TIDMSTOB
RNS Number : 0339P
Stobart Group Limited
04 June 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 ("MAR"). IN ADDITION, MARKET
SOUNDINGS (AS DEFINED IN MAR) WERE TAKEN IN RESPECT OF CERTAIN OF
THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT
CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION, AS
PERMITTED BY MAR. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND
SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE
INFORMATION.
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE
UNITED STATES, AUSTRALIA, CANADA, HONG KONG, JAPAN, THE PEOPLE'S
REPUBLIC OF CHINA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR
REGULATION. PLEASE SEE THE IMPORTANT NOTICE AT THE OF THIS
ANNOUNCEMENT.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A
PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NEITHER THIS
ANNOUNCEMENT NOR ANYTHING CONTAINED HEREIN SHALL FORM THE BASIS OF,
OR BE RELIED UPON IN CONNECTION WITH, ANY OFFER OR COMMITMENT
WHATSOEVER IN ANY JURISDICTION. ANY DECISION TO PURCHASE, SUBSCRIBE
FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY SECURITIES
REFERRED TO IN THIS ANNOUNCEMENT MUST BE MADE SOLELY ON THE BASIS
OF THE INFORMATION THAT IS CONTAINED IN AND INCORPORATED BY
REFERENCE INTO THE PROSPECTUS TO BE PUBLISHED BY THE COMPANY IN DUE
COURSE.
4 June 2020
Stobart Group Limited
("Stobart Group", the "Company" or the "Group")
Proposed Firm Placing and Placing and Open Offer to raise gross
proceeds of between GBP80 million and GBP100 million
Stobart Group, the aviation and energy group, today announces
its intention to raise gross proceeds of between GBP80 million and
GBP100 million by way of a Firm Placing and Placing and Open Offer
(together, the "Capital Raise") of new ordinary shares in the
capital of the Company (the "New Shares") at a price between 35 and
40 pence per New Share.
The Firm Placing and the Placing will be conducted through an
accelerated bookbuilding process (the "Bookbuild"), which will be
launched immediately following this announcement. The Firm Placing
and the Placing are subject to the terms and conditions set out in
Appendix III to this announcement (which forms part of this
announcement). The final price per New Share (the "Offer Price")
will be determined following closing of the Bookbuild.
Canaccord Genuity Limited ("Canaccord") is acting as Joint
Sponsor, Joint Global Co-ordinator, Joint Bookrunner and Corporate
Broker and UBS AG London Branch ("UBS") is acting as Joint Sponsor,
Joint Global Co-ordinator, Joint Bookrunner and Financial Adviser
(together the "Joint Bookrunners").
The Capital Raise will be fully underwritten by the Joint
Bookrunners on closing of the Bookbuild.
Reasons for the Capital Raise
A detailed operational and financial review was conducted during
2019 which set out a clear path to maximising long term value for
the Group's shareholders. As a result, the Group announced in
November 2019 it would be suspending its dividend and that it had
commenced a process to obtain new long-term debt to fund its growth
investment programme. In parallel, as announced on 17 March 2020,
the Group explored the option of raising financing through the sale
of a minority investment in London Southend Airport.
The Group progressed both of these processes as planned and was
on track to enter into an enlarged debt facility ahead of the
FY19/20 results, as well as being engaged in advanced discussions
in relation to an investment in London Southend Airport. However,
the negative impact from the COVID-19 pandemic on both Flybe and
the wider Group caused disruption to this process, removing the
ability for the Group to secure this funding.
The Group has taken a series of mitigating actions to help
preserve cash flow through this period of uncertainty, however with
the business currently suffering from the severe negative impacts
of the pandemic, the Group requires additional liquidity both to
fund the Group's short-term cash obligations and to enable it to
build a strong foundation from which it can return the Aviation
business to growth and deliver on its longer-term strategic
ambitions.
Key Highlights
-- Intention to raise gross proceeds of between GBP80 million
and GBP100 million through a Firm Placing and Placing and Open
Offer at the Offer Price;
-- Entry into an amended Facility Agreement comprising the
original GBP80.0 million revolving credit facility and a new
GBP40.0 million revolving credit facility;
-- The Group intends to use the net proceeds from the Capital
Raise for general corporate purposes, including:
-- Repayment of certain amounts drawn under the RCF
-- Short-term stabilisation and maintenance: support the
Aviation and Energy business as the Stobart Group rebuild top-line
revenues and work through COVID-19 recovery, and Stobart Air
funding requirements.
-- Selective investment: airport infrastructure for post
COVID-19 world to establish platform for "best customer
experience".
-- The Company intends to raise approximately 80 per cent. of
the gross proceeds of the Capital Raise through the Firm Placing at
the Offer Price to certain institutional investors.
-- Approximately 20 per cent. of the Capital Raise is expected
to be raised through the Placing, pursuant to which the Joint
Bookrunners intend to conditionally place the Open Offer Shares
with certain institutional investors at the Offer Price, subject to
clawback to satisfy valid applications by Qualifying Shareholders
under the Open Offer.
-- The Capital Raise will be fully underwritten by the Joint
Bookrunners on closing of the Bookbuild and is conditional upon,
among other things, the approval of Shareholders at a general
meeting of the Company which will take place at 10.00 a.m. on 25
June 2020.
-- The Directors intend to subscribe for an aggregate of
approximately GBP356,000 of New Shares, through the Firm Placing
and including their commitment to take up their pro rata
entitlements under the Open Offer in full.
-- The Company's largest shareholder, Toscafund Asset Management
LLP has given a letter of intent confirming that they intend to
vote, in aggregate, 89,640,562 Existing Shares representing
approximately 23.93 per cent. of the Company's existing issued
share capital as at 29 May 2020 (being the latest practicable date
prior to the date of this announcement), in favour of the
Resolutions to be proposed at the General Meeting on which they are
permitted to vote.
-- Qualifying Shareholders will be offered the opportunity to
apply for Excess Open Offer Shares at the Offer Price through the
Excess Application Facility pursuant to the Open Offer.
-- Following completion of the Bookbuild, the Company will
publish a press announcement setting out the Offer Price (the
"Pricing Announcement") and a Prospectus in connection with the
Capital Raise and will convene a General Meeting to approve certain
matters necessary to implement the Capital Raise.
Bookbuild
The Firm Placing and the Placing are being conducted by way of
the Bookbuild on the Company's behalf by the Joint Bookrunners. The
Bookbuild will open with immediate effect following this
announcement. The Firm Placed Shares and Open Offer Shares, when
issued, will be fully paid and will rank pari passu in all respects
with the Existing Shares.
The Bookbuild is expected to close no later than 7.00 a.m. on 5
June 2020, subject to acceleration. Timing of the closing of the
Bookbuild and allocations are at the discretion of the Joint
Bookrunners and the Company. Details of the results of the Firm
Placing and the Placing will be announced as soon as practicable
after the close of the Bookbuild.
If a Placee is entitled to participate in the Open Offer by
virtue of being a Qualifying Shareholder it will be able to apply
to subscribe for Open Offer Shares under the terms and conditions
of the Open Offer. Unless otherwise agreed with the Joint
Bookrunners, any participation by a Placee as a Qualifying
Shareholder in the Open Offer will not reduce such Placee's
commitment in respect of its participation in the Firm Placing
and/or Placing.
The Firm Placing and Placing are subject to the terms and
conditions set out in Appendix II to this announcement (which forms
part of this announcement).
Capitalised terms used but not otherwise defined in the text of
this announcement are defined in Appendix II of this
announcement.
Expected Timetable of Principal Events
Record Date for entitlements under the Open Offer close of business on 3 June 2020
Announcement of the Capital Raise 4.35 p.m. on 4 June 2020
---------------------------------
Announcement of the results of the Firm Placing through a Regulatory Information 7.00 a.m. 5 June 2020
Service
---------------------------------
Ex-entitlement date for the Open Offer 5 June 2020
---------------------------------
Publication and posting of the Prospectus and Application Form 5 June 2020
---------------------------------
Open Offer Entitlements and Excess Open Offer Entitlements enabled in CREST and 8 June 2020
credited to
stock accounts of Qualifying CREST Shareholders in CREST
---------------------------------
Recommended latest time for requesting withdrawal of Open Offer Entitlements and 4.30 p.m. on 18 June 2020
Excess Open
Offer Entitlements from CREST
---------------------------------
Latest time and date for depositing Open Offer Entitlements and Excess Open Offer 3.00 p.m. on 19 June 2020
Entitlements
into CREST
---------------------------------
Latest time and date for splitting of Application Forms (to satisfy bona fide 3.00 p.m. on 22 June 2020
market claims
only)
---------------------------------
Latest time and date for electronic proxy appointments or receipt of form of proxy 10.00 a.m. on 23 June 2020
---------------------------------
Latest time and date for receipt of completed Application Forms and payment in 11.00 a.m. on 24 June 2020
full under
the Open Offer or settlement of relevant CREST instructions (as appropriate)
---------------------------------
Announcement of the results of the Placing and Open Offer through a Regulatory 7.00 a.m. on 25 June 2020
Information
Service
---------------------------------
General Meeting 10.00 a.m. on 25 June 2020
---------------------------------
Results of General Meeting announced through a Regulatory Information Service 25 June 2020
---------------------------------
Admission of, and dealings commence in, the Firm Placed Shares and the Open Offer 8.00 a.m. on 29 June 2020
Shares
---------------------------------
CREST members' accounts credited in respect of New Shares in uncertificated form From 8.00 a.m. on 29 June 2020
---------------------------------
Expected dispatch of definitive share certificates for New Shares in certificated Within 14 days of Admission
form
---------------------------------
Notes:
(1) References to times in this announcement are to London time
unless otherwise indicated.
(2) The ability to participate in the Placing and Open Offer is
subject to certain restrictions relating to Shareholders with
registered addresses outside the United Kingdom, details of which
are set out in the prospectus expected to be published by the
Company on 5 June 2020.
This announcement contains inside information for the purposes
of article 7 of EU Regulation 596/2014. The person who arranged the
release of this announcement on behalf of the Company was Louise
Brace, Company Secretary.
For further information, please contact:
Stobart Group Limited C/o Newgate Communications
Charlie Geller, Communications Director
Canaccord Genuity Limited (Joint Sponsor,
Joint Bookrunner, Joint Global Co-ordinator
and Corporate Broker to Stobart Group) +44 (0) 20 7523 8300
Adam James / Andrew Potts / Angelos
Vlatakis / Chris Robinson
UBS AG London Branch (Joint Sponsor,
Joint Bookrunner, Joint Global Co-ordinator
and Financial Adviser to Stobart Group) +44 (0)20 7567 8000
David James / Ian Hart / Alex Bloch
/ Alistair Smith
Important notices
This announcement has been issued by and is the sole
responsibility of the Company. The information contained in this
announcement is for background purposes only and does not purport
to be full or complete. No reliance may or should be placed by any
person for any purpose whatsoever on the information contained in
this announcement or on its accuracy or completeness. The
information in this announcement is subject to change.
This announcement is not a prospectus but an advertisement.
Neither this announcement nor anything contained in it shall form
the basis of, or be relied upon in conjunction with, any offer or
commitment whatsoever in any jurisdiction. Investors should not
acquire any Shares referred to in this announcement except on the
basis of the information contained in the Prospectus to be
published by the Company in connection with the Capital Raise.
Copies of the Prospectus when published will be available on the
Company's website at www.stobartgroup.co.uk/investors. Neither the
content of the Company's website nor any website accessible by
hyperlinks on the Company's website is incorporated in, or forms
part of, this announcement. The Prospectus will provide further
details of the New Shares being offered pursuant to the Capital
Raise.
This announcement does not contain or constitute an offer for
sale or the solicitation of an offer to purchase securities in the
United States. The New Shares, Open Offer Entitlements and Excess
Open Offer Entitlements have not been and will not be registered
under the US Securities Act of 1933 (the "Securities Act") or under
any securities laws of any state or other jurisdiction of the
United States and may not be offered, sold, taken up, exercised,
resold, renounced, transferred or delivered, directly or
indirectly, within the United States except pursuant to an
applicable exemption from or in a transaction not subject to the
registration requirements of the Securities Act and in compliance
with any applicable securities laws of any state or other
jurisdiction of the United States. There will be no public offer of
the New Shares in the United States. None of the New Shares, Open
Offer Entitlements, Excess Open Offer Entitlements, this
announcement or any other document connected with the Capital Raise
has been or will be approved or disapproved by the United States
Securities and Exchange Commission or by the securities commissions
of any state or other jurisdiction of the United States or any US
regulatory authority, nor have any of the foregoing authorities has
passed upon or endorsed the merits of the offering of the New
Shares, Open Offer Entitlements, or Excess Open Offer Entitlements
or the accuracy or adequacy of this announcement or any other
document connected with the Capital Raise. Any representation to
the contrary is a criminal offence in the United States.
This announcement is for information purposes only and is not
intended to and does not constitute or form part of any offer or
invitation to sell, allot or issue, or any offer or invitation to
purchase or subscribe for, New Shares, or to take up any
entitlements to New Shares, in any jurisdiction or any solicitation
to purchase or subscribe for, any securities in the United States
or Australia, Canada, Hong Kong, Japan, the People's Republic of
China, the Republic of South Africa (the "Excluded Territories") or
in any jurisdiction to whom or in which such offer or invitation is
unlawful, nor does the fact of its distribution form the basis of,
or be relied upon in connection with, or act as any inducement to
enter into, any contract or commitment whatsoever with respect to
such securities, the Company or otherwise.
The distribution of this announcement into jurisdictions other
than the United Kingdom may be restricted by law, and, therefore,
persons into whose possession this announcement comes should inform
themselves about and observe any such restrictions. Any failure to
comply with any such restrictions may constitute a violation of the
securities laws of such jurisdiction. In particular, subject to
certain exceptions, this announcement, the Prospectus (once
published) and the Application Forms (once printed) should not be
distributed, forwarded to or transmitted in or into the United
States or any Excluded Territory.
Recipients of this announcement and/or the Prospectus should
conduct their own investigation, evaluation and analysis of the
business, data and property described in this announcement and/or
if and when published the Prospectus. This announcement does not
constitute a recommendation concerning any investor's options with
respect to the Capital Raise. The price and value of securities can
go down as well as up. Past performance is not a guide to future
performance. The contents of this announcement are not to be
construed as legal, business, financial or tax advice. Each
Shareholder or prospective investor should consult his, her or its
own legal adviser, business adviser, financial adviser or tax
adviser for legal, financial, business or tax advice.
Notice to all investors
Canaccord Genuity Limited ("Canaccord") is authorised and
regulated by the Financial Conduct Authority ("FCA") in the United
Kingdom. UBS AG London Branch ("UBS" and together with Canaccord,
the "Joint Bookrunners") is authorised and regulated by the
Financial Market Supervisory Authority in Switzerland, and it is
authorised by the Prudential Regulation Authority ("PRA") and
subject to regulation by the FCA and limited regulation by the PRA
in the United Kingdom.
Canaccord and UBS are each acting exclusively for the Company
and no one else in connection with the Capital Raise or any other
matter referred to in this announcement and will not be responsible
to anyone other than the Company for providing the protections
afforded to their respective clients or for providing advice in
connection with the Capital Raise and/or any other matter referred
to in this announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by the Joint Bookrunners or by any of their
respective affiliates or agents (or any of their respective
directors, officers, employees or advisers) for the contents of the
information contained in this announcement, or any other written or
oral information made available to or publicly available to any
interested party or its advisers, or any other statement made or
purported to be made by or on behalf of either Joint Bookrunner or
any of their respective affiliates in connection with the Company,
the New Shares or the Capital Raise and any responsibility therefor
is expressly disclaimed. The Joint Bookrunners and each of their
respective affiliates accordingly disclaim all and any liability,
whether arising in tort, contract or in respect of any statements
or other information contained in this announcement and no
representation or warranty, express or implied, is made by either
Joint Bookrunner or any of their respective affiliates as to the
accuracy, completeness or sufficiency of the information contained
in this announcement.
No person has been authorised to give any information or to make
any representations other than those contained in this
announcement, the Prospectus and the Application Forms, and, if
given or made, such information or representations must not be
relied on as having been authorised by the Company or Canaccord and
UBS.
In connection with the Capital Raise, the Joint Bookrunners may
release communications to the market as to the extent to which the
book is "covered". A communication that a transaction is, or that
the books are, "covered" refers to the position of the order book
at that time. It is not an assurance that the books will remain
covered, that the transaction will take place on any terms
indicated or at all, or that if the transaction does take place,
the securities will be fully distributed by the Joint
Bookrunners.
In connection with the Capital Raise, each of their Joint
Bookrunners and any of their respective affiliates, acting as
investors for their own accounts, may take up a portion of the
shares in the Capital Raise as a principal position and in that
capacity may retain, purchase, sell, offer to sell for their own
accounts such shares and other securities of the Company or related
investments in connection with the Capital Raise or otherwise.
Accordingly, references in the Prospectus to the Shares being
issued, offered, subscribed, acquired, placed or otherwise dealt in
should be read as including any issue or offer to, or subscription,
acquisition, placing or dealing by, the Joint Bookrunners and any
of their respective affiliates acting as investors for their own
accounts. Except as required by applicable law or regulation, the
Joint Bookrunners do not propose to make any public disclosure in
relation to such transactions.
Cautionary statement regarding forward-looking statements
This announcement contains forward-looking statements, including
with respect to financial information, that are based on current
expectations or beliefs, as well as assumptions about future
events. These forward-looking statements can be identified by the
fact that they do not relate only to historical or current facts.
Forward-looking statements often use words such as "anticipate",
"target", "expect", "estimate", "intend", "plan", "goal",
"believe", "will", "may", "should", "would", "could", "is
confident", or other words of similar meaning. Undue reliance
should not be placed on any such statements because they speak only
as at the date of this announcement and, by their very nature, they
are subject to known and unknown risks and uncertainties and can be
affected by other factors that could cause actual results, and the
Company's plans and objectives, to differ materially from those
expressed or implied in the forward-looking statements. No
representation or warranty is made that any forward-looking
statement will come to pass.
You are advised to read the Prospectus when published and the
information incorporated by reference therein in their entirety,
and, in particular, the section of the Prospectus headed "Risk
Factors", for a further discussion of the factors that could affect
the Group's future performance and the industry in which it
operates. In light of these risks, uncertainties and assumptions,
the events described in the forward-looking statements, including
statements regarding prospective financial information, in this
announcement may not occur. These statements are not fact and
should not be relied upon as being necessarily indicative of future
results, and readers of this announcement are cautioned not to
place undue reliance on the forward-looking statements, including
those regarding prospective financial information.
No statement in this announcement is intended as a profit
forecast, and no statement in this announcement should be
interpreted to mean that underlying operating profit for the
current or future financial years would necessarily be above a
minimum level, or match or exceed the historical published
operating profit or set a minimum level of operating profit.
Neither the Company nor any of Canaccord or UBS are under any
obligation to update or revise publicly any forward-looking
statement contained within this announcement, whether as a result
of new information, future events or otherwise, other than in
accordance with their legal or regulatory obligations (including,
for the avoidance of doubt, the Prospectus Regulation Rules, the
Listing Rules and Disclosure Guidance and Transparency Rules).
Subject to the Prospectus Regulation Rules, the Listing Rules and
the Disclosure Guidance and Transparency Rules, the issue of this
announcement shall not, in any circumstances, create any
implication that there has been no change in the affairs of the
Company since the date of this announcement or that the information
in it is correct as at any subsequent date.
Information to Distributors
Solely for the purposes of the product governance requirements
contained within (a) EU Directive 2014/65/EU on markets in
financial instruments, as amended ("MiFID II"); (b) Articles 9 and
10 of Commission Delegated Directive (EU) 2017/593 supplementing
MiFID II; and (c) local implementing measures (together, the MiFID
II Product Governance Requirements), and disclaiming all and any
liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product
Governance Requirements) may otherwise have with respect thereto,
the New Shares have been subject to a product approval process,
which has determined that the New Shares are: (i) compatible with
an end target market of retail investors and investors who meet the
criteria of professional clients and eligible counterparties, each
as defined in MiFID II; and (ii) eligible for distribution through
all distribution channels as are permitted by MiFID II (the "Target
Market Assessment"). Notwithstanding the Target Market Assessment,
distributors should note that: the price of the New Shares may
decline and investors could lose all or part of their investment;
the New Shares offer no guaranteed income and no capital
protection; and an investment in the New Shares is compatible only
with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the Capital Raise. Furthermore, it is noted that,
notwithstanding the Target Market Assessment, the Joint Bookrunners
will only procure investors who meet the criteria of professional
clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of MiFID II; or (b) a recommendation to any
investor or group of investors to invest in, or purchase, or take
any other action whatsoever with respect to the New Shares.
Each distributor is responsible for undertaking its own Target
Market Assessment in respect of the New Shares and determining
appropriate distribution channels.
Stobart Group Limited
Proposed Firm Placing and Placing and Open Offer to raise gross
proceeds of between GBP80 million and GBP100 million
1. Introduction
Stobart Group, the aviation and energy group, today announces
its intention to raise gross proceeds of between GBP80 million and
GBP100 million by way of a Firm Placing and Placing and Open
Offer.
