TIDMQRT
RNS Number : 9571Z
Quarto Group Inc
16 January 2020
THIS ANNOUNCEMENT (INCLUDING THE APPIX) AND THE INFORMATION
CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE
OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR
INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE
REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT
WOULD BE UNLAWFUL TO DO SO. FURTHER, THIS ANNOUNCEMENT IS FOR
INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE
ACQUIRE ANY SHARES OR OTHER SECURITIES OF THE QUARTO GROUP INC. IN
THE UNITED STATES (OR TO ANY U.S. PERSON), AUSTRALIA, CANADA,
JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN
WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER
THIS ANNOUNCEMENT NOR ANYTHING CONTAINED HEREIN SHALL FORM THE
BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, ANY SUCH OFFER,
SOLICITATION OR COMMITMENT WHATSOEVER IN ANY OF THOSE
JURISDICTIONS. NO MONEY, SECURITIES OR OTHER CONSIDERATION IS BEING
SOLICITED FROM ANY PERSON IN THOSE JURISDICTIONS AND, IF SENT IN
RESPONSE TO THE INFORMATION CONTAINED HEREIN, WILL NOT BE
ACCEPTED.
This announcement is an advertisement for the purposes of the
Prospectus Regulation Rules and does not constitute a prospectus
and investors must subscribe for or purchase any shares referred to
in this announcement only on the basis of information contained in
the prospectus published by The Quarto Group Inc. later today in
connection with the Open Offer to be made to shareholders
("Prospectus") and not in reliance on this announcement. 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.
A copy of the Prospectus and the Circular (as defined below)
will be, subject to certain access restrictions, available for
inspection on the Company's website (www.quarto.com) and at the
Company's principal place of business being The Old Brewery, 6
Blundell Street, London, N7 9BH. This announcement does not
constitute, and may not be construed as, an offer to sell or an
invitation to purchase, investments of any description, or a
recommendation regarding the issue or the provision of investment
advice by any party.
This announcement contains inside information for the purposes
of the Market Abuse Regulation (596/2014).
The Quarto Group Inc.
("Company", "Quarto" or "Group")
Open Offer to raise GBP13.9 million
Notice of Special Meeting
The Quarto Group Inc., the illustrated book publisher and
distribution group, today announces that it proposes to raise
GBP13.9 million (approximately $18.2 million) in gross proceeds
(GBP12.8 million (approximately $16.7 million) net of expenses) by
the issue of 20,444,550 New Common Shares at 68 pence per New
Common Share by way of an Open Offer to the Company's existing
Shareholders ("Open Offer"). The Open Offer is fully underwritten
by two groups of the Company's Shareholders, namely the Lau
Underwriter and the Giunti Parties (together, "Underwriters").
The Company will shortly send Qualifying Shareholders a
Prospectus setting out the details of, and reasons for, and the
procedures for participating in, the Open Offer. The Company will
also send a Circular containing a notice of a Special Meeting, to
be held at 9.30 a.m. on 31 January 2020 at the offices of finnCap
Ltd at 60 New Broad Street, London EC2M 1JJ, to approve certain
Resolutions necessary to implement the Open Offer. The Circular
sets out, inter alia, the reasons why both the Board and the
Independent Committee consider that the Open Offer and the
Resolutions are in the best interests of the Company and the
Shareholders as a whole and explains why both the Board and the
Independent Committee recommend that the Shareholders vote in
favour of the Resolutions as they intend to do in respect of their
own beneficial holdings. The Company has received irrevocable
undertakings to vote in favour of the Resolutions at the Special
Meeting from Shareholders holding, in aggregate, 38.8 per cent. of
the Company's Existing Common Shares.
Background to and reasons for the Open Offer
As reported by the Company in its 2018 Annual Report, the Group
has recently been experiencing a slowdown in its business together
with financial challenges deriving from the level of external bank
debt owed by the Group. As at 30 November 2019, the aggregate size
of the Group's net debt pursuant to the terms of the 2018
Facilities Agreement was $54 million. The Group also owed $13
million to the Lau Parties and Recruit & Company Limited
pursuant to the terms of certain loan instruments (see paragraph
7.1.9 ("Loan Instruments") of Part 15 ("Additional Information") of
the Prospectus for further details). This figure is significantly
higher than expected for a company of the Company's size and
profitability and the Board considers that this debt presents a
risk to the future profitability of the Group and hampers the
ability of the Company to make dividend payments or other returns
to Shareholders.
During November 2018, the Group secured an extension to its bank
facilities to 31 August 2020 which has proved helpful in providing
a stable base from which the Board and the Group have commenced
measures to improve the Group's performance and reduce its debt
(see paragraph 7.1.3 ("2018 Facilities Agreement") of Part 15
("Additional Information") for further details). The Group has
recently been in discussions with the Syndicate to amend the 2018
Facilities Agreement and the Syndicate has agreed to extend the
final repayment date under the 2018 Facilities Agreement to 31 July
2021 and to amend certain of the covenants of the 2018 Facilities
Agreement. These amendments, which are set out in the Amended
Facilities Agreement, will give the Group more certainty and time
to continue to improve business performance. The Amended Facilities
Agreement is conditional upon the Open Offer completing and the
Syndicate being repaid the total net proceeds of the Open Offer.
Therefore, if the Open Offer does not complete, the Amended
Facilities Agreement will terminate and the outstanding amounts
owed to the Syndicate will have to be repaid by the Group by 31
August 2020 pursuant to the terms of the 2018 Facilities Agreement.
The Company is obligated to pay a series of fees to the Agent and
the Security Agent and is required to pay to the Agent (for each
member of the Syndicate) a commitment fee of 40 per cent. of the
then prevailing interest rate margin on the undrawn, uncancelled
amount of each member of the Syndicate's commitment under the RCF.
In connection with the 2018 Facilities Agreement, the Company is
due to pay an unconditional success fee to the Agent, of $1,266,444
payable on the earlier of: (i) 31 August 2020 and (ii) the date on
which all the secured liabilities have been unconditional and
irrevocably paid and discharged in full (as confirmed by the
Agent). A further conditional success fee of $744,967 may be
payable by the Company under the terms of the 2018 Facilities
Agreement. However, if the Open Offer completes and the Syndicate
is repaid the total net proceeds of the Open Offer, such success
fee will be reduced to $595,973 and due by 21 February 2020. The
Amended Facilities Agreement, which is conditional upon success of
the Open Offer, will fix the Facilities at a total of $35 million.
In addition to paying the net proceeds of the Open Offer to the
Syndicate under the terms of the Amended Facilities Agreement,
since 30 November 2019, the Group has made repayments under the
terms of the 2018 Facilities Agreement of approximately $3.8
million.
For further details on the Amended Facilities Agreement, see
paragraph 7.1.8 ("Amended Facilities Agreement") of Part 15
("Additional Information") of the Prospectus.
In addition, as reported in the 2018 Annual Report, another
challenge facing the Group is the level of administrative expenses
within the business. The Group's administrative costs for the six
months ending 30 June 2019 were $9.8 million and for the year
ending 31 December 2018 were $23.9 million. As the 2018 Annual
Report emphasised, the amount of these costs is quite difficult to
justify given the financial performance and debt position of the
Group. During the 2018 financial year, the Group also undertook a
comprehensive review of its cost base and areas of expenditure.
Following this review, the Group's portfolio was reduced from 40 to
33 imprints, a number of office facilities were downsized, certain
processes relating to the printing of the Group's books were
automated and corporate overheads were reduced. The Directors and
the Group continue to monitor expenditure with a view to reducing
unnecessary costs where appropriate.
