finnCap Group PLC Cenkos Securities - Recommended All-Share Merger with Cenkos
23/03/2023 07:00
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RNS Number : 9390T finnCap Group PLC 23 March 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE MERGER AND NEW FINNCAP SHARES EXCEPT ON THE BASIS
OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE FINNCAP CIRCULAR WHICH ARE
PROPOSED TO BE PUBLISHED IN DUE COURSE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION IN RELATION TO CENKOS SECURITIES
PLC AND FINNCAP GROUP PLC
FOR IMMEDIATE RELEASE
23 March 2023
RECOMMENDED ALL-SHARE MERGER
of
Cenkos SECURITIES PLC
and
finncap GROUP PLC
to be implemented by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006
Summary
· The boards of finnCap Group plc ("finnCap") and
Cenkos Securities plc ("Cenkos") are pleased to announce that they have
reached agreement on the terms and conditions of a recommended all-share
merger of finnCap and Cenkos (the "Merger") to create a market-leading
full-service advisory firm for growth and investment companies (the "Combined
Group").
· The Combined Group has (on a proforma combined basis)
more than 210 retained listed or quoted clients and employs more than 230
colleagues with ambitions to build on strong foundations across equity capital
markets, M&A advisory, debt advisory, and private growth capital
fundraising.
· The Combined Group has in excess of £50
million of proforma combined revenues and in excess of £20 million combined
cash on its balance sheet.
· There are potentially significant cost
synergies from common systems, processes, regulatory overlap and
infrastructure, as well as clear future revenue potential through broader
client reach and collaboration across equity and private capital market
disciplines for the Combined Group.
· The Combined Group will be led by the existing
CEOs of Cenkos and finnCap as co-CEOs. Lisa Gordon will become Chair of the
Combined Group Board which will comprise equal numbers of finnCap and Cenkos
Directors.
· Under the terms of the Merger, Cenkos
Shareholders and finnCap Shareholders will each hold approximately 50% of the
entire issued ordinary share capital of finnCap.
· The Merger is to be implemented by means of a
court-sanctioned scheme of arrangement under Part 26 of the Companies Act.
Comments on the Merger
Lisa Gordon, Chair of Cenkos and intended Chair of the Combined Group Board,
said: "This proactive and mutually-beneficial merger creates a champion for
growth and investment companies, both UK-quoted and private entrepreneurial
businesses, that are the backbone of our economy. The two firms' cultures are
very similar, and our client lists and capabilities are complementary. This is
good for our clients, our employees, our investors and the UK capital markets
as a whole."
Robert Lister, Chair of finnCap and intended senior independent non-executive
director of the Combined Group Board, said: "It has been a pleasure to serve
as Chair of finnCap over the last two years. I have been impressed by the
collective spirit, dynamism and, in sometimes challenging times, the
resilience of our people. Whilst I strongly believe in the prospects of
finnCap, I am excited by the potential of the Combined Group and I look
forward to working with Lisa and the Combined Group Board and seeing our
combined business prosper."
Julian Morse, CEO of Cenkos and intended co-CEO of the Combined Group, said:
"This merger is a true meeting of minds: the combination of two firms with a
shared client-centric culture, which presents the opportunity to create a
premium full-service advisory house supporting growth and investment companies
and grow our combined business and its revenues."
John Farrugia, co-CEO of finnCap and intended co-CEO of the Combined Group,
said: "In Cenkos we have found a partner who shares the same vision, desire
and drive to create one of the leading financial services advisory firms
focused on the mid-market. With our collective strength in capital markets,
M&A, debt advisory and private growth, we believe that we are able to
provide an unrivalled level of service to all our current and prospective
clients."
Key terms
· Under the terms of the Merger, each Cenkos
Shareholder will be entitled to receive:
for each Cenkos Share: 3.19420647 New finnCap Shares
· Based on this exchange ratio (the "Exchange
Ratio") and the Closing Price of 11.625 pence per finnCap Share on 22 March
2023 (being the Latest Practicable Date), the Merger values each Cenkos Share
at 37.13 pence, comprising an equity value of Cenkos' entire issued ordinary
share capital as at the Latest Practicable Date of approximately £21.1
million and finnCap's entire issued ordinary share capital as at the Latest
Practicable Date of approximately £21.1 million.
· Each Cenkos Shareholder will be entitled to
receive and retain the 0.5 pence cash dividend for each Cenkos Share held on
the 2022 Dividend Record Date (the "2022 Dividend") which was announced on 10
March 2023 and is to be paid in respect of the financial year ended 31
December 2022 to Cenkos Shareholders without any reduction in their
entitlements under the Exchange Ratio pursuant to the Scheme. The 2022
Dividend is due to be paid on 22 June 2023 to those Cenkos Shareholders who
are on Cenkos' register of members at close of business on 26 May (the "2022
Dividend Record Date").
· The Cenkos Board intends in due course to
declare an interim dividend of 3 pence per Cenkos Share, which is intended to
be formally declared after 30 June 2023 and paid before the Effective Date
(the "Interim Dividend"). The timetable relating to the proposed Interim
Dividend will be notified in due course. Holders of Cenkos Shares as at the
record date for the Interim Dividend shall be entitled to receive the Interim
Dividend without any reduction in their entitlements under the Exchange Ratio
pursuant to the Scheme. Further information regarding the Interim Dividend
will be notified in due course. Cenkos Shareholders should be aware that
Cenkos reserves the right to bring forward the declaration, vary or even
cancel the Interim Dividend at any time prior to its payment.
· Upon completion of the Merger, Cenkos
Shareholders and finnCap Shareholders will each hold approximately 50% of the
entire issued ordinary share capital of finnCap, whose shares will continue to
be traded on AIM.
· The Merger is supported by Cenkos Shareholders Jim
Durkin, Bridger Limited, Stephen Keys, Sarah Keys and Michael Johnson, who
have irrevocably undertaken to vote in favour of the Scheme in respect of
11,492,897 Scheme Shares, representing 20.27 per cent. of the issued share
capital of Cenkos as at the Latest Practicable Date.
· In addition, irrevocable undertakings to vote
or procure the vote in favour of the Scheme have been given by Cenkos
Directors in respect of an aggregate 1,587,653 Scheme Shares, representing
2.80 per cent. of the issued share capital of Cenkos as at the Latest
Practicable Date.
· Canaccord Genuity Asset Management Limited has
given a letter of intent to procure votes in favour of the Merger in respect
of 5,500,000 Scheme Shares, representing 9.70 per cent. of the issued share
capital of Cenkos as at the Latest Practicable Date.
· The Merger is supported by finnCap Shareholders
Jon Moulton, Vin Murria, Sam Smith, Lord Leigh, Mark Tubby, Peter Gray, and
Rhys Williams, who have irrevocably undertaken to vote or procure the vote in
favour of the finnCap Resolution in respect of 83,860,205 finnCap Shares,
representing 46.31 per cent. of the issued share capital of finnCap as at the
Latest Practicable Date.
· In addition, irrevocable undertakings to vote
or procure the vote in favour of the finnCap Resolution have been given by
finnCap Directors in respect of an aggregate 10,168,726 finnCap Shares,
representing 5.62 per cent. of the issued share capital of finnCap as at the
Latest Practicable Date.
· In aggregate, Cenkos and finnCap have received
irrevocable undertakings and a letter of intent to vote or procure votes in
favour of the Merger in respect of 18,580,550 Scheme Shares, representing
32.77 per cent. of the issued share capital of Cenkos as at the Latest
Practicable Date and irrevocable undertakings to vote or procure votes in
favour of the finnCap Resolution in respect of 94,028,931 finnCap Shares,
representing 51.92 per cent. of the issued share capital of finnCap as at the
Latest Practicable Date.
Recommendations
· The Cenkos Directors, who have been so advised by
SPARK Advisory Partners as to the financial terms of the Merger, consider the
terms of the Merger to be fair and reasonable and in the best interests of the
Cenkos Shareholders taken as a whole. Accordingly, the Cenkos Directors
recommend unanimously that Cenkos Shareholders vote or procure votes to
approve the Scheme at the Court Meeting and to vote or procure votes in favour
of the Resolutions to be proposed at the General Meeting, as they have
irrevocably undertaken to do (or procure to be done) in respect of their own
legal and beneficial holdings of Cenkos Shares, being, in aggregate, 1,587,653
Cenkos Shares representing approximately 2.80 per cent. of the issued share
capital of Cenkos as at the Latest Practicable Date.
· In providing their advice to the Cenkos
Directors, SPARK Advisory Partners has taken into account the commercial
assessments of the Cenkos Directors. SPARK Advisory Partners is providing
independent financial advice to the Cenkos Directors for the purposes of Rule
3 of the Takeover Code.
· In order to allot and issue the New finnCap
Shares, finnCap will be required to seek the approval of the finnCap
Shareholders of the required authorities at the finnCap General Meeting. The
Merger is accordingly conditional on the approval of the finnCap Shareholders
of the issuance of the New finnCap Shares at the finnCap General Meeting. The
finnCap Directors consider the Merger to be in the best interests of finnCap
and the finnCap Shareholders as a whole and intend unanimously to recommend
that finnCap Shareholders vote in favour of the finnCap Resolution to be
proposed at the finnCap General Meeting, as they have irrevocably undertaken
to do (or procure to be done) in respect of their own legal and beneficial
holdings of 10,168,726 finnCap Shares (and those of their close family
members) representing, in aggregate, approximately 5.62 per cent. of the
issued share capital of finnCap as at the Latest Practicable Date.
Timetable and Conditions
· It is intended that the Merger will be implemented by
means of a court-sanctioned scheme of arrangement under Part 26 of the
Companies Act (although the right to effect the Merger by way of a Takeover
Offer, subject to the consent of the Panel and the terms of the Co-operation
Agreement, is reserved).
· The Merger will be made in accordance with the
Takeover Code and on the terms and subject to the Conditions set out in
Appendix 1 to this Announcement. In particular, the Merger is conditional
on, amongst other things: (i) the approval by the FCA of the change of control
in Cenkos in accordance with section 189 of the FSMA; and (ii) given the
importance to each of Cenkos and finnCap of their ability to operate as
Nominated Adviser to AIM companies, the requirement that each of Cenkos and
finnCap maintain their status as Nominated Adviser pursuant to the AIM Rules
for Nominated Advisers for the period ending on the Effective Date. Full
details of the Merger will be set out in the Scheme Document.
· It is expected that the Scheme Document, containing
further information about the Merger and notices of the Court Meeting and the
General Meeting, together with the associated forms of proxy, will be posted
to Cenkos Shareholders during April 2023 (or such later date as Cenkos,
finnCap and the Panel agree) and the Meetings are expected to be held shortly
thereafter.
· It is expected that the finnCap Circular will be
posted to finnCap Shareholders at a similar time as the Scheme Document is
posted to Cenkos Shareholders, with the finnCap General Meeting being held
before the Cenkos Meetings.
· Taking into account the FCA approval timetable, the
Scheme is currently expected to become Effective during the third calendar
quarter of 2023, subject to the satisfaction (or, where applicable, waiver) of
the Conditions and further terms set out in Appendix 1 to this Announcement.
An expected timetable of key events relating to the Merger will be provided in
the Scheme Document.
This summary should be read in conjunction with, and is subject to, the full
text of this Announcement, including the Appendices to it. The Merger will
be subject to the Conditions and further terms set out in Appendix 1 to this
Announcement and to the full terms and conditions which will be set out in the
Scheme Document. Appendix 2 to this Announcement contains the sources of
information and bases of calculations of certain information contained in this
Announcement. Appendix 3 contains a summary of the irrevocable undertakings
and letters of intent received by finnCap and Cenkos in relation to this
Merger. Appendix 4 contains definitions of certain expressions used in this
summary and in this Announcement.
Enquiries:
finnCap
Tel: +44 (0)20 7220 0500
John Farrugia, Chief Executive Officer
investor.relations@finncap.com
Richard Snow, Chief Financial Officer
Henrik Persson, Strategic PLC Advisory
Cenkos
Tel: +44 (0)207 397 8900
Lisa Gordon, Chair
Julian Morse, Chief Executive Officer
Ben Procter, Chief Financial Officer
Jeremy Osler, Head of Corporate Finance & General Counsel
SPARK Advisory Partners
Tel: +44 (0)203 368 3552
(Financial Adviser and Nominated Adviser to Cenkos)
Matt Davis
Grant Thornton (Nominated Adviser to finnCap)
Tel: +44 (0)20 7383 5100
Philip Secrett/Samantha Harrison/George Grainger
Oberon Capital (Joint Broker to finnCap)
Tel: +44 (0)20 3179 5344
Mike Seabrook
finnCap Ltd (Joint Broker to finnCap)
Tel: +44 (0)20
7220 0500
Rhys Williams/Tim Redfern
Hudson Sandler (PR Adviser to finnCap)
Dan de Belder
Tel: +44 (0)7977 927142
Rebekah Chapman
Tel: +44 (0)7702 596674
The Nisse Consultancy (PR Adviser to Cenkos)
Tel: +44 (0) 7769 688618
Travers Smith LLP is acting as legal adviser to finnCap and Simmons &
Simmons LLP is acting as legal adviser to Cenkos.
This Announcement contains certain inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"),
and is disclosed in accordance with the Cenkos' and finnCap's obligations
under Article 17 of MAR. For the purposes of MAR, this announcement is being
made on behalf of Cenkos by Jeremy Osler, Head of Corporate Finance &
General Counsel and on behalf of finnCap by Richard Snow, Chief Financial
Officer.
Important notice about financial adviser
SPARK Advisory Partners Limited ("SPARK Advisory Partners"), which is
authorised and regulated in the United Kingdom by the Financial Conduct
Authority ("FCA"), is acting as financial adviser to Cenkos and for no one
else in connection with the Merger and will not be responsible to anyone other
than Cenkos for providing the protections afforded to its clients nor for
providing advice in relation to the Merger, the contents of this Announcement
or any other matters referred to in this Announcement.
Grant Thornton UK LLP ("Grant Thornton") is authorised and regulated in the
United Kingdom by the FCA and is acting as nominated adviser for finnCap and
no one else in connection with the Merger and will not regard any other person
as its client in relation to the Merger and will not be responsible to anyone
other than finnCap for providing the protections afforded to clients of
Grant Thornton or for providing advice in relation to the Merger, the contents
of this Announcement or any other matters referred to in this Announcement.
Further information
This Announcement is for information purposes only and is not intended to, and
does not, constitute or form part of any offer or inducement to sell or an
invitation to purchase, otherwise acquire, subscribe for, sell or otherwise
dispose of, any securities or a solicitation of an offer to buy any
securities, any vote or approval in any jurisdiction pursuant to the Merger or
otherwise, nor shall there be any purchase, sale, issuance or exchange of
securities or such solicitation in any jurisdiction in which such offer,
solicitation, sale issuance or exchange is unlawful. The Merger will be
implemented solely pursuant to the Scheme Document (or, if the Merger is
implemented by way of a Takeover Offer, the Offer Document), which will
contain the full terms and conditions of the Merger, including details of how
to vote in respect of the Merger. Any decision in respect of, or other
response to, the Merger should be made only on the basis of the information in
the Scheme Document (or, if the Merger is implemented by way of a Takeover
Offer, the Offer Document) and the finnCap Circular.
Cenkos and finnCap will prepare the Scheme Document (or, if the Merger is
implemented by way of a Takeover Offer, the Offer Document) to be distributed
to Cenkos Shareholders at no cost to them. Cenkos and finnCap urge Cenkos
Shareholders to read the Scheme Document when it becomes available because it
will contain important information relating to the Merger.
finnCap will prepare the finnCap Circular to be distributed to finnCap
Shareholders. finnCap urges finnCap Shareholders to read the finnCap
Circular carefully when it becomes available.
This Announcement does not constitute a prospectus, prospectus equivalent
document or an exempted document.
Overseas jurisdictions
This Announcement has been prepared in connection with proposals in relation
to a scheme of arrangement pursuant to and for the purpose of complying with
English law, the AIM Rules, the Takeover Code, the Market Abuse Regulation (EU
596/2014) (which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018) and the Disclosure Guidance and Transparency Rules and
information disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with the laws
of jurisdictions outside England and Wales. Nothing in this Announcement
should be relied on for any other purpose.
The release, publication or distribution of this Announcement in or into
certain jurisdictions other than the United Kingdom may be restricted by the
laws of those jurisdictions and therefore any persons into whose possession
this Announcement comes should inform themselves of, and observe, such
restrictions. In particular the ability of persons who are not resident in
the United Kingdom to vote their Cenkos Shares at the Court Meeting or General
Meeting, or to appoint another person as proxy to vote at the Court Meeting or
General Meeting on their behalf, may be affected by the laws of the relevant
jurisdictions in which they are located. Further details in relation to the
Overseas Shareholders will be contained in the Scheme Document. Any failure
to comply with any such restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by
applicable law, the companies and persons involved in the Merger disclaim any
responsibility or liability for the violation of such restrictions by any
person.
Unless otherwise determined by finnCap or required by the Takeover Code, and
permitted by applicable law and regulation, New finnCap Shares to be issued
pursuant to the Merger shall not be made available, directly or indirectly,
in, into or from a Restricted Jurisdiction where to do so would violate the
laws in that jurisdiction and no person may vote in favour of the Scheme by
any such means from within a Restricted Jurisdiction or any other jurisdiction
if to do so would constitute a violation of the laws of that jurisdiction and
no person may vote in favour of the Merger by use of mail or any other means
of instrumentality (including, without limitation, facsimile, email or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or any facility of a national, state or other securities exchange of, any
Restricted Jurisdiction.
