REG - Highcroft Invs PLC - Proposed Cancellation from LSE & Admission to TISE

Highcroft InvestmentsAnnouncement

04/01/2024 11:30

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RNS Number : 6800Y  Highcroft Investments PLC  04 January 2024

 

4 January 2024

Highcroft Investments PLC

("Highcroft" or the "Company")

 

Proposed Cancellation of Listing of Ordinary Shares from the Official List

and

Proposed Admission of the Ordinary Shares to the TISE Official List

 

The Company announces the proposed cancellation of listing of the Ordinary
Shares on the premium listing segment of the Official List (the
"Cancellation"), and the proposed admission of the Ordinary Shares to the TISE
Official List (the "Admission", together the "Proposal").

 

The Directors have undertaken a review to evaluate the benefits and drawbacks
to the Company and Shareholders of retaining the listing of the Ordinary
Shares on the premium listing segment of the Official List. In parallel, the
Directors have conducted a review of the proposed admission of the Ordinary
Shares to the TISE Official List. This review has included, among other
matters, the impact on Shareholders, the lack of trading liquidity in the
Ordinary Shares, the requirement, as a REIT, for the Company to be publicly
listed, and the regulatory and financial burden of maintaining a public
listing on the Main Market. Given the matters referred to above and following
careful consideration, the Directors believe that the Proposal is in the best
interests of the Company and its Shareholders as a whole. A detailed
explanation of the reasons outlined above is set out in the Appendix to this
announcement.

 

Pursuant to Listing Rule 5.2.5, the Cancellation is subject to Shareholder
approval and accordingly, a circular will be sent to Shareholders and made
available on the Company's website later today, setting out the background to
and reasons for the Proposal (the "Circular"). The Circular will contain a
notice convening a general meeting (the "General Meeting") at which
Shareholders will be invited to consider and, if thought fit, pass the
requisite shareholder resolution to approve the Proposal (the "Resolution").
Extracts of the Circular can be found in the Appendix to this announcement.

 

The Resolution will be proposed as a special resolution to approve the
Cancellation and to authorise the Directors to apply for TISE Admission and
must be approved by: (i) a majority of at least 75 per cent. of votes cast by
Shareholders (in person or by proxy) at the General Meeting (the "First Voting
Threshold"); and (ii) as a company with a "controlling shareholder" (as
defined in the Listing Rules), more than 50 per cent. of votes cast by
Independent Shareholders (in person or by proxy) at the General Meeting (the
"Second Voting Threshold"). As at today's date, the Company has received
irrevocable undertakings from certain shareholders representing approximately
50.0 per cent. of the Company's voting rights and issued share capital, to
vote in favour of the Resolution (with approximately 33.5 per cent. of such
votes counting only towards the First Voting Threshold and remainder counting
both towards the First Voting Threshold and the Second Voting Threshold).

 

The General Meeting will be held at held at 2.00 p.m. on Monday 22 January
2024 at the offices of Singer Capital Markets at 1 Bartholomew Lane, London,
EC2N 2AX.

 

A copy of the Circular will be made available later today on the Company's
website at https://www.highcroftplc.com/ (https://www.highcroftplc.com/)

 

Capitalised terms in this announcement (including in the Appendix to this
announcement) shall have the meanings given to them in the Circular, unless
otherwise defined in this announcement or the context otherwise requires).

 

Expected timetable of principal events((1))

 

 Event                                                                       2024
 Publication of the Circular                                                 4 January
 Latest time and date for receipt of completed proxy appointments            2.00p.m. on 18 January
 Record time and date for entitlement to vote at the General Meeting         8.00p.m. on 18 January
 Time and date of General Meeting                                            2.00p.m. on 22 January
 Last day of dealings in the Ordinary Shares on the Main Market              19 February
 Admission of, and commencement of dealings in, the Ordinary Shares on TISE  8.00a.m. on 19 February
 Cancellation of the listing of the Ordinary Shares from the Official List   8.00a.m. on 20 February
 becomes effective

 

(1)All times referred to are London times. Each of the above dates and times
is based on the Company's expectations as at the date of this announcement. If
any of the above times and/or dates change, the revised times and/or dates
will be posted to Shareholders by an announcement through the Regulatory
Information Service.

 

For further information, please contact:

 

 Highcroft Investments PLC                                     +44 (0)1869 352766

 Paul Leaf-Wright/Roberta Miles

 Singer Capital Markets Advisory LLP                           +44 (0)20 7496 3000

 Peter Steel / Asha Chotai / Finn Gordon - Corporate Finance

 

 

 

Appendix - Extracts from the Circular

 

1.   INFORMATION ON HIGHCROFT

Highcroft is an internally managed UK REIT with a focus on commercial property
in England and Wales.  The Company has a diverse portfolio of 22 properties
generating rental income from 28 tenancies spread across the warehouse, retail
warehouse, leisure, office and retail sectors.