The Capital Raise will be fully underwritten by the Joint
Bookrunners on closing of the Bookbuild, subject to, and in
accordance with, the terms and conditions of the Placing
Agreement.
The Company has also announced that it has entered into an
amended Facility Agreement comprising the original GBP80.0 million
revolving credit facility under which the Group is fully drawn
("Facility A") and a new GBP40.0 million revolving credit facility
("Facility B"). Under Facility B, the Group can draw up to GBP10.0
million during the period commencing 5 June 2020 up to and
including the date of Admission, subject to certain liquidity
conditions. Pursuant to the terms of Facility B, the Group will use
a portion of the proceeds of the Capital Raise (up to GBP10.0
million) to repay the amount drawn under Facility B as at the date
of Admission within three Business Days of that date. Following
such repayment, the Group can draw down under Facility B subject to
conditions.
The Board believes the Capital Raising to be in the best
interests of Shareholders as a whole and this announcement will
explain why the Board unanimously recommends that Shareholders
should vote in favour of the Resolutions, as each Director has
committed to do so in respect of his or her own legal and
beneficial holdings of Shares.
2. Background to and reasons for the Capital Raise
Over the past few years, the Group has been focused on growing
its two principal activities to reposition it as a high-quality
infrastructure business, focused on the aviation and
energy-from-waste sectors. The Group has been committed to
establishing London Southend Airport as a major London airport and
creating a high-margin renewable waste wood fuel business.
Investment in accelerating the growth of the Aviation and Energy
divisions has been financed through the use of debt facilities,
cash resources and non-core asset sales.
Stobart Aviation
Stobart Aviation owns and operates London Southend Airport and
provides management services to the Tees Valley Combined Authority
in respect of the Teesside International Airport. In addition,
Stobart Aviation Services, one of the businesses within the
division, provides check-in, baggage handling and cargo services
for 16 airlines at London Stansted, London Southend, Manchester,
Edinburgh and Glasgow airports. The Group also operates Stobart Jet
Centre, which provides services to the private aviation market.
Stobart Aviation's principal asset is London Southend Airport,
which has been rated the best London airport in 2019 for the sixth
consecutive year in the Which? Airport Passenger Survey and was the
United Kingdom's fastest growing airport in 2019 according to CAA
data. The airport is served by easyJet, Ryanair and Wizz Air,
amongst others, and in early 2020 served approximately 40
destinations across Europe and the United Kingdom.
London Southend Airport made considerable progress toward its
strategic ambitions during FY19/20. Passenger numbers increased 43
per cent. to 2.14 million in FY19/20 (FY18/19: 1.49 million). In
addition, in 2019 the Group signed an agreement with a global
logistics customer to provide facilities and expertise to support
the import and export of goods at London Southend Airport.
Once the unprecedented effects of COVID-19 have subsided, the
Directors believe that low-cost
carriers ("LCCs") will benefit from their lower cost bases and
will likely return to normalised operations faster than non-LCCs.
The Directors believe that LCCs will likely be focused on seeking a
low cost base for operations and hub capacity at suitable prices
and service levels.
The pace at which this capacity is required will largely depend
on the demand from passengers to return to international travel,
the ability of airlines to react to that demand and the
preparedness of airports to respond to the changing expectations of
passengers and airlines alike. Airports will be expected to provide
clean, secure and spacious environments in which passengers are not
expected to gather in confined retail spaces, where cleaners are
highly visible and where people can move through central search
areas efficiently. The Directors believe that London Southend
Airport has an opportunity therefore to make use of significant
unutilised space and enhanced technology, provide a cost-efficient
base for airlines given the airport's lower capital expenditure to
date, and deliver a passenger-focused experience for its
customers.
Stobart Energy
The Directors believe that the Group is the United Kingdom's
largest supplier of waste wood fuel to UK biomass energy plants,
with long-term exclusive contracts in place with some of the
largest biomass energy plants in the United Kingdom. Bioenergy
(including waste wood fuel) is Britain's second largest source of
renewable electricity (behind wind), generating more than 11 per
cent. of the United Kingdom's electricity in 2019 (according to UK
Department for Business, Energy & Industrial Strategy
statistics).
As at the date of this announcement, the Group supplies more
than 15 large, and a significant number of smaller, biomass energy
plants in the United Kingdom and Ireland, all of which have
successfully completed commissioning and are fully operational.
With the biomass energy plants operating more consistently as a
result of completing commissioning, the Group was able to supply
1.5 million tonnes of waste wood fuel in FY19/20, representing an
increase of 11.5 per cent. on the previous year (FY18/19: 1.3
million).
Non-core operating divisions
The Group has three non-core operating divisions: Stobart Rail
& Civils, Stobart Investments and Stobart Infrastructure. These
divisions consist of non-core businesses and assets, and the Group
aims to divest all of them within the next three years, other than
Carlisle Lake District Airport, with an aim of realising value over
time from a position of strength when market conditions are
right.
Recent Developments
Whilst the Group's two core operating divisions performed
broadly in line with management expectations in FY19/20, the
COVID-19 pandemic has significantly impacted the Group's revenue
and costs in the first three months of FY20/21, in particular in
the Stobart Aviation and Stobart Energy operating divisions.
Stobart Aviation
Passenger numbers at London Southend Airport fell from
approximately 5,500 passengers per day to nearly zero over the
course of March 2020 and aircraft movements (i.e. landings or
take-offs) fell from approximately 50 to fewer than 10 per day in
the same period. Passenger numbers remain near zero and aircraft
movements (primarily relating to logistics) remain near 10 as at
the date of this announcement, and the Group expects this to
continue until at least the end of September 2020 (and until the
end of March 2021 under a 'reasonable worst case scenario'), with a
slow recovery until the end of February 2021 (or until end of June
2021 under a 'reasonable worst case scenario'). This has driven
both aeronautical and non-aeronautical revenue to virtually zero,
with the exception of logistics and some long-term parking income.
At the same time, the Group has been required to continue to fund
its largely fixed cost base in regulated areas including security,
air traffic control and fire safety to support logistics
operations. Furthermore, the Stobart Aviation operating division
experiences marked seasonality, with most of its profits coming
from the summer months, which are set to be significantly affected
by the COVID-19 pandemic.
In addition, on 5 March 2020 Flybe announced it had entered into
Administration, and on 10 March 2020 Flybe's parent company,
Connect Airways, also entered into Administration. The Group has a
30 per cent. ownership stake in Connect Airways, and Flybe
accounted for approximately six per cent. of the passenger traffic
at London Southend Airport in FY19/20.
As at the date of this announcement, the operations of London
Southend Airport's airline partners are, for the most part, still
suspended, with airlines taking the opportunity to ground fleets at
London Southend Airport. Over 15 aircraft are currently parked on
the airport's stands, which generates approximately GBP5,000 to
GBP10,000 per week.
The airport's global logistics customer, which imports and
exports goods to and from the United Kingdom, continues to operate
as normal. The importance of maintaining the logistics network in
the United Kingdom means that people working in that operation have
been given "key worker" status. Strict safety protocols and
procedures are in place across the Group's locations in order to
protect people still at work, including aircraft cleaning after
every flight and separation of flight and ground crews. The Group
is also undertaking a variety of pro bono activities to support
community groups and furloughed staff.
Stobart Energy
Stobart Energy is currently maintaining its operations as
biomass energy plants continue to require waste wood fuel in order
to service the United Kingdom's electricity needs. The importance
of supplying fuel to support these plants and ensuring the waste
supply chain continues to function has meant drivers and associated
employees have been assigned "key worker" status.
The key risk to Stobart Energy's ongoing operations is the
availability of waste wood. The COVID-19 pandemic has led to a
significant slowdown in construction activity, a 75 per cent.
decrease in commercial and industrial waste arisings year-on-year
and the closure of household waste and recycling centres. Without
these key sources of supply, the Group's inbound waste wood supply
decreased as much as 80 per cent. year-on-year, although is
starting to recover. The profitability of the Group's production of
waste wood fuel is, in part, related to the gate fees it charges to
third parties for taking waste wood from them. The low supply of
available waste wood is negatively impacting gate fee pricing and
may continue to do so for an extended period and may result in an
inability of the Group to fulfil its requirements under its supply
agreements with its biomass energy plant customers.
As a result, the Group has issued force majeure notices to many
its biomass energy plant customers pursuant to the terms of certain
of its supply agreements. The Group is working with its customers
to discuss options around supply and determine future volumes for
when lockdown restrictions are relaxed, and the Group has developed
volume models to help support these discussions.
The Group is engaged with the UK Government to request the
reopening of household waste and recycling centres and recommend
that all available waste wood is prioritised for the use in biomass
energy plants. The Group, along with its biomass energy plant
customers, is also engaged with the UK Government to extend the
expiration of the ROC subsidy scheme beyond the current expiration
date in 2037 to compensate for the COVID-19 related slowdown in
production.
The Group aims to identify a strategic buyer or infrastructure
investor to monetise Stobart Energy in the next 18-24 months in
order to fund future growth at London Southend Airport.
Stobart Rail & Civils
In FY19/20 Stobart Rail & Civils traded below expectations,
in part due to delays in Network Rail awarding contracts at the
start of its Control Period 6 and the Group's continued exposure to
a poor performing legacy project. In the first three months of
FY20/21 the division has been negatively impacted by the closure of
certain work sites due to the COVID-19 pandemic. As a result of the
recent poor performance, the Group is actively engaging to exit the
Rail & Civils business within the next six months. There are
currently 26 open contracts including 12 operationally live
projects. The Directors expect all of these to be substantially
concluded in the next six months.
Group COVID-19 response
Given the pressure on the Group's revenue and balance sheet, the
Group has implemented the following measures to manage costs and
preserve liquidity:
-- The Group has frozen all capital expenditure other than where
it is considered critical for safety reasons and has deferred all
discretionary spend.
-- The Group has utilised the UK Government's Job Retention
Scheme to put on furlough approximately 50 per cent. of the Group's
approximately 1,550 employees as of 1 April 2020. All employees in
continuing roles that allow them to work from home are doing
so.
-- The Directors and members of the Management Board have agreed
to 20 per cent. pay reductions and all other non-furloughed
management have accepted 10 per cent. pay reductions.
-- A recruitment freeze has been in place since early March 2020
and all variable pay awards have been deferred to August 2020 at
the earliest.
-- The Group has utilised a number of measures made available by
the UK Government to help conserve cash.
The Group also announced on 6 April 2020 that it withdrew all
previously made financial guidance.
New revolving credit facility
The Company has entered into an amended Facility Agreement
comprising the original GBP80.0 million revolving credit facility
under which the Group is fully drawn (Facility A) and a new GBP40.0
million revolving credit facility (Facility B). Under Facility B,
the Group can draw up to GBP10.0 million during the period
commencing 5 June 2020 up to and including the date of Admission,
subject to certain liquidity conditions. Pursuant to the terms of
Facility B, the Group will use a portion of the proceeds of the
Capital Raise (up to GBP10.0 million) to repay the amount drawn
under Facility B as at the date of Admission within three Business
Days of that date. Following such repayment, the Group can draw
down under Facility B subject to conditions.
Stobart Air and Propius
On 27 April 2020, the Group announced it had reached agreement
with the administrators of Connect Airways to acquire Stobart Air
and Propius, and the Group now holds a 40 per cent. voting and 75
per cent. economic interest in Everdeal, the ultimate holding
company of both businesses, and a 15 per cent. shareholding in the
company that holds the remaining 60 per cent. voting interest and
25 per cent. economic interest in Everdeal, Everdeal Employees 2019
Limited.
This provides the Group with an effective indirect economic
interest of 78.75 per cent. in Stobart Air and Propius. This
structure was in place prior to the Group's disposal of Stobart Air
and Propius and is required to ensure that Stobart Air meets the
requirements of its Air Operator Certificate to operate out of
Ireland.
Propius is an aircraft leasing business that leases eight ATR
aircraft, and leases those aircraft on to Stobart Air. Stobart Air
is a regional airline that has operated under the Aer Lingus brand
through a franchise relationship since 2010 and also provides
private charter flights and wet-leasing services whereby it
provides an aircraft, complete crew, maintenance and insurance
(ACMI) to other airlines.
The businesses were owned previously by the Group, which entered
into an agreement to sell the businesses to Connect Airways in
February 2019 (the Connect Sale). The Group is a guarantor for
various obligations of Propius following a sale and leaseback of
aircraft arrangement which was entered into by Propius in April
2017, including maintenance commitments under the aircraft leases.
Guarantees were also granted by the Group with respect to the
obligations owed by Stobart Air arising under the franchise
agreement with Aer Lingus and certain fuel and currency hedging
arrangements entered into when the businesses were under the
Group's ownership. These guarantees were required to remain with
the Group following the completion of the Connect Sale, as the
holders of the guarantees were not prepared to see them released in
view of the perceived covenant quality of Connect Airways. As part
of the Connect Sale, it was also agreed that the Group would
continue to make repayments of a loan in respect of aircraft
maintenance reserves advanced by Propius over time rather than in a
single payment at completion.
The Board reviewed the options available to the Company in
relation to the future of Stobart Air and Propius during this
unprecedented time. This included allowing the businesses to enter
some form of insolvency process and a range of ways to support them
going forward particularly in light of the strong relationship
which exists between the Group and Aer Lingus. The Board concluded
that the best course of action financially for the Company and its
Shareholders was for it to buy back Stobart Air and Propius. This
action will give the Group considerable influence over the
pre-existing obligations it has in respect of those businesses. The
intention is that the Group will continue its current positive
dialogue with Aer Lingus to conclude a long-term franchise
extension, as the current franchise agreement term expires on 31
December 2022, and ensure that the businesses are put on a sound
financial footing.
The Group's aviation strategy has not changed as a result of
this transaction and the Company will work with Aer Lingus to
identify a new financial partner to support the business for the
future with the Group exiting its involvement in a controlled way
at the appropriate time.
The consideration for the Stobart Air and Propius acquisition is
a payment of up to GBP8.55 million on the following basis:
-- an initial consideration of GBP300,000 paid in cash at
completion;
-- a deferred consideration of GBP2 million to be paid no later
than 15 December 2020; and
-- a contingent deferred consideration up to a maximum of
GBP6.25 million based on the value achieved (after disposal costs)
on a realisation of value in respect of one or both of the
businesses by the Group prior to 31 December 2023, by reference
to:
-- 75 per cent. of the first GBP5 million of value being a
payment of up to GBP3.75 million;
-- 50 per cent. of the next GBP5 million of value being a
payment of up to GBP2.5 million; and
-- any value above GBP10 million is retained by the Group.
The Group expects to fund the operations of Stobart Air and
Propius over the period through to achieving positive cash flow.
The businesses have actively sought to reduce their cash
requirements during the COVID-19 period and the Group expects to
fund approximately EUR25 million over the period to 31 December
2021, including the lease payments discussed below.
As part of the acquisition, a EUR20 million loan by the Group to
the holding company of Stobart Air and Propius, and subsequently
novated from the Group to Connect Airways in connection with the
sale of Stobart Air and Propius to Connect Airways, will be novated
back to the Group. This is included within the overall
consideration referred to above and the loan became an intra-Group
matter following the acquisition.
The value of the combined gross assets of Stobart Air and
Propius as at 31 August 2019 was GBP91.2 million. While valuation
work in respect of the Group's acquisition of Stobart Air and
Propius in April 2020 is currently in progress, the value of assets
acquired is likely to be significantly lower than that as at 31
August 2019. Propius has annual commitments (guaranteed by the
Group) under aircraft leases totalling $15.4 million per annum
until April 2027 with a break clause in April 2023 if the Aer
Lingus franchise is not extended beyond December 2022, on payment
of a break fee of $21.2 million plus associated break fee finance
costs. The lease payments falling due within the 12 months
following the acquisition are reflected in the funding requirement
for Stobart Air and Propius of EUR25 million referred to above. The
combined profits before tax for Stobart Air and Propius for the
year ended 28 February 2019 were GBP5.5 million.
Sale of the Stobart and Eddie Stobart brands
As announced on 21 May 2020, the Group has sold the Eddie
Stobart and Stobart trademarks and designs to Eddie Stobart for a
total consideration of GBP10 million. The Company will put forward
a resolution at a general meeting of Shareholders to change its
corporate name prior to 28 February 2021.
Until completion of the sale, the Group owned the Eddie Stobart
and Stobart trademarks and designs and all associated intellectual
rights. In February 2014, the Group entered into an agreement to
licence the Eddie Stobart trademarks and designs to Eddie Stobart
in consideration of a GBP13.7 million premium fee as part of the
initial partial sale of the Eddie Stobart business. That 15-year
licence agreement provided the first six years to 29 February 2020
royalty free.
From 1 March 2020, a licence fee of GBP3 million per annum
became payable until February 2029. However, that agreement was
terminable by Eddie Stobart on six months' written notice. The
annual licence fee was also conditional on Eddie Stobart achieving
certain performance targets. If Eddie Stobart did not achieve these
performance targets in any given year, the GBP3 million licence fee
was to accrue and only become payable at subsequent dates once
these performance targets had been achieved.
The sale of the Eddie Stobart and Stobart trademarks and designs
resulted in an immediate cash receipt. It will also have the effect
of helping investors and stakeholders to more easily differentiate
between Eddie Stobart's business and Stobart Group's aviation and
energy businesses through Stobart Group transitioning to a
different name.
The consideration for the sale is GBP10.0 million, of which
GBP6.0 million was received on completion, GBP2.5 million is
payable on or before 1 December 2020 and GBP1.5 million is payable
36 months following completion of the sale. The cash consideration
will be used for general working capital purposes.
The Company will change its name prior to February 2021.
However, there are a number of Stobart divisions that will continue
to use the brand for up to 36 months after completion and this will
be licenced on a royalty free basis from Eddie Stobart.
Stobart Air may continue to use its name so long as it is owned
by the Group. If the Group sells the Stobart Air business, it must
use reasonable endeavours to procure a change of name as part of
that sale.
3. Reasons for the Capital Raise
A detailed operational and financial review was conducted during
2019 which set out a clear path to maximising long term value for
the Group's shareholders. As a result, the Group announced in
November 2019 it would be suspending its dividend and that it had
commenced a process to obtain new long-term debt to fund its growth
investment programme. In parallel, as announced on 17 March 2020,
the Group explored the option of raising financing through the sale
of a minority investment in London Southend Airport.
The Group progressed both of these processes as planned and was
on track to enter into an enlarged debt facility ahead of the
FY19/20 results, as well as being engaged in advanced discussions
in relation to an investment in London Southend Airport. However,
the negative impact from the COVID-19 pandemic on both Flybe and
the wider Group caused disruption to this process, removing the
ability for the Group to secure this funding.
The Group has taken a series of mitigating actions to help
preserve cash flow through this period of uncertainty, however with
the business currently suffering from the severe negative impacts
of the pandemic, the Group requires additional liquidity both to
fund the Group's short-term cash obligations and to enable it to
build a strong foundation from which it can return the Aviation
business to growth and deliver on its longer-term strategic
ambitions.
The Group continues to have confidence in the long-term growth
prospects of the business. The Group owns and operates two valuable
growth businesses in London Southend Airport and Stobart Energy,
and the Group will be well-positioned to benefit from the
normalisation in operations.
4. Use of proceeds
The Group intends to use the net proceeds as follows: (i) within
three Business Days of Admission, up to GBP10.0 million of the net
proceeds of the Capital Raise will be used to repay the amount
drawn down under Facility B as at that date, and (ii) under the
terms of the Facility Agreement, the remaining portion of the net
proceeds will be used to reduce the drawn amount under Facility A
(which was fully drawn at GBP80.0 million as at 1 June 2020).
Following these payments under its facilities, which will have the
effect of reducing the Group's interest expense payable on those
amounts, the Group will have immediate access to the undrawn funds
under Facility A. The Group intends to draw down such funds as and
when they are needed for its working capital requirements, which
are set forth in the following table.
By its nature, the information in the following table involves
risks and uncertainties because it relates to events and depends on
circumstances that may or may not occur in the future, in
particular given the risks and uncertainties related to the
COVID-19 pandemic.
10 months to 28 February 2021 FY21/22(1) To end of FY21/22(1)
------------------------------ ----------- ---------------------
(GBP millions)
Opening
balance.........................................
........................... 8 31 - 51 8
============================== =========== =====================
Gross proceeds of the Capital
Raise.............................. 80 - 100 0 80 - 100
Approximate expenses of the Capital
Raise.................. 7 0 7
Approximate net proceeds of the Capital
Raise......... 73 - 93 0 73 -93
============================== =========== =====================
Available proceeds from Facility B between 5
June 2020
and
Admission.....................................
................................. 10 0 10
Repayment of Facility B(2)
..............................................
..... (10) 0 (10)
Approximate net proceeds of the Capital Raise
following
repayment of Facility
B.............................................
......... 73 - 93 0 73-93
============================== =========== =====================
Asset finance repayments(3)
.............................................. (13) (13) (26)
Lease
payments......................................
............................. (4) (5) (9)
Interest
payments......................................
........................... (7) (9) (16)
Debt, leases and asset
financing................................... (24) (27) (51)
============================== =========== =====================
London Southend Airport capital
expenditure...................................
........................................ (10) (10) (20)
Energy capital
expenditure...................................
............. (2) (2) (4)
Other capital
expenditure...................................