Accordingly, copies of this Announcement and all documents relating to the
Merger are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in, into or from a Restricted
Jurisdiction where to do so would violate the laws in that jurisdiction, and
persons receiving this Announcement and all documents relating to the Merger
(including custodians, nominees and trustees) must not mail or otherwise
distribute or send them in, into or from such jurisdictions where to do so
would violate the laws in that jurisdiction. Doing so may render invalid any
related purported vote in respect of the Merger. If the Merger is
implemented by way of a Takeover Offer (unless otherwise permitted by
applicable law or regulation), such Takeover Offer may not be made, directly
or indirectly, in or into, or by use of mail or any other means or
instrumentality (including, without limitation, facsimile, email or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or any facility of a national, state or other securities exchange of, any
Restricted Jurisdiction and such Takeover Offer will not be capable of
acceptance by any such use, means, instrumentality or facilities from within
any Restricted Jurisdiction.
The availability of New finnCap Shares pursuant to the Merger to Cenkos
Shareholders who are not resident in the United Kingdom may be affected by the
laws of the relevant jurisdictions in which they are resident. Persons who
are not resident in the United Kingdom should inform themselves of, and
observe, any applicable requirements. To the fullest extent permitted by
applicable law, the companies and persons involved in the Merger disclaim any
responsibility or liability for the violation of such restrictions by any
person.
Further details in relation to Cenkos Shareholders in overseas jurisdictions
will be contained in the Scheme Document.
The Merger shall be subject to the applicable requirements of the Takeover
Code, the Panel, the London Stock Exchange, the AIM Rules, the FCA and the
Registrar of Companies.
Additional information for US investors
Cenkos Shareholders in the United States should note that the Merger relates
to the shares of an English company with a listing on AIM and is proposed to
be effected by means of a scheme of arrangement under English law. This
Announcement, the Scheme Document and certain other documents relating to the
Merger have been or will be prepared in accordance with English law, the
Takeover Code and UK disclosure requirements, format and style, all of which
differ from those in the United States. A transaction effected by means of a
scheme of arrangement is not subject to the tender offer rules or the proxy
solicitation rules under the US Exchange Act. Accordingly, the Merger is
subject to the disclosure requirements of and practices applicable in the
United Kingdom to schemes of arrangement, which differ from the disclosure
requirements of the United States tender offer and proxy solicitation rules.
If, in the future, finnCap exercises the right to implement the Merger by way
of a Takeover Offer and determines to extend such Takeover Offer into the
United States, any such Takeover Offer will be made in compliance with
applicable United States laws and regulations, including any applicable
exemptions under the US Exchange Act and the US Securities Act.
Cenkos' financial statements, and all financial information included in this
Announcement, the Scheme Document or any other documents relating to the
Merger, have been or will be prepared in accordance with IFRS and may not be
comparable to financial statements of companies in the United States or other
companies whose financial statements are prepared in accordance with US
generally accepted accounting principles.
Each Cenkos Shareholder is urged to consult their independent professional
adviser immediately regarding the tax consequences of the Merger applicable to
them.
It may be difficult for US holders to enforce their rights and claims arising
out of the US federal securities laws, since finnCap and Cenkos are located in
countries other than the United States, and some or all of their officers and
directors may be residents of countries other than the United States. US
holders may not be able to sue a non-US company or its officers or directors
in a non-US court for violations of US securities laws. Further, it may be
difficult to compel a non-US company and its affiliates to subject themselves
to a US court's judgement.
The Merger is intended to be implemented pursuant to a scheme of arrangement
under the laws of England, the New finnCap Shares to be issued as part of the
Merger will be issued in reliance on the exemption from the registration
requirements of the US Securities Act provided by Section 3(a)(10) thereof.
Cenkos will advise the Court that its sanction of the scheme of arrangement
will be relied upon by finnCap and Cenkos as an approval of the scheme of
arrangement following a hearing on its fairness to Cenkos Shareholders at
which hearing all such shareholders are entitled to attend in person or
through counsel to support or oppose the sanctioning of the scheme of
arrangement and in respect of which notification has been given to all Cenkos
Shareholders.
In accordance with normal UK practice and consistent with Rule 14e-5(b) of the
US Exchange Act, (to the extent applicable) finnCap, certain affiliated
companies and their nominees or brokers (acting as agents) may make certain
purchases of, or arrangements to purchase, shares in Cenkos outside of the
United States, other than pursuant to the Merger, until the date on which the
Merger and/or Scheme becomes Effective, lapses or is otherwise withdrawn. If
such purchases or arrangements to purchase were to be made they would occur
either in the open market at prevailing prices or in private transactions at
negotiated prices and comply with applicable law, including the US Exchange
Act. Any information about such purchases or arrangements to purchase will
be disclosed as required in the United Kingdom, will be reported to a
Regulatory Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com
(http://www.londonstockexchange.com) .
Neither the United States Securities and Exchange Commission nor any US state
securities commission has approved or disapproved the Merger, passed upon the
merits or fairness of the Merger or passed any opinion upon the accuracy,
adequacy or completeness of this Announcement (nor will it do so in respect of
the Scheme Document). Any representation to the contrary is a criminal
offence in the United States.
Forward looking statements
This Announcement (including information incorporated by reference in this
Announcement), oral statements made regarding the Merger, and other
information published by finnCap, Cenkos, any member of the Wider finnCap
Group or any member of the Wider Cenkos Group may contain statements which
are, or may be deemed to be, "forward looking statements". Forward looking
statements are prospective in nature and are not based on historical facts,
but rather on current expectations and projections about future events, and
are therefore subject to risks and uncertainties which could cause actual
results to differ materially from the future results expressed or implied by
the forward looking statements.
The forward looking statements contained in this Announcement include
statements relating to the expected effects of the Merger on finnCap, Cenkos,
any member of the Wider finnCap Group or any member of the Wider Cenkos Group
(including their future prospects, developments and strategies), the expected
timing and scope of the Merger and other statements other than historical
facts. Often, but not always, forward looking statements can be identified by
the use of forward looking words such as "prepares", "plans", "expects" or
"does not expect", "is expected", "is subject to", "budget", "projects",
"synergy", "strategy", "scheduled", "goal", "estimates", "forecasts",
"intends", "cost-saving", "intends", "anticipates" or "does not anticipate",
or "believes", or variations of such words and phrases or statements that
certain actions, events or results "may", "could", "should", "would", "might"
or "will" be taken, occur or be achieved. Forward looking statements may
include statements relating to the following: (i) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy, losses and future prospects; (ii)
business and management strategies and the expansion and growth of finnCap's,
Cenkos', any member of the Wider finnCap Group's or any member of the Wider
Cenkos Group's operations and potential synergies resulting from the Merger;
and (iii) the effects of global economic conditions and governmental
regulation on finnCap's, Cenkos', any member of the Wider finnCap Group's or
any member of the Wider Cenkos Group's business.
Although finnCap and Cenkos believe that the expectations reflected in such
forward looking statements are reasonable, finnCap, Cenkos, the Wider finnCap
Group and the Wider Cenkos Group can give no assurance that such expectations
will prove to be correct. By their nature, forward looking statements involve
risk and uncertainty because they relate to events and depend on circumstances
that will occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those expressed or
implied by such forward looking statements.
These factors include, but are not limited to: the ability to complete the
Merger; the ability to obtain requisite regulatory and shareholder approvals
and the satisfaction of other Conditions; changes in the global political,
economic, business and competitive environments and in market and regulatory
forces; changes in future exchange and interest rates; changes in tax rates;
future business combinations or disposals; changes in general economic and
business conditions; changes in the behaviour of other market participants;
the anticipated benefits from the proposed transaction not being realised as a
result of changes in general economic and market conditions in the countries
in which finnCap, Cenkos, the Wider finnCap Group and/or the Wider Cenkos
Group operate; weak, volatile or illiquid capital and/or credit markets;
changes in the degree of competition in the geographic and business areas in
which finnCap, Cenkos, the Wider finnCap Group and/or the Wider Cenkos Group
operate; and changes in laws or in supervisory expectations or requirements.
Other unknown or unpredictable factors could cause actual results to differ
materially from those expected, estimated or projected in the forward looking
statements. If any one or more of these risks or uncertainties materialises or
if any one or more of the assumptions proves incorrect, actual results may
differ materially from those expected, estimated or projected. Such forward
looking statements should therefore be construed in the light of such factors.
Neither finnCap, Cenkos, the Wider finnCap Group nor the Wider Cenkos Group,
nor any of their respective associates or directors, officers or advisers,
provide any representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward looking statements in this
Announcement will actually occur. Given these risks and uncertainties,
potential investors are cautioned not to place any reliance on these forward
looking statements.
Specifically, statements of estimated cost savings and synergies related to
future actions and circumstances which, by their nature, involve risks,
uncertainties and contingencies. As a result, the cost savings and synergies
referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated.
Other than in accordance with their legal or regulatory obligations, neither
finnCap, Cenkos, the Wider finnCap Group nor the Wider Cenkos Group is under
any obligation, and each such person expressly disclaims any intention or
obligation to update or revise any forward looking statements, whether as a
result of new information, future events or otherwise.
No profit forecasts, estimates or qualified benefits statements
No statement in this Announcement, or incorporated by reference in this
Announcement, is intended as a profit forecast, profit estimate or quantified
benefits statement for any period and no statement in this Announcement should
be interpreted to mean that earnings or earnings per share for Cenkos or
finnCap for the current or future financial years would necessarily match or
exceed the historical published earnings or earnings per share for Cenkos or
for finnCap.
No dividend forecasts
No statement in this Announcement, or incorporated by reference in this
Announcement, is intended as a dividend forecast for any period and no
statement in this Announcement should be interpreted to mean that earnings or
earnings per share for Cenkos or finnCap for the current or future financial
years would necessarily match or exceed the historical published earnings or
earnings per share for Cenkos or for finnCap.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
Publication on website
A copy of this Announcement and the documents required to be published
pursuant to Rule 26.1 of the Takeover Code will be available, free of charge,
subject to certain restrictions relating to persons resident in Restricted
Jurisdictions on Cenkos' website at www.cenkos.com/investors and finnCap's
website at https://announcements.finncap.com/merger/
(https://announcements.finncap.com/merger/) by no later than 12.00 p.m. on
the Business Day following this Announcement. For the avoidance of doubt,
neither the content of Cenkos' website nor finnCap's website is incorporated
into, or forms part of, this Announcement.
Information relating to Cenkos Shareholders
Please be aware that addresses, electronic addresses and certain information
provided by Cenkos Shareholders, persons with information rights and other
relevant persons for the receipt of communications from Cenkos may be provided
to finnCap during the Offer Period as required under Section 4 of Appendix 4
of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code.
Right to receive documents in hard copy form
Any person entitled to receive a copy of documents, announcements and
information relating to the Merger is entitled to receive such documents in
hard copy form free of charge. For persons who receive a copy of this
Announcement in electronic form or via a website notification, a hard copy of
this Announcement will not be sent unless so requested. A person may request
that all future documents, announcements and information in relation to the
Merger are sent to them in hard copy form.
In accordance with Rule 30.3 of the Takeover Code, Cenkos Shareholders,
persons with information rights and participants in Cenkos Share Plans may
request a hard copy of this announcement by contacting, Link Asset Services,
Cenkos' Registrars on 0371 664 0300 (or +44 371 664 0300 if calling from
outside the UK). Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1% or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An Opening Position
Disclosure must contain details of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 pm (London time) on the 10(th) business day following the
commencement of the offer period and, if appropriate, by no later than 3.30 pm
(London time) on the 10(th) business day following the announcement in which
any securities exchange offeror is first identified. Relevant persons who deal
in the relevant securities of the offeree company or of a securities exchange
offeror prior to the deadline for making an Opening Position Disclosure must
instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the offeree
company or of any securities exchange offeror must make a Dealing Disclosure
if the person deals in any relevant securities of the offeree company or of
any securities exchange offeror. A Dealing Disclosure must contain details of
the dealing concerned and of the person's interests and short positions in,
and rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s), save to the
extent that these details have previously been disclosed under Rule 8. A
Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no
later than 3.30 pm (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk (http://www.thetakeoverpanel.org.uk) , including
details of the number of relevant securities in issue, when the offer period
commenced and when any offeror was first identified. You should contact the
Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any
doubt as to whether you are required to make an Opening Position Disclosure or
a Dealing Disclosure.
General
The right to elect, with the consent of the Panel, and subject to the terms of
Co-operation Agreement, to implement the Merger by way of a Takeover Offer as
an alternative to the Scheme, is reserved. In such an event, the Takeover
Offer will be implemented on the same terms or, if finnCap so decides, on such
other terms being no less favourable (subject to appropriate amendments), so
far as applicable, as those which would apply to the Scheme and subject to the
amendment referred to in Appendix 1 to this Announcement. Upon sufficient
acceptances being received in respect of such Takeover Offer, finnCap intends
to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the
Companies Act so as to acquire compulsorily the remaining Cenkos Shares in
respect of which the offer has not been accepted.
If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor or
independent financial adviser duly authorised under FSMA if you are resident
in the United Kingdom or, if not, from another appropriate authorised
independent financial adviser.
Rule 2.9
For the purposes of Rule 2.9 of the Takeover Code, Cenkos confirms that, as at
the Latest Practicable Date, it had in issue 56,694,783 ordinary shares of 1
penny each (with no ordinary shares held in treasury). The International
Securities Identification Number (ISIN) number of the ordinary shares is
GB00B1FLHR07.
For the purposes of Rule 2.9 of the Takeover Code, finnCap confirms that, as
at the Latest Practicable Date, it had in issue 181,094,844 ordinary shares of
1 penny each (with no ordinary shares held in treasury). The International
Securities Identification Number (ISIN) number of the ordinary shares is
GB00BGKPX309.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE MERGER AND NEW FINNCAP SHARES EXCEPT ON THE BASIS
OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE FINNCAP CIRCULAR WHICH ARE
PROPOSED TO BE PUBLISHED IN DUE COURSE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION IN RELATION TO CENKOS SECURITIES
PLC AND FINNCAP GROUP PLC
FOR IMMEDIATE RELEASE
23 March 2023
RECOMMENDED ALL-SHARE MERGER
of
Cenkos SECURITIES PLC
and
finnCap GROUP PLC
to be implemented by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006
1. Introduction
The boards of finnCap Group plc ("finnCap") and Cenkos Securities plc
("Cenkos") are pleased to announce that they have reached agreement on the
terms and conditions of a recommended all-share merger of finnCap and Cenkos
to be implemented by means of a court-sanctioned scheme of arrangement under
Part 26 of the Companies Act (the "Merger").
finnCap and Cenkos are two complementary businesses, established in 2007 and
2004 respectively, by founders with the entrepreneurial, ambitious and dynamic
spirit that has remained with both businesses. The Cenkos Board and the
finnCap Board believe that there is a compelling strategic, strong financial
and cultural rationale for the Merger which will benefit the shareholders,
employees, clients, commercial counterparties and stakeholders of the Combined
Group.
2. The Merger
Under the terms of the Merger, which will be subject to the Conditions and
further terms set out in Appendix 1 to this Announcement and the full terms
and conditions to be set out in the Scheme Document, each Cenkos Shareholder
will be entitled to receive:
for each Cenkos Share: 3.19420647 New finnCap Shares
Based on the Exchange Ratio and the Closing Price of 11.625 pence per
finnCap Share on 22 March 2023 (being the Latest Practicable Date), the Merger
values each Cenkos Share at 37.13 pence, comprising an equity value of Cenkos'
entire issued ordinary share capital as at the Latest Practicable Date of
approximately £21.1 million and finnCap's entire issued ordinary share
capital as the Latest Practicable Date of approximately £21.1 million.
Upon completion of the Merger, Cenkos Shareholders and finnCap Shareholders
will each hold approximately 50% of the entire issued ordinary share capital
of finnCap, whose shares will continue to be traded on AIM.
It is intended that the Merger will be implemented by means of a
Court-sanctioned scheme of arrangement under Part 26 of the Companies Act
(although the right to effect the Merger by way of a Takeover Offer, subject
to the consent of the Panel and the terms of the Co-operation Agreement, is
reserved).
It is expected that the Scheme Document, containing further information about
the Merger and notices of the Court Meeting and the General Meeting, together
with the associated forms of proxy, will be posted to Cenkos Shareholders
during April 2023 (or such later date as Cenkos, finnCap and the Panel agree)
and the Meetings are expected to be held shortly thereafter.
It is expected that the finnCap Circular will be posted to finnCap
Shareholders at a similar time as the Scheme Document is posted to Cenkos
Shareholders, with the finnCap General Meeting being held before the Cenkos
Meetings.
The Scheme will also need to be sanctioned by the Court. Finally, a copy of
the Court Order must be delivered to the Registrar of Companies for
registration, and the Scheme will become Effective upon such delivery.
Taking into account the FCA approval timetable, the Merger is currently
expected to become Effective during the third calendar quarter of 2023,
subject to the satisfaction (or, where applicable, waiver) of the Conditions
and further terms set out in Appendix 1 to this Announcement. An expected
timetable of key events relating to the Merger will be provided in the Scheme
Document.
The New finnCap Shares will be issued credited as fully paid and will rank
pari passu in all respects with the finnCap Shares in issue at the time the
New finnCap Shares are issued pursuant to the Merger, including the right to
receive and retain dividends and other distributions declared, made or paid by
reference to a record date falling after the Effective Date. Application
will be made to the London Stock Exchange for the New finnCap Shares to be
admitted to trading on AIM.
3. Information on Cenkos and current trading
Cenkos acts as a nominated adviser, sponsor, broker and financial adviser to a
range of companies and investment funds, at all stages of their growth and
across all sectors. It concentrates on companies that seek admission of their
shares to trading on AIM or the Main Market of the London Stock Exchange and
companies that are already quoted on those markets. It seeks long-term
relationships with its clients throughout the various stages of their
development, its ethos being to focus on understanding its clients' financing
needs to deliver good outcomes for them.
With over 90 employees, Cenkos provides its range of services from offices in
London and Edinburgh to 100 clients quoted on AIM, the Main Market or other
exchanges. A particular strength of the firm is its ability to raise funds for
clients and complete transactions, even in challenging markets. In 2022,
Cenkos acted on the three largest AIM IPOs by new money raised and was
involved in transactions raising approximately 15% of total monies raised on
AIM during that period.