Highcroft's purpose is to provide its tenants with quality properties, in good
locations, enabling them to succeed, and for stakeholders to benefit on a
long-term, sustainable basis.  The Company aims to deliver sustainable
long-term income and capital growth through accretive asset management
initiatives and recycling of capital in its regionally based property
portfolio.

A REIT is exempt from corporation tax on qualifying income and gains of its
property rental business provided that various conditions are met. A REIT
remains subject to corporation tax on non-exempt income and gains. REITs must
distribute at least 90 per cent. of their income profits from their tax-exempt
property rentals business by way of dividend, known as "Property Income
Distribution".

2.   BACKGROUND TO AND REASONS FOR THE DELISTING AND TISE ADMISSION

The Directors have undertaken a review to evaluate the benefits and drawbacks
to the Company and Shareholders of retaining the listing of the Ordinary
Shares on the premium listing segment of the Official List.  In parallel, the
Directors have conducted a review of the proposed admission of the Ordinary
Shares to the TISE Official List.  This review has included, among other
matters, the impact on Shareholders, the lack of trading liquidity in the
Ordinary Shares, the requirement, as a REIT, for the Company to be publicly
listed, and the regulatory and financial burden of maintaining a public
listing on the Main Market. Specifically, the Directors have considered the
following points in relation to the Company's current listing of the Ordinary
Shares on the Official List:

(a)   the Company has two separate Concert Parties which, when combined,
account for approximately 65 per cent. of its current issued share capital.
The Kingerlee Concert Party and the Conn Concert Party hold approximately 41
per cent. and 24 per cent. of the Company's current issued share capital,
respectively. The major shareholdings of the Concert Parties have contributed
to the limited trading liquidity in the Ordinary Shares for some time. As a
result, the Directors do not believe that the Company's issued share capital
and small market capitalisation provides sufficient liquidity and opportunity
to trade in meaningful volumes or with sufficient frequency to create an
active market in the Ordinary Shares on the Main Market.  The Company does
not have any institutional Shareholders, which the Directors believe further
compounds the limited trading liquidity. The Company believes it is unlikely
to attract new institutional shareholders by remaining on the Official List
and there is no negative impact in this regard of moving to TISE; and

(b)   the Directors believe that the considerable current, and likely future
increased, cost, management time and the legal and regulatory burden
associated with maintaining the Ordinary Shares admission to listing on the
Official List and to trading on the Main Market significantly outweighs the
benefits of continued admission.  Given the lower costs and less onerous
regulatory environment associated with trading on TISE, the Directors believe
that the Delisting and TISE Admission will materially reduce the Company's
recurring administrative and adviser expenses, whilst allowing an enhanced
focus on achieving operational and strategic goals.

Given the matters referred to above and following careful consideration, the
Directors believe that the Delisting and TISE Admission are appropriate for
the following reasons:

(a)   the Company will continue to be a UK-registered and UK-based company;

(b)   the Company will continue to be a UK REIT paying Property Income
Distributions in accordance with all applicable laws relating to REIT Property
Income Distributions;

(c)   TISE is a global exchange, internationally recognised and a regulated
market which is located conveniently in the British Isles;

(d)   TISE is the second largest market for all listed UK REITs; and

(e)   the regulatory environment of TISE is such that it would allow the
Company, if appropriate, to issue new shares to new investors to raise capital
for growth or to implement a share buyback programme to improve the trading
liquidity of the Company's issued share capital more cost effectively than on
the Main Market, where the costs of such activities outweigh the benefits.

Future strategy

The Board's strategy will remain to:

(a)   protect the capital base of the Company by investing in good quality
real estate assets that generate long term income;

(b)   increase Property Income Distributions to Shareholders;

(c)   keep the Company's cost base to a minimum; and

(d)   maintain high standards of ethics and governance.

Summary

For the reasons set out above, the Directors have concluded that TISE is a
more appropriate market for the Company at this point in time and that the
Delisting and TISE Admission is in the best interests of the Company and its
Shareholders.

Accordingly, if the Resolution is passed by Shareholders (on the date on which
the General Meeting is originally convened), TISE Admission is expected to
take place on 19 February 2024 and the Delisting on 20 February 2024.

The Board has consulted with certain of the Company's largest Shareholders in
connection with the Delisting and TISE Admission and has received certain
irrevocable undertakings to vote in favour of the Resolution (please see
paragraph 5 below for further details).

