TIDMTSL
RNS Number : 1709W
ThinkSmart Limited
20 December 2021
20 December 2021
ThinkSmart Limited
("ThinkSmart" or the "Company" which together with its
subsidiaries is the "Group")
Proposed sale of shareholding in Clearpay to Afterpay
ThinkSmart Limited (AIM: TSL), a specialist digital payments
platform business, today announces that it has agreed terms with
Afterpay for ThinkSmart's subsidiary, ThinkSmart Europe, to sell
its 10% holding in Clearpay in exchange for 1,650,000 shares in
Afterpay, subject to the approval of ThinkSmart shareholders.
The Board believes this exchange of ThinkSmart's interest in
Clearpay for the Consideration Shares represents a strong outcome
for ThinkSmart shareholders and removes the uncertainty of the
independent valuation process which could occur any time, at the
election of Afterpay, after the change of control of Afterpay
arising from the proposed takeover by Block (formerly Square, Inc)
which is expected to occur in Q1 calendar 2022.
In agreeing to these terms, the Board is looking through the
current market volatility and is focusing and prioritising on both
the volume and the ratio of shares in the exchange. The final ratio
of shares agreed is equivalent to that prevailing at the point of
the announcement of the Block takeover of Afterpay.
-- Based on the Block closing share price on 17 December 2021,
and the agreed ratio of 0.375 Block shares for every Afterpay share
(and using 1.3239 USD:1 GBP) on implementation of the Scheme, the
Consideration Shares equate to a value of GBP78.1m which, together
with the GBP6.5m of cash and other assets (being GBP9.5m of net
assets at 30 June 2021 less GBP3m returned to shareholders on 8
December 2021) equates to GBP84.6m
-- This is broadly in line with ThinkSmart's closing market
capitalisation on 17 December 2021 of GBP86.3m
-- Block share price on 17 December closed 30% below its average
since 2 August 2021 but despite this recent reduction in the value
of Block shares the Directors believe there is significant
potential for future value accretion
Ned Montarello, Executive Chairman of ThinkSmart, said "We
believe this outcome provides our shareholders with an opportunity
to continue the exciting Afterpay journey now directly with Block
and we as a Board see continued long term value accretion with this
outcome."
The Disposal will be put to a vote of ThinkSmart shareholders at
a meeting on 14 January 2022 and is unanimously supported by the
Board.
The Directors consider the Disposal to be in the best interests
of the Company and ThinkSmart shareholders as a whole and
unanimously recommend that shareholders vote in favour of the
Disposal, as they intend to do in respect of their own beneficial
holdings amounting to, in aggregate, 44,022,458 Ordinary Shares
representing approximately 41.30% of the Company's issued share
capital.
The Disposal is conditional upon ThinkSmart shareholder approval
being obtained at the General Meeting which is to be held virtually
by videoconference at 4.30pm (AWST) and 8.30am (GMT) on Friday 14
January 2022.
The Circular, including the Notice, will shortly be posted to
Shareholders and a copy will also be made available to view on the
Company's website at www.thinksmartworld.com .
Prior to publication the information communicated in this
announcement was deemed by the Company to constitute inside
information for the purposes of article 7 of the Market Abuse
Regulations (EU) No 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations No 2019/310 ('MAR').
With the publication of this announcement, this information is now
considered to be in the public domain.
For further information please contact:
ThinkSmart Limited Via Buchanan
Ned Montarello
Canaccord Genuity Ltd (Nominated Adviser
and Broker)
Sunil Duggal
Andrew Potts
Tom Diehl +44 (0)20 7523 8350
Buchanan
Giles Stewart
Chris Lane
Toto Berger +44 20 7466 5000
Additional Information
The following are extracts from the Company's Circular to
Shareholders which will be made available in due course.
1. Introduction
The Company announced today that it and its subsidiary,
ThinkSmart Europe, have entered into a conditional agreement with
Afterpay pursuant to which ThinkSmart Europe has agreed to sell the
Clearpay Shares to Afterpay in consideration of the issue and
allotment to it of the Consideration Shares.
As a consequence of the size of the consideration arising from
the Disposal relative to the Company's market capitalisation,
pursuant to Rule 15 of the AIM Rules, the Disposal is deemed to
constitute a disposal resulting in a fundamental change of business
of the Company, which requires the approval, by way of an ordinary
resolution, of the ThinkSmart shareholders at the General
Meeting.
