27 March 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, NEW ZEALAND, SOUTH AFRICA OR SWITZERLAND OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL
REAL ESTATE INVESTORS PLC
(“REI” or the “Company”)
Proposed Placing of new Ordinary Shares
Real Estate Investors plc (AIM:RLE), the West Midlands based property group, is pleased to announce a proposed placing (the “Placing“) of new Ordinary Shares at a price of 60 pence per Ordinary Share.
Liberum Capital Limited (“Liberum“) is acting as sole broker and bookrunner to the Placing.
Summary of the Placing
· Proposed placing of new Ordinary Shares at a Placing Price of 60 pence per Ordinary Share to raise a minimum of £40 million.
· Firm commitments have been received from certain institutional investors and certain of the Directors to participate in the Placing.
· Net proceeds of the Placing to be used to provide additional resources to capitalise on acquisition opportunities in the West Midlands property market.
· The Placing Price represents a premium of 2.6 per cent. to the closing middle market price of 58.5 pence per Ordinary Share on 26 March 2015, being the latest practicable date prior to the initial announcement of the Placing.
· Liberum Capital Limited (“Liberum“) is acting as sole broker and bookrunner to the Placing and Smith & Williamson Corporate Finance Limited (“Smith & Williamson“) as Nominated Adviser.
The Placing will be conditional, inter alia, on the approval by Shareholders in a general meeting. A circular setting out the details of the Placing (the “Circular“), incorporating a notice convening the General Meeting, will be posted to shareholders tomorrow. The Circular will also be available on the Company’s website.
Details of the Placing
The Company is proposing to issue New Shares at a price of 60 pence per New Share pursuant to the Placing, raising a minimum of £40 million. The Directors of the Company, in consultation with Liberum, reserve the right to adjust the final size of the Placing. The Company will update the market in due course as to the final size of the Placing and the timetable for the issue of the New Shares. The Issue Price represents a premium of 1.5 pence (2.6 per cent.) to the closing middle market price of an Ordinary Share on 26 March 2015, the latest practicable date prior to the announcement of the Placing.
The books for the Placing will open with immediate effect. The books are expected to close no later than 10 a.m. (London) today. The timing of the closing of the books and the making of allocations may be accelerated or delayed at the sole discretion of Liberum.
The Company has entered into a placing agreement (“Placing Agreement“) with Liberum and Smith & Williamson. Under the terms of the Placing Agreement Liberum, as agent for the Company, has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares and Smith & Williamson as agent for the Company, has agreed to act as nominated adviser in connection with the application for Admission. The Placing is not being underwritten. Further details of the Placing Agreement are set out later on in this Announcement.
The Placing will not be structured as a rights issue or open offer and the Placing Shares will not be offered generally to Shareholders on a pre-emptive basis. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.
The Company has received commitments to participate in the Placing from certain Directors, being Paul Bassi, Marcus Daly, John Crabtree and Peter London, to subscribe for a total of 199,998 Placing Shares. Further details of the Directors’ participation will be set out in the announcement to be made on the closing of the Placing.
Information extracted from the Circular is set out below.
-ENDS-
Enquiries:
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Real Estate Investors Plc |
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Paul Bassi |
T: +44 (0)121 265 6400 |
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Smith & Williamson Corporate Finance Limited (Nominated Adviser) |
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Azhic Basirov / David Jones
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T: +44 (0)20 7131 4000 |
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Liberum Capital (Sole Broker and Bookrunner) |
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Tom Fyson / Jamie Richards |
T: +44 (0)20 3100 2000 |
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Gable Communications Limited |
T: +44 (0)20 7193 7463 |
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John Bick
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M: +44 (0)7872 061007 |
The following information has been extracted without material adjustment from the Circular. Unless the context otherwise requires, defined terms used in this announcement shall have the meanings ascribed to them in the Circular.
Background to and reasons for the Placing
REI is a regional investor with a focus on Birmingham and the West Midlands. The Directors believe that the region is on the cusp of its re-emergence as an economic and commercial centre. This regeneration is expected to impact positively on REI’s business in the immediate and longer term. The economy is robust and growth is driven by the creative industries, education, tourism, retail and high end manufacturing. Listed below are some of the key facts that support and demonstrate a growing regional economy:
· export growth continues with West Midlands outstripping London for the first time, boosted by significant investment in the region by Jaguar Land Rover, which has, itself, enjoyed record levels of global sales in 2014;
· unemployment levels in the West Midlands are reducing whilst the region is seeing increased local and foreign investment, as well as strong growth in international trade;
· Greater Birmingham is the largest regional financial and professional services hub in the UK, and Birmingham Airport recorded its busiest year in its 75 year history in 2014; and
· property investment in the region reached an 8 year high during 2014, with West Midlands commercial property investment soaring to £2.3 billion, up 44% on 2013 and Q4 2014 office market lettings reached 713,460 sq ft, the highest total since 2008.
Investment demand in the West Midlands is varied, and includes international buyers from China, Singapore, the Middle East and the USA, as well as the traditional UK based institutional funds, insurance companies and public and private property companies. REI has benefitted from rising values, and anticipates further growth from improving occupier demand and rising rental values, in particular from its prime Birmingham city centre owned properties, which represent 31% of the portfolio. The Company’s year-end valuations as at 31 December 2014 have revealed a general uplift in values, however the Directors believe that these continue to ‘lag’ the market and actual sales values would provide further uplifts as demonstrated by the sales that were made during 2014. REI’s investments outside the city centre, in what the Directors consider to be quality secondary locations, are predicted to see yield compression in 2015 and 2016, providing REI with further potential growth.
