TIDMZEG
RNS Number : 2390P
Zegona Communications PLC
30 August 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN ANY
JURISDICTION WHERE TO DO SO WOULD VIOLATE ANY APPLICABLE LAW
ZEGONA COMMUNICATIONS PLC
Zegona ANNOUNCES GBP140 million TER OFFER FOR AT LEAST
GBP2.00(1) per share
London, England, 30 August 2017 - Zegona Communications PLC
("Zegona" or the "Company") announces the publication of a circular
(the "Circular") for a return of up to GBP140 million to
shareholders by way of a tender offer (the "Tender Offer") at a
price of at least GBP2.00 per share
Tender Offer delivers on Zegona's commitment to return capital
to shareholders after selling Telecable(2)
-- On the completion of the Telecable sale, we announced our
intention to return up to GBP140 million of capital to shareholders
through a tender offer.
-- The Tender Offer is a straightforward mechanism to return
this capital quickly and tax efficiently.
-- Today we are publishing the Circular detailing the Tender
Offer and the required General Meeting.(3)
Tender Offer at a premium to Zegona's current share price
-- Under the Tender Offer, each qualifying holder of Zegona's
ordinary shares (the "Shares") will have the option to sell
approximately 36%(4) of their Shares (their "Tender Offer
Entitlement") at a price of at least GBP2.00 per Share. This Share
price represents a premium of at least 19%to the current market
price(5) of the Shares.
-- The Tender Offer will close on 5 October 2017 with cash
payments expected shortly thereafter.(6)
-- Zegona's largest shareholder, Marwyn Asset Management
Limited, has signed an irrevocable undertaking to tender its Tender
Offer Entitlement and vote in favour of the required resolutions,
and all members of Zegona's Board of Directors who hold Shares have
indicated that they will also do the same.
Attractive capital returns to Zegona shareholders
-- The Tender Offer will return up to 42% of Zegona's market
capitalisation, equivalent to GBP0.71 per Share.(4)
-- Targeted 2017 dividend reconfirmed, GBP9.8 million total
pay-out (equivalent to 5 pence per existing Share).(7)
-- Total cash returned to Zegona shareholders to end 2017 equals
55% of initial equity invested(8) whilst still retaining exposure
to underlying Euskaltel cash flows of similar magnitude to those of
Telecable standalone(9)
Eamonn O'Hare, Zegona's Chairman and CEO commented: "Today,
Zegona is delivering on its commitment to return GBP140 million to
shareholders quickly and tax efficiently. We believe the tender at
a price of at least GBP2.00 per Share represents an attractive
return of capital to our shareholders. We are also reconfirming our
intention to pay GBP9.8 million in dividends for 2017. As a result,
Zegona will have returned 55% of shareholders' initial investment,
while retaining a 15% shareholding in the enlarged Euskaltel
business.
We continue to see good potential to drive further value growth
both through our investment in Euskaltel and other investment
opportunities. Euskaltel has a very strong market position, is
highly cash generative and will benefit from the input and
experience of Zegona management. In parallel, we are actively
developing a number of new investment opportunities in the European
TMT industry where we believe we can again successfully apply our
innovative 'Buy-Fix-Sell' strategy."
Enquiries
Tavistock (Public Relations adviser)
Tel: +44 (0)20 7920 3150
Jos Simson - jos.simson@tavistock.co.uk
Lulu Bridges - lulu.bridges@tavistock.co.uk
This announcement contains inside information. Capitalised terms
used and not defined in this announcement have the meaning given to
them in the Circular.
The Tender Offer will be made to Non-US Shareholders and certain
US Shareholders(10) on identical terms save that the Non-US Tender
Offer is being conducted by Liberum Capital Limited.
Liberum Capital Limited, which is authorised and regulated by
the Financial Conduct Authority, is acting exclusively for Zegona
and for no one else in connection with the Non-US Tender Offer and
Liberum, its affiliates and its and their respective directors,
officers, employees and agents are not, and will not, be
responsible to anyone other than the Company for providing the
protections afforded to customers of Liberum nor for providing
advice in relation to the Non-US Tender Offer. For the avoidance of
doubt, none of Liberum, its affiliates and it and their respective
directors, officers, employees and agents will be responsible for,
or liable in relation to the US Tender Offer, any other
transaction, arrangement or other matter referred to in this
announcement, or the Circular, other than the Non-US Tender
Offer.
