AIREA Regulatory News (AIEA)



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW

AIREA plc ('the Company')

Proposed Tender Offer

The Company announces today a proposed tender offer to be made by N+1 Singer to Qualifying Shareholders to purchase up to 10 million Ordinary Shares, representing 21.6 per cent. of the Company's issued Ordinary Shares, at a fixed price of 12.25 pence per Ordinary Share in accordance with the terms and conditions of the Tender Offer set out in Part III of the Circular being sent to Shareholders today.

The implementation of the Tender Offer requires the approval of Shareholders and a Notice of General Meeting accompanies the Circular which convenes a General Meeting to be held at the offices of Eversheds LLP at Bridgewater Place, Water Lane, Leeds LS11 5DR at 11.00 a.m. on 19 December 2014. The Resolution to approve the purchase of Ordinary Shares pursuant to the Tender Offer at a fixed price of 12.25 pence per Ordinary Share will be proposed at the General Meeting.

The Tender Offer

The key points of the Tender Offer are as follows:

· The Board is proposing the Tender Offer in order to provide a guaranteed liquidity event for all Qualifying Shareholders, to reduce administrative costs in relation to the shareholder base of the Company, by potentially reducing the number of Shareholders, and to increase earnings per share through the reduction of the total number of Ordinary Shares in issue.

· The Tender Offer will be structured in order to allow Small Shareholders, with 1,000 Ordinary Shares or less, to dispose of their entire holding of Ordinary Shares without being scaled back. Such Small Shareholders must tender all or none of their Ordinary Shares.

· Each Qualifying Shareholder who is not a Small Shareholder may offer to tender none, some or all of their Ordinary Shares, subject to the Minimum Tender Size (of 1,000 Ordinary Shares).

· In the event that total valid applications exceed 10,000,000 Ordinary Shares, after having accepted applications from Small Shareholders in full, the remaining individual applications from Qualifying Shareholders will be scaled back pro rata to the size of their applications.

· If approved, the Tender Offer will be funded from the Company's existing cash resources. The Overdraft will be utilised to fund the working capital requirements of the Company and its Subsidiaries going forward.

Expected Timetable of Principal Events

Definitions in this announcement are the same as those used in the Circular.

Copies of the Circular are available from the Company and on the Company's website at http://www.aireaplc.com/.

The Tender Offer is not being made, directly or indirectly, in or into, or by any means or instrumentality of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States, Canada, Australia, New Zealand, Japan, the Republic of Ireland or the Republic of South Africa or any other Restricted Jurisdiction. Copies of the Tender Form are not being and must not be mailed or otherwise distributed or sent in or into the United States, Canada, Australia, New Zealand, Japan, the Republic of Ireland or the Republic of South Africa including to Shareholders with registered addresses in these jurisdictions or to persons whom the Company knows to be trustees, nominees or custodians holding Ordinary Shares for such persons.

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as nominated adviser and broker to the Company in connection with the matters described in the Circular. N+1 Singer will not be responsible to anyone other than the Company for providing the protections afforded to customers of N+1 Singer or for advising any other person on the arrangements described in the Circular. N+1 Singer has not authorised the contents of, or any part of, this announcement or the Circular and no liability whatsoever is accepted by N+1 Singer for the accuracy of any information or opinions contained in this announcement or the Circular or for the omission of any information. N+1 Singer, as nominated adviser and broker to the Company, owes certain responsibilities to the London Stock Exchange which are not owed to the Company or the Directors.

For further information, please contact:

AIREA plc

Neil Rylance, Chief Executive Officer 01924 266561

Roger Salt, Finance Director

N+1 Singer

Richard Lindley 020 7496 3000

James White

Background to and reasons for the Tender Offer

The Company has approximately 1,240 Shareholders, overwhelmingly comprising private investors, of whom approximately 460 Shareholders own 1,000 Ordinary Shares or less. Certain small holdings are of a size which are uneconomic to trade because of associated dealing costs. There is little liquidity in the Ordinary Shares, with market makers quoting prices in units of only 5,000 Ordinary Shares. The average number of trades per day over the last 12 months was approximately 1.5 and the average number of Ordinary Shares traded per month over the last 12 months was 353,840, representing approximately 0.8 per cent. of the issued share capital of the Company.