REI’s portfolio grew by over one third in value in 2014, up 37% compared to 2013, and the Directors anticipate further growth through the acquisition of criteria compliant properties and improving the capital values and income from its existing portfolio. REI’s reputation as an established property investor, with a proven track record, along with the management’s privileged and in depth knowledge and network, continues to provide acquisition opportunities that are criteria compliant and secure capital growth and income enhancing opportunities for the Company.
In April 2014 the Company raised approximately £20 million by way of a placing of new Ordinary Shares. The net proceeds of the placing were successfully deployed on identified acquisition opportunities in line with the Company’s stated strategy at the time and within the intended timescale. REI’s management team has demonstrated its ability to deliver improved value through its active approach to asset management, whereby the Company acquires a property for which it then seeks to obtain alternative planning consents, and/or undertakes any necessary refurbishments and/or negotiates better lease arrangements, resulting in increasing capital values. For example, 33 Bennetts Hill, Birmingham was acquired for £1.575 million in 2014, a change in use consent was secured from offices (B1) to leisure (A3), and leases signed at £135,000 per annum with Loungers Limited (25 years) and at £45,000 per annum with Discovery Group (10 years). Even after an approximate capital spend of £200,000 the property has provided REI with an excellent return.
With the benefit of additional cash reserves, existing bank facilities and access to equity, the Directors believe that the Company should be able to continue to capitalise on opportunities to acquire appropriate assets at attractive valuations. The acquisition pipeline for 2015 is strong with over £100 million of opportunities identified. REI’s management team will utilise its unparalleled market knowledge and extensive relationships in order to access these opportunities. Successful acquisitions should result in capital growth and increased rental income which, in turn, will underpin the Board’s intention to pay a progressive dividend.
Over the next few years, as REI’s portfolio matures and its asset management programme completes, the Company intends to continue to actively recycle capital, disposing of assets when it makes sense to do so. The Company continues to receive approaches from agents and buyers for individual and collective elements of the portfolio, and, where it sees exceptional sales value, it will make sales.
The Directors believe that the market will see a return to normalised bank lending and significant demand from local and international buyers who recognise the benefits of investing in the region. In order to maximise REI’s ability to act quickly on the acquisition pipeline described above, the Directors are seeking to raise a minimum of £40 million by way of a Placing of new Ordinary Shares.
Use of Proceeds
The Board is proposing to raise a minimum of £40 million of additional equity by means of the Placing, in order to provide additional resources to capitalise on acquisition opportunities currently existing in the Midlands property market. The Company intends to target acquisition opportunities from a potential pipeline of over £100 million of identified opportunities in the core target areas of Birmingham and the West Midlands. The opportunities are typically ex-institutionally owned assets that, in their present form due to lease lengths, voids and lot size, are not compliant with the policy of an institutional investor, or sales from distressed portfolios acquired by US or UK specialist funds during the property crash, that are now being broken up for sale.
REI plans to invest in acquisition opportunities in line with its established investing policies, focussing on assets which have:
● high running yields or short to medium term asset management opportunities; and
● opportunities to generate rental value and/or capital growth from active asset management, refurbishment, redevelopment, change of use and planning gains.
Based on its current assessment of opportunities, the Board intends that REI will substantially deploy the proceeds of the Placing within 3-9 months of Admission. It remains the Board’s objective to grow the Company’s portfolio from the current level and for the Company to become a growing, high payout ratio property business as underpinned by its recent real estate investment trust (REIT) conversion. The Directors believe that rental value and capital growth can be achieved through active asset management of acquired properties and will not be reliant on yield compression. Notwithstanding this, the Directors believe that yield compression in the future will also benefit the portfolio.
Current Trading and Prospects
On 16 March 2015, the Company announced its preliminary results for the 12 months ended 31 December 2014, confirming a 21% uplift in profit before tax of £6.0 million, compared to £5.0 million for the year ended 31 December 2013. Revenue was up 19% to £8.0 million compared to £6.7 million for the year ended 31 December 2013, with contracted annual rental income of £7.7 million, up 33% over £5.8 million at 31 December 2013.
The Directors believe that there is still a significant differential between ERV and current contracted rental income, presenting prospects for organic growth with ERVs starting to be achieved on new lettings. The current ERV is estimated at £9.6 million. Leasing progress to date during 2015, including leases in legals, is estimated at £368,000 per annum. The Board believes that the portfolio valuation continues to ‘lag’ the market and actual sales values would provide further uplifts as demonstrated by the sales the Company has made during 2014. REI investments outside the city centre, in what the Directors consider to be quality secondary locations, are predicted to see yield compression in 2015 and 2016, providing REI with further potential growth.
The total property portfolio valuation, as at 31 December 2014, was £104.4 million, including inventory properties, with a net asset value per Ordinary Share of 57.9 pence and EPRA NAV of 61.3 pence per Ordinary Share.
REI remains conservatively financed with bank loans of approximately £43.0 million and available cash of approximately £6.3 million, as at 31 December 2014, equating to a net loan to value ratio of 35.2 per cent. It is the Board’s intention that the net loan to value ratio across the Company’s portfolio will not exceed a level of 50 per cent. at any time.
