Conviviality Retail Regulatory News (CVR)

THIS ANNOUNCEMENT INCLUDING THE APPENDIX AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION, DISTRIBUTION OR FORWARDING, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR ANY JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION IS UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN CONVIVIALITY PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY INVESTMENT DECISION IN RESPECT OF CONVIVIALITY PLC.

PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ("MAR").

21 March 2018

Conviviality Plc

(the "Company")

Update on Progress, Potential Equity Fundraising and Trading Update

Update on progress

Further to the Company's announcement of 16 March 2018, the Board of Conviviality is providing an update on a number of actions it has been taking with regards to working through its funding requirements:

· Customers and suppliers continue to remain supportive of the Company and continue to work closely and constructively with the Company at this time;

· Constructive discussions with our lenders are continuing;

· PwC has undertaken a review of the business and its future funding requirements and will continue to provide assistance to the Company going forward;

· PwC are continuing to work and support the Company in its discussions with key stakeholders; and

· The Company has held constructive discussions with HM Revenues and Customs ("HMRC") regarding the £30.0 million payment due on the 29 March 2018.

Equity fundraising

On 16 March 2018, the Company announced that it was engaging with its advisers and broker regarding the possibility of an equity fundraise to effect a recapitalisation of the business. The Board of the Company today announces that, through its broker, Investec Bank plc, meetings with institutional investors have been arranged for the coming days starting today to effect an equity placing to raise gross proceeds of £125.0 million (the "Placing"), which the Directors believe will provide the necessary funding to recapitalise the business. The £125.0 million gross proceeds from the Placing will, amongst other things, provide capital for the Company to:

· Resolve overdue payments with its creditors and return them to normalised trading terms;

· Settle payments with HMRC;

· Repay the Company's £30.0 million revolving credit facility in its entirety; and

· Provide working capital headroom and fund costs associated with the work undertaken to recapitalise the business.

In addition, should the Placing prove successful, the Directors intend to make an open offer of up to the pound sterling equivalent of €5.0 million (the "Open Offer"), the maximum permitted without requiring the Company to publish a prospectus under the EU Prospectus Directive, which would be made available to all existing Conviviality shareholders. The Open Offer would allow those shareholders who could not participate in the Placing to have the opportunity to invest.

Both the Placing and Open Offer would be subject to the approval of Conviviality shareholders at a general meeting of the Company.

Trading update

On the 13 March 2018, Conviviality announced it expected adjusted EBITDA for the year ending 29 April 2018 to be in the range of £55.3 million - £56.4 million. In addition, net debt was expected to be £150.0 million as at 29 April 2018.

Assuming the Placing is successful, the Board would expect that the adjusted EBITDA* for the year ending 29 April 2018 to be in the range of £45.5 million to £46.0 million and net debt to be below £100.0 million. For the financial year ending 28 April 2019, the Board expects adjusted EBITDA* to show modest growth compared to the expected outcome for the current financial year.

The reduction in the expected adjusted EBITDA outturn for the current financial year from that announced on 13 March is principally due to (i) the Company managing its customer and supplier base through the issues associated with its short term funding requirements and (ii) the deferral of franchise income arrangements as a consequence of the Board delaying completion of further franchise agreements.

The Company remains in compliance with its existing banking covenants and as noted above, the Company is in constructive discussions with its lending banks. In addition, as also noted above, if successful the proceeds from the Placing will reduce the amount of covenant debt by £30.0 million with the repayment and cancellation of the revolving credit facility.

The Board believes that the Placing is the most appropriate mechanism to recapitalise the business. However, the Company continues to explore other funding alternatives in the event that the Placing is unsuccessful. If the Company is unable to raise funds by way of the Placing or otherwise, it is unlikely to be able to trade on a going concern basis.

A further announcement will be made in due course.

Temporary Suspension of Trading on AIM

The shares of Conviviality Plc remain suspended pending further notice.

* References to adjusted EBITDA are stated before the application of International Accounting Standards Board's IFRS 15, Revenues from Contracts with Customers, which is to be adopted by the Company from 30 April 2018. While it has no impact on cash flow, it is expected to have an impact on the recognition of franchise income.

