TIDMWAS1
RNS Number : 1613B
Wasps Finance PLC
06 October 2020
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014.
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS SUCH TERM IS DEFINED IN
REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933 AS AMED) OR IN
OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND
POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF
COLUMBIA) OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO
DISTRIBUTE THE CONSENT SOLICITATION MEMORANDUM (AS DEFINED
BELOW).
WASPS FINANCE PLC
LAUNCHES CONSENT SOLICITATION IN RESPECT OF ITS
GBP35,000,000 6.50 PER CENT. SECURED BONDS DUE 13 MAY 2022
(ISIN: XS1221940510, COMMON CODE: 122194051)
6 October 2020
Wasps Finance plc (the "Issuer") today announces that it,
together with Wasps Holdings Limited and Arena Coventry Limited
(together, the "Guarantors"), is inviting holders ("Bondholders")
of its outstanding GBP35,000,000 6.50 per cent. Secured Bonds due
13 May 2022 (the "Bonds") (ISIN: XS1221940510, Common Code:
122194051), unconditionally and irrevocably guaranteed by the
Guarantors, to modify certain terms and conditions of the Bonds
(the "Conditions") and provisions of a trust deed dated 13 May 2015
(as supplemented on 19 January 2018), as amended or supplemented
from time to time, (the "Trust Deed") made between the Issuer, the
Guarantors, Arena Coventry (2006) Limited ("ACL2006") and U.S. Bank
Trustees Limited (the "Trustee") by an Extraordinary Resolution
pursuant to and in accordance with the Conditions and the Trust
Deed (the "Consent Solicitation"), as summarised below and in more
detail in a consent solicitation memorandum (the "Consent
Solicitation Memorandum") to be made available to Bondholders
shortly after the date hereof.
The Issuer and the Guarantors are inviting Bondholders to
approve certain modifications to the Conditions.
The Consent Solicitation is made on the terms and subject to the
conditions contained in the Consent Solicitation Memorandum. This
announcement must be read in conjunction with the Consent
Solicitation Memorandum, which contains important information which
should be read carefully before any decision is made with respect
to the Consent Solicitation.
An indicative timetable for the Consent Solicitation is set out
below and in the Consent Solicitation Memorandum.
Capitalised terms used but not otherwise defined in this
announcement shall have the meaning given to them in the Consent
Solicitation Memorandum.
BACKGROUND TO THE CONSENT SOLICITATION
As previously announced by the Issuer to Bondholders on 2 July
2020, Wasps Holdings Limited ("Wasps Holdings") and its
subsidiaries (together, the "Wasps Group") have been significantly
impacted by COVID-19.
Prior to COVID-19, the Wasps Group had been making further
financial and operational progress against its strategy: in the
first nine months of the financial year, the Wasps Group
successfully held 34 major exhibitions, Hotel Revenue Per Available
Room increased by 8 per cent. and a new 10-year lease was signed
with Grosvenor Casino. The Wasps Group also restructured aspects of
the rugby department, which not only proved successful in reducing
ongoing costs, but has led to a marked improvement of the playing
performance and results of the team. However, the Ricoh Arena was
temporarily closed in line with the Government's public health
restrictions from 21 March this year and, as of the date of this
letter, these restrictions to control COVID-19 remain in place for
all of the Wasps Group's principal business activities and
operations. The Wasps Group has been making plans for the gradual
re-opening of the Ricoh Arena in a COVID-19 secure way; however,
the Government announcement on 22 September, that the level of
restrictions at both a national and local level will be increased
for up to six months more, will further delay progress towards the
re-commencement of operations. Although the re-opening of the Ricoh
Arena will remain subject to change in light of evolving Government
public health restrictions and guidance, the Wasps Group remains
prepared with a comprehensive re-opening plan in place.
In response to COVID-19, the Wasps Group's key priority was, and
continues to be, the health and safety of its employees and
visitors to the Ricoh Arena. The Wasps Group reacted quickly to
mitigate the impact that COVID-19 has had (and will continue to
have) on its principal business activities and operations by
introducing various financial and operational measures and
initiatives to preserve cash, reduce costs and maintain
liquidity.