Portfolio and pipeline
The property portfolio, based principally in Birmingham and the West Midlands, comprises a diverse range of properties and is not reliant on, or over-exposed to, specific sub-sectors or tenants. The Directors believe that they can build on this portfolio through their network of agents and established relationships which provide introductions to prospective investments where the Company can act as an unlevered cash buyer to facilitate quick execution on competitive terms. Further, the Directors believe that REI’s well established banking relationships, with institutions including the Lloyds Banking Group, Aviva and Santander, will provide access to new credit facilities, allowing it to lever its equity investments, as well as participate in distressed asset work-outs in the region.
REI has been in discussions in relation to a pipeline of opportunities with an aggregate value of over £100 million which is expected to include the following vendors:
· UK and US based private equity;
· motivated sellers, sourced through the Company’s network of agents; and
· lender stakeholders, sourced through direct dialogue between REI management and regional lenders.
Where these opportunities are criteria compliant and the Company believes it can add value, it will act to secure these and continue to grow the portfolio. These pipeline assets provide opportunities for re-financing and active asset management by the Company. Overall, it is the Directors’ intention to achieve capital growth through active asset management coupled with revenue growth through the capture of reversionary income from the current portfolio and immediate revenue enhancement from pipeline acquisitions.
The Placing Agreement
The Company has today entered into a placing agreement (“Placing Agreement“) with Liberum and Smith & Williamson. The Placing Agreement is conditional on, amongst other things:
1. the passing of the Resolutions (without amendment) at the GM;
2. the delivery by the Company to Liberum and Smith & Williamson of certain documents and letters;
3. the Company not having breached in any material respect any of its obligations under the Placing Agreement; and
4. Admission becoming effective by not later than 8.00 a.m. on 14 April 2015 (or such later time and/or date as the Company, Liberum and Smith & Williamson may agree (being not later than 8.00 a.m. on 30 April 2015)).
The Placing Agreement contains certain warranties given by the Company in favour of Liberum and Smith & Williamson as to, amongst other things, certain matters relating to the Company and its business. In addition, the Company has given certain undertakings to Liberum and Smith & Williamson relating to, amongst other things, the despatch of public communications concerning the Company following Admission and the issue and allotment of Ordinary Shares following Admission. The Placing Agreement also contains indemnities given by the Company in favour of Liberum and Smith & Williamson in relation to certain liabilities they may respectively incur in respect of the Placing and/or Admission. Liberum and/or Smith & Williamson have the right to terminate the Placing Agreement prior to Admission in certain circumstances, including: (i) in the event that the Company has failed to comply in any material respect with any of its obligations under the Placing Agreement; (ii) in the event that any of the warranties from the Company in the Placing Agreement is not, or has ceased to be, true and accurate in any material respect; and (iii) in the event of certain events of force majeure, including any adverse change in national or international financial, economic, market or political conditions which in the opinion of Liberum and/or Smith & Williamson (arrived at in good faith and, as far as practicable, in consultation with the Company) would be materially adverse to the Placing or would render proceeding with the Placing impracticable or inadvisable.
In consideration for the services to be provided to the Company by Liberum and Smith & Williamson in connection with Admission and the Placing, the Company has agreed to pay Liberum and Smith & Williamson certain fees and commissions and certain other costs and expenses incidental to Admission and/or the Placing.
Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM. Subject to, amongst other things, the Resolutions being duly passed by the requisite majorities at the GM, it is expected that Admission will become effective and dealings in the New Shares on AIM will commence on 14 April 2015.
If Admission does not take place on or before 8.00 a.m. on 14 April 2015 (or such later time and/or date as the Company, Liberum and Smith & Williamson may agree (being not later than 8.00 a.m. on 30 April 2015)), the Placing will not proceed.
The New Shares will rank pari passu in all respects with the existing issued Ordinary Shares, including the right to receive all dividends and other distributions declared, paid or made after Admission.
The Directors are seeking authority from Shareholders to allot Ordinary Shares pursuant to the Placing and to disapply statutory pre-emption rights in respect of such Ordinary Shares.
Dividend policy
REI paid its first dividend to shareholders of 0.5 pence per Ordinary Share in October 2012 in respect of the financial year ended 31 December 2012. In October 2013, REI increased the dividend payment to Shareholders by 100 per cent., with a dividend payment of 1.0 pence per Ordinary Share in respect of the financial year ended 31 December 2013 and the total dividend for the year ended 31 December 2014 increased by 50 per cent. to 1.5 pence per Ordinary Share. The Board remains committed to a progressive dividend policy for the future and the Company’s status as a REIT will allow the payment of dividends within an attractive tax status. The Board has declared its intention to pay dividends quarterly with effect from 2016, in order to distribute income generated by the Company to Shareholders on a more timely basis.
General Meeting
As noted above, the Directors are seeking authority to allot Ordinary Shares to implement the Placing. The GM will be held at the Company’s registered office, Cathedral Place, Third Floor, 42-44 Waterloo Street, Birmingham B2 5QB on 13 April 2015 at 11:00a.m.
This announcement is for information purposes only and does not constitute an offer or invitation to acquire or dispose of any securities or investment advice in any jurisdiction.
This Announcement may contain and the Company may make verbal statements containing “forward-looking statements” with respect to certain of the Company’s plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as “aim”, “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “seek”, “may”, “could”, “outlook” or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, United Kingdom domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company’s profitability and ability to access capital and credit, a decline in the Company’s credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
Smith & Williamson Corporate Finance Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as nominated adviser for the purposes of the AIM Rules exclusively for the Company in connection with Admission and the Placing. Smith & Williamson Corporate Finance Limited is not acting for any other person and will not be responsible to any other person for providing the protections afforded to clients of Smith & Williamson Corporate Finance Limited or for advising any other person in connection with Admission and the Placing.