Over the last 24 months, the Group has taken steps to address
the challenges that it has been experiencing and, as reported in
the 2018 Annual Report, continues to focus on right-sizing the
Group, pursuing a path of sustainable debt reduction and focussing
on the Group's core business strengths of creating and developing
popular and diverse content for its portfolio of imprints.
As part of the Group's strategy to reinvigorate the Group's
balance sheet and reduce the Group's reliance on bank debt by
reducing the amount of the Group's debt and extending the terms of
the 2018 Facilities Agreement, the Company is proposing to
undertake the Open Offer. The net proceeds from the Open Offer will
be used to reduce the amount of the bank debt which will result in
the Amended Facilities Agreement becoming unconditional thereby
extending the final repayment date of the facility to 31 July 2021.
The Open Offer will raise gross proceeds of GBP13,902,294
(approximately $18,212,005) and GBP12,752,294 (approximately
$16,705,505) net of expenses.
The Open Offer is being underwritten by two groups of existing
Shareholders namely, the Lau Underwriter and the Giunti Parties.
Each of the Underwriters has separately agreed with the Company to
take up in full their Open Offer Entitlements but not to take up
any additional New Common Shares under the Excess Application
Facility. In addition, the Giunti Parties have undertaken to
subscribe for up to 6,187,820 New Common Shares which will result
in the Giunti Parties holding up to a maximum of 20 per cent. of
the Enlarged Share Capital following Admission. The Lau Underwriter
has undertaken to subscribe for all New Common Shares which are not
subscribed for by Qualifying Shareholders under the Open Offer or
by the Giunti Parties pursuant to their Open Offer Entitlements or
the terms of the Giunti Underwriting Agreement. If no Qualifying
Shareholders (other than the Underwriters) take up their Open Offer
Entitlements, the Underwriters will subscribe for all of the New
Common Shares available pursuant to the Open Offer which will
result the Lau Parties, together, holding such number of Common
Shares so as to give them control of 49.25 per cent. of the
Enlarged Share Capital and the Giunti Parties holding, together,
such number of Common Shares so as to give them control of 20 per
cent. of the Enlarged Share Capital following Admission. The Lau
Parties and the Giunti Parties are not acting in concert in respect
of the Underwriting.
Both the Board and the Independent Committee consider the
Underwriting to be essential in providing assurance to the Company,
its Shareholders and the Syndicate that sufficient monies will be
raised under the Open Offer (provided that the conditions to the
Open Offer are satisfied) in order to meet the Syndicate's
requirement that the total net proceeds of the Open Offer be repaid
in order for the Amended Facilities Agreement to become
unconditional and the terms of the 2018 Facilities Agreement be
extended to 31 July 2021. See also paragraph 6 ("Principal Terms of
the Open Offer") of Part 6 and paragraph 7.1.11 ("Underwriting
Agreements") of Part 15 ("Additional Information") of the
Prospectus for further details of the Underwriting Agreements.
If the Open Offer and the Amended Facilities Agreement do not
complete, the 2018 Facilities Agreement will remain in place, and
the Company will need to repay its debt facilities by 31 August
2020. However, pursuant to the terms of the 2018 Facilities
Agreement, the Company is required to produce its audited report
and accounts for the year ended 31 December 2019 on a going concern
basis by 31 March 2020. A failure to do so would constitute a
breach of the 2018 Facilities Agreement which could result in the
Syndicate demanding immediate repayment of the amounts owed
thereunder. In these circumstances, the Group would make serious
efforts to renegotiate the terms of the 2018 Facilities Agreement
in order to waive the requirement for the Group to prepare its
audited report and accounts for the years ended 31 December 2019 on
a going concern basis and extend the Group's debt repayment
obligations to at least 31 March 2021. If the Syndicate did not
agree to such a waiver and was to demand full repayment of the
outstanding amounts owed under the 2018 Facilities Agreement upon
such breach on 31 March 2020, the Group is unlikely to be able to
arrange any alternative sources of funding (i.e. outside of the
Syndicate and the Company's shareholders) to meet its debt
repayment obligations at that time which could ultimately lead to
the Group's insolvency and the total loss of value of the Common
Shares. Therefore, if Resolution 1 is not passed and the Open Offer
does not proceed and the Amended Facilities Agreement does not
complete, no assurance can be given that the Company will be able
to continue as a going concern after 31 March 2020 which would lead
to total loss of value in the Company's Common Shares.
Current Trading
Six month period ended 30 June 2019
The following commentary regarding the Group's trading
performance in the six month period to 30 June 2019 is extracted
from the Group's 2019 H1 Results Announcement, which were announced
on 16 August 2019:
"Trading was encouraging for the first six months of 2019.
Revenue is slightly up year on year at $56.4 million (H1 2018:
$56.2 million) with a smaller publishing programme.
Children's imprints performed particularly well, with revenues
up 14 per cent. Revenues from Adult imprints were down six per
cent. as the market remains challenging, particularly on the
co-edition side where we are still seeing consolidation of our key
publishing customers. The gross profit margin was in line with
prior year at 21.5 per cent. (H1 2018: 21.3 per cent.).
The increased revenues, combined with substantial benefits from
the cost out program implemented in 2018, have resulted in a
significantly lower adjusted group operating loss of $1.2 million
(H1 2018: loss of $4.7 million) in what is our seasonally weak half
year. The adjusted loss before tax was $4.0 million (H1 2018: loss
of $6.6 million).
Both reporting segments improved their trading performance year
on year, resulting in a significant improvement in the Group's
adjusted operating result. Net debt at 30 June 2019 was $65.0
million (H1 2018: $73.2 million), a decrease of $8.2 million over
the twelve-month period.
The book trade market remains soft, while in the co-edition
market, further consolidation is impacting both English and foreign
language sales, especially on the Adult segment. As a result, the
Group expects the trading environment in the second half to be more
challenging than in prior years.
Operating review
With fewer titles published in the period than the prior year,
as a result of the cost out programme initiated in the second half
of 2018, the Group's revenue increased slightly year on year, led
by the strong performance of our children's imprints.
UK-based Frances Lincoln Children's Books was particularly
successful. Its Little People, Big Dreams series remains a
highlight, with over 1.3 million copies sold in the English
language to date. We have expanded the list to include
inspirational male role models and these titles have done well so
far. Young Quarto also performed strongly, selling well in the book
trade, although sales to our key co-edition publishers have been
slower than the prior year. In the US, our SmartLab Toys business
also performed well.
Revenues from Adult imprints were down, and that market remains
more challenging. In the US, our Beverly-based Adult imprints,
especially Fair Winds Press and Harvard Common Press, continue to
perform strongly led by our successful line of Keto cookery titles.
Co-editions sales have been slower than the prior year both in
English and foreign language and, with the continued consolidation
of key publishers in the market, we expect them to remain so in the
second half. We continue to look at new opportunities in custom
publishing to grow our customer base.
The challenging Adult co-edition market has impacted Foreign
language sales, which have been slower than prior year in the first
half and are expected to remain down year on year for the full
year.
International English language sales are down year on year. This
is mostly due to order timings and they are expected to remain
comparable for the full year.
Group overheads were reduced by 65 per cent. due to the cost out
program initiated in the second half of 2018. The benefits of these
savings will much lower in the second half of the year.
Outlook
The market remains soft in both the US and the UK and,
considering the weaker performance of Adult co-editions in both
English and foreign language, as well as the uncertainty
surrounding Brexit and US trade tariffs, we expect the trading
environment in the second half to be particularly challenging.
That said, the Group has the right plans in place to capture all
possible opportunities and deliver a satisfactory end to the year.
The Board remains focused on returning the Group to full health,
reducing debt and defining growth strategies for 2020 and
beyond."