The proposals (the "Proposals"), as further detailed below and
in the section of the Consent Solicitation Memorandum entitled
"Description of the Proposals", will help the Wasps Group to
withstand the impact of COVID-19 and are aimed at restoring the
Wasps Group's financial position as soon as possible and
facilitating the Wasps Group's plans to refinance the Bonds on or
by their scheduled maturity date in May 2022.
The Wasps Group fully intends to continue to meet its
obligations under the Bonds to pay interest as it falls due and to
refinance the Bonds on or by their scheduled maturity.
Stephen Vaughan, Chief Executive Officer of Wasps Holdings
Limited, commented:
"The Wasps Group had a good start to the year up until the
impact of Covid-19 and the temporary closure of the Ricoh Arena in
line with Government health restrictions from 21 March this year.
Since then, we have taken a number of mitigating actions to
preserve cash, reduce costs and maintain liquidity to limit the
impact on the business. We are now asking bondholders to support
the amendment to certain leverage and cashflow covenants attached
to the Bond in light of the ongoing restrictions. The approval of
these Proposals will also give the Wasps Group the flexibility to
access additional liquidity, if required.
"We continue to tightly manage our costs and have a
comprehensive reopening plan for when restrictions are lifted with
extensive COVID-secure operating protocols. The Wasps Group fully
intends to continue to meet all of its obligations under the Bonds.
We firmly believe that the Proposals are in the best interests of
all of our stakeholders, and will help the Wasps Group to emerge in
a more robust financial position."
RATIONALE FOR THE PROPOSALS
The Issuer and the Guarantors are making the Consent
Solicitation for the following reasons:
-- to amend the financial covenants under the Bonds to take into
account the significant impact of COVID-19 on the Wasps Group and
the on-going financial impact of operating in a COVID-19
environment;
-- to enable the Wasps Group to access additional liquidity that
is required to allow it to continue to trade as a going concern
while the Government's public health restrictions to control
COVID-19 remain in place;
-- to enable the Wasps Group to improve its financial strength
through the acceleration and implementation of its development plan
for the Ricoh Arena and surrounding land and facilities; and
-- to facilitate the Wasps Group's plans to refinance the Bonds
on or by their scheduled maturity date in May 2022,
as further detailed in the Consent Solicitation Memorandum.
PRELIMINARY RESULTS FOR THE FINANCIAL YEARED 30 JUNE 2020
The Wasps Group's auditors (Mazars LLP) are currently conducting
their annual audit of the draft financial statements prepared by
the Wasps Group for the financial year ended 30 June 2020. The
following figures present selective consolidated financial
information relating to the Wasps Group for the financial year
ended 30 June 2020. As at the date hereof, this information has not
been audited by Mazars LLP. Such information has been prepared in
accordance with International Financial Reporting Standards and
such accounting is consistent with the accounting policies of Wasps
Holdings. Wasps Holdings expects such unaudited financial
information to be substantially consistent with the audited
consolidated financial statements of Wasps Holdings for such
period, once the audit is complete.
This was the Wasps Group's fifth full year at the Ricoh Arena,
and, over the year, the Wasps Group has continued to invest and
mature as a business and build on the foundations established in
the previous years. In the first nine-months of the financial year,
the Wasps Group had been trading in line with expectations. It had
held 34 major exhibitions, Hotel Revenue Per Available Room
increased by 8 per cent. and a new 10-year lease was signed with
Grosvenor Casino. However, the COVID-19 pandemic and the temporary
closure of the Ricoh Arena since 21 March this year has had a
significant effect on the financial performance of the Wasps Group.
The main impact has been the significant reduction in the number of
events that the Wasps Group has been able to hold at the Ricoh
Arena during the course of the financial year ended 30 June 2020:
although 34 major exhibitions were held during the first
nine-months of the financial year, this still represents a
significant reduction compared to the number of exhibitions held
during the financial year ended 30 June 2019 (49). The impact of
COVID-19 on the Wasps Group during the final three months of the
financial year has led to a significant decline in the year-end
financial performance across the Wasps Group.
