REG - Gama Aviation PLC - Increased tender offer announcement

Gama AviationAnnouncement

01/03/2024 14:00

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RNS Number : 3143F  Gama Aviation PLC  01 March 2024

Date: 01 March 2024

 

Increased tender offer announcement

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under Article 7 of the Market Abuse
Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018.

Gama Aviation Plc (AIM: GMAA)

("Gama Aviation" or the "Company" or "Group")

 Increased scale of proposed Tender Offer at 95p to enable all shareholders
that wish to do so to sell the entirety of their holdings

 

 

 

Gama Aviation is today announcing an increase in the size of the proposed
capital return by way of tender offer to allow the Company to acquire all
shares tendered by shareholders without the need to scale back.

Increased Tender Offer at 95 pence per share

On 5 February 2024, the Board of Gama Aviation announced the completion of its
review of capital requirements and the intention to make a phased return of
capital to shareholders, with an initial return of £16.5 million to be
effected by means of a Tender Offer at a price of 95 pence per share.  Given
the £16.5 million amount of that proposed return, the maximum number of
shares that could have been acquired by the Company would have been circa 17.5
million shares representing approximately 27% of the current issued share
capital.  Accordingly, the number of shares that shareholders could sell to
the Company would have been scaled back compared with the number of shares
tendered, depending on the level of interest in tendering shares from other
shareholders.

The Board has been asked to consider  the potential for shareholders not to
be scaled back. The Board has considered this and has further reviewed the
impact for smaller shareholders of the changes to the investment profile of
the Company's shares as a result of the changes to the nature of the Group's
overall business having sold the Jet East business and determining to continue
with substantial capital projects.

As described in the announcement of 5 February 2024,  the £16.5 million
amount of capital return was calibrated in order to retain sufficient funds in
the Company to meet its near-term capital requirements, pending the securing
of the appropriate level of debt on favourable terms.  Any increase in the
size of the capital return would reduce funds available for capital
requirements; a tender offer at 95 pence capable of acceptance by all
shareholders would, if fully subscribed, leave the Company with insufficient
funds to invest in strategic  capital projects.

However, as described below, two shareholders (Marwan Khalek and Bermesico
Holdings Limited who together hold 41.1% of the issued share capital) have
indicated that they would be prepared to undertake not to tender any of their
existing shares so as to ensure that sufficient  funds will be retained in
the Company to meet the investment capital requirements of these strategic
projects.

Against this background, the Board has decided to accelerate the return of
capital to shareholders and increase the amount to be returned in the short
term to shareholders by way of Tender Offer at 95 pence per share to up to
£37.6 million equivalent to up to circa. 40.6 million shares representing
approximately 61% of the share capital (issued and under option). Taking into
account the proposed undertakings from Marwan Khalek and Bermesico Holdings
Limited this would now enable the Company to acquire all shares tendered by
shareholders (excluding Marwan Khalek and Bermesico Holdings Limited) without
the need for any scaling back. The Board expects to make an appropriate offer
to holders of options over shares in the Company.  This may involve enabling
those option holders that wish to do so to cancel the ability to exercise
their options in return for a cash amount equal to the amount by which the
Tender Offer price of 95 pence exceeds the exercise price of those options.

This would effectively give all shareholders, other than Marwan Khalek and
Bermesico Holdings Limited, the choice between selling 100% of their shares at
95 pence per share or remaining invested in the Company (in whole or in part),
in effect contributing the Tender Offer proceeds that they might otherwise
have received to the cash that the Company will have available to invest in
capital projects.

Undertakings from major shareholders

The Company's three largest shareholders representing in aggregate 70.7% of
the current issued share capital have indicated that, conditional on the
posting of the Shareholder Circular (as described below), they are willing to
give certain undertakings as described below.

Hutchison Capital Holdings Limited, the holder of 18,954,520 shares
representing 29.6% of the issued share capital has indicated that it intends
to give an irrevocable undertaking to tender all of its shares in the
Company.  Accordingly, if the Tender Offer proceeds, it will no longer be a
shareholder in the Company.

Marwan Khalek, the holder of 14,179,607 shares representing 22.1% of the
issued share capital has indicated that he intends to give an irrevocable
undertaking to tender none of his existing shares in the Company.
Accordingly, if the Tender Offer proceeds, his percentage holding in the
Company will increase to between 29.6% (assuming that no shareholder other
than Hutchison Capital Holdings Limited tenders any shares) and 53.9%
(assuming that all shareholders other than Marwan Khalek and Bermesico
Holdings Limited tender all their shares).

