H&t Group Plc Regulatory News (HAT)

16 May 2007 07:04

H&T Group PLC16 May 2007 NOT FOR DISTRIBUTION, PUBLICATION OR RELEASE IN OR INTO JURISDICTIONS OTHER THANTHE UNITED KINGDOM This announcement does not constitute or form part of any offer or invitation tosell or issue, or any solicitation of any offer to subscribe for, any ordinaryshares or any other securities, nor shall it (or any part of it), or the fact ofits distribution, form the basis of, or be relied on in connection with, anycontract relating thereto. This summary should be read in conjunction with the full text of the followingannouncement. H&T Group plc "H&T" or "the Group" Proposed placing and Notice of EGM H&T, the UK's leading pawnbroking business by size of pledge book, is pleased toannounce a conditional placing of in aggregate 3,600,000 new ordinary shares ata price of 204 pence per share, raising £7 million, net of expenses for theCompany. The proceeds will be used to finance the expansion of the Group's store estate,in particular to fund acquisitions. To this end, the Company has recentlycompleted the acquisition of two stores and has agreed terms and exclusivity toacquire a further four stores. In addition, terms are being progressed inrespect of four more stores. A circular, which will include a Notice of EGM to be held at 10 a.m. on 11 June2007, is expected to be posted to shareholders later today. It is expected that the Placing Shares will be admitted to trading on AIM on 12June 2007. The Placing is conditional upon: • the approval of the Resolutions at the EGM; • the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and • Admission. John Nichols, H&T Group CEO commented: "H&T Group delivered a strong financial performance in 2006, with underlyinggross profit increasing by 18 per cent. The pawnbroking industry remains a veryfragmented market and the proposed fundraising will allow us to participate inthe consolidation process. This forms a key part of our current growth strategy." 16 May 2007 For further information please contact: H&T Group plc 0870 9022 600John Nichols, Chief Executive Hawkpoint Partners Limited 020 7665 4500Lawrence Guthrie / Sunil Duggal Numis Securities Limited 020 7260 1000Oliver Hemsley / Charles Farquhar College Hill Associates 020 7457 2020Gareth David / Paddy Blewer About H&T Group H&T Group is the UK's leading pawnbroking business by size of pledge book. Thebusiness was founded in 1897 and now has 78 outlets across the UK andapproximately 350 employees. H&T Group's outlets offer a range of services including pawnbroking, prepaiddebit cards, cheque cashing and unsecured loans. H&T Group is also a retailerof jewellery, both second-hand items sourced from its pawnbroking operations anda relatively small number of new products brought in for re-sale. H&T Group provides lending solutions designed to meet the financing needs ofindividuals who may not satisfy the lending criteria of high street banks. Asthese individuals are not adequately serviced by mainstream lenders, theDirectors believe that this represents an attractive niche market. TheDirectors believe that H&T Group has developed strong client relationshipsfounded on its ability to reach lending decisions quickly and the emphasis oncustomer service, evidenced by repeat business where a single item may be pawnedmore than once. New customers are typically sourced through passing trade atthe Company's high street and shopping mall locations, introductions fromexisting clients and advertising. H&T Group's admission to AIM in May 2006 was accompanied by a £49 millioninstitutional placing of Ordinary Shares at 172 pence per share. The Board of H&T wishes to draw the market's attention to the following letterto shareholders from the Chairman of H&T Group plc, which is included in theshareholder circular that will be sent today. Copies of this document will beavailable free of charge until 11 June 2007 on the Company's website and at theCompany's registered office, which is located at Times House, Throwley Way,Sutton, Surrey SM1 4AF, during normal business hours. Definitions The following definitions apply throughout this document and in the accompanyingform of proxy unless the context requires otherwise: "Act" the Companies Act 1985, as amended;"Admission" admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules;"AIM" AIM, a market operated by the London Stock Exchange;"AIM Rules" the rules for AIM companies and their nominated advisers published by the London Stock Exchange governing admission to, and the operation of, AIM (as amended from time to time);"Board or Directors" the directors of H&T Group whose names are set out on page 5 of this document and "Director" shall mean any one of them;"Company" or "H&T" or "H&T Group" H&T Group plc;"CREST" the computerised settlement system operated by CRESTCo Limited which facilitates the transfer of shares;"EGM" or "Extraordinary the extraordinary general meeting of H&T Group to be held at" the offices of Numis at the London StockGeneral Meeting Exchange Building,10 Paternoster Square, London EC4M 7LT at 10 a.m. on 11 June 2007, notice of which is set out at the end of this document;"Group" the Company and its subsidiaries;"HMRC" HM Revenue and Customs;"London Stock Exchange" London Stock Exchange plc;"Option