Increased and final recommended offer
15/01/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250115:nRSO4027Ta&default-theme=true
RNS Number : 4027T Fortress Investment Group (UK) Ltd 15 January 2025
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 OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
15 January 2025
INCREASED AND FINAL* RECOMMENDED OFFER
FOR
LOUNGERS PLC
BY
CF EXEDRA BIDCO LIMITED
(a newly-formed company indirectly owned by funds and accounts managed or
advised by affiliates of Fortress Investment Group, LLC)
to be implemented by means of a scheme of arrangement under Part 26 of the
Companies Act 2006
Introduction
On 28 November 2024 (the "Original Announcement Date"), the boards of
directors of Loungers plc ("Loungers") and CF Exedra Bidco Limited ("Bidco"),
a newly-formed company indirectly owned by funds and accounts managed or
advised by affiliates of Fortress Investment Group, LLC ("Fortress"),
announced that they had reached agreement on the terms and conditions of a
recommended acquisition by Bidco of the entire issued and to be issued share
capital of Loungers (the "Acquisition"). The Acquisition is to be effected by
means of a Court sanctioned scheme of arrangement under Part 26 of the
Companies Act 2006 (the "Scheme").
The shareholder circular in respect of the Acquisition (the "Scheme Document")
was published and made available to Loungers Shareholders on 17 December 2024.
This announcement should be read in conjunction with the Scheme Document.
Unless otherwise defined, capitalised terms used in this announcement have the
same meanings as set out in the Scheme Document. All references in this
announcement to times are to London time unless otherwise stated.
Increased and Final* Offer
The boards of directors of Bidco and Loungers are pleased to announce that
they have reached an agreement on the terms of an increased recommended offer
by Bidco for the entire issued and to be issued share capital of Loungers (the
"Increased and Final Offer").
*Bidco considers the financial terms of the Increased and Final Offer to be
fair. Bidco therefore confirms today that the financial terms of the Increased
and Final Offer are final and will not be increased, except that Bidco
reserves the right to increase the Increased and Final Cash Offer (as defined
below), the Increased and Final Alternative Offer (as defined below) and/or
otherwise improve the terms of the Acquisition: (i) if there is an
announcement on or after the date of this announcement of a possible offer or
of a firm intention to make an offer for Loungers by any third party; or (ii)
if the Panel otherwise provides its consent (such consent to be given only in
wholly exceptional circumstances).
The Increased and Final Cash Offer
Under the terms of the Increased and Final Offer, Loungers Shareholders will
be entitled to receive:
for each Scheme Share: 325 pence in cash
(the "Increased and Final Cash Offer")
The Increased and Final Cash Offer values the entire issued, and to be issued,
ordinary share capital of Loungers at approximately £354.4 million, and
implies an enterprise value of approximately £366.6 million and a multiple of
approximately 8.4 times Loungers' FY24 Adjusted EBITDA (before site
pre-opening costs) and of approximately 9.4 times Loungers' FY24 Adjusted
EBITDA (after site pre-opening costs).
The Increased and Final Cash Offer represents a premium of approximately 4.8
per cent. to 310 pence per Loungers Share, being the original Cash Offer for
the Acquisition (the "Original Cash Offer"), and a premium of approximately:
· 36.6 per cent. to the closing price of 238.0 pence per Loungers Share
on 27 November 2024, being the last Business Day before the Original
Announcement Date;
· 46.5 per cent. to the volume weighted average price of 221.9 pence
per Loungers Share in the two weeks to 27 November 2024, being the last
Business Day before the Original Announcement Date;
· 41.1 per cent. to the volume weighted average price of 230.4 pence
per Loungers Share in the one month to 27 November 2024, being the last
Business Day before the Original Announcement Date; and
· 35.9 per cent. to the volume weighted average price of 239.2 pence
per Loungers Share in the twelve months to 27 November 2024, being the last
Business Day before the Original Announcement Date.
The Increased and Final Alternative Offer
As an alternative to the Increased and Final Cash Offer, Eligible Scheme
Shareholders will continue to be able to elect for the Alternative Offer in
relation to some or all of their holdings of Loungers Shares (subject to the
implementation of the Rollover Process as detailed in the Scheme Document). As
a result of the Increased and Final Offer, Eligible Scheme Shareholders who
elect for the Alternative Offer will receive (subject to the implementation of
the Rollover Process as detailed in the Scheme Document) for each Loungers
Share:
1 Rollover Unit (each Rollover Unit comprising 3.67862913805519 Topco Ordinary
Shares and 321.321370861945 Topco B Preference Shares (the "Revised Exchange
Ratio"))
As the Increased and Final Cash Offer represents an increase in value per
Loungers Share, the value of the Rollover Unit will be increased
commensurately. To reflect the increased value of a Rollover Unit, the number
of Topco B Preference Shares and Topco Ordinary Shares per Rollover Unit have
been increased so as to maintain as closely as possible the ratio of the Topco
B Preference Shares and Topco Ordinary Shares received by Loungers
Shareholders who validly elect for the Alternative Offer (the "Increased and
Final Alternative Offer").
Except for the Revised Exchange Ratio, the terms and conditions of the
Increased and Final Alternative Offer (as detailed in Part V (Details of the
Rollover Units) of the Scheme Document) have not changed and the Topco
Ordinary Shares and the Topco B Preference Shares will continue to have the
rights of the "Ordinary Shares" and "B Preference Shares" respectively set out
in the Revised Topco Shareholders' Agreement and the Topco Articles (as
amended from time to time).
For the purposes of Rule 24.11 of the Takeover Code, the Rollover Units have
been independently valued by HSBC (as financial adviser to Bidco) and an
estimate of the value of the Rollover Units, together with the assumptions,
qualifications and caveats forming the basis of that estimate of value, was
set out at Part XI (Rule 24.11 HSBC Estimated Value of Rollover Units) of the
Scheme Document. It is HSBC's view that under the terms of the Increased and
Final Alternative Offer, the Estimated Value of each Rollover Unit is a range
of 240 pence to 285 pence (the "Revised Estimated Value"). As a result of the
Increased and Final Alternative Offer and the Revised Estimated Value, HSBC
have prepared a Revised 24.11 Letter, which is attached as Appendix 2 to this
announcement.
