REG - Bonhill Group PLC - Proposed Disposal and Capital Reduction
10/02/2023 14:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230210:nRSJ6156Pa&default-theme=true
RNS Number : 6156P Bonhill Group PLC 10 February 2023
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN OR INTO CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH
AFRICA OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE
PROHIBITED BY APPLICABLE LAW. THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL OR A
SOLICITATION TO BUY SECURITIES IN ANY JURISDICTION, INCLUDING THE UNITED
STATES, CANADA, AUSTRALIA, JAPAN AND THE REPUBLIC OF SOUTH AFRICA. NEITHER
THIS ANNOUNCEMENT NOR ANYTHING CONTAINED HEREIN SHALL FORM THE BASIS OF, OR BE
RELIED UPON IN CONNECTION WITH, ANY OFFER OR COMMITMENT WHATSOEVER IN ANY
JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018), AS AMENDED. IN ADDITION, MARKET
SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT,
WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION.
UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE
TO BE IN POSSESSION OF INSIDE INFORMATION.
10 February 2023
Bonhill Group plc
("Bonhill", the "Company" or the "Group")
Proposed Disposal of the Business and Assets of Bonhill Media UK Limited and the Entire Issued Share Capital of Last Word Media (Asia) Pte. Limited
and
Proposed Reduction of Capital
Bonhill (AIM: BONH), a leading B2B media business specialising in financial
services providing media, events and data & analytics, announces that it
has exchanged contracts with MA Financial Media, a member of the Mark Allen
Group, and an ultimate subsidiary of Mark Allen Holdings Limited, regarding
the conditional disposal of the business and assets of Bonhill Media UK
Limited ("Bonhill Media") and the entire issued share capital of Last Word
Media (Asia) Pte. Limited ("Last Word Asia") (together the "UK and Asia
Businesses") for a total cash consideration of £6.5 million. Due to its
size, under the AIM Rules, the Disposal is conditional on Shareholders'
approval.
Highlights
· Disposal of the UK and Asia Businesses agreed with MA Financial
Media, subject to shareholder approval, for £6.5 million in cash
· The Disposal represents a fundamental change of business for the
Company pursuant to Rule 15 of the AIM Rules and is therefore subject to
Shareholders' approval which is to be obtained at the General Meeting
· The UK business and brands of Bonhill Media (being Bonhill Create,
Portfolio Advisor, Expert Investor, International Advisor, ESG Clarity,
Content Clarity, Future Flows, What Investment and Tax Guide) are to be sold
to MA Financial Media
· The disposal of Last Word Asia will be undertaken by way of the
acquisition by the entire issued share capital of Last Word Asia by MA
Financial Media
· Due diligence by a US media buyer on InvestmentNews is continuing
· As soon as practicable following both Completion and Completion of
the US Disposal, the Company intends to return substantially all of its cash
to Shareholders by way of a tender offer
· In order for the Board to effect the proposed return of capital to
Shareholders (howsoever it is structured), the Company will need to create
further distributable reserves by way of the Proposed Capital Reduction
· Following Completion, Patrick Ponsford, the Group CEO, will resign as
a Director and will be joining the Mark Allen Group. Jon Kempster, a
Non-Executive Director, has notified the Board of his intention to resign as a
Director with effect from 31 March 2023
Further details of the Disposal and Proposed Capital Reduction in the form of
extracts from the Circular are set out below. The Company intends later today
to post a Circular to Shareholders regarding the Disposal and Proposed Capital
Reduction, which includes a notice convening the General Meeting at 10.00 a.m.
on 27 February 2023. A copy of the Circular will be published on the Company's
website at www.bonhillplc.com (http://www.bonhillplc.com) . Capitalised terms
used but not defined in this announcement will have the same meaning given to
them in the Circular.
Commenting, Jonathan Glasspool, Non-Executive Chair of Bonhill, said:
"We are pleased to announce today the conditional exchange of contracts with
MA Financial Media, which represents the first stage of the sale of the
distinct parts of the Group. I would like to take this opportunity to thank
Patrick Ponsford for leading the business since he was appointed last year as
Group CEO and successfully navigating the sale process thus far.
The Board is committed to completing the proposed sale of InvestmentNews as
soon as reasonably practicable. Once that has been achieved, we will focus on
returning substantially all of the Company's cash to shareholders."
For further enquiries please contact:
Bonhill Group plc
Jonathan Glasspool, Non-executive Chairman +44 (0)207 638 6378
Patrick Ponsford, Group CEO +44 (0)7714 660 943
Sarah Thompson, Chief Financial Officer
Shore Capital (Financial Adviser, Nominated Adviser and Broker)
Tom Griffiths/David Coaten +44 (0)20 7408 4050
About Bonhill Group plc
Bonhill Group plc is a leading, AIM-quoted, B2B media company providing
Business Information, Events and Data & Insight propositions to the global
Financial Services community. Bonhill operates multiple digital platforms, has
market leading media brands, hosts over 100 events per annum, offers a
portfolio of data & analytics propositions and provides a range of content
marketing solutions.