................ 0 (5) (5)
Available asset financing(3)
..............................................
.. 10 12 22
Capital expenditure net of asset
financing.................. (2) (5) (7)
============================== =========== =====================
Stobart Air
acquisition...................................
...................... (2) 0 (2)
Stobart Air lease payments (Propius and other
lease
payments)(4)
..............................................
............................ (18) (27) (45)
Stobart Air operating cash
flow......................................... 3 20 23
Stobart
Air...........................................
.................................. (17) (7) (24)
============================== =========== =====================
Other cash inflows / (outflows) including
working capital. (7) 9 2
Approximate residual
balance.........................................
.. 31 - 51 1 - 21 1 - 21
============================== =========== =====================
Notes:
(1) Assuming the Facility Agreement is refinanced in full prior
to its termination on 31 January 2022.
(2) Assuming that the Company has drawn down the full GBP10.0
million available under Facility B between 5 June 2020 and
Admission.
(3) Asset financing is used to fund the purchase of small scale
assets with security provided over the specific asset being
purchased. Assets include plant and equipment for Aviation (e.g.
scanners, radars, fire engines) and trucks and trailers for Energy.
The Group has existing asset financing facilities in place of which
GBP42 million was drawn at 29 February 2020. Facilities are held
with a number of banks including HSBC, Lombard, Lloyds, Scania
Finance and Barclays. GBP22 million of planned capital expenditure
has been identified as eligible for asset financing, which can be
funded using pre-existing facilities. Given the existing repayment
profile, the Directors do not expect this to result in an increased
net exposure in total asset financing.
(4) Stobart Air lease payments include the $15.4 million per
annum lease cost commitments highlighted at the time of acquiring
Stobart Air and Propius as well as other lease commitments.
In addition to the net proceeds of the Capital Raise, the Group
will also have access to the GBP40.0 million available under
Facility B from Admission, subject to draw down conditions. The
Directors do not expect to utilise Facility B until FY21/22 other
than the draw down of up to GBP10 million as described in the table
above.
5. Terms of the Capital Raise and the New Shares
The Company is proposing to raise gross proceeds of between
GBP80 million and GBP100 million by way of a Firm Placing and
Placing and Open Offer, at an Offer Price of between 35 and 40
pence per New Share. The Firm Placing and Placing and Open Offer is
conditional, among other things, on the passing of the Resolutions,
which will be sought at the General Meeting.
The Directors have given careful consideration as to how to
structure the proposed issuance of equity and have concluded that a
Placing and Open Offer and Firm Placing is the most suitable option
available to the Company and its Shareholders at this time.
Subject to completion of the Bookbuild, the Joint Bookrunners
have agreed to underwrite the settlement of the Firm Placed Shares
and conditionally placed Open Offer Shares placed with Placees
procured through the Bookbuild, on the terms and subject to the
conditions in the Placing and Open Offer Agreement.
The Firm Placing is expected to settle simultaneously with the
Placing and Open Offer on 29 June 2020 and is conditional on, among
other things:
(a) Shareholder approval of the Resolutions at the General Meeting; and
(b) the Placing Agreement having become or been declared
unconditional in all respects and the Placing Agreement not having
been terminated by the Underwriters in accordance with its
terms.
If Admission of the Firm Placed Shares does not take place on or
before 8.00 a.m. on 29 June 2020 (or such later date as the Company
and the Joint Bookrunners may agree, not being later than 8.00 a.m.
on 6 July 2020), the Firm Placing will not proceed and subscription
monies will be refunded to Firm Placees by cheque or CREST payment,
as appropriate (at the Firm Placees' risk).
The New Shares to be issued pursuant to the Firm Placing and
Placing and Open Offer will, following Admission, rank pari passu
in all respects with the Existing Shares and will carry the right
to receive all dividends and distributions declared, made or paid
on or in respect of the Ordinary Shares after Admission.
Application will be made to the FCA for the New Shares proposed
to be issued in connection with the Firm Placing and Placing and
Open Offer to be admitted to the premium listing segment of the
Official List and to the London Stock Exchange for the New Shares
to be admitted to trading on its Main Market for listed securities.
It is expected that Admission will become effective, and that
dealings in the New Shares will commence, at 8.00 a.m. on or around
29 June 2020.
Firm Placing
Approximately 80 per cent. of the Firm Placing and Placing and
Open Offer will be placed pursuant to the Firm Placing. The Firm
Placed Shares are not to be offered first to Shareholders
generally. The Board has undertaken discussions with key
Shareholders in relation to the Firm Placing. The Firm Placed
Shares are not subject to clawback under, nor do they form part of,
the Open Offer.
Subject to completion of the Bookbuild, the Joint Bookrunners
have agreed to underwrite the settlement of the Firm Placed Shares
and conditionally placed Open Offer Shares placed with Placees
procured through the institutional Bookbuild, on the terms and
subject to the conditions in the Placing and Open Offer Agreement.
With effect from the completion of the Bookbuild and subject to the
execution by the Company and the Joint Bookrunners of the terms of
subscription setting out, among other things, the final number of
the Firm Placed Shares and the Open Offer Shares to be issued and
the final Offer Price following completion of the Bookbuild (the
"Terms of Subscription")Terms of Subscription, to the extent that
any Firm Placee procured by the Joint Bookrunners fails to take up
any or all of the Firm Placed Shares which have been allocated to
it or which it has agreed to take up at the Offer Price, each of
the Joint Bookrunners has agreed, on the terms and subject to the
conditions set out in the Placing Agreement, to take up such Firm
Placed Shares at the Offer Price in equal proportions. This
underwriting commitment is conditional on the Placing Agreement
becoming fully unconditional and not having been terminated in
accordance with its terms.
The Firm Placed Shares, when issued and fully paid, will be
identical to, and rank pari passu with, the Existing Shares in
respect of all dividends or other distributions declared, made or
paid after Admission. Firm Placees will not be able to participate
in the Open Offer with respect to the Firm Placed Shares.
Placing and Open Offer
Approximately 20 per cent. of the Firm Placing and Placing and
Open Offer will be placed conditionally with Conditional Placees.
The Joint Bookrunners intend, pursuant to the Placing Agreement, to
conditionally place all of the Open Offer Shares at the Offer Price
with institutional investors. The commitments of the Conditional
Placees will be subject to clawback in respect of valid
applications for Open Offer Shares by Qualifying Shareholders
pursuant to the Open Offer. Subject to waiver or satisfaction of
the conditions relating to Admission and the Placing and Open Offer
not being terminated, any Open Offer Shares which are not applied
for in the Open Offer through valid applications received from
Qualifying Shareholders will be issued to the Conditional Placees
procured by the Joint Bookrunners. Certain Conditional Placees who
are existing Shareholders of the Company, at the absolute
discretion of the Joint Bookrunners, may be offered the opportunity
to offset their Placing commitments against the Open Offer Shares
validly taken up and paid for under the Open Offer.
The Joint Bookrunners, as agents for the Company, have made
arrangements to conditionally place the Open Offer Shares with
institutional investors at the Offer Price. The Open Offer Shares
will be subject to clawback to satisfy valid applications by
Qualifying Shareholders under the Open Offer. Subject to the waiver
or satisfaction of the conditions and the Placing Agreement not
being terminated in accordance with its terms, any Open Offer
Shares not subscribed for under the Open Offer will be issued to
Placees procured by the Joint Bookrunners.
With effect from the completion of the Bookbuild and subject to
the execution by the Company and the Joint Bookrunners of the Terms
of Subscription, to the extent that any Conditional Placee procured
by the Joint Bookrunners fails to take up any or all of the Open
Offer Shares which have been allocated to it or which it has agreed
to take up at the Offer Price, each of the Joint Bookrunners has
agreed, on the terms and subject to the conditions set out in the
Placing Agreement, to take up such Open Offer Shares at the Offer
Price in equal proportions. This underwriting commitment is
conditional on the Placing Agreement becoming fully unconditional
and not having been terminated in accordance with its terms.
Subject to the fulfilment of the conditions set out below and in
the terms and conditions of the Open Offer and, in the case of
Qualifying Non-CREST Shareholders, the terms and conditions in the
Application Form, Qualifying Shareholders will be given the
opportunity to subscribe for New Shares pro rata to their existing
shareholdings at the Offer Price on the basis of a ratio determined
at the close of the Bookbuild.
Fractions of Ordinary Shares will not be issued and each
Qualifying Shareholder's entitlement under the Open Offer will be
rounded down to the nearest whole number.
Shareholders who have sold or otherwise transferred all of their
Existing Shares before the ex-entitlement date will not be entitled
to participate in the Open Offer.
The New Shares will not be made available in whole or in part to
the public except under the terms of the Open Offer. Subject to
certain exceptions, the Open Offer will not be made to Shareholders
in the United States or in other Excluded Territories. Accordingly,
subject to certain exceptions, Application Forms will not be sent
to and Open Offer Entitlements will not be credited to the accounts
of Shareholders in the United States or in Excluded
Territories.
Shareholders should note that the Open Offer is not a rights
issue. Qualifying Shareholders should be aware that in the Open
Offer, unlike in a rights issue, any Open Offer Shares not applied
for will not be sold in the market on behalf of or placed for the
benefit of Qualifying Shareholders who do not apply under the Open
Offer, but will be subscribed for under the Conditional Placing for
the benefit of the Company.
Full terms and conditions of the Open Offer will be contained in
the Prospectus which is expected to be published by the Company on
or around 5 June 2020 following approval by the FCA in accordance
with the Prospectus Rules and, in respect of Qualifying Non-CREST
Shareholders, in the Application Form.
6. Intentions of the Directors
The Directors, who beneficially hold in aggregate 697,839
Existing Shares, representing approximately 0.19 per cent. of the
Company's existing issued ordinary share capital as 9 May 2020
(being the latest practicable date prior to the date of this
announcement), each have committed to vote their Existing Shares in
favour of the Resolutions.
In addition, each of the Directors has committed to take up
their Open Offer Entitlements in full and to subscribe for New
Shares in the Firm Placing for a total investment (including under
the Open Offer) of approximately GBP356,000.
7. Letter of intent
The Company's largest shareholder, Toscafund Asset Management
LLP has given a letter of intent confirming that they intend to
vote, in aggregate, 89,640,562 Existing Shares representing
approximately 23.93 per cent. of the Company's existing issued
share capital as at 29 May 2020 (being the latest practicable date
prior to the date of this announcement), in favour of the
Resolutions to be proposed at the General Meeting on which they are
permitted to vote.
8. Current trading and prospects in respect of the Group
Management's current expectations in respect of its future
business operations are set forth in the following table. By their
nature, these expectations involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future. These risks are heightened as a result of
the uncertainties resulting from the COVID-19 pandemic. As a result
of these risks and uncertainties, the Directors have considered a
range of operating scenarios with regard to the impact of COVID-19
and the Group's recovery.
Management's current expectations
London Southend Airport (1)
Zero passengers until end of September 2020
Passenger numbers at budgeted level February 2021
by end of
Stobart Energy (2)
70% reduction in waste wood supply June 2020
until the end of
Waste wood supply at budgeted level February 2021
by end of
Stobart Air (3)
Minimal passengers until end of July 2020
Passenger numbers return to pre-COVID-19 March 2021
levels by end of
Notes:
(1) London Southend Airport uses, on average, GBP1.3 million of
cash per month while closed for passengers. The Directors believe
the airport will achieve cash break-even (after capital
expenditure) on a scenario of approximately 2.3 million-2.6 million
annual passengers, assuming historical spending behaviour by
passengers.
(2) Stobart Energy is already returning to normalised
operations. The Directors believe that Stobart Energy will achieve
cash break-even on a scenario of delivering 1.1 million tonnes of
waste wood fuel per year.
(3) Stobart Air and Propius had a cash outflow in May 2020 of
EUR3.5 million, and the Directors believe that such cash outflow in
June 2020 will be EUR5.5 million. On average, the businesses use
approximately EUR3.5 million of cash per month when closed for
passengers (other than "Public Service Obligation" routes). The
Directors believe that Stobart Air will achieve cash break-even in
January 2021-March 2021 based on the expectations set forth in this
table and assuming the COVID-19-related disruption dissipates.
The Directors believe a flexible approach to capital expenditure
at London Southend Airport is key to the Group's post-COVID-19
recovery. The following table sets forth the Group's planned
capital expenditure for the periods indicated.
FY20/21 FY21/22 FY22/23 Total
(GBP millions)
Regulatory and maintenance 1.7 0.0 5.5 7.2
Immediate investments 7.3 0.0 0.0 7.3
Growth: Passenger experience 0.0 0.0 7.3 7.8
Growth: Arrivals terminal extension 1.0 0.0 2.4 3.4
Growth: Departures terminal
extension 0.0 0.0 3.8 3.8
Growth: Car park 0.0 3.9 5.8 9.6
Growth: Hotel 0.0 6.1 6.4 12.5
Growth: Airline capacity 0.0 0.0 0.3 0.3
Growth: Other 0.0 0.0 1.2 1.2
Total 10.0 10.4 32.6 53.0
9. Dividends and dividend policy
The Group is focused on strengthening its balance sheet and
maximising the capital available for the further development of its
growth businesses. It is therefore the Directors' intention to
retain the Group's cash flow to achieve these objectives. The
Directors intend to review the Company's dividend policy on an
ongoing basis and restore dividends at the point at which the Group
becomes significantly cash generative at an operating level,
subject to investment requirements to maximise shareholder
returns.
In addition, under the terms of the Facility Agreement, if the
Capital Raise completes successfully, the Company will be unable to
pay or declare any dividends until 30 November 2021, and between 1
December 2021 and termination of the Facility Agreement the
Company's ability to pay or declare dividends will be subject to a
leverage ratio test, as described in more detail in the
Prospectus.
11. Working Capital
The Prospectus will contain a statement that the Company is of
the opinion that, taking into account the net proceeds of the
Capital Raise, the Group has sufficient working capital for its
present requirements, that is for at least 12 months from the date
of this announcement.
Assumptions in respect of the impact of COVID-19
The COVID-19 pandemic and the attendant public health
interventions to combat the virus have caused considerable
disruption to business globally. There is significant uncertainty
as to the size and duration of this disruption. In preparing its
working capital statement, the Company has prepared a 'reasonable
worst case scenario' to reflect the impact of the COVID-19
pandemic. The uncertainties created by the COVID-19 pandemic make
the construction of a 'reasonable worst case scenario' uniquely
challenging.
The Company has made its working capital statement based on a
model that has sufficient headroom to cover the 'reasonable worst
case scenario', which includes the following principal COVID-19
pandemic-related assumptions:
-- Until the end of March 2021, there will be no passenger
airline activity at London Southend Airport, compared to an average
of 178,526 passengers per month in the corresponding period in
FY19/20. Between April 2021 and the end of June 2021, there will be
a phased recovery in passenger airline activity at the airport with
an average of 153,433 passengers per month during that period,
compared to an average of 202,856 passengers per month in the
corresponding period in FY19/20.
-- Until the end of December 2020, Stobart Aviation Services
will not generate revenue at Manchester or Stansted airports as a
result of those airports being closed. By the end of January 2021
flights at those airports will return to pre-COVID-19 levels.
-- As a result of the Aviation-related assumptions discussed
above, for the period April 2020 to March 2021, Stobart Aviation
revenues will be 41 per cent. of the corresponding period in the
previous year.
-- Between April 2020 and the end of June 2020, Stobart Energy
will supply on average 56,000 tonnes of waste wood fuel per month
to its biomass energy plant customers, compared to an average of
116,000 tonnes per month in the corresponding period in FY19/20,
due to an inability to access sufficient waste wood. Between July
2020 and the end of August 2020, there will be a phased recovery in
waste wood supply and gate fees. During this two month period of
recovering activity levels, Stobart Energy will supply on average
135,000 tonnes of waste wood fuel per month to its biomass energy
plant customers, compared to an average of 125,000 tonnes per month
in the corresponding period in FY19/20 (such corresponding period
having been negatively impacted by plant capacity).
-- As a result of the waste wood fuel supply assumptions
discussed above, from November 2020 until February 2021 Stobart
Energy revenues will be 91.3 per cent. of the corresponding period
in FY19/20.
-- Stobart Air operates minimal flights until the end of
September 2020, after which operations recommence and increase such
that passenger numbers return to pre-COVID-19 levels by March
2021.
-- Employees being furloughed under the UK Government's Job
Retention Scheme during the period of reduced activity remain in
place until September 2020.
The working capital statement to be contained in the Prospectus
will be prepared in accordance with the ESMA Recommendations
(ESMA/2013/319), and the technical supplement to the FCA Statement
of Policy published on 8 April 2020 relating to the COVID-19
crisis.
12. Importance of vote
Shareholders are asked to vote in favour of the Resolutions at
the General Meeting in order for the Capital Raise to proceed. The
Directors believe that successful completion of the Capital Raise
is required to fund the Group's short-term working capital
requirements, avoid an event of default under Facility B and allow
the Group to survive the short-term difficulties through the
current COVID-19 crisis and position the Group to deliver its
medium-term growth strategies.
The Group has an GBP80.0 million revolving credit facility
(Facility A), which was drawn at GBP75.0 million as at 29 February
2020. The COVID-19 pandemic has significantly impacted the Group's
revenue and costs in the first three months of FY20/21, in
particular in the Stobart Aviation and Stobart Energy operating
divisions. As a result, the Group has drawn down the remaining
GBP5.0 million since year-end to meet its short-term working
capital requirements and has also implemented the following
measures to manage costs and preserve liquidity:
-- The Group has frozen all capital expenditure other than where
it is considered critical for safety reasons and has deferred all
discretionary spend.
-- The Group has utilised the UK Government's Job Retention
Scheme to put on furlough approximately 50 per cent. of the Group's
approximately 1,550 employees as of 1 April 2020. All employees in
continuing roles that allow them to work from home are doing
so.
-- The Directors and members of the Management Board have agreed
to 20 per cent. Pay reductions and all other non-furloughed
management have accepted 10 per cent. pay reductions.
-- A recruitment freeze has been in place since early March 2020
and all variable pay awards have been deferred to August 2020 at
the earliest.
-- The Group has utilised a number of measures made available by
the UK Government to help conserve cash.
In addition, the Group also has a new GBP40.0 million revolving
credit facility (Facility B). Under Facility B, the Group can draw
up to GBP10.0 million during the period commencing 5 June 2020 up
to and including the date of Admission, subject to certain
liquidity conditions. Pursuant to the terms of Facility B, the
Group will use a portion of the proceeds of the Capital Raise (up
to GBP10.0 million) to repay the amount drawn under Facility B as
at the date of Admission within three Business Days of that date.
Following such repayment, the Group can draw down under Facility B
subject to conditions, as detailed in the Prospectus. If the
Capital Raise does not complete successfully, immediate payment of
amounts then due under Facility A and Facility B would be required.
Unless the Group is able to agree short-term relief with the
lenders and certain of its other stakeholders, the Company does not
expect that the Group would be able to obtain the funds necessary
to pay all due amounts, and Administration (or equivalent local law
procedures) would therefore become reasonably likely for the
Company and key trading companies in the Group at that time.
The Directors believe that any potential remedial actions, such
as refinancing or disposals of assets, would not be achievable in
the required timeframe. In addition, as the Group has already
implemented significant cost savings following the outbreak of
COVID-19, the Directors believe that no further significant cost
savings are likely possible to avoid Administration (or equivalent
local law procedures) in the event that the Capital Raise does not
successfully complete.
Consequently, if the Capital Raise does not successfully
complete, the Directors expect that Administration (or equivalent
local law procedures) of the Company and of certain key trading
companies in the Group would be reasonably likely shortly
thereafter. Shareholders would likely lose all or a substantial
part of their investment in the Company as a result.
Accordingly, it is critical that Shareholders vote in favour of
the Resolutions, as the Directors consider the Capital Raise to
represent the best transaction possible for the Company,
Shareholders and its stakeholders as a whole in the current
circumstances.
13. Recommendation and voting intentions
The Board believes the Capital Raise and the Resolutions to be
in the best interests of the Shareholders as a whole.
Accordingly, the Board unanimously recommends that the
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting to approve the Capital Raise, as the Directors
each intend to do in respect of their own legal and beneficial
holdings, amounting to 697,839 Existing Shares (representing
approximately 0.19 per cent. of the Company's existing issued
ordinary share capital as at 29 May 2020 (being the latest
practicable date prior to the date of this announcement).
APPIX I
EXTRACTS OF CERTAIN ADDITIONAL INFORMATION TO BE INCLUDED IN THE
PROSPECTUS
Overview
Stobart Group is a UK infrastructure group with operations
across the United Kingdom in the aviation, biomass energy and civil
engineering industries. The Group's operations are organised across
two core and three non-core operating divisions.
The Group's core operating divisions are:
-- Stobart Aviation -The Group owns and operates London Southend
Airport and provides management services to the Tees Valley
Combined Authority in respect of the Teesside International
Airport. In addition, Stobart Aviation Services, one of the
businesses within the division, provides check-in, baggage handling
and cargo services for 16 airlines at London Stansted, London
Southend, Manchester, Edinburgh and Glasgow airports. Stobart
Aviation accounted for GBP56.8 million of total revenue (before
adjustments and eliminations) in FY19/20.