The Increased and Final Offer is subject to the terms and conditions set out
in the Scheme Document (as modified by the terms of the Increased and Final
Offer contained in this announcement). Loungers Shareholders should note that
Loungers does not intend to publish a revised scheme document for the
Increased and Final Offer.
If, on or after the Announcement Date and before the Effective Date, any
dividend and/or other distribution and/or other return of capital is declared,
made or paid or becomes payable in respect of Loungers Shares, Bidco shall
reduce the consideration payable under the terms of the Increased and Final
Cash Offer (and, as the case may be, the consideration due under the terms of
the Increased and Final Alternative Offer), by an amount up to the amount of
such dividend and/or distribution and/or return of capital, in which case any
reference in this document to the consideration payable under the Increased
and Final Cash Offer (or consideration due under the Increased and Final
Alternative Offer) will be deemed to be a reference to the consideration as so
reduced. If the consideration payable under the terms of the Increased and
Final Cash Offer (or consideration due under the Increased and Final
Alternative Offer) is reduced in accordance with this paragraph, it shall be
the subject of an announcement and, for the avoidance of doubt, shall not be
regarded as constituting any revision or variation of the terms of the Scheme.
Comments on the Increased and Final Offer
Commenting on the Increased and Final Offer, Alex Reilley, the Chairman of
Loungers said:
"We are very pleased that Fortress has decided to increase its offer, making
it even more compelling for Loungers Shareholders and reinforcing the Loungers
Directors' recommendation that they should vote in favour of the Acquisition."
Commenting on the Increased and Final Offer, Domnall Tait, Managing Director
of Fortress said:
"This increased offer for Loungers reflects our continued belief in the
business and its management team, and we look forward to supporting them
through the next stage of growth. Notwithstanding the recent challenges,
Fortress remains a strong believer in the UK."
Recommendation of the Increased and Final Cash Offer
The Loungers Directors, who have been so advised by Houlihan Lokey as to the
financial terms of the Increased and Final Cash Offer, consider the terms of
the Increased and Final Cash Offer to be fair and reasonable. In providing its
advice to the Loungers Directors, Houlihan Lokey has taken into account the
commercial assessments of the Loungers Directors. Houlihan Lokey is providing
independent financial advice to the Loungers Directors for the purposes of
Rule 3 of the Takeover Code.
Accordingly, the Loungers Directors unanimously recommend that Loungers
Shareholders vote in favour of the Scheme at the Court Meeting and the
Resolution to be proposed at the General Meeting as the Loungers Directors who
are interested in Loungers Shares have irrevocably undertaken to do (or
procure to be done) in respect of their own beneficial holdings, being, in
aggregate, 7,759,526 Loungers Shares (representing approximately 7.5 per cent.
of the issued ordinary share capital of Loungers as at close of business on 14
January 2025, being the latest practicable date prior to publication of this
announcement.
As an alternative to the Increased and Final Cash Offer, Eligible Scheme
Shareholders may also elect for the Increased and Final Alternative Offer in
respect of some or all of their Loungers Shares. Houlihan Lokey is unable to
advise the Loungers Directors as to whether or not the financial terms of the
Increased and Final Alternative Offer are fair and reasonable. Accordingly,
the Loungers Directors are unable to form an opinion as to whether or not the
terms of the Increased and Final Alternative Offer are fair and reasonable and
are not making any recommendation to Loungers Shareholders as to whether or
not they should elect for the Increased and Final Alternative Offer, and in
this regard Loungers Shareholders attention is drawn to section 16 of Part I
(Letter from the Executive Chair of Loungers plc) of the Scheme Document.
Background to and reasons for the Loungers' Directors recommendation of the
Increased Final Cash Offer
The Loungers Directors welcome the decision by Bidco to increase the value of
the Original Cash Offer. The Loungers Directors reaffirm the reasons for their
recommendation of the Original Cash Offer, as set out in paragraph 3 of Part 1
of the Scheme Document, with respect to the Increased and Final Cash Offer.
The Loungers Directors not only believe that the Increased and Final Cash
Offer is in the best interests of Loungers and the Loungers Shareholders but
also that the consequences of the Acquisition failing to complete could be
materially detrimental for Loungers and Loungers Shareholders.
In order to ensure that Loungers Shareholders are in a position to make a
fully informed decision about the Acquisition, the Loungers Directors wish to
highlight the following:
1. the Increased and Final Cash Offer represents an approximately 4.8 per
cent. premium on the value of the Original Cash Offer and a premium of 8.3 per
cent. to the highest-ever closing price prior to the Original Announcement
Date of a Loungers Share of 300 pence. The Increased and Final Cash Offer will
provide the opportunity to receive an immediate and certain value per Loungers
Share in cash at a valuation that might not otherwise become available and
would, in any event, be subject to recognition by the stock market of the
successful ongoing execution of Loungers' strategy and sufficient liquidity in
the Loungers Shares;
2. the Increased and Final Offer has been made despite the increasing
weight of negative comment about the outlook for the sector and implies a
multiple of approximately 8.4 times Loungers' FY24 Adjusted EBITDA (before
site pre-opening costs) and of approximately 9.4 times Loungers' FY24 Adjusted
EBITDA (after site pre-opening costs) which, the Loungers Directors believe,
is at a level comparable with relevant recent precedent;
3. the Increased and Final Offer is, by a significant measure, the highest
offer received for Loungers following its comprehensive and competitive sale
process involving both private equity and strategic potential acquirors and
several rounds of negotiations with Fortress, as detailed in paragraph 3 of
Part 1 of the Scheme Document. The Loungers Directors believe that it is
instructive, and indicative of the fair value represented by the Original Cash
Offer, let alone the Increased and Final Cash Offer, that in the period since
the Original Announcement Date, Loungers has received no competing offer
approaches from any third party;
4. that sale process was itself the culmination of extended strategic
discussions aimed at addressing the failure of the Loungers Share price to
reflect the business' strong operational performance. Loungers had, in
conjunction with its brokers and other advisers, considered several options to
address this, including the commencement of dividend payments and share
buy-backs. However, it was ultimately concluded such actions would not have a
meaningful impact. Loungers also sought to engage with potential new
investors, including retail investors, and increased both its media and
research analyst engagement. The effect of these actions on Loungers'
valuation was limited and, as a result, the Loungers Directors decided to
evaluate the potential for a recommendable offer;
5. if the Acquisition were to fail to complete, the consequences could, in
the opinion of the Loungers Directors, be materially detrimental to Loungers
and Loungers Shareholders. It would undermine both the recommendation of the
Loungers Directors and, in particular, the positions of Executive Chairman
Alex Reilley and CEO Nick Collins, both of whom are fully supportive of the
Acquisition and both of whom would find their positions untenable if it was
voted down by Loungers Shareholders. Investors and other market participants
acknowledge that one of Loungers' key strengths is its strong management team.