Schemes" the H&T Group plc Company Share Option Scheme and the H &T Group plc 2006 Unapproved Share Option Scheme; "Ordinary Shares" the ordinary shares of 5p each in the capital of the Company;"Placing" the proposed placing by Numis of the Placing Shares on behalf of the Company at the Placing Price and on the terms of the Placing Agreement;"Placing Agreement" the conditional agreement dated 16 May 2007 between Numis and the Company relating to the Placing, a summary of which is set out in paragraph 4 of the letter from the Chairman;"Placing Price" 204p per Placing Share;"Placing Shares" 3,600,000 new Ordinary Shares to be allotted pursuant to the Placing;"Resolutions" the resolutions to be proposed at the EGM, as set out in the notice of EGM at the end of this document; and"Shareholders" the holders of Ordinary Shares. Letter from the Chairman H&T Group plc (Incorporated and registered in England and Wales under the Companies Act 1985 with registered number 5188117) Peter Middleton (Non-Executive Chairman) Registered Office:John Nichols (Chief Executive) Times HouseLaurent Genthialon (Finance Director) Throwley WayStephen Fenerty (Commercial Director) SuttonAndrew Brown (Non-Executive Director) Surrey SM1 4AFPeter McNamara (Non-Executive Director) To Shareholders and, for information only, to holders of options under theOption Schemes 16 May 2007 Dear Shareholder, PROPOSED PLACING OF 3,600,000 NEW ORDINARY SHARES AND NOTICE OF EXTRAORDINARYGENERAL MEETING 1. Introduction H&T Group announced today a conditional placing of in aggregate 3,600,000 newOrdinary Shares at a price of 204 pence per share. The Placing will raiseapproximately £7 million, net of expenses, for the Company. The Company intends to use the proceeds of the Placing to finance the expansionof its store estate, in particular to fund the cash element of acquisitions andthe working capital required to grow these businesses. To this end, the Companyhas recently completed the acquisition of two stores, has agreed key terms andexclusivity to acquire a further four stores and terms are being progressed inrespect of an additional four stores. Further details of the Placing and the other matters referred to above are setout below. The Placing Shares have been conditionally placed with institutions. Dealings inthese Placing Shares are expected to commence on AIM at 8 a.m. on 12 June 2007.The Placing Shares are equivalent to approximately 11.43 per cent. of theCompany's existing issued share capital and will, when issued, representapproximately 10.26 per cent. of the enlarged issued share capital. Approval of the necessary authorities required for the allotment of the PlacingShares pursuant to the Placing will be sought at an Extraordinary GeneralMeeting convened for 10 a.m. on 11 June 2007. The purpose of this document is toprovide shareholders with information on the Placing, and to convene the EGM atwhich shareholders' approval will be sought for the Resolutions, as set out inthe notice of EGM at the end of this document. 2. Background to and reasons for the Placing The National Pawnbroking Association estimates that there are approximately 800pawnbroking stores in the UK. The market is highly fragmented with the fourlargest chains only accounting for just over 200 stores. The Directors believethe structure of the market and the Company's position within it mean that theCompany is well placed to make acquisitions to expand its geographicalfootprint. The Company maintains a list of potential store acquisitions and plans toacquire at least ten stores during 2007. The Company's acquisition strategy isprincipally asset driven, with assets consisting of a combination of pledgebook,Pay Day Advance book and retail jewellery stock together with store fixtures andfittings. The Company seeks acquisitions which: • are earnings accretive; • are supportable by the Company's existing infrastructure; and • do not adversely impact the financial performance of existing stores. Following the acquisition of a store, the Company either continues trading fromthe acquired premises or relocates to an alternative nearby site, which may beone of the Company's existing stores. So far during 2007, the Company has acquired two stores. The Company has agreedkey terms and exclusivity to acquire a further four stores. Terms are also beingprogressed in respect of an additional four stores which are part of theCompany's wider target list of stores for acquisition The Company intends to use the funds raised pursuant to the Placing to expandits store estate and, in particular, to finance the cash consideration of theacquisition opportunities and the working capital required to grow thesebusinesses. 