ACI.L Regulatory News (ACI)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

24 November 2020

RECOMMENDED CASH OFFER

for

ALTERNATIVE CREDIT INVESTMENTS PLC

by

WATERFALL EIT UK LIMITED

(a newly formed company owned by funds managed by Waterfall Asset Management, LLC.)

to be effected by means of a Scheme of Arrangement

under Part 26 of the Companies Act 2006

PUBLICATION OF THE SCHEME DOCUMENT

On 3 November 2020, the board of directors of Waterfall EIT UK Limited ("Bidco"), a newly formed company owned by funds managed by Waterfall Asset Management, LLC. ("Waterfall"), and the board of directors of Alternative Credit Investments plc ("ACI") (the "ACI Board" or the "ACI Directors") announced that they had reached agreement on the terms of a recommended cash offer to be made by Bidco for the entire issued ordinary share capital of ACI (the "Acquisition"). It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (the "Scheme").

Publication of the Scheme Document

ACI is pleased to announce that the Scheme Document in relation to the Acquisition (the "Scheme Document") is being posted today to the shareholders of ACI (the "ACI Shareholders") and, for information only, to persons with information rights in relation to ACI, and is available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on ACI's website at https://www.alternativecreditinvestments.co.uk/offer-for-aci/. The Scheme Document contains, among other things, a letter from the Chairman of ACI, a statutory explanatory statement pursuant to section 897 of the Companies Act 2006, the full terms and conditions of the Scheme, an expected timetable of principal events, notices of the Court Meeting and General Meeting (the "Meetings") and details of the action to be taken by ACI Shareholders, and is accompanied by Forms of Proxy for the Meetings.

Capitalised terms in this announcement (the "Announcement"), unless otherwise defined, have the same meanings as set out in the Scheme Document. All references to times in this Announcement are to London times unless otherwise stated.

Notices of the Court Meeting and General Meeting

As detailed further in the Scheme Document, in order to become Effective, the Scheme requires the: (a) satisfaction (or, where applicable, waiver) of the Conditions; (b) approval of a majority in number of the Scheme Shareholders who vote, representing not less than 75 per cent. in nominal value of the Scheme Shares voted, either in person or by proxy, at the Court Meeting; and (c) approval of Resolution 1 by the requisite majority at the General Meeting, being ACI Shareholders representing at least 75 per cent. in value of the ACI Shares voted either in person or by proxy at the General Meeting.

The Court Meeting and the General Meeting are scheduled to be held at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH on 17 December 2020. The Court Meeting will start at 10.00 a.m. and the General Meeting at 10.15 a.m. (or as soon thereafter as the Court Meeting has concluded or been adjourned).

The ACI Board, who have been so advised by Smith Square Partners as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their advice to the ACI Directors, Smith Square Partners has taken into account the commercial assessments of the ACI Directors. Smith Square Partners is providing independent financial advice to the ACI Directors for the purposes of Rule 3 of the Code.

The ACI Directors consider the terms of the Acquisition to be fair and reasonable and in the best interests of ACI Shareholders as a whole. Accordingly, the ACI Directors unanimously recommend that ACI Shareholders vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting, as those ACI Directors who are also ACI Shareholders have irrevocably undertaken to do in respect of their own beneficial holdings of ACI Shares.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of shareholder opinion. ACI Shareholders are therefore strongly urged to complete, sign and return their Forms of Proxy by post or email (or transmit a proxy appointment and voting instruction online, by email or through the CREST electronic proxy appointment service) as soon as possible.

In light of the current COVID-19 Restrictions, attendance and voting in person at the Meetings will not be permitted. However, ACI Shareholders will be given the opportunity to attend remotely, submit written questions and vote at the Court Meeting and the General Meeting via a virtual meeting platform, details of which are included in the Scheme Document.

ACI Shareholders should carefully read the Scheme Document in its entirety before making a decision with respect to the Scheme.

Expected timetable of principal events

The Scheme Document contains a current expected timetable of principal events for the implementation of the Scheme, which is also set out in the Appendix to this Announcement. Subject to the approval of ACI Shareholders and the Court, and to the satisfaction or waiver of the other Conditions set out in the Scheme Document, the Scheme is expected to become effective no later than 25 March 2021.

Information for ACI Shareholders

If ACI Shareholders have any further questions, including in relation to the completion and return of the Forms of Proxy or submitting their votes or proxies via CREST, they are asked to please call ACI's Registrars, Link Group, by telephone on +44 (0) 371 664 0300. Lines are open from 9.00 a.m. to 5.30 p.m. (London time). Monday to Friday (excluding English and Welsh public holidays). Calls to the Shareholder Helpline cost 12 pence per minute plus your phone company's access charge. Calls outside the United Kingdom will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and monitored for security and training purposes. Please note that the Shareholder Helpline operators cannot provide advice on the merits of the Scheme, nor give financial, tax, investment or legal advice.

Enquiries:

Latham & Watkins LLP are retained as legal adviser to Waterfall and Bidco.

Stephenson Harwood LLP are retained as legal adviser to ACI.

