AFHP.L Regulatory News (AFHP)

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

10 March 2021

RECOMMENDED CASH ACQUISITION

of

AFH FINANCIAL GROUP PLC

by

CORTINA BIDCO LIMITED

(a newly incorporated company indirectly controlled by funds managed by Flexpoint Ford, LLC)

to be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006

Publication and posting of Supplemental Scheme Document

On 25 January 2021, it was announced that the board of Cortina Bidco Limited ("Bidco"), a newly incorporated company indirectly controlled by funds managed by Flexpoint Ford, LLC ("Flexpoint"), and the Independent Directors of AFH Financial Group Plc ("AFH" or the "Company") had reached agreement on the terms of a recommended all cash acquisition of the entire issued, and to be issued, ordinary share capital of AFH (the "Acquisition"). The Acquisition is to be implemented by way of a Court-approved scheme of arrangement (the "Scheme").

On 8 February 2021, the Company published and posted a circular to AFH Shareholders (the "Scheme Document"), as part of which John Wheatley wrote to Shareholders on behalf of the Independent Directors to set out, amongst other things, the background to, the terms of, and the reasons for the Independent Directors recommending, the Acquisition. The Scheme Document also contained, amongst other things, the Scheme and notices of the Court Meeting and the General Meeting, which were intended to take place on 1 March 2021.

On 1 March 2021, it was announced that the Court Meeting and the General Meeting had been adjourned until further notice and, on 2 March 2021, the board of Bidco and the Independent Directors announced that they had reached agreement on the terms of an increased recommended cash offer by Bidco to acquire the entire issued, and to be issued, share capital of AFH at a price of 480 pence per AFH Share (the "Increased Acquisition Price") (the "Increased Offer").

The Board of Bidco and the Independent Directors of AFH are pleased to announce that the supplemental scheme document in relation to the Scheme (the "Supplemental Document") is today being published and posted to AFH Shareholders (other than to AFH Shareholders in certain Restricted Jurisdictions). The Supplemental Document is supplemental to, and should be read in conjunction with, the Scheme Document. All relevant changes to the information disclosed in the Scheme Document which are material in the context of the Scheme Document, and all material new information which has arisen since the Scheme Document was published on 8 February 2021, are contained in the Supplemental Document. Where no material changes to the information disclosed in the Scheme Document have occurred since the date of the Scheme Document and the information set out therein continues to apply, the Supplemental Document cross-refers to the relevant parts of the Scheme Document, as applicable.

The Independent Directors, who have been so advised by KBW as to the financial terms of the Increased Offer and the Acquisition, consider the terms of the Increased Offer and the Acquisition to be fair and reasonable. In providing its advice, KBW has taken into account the commercial assessments of the Independent Directors. KBW is providing independent financial advice to the Independent Directors for the purposes of Rule 3 of the Code.

Notice of Reconvened Meetings

The Reconvened Court Meeting and the Reconvened General Meeting are scheduled to be held at AFH House, Buntsford Drive, Stoke Heath, Bromsgrove, Worcestershire B60 4JE on 26 March 2021 with the Reconvened Court Meeting scheduled to commence at 11.00 a.m. and the Reconvened General Meeting scheduled to commence at 11.15 a.m. (or as soon thereafter as the Reconvened Court Meeting is concluded or adjourned). Notices of the Reconvened Court Meeting and the Reconvened General Meeting are set out in the Supplemental Document.

Subject to the requisite approval of AFH Shareholders at the Reconvened Court Meeting and the Reconvened General Meeting and the satisfaction of the Regulatory Condition, which is expected to be in the second quarter of 2021, a Scheme Court Hearing to sanction the Scheme will take place at a date expected to be not less than 10 Business Days after the satisfaction of the Regulatory Condition.

Given the current UK Government guidance and the general uncertainty on what additional and/or alternative measures may be put in place in relation to restricting social gatherings in view of the COVID-19 pandemic, AFH Shareholders (or their proxies) will not be permitted to attend the Reconvened Meetings physically, save for AFH Shareholders permitted by the Chair of the relevant Reconvened Meeting to establish a quorum.

It is therefore very important that, for the Reconvened Court Meeting in particular, as many votes as possible are cast by proxy so that the Court may be satisfied that there is a fair and reasonable representation of AFH Shareholder opinion. AFH Shareholders are therefore strongly urged to complete, sign and return their Forms of Proxy, if they have not already done so, via post or email, or appoint a proxy electronically through CREST as soon as possible.

