10 Jun 2010 07:00
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF IRELAND OR SOUTH AFRICA OR TO US PERSONS. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. THE SECURITIES DISCUSSED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT. NO PUBLIC OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE UNITED STATES AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, NEW ZEALAND, THE REPUBLIC OF IRELAND OR SOUTH AFRICA.
10 June 2010
Better Capital Limited (the "Company")
PROPOSED MIGRATION TO THE OFFICIAL LIST AND FIRM PLACING AND PLACING
AND OPEN OFFER OF UP TO 64,380,952 NEW SHARES AT 105 PENCE PER NEW SHARE AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
The Company today announces its intention to apply for admission of its Shares to listing on the Official List of the UK Listing Authority and to admission to trading on the London Stock Exchange's main market for listed securities, and to raise gross proceeds of up to £67.6 million (approximately £65.8 million net of expenses) by way of a Firm Placing and Placing and Open Offer.
The Firm Placing and Placing and Open Offer will comprise a total of up to 64,380,952 New Shares at a price of 105 pence per New Share, representing a 8.0 per cent. premium to the audited Net Asset Value per Existing Share of 97.3 pence as at 28 February 2010 and a 5.0 per cent. discount to the Closing Price of 110.5 pence per Existing Share as at 9 June 2010 (being the last Business Day prior to this announcement). 32,226,114 New Shares will be issued through the Firm Placing and up to 32,154,838 New Shares will be issued through the Placing and Open Offer.
The Company will shortly be publishing a Prospectus and will convene an Extraordinary General Meeting to be held on 24 June 2010 to approve certain matters necessary to implement the proposed Migration and Firm Placing and Placing and Open Offer.
Summary
·; Migration from AIM to the Official List and a Firm Placing and Placing and Open Offer to raise gross proceeds of up to £67.6 million (approximately £65.8 million net of expenses).
·; Net Placing Proceeds will be invested directly in Better Capital Fund within five Business Days of Admission.
·; Significant number of opportunities to invest selectively in businesses which need reviving due to the effects of the recent recession, continued fragile economic conditions and escalating levels of corporate debt.
·; The Directors believe there to be sufficient investment opportunities in the UK and Ireland to enable the placing proceeds to be substantially invested or committed by Better Capital Fund within approximately the next 18 months.
·; The Firm Placing and Placing and Open Offer is expected to enhance Net Asset value per Share.
·; The New Shares will be issued pursuant to authorities to be sought at the Extraordinary General Meeting.
·; The Board believes that the Migration and the Firm Placing and Placing and Open Offer are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions.
Statistics relating to the Firm Placing and Placing and Open Offer
|
Issue Price per New Share
|
105 pence |
| Basic Entitlement under the Open Offer
| 7 New Shares for every 31 Existing Shares |
| Number of Shares in issue at the date of this document
| 142,400,000 |
| Number of Firm Placed Shares
| 32,226,114 |
| Number of Open Offer Shares
| up to 32,154,838 |
| Total number of New Shares
| up to 64,380,952 |
| Enlarged Share Capital immediately following completion of the Firm Placing and Placing and Open Offer(1)
| 206,780,952 |
| New Shares as a percentage of the Enlarged Share Capital(1)
| 31.1% |
| Net proceeds of the Firm Placing and Placing and Open Offer (approximately)(1)(2)
| £65.8 million |
| Net Asset Value per Share (audited) as at 28 February 2010
| 97.3 pence |
| Estimated Net Asset Value per Share (unaudited) following the Firm Placing and Placing and Open Offer(2)(3)
| 98.8 pence |
Notes:
(1) Assuming full take-up under the Open Offer.
(2) Estimated expenses of the Firm Placing and Placing and Open Offer are £1.8 million.
(3) Based on adjustments made to the Net Asset Value (audited) of the Company as at 28 February 2010.
Migration to the Official List
The Company's AIM admission document stated that the Directors would keep under review and consider whether it would be in the best interests of the Company and Shareholders for the Company to seek a full listing on the Main Market. In light of the preference of certain investors to invest on the Main Market and of the benefits that a full listing can bring to existing Shareholders, the Directors have concluded that the proposed issue of New Shares represents an opportune time to migrate the Shares from AIM to the Main Market.
Pursuant to Rule 41 of the AIM Rules, the Company hereby gives notice of the intended cancellation of the Company's issued share capital to trading on AIM. It is expected that subject to, among other things, the Resolutions being passed, the Shares will be simultaneously cancelled from trading on AIM and admitted to listing on the Official List and to trading on the Main Market at 8.00 a.m. on 8 July 2010.
Enquiries
| Mark Huntley (Director) Administrator and Company Secretary Laurence McNairn
| +44 (0)14 8171 6000 |
| Better Capital LLP Jon Moulton (Chairman)
| +44 (0)20 7440 0840 |
| Numis Securities Limited Sponsor, Nominated Adviser, Broker and Joint Placing Agent Nathan Brown, Simon Blank
Dar Capital (UK) Limited Joint Placing Agent Richard Bryant | +44 (0)20 7260 1000
+44 (0)20 7907 8500
|
Numis Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as sponsor, nominated adviser, broker and joint placing agent exclusively to the Company and for no one else in connection with the Admission and Firm Placing and Placing and Open Offer and Migration and will not be responsible to anyone other than the Company for providing the protections afforded to its customers or for providing advice in relation to the Admission and Firm Placing and Placing and Open Offer and Migration or any other arrangements referred to herein.