Bonhill operates exclusively in the financial services space where its brands
and services are acknowledged as market leaders. It specialises in enhancing
the relationship and flow of information between the global community of
financial services providers and the advisers who recommend their products.
Bonhill was early to recognise the growing importance of ESG in asset
allocation and fund selection and now owns the leading global platform in this
space, serving the adviser community.
Flagship brands include: InvestmentNews, ESG Clarity, Portfolio Adviser, Fund
Selector Asia, Expert Investor Europe, UK Adviser and International Adviser.
Offices in New York, London, Singapore and Hong Kong.
For more information visit www.bonhillplc.com (http://www.bonhillplc.com) .
About Mark Allen Holdings Limited
Mark Allen Holdings Limited is the parent company of a privately-owned group
of operating companies, including MA Healthcare, MA Business, MA Agriculture,
MA Education, MA Exhibitions, MA Music Leisure & Travel and MA Dentistry
Media. Founded in 1985, the group has grown to be a global business with a
team of nearly 500 people and a diverse portfolio of market-leading brands,
digital products and events providing quality content and information services
to specialist business and consumer communities.
IMPORTANT NOTICES
Shore Capital is authorised and regulated in the United Kingdom by the
Financial Conduct Authority ("FCA") and is acting exclusively as Financial
Adviser, Nominated Adviser and Broker and for no one else in connection with
the subject matter of this announcement and will not be responsible to anyone
other than Bonhill for providing the protections afforded to its clients nor
for providing advice in relation to the subject matter of this announcement.
This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise.
This announcement (including any information incorporated by reference in this
announcement), oral statements made regarding the formal sale process, and
other information published by the Group contain statements about the Group
that are or may be deemed to be forward looking statements. Without
limitation, any statements preceded or followed by or that include the words
"targets", "plans", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "projects" or words or terms of similar substance
or the negative thereof, may be forward looking statements.
These forward-looking statements are not guarantees of future performance.
Such forward-looking statements involve known and unknown risks and
uncertainties that could significantly affect expected results and are based
on certain key assumptions. Many factors could cause actual results to differ
materially from those projected or implied in any forward-looking statements.
Due to such uncertainties and risks, readers should not rely on such
forward-looking statements, which speak only as of the date of this
announcement. The Group disclaims any obligation or responsibility to update
publicly or review any forward-looking or other statements contained in this
announcement, except as required by applicable law.
The distribution of this announcement in jurisdictions outside the United
Kingdom may be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities law of any such jurisdiction.
PART I
1. Introduction
The Company announces that it has exchanged contracts with MA Financial Media,
a member of the Mark Allen Group, and an ultimate subsidiary of Mark Allen
Holdings Limited, regarding the conditional disposal of the business and
assets of Bonhill Media UK Limited ("Bonhill Media") and the entire issued
share capital of Last Word Media (Asia) Pte. Limited ("Last Word Asia")
(together the "UK and Asia Businesses") for a total cash consideration of
£6.5 million. Due to its size, under the AIM Rules, the Disposal is
conditional on Shareholders' approval.
This announcement provides the background to the Disposal and to explain why
the Independent Directors consider that it is in the best interests of the
Company and its Shareholders as a whole and why they recommend that
Shareholders should vote in favour of the Resolutions to be proposed at the
General Meeting. A notice convening the General Meeting to be held at the
offices of Charles Russell Speechlys LLP, 5 Fleet Place, London EC4M 7RD at
10.00 a.m. on 27 February 2023 will be set out at the end of the Circular.
Patrick Ponsford, the Group's CEO, will resign upon Completion as he is
joining the Mark Allen Group, and therefore he has not participated in the
Board's consideration of, and recommendation to proceed with, the Disposal.
2. Background to and reasons for the Disposal
Following board changes in April 2022 and an equity fundraising of £1.1
million at 5.5 pence per share, which was completed in May 2022, the Board set
about divesting or discontinuing all low margin and non-core business
previously undertaken by the Group. This resulted in the sale in late August
2022 of the Company's Business Solutions and Governance division ("BSG") for a
cash consideration of £0.723 million to Stubben Edge Limited. At the time,
the Company stated that the sale of the BSG division would enable it to
achieve approximately £0.6 million in annual cost savings from streamlining
central support headcount, reduced office space and lower IT costs, the full
benefit of which would be achieved in 2023. Furthermore, following the
disposal of the BSG division, the Group would be more focused, less capital
intensive, less complex and would generate higher margins.
