TIDMWRN
RNS Number : 2750R
Worthington Group PLC
10 September 2014
Worthington Group plc ("the Company" or "Worthington")
10(th) September 2014
FOR IMMEDIATE RELEASE
Worthington Group plc to expand global legal claims business
with acquisition of GBP43m legal claim.
Worthington is delighted to announce the expansion of its global
claims business following agreement in principle to acquire a
substantial claim estimated to be in the region of GBP43million.
The litigation claim by two European companies centres on a claim
for loss and breach of contract by a Chinese client in respect of a
contract to develop a series of University campuses in China. Under
the terms of the agreement, the legal title of the land and
buildings concerned in the project passes to the claimants upon
default by the Chinese counterparty. The claimants seek either cash
settlement of the amount due under the contract, or sale of the
land and buildings to recover their losses.
The Company believes that, as a London Stock Exchange main
market company, it is well placed to use its Sterling listed paper
to acquire substantial international investments on attractive
terms. Worthington believes that the legal claims market is ideally
suited to Worthington's stated intention to utilise its paper to
acquire international investments on terms that are substantially
value enhancing for Worthington's shareholders, whilst also
spreading and managing risk.
Worthington is particularly attracted to the legal claims market
because there are essentially only three outcomes: Win, lose or
settle - which is in contrast to most business propositions where
outcomes can be affected by many more factors which are outside the
control of management.
Worthington's model is to charge the claimant a fee for
assessing the merits of the claim. This fee provides a gross profit
for Worthington after deduction of fees payable to specialist legal
counsel. Counsel is employed to establish whether the claim has
value, whether the claimant's statement of case is an accurate
reflection of the facts as far as can be ascertained, and whether
those facts, once assessed, would give rise to a claim having, in
most cases, a greater than 60% chance of success. A key additional
factor is whether the defendant is able to pay any successful
award. The willingness of the claimant to pay such assessment fees
is an indication to Worthington of the confidence the claimant has
in its own case.
In the event that Worthington's senior counsel provides such an
assessment, then Worthington will pay to the claimant an initial
part payment in relation to the value of the claim, as assessed by
Worthington's leading counsel, plus a deferred payment based on
success. In this way, the claimant can immediately turn part of the
claim into cash or main market London listed paper. This contrasts
with traditional litigation funders who tend to fund the legal
action but do not pay the claimant anything in advance of a
successful outcome. Worthington believes that providing the
claimant with some immediate consideration will be attractive to
claimants worldwide; indeed, as stated above, the GBP43 million
case centres around a claim for loss and breach of contract in
respect of a significant property transaction in China. This
underpins Worthington's confidence that demand for this product
will be substantial internationally.
In relation to claims both in the United Kingdom and Worldwide,
Worthington will typically only be interested in claims:
-- With a value exceeding GBP5 million
-- Where fees paid to verify the claims delivers at least a 50%
gross profit margin to Worthington
-- Where the probability of success is at least 60%
By rapidly expanding its portfolio of United Kingdom and
international claims, Worthington expects to reduce the risk
associated with any one claim whilst also increasing profits
substantially over the coming years.
The principal terms of the claim are as follows:
The claimants will pay Worthington a fee of GBP125,000 to employ
specialist counsel. Counsel will assess whether the claimants'
statement of case, after verification, would indeed give rise to a
claim in law for at least GBP43m. He will also provide an opinion
as to the percentage probability of a successful claim.
In the event that this expert opinion establishes that the
chance of success exceeds 60%, at a claim value of GBP43m,
Worthington will issue to the claimants one million new Worthington
ordinary shares.
The contracts concerned give rise to potential claims in
different jurisdictions; therefore, a further payment of GBP1.5
million will be paid to the claimants by Worthington upon an
English court finding in favour of the claimants. This GBP1.5
million may be settled, at Worthington's option, in cash or new
Worthington ordinary shares, issued at the closing market price at
the date that such judgement is given, subject to a minimum price
of 50p per Worthington share.
Upon the entry of judgement, or order, by a court or form of
arbitration in China, acceptable to Worthington, ratifying the
judgement of the English court, a further payment of GBP3 million
will be payable to the claimants. As before, this may be settled,
at Worthington's option, in cash or Worthington shares at the
closing market price at the date of such judgement, subject to a
minimum market price of GBP1 per Worthington share.
Subject to successful enforcement of the judgement, such that
Worthington receives no less than GBP43 million in cash and/or real
property, Worthington shall pay to the claimants a further GBP5
million payable, at Worthington's option, in either cash or new
Worthington shares at the closing market price prevailing at the
date of receipt of the GBP43m subject to a minimum market price of
GBP1.25 per Worthington share. In the event that Worthington
receives less than GBP43 million, the GBP5 million payment to the
claimants shall be reduced pro rata.
In the event that Worthington were to elect to pay the claimants
in ordinary shares, and the claimants were to hold more than 9.9%
of Worthington's enlarged share capital, Worthington may require
the claimants to receive convertible loan notes instead. Such loan
notes would be convertible into Worthington ordinary shares only to
the extent that, immediately following any conversion, the
claimants would hold less than 10% of Worthington's enlarged issued
ordinary share capital.
Further details of this claim, including its structure, will be
announced upon receipt of senior counsel's opinion on the claim's
value and percentage likelihood of success.
Commenting on the expansion of Worthington's global claims
business, Doug Ware CEO stated "I believe that the legal claims
market represents an excellent growth opportunity for Worthington
and that Worthington's innovative payment method should see
substantial interest from claimants worldwide. The ability of
Worthington to issue increasingly liquid stock to claimants, in
advance of final judgement and settlement, is expected to make
Worthington an attractive partner for claimants seeking to recover
some of their losses much quicker than through traditional
litigation funders. We also expect to soon be able to make an
announcement in relation to our plans to drive liquidity in
Worthington shares, this is so that claimants can be confident that
Worthington shares will be increasingly actively traded".
About Worthington Group Plc ("Worthington")
Worthington (Stock Exchange LSE: WRN) is a British investment
company that this year celebrates its 60th anniversary as a London
Stock Exchange main market listed company. The company has four
areas of investment focus: property, litigation claims, new economy
and emerging markets. The Company believes that exceptional
shareholder returns can be achieved by utilising its main market
Sterling paper to acquire investments in these sectors
worldwide.
Note:
Forward looking statements contained in this announcement,
including descriptions of Worthington's litigation portfolio, legal
claims (current and potential), strategy and plans, as well as
expectations for future revenue and earnings, reflect Worthington's
current views and assumptions with respect to future events and are
subject to certain risks and uncertainties. There are many factors
that may cause actual results achieved by Worthington to differ
materially from expectations for future results. Such factors
include risks related to litigation in general and the legal
process, uncertainties related to the results of Worthington legal
cases, including risks of delays or of failure of claims,
macro-economic factors, domestic and international political risks,
acts of God, environment and other risks, reputational risks,
currency fluctuations and changes in contractual terms, legislation
and administrative practices, as well as competition risk and other
unforeseen factors. If one or more of such risks or factors of
uncertainty were to materialise, or should one or more of the
statements provided prove to be incorrect, actual developments and
results may differ materially from the forward-looking statements
contained in this announcement.
Enquiries:
Charlotte Parham, Media information Tel: +44 203 291 1872
or email: media@worthingtongroupplc.com
PD Cosec - Company Secretary Tel: +44 208 940 0963
Website: www.worthingtongroupplc.com
Statement ends.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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