Dar Capital (UK) Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as joint placing agent exclusively to the Company and for no one else in connection with the Admission and Firm Placing and Placing and Open Offer and Migration and will not be responsible to anyone other than the Company for providing the protections afforded to its customers or for providing advice in relation to the Admission and Firm Placing and Placing and Open Offer and Migration or any other arrangements referred to herein.
This announcement has been issued by, and is the sole responsibility of, Better Capital Limited. Apart from the responsibilities and liabilities, if any, which may be imposed by the FSMA, neither of Numis nor Dar Capital nor any of their affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings or any of their respective directors, officers, employees or advisers or any other person accepts any responsibility whatsoever and makes no representation or warranty, express or implied, for or in respect of the contents of this announcement or as to the accuracy or completeness or fairness of the information or opinions contained in this announcement and, without prejudice to the generality of the foregoing, no responsibility or liability is accepted by any of them for any such information or opinions or for any errors or omissions.
Cautionary note regarding forward-looking statements
This announcement may contain statements that are or may be forward-looking statements. All statements other than statements of historical facts included in this announcement may be forward-looking statements, including statements that relate to the Company's future prospects, developments and strategies. Forward-looking statements are identified by their use of terms and phrases such as "believe", "targets", "expects", "aim", "anticipate", "projects", "would", "could", "envisage", "estimate", "intend", "may", "plan", "will" or the negative of those, variations or comparable expressions, including references to assumptions. The forward looking statements in this document are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results, performance and achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements.
Important notice
This announcement is an advertisement. It is not a prospectus and investors should not subscribe for or purchase any Shares referred to in this announcement except on the basis of information contained in the Prospectus which is to be published in due course. The Prospectus, when published, will be made available on the Company's website and will be available for inspection at the UK Listing Authority's announcement viewing facility.
This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire any New Shares, nor shall it (or any part of it), or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract or commitment whatsoever with respect to the proposed Firm Placing and Placing and Open Offer or otherwise.
The distribution of this announcement in certain jurisdictions may be restricted by law and such distribution could result in violation of the laws of such jurisdictions. In particular, this announcement is not for distribution in the United States, Canada, Japan, Australia, New Zealand, Republic of Ireland or South Africa.
The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.
Any person receiving this announcement is advised to exercise caution in relation to the Firm Placing and Placing and Open Offer. If in any doubt about any of the contents of this announcement, independent professional advice should be obtained.
This summary should be read in conjunction with the full text of the announcement.
PROPOSED MIGRATION TO THE OFFICIAL LIST AND FIRM PLACING AND PLACING
AND OPEN OFFER OF UP TO 64,380,952 NEW SHARES AT 105 PENCE PER NEW SHARE AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
Introduction
The Company today announces its intention to apply for admission of its Shares to listing on the Official List of the UK Listing Authority and to admission to trading on the London Stock Exchange's main market for listed securities, and to raise gross proceeds of up to £67.6 million (approximately £65.8 million net of expenses) by way of a Firm Placing and Placing and Open Offer.
The Firm Placing and Placing and Open Offer will comprise a total of up to 64,380,952 New Shares at a price of 105 pence per New Share, representing a 8.0 per cent. premium to the audited Net Asset Value per Existing Share of 97.3 pence as at 28 February 2010 and a 5.0 per cent. discount to the Closing Price of 110.5 pence per Existing Share as at 9 June 2010 (being the last Business Day prior to the date of this announcement). 32,226,114 New Shares will be issued through the Firm Placing and up to 32,154,838 New Shares will be issued through the Placing and Open Offer.
It is intended that the Company will invest the Net Placing Proceeds directly in Better Capital Fund within five Business Days of Admission.
This announcement sets out the background to, and the reasons for, the proposed Migration and the Firm Placing and Placing and Open Offer and explains why the Board believes the Migration and the Firm Placing and Placing and Open Offer are in the best interests of the Company and its Shareholders as a whole.
The Company will shortly be publishing a Prospectus and will convene an Extraordinary General Meeting to be held on 24 June 2010 to approve the Resolutions necessary to implement the proposed Migration and Firm Placing and Placing and Open Offer.
Background to and reasons for the Firm Placing and Placing and Open Offer
The Shares were admitted to trading on AIM on 17 December 2009 and have subsequently traded at a significant premium to Net Asset Value per Share, indicating an ongoing demand for Shares in the secondary market from investors who did not subscribe at launch. A number of such investors, and certain Shareholders, have recently indicated a willingness to participate in an issue of further Shares and accordingly the Company engaged Numis and Dar Capital to seek to procure subscribers for New Shares under the Firm Placing and Placing and Open Offer.
The Company's AIM admission document stated that the Directors would keep under review and consider whether it would be in the best interests of the Company and the Shareholders for the Company to seek a full listing on the Main Market. In light of the preference of certain investors to invest on the Main Market and of the benefits that a full listing can bring to existing Shareholders, the Directors have concluded that the proposed issue of New Shares represents an opportune time to migrate the Shares from AIM to the Main Market. It is expected that Migration will take effect on 8 July 2010 whereupon the Company's listing will be a Premium Listing.
The Board believes that Better Capital Fund and the Company are well positioned to take advantage of the effects of the recent recession, fragile economic conditions and escalating levels of corporate debt as these factors continue to give rise to a steady flow of investment opportunities and that this is, accordingly, an opportune time to raise additional investment capital through the Firm Placing and Placing and Open Offer. There are good grounds to believe that this flow of investment opportunities may extend in both quantity and size.
