21 Dec 2015 07:00
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21 December 2015
GLI Finance Limited (the "Company" or "GLIF")
Further re Placing and Open Offer of 2020 ZDP Shares and Extraordinary General Meeting
Board Changes
Firm Placing and Indicative Proposals
Further to the announcement on 3 December 2015, and in light of feedback received as part of the marketing of the 2020 ZDP Shares to investors, the Board of GLIF announces that it has decided to cancel the Placing and Open Offer of 2020 ZDP Shares.
The Board will not be progressing the issue of the CULS which had been considered as part of the capital raising exercise announced on 3 December 2015.
Geoff Miller, CEO of the Company, has resigned with immediate effect. Andy Whelan, Executive Director of the Company, will take the role as the Company's Interim CEO pending the appointment of a permanent replacement for Mr Miller. Mr Whelan is also CEO and a founder shareholder of Sancus and is well-acquainted with GLIF's other platform investments.
The Board has considered its overall strategy and would like to (i) provide greater clarity over its approach to maximising value from GLIF's 19 platform investments; and (ii) set out a clear policy for the Company's future dividend payments.
In addition, the Board announces that it intends to enter into a strategic relationship with Golf Investments Limited, a member of the Somerston group of companies ("Somerston"), which the Board believes will reduce the Company's overall cost of capital by both helping to accelerate the growth of GLI Asset Management Limited ("GLIAM") and GLI Alternative Finance plc ("GLIAF") whilst repaying the outstanding Sancus Loan Facility.
Update on Strategy to Maximise Value of Platform Portfolio
The Board believes that the Company has an attractive and unique portfolio of platform companies, a number of which are growing very rapidly and are conservatively valued. This portfolio is expected to bring significant long-term capital gains to shareholders. Taking into account the capital available to the Company, the Board believes that the focus of the business should be on supporting and developing those platforms with the greatest potential in the context of generating incremental shareholder value.
Whilst the Board does not rule out future acquisitions in exceptional circumstances, the strategy going forward will be to maximise the value of the existing portfolio and the Board will carry out a detailed strategic review of the platform portfolio in 2016.
Update on Dividend Policy
The Board is aware that a number of investors in the Company have been attracted by its dividend. The structure of the Company and its focus on double digit returns on capital are such that dividends are a natural by-product of the underlying portfolio of assets.
Nevertheless the Board believes that the dividend should be set at a level which provides sufficient flexibility to ensure that the Company can also support its rapidly growing portfolio of platform assets.
Therefore the Board expects, following implementation of the Proposals, to pay a dividend of not less than 2.5p per annum paid quarterly. The Board believes that this policy allows a progressive dividend from a solid base.
Strategic Relationship with Somerston
GLIF announces that it is at an advanced stage of negotiations with a view to entering into a strategic relationship with Somerston. As part of these negotiations, Somerston, through Golf Investments Limited (a newly formed special purpose vehicle), has entered into a binding agreement to subscribe for 15,000,000 new ordinary shares in the capital of the Company ("Placing Shares") at 37 pence per Placing Share ("Placing"). The Placing will be conditional only on admission of the Placing Shares to trading on AIM ("Admission"). Application will be made to the London Stock Exchange for Admission of the Placing Shares, which will rank pari passu in all respects with the existing Ordinary Shares. It is expected that Admission of the Placing Shares will take place on or around 8.00 a.m. on 31 December 2015.
The Board has also agreed indicative terms ("Proposals") with Golf Investments Limited, which are subject to Shareholder approval as summarised below, in order to provide the Group with further capital:
· GLIF will issue Golf Investments Limited with warrants exercisable over 32,000,000 Ordinary Shares in the capital of the Company ("Warrants") as follows:
- 10,000,000 Warrants at 40 pence per Ordinary Share;
- 10,000,000 Warrants at 45 pence per Ordinary Share; and
- 12,000,000 Warrants at 55 pence per Ordinary Share.
The issue of the Warrants to Golf Investments Limited will be subject to the approval of GLIF shareholders in general meeting. Conditional upon the issue of the Warrants being approved by shareholders, it is intended that Golf Investments Limited would also:
- purchase from GLIF 15 million shares in GLIAF, currently held on the balance sheet of GLIF, at a price equal to the lower of £1 per share or GLIAF's NAV per share. Somerston has indicated its willingness to remaining a long term shareholder of GLIAF;
- subscribe or procure subscriptions for 10,000,000 C shares to be issued in GLIAF within 12 months of completion of the Proposals;
- purchase 50% of GLIAM (currently a wholly-owned subsidiary of GLIF) for £250,000 and enter into a shareholder agreement covering normal protections. It would be the intention of the asset management joint venture to expand GLIAF and to develop other income related products which in turn will support the growth of the platforms owned by GLIF; and
- have the right to appoint one director to the Board of GLIF and two directors to the board of GLIAM.