Apart from the responsibility and liabilities, if any, which may
be imposed on Liberum by the Financial Services and Markets Act (as
amended), the Financial Services Act 2012, or the regulatory
regimes established thereunder, Liberum does not accept any
responsibility or liability whatsoever nor make any representation
or warranty, express or implied, concerning the contents of this
announcement or the Circular, including its accuracy, completeness
or verification, or for any other statement made or purported to be
made by it, or on its behalf, in connection with the Company, the
Non-US Tender Offer, the Circular or this announcement. Each of
Liberum, its affiliates and their respective directors, officers,
employees and agents accordingly disclaims all and any
responsibility or liability whether arising in tort, contract or
otherwise (save as referred to above) which it might otherwise have
in respect of this announcement, the Circular or any such
statement.
About Zegona
Zegona was established with the objective of acquiring
businesses in the European Telecommunications, Media and Technology
("TMT") sector with a 'Buy-Fix-Sell' strategy to deliver attractive
shareholder returns. Zegona is listed on the London Stock
Exchange's Main Market and is led by former Virgin Media
executives, Eamonn O'Hare and Robert Samuelson.
Zegona acquired Telecable, the leading quad play cable
telecommunications operator in the Asturias region of Spain in
August 2015. The sale of Telecable to Euskaltel was completed on 26
July 2017.
Notes:
1 The tender price of GBP2.00 will be subject to an upwards
adjustment should the Pound Sterling denominated price of one
Euskaltel share be higher than GBP7.99 at the close of business on
the closing date of the Tender Offer. For every GBP1.00 the price
exceeds GBP7.99, the tender price will be increased by 14p. See
paragraph 3.1 of Part I of the Tender Offer Circular for details of
the formula used to adjust the price.
2 Zegona completed the sale of the Telecable group to Euskaltel, S.A., on 26 July 2017.
3 The Circular setting out full details of the Tender Offer and
containing a Notice of General Meeting is being sent to
shareholders today and will shortly be available on Zegona's
website at http://www.zegona.com/investor
-relations/regulatory-news.aspx. The Tender Offer will be
conditional upon shareholders passing a special resolution to
approve the requisite repurchase of shares. At the General Meeting
convened for 11.00 a.m. on 22 September, 2017 to approve the
repurchase, a special resolution will also be proposed to amend
Zegona's articles of association to give the Board of Directors the
power to make distributions in specie of Euskaltel shares.
4 If all shareholders tender their Tender Offer Entitlement at
the minimum price of GBP2.00 per Share, 70m shares will be
repurchased, equal to approximately 35.7% of Zegona's total issued
share capital of approximately 196m shares. Shareholders are not
under any obligation to tender their Shares but to the extent that
they wish to participate in the Tender Offer, they may only tender
their whole Tender Offer Entitlement of Shares. If the tender price
is adjusted upwards as described in footnote 1, each shareholder's
entitlement will be scaled back proportionately as described in
paragraph 4.1.2 of Part IV of the Circular.
5 Based on a Zegona share price of GBP1.685 on 29 August, 2017
and assuming the minimum tender price of at least GBP2.00.
6 Payments expected by 16 October 2017.
7 Zegona intends to adjust the dividend per share following the
Tender Offer such that a total dividend of GBP9.8m is paid in 2017.
Anticipated dividends from Euskaltel will help fund future Zegona
dividends. Euskaltel's current dividend is EUR36c per share -
Euskaltel has stated that it intends to increase its annual
dividend pay-out at a double-digit rate.
8 Total Zegona equity raised GBP286.6m. Total cash intended to
be returned to shareholders of up to GBP158.6m comprised of up to
GBP140m from the Tender Offer, dividends paid of GBP8.8m (4.5p on
196m shares), and 2017 dividends targeted to be paid of GBP9.8m
(equivalent to 5p on 196m shares).
9 Zegona exposed to EUR36m Cash Flow based on 15% of Euskaltel
Pro Forma 2016 Cash Flow of EUR224m plus anticipated run-rate
synergies of EUR17m from Telecable acquisition. At acquisition in
2015, Telecable's Cash Flow was EUR36.1m and in 2016 it was
EUR39.6m. Telecable's Cash Flow is Adjusted Cash Flow as defined on
page 12 of Zegona's 2016 Annual Report.