The Loungers Directors consider that Loungers' team morale stems, in large
part, from its executive leadership and that should any of the management team
leave Loungers as a result of the Acquisition being voted down at this stage,
it would undoubtedly impact the Loungers business, potentially materially;
6. the Loungers Directors have little confidence that the stock market
outlook for quoted consumer stocks will improve markedly in the foreseeable
future. The Loungers Directors consider that 2025 is likely to be a
challenging year for British consumers as retailers and leisure operators
raise prices again to mitigate the rise in National Insurance Contributions
and the National Minimum Wage introduced in the October budget. Loungers too
has meaningful incremental costs as a result of these measures which it will
need to seek to mitigate; and
7. the Loungers Directors believe that poor liquidity in Loungers Shares
is a reason why it has been hard to attract new institutional investors to
Loungers. Should the Acquisition not complete, the Loungers Directors would
expect to see downward pressure on the Loungers Share price as the factors
mentioned above materialise, and believe that this would be exacerbated by
selling pressure from short term event driven investors that joined the
Loungers share register following the Original Announcement and other Loungers
Shareholders who wished to receive the Increased and Final Cash Offer but were
prevented from doing so because the Acquisition did not complete. Even if the
value of the Loungers Shares were to increase over time, the Loungers
Directors believe that the poor liquidity in the Loungers Shares is likely to
restrict material volumes of Loungers Shares being traded.
For these reasons, the Loungers Directors believe that the Increased and Final
Cash Offer is in the best interests of Loungers and the Loungers Shareholders.
Accordingly, the Loungers Directors recommend unanimously that Loungers
Shareholders vote in favour of the Scheme at the Court Meeting and the
Resolution to be proposed at the General Meeting, as the Loungers Directors
who are interested in Loungers Shares have irrevocably undertaken to do (or
procure to be done) in respect of their own beneficial holdings, being, in
aggregate, 7,759,526 Loungers Shares (representing approximately 7.5 per cent.
of the issued ordinary share capital of Loungers as at close of business on 14
January 2025, being the latest practicable date prior to publication of this
announcement.
Irrevocable Undertakings and Letter of Intent
Loungers Directors
Revised irrevocable undertakings in relation to the Increased and Final
Alternative Offer have been received from Loungers Directors who hold Loungers
Shares and who intend to participate in the Increased and Final Alternative
Offer (being Alex Reilley and Nick Collins). These revised irrevocable
undertakings reflect the terms of the Increased and Final Offer and account
for the fact that both intend to increase their participation in the Increased
and Final Alternative Offer.
Name Total Number of Percentage of existing issued share capital held Percentage of existing issued share capital committed to the Increased and
Loungers Shares Final Alternative Offer
Alex Reilley 6,751,432 6.5 5.0
Nick Collins 956,276 0.9 0.3
A revised irrevocable undertaking, which reflects the terms of the Increased
and Final Offer, has also been received from Stephen Marshall. He does not
currently hold any Loungers Shares but to the extent he acquires any as a
result of the vesting of awards or the exercise of options under the Loungers
Share Plans following the date of this announcement, he intends to participate
in the Increased and Final Alternative Offer in respect of 100 per cent. of
his Loungers Shares (which are expected to represent 0.02 per cent. of the
fully diluted share capital of Loungers at completion of the Acquisition).
Robert Darwent is a Loungers Director. He holds no Loungers Shares in his own
name. However, he is a representative of Lion on the Loungers Board. Lion is
interested in 26,728,524 Loungers Shares and has given an irrevocable
undertaking as described below.
Loungers Shareholders
Revised irrevocable undertakings, which reflect the terms of the Increased and
Final Offer, have also been received from Lion, Jake Bishop and Justin Carter,
all of whom currently hold Loungers Shares and intend to participate in the
Increased and Final Alternative Offer, and in the case of Jake Bishop and
Justin Carter reflect that both intend to increase their participation in the
Increased and Final Alternative Offer.
Name Total Number of Percentage of existing issued share capital held Percentage of existing issued share capital committed to the Increased and
Loungers Shares Final Alternative Offer
Lion Capital LLP 26,728,524 25.7 25.7
Jake Bishop 6,507,432 6.3 4.9
Justin Carter 598,572 0.6 0.3
Revised irrevocable undertakings, which reflect the terms of the Increased and
Final Offer, have also been received from Kate Eastwood, Lucy Knowles, Jono
Jenkins, Tom Trenchard and Guy Youll. They do not currently hold any Loungers
Shares, but intend to participate in the Increased and Final Alternative Offer
in respect of 30 per cent., 30 per cent., 15.9 per cent., 15.9 per cent. and
40 per cent. respectively of the Loungers Shares they acquire as a result of
the vesting of awards or the exercise of options under the Loungers Share
Plans following the date of this announcement (which are expected to represent
0.01 per cent., 0.02 per cent., 0.01 per cent, 0.02 per cent. and 0.09 per
cent. respectively of the fully diluted share capital of Loungers at
completion of the Acquisition).
Copies of the revised irrevocable undertakings will be available on Fortress'
website at https://www.fortress.com/loungers-offer
(https://www.fortress.com/loungers-offer) and on Loungers' website at
https://loungers.co.uk/offer-documentation
(https://loungers.co.uk/offer-documentation) by no later than 12 noon on 16
January 2025.
The irrevocable undertakings and the non-binding letter of intent previously
received by Bidco, and which have not been revised, remain valid in relation
to the Increased and Final Offer. Further information regarding these
irrevocable undertakings can be found at Part X (Additional Information) of
the Scheme Document.