Further information on the Delisting and TISE Admission is set out in Part II
of the Circular.

3.   CONSEQUENCES AND RISKS ASSOCIATED WITH DELISTING FROM THE OFFICIAL LIST
AND TISE ADMISSION

Following TISE Admission, the Company will be subject to the TISE Listing
Rules. Shareholders should note that the protections afforded to investors in
TISE companies are in some respects less rigorous than those afforded to
investors in companies whose shares are listed on the premium segment of the
Official List. The regulatory and financial reporting regime applicable to
companies whose shares are listed on the Official List will no longer apply
and the levels of disclosure and corporate governance within the Company may
not be as stringent as for a company listed on the Official List. This
paragraph sets out further detailed information on the consequences and risks
associated with the Delisting.

While for the most part the obligations of a company whose shares are traded
on TISE are similar to those of companies whose shares are listed on the
premium segment of the Official List, there are certain exceptions. Examples
of these areas of similarity and difference are provided below:

 

·      Under the Listing Rules, a company is required to appoint a
'sponsor' for the purposes of certain corporate transactions. The
responsibilities of the sponsor include providing assurance to the FCA, when
required, that the responsibilities of the listed company have been met. The
TISE Listing Rules require that a company retains a TISE sponsor at all times.
The TISE sponsor is responsible to TISEA for advising and guiding a TISE
company on its responsibilities under the TISE Listing Rules, must be approved
by TISEA to act in that capacity and has ongoing responsibilities to both the
Company and TISEA. The TISE Listing Rules require a TISE listed company to
seek advice from its TISE sponsor regarding its compliance with the TISE
Listing Rules and to take that advice into account. Conditional on TISE
Admission, the Company has appointed Appleby as its TISE sponsor.

 

·      Under the TISE Listing Rules (and similar to the Listing Rules),
prior shareholder approval is required for: (i) reverse takeovers (being an
acquisition or acquisitions in a 12 month period which would exceed 100 per
cent. in various class tests; (ii) acquisitions, which would exceed 15 per
cent. in various class tests, that are not already approved in advance by all
shareholders in accordance with the issuer's constitutional documents; (iii)
disposals which, when aggregated with any other disposals over the previous 12
months, would result in a material change of business (being disposals that
exceed 75 per cent. in various class tests); or (iv) transactions with a
related party, which would exceed five per cent. in various class tests, that
are not already approved in advance by all shareholders in accordance with the
issuer's constitutional documents. The TISE Listing Rules require a circular
to be sent to shareholders in relation to the transactions described in (i) to
(iv) above, albeit the content requirements for such circulars under the TISE
Listing Rules are less detailed than under the Listing Rules and do not
require the approval of TISEA prior to publication (certain circulars
published under the Listing Rules require prior approval by the FCA).

 

·      There is no requirement under the TISE Listing Rules for a
prospectus or a listing document to be published for further issues of a class
of listed securities, except when seeking admission for a new class of
securities, or in connection with a reverse takeover (as defined above), or as
otherwise required by law.

 

·      Unlike the Listing Rules, the TISE Listing Rules do not specify
any required structures or discount limits in relation to further issues of
securities.

 

·      The Company has a controlling shareholder (as defined in the
Listing Rules and under the TISE Listing Rules) but will no longer be required
to enter into: (i) a relationship agreement with the Kingerlee Concert Party
as a controlling shareholder (or, for that matter, any other such
shareholder); or (ii) comply with the independence provisions required by the
Listing Rules. The Company and the Kingerlee Concert Party have agreed to
maintain the existing relationship agreement in place from admission to TISE.

 

·      In common with a company whose shares are admitted to trading on
the premium segment of the Official List, a company listed on TISE has to
maintain a minimum of 25 per cent. of its issued ordinary share capital in
public hands (except in certain limited circumstances).

 

·      The regime in relation to dealing in own securities and treasury
shares on TISE has similarities to the Listing Rules, including restrictions
on the timing of dealings and requirements relating to notification, price,
shareholder approval or tender offers. It is highlighted that the levels of
disclosure may not be as stringent under the TISE Listing Rules as for a
company whose shares are admitted to trading on the premium segment of the
Official List.

 

·      Companies with a listing on the premium segment of the Official
List may only cancel their listing with the approval of 75 per cent. of the
voted shares and, if the company has a controlling shareholder, must also
secure the approval of a majority of the voting independent shareholders
(other than in certain limited circumstances). Under the TISE Listing Rules, a
TISE company does not require shareholder consent to cancel admission of its
securities to TISE.