Six month period ended 31 December 2019
Since 30 June 2019, as anticipated in the Company's 2019 H1
Results Announcement, market conditions have proven to be
challenging in the second half of the year. The market has remained
soft in the US and UK and there has been a weaker performance of
Adult co edition in both English and foreign language. This,
together with the uncertainty caused by Great Britain's exit from
the EU and US tariffs and other factors outside the control of
management, has resulted in a particularly challenging environment.
The Company's performance between July and the end of October 2019
continued to meet the Board's expectations; however subdued trading
in the last two months of the year has resulted in a modest
reduction in the Board's expectations of Group's performance for
the year ended 31 December 2019. The Group's revenues were lower
than anticipated during this period primarily as a result of weak
trade sales in the US in the latter months of 2019, which was in
part explained by the reported congestion in Amazon warehouses that
resulted in lower than expected orders.
Notwithstanding this challenging environment, the Group has
continued to see good cash generation during this period as it
benefits from the cost-out programme initiated by the Board in
2018. Save as disclosed above, since 30 June 2019, the Group
confirms that there has been no significant change in the financial
performance of the Group and that the Directors do not know of any
known trends, uncertainties, demands, commitments or events that
are reasonably likely to have a material effect on the Company's
prospects for at least the current financial year, being the year
ending 31 December 2020.
Use of proceeds
The Company intends to use the net proceeds of the Open Offer of
GBP12,752,294 (approximately $16,705,505) to reduce the Group's
existing bank debt as required by the Syndicate under the terms of
the Amended Facilities Agreement.
Principal terms of the Open Offer
The Company intends to raise aggregate gross proceeds of
GBP13,902,294 (approximately $18,212,005) (being GBP12,752,294
(approximately $16,705,505) net of expenses) through the issue of
20,444,550 New Common Shares at the Issue Price of 68 pence per New
Common Share by way of the Open Offer. The Open Offer is
conditional on, among other things, the passing of Resolution 1 at
the Special Meeting.
The Issue Price was set having regard to the prevailing market
conditions and the size of the Open Offer. The Issue Price
represents a discount of approximately 9.9 per cent. to the closing
price per Common Share of 75.5 pence on the Latest Practicable
Date. The Directors and the Independent Committee believe that it
is necessary to offer the New Common Shares at a discount to
complete the Open Offer, and accordingly believe that such discount
is in the best interests of Shareholders, and that the Issue Price
(and the discount) is appropriate for the Open Offer.
The Open Offer is conditional on, among other things:
-- Resolution 1 being passed by the Shareholders at the Special Meeting;
-- the Underwriting Agreements having become unconditional in
all respects and not having been terminated in accordance with
their respective terms before Admission;
-- Admission becoming effective by no later than 8.00 a.m. on 3
February 2020 (or such later time as finnCap and the Company may
agree, being not later than 28 February 2020); and
-- the Sponsor Agreement having become unconditional in all
respects and not having been terminated in accordance with its
terms prior to Admission.
Accordingly, if any such conditions are not satisfied or, if
applicable, waived, the Open Offer will not proceed, any Open Offer
Entitlements admitted to CREST will thereafter be disabled and
application monies under the Open Offer will be refunded to the
applicants, by cheque (at the applicant's risk) in the case of
Qualifying Non-CREST Shareholders and by way of a CREST payment in
the case of Qualifying CREST Shareholders, without interest, as
soon as practicable thereafter.
The New Common Shares to be issued pursuant to the Open Offer
will, following Admission, rank pari passu in all respects with the
Existing Common Shares and will carry the right to receive all
dividends and distributions declared, made or paid on or in respect
of the Common Shares after Admission.
The Open Offer will result in 20,444,550 New Common Shares being
issued (representing approximately 50 per cent. of the Enlarged
Share Capital).
Application will be made to the FCA for the New Common Shares
proposed to be issued in connection with the Open Offer to be
admitted to the premium listing segment of the Official List and to
the London Stock Exchange for the New Common 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
Common Shares will commence, at 8.00 a.m. on 3 February 2020 at
which time it is also expected that the Depository Interests
representing New Common Shares to be held in uncertificated form
will be enabled for settlement in CREST. Upon Admission, the New
Common Shares will trade in the Company's new restricted line of
Common Shares under the symbol QRTR, and the New Common Shares, as
represented by Depository Interests, will be held in the CREST
system and will be segregated into a separate trading system within
CREST identified with the marker "REG S" and ISIN USU748092009. The
Company also maintains an unrestricted line of Common Shares
trading under the existing symbol QRT and ISIN US74772E1001.
As at the Latest Practicable Date, the Lau Parties currently
hold, in aggregate, such number of Common Shares as give them
control of 33.63 per cent. of the Existing Common Shares and the
Giunti Parties currently hold such number of Common Shares to give
them control of 4.87 per cent. of the Existing Common Shares. If no
Qualifying Shareholders (other than the Underwriters) take up their
Open Offer Entitlements, the Underwriters will subscribe for all of
the New Common Shares available pursuant to the Open Offer. This
will result the Lau Parties, together, holding such number of
Common Shares so as to give them control of 49.25 per cent. of the
Enlarged Share Capital and the Giunti Parties holding, together,
such number of Common Shares so as to give them control of 20 per
cent. of the Enlarged Share Capital following Admission. This could
result in a failure by the Company to comply with the free float
requirement under Listing Rule 6.14 that 25 per cent. of the
Company's Common Shares must be held in public hands which could
lead to a suspension or cancellation of the listing of Common
Shares on the premium segment of the Main Market of the London
Stock Exchange.
Common Shares held by Directors or their connection persons or
persons who hold five per cent. or more of the Common Shares and
non-EEA Shareholders are not regarded as shares held in public
hands under the Listing Rules. Failure to comply with the Listing
Rule 6.14 without a derogation from the FCA, could result in the
FCA either suspending or cancelling the listing of the Common
Shares on the premium segment of the Main Market of the London
Stock Exchange.
The Company has been in discussions with the FCA regarding these
matters and to counteract the risk that the FCA may suspend or
cancel the listing of the Common Shares after Admission, Mr Lau has
undertaken to the Company to use reasonable endeavours to sell such
number of Common Shares as will result in the Company satisfying
the Listing Rules' free float requirement of 25 per cent. up to a
maximum number of all of the Common Shares held by him following
Admission, and to the extent he is unable to sell such Common
Shares, to gift such Common Shares as is required to satisfy the
Listing Rules' free float requirement to an unrelated third party
by not later than the date which falls six months immediately
following the date of Admission. Where the number of Common Shares
sold or gifted by Mr Lau is insufficient to meet the Listing Rules'
free float requirement, 1010 Printing has undertaken to the Company
to use reasonable endeavours to sell and/or to gift for nil
consideration such number of Common Shares that it holds to an
unrelated third party as required to satisfy the Listing Rules free
float requirement up to a maximum of 1,540,514 Common Shares by not
later than the date which falls six months following the date of
Admission.
Depending on the results of the Open Offer and whether the
Company no longer satisfies the Listing Rules' free float
requirement, the Company intends to apply to the FCA, at the
appropriate time, for a derogation in respect of the free float
requirement on the basis of the Lau Parties' undertaking to either
sell and/or gift such number of Common Shares within six months of
Admission so as to ensure that the free float requirement is
satisfied.
