17 April 2020
Bloomsbury Publishing Plc (LSE: BMY), the leading independent publisher, today provides an update on current trading in light of the rapidly evolving coronavirus situation and also announces its intention to launch a non-pre-emptive equity placing of up to 3,766,428 new ordinary shares (the "Placing Shares") at a price of 223.25p per share (the "Placing Price") to raise gross proceeds of approximately £8.4 million (the “Placing”).
Update on current trading and outlook
Since the Company’s pre-close trading update on 19 March 2020, the coronavirus crisis has rapidly escalated with the imposition of government lockdowns, restrictions and retail closures in all our key markets of the UK, US, Australia and India as well as many other important markets.
Retail closures have affected most UK and North America bookshop chains, including the retail branches of Waterstones, Barnes & Noble and WH Smith. Whilst some retailers have been able to continue to trade via their websites, orders for print books, which comprised 79 per cent of the Company’s revenue for the year ended 29 February 2020, are being impacted in all our markets.
Our UK, US and Australia warehouses remain open and continue supply to customers. We have positive sales prospects through Amazon, even as they prioritise essential crisis services, with strong growth in demand for e-books and audio books. Supermarkets, which remain essential services open to all, are trading as previously expected. We are also pleased to see the strong recovery in orders from China since the market re-opened and sales from our own website Bloomsbury.com. We have also launched a scheme to support independent bookshops by offering a referral incentive for Bloomsbury titles and sharing our ecommerce and distribution channels.
Ongoing strong digital growth continues from academic institutional customers as libraries pivot swiftly to digital resources to support remote learning for students. March 2020 academic digital revenues are up over 20% year-on-year and this trend has continued into April.
There is no immediate certainty around the severity and duration of the impact on our business and therefore the Board is unable to provide guidance for the year ending 28 February 2021 at this time.
The impact may be substantial; the extent to which the coronavirus crisis will impact our business will depend on the changing positions of our major wholesale print and digital customers, academic institutions and the duration of government lockdowns and restrictions and in particular their impact on retailers and academic institutions. Our strategy of expanding and leveraging our digital rights and products means that we are well placed to benefit from increased demand for our digital resources, audio and e-books as we are with direct supply from Amazon, Bloomsbury.com, Waterstones.com and most internet retailers selling print books.
Given this uncertainty, management has modelled various scenarios on differing degrees of revenue impact, duration, extended debtor days and periods of recovery. Based on a prudent downside scenario, assuming a 75% decline in print revenues and gradual retailer re-openings, to recovery in January 2021, the Board has determined that the Company undertake a placing to raise approximately £8.4 million of additional headroom to provide financial flexibility to the Company to enable it to maintain appropriate investment to capitalise on future commercial opportunities, whilst ensuring it remains within its banking covenants.
We have agreed in principle to extend the maturity of our facilities with Lloyds Bank Plc from May 2021 to May 2022 and to amend covenants to exclude IFRS 16.
Management has also taken the following immediate proactive measures to conserve cash and reduce costs:
To ensure we continue to operate effectively and avoid damage to the business, we have balanced these actions with being able to retain staff and acquire new titles, as the Company’s business model is to commission titles one to two years ahead of publication.
These actions, combined with our strong net cash position, will safeguard the interests of all shareholders and best position Bloomsbury for future opportunities.
The Board will not be declaring a cash dividend for the last financial year but is considering a scrip dividend, which would be announced with the results for the year ended 29 February 2020. Bloomsbury is proud of its strong track record of 24 years of consecutive dividend growth. Our intention would be to reintroduce cash dividend payments as soon as these extreme market conditions allow us to do so.
Bloomsbury has a strong balance sheet and as at 29 February 2020 had net cash of £31 million. Following the year end, the Company made author royalty payments of £10.5 million, covering the period from July to December 2019. In addition, Bloomsbury has an unsecured committed revolving credit facility with Lloyds Bank Plc. The facility comprises £8.0 million in the first half and an additional £4.0 million in the second half, totalling £12.0 million, to match Bloomsbury’s cashflow cycle.
The loan facilities mature in May 2022. The facilities are subject to two covenants, being a maximum net debt to EBITDA ratio of 2.5x and a minimum interest cover of 4x.
