Update on Financing Arrangements
15/12/2023 16:21
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RNS Number : 0412X Apax Partners LLP 15 December 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 THAT JURISDICTION
FOR IMMEDIATE RELEASE
15 December 2023
RECOMMENDED CASH ACQUISITION
of
Kin and Carta plc ("Kin and Carta")
by
Kelvin UK Bidco Limited ("Bidco")
(a newly formed company owned indirectly by funds advised by Apax Partners
LLP ("Apax"))
to be effected by means of a scheme of arrangement under Part 26 of the
Companies Act 2006
Update on Financing Arrangements and Regulatory Conditions
On 18 October 2023, the boards of directors of Kin and Carta and Bidco
announced that they had reached agreement on the terms and conditions of a
recommended cash acquisition pursuant to which Bidco will acquire the entire
issued, and to be issued, share capital of Kin and Carta (the "Acquisition").
The Acquisition is to be effected by means of a scheme of arrangement under
Part 26 of the Companies Act 2006 (the "Scheme"), subject to the terms and
conditions set out in the circular in relation to the Scheme sent to Kin and
Carta Shareholders dated 9 November 2023 (the "Scheme Document").
Capitalised terms used but not otherwise defined in this announcement (the
"Announcement") have the meanings set out in the Scheme Document.
Entry into Senior Facilities Agreement
On 15 December 2023, Kelvin Midco 2 Limited ("Midco 2"), a private limited
company incorporated in England and Wales and the direct parent of Bidco,
entered into a senior facilities agreement with (among others) HSBC UK Bank
plc, JPMorgan Chase Bank, N.A., London Branch, National Westminster Bank plc,
SMBC Bank International plc and UniCredit Bank AG (the "Original Lenders")
(the "Senior Facilities Agreement"), and an intercreditor agreement with
(among others) Wilmington Trust (London) Limited as facility agent and
security agent (the "Intercreditor Agreement" and, together with the Senior
Facilities Agreement, the "Financing Documents") in relation to the financing
of the Acquisition. A summary of the terms of the Financing Documents is
attached at the Appendix to this Announcement.
A copy of the Financing Documents will be available, subject to certain
restrictions relating to persons resident in certain jurisdictions, on Kin and
Carta's website at https://investors.kinandcarta.com
(https://investors.kinandcarta.com) and Bidco's website at www.kelvinoffer.com
by no later than 12.00 p.m. on the Business Day following the date of this
Announcement.
Update on Fees and Expenses
In accordance with Rule 24.16 of the Takeover Code, the aggregate fees and
expenses expected to be incurred by Bidco in connection with the financing
described above (excluding any applicable VAT and other taxes) is expected to
be approximately GBP 4,670,000, therefore bringing the total fees and expenses
expected to be incurred by Bidco in connection with the Acquisition to GBP
16,561,500. Bidco's expectations for the other categories of fees and expenses
remain in line with the estimate previously disclosed in the Scheme Document.
Update on Regulatory Conditions
The Acquisition is conditional on, among other things, certain antitrust,
foreign investment and regulatory approvals and clearances. All first-round
filings required in relation to such approvals and clearances were made on or
before 17 November 2023.
Bidco is pleased to confirm that the CMA has responded to a briefing paper in
writing confirming that it has no further questions in relation to the
Acquisition (and has not otherwise opened an inquiry, or indicated that it is
still deciding whether to open an enquiry). In addition, the applicable
waiting period for the Hart Scott Rodino Antitrust Improvements Act of 1976
(as amended) and the regulations made thereunder relating to the Acquisition,
has now expired.
Bidco therefore continues to expect that, subject to the satisfaction (or
where applicable, waiver) of the Conditions, the Scheme will become Effective
during the first quarter of 2024.