Use of proceeds
The Company is a feeder fund that invested the net proceeds of the Initial Placing of £138 million directly in Better Capital Fund by 21 December 2009 and intends, in accordance with its investment policy, to invest the Net Placing Proceeds directly in Better Capital Fund within five Business Days of Admission. The costs and expenses associated with the Firm Placing and Placing and Open Offer and the Migration will be deducted from the proceeds of the Firm Placing and Placing and Open Offer. The Company does not otherwise intend to retain any additional liquidity for general corporate requirements over and above the retention of approximately £1 million that was made at the time of the Initial Placing.
Given the severity of the recent recession, the Directors believe there to be a sufficiently large number of investment opportunities in the UK and Ireland which should mean that the Aggregate Net Placing Proceeds can be substantially invested or committed by Better Capital Fund in accordance with its investment policy within approximately the next 18 months.
Current trading and prospects
Since the Company's shares were admitted to trading on AIM on 17 December 2009, the effects of the recession experienced by the UK economy have continued and resulted in businesses suffering from poor trading conditions and restricted credit. This economic backdrop has presented Better Capital Fund with a significant number of opportunities to invest selectively in businesses which need reviving. Many of these have been attracted to Better Capital Fund not only to access capital in order to refinance, but also to access expertise with the aim of significantly improving operational performance.
Two examples of this are Better Capital Fund's two investments to date in Gardner and Reader's Digest UK. Gardner is a leading supplier to the aerospace industry in Europe which provides a range of high complexity components to aero structure and engine manufacturers. Gardner is the UK's largest independently owned supplier of metallic aerospace details and sub-assemblies, and is one of the largest in Europe. Gardner is headquartered in Ilkeston, Derbyshire, UK and has six sites in the UK and one in Poland. Gardner's customers include Airbus, Rolls-Royce, GKN, BAe Systems and other major international companies in the aviation sector. Gardner also provides aerospace component repair services; fast turnaround 'late definition' services; and manufactures transmission components for truck gearboxes. Gardner is already trading profitably and Better Capital Fund is pleased with Gardner's progress to date.
Since the first quarter of 2009, Gardner had experienced major declines in demand for its business jet and truck transmission products - both important markets for the business. This decline led to the need to restructure the business and, on 3 February 2010, it was announced that Better Capital Fund had acquired the entire issued share capital and debt liabilities of Gardner. Better Capital Fund was able to commit £20 million to finance the transaction and fund future growth, and Nick Sanders, a managing member of the Consultant, has joined the board as Chairman. Nick is a former Vice President Operations of Lucas Aerospace and brings with him a wealth of relevant operating experience.
On 10 May 2010, the Company announced that Better Capital Fund had utilised £3.6 million (out of the £20 million) to fund a strategic bolt-on acquisition by Gardner of certain of the assets and obligations of RD Precision Limited (In Administration) ("RDP). RDP is a manufacturer and supplier of precision tools and parts for the aerospace and defence industries. The acquisition includes businesses in the UK and Poland.
On 9 April 2010, the Company announced that Better Capital Fund had acquired the trade and certain assets of Reader's Digest UK by a special purpose vehicle which is majority owned and controlled by Better Capital Fund. The investment backs the Reader's Digest UK management team who will take 35 per cent. of the equity in the new company.
Reader's Digest UK is a direct marketing business selling books, music CDs, DVDs and other products to its customer base of around 600,000 individuals. It also publishes a monthly magazine which is sent to nearly half a million subscribers and regularly operates prize draws for large sums of money. Although profitable historically, Reader's Digest UK faced a number of issues, including the funding of its defined benefit pension scheme (as had already been widely publicised) and as a result the directors filed for administration on 17 February 2010.
The trade and assets were acquired from the administrators. The assets acquired had a book value of £7 million (unaudited) at 31 March 2010. Following the transaction, the new company will have no bank debt. Unaudited net revenues for the year to 30 June 2008 were £85 million, with an operating profit (pre-exceptional items) of £1 million (unaudited).
Better Capital Fund anticipates committing a total of £13 million to finance the transaction and fund future growth, injected in a combination of equity and loan stock that has yet to be finalised. Sean Cooper, a member of the Consultant, has joined the board of the acquisition vehicle.
No other investments have yet been made by Better Capital Fund. Cash awaiting investment held by Better Capital Fund has been placed on deposit across a range of selected banks with a minimum of A rating utilising terms ranging from instant access to six months. This allows accessible cash to match to anticipated cash flows whilst seeking to maximise interest earned.
Since the acquisitions of Gardner and Reader's Digest UK, the General Partner and the Consultant have continued to receive a good flow of investment opportunities and the Board remains confident that the Aggregate Net Placing Proceeds can be substantially invested or committed by Better Capital Fund in accordance with its investment policy within approximately the next 18 months.
As announced on 14 May 2010, the unaudited Net Asset Value of the Company as at 31 March 2010 was £138.3 million (97.1 pence per Share).
Summary of the principal terms of the Firm Placing and Placing and Open Offer
Structure
The Directors have given careful consideration as to the structure of the proposed fundraising and have concluded that the Firm Placing and Placing and Open Offer is the most suitable option available to the Company and its Shareholders at this time.