-- Stobart Energy -The Directors believe that the Group is the
United Kingdom's largest supplier of waste wood fuel to UK biomass
energy plants, with long-term exclusive contracts in place with
some of the largest biomass energy plants in the United Kingdom.
The Group has contracts in place to supply 1.7 million tonnes of
waste wood fuel and in FY19/20 supplied 1.5 million tonnes. Stobart
Energy accounted for GBP76.3 million of total revenue (before
adjustments and eliminations) in FY19/20.
The Group's non-core operating divisions are:
-- Stobart Rail & Civils -The Group is an established
provider of rail and non-rail civil engineering services in the
United Kingdom. Stobart Rail & Civils accounted for GBP41.5
million of total revenue (before adjustments and eliminations) in
FY19/20. As a result of recent poor performance, the Group is
actively engaging to exit the Rail & Civils business within the
next six months. There are currently 26 open contracts including 12
operationally live projects. The Directors expect all of these to
be substantially concluded in the next six months.
-- Stobart Investments -The Group holds an 11.8 per cent. stake
in Eddie Stobart Logistics plc and a 19.5 per cent. stake in
luggage transportation company, AirportR. The Group holds a 30 per
cent. stake in Connect Airways, and on 10 March 2020 Connect
Airways, which owns Flybe, entered into Administration following
Flybe entering into Administration on 5 March 2020.
In addition, on 27 April 2020, the Group announced it had
reached agreement with the administrators of Connect Airways to
acquire Stobart Air and Propius, and the Group now holds a 40 per
cent. voting and 75 per cent. economic interest in Everdeal, the
ultimate holding company of both businesses, and a 15 per cent.
shareholding in the company that holds the remaining 60 per cent.
voting interest and 25 per cent. economic interest in Everdeal,
Everdeal Employees 2019 Limited. Stobart Investments accounted for
GBP2.1 million of total revenue (before adjustments and
eliminations) in FY19/20.
-- Stobart Infrastructure -The Group holds a portfolio of
non-strategic property and infrastructure assets, including the
Carlisle Lake District Airport, with a book value of GBP47.3
million as at 29 February 2020. The Group aims to divest all of its
non-core assets within the next three years, other than Carlisle
Lake District Airport, with the aim of realising value over time
from a position of strength when market conditions are right.
Stobart Infrastructure accounted for GBP2.8 million of total
revenue (before adjustments and eliminations) in FY19/20.
Competitive Strengths and Long-term Strategy
The Group expects that the key competitive strengths set out
below will help the Group to realise its strategic goals and
reinforce its competitive position.
-- Owner and operator of key London Southend Airport -Once the
unprecedented effects of COVID-19 have subsided, the Directors
believe that low-cost carriers (LCCs) will benefit from their lower
cost bases and will likely return to normalised operations faster
than non-LCCs. The Directors believe that LCCs will likely be
focused on seeking a low cost base for operations and hub capacity
at suitable prices and service levels. The pace at which this
capacity is required will largely depend on the demand from
passengers to return to international travel, the ability of
airlines to react to that demand and the preparedness of airports
to respond to the changing expectations of passengers and airlines
alike. Airports will be expected to provide clean, secure and
spacious environments in which passengers are not expected to
gather in confined retail spaces, where cleaners are highly visible
and where people can move through central search areas efficiently.
The Directors believe that London Southend Airport has a highly
flexible, modular and cost-efficient capital expenditure plan with
minimal passenger disruption. The Directors believe that London
Southend Airport has an opportunity therefore to make use of
significant unutilised space and enhanced technology, provide a
cost-efficient base for airlines given the airport's lower capital
expenditure to date, and deliver a passenger-focused experience for
its customers.
-- Market leading position in the waste wood fuel supply chain
-The Directors believe that the Group is the United Kingdom's
largest supplier of waste wood fuel to UK biomass energy plants,
and in FY19/20 the Group supplied 1.5 million tonnes of waste wood
fuel. Bioenergy (including waste wood fuel) is Britain's second
largest source of renewable electricity (according to UK Department
for Business, Energy & Industrial Strategy statistics), and the
UK Committee on Climate Change has stated that sustainably sourced
bioenergy could provide up to 15 per cent. of the United Kingdom's
primary energy by 2050. The Group is the exclusive supplier to some
of the largest biomass energy plants in the United Kingdom, and the
Group does not expect new plants to become operational following
the closure of the Renewables Obligations scheme to new
participants in September 2018. The Directors consider that it is
therefore a mature, highly cash generative and stable business.
-- Experienced management team with a proven track record -The
Group's CEO and CFO have extensive experience in the aviation
industry, and they are supported by a senior management team and
divisional leadership with a depth of knowledge and experience
across all of the Group's industries. The divisional leadership
teams maintain strong relationships with key customers, suppliers
and other counterparties, and the Group's management structure is
aligned to its strategy enabling agile decision making.
The Group has the following strategic goals:
-- Stobart Aviation -The Group aims to balance commercial
revenues with a spacious, convenient, safe and secure environment
suitable to address COVID-19 related travel requirements, and to
provide its low-cost carrier customers with a low cost base for
operations and hub capacity at suitable prices and service levels.
The Group is further targeting to deliver GBP8 Underlying Adjusted
EBITDA per passenger in the medium term, which compares to an
average of GBP7.90 for London's airports (excluding Heathrow) and
GBP6.50 the United Kingdom's other large airports. As Underlying
Adjusted EBITDA is a non-IFRS measure and therefore is not
calculated in a consistent manner by other companies, these
averages have been calculated by the Company using publicly
available information with certain adjustments applied by the
Company.
-- Stobart Energy -The Group aims to identify a strategic buyer
or infrastructure investor to monetise Stobart Energy in the next
18-24 months in order to fund future growth at London Southend
Airport.
-- Non-strategic assets -The Group aims to divest all of its
non-core assets within the next three years, other than Carlisle
Lake District Airport, with the aim of realising value over time
from a position of strength when market conditions are right.
Non-core infrastructure assets, other than Carlisle Lake District
Airport, had a book value of GBP38.4 million as at 29 February
2020. The Group has assumed zero proceeds from asset sales in its
base case business plan.
Business Operations
The Group's operations are organised across two core and three
non-core operating divisions. The core operating divisions are
Stobart Aviation and Stobart Energy, and the non-core operating
divisions are Stobart Rail & Civils, Stobart Investments and
Stobart Infrastructure.
Stobart Aviation
Stobart Aviation's principal asset is London Southend Airport,
which has been rated the best London airport in 2019 for the sixth
consecutive year in the Which? Airport Passenger Survey and was the
United Kingdom's fastest growing airport in 2019 according to CAA
data.
In addition, Stobart Aviation Services, which started operations
in FY17/18, provides check-in, baggage handling and cargo services
for 16 airlines at London Stansted, London Southend, Manchester,
Edinburgh and Glasgow airports. The Group also provides management
services to the Tees Valley Combined Authority in respect of the
Teesside International Airport.
In FY19/20, London Southend Airport (including the hotel and
Stobart Jet Centre) accounted for approximately three-quarters of
Stobart Aviation's revenue and substantially all of its Underlying
Adjusted EBITDA, and Stobart Aviation Services accounted for
approximately one-quarter of Stobart Aviation's revenue and
generated an Underlying Adjusted EBITDA loss of approximately GBP1
million.
The Group also owns and operates the Carlisle Lake District
Airport, which is operated and accounted for in Stobart
Infrastructure, as discussed below.
Revenue generation
The Group's airports generate two types of revenue: aeronautical
revenue, which is generated from fees charged to airlines for use
of the airports' facilities, and non-aeronautical revenue from a
variety of sources. During FY17/18, FY18/19 and FY19/20, the
majority of Stobart Aviation's revenue comprised non-aeronautical
revenue.
Aeronautical revenue
Aeronautical revenue reflects the tariffs levied by the Group's
airports on their airline customers. The tariff structure through
which the aeronautical revenue is recovered from airlines includes
three key elements:
-- Departing passenger fees-Fees per passenger are based on the
number of passengers on board an aircraft and are levied in respect
of all departing passengers. Fees can vary depending on the route
and are subject to minimum levels.
-- Landing charges-Landing charges are levied for substantially
all aircraft and are calculated with respect to the weight of the
aircraft, as well as other factors such as noise rating and
emissions levels.
-- Parking charges-Aircraft parking charges are levied on
aircraft after they have exceeded a minimum parking time.
Non-aeronautical revenue
The Group generates non-aeronautical income from a variety of
sources, including:
-- the sale of jet fuel to the Group's airline customers;
-- concession fees from retail operators;
-- revenue generated by the train station at London Southend
Airport;
-- revenue generated by the hotel at London Southend
Airport;
-- direct revenue from car parks and advertising;
-- the leasing of airport premises such as aircraft hangars,
warehouses, cargo storage facilities, maintenance facilities,
offices and airline lounges; and
-- through Stobart Aviation Services, the provision of check-in,
baggage handling and cargo services.
Market Overview
The first three months of FY20/21 have seen unprecedented
challenges for the global aviation industry as a result of the
COVID-19 pandemic, which has had a material impact on the
sector.
However, the UK Government has offered support to business,
including aviation, and the Group anticipates that such support
will help the industry recover once travel restrictions are lifted
in the United Kingdom and abroad.
With a long-term view, the Group considers that the underlying
fundamentals of the London aviation market remain strong. The
London aviation market is the largest in the world and, over the
long term, has continued to grow in excess of UK GDP despite
significant constraints at the majority of London airports. As a
result, the Directors believe the growth trajectory will resume and
continue once the COVID-19 pandemic passes, although there is
considerable uncertainty as to the duration and impact of the
pandemic. London is the largest metropolitan area in Europe, with
over 14 million residents and
in 2018 ranked in the top three visitor destinations in the
world by number of visitors. It also serves as a major global
international commercial centre.
London metropolitan area air traffic is the busiest in the world
with 181 million passengers in 2019 and is 25 per cent. larger than
New York, the second busiest city. As a consequence, both the
network carriers and low-cost carriers (LCCs) have been growing
their capacity. Since 2014, LCCs have added 9.2 million seats (a 32
per cent. increase) to the London market, or the equivalent of 41
daily aircraft (a 27 per cent. increase).
Once the unprecedented effects of COVID-19 have subsided, the
Directors believe that LCCs will benefit from their lower cost
bases and will likely return to normalised operations faster than
non-LCCs. The Directors believe that LCCs will likely be focused on
seeking a low cost base for operations and hub capacity at suitable
prices and service levels.
The pace at which this capacity is required will largely depend
on the demand from passengers to return to international travel,
the ability of airlines to react to that demand and the
preparedness of airports to respond to the changing expectations of
passengers and airlines alike. Airports will be expected to provide
clean, secure and spacious environments in which passengers are not
expected to gather in confined retail spaces, where cleaners are
highly visible and where people can move through central search
areas efficiently. The Directors believe that London Southend
Airport has an opportunity therefore to make use of significant
unutilised space and enhanced technology, provide a cost-efficient
base for airlines given the airport's lower capital expenditure to
date, and deliver a passenger-focused experience for its
customers.
London Southend Airport
London Southend Airport is located in the county of Essex,
England, approximately 36 miles east of central London. The airport
has a known catchment area of 8.2 million people and served 1.13
million, 1.49 million and 2.14 million passengers in FY17/18,
FY18/19 and FY19/20, respectively.
Underlying Adjusted EBITDA per passenger at London Southend
Airport decreased from GBP4.97 in FY17/18 to GBP3.17 in FY18/19
primarily due to the fact that Underlying Adjusted EBITDA in
FY17/18 included the profit on the sale and leaseback of the hotel
at the airport. Underlying Adjusted EBITDA per passenger increased
to GBP4.53 in FY19/20 primarily due to the start of operations with
the global logistics customer, more passengers arriving by train,
new parking charges and an improved retail offer.
In early 2020, London Southend Airport served approximately 40
destinations across Europe and the United Kingdom with flights
operated by easyJet, Ryanair, Loganair, Wizz Air and Flybe, amongst
others. Since year-end, Flybe has entered into Administration and
ceased flight operations.
In FY19/20, easyJet and Ryanair accounted for, in aggregate,
approximately 85 per cent. of the airport's passenger traffic.
London Southend Airport has more than 1,100 square metres of
retail space served by seven retail clients operating 10 retail
outlets. The largest retail client in London Southend Airport is
The Restaurant Group, which operates a number of food concessions
and in FY19/20 comprised more than a third of the airport's retail
concession fees.
The airport also has a hotel facility on site. The Group sold
the hotel to Interstate Hotels & Resorts in FY17/18 pursuant to
a sale and leaseback agreement under which the Group continues to
operate and generate revenue from the hotel.
In October 2019, the Group announced that it had entered into an
initial two-year agreement with a global logistics customer to
provide facilities and expertise to support the import and export
of goods at London Southend Airport. The Group provides runway
access and import/export facilities by converting existing
hangarage on the north side of the runway, away from the south-side
based commercial passenger operations.
In 2011, the Stobart Rail & Civils operating division built
a train station at London Southend Airport which serves central
London with up to six trains per hour during peak times. The
journey to London takes approximately 52 minutes, and in FY19/20
approximately 30 per cent. of London Southend Airport passengers
travelled to/from the airport by train. The Group receives a share
of ticket fares from people using the station at London Southend
Airport.
The Group also operates the Stobart Jet Centre located at the
London Southend Airport, which offers private aviation services.
The Stobart Jet Centre had 908, 1,660 and 1,512 movements in
FY17/18, FY18/19 and FY19/20.
Passenger experience
The Directors believe that, as a result of COVID-19, airports
will be expected to provide clean, secure and spacious environments
in which passengers are not expected to gather in confined retail
spaces, where cleaners are highly visible and where people can move
through central search areas efficiently.
The Directors believe that London Southend Airport has a highly
flexible, modular and cost-efficient capital expenditure plan with
minimal passenger disruption. The Directors believe that London
Southend Airport has an opportunity therefore to make use of
significant unutilised space and enhanced technology, provide a
cost-efficient base for airlines given the airport's lower capital
expenditure to date, and deliver a passenger-focused experience for
its customers.
The enhancements that the Company expects to make to London
Southend Airport as a result of COVID-19 include the following:
-- Thermal cameras are expected to be installed to monitor
passenger temperatures as they approach the entrance to the
departure terminal, allowing airport staff to identify potential
infected people and take appropriate action. Social distancing
markers will be located on the floor. Only passengers and staff
will be allowed in the terminal during the short term.
-- Face masks will be mandatory on entering the airport and
masks will be provided to all passengers that do not have their
own. Over 30 hand sanitiser stations and large wipe dispensers will
be strategically located throughout the airport journey. The
airport's cleaning team will be highly visible.
-- Bio shields are expected to be installed to protect
passengers and staff when presenting at check-in. Automated
self-service check-in and bag drops are expected to be introduced
in 2021.
-- Passengers will use self-service boarding card machines. The
security process will use noncontact CTiX search machines, and
advanced baggage scanning devices have now been installed.
-- After security, passengers will move through to a large,
open-plan departure lounge. The airport will use short-queue
departure gates with passengers called to their gate in small
groups according to their row number.
-- Arriving passengers will be kept separate to departing
passengers. Their luggage will be scanned by ultraviolet
technology. Security and departures terminal areas are expected to
be extended in 2023 following the construction of a new arrivals
terminal.
Stobart Aviation Services
Stobart Aviation Services began operating in FY17/18 and
provides check-in, baggage handling and cargo services at London
Stansted, London Southend, Manchester, Edinburgh and Glasgow
airports.
The Group has contracts with 16 airlines, including easyJet,
Scandinavian airlines (SAS), Loganair, Wizz, Titan, Ryanair,
Norwegian, Eurowings and SN Brussels. The Group's Aviation Services
contracts employ cost-plus, fixed cost and price per turn contracts
used to appeal to both larger and smaller airlines to be handled on
a frequent or ad hoc basis, and the contracts vary in duration, but
are typically three to five years.
Teesside International Airport-Strategic Partnership
In March 2019, the Group entered into a strategic partnership
with the Tees Valley Combined Authority (TVCA) to provide
management services in respect of the Teesside International
Airport, for which the Group receives an annual fee. The Group also
holds a stake in the airport's holding company, which provides for
the Group to share in a portion of the equity.
Teesside International Airport largely serves the private
aviation market and also includes a flight school, air ambulance
operations, a fire training centre and a base for defence
contractors. In early 2020, Teesside International Airport
announced that commercial flights would begin to a number of
destinations in the United Kingdom and Europe. However, commercial
flight operations have been suspended due to the COVID-19
pandemic.
Stobart Energy
The Directors believe that the Group is the United Kingdom's
largest supplier of waste wood fuel to UK biomass energy plants,
with long-term exclusive contracts in place with some of the
largest biomass energy plants in the United Kingdom. The Group has
contracts in place to supply 1.7 million tonnes of waste wood fuel
and in FY19/20 supplied 1.5 million tonnes. The Group aims to
identify a strategic buyer or infrastructure investor to monetise
Stobart Energy in the next 18-24 months in order to fund future
growth at London Southend Airport.
Biomass energy (including waste wood fuel) is generated using
plant-based products, including wood pellets and wood chips,
bioenergy crops and agricultural and domestic waste. The
plant-based products are processed to create a low-carbon,
renewable alternative to fossil fuels. Bioenergy (including waste
wood fuel) is Britain's second largest source of renewable
electricity (according to UK Department for Business, Energy &
Industrial Strategy statistics), and the UK Committee on Climate
Change has stated that sustainably sourced bioenergy could provide
up to 15 per cent. of the United Kingdom's primary energy by
2050.
The Group offers a range of solutions across the biomass energy
supply chain, from commercial waste collection through to producing
fuel to a specification and delivering fuel to biomass energy
plants using its large logistics function. The Group has expertise
in waste wood, virgin wood, refuse derived fuel (RDF) and solid
recovered fuel (SRF). Stobart Energy employs more than 350 people,
operates 145 walking floor vehicles and operates six large fuel
production and storage facilities, with a significant number of
other fuel production and storage sites contracted to third parties
to operate. The Group supplies more than 15 large, and a
significant number of smaller, biomass energy plants in the United
Kingdom and Ireland.
The following table sets forth Stobart Energy's actual tonnage
of waste wood fuel supplied, revenue, profit before tax from
continuing operations and Underlying Adjusted EBITDA for the
periods indicated.
FY19/20 FY18/19 FY17/18
-------- -------- --------
Waste wood fuel supplied (1) 1.5 1.3 0.9
Revenue (2) 76,339 65,143 54,697
Profit before tax from continuing
operations (2) 5,192 5,324 2,343
Underlying Adjusted EBITDA (3) 24,166 19,200 12,041
Notes:
(1) Figures represent millions of tonnes of waste wood fuel
supplied to third-party biomass energy plants.
(2) Figures are presented in thousands of pounds sterling.
(3) Figures are presented in thousands of pounds sterling.
Underlying Adjusted EBITDA is referred to as Underlying EBITDA in
the FY18/19 Financial Statements and FY19/20 Financial
Statements.
Market and Competition
Gate fees in November 2019 declined significantly due to a
combination of a seasonal decline in waste wood supply, demand from
UK biomass energy plants peaking and a six-month drop in
construction output due to Brexit uncertainties. The COVID-19
pandemic has exacerbated this trend, leading to a significant
slowdown in construction activity, a 75 per cent. decrease in
commercial and industrial waste arisings year-on-year and the
closure of household waste and recycling centres.
Without these key sources of supply, the Group's inbound waste
wood supply decreased as much as 80 per cent. year-on-year,
although has started to recover.
Pre-COVID-19, approximately five million tonnes of waste wood
were produced annually in the United Kingdom, with a large
proportion of this used as fuel for biomass energy plants. Supply
of timber is generally low in the winter months in the United
Kingdom, whilst fuel demand increases during that time due to the
cold weather.
In the long term when the market returns to normal, the Group
believes that waste wood suppliers will continue to find it cheaper
and more environmentally responsible to provide waste wood to
biomass energy producers than to send it to landfill.
In addition, accreditation under the Renewables Obligation
scheme closed to new biomass energy plants in September 2018. As a
result, the Group does not expect any new plants to become
operational. The Renewables Obligation scheme will terminate
altogether in 2037, although the Group, along with its biomass
energy plant customers, is engaged with the UK Government to extend
the expiration of the scheme to compensate for the COVID-19 related
slowdown in production.
Fuel Production and Storage
The Group operates six large fuel production and storage
facilities in England, located at Port Clarence, Pollington,
Rotherham, Widnes and two at Tilbury. The facilities receive waste
wood and other biomass materials, such as virgin wood, and convert
the materials into fuel. Each facility has a dedicated laboratory
where qualified technicians measure moisture, particle size and
bulk density to monitor energy content and plant suitability to
meet customer requirements.
One of the Group's fuel production facilities includes its own
port facility to receive raw materials by water, and the Group has
port operations in Cardiff and Shoreham as well. The Group also
operates a drying facility in Port Clarence to receive and treat
virgin wood and other wastes from across the United Kingdom.
The Group's own facilities can store up to 85,000 tonnes of
waste wood fuel, which equates to approximately two months' worth
of supply. In addition, the Group has a significant number of other
fuel production and storage facilities in strategic locations
around the United Kingdom that are operated by third-party
contractors for supply into UK biomass energy plants. This helps
the Group to balance seasonal demand and supply, as supply of
timber is generally low in the winter months in the United Kingdom,
whilst fuel demand increases during that time due to the cold
weather. The Group's national network of fuel production and
storage facilities are critical to the operation of many of the
United Kingdom's largest biomass energy power plants, which are not
always able to store large volumes of processed material at their
own sites.