However, as first announced by the Company in its unaudited interim results
for the six months ended 30 June 2022, which were released on 8 September
2022, market turbulence over the period had led to a weakening in traditional
media and content projects, as the Group's clients had held off on
discretionary marketing spend. Since then, as further announced on 2 November
2022 and 9 December 2022, due to ongoing political uncertainty, particularly
in the UK, and economic uncertainty in the UK and the US, the Company's
markets had continued to soften and trading conditions continued to
deteriorate, leading to major content projects, which had been budgeted for Q4
2022, slipping into Q1 2023.
Due to being AIM quoted, the Company is burdened with a fixed set of annual
overheads currently amounting to approximately £0.4 million which, given that
the Group is loss making and not cashflow positive, is becoming harder to
justify. In addition, due to the size of the Company's market capitalisation,
which has been below £10.0 million for some time, and consequently the shares
are becoming increasingly more illiquid with reduced day-to-day share trading,
in the Board's opinion, there are therefore very few reasons for the Ordinary
Shares to remain admitted to trading on AIM ("Admission"). While cancellation
of Admission is an option, given the cash consumptive nature of the Company
and as access to the requisite equity capital would be much reduced as a
private unquoted company, the Board considers that the Group, its brands and
employees would be better placed as part of a larger group.
As announced on 10 October 2022, given the challenging macro-economic
situation, and following discussions with certain of the Company's major
shareholders, the Board decided to undertake a strategic review which might or
might not result in the sale of the Group as a whole or of either of the
Company's principal trading businesses, InvestmentNews LLC ("InvestmentNews")
in the US or Bonhill in the UK and Asia. As the Company is subject to the City
Code and as a potential sale of the Group was being considered, a formal sale
process under the City Code ("Formal Sale Process") was launched. As
previously announced, the Board was pleased by the strong level of interest
received from a range of bona fide potential buyers following the commencement
of the Formal Sale Process, including for the Group in its entirety and
separate parts of the Group.
At the same time as it announced the Formal Sale Process, the Company
announced that as at 30 September 2022 it had cash of £1.0 million and net
debt, including leases of £2.6 million, totalling £1.7 million. However,
given the macro-economic conditions, as a precautionary measure, it had
entered into a standby loan facility ("Loan Facility") with Rockwood Strategic
Plc ("Rockwood"), its largest shareholder. The Loan Facility, which runs to 1
May 2023, was initially for up to £0.8 million in cash at a monthly compound
interest rate of 2 per cent. on funds drawn down, which would be capitalised.
It has an arrangement fee of 5 per cent., may be drawn down in tranches of
£200,000 and would be used for working capital purposes. On 6 February 2023,
the Company and Rockwood agreed to increase the size of the Loan Facility to
£1.0 million. All other terms of the Loan Facility remain unchanged.
In its announcement of 9 December 2022 referred to above, the Company stated
that it expected to have cash at 31 December 2022 of £0.3 million and that it
continued to manage its cash well, including the use of the Loan Facility
where required. As at 31 January 2023, the Company had cash of £0.5 million
and net debt of £2.6 million, including leases of £2.2 million and £0.8
million drawn down under the Loan Facility. On 6 February 2023, the Company
drew down the remaining £0.2 million under the Loan Facility.
On 9 December 2022, the Company announced that, subject to the completion of
satisfactory due diligence, it had received a conditional offer of £6.6
million in cash (equating to a price per share of approximately 5.5 pence)
from a privately owned UK media company for the business and assets of its UK
and Asia businesses. On the same date, the Company also announced that it
had received indicative conditional offers for InvestmentNews. After exploring
the various options, the Board has concluded that a sale of the UK and Asia
Businesses to MA Financial Media, a member of the Mark Allen Group, and an
ultimate subsidiary of Mark Allen Holdings Limited, (along with the separate
sale in due course of InvestmentNews) represents the best value for
Shareholders and therefore the Company has entered into the Sale and Purchase
Agreements, further details of which are set out below.
If the Disposal is not approved by Shareholders at the General Meeting, the
Board believes that the Company will need to raise further equity capital.
There is no guarantee that the price per share would be at or above 5.5 pence,
being the price at which the new shares were issued in the fundraising in May
2022, referred to above.
Having concluded the strategic review and Formal Sale Process as it is no
longer in discussions with, nor in receipt of an approach from, any potential
offeror relating to an acquisition of its issued and to be issued share
capital, the Company announced on 6 February 2023 that it was no longer
conducting the Formal Sale Process. As such, the Company ceased to be in an
"offer period" as defined in the City Code and the disclosure requirements
pursuant to Rule 8 of the City Code are therefore no longer applicable.
3. Current trading and prospects
On 6 February 2023, the Company announced that, since its announcement on 9
December 2022, certain clients had continued to delay the release of planned
marketing spend in the year ended 31 December 2022 ("FY2022") (equating to
approximately £0.2 million of revenue and £0.1 million of EBITDA) and, as a
result, the Board expected FY2022 revenue of £13.6 million and LBITDA of
£1.5 million. Furthermore, the Company announced that it continued to manage
its cash well, including the use of the Loan Facility, with an expected year
end net cash position of £0.7 million. Subsequently, as set out above, the
Company and Rockwood agreed to increase the size of the Loan Facility to £1.0
million.