Current trading
Cenkos reiterates guidance and the outlook provided with its annual report on
10 March 2023.
4. Information on finnCap and current trading
finnCap is a diversified financial advisory firm offering a full range of
services across M&A advice, equity and debt capital raising and related
services to corporate and institutional clients and high net worth investors
including private equity and family offices. It has particular strength in the
technology, life sciences, consumer and business services sectors. finnCap has
global reach through its affiliation with the Oaklins partnership and access
to net zero and carbon economy consultancy through its partnership with
Energise Limited.
finnCap acts as Nominated Adviser and/or broker for 118 retained clients.
In the six months ended 30 September 2022, finnCap advised on a total of 33
transactions with an aggregate deal value of c.£740 million. In particular
it:
(i) raised c.£80 million equity through 10 public
market placings (H1 22: 14 deals; c.£250 million raised);
(ii) advised on 11 private M&A deals with
aggregate value of c.£430 million (H1 22: 13 deals with aggregate value of
c.£1 billion);
(iii) advised on four public company M&A deals
with an aggregate value of c.£75 million (H1 22: four deals with aggregate
value of c.£500 million); and
(iv) completed eight debt financing mandates raising
c.£160 million (H1 22: six deals; c.£250 million raised).
For the year ended 31 March 2022, finnCap had total revenues of £52.5 million
(FY21: £46.6 million) and profit before tax of £8.1 million (FY21: £8.4
million) and for the six months ended 30 September 2022 it had total revenue
of £16.4 million (H1 22: £31.7 million) and recorded a loss before taxation
of £2.6 million (H1 22: profit £6.3 million).
Current trading
finnCap expects revenue in the second half of its financial year to 31 March
2023 to be broadly similar to the first half, and revenue for the financial
year to be approximately £32 million.
ECM deal fees improved in the second half over the first half, with the team
closing a number of fundraising transactions despite a backdrop of muted
activity levels overall. Whilst M&A activity slowed in the second half,
overall revenue and activity have been good.
In the second half, finnCap has also begun to see the benefit of its cost
reduction programme such that finnCap believes its fixed operating expenditure
in the next financial year to 31 March 2024 (on a standalone basis) would be
approximately £28 million.((1)) Non-recurring costs will be higher in the
second half reflecting the costs of an employee restructuring and professional
fees related to the lapsed bid by Panmure Gordon Group Limited.
Revenue trends in ECM improved in the second half and the ECM team has a
pipeline of mandates under execution, but market conditions remain
challenging.
finnCap is working on a number of M&A mandates whilst continuing to build
a pipeline of M&A deals. Similarly to ECM, the frequency of completions
and deal timetables have been impacted in the short term by the reduced
availability and pricing of financing for private equity buyers.
(1) Fixed operating expense = total fixed employee costs and non-people
operating expenses. It excludes any non-recurring items, third party
introductory fees and staff bonuses.
5. Background to and reasons for the Merger
The finnCap Board and the Cenkos Board believe that there is a compelling
strategic, strong financial and cultural rationale for the Merger which will
benefit the shareholders, employees, clients, commercial counterparties and
other stakeholders of the Combined Group.
A combined business with complementary capabilities and greater scale that is
well positioned for future growth and a strong client proposition
The Merger will combine the equity capital market practices of two
complementary businesses. Each firm services a broad mix of corporate and
institutional client constituencies in their respective equity capital market
divisions. finnCap and Cenkos have very few shared corporate clients. The
Merger will enhance and complement finnCap's larger client base by combining
with Cenkos, an institutional stockbroker which has been involved in many of
the largest fundraisings and IPOs by growth companies in recent years.
The Combined Group will have its combined client base at its heart and be
focussed on providing the best possible service to them.
The Merger will give Cenkos' clients access to a wider range of services
including finnCap's private M&A business Cavendish and finnCap's debt and
private capital raising advisory teams which will enhance Cenkos' ability to
provide strategic financial advice to its clients where it already enjoys a
strong reputation for equity capital markets advice and capital raising.
This combination will therefore create a leading provider in fundraising and
advisory services for quoted growth and investment companies, and together
with the wider offering of finnCap across M&A, debt and private growth
capital, will create a leading full-service advisory firm.
The Combined Group has over 210 retained listed or quoted clients companies
across a complementary suite of sectors, and will be able to provide the
combined client base with a greater depth of expertise, transactional capacity
and fundraising strength, and for Cenkos' clients, a wider range of services
and products.
A combined business with a through-the-cycle financial performance that will
underpin shareholder returns, the resources to invest and a stable platform
for growth
Both the finnCap Board and the Cenkos Board are strong believers in and
supporters of the role of the public markets as a compelling source of growth
capital whilst allowing their investors to achieve greater liquidity. The
Combined Group will focus on delivering attractive and consistent shareholder
returns through the economic cycle as detailed in the dividend policy below.
The Combined Group will have scale and greater breadth of clients, with a high
level of recurring revenue and improved operating cost efficiency, which the
Cenkos Board and the finnCap Board believe will allow it to perform strongly
through the stock market cycle. Furthermore, the Combined Group has in excess
of £20 million of combined cash on its balance sheet, which will provide both
financial resilience and a platform to support the future growth of the
Combined Group.
As further described in paragraph 10 below, the Cenkos Board and the finnCap
Board also believe there will be areas of duplicative or inefficient spending
across the Combined Group (as compared to the companies on a standalone basis)
where financial savings can be made following the Effective Date which, if
implemented, would have a beneficial impact on the Combined Group.
The finnCap Board and the Cenkos Board are mindful of the market challenges
faced by the broking sector in recent years and that as this highly fragmented
market is becoming increasingly competitive, scale is becoming increasingly
important. The finnCap Board and the Cenkos Board believe that the consequent
financial pressures faced by many competitors is expected to lead to
consolidation in the short to medium term. The Merger will offer a stable
platform from which the Combined Group can take advantage of disruption
amongst competitors as this consolidation accelerates.
Shared client-centred culture with an entrepreneurial and ambitious mindset
The Combined Group will have, on a combined proforma basis, over 230
colleagues. The finnCap Board and the Cenkos Board believe there is a strong
cultural alignment between two client-centric and ambitious groups, centring
around collegiate respect, teamworking, dynamism and the entrepreneurialism
needed to succeed and to deliver the best results for our clients.
The Merger presents a very robust platform from which to develop the Combined
Group's talent pool through the sharing of best practices, revenue generating
ideas and collaboration. The strengthened financial position of the Combined
Group would also enable further investment in developing and recruiting the
very best talent, at all levels and across divisions, to drive the Combined
Group's growth.
6. Dividends
2022 Dividend
Each Cenkos Shareholder will be entitled to receive and retain the 0.5 pence
cash dividend for each Cenkos Share held on the 2022 Dividend Record Date (the
"2022 Dividend") which was announced on 10 March 2023 and is to be paid in
respect of the financial year ended 31 December 2022, to Cenkos Shareholders
without any reduction in their entitlements under the Exchange Ratio pursuant
to the Scheme. The 2022 Dividend is due to be paid on 22 June 2023 to those
Cenkos Shareholder who are on Cenkos' register of members at close of business
on 26 May 2023 (the "2022 Dividend Record Date").
Interim Dividend
The Cenkos Board intends in due course to declare an interim dividend of 3
pence per Cenkos Share, which is intended to be formally declared after 30
June 2023 and paid before the Effective Date (the "Interim Dividend"). The
timetable relating to the proposed Interim Dividend will be notified in due
course. Holders of Cenkos Shares as at the record date for the Interim
Dividend shall be entitled to receive the Interim Dividend without any
reduction in their entitlements under the Exchange Ratio pursuant to the
Scheme. Further information regarding the Interim Dividend will be notified in
due course. Cenkos Shareholders should be aware that Cenkos reserves the right
to bring forward the declaration, vary or even cancel the Interim Dividend at
any time prior to its payment.
Other dividends
finnCap does not currently expect to pay a final dividend when it announces
results in respect of the financial year ending 31 March 2023.
If either finnCap or Cenkos announces, declares, makes or pays any dividend or
other distribution on or after the date of this Announcement and prior to the
Effective Date, other than the 2022 Dividend and the Interim Dividend, there
will be no change to the Exchange Ratio. Each of finnCap and Cenkos reserves
the right to pay an equalising dividend to their respective shareholders
should any dividend other than the 2022 Dividend or the Interim Dividend be
paid by the other party.
The proposed procedure and timings for declaring and paying the dividends set
out in this Announcement are indicative only and are expected to be set out in
detail in the Scheme Document.
7. Recommendations
The Cenkos Directors, who have been so advised by SPARK Advisory Partners as
to the financial terms of the Merger, consider the terms of the Merger to be
fair and reasonable and in the best interests of the Cenkos Shareholders taken
as a whole. Accordingly, the Cenkos Directors recommend unanimously that
Cenkos Shareholders vote or procure votes to approve the Scheme at the Court
Meeting and to vote or procure votes in favour of the Resolutions to be
proposed at the General Meeting, as they have irrevocably undertaken to do (or
procure to be done) in respect of their own legal and beneficial holdings,
being, in aggregate, 1,587,653 Cenkos Shares representing approximately 2.80
per cent. of the issued share capital of Cenkos as at the Latest Practicable
Date.
In providing their advice to the Cenkos Directors, SPARK Advisory Partners has
taken into account the commercial assessments of the Cenkos Directors. SPARK
Advisory Partners is providing independent financial advice to the Cenkos
Directors for the purposes of Rule 3 of the Takeover Code.
In order to allot and issue the New finnCap Shares, finnCap will be required
to seek the approval of the finnCap Shareholders at the finnCap General
Meeting. The Merger is accordingly conditional on the approval of the finnCap
Shareholders of the issuance of the New finnCap Shares at the finnCap General
Meeting. The finnCap Directors consider the Merger to be in the best interests
of finnCap and the finnCap Shareholders as a whole and intend unanimously to
recommend that finnCap Shareholders vote in favour of the finnCap Resolution
to be proposed at the finnCap General Meeting, as they have irrevocably
undertaken to do (or procure to be done) in respect of their own legal and
beneficial holdings of 10,168,726 finnCap Shares (and those of their close
family members) representing, in aggregate, approximately 5.62 per cent. of
the issued ordinary share capital of finnCap as at the Latest Practicable
Date.
8. Background to and reasons for the
recommendation
The Cenkos Board believes that in taking this proactive step to merge the two
firms, it will create a combined group which will be a true market leader in
advising growth and investment companies. The Combined Group will have the
scale and diversity of operations to be a full-service advisory firm across
equity, debt, and M&A serving the public and private capital markets. As
standalone firms, the Cenkos Board believes it would be difficult for either
of Cenkos or finnCap to achieve this breadth and scale through organic growth
alone. The Merger is made possible through the shared vision, mutual
respect, cultural alignment and complementary nature of the two businesses,
with very little overlap between clients or sector focus.
The Cenkos Board further believes that the enlarged business of the Combined
Group, with over £50 million of proforma combined revenues, in excess of £20
million of combined cash on its balance sheet and the potential cost benefits
of economies of scale, provides the financial stability and business platform
to drive future growth and deliver enhanced returns for its shareholders.
The terms of the Merger allow Cenkos Shareholders to participate fully in
anticipated future value accretion and a potential rerating due to enhanced
scale and business diversity.
9. Irrevocable undertakings and letter of intent
Cenkos Shares
As described in paragraph 7 above, finnCap and Cenkos have received
irrevocable undertakings to vote (or, where applicable, procure voting) in
favour of the Scheme at the Court Meeting and the Resolutions to be proposed
at the General Meeting (or, in the event that the Merger is implemented by a
Takeover Offer, to accept or procure acceptance of such Takeover Offer) from
all of the Cenkos Directors who hold Cenkos Shares, in respect of their own
legal and/or beneficial holdings which are under their control, totalling
1,587,653 Cenkos Shares (representing approximately 2.80 per cent. of the
existing issued ordinary share capital of Cenkos as at the Latest Practicable
Date), as well as any further Cenkos Shares of which they may become the legal
or beneficial holder (as a result of the exercise of options or vesting of
awards under the Cenkos Share Plans). All of the Cenkos Directors support
the Merger, as set out in paragraph 7 above.
The undertakings from Cenkos Directors will cease to be binding if: (i)
finnCap announces, with the consent of the Panel, that it does not intend to
proceed with the Merger and no new, revised or replacement scheme of
arrangement or Takeover Offer is announced by finnCap in accordance with Rule
2.7 of the Takeover Code at the same time; (ii) the Scheme Document is not
dispatched to Cenkos Shareholders within 28 days (or such longer period as may
be agreed between Cenkos, finnCap and the Panel) of this Announcement; (iii)
the Merger lapses or is withdrawn in accordance with its terms and no new,
revised or replacement scheme of arrangement or Takeover Offer is announced by
finnCap by such time; (iv) the Scheme has not become Effective by 5.00 p.m. on
the Long Stop Date or such later time and date as Cenkos and finnCap may agree
with the approval of the Court and/or Panel if required (other than in
circumstances where finnCap has, prior to such date, elected to exercise its
right to proceed by way of a Takeover Offer and announced the same in
accordance with the requirements of paragraph 8 of Appendix 7 to the Takeover
Code, and such Takeover Offer has not lapsed or been withdrawn); and/or (v)
any competing offer for the entire issued and to be issued ordinary share
capital of Cenkos is declared unconditional or, if proceeding by way of a
scheme of arrangement, becomes effective. These undertakings will remain
binding in the event that a higher competing offer for Cenkos is made.
In addition to the irrevocable undertakings given by the Cenkos Directors,
Cenkos Shareholders Jim Durkin, Bridger Limited, Stephen Keys, Sarah Keys and
Michael Johnson have given irrevocable undertakings to finnCap and Cenkos to
vote in favour of the Scheme at the Court Meeting and the Resolutions to be
proposed at the General Meeting (or, in the event that the Merger is
implemented by a Takeover Offer, to accept or procure acceptance of such
Takeover Offer), in each case in respect of their own legal and/or beneficial
holdings (or those Cenkos Shares over which they have control) of Cenkos
Shares, totalling 11,492,897 Cenkos Shares (representing approximately 20.27
per cent. of the existing issued ordinary share capital of Cenkos as at the
Latest Practicable Date) as well as any further Cenkos Shares of which they
may become the legal and/or beneficial holder (as a result of the exercise of
options or vesting of awards under the Cenkos Share Plans).
In addition, finnCap and Cenkos have received a non-binding letter of intent
from Canaccord Genuity Asset Management Limited to procure votes to approve
the Scheme at the Court Meeting and to procure votes in favour of the
Resolutions to be proposed at the General Meeting (or, in the event that the
Merger is implemented by a Takeover Offer, to procure acceptance of such
Takeover Offer). This letter of intent represents 5,500,000 Cenkos Shares
representing approximately 9.70 per cent. of the ordinary share capital of
Cenkos in issue as at the Latest Practicable Date.
finnCap Shares
As described in paragraph 7 above, Cenkos and finnCap have received
irrevocable undertakings to vote or procure votes in favour of the finnCap
Resolution to be proposed at the finnCap General Meeting from all of the
finnCap Directors who hold finnCap Shares, in each case in respect of their
own legal and/or beneficial holdings (and those of their close family members)
(or those finnCap Shares over which they have control) totalling 10,168,726
finnCap Shares (representing approximately 5.62 per cent. of the existing
issued ordinary share capital of finnCap as at the Latest Practicable Date).
All of the finnCap Directors support the Merger, as set out in paragraph 7
above.
The undertakings from finnCap Directors who hold finnCap Shares will cease to
be binding if: (i) finnCap announces, with the consent of the Panel, that it
does not intend to proceed with the Merger and no new, revised or replacement
scheme of arrangement or Takeover Offer is announced by finnCap in accordance
with Rule 2.7 of the Takeover Code at the same time; (ii) the Scheme Document
is not dispatched to Cenkos Shareholders within 28 days (or such longer period
as may be agreed between Cenkos, finnCap and the Panel) of this Announcement;
(iii) the Merger lapses or is withdrawn in accordance with its terms and no
new, revised or replacement scheme of arrangement or Takeover Offer is
announced by finnCap by such time; (iv) the Scheme has not become Effective by
5.00 pm on the Long Stop Date or such later time and date as Cenkos and
finnCap may agree with the approval of the Court and/or Panel if required
(other than in circumstances where finnCap has, prior to such date, elected to
exercise its right to proceed by way of a Takeover Offer and announced the
same in accordance with the requirements of paragraph 8 of Appendix 7 to the
Takeover Code, and such Takeover Offer has not lapsed or been withdrawn); (v)
any competing offer for the entire issued and to be issued ordinary share
capital of Cenkos is declared unconditional or, if proceeding by way of a
scheme of arrangement, becomes effective; and/or (vi) the finnCap Resolution
is duly passed by the requisite majority of finnCap Shareholders at the
finnCap General Meeting.
In addition to the irrevocable undertakings given by the finnCap Directors,
finnCap Shareholders Jon Moulton, Vin Murria, Sam Smith, Lord Leigh, Mark
Tubby, Peter Gray, and Rhys Williams have given irrevocable undertakings to
Cenkos and finnCap to vote or procure votes in favour of the finnCap
Resolution to be proposed at the finnCap General Meeting, in each case in
respect of their own legal and/or beneficial holdings (or those finnCap Shares
over which they have control) of finnCap Shares, totalling 83,860,205 finnCap
Shares (representing approximately 46.31 per cent. of the existing issued
ordinary share capital of finnCap as at the Latest Practicable Date).
In aggregate, Cenkos and finnCap have received irrevocable undertakings to
vote or procure votes in favour of the finnCap Resolution to be proposed at
the finnCap General Meeting in respect of 94,028,931 finnCap Shares,
representing 51.92 per cent. of the issued share capital of finnCap as at the
Latest Practicable Date.
Further details of these irrevocable undertakings, including the circumstances
in which they cease to be binding, are set out in Appendix 3 to this
Announcement.