Liberum Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as lead manager and broker exclusively for the Company in connection with the Placing. Liberum Capital Limited is not acting for any other person and will not be responsible to any other person for providing the protections afforded to clients of Liberum Capital Limited, or for advising any other person in connection with the Placing.
No representation or warranty, express or implied, is made by Smith & Williamson Corporate Finance Limited or Liberum Capital Limited or any of their respective directors, officers, employees, advisers or agents as to any of the contents of this announcement and, without limiting the statutory rights (if any) of any person to whom this announcement is issued, no liability whatsoever is accepted by Smith & Williamson Corporate Finance Limited or Liberum Capital Limited or any of their respective directors, officers, employees, advisers or agents for the accuracy of any information or opinions contained in this announcement or for the omission of any material information.
The information contained in this announcement is not for release, publication or distribution, directly or indirectly, to persons in the United States, Australia, Canada, Japan, the Republic of Ireland, New Zealand, South Africa or Switzerland or any other jurisdiction in which such publication or distribution is unlawful 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. The new Ordinary Shares to be issued in relation to the Placing have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act“), or under the laws of any state of the United States, and may not be offered, sold or transferred in the United States except pursuant to an exemption from, or in a transaction not subject to, the requirements of the Securities Act. The new Ordinary Shares to be issued in relation to the Placing may not be offered, sold or transferred, directly or indirectly, in or into Australia, Canada, Japan, the Republic of Ireland, New Zealand, South Africa or Switzerland, or any province or territory thereof, or any other jurisdiction in which it would be unlawful to do so. There will be no public offer of Ordinary Shares to be issued in relation to the Placing in the United Kingdom or elsewhere.
Notes to Editors
Real Estate Investors is an AIM listed property investment company with a £104.4 million (as at 31 December 2014) commercial and residential portfolio principally in the West Midlands and central England.
Real Estate Investors is focused on delivering shareholder value through returns generated from strong yields and capital enhancements. This is achieved by targeting investments in orphaned, distressed, part-let and underperforming commercial and residential property assets.
Real Estate Investors is led by respected property investor Paul Bassi CBE, who has over 30 years of property experience in the West Midlands. Mr Bassi is also founder and non-executive chairman of Bond Wolfe and non-executive chairman of CP Bigwood Chartered Surveyors. Real Estate Investors was admitted to trading on AIM in June 2004. Further information on Real Estate Investors can be found at www.reiplc.barques.dev.
DEFINITIONS
“Act” the Companies Act 2006;
“Admission” the admission of the New Shares to trading on AIM becoming effective in accordance with Rule Six of the AIM Rules;
“AIM Rules” the rules for companies whose shares are traded on AIM, and their nominated advisers, and issued by the London Stock Exchange from time to time;
“AIM” a market operated by the London Stock Exchange;
“Board” or “Directors” the directors of the Company;
“Committed Shares” up to 199,998 new Ordinary Shares to be subscribed for by certain of the Directors as part of the Placing;
“Company” or “REI” Real Estate Investors PLC;
“Enlarged Issued Share Capital” the Company’s issued Ordinary Share capital immediately following the Placing;
“EPRA NAV” the net assets of the Company calculated in accordance with the definition set out by the European Public Real Estate Association;
“ERV” Estimated Rental Value, being the estimate of the rental which a property is likely to command in the open market at a given time;
“Euroclear” Euroclear UK & Ireland Limited (formerly CRESTCo Limited), the operator of CREST;
”GM” or “General Meeting” the general meeting of the Company convened for 13April 2015 (and any adjournment thereof), notice of which is set out at the end of the Circular;
“Issue Price” 60pence per New Share;
“Liberum” Liberum Capital Limited, Ropemaker Place, Level 12, 25 Ropemaker Street, London EC2Y 9LY;
“London Stock Exchange” London Stock Exchange plc;
“New Shares” the Placing Shares and the Committed Shares;
“Ordinary Shares” ordinary shares of 10 pence each in the capital of the Company;
“Placing” the proposed sale of the New Shares by the Company (through subscription) pursuant to the Placing Agreement;
“Placing Agreement” the placing agreement dated 27 March 2015 between (1) the Company, (2) Liberum and (3) Smith & Williamson;
“Placing Shares” new Ordinary Shares to be issued to places procured by Liberum pursuant to the Placing;
“Register” the register of members of the Company;
“Resolutions” the ordinary and special resolutions of Shareholders at the GM, respectively, to grant the Directors authority to allot the Placing Shares and disapplying pre-emption rights in respect of the allotment of the Placing Shares;
“Shareholders” holders of Ordinary Shares;
“Smith & Williamson” Smith & Williamson Corporate Finance Limited, 25 Moorgate, London EC2R 6AY; and
“Voting Record Time” in relation to the GM, 6.00 p.m. on 9April 2015 or if the GM is adjourned, 6.00 p.m. on the day which is two days before the date of the adjourned meeting.
APPENDIX
FURTHER DETAILS OF THE PLACING
TERMS AND CONDITIONS
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX (TOGETHER, THE “ANNOUNCEMENT“) AND THE INFORMATION IN IT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, NEW ZEALAND, SOUTH AFRICA, SWITZERLAND OR ANY JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS WHO ARE IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA AND ARE “QUALIFIED INVESTORS” AS DEFINED IN ARTICLE 2.1(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE “PROSPECTUS DIRECTIVE“); AND (B) IN THE UNITED KINGDOM, PERSONS WHO ARE: (I) “INVESTMENT PROFESSIONALS” WITHIN THE MEANING OF ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER“); (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (“HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC”) OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS“). THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT IS NOT AN OFFER OF OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT“), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR AS PART OF A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NO OFFERING OF SECURITIES IS BEING MADE IN THE UNITED STATES. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL NOT BE ACCEPTED.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES.