Enquiries
Apax +44 79 1828 6640
Luke Charalambous
BofA Securities (Lead Financial Adviser to Apax and Bidco) +44 20 7628 1000
James Robertson
Eish Dhillon
Antonia Rowan
Charles Pitt Ford
Equiteq Corporate Finance Limited (Financial Adviser to Apax and Bidco) +44 (0) 203 651 0600
Jerome Glynn-Smith
Emmanuel Kostucki
Headland Consultancy Limited (PR Adviser to Apax and Bidco) +44 (0)74713 50848
Emma Nyman
Important Notices
Merrill Lynch International ("BofA Securities"), which is authorised by the
PRA and regulated by the FCA and the PRA in the United Kingdom, is acting
exclusively for Apax and Bidco and for no one else in connection with the
matters set out in this Announcement and will not be responsible to anyone
other than Apax and Bidco for providing the protections afforded to its
clients or for providing advice in relation to any matter referred to in this
Announcement or any transaction or arrangement referred to herein. Neither
BofA Securities, nor any of its affiliates, owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of BofA Securities in connection with this Announcement, any statement
contained herein, any transaction or arrangement referred to herein, or
otherwise.
Equiteq Corporate Finance Limited ("Equiteq"), an appointed representative of
Frank Investments Limited, who is authorised and regulated by the FCA in the
United Kingdom, is acting exclusively for Apax and Bidco and for no one else
in connection with this Announcement and any other matters in connection with
it. Equiteq will not be responsible to anyone other than Apax and Bidco for
providing the protections afforded to its clients or for providing advice in
connection with any matters in connection with this Announcement. Neither
Equiteq, nor any of its affiliates, directors or employees, owes or accepts
any duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Equiteq in connection with this Announcement or any statement
contained therein or otherwise.
Further information
The release, publication or distribution of this Announcement in or into or
from jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about, and observe, such
restrictions. Any failure to comply with the applicable restrictions may
constitute a violation of the securities laws of such jurisdiction. To the
fullest extent permitted by applicable law, the companies and persons involved
in the Acquisition disclaim any responsibility or liability for the violation
of such restrictions by any person. This Announcement does not constitute an
offer or invitation to purchase or subscribe for any securities or a
solicitation of an offer to buy any securities pursuant to the Scheme Document
or otherwise in any jurisdiction in which such offer or solicitation is
unlawful.
The statements contained in this Announcement are made as at the date of this
Announcement, unless some other time is specified in relation to them. Nothing
in this Announcement shall be deemed to be a forecast, projection or estimate
of the future financial performance of Kin and Carta, the Wider Kin and Carta
Group, Bidco or the Wider Bidco Group except where otherwise stated.
This Announcement is not a prospectus or prospectus-equivalent document.
Overseas Shareholders
This Announcement has been prepared in accordance with and for the purpose of
complying with English and Welsh law, the Code, the Market Abuse Regulation,
the Disclosure Guidance and Transparency Rules and the Listing 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.
The availability of the Acquisition to Kin and Carta 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. In particular, the ability of persons who are not
resident in the United Kingdom to vote their Kin and Carta Shares with respect
to the Scheme at the Court Meeting, or to appoint another person as proxy to
vote at the Court Meeting on their behalf, may be affected by the laws of the
relevant jurisdictions in which they are located. Any failure to comply with
the applicable 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 Acquisition disclaim any
responsibility or liability for the violation of such restrictions by any
person.
Unless otherwise determined by Bidco or required by the Code, and permitted by
applicable law and regulation, the Acquisition will 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 use, means, instrumentality or from within a
Restricted Jurisdiction or any other jurisdiction if to do so would constitute
a violation of the laws of that jurisdiction. Accordingly, copies of this
Announcement and any formal documentation relating to the Acquisition are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction, and persons receiving this
Announcement and all such documents relating to the Acquisition (including,
without limitation, agents, custodians, nominees and trustees) must not mail
or otherwise forward, distribute or send them in or 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
Acquisition. If the Acquisition is implemented (with the consent of the Panel
and subject to and in accordance with the terms of the Co-operation Agreement)
by way of a Takeover Offer (unless otherwise permitted by applicable law and
regulation), the Takeover Offer may not be made directly or indirectly, in or
into, or by the use of mails or any means or 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
and the Takeover Offer may not be capable of acceptance by any such use,
means, instrumentality or facilities.
