Hummingbird Regulatory News (HUM)

3 Nov 2005 07:01

Farley Group PLC03 November 2005 Farley Group plc ("Farley" or the "Company") Proposed acquisition of the Business of Humberts ("the Acquisition") Placing of up to 13,333,334 Ordinary Shares at 60 pence per share ("the Placing") Publication of Admission Document Re-Admission to trading on AIM Further to the announcement on 26 September 2005 the Company today announcesthat it has conditionally agreed to acquire the Business of Humberts. Humbertsis an independent national firm of land and estate agents and charteredsurveyors with a multi-disciplined practice providing integrated expertise inthe residential, commercial, rural and professional services fields. Humberts has a total of 39 offices, 18 of which are owned and 21 of which arefranchised. For the year ended 31 March 2005 the Business of Humberts producedan adjusted profit before tax of £576,000 on turnover of £8.1 million. Theinitial consideration for the Acquisition is to be satisfied by £1.8 millionpayable in cash; the issue to the Vendors of the Initial Consideration Shares,credited as fully paid at the Placing Price, at Completion; and the grant to theVendors of 500,000 Warrants on Admission, exercisable at the Placing Price.Further details of the Acquisition and the further consideration payable underthe Acquisition Agreement are set out below. In connection with the Acquisition, the Company is also proposing to raise up to£8 million (before expenses) pursuant to the Placing, the proceeds of which willbe used to provide the Enlarged Group with additional working capital. Farley also announces, conditional on Admission, the appointment of Max Ziff asChief Executive Officer of the Company. Max has a wide range of financialexperience in corporate restructuring, mergers and acquisitions, liabilitymanagement and the raising of debt and equity capital across the internationalcapital markets. The size of the Business of Humberts in relation to the Company means that theAcquisition is considered to be a "reverse takeover" for the purposes of the AIMRules. Accordingly, the Acquisition is conditional on the prior approval of theShareholders. Completion of the Acquisition is also conditional on Admission. Application will be made to the London Stock Exchange for the Enlarged ShareCapital to be admitted to trading on AIM and Admission is expected to occur on29 November 2005. For further information please contact: • Max Ziff, Proposed Chief Executive Officer, Farley Group plc: 07802 472 774 • Tim James, Executive Chairman, Farley Group plc: 07768 833 029 • John Prior / David Seal, Corporate Synergy Plc: 020 7448 4400 Background Farley & Co, the Company's principal trading subsidiary, is an independentestate agent established for over half a century, which specialises in theselling, letting and management of property in central London. Farley & Co has ateam of 29 qualified and experienced professionals who have extensive knowledgeof the central London area. Having traded successfully for more than half acentury, Farley & Co has a well known name within Kensington and Chelsea,particularly in the residential property market. On 19 December 2003, FarleyGroup Limited (now Farley Services Limited) was acquired by Dealstore II PLC(which changed its name to Farley Group plc) which was admitted to trading onAIM on 20 December 2003. In March 2004 the Company raised £2 million (beforeexpenses) through the issue of 6,060,608 Ordinary Shares at 33 pence per share. The Directors and Proposed Director consider that there is an opportunity toconsolidate within the market in which the Group operates through theacquisition of estate agents and property management companies. On 20 June 2005the Company announced the placing of new Ordinary Shares to Pendana Limited (acompany which is ultimately owned by Investec Trust (Guernsey) Limited astrustees of the Tchenguiz Family Trust) to raise £2 million (before expenses),in order to further strengthen its ability to acquire businesses operatingwithin the sector in which it operates. The acquisition of the Business ofHumberts represents the first step in the Company's strategy to consolidatewithin this sector. The Directors and Proposed Director believe that there is scope to rationalisethe activities of the Business of Humberts, to generate improved returns and toexpand the franchise operations of the Business of Humberts, and suchrationalisation costs may, in the current and next financial year of theCompany, amount to up to £1 million. The Directors and Proposed Director also believe that an increase in the marketshare of the sector in which Farley operates will enable it to make furtheracquisitions and property related investments. Details of the Acquisition Humberts Limited, a wholly-owned subsidiary of Farley, has conditionally agreedto acquire the Business of Humberts pursuant to the Acquisition Agreement. Under the terms of the Acquisition Agreement the Buyer will acquire the Businessof Humberts, being the business of chartered surveyors, land and estate agentsand auctioneers carried on by the Vendors under the name "Humberts", as well ascertain assets and will acquire the benefit of the Business of Humberts from 31October 2005. The assets to be acquired under the Acquisition Agreement includethe goodwill, intellectual property rights, stocks, records, benefit of thecontracts of Humberts, computer systems, trade debtors, currentwork-in-progress, Humberts' plant and equipment, the leasehold propertiescurrently occupied by the Business of Humberts