In the event that other Shareholders (except for the Lau Parties
and the Giunti Parties) elect not to take up their Open Offer
Entitlements, the Lau Parties and the Giunti Parties could end up
subscribing for all of the New Common Shares pursuant to their Open
Offer Entitlements and the terms of the Underwriting Agreements
which would result in the Lau Parties, together, holding such
number of Common Shares as to give them control of 49.25 per cent.
of the Enlarged Share Capital. In addition if Herald Investment
Management participates in the Open Offer to the maximum extent
possible, but no other Qualifying Shareholders (except for the
Underwriters) participate in the Open Offer, the resultant free
float of the Company would be approximately 13.7 per cent. (based
on the latest information available to the Company). As a result,
the Lau Parties' interests in the voting capital of the Company may
permit them to effect certain transactions without other
Shareholders' support, or delay or prevent certain transactions
that are in the interests of other Shareholders including amending
the Company's Certificate of Incorporation and the By-laws.
For further details of significant shareholders and their
holdings in the Company and Underwriting Agreements, see paragraph
5.2 ("Significant Shareholders") and paragraph 7.1.11
("Underwriting Agreements") of Part 15 ("Additional Information")
of the Prospectus.
Effect of the Open Offer
Upon Admission the Enlarged Share Capital will comprise
40,889,100 Common Shares. The New Common Shares will represent
approximately 50 per cent. of the Enlarged Share Capital and the
Existing Common Shares will represent approximately 50 per cent. of
the Enlarged Share Capital.
Where no Shareholders (other than the Underwriters) take up
their Open Offer Entitlements, then all of the New Common Shares
offered pursuant to the terms of the Open Offer will be subscribed
for by the Underwriters by way of each of them taking up their Open
Offer Entitlements in full and, in the case of each Underwriter,
pursuant to the terms of the Underwriting Agreements. Therefore,
following completion of the Open Offer, 49.25 per cent. of the
Enlarged Share Capital will be held or controlled by the Lau
Parties and 20 per cent. of the Enlarged Share Capital will be held
by the Giunti Parties. As the Company is incorporated under the
laws of and its registered office is located in the State of
Delaware, United States of America, it is not subject to the City
Code. Accordingly, the mandatory bid provisions of the City Code do
not apply to the Company.
US Securities Law Restrictions
The New Common Shares have not been, and will not be, registered
under the Securities Act or under any securities laws of any state
or other jurisdiction of the United States. The New Common Shares
will be offered and sold only to non-U.S. Persons in "offshore
transactions" as defined in and pursuant to Regulation S or
otherwise in transactions that are exempt from, or not subject to,
the registration requirements of the Securities Act.
The New Common Shares offered in "offshore transactions" (as
defined in Regulation S) to non-U.S. Persons in the Open Offer will
be subject to the conditions listed under Rule 903(b)(3), or
Category 3, of Regulation S. Under Category 3, "offering
restrictions" (as defined in Regulation S) must be in place in
connection with the Open Offer and additional restrictions are
imposed on resales of the New Common Shares. Further details of
these restrictions are set out in Part 17 ("U.S. Restrictions on
the Transfer of New Common Shares") of the Prospectus. The New
Common Shares will be "restricted securities" as defined in Rule
144 under the Securities Act. Purchasers of the New Common Shares
may not offer, sell, pledge or otherwise transfer New Common
Shares, directly or indirectly, in or into the United States or to,
or for the account or benefit of, any U.S. Person, except pursuant
to a transaction meeting the requirements of Rules 901 to 905
(including the Preliminary Notes) of Regulation S, pursuant to an
effective registration statement under the Securities Act or
pursuant to an exemption from the registration requirements of the
Securities Act. All New Common Shares sold to non-U.S. Persons in
"offshore transactions" (as defined in Regulation S) in the Open
Offer will be subject to these restrictions until the expiration of
the Distribution Compliance Period. These restrictions may remain
in place or be reintroduced in relation to the New Common Shares
following expiry of the Distribution Compliance Period, at the
discretion of the Company, such as in the event the Company issues
additional Common Shares under the same ISIN as the New Common
Shares. Hedging transactions in the New Common Shares may not be
conducted, directly or indirectly, unless in compliance with the
Securities Act.
The New Common Shares held in CREST and the New Common Shares
held in certificated form will bear a legend (electronically in the
case of the former), inter alia, describing the restrictions on
transfer thereof and prohibiting hedging transactions in the New
Common Shares unless in compliance with the Securities Act.
Each purchaser of New Common Shares, by agreeing to purchase
such New Common Shares, agrees to reoffer or resell the New Common
Shares only pursuant to registration under the Securities Act and
qualification under applicable U.S. state securities laws or in
accordance with the provisions of Regulation S or pursuant to
another available exemption from registration, and agrees not to
engage in hedging transactions with regard to such securities
unless in compliance with the Securities Act. Representations,
warranties, certifications, acknowledgements, agreements and
covenants must be made through the CREST system by those acquiring
the New Common Shares (represented by the Depository Interests). If
such representations, warranties, certifications, acknowledgements,
agreements and covenants cannot be made or are not made, settlement
through CREST will be rejected.
Furthermore, New Common Shares held by Affiliates of the
Company, U.S. Persons or for the account or benefit of U.S. Persons
will be held in certificated form and settlement will not be
permitted via CREST until such time as the relevant restrictions
are no longer applicable.
The above restrictions may severely restrict purchasers of New
Common Shares from reselling the New Common Shares.
Subject to various conditions including, among others, the
availability of current information regarding the Company,
applicable holding periods and volume and manner of sale
restrictions, Rule 144 may be available for U.S. resales of New
Common Shares by Affiliates of the Company. Affiliates of the
Company at the time of the Open Offer, or investors that become
Affiliates at any time after the Open Offer, should seek
independent U.S. legal counsel prior to selling or transferring any
New Common Shares.
Prospectus and Circular
Both the Prospectus containing full details of the Open Offer
and the Circular containing the Notice of Special Meeting convening
the Special Meeting in connection with the consideration and
approval of the Resolutions are expected to be, subject to certain
access restrictions, made available on Quarto's website
(http://www.quarto.com) later today.
The Prospectus will be submitted to the National Storage
Mechanism and will be available for inspection at
www.morningstar.co.uk/uk/nsm following publication.
The preceding summary should be read in conjunction with the
full text of the following announcement and its appendices,
together with the Prospectus and Circular. Capitalised terms used
in this announcement shall have the meanings set out in the
Appendix.
For further information, please contact:
The Quarto Group Inc.
+44 (0)20 7700
Michael Clarke, Chief Administrative Officer 9006
finnCap Ltd (Sponsor to Quarto) +44 (0)20 7220
Matt Goode, Anthony Adams, Max Bullen-Smith 0500
About The Quarto Group
The Quarto Group (LSE: QRT) creates a wide variety of books and
intellectual property products, with a mission to inspire life's
experiences. Produced in many formats for adults, children and the
whole family, our products are visually appealing, information rich
and stimulating.
The Group encompasses a diverse portfolio of imprints and
businesses that are creatively independent and expert in developing
long-lasting content across specific niches of interest.
Quarto sells and distributes its products globally in over 50
countries and 40 languages, through a variety of sales channels,
partnerships and routes to market.
Quarto employs c.330 talented people in the US and the UK. The
group was founded in London in 1976. It is domiciled in the US and
listed on the London Stock Exchange.
For more information, visit quarto.com or follow us on Twitter
at @TheQuartoGroup.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (596/2014) ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
IMPORTANT NOTICE:
This announcement has been issued by and is the sole
responsibility of the Company. This announcement is an
advertisement for the purposes of the Prospectus Regulation Rules
and does not constitute a prospectus and investors should not
acquire any New Common 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 Open Offer.
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.
Copies of the Prospectus and the Circular when published will,
subject to certain access restrictions, be available for inspection
from the principal place of business of the Company at The Old
Brewery, 6 Blundell Street, London, N7 9BH and on the Company's
website at www.quarto.com. Neither the content of Quarto's website
nor any website accessible by hyperlinks on Quarto's website is
incorporated in, or forms part of, this announcement. The
Prospectus provides further details of the New Common Shares being
offered pursuant to the Open Offer.