The Acquisition shall be subject to, among other things, the applicable
requirements of the Code, the Panel, the London Stock Exchange and the FCA.
The statements contained in this Announcement are not to be construed as
legal, business, financial or tax advice.
Additional information for US investors
The Acquisition relates to the shares of an English company and is being made
by means of a scheme of arrangement provided for under the laws of England and
Wales. 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 Acquisition is subject to the disclosure
requirements and practices applicable in the United Kingdom to schemes of
arrangement, which differ from the disclosure requirements of United States
tender offer and proxy solicitation rules.
The financial information included in this Announcement and the Scheme
Document (or, if the Acquisition is implemented by way of a Takeover Offer,
the Offer Document) has been prepared in accordance with generally accepted
accounting principles applicable in the United Kingdom and thus may not be
comparable to financial information of US companies or companies whose
financial statements are prepared in accordance with generally accepted
accounting principles in the United States ("US GAAP"). US GAAP differs in
significant respects from accounting standards applicable in the United
Kingdom.
If Bidco were to exercise its right (with the consent of the Panel and subject
to and in accordance with the terms of the Co-operation Agreement) to
implement the Acquisition by means of a Takeover Offer and determines to
extend the Takeover Offer into the United States, such Takeover Offer would be
made in compliance with all applicable United States laws and regulations.
In the event that the Acquisition is implemented by way of a Takeover Offer,
in accordance with normal United Kingdom practice and pursuant to Rule
14e-5(b) of the US Exchange Act, Bidco or its nominees, or its brokers (acting
as agents), may from time to time make certain purchases of, or arrangements
to purchase, shares or other securities of Kin and Carta outside of the US,
other than pursuant to the Acquisition, until the date on which the
Acquisition becomes Effective, lapses or is otherwise withdrawn. Also, in
accordance with Rule 14e-5(b) of the US Exchange Act, BofA Securities will
continue to act as exempt principal trader in Kin and Carta Shares on the
London Stock Exchange. These purchases may occur either in the open market at
prevailing prices or in private transactions at negotiated prices and would
comply with applicable law, including the US Exchange Act. Any information
about such purchases or arrangements to purchase shall be disclosed as
required in the United Kingdom, shall be reported to a Regulatory Information
Service and shall be available on the London Stock Exchange website at
www.londonstockexchange.com (http://www.londonstockexchange.com) .
Neither the US Securities and Exchange Commission (the "SEC") nor any
securities commission of any state of the US nor any other US regulatory
authority has approved the Acquisition, passed upon the fairness of the
Acquisition or passed upon the adequacy or accuracy of this Announcement. Any
representation to the contrary is a criminal offence in the US.
For the purposes of qualifying for the exemption from the registration
requirements of the US Securities Act afforded by Section 3(a)(10) thereof,
Kin and Carta will advise the Court that its sanctioning of the Acquisition
will be relied upon by Kin and Carta and Bidco as an approval of the Scheme
following a hearing on its fairness which all Scheme Shareholders are entitled
to attend, in person or through counsel, to support or oppose the sanctioning
of the Scheme and with respect to which notification has been given to all
such Scheme Shareholders.
The receipt of cash pursuant to the Acquisition by a US holder of Kin and
Carta Shares as consideration for the transfer of its Kin and Carta Shares
pursuant to the Scheme will likely be a taxable transaction for US federal
income tax purposes and may also be a taxable transaction under applicable
state and local tax laws, as well as foreign and other tax laws. Each US
holder of Kin and Carta Shares is strongly advised to consult an appropriately
qualified independent professional adviser immediately regarding the tax
consequences of the Scheme applicable to them, including under applicable
United States state and local, as well as overseas and other, tax laws.
Each US holder is urged to consult his, her or its independent professional
adviser immediately regarding the tax consequences of the Acquisition.