Customers and Contracts
The Group supplies more than 15 large, and a significant number
of smaller, biomass energy plants in the United Kingdom and
Ireland. The Group has contracts in place with all of its large and
many of its smaller customers, with an average remaining contract
duration of 13 years. By the end of FY19/20, all of the plants
currently supplied by the Group had successfully completed
commissioning and are fully operational. The Group supplied 1.5
million tonnes of waste wood fuel in FY19/20. As discussed in more
detail in "Recent Developments" above, the COVID-19 pandemic has
led to a shortage of waste wood supply, which may result in an
inability of the Group to fulfil its requirements under its supply
agreements with its biomass energy plant customers. As a result,
the Group has issued force majeure notices to many of its biomass
energy plant customers pursuant to the terms of certain of its
supply agreements. The Group is working with its customers to
discuss options around supply and determine future volumes for when
lockdown restrictions are relaxed, and the Group has developed
volume models to help support these discussions. The Group is
engaged with the UK Government to request the reopening of
household waste and recycling centres and recommend that all
available waste wood is prioritised for the use in biomass energy
plants. The Group, along with its biomass energy plant customers,
is also engaged with the UK Government to extend the expiration of
the ROC subsidy scheme beyond the current expiration date in 2037
to compensate for the COVID-19 related slowdown in production.
The Group's seven largest biomass energy plant customers
accounted for approximately 74 per cent. of the tonnage supplied by
the Group in FY19/20, and the Group is the exclusive supplier to
six of these seven customers.
A majority of the Group's supply agreements with its large
biomass energy plant customers contain "take or pay" provisions
whereby the plant customer is obligated to pay penalties if it
doesn't meet contracted demand levels or a specified percentage
thereof. Similarly, the Group is obligated to pay penalties if it
cannot supply minimum contracted levels or a specified percentage
thereof.
Procurement and Supply
The Group has relationships with over 300 suppliers, ranging
from local skip companies to tier 1 waste companies, as well as
virgin wood suppliers.
For the collection of waste wood, the Group charges third
parties a gate fee for taking wood from them. The Group's gate fees
are not contracted with many of its waste wood suppliers, and in
many cases such suppliers are not committed to supplying any
minimum volume. Therefore, the Group's gate fee revenue is variable
and subject to shifts in demand and availability of supply. For
example, gate fees in November 2019 declined significantly due to a
combination of a seasonal decline in waste wood supply, demand from
UK biomass energy plants peaking and a six-month drop in
construction output due to Brexit uncertainties. As discussed in
more detail in "Recent Developments" above, the COVID-19 pandemic
has exacerbated this supply shortage, which is negatively impacting
gate fee pricing and may continue to do so for an extended period.
Gate fees impact on pricing into the Group's own facilities and the
facilities operated by its contracted fuel producers. Therefore,
gate fees have a large impact on both the revenue and cost base of
the business.
The Group employs an integrated supply chain IT system that
provides real-time data to various functions within the business.
The system tracks supply from the time of supply order, through the
fuel production, transportation and delivery to customers, and it
provides detailed management information to enable quick
decision-making.
Transport
The Group operates a fleet of 145 walking floor vehicles located
in depots across the United Kingdom. The vehicles are specifically
designed for the transport of waste wood, virgin wood and RDF. The
Group also provides services for the transportation of other waste
products, renewable fuels and power plant residues.
The Group operates a rolling three-year replacement programme of
its fleet to ensure the fleet is operating with the most efficient
and environmentally friendly vehicles available. The Group's
drivers undertake regular training including tailored annual
appraisals, certificate of professional competence training and
career development programmes.
Renewables Obligation Certificates
The Renewables Obligation scheme was introduced in Great Britain
in 2002. The scheme is administered by Ofgem, which is Great
Britain's government regulator for gas and electricity. A similar
scheme operates in Northern Ireland.
Under the scheme, a Renewables Obligation Certificate (ROC) is
issued by Ofgem to an operator of an accredited renewable energy
generator for every megawatt hour of renewable energy that it
generates. The operator then sells its ROCs to electricity
suppliers alongside the electricity supplied, thereby allowing the
operator to receive a premium in addition to the wholesale
electricity price.
Suppliers submit their purchased ROCs to Ofgem to demonstrate
compliance with the Renewables Obligation scheme. Non-compliant
suppliers must pay a penalty.
Accreditation under the Renewables Obligation scheme closed to
new biomass energy plants in September 2018. Of the biomass energy
plants with which the Group had supply agreements, all but one
completed the commissioning phase before the deadline and have
therefore been accredited. The one plant that did not obtain
accreditation is not currently operating and has terminated its
supply agreement with the Group.
The Renewables Obligation scheme will terminate in 2037. The
Group, along with its biomass energy plant customers, is engaged
with the UK Government to extend the expiration of the scheme to
compensate for the COVID-19 related slowdown in production.
Other Regulatory and Environmental Issues
The Group's fuel production and storage facilities, as well as
its industrial scale drying facility, operate under environmental
permits issued and regulated by the UK Environment Agency.
Compliance under the permits is audited at least once per year by
the UK Environment Agency and on a regular basis by the Group's own
health, safety, quality and environment team, which reports
directly to the Board.
The quality teams in place at each fuel production facility
provides customers with advice on the sampling and testing of
fuels, the environmental characteristics and the best ways to meet
UK and international standards.
The Group also has a number of bespoke permit variations for its
fuel production and storage facilities, allowing storage of
material in larger stockpiles and longer periods for finished
fuel.
Stobart Rail & Civils
The Group is an established provider of rail and non-rail civil
engineering projects in the United Kingdom. The Group delivers
design, construction, maintenance and enhancement projects,
offering complete packages including structures, earthworks and
geotechnical, lineside infrastructure, drainage and permanent way
works. The division also manages specialist industrial and
commercial schemes, including multi-modal distribution warehouses,
terminal and office buildings, racecourses, airport aprons, stands
and taxiways.
The Group is a key partner to Network Rail, the UK
Government-owned entity that owns the rail tracks and
infrastructure (including signalling and stations) in the United
Kingdom. The Group supports Network Rail through framework
contracts in three of the five regions it operates. These three
regions cover 75 per cent. of the United Kingdom.
In 2019, the Group became the Civils Partner for the Northern
Alliance track renewals programme being managed by Babcock, and the
Group also secured a milestone GBP4.8 million contract with Nexus,
a public body that delivers public transport services, following a
competitive bid process. As a result, the Group worked alongside
Nexus and other key partners and successfully completed full track
renewals across four sites on the Tyne and Wear Metro in the north
of England.
Historically, a significant portion of Stobart Rail &
Civils' revenue was generated from projects for other Group
operating divisions. For example, Stobart Rail & Civils
delivered a runway improvement project and new train station at
London Southend Airport, constructed the new terminal at Carlisle
Lake District Airport and undertakes improvement works at Stobart
Energy facilities. In FY18/19, the Group implemented a strategic
plan aimed at both increasing work with existing partners and
securing new contracts. The following table sets forth Stobart Rail
& Civils' internal and external revenue during the periods
indicated.
FY19/20 FY18/19 FY17/18
(GBP'000)
----------------------------
Internal revenue 13,404 20,480 24,701
External revenue 28,077 31,867 16,253
Total revenue (1) 41,481 52,347 40,954
Note:
(1) Total revenue is stated before the elimination of
intercompany revenue. Please see Note 3 in the FY19/20 Financial
Statements and FY18/19 Financial Statements for further
information.
In FY19/20 Stobart Rail & Civils traded below expectations,
in part due to delays in Network Rail awarding contracts at the
start of its Control Period 6 and the Group's continued exposure to
a poor performing legacy project. In in the first three months of
FY20/21 the division has been negatively impacted by the closure of
certain work sites due to the COVID-19 pandemic. As a result of the
recent poor performance, the Group is actively engaging to exit the
Rail & Civils business within the next six months. There are
currently 26 open contracts including 12 operationally live
projects. The Directors expect all of these to be substantially
concluded in the next six months.
Stobart Air and Propius
On 27 April 2020, the Group announced it had reached agreement
with the administrators of Connect Airways to acquire Stobart Air
and Propius, and the Group now holds a 40 per cent. voting and 75
per cent. economic interest in Everdeal, the ultimate holding
company of both businesses, and a 15 per cent. shareholding in the
company that holds the remaining 60 per cent. voting interest and
25 per cent. economic interest in Everdeal, Everdeal Employees 2019
Limited.
This provides the Group with an effective indirect economic
interest of 78.75 per cent. in Stobart Air and Propius. This
structure was in place prior to the Group's disposal of Stobart Air
and Propius and is required to ensure that Stobart Air meets the
requirements of its Air Operator Certificate to operate out of
Ireland.
Propius is an aircraft leasing business that leases eight ATR
aircraft from the GOAL Lessors, and leases those aircraft on to
Stobart Air. On 5 April 2017, the Company granted, in favour of
each GOAL Lessor, a guarantee of punctual performance and payment
in respect of Propius' obligations and liabilities under each lease
agreement.
Stobart Air is a regional airline that has operated under the
Aer Lingus brand through a franchise relationship since 2010. Prior
to the suspension of most of its flights as a result of the
COVID-19 pandemic, Stobart Air operated Aer Lingus Regional flights
from Dublin, Shannon and Cork to 25 destinations. During the
COVID-19 pandemic, Stobart Air has been flying "Public Service
Obligation" routes only. The Aer Lingus franchise agreement
generated approximately EUR127 million of revenue for Stobart Air
in the year ended 28 February 2019. The franchise agreement expires
on 31 December 2022, and the Group intends to continue its current
positive dialogue with Aer Lingus to conclude a long-term franchise
extension and ensure that the Stobart Air business is put on a
sound financial footing. In the event that Aer Lingus chooses a
different airline partner going forward, the Group intends to
redeploy the existing fleet with a new partner.
Stobart Air also provides private charter flights and
wet-leasing services whereby it provides an aircraft, complete
crew, maintenance and insurance (ACMI) to other airlines.
In 2019, Stobart Air carried 1.4 million passengers and was the
third largest airline at Dublin Airport, with a nine per cent.
share of all Dublin slots. Stobart Air leases a fleet of 15
aircraft (eight from Propius), consisting of 12 ATR 72 600
(2013-17), one ATR 42 600 (2018) and two Embraer E190 (2008). The
13 ATR aircraft are used for the Aer Lingus franchise flights and
the two E190 aircraft are non-operational and being returned to
their lessors.
The total outstanding financial liability of Stobart Air is $2.2
million per month for all aircraft leases, including those with
Propius. The eight Propius ATR aircraft leases have monthly cash
flow payments of $1.3 million. Stobart Air and Propius had a cash
outflow in May 2020 of EUR3.5 million, and the Directors believe
that such cash outflow in June 2020 will be EUR5.5 million (in the
management base case business plan).
Stobart Air uses, on average, EUR3.5 million of cash per month
when closed for passengers (other than "Public Service Obligation"
routes). The Directors believe that Stobart Air will achieve cash
break-even in January 2021-March 2021 based on the management base
case business plan and assuming the COVID-19-related disruption
dissipates. Under this base case, the Group expects to fund
approximately EUR25 million in the period to 31 December 2021.
Under a 'reasonable worst case scenario', the Directors estimate
that EUR40 million would be required to fund the businesses in that
period.
The Group aims to manage costs in these businesses whilst
passenger volume is reduced with the following measures:
-- engine maintenance management in light of operational
levels;
-- lease payment holidays and deferrals;
-- temporary COVID-19 Wage Subsidy Scheme;
-- staff pay cuts across the airline;
-- airport and supplier negotiation; and
-- airline passenger duty payment timing delay.
When passenger volumes recover, the Group aims to manage costs
in these businesses with the following measures:
-- managing the cost base;
-- renegotiate handling terms (and take advantage of Stobart
Aviation Services synergies);
-- renegotiate other supplier terms where possible;
-- review pay scales and structure of the businesses;
-- agree the Franchise Agreement extension with Aer Lingus;
and
-- renegotiate aircraft leases where possible.
If a managed wind down of Stobart Air is required as a result of
the non-renewal of the Aer Lingus franchise agreement, such wind
down would include the crystallisation of parent guarantees with
Aer Lingus of up to a maximum of EUR18 million, liabilities
associated with the Propius aircraft leases of $15.4 million per
annum, a break fee of $21.2 million plus associated break fee
finance costs (which, once the break fee is paid, would end lease
payment obligations to the GOAL Lessors) and $21 million of
maintenance reserve liabilities outstanding against the Propius
aircraft. The Group would seek to sell its valuable Dublin Airport
slots owned by Stobart Air, would seek a standstill agreement with
the GOAL Lessors and Aer Lingus in order to optimise the
satisfaction of the liabilities in time and quantum and would seek
to redeploy the Propius fleet to another carrier.
Stobart Infrastructure
Stobart Infrastructure holds a portfolio of non-strategic
property and infrastructure assets with a book value of GBP47.3
million as at 29 February 2020 (compared to GBP82.6 million as at
28 February 2019).
The portfolio includes Carlisle Lake District Airport, the
Group's Widnes and Pollington biomass fuel production facilities
and a stake in Mersey Bioenergy Holdings Limited, among others.
The Group aims to divest all of its non-core assets within the
next three years, other than Carlisle Lake District Airport, with
the aim of realising value over time from a position of strength
when market conditions are right. Non-core infrastructure assets,
other than Carlisle Lake District Airport, had a book value of
GBP38.4 million as at 29 February 2020. The Group has assumed zero
proceeds from asset sales in its base case business plan.
Carlisle Lake District Airport
The Group acquired Carlisle Lake District Airport, which largely
serves the private aviation market, in 2009. The airport has also
housed an air freight distribution centre since 2015, which is
leased to Eddie Stobart.
The airport had 15,183, 6,067 and 14,007 movements in FY17/18,
FY18/19 and FY19/20. The decline in FY18/19 was due to the airport
being closed whilst the new runway was being built.
In 2018, Stobart Rail & Civils completed construction of a
new terminal, which began welcoming commercial Loganair flights in
July 2019, although these flights were subsequently suspended in
late March 2020 due to the COVID-19 pandemic. The Group, along with
local government partners, is in discussions with the UK Government
with a view to having services to and from the airport designated
as "Public Service Obligation" routes and therefore able to benefit
from UK Government funding. This would reduce commercial risk to
airlines and therefore encourage operations by other carriers. In
FY19/20, Carlisle Lake District Airport served approximately 15,000
commercial passengers.
Going forward, the Group plans to explore broadening the
airport's non-commercial operations.
Carlisle Lake District Airport's results are accounted for in
Stobart Infrastructure due to the infrastructure potential at the
site.
Contingent liabilities
Guarantees were given for some Eddie Stobart property leases
when that business formed part of the Group. The guarantees
remained in place following the Group's partial disposal of Eddie
Stobart in 2014. Under the terms of the guarantees, if Eddie
Stobart were to default on its rent or rates payments in respect of
a guaranteed lease, the Group would be liable to pay the applicable
costs until the relevant landlord replaced Eddie Stobart with a new
tenant. The Group's maximum potential liability under the
guarantees as at 29 February 2020 was approximately GBP77 million.
This liability decreases each year as the various leases near
termination until 2034 when the final lease terminates. The maximum
liability in any one year, should the risk crystallise, is GBP6.7
million, which is the annual rent and rates liability if all the
properties covered by the guarantee were to become vacant. The
Directors believe that, due to the nature of the properties, it is
unlikely that the properties would remain vacant for any
significant period of time in the event that Eddie Stobart
defaults.
Guarantees have been provided to the airline Stobart Air in
relation to jet fuel and foreign exchange hedging contracts. The
current exposure on these contracts is approximately EUR4 million.
In addition, a facility provided by Aer Lingus, under which, to
date, Stobart Air receives 100 per cent. of ticket revenue in
advance of passenger flights, has been guaranteed up to a maximum
of EUR18 million.
Following the sale and leaseback of eight ATR72-600 aircraft in
April 2017, the Group provided guarantees over the $15.4 million
annual rentals. These guarantees expire in April 2027, with a break
clause in April 2023 if the Aer Lingus franchise is not extended
beyond December 2022 requiring payment of a break fee of $21.2
million plus associated break fee finance costs.
In addition, various legal claims have been made against the
Stobart Energy and Stobart Aviation divisions, including the claims
against the Stobart Aviation division made under Part 1 of the Land
Compensation Act 1973. The Group is vigorously defending all such
claims and believes the risk of outflow to be low, although is not
classified as remote. The maximum exposure under all such claims
against the Stobart Energy and Stobart Aviation divisions is
GBP12.6 million.
Revolving Credit Facilities
On 26 January 2015, the Company and certain of its subsidiaries
as original borrowers and original guarantors (collectively, the
Obligors) entered into a multicurrency revolving facility agreement
with Lloyds Bank plc as arranger and Lloyds Bank plc as agent and
security trustee. The facility agreement was amended and restated
pursuant to an amendment and restatement agreement dated 28
February 2017, and further amended on 27 June 2017, 30 January
2018, and 27 February 2018, and further amended by amendment and
restatement agreements dated 30 July 2018, 23 May 2020 and 4 June
2020 (the Facility Agreement). In the amendment and restatement
agreement dated 30 July 2018, AIB Group (UK) plc joined the
Facility Agreement as an arranger and a lender
The Facility Agreement provides for borrowings up to an
aggregate principal amount of GBP120,000,000 on a committed basis,
comprising the original GBP80,000,000 revolving credit facility
(Facility A) and a new GBP40,000,000 revolving credit facility
(Facility B) pursuant to the amendment and restatement agreement in
respect of the Facility Agreement dated 4 June 2020. The funds
under Facility A may be applied towards the general corporate
purposes of the Group provided that the facility shall not be used
to pay any scheduled or other payments due under the aircraft sale
and leaseback arrangements entered into with any company managed by
GOAL German Operating Aircraft Leasing GmbH & Co. KG and KGAL
Group without the prior consent of a majority of the lenders. The
funds under Facility B are to be utilised for the general corporate
purposes of the Group and in accordance with the Group's short-term
cash flow forecasts.
Conditions to Utilisation
The Group is entitled to utilise the Facility A provided that
(i) no default, or, in the case of a rollover loan, no event of
default is continuing and (ii) certain representations are true in
all material respects as at the date of the proposed
utilisation.
In respect of Facility B, for the period commencing on 5 June
2020 up to and including the date of Admission (the Initial
Drawdown Period), the Group is entitled to utilise Facility B up a
maximum of GBP10,000,000. During the Initial Drawdown Period, the
conditions to utilisation include, in addition to the conditions
specified above for Facility A, a requirement that (i) Facility A
has been drawn in full; (ii) the Placing Agreement has not been
terminated or materially amended and the proposed size of Capital
Raise is realising net proceeds at least GBP70 million; (iii) no
notice of termination of the Placing Agreement has been served;
(iv) no right has arisen for termination of the Placing Agreement
(unless and until that right to terminate has been waived); (v) the
Company submits a daily cashflow forecast for the Initial Drawdown
Period; and (vi) the maximum amount requested to be drawn in any
utilisation request does not exceed the Permitted Initial
Utilisation Amount, this being the minimum amount of funding
required by the Group to ensure that at all times during the
Initial Drawdown Period, there is minimum headroom liquidity of
GBP10,000,000 on each day during such period. Any amounts utilised
under Facility B during the Initial Drawdown Period must be repaid
in full within three Business Days of the date of Admission.
At any time after the Initial Drawdown Period, the Group shall
be entitled to utilise Facility B, subject to the following
conditions in addition to the conditions specified above for
Facility A: (i) Facility A has been drawn in full; (ii) the Capital
Raise has completed with net proceeds of at least GBP70 million;
(iii) the most recently provided cashflow forecast prepared in
accordance with the requirements of the requirements of the
Facility Agreement (a Cashflow Forecast)indicates that all drawing
under Facility B will be capable of being repaid within the earlier
of 12 months and the final maturity date; and (iv) the maximum
amount requested to be drawn in any utilisation request does not
exceed the Permitted Utilisation Amount, this being the minimum
amount of funding required by the Group within the two month period
following the date of the utilisation request, to ensure that there
is minimum headroom liquidity of GBP10,000,000 during such
period.
Maturity and repayment
The Facility Agreement terminates on 31 January 2022 (the
Facility Termination Date). Subject to the rollover provisions in
the Facility Agreement (detailed below), each loan under the
Facility must be repaid on the last day of the interest period
relating thereto. The interest period in respect of a loan under
the Facility A is one, two, three or six months at the election of
the borrower upon utilisation.
Subject to certain conditions and exceptions, loans under the
Facility may be borrowed, repaid and reborrowed at any time during
the availability period under the Facility Agreement. Any amounts
prepaid will be applied in prepayment of Facility B in priority to
Facility A. All outstanding amounts under the Facility Agreement
must be repaid in full on or prior to the termination date.