Persons who have been or who are invited to and who have chosen or choose to participate in the Placing, by making or having made (or on whose behalf there is or has been made) an oral or written offer to subscribe for Placing Shares (the “Placees“), will be deemed to have read and understood the Announcement, including this Appendix, in its entirety and to have made such offer on the terms and conditions, and to have provided the representations, warranties, acknowledgements, and undertakings contained in this Appendix. In particular, each such Placee represents, warrants and acknowledges that:
1. it is a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it solely for the purposes of its business;
2. in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Member State of the European Economic Area which has implemented the Prospectus Directive other than Qualified Investors or in circumstances in which the prior consent of Liberum has been given to the offer or resale; or (ii) where Placing Shares have been acquired by it on behalf of persons in any member state of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons; and
3. (i) it is not in the United States, and (ii) it is not acting for the account or benefit of a person in the United States, (iii) it has not received any offer, or a solicitation of an offering, to buy the Placing Shares within the United States and (iv) it did not initiate any buy order to purchase Placing Shares whilst in the United States.
The Company and Liberum are relying upon the truth and accuracy of the foregoing undertakings, representations, warranties, acknowledgements and agreements.
This Announcement does not constitute an offer, and may not be used in connection with an offer, to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. This Announcement and the information contained herein is not for publication or distribution, directly or indirectly, to persons in the United States, Australia, Canada, Japan, the Republic of Ireland, New Zealand, South Africa or Switzerland or in any jurisdiction in which such publication or distribution would be unlawful. Persons into whose possession this Announcement may come are required by the Company to inform themselves about and to observe any restrictions of transfer of this Announcement. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.
In particular, the Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or any laws of or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, pledged or otherwise transferred 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 the securities laws of any state or other jurisdiction of the United States. The Placing Shares are being offered and sold only outside the United States in accordance with Regulation S.
The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by the Australian Securities and Investments Commission or the Japanese Ministry of Finance or the South African Reserve Bank; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan, the Republic of Ireland, New Zealand, South Africa or Switzerland. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Japan, the Republic of Ireland, New Zealand, South Africa or Switzerland or any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Appendix or the Announcement of which it forms part should seek appropriate advice before taking any action.
In this Appendix, unless the context otherwise requires, “Placee” means a Relevant Person (including individuals, funds or others) on whose behalf a commitment to subscribe for Placing Shares has been given.
Details of the Placing Agreement and the Placing Shares
Liberum and Smith & Williamson (as nominated adviser) have entered into a Placing Agreement (the “Placing Agreement“) with the Company under which Liberum has, on the terms and subject to the conditions set out therein, undertaken to use its reasonable endeavours to procure subscribers for new ordinary shares of 10 pence each in the capital of the Company (the “Placing Shares“) at the Placing Price (as defined below). The Placing is not being underwritten by Liberum, Smith & Williamson or any other person.
The number of Placing Shares will be determined following completion of the Bookbuild (as defined below) as set out in this Announcement.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued ordinary shares in the capital of the Company (“Ordinary Shares“), including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of the Ordinary Shares after the date of issue of the Placing Shares.
The Company, except pursuant to the Placing, has agreed not to allot, issue or grant any rights in respect of any of its Ordinary Shares in the period from the date of this Announcement until 90 days after Admission (as defined below) without Liberum’s and Smith & Williamson’s prior written consent.
Application for admission to trading
Application will be made to London Stock Exchange plc (the “London Stock Exchange“) for admission to trading of the Placing Shares on AIM (“Admission“). It is expected that settlement of any such shares and Admission will become effective on or around 14 April 2015 and that dealings in the Placing Shares will commence at that time.
Bookbuild
Liberum will today carry out an accelerated bookbuilding process (the “Bookbuild“) to determine additional demand for participation in the Placing by Placees at the Placing Price. The Company intends to raise a minimum of £40 million but reserves the right to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
Liberum and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their sole discretion, determine.
Participation in, and principal terms of, the Placing
1. Liberum is arranging the Placing as sole agent and broker of the Company.
2. Participation in the Placing is only available to persons who are lawfully able to be, and have been, invited to participate by Liberum. Liberum and its respective affiliates are entitled to participate in the Placing as principal.
3. The price per Placing Share (the “Placing Price“) is fixed at 60 pence and is payable to Liberum (as agent for the Company) by all Placees.
4. To bid in the Bookbuild, Placees should communicate their bid by telephone to their usual sales contact at Liberum. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at the Placing Price. Bids may be scaled down by Liberum on the basis referred to in paragraph 8 below.
5. The timing of the closing of the Bookbuild is at the discretion of Liberum. Liberum may, in agreement with the Company, accept bids that are received after the Bookbuild has closed. The Company reserves the right to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.
6. Each Placee’s allocation will be determined by Liberum in its discretion following consultation with the Company and will be confirmed orally to each Placee by Liberum and a contract note will be dispatched as soon as possible thereafter. That oral confirmation will give rise to an irrevocable, legally binding commitment by that person (who at that point becomes a Placee), in favour of Liberum and the Company, under which it agrees to acquire the number of Placing Shares allocated to it at the Placing Price and otherwise on the terms and subject to the conditions set out in this Appendix and in accordance with the Company’s articles of association. Except with Liberum’s consent, such commitment will not be capable of variation or revocation from the time at which it is submitted.