Wasps Group Financial Highlights
The preliminary financial results for the Wasps Group summarised
below reflect the impact of COVID-19 on the Wasps Group, combined
with the prior year cash injection of GBP12.5 million of funds
received by Wasps Holdings as part of the Premier Rugby Limited
commercial deal with CVC Capital Partners and a GBP4.1 million
increase in the valuation of the "P-Shares" that Wasps Holdings
holds in Premier Rugby Limited:
-- as at 30 June 2020, full year revenue decreased year-on-year
to GBP22.2 million, compared to GBP34.5 million for the year to 30
June 2019 (Wasps Holdings: GBP9.9 million (2019: GBP14.8 million);
ACL: GBP3.0 million (2019: GBP5.1 million); and IEC Experience
Limited: GBP9.3 million ( 2019: GBP14.6 million));
-- operating loss of GBP8.75 million, compared to an operating
profit of GBP8.4 million in 2019;
-- EBITDA loss (operating loss before taxation, finance costs,
depreciation and amortisation) of GBP6.5 million, compared to a
profit of GBP10.7 million in 2019 (a decrease of GBP17.1 million
from the financial year ended 30 June 2019);
-- valuation of the Ricoh Arena at GBP51 million and P-Shares at
GBP13.9 million, unchanged from the 2019 valuations; and
-- consolidated senior net debt at GBP37.3 million (mainly owed
to Wasps Finance), compared to GBP31.4 million in 2019.
THE PROPOSALS
The proposals that the Issuer and the Guarantors are inviting
Bondholders to approve are as follows (together, the
"Proposals"):
(a) to amend:
(i) Condition (4)(d) (Interest Service Reserve Account and Approved Investments) to:
(A) allow the Issuer to withdraw monies from the Interest
Service Reserve Account on any Interest Payment Date falling on or
after 13 November 2020 if the amount standing to the credit of the
Interest Service Reserve Account exceeds the Required Account
Balance and to amend the definition of the Required Account Balance
such that it will be zero on or after 13 November 2020;
(B) remove the additional requirement for the Consolidated
EBITDA to Consolidated Finance Costs as at and for the 12 month
period ending the most recent Reporting Date to be at least 1.4 :
1.0 for the Issuer to be able to withdraw such amounts; and
(C) remove the reference to the account being closed at the
option of the Issuer once the Release Conditions have been met;
(ii) Condition 4(e) (Financial Covenants) so that:
(A) the Asset Cover Ratio requirement set out in Condition
4(e)(i) shall be split into two parts:
(1) a "Secured Asset Cover Ratio" of at least of 1.4 : 1.0 only
in respect of Consolidated Secured Senior Debt of the Wasps Group.