AFH will provide a facility for AFH Shareholders (or their proxies) who wish to attend, ask questions and vote at the relevant Reconvened Meeting in real time should they wish to do so via a virtual meeting platform. AFH Shareholders wishing to use this facility should refer to the relevant details set out in the Supplemental Document.

Voting

Any votes cast, and Forms of Proxy already submitted, will continue to be valid and binding in respect of the Reconvened Court Meeting and/or the Reconvened General Meeting, as applicable, unless additional Forms of Proxy are submitted in accordance with the instructions set out in the Scheme Document, the Supplemental Document and the Forms of Proxy. Accordingly, if you have already cast your vote, and submitted a Form of Proxy, in respect of the Court Meeting and/or the General Meeting, as applicable, and you do not wish to change your vote and/or your proxy appointment(s), you need take no further action and your votes and/or proxy appointment(s) will continue to be valid and binding in respect of the Reconvened Court Meeting and/or the Reconvened General Meeting, as applicable.

Cancellation of admission of AFH Shares to trading on AIM

If the Scheme becomes Effective in accordance with its terms, it is currently expected that trading on AIM of AFH Shares will be suspended at 7.30 a.m. (London time) on the Effective Date. AFH intends that, prior to the Scheme becoming Effective, an application will be made to the London Stock Exchange for the AFH Shares to cease to be admitted to trading on AIM with effect from shortly after the Effective Date. As soon as possible after the Scheme becoming Effective, it is intended that AFH will be re-registered as a private company limited by shares under the relevant provisions of the Companies Act.

Expected Timetable of Principal Events

A detailed timetable of events for the Scheme is set out in the appendix to this announcement. These dates are indicative only and will depend, amongst other things, on the satisfaction of the Regulatory Condition and the date on which the Court sanctions the Scheme. If the expected dates change, the Company will give notice of the changes in an announcement through a Regulatory Information Service.

Publication of the Supplemental Document

Copies of the Supplemental Document, as well as certain other documentation in connection with the Acquisition and the Scheme, are available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions), free of charge, on AFH's website at www.afhwm.co.uk/investor-relations.

Words and expressions defined in the Supplemental Document shall, unless the context provides otherwise, have the same meanings in this announcement.

Enquiries

Further information

Stifel Nicolaus Europe Limited, which also trades under the name Keefe, Bruyette & Woods ("KBW"), and which is authorised and regulated in the United Kingdom by the FCA, is acting as financial adviser to AFH and no-one else in connection with the matters described in this announcement and will not be responsible to anyone other than AFH for providing the protections afforded to clients of KBW nor for providing advice in connection with the matters referred to herein. Neither KBW 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 KBW in connection with this announcement, any statement contained herein, the Acquisition or otherwise.

Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited ("Shore Capital") are authorised and regulated in the United Kingdom by the FCA. Shore Capital is acting exclusively for AFH and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than AFH for providing the protections afforded to clients of Shore Capital or for providing advice in connection with the matters referred to in this announcement. Neither Shore Capital nor any of its subsidiaries or 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 Shore Capital in connection with this announcement or any matter referred to herein.

Eversheds Sutherland (International) LLP is retained as legal adviser to AFH.

Raymond James Financial International Limited ("Raymond James"), which is authorised and regulated in the United Kingdom by the FCA, is acting as financial adviser to Bidco and no-one else in connection with the matters described in this announcement and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of Raymond James nor for providing advice in connection with the matters referred to herein. Neither Raymond James 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 Raymond James in connection with this announcement, any statement contained herein, the Acquisition or otherwise.

Kirkland & Ellis International LLP is retained as legal adviser to Flexpoint and Bidco.

The person responsible for arranging for the release of this announcement on behalf of AFH is Paul Wright, Chief Financial Officer.

This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval, in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of AFH in any jurisdiction in contravention of applicable law. The Acquisition will be implemented solely by means of the Scheme Document, the Supplemental Document (or, if applicable, the offer document containing any Offer), which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Scheme (or, if applicable, how to accept the Offer). Any vote in respect of the Scheme or other response in relation to the Acquisition should be made only on the basis of the information contained in the Scheme Document, the Supplemental Document (or, if applicable, the offer document containing any Offer).

Overseas jurisdictions

The availability of the Acquisition to AFH Shareholders who are not resident in, and citizens of, the UK may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Persons who are not resident in the UK should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions.

The release, publication or distribution of this announcement in or into jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than the UK should inform themselves of, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the UK to vote their AFH Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This announcement has been prepared for the purposes of complying with English Law, the AIM Rules, UK MAR, the rules of the London Stock Exchange 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 of England.