7. The Company will make a further announcement following the close of the Bookbuild detailing the number of Placing Shares to be issued at the Placing Price.
8. Subject to paragraphs 4 and 5 above, Liberum may choose to accept bids, either in whole or in part, on the basis of allocations determined at their discretion (in agreement with the Company) and may scale down any bids for this purpose on such basis as it may determine. Liberum may also, notwithstanding paragraphs 4 and 5 above, subject to the prior consent of the Company (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.
9. A bid in the Bookbuild will be made on the terms and subject to the conditions in the Announcement (including this Appendix) and will be legally binding on the Placee on behalf of which it is made and, except with Liberum’s consent, articles of association. Except with Liberum’s consent, such commitment will not be capable of variation or revocation from the time at which it is submitted.
10. Each Placee’s allocation and commitment will be evidenced by a contract note issued to such Placee by Liberum. The terms and conditions of this Appendix will be deemed incorporated into that contract note.
11. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Liberum, to pay Liberum (or as Liberum may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares for which such Placee has agreed to subscribe. Each Placee’s obligations will be owed to Liberum.
12. Except as required by law or regulation, no press release or other announcement will be made by Liberum or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee’s prior written consent.
13. Irrespective of the time at which a Placee’s allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under “Registration and Settlement”.
14. All obligations of Liberum under the Placing will be subject to fulfilment of the conditions referred to below under “Conditions of the Placing” and to the Placing not being terminated on the basis referred to below under “Right to terminate under the Placing Agreement”.
15. By participating in the Placing, each Placee agrees that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
16. To the fullest extent permissible by law and the applicable rules of the Financial Conduct Authority (“FCA“), neither Liberum nor any of its affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise whether or not a recipient of these terms and conditions) in respect of the Placing. Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and Liberum shall have no liability to the Placees for the failure of the Company to fulfil those obligations. In particular, neither Liberum nor any of its affiliates shall have any liability (including to the extent permissible by law, any fiduciary duties) in respect of Liberum’s method of effecting the Placing.
Conditions of the Placing
Liberum’s and Smith & Williamson’s obligations under the Placing Agreement in respect of the Placing Shares are conditional on, inter alia:
(a) the Company allotting the Placing Shares, prior to and conditional only on Admission, in accordance with the terms of the Placing Agreement;
(b) the passing of certain resolutions in connection with the Placing at a general meeting of the Company proposed to be held on or around 13 April 2015; and
(c) Admission taking place not later than 8.00 a.m. on 14 April 2015 (or such later time or date as the Company, Liberum and Smith & Williamson may agree, but not being later than 8.00 a.m. on 30 April 2015).
If: (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by Liberum and/or Smith & Williamson, as applicable, by the respective time or date where specified (or such later time or date as the Company, Liberum and Smith & Williamson may agree, but not being later than 8.00 a.m. on 30 April 2015); (ii) any of such conditions becomes incapable of being fulfilled; or (iii) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and the Placee’s rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.
Liberum and/or Smith & Williamson may, at their discretion and upon such terms as they think fit, waive, or extend the period for, compliance by the Company with the whole or any part of any of the Company’s obligations in relation to the conditions in the Placing Agreement save that the above condition relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees’ commitments as set out in this Announcement.
Neither Liberum, Smith & Williamson, the Company nor any of their respective affiliates shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of Liberum and Smith & Williamson.
Right to terminate the Placing Agreement
Liberum and Smith & Williamson are each entitled, at any time before Admission, to terminate the Placing Agreement by giving notice to the Company in certain circumstances, including, inter alia:
(a) a material breach by the Company of any of its obligations under the Placing Agreement;
(b) any of the warranties given to Liberum and Smith & Williamson in the Placing Agreement not being, or having ceased to be, true and accurate in any material respect;
(c) a matter having arisen which has or might give rise to a claim under any of the indemnities given under the Placing Agreement;
(d) there having occurred or come into effect any event or omission which in the opinion of Liberum and/or Smith & Williamson (acting in good faith) is materially adverse in the context of the Placing or Admission;
(e) any statement in this Announcement or in the circular or presentation materials issued by the Company in connection with the Placing having become untrue, incorrect or misleading in any material respect; or
(f) the occurrence of a force majeure event which, in the opinion of Liberum and/or Smith & Williamson (acting in good faith), is likely to be materially adverse to the Placing.
Following Admission, the Placing Agreement is not capable of termination to the extent that it relates to the Placing of the Placing Shares. The rights and obligations of the Placees shall terminate only in the circumstances described in these terms and conditions and will not be subject to termination by the Placee or any prospective Placee at any time or in any circumstances. By participating in the Placing, Placees agree that the exercise by Liberum and/or Smith & Williamson of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Liberum and/or Smith & Williamson, as applicable, and that it need not make any reference to Placees and that neither Liberum, Smith & Williamson nor any of their respective affiliates shall have any liability to Placees whatsoever in connection with any such exercise.