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 purchase or subscribe for, or any solicitation to
purchase or subscribe for New Common Shares in any jurisdiction. No
offer or invitation to purchase or subscribe for, or any
solicitation to purchase or subscribe for Common Shares will be
made in any jurisdiction in which such an offer or solicitation is
unlawful. The information contained in this announcement is not for
release, publication or distribution to U.S. Persons or persons in
Excluded Territories, and should not be distributed, forwarded to
or transmitted in or into or from any jurisdiction, where to do so
might constitute a violation of local securities laws or
regulations.
This announcement is not for release, publication or
distribution, directly or indirectly, in or into or from the United
States. This announcement is not an offer of securities for sale in
the United States. The New Common Shares have not been and will not
be registered under 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, or offered, sold, taken up, exercised, resold, renounced,
transferred or delivered to, or for the account or benefit of, U.S.
Persons, 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.
Hedging transactions in the New Common Shares may not be conducted,
directly or indirectly, unless in compliance with the Securities
Act. No public offering of securities is being made in the United
States. No money, securities or other consideration from any person
in the United States is being solicited and, if sent in response to
the information contained in this announcement, will not be
accepted.
The New Common Shares have not been and will not be registered
under the applicable securities laws of any of the Excluded
Territories and, subject to certain limited exceptions, the New
Common Shares may not be offered or sold in the Excluded
Territories or to, or for the account or benefit of, any U.S.
Person or resident of the Excluded Territories. There will be no
public offer of securities in the Excluded Territories.
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 limited exceptions, this announcement, the Prospectus (once
published) and the Application Forms (once printed) should not be
distributed, forwarded to or transmitted in or into or from the
United States or any other Excluded Territory.
This announcement does not constitute a recommendation
concerning any investor's options with respect to the Open Offer.
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.
This announcement contains forward-looking statements 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
Quarto's plans and objectives, to differ materially from those
expressed or implied in the forward-looking statements.
There are a number of factors which could cause actual results
to differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward-looking statements are: increased competition, the loss of
or damage to one or more key customer relationships, changes to
customer ordering patterns, delays in obtaining customer approvals
for engineering or price level changes, the failure of one or more
key suppliers, the outcome of business or industry restructuring,
the outcome of any litigation, changes in economic conditions,
currency fluctuations, changes in interest and tax rates, changes
in raw material or energy market prices, changes in laws,
regulations or regulatory policies, developments in legal or public
policy doctrines, technological developments, the failure to retain
key management, or the key timing and success of future acquisition
opportunities or major investment and research and development
projects.
Neither the Company nor finnCap 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 under the Listing Rules,
the Disclosure Guidance and Transparency Rules and the Prospectus
Rules).
Notice to all investors
finnCap Ltd ("finnCap") is authorised and regulated by the FCA
in the United Kingdom, is acting exclusively as sponsor for the
Company and no one else in connection with the Open Offer and will
not regard any other person (whether or not a recipient of this
announcement) as a client in relation to the Open Offer and other
arrangements referred to in this announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to its clients nor for giving advice in
relation to the Open Offer or any transaction or arrangement
referred to in the Prospectus.
Apart from the responsibilities and liabilities, if any, which
may be imposed on finnCap by the FSMA or the regulatory regime
established thereunder, or under the regulatory regime of any
jurisdiction where exclusion of liability under the relevant
regulatory regime would be illegal, void or unenforceable, finnCap,
nor any of its affiliates, directors, officers, employees or
advisers, accepts any responsibility whatsoever for, or makes any
representation or warranty, express or implied, as to, the contents
of this announcement, including its accuracy, completeness or
verification, or for any other statement made or purported to be
made by it, or on its behalf, by the Company, the Directors or any
other person, in connection with the Company or the Common Shares
or the Open Offer and nothing contained in the announcement is or
shall be relied upon as a promise or representation in this
respect, whether as to the past or future. finnCap and each of its
affiliates each accordingly disclaims all and any liability whether
arising in tort, contract or otherwise which they might otherwise
have in respect of this announcement or any such statement. No
representation or warranty express or implied, is made by finnCap
or any of its affiliates as to the accuracy, completeness or
sufficiency of the information set out in the Prospectus.
No person has been authorised to give any information or to make
any representations other than those contained in this
announcement, the Prospectus, Circular and Application Forms, and,
if given or made, such information or representations must not be
relied on as having been authorised by Quarto or finnCap. Subject
to the Listing Rules, the Prospectus Rules and the Transparency
Rules of the Financial Conduct Authority and the Disclosure
Requirements (as such term is defined in the Listing Rules), the
issue of this announcement shall not, in any circumstances, create
any implication that there has been no change in the affairs of
Quarto 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, 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
Common Shares to be issued in the Open Offer have been subject to a
product approval process, which has determined that the New Common
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 (Target Market Assessment).
Notwithstanding the Target Market Assessment, distributors should
note that: the price of the New Common Shares may decline and
investors could lose all or part of their investment; the New
Common Shares to be issued in the Open Offer provide no guaranteed
income and no capital protection; and an investment in the New
Common Shares to be issued in the Open Offer 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 Open Offer. Furthermore, it is noted that, notwithstanding
the Target Market Assessment, the Sponsor 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 Common Shares.
Each distributor is responsible for undertaking its own Target
Market Assessment in respect of the New Common Shares and
determining appropriate distribution channels.
APPIX
Further information in relation to the Company and the Open
Offer
Group Operations
The Group has a creative portfolio of imprints and develops
content across a broad range of subject matters. The Group
publishes appealing, information-rich books and products over
various formats for a wide range of audiences. The Group has an
international operation covering markets in 50 countries across the
Americas, Europe and Asia.
In the six month period to 30 June 2019, the Group announced
revenue of $56.4 million and adjusted operating loss of $1.2
million, down 75 per cent. from the six months ended 30 June 2018.
The Group also announced that its net debt totalled approximately
$65 million as at 30 June 2019 compared to $73.2 million as at 30
June 2018.
The vast majority of the titles which the Group publishes are
printed in China by third party printers. The US is a large
consumer market for the Group's business with 65.2 per cent. of the
Group's revenue being generated in the US for the six months ended
30 June 2019 (and 57.7 per cent. for the financial year ended 31
December 2018). Import tariffs of 15 per cent. have recently been
imposed on books that are imported from China to the US, for sale
to US customers including books published by the Group.
Following Admission, the Company will continue to focus on its
core business strengths of creating and developing popular and
diverse content for its portfolio of imprints with a view to
growing the Group and continuing to manage its debt.
Directors' participation in the Open Offer
Each of the Directors is supportive of the Open Offer. Mr Lau
has committed to subscribing for his Open Offer Entitlement. Mr
Fund has expressed an interest in doing so, subject to meeting the
applicable regulatory requirements, although has not formally
committed.
The Lau Underwriter (a subsidiary of Lion Rock, an entity
ultimately controlled by Mr Lau and of which Ms Lam is a director
and shareholder), has entered into the Lau Underwriting Agreement
pursuant to which the Lau Underwriter has agreed to underwrite part
of the Open Offer. Under the terms of the Lau Underwriting
Agreement, the Lau Underwriter will subscribe for any outstanding
New Common Shares that are not taken up by any Qualifying
Shareholder under their Open Offer Entitlement or by way of the
Excess Application Facility or by Giunti pursuant to the terms of
the Giunti Underwriting Agreement. For further information, please
see paragraph 7.1.11 ("Underwriting Agreements") of Part 15
("Additional Information") of the Prospectus.