It may be difficult for US holders of Kin and Carta Shares to enforce their
rights and claims arising out of US federal securities laws, since Bidco and
Kin and Carta are located in a non-US jurisdiction, and some or all of their
officers and directors may be residents of a non-US jurisdiction, and a
substantial part of the assets of Kin and Carta are located outside of the US.
US holders of Kin and Carta Shares 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.
Cautionary note regarding forward-looking statements
This Announcement (including information incorporated by reference in this
Announcement), oral statements made regarding the Acquisition, and other
information published by Bidco and Kin and Carta 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 of the management of Bidco
and Kin and Carta 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 Acquisition on Bidco and
Kin and Carta (including their future prospects, developments and strategies),
the expected timing and scope of the Acquisition 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", "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 Bidco's,
Kin and Carta's, any member of the Bidco Group's or any member of the Kin and
Carta Group's operations and potential synergies resulting from the
Acquisition; and (iii) the effects of global economic conditions and
governmental regulation on Bidco's, Kin and Carta's, any member of the Bidco
Group's or any member of the Kin and Carta Group's business.
Although Bidco and Kin and Carta believe that the expectations reflected in
such forward-looking statements are reasonable, Bidco and Kin and Carta 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
Acquisition; the ability to obtain requisite regulatory and shareholder
approvals and the satisfaction of other Conditions on the proposed terms and
schedule; 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; changes in the anticipated benefits
from the Acquisition not being realised as a result of changes in general
economic and market conditions in the countries in which Bidco and Kin and
Carta operate, weak, volatile or illiquid capital and/or credit markets,
changes in tax rates, interest rate and currency value fluctuations, the
degree of competition in the geographic and business areas in which Bidco and
Kin and Carta 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 Bidco nor Kin and Carta, nor any of their
respective associates or directors, officers or advisers, provides 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. You are cautioned not to place any reliance on these
forward-looking statements.
Other than in accordance with their legal or regulatory obligations, neither
Bidco nor Kin and Carta is under any obligation, and Bidco and Kin and Carta
expressly disclaim any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Profit forecasts, estimates or quantified financial benefits statements
No statement in this Announcement is intended as a profit forecast, estimate
or quantified financial benefits statement for any period and no statement in
this Announcement should be interpreted to mean that earnings or earnings per
share for Kin and Carta for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share for Kin and Carta.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. 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 p.m. (London time) on the 10th Business Day following the
commencement of the Offer Period and, if appropriate, by no later than 3:30
p.m. (London time) on the 10th 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 Code, any person who is, or becomes, interested in 1
per cent. 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 p.m. (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 Panel's website at
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.
Publication on a website
In accordance with Rule 26.1 of the Code, a copy of this Announcement will be
made available, subject to certain restrictions relating to persons resident
in Restricted Jurisdictions, on Kin and Carta's website at
https://investors.kinandcarta.com (https://investors.kinandcarta.com) and on
Bidco's website at www.kelvinoffer.com (http://www.kelvinoffer.com) .
For the avoidance of doubt, neither the contents of Kin and Carta's website
and Bidco's website nor Apax's website nor any website accessible from
hyperlinks is incorporated into or forms part of this Announcement.
Requesting hard copy documents
In accordance with Rule 30.3 of the Code, Kin and Carta Shareholders, persons
with information rights and participants in Kin and Carta Share Plans may
request a hard copy of this Announcement by contacting Kin and Carta's
receiving agents, Link Group, between 9:00 a.m. and 5:30 p.m. (London time)
Monday to Friday (except UK public holidays) on 0371 664 0321 from within the
UK or on +44 371 664 0321 if calling from outside the UK or by submitting a
request in writing to Link Group, Corporate Actions, Central Square, 29
Wellington Street, Leeds, LS1 4DL. Calls are charged at the standard
geographical rate and will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Please note that Link
Group cannot provide any financial, legal or tax advice and calls may be
recorded and monitored for security and training purposes.