In total therefore, Bidco has procured irrevocable undertakings to vote (or,
where applicable, procure voting) in favour of the Scheme at the Court Meeting
and the Resolution to be proposed at the General Meeting (or if the
Acquisition is implemented by an Offer, to accept or procure acceptance of
such Offer) in respect of, in aggregate, 41,774,202 Loungers Shares,
representing approximately 40.2 per cent. of the existing issued ordinary
share capital of Loungers as at 14 January 2025, the latest practicable date
prior to the date of this announcement.
Financing of the Increased and Final Offer
The additional cash consideration payable pursuant to the Increased and Final
Offer will be financed by equity to be invested by the Fortress Funds. On 15
January 2025, Bidco and certain of the Fortress Funds entered into a revised
Equity Commitment Letter (the "Revised Equity Commitment Letter") to reflect
the revised total amount of the Fortress Equity Investment which may be
required. A revised Omnibus Subscription Agreement (the "Revised Omnibus
Subscription Agreement") was also entered into to reflect the terms of the
Increased and Final Offer. The balance of the cash consideration payable
pursuant to the acquisition will be financed in the manner described in
paragraph 9 of Part II (Explanatory Statement) of the Scheme Document.
Further detail regarding the funding of the Acquisition can be found at Part
II (Explanatory Statement) and at paragraph 6 of Part X (Additional
Information) of the Scheme Document.
HSBC, in its capacity as sole financial adviser to Bidco, is satisfied that
sufficient resources are available to Bidco to satisfy in full the cash
consideration payable to Loungers Shareholders pursuant to the terms of the
Acquisition.
Information on Topco share capital
The total amount of the Fortress Equity Investment on the Effective Date in
connection with the Increased and Final Offer will continue to depend on the
number of elections validly made by Eligible Scheme Shareholders under the
Increased and Final Alternative Offer. If no valid elections are received from
Loungers Shareholders other than those who have irrevocably undertaken to
participate in the Increased and Final Alternative Offer (as described in this
announcement and at paragraph 6 of Part X (Additional Information) of the
Scheme Document), the amount of the Fortress Equity Investment would be
£112.3 million (with the amount of the Fortress Preference Investment being
an amount equal to £112.3 million minus the amount of the Fortress Ordinary
Investment) and the share capital of Topco would comprise, following, and
subject to, the implementation of the Rollover Process:
· 143,432,648 Topco Ordinary Shares issued to Loungers
Shareholders;
· 95,621,765 Topco Ordinary Shares issued to Fortress Funds;
· 12,528,573,451 Topco B Preference Shares issued to Loungers
Shareholders; and
· 11,137,813,610 Topco A Preference Shares issued to Fortress
Funds.
For every additional Loungers Share which is subject to the Increased and
Final Alternative Offer, the Fortress Equity Investment will be reduced (on a
pound for pound basis) by an amount equal to the value of the Increased and
Final Cash Offer in respect of each such additional Loungers Share
participating in the Increased and Final Alternative Offer (subject always to
the Alternative Offer Maximum). Accordingly, if the Increased and Final
Alternative Offer were taken up in full by Eligible Scheme Shareholders, the
maximum amount of the Fortress Equity Investment would be £107.3 million
(with the amount of the Fortress Preference Investment being an amount equal
to £107.3 million minus the amount of the Fortress Ordinary Investment) and
the share capital of Topco would comprise, following, and subject to, the
implementation of the Rollover Process:
· 149,112,798 Topco Ordinary Shares issued to Loungers
Shareholders;
· 99,408,532 Topco Ordinary Shares issued to Fortress Funds;
· 13,024,723,851 Topco B Preference Shares issued to Loungers
Shareholders; and
· 10,632,196,205 Topco A Preference Shares issued to Fortress
Funds.
Any fractional entitlements of a Loungers Shareholder to Topco Ordinary Shares
and Topco B Preference Shares under the Increased and Final Alternative Offer
will be rounded down to the nearest whole number of Topco Ordinary Shares and
Topco B Preference Shares per Loungers Shareholder. Fractional entitlements to
Topco Ordinary Shares and Topco B Preference Shares will not be allotted or
issued to such Loungers Shareholder but will be disregarded. Any fractional
entitlements of Fortress Funds to Topco Ordinary Shares or Topco A Preference
Shares will be rounded down to the nearest whole number and any such
fractional entitlements will be disregarded.
Accordingly, if a Loungers Shareholder with 1,000 Loungers Shares validly
accepts the Alternative Offer in respect of such shares, they would, subject
to the implementation of the Rollover Process and to any scale back pursuant
to the mechanism described at paragraph 3 of Part II (Explanatory
Statement) of the Scheme Document, receive 1,000 Rollover Units (comprising
3,678 Topco Ordinary Shares and 321,321 Topco B Preference Shares).
Court Meeting and General Meeting
The Loungers Board confirms that the Court Meeting and the General Meeting,
notices of which are set out in Part XII (Notice of Court Meeting) and Part
XIII (Notice of General Meeting) of the Scheme Document respectively, will be
held at 9.00 a.m. and 9.15 a.m. (or, if later, as soon as the Court Meeting
has concluded or been adjourned), respectively, on 30 January 2025 at the
offices of Loungers at 26 Baldwin Street, Bristol, BS1 1SE in accordance with
the Scheme Document.
Action to be taken by Loungers Shareholders
As described in the Scheme Document, in order to become Effective the Scheme
will require, among other things, the approval at the Court Meeting of a
majority in number of the Scheme Shareholders present and voting in person or
by proxy, representing not less than 75 per cent. in value of the Scheme
Shares held by such Scheme Shareholders, the passing of the Resolution, among
other things, to implement the Scheme at the General Meeting by the requisite
majority of Loungers Shareholders at such General Meeting and the subsequent
sanction of the Scheme by the Court. The Scheme is also subject to the
satisfaction or, where applicable, waiver of the Conditions and to further
terms that are set out in the Scheme Document. It is important that, for the
Court Meeting in particular, as many votes as possible are cast so that the
Court may be satisfied that there is fair representation of the opinion of
Scheme Shareholders.
Scheme Shareholders who have not yet done so are therefore strongly encouraged
to complete, sign and return the Form of Proxy in accordance with the
instructions printed thereon or, alternatively, to appoint a proxy or voting
instruction online or through CREST, for both the Court Meeting and the
General Meeting, as soon as possible and by no later than the following times
and dates:
· BLUE Form of Proxy for use at the Court Meeting so as to be
received no later than 9.00 a.m. on 28 January 2025; and
· WHITE Form of Proxy for use at the General Meeting so as to be
received no later than 9.15 a.m. on 28 January 2025.