3. Information on H&T Group 3.1 Overview H&T Group is the UK's leading pawnbroking business by size of pledge book. Thebusiness was founded in 1897 and now has 78 outlets across the UK andapproximately 350 employees. H&T Group's outlets offer a range of services including pawnbroking, prepaiddebit cards, cheque cashing and unsecured loans. H&T Group is also a retailer ofjewellery, both second-hand items sourced from its pawnbroking operations and arelatively small number of new products brought in for re-sale. H&T Group provides lending solutions designed to meet the financing needs ofindividuals who may not satisfy the lending criteria of high street banks. Asthese individuals are not adequately serviced by mainstream lenders, theDirectors believe that this represents an attractive niche market. The Directorsbelieve that H&T Group has developed strong client relationships founded on itsemphasis on customer service, evidenced by repeat business where a single itemmay be pawned more than once. New customers are typically sourced throughpassing trade at the Company's high street and shopping mall locations,introductions from existing clients and advertising. H&T Group's admission to AIM in May 2006 was accompanied by a £49 millioninstitutional placing of Ordinary Shares at 172 pence per share. 3.2 Strategy H&T Group's objective is to capitalise on its position as one of the UK'slargest pawnbrokers. It intends to continue growing the business through: • expanding its geographical footprint through greenfield sites and storeacquisitions; • establishing recently introduced products and services. The Directors believethat H&T Group is well placed to capitalise on the growing awareness of prepaidcards in the UK. The Company also intends to expand its portfolio of unsecuredproducts, using the Pay Day Advance and KwikLoan models to their best advantage.In addition, the Company is continuing to appraise the trial of its secondarybrand, Get>Go; and • developing new products and services. H&T Group has a track record fordeveloping new products and the Company intends to introduce new products toattract new customers and provide additional services to the existing customerbase. 3.3 Current trading The current financial year has started well and trading is in line withmanagement's expectations. 4. The Placing The Company announced today that it was raising approximately £7 million, net ofexpenses, through the placing of the Placing Shares. The Placing Pricerepresents a discount of approximately 2.63 per cent. to the closing mid-marketprice of 2091/2p per Ordinary Share as at 14 May 2007, the latestpracticable date prior to the announcement of the Placing. The Placing Shareswill rank in full for all dividends and otherwise pari passu with the existingOrdinary Shares. It is expected that the Placing Shares will be admitted to trading on AIM on 12June 2007. The Placing is conditional upon: • the approval of the Resolutions at the EGM; • the Placing Agreement becoming unconditional in all respects and not havingbeen terminated in accordance with its terms; and • Admission. The Placing is to be effected on behalf of the Company by Numis on the terms ofthe Placing Agreement. The Placing Agreement provides for Numis to use itsreasonable endeavours to procure subscribers for the Placing Shares and to theextent that it does not procure such subscribers, to subscribe for such PlacingShares itself. These obligations are subject to certain conditions includingthose listed above. In consideration of their services in connection with the Placing, the Companywill pay to Numis a commission of an amount equal to 2 per cent. of theaggregate value, at the Placing Price, of the Placing Shares. The PlacingAgreement contains warranties given by the Company with respect to its businessand the Group and certain matters connected with the Placing. In addition, theCompany has given indemnities to Numis in connection with the Placing and Numis'performance of services in relation to the Placing. Numis is entitled toterminate the Placing Agreement in specified circumstances. The Placing Shares represent approximately 10.26 per cent. of the enlargedissued ordinary share capital of the Company following the Placing. 5. Directors' Shareholdings The Directors will not be subscribing for any shares pursuant the Placing. Thebeneficial and non-beneficial interests of the Directors (not includingunexercised options over the Ordinary Shares) on the date of this document andfollowing the Placing are set out below: Director Current number of Ordinary Shares Interests after the Placing as a percentage of the enlarged issued share capitalPeter Middleton 12,000 0.03John Nichols* 1,400,000 3.99Laurent Genthialon** 800,000 2.28Stephen Fenerty*** 400,000 1.14Andrew Brown 12,000 0.03Peter McNamara 12,000 0.03 * John Nichols has a beneficial interest in options granted over 87,397 OrdinaryShares under the Option Schemes ** Laurent Genthialon has a beneficial interest in options granted over 63,287Ordinary Shares under the Option Schemes *** Stephen Fenerty has a beneficial interest in options granted over 51,233Ordinary Shares under the Option Schemes 6. Extraordinary General Meeting and action to be taken A notice convening the EGM to be held at the offices of Numis at the LondonStock Exchange Building, 10 Paternoster Square, London EC4M 7LT at 10 a.m. on 11June 2007 is set out at the end of this document. The Resolutions to be proposedat the EGM are to empower the Directors to allot equity securities for cash andto do so otherwise than in accordance with the Shareholders' statutorypre-emptory provisions, as set out in the Act, in connection with the Placing. The authority given to the Directors to allot further shares in the capital ofthe Company requires the prior authorisation of the Shareholders at a generalmeeting under section 80 of the Act. Upon