Peel Hotels Regulatory News (PHO)

Peel Hotels PLC (the "Company")

Proposed Cancellation and Notice of AGM

Introduction

Further to its announcement on 2 August 2019, the Company announces that it has published a circular ("Circular") and is seeking Shareholder approval for the cancellation of the admission of its Ordinary Shares to trading on AIM ("Cancellation"). The Circular sets out the reasons why the Directors believe that this is in the best interests of the Company and its Shareholders as a whole and their recommendation to Shareholders to vote in favour of the resolution to approve the Cancellation (the "Resolution"). The Board is proposing the Resolution at the Company's Annual General Meeting to be held at 12.00 noon on 19 September 2019.

The Circular has been made available on the Company's website at www.peelhotels.co.uk.

The Cancellation is conditional, pursuant to Rule 41 of the AIM Rules, upon the approval of not less than 75 per cent of the votes cast by Shareholders (whether present in person or by proxy) at the Annual General Meeting, notice of which is set out at the end of the Circular.

In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the date of the proposed Cancellation.

Expected timetable of principal events

Notes:

(1) All of the times referred to in this announcement refer to London time, unless otherwise stated.

(2) Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and dates will be notified to Shareholders by an announcement through a Regulatory Information Service.

(3) The Cancellation requires the approval of not less than 75 per cent of the votes cast by Shareholders at the Annual General Meeting.

Background to, and reasons for, the Cancellation

The Company's strategy is to pay down its debt and increase value for its Shareholders, and as such will have no requirement for access to funding from equity capital markets.

The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders in retaining its quotation on AIM, and believe that the Cancellation is in the best interests of the Company and its Shareholders as a whole.

In reaching this conclusion, the Directors have considered the following key factors, amongst others:

- The cost, management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM are, in the Directors' opinion, disproportionate to the benefits to the Company.

- There is very little on-market trading activity in the Company's shares.

- The Cancellation will enable the Company to reduce significantly administrative costs.

- The Directors have looked at the tax position of Shareholders, which will be unchanged by the delisting.

- Shareholders will still stand to benefit from a return of surplus cash, and whether by the payment of dividends, or buying back shares, or otherwise, as (in the Board's discretion) cash allows.

- Both Robert Peel and his brother, Charles Peel, who together own 62.41% of the issued share capital of the Company have committed to vote in favour of the Cancellation.

Following careful consideration, the Directors believe that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation at the earliest opportunity.

Process for Cancellation

The Cancellation is conditional, pursuant to Rule 41 of the AIM Rules, upon the approval of not less than 75 per cent of the votes cast by Shareholders (whether present in person or by proxy) at the Annual General Meeting, notice of which is set out at the end of the Circular.

In accordance with rule 41 of the AIM Rules, an AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM must notify such intended cancellation and separately inform the London Stock Exchange of its preferred cancellation date at least 20 business days prior to such date.

Additionally, Cancellation will not take effect until at least five clear Business Days have passed following the passing of the Resolution for the Cancellation. If the Resolution for the Cancellation is passed at the AGM, it is the Company's intention to cease trading of the Company's Ordinary Shares on AIM on 26 September 2019 and the Cancellation will take effect on 07:30 am on 27 September 2019.

Principal effects of Cancellation

The principal effects that the Cancellation will have on Shareholders include the following:

- the underlying liquidity in the Ordinary Shares is currently low and, in the opinion of the Directors, is likely to remain that way for the foreseeable future whether or not the Cancellation proceeds.

- it may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time.

- Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events, such as substantial transactions, financing transactions, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals.

- the Company will cease to have an independent nominated adviser and broker.

- the Cancellation of itself should not have any taxation consequences for Shareholders (Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately).

After the Cancellation, the Company will continue to comply with applicable statutory requirements. Subject to the Reregistration occurring, Shareholders should also note that the Takeover Code will continue to apply to the Company for the period of 10 years from the date of Cancellation.

The Resolutions to be proposed at the Annual General Meeting include the adoption of the New Articles with effect from completion of the Cancellation. A summary of the principal changes being made by the adoption of the New Articles is included in the Circular.

The above considerations are not exhaustive and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

Transactions in the Ordinary Shares prior to and post the proposed Cancellation

Prior to Cancellation

Shareholders should note that they are able to trade in the Ordinary Shares on AIM prior to Cancellation.

Post Cancellation

Shareholders should note that, post Cancellation, there will be no dealing and settlement arrangements in the Ordinary Shares on AIM, and that your Board does not intend to apply for admission of the Ordinary Shares to any other Market. The Company is making arrangements to allow for those of the Company's Shareholders who wish to buy and sell Ordinary Shares post-Cancellation to be matched.