4. Details of the Disposal
The UK Business is to be disposed of by way of the acquisition of certain
tangible and intangible assets by MA Financial Media, a member of the Mark
Allen Group, and an ultimate subsidiary of Mark Allen Holdings Limited. The
disposal of Last Word Asia will be undertaken by way of the acquisition by the
entire issued share capital of Last Word Asia by MA Financial Media.
In the year ended 31 December 2021, the UK and Asia Businesses generated
audited turnover of approximately £6.3 million and made an operating profit
of approximately £0.3 million. At the same date, they had audited net assets
of approximately £1.1 million.
The Disposal will represent a fundamental change of business for the Company
pursuant to Rule 15 of the AIM Rules and is therefore subject to Shareholders'
approval which is to be obtained at the General Meeting. A notice convening
the General Meeting to be held at the offices of Charles Russell Speechlys
LLP, 5 Fleet Place, London EC4M 7RD at 10.00 a.m. on 27 February 2023 will be
set out at the end of the Circular.
Mark Allen Holdings Limited is the parent company of a privately-owned group
of operating companies, including MA Healthcare, MA Business, MA Agriculture,
MA Education, MA Exhibitions, MA Music Leisure & Travel and MA Dentistry
Media. Founded in 1985, the group has grown to be a global business with a
team of nearly 500 people and a diverse portfolio of market-leading brands,
digital products and events providing quality content and information services
to specialist business and consumer communities.
5. Summary of the Sale and Purchase Agreements
On 10 February 2023, the Company entered into the Sale and Purchase
Agreements, pursuant to which it has conditionally agreed to dispose of the UK
and Asia Businesses to MA Financial Media, a member of the Mark Allen Group,
and an ultimate subsidiary of Mark Allen Holdings Limited for a total cash
consideration of £6.5 million.
Completion of the Sale and Purchase Agreements, which is conditional on the
passing of Resolution 1 as set out in the Notice, is expected to take place
shortly following conclusion of the General Meeting.
UK Sale and Purchase Agreement
Pursuant to the UK Sale and Purchase Agreement, the UK business and brands of
Bonhill Media (being Bonhill Create, Portfolio Advisor, Expert Investor,
International Advisor, ESG Clarity, Content Clarity, Future Flows, What
Investment and Tax Guide) are to be sold to MA Financial Media.
Under the terms of the UK Sale and Purchase Agreement:
· the purchase price attributable to the UK Business which is payable
by MA Financial Media at Completion shall be £5.18 million in cash save that
£0.2 million is to be retained in escrow to the later of:
i) six months from Completion; and
ii) cancellation of Admission of the Ordinary Shares; or
iii) a change of control of the Company.
· in the period between the date of the agreement and Completion,
Bonhill has agreed to carry on the UK Business in the ordinary course;
· the Company and Bonhill Media have provided certain warranties to
MA Financial Media in respect of the UK Business;
· the Company and Bonhill Media are providing a limited number of
indemnities to MA Financial Media in respect of certain agreed matters; and
· the Company and Bonhill Media have agreed to certain non-compete
restrictions in respect of the UK Business, including those brands being
disposed of. However, it is not envisaged that the Company will carry on any
trade relating to the UK Business in the future.
Asia Sale and Purchase Agreement
Pursuant to the Asia Sale and Purchase Agreement, the Company and Last Word UK
are to sell the entire issued share capital of Last Word Asia to MA Financial
Media.
Under the terms of the Asia Sale and Purchase Agreement:
· the purchase price attributable to the Asia Business shall be £1.32
million in cash which is payable by MA Financial Media at Completion;
· in the period between the date of the agreement and Completion, Bonhill
and Last Word Asia have agreed to carry on the Asia Business in the ordinary
course;
· the Company and Last Word UK have provided certain warranties to MA
Financial Media in respect of Last Word Asia;
· the Company and Last Word UK are providing a limited number of
indemnities to MA Financial Media in respect of certain agreed matters; and
· the Company and Last Word UK have agreed to certain non-compete
restrictions in respect of the Asia Business. However, it is not envisaged
that the Company will carry on any trade relating to the Asia Business in the
future.
6. Board Changes
Upon Completion, Patrick Ponsford, the Group CEO, will resign as a Director
and will be joining the Mark Allen Group. In addition, Jon Kempster, a
Non-Executive Director, has notified the Board of his intention to resign as a
Director with effect from 31 March 2023.
7. The Continuing Group
Following Completion, the Company will comprise solely of its US businesses,
including InvestmentNews.
The Company announced on 6 February 2023, that it had received a non-binding
offer from a US media buyer for the business and assets of InvestmentNews of
$6.5 million in cash (equating to a price per share of approximately 4.5
pence). Subject to the completion of satisfactory due diligence, the Company
expects to sign a conditional agreement with the purchaser in March 2023.