32,226,114 New Shares will be issued through the Firm Placing and up to 32,154,838 New Shares will be issued through the Placing and Open Offer at 105 pence per New Share (to raise in aggregate gross proceeds of up to £67.6 million). The Issue Price represents a premium of 8.0 per cent. to the audited Net Asset Value per Existing Share of 97.3 pence as at 28 February 2010 and a discount of 5.0 per cent. to the Closing Price of 110.5 pence per Existing Share as at 9 June 2010 (being the last Business Day prior to this announcement).
Firm Placing
The Firm Placees required the Firm Placing in order to give them certainty as to the size of their shareholding following the fundraising. The Firm Placees have agreed to subscribe for 32,226,114 New Shares at the Issue Price (representing gross proceeds of £33.8 million). The Firm Placed Shares are not subject to clawback and are not part of the Placing and Open Offer.
Placing and Open Offer
The Directors recognise the importance of pre-emption rights to Shareholders and consequently up to 32,154,838 of the New Shares proposed to be issued by the Company at the Issue Price are being offered to Existing Shareholders by way of the Open Offer (representing gross proceeds of up to £33.8 million). The Open Offer provides an opportunity for all Qualifying Shareholders to participate in the fundraising by both subscribing for their respective Basic Entitlements and by subscribing for Excess Shares under the Excess Application Facility, subject to availability.
Qualifying Shareholders will have a Basic Entitlement of:
7 Open Offer Shares for every 31 Existing Shares
registered in the name of the relevant Qualifying Shareholder on the Record Date.
Qualifying Shareholders may also apply, under the Excess Application Facility, for a maximum number of Excess Shares equal to 0.2 times the number of Shares held by them at the Record Date, entitlements being rounded down to the nearest whole number. Applications under the Excess Application Facility may be allocated in such manner as the Directors determine, in their absolute discretion.
The Conditional Placees have agreed to subscribe for the Conditional Placed Shares pursuant to the Placing. In the event that valid acceptances are not received in respect of any of the Open Offer Shares under the Open Offer, unallocated Open Offer Shares may be allotted to Qualifying Shareholders to meet any valid applications under the Excess Application Facility and, to the extent that there remain any unallocated Open Offer Shares, such number as Conditional Placees have agreed to subscribe in aggregate under the Placing will be placed to such Conditional Placees. To the extent that the Open Offer Shares are not taken up under the Open Offer or the Placing, the Company would receive less than the gross proceeds under the Open Offer, which are estimated to be a maximum of £67.6 million.
Excess Application Facility
Subject to availability, the Excess Application Facility enables Qualifying Shareholders who have taken up their Basic Entitlement in full to apply for any whole number of Excess Shares in addition to their Basic Entitlement up to a maximum number of Excess Shares equal to 0.2 times the number of Shares they held at the Record Date. Qualifying Non-CREST Shareholders who wish to apply to subscribe for more than their Basic Entitlement should complete the relevant sections on the Non-CREST Application Form. Qualifying CREST Shareholders will have Excess CREST Open Offer Entitlements credited to their stock account in CREST.
Excess applications may be allocated in such manner as the Directors may determine, in their absolute discretion, and no assurance can be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full or in part or at all.
Conditionality
The Firm Placing and Placing and Open Offer are conditional, inter alia, upon the following:
·; the passing of the first, third and fourth Resolutions to be proposed at the Extraordinary General Meeting to be held on 24 June 2010, notice of which is set out in the back of the Prospectus;
·; Admission by not later than 8.00 a.m. on 8 July 2010; and
·; the Placing Agreement becoming unconditional in all respects.
If the Resolutions referred to above are not passed or Admission does not take place at 8.00 a.m. on 28 June 2010 (or such later time and/or date as the Company, Numis and Dar Capital may agree, not being later than 8.00 a.m. on 8 July 2010), the Firm Placing and Placing and Open Offer will lapse, any Basic Entitlements and Excess CREST Open Offer Entitlements admitted to CREST will, after that time and date be disabled and application monies received 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. In the event that the second Resolution to be proposed at the Extraordinary General Meeting is not passed, the Open Offer will remain open for acceptance until 1 July 2010, and an announcement will be made to this effect and the application for Admission will be delayed accordingly.
The Firm Placing and Placing and Open Offer is not conditional on Migration. The Company intends to complete the Migration whether or not the Firm Placing and Placing and Open Offer becomes wholly unconditional.
Applications for Admission and Migration
Applications will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM and to the UK Listing Authority for the Existing Shares and the New Shares to be listed on the Official List and to the London Stock Exchange for the Existing Shares and the New Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. Subject to, among other things, the Resolutions being passed, it is expected that Admission will become effective at 8.00 a.m. on 28 June 2010 and that dealings for normal settlement in the New Shares will commence at 8.00 a.m. on the same day. It is expected that Migration will take effect on 8 July 2010. No temporary documents of title will be issued in respect of New Shares and certificates in respect of New Shares will remain valid.
In connection with the applications for Admission and Migration and the Firm Placing and Placing and Open Offer, the Company has entered into the Placing Agreement with Dar Capital and Numis.
Important notice
Qualifying Shareholders should note that the Open Offer is not a rights issue. Qualifying Shareholders should be aware that in the Open Offer, unlike with a rights issue, any Open Offer Shares not applied for by Qualifying Shareholders under their Basic Entitlements will not be sold in the market on behalf of, or placed for the benefit of, Qualifying Shareholders who do not apply under the Open Offer, but may be allotted to Qualifying Shareholders to meet any valid applications under the Excess Application Facility and, to the extent that there remain any unallocated Open Offer Shares, such number as Conditional Placees have agreed to subscribe in aggregate under the Placing will be placed to such Conditional Placees and that the net proceeds will be retained for the benefit of the Company. To the extent that the Open Offer Shares are not taken up under the Open Offer or the Placing, the Company would receive less than the gross proceeds under the Open Offer, which are estimated to be a maximum of £67.6 million.