For persons who receive a copy of this Announcement in electronic form or via
a website notification, a hard copy of this Announcement and any such
information incorporated in it by reference to another source will not be sent
unless so requested. Such persons may also request that all future documents,
announcements and information in relation to the Acquisition be sent to them
in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain information
provided by Kin and Carta Shareholders, persons with information rights and
other relevant persons for the receipt of communications from Kin and Carta
may be provided to Bidco during the Offer Period as requested under Section 4
of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments.
General
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, accountant
or from an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 if you are a resident in the UK or, if not, from
another appropriate authorised independent financial adviser.
APPENDIX
Summary of the Financing Documents
On 15 December 2023, Midco 2 and the Original Lenders (among others) entered
into the Senior Facilities Agreement concerning the debt financing facilities
described below.
Under the terms of the Senior Facilities Agreement, the Original Lenders
agreed to make available certain term loans and a revolving credit facility
described more particularly below. The Senior Facilities Agreement
contemplates that the Original Lenders may transfer their rights and
obligations under the Senior Facilities Agreement to other banks, financial
institutions, trusts, funds or other entities which are regularly engaged in
or established for the purpose of making, purchasing or investing in loans,
securities or other financial assets, or any other person approved in writing
by Midco 2.
The facilities, amounts and documentation process
The debt financing facilities comprise (i) a senior secured term loan facility
in the principal amount of up to GBP 60,000,000 (a portion of which is to be
redenominated into USD in accordance with the terms of the Senior Facilities
Agreement) (the "Facility B1"), (ii) a senior secured multicurrency term loan
facility in the principal amount of up to GBP 20,000,000 (the " Facility B2"),
and (iii) a senior secured multicurrency revolving credit facility in the
principal amount of up to GBP 25,000,000 (the " Revolving Facility" and
together with Facility B1 and Facility B2, the "Facilities").
The Facilities are available to be drawn down by certain members of the Bidco
Group, subject to satisfaction of the conditions precedent set out in the
Senior Facilities Agreement summaries below.
The proceeds of the Facilities are to be applied as follows:
(A) in respect of the Facility B1, to directly or
indirectly finance/refinance: (i) the amounts payable under or in connection
with the Acquisition; (ii) the repayment, purchase or other discharge of
indebtedness of the Group (together with any broken funding costs, redemption
premia and other fees, costs and/or expenses payable in connection with that
repayment, purchase or discharge); (iii) the payment of fees, costs and
expenses relating to the Acquisition; and/or (iv) the working capital
requirements and/or general corporate purposes of the Bidco Group;
(B) in respect of the Facility B2, to directly or indirectly
finance/refinance: (i) any amounts payable under or in connection with any
acquisition, joint venture, investment and/or other similar or equivalent
transaction; (ii) any repayment, purchase or other discharge of indebtedness
and broken funding costs, redemption premia and other fees, costs and/or
expenses payable in connection with that repayment/purchase/discharge; (iii)
any payment of fees, costs and expenses incurred in connection with any
acquisition, joint venture, investment, capital expenditure and/or other
similar or equivalent transaction; (iv) any capital expenditure requirements
of the Bidco Group; and/or (v) any costs, expenses and other expenditure
relating to any restructuring undertaken by the Bidco Group; and
(C) in respect of the Revolving Facility, to directly or indirectly
finance/refinance the working capital requirements and/or general corporate
purposes of the Bidco Group.
Repayment terms - maturity
Once drawn, the Facility B1 and Facility B2 must be repaid as a bullet payment
in full on the date falling seven years after the date on which the first
drawing is made under Facility B1 (the "Closing Date").
The Revolving Facility must be repaid in full on the date falling six years
from the Closing Date (the "Revolving Facility Maturity Date").
Prepayment and repayment terms - voluntary/mandatory
Any borrower under the Facilities may voluntarily cancel and prepay the
Facilities in whole or in part at any time subject to the giving of one
Business Days' prior notice. Prepayment and cancellation rights shall apply
(and/or may be exercised by the applicable lenders) in respect of illegality,
change of control or a sale of all or substantially all of the assets of the
Bidco Group to persons who are not members of the Bidco Group. Additionally,
mandatory prepayment rights shall apply (subject to various exceptions and
exclusions) in respect of any excess cashflow of the Bidco Group (calculated
per financial year), and of net cash proceeds received by Midco 2 or certain
other members of the Bidco Group as a result of the sale of certain assets.