10. Directors, management, employees, pensions,
research and development and locations
Management, directors, employees and pensions
The Combined Group will endeavour to harness the talent in both companies to
optimise the benefits for clients and shareholders of the Combined Group. The
finnCap Board and the Cenkos Board also recognise that the management and
employees of the Combined Group are its most important assets and the success
of the Combined Group in the future is attributable to their skills, knowledge
and expertise, as it has been to the success of finnCap and Cenkos previously.
The integration of the finnCap and Cenkos businesses will be led by key
finnCap and Cenkos personnel.
The Combined Group will have a culture which is client-centric and values the
relationships developed with clients by front office staff. The Boards of
finnCap and Cenkos believe that employees within the equity capital markets
and stockbroking functions have similar roles and can naturally be merged with
limited post-integration change or disruption.
finnCap and Cenkos have had high level discussions regarding other
opportunities arising from the Merger and identified, at a high level, areas
of cost duplication and other inefficiencies for the Combined Group (as
compared to the companies on a standalone basis). This will be explored
further as part of a comprehensive review following the Effective Date. This
review will consider, in particular but not limited to, the further
integration of systems, operational and administrative areas of the Combined
Group and, as part of this, to identify duplication or overlap in staff roles.
This review will also explore other efficiencies and financial benefits of the
Merger, while being mindful to ensure that the Combined Group has the
appropriate systems and controls in keeping with its greater scale, regulatory
requirements and with best market practice. finnCap recognises in connection
with this that the Combined Group's headcount would likely reduce over a
twelve-month implementation period (and the number of affected individuals
could potentially, depending on the outcome of this review, be material), some
of which would take place via natural attrition, and that rationalisation is
particularly likely within central and support functions across the Combined
Group.
Pending this review, which will only commence after the Effective Date, it is
not possible to detail the steps for and extent of any rationalisation,
however it is an important strategic consideration for Cenkos and finnCap to
retain and reward the best talent across the Combined Group from each
business, without preference or bias. This rationalisation will be subject to
any required consultation with employees and/or their representatives.
Other than as set out above, finnCap and Cenkos are not planning any material
change in the balance of the skills and functions of the employees and
management of the Combined Group taken as a whole.
The Cenkos Board and the finnCap Board have each confirmed that the existing
statutory and contractual employment rights, including accrued pension rights
of all Cenkos or finnCap employees, will be fully safeguarded upon and
following completion of the Merger.
Cenkos operates a defined contribution pension scheme for its employees and
contributes towards a number of personal pension plans set up by its employees
pursuant to the scheme. finnCap's intention for the Combined Group is to
maintain current employer contributions to existing pension arrangements.
Any Cenkos employees who are not participants in such scheme at the Effective
Date will be entitled to join the finnCap pension plan after the Effective
Date on the same basis as existing finnCap employees.
finnCap and Cenkos believe that the benefits of the Merger include the
opportunity to establish new incentive and remuneration policies for existing
and future employees of the Combined Group, based on existing practices,
designed to reward revenue generation and financial performance as well as
non-financial contributions to the success of the Combined Group. It is
intended that a new employee incentive policy and plan will be adopted
following the Effective Date.
The Combined Group will be led by the existing CEOs of finnCap and Cenkos as
co-CEOs. Lisa Gordon will become Chair of the Combined Group Board which will
comprise an equal numbers of finnCap Directors and Cenkos Directors. The
remainder of the Combined Group Board will comprise Ben Procter (CFO), Richard
Snow (COO), Robert Lister (senior independent non-executive director) and an
expected two further independent non-executive directors to be agreed, one of
whom will be nominated by each of Cenkos and finnCap. Individual
appointments to the Combined Group Board will be subject to the approval of
the FCA.
An executive committee with day to day operational responsibility for the
Combined Group (including during the implementation period taking particular
responsibility for overseeing integration), reporting to the Combined Group
Board, will be constituted comprising of the co-CEOs of the Combined Group,
the CFO, COO, Jeremy Osler and Geoff Nash. Separate management committees will
be established following the Effective Date for each of the Combined Group's
principal operating divisions.
Incentivisation Arrangements
finnCap and Cenkos have not entered into, and have not discussed any form of
incentivisation arrangements with members of Cenkos' management team.
Following the Effective Date, the Combined Group may put in place incentive
arrangements, including for certain members of the Cenkos management team
and/or the continuing Cenkos Directors.
As set out above, it is intended that a new employee equity incentive plan
will be adopted for the Combined Group following the Effective Date following
further consultation with the management of Cenkos.
Name, headquarters and locations
The finnCap Board and the Cenkos Board are highly respectful of the value and
heritage attaching to their respective names and brands amongst their clients,
counterparties and employees. The Merger presents an opportunity for the
Combined Group to establish its own identity and, following the Effective
Date, it is intended that a working group will further consider a rebranding
of the Combined Group. In the meantime, the Combined Group will be known as
Cenkos finnCap Group plc, its equity capital markets business will be branded
Cenkos finnCap, and its M&A division as Cavendish.
The Combined Group will be headquartered at the current existing registered
office of finnCap being 1 Bartholomew Close, London EC1A 7BL with all Cenkos'
operations transferring to that address at an appropriate time following the
Effective Date. No change is intended with regard to Cenkos' existing office
in Edinburgh.
Business, assets, research and development
Neither finnCap nor Cenkos has any material research or development function
nor do they intend to create such functions. It is intended that the fixed
assets of Cenkos located at its headquarters in London will be transferred
together with the combination of operations at finnCap's London office, as
described above.
Trading Facilities
finnCap and Cenkos are both currently traded on AIM and, as explained in
paragraph 16 below, finnCap and Cenkos intend to make a request to the London
Stock Exchange to cancel trading of the Cenkos Shares on AIM, with effect from
and shortly following the Effective Date. Cenkos will be re-registered as a
private company following the Effective Date.
Statements
None of the statements in this paragraph 10 is a "post-offer undertaking" for
the purposes of Rule 19.5 of the Takeover Code.
11. Cenkos Share Plans
Participants in the Cenkos Share Plans will be contacted regarding the effect
of the Merger on their rights under the Cenkos Share Plans and, where
required, an appropriate offer or proposal will be made to such participants
which reflects their rights under the Cenkos Share Plans in due course.
Details of any offer or proposal will be set out in the Scheme Document and in
separate letters to be sent to participants in the Cenkos Share Plans. Further
Details of the impact of the Scheme on each of the Cenkos Share Plans will be
set out in the Scheme Document.
The finnCap Board and the Cenkos Board believe the Merger will create a strong
platform for value creation for all stakeholders.
Prior to completion of the Merger, the Remuneration Committee of Cenkos
proposes to grant, on a basis which is materially consistent with past Cenkos
policy and practice of granting discretionary bonus and equity incentive
awards to employees, new awards under the Cenkos Securities Short Term
Incentive Plan (the "STIP") over a total of up to 6,800,000 Cenkos Shares
which are currently held as unallocated shares in the Cenkos employee benefit
trust (the "New STIP Awards"). The New STIP Awards shall not vest in full on
the completion of the Merger but shall be rolled over into finnCap Shares and
will continue to vest in accordance with their original terms. SPARK Advisory
Partners, in its capacity as independent financial adviser to the Cenkos
Directors for the purposes of Rule 3 of the Takeover Code, considers the
proposed New STIP Awards to be fair and reasonable and in the best interests
of the Cenkos Shareholders taken as a whole.
12. Offer-related arrangements
Confidentiality Agreement
On 24 January 2023, Cenkos and finnCap entered into a mutual confidentiality
agreement in relation to the Merger (the "Confidentiality Agreement"),
pursuant to which, amongst other things, each of finnCap and Cenkos gave
certain undertakings to keep, and to procure that certain of their respective
representatives keep, confidential information relating to the other party
and/or to the Merger confidential, to use such information solely for the
agreed purpose in relation to the Merger and not to disclose it to third
parties (subject to certain exceptions). These confidentiality obligations
will remain in force until 24 January 2025.
The Confidentiality Agreement also contains undertakings from each of finnCap
and Cenkos that, for a period of 12 months from the date of the
Confidentiality Agreement, they shall not, without the prior written consent
of the counterparty, approach certain employees or officers of the
counterparty nor employ or otherwise engage certain employees or visit or
inspect any of the counterparty's premises.
Each of finnCap and Cenkos has also agreed to customary standstill
arrangements pursuant to which they agree not to, without the prior written
consent of the counterparty, for a period of 12 months from the date of the
Confidentiality Agreement acquire Cenkos Shares or any interest in Cenkos
Shares (in the case of finnCap) or finnCap Shares or any interest in finnCap
Shares (in the case of Cenkos). These restrictions fall away immediately
following the making of this Announcement.
Co-operation Agreement
On 23 March 2023, finnCap and Cenkos entered into a co-operation agreement in
relation to the Merger (the "Co-operation Agreement"), pursuant to which,
amongst other things: (i) Cenkos and finnCap have agreed to co-operate to
ensure the satisfaction of certain regulatory conditions, and finnCap has
entered into certain commitments in relation to obtaining regulatory
clearances; (ii) finnCap has agreed to provide Cenkos with certain information
for the purposes of the Scheme Document and to otherwise assist with the
preparation of the Scheme Document; (iii) finnCap has agreed to certain
provisions if the Scheme should switch to a Takeover Offer; and (iv) each of
Cenkos and finnCap has agreed to take certain actions to implement certain
proposals in relation to the Cenkos Share Plans.
The Co-operation Agreement will terminate if: (i) the parties agree in writing
prior to the Effective Date that it shall be terminated; or (ii) amongst other
things: (a) the Merger is withdrawn or lapses; (b) (at finnCap's election)
prior to the Long Stop Date any Condition becomes incapable of satisfaction;
(c) (at finnCap's election) the Cenkos Directors withdraw their recommendation
of the Merger; (d) (at finnCap's election) the Cenkos Directors recommend or
intend to recommend a competing proposal; (e) (at either party's election) a
competing proposal completes, becomes effective or is declared unconditional;
or (f) the Scheme does not become Effective in accordance with its terms by
the Long Stop Date.
13. Structure of the Merger
It is intended that the Merger will be implemented by means of a
Court-sanctioned scheme of arrangement between Cenkos and Scheme Shareholders
under Part 26 of the Companies Act (although the right to effect the Merger by
way of a Takeover Offer, subject to the consent of the Panel and the terms of
the Co-operation Agreement, is reserved).
The purpose of the Scheme is to provide for finnCap to become the holder of
the entire issued and to be issued ordinary share capital of Cenkos. This is
to be achieved by the transfer of the Cenkos Shares (other than any Excluded
Shares) to finnCap, in consideration for which the Cenkos Shareholders will
receive the New finnCap Shares on the basis set out in paragraph 2 above.
The Merger is subject to the Conditions and further terms referred to in
Appendix 1 to this Announcement and to the full terms and conditions to be set
out in the Scheme Document, and will only become Effective if, among other
things, the following events occur on or before the Long Stop Date:
(i) a resolution to approve the Scheme is passed
by a majority in number of the Scheme Shareholders present and voting (and
entitled to vote) at the Court Meeting, either in person or by proxy,
representing at least 75 per cent. in value of the Scheme Shares voted by
those Scheme Shareholders;
(ii) the Resolutions required to implement the
Scheme being duly passed by Cenkos Shareholders at the General Meeting
representing at least 75 per cent. of the votes validly cast on such
Resolutions, either in person or by proxy;
(iii) following the Court Meeting and the General
Meeting, the Scheme is sanctioned by the Court (without modification, or with
modification on terms agreed by finnCap and Cenkos); and
(iv) following such sanction, a copy of the Court Order
is delivered to the Registrar of Companies.
The Scheme will lapse if, amongst other things:
(i) the Court Meeting and the General Meeting are
not held on or before the 22nd day after the expected date of such Meetings,
which will be set out in the Scheme Document (or such later date as may be
agreed between finnCap and Cenkos, with the consent of the Panel and, if
required, the Court);
(ii) the Sanction Hearing to approve the Scheme is
not held on or before the 22nd day after the expected date of such hearing,
which will be set out in the Scheme Document (or such later date as may be
agreed between finnCap and Cenkos, with the consent of the Panel and, if
required, the Court); or
(iii) the Scheme does not become Effective on or
before the Long Stop Date,
provided, however, that the deadlines for the Court Meeting, the General
Meeting and the Sanction Hearing as set out above may be waived by finnCap and
the deadline for the Scheme to become Effective may be extended by agreement
between Cenkos and finnCap, with the consent of the Panel and, if required,
the Court.
Once the necessary approvals from Cenkos Shareholders have been obtained and
the other Conditions have been satisfied or (where applicable) waived and the
Scheme has been approved by the Court, the Scheme will become Effective upon
delivery of the Court Order to the Registrar of Companies. Subject to the
satisfaction (or, where applicable, waiver) of the Conditions and the further
terms set out in Appendix 1, the Scheme is expected to become Effective during
the third calendar quarter of 2023.
Upon the Scheme becoming Effective: (i) it will be binding on all Scheme
Shareholders, irrespective of whether or not they attended or voted at the
Court Meeting or the General Meeting (and if they attended and voted, whether
or not they voted in favour); and (ii) entitlements to Cenkos Shares held
within the CREST system will be cancelled and such entitlements
rematerialised; and (iii) share certificates in respect of Cenkos Shares will
cease to be valid. The New finnCap Shares will be allotted and issued to
Cenkos Shareholders no later than 14 days after the Effective Date.
Any Cenkos Shares issued before the Scheme Record Time will be subject to the
terms of the Scheme. The Resolutions to be proposed at the General Meeting
will, amongst other matters, provide that the Articles be amended to
incorporate provisions requiring any Cenkos Shares issued after the Scheme
Record Time (other than to finnCap and/or its nominees) to be automatically
transferred to finnCap and, where applicable, for New finnCap Shares to be
issued as consideration to the transferee or to the original recipient of the
Cenkos Shares so transferred or issued on the same terms as the Merger (other
than terms as to timings and formalities). The provisions of the Articles (as
amended) will avoid any person (other than finnCap and its nominees) holding
shares in the capital of Cenkos after the Effective Date.
The right to elect to implement the Merger by way of a Takeover Offer as an
alternative to the Scheme (subject to the Panel's consent and the terms of the
Co-operation Agreement), is reserved. In such event, the Merger will be
implemented on the same terms (subject to appropriate amendments including
(without limitation) the inclusion of an acceptance condition which, unless
otherwise agreed in writing between finnCap and Cenkos or otherwise required
by the Panel, will be set at 90 per cent. (or such lesser percentage as may be
agreed between Cenkos and finnCap in writing after, to the extent necessary,
consultation with the Panel, being in any case more than 75 per cent. of the
voting rights attaching to the Cenkos Shares) of the shares to which the
Merger relates and those required by, or deemed appropriate by, finnCap under
applicable law, so far as applicable) as those which would apply to the
Scheme. Further, if sufficient acceptances of such Takeover Offer are received
and/or sufficient Cenkos Shares are otherwise acquired, it is the intention of
finnCap to apply the provisions of the Companies Act to acquire compulsorily
any outstanding Cenkos Shares to which such Takeover Offer relates.
Further details of the Scheme, including expected times and dates for each of
the Court Meeting, the General Meeting and the Sanction Hearing, together with
notices of the Meetings and with the associated forms of proxy, will be set
out in the Scheme Document, which will be posted to Cenkos Shareholders within
28 days of this Announcement (or such later date as Cenkos, finnCap and the
Panel agree) and the Meetings are expected to be held shortly after posting.
The General Meeting is expected to be held immediately after the Court
Meeting.
The Scheme will be governed by the laws of England and will be subject to the
jurisdiction of the courts of England and Wales. The Scheme will be subject
to the applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange, the AIM Rules, the FCA and the Registrar of Companies.
finnCap Shareholder Approval
In order to allot and issue the New finnCap Shares, finnCap will be required
to seek the approval of the finnCap Shareholders at the finnCap General
Meeting. finnCap will prepare and send the finnCap Circular to finnCap
Shareholders, which will include a notice convening the finnCap General
Meeting. The Merger is conditional on, among other things, the finnCap
Resolution being passed by the requisite majority of finnCap Shareholders at
the finnCap General Meeting. It is expected that the finnCap Circular will be
posted to finnCap Shareholders at the same time as the Scheme Document is
posted to Cenkos Shareholders, during April 2023.
Indicative Timing
The timing of implementation of the Merger will be dependent upon a number of
factors including availability of the Court and receipt of regulatory
approvals. However, subject to these factors, it is expected that the
posting of the Scheme Document and the finnCap Circular will occur during
April 2023 and that the Scheme will become effective during the third calendar
quarter of 2023.
14. Conditions to the Merger
Appendix 1 to this Announcement sets out the Conditions and further terms to
which the Merger will be subject, including (i) the approval by the FCA of the
change of control in Cenkos in accordance with section 189 of the FSMA; and
(ii) given the importance to each of Cenkos and finnCap of their ability to
operate as Nominated Adviser to AIM companies, the requirement that each of
Cenkos and finnCap maintain their status as Nominated Adviser pursuant to the
AIM Rules for Nominated Advisers for the period ending on the Effective Date.
15. Admission of New finnCap Shares
Application will be made to the London Stock Exchange for the New finnCap
Shares to be admitted to trading on AIM. It is expected that Admission will
become effective and that dealings for normal settlement in the New finnCap
Shares will commence on AIM at 8.00 am on the first Business Day following the
Effective Date.
16. Cancellation of trading of Cenkos Shares on AIM
and re-registration
Before the Scheme becomes Effective, it is intended that applications will be
made to the London Stock Exchange for the cancellation of trading of the
Cenkos Shares on AIM, with effect from or shortly following the Effective
Date. The last day of dealings in, and registration of transfers of, Cenkos
Shares on AIM is expected to be the Business Day immediately prior to the
Effective Date.
On the Effective Date, share certificates in respect of Cenkos Shares will
cease to be valid and entitlements to Cenkos Shares held within the CREST
system will be cancelled. Cenkos Shareholders shall be required to return
share certificates to Cenkos or destroy them following the Effective Date.
