Richoux Group Regulatory News (RIC)

9 Nov 2005 07:00

Gourmet Holdings PLC09 November 2005 9 November 2005 Contacts Gareth Lloyd-Jones, Chief Executive Gourmet Holdings plc (020) 8394 5555 Stephen Austin/Alistair Rae (020) 7426 9000 Teather & Greenwood David Bick/Mark Longson Holborn PR (020) 7929 5599 Gourmet Holdings plc ("the Company") Placing to raise £5.2m Gourmet Holdings plc owner of Richoux and Bel and the Dragon restaurant brands • Placing by Teather & Greenwood of 14,444,445 New Ordinary Shares of 4p each at 36p per share to raise £5.2m before expenses • Redemption of Preference Shares for £680,000 • Capital Reorganisation including a £7.4m reduction of capital and a one for four shares held consolidation • Roll out of pub-restaurant concept Commenting, Nigel Whittaker, Chairman said: "We are now able to accelerate the roll out of our pub-restaurant businessfollowing the strong support we have received from both existing and newinstitutional investors." The Proposals Your board announced today that, subject inter alia to Shareholders approval,the Company proposes to raise approximately £5.2m (£4.9m after expenses) by wayof a Placing of the VCT Shares and a Placing of the Ordinary Placing Shares at36p per New Ordinary Share (that is, those shares arising on the four for oneShare Consolidation). The Company also announced the Redemption, the ShareConsolidation and the Capital Reduction. Shareholders have today been sent a Circular with further information on thePlacings, which are being carried out on a non pre-emptive basis and on theRedemption, the Capital Reorganisation and the Capital Reduction and to explainwhy your Board considers them to be in the best interests of the Company andShareholders as a whole. An Extraordinary General Meeting of the Company isbeing convened for 2 December 2005 at which Shareholders will be asked toconsider the resolutions necessary to approve and implement the Placings, theRedemption, the Capital Reorganisation and the Capital Reduction. Noticeconvening the EGM, which will be held at 11.15 a.m. (or, if later, immediatelyfollowing the conclusion or adjournment of the Annual General Meeting of theCompany convened for 11.00 a.m. on the same day and at the same place) on 2December 2005, is set out in the Circular. Strategy In my statement in the Preliminary Results, I described the trend in recentyears of the consumers' growing desire to eat out, which has been driven,amongst other things, by the increasing affordability and availability of suchopportunity to do so offered by hospitality operators. We aim to build a UK based restaurant business capable of long term sustainablegrowth. Our Richoux business offers all day dining from four premises incentral London. Following our recent investment in Richoux, revenues have grownand operational efficiencies increased leading us to believe that this businessis capable of sustained long term growth. Our pub-restaurant business offersquality food in residential and semi-rural areas operating out of traditionalpublic houses. We currently operate six pub restaurants of which three carry the Bel and theDragon brand. We have recently developed our format to offer a simplified menuat a lower pricing point. The directors believe that customer reaction to thisrevised offering has been encouraging. Accordingly, our strategy is to expand both the traditional pub-restaurantconcept as appropriate properties become available but, at the same time, toexpand the lower priced concept through a roll out in properties moreappropriate to this concept, availability of which, the Directors believe, isgreater. Reasons for the Placings The majority of the net proceeds of the Placings will be applied towards rollingout our pub restaurants format as described above. In addition, £680,000 of thePlacings proceeds are to be applied towards redeeming the Preference Shares (asdescribed below) and up to £650,000 is proposed to be used to purchase thefreehold interests incertain of our leasehold properties. Reason for the Redemption The Preference Shares were issued in two series. Preference Shares designated as"Series 2 Preference Shares" were issued on 14 June 1999 in part considerationof the acquisition of Carwardine Limited. Preference Shares designated as "Series 1 Preference Shares" were issued on 12 September 2001 in partconsideration for the acquisition of Newultra Limited. The Series 2 Preference Shares were due to be redeemed at nominal value on thefourth anniversary of their issue, namely 14 June 2003, if