10 The US Tender Offer is being made by Zegona solely to US
Shareholders that are both (i) "qualified institutional buyers"
("QIBs") as defined in Rule 144A under the US Securities Act of
1933, as amended; and (ii) "qualified purchasers" ("QPs") as
defined in the US Investment Company Act of 1940, as amended. Any
US Shareholder that was not both a QIB and a QP at the time it
acquired any Shares or any such beneficial interest therein should
notify Zegona immediately.
Important Notice
This announcement has been issued by, and is the sole
responsibility of, the Company.
This announcement has been prepared in accordance with English
law, the Listing Rules and the Disclosure Guidance and Transparency
Rules and information disclosed may not be the same as that which
would have been prepared in accordance with the laws of
jurisdictions outside England.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
The US Tender Offer is made solely by the Company. While the US
Tender Offer is being made available to US Shareholders, the right
to tender Shares is not being made available in any jurisdiction in
the United States in which the making of the US Tender Offer or the
right to tender Shares would not be in compliance with the laws of
such jurisdictions.
The US Tender Offer is being made for the securities of a UK
company and is subject to UK disclosure requirements, which are
different from those of the United States. The settlement procedure
with respect to the US Tender Offer will be consistent with UK
practice, which differs from US domestic tender offer procedures in
certain material respects, particularly with regard to date of
payment. US Shareholders should note that the Shares are not listed
on a US securities exchange and the Company is not subject to the
periodic reporting requirements of the US Securities Exchange Act
of 1934, as amended, (the "Exchange Act") and is not required to,
and does not, file any reports with the US Securities and Exchange
Commission thereunder. The US Tender Offer is not subject to the
disclosure and other procedural requirements of Regulation 14D
under the Exchange Act. The US Tender Offer will be made in
accordance with the requirements of Regulation 14E under the US
Exchange Act to the extent applicable. Accordingly, the US Tender
Offer will be subject to disclosure and other procedural
requirements, including with respect to withdrawal rights, offer
timetable, settlement procedures and timing of payments that are
different from those applicable under US domestic tender offer
procedures and law.
Certain information in this announcement is based on management
estimates. By their nature, estimates may not be correct or
complete. Accordingly, no representation or warranty (express or
implied) is given that such estimates are correct or complete or
founded on reasonable grounds. No representation or warranty
(express or implied) is given that such estimates are founded on
reasonable grounds. Zegona does not undertake any obligation to
correct or complete any estimate whether as a result of being aware
of information (new or otherwise), future events or otherwise.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"envisages", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would",
"could" or "should" or, in each case, their negative or other
variations or comparable terminology. These forward-looking
statements include matters that are not facts. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. A number of factors
could cause actual results and developments to differ materially
from those expressed or implied by the forward-looking statements,
including, without limitation: Euskaltel's ability to successfully
combine the business of Telecable and Euskaltel and to realise
operational efficiencies from that combination; the assessment of
Telecable's working capital and net debt at closing of the
acquisition could result in an adjustment to the cash consideration
payable; the tax credits which are required to be proven to
generate the contingent consideration may not arise or be usable;
conditions in the markets; the market position of Telecable and
Euskaltel; earnings, financial position, cash flows, return on
capital and operating margins of Telecable and Euskaltel;
anticipated investments and capital expenditures of Telecable and
Euskaltel; changing business or other market conditions; and
general economic conditions. These and other factors could
adversely affect the outcome and financial effects of the plans and
events described in this announcement. Forward-looking statements
contained in this announcement based on past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. Subject to any requirement
under the Listing Rules, Prospectus Rules, the Disclosure Guidance
and Transparency Rules or other applicable legislation or
regulation, Zegona does not undertake any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Investors should not place
undue reliance on forward-looking statements, which speak only as
of the date of this announcement.
Target returns
The expected returns to Zegona shareholders are a target only
and not a profit forecast. There can be no assurance that the
target returns will be achieved and investors should place no
reliance on such targets when making an investment decision.
Nothing in this announcement is intended, or is to be construed, as
a profit forecast or to be interpreted to mean that earnings per
Zegona share for the current or future financial years will
necessarily match or exceed the historical published earnings per
Zegona share.
Company website
Neither the content of the Company's website, nor the content on
any website accessible from hyperlinks on its website for any other
website, is incorporated into, or forms part of, this announcement
nor, unless previously published by means of a recognised
information service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
The person responsible for arranging for the release of this
announcement on behalf of Zegona is Dean Checkley, whose business
address is 20 Buckingham Street, London, WC2N 6EF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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