The Proposals are subject to definitive agreement and documentation. The Board believes that the nominal NAV dilution of approximately 2% arising on the issue of the Placing Shares and the potential further dilution of the Warrants is offset by the advantages of the above arrangements and future strategic relationship with Somerston.
Somerston Background
Somerston is a privately owned group of companies headquartered in Jersey. With its origins in shipping, Somerston now primarily focuses on real estate investment and development internationally as well as making private equity and venture capital investments. Somerston has held strategic interests in a number of listed companies. Further details on Somerston are available to view at www.somerston.com.
Rationale for the Placing and the Proposals
The Board had planned to use part of the proceeds from the Placing and Open Offer of 2020 ZDP Shares to repay the Sancus Loan Facility on or before March 2016. £24.9 million is currently owed by the Company and interest is charged at 11% p.a. under the Sancus Loan Facility. Without the proceeds from the Placing and Open Offer, the Company has considered exercising its option to extend the repayment date of the Sancus Loan Facility to March 2017. The Board believes, however, that this would be expensive and relatively unattractive and would not be in the long term interests of the Company or Shareholders. It would, for example, require the Company to realise certain of its assets having regard, inter alia, to their relative liquidity whilst safeguarding the remaining assets for the benefit of all Shareholders. One of the Board's key objectives is to maximize the potential value of the Company's portfolio of platform investments and the absence of further capital being made available would significantly impair the Company's ability to capitalise on the underlying potential of its portfolio. The Board therefore believes that the Placing and the Proposals are in the best interests of the Company and its Shareholders as a whole.
Following implementation of the Proposals, the Board intends to use the proceeds of the Placing together with a sale of 15 million of the Company's shares in GLIAF and its internal capital resources, to substantially repay the Sancus Loan Facility thereby reducing the overall cost of capital.
The Board is focused on reducing the overall cost of capital of the business whilst supporting those platform businesses which are growing rapidly. The Directors believe that there are opportunities to provide additional capital to support platform growth outside of the balance sheet of GLIF through the growth of asset management products which will also help to build value within GLIAM. Somerston shares the Board's vision of expanding GLIAF as a means of building value within GLIAM and that the Proposals will support this objective. In summary, the Board believes that the Proposals offer the means to to accelerate the development of GLIAF and GLIAM for the benefit of all Shareholders.
The Board will only consider future debt facilities, whether from Sancus or other parties in the context of lowering cost to reflect the evolution of the business, maintaining a high level of cover on the existing Zero Dividend Preference Shares and maintaining an overall lower level of short term debt.
A further announcement will be made by way of update on the Proposals in due course.
Further re Placing and Open Offer of 2020 ZDP Shares
Acceptances under the Open Offer will be returned to shareholders as soon as practicable. In view of this, the Extraordinary General Meeting convened for later today for Shareholders to consider special resolutions for the adoption of new articles of incorporation to permit the issue of the 2020 ZDP Shares and the waiving of pre-emption rights to permit the issue of the CULS will be adjourned indefinitely.
Total Voting Rights
On Admission, the Company's enlarged issued ordinary share capital will consist of 229,559,865 Ordinary Shares. All of these Ordinary Shares carry voting rights of one vote per Ordinary Share. There are no Ordinary Shares held in treasury and so the total number of voting rights in the Company following Admission will be 229,559,865. The above figures should be used by shareholders following Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.
For further information, please contact:
GLI Finance Limited
Andy Whelan
+44 (0)1534 708900
Panmure Gordon (Nominated Adviser and Corporate Broker)
Dominic Morley / Tom Salvesen
+44 (0)20 7886 2500
Peter Steel
+44 (0)113 357 1150
Camarco (PR Advisor)
Ed Gascoigne-Pees
+44 (0)203 757 4984
+44 (0)788 400 1949
Hazel Stevenson
+44 (0)203 757 4989
+44 (0)798 600 9720
Capitalised terms in this announcement have the same meaning as defined in the circular posted to shareholders on 3 December 2015, a copy of which is available to view at: http://investor-relations.glifinance.com/~/media/Files/G/Gli-Fund/documents/notice-of-egm-2020-zdps-shares.pdf
About GLI Finance Limited
GLI Finance (www.glifinance.com) is a specialist provider of finance to small and medium sized enterprises. Its ordinary shares are quoted on AIM and its issued zero dividend preference shares are listed and traded on the main market of the London Stock Exchange (ticker GLIF (Ord) and GLIZ (2019 ZDP)). GLI Finance both invests in loans to SMEs and originates finance for SMEs through a variety of finance platforms.
The platforms in which GLI Finance is invested vary by geography, industry, size of lending and by type of lending. They include Global Trade Finance, UK and US SME Lending, Offshore Lending, UK invoice discounting, European invoice discounting, Global multi-asset crowd funding and UK property-backed lending.