtzbard are all directors of Young Associates Limited, a private equity
firm, and Mark Lewarne and Philip Congdon are, respectively, Chief Executive and
Finance Director of the Company. Together, the five members of the Majority
Group, including interests held by a charitable trust and family interests, are
interested in aggregate in 20,695,434 Shares representing approximately 61.0 per
cent. of the Existing Issued Share Capital.
Shareholders should be aware that Lord Young of Graffham, his family interests
and the David Young Charitable Trust, Simon Alberga, and Yoav Kurtzbard and
their family interests are deemed by the Panel on Takeovers and Mergers to be
acting in concert.
Depending on the level of acceptances under the Offer (and taking account of the
undertakings received not to accept the Offer) the Majority Group will be
interested in between approximately 61.0 and 97.2 per cent. of the issued share
capital of the Company.
10. Irrevocable Undertakings
The Company has received irrevocable undertakings to vote in favour of the
Resolutions from each member of the Majority Group in respect of all of their
respective holdings of Shares being 20,695,434 Shares in aggregate, representing
approximately 61.0 per cent. of the Existing Issued Share Capital.
The Company has received irrevocable undertakings not to accept the Offer from
Minority Shareholders who are key employees of the Company, in respect of a
total of 689,367 Shares representing approximately 2.0 per cent. of the Existing
Issued Share Capital. These undertakings have been secured because the Directors
consider it to be in the interests of the Company that its key personnel are
committed to the Company and have the ability to participate in any future
success to which they contribute by retaining an equity stake.
For further information please contact:
Spectrum Interactive plc
Tel: 01442 205 511
Mark Lewarne, Chief Executive Officer
Philip Congdon, Chief Financial Officer
Arbuthnot Securities
Tel: 020 7012 2000
Alasdair Younie/Ben Wells
Expected Timetable of Principal Events
Latest time and date for receipt of Forms of Proxy
for the first General Meeting
10.00 a.m. on 10 April 2010
First General Meeting 10.00 a.m. on 12 April 2010
Latest time and date for receipt of completed Acceptance Form and TTE
Instruction 1.00 p.m. on 16 April 2010
Offer closes 1.00 p.m. on 16 April 2010
Offer Record Date Close of business on 16 April 2010
Announcement as to acceptances 8.00 a.m. on 19 April 2010
Trading on AIM cancelled 7.00 a.m. on 28 April 2010
Latest time for application to court to cancel Re-registration Resolution 10 May
2010
Latest time and date for receipt of Forms of Proxy
for the Second General Meeting 10.00 a.m. on 10 May 2010
Expected date for Re-registration 11 May 2010
Second General Meeting 10.00 a.m. on 12 May 2010
Expected date for Share Premium Account Resolution to take effect 13 May 2010
CREST accounts credited with Offer proceeds 24 May 2010
Cheques dispatched for certified shares purchased pursuant to the Offer 24 May
2010
Balance share certificates dispatched where relevant by 24 May 2010
Note: If any of the above times or dates should change, the revised times and/or
dates will, prior to cancellation of trading on AIM, be notified to Shareholders
by an announcement on a Regulatory Information Service (whilst the Company
remains listed on AIM) and thereafter by post.
This announcement and a copy of the Offer Document will be available on the
Company's website, www.spectruminteractive.co.uk
DEFINITIONS
"Acceptance Form" the acceptance form, election and authority relating to the
Offer, for use in respect of Spectrum Interactive Shares
"Act" or "Companies Act" the Companies Act 2006
"acting in concert" has the meaning attributed to it in the City Code
"AIM" the AIM market of the London Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the London Stock Exchange
"Arbuthnot Securities" Arbuthnot Securities Limited
"Board" or "Directors" the Spectrum Interactive directors
"BoS Loan" an additional senior loan of GBP560,000 from the Bank of Scotland plc
pursuant to a facility letter dated 25 March 2010 to be made as part of the
financing of the Offer
"Business Days" Monday to Friday other than bank or public holidays in the
United Kingdom
"Cancellation Application" an application to the court to cancel the
Re-registration Resolution pursuant to section 98 of the Act
"Cancellation Period" the period from the date of passing of the Re-registration
Resolution to the Condition Date
"Closing Date" the closing date of the Offer, being 1.00 p.m. on 16 April 2010
"Code" or "City Code" the City Code on Takeovers and Mergers
"Company", "Spectrum" or "Spectrum Interactive Spectrum Interactive plc, company
number 4440500
"Condition Date" 28 days after the Re-registration Resolution is passed
"CREST" the relevant system in respect of which Euroclear is the operator and in
accordance with which securities may be held and transferred in uncertificated
form
"De-listing" the cancellation of the admission of the Company's Shares to
trading on AIM
"De-listing Resolution" the special resolution approving the De-listing to be
proposed at the First General Meeting
"Directors' Loan" the convertible loans of GBP240,000 made to the Company by Simon
Alberga and Yoav Kurtzbard
"DTR" Disclosure and Transparency Rules published by the FSA
"Euroclear" Euroclear UK & Ireland Limited, the operator of CREST
"Excluded Territories" the United States of America, Canada, Japan, Australia
and the Republic of South Africa or any jurisdiction where such actions may
violate the laws in that jurisdiction
"Existing Issued Share Capital" the issued ordinary share capital of the
Company as at the date of this announcement
"First General Meeting" the general meeting of the Company
"Form of Proxy" the form of proxy for use by Shareholders at the relevant
General Meeting
"General Meetings" the First General Meeting and the Second General Meeting of
the Company
"Group" the Company and its subsidiaries (as defined in the Act)
"London Stock Exchange" London Stock Exchange plc
"Minority Shareholder" means any Shareholder on the share register of Spectrum
Interactive on the Record Date other than the Majority Group
"Majority Group" the Directors (other than Peter Benson), the Rt. Hon. Lord
Young of Graffham, The David Young Charitable Settlement and their family trusts
and nominees
"Notice" the notice of the First General Meeting or the Second General Meeting
(as appropriate)
"Offer" the cash offer made by Spectrum Interactive to Qualifying Shareholders
to acquire from them the Offer Shares
"Offer Document" the document to be posted to Shareholders setting out the Offer
"Offer Shares" 13,208,072 Shares not already owned by the Majority Group
"Offer Price" 7 pence per Share