No Admission Document or Prospectus
The Placing Shares are being offered to a limited number of specifically invited persons only and have not been nor will be offered in such a way as to require the publication of an admission document or prospectus in the United Kingdom or in any other jurisdiction. No offering document, admission document or prospectus has been or will be submitted to be approved by the FCA in relation to the Placing, and Placees’ commitments will be made solely on the basis of the information contained in the Announcement (including this Appendix) and the business and financial information that the Company is required to publish in accordance with the AIM Rules for Companies (the “Exchange Information“). Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Exchange Information), representation, warranty, or statement made by or on behalf of the Company or Liberum or any other person and neither Liberum, the Company nor any other person will be liable for any Placee’s decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received and, if given or made, such information, representation, warranty or statement must not be relied upon as having been authorised by Liberum, the Company, or their respective officers, directors, employees or agents. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Neither the Company nor Liberum are making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations. Each Placee should not consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and Settlement
If Placees are allocated any Placing Shares in the Placing they will be sent a contract note or electronic confirmation by Liberum, which will confirm the number of Placing Shares allocated to them, the Placing Price and the aggregate amount owed by them to Liberum.
Each Placee will be deemed to agree that it will do all things necessary to ensure that delivery and payment is completed as directed by Liberum in accordance with the standing CREST settlement instructions which they have in place with Liberum.
Settlement of transactions in the Placing Shares (ISIN: GB00B45XLP34) following Admission will take place within the system administered by Euroclear UK & Ireland Limited (“CREST“) provided that, subject to certain exceptions, Liberum reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees by such other means that it deems necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee’s jurisdiction.
It is expected that settlement will be on 14 April 2015 in accordance with the instructions set out in the contract notes.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by Liberum.
Each Placee is deemed to agree that, if it does not comply with these obligations, Liberum may sell any or all of the Placing Shares allocated to that Placee on such Placee’s behalf and retain from the proceeds, for Liberum’s account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee’s behalf. By communicating a bid for Placing Shares, each Placee confers on Liberum all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Liberum lawfully takes in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the contract note is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee’s name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax or securities transfer tax. Neither Liberum nor the Company will be liable in any circumstances for the payment of stamp duty, stamp duty reserve tax or securities transfer tax in connection with any of the Placing Shares. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Representations, Warranties and Further Terms
By participating in the Placing, each Placee (and any person acting on such Placee’s behalf) makes the following representations, warranties, acknowledgements, agreements and undertakings (as the case may be) to Liberum (for itself and on behalf of the Company):
1. that it has read and understood this Announcement, including the Appendix, in its entirety and that its subscription for Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein and undertakes not to redistribute or duplicate this Announcement;
2. that its obligations are irrevocable and legally binding and shall not be capable of rescission or termination by it in any circumstances;
3. that the exercise by Liberum of any right or discretion under the Placing Agreement shall be within the absolute discretion of Liberum and Liberum need not have any reference to it and shall have no liability to it whatsoever in connection with any decision to exercise or not to exercise any such right and each Placee agrees that it has no rights against Liberum, Smith & Williamson or the Company, or any of their respective directors and employees under the Placing Agreement pursuant to the Contracts (Rights of Third Parties Act) 1999;
4. that each Placee, in accepting its participation in the Placing, is not relying on any information or representation or warranty in relation to the Company or any of its subsidiaries or any of the Placing Shares other than as contained in this Announcement. Each Placee agrees that neither the Company nor Liberum nor any of their respective officers, directors or employees will have any liability for any such other information, representation or warranty, express or implied;
5. that it has neither received nor relied on any unpublished price sensitive information concerning the Company in accepting this invitation to participate in the Placing;
6. neither it nor, as the case may be, its clients expect Liberum to have any duties or responsibilities to such persons similar or comparable to the duties of “best execution” and “suitability” imposed by the FCA’s Conduct of Business Source Book, and that Liberum is not acting for it or its clients, and that Liberum will not be responsible for providing the protections afforded to customers of Liberum or for providing advice in respect of the transactions described herein;
7. (i) it is not in the United States, and (ii) it is not acting for the account or benefit of a person in the United States, (iii) it has not received any offer, or a solicitation of an offering, to buy the Placing Shares within the United States and (iv) it did not initiate any buy order to purchase Placing Shares whilst in the United States;
8. each Placee acknowledges that (a) the Placing Shares have not been, and will not be, registered under the Securities Act, (b) the Company has not been, and will not be, registered under the US Investment Company Act of 1940 and (c) the Placing Shares may not be offered, sold, pledged or otherwise transferred or delivered within the United States or to, or for the account or benefit of, any US Person as defined in Regulation S of the Securities Act (“US Person“);
9. that it is not acquiring the Placing Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of such Placing Shares in or into the United States;
10. that it is not a national or resident of Canada, Australia, the Republic of Ireland, Switzerland, New Zealand, South Africa or Japan or a corporation, partnership or other entity organised under the laws of Canada, Australia, the Republic of Ireland, Switzerland, New Zealand, South Africa or Japan and that it will not offer, sell, renounce, transfer or deliver directly or indirectly any of the Placing Shares in Canada, Australia, the Republic of Ireland, Switzerland, New Zealand, South Africa or Japan or to or for the benefit of any person resident in Canada, Australia, the Republic of Ireland, Switzerland, New Zealand, South Africa or Japan and each Placee acknowledges that the relevant exemptions are not being obtained from the Securities Commission of any province of Canada, that no document has been or will be lodged with, filed with or registered by the Australian Securities and Investments Commission or Japanese Ministry of Finance and that the Placing Shares are not being offered for sale and may not be, directly or indirectly, offered, sold, transferred or delivered in or into Canada, Australia, the Republic of Ireland, Switzerland, New Zealand, South Africa or Japan;