Interest rates
The rate of interest payable on each loan drawn under the Facilities is the
aggregate of the applicable margin, plus the applicable reference rate (being
SOFR for USD loans, SONIA for GPB loans, SARON for CHF loans, EURIBOR for Euro
loans and the applicable base rate for loans in any other currency).
Subject to the below, the margin in respect of the Facilities is as follows:
(A) 5.00% per annum in relation to any GBP Facility B1
loan;
(B) 4.75% per annum in relation to any non-GBP Facility B1 loan;
(C) 5.00% per annum in relation to any GBP Facility B2 loan;
(D) 4.75% per annum in relation to any non-GBP Facility
B2 loan; and
(E) 4.25% per annum in relation to any Revolving Facility loan.
The above margin rates shall apply from the Closing Date until 6 months
thereafter, provided no material default is continuing and the Bidco Group is
complying with the financial covenant (the "Opening Margin Period"). After the
end of the Opening Margin Period, the margin rates outlined above will remain
as above, provided the total net leverage is greater than 3.00:1. Further,
there is a cumulative step-down of 0.25% per annum in the margin (subject to a
maximum of three step-downs in the case of Facility B1 and Facility B2) in the
event that the total net leverage reaches each of the following total net
leverage ratios:
(A) Equal to or less than 3.00:1 but greater than
2.75:1;
(B) Equal to or less than 2.75:1 but greater than 2.50:1;
(C) Equal to or less than 2.50:1 but greater than 2.25:1; and
(D) Equal to or less than 2.25:1.
Guarantees and security
The lenders will receive the benefit of guarantees and security in respect of
each of the Facilities and guarantees and security will initially be provided
by Midco 2, Bidco and Kelvin US Bidco, Inc. (a wholly-owned subsidiary of
Bidco). Each of Midco 2, Bidco and Kelvin US Bidco, Inc. will guarantee the
Facilities, and provide security over certain of their assets pursuant to
certain security documents (the "Security Documents"). In due course after the
Closing Date, other members of the Bidco Group will also provide guarantees
and security as is customary for a transaction of this nature.
Representations, warranties, undertakings and events of default
The Senior Facilities Agreement contains representations and warranties, a
financial covenant, undertakings (both operational and as regards certain
information) and events of default that are customary for a financing of this
nature.
Representations and warranties have been made (subject to various exceptions
and materiality and other thresholds) regarding status, binding obligations,
non-conflict with other obligations, power and authority, authorisations, no
default and accuracy of information.
The Senior Facilities Agreement contains a financial covenant based on total
net leverage that is initially set at 6.00:1, decreasing over time. The
financial covenant will be first tested on the last day of the financial
quarter falling at least four full financial quarters after the Closing Date.
The Senior Facilities Agreement also contains operational general undertakings
(subject to various exceptions and materiality and other thresholds)
regarding, among other things, due authorisations, compliance with laws, tax,
restrictions on demergers/mergers/consolidation/corporate reconstruction, pari
passu ranking, arm's length dealings, pensions, access, intellectual property,
insurance, additional guarantors and security, further assurance, incurring
indebtedness, restricted payments, liens, disposal of assets, and the
Acquisition. In addition, certain information undertakings will be given with
respect to, amongst other things, the provision of financial statements and
budgets, compliance certificates and annual lender presentations.
The events of default are customary for a secured financing of this type and
are subject to various exceptions, materiality and other thresholds and grace
periods.
Conditions precedent
The Senior Facilities Agreement sets out a number of conditions precedent to
first utilisation (both documentary and otherwise) which include, among other
things, the delivery of the Security Documents, the Intercreditor Agreement
and customary officer's certificates setting out various confirmations in
respect of applicable conditions being delivered.
The foregoing description is a high-level overview of key indicative terms of
the Senior Facilities Agreement and ancillary documents.
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