It is also proposed that, following the Effective Date and after its shares
are delisted, Cenkos will be re-registered as a private limited company under
the relevant provisions of the Companies Act.
17. Disclosure of Interests in Cenkos securities
As at the Latest Practicable Date, save for the irrevocable undertakings
referred to in paragraph 9 above, neither finnCap, nor any of its directors,
nor, so far as finnCap is aware, any person acting in concert (within the
meaning of the Takeover Code) with any of them for the purposes of the Merger
had:
(i) any interest in or right to subscribe for any
relevant securities of Cenkos;
(ii) any short positions in respect of relevant
securities of Cenkos (whether conditional or absolute and whether in the money
or otherwise), including any short position under a derivative, any agreement
to sell or any delivery obligation or right to require another person to
purchase or take delivery;
(iii) borrowed or lent any relevant securities of
Cenkos (including, for these purposes, any financial collateral arrangements
of the kind referred to in Note 4 on Rule 4.6 of the Takeover Code), save for
any borrowed relevant securities of Cenkos which had been either on-lent or
sold; and/or
(iv) entered into any dealing arrangement of the kind
referred to in Note 11 on the definition of acting in concert in the Takeover
Code.
"interests in securities" for these purposes and within the meaning of the
Takeover Code arise, in summary, when a person has long economic exposure,
whether absolute or conditional, to changes in the price of securities (and a
person who only has a short position in securities is not treated as
interested in those securities). Notwithstanding the above, a person will be
treated as having an 'interest' by virtue of the ownership, voting rights or
control of securities, or by virtue of any agreement to purchase, option in
respect of, or derivative referenced to, securities.
18. Consents
SPARK Advisory Partners has given and not withdrawn its written consent to the
publication of this Announcement with the inclusion of the references to its
name in the form and context in which they appear.
19. General
The Merger will be on the terms and subject to the Conditions set out in
Appendix 1 to this Announcement, and the full terms and conditions will be set
out in the Scheme Document. The bases and sources of certain financial
information contained in this Announcement are set out in Appendix 2 to this
Announcement. A summary of the irrevocable undertakings and letter of intent
given in relation to the Merger is contained in Appendix 3 to this
Announcement. Certain terms and expressions used in this Announcement are
defined in Appendix 4 to this Announcement.
The Scheme Document and the forms of proxy accompanying the Scheme Document
will be sent to Cenkos Shareholders within 28 days of this Announcement (or on
such later date as may be agreed between finnCap and Cenkos, with the consent
of the Panel).
This Announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities. Cenkos Shareholders are advised to read
carefully the Scheme Document and associated forms of proxy once they have
been dispatched.
The availability of New finnCap Shares pursuant to the Merger to Cenkos
Shareholders who are not resident in and citizens of the United Kingdom may be
affected by the laws of the relevant jurisdictions in which they are located
or of which they are citizens. Persons who are not resident in the United
Kingdom should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdictions. Cenkos Shareholders who are in
any doubt regarding such matters should consult an appropriate independent
professional adviser in the relevant jurisdiction without delay.
20. Documents available on website
Copies of the following documents will be available promptly via a link on
Cenkos' website at www.cenkos.com/investors and finnCap's website at
https://announcements.finncap.com/merger/
(https://announcements.finncap.com/merger/) , subject to certain restrictions
relating to persons resident in Restricted Jurisdictions, and in any event by
no later than noon on the Business Day following the date of this Announcement
until the end of the Merger:
(i) a copy of this Announcement;
(ii) the irrevocable undertakings and letter of intent
referred to in paragraph 9 above;
(iii) the Confidentiality Agreement referred to in paragraph
12 above;
(iv) the Co-operation Agreement referred to in paragraph
12 above; and
(v) the written consent letter from SPARK Advisory
Partners as referred to in paragraph 18 above.
The content of the websites referred to in this Announcement is not
incorporated into and does not form part of this Announcement.
Enquiries:
finnCap
Tel:
+44 (0) 20 7220 0500
John Farrugia, Chief Executive Officer
investor.relations@finncap.com
Richard Snow, Chief Financial Officer
Henrik Persson, Strategic PLC Advisory
Cenkos
Tel: +44 (0)207 397 8900
Lisa Gordon, Chair
Julian Morse, Chief Executive Officer
Ben Procter, Chief Financial Officer
Jeremy Osler, Head of Corporate Finance & General Counsel
SPARK Advisory Partners
Tel: +44 (0)203 368 3552
(Financial Adviser and Nominated Adviser to Cenkos)
Matt Davis
Grant Thornton (Nominated Adviser to finnCap)
Tel: +44 (0)20 7383 5100
Philip Secrett/Samantha Harrison/George Grainger
Oberon Capital (Joint Broker to finnCap)
Tel: +44
(0)20 3179 5344
Mike Seabrook
finnCap Ltd (Joint Broker to finnCap)
Tel:
+44 (0)20 7220 0500
Rhys Williams/Tim Redfern
Hudson Sandler (PR Adviser to finnCap)
Dan de Belder
Tel: +44 (0)7977 927142
Rebekah Chapman
Tel: +44 (0)7702 596674
The Nisse Consultancy (PR Adviser to Cenkos)
Tel: +44 (0)7769
688618
Travers Smith LLP is acting as legal adviser to finnCap and Simmons &
Simmons LLP is acting as legal adviser to Cenkos.
Appendix 1
CONDITIONS TO AND FURTHER TERMS OF THE Scheme and the MERGER
PART A: CONDITIONS TO THE SCHEME AND THE MERGER
Long Stop Date
1. The Merger will be conditional upon the Scheme
becoming unconditional and becoming Effective, subject to the provisions of
the Takeover Code, by no later than 11.59 p.m. on the Long Stop Date or such
later date (if any) as finnCap and Cenkos may agree, with the consent of the
Panel, and (if required) the Court may allow.
Scheme approval
2. The Scheme will be conditional upon:
(a)
(i) its approval by a majority in number of the
Scheme Shareholders who are on the register of members of Cenkos (or the
relevant class or classes thereof, if applicable) at the Voting Record Time
and who are, present and voting (and entitled to vote), either in person or by
proxy, at the Court Meeting and at any separate class meeting which may be
required (or at any adjournment of such meeting) and who represent at least 75
per cent. in value of the Scheme Shares voted by those Scheme Shareholders;
and
(ii) such Court Meeting (and any separate class
meeting which may be required) being held on or before the 22(nd) day after
the expected date of the Court Meeting to be set out in the Scheme Document
(or such later date as may be agreed by finnCap and Cenkos, with the consent
of the Panel, and the Court may allow (if required));
(b)
(i) the Resolutions being duly passed by the
requisite majority or majorities of Cenkos Shareholders at the General Meeting
(or at any adjournment of that Meeting); and
(ii) such General Meeting being held on or before
the 22(nd) day after the expected date of such meeting to be set out in the
Scheme Document (or such later date as may be agreed by finnCap and Cenkos
with the consent of the Panel, and the Court may allow (if required)); and
(c)
(i) the sanction of the Scheme by the Court (with
or without modification, but subject to any modification being on terms
acceptable to Cenkos and finnCap) and the delivery of a copy of the Court
Order to the Registrar of Companies; and
(ii) the Sanction Hearing being held on or before
the 22(nd) day after the expected date of such hearing to be set out in the
Scheme Document (or such later date as may be agreed by finnCap and Cenkos
with the consent of the Panel, and the Court may allow (if required)).
Other conditions
In addition, subject as stated in Part B below and to the requirements of the
Panel, finnCap and Cenkos have agreed that the Merger will be conditional upon
the following Conditions and, accordingly, the Court Order will not be
delivered to the Registrar of Companies unless such Conditions (as amended if
appropriate) have been satisfied (and continue to be satisfied pending the
commencement of the Sanction Hearing) or, where relevant, waived:
finnCap Shareholder approval
3. the passing at the finnCap General Meeting (or
at any adjournment thereof) of the finnCap Resolution to authorise the
allotment and issue of New finnCap Shares to Scheme Shareholders (and any
other Cenkos Shareholders whose Cenkos Shares are issued after the Scheme
becomes Effective) by no later than the Long Stop Date;
Admission to trading
4. the London Stock Exchange having acknowledged
to finnCap or its agent (and such acknowledgement not having been withdrawn)
that the New finnCap Shares will be admitted to trading on AIM by no later
than the Long Stop Date;
Regulatory approvals
FCA change in control
5. the FCA:
(a) giving written notice in accordance
with section 189(4)(a) of FSMA of its approval of the acquisition of control
(within the meaning of section 181 of FSMA) in respect of Cenkos; or
(b) being treated as having given such
approval pursuant to section 189(6) of FSMA;
Nominated Adviser Status
6. prior to the Effective Date, the London Stock
Exchange having not removed or suspended the Nominated Adviser status of
either Cenkos or finnCap or imposed any conditions on the ability of either
Cenkos or finnCap to act as Nominated Adviser (including by way of imposing a
moratorium) pursuant to the AIM Rules for Nominated Advisers, unless
successfully appealed prior to the Effective Date;
Anti-trust and regulatory
7. one of the following has occurred:
(i) the CMA having indicated in a
response to a briefing paper that it has no further questions at that stage in
relation to the Merger; and as at the date on which all other Conditions are
satisfied or waived, the CMA has not:
(a) requested submission of a merger notice;
(b) given notice to either party that it is commencing
a Phase I investigation;
(c) indicated that the statutory review period in
which the CMA has to decide whether to make a reference under section 34ZA
Enterprise Act 2002 has begun; or
(d) requested documents or attendance by witnesses
under section 109 of the Enterprise Act 2002 which may indicate that it
intends to commence the aforementioned statutory review period in respect of
the Merger; or
(ii) where the CMA has commenced an
investigation following the submission of a merger notice or a briefing paper,
the CMA:
(a) in accordance with section 33(1) of the Enterprise
Act 2002, announcing that it has decided not to refer the Merger to the chair
of the CMA for the constitution of a group under Schedule 4 to the Enterprise
and Regulatory Reform Act 2013 (a "Referral"); or
(b) in accordance with section 73(2) of the Enterprise
Act 2002, formally accepting undertakings in lieu of a Referral offered by
finnCap, or a modified version of them;
Notifications, waiting periods and Authorisations
8. all notifications, filings or applications
which are necessary or reasonably considered appropriate or desirable by
finnCap having been made in connection with the Merger and all necessary
waiting periods (including any extensions thereof) under any applicable
legislation or regulation of any jurisdiction having expired, lapsed or been
terminated (as appropriate) and all statutory and regulatory obligations in
any jurisdiction having been complied with in each case in respect of the
Merger and its implementation and all Authorisations reasonably necessary or
appropriate for or in respect of the Merger and, except pursuant to Chapter 3
of Part 28 of the Companies Act, the Merger of any shares or other securities
in, or control or management of, Cenkos or any other member of the Wider
Cenkos Group by any member of the Wider finnCap Group having been obtained in
terms and in a form reasonably satisfactory to finnCap from all appropriate
Third Parties or (without prejudice to the generality of the foregoing) from
any person or bodies with whom any member of the Wider Cenkos Group or the
Wider finnCap Group has entered into contractual arrangements and all such
Authorisations necessary, appropriate or desirable to carry on the business of
any member of the Wider Cenkos Group in any jurisdiction having been obtained
and all such Authorisations remaining in full force and effect and filings
necessary for such purpose have been made and at the time at which the Merger
becomes otherwise unconditional and there being no notice or intimation of an
intention to revoke, suspend, restrict, modify or not to renew such
Authorisations;
General antitrust and regulatory
9. no antitrust regulator or Third Party having
given notice of a decision to take, institute, implement or threaten any
action, proceeding, suit, investigation, enquiry or reference (and in each
case, not having withdrawn the same), or having required any action to be
taken or otherwise having done anything, or having enacted, made or proposed
any statute, regulation, decision, order or change to published practice or
having taken any other steps (and in each case, not having withdrawn the same)
and there not continuing to be outstanding any statute, regulation, decision
or order which would or might reasonably be expected to, in any case to an
extent or in a manner which is or would be material in the context of the
Wider Cenkos Group or Wider finnCap Group (as the case may be) taken as a
whole or in the context of the Merger:
(a) require, prevent or materially delay the
divestiture or materially alter the terms envisaged for such divestiture by
any member of the Wider finnCap Group or by any member of the Wider Cenkos
Group of all or any part of its businesses, assets or property or impose any
limitation on the ability of all or any of them to conduct their businesses
(or any part thereof) or to own, control or manage any of their assets or
properties (or any part thereof);
(b) except pursuant to Chapter 3 of Part 28 of
the Companies Act, require any member of the Wider finnCap Group or the Wider
Cenkos Group to acquire or offer to acquire any shares, other securities (or
the equivalent) or interest in any member of the Wider Cenkos Group or any
asset owned by any Third Party (other than in connection with the
implementation of the Merger);
(c) impose any material limitation on, or result
in a material delay in, the ability of any member of the Wider finnCap Group
directly or indirectly to acquire, hold or to exercise effectively all or any
rights of ownership in respect of shares, loans or securities convertible into
shares or any other securities in any member of the Wider Cenkos Group or on
the ability of any member of the Wider Cenkos Group or any member of the Wider
finnCap Group directly or indirectly to hold or exercise effectively all or
any rights of ownership in respect of shares, loans or securities convertible
into shares or any other securities (or the equivalent) in, or to exercise
voting or management control over, any member of the Wider Cenkos Group;
(d) otherwise adversely affect any or all of the
business, assets, profits, financial or trading position or prospects of any
member of the Wider Cenkos Group or any member of the Wider finnCap Group;
(e) result in any member of the Wider Cenkos
Group or any member of the Wider finnCap Group ceasing to be able to carry on
business under any name under which it presently carries on business;
(f) make the Scheme or the Merger, its
implementation or the acquisition of any shares or other securities in, or
control or management of, Cenkos or any member of the Wider Cenkos Group by
any member of the Wider finnCap Group void, unenforceable and/or illegal under
the laws of any relevant jurisdiction, or otherwise, directly or indirectly
prevent or prohibit, restrict, restrain, or delay or otherwise materially
interfere with the implementation of, or impose additional conditions or
obligations with respect to, or otherwise challenge, impede, interfere or
require material amendment of the Scheme and/or the Merger or the acquisition
of any shares or other securities in, or control or management of, Cenkos or
any member of the Wider Cenkos Group by any member of the Wider finnCap Group;
(g) require, prevent or materially delay a
divestiture by any member of the Wider finnCap Group of any shares or other
securities (or the equivalent) in any member of the Wider Cenkos Group or any
member of the Wider finnCap Group;
(h) impose any limitation on the ability of any
member of the Wider finnCap Group or any member of the Wider Cenkos Group to
conduct, integrate or co-ordinate all or any part of its business with all or
any part of the business of any other member of the Wider finnCap Group and/or
the Wider Cenkos Group;
(i) require any member of the Wider Cenkos Group
or the Wider finnCap Group to terminate or vary in any material way any
material contract to which any member of the Wider Cenkos Group or the Wider
finnCap Group is a party;
(j) require any member of the Wider finnCap Group
or any member of the Wider Cenkos Group or any of their respective affiliates
to: (i) invest, contribute or loan any capital or assets to; or (ii) guarantee
or pledge capital assets for the benefit of any member of the Wider finnCap
Group or any member of the Wider Cenkos Group; or
(k) otherwise materially adversely affect any
or all of the business, assets, profits or prospects of any member of the
Wider Cenkos Group or any member of the Wider finnCap Group,
and all applicable waiting and other time periods (including any extensions
thereof) during which any such antitrust regulator or Third Party could decide
to take, institute, implement or threaten any such action, proceeding, suit,
investigation, enquiry or reference or take any other step under the laws of
any jurisdiction in respect of the Merger or the acquisition of any Cenkos
Shares or otherwise intervene having expired, lapsed or been terminated;
Certain matters arising as a result of any arrangement, agreement, etc.
