REG - Kingswood Holdings - Financial Position Update & Possible Offer

Kingswood HoldingsAnnouncement

12/03/2025 08:00

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RNS Number : 3579A  Kingswood Holdings Limited  12 March 2025

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

 

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS
AND MERGERS ('THE CODE') AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO
CERTAINTY THAT AN OFFER WILL BE MADE.

 

THIS ANNOUNCEMENT CONSTITUTES INSIDE INFORMATION AS STIPULATED UNDER THE
MARKET ABUSE REGULATION (EU) NO. 596/2014, AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

 

For immediate release

 

12 March 2025

 

 

Kingswood Holdings Limited

 

("Kingswood", the "Company" or the "Group")

 

Update on financial position and announcement of possible offer

 

Kingswood announces an update on its financial position and that it is in
advanced discussions with HSQ Investments Limited ("HSQ") regarding a possible
cash offer by HSQ for the entire issued and to be issued share capital of
Kingswood not already owned by HSQ at a price of 7 pence per Kingswood share
(the "Possible Offer").

 

Company's current financial position and HSQ's financial support

 

HSQ initially invested in Kingswood in September 2019, providing up to £80m
of growth equity capital to the business. HSQ currently holds 68.4 per cent of
Kingswood's voting rights and have reiterated their support for the Company.

 

Notwithstanding the Company's growth in revenues and AUA&M since HSQ
initially invested in the Company in 2019, the Company's performance has been
impacted by the headwinds seen across the sector over the last couple of
years. This has resulted in the Company's growth not being as strong over the
period as management had expected. In conjunction with this, the acquisition
strategy has seen the Company's debt position increase significantly over the
last two years, rising from a net cash position of £39.7m to a net debt
position of £48.1m as at 31 December 2023. Since the start of 2024, in order
to satisfy the working capital obligations of the Company (including to meet
deferred payment obligations and debt interest payments on its senior debt
facility) HSQ, or affiliates of HSQ, have provided the Company with additional
loans, amounting to in aggregate £21 million.

 

As at 31 December 2024, the unaudited gross debt in the Company from its
senior debt facility and the loans provided by HSQ and/or affiliates of HSQ
since February 2024 amounted to, in aggregate, £90.7m. Set against this, the
Company has imminent obligations which significantly exceed the cash balance
available at the end of March 2025. In the absence of new external financial
support, the Company would not be able to satisfy these obligations.

 

HSQ has confirmed that they continue to be supportive of the business but
believe that this is most appropriate from a position as sole institutional
shareholder alongside the Company moving to an unlisted, private company
setting and therefore they have stated that they would be willing to provide
the required near-term funding only on this basis.  The Kingswood Independent
Directors are strongly of the view that there is no other near term credible
alternative to the Company other than the continued financial support from
HSQ.

 

The Possible Offer

 

The making of the Possible Offer by HSQ is subject to formalising an
in-principle agreement between HSQ and KPI regarding a sale by KPI and
purchase by HSQ of KPI's entire shareholding in the Company at a price of 7
pence per share.

 

The Company also understands that HSQ and KPI have agreed to amend the terms
of certain existing arrangements between them for the benefit of KPI (the
"Amendment"). The Amendment (to be more fully described in due course) relates
to a change for the benefit of KPI in the arrangements between KPI and HSQ
described in the Company's announcement of 31 May 2024 (including KPI's
indirect interest in the Make Whole Instrument as defined in that
announcement).

 

The Independent Kingswood Directors have informed HSQ that they would be
minded to recommend the Possible Offer, if made, to Kingswood Shareholders at
this price of 7 pence per share.

 

There can be no certainty that an offer will be made. Further announcements
will be made as and when appropriate.

 

In accordance with Rule 2.4(c) of the Takeover Code ("Code"), HSQ will be
required, pursuant to Rule 2.6(a) of the Code, by no later than 5.00 p.m. on 9
April 2025, to either announce a firm intention to make an offer for the
Group, under Rule 2.7 of the Code, or announce that it does not intend to make
an offer for the Group, in which case the announcement will be treated as a
statement to which Rule 2.8 of the Code applies. The deadline can only be
extended with the consent of the Panel on Takeovers and Mergers (the 'Panel')
in accordance with Rule 2.6(c) of the Code.

 

As a consequence of this announcement, an offer period has now commenced in
respect of the Company in accordance with the Code and the attention of
Kingswood shareholders is drawn to the disclosure requirements of Rule 8 of
the Code, which are summarised below.

 

HSQ have provided their consent to this announcement.

 

 

Enquiries:

 

 Kingswood Holdings Limited                                          +44(0)20 7293 0730

 David Hudd, Chairman                                                 www.kingswood-group.com

 Peter Coleman, Chief Executive Officer

 Cavendish (Rule 3 adviser, Nominated Adviser and Corporate Broker)  +44 (0)20 7220 0500

 Marc Milmo

 Henrik Persson

 Isaac Hooper

 Important information

 

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise.

 

The distribution of this announcement in jurisdictions outside the United
Kingdom may be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about, and observe such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities law of any such jurisdiction.

 

The Company's ordinary shares have not been and will not be registered under
the US Securities Act or under the securities laws of any state or other
jurisdiction of the United States.  Accordingly, the Ordinary Shares may not
be offered, sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into the United States absent registration under
the US Securities Act of 1933 or an exemption therefrom.  There will be no
public offer of the Company's ordinary shares in the United States.

 

Cavendish Capital Markets Limited ("Cavendish"), which, in the United Kingdom,
is authorised and regulated by the Financial Conduct Authority, is acting
exclusively for Kingswood and no one else in connection with the Possible
Offer and will not be responsible to anyone other than Kingswood for providing
the protections afforded to clients of Cavendish nor for providing advice in
relation to the Possible Offer or any other matter or arrangement referred to
in this Announcement.

 

Rule 2.9 information

 

In accordance with Rule 2.9 of the Takeover Code, as at the date of this
announcement, Kingswood Holdings Limited has 686,184,011 ordinary shares of 5
pence each in issue and admitted to trading on the London Stock Exchange AIM
market.  The International Securities Identification Number for the ordinary
shares is GG00BKY4K072.

 

Website publication

 

In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement
will be available on Kingswood's website at www.kingswood-group.com by no
later than 12 noon (London time) on 13 March 2025. The content of the website
referred to in this announcement is not incorporated into and does not form
part of this announcement.

 

 

"Disclosure requirements of the Takeover Code (the 'Code')

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 pm (London time) on the 10th
business day following the commencement of the offer period and, if
appropriate, by no later than 3.30 pm (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%
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 offerors, save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the

 

Takeover Panel's website at www.thetakeoverpanel.org.uk, 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."

 

Market Abuse Regulations

 

The information contained within this announcement is considered to constitute
inside information as stipulated under Article 7 of the Market Abuse
Regulations (EU) No.596/2014 as incorporated into UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("UK MAR").  Upon the publication of
this announcement via a regulatory information service, this inside
information will be considered to be in the public domain.  For the purposes
of UK MAR, the person responsible for arranging for the release of this
information on behalf of Kingswood is Peter Coleman.

 

Note

 

References to "Rules" are to the rules of the City Code on Takeovers and
Mergers. The terms "offeror", "offeree company", "offer period", "interested"
(and related variations), "relevant securities", "deals" (and related
variations) and "acting in concert" all bear the same meanings given to them
in the City Code on Takeovers and Mergers.

 

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