Equity placing to strengthen our balance sheet
The Board believes that it is in the long-term interests of all stakeholders to strengthen our balance sheet today to ensure we have sufficient working capital to weather the impact of coronavirus without damaging Bloomsbury’s business; being able to retain our staff and acquire future titles is a crucial part of this.
Should a prolonged downside scenario materialise, in the absence of the additional headroom provided by this Placing, the Company would not be able to maintain these required levels of investment and remain within its banking covenants.
The Board has therefore determined that it is in the best interest of shareholders that the Company undertake the Placing to raise approximately £8.4 million of additional headroom. Should a downside scenario not materialise the Placing proceeds will be used for future growth opportunities.
Bloomsbury has a strong track record of acquisitive growth via 26 acquisitions and we continue to see opportunities in the Academic markets. We expect this to increase over the next 12 months.
Details of the Placing
Bloomsbury is proposing to raise approximately £8.4m (before expenses) through the issue of the Placing Shares at the Placing Price. The Placing Price represents a discount of 5.0 per cent. to the closing mid-market price of 235p per ordinary share of 1.25p each in the capital of the Company on 16 April 2020, being the last practicable day prior to the publication of this Announcement. The Placing Shares, should they be allotted in full, will represent approximately 5 per cent of Bloomsbury’s current issued share capital.
In order to effect the Placing, the Company intends to utilise the authorities granted to it at its Annual General Meeting held on 17 July 2019 which enables it to issue up to 3,766,428 new ordinary shares (representing approximately 5 per cent of its existing issued share capital on a non-pre-emptive basis) for cash.
The Placing will be conducted through an accelerated bookbuilding process ("the Bookbuild"), which will be launched immediately following this announcement and is subject to the terms and conditions set out in the Appendix to this announcement (which forms part of this Announcement, together the “Announcement”). The timing of the closing of the book and allocations are at the absolute discretion of Investec Bank plc (“Investec”) and the Company. The result of the Placing will be announced as soon as practicable after the close of the Bookbuild. The Placing is not being underwritten. Investec is acting as sole bookrunner in connection with the Placing.
The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects and with the existing issued ordinary shares of the Company, including, without limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.
Applications will be made to the Financial Conduct Authority (the "FCA") and the London Stock Exchange plc (the "London Stock Exchange") respectively for the admission of the Placing Shares to the premium listing segment of the Official List of the FCA and to trading on the main market for listed securities of the London Stock Exchange (together, "Admission"). Settlement of the Placing Shares and Admission are expected to take place on or before 8.00 a.m. on 21 April 2020. The Placing is conditional upon, among other things, Admission becoming effective and the placing agreement between the Company and Investec (the "Placing Agreement") not being terminated in accordance with its terms. The Appendix to this announcement sets out further information relating to the terms and conditions of the Placing.
This Announcement is released by Bloomsbury Publishing Plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, the person responsible for releasing this Announcement is Maya Abu-Deeb, General Counsel and Company Secretary.
Persons who have chosen to participate in the Placing, by making an oral or written offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, acknowledgements and undertakings contained in the Appendix.
For further information, please contact:
Bloomsbury Publishing Plc
Nigel Newton, Chief Executive
Penny Scott-Bayfield, Group Finance Director
Investec Bank plc
+44 (0) 20 7597 5970
Sara Hale / Henry Reast
+44 (0) 20 7796 4133
Dan de Belder / Hattie Dreyfus
Notes to Editors
About Bloomsbury Publishing Plc
Bloomsbury is a leading independent publisher of fiction, non-fiction, children’s, specialist, academic and professional titles. The company’s mission is to be an entrepreneurial, independent publisher of works of excellence and originality to a worldwide audience. Bloomsbury’s ambitions growth story has seen the Group become a significant global publisher with offices in the UK, US, Australia and India.
This announcement including its Appendix (together, the "Announcement") and the information contained in it is not for publication, release, transmission distribution or forwarding, in whole or in part, directly or indirectly, in or into the United States, Canada, Australia, South Africa, Japan or New Zealand or any other jurisdiction in which publication, release or distribution would be unlawful. This Announcement is for information purposes only and does not constitute an offer to sell or issue, or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in the United States, Canada, Australia, South Africa, Japan or New Zealand or any other state or jurisdiction. This Announcement has not been approved by the London Stock Exchange. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions.
