REG - CPPGroup Plc - Statement re Close of Formal Sale Process <Origin Href="QuoteRef">CPPG.L</Origin> - Part 2

CPPGroupAnnouncement

23/12/2014 18:40

- Part 2: For the preceding part double click  ID:nRSW6596Aa 

otherwise rank on AIM Admission pari passu in all respects with the Ordinary
Shares. The Placing Shares have not been made available to the public and are
not being offered or sold in any jurisdiction where it would be unlawful to do
so. 
 
Application will be made to the London Stock Exchange for the Ordinary Shares
(including the Placing Shares) to be admitted to trading on AIM. On the
assumption that, inter alia, the Resolutions are passed, it is expected that
AIM Admission will become effective on or around 11 February 2015. 
 
The Placing Shares have not been and will not be registered under the
Securities Act. Subject to certain exceptions, the Placing Shares may not be
offered or sold within the United States. 
 
The Placing will result in a significant dilution of the proportionate
holdings of existing Shareholders who do not participate in the Placing;
approximately 79.5 per cent. of the Enlarged Share Capital will be represented
by the Placing Shares upon completion of the Placing. 
 
Reasons for and details of the Capital Reorganisation 
 
The Company's existing issued share capital consists of 171,649,941 Existing
Ordinary Shares which are currently in issue. 
 
The Placing Shares are proposed to be issued at the Placing Price, which
represents a discount of approximately 70 per cent. to the nominal value of
the Existing Ordinary Shares. 
 
Under section 580 of the 2006 Act, the Company may not allot shares at a price
which is less than the nominal value of those shares. To enable the Company to
proceed with the Placing, the Existing Ordinary Shares will therefore need to
be sub-divided and re-designated as described below and in the Notice of
General Meeting. 
 
The Capital Reorganisation is conditional on the approval of the Shareholders
at the General Meeting but is not conditional on the passing of any of the
other Resolutions. 
 
Details of the Capital Reorganisation 
 
Pursuant to the Capital Reorganisation, it is proposed that each Existing
Ordinary Share with a nominal value of 10 pence will be sub-divided and
re-designated into one Ordinary Share of 1 penny and one Deferred Share of 9
pence. Immediately following the Capital Reorganisation, every Shareholder
will hold one Ordinary Share and one Deferred Share for every Existing
Ordinary Share held by them. The Capital Reorganisation should not affect the
market value of a Shareholder's aggregate holding of the Existing Ordinary
Shares in the Company. 
 
It is proposed that, following completion of the Capital Reorganisation, each
Ordinary Share will carry the same rights in all respects as each Existing
Ordinary Share does at present, including the rights in respect of voting and
the entitlement to receive dividends. 
 
The Company does not propose to issue new share certificates to the existing
Shareholders as a result of the Capital Reorganisation. The existing share
certificates which have been issued to the Shareholders in respect of their
holdings of Existing Ordinary Shares will remain valid in respect of the
Ordinary Shares following completion of the Capital Reorganisation. The
Company will make arrangements for the ISIN of the Existing Ordinary Shares to
apply to the Ordinary Shares. 
 
CREST accounts of Shareholders will not be credited in respect of any
entitlement to Deferred Shares. 
 
Amendments to the Existing Articles 
 
As part of the Capital Reorganisation, the Company proposes to make
consequential amendments to its Existing Articles to include provisions in
respect of the rights attaching the Deferred Shares. Each Deferred Share will
have very limited rights and will effectively be valueless. Such shares will
have no voting rights, no rights to receive dividends and will have only very
limited rights on a return of capital. The Deferred Shares will not be
admitted to trading on AIM or listed on any other stock exchange and will not
be freely transferable. 
 
Please refer to Resolution 2 set out in the Notice of the General Meeting at
the end of the Circular for further details of the rights which are proposed
to be attached to the Deferred Shares. 
 