"Qualifying Shareholders" Shareholders who are entitled to participate in the
Offer, being shareholders other than a member of the Majority Group on the
register of members of the Company at the Record Date who are not persons
resident in any of the Excluded Territories
"Receiving Agent" Capita Registrars
"Record Date" 16 April 2010
"Registrar" Capita Registrars Limited
"Re-registration" the re-registration of the Company as a private limited
company
"Re-registration Resolution" the special resolution approving the
Re-registration to be proposed at the First General Meeting
"Regulatory Information Service" any channel recognised as a channel for the
dissemination of regulatory information by listed companies as defined in the
AIM Rules
"Resolutions" all the resolutions to be proposed at the General Meetings
"Second General Meeting" the general meeting of the Company convened by the
notice
"Shareholders" holders of Spectrum Interactive Shares on the Record Date
"Share Premium Account Resolution" the special resolution approving the
cancellation of the Company's share premium account to be proposed at the Second
General Meeting
"Spectrum Interactive Shares" or "Shares" the issued ordinary shares of GBP0.01
each in the capital of the Company and any such further shares which are
unconditionally allotted or issued after the date hereof and before the date on
which the Offer ceases to be open for acceptance (or such earlier date or dates
as the Company may decide)
"Takeover Panel" or "Panel" the Panel on Takeovers and Mergers
In accordance with Rule 2.10 of the City Code on Takeovers and Mergers, the
Company confirms that it has 33,903,506 ordinary shares of 1p each in issue and
admitted to trading on the London Stock Exchange under UK ISIN code
GB00B07BZ552.
Arbuthnot Securities Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority is acting exclusively for Spectrum
Interactive and is acting for no one else in connection with the Offer and will
not be responsible to anyone other than Spectrum Interactive for providing the
protections afforded to clients of Arbuthnot Securities Limited or for providing
advice in relation to the Offer or any other matter referred to herein.
This announcement is not intended to, and does not, constitute an offer or an
invitation to purchase or subscribe for any securities or the solicitation of an
offer to purchase any securities, pursuant to the Offer or otherwise. Any
response in relation to the Offer should be made only on the basis of the
information in the Offer Document or any document by which the Offer and Scheme
are made. Shareholders are advised to read the Offer Document when it becomes
available because it will contain important information relating to the Offer.
The distribution of this announcement in jurisdictions in or into certain
jurisdictions may be restricted by the laws of those jurisdictions. Accordingly,
copies of this announcement and all other documents relating to the Offer are
not being, and must not be, released, published, mailed or otherwise forwarded,
distributed or sent in, into or from any Excluded Territories. Persons receiving
such documents (including, without limitation, nominees, trustees and
custodians) should observe these restrictions. Failure to do so may constitute a
violation of the securities laws of any such jurisdiction.
Any response in relation to the Offer should be made only on the basis of the
information contained in the Offer Document or any document by which the Offer
is made. This announcement is made pursuant to Rule 2.5 of the Code.
This announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of Spectrum
Interactive and certain plans and objectives of the board of directors of
Spectrum Interactive. These forward-looking statements can be identified by the
fact that they do not relate only to historical or current facts.
Forward-looking statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "will", "may",
"should", "would", "could" or other words of similar meaning. By their nature,
forward-looking statements involve risks and uncertainties that could cause
actual results and developments to differ materially from those expressed in or
implied by such forward-looking statements. Many of these risks and
uncertainties relate to factors that are beyond Spectrum Interactive's abilities
to control or estimate precisely, such as future market conditions and the
behaviours of other market participants, and therefore undue reliance should not
be placed on such statements. Should one or more of these risks or
uncertainties materialise, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this announcement.
Spectrum Interactive assumes no obligation and do not intend to update or
correct these forward-looking statements, except as required pursuant to
applicable law.
The Spectrum Interactive Directors accept responsibility for the information
contained in this announcement. To the best of the knowledge and belief of the
Spectrum Interactive Directors (who have taken all reasonable care to ensure
that such is the case) the information contained in this announcement for which
they are responsible is in accordance with the facts and does not omit anything
likely to affect the import of such information.
Arbuthnot Securities Limited has given and has not withdrawn its written consent
to the issue of this announcement with the inclusion of references to its name
in the form and context in which they appear.
Dealing Disclosure Requirements:
Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the
'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in
1% or more of any class of 'relevant securities' of the Company, all 'dealings'
in any 'relevant securities' of that company (including by means of an option in
respect of, or a derivative referenced to, any such 'relevant securities') must
be publicly disclosed by no later than 3.30 pm (London time) on the London
business day following the date of the relevant transaction. This requirement
will continue until the date on which the offer becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or on which
the 'offer period' otherwise ends. If two or more persons act together pursuant
to an agreement or understanding, whether formal or informal, to acquire an
'interest' in 'relevant securities' of the Company, they will be deemed to be a
single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of the Company by the Company, or by any of its respective
'associates', must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities dealings' should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at
www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, you should consult the Panel.
END
[HUG#1399006]
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