the passing of Resolution 1 theDirectors will have authority to allot certain of the unissued ordinary sharecapital of the Company up to an aggregate nominal amount of £524,214.70,representing approximately 29.88 per cent. of the issued ordinary share capitalof the Company as enlarged by the issue of the Placing Shares. This authoritywill expire immediately following the annual general meeting of the Company in2008 or on 11 September 2008, whichever is the earliest. Upon the passing of Resolution 2, the Directors will have the power undersection 95 of the Act. to allot, for cash, Ordinary Shares up to a maximumaggregate nominal amount of £87,714.25, representing approximately 5 per cent.of the issued ordinary share capital of the Company as enlarged by the issue ofthe Placing Shares, without being required first to offer such securities toShareholders in accordance with statutory pre-emption rights. This authoritywill expire immediately following the annual general meeting of the Company in2008 or on 11 September 2008, whichever is the earliest. While the Directors have no present intention to allot any Ordinary Sharespursuant to the authorities proposed to be granted to them at the EGM, save forthe allotment of the Placing Shares, the rights described above would provideflexibility for raising additional funds or making acquisitions should furthersuitable opportunities arise. A form of proxy for use by Shareholders in connection with the EGM is enclosedwith this document. Whether or not you propose to attend the EGM in person, youare requested to complete the form of proxy in accordance with the instructionsprinted on it and to return it to the Company's registrars, Lloyds TSBRegistrars, The Causeway, Worthing, West Sussex, BN99 6ZL, as soon as possibleand in any event so as to arrive no later than 10 a.m. on 9 June 2007.Completion and return of the form of proxy will not preclude you from attendingthe EGM and voting in person should you so wish. 7. Responsibility The Directors of the Company, whose names appear on page 5, acceptresponsibility for the information contained in this document includingindividual and collective responsibility for compliance with the AIM Rules. Tothe best of the knowledge and belief of the Directors (who have taken allreasonable care to ensure that such is the case), the information contained inthis document is in accordance with the facts and does not omit anything likelyto affect the import of such information. 8. Recommendation The Directors consider the terms of the Placing to be fair and reasonableinsofar as the Shareholders are concerned and in the best interests of theCompany and accordingly unanimously recommend that you vote in favour of theResolutions at the EGM as they intend to do in respect of their own holding ofOrdinary Shares, representing 2,636,000 Ordinary Shares, being approximately8.37 per cent. of the Company's current issued ordinary share capital. Yours faithfully, Peter Middleton Chairman This announcement is not for release, publication or distribution, in whole orin part, in or into jurisdictions other than the United Kingdom (the "ProhibitedTerritories"). The new ordinary shares have not been and will not be registeredunder the applicable securities laws of any of the Prohibited Territories and,unless an exemption under such laws is available, may not be offered for sale orsubscription or sold or subscribed directly or indirectly within the ProhibitedTerritories or for the account or benefit of any national, resident or citizenof any of the Prohibited Territories. Hawkpoint Partners Limited ("Hawkpoint"), which is authorised in the UnitedKingdom by the Financial Services Authority, is the Company's nominated adviserand is acting exclusively for the Company in respect of the Placing andAdmission. Hawkpoint is not acting for any other person in relation to thematters referred to in this document and will not be responsible to anyone otherthan the Company for providing the protections afforded to clients of theCompany or for giving advice in relation to the matters referred to in thisdocument. Numis Securities Limited ("Numis"), which is authorised and regulated in theUnited Kingdom by the Financial Services Authority is the Company's broker andis acting exclusively for the Company in relation to the Placing. Numis is notacting for any other person in connection with the matters referred to in thisdocument and will not be responsible to anyone other than the Company forproviding the protections afforded to clients of the Company or for givingadvice in relation to the matters referred to in this document. This announcement does not constitute an offer of, or the solicitation of anyoffer to subscribe for or buy, any of the new ordinary shares to any person inany jurisdiction to whom or in which such offer or solicitation is unlawful.The distribution of this announcement in certain jurisdictions may be restrictedby law and therefore persons into whose possession this announcement comesshould inform themselves about and observe any such restrictions. Any failureto comply with these restrictions may constitute a violation of the securitieslaws of such jurisdictions. This information is provided by RNS The company news service from the London Stock Exchange