Use of Proceeds 
 
The estimated net proceeds of the Placing of approximately £17.9 million will
be used for the prepayment in part of the Bank Facility (including certain
prepayment fees), refinancing of the Bank Facility via the Amended and
Restated Facility, satisfaction of the Group's obligations in relation to the
settlement of the Deferred Commission and interest thereon, to make an
investment in the Group's IT systems to implement a modern, cost-effective IT
infrastructure and to provide additional capital to fund in part elements of
the Group's Business Transformation programme and related costs of change, as
set out below: 
 
 Prepayment in part of the Bank Facility and related costs          8.5   
 Refinance the Bank Facility via the Amended and Restated Facility  0.5   
 Settlement of Deferred Commission and interest thereon             1.3   
 Investment in new IT infrastructure and IT systems                 4.5   
 Group transformation and costs of change                           3.1   
 Total                                                              17.9  
 
 
Total 
 
17.9 
 
Details of the De-listing and AIM Admission 
 
Listing Rule 5.2.5R(2) requires that a company wishing to cancel its listing
on the Official List may only do so if at least 75 per cent. of the votes cast
at a general meeting on a resolution to delist are in favour. Additionally,
where a premium-listed company has a controlling shareholder (that is, a
shareholder who exercises or controls on their own or together with any person
with whom they are acting in concert, 30 per cent. or more of the votes able
to be cast on all or substantially all matters at general meetings of the
company), it must also obtain the prior approval of a majority of independent
shareholders who vote in person or by proxy at the general meeting.  For these
purposes Mr Hamish Ogston is a controlling shareholder of the Company. 
 
The continued listing of the Company on the Official List would prevent the
implementation of the Proposals (including the receipt of the proceeds of
Placing), as these are conditional inter alia on AIM Admission and completion
of the Placing, which can only occur once the De-listing has taken place. 
 
In order to effect the AIM Admission and Placing as well as the other
Proposals, the Company will require, inter alia, Shareholder approval of the
Resolutions at the General Meeting. 
 
Conditional on the Resolutions being approved at the General Meeting and the
Placing Agreement not having been terminated in accordance with its terms, the
Company will apply to cancel the listing of the Ordinary Shares on the
Official List and to trading on the Main Market and will give 20 Business
Days' notice of its intention to seek their admission to trading on AIM under
AIM's streamlined process for companies that have had their securities traded
on an AIM Designated Market (which includes the Official List). 
 
It is anticipated that the last day of dealings in the Ordinary Shares on the
Main Market will be 10 February 2015. Cancellation of the listing of the
Ordinary Shares on the Official List will take effect at 8.00 a.m. on 11
February 2015. AIM Admission is expected to take place, and dealings in the
Ordinary Shares (including the Placing Shares) are expected to commence on
AIM, at 8.00 a.m. on 11 February 2015. 
 
As the Existing Ordinary Shares are currently listed on the premium segment of
the Official List, the AIM Rules do not require an admission document to be
published by the Company in connection with the Company's admission to trading
on AIM. However, in order to achieve AIM Admission, the Company will be
required to publish an announcement which complies with the requirements of
Schedule One to the AIM Rules comprising information required to be disclosed
by companies transferring their securities from the Official List, as an AIM
Designated Market, to AIM following the General Meeting if the Resolutions are
passed. 
 
Although it is their intention, there is no guarantee that the Directors will
be successful in achieving admission of the Ordinary Shares to trading on AIM
or that the conditions in the Placing Agreement will be satisfied (or, if
applicable, waived). 
 
Risk Factors 
 
For a discussion of the risks and uncertainties which you should take into
account when considering whether to vote in favour of the Resolutions,
Shareholders should refer to Part 2 of the Circular. 
 
Consequences of the move to AIM 
 
Following AIM Admission, the Company will be subject to the AIM Rules.
Shareholders should note that AIM is self-regulated and that the protections
afforded to investors in AIM companies are less rigorous than those afforded
to investors in companies listed on the premium segment of the Official List. 
 
While, for the most part, the obligations of a company whose shares are traded
on AIM are similar to those of companies whose shares are listed on the
premium segment of the Official List, there are certain exceptions. 
 