With respect to Facility B, a cash sweep mechanic shall apply
following the Initial Drawdown Period. As evidenced by the most
recent Cashflow Forecast, to the extent that cash in the Group is
forecast to exceed GBP10,000,000 on each day of the next two
months, the amount by which the cash amount exceeds the Permitted
Utilisation Amount shall be applied in prepayment of Facility
B.
Interest rates and fees
The loans under the Facility Agreement accrue interest at the
percentage rate per annum equal to the aggregate of 5.25 per cent.
in respect of Facility A and 5.25 per cent. (with ratchet increases
to the margin by 0.5 per cent. per financial quarter after February
2021) in respect of Facility B and LIBOR or, in relation to any
loan in euro, EURIBOR (subject to a zero floor).
A commitment fee applies to the Facility A and Facility B at the
rate of 35 per cent. of the then applicable margin, being 5.25 per
cent. per annum (subject, with respect to Facility B, to ratchet
increases by 0.5 per cent. per financial quarter after February
2021) payable on the on the unused and uncancelled amount available
from each lender in respect of each facility. The commitment fees
are payable in arrears on the last day of each successive period of
three months during the term of the Facility Agreement. Customary
fees will also be payable to the agent and the security agent
during the term of the Facility Agreement.
Guarantees
Each Obligor has provided a continuing guarantee of punctual
performance and payment of each Obligor's obligations under the
Facility Agreement and related finance documents.
Security
The obligations of the Obligors under the Facility Agreement and
related finance documents are secured by the following security
documents.
An English-law governed debenture originally dated 26 January
2015 (as supplemented and amended by deeds of accession or release
from time to time including a supplemental debenture dated 23 May
2020 and a second supplemental debenture dated 4 June 2020)
creating fixed and floating security as applicable over all of the
assets of the following chargors:
-- Stobart Group Limited
-- Stobart Rail Limited
-- Westlink Group Limited
-- Westlink Holdings Limited
-- Stobart Air (UK) Limited
-- London Southend Airport Company Limited
-- Stobart Properties Limited
-- Eddie Stobart Promotions Limited
-- Stobart Holdings Limited
-- Stobart Energy Limited
-- Stobart Biomass Transport Limited
-- Stobart Estates Holdings Limited
-- Stobart Green Energy Limited
-- Stobart Group Brands LLP
-- SPD1Limited
-- WADI Properties Limited
-- Moneypenny Limited
-- Stobart Aviation Limited
-- Stobart Aviation Services Limited
Pursuant to an Irish-law governed security assignment agreement
dated 23 May 2020, and an Irish-law governed second security
assignment dated 4 June 2020, entered into between Stobart Aviation
Limited and Lloyds Bank plc as security trustee, Stobart Aviation
Limited assigned by way of security, its rights under a deed of
assignment in respect of a share mortgage (under which Everdeal
2019 Limited had granted, in favour of Connect Airways Limited, a
mortgage over its shares in Everdeal Holdings Limited; Connect
Airways Limited had assigned its rights under such mortgage to
Stobart Aviation Limited pursuant to the deed of Assignment); and
its rights under the share mortgage itself.
Pursuant to an English-law governed charge dated 23 May 2020,
and an English-law governed second charge dated 4 June 2020, the
following chargors granted security by way of first fixed charge
over all membership interests in Stobart Group Brands LLP and all
rights and interest in the Limited Liability Partnership Agreement
dated 21 March 2012 entered into, inter alia, by Westlink Holdings
Limited and Stobart Group Brands LLP:
-- Stobart Holdings Limited
-- Stobart Rail Limited
-- London Southend Airport Company Limited
-- Stobart Energy Limited
-- Westlink Holdings Limited.
Pursuant to an Irish-law governed share charge dated 23 May
2020, and an Irish-law governed second charge dated 4 June 2020,
Stobart Limited granted a first fixed charge over its shares in
Everdeal Employees 2019 Limited.
Pursuant to a Guernsey-law governed security interest agreement
dated 4 June 2020, WADI Properties Limited and Estera Nominees
(Guernsey) Limited granted a security interest over their
respective rights, title and interest in and to the shares in
Moneypenny Limited.
On 23 May 2020, the chargors, Lloyds Bank plc as security
trustee, Lloyds Bank plc and AIB Group (UK) plc as lenders, Lloyds
Bank plc as facilities lenders, Lloyds Bank Corporate Markets plc
as hedge counterparty and the other parties listed therein, entered
into an intercreditor agreement (the Intercreditor Agreement)
which, amongst other things, governs the ranking and priority of
debt liabilities between each of the creditors, and governs the
application of proceeds of enforcement of the security.
Covenants
The Facility Agreement requires the Obligors to comply, and to
ensure the compliance by each other member of the Group, with a
number of customary undertakings and covenants, which are subject
to customary materiality qualifications, exceptions and baskets.
These covenants include, among others, the following financial
covenants:
-- Group Liquidity (as defined in the Facility Agreement) shall
not be forecast to be less than GBP10,000,000:
o as at the end of each Month for the duration of the Forecast
Period (as defined in the Facility Agreement); and
o as at close of business on each Business Day during the two
months immediately following each utilisation of Facility B
(Minimum Liquidity)
-- Consolidated EBITDA (as defined in the Facility Agreement),
in respect of the periods set forth in the following table, must
not be less than the amounts specified in the following table
(Minimum EBITDA).
Period Consolidated EBITDA
(GBP)
Six months ending 31 August
2020 (8,000,000)
Nine months ending 30 November
2020 (7,500,000)
12 months ending 28 February
2021 (6,750,000)
12 months ending 31 May 2021 0
-- Cashflow (as defined in the Facility Agreement), in respect
of the periods set forth in the following table, must not be less
than the amounts specified in the following table (Minimum
Cashflow).
Period Cashflow (GBP)
Six months ending 31 August
2020 (12,750,000)
Nine months ending 30 November
2020 (32,250,000)
12 months ending 28 February
2021 (44,500,000)
12 months ending 31 May 2021 (49,000,000)
12 months ending 31 August
2021 (32,500,000)
12 months ending 30 November
2021 (13,000,000)
-- The ratio of Net Debt to Consolidated EBITDA (as those terms
are defined in the Facility Agreement), in respect of the 12
month-period period ending 31 August 2021, must not exceed
9.70:1.00; and in respect of the 12 month-period ending 30 November
2021, must not exceed 7.00:1.00 (Net Leverage).
-- The ratio of Consolidated EBITDA to Net Interest Payable (as
those terms are defined in the Facility Agreement), in respect of
the 12 month-period period ending 31 August 2021, must not be less
than 1.50:1.00; and in respect of the 12 month-period ending 30
November 2021, must not be less than 2.25:1.00 (Net Interest
Cover).
-- The ratio of Fixed Assets to Net Debt (as those terms are
defined in the Facility Agreement), in respect of the periods set
forth in the following table, must not be less than the ratios
specified in the following table (Minimum Asset Cover).
Period Ratio
Relevant Period ending 31 August 2.00:1.00
2020
Relevant Period ending 30 November 2.00:1.00
2020
Relevant Period ending 28 February 1.60:1.00
2021
Relevant Period ending 31 May 1.40:1.00
2021
Relevant Period ending 31 August 1.40:1.00
2021
Relevant Period ending 30 November 1.30:1.00
2021
The Company must also project to comply with each of the
financial covenants outlined above (other than with respect to
Minimum Liquidity) with which it is obliged to comply as at each of
the next four Quarter Dates (these being 28 February, 31 May, 31
August and 30 November) or, where there are fewer than four Quarter
Dates remaining prior to the Termination Date, as at each of the
Quarter Dates falling prior to the Termination Date (Look-Forward
Compliance).
Under the terms of the Facility Agreement, if the Capital Raise
completes successfully, the Company will be unable to pay or
declare any dividends until 30 November 2021, and between 1
December 2021 and the Termination Date, the Company's ability to
pay or declare dividends will be subject to (i) no default having
occurred which is continuing or which would occur as a result of
such payment and (ii) maintaining a Net Leverage ratio of less than
2:1, pro forma for such payment.
Events of defaults
The Facility Agreement contains certain customary events of
default (subject in certain cases to agreed grace periods,
thresholds and other qualifications), including, for example,
non-payment, breach of financial covenants and a cross-default to
other financial indebtedness of any member of the Group. It will
also be an event of default if (i) the Capital Raise has not
completed with net proceeds of at least GBP70 million by 29 June
2020 or it is determined that it will not by such date; (ii) the
Placing Agreement is terminated; or (iii) the Company determines
that the resolutions described in the Notice of General Meeting
contained in this document will not be passed by the Company's
shareholders. The occurrence of an event of default which is
continuing would allow the lenders under the Facility Agreement to,
amongst other things, upon written notice to the Company,
accelerate all or part of the outstanding loans, cancel the
commitments and declare all or part of the loans payable on
demand.
Propius Lease Guarantees
Propius is party to eight lease agreements in respect of eight
aircraft with German special purpose companies managed by GOAL
German Operating Aircraft Leasing GmbH & Co, KG and KGAL Group
(the GOAL Lessors). On 5 April 2017, the Company granted, in favour
of each GOAL Lessor, a guarantee of punctual performance and
payment in respect of Propius' obligations and liabilities under
each lease agreement (the GOAL Guarantees).
Propius' annual commitments (guaranteed by the Company) under
the leases total $15.4 million per annum until the expiry of the
leases in April 2027, with a break clause in April 2023, upon
payment of a break fee of approx. $21.2 million plus associated
break fee finance costs, if the Aer Lingus franchise is not
extended beyond December 2022.
On 27 April 2020, the Group announced it had reached agreement
with the administrators of Connect Airways to acquire Stobart Air
and Propius, and the Group now holds a 40 per cent. voting and 75
per cent. economic interest in Everdeal, the ultimate holding
company of both businesses, and a 15 per cent. shareholding in the
company that holds the remaining 60 per cent. voting interest and
25 per cent. economic interest in Everdeal, Everdeal Employees 2019
Limited. This provides the Group with an effective indirect
economic interest of 78.75 per cent. in those businesses, providing
the Group with considerable influence over the pre-existing
obligations.
APPIX I
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise:
Admission admission of the New Shares to (a) the premium
listing segment of the Official List and (b)
trading on the London Stock Exchange's main
market for listed securities
Application Form the personalised application form on which
Qualifying Non-CREST Shareholders may apply
for the New Shares under the Open Offer
Board the board of directors of the Company
Bookbuild the accelerated bookbuilding process to be
launched immediately following this announcement
Business Day a day (other than a Saturday or Sunday) on
which banks are open for general business
in London
Capital Raise the Placing, the Open Offer and the Firm Placing
CREST the CREST system (as defined in the CREST
Regulations)
CREST member a person who has been admitted by Euroclear
& Ireland Limited as a system-member (as defined
in the CREST Regulations)
CREST Regulations the Uncertificated Securities (Guernsey) Regulations,
2009 (GSI
2009/48)
Directors the executive directors and non-executive
directors of the Company as at the date of
this announcement
Excess Application the facility for Qualifying Shareholders to
Facility apply for Excess Shares in excess of their
Open Offer Entitlements
Excess Open Offer in respect of each Qualifying Shareholder
Entitlements who has taken up his or her Open Offer Entitlement
in full, the entitlement (in addition to the
Open Offer Entitlement) to apply for Excess
Shares, up to a maximum number equal to the
number of that Qualifying Shareholder's Open
Offer Entitlements, pursuant to the Excess
Application Facility, which may be subject
to scaling down at the absolute discretion
of the Board in consultation with the Joint
Bookrunners
Excess Shares New Shares which may be applied for by Qualifying
Shareholders in addition to their Open Offer
Entitlements pursuant to the Excess Application
Facility
Excluded Territories Australia, Canada, Hong Kong, Japan, the People's
Republic of China and the Republic of South
Africa
Existing Shares the existing Shares in issue immediately preceding
the issue of the New Shares
Facility A the original GBP80.0 million revolving credit
facility under the Facility Agreement, as
described in more detail in this announcement
Facility Agreement the financing agreement entered into by the
Company and others on 4 June 2020 that includes
the revolving credit facility comprising Facility
A and Facility B
Facility B a new GBP40.0 million revolving credit facility
under the Facility Agreement which is described
in more detail in this announcement
FCA the Financial Conduct Authority acting in
its capacity as the competent authority for
the purposes of Part VI of the FSMA
Firm Placed Shares the New Shares which the Company is proposing
to issue pursuant to the Firm Placing
Firm Placees any persons who have agreed or shall agree
to subscribe for Firm Placed Shares pursuant
to the Firm Placing
Firm Placing the subscription by the Firm Placees for the
Firm Placed Shares
FSMA the Financial Services and Markets Act 2000,
as amended
General Meeting the general meeting of the Company to be held
at 10.00 a.m. on 25 June 2020, notice of which
will be set out in the Prospectus
Group the Company and its subsidiary undertakings
and, where the context requires, its associated
undertakings
Joint Bookrunners Canaccord and UBS
London Stock Exchange London Stock Exchange plc
New Shares the new Shares which the Company will issue
pursuant to the Placing and Open Offer and
the new Shares which the Company will issue
pursuant to the Firm Placing
Offer Price the price per New Share, to be determined
following closing of the Bookbuild
Official List the Official List of the FCA
Open Offer the conditional invitation to Qualifying Shareholders
to subscribe for the Open Offer Shares at
the Offer Price on the terms and subject to
the conditions set out in the Prospectus and,
in the case of Qualifying Non-CREST Shareholders
only, the Application Form
Open Offer Entitlements entitlements to subscribe for the Open Offer
Shares, allocated to a Qualifying Shareholder
pursuant to the Open Offer
Placing the conditional placing, by the Joint Bookrunners,
as agent of and on behalf of the Company,
of the Open Offer Shares subject to clawback
pursuant to the Open Offer, on the terms and
subject to the conditions contained in the
Placing Agreement
Placee any persons who have agreed or shall agree
to subscribe for shares pursuant to the Placing
Placing Agreement the placing agreement entered into between
the Company and the Joint Bookrunners on 4
June 2020
Prospectus the combined prospectus and circular expected
to be published by the Company on or around
5 June 2020 in respect of the Capital Raising,
together with any supplements thereto
Qualifying CREST Qualifying Shareholders holding Shares in
Shareholders uncertificated form
Qualifying non-CREST Qualifying Shareholders holding Shares in
Shareholders certificated form
Qualifying Shareholders Shareholders on the register of members of
the Company on the Record Date with the exclusion
of persons with a registered address or located
or resident in an Excluded Territory or the
United States
Record Date close of business on 3 June 2020
Resolutions the resolutions to be proposed at the General
Meeting in connection with the Capital Raise
Shareholders holders of Shares
Shares ordinary shares of GBP0.10 each in the capital
of the Company having the rights set out in
the Company's articles of incorporation
Capital Raise Statistics
Closing price of Existing Shares (1) 66.20 pence
Offer Price for each New Share 35 to 40 pence
-------------------
Number of Existing Shares in issue at 3 June
2020(2) 374,652,662
-------------------
Open Offer Entitlement To be determined
at the close
of the Bookbuild
(2)
-------------------
Number of New Shares to be issued pursuant Approximately
to the Firm Placing 80 per cent.
of the New Shares
to be issued
under the Firm
Placing and
Placing and
Open Offer
-------------------
Number of New Shares to be issued pursuant Approximately
to the Placing and Open Offer 20 per cent.
of the New Shares
to be issued
under the Firm
Placing and
Placing and
Open Offer
-------------------
Approximate expected gross proceeds from the Between GBP80
Capital Raise million and
GBP100 million
-------------------
Notes:
(1) The closing price on the London Stock Exchange's Main Market
for listed securities on 3 June 2020, being the last Business Day
prior to this announcement.
(2) Fractions of New Shares will not be issued to Shareholders
in the Open Offer and fractional entitlements under the Open Offer
will be rounded down to the nearest whole number of New Shares.
APPIX III
TERMS AND CONDITIONS OF THE FIRM PLACING AND PLACING
IMPORTANT INFORMATION ON THE FIRM PLACING AND PLACING FOR
INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM
PLACING OR THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING
DISTRIBUTED TO: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC
AREA ("EEA"), PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE
MEANING OF ARTICLE 2(E) OF REGULATION (EU) 2017/1129 (THE
"PROSPECTUS REGULATION") ("QUALIFIED INVESTORS"); (B) IF IN THE
UNITED KINGDOM, PERSONS WHO ARE QUALIFIED INVESTORS AND FALL WITHIN
THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION)
ORDER 2005, AS AMED (THE "ORDER") OR ARE PERSONS FALLING WITHIN
ARTICLE 49(2) OF THE ORDER AND WHO ARE QUALIFIED INVESTORS; (C) IF
IN THE UNITED STATES, PERSONS REASONABLY BELIEVED TO BE "QUALIFIED
INSTITUTIONAL BUYERS" ("QIBS") WITHIN THE MEANING OF RULE 144A
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES
ACT"); OR (D) ANY OTHER PERSON TO WHOM IT MAY OTHERWISE LAWFULLY BE
COMMUNICATED; AND, IN EACH CASE, WHO HAVE BEEN INVITED TO
PARTICIPATE IN THE FIRM PLACING AND/OR THE PLACING BY THE JOINT
BOOKRUNNERS (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS
"RELEVANT PERSONS").
THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR
RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO
HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST
SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS
AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES
CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN
THE COMPANY.
THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION OF THE UNITED STATES AND THE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR
INDIRECTLY IN, INTO OR 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 APPLICABLE
STATE SECURITIES LAWS. THERE WILL BE NO PUBLIC OFFERING OF THE
SECURITIES IN THE UNITED STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING
SHARES (AS SUCH TERM IS DEFINED BELOW).
Unless otherwise defined in these terms and conditions,
capitalised terms used in these terms and conditions shall have the
meaning given to them in this announcement.
If a person indicates to the Joint Bookrunners that it wishes to
participate in the Firm Placing and/or the Placing (together, the
"Equity Placings") by making an oral or written offer to acquire
Firm Placed Shares pursuant to the Firm Placing and/or Open Offer
Shares pursuant to the terms of the Placing (together, the "Placing
Shares") (each such person, a "Placee") it will be deemed (i) to
have read and understood these terms and conditions in this
Appendix and the announcement of which it forms part and the draft
prospectus dated 4 June 2020 prepared by, and relating to, the
Company (the "Preliminary Prospectus") and the Pricing Announcement
in their entirety, (ii) to be participating and making such offer
on the terms and conditions contained in this Appendix, and (iii)
to be providing the representations, warranties, indemnities,
agreements, undertakings and acknowledgements, contained in these
terms and conditions in this Appendix.
In particular, each such Placee represents, warrants and
acknowledges that:
1. it is a Relevant Person and undertakes that it will acquire,
hold, manage and dispose of any of the Placing Shares that are
allocated to it for the purposes of its business only;
2. in the case of any Placing Shares subscribed for by it as a
financial intermediary, as that term is used in Article 5(1) of the
Prospectus Regulation, that (i) the Placing Shares acquired by
and/or subscribed for by it in the Equity Placings will not be
acquired and/or subscribed for on a on discretionary basis on
behalf of, nor will they be acquired or subscribed for with a view
to their offer or resale to, persons in a member state of the EEA
or the UK other than Qualified Investors, or in circumstances which
may give rise to an offer of securities to the public other than an
offer or resale, in a member state of the EEA which has implemented
the Prospectus Regulation, to Qualified Investors, or in
circumstances in which the prior consent of the Joint Bookrunners
has been given to each such proposed offer or resale; or (ii) where
the Placing Shares have been acquired or subscribed for by it on
behalf of persons in any member state of the EEA or the United
Kingdom other than Qualified Investors, the offer of those Placing
Shares to it is not treated under the Prospectus Regulation as
having been made to such persons;
3. it is and, at the time the Placing Shares are acquired, will
be either (i) outside the United States, and acquiring the Placing
Shares in an offshore transaction in accordance with Rule 903 or
Rule 904 of Regulation S under the Securities Act ("Regulation S")
for its own account or purchasing the Placing Shares for an account
with respect to which it exercises sole investment discretion; or
(ii) a QIB. These terms and conditions do not constitute an offer
to sell or issue or the invitation or solicitation of an offer to
buy or acquire the Placing Shares in the United States or
Australia, Canada, Hong Kong, Japan, the People's Republic of
China, the Republic of South Africa or any other jurisdiction where
the extension or availability of the Equity Placing would breach
any applicable laws or regulations, and "Excluded Territories"
shall mean any of them;
4. it understands (or, if acting for the account of another
person, such person understands) the resale and transfer
restrictions set out in this Appendix ; and
5. the Company and the Joint Bookrunners will rely upon the true
and accuracy of the foregoing representations, warranties and
acknowledgements .
These terms and conditions and the information contained herein
are not for release, publication or distribution, directly or
indirectly, in whole or in part, in or into the United States or
any other Excluded Territory, subject to certain exceptions.
In particular, the Placing Shares referred to in these terms and
conditions have not been and will not be registered under the
Securities Act or the securities laws of any state or other
jurisdiction of the United States and the Placing Shares may not be
offered, sold, transferred or delivered, directly or indirectly in,
into or 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 applicable state securities
laws. Accordingly, the Placing Shares are being offered and sold
outside the United States in accordance with Regulation S, and in
the United States to a limited number of QIBs pursuant to an
exemption from registration under the Securities Act in a
transaction not involving any public offering. There will be no
public offering of the Placing Shares in the United States. The
Placing Shares have not been approved or disapproved by the U.S.