Financial impact of the Firm Placing and Placing and Open Offer
The effect of the Firm Placing and Placing and Open Offer, on the basis that the Firm Placing and Placing and Open Offer raises net proceeds of £65.8 million, will be to increase the net assets of the Company from £138.5 million as at 28 February 2010 to an estimated £204.3 million immediately after Admission and the resultant Net Asset Value per Share will increase from 97.3 pence to an estimated 98.8 pence. It is not possible to quantify the effect of the Firm Placing and Placing and Open Offer on the Company's earnings.
Upon completion of the Firm Placing and Placing and Open Offer, the New Shares will represent 31.1 per cent. of the Enlarged Share Capital. New Shares issued through the Firm Placing will represent 15.6 per cent. of the Enlarged Share Capital and New Shares issued through the Placing and Open Offer will represent 15.6 per cent. of the Enlarged Share Capital. The New Shares will be issued pursuant to authorities to be sought at the Extraordinary General Meeting.
Following the issue of the New Shares pursuant to the Firm Placing and Placing and Open Offer, Qualifying Shareholders (including shareholders in the United States and any other Restricted Jurisdiction and other jurisdiction where participation is restricted for legal, regulatory or other reasons) who do not take up any of their Basic Entitlement (and who do not take up any Excess Shares under the Excess Application Facility) will suffer a dilution of 31.1 per cent. to their respective economic interests in the Company. However, based on the resultant estimated Net Asset Value per Share set out above, there will be a 1.6 per cent. enhancement to the Net Asset Value per existing Share. If Qualifying Shareholders subscribe for their Basic Entitlement in full they will suffer a dilution of 15.6 per cent. to their economic interests in the Company but, based on the resultant estimated Net Asset Value per existing Share set out above, a 1.6 per cent. enhancement to the Net Asset Value per existing Share.
Dividend policy
The New Shares, when issued and fully paid, will be identical to and rank in full for all dividends or other distributions declared, made or paid after Admission and in all respects will rank pari passu with the Existing Shares. The Company's investment objective is focused primarily on capital appreciation by investing in Better Capital Fund. The Directors intend to make dividend distributions to Shareholders as and when such distributions are, in their view, feasible.
Extraordinary General Meeting
A notice convening the Extraordinary General Meeting, to be held at 10.30 a.m. on 24 June 2010 at the offices of Heritage, Heritage Hall, Le Marchant Street, St Peter Port, Guernsey, GY1 4HY is set out in the Prospectus which will be published shortly. The Extraordinary General Meeting is being convened for the purpose of considering and, if thought fit, passing the Resolutions.
As part of the Migration, the Company intends to seek Shareholder approval of certain amendments to its Articles. This is in order to make the Articles more appropriate for a Company with a full listing on the Main Market.
The Resolutions to be proposed at the Extraordinary General Meeting are seeking approval to:
1) the issue of up to 64,380,952 Shares for cash, on the terms set out in this document, at the Issue Price;
2) the disapplication of Article 4.13 of the Articles to the Open Offer ;
3) conditional on Admission, certain amendments to the Articles; and
4) provide for continuation of the Investment Period in the event that less than 50 per cent. of the Total Commitments have been invested by 21 June 2011.
The purpose of the Resolution summarised in paragraph (1) above is to approve the Firm Placing and Placing and Open Offer generally. This resolution is required under Article 4.13 which requires the approval of Shareholders by special resolution in respect of any issue of Shares wholly for cash if such issue is not to comply with certain requirements including that all the Shares so to be issued first be offered to Shareholders in proportion to their existing holdings and that in the event that the Resolution summarised in paragraph (2) above is not passed, such offer will be open to acceptance within a period of at least 21 clear days in accordance with the Articles. In the event that this resolution is not passed, the issue of New Shares under the Firm Placing and Placing and Open Offer would not be approved and consequently the Company would not proceed with the fundraising pursuant thereto.
The purpose of the Resolution summarised in paragraph (2) above is to approve the Open Offer being open to acceptance for ten Business Days. In the event that this resolution is not passed, an announcement will be made to this effect, the Open Offer will be kept open such that it will have been open for acceptance for a total period of at least 21 clear days in accordance with Article 4.13 of the Articles and Admission will be delayed accordingly.
The purpose of the Resolution summarised in paragraph (3) above is to approve certain changes to the Articles with effect from Migration. These changes are intended to remove references to AIM and to adapt certain provisions so that they are more appropriate for a company whose shares are admitted to the Official List. It is also proposed that the period specified in the Articles for which a pre-emptive issue must be open to Shareholders (currently 21 clear days) should be altered to ten Business Days to bring this into line with the requirements of the Listing Rules.