sufficientdistributable reserves were available. The Series 1 Preference Shares wereissued with conversion rights in favour of the holders, however these rightshave now expired. The Company became obliged to redeem any unconverted shares onthe fourth anniversary of their issue, namely 12 September 2005, if sufficientdistributable reserves were available. As the Company did not have sufficientdistributable reserves on the relevant redemption dates the Preference Shareswere not redeemed and to date remain in issue and the dividend on the PreferenceShares has not been paid. As the Company has to date been unable to redeem the Preference Shares theCompany has, since 14 June 2003, accrued a cumulative coupon rate of 2 per cent.above the base rate of Barclays Bank plc on the Series 2 Preference Shares andsince 12 September 2005 a cumulative coupon rate of 3 per cent.above the baserate of NationalWestminster Bank plc on the Series 1 Preference Shares. Theprofit and loss account of the Company as at 26 June 2005 was in deficit to theextent of proximately £7,411,000 and so the Directors believe that it isunlikely in the foreseeable future that the Company will have sufficientdistributable reserves out of which to redeem the Preference Shares. The resulting position is that dividends on the Ordinary Shares cannot be paidby the Company until all of the Preference Shares have first been redeemed andall accumulated dividends on the Preference Shares been paid. Consequently, theDirectors consider that it would be in the best interests of the Company and itsshareholders to seek to redeem the Preference Shares and reorganise theCompany's capital (as described below). Your Board is therefore pleased toannounce that it has agreed terms with all of the holders of the PreferenceShares for their redemption at a price of 62.5p per Preference Share under theterms of the Redemption Agreements. Holders of Preference Shares have entered into conditional agreements with theCompany pursuant to which the Company will redeem the reference Shares at aprice of 62.5p per Preference Share. The holders of Preference Shares haveagreed to waive all accrued and unpaid interest due in respect of the PreferenceShares. The redemption is conditional upon Admission of the Placing Sharestaking place before 30 December 2005. The Capital Reorganisation and Share Consolidation In addition to the Redemption, in order for the Company to be in a position topay dividends to the holders of the Ordinary Shares in the future it mustaddress the issue of the deficit currently standing in the profit and lossaccount of the Company. Accordingly, your Board proposes that Shareholdersapprove a reduction of capital of the Company whereby approximately £7,411,000of the sum of approximately £11,815,000 standing to the credit to the sharepremium account of the Company as at 26 June 2005 be applied against the deficitof approximately £7,411,000 on the profit and loss account of the Company tobring this account to a nil balance. Completion of the Capital Reduction, shouldthe proposal be approved by Shareholders, will be conditional upon approval bythe Court. The Board also proposes that the Ordinary Shares in the Company be consolidatedon the basis of one new ordinary share of 4p for every four Ordinary Shareswhich the Directors consider to be a more appropriate par value for theCompany's ordinary shares. The New Ordinary Shares will have the same rights asto voting, dividends and return on capital as the existing Ordinary Shares. In the event that any Shareholders become entitled to fractions of shares as aresult of the consolidation, the Directors are authorised by the Articles todeal with such fractions as they shall determine including selling the sharesrepresenting such fractions to any person for the best price reasonablyobtainable and distributing the net proceeds of the sale in due proportionsamongst Shareholders who had a fractional entitlement to shares provided thatany amount otherwise due to a Shareholder, being less than £5.00 may be retainedfor the benefit of the Company. Shareholders who hold their Existing OrdinaryShares in uncertificated form are expected to have their CREST accounts creditedwith the New Ordinary Shares on 5 December 2005. Certificates for the New Ordinary Shares will be despatched by 19 December 2005.Temporary certificates of title will not be issued. Certificates in respect ofExisting Ordinary Shares will no longer be valid from 5 December 2005 and shouldbe destroyed upon receipt of certificates in respect of