If the BLUE Form of Proxy for the Court Meeting is not returned by the above
time, it may be handed to a representative of Link Group, on behalf of the
Chairman of the Court Meeting, or to the Chairman of the Court Meeting, before
the start of that Meeting. However, in the case of the General Meeting, the
WHITE Form of Proxy must be received by Link Group by the time mentioned
above, or it will be invalid.
Loungers Shareholders are reminded that completion and return of a Form of
Proxy, or the appointment of a proxy electronically using CREST (or any other
procedure described in the Scheme Document), will not prevent them from
attending, speaking and voting in person at either the Court Meeting and/or
the General Meeting, or any adjournment thereof, if they wish and are entitled
to do so.
Loungers Shareholders who do NOT wish to change their voting instructions or
Form of Election
Loungers Shareholders who have already submitted Forms of Proxy for the Court
Meeting and/or General Meeting and who do not wish to change their voting
instructions need take no further action as their Forms of Proxy will continue
to be valid in respect of the Court Meeting and the General Meeting.
Loungers Shareholders who have already submitted a Form of Election in respect
of the Alternative Offer and who do not wish to change their election need
take no further action as their Form of Election will continue to be valid in
respect of the Increased and Final Alternative Offer.
Loungers Shareholders who DO wish to change their voting instructions or Form
of Election
Loungers Shareholders who have already submitted Forms of Proxy for the Court
Meeting and/or General Meeting or a Form of Election in respect of the
Alternative Offer and who now wish to change their voting instructions or
election should contact Link Group by calling the shareholder helpline between
9.30 a.m. and 5.30 p.m. Monday to Friday (excluding public holidays in England
and Wales) on +44 (0) 371 664 0321. Calls are charged at the standard
geographic rate and will vary by provider. Calls from outside the UK 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.
Conditions
The Conditions to the Acquisition are set out in full in Part III (Conditions
to and further terms of the Acquisition and the Scheme) of the Scheme
Document.
The Scheme will be modified to reflect the terms of the Increased and Final
Offer. Save as disclosed in this announcement, the Increased and Final Offer
is subject to the terms and conditions set out in the Scheme Document.
Expected Timetable of Principal Events
The Scheme Document contains an expected timetable of principal events
relating to the Scheme, which is also attached as Appendix 1 to this
announcement. Subject to obtaining the necessary approvals of the Scheme
Shareholders at the Court Meeting, Loungers Shareholders at the General
Meeting, the satisfaction or, where applicable, the waiver of the other
Conditions (as set out in the Scheme Document) and the sanction of the Court,
the Scheme is expected to become effective on or around 11 February 2025.
If any of the key dates and/or times set out in the expected timetable change,
Loungers will give notice of this change by issuing an announcement through a
Regulatory Information Service with such announcement being made available on
Loungers' website at https://loungers.co.uk/offer-documentation
(https://loungers.co.uk/offer-documentation) .
General
The Increased and Final Offer does not change Bidco's intentions as regards
the Loungers business (including locations of its operations), the management
and employees of Loungers, existing employment and pension rights. The
Increased and Final Offer does not change the effect of the Scheme on
participants' options and awards under the Loungers Share Plans or (where
applicable) the appropriate proposal in respect of such rights pursuant to
Rule 15 of the Takeover Code. Joint letters are being sent to participants in
the Loungers Share Plans to update them on the Increased and Final Offer and
giving them the opportunity to change their decisions as to whether to receive
the Increased and Final Cash Offer or the Increased and Final Alternative
Offer in relation to the Loungers Shares under their options and awards (the
"Share Plan Participant Letters"). The Share Plan Participant Letters will be
made available on the Fortress website at
https://www.fortress.com/loungers-offer
(https://www.fortress.com/loungers-offer) and the Loungers' website at
https://loungers.co.uk/offerdocumentation.
Save as disclosed in this announcement, there are no disclosures required to
be made under Rule 27.2(a), 27.2(b) or 27.2(c) of the Takeover Code by
Loungers, Bidco or Fortress.
Revised documents
The Omnibus Put and Call Option Deed, the Bidco Loan Note Instrument and the
Midco Loan Note instrument have been revised to reflect the terms of the
Increased and Final Alternative Offer.
Sources and Bases
Appendix 3 to this announcement contains sources and bases of certain
information contained in this announcement.
Consents
Each of HSBC, Houlihan Lokey, Panmure Liberum and Peel Hunt has given and not
withdrawn its written consent to the inclusion herein of the references to its
name in the form and context in which such references appear.
Documents available on website
Copies of the following documents will, by no later than 12 noon on 16 January
2025, be made available via the links on Fortress' website at
https://www.fortress.com/loungers-offer
(https://www.fortress.com/loungers-offer) and Loungers' website at
https://loungers.co.uk/offer-documentation
(https://loungers.co.uk/offer-documentation) :
· this announcement;
· letters to Loungers Shareholders notifying them of this
announcement;
· the Share Plan Participant Letters;
· the Revised 24.11 Letter;
· the Revised Equity Commitment Letter;
· the Revised Omnibus Subscription Agreement;
· the Revised Omnibus Put and Call Option Deed;
· the Revised Bidco Loan Note Instrument;
· the Revised Midco Loan Note Instrument;
· the revised irrevocable undertakings as described in this
announcement; and
· the consent letters from each of the financial advisers and
brokers referred to above.
The contents of the websites referred to in this announcement are not
incorporated into and do
not form part of this announcement.
Enquiries:
HSBC Bank plc (Financial Adviser to Bidco)
Anthony Parsons +4 (tel:%20+4) 4 (0)20 7991 8888
David Plowman
Christopher Fincken
Alex Thomas
Alina Vaskina (Corporate Broking)
Cardew Group (Communications adviser to Fortress) +44 7738 724 630
+44 7552 864 250
Ed Orlebar (ed.orlebar@cardewgroup.com)
Olivia Rosser (olivia.rosser@cardewgroup.com)
fortress@cardewgroup.com (mailto:fortress@cardewgroup.com)
Loungers +44 (0)117 930 9771
Nick Collins
Stephen Marshall
Houlihan Lokey UK Limited (Financial Adviser to Loungers)
Sam Fuller +44 (0)20 7389 3355
Tim Richardson
Tom Barnard
Panmure Liberum Limited (Joint Broker to Loungers) +44 (0)20 3100 2000
Andrew Godber
Rupert Dearden
William King
Peel Hunt LLP (Joint Broker to Loungers)
Dan Webster
Sohail Akbar
Andrew Clark +44 (0)20 7418 8900
Sodali & Co (PR Adviser to Loungers)
Rob Greening
Russ Lynch
+44 (0)20 7250 1446
Slaughter and May is acting as legal adviser to Bidco.