Copies of this announcement and the formal documentation relating to the Scheme and the Acquisition will not be, and must not be, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction or any jurisdiction where to do so would violate the laws of that jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition. If the Acquisition is implemented by way of an Offer (unless otherwise permitted by applicable law or regulation), the Offer may not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

Further details in relation to overseas shareholders are contained in the Scheme Document.

Additional information for US Holders

US Holders should note that the Acquisition relates to the securities of an English company and is proposed to be implemented under a scheme of arrangement under English company law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act and the proxy solicitation rules under the US Exchange Act will not apply to the Acquisition. The Scheme will be subject to UK disclosure requirements and practices which are different from the disclosure requirements of the US tender offer and proxy solicitation rules. The financial information included in the Scheme Document has been prepared in accordance with IFRS and thus may not be comparable to financial information of companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. However, if Bidco were to exercise its right to implement the Acquisition of the AFH Shares by way of an Offer, such Offer will be made in compliance with applicable US tender offer and securities laws and regulations. Such an Offer would be made by Bidco.

The receipt of cash pursuant to the Acquisition by a US Holder as consideration for the transfer of its Scheme Shares pursuant to the Scheme may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each AFH Shareholder is urged to consult his, her or its independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him, her or it.

It may be difficult for US Holders to enforce their rights and claims arising out of the US federal securities laws since Bidco and AFH are located in countries other than the US and some or all of their officers and directors may be residents of countries other than the US. US Holders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, Bidco or its nominees, or their brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, AFH Shares outside of the US, other than pursuant to the Acquisition, until the date on which the Scheme and/or the Acquisition becomes Effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

Dealing disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in one 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 (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day 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 one 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(s), 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 (London time) on the business day 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 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 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.

Publication on website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on AFH's website at https://www.afhwm.co.uk/investor-relations by no later than 12 noon (London time) on the business day following the date of this announcement. For the avoidance of doubt, the contents of this website is not incorporated by reference into, and does not form part of, this announcement.

Requesting hard copy documents

AFH Shareholders may request a hard copy of this announcement by contacting the Company Secretary of AFH during business hours on +44 (0)152 757 7775 or by submitting a request in writing to the Company Secretary of AFH at AFH House, Buntsford Drive, Stoke Heath, Bromsgrove, Worcestershire, B60 4JE. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form.

APPENDIX

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

All times shown are London times unless otherwise stated. All dates and times are based on AFH's and Bidco's current expectations 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 AFH Shareholders by announcement through a Regulatory Information Service and by posting notice of these dates on the following website: www.afhwm.co.uk/investor-relations.

The Reconvened Court Meeting and the Reconvened General Meeting will both be held at AFH House, Buntsford Drive, Stoke Heath, Bromsgrove, Worcestershire B60 4JE on 26 March 2021.

Notes:

(1) If the BLUE Form of Proxy for the Reconvened Court Meeting is not lodged by the time stated above, it may be e-mailed to ProxyVotes@equiniti.com any time up until the commencement of the Reconvened Court Meeting and will still be valid. However, in order to be valid, the YELLOW Form of Proxy for the Reconvened General Meeting must be lodged no later than 11.15 a.m. (London time) on 24 March 2021 (or, if the Reconvened General Meeting is adjourned, 48 hours before the time fixed for the adjourned Meeting (excluding any part of a day which is not a working day)). Please see "Action to be taken" in the Supplemental Document.

(2) If either the Reconvened Court Meeting or the Reconvened General Meeting is adjourned, the Voting Record Time for the relevant adjourned Meeting will be 6.30 p.m. on the day which is two days (excluding any part of a day that is a non-working day) before the date of such adjourned Meeting.

(3) To commence at 11.15 a.m. (or as soon as reasonably practicable thereafter as the Reconvened Court Meeting shall have been concluded or adjourned).

(4) These times and dates are indicative only and will depend on, among other things, whether and when the Conditions are satisfied or (where applicable) waived and the dates upon which the Court sanctions the Scheme and a copy of the Scheme Court Order to sanction the scheme is delivered to the Registrar of Companies. If the expected date of the Scheme Court Hearing is changed, AFH will give adequate notice of the changes by issuing an announcement through a Regulatory Information Service and by posting notice of these dates on the following website: www.afhwm.co.uk/investor-relations.

(5) This date will be the date on which a copy of the Scheme Court Order is delivered to the Registrar of Companies.

(6) This is the latest date by which the Scheme may become Effective unless AFH and Bidco agree, with the consent of the Panel and (if required) the Court, a later date.