Securities and Exchange Commission, or state securities commission
in the United States or any other regulatory authority in the
United States, nor have any of the foregoing authorities passed
upon or endorsed the merits of the Equity Placings or the accuracy
or adequacy of these terms and conditions. Any representation to
the contrary is a criminal offence in the United States.
The distribution of these terms and conditions and the offer
and/or placing of Placing Shares in certain other jurisdictions may
be restricted by law. No action has been or will be taken by the
Joint Bookrunners or the Company that would, or is intended to,
permit an offer of the Placing Shares or possession or distribution
of these terms and conditions or any other offering or publicity
material relating to the Placing Shares in any jurisdiction where
any such action for that purpose is required, save as mentioned
above. Persons into whose possession these terms and conditions
come are required by the Joint Bookrunners and the Company to
inform themselves about and to observe any such restrictions.
Each Placee's commitments will be made solely on the basis of
the information set out in this announcement (including the
Appendix), the Preliminary Prospectus and the Pricing Announcement.
Each Placee, by participating in the Equity Placings, agrees that
it has neither received nor relied on any other information,
representation, warranty or statement made by or on behalf of any
of the Joint Bookrunners or the Company or any of their respective
affiliates. None of the Joint Bookrunners, the Company, or any
person acting on such person's behalf nor any of their respective
affiliates has or shall have liability for any Placee's decision to
accept this invitation to participate in the Equity Placings based
on any other information, representation, warranty or statement.
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 Equity Placings.
Nothing in this paragraph shall exclude the liability of any person
for fraudulent misrepresentation.
No undertaking, representation, warranty or any other assurance,
express or implied, is made or given by or on behalf of any Joint
Bookrunner or any of its affiliates, their respective directors,
officers, employees, agents, advisers, or any other person, as to
the accuracy, completeness, correctness or fairness of the
information or opinions contained in the Preliminary Prospectus and
the Prospectus (when published), this announcement, the Pricing
Announcement or for any other statement made or purported to be
made by any of them, or on behalf of them, in connection with the
Company or the Equity Placings and no such person shall have any
responsibility or liability for any such information or opinions or
for any errors or omissions. Accordingly, save to the extent
permitted by law, no liability whatsoever is accepted by any of the
Joint Bookrunners or any of their respective directors, officers,
employees or affiliates or any other person for any loss howsoever
arising, directly or indirectly, from any use of this announcement
or such information or opinions contained herein or otherwise
arising in connection with the Preliminary Prospectus and the
Prospectus (when published).
These terms and conditions do not constitute or form part of,
and should not be construed as, any offer or invitation to sell or
issue, or any solicitation of any offer to purchase or subscribe
for, any Placing Shares or any other securities or an inducement or
recommendation to enter into investment activity, nor shall these
terms and conditions (or any part of them), nor the fact of their
distribution, form the basis of, or be relied on in connection
with, any investment activity. No statement in this announcement is
intended to be nor may be construed as a profit forecast and nor
should any such statement be interpreted to mean that the Company's
profits or earnings per share for any future period will
necessarily match or exceed historical published profits or
earnings per share of the Company.
Proposed Firm Placing of Firm Placed Shares and Placing of Open
Offer Shares subject to clawback in respect of valid applications
by Qualifying Shareholders pursuant to the Open Offer
Placees are referred to these terms and conditions, this
announcement, the Preliminary Prospectus and the Pricing
Announcement containing details of, inter alia, the Equity
Placings. These terms and conditions, this announcement, the
Preliminary Prospectus and the Pricing Announcement have been
prepared and issued by the Company, and each of these documents is
the sole responsibility of the Company.
Applications will be made to the FCA for admission of the
Placing Shares to listing on the premium listing segment of the
Official List of the FCA and to the London Stock Exchange for
admission of the Placing Shares to trading on its main market for
listed securities.
Firm Placing
The Joint Bookrunners have severally agreed, pursuant to the
Placing Agreement, to use reasonable endeavours to procure
subscribers for the Firm Placed Shares, as agent for the Company,
at the Offer Price. The Firm Placed Shares are not subject to
clawback and do not form part of the Placing and Open Offer. The
Firm Placing is subject to the same conditions and termination
rights which apply to the Placing and Open Offer.
Following the execution of the Terms of Subscription if any
Placee fails to take up any or all of the Firm Placed Shares which
have been allocated to it or which it has agreed to take up at the
Offer Price, the Joint Bookrunners have severally agreed, on the
terms and subject to the conditions in the Placing Agreement, to
take up such Firm Placed Shares at the Offer Price.
Subject to the conditions below being satisfied, it is expected
that Admission will become effective on 29 June 2020 and that
dealings for normal settlement in the Firm Placed Shares will
commence at 8.00 a.m. on the same day. The Firm Placed Shares, when
issued and fully paid, will be identical to, and rank pari passu
with, the Existing Shares, including the right to receive all
dividends and other distributions declared, made or paid on the
Existing Shares by reference to a record date on or after
Admission.
Placees should note that the Firm Placed Shares do not carry any
entitlement to participate in the Open Offer.
The Firm Placing is conditional, inter alia, upon:
(i) the Resolutions being passed by Shareholders at the General Meeting;
(ii) the Placing Agreement having become unconditional in all
respects and not having been terminated by the Joint Bookrunners in
accordance with its terms prior to Admission; and
(iii) Admission becoming effective by not later than 8.00 a.m.
on 29 June 2020 (or such later time or date as the Company and the
Joint Bookrunners may agree, being not later than (being not later
than 6 July 2020).
Conditional Placing and Open Offer
The Joint Bookrunners have severally agreed, pursuant to the
Placing Agreement, to use reasonable endeavours to procure
subscribers for the Open Offer Shares, as agent for the Company, at
the Offer Price. The commitments of Placees in respect of the Open
Offer Shares in the Placing (the "Conditional Placees") are subject
to clawback in respect of valid applications for Open Offer Shares
by Qualifying Shareholders pursuant to the Open Offer. Following
the execution of the Terms of Subscription by the Company and the
Joint Bookrunners, to the extent that placees cannot be found for
the Open Offer Shares which are not applied for in respect of the
Open Offer or any Conditional Placee fails to take up any or all of
the Open Offer Shares which are not applied for in respect of the
Open Offer and which have been allocated to it, the Joint
Bookrunners have severally agreed, on the terms and subject to the
conditions in the Placing Agreement, to take up such Open Offer
Shares at the Offer Price.
Qualifying Shareholders are being given the opportunity to apply
for the Open Offer Shares at the Offer Price on and subject to the
terms and conditions of the Open Offer, pro rata to their holdings
of Existing Shares on the Record Date. Fractions of Open Offer
Shares will be rounded down to the nearest whole number. Qualifying
Shareholders are also being given the opportunity to apply for
Excess Open Offer Shares at the Offer Price through the Excess
Application Facility. If applications under the Excess Application
Facility are received for more than the number of Excess Open Offer
Shares available following take up of Open Offer Entitlements,
applications will be scaled back at the absolute discretion of the
Company in consultation with the Joint Bookrunners.
The New Shares issued under the Placing and Open Offer, when
issued and fully paid, will be identical to, and rank pari passu in
all respects with, the Existing Shares including the right to
receive all dividends and other distributions declared, made or
paid on the Existing Shares by reference to a record date on or
after Admission.
Subject to the conditions below being satisfied, it is expected
that Admission will become effective on 29 June 2020 and that
dealings for normal settlement in the Open Offer Shares will
commence at 8.00 a.m. on the same day.
The Placing and Open Offer are conditional, inter alia,
upon:
(i) the Resolutions being passed by Shareholders at the General Meeting;
(ii) the Placing Agreement having become unconditional in all
respects and not having been terminated by the Joint Bookrunners in
accordance with its terms prior to Admission; and
(iii) Admission becoming effective by not later than 8.00 a.m.
on 29 June 2020 (or such later time or date as the Company and the
Joint Bookrunners may agree, being not later than (being not later
than 6 July 2020).
The full terms and conditions of the Open Offer will be
contained in the Prospectus to be issued by the Company in
connection with the Capital Raise and Admission. The Prospectus to
be issued by the Company will be approved by the FCA under section
87A of the FSMA and made available to the public in accordance with
Rule 3.2 of the Prospectus Regulation Rules made under Part VI of
the FSMA.
Bookbuild of the Equity Placings
Commencing today, the Joint Bookrunners will be conducting the
Bookbuild to determine demand for participation in the Equity
Placings. The Joint Bookrunners will seek to procure Placees as
agent for the Company as part of this Bookbuild. These terms and
conditions give details of the terms and conditions of, and the
mechanics of participation in, the Equity Placings.
Principal terms of the Bookbuild
a. By participating in the Equity Placings, Placees will be
deemed (i) to have read and understood this announcement, these
terms and conditions in this Appendix, the Preliminary Prospectus
and the Pricing Announcement in their entirety and (ii) to be
participating and making an offer for any Placing Shares on the
terms and conditions in this Appendix, and (iii) to be providing
the representations, warranties, indemnities, agreements,
undertakings and acknowledgements, contained in this Appendix.
b. The Joint Bookrunners are arranging the Equity Placings
severally, and not jointly, nor jointly and severally, as agents of
the Company.
c. Participation in the Equity Placings will only be available
to persons who are Relevant Persons and who may lawfully be, and
are, invited to participate by any of the Joint Bookrunners. The
Joint Bookrunners and their respective affiliates are entitled to
offer to subscribe for Placing Shares as principal in the
Bookbuild.
d. To bid in the Bookbuild, Placees should communicate their bid
by telephone or in writing to their usual sales contact at any
Joint Bookrunner. Each bid should state the aggregate number of
Firm Placed Shares and Open Offer Shares which the Placee wishes to
acquire or the total monetary amount which it wishes to commit to
acquire Placing Shares at the Offer Price which is ultimately
established by the Company and the Joint Bookrunners, or at a price
up to a price limit specified in its bid. Allocations of Placing
Shares will be made in a combination that reflects an approximately
80:20 ratio of Firm Placed Shares to Open Offer Shares. The Offer
Price will be jointly agreed between the Joint Bookrunners and the
Company following completion of the Bookbuild and will be payable
by the Placees in respect of the Placing Shares allocated to them.
Bids may be scaled down by the Joint Bookrunners on the basis
referred to in paragraph (k) below.
e. The Bookbuild is expected to close no later than 7.00 a.m. on
5 June 2020 but may close earlier or later, at the discretion of
the Joint Bookrunners and the Company. The timing of the closing of
the books and allocations will be agreed between the Joint
Bookrunners and the Company following completion of the Bookbuild.
The Joint Bookrunners may, in agreement with the Company, accept
offers to subscribe for Placing Shares that are received after the
Bookbuild has closed.
f. An offer to subscribe for Placing Shares in the Bookbuild
will be made on the basis of these terms and conditions (which
shall be deemed to be incorporated in such offer), the Preliminary
Prospectus and the Pricing Announcement and will be legally binding
on the Placee by which, or on behalf of which, it is made and will
not be capable of variation or revocation.
g. Subject to paragraph (e) above, the Joint Bookrunners reserve
the right not to accept an offer to subscribe for Placing Shares,
either in whole or in part, on the basis of allocations agreed with
the Company and may scale down any offer to subscribe for Placing
Shares for this purpose.
h. If successful, each Placee's allocation will be confirmed to
it by the Joint Bookrunners following the close of the Bookbuild.
Oral or written confirmation (at the Joint Bookrunners' discretion)
from the Joint Bookrunners to such Placee confirming its allocation
will constitute a legally binding commitment upon such Placee, in
favour of the Joint Bookrunners and the Company to acquire the
number of Placing Shares allocated to it (and in the respective
numbers of Firm Placed Shares and Open Offer Shares (subject to
clawback) so allocated) on the terms and conditions set out herein
(which shall be deemed to be incorporated in such legally binding
commitment). Each Placee will have an immediate, separate,
irrevocable and binding obligation, owed to the Joint Bookrunners,
to pay to the Joint Bookrunners (or as the Joint Bookrunners may
direct) as agent for the Company in cleared funds an amount equal
to the product of the Offer Price and the sum of the number of Firm
Placed Shares and, once apportioned after clawback (in accordance
with the procedure described in the paragraph entitled "Placing
Procedure" below), the Open Offer Shares, which such Placee has
agreed to acquire.
j. The Company will make a further announcement detailing the
Offer Price and the number of Placing Shares to be issued. It is
expected that such announcement will be made as soon as practicable
after the close of the Bookbuild.
k. Subject to paragraphs (g) and (h) above, the Joint
Bookrunners reserve the right not to accept bids or to accept bids,
either in whole or in part, on the basis of allocations determined
at the Joint Bookrunners' discretion and may scale down any bids as
the Joint Bookrunners may determine, subject to agreement with the
Company. The acceptance of bids shall be at the Joint Bookrunners'
absolute discretion, subject to agreement with the Company.
l. Irrespective of the time at which a Placee's allocation(s)
pursuant to the Equity Placings is/are confirmed, settlement for
all Placing Shares to be acquired pursuant to the Firm Placing will
be required to be made at the time specified and all Placing Shares
to be acquired pursuant to the Placing will be required to be made
at the later time specified, on the basis explained below under the
paragraph entitled "Registration and Settlement".
m. Commissions are payable to Placees in respect of the Placing,
subject to certain exceptions. No commissions are payable to
Placees in respect of the Firm Placing or any Open Offer Shares
which are subscribed for under the Open Offer.
n. By participating in the Bookbuild, each Placee agrees that
its rights and obligations in respect of the Firm Placing and/or
the Placing will terminate only in the circumstances described
below and will not be capable of rescission or termination by the
Placee. All obligations under the Equity Placings will be subject
to the fulfilment of the conditions referred to below under the
paragraph entitled "Conditions of the Equity Placings and
Termination of the Placing Agreement".
o. To the fullest extent permissible by law, no Joint Bookrunner
nor any of its affiliates nor any of its or their respective
affiliates' agents, directors, officers or employees, respectively,
shall have any liability to Placees (or to any other person whether
acting on behalf of a Placee or otherwise). In particular, no Joint
Bookrunner nor any of its affiliates nor any of its or their
respective affiliates' agents, directors, officers or employees,
respectively, shall have any liability (including, to the extent
permissible by law, any fiduciary duties) to Placees (or to any
person whether acting on behalf of a Placee or otherwise) in
respect of the Joint Bookrunners' conduct of the Bookbuild or of
such alternative method of effecting the Equity Placings as the
Joint Bookrunners and the Company may agree.
Conditions of the Equity Placings and Termination of the Placing
Agreement
Placees will only be called on to subscribe for Placing Shares
if the obligations of the Joint Bookrunners under the Placing
Agreement have become unconditional in all respects and the Joint
Bookrunners have not terminated the Placing Agreement prior to
Admission.
The Joint Bookrunners' obligations under the Placing Agreement
in respect of the Firm Placing and the Placing and Open Offer are
conditional upon, inter alia:
(a) the Prospectus being approved pursuant to the Prospectus
Regulation Rules by the FCA not later than 5.00 p.m. on 5 June
2020;
(b) Admission occurring not later than 8.00 a.m. on 29 June 2020
(or such later time and/or date (being not later than 8.00 a.m. on
6 July 2020) as the Company and the Joint Bookrunners may
agree);
(c) the passing of the Resolutions (without amendment or with
such amendments as the Joint Bookrunners may agree) at the General
Meeting on 25 June 2020 (or such later date as the Joint
Bookrunners may agree);
(d) representations and warranties given by the Company to the
Joint Bookrunners as contained in the Placing Agreement being true
and accurate in all respects and not misleading on and as of the
date of the Placing Agreement, the date of the Prospectus, the date
of any supplementary prospectus published prior to Admission and
Admission, in each case by reference to the facts and circumstances
then existing;
(e) in the opinion of a Joint Bookrunners (acting in good
faith), there not having occurred a material adverse change (as
such term is defined in the Placing Agreement);
(f) no event referred to in Article 23 of the Prospectus
Regulation arising between the time of publication of the
Prospectus and Admission and no supplementary prospectus being
published by or on behalf of the Company which the Joint
Bookrunners consider (acting in good faith) to be material in the
context of the Firm Placing and the Placing and Open Offer or
Admission; and
(h) the Offer Price and the number of New Shares to be issued
having been determined and the Terms of Subscription having been
executed by the Company and the Joint Bookrunners following
completion of the Bookbuild.
The Placing Agreement can be terminated at any time before
Admission by the Joint Bookrunners by giving notice to the Company
in certain circumstances, including (but not limited to): (a) where
any of the relevant Conditions in the Placing Agreement are not
satisfied at the required times (unless waived); (b) where there
has been a breach by the Company of any of the undertakings in the
Placing Agreement which, in the good faith opinion of the Joint
Bookrunners, is material in the context of the Group taken as a
whole, the Capital Raise, Admission or the underwriting of the New
Shares; (c) in the good faith opinion of the Joint Bookrunners, any
of the representations and warranties given by the Company in the
Placing Agreement is or if repeated at any time up to and including
Admission (by reference to the facts and circumstances then
existing) would be untrue, inaccurate or misleading, ; or (d) in
the good faith opinion of the Joint Bookrunners, there has been a
material adverse change.
If any Condition has not been satisfied or waived by the Joint
Bookrunners as described below or if the Placing Agreement is
terminated, all obligations under these terms and conditions will
automatically terminate . By participating in the Equity Placings,
each Placee agrees that its rights and obligations hereunder are
conditional upon the Placing Agreement becoming unconditional in
all respects in respect of the Firm Placing (in respect of Firm
Placed Shares subscribed for under the Firm Placing) and/or in
respect of the Placing (in respect of Open Offer Shares subscribed
for under the Placing) and that its rights and obligations will
terminate only in the circumstances described above and will not be
capable otherwise of rescission or termination by it after oral or
written confirmation by the Joint Bookrunners (at the Joint
Bookrunners' discretion) following the close of the Bookbuild.
The Joint Bookrunners may in their absolute discretion in
writing waive fulfilment of certain of the Conditions in the
Placing Agreement or extend the time provided for fulfilment of
such Conditions. Any such extension or waiver will not affect
Placees' commitments as set out in these terms and conditions.
By participating in the Equity Placings each Placee agrees that
the exercise by the Company or any Joint Bookrunner of any right or
other discretion under the Placing Agreement shall be within the
absolute discretion of the Company and each Joint Bookrunner (as
the case may be) and that neither the Company nor any Joint
Bookrunner need make any reference to such Placee (or to any other
person whether acting on behalf of any Placee or otherwise) and
that neither the Company nor any Joint Bookrunner nor any person
acting on their behalf shall have any liability to such Placee (or
to any other person whether acting on behalf of any Placee or
otherwise) whatsoever in connection with any such exercise or
failure so to exercise.
Neither the Company nor any Joint Bookrunner 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 made by
the Joint Bookrunners as to whether or not to waive or to extend
the time and/or date for the fulfilment of any condition in the
Placing Agreement and/or whether or not to exercise any such
termination right.
Withdrawal Rights
Placees acknowledge that their acceptance of any of the Placing
Shares is not by way of acceptance of the public offer made in the
Prospectus and (if applicable) the Application Form but is by way
of a collateral contract and as such section 87Q of the FSMA does
not entitle Placees to withdraw in the event that the Company
publishes a supplementary prospectus in connection with the Firm
Placing and Placing and Open Offer or Admission.
Placing Procedure
Placees shall acquire or subscribe for the Firm Placed Shares
and Open Offer Shares to be issued pursuant to the Equity Placings
(after clawback) and any allocation of the Firm Placed Shares and
Open Offer Shares (subject to clawback) to be issued pursuant to
the Equity Placings will be notified to them on or around 25 June
2020 (or such other time and/or date as the Company and the Joint
Bookrunners may agree).
Placees will be called upon to subscribe for, and shall
subscribe for, the Open Offer Shares only to the extent that valid
applications by Qualifying Shareholders under the Open Offer are
not received by 11.00 a.m. on 24 June 2020 or if applications have
otherwise not been deemed to be valid in accordance with the
Prospectus and the Application Form.
Payment in full for any Firm Placed Shares and Open Offer Shares
so allocated in respect of the Equity Placings at the Offer Price
must be made by no later than 29 June 2020 (or such other date as
shall be notified to each Placee by the relevant Joint Bookrunner)
on the closing date for the Firm Placing and the closing date for
the Open Offer, respectively (or such other time and/or date as the
Company and the Joint Bookrunners may agree). The Joint Bookrunners
will notify Placees if any of the dates in these terms and
conditions should change, including as a result of delay in the
posting of the Prospectus, the Application Forms or the crediting
of the Open Offer Entitlements in CREST or the production of a
supplementary prospectus or otherwise.
Lock-up
The Company has undertaken to the Joint Bookrunners that,
between the date of the Placing Agreement and 90 calendar days
after Admission, it will not, without the prior written consent of
the Joint Bookrunners enter into certain transactions involving or
relating to the Shares, subject to certain customary carve-outs
agreed between the Joint Bookrunners and the Company.