The Placing Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or into the United States absent registration under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Placing Shares have not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Placing Shares. Subject to certain exceptions, the securities referred to herein may not be offered or sold in the United States, Canada, Australia, South Africa, Japan or New Zealand or to, or for the account or benefit of, any national, resident or citizen of the United States, Canada, Australia, South Africa, Japan or New Zealand.
No public offering of the Placing Shares is being made in the United States, United Kingdom or elsewhere. All offers of the Placing Shares will be made pursuant to an exemption under the Prospectus Regulation (EU) 2017/1129 (as supplemented by Commission Delegated Regulation (EU) 2019/980 and Commission Delegated Regulation (EU) 2019/979 (the "Prospectus Regulation") from the requirement to produce a prospectus. This Announcement is being distributed to persons in the United Kingdom only in circumstances in which section 21(1) of the Financial Services and Markets Act 2000, as amended ("FSMA") does not apply.
No prospectus will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the Prospectus Regulation) to be published. This Announcement and the terms and conditions set out herein are for information purposes only and are directed only at persons who are: (a) persons in Member States of the European Economic Area who are qualified investors (within the meaning of article 2(e) of the Prospectus Regulation ("Qualified Investors"); and (b) in the United Kingdom, Qualified Investors who fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), or are persons who fall within article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc") of the Order; or (c) persons to whom it may otherwise be lawfully communicated; (all such persons together being referred to as "relevant persons"). This Announcement and the terms and conditions set out herein must not be acted on or relied on by persons who are not relevant persons. Persons distributing this Announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this Announcement and the terms and conditions set out herein relates is available only to relevant persons and will be engaged in only with relevant persons.
This Announcement has been issued by, and is the sole responsibility of, the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Investec, or by any of its or their respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
Investec Bank plc is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority.
Investec is acting solely for the Company and no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for providing advice in relation to the Placing and/or any other matter referred to in this Announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on the Investec by FSMA or by the regulatory regime established under it, none of the Investec nor any of their respective affiliates accepts any responsibility whatsoever for the contents of the information contained in this Announcement or for any other statement made or purported to be made by or on behalf of the Investec or any of their respective affiliates in connection with the Company, the Placing Shares or the Placing. The Investec and each of their respective affiliates accordingly disclaim all and any responsibility and liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) in respect of any statements or other information contained in this Announcement and no representation or warranty, express or implied, is made by the Investec or any of their respective affiliates as to the accuracy, completeness or sufficiency of the information contained in this Announcement.
The distribution of this Announcement and/or the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or the Investec or any of their respective affiliates that would, or which is intended to, permit an offering of the Placing Shares in any jurisdiction or result in the possession or distribution of this Announcement or any other offering or publicity material relating to Placing Shares in any jurisdiction where action for that purpose is required.
Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any such action. Persons into whose possession this Announcement comes are required by the Company and the Investec to inform themselves about, and to observe, such restrictions.
This Announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events. These statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions which may occur in the future, are beyond the Company's control and could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Announcement is subject to change without notice and, except as required by applicable law, the Company does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained in it, nor do they intend to. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement. No statement in this Announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. As a result of these risks, uncertainties and assumptions, the recipient should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise.
This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Placing Shares. Any investment decision to buy Placing Shares in the Placing must be made solely on the basis of publicly available information, which has not been independently verified by the Investec.
The information in this Announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.
This Announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities in any jurisdiction. This Announcement does not constitute a recommendation concerning any investor's option with respect to the Placing. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this Announcement and publicly available information. The price and value of securities can go down as well as up. Past performance is not a guide to future performance.
The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than on the Premium Segment of the Main Market of the London Stock Exchange.
References in this Announcement to other reports or materials, such as a website address, have been provided to direct the reader to other sources of information on the Company which may be of interest. Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website nor any additional materials contained or accessible thereon, are incorporated in, or form part of, this Announcement.