together with all other assetsand rights and the benefit of any claims relating to the Business as atCompletion other than the excluded assets as set out below. The consideration for the Acquisition is to be satisfied as to an initial £1.8million payable in cash; the issue to the Vendors of the Initial ConsiderationShares, credited as fully paid at the Placing Price, at Completion; and thegrant to the Vendors of 500,000 Warrants on Admission, exercisable at thePlacing Price. In addition, the Buyer will pay the Vendors an amount equal tothe increase in the net asset value of the Business of Humberts in the periodcommencing on 1 July 2005 and ending on 31 October 2005. The amount payable tothe Vendors in respect of such increase in net asset value will be limited to£100,000 plus any tax payable by the Vendors if the increase in the net assetvalue of the Business of Humberts is in excess of £100,000. Also, the Buyer willrepay the overdraft of the Business of Humberts as at 31 October 2005 up to amaximum amount of £800,000 and any increase in the overdraft between 31 October2005 and completion of the Acquisition. Subject to certain performance targets being met by the Business of Humberts forthe 12 months ending 31 October 2006, the Group will pay the Vendors a furtherconsideration of up to £1.6 million to be satisfied by the payment of cash bythe Buyer (as to 50 per cent.) and the issue by the Company of FurtherConsideration Shares (as to 50 per cent.) credited as fully paid up at the thenprevailing market price, and the grant by the Company of up to 250,000 Warrantsexercisable at the Placing Price. Subject to certain performance targets beingmet by Humberts for the year ending 31 October 2007, the Group will pay theVendors a further consideration of up to £1.6 million to be satisfied by thepayment of cash by the Buyer (as to 50 per cent.) and the issue by the Companyof Further Consideration Shares (as to 50 per cent.) credited as fully paid upat the then prevailing market price and grant by the Company of up to 250,000Warrants exercisable at the Placing Price. The Consideration Shares will rank pari passu in all respects with the ExistingOrdinary Shares, save that the Consideration Shares will not entitle the holdersthereof to receive the Dividend. The Acquisition does not include the freehold interest in the Humberts officesin Bridport, Sherbourne, Tetbury, Yeovil and Blandford. Instead, the Vendorswill grant the Buyer a 15 year lease in respect of each of these properties. TheAcquisition also does not include the shares owned by the Vendors in Humberts(Cotswolds) Limited and Humberts Chichester Limited and all amounts owed bythose two companies to the Business of Humberts, the Shares owned by the Vendorsin Humberts Fine Arts Limited and Humberts Salisbury Limited, and the assets andbusiness of Humberts operating in Cheltenham. Completion of the Acquisition Agreement is conditional, inter alia, on: • the passing at the EGM of the Resolutions; and • Admission. Details of the Placing Corporate Synergy has conditionally agreed to use its reasonable endeavours toprocure subscribers for the Placing Shares at the Placing Price on behalf of theCompany to raise a maximum of £8 million (before expenses). The Placing Shareswill represent a maximum of approximately 34.61 per cent. of the Enlarged ShareCapital. Max Ziff, Proposed Chief Executive Officer of the Company, issubscribing for 283,333 Ordinary Shares pursuant to the Placing representing0.74 per cent. of the Enlarged Share Capital (assuming the maximum number ofPlacing Shares is issued). In addition Simon Wharmby and Tim James, existingdirectors of the Company, are subscribing for 50,000 Ordinary Shares eachpursuant to the Placing, representing 0.13 per cent. each of the Enlarged ShareCapital, and Patricia Farley, an existing director of the Company, issubscribing for 216,667 Ordinary Shares pursuant to the Placing, representing0.56 per cent. of the Enlarged Share Capital (assuming the maximum number ofPlacing Shares is issued). Pendana Limited (a company which is ultimately owned by Investec Trust(Guernsey) Limited as trustees of the Tchenguiz Family Trust) is subscribing for3,570,946 Ordinary Shares pursuant to the Placing representing 9.27 per cent. ofthe of the Enlarged Share Capital (assuming the maximum number of Placing Sharesis issued). The proceeds of the Placing will be used to provide additional working capitalfor the Enlarged Group. The Placing is not underwritten. The Placing Shares will, when issued and fullypaid, rank pari passu in all respects with the Existing Ordinary Shares,including the right to receive all dividends and other distributions thereafterdeclared, made or paid on the Ordinary Shares, but the Placing Shares will notentitle the holders thereof to receive the Dividend. The Placing is conditional on, inter alia: • the passing of the Resolutions; • the Acquisition Agreement becoming unconditional (save for any condition relating to Admission) and not being terminated in accordance with its terms prior to Admission; and • Admission becoming effective no later than 8.00 a.m. on 29 November 2005 (or such later time and date being not later than 8.00 a.m. on 6 December 2005 as Corporate Synergy and the Company may agree). Admission to AIM Application will be made to the London Stock Exchange for all of the ExistingOrdinary Shares, the Placing Shares and the Initial Consideration Shares to beadmitted to trading on AIM. Admission is expected to become effective andtrading in the Enlarged Share Capital to commence