Jones Day is acting as legal adviser to Loungers.
Important Notices Relating to Financial Advisers
HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation
Authority and regulated in the United Kingdom by the Financial Conduct
Authority and the Prudential Regulation Authority, is acting as financial
adviser exclusively for Bidco and no one else in connection with the
Acquisition and will not be responsible to anyone other than Bidco for
providing the protections afforded to clients of HSBC, or for providing advice
in relation to the Acquisition or any other matters referred to in this
announcement. Neither HSBC nor any of its group undertakings or 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 HSBC in connection with this announcement
or any matter referred to herein.
Houlihan Lokey UK Limited ("Houlihan Lokey"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom, is acting
as financial adviser exclusively for Loungers and no one else in connection
with the Acquisition and will not be responsible to anyone other than Loungers
for providing the protections afforded to clients of Houlihan Lokey or for
providing advice in relation to the Acquisition or any other matters referred
to in this announcement. Neither Houlihan Lokey 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 Houlihan Lokey in connection with this
announcement, any statement contained herein or otherwise.
Panmure Liberum Limited ("Panmure Liberum"), which is authorised and regulated
in the United Kingdom by the FCA, is acting as corporate broker exclusively
for Loungers and no one else in connection with the Acquisition and the
matters set out in this announcement. Panmure Liberum will not regard any
other person as its client in relation to the Acquisition or any other matter
or arrangement set out in this announcement and will not be responsible to
anyone other than Loungers for providing the protections afforded to clients
of Panmure Liberum, nor for providing advice in relation to the Acquisition or
any other matter or arrangement referred to in this announcement. Neither
Panmure Liberum nor any of its affiliates (nor their respective directors,
officers, employees or agents) 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 Panmure
Liberum in connection with the Acquisition, this announcement, any statement
contained herein or otherwise. No representation or warranty, express or
implied, is made by Panmure Liberum as to the contents of this announcement.
Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United
Kingdom by the FCA, is acting as corporate broker exclusively for Loungers and
no one else in connection with the Acquisition and the matters set out in this
announcement. Peel Hunt will not regard any other person as its client in
relation to the Acquisition or any other matter or arrangement set out in this
announcement and will not be responsible to anyone other than Loungers for
providing the protections afforded to clients of Peel Hunt, nor for providing
advice in relation to the Acquisition or any other matter or arrangement
referred to in this announcement. Neither Peel Hunt nor any of its affiliates
(nor their respective directors, officers, employees or agents) 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 Peel Hunt in connection with the Acquisition,
this announcement, any statement contained herein or otherwise. No
representation or warranty, express or implied, is made by Peel Hunt as to the
contents of this announcement.
Further information
This announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or inducement to sell or an invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of an offer to buy any securities, any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise. The Acquisition will be made and implemented solely pursuant to the terms of the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document), which will contain the full terms and conditions of the Acquisition, including details of what action is required from Loungers Shareholders in respect of the Acquisition. Any decision in respect of, or other response to, the Acquisition should be made only on the basis of the information in the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document).
This announcement does not constitute a prospectus or prospectus equivalent
document.
This announcement has been prepared for the purposes of complying with English
law, the rules of the London Stock Exchange, the Listing Rules and the City
Code on Takeovers and Mergers and the 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 and regulations of any jurisdictions
outside the United Kingdom.
Bidco reserves the right to elect to implement the Acquisition by way of an
Offer as an alternative to the Scheme (subject to the Panel's consent and the
terms of the Co-operation Agreement). In such event, the Acquisition would be
implemented on substantially the same terms, so far as applicable, as those
which would apply to the Scheme, subject to appropriate amendments to reflect,
among other things, the change in method of effecting the Acquisition
(including, without limitation: (i) the inclusion of an acceptance condition
set at 90 per cent. of the Loungers Shares to which such Offer relates (or
such other percentage as Bidco may, subject to the rules of the Takeover Code
and the terms of the Co-operation Agreement and with the consent of the Panel,
decide); and (ii) those required by, or deemed appropriate by, Bidco under
applicable law, including US securities laws). Further, Bidco has agreed under
the Co-operation Agreement that, if sufficient acceptances of such Offer are
received and/or sufficient Loungers Shares are otherwise acquired, it will
apply the provisions of the Companies Act 2006 to acquire compulsorily any
outstanding Loungers Shares to which such offer relates.
Overseas Shareholders
This announcement has been prepared in accordance with, and for the purpose of
complying with, the laws of England and Wales, the Takeover Code, the Market
Abuse Regulation, the AIM Rules and the Disclosure Guidance and Transparency
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 release, publication or distribution of this announcement in or into
certain 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 of, and observe, any
applicable requirements of their jurisdictions.
The availability of the Acquisition to Loungers 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 Loungers Shares with respect to
the Scheme at the Court Meeting, or to execute and deliver forms of proxy
appointing another 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 Takeover Code, and
permitted by applicable law and regulation, participation in 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 Acquisition 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,
into or from any Restricted Jurisdiction and persons receiving this
announcement and all such documents relating to the Acquisition (including
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send them in, into or from any Restricted Jurisdiction. Doing so
may render invalid any related purported vote in respect of the Acquisition.
If the Acquisition is implemented by way of an Offer (unless otherwise
permitted by applicable law and regulation), the 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 Offer may not be capable of acceptance by
any such use, means, instrumentality or facilities.
Further details in relation to Overseas Shareholders are contained in the
Scheme Document.