TERMS AND CONDITIONS OF THE PLACING
TERMS AND CONDITIONS
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING (AS DEFINED BELOW). THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (THE “EEA”), PERSONS WHO ARE QUALIFIED INVESTORS (“QUALIFIED INVESTORS”) WITHIN THE MEANING OF ARTICLE 2(E) OF REGULATION (EU) 2017/1129 (AS SUPPLEMENTED BY COMMISSION DELEGATED REGULATION (EU) 2019/980 AND COMMISSION DELEGATED REGULATION (EU) 2019/979 (THE “PROSPECTUS REGULATION”)); (B) IF IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “ORDER”), OR ARE PERSONS WHO FALL WITHIN ARTICLE 49(2)(A) TO (D) (“HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC”) OF THE ORDER; OR (C) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”).
THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD, TAKEN UP, RESOLD TRANSFERRED OR DELIVERED DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION OF THE UNITED STATES. THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT ARE BEING OFFERED AND SOLD OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. NO PUBLIC OFFERING OF THE SHARES REFERRED TO IN THIS ANNOUNCEMENT IS BEING MADE IN THE UNITED STATES, THE UNITED KINGDOM OR ELSEWHERE.
THE CONTENTS OF THIS ANNOUNCEMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN THE UNITED KINGDOM OR ELSEWHERE. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE PLACING. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS ANNOUNCEMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE.
Neither the Company nor Investec makes any representation to persons who are invited to and who choose to participate in the Placing (“Placees”) of the Placing Shares regarding an investment in the securities referred to in this Announcement under the laws applicable to such Placees. Each Placee should consult its own advisers as to the legal, tax, business, financial and related aspects of an investment in the Placing Shares.
By participating in the Placing, Placees will be deemed to have read and understood this Announcement in its entirety, and to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgments and undertakings contained herein.
Investec and the Company have today entered into the Placing Agreement under which, on the terms and subject to the conditions set out therein, Investec has agreed to use its reasonable endeavours, as agent of the Company, to procure subscribers for the Placing Shares.
In addition, to the extent that any Placee procured by Investec fails to subscribe for any or all of the Placing Shares which have been allocated to it in the Placing and for which it has agreed to subscribe (the “Defaulted Shares”), Investec has agreed, on the terms and subject to the conditions set out in the Placing Agreement, to subscribe as principal for the Defaulted Shares at the Placing Price on the Closing Date.
The Placing Shares have been duly authorised and will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares in the Company, including the right to receive all dividends and other distributions declared, made or paid in respect of the ordinary shares of the Company after the date of issue of the Placing Shares.
Application will be made to the FCA and the Premium Segment of the Main Market of the London Stock Exchange for the admission of the Placing Shares to the Official List and to trading on the London Stock Exchange. It is expected that Admission will become effective on or around 8.00 a.m. on 21 April 2020 and that dealings in the Placing Shares will commence at that time.
Investec will commence with immediate effect the Bookbuild process in relation to the Placing to establish demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
Investec and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their absolute discretion, determine.
Participation in, and principal terms of, the Placing
To bid in the Bookbuild, Placees should communicate their bid by telephone and in writing to their usual sales contact at Investec. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at the Placing Price. Investec reserves the right not to accept a bid from a potential Placee. Bids may also be scaled down by Investec on the basis referred to in paragraph 8 below.
Conditions of the Placing
The Placing is conditional upon, among other things, the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. The obligations of Investec under the Placing Agreement in respect of the Placing Shares are conditional on, among other things:
The Placing is conditional upon, among other things, the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. The obligations of Investec under the Placing Agreement in respect of the Placing Shares are conditional on, among other things:
If: (i) any of the conditions contained in the Placing Agreement are not fulfilled or, where permitted, waived by Investec by the time or date specified (or such later time and/or date as the Company and Investec may agree); or (ii) any of such conditions become incapable of being fulfilled; or (iii) the Placing Agreement is terminated in the circumstances specified below under “Right to terminate under the Placing Agreement”, the Placing will not proceed and the Placees’ rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof. Any such waiver by Investec will not affect Placees’ commitments as set out in this Announcement.
Neither Investec, the Company nor any of their respective affiliates, agents, directors, officers, consultants or employees shall have any liability, whether in contract, tort or otherwise, to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of Investec.