Bermesico Holdings Limited, the holder of 12,145,726 shares representing 19.0%
of the issued share capital has indicated that it intends to give an
irrevocable undertaking to tender none of its shares in the Company.
Accordingly, if the Tender Offer proceeds, its percentage holding in the
Company will increase to between 26.5% (assuming that no shareholder other
than Hutchison Capital Holdings Limited tenders any shares) and 46.1%
(assuming that all shareholders other than Marwan Khalek and Bermesico
Holdings Limited tender all their shares).

Each of the above parties have indicated that they intend to submit
irrevocable undertakings to vote in favour of the resolutions to effect the
Tender Offer (as described below) except to the extent they are not permitted
to do so under the Takeover Code.  No binding irrevocable undertakings have
been entered into at the date of this announcement and so there can be no
guarantee that the enlarged Tender Offer will take place.

Impact on the Company's balance sheet

The total cost to the Company of the increased Tender Offer will depend on the
level of tenders by shareholders.  However, if all shareholders other than
Marwan Khalek and Bermesico Holdings Limited (as well as options holders as
described above) were to elect to tender all their shares then the total cost
is expected to be approximately £37.6m.

This will be funded from the cash balances of the Company which at 31 December
2023 were $92 million (approximately £72 million).

The Board believes that the Company will continue to have adequate resources
to meet its working capital requirements.  Furthermore, the Company expects
to have sufficient funding to continue to deliver on its strategic objectives
including capital projects through a combination of utilisation of its cash
resources and selectively accessing third party funding where that can be
delivered on favourable terms.  Further detail on the capital projects and
the future prospects of the Company will be included in the Shareholder
Circular.

In determining whether to tender shares or to retain an interest in the
Company (at an increased proportionate shareholding), shareholders should take
into account, inter alia, the changed financial profile of the Group going
forwards, the increased proportionate shareholdings of Marwan Khalek and
Bermesico Holdings Limited and the likely reduced stock market liquidity in
the Company's shares.

Potential De-Listing

In view of the likely significant increase in shareholder concentration
coupled with the likely reduction in stock market liquidity in the Company's
shares, that may result from the Tender Offer, the Board believes that a
de-listing from AIM will be in the best interest of the Company.  However,
the Board is evaluating whether this should be a matter for the current
shareholders or the shareholders remaining following the Tender Offer to
determine.  The Board will continue to evaluate this in consultation with its
shareholders and will provide additional information in the Shareholder
Circular in due course.

 

Shareholder Circular

The proposed Tender Offer remains conditional on review by the Takeover Panel
and shareholder approval.  When the Tender Offer arrangements have been
finalised, a further announcement will be made and a circular containing a
more detailed explanation of the impact of the capital return, the Tender
Offer and the resolutions required to be passed (including, if required,
certain resolutions to disapply Rule 9 of the Takeover Code and to enable
release of the share premium account for the purposes to making the Tender
Offer if it is determined that the level of potential share tenders means that
the level of distributable reserves are not sufficient) will be sent to
shareholders in due course.  It is expected that a shareholder meeting will
be convened during April 2024 and subject to regulatory requirements (which
may include a Court process to release the share premium account) that the
Tender Offer can become effective by May 2024.

 

Dial Partners LLP is acting as Financial Adviser to the Company.

 

ENDS

 

 

Contacts

Gama Aviation Plc

Marwan Khalek, Chief Executive Officer

Michael Williamson, Chief Financial Officer

Tel: +44 125 298 4515

 

Dial Partners LLP, Financial Adviser

Angus Russell, Partner

Sandor de Jasay, Managing Director

Tel: +44 207 098 7098

 

WH Ireland, Nominated Adviser and Broker

James Joyce, Director

Sarah Mather

Tel: +44 207 220 1666

 

Camarco, PR

Geoffrey Pelham-Lane

Ginny Pulbrook

Tel: +44 203 757 4992

 

Gama Aviation - Notes to Editors

Founded in 1983 with the simple purpose of providing aviation services that
equip its customers with decisive advantage, Gama Aviation Plc (LSE AIM: GMAA)
is a highly valued global partner to blue chip corporations, government
agencies, healthcare trusts and private individuals.

 

The Group has three global divisions: Business Aviation (Aircraft Management,
Charter, FBO & Maintenance), Special Mission (Air Ambulance & Rescue,
National Security & Policing, Infrastructure & Survey, Energy &
Offshore); and Technology & Outsourcing (Flight Operations, FBO, CAM
software, Flight Planning, CAM & ARC services).

 

More details can be found at: http://www.gamaaviation.com/

 

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