Important Notices

Smith Square Partners LLP ("Smith Square Partners"), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for ACI and no one else in connection with the Acquisition and other matters set out in this Announcement and will not be responsible to anyone other than ACI for providing the protections afforded to clients of Smith Square Partners nor for providing advice in relation to the Acquisition or any other matters referred to in this Announcement. Neither Smith Square Partners nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Smith Square Partners in connection with this Announcement, any statement contained herein or otherwise.

Liberum Capital Limited ("Liberum") which is authorised and regulated by the FCA in the United Kingdom is appointed as corporate broker to ACI and is acting exclusively for ACI and no one else in connection with the Acquisition and other matters set out in this Announcement, and will not be responsible to anyone other than ACI for providing the protections afforded to clients of Liberum, nor for providing advice in relation to the Acquisition or any other matters referred to in this Announcement.

Numis Securities Limited ("Numis"), which is regulated by the FCA in the United Kingdom, is acting exclusively for Waterfall and Bidco and no one else in connection with the Acquisition and other matters set out in this Announcement and will not be responsible to anyone other than Waterfall and Bidco for providing the protections afforded to clients of Numis, or for providing advice in connection with the Acquisition or any matter referred to herein. Neither Numis nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Numis in connection with this Announcement, any statement contained herein or otherwise.

This Announcement is for information purposes only and is not intended to and does not constitute, or form any part of, an offer to sell or subscribe for, or any invitation to purchase or subscribe for, any securities, or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise. The Acquisition will be made solely through and on the terms set out in the Scheme Document (or, in the event that the Acquisition is to be implemented by means of a Takeover Offer, the offer document) and the accompanying Forms of Proxy, which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Scheme. Any approval, decision or other response to the Acquisition should be made only on the basis of the information in the Scheme Document. Scheme Shareholders are strongly advised to read the formal documentation in relation to the Acquisition once it has been despatched.

The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them, and service of this Announcement shall not give rise to any implication that there has been no change in the facts set forth in this Announcement since such date.

Overseas shareholders

This Announcement has been prepared for the purpose of complying with English law, the Listing Rules and the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

The laws of other relevant jurisdictions may affect the availability of the Acquisition to persons who are not resident in the United Kingdom. Persons who are not resident in the United Kingdom, or who are subject to laws of any jurisdiction other than the United Kingdom, should inform themselves about, and observe any applicable requirements. Any person (including, without limitation, nominees, trustees and custodians) who would, or otherwise intends to, forward this Announcement, the Scheme Document or any accompanying document to any jurisdiction outside the United Kingdom should refrain from doing so and seek appropriate professional advice before taking any action. In particular, the ability of persons who are not resident in the United Kingdom to vote their Scheme Shares at the Court Meeting or the General Meeting, or to execute and deliver Forms of Proxy appointing another to vote their Scheme Shares in respect of the Court Meeting or the General Meeting on their behalf, may be affected by the laws of the relevant jurisdiction in which they are located or to which they are subject.

Any failure to comply with the applicable legal or regulatory requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility and liability for the violation of such restrictions by any person.

The Acquisition will not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, telephonic or electronic) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, a Restricted Jurisdiction, and the Acquisition will not be capable of acceptance by any such use, means, instrumentality or facility or from within a Restricted Jurisdiction. Accordingly, copies of this Announcement and formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded or distributed in, into or from a Restricted Jurisdiction and persons receiving this Announcement (including custodians, nominees and trustees) must not distribute or send it into or from a Restricted Jurisdiction.

The Acquisition relates to the shares of a company incorporated in England and it is proposed to be made by means of a scheme of arrangement provided for under English law. The Scheme will relate to the shares of a UK company that is a "foreign private issuer" as defined under Rule 3b-4 under the US Exchange Act. A transaction effected by means of a scheme of arrangement is not subject to the shareholder vote, proxy solicitation and tender offer rules under the US Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement, which differ from the disclosure requirements and practices of US shareholder vote, proxy solicitation and tender offer rules. Financial information included in the relevant documentation will have been prepared in accordance with accounting standards applicable in the UK and may not be comparable to the financial statements of US companies. However, if Bidco were to elect to implement the Acquisition by means of a Takeover Offer, such Takeover Offer shall be made in compliance with all applicable laws and regulations, including section 14(e) of the US Exchange Act and Regulation 14E thereunder. In the event that the Acquisition is implemented by way of a Takeover Offer and extended into the US, Bidco will do so in satisfaction of the procedural and filing requirements of the US securities laws at that time, to the extent applicable thereto. Such Takeover Offer would be made in the US by Bidco and no one else. In addition to any such Takeover Offer, Bidco, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in ACI outside such Takeover Offer during the period in which such Takeover Offer would remain open for acceptance. If such purchases or arrangements to purchase are made they would be made outside the United States in compliance with applicable law, including the US Exchange Act.

Forward-looking statements

This Announcement may contain certain "forward-looking statements" with respect to Waterfall, Bidco and ACI. 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" or other words or terms of similar meaning or the negative thereof. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies of Waterfall and/or Bidco and the expansion and growth of ACI and potential synergies resulting from the Acquisition; and (iii) the effects of government regulation on the business of ACI.