Shareholders are advised that there can be no certainty that any sale or other
transaction will be concluded for InvestmentNews, nor as to the terms on which
any sale or other transaction may be made. A further announcement will be made
in due course.
Should the proposed sale of the business and assets of InvestmentNews be
successful ("Completion of the US Disposal"), the Company will cease to own,
control or conduct all or substantially all, of its existing trading business,
activities or assets. The Company, which is then expected to have four
Directors, being Sarah Thompson, Laurie Benson, Richard Staveley and myself,
and three employees, will therefore become an AIM Rule 15 cash shell and, as
such, will be required to make an acquisition or acquisitions which
constitute(s) a reverse takeover under AIM Rule 14 (including seeking
re-admission as an investing company (as defined under the AIM Rules)) on or
before the date falling six months from Completion of the US Disposal or be
re-admitted to trading on AIM as an investing company under the AIM Rules
(which requires the raising of at least £6.0 million), failing which, the
Ordinary Shares would then be suspended from trading on AIM pursuant to AIM
Rule 40. Admission to trading on AIM would be cancelled six months from the
date of suspension should the reason for the suspension not be rectified
during that period.
Any failure in completing an acquisition or acquisitions which constitute(s) a
reverse takeover under AIM Rule 14, including seeking re-admission as an
investing company (as defined under the AIM Rules), would result in the
cancellation of the Ordinary Shares from trading on AIM.
Market conditions may also have a negative impact on the Company's ability to
make an acquisition or acquisitions which constitute(s) a reverse takeover
under AIM Rule 14. There is therefore no guarantee that the Company would be
successful meeting the AIM Rule 15 deadline as described above.
8. Proposed return of capital to Shareholders
As soon as practicable following both Completion and Completion of the US
Disposal, the Company intends to return substantially all of its cash to
Shareholders. Following consideration and consultation, the Board has
concluded that a tender offer is the best and most efficient way to return a
significant amount of capital to Shareholders in a short space of time, taking
account of the relative costs, complexity and timeframes of the various
possible methods, as well as the likely tax treatment for Shareholders (the
"Proposed Tender Offer"). Further details of the Proposed Tender Offer will
be sent to Shareholders at the appropriate time. In the event that the US
Disposal does not take place or is delayed beyond current expectations, the
Board will consider returning certain of the proceeds of the Disposal to
Shareholders with a further return of capital as and when the US Disposal
completes.
9. Capital Reduction
In order for the Board to effect the proposed return of capital to
Shareholders (howsoever it is structured), the Company will need to create
further distributable reserves. It is intended to do this by: -
· cancelling the amounts standing to the credit of the Company's Share
Premium Account (the "Share Premium Reduction"); and
· capitalising the amounts standing to the credit of the Company's Merger
Reserve by issuing B ordinary shares in the capital of the Company and
immediately cancelling such B ordinary shares (the "Merger Reserve
Reduction").
The Share Premium Reduction and the Merger Reserve Reduction being, together,
the "Capital Reduction".
Further details of the Capital Reduction are set out at Part II of this
announcement. The Company intends to commence the process relating to
the Capital Reduction as soon as practicable following the despatch of the
Circular. The Company will make further announcements in this regard.
Following completion of the Capital Reduction, it is expected that the
Retained Earnings will be approximately £8.0 million, which will allow the
Board to distribute substantially all of the expected proceeds (net of costs)
from the Disposal and, if successful, the US Disposal. It should be noted
that the Company will need to retain a certain amount of such proceeds for its
on-going working capital requirements following both Completion and Completion
of the US Disposal.
10. Shareholders' Approval
Set out at the end of the Circular will be a notice convening the General
Meeting to be held at 10.00 a.m. on 27 February 2023 at the offices of Charles
Russell Speechlys LLP, 5 Fleet Place, London EC4M 7RD at which the Resolutions
will be proposed to approve the: -
· sale by the Company of the UK and Asia Businesses to MA
Financial Media for the purposes of Rule 15 of the AIM Rules;
· Share Premium Reduction;
· Capitalisation of the Merger Reserve; and
· Cancellation of the B Shares.
11. Action to be taken by Shareholders
Shareholders will find enclosed with the Circular a Form of Proxy for use at
the General Meeting. They are requested to complete and return the Form of
Proxy to Share Registrars, 3 The Millennium Centre, Crosby Way, Farnham,
Surrey GU9 7XX in accordance with the instructions printed thereon as soon as
possible but, in any event, to be received no later than 10.00 a.m. on 23
February 2023 being 48 hours (excluding days that are not business days)
before the time of the General Meeting. Completion and return of a Form of
Proxy will not prevent you from attending and voting at the meeting in person
should you wish to do so.
