REG - Braemar PLC - Trading Update and Proposed Capital Reduction

BraemarAnnouncement

14/02/2023 07:00

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RNS Number : 7896P  Braemar PLC  14 February 2023

 

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INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO.
596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL)
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IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

 
 
                       14 February 2023

 

BRAEMAR PLC

("Braemar" or the "Company" or the "Group")

 

Trading update

Capital reduction to increase capacity to pay future dividends

 

Braemar Plc (LSE: BMS), a provider of expert investment, chartering, and risk
management advice to the shipping and energy markets, today announces an
update on trading for the year ending 28 February 2023, together with an
intention to convene a General Meeting ("GM") in order to propose a capital
reduction process. The latter process is designed to increase the Group's
distributable reserves, increase the Group's capacity to pay future dividends
and provide sufficient distributable reserves to cover all historic dividends
paid.

 

Trading Update

 

The board of Braemar is pleased to report that the Group has continued to
trade well since the release of its interim results in November 2022. The
integration of the Group's newly acquired Spanish and US businesses announced
in December 2022 has progressed well and both businesses are set to make an
immediate and strong contribution to the Group's trading in the next financial
year.

 

The board looks forward with confidence to providing a more detailed update on
trading for the year ending 28 February 2023 and on expectations for the year
to February 2024 in a pre-close update to be announced in mid-March 2023.

 

Capital Reduction

 

As at the date of this announcement, Braemar has issued 32,919,252 Ordinary
Shares. The Company has an amount standing to the credit of the share premium
account of £53,672,079 and an amount of £23,366,000 in its merger reserve
account. Both of these accounts are non-distributable reserves and the Company
is unable to use these to, amongst other things, make distributions to
shareholders.

 

The Companies Act 2006 permits the Company (subject to the approval of
shareholders and the consent of the Court) to cancel or reduce its share
premium and certain other reserve accounts and credit the resulting sum (less
an amount equal to certain of the Company's liabilities as at that date) to
enhance the Company's distributable reserves. By increasing its distributable
reserves in this way, the Company increases its capacity and flexibility to
pay dividends.

 

Recognising the importance of dividends to shareholders and reflecting the
strong cash generation of the business, the board of Braemar intends to seek
shareholder approval to reduce the amount standing to the credit of its share
premium and capitalise and reduce the merger reserve by approximately £75
million and create distributable reserves to increase the Company's capacity
and flexibility to pay future dividends.

 

The reduction of the share premium and capitalisation of the merger reserve
and cancellation of the resultant share issue requires the passing of special
resolutions at a GM and subsequent approval of the Court (the "Capital
Reduction"). The Company intends to send a notice convening a GM in due course
and will apply to the Court for approval of the Capital Reduction conditional
upon, and subsequent to, the passing of the necessary shareholder resolutions
at the GM. The Capital Reduction will not be effective until the order of the
Court confirming the reduction has been registered with Companies House. The
dates and times of the GM and Court hearings will be set out in the GM
circular.

 

Deeds of Release and Related Party Transaction

The Company has become aware that some historic dividends: i) having been paid
out of retained earnings which do not qualify as distributable reserves under
the Companies Act 2006 (the "Act") and/or ii) as a result of an administrative
oversight by not filing unaudited interim accounts at Companies House, as
required by the Act, (both the "Relevant Distributions") have been declared
and paid in infringement of the Act. Neither the amount, nor payment of the
Relevant Distributions, nor the Company's prior audited accounts, are affected
by this, nor is there any impact on the Company's financial position at any
time and the Company's intention is that no party should be put in a worse
position as a result of these issues. The Company therefore intends to rectify
this situation at the same time as the Capital Reduction and include
appropriate resolutions at the GM to address the matter.

A consequence of the Relevant Distributions is that the Company may have a
claim against its past and present shareholders who received the Relevant
Distributions, as well as a claim against all directors who approved the
Relevant Distributions at the time. The Company has no intention to make such
claims.

The Company will therefore enter into a deed of release in favour of all
shareholders who have received the Relevant Distributions releasing them from
any and all claims which the Company has or may have in respect of the payment
of the Relevant Distributions (the "Shareholders' Deed of Release") and
a deed of release in favour of all persons who were directors at the time of
payment of the Relevant Distributions, by which the Company waives any rights
to make claims against such directors in respect of the Relevant Distributions
(the "Directors' Deed of Release" and together with the Shareholders' Deed of
Release, the "Deeds of Release").

The Deeds of Release are intended to ensure that the Company will be unable to
make any claims against its past and present shareholders who were
recipients of the Relevant Distributions or against all persons who were
directors at the time that the Relevant Distributions were made.

As the Company's directors (comprising current and former directors within the
last twelve months, being James Gundy, Tris Simmonds, Nick Stone, Nigel Payne,
Elizabeth Gooch, Joanne Lake, Stephen Kunzer and Lesley Watkins) are deemed to
be related parties of the Company pursuant to LR 11.1.4 R, it is expected that
the Company's entry into the Directors' Deed of Release for nil consideration
in respect of the Relevant Distributions will constitute a related party
transaction pursuant to LR 11.1.4 R.

Accordingly, subject to the approval of the FCA and in accordance with LR
11.1.7 R, it is expected that a circular will be posted to shareholders in due
course, and that the Directors' Deed of Release will become effective subject
to shareholders passing the necessary resolutions at the proposed GM. The
Directors' Deed of Release will also be conditional on the Court approving the
Capital Reduction.

The Company will make further announcements in respect of the related party
transaction in due course, as appropriate.

ENDS

For further information, contact:

 Braemar Plc
 James Gundy, Group Chief Executive Officer        Tel +44 (0) 20 3142 4100
 Nick Stone, Chief Financial Officer
 Investec Bank plc
 Gary Clarence / Harry Hargreaves / Alice King     Tel +44 (0) 20 7597 5970
 Cenkos Securities plc

                                                   Tel +44 (0) 20 7397 8900

 Ben Jeynes / Max Gould (Corporate Finance)

 Alex Pollen / Leif Powis (Sales)
 Buchanan
 Charles Ryland / Jamie Hooper / Jack Devoy        Tel +44 (0) 20 7466 5000

 

Notes to Editors:

 

About Braemar Plc

Braemar provides expert investment, chartering, and risk management advice
that enable its clients to secure sustainable returns and mitigate risk in the
volatile world of shipping and energy. Our experienced brokers work in tandem
with specialist professionals to form teams tailored to our customers' needs,
and provide an integrated service supported by a collaborative culture.

 

Braemar joined the Official List of the London Stock Exchange in November 1997
and trades under the symbol BMS.

 

For more information, including our investor presentation, visit
www.Braemar.com (http://www.Braemar.com) and follow Braemar on LinkedIn
(https://www.linkedin.com/company/braemar-ltd) .

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