10. except as Disclosed, there being no provision of
any arrangement, agreement, lease, licence, franchise, permit or other
instrument to which any member of the Wider Cenkos Group or any member of the
Wider finnCap Group is a party or by or to which any such member or any of its
assets is or may be bound, entitled or subject to or any event or circumstance
which, as a consequence of the Merger or the proposed acquisition or the
acquisition by any member of the Wider finnCap Group or any member of the
Wider Cenkos Group of any shares or other securities (or the equivalent) in
Cenkos or finnCap or because of a change in the control or management of any
member of the Wider Cenkos Group or any member of the Wider finnCap Group or
otherwise, would or might reasonably be expect to result in, in each case to
an extent which is material in the context of the Wider Cenkos Group or the
Wider finnCap Group as a whole:
(a) any monies borrowed by, or any other
indebtedness or liabilities, actual or contingent, of, or any grant available
to, any member of the Wider Cenkos Group or any member of the Wider finnCap
Group being or becoming repayable, or capable of being declared repayable,
immediately or before its or their stated maturity date or repayment date, or
the ability of any such member to borrow monies or incur any indebtedness
being withdrawn or inhibited or being capable of becoming or being withdrawn
or inhibited;
(b) save in the ordinary course of business,
the creation or enforcement of any mortgage, charge or other security interest
over the whole or any part of the business, property, assets or interests of
any member of the Wider Cenkos Group or any member of the Wider finnCap Group
or any such mortgage, charge or other security interest (whenever created,
arising or having arisen) being enforced or becoming enforceable;
(c) any such arrangement, agreement, lease,
licence, franchise, permit or other instrument being terminated or becoming
capable of being terminated or adversely modified or the rights, liabilities,
obligations or interests of any member of the Wider Cenkos Group or any member
of the Wider finnCap Group being terminated or adversely modified or affected
or any obligation or liability arising or any adverse action being taken or
arising thereunder;
(d) any liability of any member of the Wider
Cenkos Group or any member of the Wider finnCap Group to make any severance,
termination, bonus or other payment to any of its directors, or other
officers;
(e) the rights, liabilities, obligations,
interests or business of any member of the Wider Cenkos Group or any member of
the Wider finnCap Group under any such arrangement, agreement, licence,
permit, lease or instrument or the interests or business of any member of the
Wider Cenkos Group or any member of the Wider finnCap Group in or with any
other person or body or firm or company (or any arrangement or agreement
relating to any such interests or business) being or becoming capable of being
terminated, or adversely modified or affected or any onerous obligation or
liability arising or any adverse action being taken thereunder;
(f) any member of the Wider Cenkos Group or
any member of the Wider finnCap Group ceasing to be able to carry on business
under any name under which it presently carries on business;
(g) the business, assets, profits, value of,
or the financial or trading position or prospects of, any member of the Wider
Cenkos Group or any member of the Wider finnCap Group being prejudiced or
adversely affected; or
(h) the creation or acceleration of any
material liability (actual or contingent) by any member of the Wider Cenkos
Group or any member of the Wider finnCap Group other than trade creditors or
other liabilities incurred in the ordinary course of business or in connection
with the Merger,
and, except as Disclosed, no event having occurred which, under any provision
of any arrangement, agreement, licence, permit, franchise, lease or other
instrument to which any member of the Wider Cenkos Group or any member of the
Wider finnCap Group is a party or by or to which any such member or any of
its assets are bound, entitled or subject, would or might result in any of the
events or circumstances as are referred to in Conditions 10(a) to (h);
Certain events occurring since 31 December 2022
11. Except as Disclosed, no member of the Wider Cenkos
Group having since 31 December 2022 and no member of the Wider finnCap Group
having since 30 September 2022:
(a) issued or agreed to issue or authorised or
proposed or announced its intention to authorise or propose the issue, of
additional shares of any class, or securities or securities convertible into,
or exchangeable for, or rights, warrants or options to subscribe for or
acquire, any such shares, securities or convertible securities or transferred
or sold or agreed to transfer or sell or authorised or proposed the transfer
or sale of Cenkos Shares or finnCap Shares out of treasury (except, where
relevant (i) as between Cenkos and wholly-owned subsidiaries of Cenkos or
between the wholly-owned subsidiaries of Cenkos; and (ii) as between finnCap
and wholly-owned subsidiaries of finnCap or between the wholly-owned
subsidiaries of finnCap, and except for (i) the issue or transfer out of
treasury of Cenkos Shares on the grant of restricted share awards, the
exercise of employee share options and/or the vesting of employee share awards
in the ordinary course under the Cenkos Share Plans); or the issue or transfer
out of treasury of finnCap Shares on the exercise of employee share options or
vesting of employee share awards in the ordinary course under the finnCap
Share Plans);
(b) except for the 2022 Dividend or the
Interim Dividend, recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus issue, dividend or other
distribution (whether payable in cash or otherwise) other than dividends (or
other distributions whether payable in cash or otherwise) lawfully paid or
made by: (i) any wholly-owned subsidiary of Cenkos to Cenkos or any of its
wholly-owned subsidiaries; or (ii) any wholly-owned subsidiary of finnCap to
finnCap or any of its wholly-owned subsidiaries;
(c) other than pursuant to the Merger (and except
for: (i) transactions between Cenkos and its wholly-owned subsidiaries or
between the wholly-owned subsidiaries of Cenkos; (ii) transactions between
finnCap and its wholly-owned subsidiaries or between the wholly-owned
subsidiaries of finnCap; and (iii) transactions in the ordinary course of
business) implemented, effected, authorised or proposed or announced its
intention to implement, effect, authorise or propose any merger, demerger,
reconstruction, amalgamation, scheme, commitment or offer or disposal of
assets or shares or loan capital (or the equivalent thereof), in each case to
an extent which is material in the context of the Wider Cenkos Group or the
Wider finnCap Group taken as a whole;
(d) except for: (i) transactions between
Cenkos and its wholly-owned subsidiaries or between the wholly-owned
subsidiaries of Cenkos; (ii) transactions between finnCap and its wholly-owned
subsidiaries or between the wholly-owned subsidiaries of finnCap; and (iii)
transactions in the ordinary course of business, disposed of, or transferred,
mortgaged or created any security interest over any material asset or any
right, title or interest in any asset or authorised, proposed or announced any
intention to do so, in each case to an extent which is material in the context
of the Wider Cenkos Group or the Wider finnCap Group taken as a whole;
(e) (except for: (i) transactions between
Cenkos and its wholly-owned subsidiaries or between the wholly-owned
subsidiaries of Cenkos; and (ii) transactions between finnCap and its
wholly-owned subsidiaries or between the wholly-owned subsidiaries of
finnCap), issued, authorised or proposed or announced an intention to
authorise or propose, the issue of or made any change in or to the terms of
any debentures or become subject to any contingent liability or incurred or
increased any indebtedness which is material in the context of the Wider
Cenkos Group taken as a whole or is material in the context of the Merger), in
each case to an extent which is material in the context of the Wider Cenkos
Group or Wider finnCap Group taken as a whole or in the context of the Merger;
(f) entered into or varied or authorised,
proposed or announced its intention to enter into or vary any contract,
arrangement, agreement, transaction or commitment (whether in respect of
capital expenditure or otherwise) which is of a long term, unusual or onerous
nature or magnitude or which is or which involves or could involve an
obligation of a nature or magnitude which is or could be materially
restrictive on the business of any member of the Wider Cenkos Group or any
member of the Wider finnCap Group to an extent which is or is reasonably
likely to be material to the Wider Cenkos Group or the Wider finnCap Group,
taken as a whole;
(g) entered into or varied the terms of, or
made any offer (which remains open for acceptance) to enter into or vary the
terms of any contract, service agreement, commitment or arrangement with any
director except for salary increases, bonuses or variations of terms in the
ordinary course, or senior executive of any member of the Wider Cenkos Group
or any member of the Wider finnCap Group;
(h) proposed, agreed to provide or modified the
terms of any share option scheme, incentive scheme or other benefit relating
to the employment or termination of employment of any employee of the Wider
Cenkos Group or the Wider finnCap Group which are material in the context of
the Wider Cenkos Group or the Wider finnCap Group taken as a whole;
(i) purchased, redeemed or repaid or
announced any proposal to purchase, redeem or repay any of its own shares or
other securities or reduced or, except in respect of the matters mentioned in
sub-paragraph (a) above, made any other change to any part of its share
capital;
(j) except in the ordinary course of
business, waived, compromised or settled any claim which is material in the
context of the Wider Cenkos Group or the Wider finnCap Group taken as a whole
or in the context of the Merger;
(k) terminated or varied the terms of any
agreement or arrangement between any member of the Wider Cenkos Group or the
Wider finnCap Group and any other person in a manner which would or might
reasonably be expected to have a material adverse effect on the financial
position of the Wider Cenkos Group or the Wider finnCap Group taken as a
whole;
(l) (except as disclosed on publicly
available registers) made any alteration to its memorandum or articles of
association or other constitutional documents (other than in connection with
the Scheme) which is material in the context of the Merger;
(m) except in relation to changes made or
agreed as a result of, or arising from, changes to legislation, made or agreed
or consented, in each case to an extent which is material in the context of
the Wider Cenkos Group or the Wider finnCap Group taken as a whole or in the
context of the Merger, to any change to:
(i) the terms of the trust deeds and rules
constituting the pension scheme(s) established by any member of the Wider
Cenkos Group for its directors, employees or their dependants;
(ii) the contributions payable to any such scheme(s)
or to the benefits which accrue, or to the pensions which are payable,
thereunder;
(iii) the basis on which qualification for, or accrual
or entitlement to, such benefits or pensions are calculated or determined; or
(iv) the basis upon which the liabilities (including
pensions) of such pension schemes are funded, valued, made, agreed or
consented to;
(n) been unable, or admitted in writing that
it is unable, to pay its debts or commenced negotiations with one or more of
its creditors with a view to rescheduling or restructuring any of its
indebtedness, or having stopped or suspended (or threatened to stop or
suspend) payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business which is material in the
context of the Wider Cenkos Group or the Wider finnCap Group taken as a whole
or in the context of the Merger;
(o) taken or proposed any steps, corporate
action or had any legal proceedings instituted or threatened against it in
relation to the suspension of payments, a moratorium of any indebtedness, its
winding-up (voluntary or otherwise), dissolution, reorganisation or for the
appointment of a receiver, administrator, manager, administrative receiver,
trustee or similar officer of all or any of its assets or revenues or any
analogous or equivalent steps or proceedings in any jurisdiction or appointed
any analogous person in any jurisdiction or had any such person appointed;
(p) (except for transactions between
Cenkos or finnCap and its wholly-owned subsidiaries or between the
wholly-owned subsidiaries), made, authorised, proposed or announced an
intention to propose any change in its loan capital;
(q) entered into, implemented or authorised
the entry into, any joint venture, asset or profit sharing arrangement,
partnership, composition, assignment, reconstruction, amalgamation,
commitment, scheme or other similar transaction or arrangement (other than the
Scheme) which is material in the context of the Wider Cenkos Group or the
Wider finnCap Group taken as a whole or in the context of the Merger;
(r) having taken (or agreed or proposed to
take) any action which requires or would require, the consent of the Panel or
the approval of Cenkos Shareholders in general meeting in accordance with, or
as contemplated by, Rule 21.1 of the Takeover Code; or
(s) entered into any agreement,
arrangement, commitment or contract or passed any resolution or made any offer
(which remains open for acceptance) with respect to or announced an intention
to, or to propose to, effect any of the transactions, matters or events
referred to in this Condition 11 which is material in the context of the Wider
Cenkos Group or the Wider finnCap Group taken as a whole or in the context of
the Merger;
No adverse change, litigation, regulatory enquiry or similar
12. except as Disclosed, since 31 December 2022 in
respect of Cenkos and since 30 September 2022 in respect of finnCap, there
having been:
(a) no adverse change and no circumstance
having arisen which would be expected to result in any adverse change or
deterioration in, the business, assets, value, financial or trading position
or profits or prospects or operational performance of any member of the Wider
Cenkos Group or any member of the Wider finnCap Group which is material in the
context of the Wider Cenkos Group or the Wider finnCap Group taken as a whole
or is material in the context of the Merger;
(b) no litigation, arbitration proceedings,
prosecution or other legal proceedings having been threatened, announced or
instituted by or against or remaining outstanding against or in respect of,
any member of the Wider Cenkos Group or any member of the Wider finnCap Group
or to which any member of the Wider Cenkos Group or any member of the Wider
finnCap Group is or may become a party (whether as claimant, defendant or
otherwise) having been threatened, announced, instituted or remaining
outstanding by, against or in respect of, any member of the Wider Cenkos Group
or any member of the Wider finnCap Group, in each case which is or might
reasonably be expected to be material in the context of the Wider Cenkos Group
or the Wider finnCap Group taken as a whole or is material in the context of
the Merger;
(c) no enquiry, review or investigation by, or
complaint or reference to, any Third Party against or in respect of any member
of the Wider Cenkos Group or any member of the Wider finnCap Group having been
threatened, announced or instituted or remaining outstanding by, against or in
respect of any member of the Wider Cenkos Group or any member of the Wider
finnCap Group, in each case which might reasonably be expected to have a
material adverse effect on the Wider Cenkos Group or the Wider finnCap Group
taken as a whole or is material in the context of the Merger;
(d) no contingent or other liability having
arisen or become apparent to finnCap or Cenkos increased which is reasonably
likely to affect adversely the business, assets, financial or trading position
or profits or prospects or operational performance of any member of the Wider
Cenkos Group or the Wider finnCap Group to an extent which is material in the
context of the Wider Cenkos Group or the Wider finnCap Group taken as a whole
or is material in the context of the Merger;
(e) no steps having been taken and no omissions
having been made which are reasonably likely to result in the withdrawal,
cancellation, termination or modification of any licence held by any member of
the Wider Cenkos Group or any member of the Wider finnCap Group which is
necessary for the proper carrying on of its business and the withdrawal,
cancellation, termination or modification of which might reasonably be
expected to have a material adverse effect on the Wider Cenkos Group or the
Wider finnCap Group taken as a whole or is material in the context of the
Merger; and
(f) no member of the Wider Cenkos Group and no
member of the Wider finnCap Group having conducted its business in material
breach of any applicable laws or regulations to an extent which might
reasonably be expected to have a material adverse effect on the Wider Cenkos
Group or the Wider finnCap Group taken as a whole or is material in the
context of the Merger;
No discovery of certain matters regarding information or liabilities
13. except as Disclosed, neither finnCap nor Cenkos
having discovered that:
(a) any financial, business or other
information concerning the Wider Cenkos Group or the Wider finnCap Group
publicly announced before the date of this Announcement or disclosed at any
time: (i) to any member of the Wider finnCap Group by or on behalf of any
member of the Wider Cenkos Group; or (ii) to any member of the Wider Cenkos
Group by or on behalf of any member of the Wider finnCap Group, before the
date of this Announcement is misleading, contains a misrepresentation of any
fact, or omits to state a fact necessary to make that information not
misleading and which is, in any case, material in the context of the Wider
Cenkos Group or the Wider finnCap Group taken as a whole in the context of the
Merger;
(b) any member of the Wider Cenkos Group or
any member of the Wider finnCap Group is subject to any liability, contingent
or otherwise which is material in the context of the Wider Cenkos Group or the
Wider finnCap Group taken as a whole or material in the context of the Merger;
Anti-corruption, sanctions and criminal property
14. except as Disclosed, neither finnCap nor Cenkos
having discovered that, to an extent that is material in the context of the
Wider Cenkos Group or Wider finnCap Group taken as a whole:
(a) (i) any past or present member of the Wider
Cenkos Group or any member of the Wider finnCap Group is or has at any time
engaged in any activity, practice or conduct would constitute an offence under
the Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977, as
amended, or any other applicable anti-corruption legislation; or (ii) any
person that performs or has performed services for or on behalf of the Wider
Cenkos Group or the Wider finnCap Group is or has at any time engaged in any
activity, practice or conduct in connection with the performance of such
services which would constitute an offence under the Bribery Act 2010, the US
Foreign Corrupt Practices Act of 1977, as amended, or any other applicable
anti-corruption legislation;
(a) any asset of any member of the Wider
Cenkos Group or any member of the Wider finnCap Group constitutes criminal
property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but
disregarding paragraph (b) of that definition) or proceeds of crime under any
other applicable law, rule, or regulation concerning money laundering or
proceeds of crime or any member of the Wider Cenkos Group or any member of
Wider finnCap Group is found to have engaged in activities constituting money
laundering under any applicable law, rule, or regulation concerning money
laundering;
(b) any past or present member, director,
officer or employee of the Wider Cenkos Group or the Wider finnCap Group, or
any other person for whom any such person may be liable or responsible, has
engaged in any business with, made any investments in, made any funds or
assets available to or received any funds or assets from: (i) any government,
entity or individual in respect of which US, UK or European Union persons, or
persons operating in those territories, are prohibited from engaging in
activities or doing business, or from receiving or making available funds or
economic resources, by applicable US, UK or European Union laws or
regulations, including the economic sanctions administered by the United
States Office of Foreign Assets Control or HM Treasury & Customs; or (ii)
any government, entity or individual targeted by any of the economic sanctions
of the United Nations, the United States, the United Kingdom, the European
Union or any of its member states; or
(c) a member of the Wider Cenkos Group or of
the Wider finnCap Group has engaged in any transaction or conduct which would
cause any member of the Wider finnCap Group or of the Wider Cenkos Group to be
in breach of any applicable law or regulation upon completion of the Merger,
including the economic sanctions of the United States Office of Foreign Assets
Control or HM Treasury & Customs, or any government, entity or individual
targeted by any of the economic sanctions of the United Nations, the United
States, the United Kingdom, the European Union or any of its member states.
PART B: FURTHER TERMS OF THE MERGER
1. Conditions 2(a), 2(b) and 3 to 14 (inclusive)
of Part A above must each be fulfilled, determined by finnCap or Cenkos (as
applicable) to be or to remain satisfied or (if capable of waiver) be waived
by finnCap or Cenkos (as applicable) prior to the commencement of the Sanction
Hearing, failing which the Scheme will, with the consent of the Panel, lapse.
2. Notwithstanding paragraph 1 of this Part B,
subject to the requirements of the Panel and the Takeover Code, finnCap
reserves the right in its sole discretion to waive:
(a) the deadline set out in Condition 1 of Part
A above, and any deadlines set out in Condition 2 of Part A above for the
timing of the Court Meeting, the General Meeting and the Sanction Hearing.
If any such deadline is not met, finnCap shall make an announcement by 8.00
a.m. on the Business Day following such deadline confirming whether it has
invoked or waived the relevant Condition or agreed with Cenkos to extend the
deadline in relation to the relevant Condition; and
(b) in whole or in part, all or any of
Conditions 8 to 14 (inclusive) of Part A above (only so far as such Conditions
relate to Cenkos, the Wider Cenkos Group or any part thereof).
3. Notwithstanding paragraph 1 of this Part B,
subject to the requirements of the Panel and the Takeover Code, Cenkos
reserves the right in its sole discretion to waive:
(a) the deadline set out in Condition 3 of Part
A above. If such deadline is not met, Cenkos shall make an announcement by
8.00 a.m. on the Business Day following such deadline confirming whether it
has invoked the relevant Condition or agreed with finnCap to extend the
deadline in relation to the relevant Condition; and
(b) in whole or in part, all or any of the
Conditions 8 to 14 (inclusive) of Part A above (only so far as such Conditions
relate to finnCap, the Wider finnCap Group or any part thereof):
4. Save as set out in paragraphs 2 and 3 in this
Part B, the Conditions in paragraphs 1 to 3 in Part A above cannot be waived.
5. Neither Cenkos nor finnCap shall be under any
obligation to waive or treat as satisfied any of the Conditions that it is
entitled (with the consent of the Panel and subject to the requirements of the
Takeover Code) to invoke, by a date earlier than the latest date specified
above for the fulfilment or waiver thereof, notwithstanding that the other
Conditions may at such earlier date have been waived or fulfilled and that
there are at such earlier date no circumstances indicating that any of such
Conditions may not be capable of fulfilment.