A definition of "Consolidated Secured Senior Debt" shall be added
which includes all secured Financial Indebtedness of the Wasps
Group other than any future COVID Funding and any Non-Recourse Debt
(each as further described below)); and
(2) a "Total Asset Cover Ratio" of at least 1.1 : 1.0 in respect
of the Consolidated Total Senior Debt of the Wasps Group. A
definition of "Consolidated Total Senior Debt" shall be added which
includes all secured and unsecured Financial Indebtedness of the
Wasps Group other than any Non-Recourse Debt;
(B) the requirement for each Guarantor and ACL2006 to maintain a
minimum ratio Consolidated EBITDA to Consolidated Finance Costs in
respect of any Reporting Date falling on or after 30 June 2020 is
removed and shall no longer apply; and
(C) the Consolidated Senior Debt limit set out in Condition
4(e)(iii) shall be split into two separate limits:
(1) a "Consolidated Secured Senior Debt" limit of GBP36.5
million only in respect of Consolidated Secured Senior Debt of the
Wasps Group, which includes all secured Financial Indebtedness of
the Wasps Group other than any future COVID Funding and any
Non-Recourse Debt; and
(2) a "Consolidated Total Senior Debt" level of GBP50 million in
respect of Consolidated Total Senior Debt of the Wasps Group, which
includes all secured and unsecured Financial Indebtedness of the
Wasps Group other than Non-Recourse Debt;
(iii) Condition 6(c) (Redemption at the option of the Issuer) to
allow the Issuer to redeem the Bonds at a redemption price of 100%
of their principal amount in respect of any redemption at the
option of the Issuer occurring at any time after the Interest
Period beginning on 13 November 2020 until the scheduled final
maturity date;
(iv) Condition 19 to amend the definition of "Permitted
Collateral Security Interest" to permit Wasps Holdings to grant
Quasi Security upon any distributions or other amounts payable to
Wasps Holdings under the PRL Licensing Agreement and/or the PRL
Shareholders' Agreement as part of any COVID Funding made available
to the Wasps Group by Premier Rugby Limited or the Government;
(v) Condition 19 to include a definition of "Non-Recourse Debt"
to permit a special purpose company that is a Subsidiary of the
Issuer, each Guarantor or ACL2006 to incur non-recourse debt for
the purposes of any project or development of assets owned by such
Subsidiary and provided that recourse of such debt is limited to
such Subsidiary and its assets (subject to certain limited,
customary exceptions); and
(vi) Condition 19 such that, on and from the date on which the
Amended and Restated Trust Deed is duly executed:
(A) "Account Bank", "IECE Shares", "Permitted Collateral
Security Interest" (as outlined above) , "Required Account
Balance", and "Shareholder Loan" are amended in the form outlined
in Annex 2 to the Consent Solicitation Memorandum to align with the
amendments outlined above;
(B) the definitions of "Asset Cover Ratio", "Consolidated
EBITDA", "Consolidated Finance Costs" and "Consolidated Senior
Debt" are deleted in their entirety to align with the amendments
outlined above; and
(C) new definitions, being, "Consolidated Secured Senior Debt",
"Consolidated Total Senior Debt", "COVID Funding", "Non-Recourse
Debt" (as outlined above), "PRL Licensing Agreement", "PRL
Shareholders' Agreement", "Secured Asset Cover Ratio" and "Total
Asset Cover Ratio" are added to Condition 19 to implement the
amendments outlined above; and
(b) all consequential amendments to the Transaction Documents
that are necessary or desirable in the opinion of the Issuer to
implement the modifications described in paragraphs (a)(i) to (vi)
above,
in each case, as further described in the section of the Consent
Solicitation Memorandum entitled "The Consent Solicitation -
Description of the Proposals".
No consent fee will be payable in connection with the Consent
Solicitation.
MEETING OF BONDHOLDERS
Notice (the "Notice") of a meeting (the "Meeting") of the
Bondholders to be held via video conference will start at 10:00
a.m. (London time) on 29 October 2020 will, shortly following
publication of this announcement, be published in accordance with
the Trust Deed.
At the Meeting, Bondholders will be asked to consider and, if
thought fit, pass an extraordinary resolution as set out in the
Notice (the "Extraordinary Resolution"), which will provide, among
other things, for the Trustee to be authorised and requested to
concur in and execute the Amended and Restated Trust Deed which
will implement the Proposals and effect the modifications to the
Conditions.
If the Extraordinary Resolution is passed, the proposed
modifications to the Conditions will be binding on all Bondholders,
including those Bondholders who do not vote in respect of, or vote
against, the Proposals.
INDICATIVE TIMETABLE FOR THE CONSENT SOLICITATION
Event Date and Time
-------------------------------------------- --------------------------------
Announcement of the Consent Solicitation 6 October 2020
and the Proposals
Notice of Meeting delivered to the
Clearing Systems for communication
to Direct Participants and published
via the Regulatory News Service
of the London Stock Exchange.
Voting Deadline 10:00 a.m. (London time)
Deadline for Bondholders to deliver on 27 October 2020
or procure delivery on their behalf
to the Tabulation Agent of a Consent
Instruction in favour of the Extraordinary
Resolution. This will also be the
latest time for Bondholders to deliver
or procure delivery on their behalf
to the Tabulation Agent of a valid
instruction revoking previously
submitted Consent Instructions.