These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or developments to differ materially from those expressed in or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding present and future strategies and environments. None of Waterfall, Bidco or ACI, nor any of their respective associates, directors, officers, employees or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur. You are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. All subsequent oral or written forward-looking statements attributable to Waterfall, Bidco or ACI or any person acting on their behalf are expressly qualified in their entirety by the cautionary statement above. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Announcement. Bidco and ACI assume no obligation to update publicly or revise forward-looking or other statements contained in this Announcement, whether as a result of new information, future events or otherwise, except to the extent legally required.

No profit forecasts or estimates

No statement in this Announcement is intended as a profit forecast or estimate for Waterfall, Bidco or ACI in respect of any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per ACI Share for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per ACI Share.

Right to switch to a Takeover Offer

Waterfall and Bidco reserve the right to elect, with the consent of the Takeover Panel, to implement the Acquisition by way of a Takeover Offer for the entire issued and to be issued ordinary share capital of ACI as an alternative to the Scheme. In such an event, the Takeover Offer will be implemented on the same terms or, if Waterfall so decides, on such other terms being no less favourable (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme and subject to the amendment referred to in paragraph 5 of Part B of Part IV of the Scheme Document.

Publication on website

A copy of this Announcement will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions), free of charge, on ACI's website at https://www.alternativecreditinvestments.co.uk/offer-for-aci/ from the time this Announcement is published. Neither the contents of this website nor the content of any other website accessible from hyperlinks on such websites is incorporated into, or forms part of, this Announcement.

Requesting hard copies

In accordance with Rule 30.3 of the Code, a person so entitled may request a hard copy of this Announcement, free of charge, by contacting Link Company Matters on +44 (0) 20 7954 9664 / companymatters@linkgroup.co.uk. For persons who receive a copy of this Announcement in electronic form or via a website notification, a hard copy of this Announcement will not be sent unless you have previously notified ACI that you wished to receive all documents in hard copy form or unless requested by contacting Link Company Matters on +44 (0) 20 7954 9664 / companymatters@linkgroup.co.uk. In accordance with Rule 30.3 of the Code, a person so entitled may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be in hard copy form.

Electronic communications - information for ACI Shareholders

Please be aware that addresses, electronic addresses and certain information provided by ACI Shareholders, persons with information rights and other relevant persons for the receipt of communications from ACI may be provided to Waterfall and Bidco during the Offer Period as required under section 4 of Appendix 4 of the Code.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of: (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm on the 10th Business Day (as defined in the Code) following the commencement of the offer period and, if appropriate, by no later than 3.30 pm on the 10th Business Day (as defined in the Code) following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of: (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm on the Business Day (as defined in the Code) following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror, and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Takeover Panel's Market Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

APPENDIX

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

All dates and times set out in the timetable below are based on ACI's and Bidco's current expectations for the implementation of the Scheme and are subject to change. If any of the dates and/or times in this expected timetable change, the revised dates and/or times will be notified to ACI Shareholders by announcement through the Regulatory Information Service of the London Stock Exchange, with any such announcement also being made available on the Offer Website at https://www.alternativecreditinvestments.co.uk/offer-for-aci/. All times shown are UK times.

Notes:

(1) The dates and times given are indicative only and are based on ACI's current expectations and may be subject to change (including as a result of changes to the timetable for fulfilment of the regulatory approvals and changes to the Court timetable). If any of the times or dates above change, the revised times and dates will be notified to ACI Shareholders by announcement through a Regulatory Information Service.

(2) It is requested that the BLUE Form of Proxy for the Court Meeting be lodged not later than 48 hours prior to the time appointed for the Court Meeting or, if the Court Meeting is adjourned, the time fixed for any adjourned Court Meeting (excluding any part of such 48 hour period falling on a non-working day). If the BLUE Form of Proxy is not lodged by this time, it may be emailed to Mark.Ray@linkgroup.co.uk any time prior to the commencement of the Court Meeting.

(3) In order to be valid, the WHITE Forms of Proxy for the General Meeting must be received by 10.15 a.m. on 15 December 2020 or, if the General Meeting is adjourned, 48 hours prior to the time fixed for the adjourned General Meeting (excluding any part of such 48 hour period falling on a non-working day).

(4) Only those ACI Shareholders registered on the Register as at 6.00 p.m. on 15 December 2020 will be entitled to vote at the Meetings. If either Meeting is adjourned, the Voting Record Time for the adjourned Meeting will be 48 hours (excluding non-working days) before the date set for the adjourned Meeting.

(5) To commence at the time fixed or, if later, immediately after the conclusion or adjournment of the Court Meeting.

(6) The Sanction Hearing to sanction the Scheme is to be held on such date as ACI and Bidco may agree and the Court may allow.

(7) This is the latest date by which the Scheme may become Effective unless ACI and Bidco agree, and (if required) the Court and the Takeover Panel allow, a later date.