 

·      The Company is currently required to comply with the UK Corporate
Governance Code or explain areas of non-compliance. It is not mandatory for
companies whose shares are admitted to trading on TISE to comply with this
code. The Board recognises, however, the importance of high standards of
corporate governance and, if TISE Admission becomes effective, intends to
comply, insofar as possible for a company of its size and nature, with the
provisions of the QCA Code as described in paragraph 8 of this document.

 

·      The Disclosure Guidance and Transparency Rules will no longer
apply to the Company following TISE Admission. This is because TISE is not a
regulated market for the purposes of the EU's securities directives. The
Company will, however, be required to notify TISEA and publish an announcement
on the website of TISE relating to changes to the person(s) who, directly or
indirectly, hold or control three per cent. or more of the Ordinary Shares
(excluding treasury shares) or of the votes to be cast on all matters at
general meetings of the Company.

 

·      Investor guidelines (such as those issued by the Investment
Association, the Pensions and Lifetime Savings Association and the Pre-Emption
Group), which provide guidance on issues such as executive compensation and
share-based remuneration, corporate governance, share capital management and
the issue and allotment of shares on a pre-emptive or non-pre-emptive basis,
do not directly apply to companies whose shares are admitted to trading on
TISE.

 

·      The requirement under section 439A of the Companies Act to submit
a remuneration policy for a binding vote by shareholders is only applicable to
quoted companies listed on the Main Market. A company whose shares are traded
on TISE is not subject to the same obligation to submit its remuneration
policy to a binding vote of shareholders.

 

·      There can be no assurance that an active or liquid trading market
for the Ordinary Shares will develop or, if developed, will be maintained
following TISE Admission. Additionally, the future success of TISE and
liquidity in the market for the Company's shares cannot be guaranteed.
Potential investors and Shareholders should be aware that the value and any
income from the Ordinary Shares can go down as well as up and that investment
in securities which are traded on TISE might be less realisable and might
carry a higher risk than a security listed on the Official List.

 

·      Singer Capital Markets will cease to be financial adviser and
broker to the Company at the point the Company of Delisting.

It is emphasised that the Delisting and TISE Admission will have no impact on
the assets and liabilities of the Company (save in respect of the fees for the
production of this document and TISE Admission) and it will continue to have
the same business and operations following TISE Admission.

4.   IRREVOCABLE UNDERTAKINGS TO VOTE

The Company has received irrevocable undertakings to vote (or procure a vote)
in favour of the Resolution from:

(a)   Shareholders who are beneficially interested, in aggregate, 1,744,390
Ordinary Shares (representing approximately 33.5 per cent. of the Ordinary
Shares as at 29 December 2023, being the latest practicable date prior to the
publication of this document) to vote in favour of the Resolution.  All such
Shareholders' votes will count only towards the First Voting Threshold; and

(b)   Shareholders (in addition to those under paragraph (a)) who are
beneficially interested, in aggregate, 859,426 Ordinary Shares (representing
approximately 16.5 per cent. of the Ordinary Shares as at 29 December 2023,
being the latest practicable date prior to the publication of this document)
to vote in favour of the Resolution.  All such Shareholders' votes will count
both towards the First Voting Threshold and the Second Voting Threshold.

5.   DELISTING AND TISE ADMISSION

Conditional on the Resolution being approved by the requisite majorities of
Shareholders at the General Meeting, the Company will apply to cancel the
listing of the Ordinary Shares on the Official List and their admission to
trading on the Main Market and give 20 Business Days' notice to the London
Stock Exchange of its intention to delist.  It is currently anticipated that,
subject to the passing of the Resolution by the requisite majorities:

(a)   TISE Admission will take place at 8.00 a.m. on 19 February 2024;

(b)   the last day of dealings in the Ordinary Shares on the Main Market
will be 19 February 2024; and

(c)   the Delisting will take effect at 8.00 a.m. on 20 February 2024, being
not less than 20 Business Days from the date of the General Meeting.

Although TISE Admission is planned to take place at 8.00 a.m. on 19 February
2024, TISE Admission is subject to final approval of TISEA, and there is no
guarantee that TISEA will approve TISE Admission on the intended date, and
there is no assurance that TISE Admission will occur or that such TISE listing
will be maintained.

 

6.   APPLICATION OF THE TAKEOVER CODE

The Takeover Code applies to all companies which have registered offices in
the United Kingdom, the Channel Islands, or the Isle of Man, if any of their
equity share capital or other transferable securities carrying voting rights
are admitted to trading on a regulated market or multilateral trading facility
in the United Kingdom or on any exchange in the Channel Islands or the Isle of
Man.