The Board is proposing the Tender Offer in order to provide a guaranteed liquidity event for all Qualifying Shareholders, to reduce administrative costs in relation to the shareholder base of the Company, by potentially reducing the number of Shareholders, and to increase earnings per share through the reduction of the total number of Ordinary Shares in issue.

The Tender Offer will be structured in order to allow Small Shareholders, with 1,000 Ordinary Shares or less, to dispose of their entire holding of Ordinary Shares without being scaled back. Such Small Shareholders must tender all or none of their Ordinary Shares.

If approved, the Tender Offer will be funded from the Company's existing cash resources. The Overdraft will be utilised to fund the working capital requirements of the Company and its Subsidiaries going forward. The Overdraft replaces a similar overdraft facility which the Company and certain of its Subsidiaries had with Clydesdale Bank Plc.

The Pension Scheme Trustees and the Company have separately obtained advice that the Tender Offer may be detrimental to the Pension Scheme. It is not thought by such advisors, however, that such detriment will be material and, as such, clearance from the Pensions Regulator is not required. The Company has though agreed to grant a legal mortgage (in order to secure liabilities to the Pension Scheme Trustees of up to £1.25 million) over the Victoria Mills property owned by the Company's subsidiary, Burmatex Limited, in favour of the Pension Scheme Trustees in order to mitigate such potential detriment.

Current Trading

In the announcement of the results for the year to 30 June 2014, the Company reported an improvement in trading in the second half of the financial year following a difficult first six months, resulting in increased underlying profitability for the year as a whole.

The trading environment has been in line with the expectations expressed in the results statement. The Eurozone continues to struggle to break out of a pattern of stagnation, and the UK public sector remains squeezed by austerity. However, UK private construction new build and refurbishment performance has been more robust. Against this market backdrop the success achieved in the second half of the last financial year has been maintained and the dip in sales seen in the first half of last year reversed.

The Board does not detect any fundamental changes in the outlook for the markets that we serve, and competition for business is likely to remain fierce. However, there is no reason to believe that the performance achieved through the second half of the last financial year and in the current financial period cannot be sustained.

Tender Offer

Summary of Tender Offer

As explained above, N+1 Singer has agreed to provide Qualifying Shareholders with the opportunity to sell their Ordinary Shares, pursuant to the Tender Offer, which N+1 Singer will purchase, as principal. The Company has agreed that, upon receipt of written notice from N+1 Singer, it shall repurchase the Ordinary Shares acquired by N+1 Singer pursuant to the Tender Offer and any Ordinary Shares so purchased shall be cancelled. The Tender Offer is subject to the conditions set out in the Repurchase Agreement being fulfilled.

A letter from N+1 Singer containing further details relating to the Tender Offer and the terms and conditions of the Tender Offer are set out in Parts II and III of the Circular, respectively. Under the terms of the Tender Offer, the price to be paid for each Ordinary Share subject to the Tender Offer is 12.25 pence. This represents a premium of 4.3 per cent. over the closing middle-market price of an Ordinary Share on 2 December 2014, being the latest practicable date prior to the date of the Circular, and a premium of 4.4 per cent. over the average closing middle-market price of an Ordinary Share over the three months to 30 November 2014.

N+1 Singer has agreed to accept in full all valid tenders made by Small Shareholders. Each Small Shareholder must tender either all or none of their Ordinary Shares in order for such tenders to be valid and all such valid tenders will be accepted in full.