2. Impact of COVID-19 on the General Meeting
Due to the uncertainty caused by the evolving COVID-19 situation
the General Meeting will be held in accordance with the Treasury
Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) and the Company
will conduct the General Meeting via live videoconference with
shareholders (and their proxies) being able to cast votes in real
time during the General Meeting via Lumi voting software.
Alternatively, shareholders may vote by lodging a Proxy Form by the
required cut-off time which will be set out in the Notice of
General Meeting. Depositary Interests ("DIs") Holders may attend
the Meeting via the live videoconference but will not be permitted
to vote at the General Meeting. For their votes to be counted, DI
Holders must submit their CREST Voting Instruction to the Company's
agent by the required cut-off time that will be set out in the
Notice of General Meeting. Alternatively, DI holders can vote using
a Form of Instruction as per the instruction that will be set out
in the Notice of General Meeting.
3. Background to and reasons for Disposal
Pursuant to the terms of a sale and purchase agreement dated 22
August 2018 and made between Afterpay, ThinkSmart Europe and the
Company (the "Clearpay SPA"), ThinkSmart Europe sold 90% of its
shareholding in Clearpay to Afterpay for a consideration of
1,000,000 shares in the capital of Afterpay (which at the time of
the 23 August 2018 announcement was valued at AUD$18.55m) and
retained the Clearpay Shares. The retained Clearpay Shares were
subject to a put and call option in the Clearpay SPA which was
disclosed in the Company's 23 August 2018 announcement and various
announcements subsequent to that date.
The value of the Afterpay group and of the Clearpay Shares has
risen significantly since then as Shareholders have seen by the
increase in fair value that the Directors have recognised in recent
financial statements published by the Company, and earlier this
year Afterpay agreed the terms of a takeover by Block, Inc.
(formerly Square, Inc. "Block") such takeover to be effected by way
of the Scheme.
Under the Clearpay SPA, there was a put and call option relating
to the Clearpay Shares which enabled Afterpay or ThinkSmart Europe
to buy or sell the Clearpay Shares in certain circumstances. As
announced on 2 August 2021, the planned takeover of Afterpay by
Block will give Afterpay the right to bring forward its call option
and exercise it anytime following the change of control occurring.
If Afterpay has not exercised the call option by 23 February 2024
then ThinkSmart Europe could exercise the put option.
However, Afterpay has approached the Company with a view to
agreeing the terms on which the Clearpay Shares can be sold to
Afterpay outside of the terms of the Clearpay SPA, and I am pleased
to be able to let you know that Afterpay, ThinkSmart and ThinkSmart
Europe have now agreed that Afterpay will acquire the Clearpay
Shares in consideration for the issue and allotment to ThinkSmart
Europe of the Consideration Shares, being 1,650,000 fully paid
ordinary shares in the capital of Afterpay. The parties have
entered into the ThinkSmart SPA to give effect to this agreement.
The Disposal removes uncertainty regarding the timing of when
Afterpay may exercise their call option and also the exercise price
that may be determined at that time from the valuation process,
together with any impact that any post-takeover restructuring may
have on the future value of Clearpay. The Disposal also removes the
uncertainty and possible delay that could arise under the terms of
the valuation mechanism set out in the put and call options.
Based on the closing share price of Afterpay on 17 December 2021
of AUD$82.67 (and using 1.8575 AUD: 1 GBP) the Consideration Shares
would have a market value of GBP73.4m. Pursuant to the terms of the
Scheme, Afterpay's shares will be converted to Block shares at the
ratio of 0.375 Block shares for every Afterpay share on
implementation of the Scheme. At this ratio and based on the Block
closing share price on 17 December 2021 of US$167.06 (and using
1.3239 USD:1 GBP) then the 1.65m Afterpay Consideration Shares
equate to a market value of GBP78.1m. Reflecting the recent fall in
the value of both Afterpay and Block's share price, along with most
fintech stocks, and instead using the average volume weighted Block
share price since the proposed takeover of Afterpay was announced
on 2 August 2021 of US$238 (and using 1.3239 USD:1 GBP) then the
value of the Consideration Shares equate to GBP108m. Despite this
recent reduction in the value of Block shares the Directors believe
there is significant potential for future value accretion.