Notice to US investors in Loungers
Loungers Shareholders in the United States should note that the Acquisition
relates to the shares of an English company with a quotation on AIM and is
proposed to be made by means of a scheme of arrangement provided for under,
and which is governed by, the laws of England and Wales. If the Acquisition is
carried out under the Scheme, it is expected that any Rollover Units issued
pursuant to the Acquisition would be issued in reliance upon the exemption
from the registration requirements under the US Securities Act provided by
Section 3(a)(10) thereof and would not be registered under the US Securities
Act. Securities issued pursuant to the Scheme will not be registered under any
laws of any state, district or other jurisdiction of the United States, and
may only be issued to persons resident in such state, district or other
jurisdiction pursuant to an exemption from the registration requirements of
such laws.
Neither proxy solicitation rules nor the tender offer rules under the US
Exchange Act will apply to the Scheme. Moreover, the Scheme will be subject to
the disclosure and procedural requirements and practices applicable in the
United Kingdom to schemes of arrangement which differ from the disclosure
requirements of US tender offer and proxy solicitation rules. If, in the
future, Bidco exercises the right to implement the Acquisition by way of an
Offer and determines to extend the offer into the United States, the
Acquisition will be made in compliance with applicable United States laws and
regulations, including any applicable exemptions under the US Exchange Act.
Such an Offer would be made in the United States by Bidco and no one else. In
accordance with normal United Kingdom practice and consistent with Rule 14e-5
under the US Exchange Act, Bidco, certain affiliated companies and the
nominees or brokers (acting as agents) may make certain purchases of, or
arrangements to purchase, shares in Loungers outside such Offer during the
period in which such Offer would remain open for acceptance. If such purchases
or arrangements to purchase were to be made they would be made outside the US
either in the open market at prevailing prices or in private transactions at
negotiated prices and would comply with applicable law, including, to the
extent applicable, the US Exchange Act. Any information about such purchases
will be disclosed as required in the United Kingdom, will be reported to a
Regulatory Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com
(http://www.londonstockexchange.com) .
The financial information included in this announcement and the Scheme
Document (or, if the Acquisition is implemented by way of an Offer, the Offer
Document) has been or will have been prepared in accordance with generally
accepted accounting principles of the United Kingdom and thus may not be
comparable to the financial information of US companies or companies whose
financial statements are prepared in accordance with IFRS in the United
States.
The receipt of consideration by a US holder for the transfer of its Loungers
Shares pursuant to the Acquisition may be a taxable transaction for US federal
income tax purposes and under applicable US state and local, as well as non-US
and other, tax laws. Each Loungers Shareholder is urged to consult their
independent professional adviser immediately regarding the tax consequences of
the Acquisition applicable to them, including under applicable US federal,
state and local, as well as non-US and other, tax laws.
It may be difficult for US holders of Loungers Shares to enforce their rights
and any claim arising out of the US federal laws or to enforce against them a
judgment of a US court predicated upon the securities laws of the United
Kingdom, since Bidco and Loungers are incorporated in a non-US jurisdiction,
and some or all of their officers and directors may be residents of countries
other than the United States. US holders of Loungers Shares may not be able to
sue a non-US company or its officers or directors in a non-US court for
violations of the 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 Loungers contain certain 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/or Loungers (as the case may be) 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.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements
often use words such as "anticipate", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar meaning or
derivatives thereof. These statements are based on assumptions and assessments
made by Loungers and/or Bidco in light of their experience and their
perception of historical trends, current conditions, future developments and
other factors they believe appropriate. 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 and the factors
described in the context of such forward-looking statements in this
announcement could cause actual results and developments to differ materially
from those expressed in or implied by such forward-looking statements. Among
the factors that could cause actual results to differ materially from those
described in the forward-looking statements, include but are not limited to:
the ability to complete the Acquisition, the ability to obtain requisite
regulatory and shareholder approvals and changes in the global, political,
economic, business, competitive, market and regulatory forces, financial
regulatory matters, future exchange and interest rates, changes in tax rates
and future business combinations or dispositions.
Although it is believed that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct and you are therefore cautioned
not to place undue reliance on these forward-looking statements which speak
only as at the date of this announcement. Neither Loungers nor Bidco assumes
any obligation to update or correct the information contained in this
announcement (whether as a result of new information, future events or
otherwise), except as required by applicable law.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one
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 10(th)
business day following the commencement of the offer period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10(th) 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 Takeover Code, any person who is, or becomes,
interested in one 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, 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 Takeover Code, a copy of this announcement
will be made available and other documents required to be published under Rule
26 of the Takeover Code will be made available, subject to certain
restrictions relating to persons resident in Restricted Jurisdictions, on
Loungers' website at https://loungers.co.uk and Fortress' website at
https://www.fortress.com/loungers-offer by no later than 12 noon (London time)
on the first Business Day following the date of this announcement. For the
avoidance of doubt, neither the contents of these websites nor any website
accessible from hyperlinks is incorporated into or forms part of this
announcement.
No profit forecasts, estimates or quantified benefits statements
No statement in this announcement is intended to constitute a profit forecast,
profit estimate or quantified benefits statement for any period and no
statement in this announcement should be interpreted to mean that the earnings
or future earnings per share of or dividends or future dividends per share of
Loungers for the current or future financial years will necessarily match or
exceed the historical published earnings or earnings per share or dividends
per share of Loungers.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, Loungers Shareholders,
persons with information rights and participants in Loungers Share Plans may
request a hard copy of this announcement by contacting Loungers' registrars,
Link Group 10(th) Floor, Central square, 29 Wellington Street, Leeds, LS1 4DL,
between 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday (except public
holidays in England and Wales) by calling +44 345 922 0044 or by submitting a
request in writing to Link Group. 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 will not be sent unless so
requested. Such persons may also request that all future documents,
announcements and information to be sent to them in relation to the
Acquisition should be in hard copy form.
Electronic Communications
Please be aware that addresses, electronic addresses and certain other
information provided by Loungers Shareholders, persons with information rights
and other relevant persons for the receipt of communications from Loungers may
be provided to Bidco during the Offer Period as required under Section 4 of
Appendix 4 of the Takeover Code to comply with Rule 2.11 of the Takeover Code.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
General
If the Acquisition is effected by way of an Offer, and such an Offer becomes
or is declared unconditional in all respects and sufficient acceptances are
received, Bidco has agreed under the Co-operation Agreement to exercise its
rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act
2006 so as to acquire compulsorily the remaining Loungers Shares in respect of
which the Offer has not been accepted.