If the Delisting and TISE Admission is approved by Shareholders at the General
Meeting, the Company will remain subject to the Takeover Code as it will
remain a public company incorporated and registered in England and Wales with
its registered offices in the UK and, its securities admitted to and trading
on an exchange in the Channel Islands.  As a result, the protections that are
afforded to Shareholders under the Takeover Code will remain applicable to the
Company.

Under the Takeover Code, if an acquisition of an interest in Ordinary Shares
were to increase the aggregate interests of the acquirer and its concert
parties to 30 per cent. or more of the voting rights in the Company, the
acquirer and its concert parties would be required to make a cash offer for
the outstanding Ordinary Shares at a price not less than the highest price
paid for interests in Ordinary Shares by the acquirer or its concert parties
during the previous 12 months.  This requirement would also be triggered
when, except with the consent of the Panel, any person (together with persons
acting in concert with that person) who is interested in Ordinary Shares which
carry not less than 30 per cent. of the voting rights of the Company but does
not hold Ordinary Shares carrying more than 50 per cent. of such voting
rights, and such person (or person acting in concert with that person)
acquires any other Ordinary Shares which increases the percentage of Ordinary
Shares carrying voting rights in which he is interested.

The Kingerlee Concert Party has an interest in approximately 41 per cent. of
the Company's current issued share capital. If members of the Kingerlee
Concert Party acquire any further interest in Ordinary Shares, such
acquisition will, subject to Panel consent, result in an obligation under Rule
9 of the Takeover Code upon the Kingerlee Concert Party to make a general
offer for the remaining Ordinary Shares not already held by the Kingerlee
Concert Party, at a price not less than the highest price paid by any member
of the Kingerlee Concert Party for any Ordinary Shares in the previous 12
months.

7.   CORPORATE GOVERNANCE

The Board recognises the value of good corporate governance and envisages no
significant alteration in the standards of governance which the Group has
always achieved.  It will maintain its existing governance framework which
includes the key mechanisms through which the Company sets strategy, plans its
objectives and monitors performance and risk management. As the Company will
no longer be listed on the premium listing segment of the Official List, it
will no longer need to comply with the UK Corporate Governance Code.

The TISE Listing Rules require issuers to adhere to certain principles,
including being responsible for following any applicable recognised code of
corporate governance.  Following TISE Admission, the Company intends to
comply, insofar as possible for a company of its size and nature, with the
provisions of the QCA Code.  The Board believes the QCA Code offers a
flexible, yet rigorous approach to support the Company as the business
evolves.

8.   TAXATION

The Company has taken tax advice to confirm the proposed Delisting and TISE
Admission would not affect the Company's REIT status and has disclosed the
proposed Delisting and TISE Admission to HMRC.

The Company will therefore remain a UK REIT for tax purposes and will continue
to comply with all applicable laws. As such, distributions to shareholders
will be made, as in the past, as Property Income Distributions.

Shareholders are urged to consult their own independent professional adviser
regarding the tax consequences of Delisting and TISE Admission.

9.   GENERAL MEETING

The Delisting is conditional on the passing of the Resolution at the General
Meeting by the requisite majorities. A notice convening a general meeting of
the Company to be held at 2.00 p.m. on Monday 22 January 2024 at the offices
of Singer Capital Markets at 1 Bartholomew Lane, London EC2N 2AX is set out at
the end of this document.

The Resolution will be proposed as a special resolution to approve the
Delisting and to authorise the Directors to apply for TISE Admission.

The Resolution will be voted on by way of a poll (and not on a show of
hands).  The Board believes a poll is more representative of Shareholders'
voting intentions because Shareholders' votes are counted according to the
number of Ordinary Shares held and all votes tendered are taken into
account.  This will also assist in ensuring that only those votes cast (in
person or by proxy) by Independent Shareholders are counted towards the Second
Voting Threshold.  The results of the poll vote held at the General Meeting
will be published on the Company's website and will be released via a
Regulatory Information Service as soon as practicable following the close of
the General Meeting.

Shareholders are encouraged to take the recommended action before the General
Meeting (as set out below), which includes appointing a proxy whether online,
via a CREST Proxy Instruction or by a hard copy form of proxy in accordance
with the instructions in this document.

The Board strongly urges all Shareholders to vote by proxy on the Resolution
as early as possible and recommends that Shareholders appoint the chair of the
General Meeting as their proxy.

10.  RECOMMENDATION

The Board considers that cancelling the listing of the Ordinary Shares on the
Official List and trading on the Main Market and applying for admission to
listing on the TISE Official List and trading on TISE is, in the Board's
opinion, in the best interests of the Shareholders as a whole.

Accordingly, the Board unanimously recommends that you vote in favour of the
Resolution to be proposed at the General Meeting.

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