Recommendation
Given that Mr Fund, Ms Lam, Mr Lau and Mr Mousley may have
interests in the Open Offer that are different from, or in addition
to, the interests of Shareholders generally, the Board formed the
Independent Committee, which consists solely of Independent
Directors, to, among other things, review, evaluate, negotiate and
determine the terms of the Open Offer, determine whether the Open
Offer is in the best interests of the Company and the Shareholders
and make determinations and/or recommendations to the Board
regarding the Open Offer.
The Board and the Independent Committee have separately
considered, and each believes that, the Open Offer is in the best
interests of the Company and Shareholders as a whole and
unanimously supports the Open Offer. Accordingly, the Board and the
Independent Committee will unanimously recommend in the Circular
that Shareholders vote in favour of both of the Resolutions to be
proposed at the Special Meeting as set out in the Circular, as they
(other than Mr Mousley) intend to do so in respect of their own
beneficial entitlement. The Independent Committee and the Board
were aware of and considered the interests of Mr Fund, Ms Lam, Mr
Lau and Mr Mousley in the Open Offer referenced above, to the
extent such interests existed at the time, in evaluating the Open
Offer, determining that the Open Offer is in the best interests of
the Company and Shareholders as a whole and recommending that
Shareholders vote in favour of all of the Resolutions to be
proposed at the Special Meeting.
No significant change
There has been no significant change in the financial or trading
position of the Group since 30 June 2019, being the date to which
the latest financial information of the Group set out in Part 14
("Historical Financial Information") of the Prospectus was
prepared.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND OFFER STATISTICS
The times and dates set out in the expected timetable of key
events below, and mentioned throughout this announcement, the
Prospectus, the Application Form and any other document issued in
connection with the Open Offer, are subject to change, and may be
adjusted by the Company in consultation with the Sponsor. The
timetable below also assumes that the Resolutions are all passed at
the Special Meeting without adjournment or postponement. In the
event of any significant changes from the below expected timetable,
details of the new times and dates will be notified to the London
Stock Exchange and, where appropriate, Qualifying Shareholders.
If you have any queries on the procedures for application under
the Open Offer, you should contact Link Asset Services on +44 (0)
371 664 0321. Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom will be
charged at the applicable international rate. The helpline is open
between 9.00 a.m. - 5.30 p.m., Monday to Friday excluding public
holidays in England and Wales. Please note that Link Asset Services
cannot provide any financial, legal or tax advice and calls may be
recorded and monitored for security and training purposes.
References to times in this announcement are to London time
unless otherwise stated.
Record Date for entitlements under the Open Offer Close of
business on 15 January 2020
Announcement of the Open Offer 16 January 2020
Publication of the Prospectus and the Circular 16 January
2020
Ex-entitlement date for the Open Offer 16 January 2020
Posting of the Application Form to Qualifying Non-CREST 16
January 2020
Shareholders(1) and the Circular and Forms of Proxy
Open Offer Entitlements and Excess Open Offer Entitlements as
soon as possible after
enabled in CREST and credited to stock accounts of Qualifying
8.00 a.m. on 17 January 2020
CREST Shareholders(1) in CREST
Recommended latest time and date for requesting withdrawal of
4.30 p.m. on 27 January 2020
Open Offer Entitlements and Excess Open Offer Entitlements
from
CREST(2 )
Latest time and date for depositing Open Offer Entitlements and
3.00 p.m. on 28 January 2020
Excess Open Offer Entitlements into CREST(2)
Latest time and date for splitting of Application Forms 3.00
p.m. on 29 January 2020
(to satisfy bona fide market claims only)(2)
Latest time and date for receipt of Forms of Proxy for use at
the 7.30 a.m. on 29 January 2020
Special Meeting
Latest time and date for receipt of completed Application 11.00 a.m. on 31 January 2020
settlement Forms and payment in full under the Open Offer or of
relevant CREST instruction (as appropriate)
Special Meeting 9.30 a.m. on 31 January 2020
Announcement of the results of the Special Meeting 31 January
2020
Announcement of the results of the Open Offer 3 February
2020
Admission and commencement of dealings in New Common
Shares 8.00 a.m. on 3 February 2020
CREST Members' accounts credited in respect of New Common as
soon as possible after
Shares in uncertificated form 8.00 a.m. on 3 February 2020
Despatch of definitive share certificates for New Common Shares
Within 10 Business
in certificated form(3)
Days of Admission
Notes:
(1) The ability to participate in the Open Offer is subject to
certain restrictions relating to Shareholders who are U.S. Persons
(or who are acting for the account or benefit of a U.S. Person) or
with registered addresses, or who are citizens or resident, outside
the United Kingdom, details of which are set out in Part 8 ("Terms
and Conditions of the Open Offer") of the Prospectus.
(2) Different deadlines and procedures for applications may
apply in certain cases. For example, if you hold your Existing
Common Shares through a CREST Member or other nominee, that person
may set an earlier date for application and payment than the dates
noted above.
(3) Temporary documents of title will not be issued.
OPEN OFFER STATISTICS
Closing price of Existing Common Shares(1)
75.5 pence
Issue Price per New Common Share
68.0 pence
Discount of Issue Price to closing price(1)
9.9 per cent.
Open Offer Entitlement 1 New Common Share
for every 1 Existing
Common Share(2)
Number of Existing Common Shares in issue as at 15 January 2020,
20,444,550
being the Latest Practicable Date
Number of New Common Shares to be issued pursuant to the Open
Offer 20,444,550
Number of Common Shares in issue immediately upon completion of
the 40,889,100
Open Offer(3)
New Common Shares as a percentage of the Enlarged Share Capital
50 per cent.
Estimated gross proceeds of the Open Offer GBP13,902,294
Estimated net proceeds of the Open Offer receivable by the
Company GBP12,752,294
after expenses
Expected market capitalisation of the Company at the Issue
GBP27,804,588
Price upon Admission
Notes:
(1) The closing price on the London Stock Exchange's Main Market
for listed securities at the Latest Practicable Date.
(2) Fractions of New Common Shares will not be allotted to
Shareholders in the Open Offer and fractional entitlements under
the Open Offer will be rounded down to the nearest whole number of
New Common Shares.
(3) On the assumption of completion of the Open Offer.