Based on the closing share price of ThinkSmart on 17 December
2021 of 81 pence this equates to a market capitalisation of
GBP86.3m, or GBP79.8m excluding cash and other assets of GBP6.5m
(being GBP9.5m at 30 June 2021 less the GBP3m capital and dividend
return paid on 8 December 2021). The accounting fair value of the
Clearpay Shares is a book value of GBP125m at the 30 June 2021
valuation, however there has been a 31% reduction in the Afterpay
GBP equivalent share price from 30 June 2021 to 17 December 2021.
As noted in ThinkSmart's FY21 annual report, Afterpay valued its
put option liability at AUD$99.9m (cGBP54.2m) at 30 June 2021.
Provided that ThinkSmart shareholder approval is obtained, 1.65m
Afterpay shares will be issued to ThinkSmart before the earliest
possible record date for the Scheme, being 21 January 2022, which
means that the Consideration Shares will then be acquired on
implementation of the Scheme and ThinkSmart Europe will become a
shareholder in Block.
The Disposal is not subject to or conditional upon the
implementation of the Scheme. However, if ThinkSmart does not
obtain shareholder approval for the Disposal on or before 17
January 2022 the ThinkSmart SPA cannot be completed and the put and
call option contained in the Clearpay SPA will remain in force on
its current terms. Similarly, on completion of the ThinkSmart SPA
the put and call option will expire and be of no further force and
effect. If Shareholder approval is obtained but the Block Scheme is
not implemented, ThinkSmart Europe will retain the Consideration
Shares and remain a shareholder in Afterpay.
In addition, whilst under the terms of the Clearpay SPA there
was a requirement for ThinkSmart to share up to 35 per cent. of the
consideration received under the Clearpay SPA with the Clearpay
ESOP holders, it should be noted that as part of the Disposal it
has been agreed that any options granted under the ESOP for
Clearpay shares will be satisfied by the issue and allotment of new
shares in the capital of Afterpay by Afterpay and will not impact
the Consideration Shares, and as a result the Clearpay SPA will no
longer be effective and ThinkSmart will have no obligations with
regards to the ESOP under the Disposal.
The Board therefore believes the Disposal represents a strong
outcome for ThinkSmart shareholders in terms of the number of
Afterpay shares being received and also by removing the
uncertainties referred to above whilst giving ThinkSmart the
ability to continue to benefit from any future accretion in the
value of Afterpay, and Block post-takeover, with the flexibility to
realise this value at any time. There are no restrictions on
ThinkSmart Europe's ability to sell the Consideration Shares and
any shares derived therefrom as part of the Scheme.
In agreeing to these terms, the Board is looking through the
current market volatility and is focusing and prioritising on both
the volume and the ratio of shares in the exchange. The final ratio
of shares agreed is equivalent to that prevailing at the point of
the announcement of the Block takeover of Afterpay.
In accordance with the disclosure requirements of Schedule 4 of
the AIM Rules the particulars of the Disposal and the name of the
buyer of the Clearpay Shares have been summarised earlier in this
section. The assets which are subject to the Disposal are the
Clearpay Shares, and the profits attributable to the Clearpay
Shares are a GBP71.37m non-cash fair value gain reported in the
Company's 30 June 2021 annual financial statements. The value of
the Clearpay Shares in accordance with the Disposal is GBP73.4
million (based on closing price of Afterpay shares on 17 December
2021 price), which differs from the book value reported in the
Company's 30 June 2021 financial statement of GBP125m, and the
reasons for the difference are described above.
The effect on the Company is that it will receive the
Consideration Shares for its Clearpay Shares, which, assuming the
Scheme is implemented, will be exchanged for 618,750 Block shares
which based on the closing price of Block shares on 17 December
2021 (using 1.3239 USD:1 GBP) is GBP78.1m. Both Block and Afterpay
are companies with publicly traded shares that are listed on stock
exchanges.
The application of the sale proceeds is described below in
section 4.
On completion of the ThinkSmart SPA Ned Montarello will resign
as a director of Clearpay.
4. Use of Proceeds
As described above the Company will receive Consideration Shares
as consideration for the sale of the Clearpay Shares. Assuming that
the takeover of Afterpay by Block ("Scheme") proceeds, the Company
will receive 618,750 Block shares in exchange for the Consideration
Shares. At the date of this announcement, the Directors have not
determined the future strategy regarding the shareholding in
Afterpay, or Block if the Scheme is implemented, and whether they
will retain such shareholding or seek to sell such shareholding.