the New Ordinary Shares.Pending despatch of the definitive certificates in respect of New OrdinaryShares, transfers of New Ordinary Shares held in certificated form will becertified against the register. All documents will be sent to Shareholders attheir own risk. The Placings The Company is proposing to raise £5.2m (gross) by the issue of the VCT Sharesand the Ordinary Placing Shares at the Placing Price (equivalent in aggregate toapproximately 73.22 per cent. of the Existing Ordinary Shares) to institutionaland other investors. The Placing Price (as adjusted for the Share Consolidation)represents a discount of approximately 12.2 per cent. to the closing mid marketprice of the Ordinary Shares on 7 November 2005. The net proceeds of thePlacings will amount to approximately £4.9m and will fund the Redemption, thepurchase of the freehold interests in certain of the Group's restaurants and theroll-out of the Company's pub-restaurant format as described above. The Placingsare conditional on the passing of the Resolutions set out in the Notice of EGM. The Directors have committed to subscribe for Ordinary Placing Shares pursuantto the Placings at the Placing Price. Details of each of the Directors' holdingsof Existing Ordinary Shares, the number of Placing Shares which they are eachsubscribing for, each of their holdings following the Placings and thepercentage of the total issued share capital, following the Placings, that eachsuch holding will represent are set out in the table below: No. of Placing Existing Holding Holding % of Enlarged Shares of New Ordinary following Share Capital Shares PlacingDirectors N. Whittaker 12,500 189,137 201,637 0.59G. Lloyd-Jones 12,500 1,000,000 1,012,500 2.96A. Guy 12,500 374,035 386,535 1.13S. N. Broackes 0 1,304,048 1,304,048 3.82M. Horrocks 0 2,449,107 2,449,107 7.17R. Scott 10,000 15,000 25,000 0.07 Under the Placing Agreement, Teather & Greenwood has agreed to use itsreasonable endeavours to procure placees for the Placing Shares at the PlacingPrice. The Placing Agreement is conditional on, inter alia, the passing of theResolutions and admission to trading of the Placing Shares on AIM. The Placingsare not being underwritten. The Placing Shares are not being offered generallyto Shareholders, whether on a pre-emptive basis or otherwise. The Directorsbelieve that the additional cost and delay which a rights issue or open offerwould entail would not be in the best interests of the Company in thecircumstances. The Placing Shares will rank pari passu in all respects with the ExistingOrdinary Shares. Application will be made to the London Stock Exchange for thePlacing Shares to be admitted to trading on AIM. Subject to Admission becomingeffective, it is expected that dealings in the VCT Shares will commence on 5December 2005 and that dealings in the Ordinary Placing Shares will commence on6 December 2005. Venture Capital Trust ("VCT") Legislation HMRC has given provisional confirmation that, on the basis of the informationprovided to it with the clearance application, following the issue of the VCTShares the Company will comply with the requirements of Schedule 28B Income andCorporation Taxes Acts 1988 and that the VCT Shares will be eligible shares forthe purposes of that act. Current Trading and Prospects The directors believe that the Company continues to have exciting prospects toexpand and grow. Since the year-end we have seen some softening in our CentralLondon restaurants but this is something that, from experience, the directorsanticipate will be short lived. Our other restaurants are trading in line withthe director's expectations. Extraordinary General Meeting The Placings are conditional on the passing of the Resolutions. Shareholdershave today been sent a Circular containing a notice convening an ExtraordinaryGeneral Meeting of the Company to be held at the offices of Dechert LLP 160Queen Victoria Street, London, EC4V 4QQ at 11.15 a.m. (or, if later, immediatelyfollowing the conclusion or adjournment of the Annual General Meeting of theCompany convened for 11.00 a.m. on the same day and at the same place) on 2December 2005. Recommendations The Directors consider that the Proposals are in the best interests of theCompany and its Shareholders taken as a whole and unanimously recommendShareholders to vote in favour of the Resolutions. The Directors haveundertaken to vote in favour of the Resolutions in respect of their ownbeneficial holdings, which in aggregate amount to 21,325,306 Ordinary Shares,representing approximately 27.03 per