Deadline for appointing a proxy 10:00 a.m. (London time)
in respect of the Bonds on 27 October 2020
The latest time for appointing a
proxy (other than the Tabulation
Agent) to attend and vote at the
Meeting in person.
Meeting 10:00 a.m. (London time)
Time and date of the Meeting. on 29 October 2020 via
a video conference as
initiated by the Issuer's
counsel, Ashurst LLP,
expected to be via GoToMeeting
Announcement and publication of As soon as reasonably
results of Meeting practicable after the
Announcement of the results of the Meeting has concluded
Meeting. and, in any event, within
14 days of the Meeting.
The above times and deadlines are subject to the right of the
Issuer and the Guarantors to extend, amend (other than the terms of
the Extraordinary Resolution), waive any condition of or terminate
the Consent Solicitation at any time (subject to applicable law and
as provided in the Consent Solicitation Memorandum). Bondholders
are advised to check with any broker, dealer, commercial bank,
custodian, trust company or other nominee through which they hold
Bonds whether such broker, dealer, commercial bank, custodian,
trust company or other nominee would require receiving any notice
or instructions prior to the deadlines set out above.
GENERAL
Details of how to participate in the Consent Solicitation are
set out in the Consent Solicitation Memorandum. Bondholders may
obtain a copy of the Consent Solicitation Memorandum by contacting
the Tabulation Agent, the contact details of which are set out
immediately below.
Notices throughout the Consent Solicitation will be published in
accordance with the Trust Deed and all applicable rules and
regulations as follows:
(a) a notice in Euroclear Bank SA/NV and Clearstream Banking
S.A. for communication to Direct Participants; and/or
(b) an announcement released on the London Stock Exchange plc's regulatory news service,
and by any other means as the Issuer may, in its absolute
discretion, consider appropriate.
CONTACT INFORMATION
Requests for further information in relation to the Consent
Solicitation should be directed to the Wasps Group:
Wasps Holdings Limited
Ricoh Arena
Judds Lane
Longford
Coventry CV6 6AQ
England
c/o Aldwick Advisory Services Limited:
E-mail: ian.dixon@aldwickadvisory.co.uk
Telephone: +44 (0)7720 086993
Attention: Ian Dixon
Requests for copies of the Consent Solicitation Memorandum and
information in relation to the procedures for submission of a
Consent Instruction should be directed to the Tabulation Agent:
Lucid Issuer Services Limited
Tankerton Works
12, Argyle Walk
London WC1H 8HA
E-mail: wasps@lucid-is.com
Telephone: +44 (0)20 7704 0880
Attention: David Shilson / Owen Morris
Media enquiries should be directed to Wasps Holdings' PR
advisers:
Tulchan Group
2nd Floor
85 Fleet Street
London EC4Y 1AE
Email: wasps@tulchangroup.com
Telephone: +44 (0)20 7353 4200
Attention: Elizabeth Snow
MARKET ABUSE REGULATION
The information contained in this announcement is inside
information as stipulated under the Market Abuse Regulation (EU)
No. 596 /2014. Upon publication of this announcement, this inside
information is now considered to be in the public domain. The
person responsible for arranging for the release of this
announcement on behalf of the Issuer is Nick Eastwood, Deputy
Chairman of Wasps Holdings Limited.
DISCLAIMER AND CONSENT SOLICITATION RESTRICTIONS
The Consent Solicitation Memorandum contains important
information which should be read carefully before any decision is
made in respect of the Proposals, as defined and more fully
described herein.
If you are in any doubt as to the action you should take, you
are recommended to seek your own financial advice, including in
respect of any tax consequences, immediately from your stockbroker,
bank manager, solicitor, accountant or other independent financial
adviser authorised under the Financial Services and Markets Act
2000 as amended (if you are in the United Kingdom) or from another
appropriately authorised independent financial adviser (if you are
not).
