Class 1 disposal

9 Jun 2006 08:36

Safeland PLC09 June 2006 Press Announcement Safeland Plc 9 June 2006 Class 1 disposal Safeland plc ("Safeland" or the "Company") holds 6,514,096 ordinary shares of 5peach in the share capital of Bizspace plc ("Bizspace"), (which constitutes the "Bizspace Investment") representing 7.85 per cent. of the entire existing issuedshare capital of Bizspace. On 8 June 2006 the boards of Bizspace and Highcross(Bugatti) Limited ("Highcross") announced a recommended cash offer for theentire issued and to be issued share capital of Bizspace at 93.5p per share (the"Offer Price") made by Deloitte Corporate Finance on behalf of Highcross (the "Offer"). The Offer is being made in accordance with the City Code. As part of the negotiations which led to Highcross agreeing to make the Offer,the Company has given Highcross an irrevocable undertaking to accept the Offerin relation to the Bizspace Investment (the "Disposal"), but for the reasonsexplained below, that undertaking is conditional upon the approval ofShareholders. Due to the size of the Bizspace Investment relative to the size of the Company,the Disposal constitutes a class 1 transaction for the purposes of the ListingRules. Accordingly, the Disposal (and the Company's obligations pursuant to theirrevocable undertaking which it has given to Highcross) is thereforeconditional upon the approval of shareholders of the Company (as well as theconditions of the Offer), which will be sought at an Extraordinary GeneralMeeting to be convened at 10.00 a.m. on 27 June 2006, notice of which iscontained in a circular which has been posted to shareholders today. Background to and reasons for the Disposal The Bizspace Group is a specialist provider of managed work space. It offers awide range of flexible accommodation for smaller businesses requiring studio,workshop, light industrial, office or storage facilities. The accommodationcomprises units within a managed centre providing a base designed for smallbusinesses or established companies with temporary overflow needs on short termrenewable licences. The Bizspace Group's income is primarily derived from acombination of licence fees and user charges (a form of rent and servicecharge). Two of the directors of the Company, Larry Lipman and Paul Davis, arealso directors of Bizspace. Bizspace was demerged from the Company in July 2000, when its shares wereadmitted to trading to the AIM Market of the London Stock Exchange plc. At thetime of the Demerger, the Bizspace Group owned three work space centres and hada market capitalisation of £10,000,000 based on the placing price of 70p onadmission. As at 28 February 2006, the Bizspace Group operated 60 centresnationwide and based on the Offer Price, it has a market capitalisation ofapproximately £77.6 million. The Demerger was implemented by the Company distributing, by way of dividend inspecie, 90 per cent. of the entire issued share capital of Bizspace to theCompany's shareholders at the time of the Demerger. Safeland retained theremaining 10 per cent. holding in Bizspace. Shareholders at the time of theDemerger will therefore have received Bizspace Shares, and the Offer will applyto any Shareholder who still holds Bizspace Shares on the same terms as itapplies to the Company and every other shareholder in Bizspace. Safeland acquired its Bizspace Shares pursuant to the Demerger (when it retained10 per cent.) and through various placings on subsequent occasions. The totalacquisition cost of the Bizspace Investment, extracted without materialadjustment from the latest published audited financial statements of the Companyfor the year ended 31 March 2005 was £2,584,000. The unaudited interimfinancial statements for the six months ended 30 September 2005 were drawn upunder the newly adopted International Financial Reporting Standards and theBizspace Investment was therefore included at fair value of £4,101,858 (31 March2005 (restated): £2,910,996) in accordance with IAS 39. At the Offer Price, theBizspace Investment is worth, and the cash consideration receivable would be,£6,090,680. Principal terms and conditions of the Offer The Offer is being made in accordance with the City Code on terms and conditionswhich are customary for offers made under the City Code. The Offer Price willbe paid in cash. In accordance with the terms of the City Code, Highcross'sadvisers, Deloitte & Touche LLP, have stated that it is satisfied thatsufficient cash resources are available to Highcross to satisfy full acceptanceof the Offer in cash. The board of Bizspace, who have taken advice from Bizspace's financial adviser,PricewaterhouseCoopers LLP, have recommended the Offer. The Offer Price of93.5p represents a premium of 18 per cent. when compared to 79.0p per share,which was the mid market closing price prevailing on 28 March 2006, the lastbusiness day prior to the announcement that it was in talks which may or may notlead to an offer. The Offer Price also represents a premium of 11.3 per cent.when compared to 84.0p per share, which was the mid market closing priceprevailing on 7 June 2006, the day before the announcement of the Offer. TheOffer is subject to valid acceptances of the Offer in respect of not less than90 per cent. (or such lesser percentage as Highcross may decide) of the nominalvalue of the Bizspace Shares to which it relates being received (and not, wherepermitted, withdrawn) by no later than 3.00 p.m. on 29 June 2006. Effect of the Disposal on the Group The proceeds of the Disposal will increase the cash held by the Group. TheBoard intends to use those proceeds to finance investment and tradingopportunities which the Board considers appropriate as at the date of receipt ofthe proceeds. To the extent that the proceeds are not so applied they will beused towards repayment of any of the Group's borrowings still outstanding as atthat date. Bizspace paid a dividend totalling 0.55p per share in its financial year ended28 February 2005, amounting to an aggregate of £35,828in respect of the BizspaceInvestment. No dividend will be paid to the Shareholders of Bizspace in respectof the financial year ended 28 February 2006 if the Offer becomes or is declaredunconditional in all respects but the Board of Bizspace has indicated itsintention to recommend a dividend of 0.6p per share (which would amount to£39,085 in respect of the Bizspace Investment) if the Offer does not becomeunconditional. The sale of the Bizspace Investment will of course mean that the Company willcease to receive dividends from Bizspace but in considering this factor, accountshould be taken of the savings in the Group's interest charges (which were£820,000 in the financial year ended 31 March 2005) which may be made should theproceeds of the Disposal be used to repay the Group's borrowings. Current Trading and Prospects As announced by the Company today, the conditions of those sections of theproperty market in which the Company operates remain challenging with relativelyfew opportunities for the Company to buy on acceptable terms and this hasresulted in a loss before tax for the year to 31 March 2006, extracted from theunaudited draft financial statements of the Company, of approximately £1.1million compared to a profit before tax for the previous year, extracted withoutmaterial adjustment from the restated audited financial statements of theCompany, of £1.8 million. The net asset value per share as at 31 March 2006,extracted from the unaudited draft financial statements of the Company, hasremained relatively stable at 110p compared to 111p as at 30 September 2005, thedate of the unaudited interim financial statements. The Directors believe thatthe cash proceeds of the Disposal will enhance the Group's abilities to pursueinvestments and trading opportunities as and when they arise. Suchopportunities are frequently presented to the Company and the Directors arealways ready to investigate those which look attractive. Copies of the circular will be available for viewing at the UK ListingAuthority's document viewing facility which is situated at 25 The NorthColonnade, Canary Wharf, London E14 5HS. Copies of the circular will be available from Safeland plc's registered officeat 94-96 Great North Road, London N2 0NL. -end- This information is provided by RNS The company news service from the London Stock Exchange