The purpose of the Resolution summarised in paragraph (4) above is to authorise and direct the Company to consent, pursuant to the Partnership Agreement, to the continuation of the Investment Period in circumstances where it has been suspended by the General Partner in accordance with the Partnership Agreement because less than 50 per cent. of the Total Commitments have been invested by 21 June 2011. Should such a suspension occur, Shareholder approval would be required to lift the suspension and if this was not forthcoming the General Partner would be required to propose an amendment to the investment policy that would require Shareholder approval. Should such approval in turn not be forthcoming, then the uninvested part of the Total Commitments would have to be returned to the Company from Better Capital Fund. These requirements were included in the Partnership Agreement in order to comply with the AIM Rules. There is no equivalent requirement in the Listing Rules that will apply to the Company upon Migration to the AIM Rule that requires a continuation vote in the event that less than 50 per cent. of the Total Commitments is invested by 21 June 2011 and, accordingly, the General Partner has recommended that, in light of Migration, these requirements should not have effect.
Related party transactions
In order to maintain their shareholding, 9,494,510 Firm Placed Shares and up to 9,473,510 Conditional Placed Shares that are not subject to clawback will be issued to Ruffer LLP (who have agreed not to subscribe for their proportionate entitlement to Open Offer Shares under the Open Offer). These represent related party transactions under the AIM Rules. The Board considers, having consulted with Numis, that the terms of these transactions are fair and reasonable insofar as Shareholders are concerned.
Intention of Directors and the Managing Members of the Consultant
The Directors currently beneficially own, in aggregate, 200,000 Existing Shares representing approximately 0.1 per cent. of the existing issued ordinary share capital of the Company as at 9 June 2010 (being the latest practicable date prior to this announcement). The Directors who hold Existing Shares intend to apply for an aggregate of 50 per cent. of their combined Basic Entitlement under the Open Offer. In addition, the Directors intend to subscribe for an aggregate of 217,419 New Shares pursuant to the Firm Placing and Placing and Open Offer, following which they will own, in aggregate, up to approximately 0.2 per cent. of the Enlarged Share Capital.
In addition, Jon Moulton has indicated his intention to apply for his Basic Entitlement under the Open Offer and has agreed to subscribe for an aggregate of up to 1,136,713 New Shares pursuant to the Firm Placing such that in aggregate the interests in the Company that are attributable to Jon Moulton, Mark Aldridge and Nick Sanders and persons connected with them will represent approximately 9.6 per cent. of the Shares immediately following Admission. Mark Aldridge and Nick Sanders do not intend to take up their respective Basic Entitlements under the Open Offer nor to subscribe for Firm Placed Shares or Conditional Placed Shares.
Recommendation
The Board believes that the Firm Placing and Placing and Open Offer and the Resolutions are in the best interests of the Company and its Shareholders as a whole.
Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions as those Directors who are Shareholders intend to in respect of their own beneficial holdings which amount in aggregate to 200,000 Shares, representing approximately 0.1 per cent. of the existing issued ordinary share capital of the Company as at 9 June, being the latest practicable date prior to this announcement.
Expected timetable of principal events
| Record Date for entitlement to participate in the Open Offer
| 5.00 p.m. on 9 June 2010 |
| Announcement of the Firm Placing and Placing and Open Offer, publication of the Prospectus and despatch of the Prospectus, Form of Proxy and the Non-CREST Application Form
| 10 June 2010 |
| Ex-entitlement date for the Open Offer
| 8.00 a.m. on 10 June 2010 |
| Basic Entitlements and Excess CREST Open Offer Entitlements credited to CREST stock accounts of Qualifying CREST Shareholders
| as soon as possible after 8.00 a.m. on 11 June 2010 |
| Recommended latest time for requesting withdrawal of Basic Entitlements and Excess CREST Open Offer Entitlements from CREST
| 4.30 p.m. on 18 June 2010 |
| Latest time for depositing Basic Entitlements and Excess CREST Open Offer Entitlements into CREST
| 3.00 p.m. on 21 June 2010 |
| Latest time and date for receipt of Forms of Proxy or CREST Proxy Instructions
| 10.30 a.m. on 22 June 2010 |
| Latest time and date for splitting Non-CREST Application Forms (to satisfy bona fide market claims only) | 3.00 p.m. on 22 June 2010 |
|
|
|
| Extraordinary General Meeting
| 10.30 a.m. on 24 June 2010 |
| Latest time for receipt of completed Non-CREST Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)
| 12.00 noon on 24 June 2010 |
| Admission of, and commencement of dealings in, the New Shares on AIM
| 8.00 a.m. on 28 June 2010(3) |
| New Shares in uncertificated form expected to be credited to accounts in CREST by
| as soon as possible after 8.00 a.m. on 28 June 2010(3) |
| Expected date of despatch of definitive share certificates for New Shares in certificated form
| Within seven days of Admission |
| Migration to, and commencement of dealings in the Existing Shares and the New Shares on, the Main Market | 8.00 a.m. on 8 July 2010 |
Notes:
(1) Each of the times and dates set out in the above timetable and mentioned in this announcement is subject to change by the Company (with the agreement of Numis and Dar Capital), in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, to Shareholders.
(2) References to times in this announcement are to London times.
(3) Assumes that all Resolutions that are set out in the notice of Extraordinary General Meeting set out in the back of the Prospectus are passed.
