REG - Best of the Best PLC - Announcement of Tender Offer and General Meeting

Best Of The BestAnnouncement

16/06/2022 07:16

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RNS Number : 0560P  Best of the Best PLC  16 June 2022

Best of the Best plc

 

("Best of the Best", "BOTB", "the Company" or "the Group")

 

Announcement of Tender Offer and General Meeting

 

Best of the Best plc runs competitions online to win cars and other prizes.

 

 

The Company announced today that it intends to return surplus cash to
Shareholders by way of a tender offer, pursuant to which finnCap will
purchase, as principal, up to approximately 11 per cent. of the Company's
Ordinary Shares (on the basis of 1 Ordinary Share for every 9 held) at a price
of 600 pence per Ordinary Share. All of the Ordinary Shares that finnCap
purchase under the Tender Offer will be subsequently repurchased from it by
the Company pursuant to the terms and conditions of the Repurchase Agreement.

 

If the maximum number of Ordinary Shares under the Tender Offer are acquired
this will result in an amount of approximately £6.275 million being paid to
Qualifying Shareholders. Shareholders can decide whether they want to tender
up to their Basic Entitlement together with potential for further purchases,
depending on the number of Shares tendered by other Qualifying Shareholders.

 

The Tender Offer Price represents a premium of 52.28 per cent. to the middle
market closing price of 394 pence per Ordinary Share on 15 June 2022, being
the latest practicable date before the release of this announcement.

 

A circular, containing the formal terms and conditions of the Tender Offer and
instructions to Qualifying Shareholders on how to tender their Ordinary Shares
should they choose to do so, together with a Tender Form and Form of Proxy,
are expected to be posted to Shareholders later today (the "Circular"). Unless
otherwise defined herein, capitalised terms used in this announcement shall
have the same meanings as defined in the Circular, an extract of which is
included below.

 

 

Background to and reasons for the Proposals

 

The Board of BOTB considers that it is in the interests of Shareholders to
implement the Tender Offer so as to provide those Qualifying Shareholders who
wish to sell shares in the Company the opportunity to do so.

The Company has been cash generative for a number of years and as noted in the
Trading Update section below benefits from a strong balance sheet with
sufficient distributable cash reserves. Profitable trading in recent periods
has led this surplus cash on the balance sheet which the Board believes that
the Company does not require to fund its growth plans in the short term.
Following the capital distribution, the Company will retain a robust balance
sheet, maintaining cash balances in excess of £2.0 million, which the
Directors consider to be sufficient working capital to fund its activities
over the next 12 month period. As such, the Board deems it appropriate to
return surplus cash to shareholders via the Tender Offer. Returning surplus
cash by way of Tender Offer or Special Dividend has been part of the Company's
strategy for a number of years.

In determining the level of return of value, the Board has taken into
consideration its aim of improving the Company's earnings per share, as well
as targeting a more efficient capital structure through returning excess
balance sheet cash to Shareholders.

In order to return surplus cash to Shareholders by way of the Tender Offer,
the Company is required to produce and file a new balance sheet with Companies
House, demonstrating that it has sufficient distributable cash reserves. The
Company shortly intends to file an audited Company balance sheet as at 30
April 2022 with Companies House.

 

 

Benefits of the Proposals

 

The Board has considered a range of options for returning cash to Shareholders
but decided to do this by way of the Tender Offer because it believes this
process benefits both Qualifying Shareholders and the Company. In particular,
the Directors believe that the Tender Offer:

•           provides those Qualifying Shareholders who wish to
sell Ordinary Shares with the opportunity to do so;

•           is available to all Qualifying Shareholders regardless
of the size of their shareholdings;

•          ensures equal opportunity to all Qualifying
Shareholders to participate in the return of capital by offering a guaranteed
Basic Entitlement to all Qualifying Shareholders;

•        enables those Qualifying Shareholders who do not wish to
receive capital at this time to maintain their full investment in the Company;

•        enables Ordinary Shares to be sold by Qualifying Shareholders
free of commissions or charges that would otherwise be payable by them if they
were to sell their shares through their broker; and

•      will have a positive impact on both the Company's earnings per
share and dividend per share as all Ordinary Shares purchased by the Company
pursuant to the Repurchase Agreement will be cancelled.

Acceptance of the Tender Offer will constitute a return of capital of 600
pence per share in respect of each Ordinary Share tendered.

 

 

Details of the Proposals

 

The Directors propose that the Tender Offer be made, pursuant to which finnCap
will purchase, as principal, up to approximately 11 per cent. of the Company's
Ordinary Shares at a price of 600 pence per Ordinary Share. The Tender Offer
is being made subject to the passing of a special resolution which will be
proposed at the General Meeting. The Tender Offer is also subject to the
conditions set out in the Repurchase Agreement and Part 2 of the Circular
being fulfilled. The Tender Offer is open to Qualifying Shareholders on the
Register at 6.00 p.m. on the Tender Offer Record Date.

 

In accordance with the terms and subject to the conditions of the Repurchase
Agreement, finnCap has granted to the Company a call option pursuant to which,
the Company may, at its sole discretion, purchase from finnCap all of the
Ordinary Shares purchased by it pursuant to the Tender Offer at a price of 600
pence per Ordinary Share. Under the Repurchase Agreement the Company has also
granted to finnCap a put option whereby to the extent that the call option is
not exercised by the Company within the prescribed call option exercise
period, finnCap may, at its sole discretion, require that the Company purchase
all such Ordinary Shares from it at a price of 600 pence per Ordinary Share.
All of the Ordinary Shares purchased by the Company under the Repurchase
Agreement will be cancelled.