6. If finnCap is required by the Panel to make an
offer for Cenkos Shares under the provisions of Rule 9 of the Takeover Code,
finnCap may make such alterations to any of the above Conditions and terms of
the Merger as are necessary to comply with the provisions of that Rule.
7. Under Rule 13.5(a) of the Takeover Code,
finnCap may only invoke a Condition that is subject to Rule 13.5(a) of the
Takeover Code so as to cause the Merger not to proceed, to lapse or to be
withdrawn with the consent of the Panel.
8. Under Rule 13.6(a) of the Takeover Code, Cenkos
may only invoke a Condition that is subject to Rule 13.6(a) of the Takeover
Code so as to cause the Merger not to proceed, to lapse or to be withdrawn
with the consent of the Panel.
9. The Panel will normally only give its consent
to the invocation of Conditions pursuant to paragraphs 7 and 8 if the
circumstances which give rise to the right to invoke the Condition are of
material significance to finnCap or Cenkos (as applicable) in the context of
the Merger. This will be judged by reference to the facts of each case at
the time that the relevant circumstances arise. Conditions 1, 2(a), 2(b) and
2(c) of Part A above and, if applicable, any acceptance condition if the
Merger is implemented by means of a Takeover Offer, are not subject to Rule
13.5(a) of the Takeover Code.
10. Any Condition that is subject to Rule 13.5(a) of
the Takeover Code may be waived by finnCap.
11. Fractions of New finnCap Shares will not be
allotted or issued to persons accepting the Scheme.
12. The New finnCap Shares to be issued pursuant to
the Merger have not been and will not be registered under the United States
Securities Act of 1933 (as amended) nor under any of the relevant securities
laws of any Restricted Jurisdiction. Accordingly, the New finnCap Shares may
not be offered, sold or delivered, directly or indirectly, into any Restricted
Jurisdiction, except pursuant to exemptions from applicable requirements of
any such jurisdiction.
13. The New finnCap Shares will be issued credited as
fully paid and will rank pari passu in all respects with finnCap Shares in
issue at the time that the New finnCap Shares are issued pursuant to the
Merger, including the right to receive and retain dividends and other
distributions declared, made or paid by reference to a record date falling on
or after the Effective Date. An application will be made to the London Stock
Exchange for the New finnCap Shares to be admitted to trading on AIM.
14. finnCap reserves the right to elect to implement
the Merger by way of a Takeover Offer as an alternative to the Scheme (subject
to the Panel's consent and the terms of the Co-operation Agreement). In such
event, the Merger will be implemented on the same terms (subject to
appropriate amendments including (without limitation) the inclusion of an
acceptance condition which, unless otherwise agreed in writing between finnCap
and Cenkos or otherwise required by the Panel, will be set at 90 per cent. (or
such lesser percentage as may be agreed between finnCap and Cenkos in writing
after, to the extent necessary, consultation with the Panel, being in any case
more than 75 per cent. of the voting rights attaching to Cenkos Shares) of
shares to which the Merger relates and those required by, or deemed
appropriate by, finnCap under applicable law, so far as applicable) as those
which would apply to the Scheme. Further, if sufficient acceptances of such
Takeover Offer are received and/or sufficient Cenkos Shares are otherwise
acquired, it is the intention of finnCap to apply the provisions of the
Companies Act to acquire compulsorily any outstanding Cenkos Shares to which
such Takeover Offer relates.
15. The Cenkos Shares to be acquired pursuant to the
Merger will be acquired with full title guarantee, fully paid and free from
all liens, equities, charges, encumbrances, options, rights of pre-emption and
any other third party rights and interests of any nature and together with all
rights now or hereafter attaching or accruing to them, including, without
limitation, voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, made or paid, or any
other return of value (whether by reduction of share capital or share premium
account or otherwise) made, on or after the Effective Date other than in
respect of the 2022 Dividend and the Interim Dividend.
16. If either finnCap or Cenkos announces, declares,
makes or pays any dividend or other distribution on or after the date of this
Announcement and prior to the Effective Date, including each of the 2022
Dividend and the Interim Dividend, there will be no change to the Exchange
Ratio. Each of finnCap and Cenkos reserves the right to pay an equalising
dividend to their respective shareholders should any dividend other than the
2022 Dividend or the Interim Dividend be paid by the other party.
17. The availability of New finnCap Shares pursuant to
the Merger to persons not resident in the United Kingdom may be affected by
the laws of the relevant jurisdictions. Any person who is subject to the
laws of any jurisdiction other than the United Kingdom should inform
themselves about and observe any applicable requirements. Further
information in relation to Overseas Shareholders will be contained in the
Scheme Document.
18. The Merger is not being made or implemented,
directly or indirectly, in, into or from, or by use of the mails of, or by any
means of instrumentality (including, but not limited to, facsimile, e-mail or
other electronic transmission, telex or telephone) of interstate or foreign
commerce of, or of any facility of a national, state or other securities
exchange of, any Restricted Jurisdiction.
19. The Scheme will be governed by the laws of England
and will be subject to the jurisdiction of the courts of England and Wales and
to the Conditions and further terms set out in this Appendix 1. The Scheme
will be subject to the applicable requirements of the Takeover Code, the
Panel, the London Stock Exchange, the AIM Rules, the FCA and the Registrar of
Companies.
20. Each of the Conditions will be regarded as a
separate Condition and will not be limited by reference to any other
Condition.
Appendix 2
SOURCES OF INFORMATION AND BASES OF CALCULATION
In this Announcement, unless otherwise stated or the context otherwise
requires, the following sources and bases have been used:
1. The "Latest Practicable Date" for the purposes
of this Announcement means close of business on 22 March 2023 (being the last
Business Day before the date of this Announcement).
2. The equity value of Cenkos' entire issued and
to be issued ordinary share capital has been calculated on the basis of
56,694,783 Cenkos Shares, being the number of Cenkos Shares in issue as at the
Latest Practicable Date, and references in this Announcement to the "entire
issued and to be issued ordinary share capital of Cenkos" are each based on
such number of Cenkos Shares.
3. As at the Latest Practicable Date, 12,219,978
Cenkos Shares are held by Cenkos Securities EBT and the Cenkos Employee
Benefit Trust which are expected to be used to satisfy the exercise of options
and vesting of awards under the Cenkos Share Plans.
4. Based on the proposals for the Cenkos Share
Plans set out in this Announcement, Cenkos expects that no Cenkos Shares would
be required to be issued on or after the date of this Announcement to satisfy
in full the awards granted or agreed to be granted under the Cenkos Share
Plans.
5. The equity value of finnCap's entire issued
ordinary share capital has been calculated on the basis of 181,094,844 finnCap
Shares, being the number of finnCap Shares in issue as at the Latest
Practicable Date.
6. finnCap:
(a) as at the Latest Practicable Date, has
outstanding option and/or incentive awards under the finnCap Share Plans in
respect of in aggregate 23,313,660 finnCap Shares; and
(b) intends to grant new option and/or
incentive awards under the finnCap Share Plans following the date of this
Announcement and prior to the Effective Date in respect of in aggregate
12,065,000 finnCap Shares.
7. As at the Latest Practicable Date, 11,165,597
finnCap Shares are held by the finnCap Group Employee Benefit Trust which are
expected to be used to part-satisfy the exercise of options and vesting of
awards described in paragraph 6 above.
8. As at the Latest Practicable Date, neither
Cenkos nor finnCap holds any ordinary shares in treasury.
9. The enlarged issued ordinary share capital of
the Combined Group (being 362,189,687 finnCap Shares) has been calculated on
the basis of:
(a) 181,094,844 finnCap Shares (as
referred to in paragraph 5 above); and
(b) 181,094,843 New finnCap Shares which
would be issued under the terms of the Merger,
and references in this Announcement to the "entire issued ordinary share
capital of the Combined Group" are each based on such number of finnCap Shares
including for the purposes of calculating the aggregate holdings of Cenkos
Shareholders in the entire issued ordinary share capital of the Combined Group
following completion of the Merger as described in paragraph 10 below.
10. The percentage of the enlarged issued ordinary
share capital of the Combined Group that will be owned by Cenkos Shareholders
following completion of the Merger is calculated by dividing the number of New
finnCap Shares to be issued pursuant to the terms of the Merger referred to in
paragraph 9 by the enlarged issued share capital of the Combined Group (as set
out in paragraph 9 above) and multiplying the resulting amount by 100 to
produce a percentage.
11. The percentage of the enlarged issued ordinary
share capital of the Combined Group that will be owned by the existing finnCap
Shareholders following completion of the Merger is calculated by dividing the
number that is equal to the enlarged issued share capital of the Combined
Group (as set out in paragraph 5 above) less the New finnCap Shares to be
issued pursuant to the terms of the Merger by the enlarged issued share
capital of the Combined Group and multiplying the resulting amount by 100 to
produce a percentage.
12. The Closing Price on any particular date is taken
from the AIM appendix to the Daily Official List.
13. Unless otherwise stated:
(a) the financial information relating to
Cenkos is extracted from the annual report and audited accounts of the Cenkos
Group for the financial year ended 31 December 2022, prepared in accordance
with IFRS; and
(b) the client and employee information
relating to Cenkos is as at the Latest Practical Date.
14. Unless otherwise stated:
(a) the financial information relating to
finnCap is extracted from the annual report and audited accounts of the
finnCap Group for the financial year ended 31 March 2022, prepared in
accordance with IFRS, the interim results for the six months ended 30
September 2022 or the trading update for finnCap in this Announcement; and
(b) the client and employee information
relating to finnCap is stated as at the Latest Practicable Date.
15. Pro forma revenue of the Combined Group has been
calculated using the sum of the consolidated revenue of Cenkos for the year
ended 31 December 2022 of £20.3m (as set out in its audited accounts for the
year then ended) and the estimated consolidated revenue of the finnCap of
£32m as set out in the current trading update for finnCap in this
Announcement.
16. Pro forma combined cash of the Combined Group has
been calculated using the sum of the cash for Cenkos of £14.2 million at 31
December 2022 (as set out in the consolidated balance sheet in Cenkos' annual
report and accounts for the year then ended) and the cash of finnCap of £11.1
million at 30 September 2022 (as set out in the consolidated balance sheet in
its Interim Results statement for the period then ended) less £2.0 million
being the cash payment of the final dividend made by finnCap to its
shareholders in October 2022 and up to £2.0 million being the aggregate of
the Interim Dividend and the 2022 Dividend.
17. Certain figures included in this Announcement have
been subject to rounding adjustments.
Appendix 3
IRREVOCABLE UNDERTAKINGS AND LETTER OF INTENT
Part I - Irrevocable undertakings and letters of intent in respect of Cenkos
Shares
1. Cenkos Directors
The following Cenkos Directors have given irrevocable undertakings to vote in
favour of the Scheme at the Court Meeting and the Resolutions to be proposed
at the General Meeting and, if finnCap exercises its right to implement the
Merger by way of a Takeover Offer (subject to the consent of the Panel and the
terms of the Co-operation Agreement), to accept or procure acceptance of such
Takeover Offer, in each case in respect of their own legal and/or beneficial
holdings (or those Cenkos Shares over which they have control) of Cenkos
Shares as well as any further Cenkos Shares of which they may become the legal
and/or beneficial holder (as a result of the exercise of options or vesting of
awards under the Cenkos Share Plans):
Name Total Number of Cenkos Shares Percentage of existing issued share capital of Cenkos
Julian Morse 1,221,556 2.15%
Jeremy Osler 82,945 0.15%
Lisa Gordon 100,000 0.18%
Andrew Boorman 128,152 0.23%
Jeremy Miller 55000 0.10%
Total 1,587,653 2.80%
These irrevocable undertakings remain binding in the event a higher competing
offer is made for Cenkos and will only cease to be binding if:
· finnCap announces, with the consent of the Panel,
that it does not intend to proceed with the Merger and no new, revised or
replacement scheme of arrangement or Takeover Offer is announced by finnCap in
accordance with Rule 2.7 of the Takeover Code at the same time;
· the Scheme Document is not dispatched to Cenkos
Shareholders within 28 days (or such longer period as may be agreed between
Cenkos, finnCap and the Panel) of this Announcement;
· the Merger lapses or is withdrawn in accordance with
its terms and no new, revised or replacement scheme of arrangement or Takeover
Offer is announced by finnCap by such time;
· the Scheme has not become Effective by 5.00 p.m. on
the Long Stop Date or such later time and date as Cenkos and finnCap may agree
with the approval of the Court and/or Panel if required (other than in
circumstances where finnCap has, prior to such date, elected to exercise its
right to proceed by way of a Takeover Offer and announced the same in
accordance with the requirements of paragraph 8 of Appendix 7 to the Takeover
Code, and such Takeover Offer has not lapsed or been withdrawn); and/or
· any competing offer for the entire issued and to be
issued share capital of Cenkos is declared unconditional or, if proceeding by
way of a scheme of arrangement, becomes effective.
2. Other shareholders
Irrevocable undertakings
The following holders, controllers and/or beneficial owners of Cenkos Shares
have given irrevocable undertakings to vote or procure the vote in favour of
the Scheme at the Court Meeting and the Resolutions to be proposed at the
General Meeting and, if finnCap exercises its right to implement the Merger by
way of a Takeover Offer (subject to the consent of the Panel and the terms of
the Co-operation Agreement), to accept or procure acceptance of such Takeover
Offer, in each case in respect of their own legal and/or beneficial holdings
(or those Cenkos Shares over which they have control) of Cenkos Shares as well
as any further Cenkos Shares of which they may become the legal and/or
beneficial holder:
Name Total Number of Cenkos Shares Percentage of existing issued share capital of Cenkos
Jim Durkin 4,677,343 8.25%
Bridger Limited 5,477,162 9.66%
Stephen Keys 19,376 0.03%
Sarah Keys 858,206 1.51%
Michael Johnson 460,810 0.81%
Total 11,492,897 20.27%
These irrevocable undertakings remain binding in the event a higher competing
offer is made for Cenkos and will only cease to be binding if:
· finnCap announces, with the consent of the Panel,
that it does not intend to proceed with the Merger and no new, revised or
replacement scheme of arrangement or Takeover Offer is announced by finnCap in
accordance with Rule 2.7 of the Takeover Code at the same time;
· the Scheme Document is not dispatched to Cenkos
Shareholders within 28 days (or such longer period as may be agreed between
Cenkos, finnCap and the Panel) of this Announcement;
· the Merger lapses or is withdrawn in accordance with
its terms and no new, revised or replacement scheme of arrangement or Takeover
Offer is announced by finnCap by such time;
· the Scheme has not become Effective by 5.00 p.m. on
the Long Stop Date or such later time and date as Cenkos and finnCap may agree
with the approval of the Court and/or Panel if required (other than in
circumstances where finnCap has, prior to such date, elected to exercise its
right to proceed by way of a Takeover Offer and announced the same in
accordance with the requirements of paragraph 8 of Appendix 7 to the Takeover
Code, and such Takeover Offer has not lapsed or been withdrawn); and/or
· any competing offer for the entire issued and to be
issued share capital of Cenkos is declared unconditional or, if proceeding by
way of a scheme of arrangement, becomes effective.
Letter of intent
The following controller and/or beneficial owner of Cenkos Shares has given a
non-binding letter of intent to procure votes in favour of the Scheme at the
Court Meeting and the Resolutions to be proposed at the General Meeting and,
if finnCap exercises its right to implement the Merger by way of a Takeover
Offer (subject to the consent of the Panel and the terms of the Co-operation
Agreement), to procure acceptance of such Takeover Offer, in each case in
respect of their beneficial holdings (or those Cenkos Shares over which they
have control) of Cenkos Shares.
Name Total Number of Cenkos Shares Percentage of existing issued share capital of Cenkos
Canaccord Genuity Asset Management Limited 5,500,000 9.70%
Part II - Irrevocable undertakings in respect of finnCap Shares
3. finnCap Directors
The following finnCap Directors have given irrevocable undertakings to vote or
procure the vote in favour of the finnCap Resolution to be proposed at the
finnCap General Meeting, in each case in respect of their own legal and/or
beneficial holdings (and those of their close family members) (or those
finnCap Shares over which they have control) of finnCap Shares:
Name Total Number of finnCap Shares Percentage of existing issued share capital of finnCap
Robert Lister 65,640 0.04%
Barbara Firth 357,142 0.20%
Andrew Hogarth 357,142 0.20%
Geoffrey Nash 7,132,626* 3.94%
John Farrugia 1,927,669 1.06%
Richard Snow 328,697 0.18%
Total 10,168,726 5.62%
* This figure includes 6,860,000 finnCap Shares which are legally and/or
beneficially held by Geoffrey Nash's wife.
These irrevocable undertakings will only cease to be binding if:
· finnCap announces, with the consent of the Panel,
that it does not intend to proceed with the Merger and no new, revised or
replacement scheme of arrangement or Takeover Offer is announced by finnCap in
accordance with Rule 2.7 of the Takeover Code at the same time;
· the Scheme Document is not dispatched to Cenkos
Shareholders within 28 days (or such longer period as may be agreed between
Cenkos, finnCap and the Panel) of this Announcement;
· the Merger lapses or is withdrawn in accordance
with its terms and no new, revised or replacement scheme of arrangement or
Takeover Offer is announced by finnCap by such time;
· the Scheme has not become Effective by 5.00 pm on
the Long Stop Date or such later time and date as Cenkos and finnCap may agree
with the approval of the Court and/or Panel if required (other than in
circumstances where finnCap has, prior to such date, elected to exercise its
right to proceed by way of a Takeover Offer and announced the same in
accordance with the requirements of paragraph 8 of Appendix 7 to the Takeover
Code, and such Takeover Offer has not lapsed or been withdrawn);
· any competing offer for the entire issued and to be
issued share capital of Cenkos is declared unconditional or, if proceeding by
way of a scheme of arrangement, becomes effective; and/or
· the finnCap Resolution is duly passed by the
requisite majority of finnCap Shareholders at the finnCap General Meeting.