DEFINITIONS AND GLOSSARY
Definitions from the Prospectus
The following definitions apply throughout this announcement
unless the context requires otherwise
1010 Printing 1010 Printing Limited, a private limited company
incorporated under the laws of Hong Kong with registered number
1419686, whose registered office is at 625 King's Road, 26th Floor,
North Point, Hong Kong, a Shareholder of the Company
2017 Amended Credit Agreement a supplemental agreement dated 22
December 2017 pursuant to which the Original Credit Agreement was
further amended and restated, as more fully described in paragraph
7.1.3 ("2018 Facilities Agreement") of Part 15 ("Additional
Information") of the Prospectus
2018 Annual General Meeting the annual general meeting of the
Company held on 15 August 2018
2018 Annual Report the Company's annual report and accounts for
the year ended 31 December 2018
2018 Facilities Agreement a supplemental agreement to the 2017
Amended Credit Agreement dated 31 October 2018 between, among
others, the Company and the Syndicate pursuant to which the 2017
Amended Credit Agreement was further amended and restated, as more
fully described in paragraph 7.1.3 ("2018 Facilities Agreement") of
Part 15 ("Additional Information") of the Prospectus
2019 H1 Results Announcement the Group's results and unaudited
accounts for the six months ended 30 June 2019
Admission admission of the New Common Shares:
(1) to the premium segment of the official list of the FCA
becoming effective in accordance with the Listing Rules; and
(2) to trading on the London Stock Exchange's main market for
listed securities becoming effective in accordance with the
Admission and Disclosure Standards
Affiliate an affiliate (as defined in Rule 405 under the
Securities Act)
Amended Facilities Agreement a supplemental agreement to the
2018 Facilities Agreement dated 16 January 2019 between, among
others, the Company and the Syndicate pursuant to which the 2018
Amended Facilities Agreement was further amended and restated as
more fully described in paragraph 7.1.8 ("Amended Facilities
Agreement") of Part 15 ("Additional Information") of the
Prospectus
Annual Exemption the level of the annual allowance of tax-free
gains in the UK tax year
Application Form the application form accompanying the
Prospectus on which Qualifying Non-CREST Shareholders who are
registered on the stock ledger of the Company at the Record Date
may apply for New Common Shares under the Open Offer
Audit Committee the audit committee of the Board, as constituted
from time to time
Board the board of directors of the Company from time to
time
Brexit the United Kingdom's proposed exit from the European
Union
Business Day a day (other than Saturday, Sunday or a public
holiday) on which banks are generally open for business in the City
of London for the transaction of normal banking business
By-laws the existing by-laws of the Company as amended from time
to time
certificated or certificated form recorded on the relevant
register of the share or security concerned as being held in
certificated form in physical paper (that is, not in CREST)
Chairman Andy Cumming
CEO or Chief Executive Officer Chuk Kin Lau, a Director and Shareholder of the Company with
or Mr Lau business address at 625 King's Road, 26th Floor, North
Point, Hong Kong
Certificate of Incorporation the existing certificate of
incorporation of the Company as amended from time to time
Chief Financial Officer or CFO Walter Nolan
Circular the circular to be sent to Shareholders including the
Notice of Special Meeting on or around the date of the
Prospectus
City Code the City Code on Takeovers and Mergers
Common Shares shares of common stock of the Company, with a par
value of $0.10 each
Companies Act the Companies Act 2006, as amended
Company or Quarto The Quarto Group Inc., a Delaware corporation
with registered number 2104160
CREST the electronic transfer and settlement system for the
paperless settlement of trades in listed securities operated by
Euroclear
CREST Member a person who has been admitted to Euroclear as a
system-member (as defined in the CREST Regulations)
CREST Regulations the Uncertificated Securities Regulations 2001
(SI 2001 No. 01/378)
CREST Sponsor a CREST participant admitted to CREST as a CREST Sponsor
CREST Sponsored Member a CREST Member admitted to CREST as a sponsored member
Depository Link Market Services Trustees Limited
Depository Interests dematerialised depository interests
representing underlying Common Shares that can be settled
electronically through and held in CREST, as issued by the
Depository or its nominees who hold the underlying securities on
trust
Directors the Executive Directors and Non-Executive Directors of
the Company
Disclosure Guidance and the disclosure guidance and transparency
rules of the FCA, as
Transparency Rules amended from time to time
Distribution Compliance Period the period during which New
Common Shares offered in "offshore transactions" (as defined in
Regulation S) to non-U.S. Persons pursuant to Regulation S are
subject to the conditions listed under Rule 903(b)(3) of Regulation
S, or such longer period as may be required under applicable law or
as determined by the Company, being until at least the expiry of
one year after the later of (i) the time when the New Common Shares
are first offered to persons other than Distributors in reliance
upon Regulation S and (ii) the date of closing of the Open
Offer
Distributor a distributor (as defined in Rule 902(d) of
Regulation S)
EBITDA earnings before interest, tax, depreciation and
amortisation
Enlarged Share Capital the Common Shares of the Company that
will be in issue following completion of the Open Offer, comprising
the Existing Common Shares and the New Common Shares
Euroclear Euroclear UK and Ireland Limited, the operator (as
defined in the CREST Regulations) of CREST
European Economic Area or EEA the European Union, Iceland, Norway and Liechtenstein
European Union or EU an economic and political union of 28
member states which are located in Europe
Excluded Territories Australia, Canada, Japan, South Africa, the
United States (subject to certain limited exceptions) and any other
jurisdiction where the offer, sale or advertisement of the New
Common Shares (or any other transaction contemplated by the Open
Offer) would breach applicable law or regulation and Excluded
Territory means any one of them
Excess Application Facility the arrangement pursuant to which
Qualifying Shareholders may apply for any number of New Common
Shares in excess of their Open Offer Entitlement provided that they
have agreed to take up their Open Offer Entitlement in full
Excess Open Offer Entitlement in respect of each Qualifying
CREST Shareholder, the entitlement (in addition to his or its Open
Offer Entitlement) to apply for New Common Shares pursuant to the
Excess Application Facility, which is conditional on him or it
taking up his or its Open Offer Entitlement in full
Excess Shares New Common Shares which may be applied for by
Qualifying Shareholders in addition to their Open Offer
Entitlements pursuant to the Excess Application Facility
Excluded Territory Shareholder any Shareholder from an Excluded Territory
Executive Directors Chuk Kin Lau and Ken Fund
Existing Common Shares the 20,444,550 Common Shares in issue as
at the Latest Practicable Date
FCA the UK Financial Conduct Authority
Form of Proxy the form of proxy for use at the Special Meeting
FSMA the UK Financial Services and Markets Act 2000, as
amended
GDP gross domestic product
Grant Thornton Grant Thornton UK LLP, auditor to the Company of
30 Finsbury Square, London EC2A 1AG
Group the Company and its subsidiaries
Giunti MONTECRISTO 2019 S.r.l., a private limited company
incorporated under the laws of Italy with registered number IVA
06943970480, whose registered office is at Via Bolognese, 16550139,
Firenze, Italy
Giunti Parties Sergio Giunti and Andrea Giunti Lombardo
(shareholders of the Company) along with Giunti (an entity,
ultimately controlled by Sergio Giunti and Andrea Giunti
Lombardo)
Giunti Underwriting Agreement the underwriting agreement between
the Giunti Parties and the Company dated 16 January 2020 as more
fully described in paragraph 7.1.11 ("Underwriting Agreements") of
Part 15 ("Additional Information") of the Prospectus
H1 2018 the six months period ended 30 June 2018
Historical Financial Information the Group's audited
consolidated financial statements for the year ended 31 December
2018 (prepared in accordance with IFRS as adopted by the European
Union) and the Group's results and unaudited accounts for the six
months ended 30 June 2019
HMRC Her Majesty's Revenue and Customs
HMT Her Majesty's Treasury
IFRS International Financial Reporting Standards
imprints the individual creative division that produces
books
Independent Committee the committee of Independent Non-Executive
Directors formed, inter alia, to review, evaluate, negotiate and
determine the terms of the Open Offer
Independent Non-Executive Andy Cumming and Jane Moriarty
Directors
ISIN International Securities Identification Number