Each Qualifying Shareholder who is not a Small Shareholder may offer to tender none, some or all of their Ordinary Shares, subject to the Minimum Tender Size (being 1,000 Ordinary Shares). In the event that total valid applications exceed 10,000,000 Ordinary Shares, after having accepted valid applications from Small Shareholders in full, the remaining individual applications from Qualifying Shareholders will be scaled back pro rata to the size of their applications.

Shareholders should note that there is no obligation for Qualifying Shareholders to sell any of their Ordinary shares.

Summary of Repurchase Agreement

On 2 December 2014, the Company entered into the Repurchase Agreement with N+1 Singer. Under the terms of the Repurchase Agreement the parties have agreed that, subject to certain conditions, including:

(a) the Tender Offer becoming unconditional in all respects and not lapsing or terminating in accordance with its terms; and

(b) an amount equal to the Tender Price multiplied by the maximum number of Ordinary Shares capable of being tendered being paid by the Company to N+1 Singer;

N+1 Singer shall purchase on-market at the Tender Price the Ordinary Shares successfully tendered. The Company has agreed that conditional on N+1 Singer or an affiliate becoming the registered and beneficial owner of the Ordinary Shares tendered pursuant to the Tender Offer by no later than 31 January 2015, upon receipt of written notice from N+1 Singer, it shall repurchase the Ordinary Shares acquired by N+1 Singer pursuant to the Tender Offer.

Procedure for Tendering Ordinary Shares

Qualifying Shareholders may offer to sell Ordinary Shares in the Tender Offer at a fixed price of 12.25 pence per Ordinary Share in accordance with Part III of the Circular. The procedure for tendering Ordinary Shares depends on whether your Ordinary Shares are held in certificated or uncertificated form and is summarised below.

If you are in any doubt as to the procedure for acceptance, please contact the Receiving Agent either:

· by telephone on 0871 664 0321 from within the UK or +44 20 8639 3399 if calling from outside the UK. Lines are open between 9.00 a.m. and 5.30 p.m. (London time) Monday to Friday. Calls to the 0871 664 0321 number cost 10 pence per minute (including VAT) plus your service provider's network extras. Calls to the helpline from outside the UK will be charged at applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the proposals set out in the Circular nor give any financial, legal or tax advice; or

· at the address set out below. You are reminded that, if you are a CREST sponsored member, you should contact your CREST sponsor before taking any action.

Ordinary Shares held in certificated form

Qualifying Shareholders who hold Ordinary Shares in certificated form and wish to tender some or all of their Ordinary Shares, on the terms set out in Part III of the Circular, should complete the Tender Form in accordance with the instructions set out therein and in Part III of the Circular, and return the completed Tender Form by post to, Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal business hours only) to Capita Asset Services, to arrive no later than 1.00 p.m. on 7 January 2015.

Qualifying Shareholders who hold their Ordinary Shares in certificated form must also return the share certificate(s) and/or other document(s) of title in respect of the Ordinary Shares tendered with their Tender Form.

Ordinary Shares in uncertificated form

Qualifying Shareholders who hold Ordinary Shares in uncertificated form (that is, in CREST) and who wish to tender some or all of their Ordinary Shares, on the terms set out in Part III of the Circular, should send a TTE Instruction and follow the procedures set out in Part III of the Circular in respect of tendering uncertificated Ordinary Shares.

Completed Tender Forms and/or TTE Instructions (as appropriate) must be received by the Receiving Agent no later than 1.00 p.m. on 7 January 2015. Qualifying Shareholders should note that Ordinary Shares, once tendered, may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Although the Tender Form (in respect of certificated Ordinary Shares) must be returned by 1.00 p.m. on 7 January 2015, the purchase by N+1 Singer of the Ordinary Shares tendered by Qualifying Shareholders will not be effected until on or about 9 January 2015. Upon having returned a Tender Form, a Qualifying Shareholder is deemed to accept that their tender application may not be withdrawn or cancelled before that date.