Following AIM Admission, Ordinary Shares that are held in uncertificated form
will continue to be held and dealt through CREST.  Share certificates
representing those Ordinary Shares held in certificated form will continue to
be valid and no new certificates will be issued in respect of such Ordinary
Shares. 
 
The City Code will continue to apply to the Company following AIM Admission as
the Company's registered office is located in the United Kingdom. 
 
The Board does not currently envisage that the implementation of the Proposals
will result in significant alteration to the standards of reporting and
governance that the Company currently maintains; however, the Board will keep
this under review. The Board intends to maintain its Audit, Remuneration,
Nomination & Governance and Risk & Compliance Committees which will be subject
to substantially similar terms of reference. 
 
Mr Hamish Ogston and the Company have entered, conditional on AIM Admission,
into a revised version of the existing relationship agreement between them in
order to ensure that the relationship agreement will continue in force
following AIM Admission and to make certain conforming changes appropriate in
the context of an AIM company.  A summary of the revised relationship
agreement is included in section 2 of Part 4 of the Circular. 
 
For a detailed discussion of the consequences of the move to AIM, Shareholders
should refer to Part 1 of the Circular. 
 
Related party transactions 
 
Mr Hamish Ogston and Schroder Investment Management Limited are related
parties of the Company for the purposes of the Listing Rules as they each have
existing shareholdings in the Company that are greater than ten per cent.,
being approximately 56.1 per cent. and 13.0 per cent., respectively. Therefore
the proposed participation by each of Mr Hamish Ogston and Schroder Investment
Management Limited in the Placing will require approval by independent
Shareholders (that is to say, Shareholders other than the relevant related
party). 
 
It is proposed that Mr Hamish Ogston and Schroder Investment Management
Limited will participate in the Placing in respect of 264,144,352 and
61,437,285 Placing Shares, respectively. 
 
Mr Hamish Ogston has irrevocably undertaken to abstain, and to take all
reasonable steps to ensure that his associates (as defined in the Listing
Rules) will abstain, from voting at the General Meeting in relation to the
resolution for the approval of the related party transaction arising from his
participation in the Placing. It should be noted for these purposes that
Schroder Investment Management Limited is not an associate of Mr Hamish Ogston
and accordingly Schroder Investment Management Limited may vote at the General
Meeting in relation to the resolution for the approval of the related party
transaction arising from Mr Hamish Ogston's participation in the Placing. 
 
Schroder Investment Management Limited has undertaken to abstain, and to take
all reasonable steps to ensure that its associates (as defined in the Listing
Rules) will abstain, from voting at the General Meeting in relation to the
resolution for the approval of the related party transaction arising from its
participation in the Placing. It should be noted for these purposes that Mr
Hamish Ogston is not an associate of Schroder Investment Management Limited
and accordingly he may vote at the General Meeting in relation to the
resolution for the approval of the related party transaction arising from
Schroder Investment Management Limited's participation in the Placing. 
 
Revised relationship agreement 
 
In connection with the Proposals, Mr Hamish Ogston has entered into a revised
relationship agreement with the Company on materially the same terms as the
existing relationship agreement (subject to certain consequential amendments
appropriate to the context of an AIM company), the effectiveness of which is
conditional on AIM Admission.  For further information, please see paragraph
2(b) of Part 4 of the Circular. Under the revised relationship agreement, Mr
Hamish Ogston will continue to have a right to appoint a Non-Executive
Director to the Board of the Company. 
 
Information on Phoenix 
 
Phoenix Asset Management Partners is a long-only investment manager that
specialises in making long-term value-based investments in businesses on the
basis of its own detailed primary research and extensive fieldwork. 
 
The firm began managing assets in May 1998 with the launch of the Phoenix UK
Fund. Phoenix is approximately 90 per cent. owned by Channon Holdings Limited
and just under approximately 10 per cent. owned by Sir Peter Thompson, the
firm's retired non-executive chairman. Gary Channon has been Chief Investment
Officer of the business since inception. The same core investment team has
been in place for over 13 years. 
 