Investors who wish to vote and whose Bonds (or interests in
Bonds) are held in the name of a broker, dealer, commercial bank,
custodian, trust company or other nominee institution (including
through CDIs in CREST) must contact such nominee promptly and
instruct or make arrangements with such nominee to vote in
accordance with the customary procedures of the Clearing Systems on
behalf of the Bondholders. The deadlines set by any such nominee
and each Clearing System for the submission of a Consent
Instruction in connection with the Extraordinary Resolution may be
earlier than the relevant deadlines specified above and in the
Consent Solicitation Memorandum.
Before making a decision with respect to the Consent
Solicitation, Bondholders should carefully consider all of the
information in the Consent Solicitation Memorandum and, in
particular, the risk factors described therein.
No person is authorised in connection with the Consent
Solicitation to give any information or to make any representation
not contained in the Consent Solicitation Memorandum and any
information or representation not contained in the Consent
Solicitation Memorandum must not be relied upon as having been
authorised by the Issuer, the Guarantors, the Trustee, Elavon
Financial Service DAC, UK Branch (the "Principal Paying Agent") or
the Tabulation Agent. The Principal Paying Agent and the Tabulation
Agent are agents of the Issuer and the Guarantors and owe no duty
to any holder of the Bonds. The Consent Solicitation Memorandum is
only issued to and directed at Bondholders for the purposes of
considering the Extraordinary Resolution. No other person may rely
upon its contents, and it should not be relied upon by Bondholders
for any other purpose. None of the Issuer, the Guarantors, the
Trustee, the Principal Paying Agent or the Tabulation Agent, or any
of their respective directors or employees, makes any
recommendation as to whether Bondholders should approve the
Proposals described in the Consent Solicitation Memorandum.
The distribution of the Consent Solicitation Memorandum in
certain jurisdictions may be restricted by law. Persons into whose
possession the Consent Solicitation Memorandum comes must inform
themselves about and observe any such restrictions.
United States
The Consent Solicitation is not for distribution, directly or
indirectly, in or into the United States (including its territories
and possessions, any State of the United States and the District of
Columbia). The matters contemplated by the Consent Solicitation do
not constitute or form a part of any offer or solicitation to
purchase or subscribe for any securities in the United States. Any
such securities have not been, and will not be, registered under
the United States Securities Act of 1933, as amended (the
"Securities Act"). Any such securities may not be offered or sold
in the United States or to, or for the account or benefit of, U.S.
persons (as such term is defined in Regulation S under the
Securities Act), except pursuant to an exemption from the
registration requirements of the Securities Act. No public offering
of securities will be made in the United States or in any other
jurisdiction where such an offering is restricted or
prohibited.
United Kingdom
The Consent Solicitation may only be communicated to persons in
the United Kingdom in circumstances where section 21(1) of the
Financial Services and Markets Act 2000 does not apply.
Accordingly, the Consent Solicitation Memorandum is only for
circulation to persons inside the United Kingdom who fall within
one of the following categories:
(a) a person who is a holder of any Bonds; or
(b) any other person also falling within Article 43(2) or within
Article 49(2)(a) to (d) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the "Order") or falling
within the definition of "investment professionals" (as defined in
Article 19(5) of the Order).
The Consent Solicitation Memorandum is only available in the
United Kingdom to such persons, and the transactions contemplated
herein will be available only to, and may be engaged in only with,
such persons.
General
In addition to the representation referred to above in respect
of the United States, each holder of Bonds participating in the
Consent Solicitation will also be deemed to give certain other
representations as set out in the Consent Solicitation Memorandum.
Any Consent Instruction from a Bondholder that is unable to make
these representations will not be accepted. Each of the Issuer, the
Guarantors, the Trustee, the Principal Paying Agent and the
Tabulation Agent reserves the right, in each of its absolute
discretion, to investigate whether any such representation given by
a Bondholder is correct and, if such investigation is undertaken
and, as a result, the Issuer and the Guarantors determine (for any
reason) that such representation is not correct, such Consent
Instruction may not be accepted.
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END
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