12. Recommendation
The Independent Directors unanimously recommend Shareholders to vote in favour
of the Resolutions as they intend to do in respect of their own beneficial
shareholdings, which amount, in aggregate, to 715,818 Ordinary Shares,
representing approximately 0.6 per cent. of the Company's issued share
capital.
PART II
1. Capital Reduction
As noted in Part I of this announcement, the Company needs to undertake the
Capital Reduction as a preliminary step in order to be able to return funds to
Shareholders. Further details on the Capital Reduction are set out in this
Part II.
As at 31 December 2022, the Company had Retained Earnings of approximately
£4.44 million. As at 31 December 2022, the balance standing to the credit
of the Share Premium Account was approximately £2.52 million. In addition, a
sum of approximately £1.97 million was standing to the credit of the Merger
Reserve.
The implementation of the Capital Reduction is subject to a number of criteria
and legal processes, which are explained further below.
Share Premium Reduction
As at the date of this announcement, the Company has £2,524,929 standing to
the credit of its Share Premium Account.
Share premium forms part of the capital of the Company which arises on the
issue by the Company of Ordinary Shares at a premium to their nominal value.
The premium element is credited to the Share Premium Account. Under the Act,
the Company is generally prohibited from paying any dividends or making other
distributions in the absence of positive distributable reserves, and the Share
Premium Account, being a non-distributable reserve, can be applied by the
Company only for limited purposes.
However, provided the Company obtains the approval of Shareholders by way of a
special resolution and the subsequent confirmation by the Court, it may reduce
all or part of its Share Premium Account and the amount by which the Share
Premium Account is cancelled is credited to the Company's Retained Earnings
reserve.
The Board is recommending that the entire amount of the Share Premium Account
be reduced to £nil. In order to effect the Share Premium Reduction, the
Company first requires the authority of its Shareholders by the passing of a
special resolution at the General Meeting.
The Share Premium Reduction will take effect when the order of the Court
confirming it and a statement of capital approved by the Court have been
registered with the Registrar of Companies. The Effective Date of the Share
Premium Reduction is expected to be the working day following the hearing at
which the Capital Reduction is to be confirmed by the Court. As noted in
Part I of this announcement, the Court process will commence as soon as
practicable following the date of this announcement and further announcements
will be made when appropriate.
Merger Reserve Reduction
In certain circumstances, such as where shares are issued in consideration for
the acquisition of shares in another company, instead of creating share
premium, an amount is credited to a merger reserve. The Company has
£1,976,190 standing to the credit of its Merger Reserve as a result of
various acquisitions of companies in which it has used its Ordinary Shares as
consideration.
As in the case of a share premium account, a merger reserve can only be used
in very limited circumstances. However, unlike the Share Premium Account, the
Merger Reserve is a non-statutory reserve and the Court does not have the
power to reduce non-statutory reserves.
Therefore, it is proposed to capitalise the entire sum standing to the credit
of the Company's Merger Reserve, being £1,976,190, by applying that sum in
paying up, in full, new B ordinary shares in the capital of the Company (with
the nominal value of such shares being equal to the sum that is obtained by
dividing the number of such shares to be issued into £1,976,190) (the "B
Shares") and, on the business day prior to the day of the Court hearing to
confirm the Merger Reserve Reduction, allotting and issuing such shares by way
of a bonus issue to the persons holding Ordinary Shares as at the Capital
Reduction Record Time, on the basis of one such B Share for every one Ordinary
Share held (the "Bonus Issue").
The B Shares will not be admitted to trading on AIM, or to any other market or
stock exchange. It is a condition of issue of the B Shares that no share
certificates will be issued in respect of them. The B Shares will have
extremely limited rights. In particular, the B Shares will carry no rights to
participate in the profits of the Company and no rights to participate in the
Company's assets, save on a winding up. The B Shares will be transferable, but
no market will exist in them and it is anticipated that the Court will confirm
their cancellation the day after they are issued.
A discussion of the United Kingdom tax position relating to the Bonus Issue is
set out in paragraph 2 below.
Other matters concerning the Capital Reduction
In order to approve the Capital Reduction, the Court will need to be satisfied
that the interests of the Company's creditors will not be prejudiced by the
Capital Reduction. The Company could be required, if the Court is of the view
that the interests of creditors may be prejudiced by the Capital Reduction, to
obtain consent from creditors and/or to provide security in a form acceptable
to the Court. This is in order that the Capital Reduction can be confirmed by
the Court on terms that will permit any part of the sum released by the
Capital Reduction to be returned to Shareholders as a capital payment.
In such event, if the Company is unable in the timetable proposed to obtain
consent from, or is unable or unwilling to provide security (where security is
required) for all such creditors, then the amount released by the Capital
Reduction, when the Capital Reduction is confirmed by the Court, will remain
undistributable for the time being until any such outstanding consents have
been obtained, security (where security is required) has been put in place, or
the relevant obligations have been discharged, and the Company may be required
to give an undertaking to that effect to the Court.