By participating in the Firm Placing and/or the Placing, Placees
agree that the exercise by the Joint Bookrunners of any power to
grant consent to waive the undertaking by the Company of a
transaction which would otherwise be subject to the lock-up under
the Placing Agreement shall be within the absolute discretion of
the Joint Bookrunners and that they need not make any reference to,
or consult with, Placees and that they shall have no liability to
Placees whatsoever in connection with any such exercise of the
power to grant consent.
Registration and Settlement
Settlement of transactions in the Placing Shares following
Admission will take place within the CREST system, subject to
certain exceptions. The Joint Bookrunners and the Company reserve
the right to require settlement for, and delivery of, the Placing
Shares to Placees by such other means that they deem necessary if
delivery or settlement is not possible or practicable within the
CREST system within the timetable set out in the Preliminary
Prospectus and/or Prospectus or would not be consistent with the
regulatory requirements in the Placee's jurisdiction. Each Placee
will be deemed to agree that it will do all things necessary to
ensure that delivery and payment is completed in accordance with
either the standing CREST or certificated settlement instructions
which they have in place with the relevant Joint Bookrunner.
Settlement for the Equity Placings will be on a T+2 and delivery
versus payment basis and settlement is expected to take place on or
around 29 June 2020. Each Placee is deemed to agree that if it does
not comply with these obligations, the Joint Bookrunners may sell
any or all of the Placing Shares allocated to it on its behalf and
retain from the proceeds, for its own account and benefit, an
amount equal to the aggregate amount owed by the Placee. By
communicating a bid for Placing Shares, each Placee confers on the
Joint Bookrunners all such authorities and powers necessary to
carry out any such sale and agrees to ratify and confirm all
actions which the Joint Bookrunners lawfully take in pursuance of
such sale. 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 which may arise
upon any transaction in the Placing Shares on such Placee's
behalf.
Acceptance
By participating in the Equity Placings, a Placee (and any
person acting on such Placee's behalf) irrevocably acknowledges,
confirms, undertakes, represents, warrants and agrees (as the case
may be) with the Joint Bookrunners and the Company, the
following:
1. in consideration of its allocation of a placing
participation, to subscribe at the Offer Price for any Placing
Shares comprised in its allocation for which it is required to
subscribe pursuant to these terms and conditions, subject in
respect of the conditional Placing only to clawback of the Open
Offer Shares in respect of valid applications from Qualifying
Shareholders in the Open Offer;
2. it has read and understood this announcement (including these
terms and conditions), the Preliminary Prospectus and the Pricing
Announcement in their entirety and that (i) it has neither received
nor relied on any information given or any investigations,
representations, warranties or statements made at any time by any
person in connection with Admission, the Equity Placings, the
Company, the New Shares, or otherwise, other than the information
contained in this announcement (including these terms and
conditions), the Preliminary Prospectus and the Pricing
Announcement that in accepting the offer of its placing
participation it will be relying solely on the information
contained in this announcement (including these terms and
conditions), the Preliminary Prospectus and the Pricing
Announcement, receipt of which is hereby acknowledged, and
undertakes not to redistribute or duplicate such documents;
3. its oral or written commitment will be made solely on the
basis of the information set out in this announcement, the
Preliminary Prospectus and the Pricing Announcement, such
information being all that such Placee deems necessary or
appropriate and sufficient to make an investment decision in
respect of the Placing Shares and that it has neither received nor
relied on any other information given, or representations or
warranties or statements made, by or on behalf of any of the Joint
Bookrunners or the Company nor any of their respective affiliates
and none of the Joint Bookrunners nor the Company nor any of their
respective affiliates shall be liable for any Placee's decision to
participate in the Equity Placings based on any other information,
representation, warranty or statement;
4. the content of this announcement, these terms and conditions,
the Preliminary Prospectus and the Pricing Announcement are
exclusively the responsibility of the Company and agrees that none
of the Joint Bookrunners nor any of their affiliates nor any person
acting on behalf of any of such persons will be responsible for or
shall have liability for any information, representation or
statements contained therein or any information previously
published by or on behalf of the Company, and none of the Joint
Bookrunners nor the Company nor any of their respective affiliates
or any person acting on behalf of any such person will be
responsible or liable for a Placee's decision to accept its placing
participation;
5. (i) it has not relied on, and will not rely on, any
information relating to the Company contained or which may be
contained in any research report or investor presentation prepared
or which may be prepared by any of the Joint Bookrunners or any of
their affiliates; (ii) none of the Joint Bookrunners nor any of
their affiliates nor any person acting on behalf of any of such
persons has or shall have any responsibility or liability for
public information relating to the Company; (iii) none of the Joint
Bookrunners nor any of its affiliates nor any person acting on
behalf of any of such persons has or shall have any responsibility
or liability for any additional information that has otherwise been
made available to it, whether at the date of publication of such
information, the date of these terms and conditions or otherwise;
and that (iv) none of the Joint Bookrunners nor any of their
affiliates nor any person acting on behalf of any of such persons
makes any representation or warranty, express or implied, as to the
truth, accuracy or completeness of any such information referred to
in (i) to (iii) above, whether at the date of publication of such
information, the date of this announcement or otherwise;
6. it has made its own assessment of the Company and has relied
on its own investigation of the business, financial or other
position of the Company in deciding to participate in the Equity
Placings, and has satisfied itself concerning the relevant tax,
legal, currency and other economic considerations relevant to its
decision to participate in the Firm Placing and/or the Placing;
7. it is acting as principal only in respect of the Equity
Placings or, if it is acting for any other person (i) it is duly
authorised to do so and has full power to make the
acknowledgements, representations and agreements herein on behalf
of each such person, (ii) it is and will remain liable to the
Company and the Joint Bookrunners for the performance of all its
obligations as a Placee in respect of the Equity Placings
(regardless of the fact that it is acting for another person);
8. it is a Relevant Person and undertakes that it will acquire,
hold, manage or dispose of any Placing Shares that are allocated to
it for the purposes of its business; and/or if it is a financial
intermediary, as that term is used in Article 5(1) of the
Prospectus Regulation, that (i) the Placing Shares acquired by
and/or subscribed for by it in the Equity Placings will not be
acquired and/or subscribed for on a non-discretionary basis on
behalf of, nor will they be acquired or subscribed for with a view
to their offer or resale to, persons in a member state of the EEA
or the UK other than Qualified Investors, or in circumstances which
may give rise to an offer of securities to the public other than an
offer or resale, in a member state of the EEA which has implemented
the Prospectus Regulation, to Qualified Investors, or in
circumstances in which the prior consent of the Joint Bookrunners
has been given to each such proposed offer or resale; or (ii) where
the Placing Shares have been acquired or subscribed for by it on
behalf of persons in any member state of the EEA or the United
Kingdom other than Qualified Investors, the offer of those Placing
Shares to it is not treated under the Prospectus Regulation as
having been made to such persons;
9. if it has received any "inside information" (as defined in EU
Regulation No. 596/2014) about the Company in advance of the Equity
Placings, it has not (i) dealt in the securities of the Company;
(ii) encouraged or required another person to deal in the
securities of the Company; or (iii) disclosed such information to
any person, prior to the information being made generally
available;
10. it has complied with its obligations in connection with
money laundering and terrorist financing under the Proceeds of
Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and
the Money Laundering, Terrorist Financing and Transfer of Funds
(Information on the Payer) 2017 Regulations and the Criminal
Justice (Money Laundering and Terrorism Financing) Act 2010 and any
related or similar rules, regulations or guidelines, issued,
administered or enforced by any government agency having
jurisdiction in respect thereof (the "AML Regulations") and, if it
is making payment on behalf of a third party, it has obtained and
recorded satisfactory evidence to verify the identity of the third
party as may be required by the AML Regulations;
11. it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances
in which section 21(1) of FSMA does not require approval of the
communication by an authorised person;
12. it is not acting in concert (within the meaning given in the
City Code on Takeovers and Mergers) with any other Placee or any
other person in relation to the Company;
13. it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the Placing Shares in, from or otherwise involving the
United Kingdom;
14. it and any person acting on its behalf is entitled to
acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has all necessary capacity and has
obtained all necessary consents and authorities to enable it to
commit to this participation in the Equity Placings and to perform
its obligations in relation thereto (including, without limitation,
in the case of any person on whose behalf it is acting, all
necessary consents and authorities to agree to the terms set out or
referred to in these terms and conditions);
15. unless otherwise agreed by the Company (after agreement with
the Joint Bookrunners), it is not, and at the time the Placing
Shares are subscribed for and purchased will not be, subscribing
for and on behalf of a resident of the United States or any
Excluded Territory and further acknowledges that the Placing Shares
have not been and will not be registered under the securities
legislation of any Restricted Jurisdiction and, subject to certain
exceptions, may not be offered, sold, transferred, delivered or
distributed, directly or indirectly, in or into those
jurisdictions;
16. it does not expect the Joint Bookrunners to have any duties
or responsibilities towards it for providing protections afforded
to clients under the rules of the FCA Handbook (the "Rules") or
advising it with regard to the Placing Shares and that it is not,
and will not be, a client of any of the Joint Bookrunners as
defined by the Rules. Likewise, any payment by it will not be
treated as client money governed by the Rules;
17. any exercise by the Joint Bookrunners of any right to
terminate the Placing Agreement or of other rights or discretions
under the Placing Agreement or the Equity Placings shall be within
that the Joint Bookrunners absolute discretion and neither of the
Joint Bookrunners shall have any liability to it whatsoever in
relation to any decision to exercise or not to exercise any such
right or the timing thereof;
18. neither it, nor the person specified by it for registration
as a holder of Placing Shares is, or is acting as nominee(s) or
agent(s) for, and that the Placing Shares will not be issued to, a
person/person(s) whose business either is or includes issuing
depository receipts or the provision of clearance services and
therefore that the issue to the Placee, or the person specified by
the Placee for registration as holder, of the Placing Shares will
not give rise to a liability under any of sections 67, 70, 93 and
96 of the Finance Act 1986 (depositary receipts and clearance
services) and that the Placing Shares are not being acquired in
connection with arrangements to issue depository receipts or to
issue or transfer Placing Shares into a clearance system;
19. it has the funds available to pay for, and will make payment
to the Joint Bookrunners (as the Joint Bookrunners may direct) for,
the Placing Shares allocated to it in accordance with the terms and
conditions of this announcement on the due times and dates set out
in this announcement, failing which the relevant Placing Shares may
be sold to or placed with other persons on such terms as the Joint
Bookrunners determine in their absolute discretion without
liability to the Placee and on the basis that such Placee will
remain liable for any shortfall below the net proceeds of such sale
and the placing proceeds of such Placing Shares and may be required
to bear any stamp duty or stamp duty reserve tax (together with any
interest or penalties due pursuant to the terms set out or referred
to in this announcement) which may arise upon the sale of such
Placee's Placing Shares on its behalf;
20. the person who it specifies for registration as holder of
the Placing Shares will be (i) itself or (ii) its nominee, as the
case may be, and acknowledges that the Joint Bookrunners and the
Company will not be responsible for any liability to pay stamp duty
or stamp duty reserve tax (together with interest and penalties)
resulting from a failure to observe this requirement; and each
Placee and any person acting on behalf of such Placee agrees to
participate in the Equity Placings on the basis that the Placing
Shares will be credited to a CREST stock account of one of the
Joint Bookrunners who will hold them as nominee on behalf of the
Placee until settlement in accordance with its standing settlement
instructions with it;
21. where it is acquiring Placing Shares for one or more managed
accounts, it is authorised in writing by each managed account to
acquire Placing Shares for that managed account;
22. if it is a pension fund or investment company, its
acquisition of any Placing Shares is in full compliance with
applicable laws and regulations;
23. it has not offered or sold and will not offer or sell any
New Shares to persons in the United Kingdom, except to persons
whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for
the purposes of their business or otherwise in circumstances which
have not resulted and which will not result in an offer to the
public in the United Kingdom within the meaning of section 85(1) of
the FSMA;
24. it has not offered or sold and will not offer or sell any
New Shares to persons in any member state of the EEA prior to
Admission except to persons whose ordinary activities involve them
acquiring, holding, managing or disposing of investments (as
principal or agent) for the purpose of their business or otherwise
in circumstances which have not resulted and will not result in an
offer to the public in any member state of the EEA within the
meaning of the Prospectus Regulation;
25. participation in the Equity Placings is on the basis that,
for the purposes of the Equity Placings, it is not and will not be
a client of either of the Joint Bookrunners and that none of the
Joint Bookrunner have any duties or responsibilities to it for
providing the protections afforded to their clients nor for
providing advice in relation to the Equity Placings nor in respect
of any representations, warranties, undertakings or indemnities
contained in the Placing Agreement or the contents of these terms
and conditions;
26. to provide the Joint Bookrunners with such relevant
documents as they may reasonably request to comply with requests or
requirements that either they or the Company may receive from
relevant regulators in relation to the Equity Placings, subject to
its legal, regulatory and compliance requirements and
restrictions;
27. any agreements entered into by it pursuant to these terms
and conditions and any noncontractual obligations arising out of or
in connection with such agreement shall be governed by and
construed in accordance with the laws of England and Wales and it
submits (on its behalf and on behalf of any Placee 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 Joint
Bookrunners 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;
28. to fully and effectively indemnify and hold harmless the
Company and the Joint Bookrunners and each of their respective
affiliates (as defined in Rule 501(b) under the Securities Act) and
each person, if any, who controls any Joint Bookrunner within the
meaning of Section 15 of the Securities Act or Section 20 of the US
Securities Exchange Act of 1934, as amended, and any such person's
respective affiliates, subsidiaries, branches, associates and
holding companies, and in each case their respective directors,
employees, officers and agents (each, an "Indemnified Person") from
and against any and all losses, claims, damages, liabilities and
expenses (including legal fees and expenses) (i) arising from any
breach by such Placee of any of the provisions of these terms and
conditions and (ii) incurred by any Indemnified Person arising from
the performance of the Placee's obligations as set out in these
terms and conditions;
29. in making any decision to subscribe for Placing Shares: (i)
it has knowledge and experience in financial, business and
international investment matters as is required to evaluate the
merits and risks of acquiring the Placing Shares; (ii) it is
experienced in investing in securities of this nature and is aware
that it may be required to bear, and is able to bear, the economic
risk of, and is able to sustain a complete loss in connection with,
the Placing; (iii) it has relied on its own examination, due
diligence and analysis of the Company and its affiliates taken as a
whole (including the markets in which the Group operates) and the
terms of the Equity Placings (including the merits and risks
involved); (iv) it has had sufficient time to consider and conduct
its own investigation with respect to the offer and purchase of the
Placing Shares, including the legal, regulatory, tax, business,
currency and other economic and financial considerations relevant
to such investment; and (v) will not look to the Joint Bookrunners,
any of their respective affiliates or any person acting on their
behalf for all or part of any such loss or losses it or they may
suffer;
30. the Joint Bookrunners and the Company and their respective
affiliates and others will rely upon the truth and accuracy of the
foregoing representations, warranties, acknowledgments and
undertakings which are irrevocable; and
31. its commitment to acquire Placing Shares will continue
notwithstanding any amendment that may in future be made to the
terms and conditions of the Firm Placing and/or the Placing, and
that Placees will have no right to be consulted or require that
their consent be obtained with respect to the Company's or the
Joint Bookrunners' conduct of the Firm Placing and/or the
Placing.
Please also note that the agreement to allot and issue Placing
Shares to Placees (or the persons for whom Placees are contracting
as agent) free of stamp duty and stamp duty reserve tax in the UK
relates only to their allotment and issue to Placees, or such
persons as they nominate as their agents, direct from the Company
for the Placing Shares in question. Furthermore, each Placee agrees
to indemnify on an after-tax basis and hold each of the Joint
Bookrunners and/or the Company and their respective affiliates
harmless from any and all stamp duty, stamp duty reserve tax and
all other similar duties or taxes to the extent that such taxes,
interest, fines or penalties arise from the unreasonable default or
delay of that Placee or its agent or from a breach or inaccuracy of
the foregoing representations, warranties, acknowledgements and
undertakings of that Placee or its agent. In addition, Placees
should note that they will be liable for any capital duty, 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 acquisition by them of any
Placing Shares or the agreement by them to acquire any Placing
Shares.
Selling Restrictions
By participating in the Equity Placings, a Placee (and any
person acting on such Placee's behalf) irrevocably acknowledges,
confirms, undertakes, represents, warrants and agrees (as the case
may be) with the Joint Bookrunners and the Company, the
following:
1. it is not a person who has a registered address in, or is a
resident, citizen or national of, a country or countries, in which
it is unlawful to make or accept an offer to subscribe for Placing
Shares;
2. it has fully observed and will fully observe the applicable
laws of any relevant territory, including complying with the
selling restrictions set out herein and obtaining any requisite
governmental or other consents and it has fully observed and will
fully observe any other requisite formalities and pay any issue,
transfer or other taxes due in such territories;
3. if it is in the United Kingdom, it is a Qualified Investor
(i) who has professional experience in matters relating to
investments and who falls within the definition of "investment
professionals" in Article 19(5) of the Order; or (ii) who falls
within Article 49(2) of the Order;
4. if it is in a member state of the EEA, it is a Qualified Investor;
5. it is a person whose ordinary activities involve it (as
principal or agent) in acquiring, holding, managing or disposing of
investments for the purpose of its business and it undertakes that
it will (as principal or agent) acquire, hold, manage or dispose of
any Placing Shares that are allocated to it for the purposes of its
business, in each case, not with a view to, or for resale in
connection with, the distribution thereof, in or into the United
States within the meaning of US securities laws;
6. it is and, at the time the Placing Shares are purchased, will be either:
(i) outside the United States, acquiring the Placing Shares in
an offshore transaction in accordance with Regulation S; not a
resident of any Excluded Territory or a corporation, partnership or
other entity organised under the laws of any Excluded Territory;
subscribing for Placing Shares for its own account (or for the
account of its affiliates or funds managed by the Placee or its
affiliates with respect to which the Placee either has investment
discretion or which are outside the United States); or
(ii) a QIB that makes each of the representations, warranties,
acknowledgements and agreements set out in paragraph 9 below;
7. none of the Placing Shares have been or will be registered
under the Securities Act or with any securities regulatory
authority of any state or other jurisdiction of the United
States;
8. that the offer and sale of the Placing Shares is being made
in reliance on an exemption from the registration requirements of
the Securities Act and acknowledge and agree that, for so long as
the Placing Shares are "restricted securities" within the meaning
of Rule 144(a)(3) under the Securities Act, none may be offered,
sold or pledged or otherwise transferred except in an offshore
transaction in accordance with the applicable requirements of
Regulation S or pursuant to another applicable exemption from
registration under the Securities Act, and in each case in
accordance with any applicable securities laws of any state of the
United States and the laws of other jurisdictions. The Placee
understand that no representation has been made as to the
availability of any exemption under the Securities Act for the
reoffer, resale, pledge or transfer of the Placing Shares, which
may be further subject to the applicable restrictions on transfer
of the Placing Shares set forth in this form of confirmation;
and
9 it (on its behalf and on behalf of any Placee on whose behalf
it is acting) has (a) fully observed the laws of all relevant
jurisdictions which apply to it; (b) obtained all governmental and
other consents which may be required; (c) fully observed any other
requisite formalities; (d) paid or will pay any issue, transfer or
other taxes; (e) not taken any action which will or may result in
the Company or the Joint Bookrunners (or any of them) being in
breach of a legal or regulatory requirement of any territory in
connection with the Equity Placings; (f) obtained all other
necessary consents and authorities required to enable it to give
its commitment to subscribe for the relevant Placing Shares; and
(g) the power and capacity to, and will, perform its obligations
under the terms contained in these terms and conditions.
Miscellaneous
If a Placee is entitled to participate in the Open Offer by
virtue of being a Qualifying Shareholder it will be able to apply
to subscribe for Open Offer Shares under the terms and conditions
of the Open Offer. Unless otherwise agreed with the Joint
Bookrunners, any participation by a Placee as a Qualifying
Shareholder in the Open Offer will not reduce such Placee's
commitment in respect of its participation in the Firm Placing
and/or Placing.
The Company reserves the right to treat as invalid any
application or purported application for Placing Shares that
appears to the Company or its agents to have been executed,
effected or dispatched from the United States or any Excluded
Territory or in a manner that may involve a breach of the laws or
regulations of any jurisdiction or if the Company or its agents
believe that the same may violate applicable legal or regulatory
requirements or if it provides an address for delivery of the share
certificates of Placing Shares in, or in the case of a credit of
Open Offer Entitlements to a stock account in CREST, to a CREST
member whose registered address would be in, the United States, any
Excluded Territory or any other jurisdiction outside the United
Kingdom in which it would be unlawful to deliver such share
certificates or make such a credit.
When a Placee or person acting on behalf of the Placee is
dealing with any of the Joint Bookrunners, any money held in an
account with any of the Joint Bookrunners 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 the Joint Bookrunners' money in accordance with the
client money rules and will be used by each Joint Bookrunner in the
course of its own business; and the Placee will rank only as a
general creditor of the relevant Joint Bookrunner.
Times
Unless the context otherwise requires, all references to time
are to London time. All times and dates in these terms and
conditions may be subject to amendment. The Joint Bookrunners will
notify Placees and any persons acting on behalf of the Placees of
any changes.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCEAKKLEFKEEFA
(END) Dow Jones Newswires
June 04, 2020 13:07 ET (17:07 GMT)
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