 

The purchase of shares from finnCap pursuant to the Repurchase Agreement will
be funded from available cash of the Company and paid out of its distributable
reserves. Accordingly, following the completion of the Repurchase, the
Company's distributable reserves will be reduced by the size of the Tender
Offer. If the call option or put option is exercised pursuant to the
Repurchase Agreement, the Company's issued share capital will be reduced to
8,367,024 Ordinary Shares, assuming the Tender Offer is taken up in full.

 

General Meeting

 

The authorisation of the Repurchase Agreement and, accordingly, the
implementation of the Tender Offer, requires, inter alia, the passing of a
special resolution.

 

There is set out at the end of the Circular a notice convening a General
Meeting of the Company to be held at the offices of the Company at 2 Plato
Place, 72-74 St Dionis Road, London SW6 4TU on 4 July 2022 at 11.00 a.m.

 

Irrevocable undertakings by Director Shareholders

 

Directors William Hindmarch, Rupert Garton, David Firth, Daniel Burns and Ben
Hughes and persons closely associated with them and former director, Michael
Hindmarch, who together are the registered holders of, in aggregate, 4,571,377
Ordinary Shares, representing approximately 48.57 per cent. of the Company's
current issued share capital, have undertaken to accept the Tender Offer in
respect of their Basic Entitlement and to vote in favour of the Resolution.

 
 
Director Shareholdings

As described in the paragraph above, the following Directors intend to accept
the Tender Offer in respect of the following shares:

 

 Name                 Current Shareholding  Current Shareholding %  Undertaken Tender Offer share take-up  Resultant Shareholding*  Resultant Shareholding %*
 William Hindmarch**  3,017,588             32.06%                  335,288                                2,682,300                32.06%
 Rupert Garton        887,250               9.43%                   98,584                                 788,666                  9.43%
 David Firth          4,623                 0.05%                   514                                    4,109                    0.05%
 Daniel Burns         20,833                0.22%                   2,315                                  18,518                   0.22%
 Ben Hughes           44,791                0.48%                   4,977                                  39,814                   0.48%

 

* Assuming full take-up of the 1,045,877 Tender Offer shares

** Including Ordinary Shares held by his wife

 

 

Trading update

As disclosed in the announcement of the Company's preliminary results for the
year ended 30 April 2022, released earlier today, revenue for the year ended
30 April 2022 was £34.68 million (2021: £45.68 million, 2020: £17.79
million) and profit before tax was £5.14 million (2021: £14.06 million,
2020: £4.21 million).  Earnings per share were 45.66p (2021: 122.52p, 2020:
37.51p).

A total of £5.90 million of cash flow was generated from operations during
the period. Net assets at 30 April 2022 stood at £8.09 million (2021: £8.96
million, 2020: £3.30 million), underpinned by cash balances of £10.82
million (2021: £11.8 million, 2020: £5.2 million) and our 965-year leasehold
office properties valued at £0.95 million. The Group is debt free.

As stated in the aforementioned announcement, the Company has delivered
consistently strong results over recent years and management have been
adjusting the various business levers at their disposal, to ensure that where
revenues and customer acquisition are settling and normalising post pandemic,
the business continues to produce strong profits and cash generation. Whilst
this has not been without its challenges, with so many unknowns in this
financial year, the Company is pleased to have produced financial results a
little better than market expectations.

The Board remains confident that the Company is underpinned by very solid
financials, a large and loyal database, and a proven business model.  There
will understandably be continued focus in the short term on both profit and
cash generation to support and strengthen our platform as we then to look to
further business development opportunities and growth.

 

Expected Timetable of Events

                                                                                2022
 Announcement of these proposals                                                07:01 a.m. 16 June
 Publication of the Circular                                                    16 June
 Latest time and date for receipt of Forms of Proxy                             11:00 a.m. on 30 June
 Latest time and date for receipt of Forms of Acceptance and TTE Instructions   1.00 p.m. on 1 July
 from CREST Shareholders
 Record Date for the Tender Offer                                               6:00 p.m. on 1 July

 General Meeting                                                                11:00 a.m. on 4 July
 Announcement of Result of GM and Tender Offer                                  4 July
 Completion of purchase of Ordinary Shares under the Tender Offer               6 July
 Cheques dispatched for certificated Ordinary Shares purchased pursuant to the  On or by 15 July
 Tender Offer and payment through CREST for uncertificated Ordinary Shares
 purchased pursuant to the Tender Offer

 

 

 

Enquiries:

 

 Best of the Best plc             William Hindmarch, Chief Executive   T: 020 7371 8866

                                  Rupert Garton, Commercial Director

 Buchanan                         Chris Lane                           T: 020 7466 5000

                                  Toto Berger

 Oakvale Capital                  Daniel Burns                         T: 0207 580 3838

 (Financial Adviser)              Kieran Davey

 finnCap                          Corporate Finance                    T: 020 7220 0500

 (Nominated Adviser and Broker)   Carl Holmes

                                  Kate Bannatyne

                                  Teddy Whiley

                                  ECM

                                  Alice Lane

 

 

 

The information communicated in this announcement is inside information for
the purposes of Article 7 of Regulation 596/2014  Please visit www.botb.com
(http://www.botb.com) for further information

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