As part of the Placing, the Company has, subject to certain customary exceptions, including pursuant to any share option schemes and other employee incentive arrangements, agreed that it will not, among other things, allot, issue, sell or grant any rights in respect of any new ordinary shares in the period from the date of this Announcement until 180 days after Admission without Investec’s prior consent.
Right to terminate under the Placing Agreement
Investec is entitled, at any time prior to Admission, to terminate the Placing Agreement in accordance with its terms by giving notice (in writing or orally) in certain circumstances, including (among others things) any of the warranties given to Investec by the Company in the Placing Agreement being when made, or becoming by reference to current circumstances, untrue or inaccurate or misleading (in the good faith opinion of Investec), the occurrence of a material adverse change in the Company’s business or in its financial or trading position (in the good faith opinion of Investec), or the occurrence of a material adverse change in market conditions including a material deterioration in, or material escalation in the response to, the Covid-19 pandemic or the occurrence of certain force majeure events.
Upon such notice being given, the Company and Investec shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement, subject to certain exceptions.
By participating in the Placing, Placees agree that the exercise or non-exercise by Investec of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Investec and that Investec does not need to make any reference to Placees and that Investec shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.
No offering document or prospectus has been or will be submitted to be approved by the FCA or any other regulator in relation to the Bookbuild or Placing and Placees’ commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix) which has been released by the Company today and any information publicly announced to a RIS by or on behalf of the Company prior to or on the date of this Announcement and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.
Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement (including this Appendix) is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of Investec or the Company or any other person and neither Investec, the Company nor any of their respective affiliates will be liable for any Placee’s decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude or limit the liability of any person for fraudulent misrepresentation by that person.
Registration and settlement
Settlement of transactions in the Placing Shares following Admission will take place within the system administered by Euroclear UK & Ireland Limited (“CREST”), subject to certain exceptions, Investec and the Company reserve the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee’s jurisdiction.
Following the close of the Bookbuild, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares to be allocated to it at the Placing Price, the aggregate amount owed by such Placee to Investec and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with Investec.
The Company will deliver the Placing Shares to a CREST account operated by Investec as the Company’s agent and Investec will enter its delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.
It is expected that settlement will be on or around 8.00 a.m. on 21 April 2020 on a delivery versus payment basis in accordance with the instructions set out in the trade confirmation unless otherwise notified by Investec.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above prevailing LIBOR as determined by Investec.
Each Placee is deemed to agree that, if it does not comply with these obligations, Investec may sell any or all of the Placing Shares allocated to that Placee on such Placee’s behalf and retain from the proceeds, for Investec’s account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee’s behalf. Each Placee confers on Investec all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Investec lawfully undertakes in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the contract note is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee’s name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees shall not be entitled to receive any fee or commission in connection with the Bookbuild or the Placing. If there are any circumstances in which any other stamp duty or stamp duty reserve tax (together with interest and penalties) is payable in respect of the issue of the Placing Shares, neither Investec nor the Company shall be responsible for the payment thereof.
Representations and warranties
By participating in the Placing each Placee (and any person acting on such Placee’s behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with the Company and Investec (in its capacity as sole bookrunner and agent of the Company), in each case as a fundamental term of their application for Placing Shares, the following:
The foregoing representations, warranties and confirmations are given for the benefit of the Company and Investec and are irrevocable. Each Placee and any person acting on behalf of the Placee acknowledges that neither the Company nor Investec owes any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
The rights and remedies of Investec and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.
Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement also assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. Neither Investec nor the Company is liable to bear any stamp duty and stamp duty reserve tax and any other similar duties or taxes (transfer taxes) that arise on a sale of Placing Shares if there are any such arrangements or that arise subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold Investec, the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to transfer taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent.
Each Placee and any person acting on behalf of each Placee acknowledges and agrees that Investec or any of its affiliates may, at its absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that it has neither received nor relied on any ‘inside information’ (for the purposes of MAR and section 56 of the CJA) concerning the Company in accepting this invitation to participate in the Placing.
All references to time in this Announcement are to London time unless otherwise stated. All times and dates in this Announcement may be subject to amendment by Investec (in its absolute discretion). Investec shall notify the Placees and any person acting on behalf of the Placees of any changes.
The price of an Ordinary Share and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
Information to Distributors
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offer. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Investec will only procure investors who meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.
Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.
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