Kelso Rns in Full30 Mar 2023 08:15
Number : 6997U
Kelso Group Holdings PLC
30 March 2023
30 March 2023
Kelso Group Holdings Plc ("Kelso" or the "Company")
Recommendations on THG Plc ("THG"), THG Investment Update, Proposed Placing and Board Changes
Kelso, the main market listed investment company, is pleased to announce:
· recommendations following further analysis into THG;
· a net purchase of a beneficial interest in an additional 2.4 million shares in THG, which takes Kelso's total beneficial interest, consisting of ordinary shares and CFDs, in THG to 7.4 million shares;
· a proposed placing at a price of 2.5 pence, a 25% premium to the offer for subscription concluded in January 2023, to raise a maximum of £3.0 million (before expenses) ("Proposed Placing"); and
· the appointment of David Charters as a Non-Executive Director.
Recommendations
Kelso has continued its analysis into THG, including, amongst other actions, a hosted visit to THG's operations in Manchester and Warrington. We believe that 2023 will be a positive year for THG as many of the operational headwinds experienced during 2022 continue to reverse. Whilst we commend THG's board and management's efforts, we believe there are more actions they can take to ensure the share price reflects what we strongly believe to be intrinsic value. Specifically, we would like to see the board deliver on commitments made to investors. We urge the board to implement the following readily achievable measures which we believe will be positive for THG's share price.
1. Kelso considers that the transition of THG from the Standard List to the Premium List of the London Stock Exchange ("LSE") would be significantly accretive to shareholder value. The performance of most active and indexed UK funds is benchmarked to the Premium Index and therefore they can ignore companies listed on the Standard Index. In October 2021, THG announced its intention to apply to move from the Standard List to the Premium List of the LSE by the end of 2022. However, in their Interim Results announced in September 2022, THG indicated that the timing of the move depended on the FCA's review for listing regime reform, anticipated in 2023. Kelso recommends that THG provide the market with a progress update on the transition with a specific timeline. Importantly, we believe this move should be completed as soon as possible, irrespective of the timing of the FCA's review.
2. We urge THG to continue to review strategic options, alongside focussing on cash generation, to ensure underlying value is realised in a practicable timeframe. Initially, for the market to better understand the value potential of THG, it is important that they provide the appropriate detailed segmental analysis, specifically including divisional contribution/pro
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