Future Shareholder Returns

The Directors are aware that Shareholders may wish to secure a return on their investment in Ordinary Shares over time. In the absence of a market for Ordinary Shares, Shareholders will continue to benefit from the return to Shareholders of funds determined by your Board to be in excess of the Company's wants. It is your Directors' intention on the first anniversary of Delisting and on subsequent anniversaries to consider the return of surplus cash to Shareholders, and whether by the payment of dividends, or buying back shares, or otherwise, as (in the Board's discretion) cash allows.

The Board will review, on each anniversary of Delisting, the possible routes to return on investment to Shareholders and will consider the appropriate use of any surplus cash to maximise shareholder returns. If the Directors consider the buy back of shares as the best possible option for its Shareholders at the relevant time, it is your Directors' current expectation that the price payable on any buyback of shares would be not less than 5 per cent above the average market value of an Ordinary Share in the Company in the six months immediately preceding Delisting. Robert and Charles Peel who collectively hold 62.41% of the issued Ordinary Shares have indicated that they would not expect to participate in such a buy-back.

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Cancellation becoming effective. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 26 September 2019 and that the effective date of the Cancellation will be 27 September 2019.

Shareholders should note that the disposal of Ordinary Shares could give rise to either corporation tax or income tax, but that the business property relief entitlement currently enjoyed by investors in the Ordinary Shares will not be affected if the Company delists from AIM and re-registers as a private Company (Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately).

Re-registration

Following the Cancellation, the Board believes that the requirements and associated costs of the Company maintaining its public company status will be difficult to justify and that the Company will benefit from the more flexible requirements and lower costs associated with private limited company status. It is therefore proposed to re-register the Company as a private limited company. In connection with the Re-registration, it is proposed that the New Articles be adopted to reflect the change in the Company's status to a private limited company.

The principal effects of the Re-registration on the rights and obligations of Shareholders and the Company are summarised in Part II of this Document. Application will be made to the Registrar of Companies for the Company to be re-registered as a private limited company. Re-registration will take effect when the Registrar of Companies issues a certificate of incorporation on Re-registration. The Registrar of Companies will not issue the certificate of incorporation on Reregistration until the Register of Companies is satisfied that no valid application can be made to cancel the resolution to reregister as a private limited company.

Takeover Code

Notwithstanding the Cancellation, subject to the Re-registration occurring under the Takeover Code the Company will continue to be subject to its terms for a period of 10 years following the Cancellation.

Under Rule 9 of the Takeover Code, when any person or group of persons acting in concert, individually or collectively, are interested in shares which carry more than 30 per cent. of the voting rights of a company but do not hold shares carrying more than 50 per cent. of the voting rights of a company and such person or any person acting in concert with him acquires an interest in any other shares, which increases the percentage of the shares carrying voting rights in which he is interested, then that person or group of persons is normally required by the Panel to make a general offer in cash to all shareholders of that company at the highest price paid by them for any interest in shares in that company during the previous 12 months.

In addition, Rule 9 of the Takeover Code states that where any person, together with persons acting in concert with him, holds over 50 per cent. of the voting rights of a company to which the Takeover Code applies and acquires additional shares which carry voting rights, then that person will not generally be required to make a general offer to the other shareholders to acquire the balance of the shares not held by that person or his concert parties.

Following the expiry of the 10 year period from the date of the Re-registration, the Company will no longer be subject to the provisions of the Takeover Code. A summary of the protections afforded to Shareholders by the Takeover Code which will be lost is set out in the Circular.

Adoption of New Articles

The Company proposes to adopt New Articles principally to reflect re-registration to a private Company and developments in company law and good practice since 1998, when the Existing Articles were adopted. Due to the extent of the changes, the Company is proposing the adoption of the New Articles rather than amendments to the Existing Articles.

Annual General Meeting

You will find set out at the end of this document a notice convening an AGM of the Company to be held at 12:00 noon on 19 September 2019 at The Norfolk Hotel, Richmond Hill, Bournemouth, Dorset, BH2 6EN at which the Resolutions will be proposed.

Norbert Paul Gottfried Petersen, who retires by rotation in accordance with the Company's Existing Articles, has informed the Board that he will not offer himself for re-election.

Action to be taken

Shareholders listed on the Company's share register at 6:00pm (UK time) on 17 September 2019 shall be entitled to participate at the AGM and vote there in person or by proxy. Shareholders will find enclosed with the Circular a Form of Proxy for use at the AGM.

The Form of Proxy should be completed and returned in accordance with the instructions printed thereon so as to arrive at the Company's Registrars, The Pavilions, Bridgwater Road, Bristol, BS13 8AE, as soon as possible and in any event not later than 12:00 noon on 17 September 2019. The completion and return of a Form of Proxy will not preclude you from attending and voting in person at meeting or any adjournment thereof, if you so wish and are so entitled.

Recommendation

The Board as a whole has considered the Proposals and agree that the Proposals are in the best interests of the Company and its Shareholders as a whole and therefore unanimously recommend that Shareholders vote in favour of the Resolutions as they will in respect of their own Ordinary Shares.

Definitions