on 29 November 2005. Application will be made, as and when necessary, to the London Stock Exchangefor the Further Consideration Shares and any Ordinary Shares issued pursuant tothe exercise of the Warrants to be admitted to trading on AIM. Application willnot be made for the Warrants to be admitted to trading on AIM. Dividend Policy The Directors' and Proposed Director's intention is to follow a progressivedividend policy in forthcoming years, while retaining a significant proportionof the Enlarged Group's earnings to facilitate the Board's plans for thecontinued growth of the Enlarged Group. The Directors propose to pay an interim dividend of 1.1p per share to thoseShareholders on the register as at 11 November 2005. Recipients of the PlacingShares and the Consideration Shares will therefore not be eligible for receiptof the interim dividend. The Company does not intend to pay a final dividend. Availability of admission document Copies of the admission document will be available to the public during normalbusiness hours on any weekday (except Saturdays and public holidays), free ofcharge from the date of this document until the date which is one month afterAdmission at the offices of Stringer Saul LLP, 17 Hanover Square, London W1S1HU. Definitions "Acquisition" the proposed acquisition by Humberts Limited, a wholly-owned subsidiary of the Company, of the Business of Humberts pursuant to the Acquisition Agreement "Acquisition Agreement" the conditional agreement dated 2 November 2005 between the Vendors (1), Humberts Limited (2) and the Company (3) relating to the Acquisition "Admission" admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules "AIM" the market of that name operated by the London Stock Exchange "AIM Rules" the rules governing the admission to, and operation of, AIM published by the London Stock Exchange "Board" the board of directors of the Company from time to time "Consideration the Initial Consideration Shares and Further Consideration Shares proposed to beShares" issued pursuant to the Acquisition "Completion" completion of the Acquisition Agreement "Corporate Synergy" Corporate Synergy Plc "Directors" the directors of the Company as at the date of the admission document "Dividend" the proposed interim dividend at 1.1p per share proposed to be paid to those Shareholders on the register as at 11 November 2005 "Enlarged Group" the Company and its subsidiaries following completion of the Acquisition "Enlarged Share Capital" the issued share capital of the Company at Admission as enlarged following completion of each of the Acquisition and the Placing "Existing Ordinary Shares the Ordinary Shares in issue on the date of the admission document" "Extraordinary General the extraordinary general meeting of the Company convened forMeeting" or "EGM" 11.00 a.m. on 25 November 2005 (or any adjournment thereof) to be held at the offices of Stringer Saul LLP "Farley & Co" Farley & Co Limited, the Company's principal trading subsidiary "Further Consideration up to 3,000,000 new Ordinary Shares proposed to be issued toShares" the Vendors, subject to the satisfaction of performance conditions set out in the Acquisition Agreement and based on the results of Humberts Limited to 31 October 2006 and 31 October 2007, credited as fully paid "Group" or "Farley Group" the Company and its subsidiaries "Humberts" or "the the business of land and estate agents and chartered surveyorsBusiness of Humberts" carried on as a partnership by the Vendors under the name "Humberts" that is being purchased by Humberts Limited "Humberts Limited" or " Humberts Limited, a wholly owned subsidiary of Farley incorporated on 6 OctoberBuyer" 2005 for the purpose of acquiring the Business of Humberts "Initial Consideration the 1,666,667 new Ordinary Shares proposed to be issued to theShares" Vendors at Admission as consideration under the Acquisition Agreement, credited as fully paid at the Placing Price "London Stock Exchange" London Stock Exchange plc "Ordinary Shares" ordinary shares of 5p each in the capital of the Company "Placing" the conditional placing by Corporate Synergy on behalf of the Company of the Placing Shares pursuant to the Placing Agreement "Placing Price" 60p per Placing Share "Placing Shares" up to 13,333,334 new Ordinary Shares to be issued pursuant to the Placing "Proposed Director" Max Ziff "Resolutions" the resolutions of the Company set out in the Notice of Extraordinary General Meeting "Shareholders" holders of Ordinary Shares "Vendors" Richard Austen, John Husband, Nicholas Evans, David Hebditch, Simon Young, Steven Butterfield, Charles Arkell and John Horton, being the vendors of the Business of Humberts "Warrants" the 1,000,000 warrants constituted by the Warrant Instrument and entitling the holders thereof to subscribe for Ordinary Shares, pursuant to the Warrant Instrument, at the Placing Price at anytime from the date of grant until 30 November 2010 and proposed to be issued to the Vendors as to (i) 500,000 at Admission and (ii) up to 500,000 in two tranches, 250,000 per tranche, subject to the satisfaction of performance conditions based on the financial results of the Business of Humberts in the financial years ending 31 October 2006 and 31 October 2007 (in accordance with the terms of the Acquisition Agreement) "Warrant Instrument" the deed poll constituting the Warrants, dated 2 November 2005, and setting out the terms and conditions upon which the Warrants may be exercised This information is provided by RNS The company news service from the London Stock Exchange