Enquiries:

IMPORTANT NOTICE

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of MAR) prior to its release as part of this announcement. The person responsible for arranging release of this information on behalf of the Company is Ciaran Stone, Group Head of Legal & Company Secretary.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which these materials are released, published, distributed or forwarded should inform themselves about and observe such restrictions. The information contained herein is not for release, publication, distribution or forwarding, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia). Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction.

This announcement does not contain or constitute an offer to sell or the solicitation of an offer to purchase securities to any person with a registered address in, or who is resident in, Australia, Canada, Japan, New Zealand, the Republic of South Africa or in any jurisdiction in which such an offer or solicitation is unlawful. None of the securities referred to herein have been or will be registered under the relevant laws of any state, province or territory of Australia, Canada, Japan, New Zealand or the Republic of South Africa. Subject to certain limited exceptions, none of these materials will be released, published, distributed or forwarded in or into Australia, Canada, Japan, New Zealand or the Republic of South Africa.

This announcement does not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, pledged or transferred, directly or indirectly, in, into or within except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any relevant state or other jurisdiction of the United States.

There is no intention to register any portion of the proposed Placing in the United States or to conduct a public offering of securities in the United States or elsewhere.

None of the securities referred to herein, this announcement or any other document connected with the proposed Placing has been or will be approved or disapproved by the United States Securities and Exchange Commission or by any state securities commission or other regulatory authority in the United States, and none of the foregoing authorities or any securities commission has passed upon or endorsed the merits of the offering of any securities or the accuracy or adequacy of this announcement or any other document connected with the proposed Placing. Any representation to the contrary is a criminal offence in the United States.

Investec Bank plc ("Investec") is authorised by the Prudential Regulatory Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority and is acting exclusively for the Company and no one else in connection with the proposed Placing, the content of this announcement and other matters described in this announcement. Investec will not regard any other person as its client in relation to the proposed Placing, the content of this announcement and other matters described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice to any other person in relation to the proposed Placing, the content of this announcement or any other matters referred to in this announcement.

This announcement has been issued by, and is the sole responsibility of the Company. Members of the public will not be eligible to take part in the proposed Placing. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change. Neither the contents of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement. This announcement should not be considered a recommendation by Investec or any of its directors, officers, employees, advisers or affiliates in relation to any purchase of or subscription for securities. Neither Investec, nor any of its directors, officers, employees, advisers, consultants or affiliates accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy, fairness, sufficiency or completeness of the information or the opinions or beliefs contained in this announcement (or any part hereof) or for any other written or oral information made available to, or publicly available to, any interested party or its advisers or for any other statements made or purported to be made by it, or on behalf of it, in connection with the Company or the proposed Placing and nothing in this announcement shall be relied upon as a promise or representation in this respect. None of the information in this announcement has been independently verified or approved by Investec or any of its directors, officers, employees, advisers, consultants or affiliates. Save in the case of fraud, no responsibility or liability is accepted by Investec or any of its directors, officers, employees, advisers or affiliates for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement or from any acts or omissions of the Company in relation to the proposed Placing. No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such announcements must not be relied on as having been authorised by the Company or Investec. Subject to the AIM Rules for Companies, the Prospectus Rules, the Disclosure Guidance and Transparency Rules and MAR, the issue of this announcement and any subsequent announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company and its subsidiaries (the "Group") since the date of this announcement or that the information contained in it is correct as at any subsequent date.

This announcement may contain and the Company may make verbal statements containing "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, United Kingdom domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company's profitability and ability to access capital and credit, a decline in the Company's credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. Except as required by applicable law or regulation (including to meet the requirements of the AIM Rules for Companies, MAR, the Prospectus Rules and/or the Financial Services and Markets Act 2000), the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statements are based. The price of the shares and any income from them may go down as well as up and investors may not get back the full amount invested on disposal of such shares. All subsequent oral or written forward-looking statements attributed to the Company or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements contained in this announcement are based on information available to the directors of the Company at the date of this announcement, unless some other me is specified in relation to them, and the posting or receipt of this announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date.