Definitions
The following definitions apply throughout this announcement, unless the context requires otherwise:
| "Administrator" or "Heritage" | Heritage International Fund Managers Limited; |
| "Admission"
| the admission of the New Shares to trading on AIM becoming effective in accordance with the AIM Rules; |
| "Aggregate Net Placing Proceeds"
| the aggregate proceeds received by the Company pursuant to the Initial Placing and the Firm Placing and Placing and Open Offer in each case net of the expenses incurred by the Company in respect thereof and net of £1 million retention made at the time of admission to AIM; |
| "AIM" | the AIM Market, a market operated by the London Stock Exchange; |
| "AIM Rules" | the London Stock Exchange's rules and guidance notes contained in its "AIM Rules for Companies" publication; |
| "Articles"
| the articles of incorporation of the Company adopted on 11 December 2009, and amended as proposed in the notice of Extraordinary General Meeting conditional upon and with effect from Migration; |
| "Basic Entitlement"
| the pro rata entitlement of Qualifying Shareholders to subscribe for 7 Open Offer Shares for every 31 Existing Shares registered in their name as at the Record Date; |
| "BECAP GP"
| means BECAP GP LP acting for its own part (and not as general partner of Better Capital Fund) and by its general partner, the GP Company; |
| "BECAP GP LP"
| a Guernsey limited partnership established on 23 November 2009 and registered in Guernsey as a limited partnership on 25 November 2009 (registration number 1244) and having its registered office at Heritage Hall, PO Box 225, Le Marchant Street, St Peter Port, Guernsey GY1 4HY; |
| "Better Capital Fund"
| BECAP Fund LP, a Guernsey limited partnership established on 23 November 2009 and registered in Guernsey as a limited partnership on 25 November 2009 (registration number 1242); |
| "Business Day"
| any day (other than a Saturday or a Sunday) on which clearing banks are open for a full range of banking transactions in London and Guernsey; |
| "certificated" or "in certificated form" | the description of a share or other security which is not in uncertificated form (that is not in CREST); |
| "Closing Price"
| the closing, middle market quotation of an Existing Share, as published in the Daily Official List of the London Stock Exchange; |
| "Company" or "Better Capital Limited" | the non-cellular company limited by shares incorporated in Guernsey with registered number 51194 whose registered office is at Heritage Hall, PO Box 225, Le Marchant Street, St Peter Port, Guernsey GY1 4HY; |
| "Conditional Placed Shares" | the 19,411,656 Open Offer Shares to be issued by the Company under the Placing subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer or Excess Application Facility pursuant to the Placing Agreement, which includes the 9,473,510 Open Offer Shares that are not subject to clawback; |
| "Conditional Placees"
| any persons who have agreed to subscribe for Conditional Placed Shares; |
| "Consultant" | means Better Capital LLP; |
| "CREST"
| the relevant system (as defined in the CREST Regulations) for the paperless settlement of share transfers and the holding of shares in uncertificated form which is administered by Euroclear; |
| "CREST Regulations"
| the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) (as amended from time to time); |
| "Dar Capital" | Dar Capital (UK) Limited; |
| "Directors" or "Board"
| the directors of the Company as at the date of this announcement and "Director" means any one of them;
|
| "Enlarged Share Capital"
| the issued share capital of the Company immediately following Admission comprising the Existing Shares and the New Shares; |
| "Euroclear" | Euroclear UK & Ireland Limited; |
| "Excess Application Facility"
| the arrangement pursuant to which Qualifying Shareholders may apply for additional Open Offer Shares in excess of their Basic Entitlement (up to a maximum number of Open Offer Shares equal to 0.2 times the number of Shares held by them at the Record Date) in accordance with the terms and conditions of the Open Offer;
|
| "Excess CREST Open Offer Entitlement"
| in respect of each Qualifying CREST Shareholder who has taken up his Basic Entitlement in full, the entitlement (in addition to his Basic Entitlement) to apply for Open Offer Shares up to the number of Open Offer Shares comprised in his Open Offer Entitlement, credited to his stock account in CREST, pursuant to the Excess Application Facility, which may be subject to scaling back in accordance with the provisions set out in the Prospectus; |
| "Excess Shares"
| Open Offer Shares which are not taken up by Qualifying Shareholders pursuant to their Basic Entitlement and are offered to Qualifying Shareholders under the Excess Application Facility; |
| "Executive Departure" | means where Jon Moulton (as the “key executive” for the purposes of the Partnership Agreement, or his replacement as such) is (in the opinion of the General Partner, acting reasonably) either permanently incapacitated or otherwise unable or unwilling to devote at least 100 business days per annum to the affairs of Better Capital Fund; |
| "Existing Shares" | the Shares in issue at the Record Date; |
| "Extraordinary General Meeting" | the general meeting of the Company notice of which is set out in the Prospectus; |
| "Firm Placed Shares"
| the 32,226,114 New Shares to be issued by the Company under the Firm Placing; |
| "Firm Placees" | any persons who have agreed to subscribe for Firm Placed Shares; |
| "Firm Placing"
| the placing by Numis and Dar Capital of the Firm Placed Shares with the Firm Placees pursuant to the Placing Agreement; |
| "FSA" | the Financial Services Authority; |
| "FSMA"
| the Financial Services and Markets Act 2000, (as amended from time to time), including any regulations made pursuant thereto; |
| "Gardner" | Gardner Group Limited; |
| "General Partner"
| means BECAP GP LP acting as general partner of Better Capital Fund and by its general partner, the GP Company; |
| "GP Company"
| means BECAP GP Limited (a company registered in Guernsey with registration number 51176) acting as general partner of the General Partner or the Special Limited Partner, as the context shall require; |
| "Guernsey" | means the Island of Guernsey; |
| "Initial Placing"
| the placing of the Initial Placing Shares that became effective on 14 December 2009; |