11. that it has not, directly or indirectly, distributed, forwarded, transferred or otherwise transmitted, and will not, directly or indirectly, distribute, forward, transfer or otherwise transmit, any presentation or offering materials concerning the Placing or the Placing Shares to any persons within the United States or to any US Persons;
12. that it is entitled to subscribe for Placing Shares under the laws of all relevant jurisdictions which apply to it and that it has fully observed such laws and obtained all governmental and other consents which may be required thereunder or otherwise and complied with all necessary formalities and that it has not taken any action which will or may result in the Company or Liberum or any of their respective directors, officers, employees or agents acting in breach of any regulatory or legal requirements of any territory in connection with the Placing or its acceptance;
13. that it has obtained all necessary consents and authorities to enable it to give its commitment to subscribe for the Placing Shares and to perform its subscription obligations;
14. that it is either: (a) a person of a kind described in paragraph 5 of Article 19 (persons having professional experience in matters relating to investments and who are investment professionals) of the Order; or (b) a person of a kind described in paragraph 2 of Article 49 (high net worth companies, unincorporated associations, partnerships or trusts or their respective directors, officers or employees) of the Order; or (c) a person to whom it is otherwise lawful to offer the opportunity to participate in the Placing;
15. that it is a qualified investor (as defined in section 86(7) of the Financial Services and Markets Act 2000, as amended (“FSMA“));
16. that it is a “professional client” or an “eligible counterparty” within the meaning of Chapter 3 of the FCA’s Conduct of Business Sourcebook and it is purchasing Placing Shares for investment only and not with a view to resale or distribution;
17. that it will (or will procure that its nominee will) if applicable, make notification to the Company of the interest in its ordinary shares in accordance with the Disclosure Rules and Transparency Rules published by the FCA;
18. that it is not, and it is not acting on behalf of, a person falling within subsections (6), (7) or (8) of sections 67 or 70 respectively or subsections (2) and (3) of section 93 or subsection (1) of section 96 of the Finance Act 1986;
19. that it is not relying on any representations or warranties or agreements by the Company, Liberum or by any of their respective directors, employees or agents or any other person except as set out in the express terms of this letter;
20. that it will not deal or cause or permit any other person to deal in all or any of the Placing Shares which it is subscribing for under the Placing unless and until Admission becomes effective;
21. that no instrument under which it acquires Placing Shares (whether as principal, agent or nominee) will be subject to stamp duty or SDRT at the increased rates referred to in sections 67 or 93 (Depository Receipts) or section 70 or 96 (Clearance Services) of the Finance Act 1986;
22. to appoint irrevocably any director of Liberum as its agent for the purpose of executing and delivering to the Company and/or its registrars any document on its behalf necessary to enable it to be registered as the holder of the Placing Shares;
23. that, as far as it is aware it is not acting in concert (within the meaning given in The City Code on Takeovers and Mergers) with any other person in relation to the Company;
24. that this Announcement does not constitute a securities recommendation or financial product advice and that neither Liberum nor the Company has considered its particular objectives, financial situation and needs;
25. that it will indemnify and hold the Company and Liberum and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the Company and Liberum will rely on the truth and accuracy of the foregoing confirmations, warranties, acknowledgements and undertakings and, if any of the foregoing is or becomes no longer true or accurate, the Placee shall promptly notify Liberum and the Company. All confirmations, warranties, acknowledgements and undertakings given by the Placee pursuant to this Announcement are given to Liberum for itself and on behalf of the Company and will survive completion of the Placing and Admission;
26. that time shall be of the essence as regards obligations pursuant to this Appendix;
27. that it is responsible for obtaining any legal, tax and other advice that it deems necessary for the execution, delivery and performance of its obligations in accepting the terms and conditions of the Placing, and that it is not relying on the Company or Liberum to provide any legal, tax or other advice to it; and
28. that all dates and times in this Announcement may be subject to amendment and that Liberum shall notify it of such amendments.
Each Placee (and any person acting on such Placee’s behalf) further represents, warrants and undertakes to Liberum (for itself and for the benefit of the Company) and acknowledges that:
1. it is aware of, has complied with and will continue to comply with any obligations it has under the Financial Services Act 2012, section 118 of FSMA and the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2007 to the extent applicable to it;
2. it will not make any offer to the public of those Placing Shares to be subscribed by it for the purposes of the Prospectus Rules made by the FCA with effect from 1 July 2005 pursuant to Commission Regulation (EC) No. 809/2004;
3. it will not distribute any document relating to the Placing Shares and it will be acquiring the Placing Shares for its own account as principal or for a discretionary account or accounts (as to which it has the authority to make and to make the statements set out herein) for investment purposes only;
4. acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter 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 Company or Liberum 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;
5. any documents sent to Placees will be sent at the Placee’s risk. They may be sent by post to such Placee at an address notified to Liberum; and
6. the Company, Liberum and their respective affiliates will rely upon the truth and accuracy of each of the foregoing representations, warranties, acknowledgements and undertakings which are given to Liberum for itself and on behalf of the Company and are irrevocable.
The agreement to settle a Placee’s subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Liberum will be responsible, and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company, and Liberum in the event that any of the Company and/or Liberum has incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify Liberum accordingly.
In addition, Placees should note that they will be liable for any 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 subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that neither Liberum nor Smith & Williamson owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee, acknowledges and agrees that either Liberum or Smith & Williamson or any of their respective affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with Liberum, any money held in an account with Liberum on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Liberum’s money in accordance with the client money rules and will be used by Liberum in the course of its own business and the Placee will rank only as a general creditor of Liberum.
All times and dates in this Announcement may be subject to amendment. Liberum shall notify the Placees and any person acting on behalf of the Placees of any changes.
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