4. Other shareholders
Irrevocable undertakings
The following holders, controllers and/or beneficial owners of finnCap Shares
have given irrevocable undertakings to vote or procure the vote in favour of
the finnCap Resolution to be proposed at the finnCap General Meeting, in each
case in respect of their own legal and/or beneficial holdings (and those of
their close family members and others they control) (or those finnCap Shares
over which they have control) of finnCap Shares:
Name Total Number of finnCap Shares Percentage of existing issued share capital of finnCap
Jon Moulton 20,022,854 11.06%
Vin Murria 18,305,198* 10.11%
Sam Smith 17,730,000 9.79%
Lord Leigh 16,327,892 9.02%
Mark Tubby 4,705,763 2.60%
Peter Gray 4,179,943 2.31%
Rhys Williams 2,588,555 1.43%
Total 83,860,205 46.31%
* This figure includes 15,268,640 finnCap Shares which are legally held by
Lynchwood Nominees Ltd.
These irrevocable undertakings will only cease to be binding if:
· finnCap announces, with the consent of the Panel,
that it does not intend to proceed with the Merger and no new, revised or
replacement scheme of arrangement or Takeover Offer is announced by finnCap in
accordance with Rule 2.7 of the Takeover Code at the same time;
· the Scheme Document is not dispatched to Cenkos
Shareholders within 28 days (or such longer period as may be agreed between
Cenkos, finnCap and the Panel) of this Announcement;
· the Merger lapses or is withdrawn in accordance
with its terms and no new, revised or replacement scheme of arrangement or
Takeover Offer is announced by finnCap by such time;
· the Scheme has not become Effective by 5.00 pm on
the Long Stop Date or such later time and date as Cenkos and finnCap may agree
with the approval of the Court and/or Panel if required (other than in
circumstances where finnCap has, prior to such date, elected to exercise its
right to proceed by way of a Takeover Offer and announced the same in
accordance with the requirements of paragraph 8 of Appendix 7 to the Takeover
Code, and such Takeover Offer has not lapsed or been withdrawn);
· any competing offer for the entire issued and to be
issued share capital of Cenkos is declared unconditional or, if proceeding by
way of a scheme of arrangement, becomes effective; and/or
· the finnCap Resolution is duly passed by the
requisite majority of finnCap Shareholders at the finnCap General Meeting.
Appendix 4
DEFINITIONS
The following definitions apply throughout this Announcement unless the
context requires otherwise:
"2022 Dividend"
has the meaning given to it in the section of
this Announcement entitled "Key Terms".
"2022 Dividend Record Date"
has the meaning given to it in the section of this Announcement
entitled "Key Terms".
"AIM"
AIM, a market operated by the London Stock Exchange.
"AIM Rules"
the rules of AIM as set out in the
"AIM Rules for Companies" issued by the London Stock Exchange from time to
time relating to AIM traded securities and the operation of AIM.
"AIM Rules for Nominated Advisers"
the rules of AIM as set out in the "AIM Rules for Nominated Advisers" issued
by the London Stock Exchange from time to time relating to Nominated Advisers.
"Announcement"
this announcement (including the summary and
Appendices to this announcement) made pursuant to Rule 2.7 of the Takeover
Code.
"Authorisations"
authorisations, orders, determinations,
grants, recognitions, confirmations, consents, licences, clearances,
certificates, permissions, exemptions or approvals, in each case of a Third
Party.
"Business Day"
a day, not being a public holiday,
Saturday or Sunday, on which clearing banks in London are open for normal
business.
"Cenkos"
Cenkos Securities plc.
"Cenkos Articles"
the articles of association of Cenkos as
amended from time to time.
"Cenkos Board"
the board of directors of Cenkos from time
to time.
"Cenkos Directors"
the directors of Cenkos from time to time.
"Cenkos Group"
Cenkos and its subsidiaries and its
subsidiary undertakings and where the context permits, each of them.
"Cenkos Share Plans"
the Cenkos Securities PLC Deferred Bonus Share
Scheme, the Cenkos Securities PLC 2021 Long Term Incentive Plan, the Cenkos
Securities PLC 2018 Company Share Option Plan, the Cenkos Securities PLC Share
Incentive Plan, the Cenkos Securities PLC Sharesave Plan and the Cenkos
Securities Short Term Incentive Plan.
"Cenkos Shareholders"
holders of Cenkos Shares.
"Cenkos Shares"
the ordinary shares of 1 penny each in the
share capital of Cenkos from time to time.
"Closing Price"
the closing middle market price of a
Cenkos Share or finnCap Share (as applicable) on a particular trading day as
derived from the AIM appendix to the Daily Official List on any particular
date.
"CMA"
the UK Competition and Markets Authority.
"Combined Group"
the enlarged group following the Scheme becoming
Effective, comprising the finnCap Group and the Cenkos Group.
"Combined Group Board"
the board of directors of finnCap with effect from the Effective
Date.
"Companies Act"
the Companies Act 2006, as amended.
"Conditions"
the conditions to the Merger, as set
out in Appendix 1 to this Announcement and to be set out in the Scheme
Document and "Condition" shall mean any one of them.
"Confidentiality Agreement"
the mutual confidentiality agreement entered into between finnCap
and Cenkos dated 24 January 2023 in respect of the Merger.
"Co-operation Agreement"
the co-operation agreement entered into between finnCap and
Cenkos dated 23 March 2023 relating to, amongst other things, the
implementation of the Merger.
"Court"
the High Court of Justice
in England and Wales.
"Court Meeting"
the meeting of Scheme Shareholders to be
convened at the direction of the Court pursuant to Part 26 of the Companies
Act for the purpose of considering and, if thought fit, approving the Scheme
(with or without amendment), and including any adjournment, postponement or
reconvening thereof.
"Court Order"
the order of the Court sanctioning the
Scheme under Part 26 of the Companies Act.
"CREST"
the relevant system (as
defined in the CREST Regulations) in respect of which Euroclear is the
operator (as defined in the CREST Regulations) in accordance with which
securities may be held and transferred in uncertificated form.
"CREST Regulations"
the Uncertificated Securities Regulations 2001 (SI
2001 No. 3755) (including as it forms part of domestic law of the United
Kingdom by virtue of the European Union (Withdrawal) Act 2018), as amended
from time to time.
"Daily Official List"
the Daily Official List published by the
London Stock Exchange.
"Dealing Disclosure"
an announcement pursuant to Rule 8 of the
Takeover Code containing details of dealings in interests in relevant
securities of a party to an offer.
"Disclosed"
(A) in respect of the information
fairly disclosed by, or on behalf of Cenkos: (i) in the annual report and
audited accounts of the Cenkos Group for the financial year ended 31 December
2022; (ii) in the interim results of the Cenkos Group for the six month period
ended 30 June 2022 (iii) in this Announcement; (iv) in any other announcement
to a Regulatory Information Service by, or on behalf of Cenkos before the
publication of this Announcement; and/or (v) as otherwise fairly disclosed in
writing prior to the date of this Announcement to finnCap (or its officers,
employees, agents or advisers (in their capacity as such)).
(B) in respect
of the information fairly disclosed by, or on behalf of finnCap: (i) in the
annual report and audited accounts of the finnCap Group for the financial year
ended 31 March 2022; (ii) in the interim results of the finnCap Group for the
six month period ended 30 September 2022 (iii) in this Announcement; (iv) in
any other announcement to a Regulatory Information Service by, or on behalf of
finnCap before the publication of this Announcement; and/or (v) as otherwise
fairly disclosed in writing prior to the date of this Announcement to Cenkos
(or its officers, employees, agents or advisers (in their capacity as such)).
"Disclosure Guidance and Transparency Rules" the disclosure
guidance and transparency rules made by the FCA pursuant to section 73A of
FSMA, as amended from time to time.
"Effective"
in the context of the Merger:
(i) if the Merger is implemented by way of the Scheme, the Scheme having
become effective pursuant to its terms; or (ii) if the Merger is implemented
by way of a Takeover Offer, the Takeover Offer having been declared or having
become unconditional in accordance with the requirements of the Takeover Code.
"Effective Date"
the date on which the Merger becomes
Effective.
"Euroclear"
Euroclear UK & International
Limited.
"Exchange Ratio"
3.19420647 New finnCap Shares for each
Cenkos Share.
"Excluded
Shareholders"
holders of Excluded Shares.
"Excluded
Shares"
any Cenkos Shares at the Scheme Record Time which (if any):
(a) are owned or controlled by the finnCap Group; or
(b) are held by Cenkos as treasury shares (within the
meaning of the Companies Act).
"FCA" or "Financial Conduct Authority" the
Financial Conduct Authority of the United Kingdom or its successor from time
to time, acting in its capacity as the competent authority for the purposes of
Part VI of FSMA.
"FCA Handbook"
the FCA's Handbook of rules and guidance as
amended from time to time.
"finnCap"
finnCap Group plc.
"finnCap Board"
the board of directors of finnCap from time
to time.
"finnCap Circular"
the circular to be sent by finnCap to finnCap
Shareholders in connection with the Merger, which will include a notice
convening the finnCap General Meeting.
"finnCap Directors"
the directors of finnCap from time to time.
"finnCap General Meeting"
the meeting of finnCap Shareholders to be convened to consider
and, if thought fit, approve the finnCap Resolution, including any adjournment
thereof.
"finnCap Group"
finnCap and its subsidiaries and its
subsidiary undertakings and where the context permits, each of them.
"finnCap Resolution"
the shareholder resolution of finnCap proposed to
be passed by the finnCap Shareholders at the finnCap General Meeting to be set
out in the notice of the finnCap General Meeting contained in the finnCap
Circular.
"finnCap Shares"
the ordinary shares of 1 penny each in the
share capital of finnCap from time to time.
"finnCap Share Plans"
the finnCap Group plc Company Share Option Plan, the
finnCap Group plc Enterprise Management Share Option Plan, the finnCap Limited
Unapproved Share Option Scheme, the finnCap Limited Enterprise Management
Incentive Plan and the finnCap Group Employee Benefit Trust (as each is
amended and restated from time to time).
"finnCap Shareholders"
holders of finnCap Shares.
"Forms of Proxy"
the forms of proxy for use at the Court
Meeting and the General Meeting which will accompany the Scheme Document.
"FSMA"
the Financial Services and Markets Act 2000, as amended from time to time.
"General Meeting"
the general meeting of Cenkos Shareholders to be
convened in connection with the Scheme to consider and, if thought fit, to
approve the Resolutions (with or without amendment), which is expected to be
held as soon as the preceding Court Meeting shall have concluded or been
adjourned, and including any adjournment, postponement or reconvening thereof.
"IFRS"
International Financial Reporting Standards.
"Interim Dividend"
has the meaning given to it in the section of
this Announcement entitled "Key Terms".
"Latest Practicable Date"
has the meaning given to it in paragraph 1 of Appendix 2
to this Announcement.
"London Stock Exchange"
London Stock Exchange plc or its successor.
"Long Stop Date"
31 December 2023 or such later date as Cenkos
and finnCap may, with the consent of the Panel, agree and, if required, as the
Court may approve.
"Meetings"
the Court Meeting and/or the General
Meeting, as the case may be.
"Merger"
the proposed acquisition by
finnCap of the entire issued, and to be issued, ordinary share capital of
Cenkos, other than Excluded Shares, to be implemented by means of the Scheme
(or should finnCap elect (subject to the consent of the Panel and the terms of
the Co-operation Agreement) by means of a Takeover Offer) and, where the
context requires, any subsequent revision, variation, extension or renewal
thereof.
"New finnCap Shares"
the new finnCap Shares to be issued fully paid to the
Scheme Shareholders pursuant to the Scheme (and any other Cenkos Shares which
are issued after the Scheme becomes Effective).
"New STIP Awards"
has the meaning given in paragraph 11 of this
Announcement.
"Nominated Adviser"
an adviser whose name appears in the directory of
nominated advisers held by the London Stock Exchange from time to time.
"Offer Document"
should the Merger be implemented by way of a
Takeover Offer, the document which would be sent to Cenkos Shareholders
containing, amongst other things, the terms and conditions of the Takeover
Offer.
"Offer Period"
the offer period (as defined by the
Takeover Code) relating to Cenkos, which commenced on 23 March 2023 (being the
date of this Announcement) and ending on the earlier of: (i) the Effective
Date and/or (ii) the date on which the Scheme lapses or is withdrawn (or such
other date as the Takeover Code may provide or the Panel may decide).
"Opening Position Disclosure"
has the same meaning given to it in Rule 8 of the Takeover Code.
"Overseas Shareholders"
holders of Scheme Shares who are resident in, ordinarily
resident in, or citizens of, jurisdictions outside the United Kingdom.
"Panel"
the Panel on Takeovers and Mergers;
"Registrar of Companies"
the Registrar of Companies in England and Wales.
"Regulatory Information Service"
a regulatory information service as defined in the FCA Handbook.
"relevant securities"
"relevant securities" as defined in the Takeover
Code.
"Resolutions"
the resolution(s) to be proposed at the
General Meeting necessary to facilitate the implementation of the Scheme,
including, without limitation, a resolution to amend the Cenkos Articles by
adoption and inclusion of a new article (in terms approved by finnCap) under
which any Cenkos Shares issued or transferred after the Scheme Record Time
(other than to finnCap and its nominees) shall be automatically transferred to
finnCap (or as it may direct) and, where applicable, for New finnCap Shares to
be issued as consideration to the transferee or to the original recipient of
the Cenkos Shares so transferred or issued on the same terms as the Merger
(other than terms as to timings and formalities).
"Restricted Jurisdiction"
any jurisdiction where local laws or regulations may
result in a significant risk of civil, regulatory or criminal exposure if
information concerning the Merger (including this Announcement) is sent or
made available to Cenkos Shareholders in that jurisdiction.
"Sanction Hearing"
the Court hearing to sanction the Scheme.
"Scheme"
the proposed scheme of
arrangement under Part 26 of the Companies Act between Cenkos and Scheme
Shareholders, with or subject to any modification, addition or condition
approved or imposed by the Court and agreed by Cenkos and finnCap, to
implement the Merger of the entire issued and to be issued share capital of
Cenkos by finnCap.
"Scheme Document"
the document to be sent to Cenkos Shareholders
containing, amongst other things, the Scheme and the notices convening the
Court Meeting and the General Meeting.
"Scheme Record Time"
the time and date to be specified in the Scheme Document,
expected to be 6.00 p.m. on the Business Day immediately prior to the
Effective Date, or such later time as finnCap and Cenkos may agree.
"Scheme Shareholders"
holders of Scheme Shares.
"Scheme Shares"
all Cenkos Shares which remain in issue at the
Scheme Record Time and are:
(a) in issue at the date of the Scheme Document;
(b) (if any) issued after the date of the Scheme Document
but before the Voting Record Time; and
(c) (if any) issued at or after the Voting Record Time
and before the Scheme Record Time, either on terms that the original or any
subsequent holders thereof shall be bound by the Scheme or in respect of which
the holders thereof shall have agreed in writing to be bound by the Scheme,
excluding, in each case, any Excluded Shares.
"SPARK Advisory Partners"
SPARK Advisory Partners Limited.
"STIP"
the Cenkos Securities Short Term Incentive Plan.
"Substantial Interest"
a direct or indirect interest in 20 per cent. or
more of the voting rights or equity share capital of an undertaking.
"Takeover Code" or "Code"
the City Code on Takeovers and Mergers issued by the Panel, as
amended from time to time.
"Takeover Offer"
subject to the consent of the Panel and the
terms of the Co-operation Agreement, should the Merger be implemented by way
of a takeover offer as defined in Chapter 3 of Part 28 of the Companies Act,
the offer to be made by or on behalf of finnCap to acquire the entire issued
and to be issued share capital of Cenkos, other than Excluded Shares and,
where the context admits, any subsequent revision, variation, extension or
renewal of such Takeover Offer.
"Third Party"
any relevant central bank, government
or governmental, quasi-governmental, supranational, statutory, regulatory,
environmental, administrative, fiscal or investigative body, court, trade
agency, association, institution, environmental body, employee representative
body, any entity owned or controlled by any relevant government or state, or
any other body or person whatsoever in any jurisdiction.
"UK" or "United Kingdom"
United Kingdom of Great Britain and Northern Ireland.
"US" or "United States"
the United States of America, its territories and
possessions, any state of the United States of America, the District of
Columbia and all other areas subject to its jurisdiction and any political
sub-division thereof.
"US Exchange Act"
the United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Voting Record Time"
the time and date to be specified in the Scheme
Document by reference to which entitlement to vote at the Court Meeting and
the General Meeting will be determined, expected to be 6.30 p.m. on the day
which is two days (excluding non-working days) before the date of the Court
Meeting and the General Meeting or, if the Court Meeting and/or the General
Meeting is adjourned, 6.30 p.m. on the day which is two days (excluding
non-working days) before the date of such adjourned Meeting.
"Wider finnCap Group"
finnCap and its subsidiaries, subsidiary undertakings
and associated undertakings, and any other undertaking (including any joint
venture, partnership, firm or company) in which finnCap and/or all such
undertakings (aggregating their interests) have a Substantial Interest.
"Wider Cenkos Group"
Cenkos and its subsidiaries, subsidiary undertakings and
associated undertakings, and any other undertaking (including any joint
venture, partnership, firm or company) in which Cenkos and/or all such
undertakings (aggregating their interests) have a Substantial Interest
(excluding, for the avoidance of doubt, finnCap and all of its associated
undertakings which are not members of the Cenkos Group).
All references to "pounds", "pounds Sterling", "Sterling", "£", "pence",
"penny" and "p" are to the lawful currency of the United Kingdom.
All references to statutory provisions or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or re-enacted from time to time and all
statutory instruments, regulations and order from time to time made thereunder
or deriving validity therefrom.
All times referred to in this Announcement are London times.
For the purposes of this Announcement, "subsidiary", "subsidiary undertaking",
"undertaking", "associated undertaking" and "equity share capital" have the
meanings given by the Companies Act.
References to the singular include the plural and vice versa.
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