| "Initial Placing Shares"
| the 142,400,000 Shares issued by the Company pursuant to the Initial Placing; |
| "Investment Period" | means, in respect of Better Capital Fund, the period from the 1 December 2009 to 31 December 2012, subject to the General Partner (with the prior consent of the Company), extending this period by up to 12 calendar months, unless terminated earlier following an Executive Departure or, if the Investment Period Resolution is not passed at the Extraordinary General Meeting and less than 50 per cent. of the Total Commitments have been applied or committed to be invested by 21 June 2011; |
| "Investment Period Resolution" | the fourth resolution that is set out in the notice of Extraordinary General Meeting set out in this announcement; |
| "Issue Price" | 105 pence; |
| "Listing Rules"
| the listing rules made under section 73A of the FSMA (as set out in the FSA Handbook), as amended; |
| "London Stock Exchange" | London Stock Exchange plc; |
| "Main Market" | the main market of the London Stock Exchange; |
| "Migration"
| the application by the Company for admission of its Shares to listing on the Official List of the UK Listing Authority and to admission to trading on the London Stock Exchange's main market for listed securities, and cancellation of the admission to trading of the Existing Shares and, following Admission, the New Shares to trading on AIM; |
| "Net Asset Value"
| the value of the assets of the Company less its liabilities, calculated in accordance with the valuation guidelines laid down by the Board; |
| "Net Placing Proceeds"
| the proceeds received by the Company pursuant to the Firm Placing and Placing and Open Offer net of expenses incurred by the Company in respect of the Firm Placing and Placing and Open Offer; |
| "New Shares"
| the new Shares to be issued by the Company pursuant to the Firm Placing and Placing and Open Offer; |
| "Non-CREST Application Form"
| the application form for use by Qualifying Non-CREST Shareholders relating to applications for Open Offer Shares (including in respect of Excess Shares under the Excess Application Facility); |
| "Numis" | Numis Securities Limited; |
| "Official List" | the official list of the UK Listing Authority; |
| "Open Offer"
| the invitation by the Company to Qualifying Shareholders to apply to subscribe for Open Offer Shares on the terms and conditions set out in this announcement, and in the case of Qualifying Non-CREST Shareholders, in the Non-CREST Application Form; |
| "Open Offer Entitlement"
| an entitlement to subscribe for Open Offer Shares allocated to a Qualifying Shareholder under the Open Offer; |
| "Open Offer Shares"
| the 32,154,838 New Shares to be offered to Qualifying Shareholders under the Open Offer; |
| "Partners"
| the limited partners in Better Capital Fund, being the Company and the Special Limited Partner, and the General Partner; |
| "Partnership Agreement"
| means the partnership agreement dated 23 November 2009 and made between BECAP GP LP and the Special Limited Partner, as amended and restated by an amended and restated limited partnership agreement made between BECAP GP LP, the Special Limited Partner and the Company and dated 14 December 2009; |
| "Partnership Indemnified Persons"
| the General Partner, the Consultant or any associate of either of them, and:
(a) any officer, director, shareholder, agent, consultant, member, partner or employee of the General Partner or the Consultant, or of any associate of either of them; or
(b) means any person nominated by Better Capital Fund (or any associate) to be a director (or equivalent) of any portfolio company; or
(c) any person previously serving in any such capacity, but only to the extent that any action taken in respect of which indemnification or exculpation is sought relates to such prior service; |
| "Placing"
| the conditional placing by Numis and Dar Capital of the Conditional Placed Shares pursuant to the Placing Agreement; |
| "Placing Agreement"
| the conditional agreement dated 10 June 2010 between (1) the Company (2) Dar Capital and (3) Numis; |
| "POI Law"
| The Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended; |
| "Qualifying CREST Shareholders" | Qualifying Shareholders holding Shares in uncertificated form; |
| "Qualifying Non-CREST Shareholders" | Qualifying Shareholders holding Shares in certificated form;
|
| "Qualifying Shareholders"
| holders of Existing Shares on the register of members of the Company on the Record Date with the exception (subject to certain exceptions) of persons with a registered address or located or resident in any Restricted Jurisdiction; |
| "Reader's Digest UK"
| The Reader's Digest Association Limited (in administration) and its main subsidiary; |
| "Record Date" | 5.00 p.m. on 9 June 2010; |
| "Resolutions" | the resolutions set out in the notice of Extraordinary General Meeting set out in this announcement; |
| "Restricted Jurisdiction"
| each of Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa and the United States; |
| "SEC" | the US Securities and Exchange Commission; |
| "Securities Act" | the US Securities Act of 1933, as amended; |
| "Shareholder" | a holder of a Share; |
| "Shares" | shares of no par value in the capital of the Company; |
| "Special Limited Partner"
| means Better Capital SLP LP, the special limited partner in Better Capital Fund, acting by its general partner, BECAP GP Limited; |
| "Stock account"
| an account within a member account in CREST to which a holding of a particular share or other security in CREST is credited; |
| "Total Commitments"
| the aggregate commitments of the Company and the Special Limited Partner to Better Capital Fund; |
| "UK" or "United Kingdom" | the United Kingdom of Great Britain and Northern Ireland; |
| "UK Listing Authority"
| the FSA in its capacity as the competent authority for the purposes of Part VI of the FSMA; |
| "uncertificated"
| recorded on a register of securities maintained by Euroclear in accordance with the CREST Regulations as being in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST; |
| "US" or "United States"
| the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia; |
| "US person" | has the meaning ascribed to it under Regulation S; and |
| "£" or "Sterling" | pounds sterling, the legal currency of the United Kingdom. |