Issue Price 68 pence per New Common Share
Latest Practicable Date 15 January 2020, being the latest
practicable date prior to publication of the Prospectus
Lau Parties Mr Lau along with Lion Rock and 1010 Printing,
entities ultimately controlled by Mr Lau
Lau Underwriter 1010 Printing
Lau Underwriting Agreement the underwriting agreement between
the Lau Underwriter and the Company dated 16 January 2020 as more
fully described in paragraph 7.1.11 ("Underwriting Agreements") of
Part 15 ("Additional Information") of the Prospectus
LEI legal entity identifier
LIBOR London Interbank Offered Rate
Link Asset Services a trading name of Link Market Services Limited
Lion Rock Lion Rock Group Limited, a limited company
incorporated under the laws of Bermuda with registered number
F0018460, whose registered office is at 625 King's Road, 26(th)
Floor, North Point, Hong Kong, sole shareholder of 1010
Printing
Listing Rules the listing rules made by the FCA pursuant to Part
VI of FSMA
London Stock Exchange London Stock Exchange plc
Main Market the main market for listed securities of the London
Stock Exchange
Market Abuse Regulation Regulation (EU) No. 596/2014 of the
European Parliament and the Council of 16 April 2014 on market
abuse
Member State member state of the EU
MiFID II EU Directive 2014/65/EU on markets in financial
instruments, as amended
MiFID II Product Governance MiFID II together with (i) Articles
9 and 10 of Commission Delegated
Requirements Directive (EU) 2017/593 supplementing MiFID II; and
(ii) local implementing measures
Money Laundering Regulations Money Laundering Regulations 2017
New Common Shares the 20,444,550 new Common Shares to be issued
and allotted by the Company pursuant to the Open Offer or the
Underwriting Agreements
Nil Rate Amount a nil rate of income tax will apply for the
first GBP2,000 of dividend income received by individual
Shareholders in a tax year
Nominations Committee the nominations committee of the Board, as
constituted from time to time
Non-Executive Directors Andy Cumming, Jane Moriarty, Mei Lan Lam
and Michael Mousley
Notice of Special Meeting the notice convening the Special
Meeting in the form appended to the Circular
Official List the Official List maintained by the FCA
Open Offer the offer to Qualifying Shareholders, constituting an
invitation to apply for the New Common Shares at the Issue Price
and on the terms and subject to the conditions set out in the
Prospectus, and in the case of Qualifying Non-CREST Shareholders,
the Application Form
Open Offer Entitlement the pro rata entitlement of Qualifying
Shareholders to subscribe for 1 New Common Share for every 1
Existing Common Share registered in their name as at the Record
Date, on and subject to the terms of the Open Offer
Original Credit Agreement a credit agreement dated 6 February
2015 between, among others, Quarto Publishing, the Company, certain
other members of the Group, Abbey National Treasury Services PLC,
Bank of America N.A., Fifth Third Bank and The Royal Bank of
Scotland plc as original
lenders, RBS as agent and Natwest Markets PLC as security agent,
as more fully described in paragraph 7.1.3 ("2018 Facilities
Agreement") of Part 15 ("Additional Information") of the
Prospectus
Overseas Shareholders Shareholders with registered addresses
outside the United Kingdom or who are citizens or residents of
countries outside the United Kingdom
Panel the Panel on Takeovers and Mergers established under the
City Code
PCAOB Standards the standards of the Public Company Accounting
Oversight Board
Prospectus the prospectus to be published later today in
connection with the Open Offer
Prospectus Regulation Regulation (EU) 2017/1129, as supplemented
by the PR Regulation
Prospectus Regulation Rules the Prospectus Regulation Rules
Sourcebook published by the FCA pursuant to section 73A of FSMA
PR Regulation Regulation (EU) 2019/980
Qualifying CREST Shareholders Qualifying Shareholders holding
Existing Common Shares in uncertificated form on the Record Date
and who are not Affiliates of the Company, U.S. Persons or acting
for the account or benefit of U.S. Persons
Qualifying Non-CREST Qualifying Shareholders holding Existing Common Shares in
Shareholders certificated form on the Record Date or who are
Affiliates of the Company, U.S. Persons or acting for the account
or benefit of U.S. Persons
Qualifying Shareholders holders of Existing Common Shares on the
stock ledger of the Company at the Record Date with the exclusion
of, subject to certain limited exceptions, U.S. Persons, holders
acting for the account or benefit of U.S. Persons and Overseas
Shareholders with a registered address or resident in, or who are
citizens of, any Excluded Territory
Receiving Agent Link Asset Services, a trading name of Link
Market Services Limited
Record Date close of business on 15 January 2020
Registrars Link Asset Services
Regulation S Regulation S under the Securities Act
Regulatory Information Service one of the regulatory information
services authorised by the FCA to receive, process and disseminate
regulatory information from listed companies
Relationship Agreement the relationship agreement entered into
on 3 December 2019 by 1010 Printing, Lion Rock, Mr Lau and the
Company
Remuneration Committee the remuneration committee of the Board,
as constituted from time to time
Resolution 1 means the resolution number 1 to be proposed at the
Special Meeting set out in the Notice of Special Meeting to amend
the Certificate of Incorporation to increase the authorised Common
Shares of the Company to 55,000,000 Common Shares
Resolution 2 means the resolution number 2 to be proposed at the
Special Meeting set out in the Notice of Special Meeting to amend
the
Company's By-laws such that the appointment or reappointment of
any independent director of the Company must be approved by a
resolution of both: (a) the Company's Shareholders; and (b) the
Company's independent Shareholders (comprising Shareholders who do
not constitute "controlling shareholders" for the purposes of the
Listing Rules)
Resolutions the resolutions to be proposed at the Special
Meeting set out in the Notice of Special Meeting as described in
paragraph 6 ("Resolutions, authorisations and approvals relating to
the New Common Shares") of Part 7 ("Information Concerning the New
Common Shares") of the Prospectus
Rule 144 Rule 144 under the Securities Act
SDRT stamp duty reserve tax
SEC the U.S. Securities and Exchange Commission
Securities Act the U.S. Securities Act of 1933, as amended
Senior Independent Director Jane Moriarty
Senior Management Walter Nolan, Michael Clarke and Karine Marko
Shareholders holders of Common Shares
Special Meeting the special meeting of the Shareholders of the
Company to be held at the offices of finnCap Ltd at 60 New Broad
Street, London EC2M 1JJ at 9.30 a.m. on 31 January 2020
Sponsor finnCap Ltd, Sponsor to the Company, of 60 New Broad
Street, London EC2M 1JJ
Sponsor Agreement the sponsor agreement between the Company and
the Sponsor relating to the Open Offer dated 16 January 2020
Syndicate Bank of America Corporation of 100 Federal Street,
Boston, Massachusetts 02110 USA, Fifth Third Bank of 38 Fountain
Square Plaza, MD 109055, Cincinnati OH 45263 USA, The Royal Bank of
Scotland plc of 280 Bishopsgate, London, EC2M 4RB, UK and Santander
UK plc of 2 Triton Square, Regent's Place, London, NW1 3AN
Target Market Assessment a product approval process, which has
determined that the New Common 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
Transparency Rules the transparency rules and corporate
governance rules made by the FCA under Part VI of FSMA
U.S. GAAP U.S. Generally Accepted Accounting Principles
U.S. GAAS U.S. Generally Accepted Auditing Standards
U.S. Person a U.S. person (as defined in Rule 902(k) of
Regulation S)
UK Corporate Governance Code UK Corporate Governance Code,
published by the Financial Reporting Council in July 2018
UK Listing Authority or UKLA the FCA when it is exercising its powers under Part VI of FSMA
UKGS UK Guarantees Scheme
Underwriters the Lau Underwriter and the Giunti Parties
Underwriting means the underwriting commitment of the Lau
Underwriter and the Giunti Parties in respect of the Open Offer
under the terms of the Underwriting Agreements
Underwriting Agreements the Giunti Underwriting Agreement and
the Lau Underwriting Agreement
uncertificated or a share or other security recorded on the
relevant register of the
uncertificated form share or security concerned as being held in
uncertificated form in CREST and title to which, by virtue of the
CREST Regulations, may be transferred by means of CREST
United Kingdom or UK the United Kingdom of Great Britain and Northern Ireland
United States or U.S. or US the United States of America, its
territories and possessions, any State of the United States and the
District of Columbia
US$ or $ or U.S. Dollars the lawful currency of the United States
VAT value added tax
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
IOEBAMBTMTMBTJM
(END) Dow Jones Newswires
January 16, 2020 02:00 ET (07:00 GMT)
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