The Board reserves the right (where necessary by application to the Court) to
abandon, discontinue or adjourn any application to the Court for confirmation
of the Capital Reduction, and hence the Capital Reduction itself, if the Board
believes that the terms required to obtain confirmation are unsatisfactory to
the Company or if the Board considers that to continue with the Capital
Reduction is inappropriate or not advisable and would not be in the best
interests of the Company and its Shareholders.
The Capital Reduction does not affect the voting or dividend rights of any
Shareholder or the rights of any Shareholder on a return of capital.
2. United Kingdom taxation
The following comments are intended as a general guide only and relate only to
certain UK tax consequences of receiving the B Shares under the Bonus Issue.
The comments are based on current legislation and HM Revenue & Customs
practice, both of which are subject to change, possibly with retrospective
effect. These comments deal only with Shareholders who are resident for
taxation purposes in the UK, who are the absolute beneficial owners of the
Ordinary Shares and who hold them as an investment and not on a trading
account. They do not deal with the position of certain classes of
Shareholders, such as dealers in securities, insurance companies, collective
investment schemes or persons regarded as having obtained their Ordinary
Shares by reason of employment.
The Bonus Issue should be treated as a "reorganisation" for the purposes of UK
taxation of chargeable gains ("CGT"), so that a Shareholder should not be
treated as making a disposal of his Ordinary Shares for CGT purposes upon
receipt of the B Shares. Instead, the B Shares will be treated as the same
asset, acquired at the same time, as their Ordinary Shares. On the basis
that the B Shares will be treated as being paid up for "new consideration"
received by the Company, the issue of the B Shares should not give rise to any
liability under UK income tax (or corporation tax) in a Shareholder's hands.
For CGT purposes, a Shareholder's base cost in their Ordinary Shares will be
apportioned between their B Shares and their Ordinary Shares based on their
respective market values at the date that the B Shares are cancelled. It is
likely that the market value of the B Shares will be £nil for the duration of
their existence. This is because the B Shares will have no voting rights or
rights to income; will have no market on which they can be traded; and it is
anticipated that they will be cancelled for no payment on the day immediately
following the date of their issue. Consequently, the issue of the B Shares
should not impact the base cost of the Ordinary Shares and there should be no
tax charge (nor any allowable loss) on the cancellation of the B Shares.
No stamp duty or stamp duty reserve tax will be payable on the issue of the B
Shares, or on their cancellation.
This section is intended to be a general guide only and is not intended to be,
and should not be construed to be, legal or taxation advice to any particular
Shareholder. Any Shareholder who has any doubt about their own taxation
position, whether regarding CGT or otherwise, or who is subject to taxation in
any jurisdiction other than the UK should consult their own professional
taxation advisor immediately.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2023
Latest time and date for receipt of Forms of Proxy 10.00 a.m. on 23 February
General Meeting 10.00 a.m. on 27 February
Completion on or around 27 February
If any of the details contained in the timetable above should change, the
revised times and dates will be notified to Shareholders by means of an
announcement through a Regulatory Information Service.
References to time in this announcement and the Notice of General Meeting are
to UK times.
DEFINITIONS
The following definitions apply throughout this announcement unless the
context otherwise requires:
"Act" the Companies Act 2006;
"AIM" AIM, a market operated by the London Stock Exchange;
"AIM Rules" the rules which set out the obligations and responsibilities in relation to
companies whose shares are admitted to AIM as published by the London Stock
Exchange from time to time;
"Asia Sale and Purchase Agreement" the conditional share sale and purchase agreement dated 10 February 2023
between: (1) the Company; (2) Last Word UK; and (3) MA Financial Media
relating to the disposal of Last Word Asia;
"B Shares" the B Shares in the capital of the Company proposed to be issued in connection
with the Merger Reserve Reduction, with the nominal value of such shares being
equal to the sum that is obtained by dividing the number of such shares to be
issued into £1,976,190;
"Board" or "Directors" the board of directors of the Company;
"Bonhill Media" Bonhill Media UK Limited
"Bonus Issue" the bonus issue of B Shares to be issued in connection with the Merger Reserve
Reduction;
"Capital Reduction" together, the Share Premium Reduction and the Merger Reserve Reduction;
"Capital Reduction Record Time" 6.30 p.m. on the date immediately preceding the business day of the Court
hearing to confirm the Merger Reserve Reduction;
"CGT" taxation of chargeable gains;
"Circular" the circular, including the Notice and the Form of Proxy, to be sent to
Shareholders;
"City Code" The City Code on Takeovers and Mergers;