Terms and conditions and full details of the procedure for tendering Ordinary Shares are set out in Part III of the Circular and (for Qualifying Shareholders holding Ordinary Shares in certificated form) in the Tender Form.

General Meeting

Implementation of the Tender Offer requires the approval of Shareholders at a General Meeting. Accordingly, a notice is set out at the end of the Circular convening the General Meeting to be held at the offices of Eversheds LLP at Bridgewater Place, Water Lane, Leeds LS11 5DR at 11.00 a.m. on 19 December 2014.

The Resolution will be proposed at the General Meeting as a special resolution to seek Shareholder approval for the Company to make on-market purchases of up to a maximum of 10,000,000 Ordinary Shares from N+1 Singer at a fixed price of 12.25 pence per Ordinary Share pursuant to the Tender Offer. The authority sought will expire on 19 June 2015.

Action to be taken by Shareholders

General Meeting

Your vote is important. Whether or not Shareholders plan to attend the General Meeting, they are encouraged to sign, date and return the Form of Proxy in accordance with the instructions contained thereon so as to arrive at Capita Registrars as soon as possible and, in any event, no later than 11.00 a.m. on 17 December 2014, by posting the Form of Proxy or delivering it by hand (during normal business hours only) to Capita Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. If Shareholders hold their Ordinary Shares in uncertificated form (i.e. in CREST), they may appoint a proxy by completing and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by the Registrar (under CREST participant RA10) by no later than 11.00 a.m. on 17 December 2014.

Tender Offer

If you are a Qualifying Shareholder and wish to participate in the Tender Offer, you should follow the procedure for acceptance set out in Part III of the Circular and the further terms and conditions set out in Part III of the Circular.

Irrevocable Undertakings

The Company has received irrevocable undertakings from Shareholders in respect of a total of 8,905,721 Ordinary Shares (representing 19.3 per cent. of the total issued Ordinary Shares) to vote or procure that Ordinary Shares held on their account are voted in favour of the Resolution.

Each of the Directors has undertaken irrevocably to the Company and N+1 Singer that they will either not accept the Tender Offer or procure that the Tender Offer is not accepted in respect of their aggregate holding of 4,780,721 Ordinary Shares, representing approximately 10.3 per cent. of the total issued Ordinary Shares.

Overseas Shareholders

The Tender Offer is not available to Shareholders with an address in the United States, Canada, Australia, New Zealand, the Republic of Ireland, the Republic of South Africa or Japan or any other Restricted Jurisdiction. Overseas Shareholders should note that they should satisfy themselves that they have fully observed any applicable legal requirements under the laws of their relevant jurisdiction if they tender Ordinary Shares in the Tender Offer.

The attention of Shareholders who are not resident in the United Kingdom is drawn to the section headed "Overseas Shareholders" in Part III of the Circular.

Taxation

A general summary of the UK taxation implications of the Tender Offer is set out in further detail in Part IV of the Circular. Shareholders are encouraged to seek further tax advice if they are in doubt as to their tax position.

Recommendation

The Directors believe that the Tender Offer is in the best interests of Shareholders as a whole. The Directors therefore unanimously recommend that you vote in favour of the Resolution as they intend to do in respect of their own interests in 4,780,721 Ordinary Shares in aggregate, representing approximately 10.3 per cent. of the Ordinary Shares currently in issue. The Directors and persons associated or connected with them have undertaken not to accept the Tender Offer in respect of their respective interests in 4,780,721 Ordinary Shares in aggregate, representing approximately 10.3 per cent. of the Ordinary Shares currently in issue.

The Directors and N+1 Singer make no recommendation to Shareholders in relation to participation in the Tender Offer itself. Whether or not Shareholders decide to tender all or any of their Ordinary Shares will depend, among other things, on their view of the Company's prospects and their own individual circumstances, including their tax position. Shareholders are recommended to consult their duly authorised independent advisers and make their own decision.