Phoenix seeks to identify businesses which they regard as undervalued, having
faced short-term challenges, but which remain fundamentally good businesses.
Phoenix does not make investments based on fixed hold periods and considers
itself to be a long term investor.  Phoenix often considers significant
investments in companies which meet its investment criteria at the time of a
significant capital raise. It is currently a 13.5 per cent. shareholder in the
AIM-quoted insurance business Randall & Quilter Investment Holdings Ltd and
was previously a significant shareholder in Goshawk Insurance Holdings Plc. 
 
Phoenix operates one strategy across all of its funds and is the investment
manager to five clients: the Phoenix UK Fund (a Bahamian domiciled mutual
fund) and four segregated/managed accounts. Investors in the Phoenix UK Fund
consist of a UK university endowment, family offices, a foundation, a
multi-manager scheme, wealth managers and high net worth individuals. The
segregated accounts manage funds on behalf of a UK pension scheme, a Guernsey
domiciled multi-manager scheme for UK Pension schemes, a UK university
endowment and a family office. 
 
As at 15 December 2014, Phoenix had firm-wide assets under management of £352
million. The Phoenix UK Fund is the largest client accounting for assets under
management of £202.0 million. The four additional segregated mandates range
from £66.0 million to £10.0 million in size. 
 
The Directors of Phoenix are Mr Gary Channon, Mr Steve Tatters, Mrs Charlotte
Maby and Mr Roger Canham. Phoenix's registered office and principal place of
business is at 64-66 Glentham Road, Barnes, London SW13 9JJ. 
 
There are no arrangements in place to transfer any Shares to be acquired by
Phoenix under the Placing to any third party. 
 
Phoenix is authorized and regulated by the Financial Conduct Authority. 
 
Phoenix is aware of the Group's on-going change and Business Transformation
programmes, is investing in support of those programmes and has no independent
plans as regards the Company's employeesand management, assets, pension
arrangements, fixed assets and places of business or strategic direction.
Following completion of the Placing and AIM Admission, Phoenix will have the
right to appoint a Non-Executive Director to the Board. 
 
Certain financial and other information on Phoenix will be included in the
display documents listed in Part 4 of the Circular. 
 
Waiver of Rule 9 of the City Code 
 
The City Code governs, inter alia, transactions which may result in a change
of control of a public company to which the City Code applies. Under Rule 9 of
the City Code, any person who acquires, whether by a series of transactions
over a period of time or not, an interest (as such term is defined in the City
Code) in shares which, taken together with the shares in which he and persons
acting in concert with him are interested, carry 30 per cent. or more of the
voting rights in a company which is subject to the City Code, is normally
required to make a general offer to all of the remaining shareholders to
acquire their shares. 
 
Similarly, Rule 9 of the City Code also provides that when any person,
together with persons acting in concert with him, is interested in shares
which, in aggregate, carry more than 30 per cent. of the voting rights of such
company, but does not hold shares carrying more than 50 per cent. of such
voting rights, a general offer will normally be required if any further
interest in any other shares carrying voting rights is acquired by any such
person, together with persons acting in concert with him. 
 
Such an offer must be in cash and must be at a price not less than the highest
price paid by the person required to make the offer, or any member of the
group of persons acting in concert with him, for any interest in shares in the
company in question during the 12 months prior to the announcement of the
offer (which in this case is taken to mean announcement of the Placing on 23
December 2014). 
 
None of Phoenix nor any of its directors nor any person acting in concert with
Phoenix currently holds, and has not at any point in the last 12 months
acquired or held, any interest in shares in the Company nor has either Phoenix
or any of its directors or any person acting in concert with Phoenix engaged
in any stock borrowing or stock lending activity nor taken any short positions
in the Company. None of the Company nor any of its Directors nor any person
acting in concert with the Company currently holds, and has not at any point
in the last 12 months acquired or held, any interest in shares in Phoenix nor
has either Company or any of its Directors or any person acting in concert
with the Company en