Accordingly, approval will be sought at the General Meeting to give
the Directors authority to deal with the Consideration Shares, or
Block shares if the Scheme proceeds, in such manner as they see
fit.
However, it is expected that in due course the Directors will
seek to return value to shareholders once a form of return of value
has been determined by the Board, mindful of the Company's existing
operating businesses and future cash requirements to meet running
costs.
5. Strategy for the Continuing Group
The Company's operating business is the managed wind-down of the
leasing business and the provision of the outsourced call centre
customer service and support service to Clearpay. Both of these
businesses are expected to continue notwithstanding the Disposal.
The Company intends to return any surplus cash, whether from the
sale of the Consideration Shares, or the Block shares if the Scheme
proceeds, or from its operating business, to shareholders as
quickly and tax efficiently as possible.
6. Information on Afterpay and Block
The buyer of the Clearpay Shares is Afterpay. As announced by
the Company on 2 August 2021 and 14 December 2021, Block is to
acquire Afterpay by way of the Scheme. Block is listed on the New
York Stock Exchange (NYSE: SQ). Afterpay is listed on the
Australian Stock Exchange (ASX: APT).
7. General Meeting
The Disposal is conditional upon, amongst other things,
ThinkSmart shareholder approval being obtained at the General
Meeting which is to be held virtually at 4.30pm (AWST) and 8.30am
(GMT) on Friday 14 January 2022.
8. Directors' Recommendation
The Directors consider the Disposal to be in the best interests
of the Company and the Shareholders as a whole and unanimously
recommend the Shareholders vote in favour of the Resolution, as
they intend to do in respect of their own beneficial holdings
amounting to, in aggregate, 44,022,458 Ordinary Shares representing
approximately 41.30% of the Company's issued share capital.
DEFINITIONS
The following definitions and technical terms apply throughout
this document, unless the context otherwise requires:
"Afterpay" Afterpay Limited;
"AIM" the AIM market, being a market of that name and operated
by the London Stock Exchange;
"AIM Rules" the AIM Rules for Companies (as amended from time to
time);
"Board" or "Directors" the board of directors of the
Company;
"Circular" this document, containing details of the
Disposal;
"Clearpay" Clearpay Finance Limited;
"Clearpay Shares" the 6,000,000 fully paid B ordinary shares of
GBP0.01 each in the capital of Clearpay held by ThinkSmart
Europe;
"Completion" completion of the Disposal expected to occur on or
about 20 January 2022;
"Consideration Shares" the 1,650,000 fully paid ordinary shares
in the capital of Afterpay to be allotted to ThinkSmart Europe in
consideration for the sale by it to Afterpay of its shareholding in
Clearpay;
"Disposal" the proposed sale of ThinkSmart Europe's remaining
interest in Clearpay;
"ESOP" the employee share ownership plan in relation to
Clearpay;
"General Meeting" the general meeting of the Company to be held
virtually at 8.30am (GMT) and 4.30pm (AWST) on Friday 14 January
2022;
"Group" the Company and its subsidiaries and subsidiary
undertakings;
"Scheme" the scheme of arrangement for the acquisition on a
share for share basis, at a ratio of 0.375 Block shares per
Afterpay share, of Afterpay by Lanai (AU) 2 Pty Ltd, a wholly owned
indirect subsidiary of Block, Inc. dated 2 August 2021, as amended
on 7 December 2021, and which became legally effective on 17
December 2021;
"Shareholders" holders of Ordinary Shares;
"ThinkSmart" or "Company" ThinkSmart Limited; and
"ThinkSmart SPA" the conditional sale and purchase agreement
relating to the sale of the Clearpay Shares.
Notes to Editors
About ThinkSmart Limited
ThinkSmart is a specialist digital payments platform business.
It offers investors unique exposure to the UK 'Buy Now Pay Later'
payments sector undergoing exponential growth, driven by ongoing
digital transformation of consumer shopping habits and financial
services.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
DISEAXAEADPFFEA
(END) Dow Jones Newswires
December 20, 2021 02:39 ET (07:39 GMT)
Grafico Azioni Thinksmart (LSE:TSL)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Thinksmart (LSE:TSL)
Storico
Da Lug 2023 a Lug 2024