cent. of the Existing Ordinary Shares. Inaddition, certain other Shareholders have undertaken to vote in favour of theResolution in respect of their beneficial holdings, which in aggregate amountsto 10,454,000 Ordinary Shares, representing approximately 13.25 per cent. of theExisting Ordinary Shares. Accordingly undertakings to vote in favour of theResolutions have been received in respect of 31,779,306 Ordinary Sharesrepresenting 40.28 per cent. of the Existing Shares. DEFINITIONS The following definitions apply in this announcement unless the context requiresotherwise: "Act" the Companies Act 1985 (as amended) "Admission" admission of either the VCT Shares or the Ordinary Placing Shares (as the case may be) to trading on AIM becoming effective in accordance with the AIM Rules "AIM" AIM, a market regulated by the London Stock Exchange "AIM Rules" the Rules of the London Stock Exchange governing admission to and operation of AIM "Articles" the articles of association of the Company "Capital Reduction" the proposed reduction of the share premium account of the Company to be effected by Resolution 5 "Circular" this circular to Shareholders including the Notice of EGM "Company" or "Gourmet" Gourmet Holdings plc "Court" the High Court of Justice in England and Wales "Directors" or "Board" the directors of the Company whose names appear on page 5 of this document "EGM" or "Extraordinary the Extraordinary General Meeting General Meeting" the Company convened for 2 December 2005 (or any adjournment thereof), notice of which is set out at the end of this document "Existing Ordinary Shares" the Ordinary Shares in issue at the date of this document "Form of Proxy" the form of proxy accompanying this document for use at EGM "FSA" the Financial Services Authority "Group" the Company and its subsidiaries at the date of this document "HMRC" HM Revenue and Customs "London Stock Exchange" London Stock Exchange plc "New Ordinary Shares" the new ordinary shares of 4 pence each in the capital of the Company arising on the Share Consolidation "Notice of EGM" the Notice of EGM set out at the end of this document "Ordinary Placing" the proposed placing by Teather & Greenwood on behalf of the Company of the Ordinary Placing Shares at the Placing Price and on the terms of the Placing Agreement "Ordinary Placing Shares" 3,923,547 New Ordinary Shares, not being the VCT Shares, to be allotted pursuant to the Ordinary Placing "Ordinary Shares" ordinary shares of 1p each in the capital of the Company "Placings" the proposed placing by Teather & Greenwood on behalf of the Company, and the subscription by certain Directors and other Shareholders, of the Placing Shares, to certain institutional and other investors, described in this document "Placing Agreement" the agreement dated 9 November 2005, between Teather & Greenwood (1) and the Company (2) relating to the Placings "Placing Price" 36 pence per Placing Share "Placing Shares" the VCT Shares and the Ordinary Placing Shares to be issued to certain institutional and other investors pursuant to the Placings "Preference Shares" the 1,088,313 Preference Shares of £1 each in the capital of the Company "Preliminary Results" the preliminary results of the Company for the 52 weeks ended 26 June 2005 "Proposals" the Placings, the Redemption, the Capital Reduction and the Share Reorganisation "Redemption" the proposed redemption by the Company of all of the issued "Redemption Agreements" the various agreements entered into by the Company and each of the holders of the Preference Shares relating to the Redemption "Resolutions" the resolutions to be proposed at the EGM "Share Consolidation" the proposed consolidation of four Ordinary Shares into one New Ordinary Share to be effected by Resolution 1 "Share Option Schemes" the Share Option Schemes of the Company "Shareholders" holders of Ordinary Shares "Teather & Greenwood" Teather & Greenwood Limited of Beaufort House, 15 St Botolph Street, London, EC3A 7QR, the Company's Nominated Adviser and Broker "UK" the United Kingdom of Great Britain and Northern Ireland "VCT Placing" the proposed placing by Teather & Greenwood on behalf of the Company of the VCT Shares at the Placing Price and on the terms of the Placing Agreement "VCT Shares" 10,520,898 New Ordinary Shares to be allotted pursuant to the Placings which are to be eligible for relief under the Enterprise Investments Scheme and under the Venture Capital Trust regime End This information is provided by RNS The company news service from the London Stock Exchange