"Company" or Bonhill Group Plc, a company incorporated and registered in England and Wales
under the Act, with registered number 02607995;
"Bonhill"
"Completion" completion of the Disposal;
"Completion of the US Disposal" completion of the proposed disposal of the business and assets of
InvestmentNews;
"Continuing Group" with effect from Completion, the Company and each of its subsidiaries and
subsidiary undertakings, being Bonhill Finance Limited, Bonhill Group Inc,
Bonhill Media, InvestmentNews and Last Word UK;
"Court" the High Court of England and Wales;
"Disposal" the conditional disposals by the Company of the UK and Asia Businesses to MA
Financial Media;
"Effective Date" expected to be the business day after the Court order confirming the Capital
Reduction;
"FCA" the United Kingdom Financial Conduct Authority;
"Form of Proxy" the form of proxy for use by the Shareholders in connection with the General
Meeting;
"FY2022" the financial year ended 31 December 2022
"General Meeting" or the General Meeting of the Company to be held at the offices of Charles
Russell Speechlys LLP, 5 Fleet Place, London EC4M 7RD at 10.00 a.m. on 27
"GM" February 2023;
"Group" the Company and each of its subsidiaries and subsidiary undertakings;
"Independent Directors" the Directors of the Company as at the date of this announcement, other than
Patrick Ponsford who is joining the Mark Allen Group on Completion;
"InvestmentNews" InvestmentNews LLC;
"Last Word Asia" or "Asia Business" Last Word Media (Asia) Pte. Limited, the Company's Singaporean subsidiary
(which is held as to 25 per cent. by the Company and 75 per cent. by Last Word
UK);
"Last Word UK" Last Word Media (UK) Limited, the Company's wholly owned subsidiary;
"Loan Facility" standby loan facility with Rockwood Strategic Plc;
"London Stock Exchange" London Stock Exchange plc;
"MA Financial Media" MA Financial Media Limited, a member of the Mark Allen Group, and an ultimate
subsidiary of Mark Allen Holdings Limited;
"Merger Reserve" the non-distributable capital reserve with that name in the accounts of the
Company;
"Merger Reserve Reduction" the reduction of the Merger Reserve to be effected by the Bonus Issue and
subsequent cancellation of the B Shares;
"Mark Allen Holdings Limited" Mark Allen Holdings Limited, the ultimate parent company of MA Financial Media
being the purchaser of the UK and Asia Businesses;
"Notice" the notice of the General Meeting, which will be set out at the end of the
Circular;
"Ordinary Shares" ordinary shares of 1 penny each in the capital of the Company;
"Proposed Tender Offer" the proposed tender offer to return certain of the Company's available cash
reserves to Shareholders following Completion and Completion of the US
Disposal;
"Registrars" Share Registrars Limited;
"Regulatory Information Service" a regulatory information service that is approved by the FCA as meeting the
FCA's primary information provider criteria and that is on the list of
authorised regulatory information service providers maintained by the FCA;
"Resolutions" the resolutions which are set out in the Notice;
"Retained Earnings" the distributable capital reserve with that name in the accounts of the
Company;
"Rockwood"
Rockwood Strategic Plc;
"Sale and Purchase Agreements" together, (i) the UK Sale and Purchase Agreement and (ii) the Asia Sale and
Purchase Agreement;
"Shareholder(s)" holder(s) of the Ordinary Shares;
"Share Premium Account" the non-distributable capital reserve with that name in the accounts of the
Company;
"Share Premium Reduction" the cancellation of the amounts standing to the credit of the Share Premium
Account;
"Shore Capital" Shore Capital and Corporate and/or Shore Capital Stockbrokers, as the context
requires;
"Shore Capital and Corporate" Shore Capital and Corporate Limited, registered in England and Wales under
company registration number 02083043, whose registered office is at Cassini
House, 57 St James's Street, London SW1A 1LD;
"Shore Capital Stockbrokers" Shore Capital Stockbrokers Limited, registered in England and Wales under
company registration number 1850105, whose registered office is at Cassini
House, 57 St James's Street, London SW1A 1LD;
"UK and Asia Businesses" the UK Business and Last Word Asia;
"UK Business" the business and assets of Bonhill Media UK Limited;
"UK Business Disposal" the disposal of the UK Business;
"UK Sale and Purchase Agreement" the conditional asset sale and purchase agreement dated 10 February 2023
between: (1) the Company; (2) Bonhill Media; (3) MA Business Limited; and (4)
MA Financial Media relating to the UK Business Disposal;
"United Kingdom" or the United Kingdom of Great Britain and Northern Ireland;
"UK"
"US" the United States of America; and
"US Disposal" the proposed disposal of the business and assets of InvestmentNews.
Unless otherwise stated, the US$/£ exchange rate used in this announcement is
1.21
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END DISGZGMZDGMGFZMRecent news on Bonhill
See all newsREG - Amcomri Group PLC - First Day of Dealings on AIM
AnnouncementREG - Bonhill Group PLC - Result of General Meeting
AnnouncementREG - AIM Bonhill Group PLC - Cancellation - BONHILL GROUP PLC
AnnouncementREG - Bonhill Group PLC - Holding(s) in Company
AnnouncementREG - Bonhill Group PLC - Holding(s) in Company
Announcement