Investors should be aware that Bidco may purchase Loungers Shares otherwise
than under any Offer or the Scheme, including pursuant to privately negotiated
purchases.
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 or
independent financial adviser duly authorised under FSMA if you are resident
in the United Kingdom or, if not, from another appropriate authorised
independent financial adviser.
Appendix 1
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
All times shown are London times. All dates and times, other than those
relating to the Court Meeting and the General Meeting, are based on Loungers'
and Bidco's current expectations and are subject to change. If any of the
dates and/or times in this expected timetable change, the revised dates and/or
times will be notified to Loungers Shareholders by announcement through a
Regulatory Information Service, with such announcement being made available on
Loungers' website at https://loungers.co.uk/offer-documentation
(https://loungers.co.uk/offer-documentation) and on Fortress' website at
https://www.fortress.com/loungers-offer.
Event Expected time/date((1))
Latest time for lodging Forms of Proxy for:
Court Meeting (BLUE form) 9.00 a.m. on 28 January 2025((2))
General Meeting (WHITE form) 9.15 a.m. on 28 January 2025((2))
Scheme Voting Record Time 6.00 p.m. on 28 January 2025 ((3))
Court Meeting 9.00 a.m. on 30 January 2025
General Meeting 9.15 a.m. on 30 January 2025 ((4))
The following dates are indicative only and subject to change((1))
Court Sanction Hearing 7 February 2025
Election Return Time for the Scheme Shares Form of Election (GREEN form) 6.00 p.m. on the date of the Court Sanction Hearing
Last day of dealings in, and for registration of transfers of, Loungers Shares 10 February 2025
Scheme Record Time 6.00 p.m. on 10 February 2025
Disablement of CREST in respect of Loungers Shares 6.00 p.m. on 10 February 2025
Suspension of dealings in Loungers Shares by 7.30 a.m. on 11 February 2025
Effective Date of the Scheme 11 February 2025
Cancellation of admission of Loungers Shares to trading on AIM by 7.00 a.m. on 12 February 2025
Latest date for despatch of cheques and crediting of CREST for cash 14 days after the Effective Date
consideration due under the Scheme
Latest date for issue of share certificates in respect of Rollover Units due, 14 days after the Effective Date
subject to the implementation of the Rollover Process, under the Alternative
Offer
Long Stop Date 11.59 p.m. on 28 August 2025((6))
Notes:
(1) The times and dates are indicative only and will depend on,
among other things, the dates upon which (i) the Court sanctions the Scheme,
and (ii) a copy of the Court Order sanctioning the Scheme is delivered to the
Registrar of Companies.
(2) The BLUE Form of Proxy for the Court Meeting, if not received
by the time stated above (or, if the Court Meeting is adjourned, 48 hours
(excluding any day which is not a Business Day) before the adjourned Court
Meeting), may be handed to a representative of Link Group, on behalf of the
Chairman of the Court Meeting, or to the Chairman of the Court Meeting, before
the start of that Meeting. However, in order to be valid, the WHITE Form of
Proxy must be received no later than 9.15 a.m. (London time) on 28 January
2025 (or, if the General Meeting is adjourned, 48 hours (excluding any day
which is not a Business Day) before the time fixed for the adjourned General
Meeting). Please see "Action to be taken" on pages 12 to 18 and paragraph 22
of Part II (Explanatory Statement) of the Scheme Document.
(3) If either the Court Meeting or the General Meeting is
adjourned, the Scheme Voting Record Time for the relevant adjourned Meeting
will be 6.00 p.m. on the date which is two Business Days before the date set
for such adjourned Meeting.
(4) To commence at 9.15 a.m. or as soon thereafter as the Court
Meeting shall have concluded or is adjourned.
(5) The Election Withdrawal Deadline will be the later of (i) the
Election Return Time and (ii) such other date and time as Bidco and Loungers
may agree.
(6) The latest time and date by which the Scheme must become
Effective, which may be extended by agreement between Loungers and Bidco with
the Panel's consent and as the Court may approve (if such approval(s) are
required).
Appendix 2
REVISED RULE 24.11 HSBC ESTIMATED VALUATION OF ROLLOVER UNITS
The Director
CF Exedra Bidco Limited
Duo, Level 6, 280 Bishopsgate
London
EC2M 4RB
15 January 2025
Recommended Acquisition of Loungers PLC ("Loungers")
by CF Exedra Bidco Limited ("Bidco") (a newly formed company indirectly owned
by funds and accounts managed or advised by affiliates of Fortress Investment
Group, LLC)
Revised Estimated Value of the Rollover Units
Dear Sir,
Pursuant to the requirements of Rule 24.11 of the Takeover Code, you have
requested our opinion as to the revised estimated value of the unlisted and
non-transferable (except in very limited circumstances) securities, which will
be issued in the capital of CF Exedra Topco Limited (the ultimate owner of
Bidco) ("Topco") (the "Rollover Units") for each Loungers Share (the "Revised
Estimated Value") on the terms and subject to the conditions of the Increased
and Final Alternative Offer (as defined below) set out in this announcement of
which this letter forms part dated 15 January 2025.
Capitalised terms used in this letter will, unless otherwise stated, have the
same meanings given to them in the Scheme Document.
1. Background
Under the terms of an increased recommended offer by Bidco for the entire
issued and to be issued share capital of Loungers (the "Increased and Final
Offer"), if the Acquisition becomes Effective, for each Loungers Share held,
Loungers Shareholders will be entitled to 325 pence per Scheme Share (the
"Increased and Final Cash Offer"). As an alternative to the Increased and
Final Cash Offer, eligible Loungers Shareholders will continue to be able to
elect for the Alternative Offer in relation to some or all of their holding of
Loungers Shares. As a result of the Increased and Final Offer, Eligible Scheme
Shareholders who elect for the Alternative Offer will, subject to the
implementation of the Rollover Process receive 3.67862913805519 Topco Ordinary
Shares and 321.321370861945 Topco B Preference Shares (a Rollover Unit) in
exchange for each Loungers Share (the "Increased and Final Alternative
Offer"), subject to the terms and conditions set out in this announcement and
the Scheme Document. The Topco Ordinary Shares and the Topco B Preference
Shares will have the rights of the "Ordinary Shares" and "B Preference Shares"
respectively set out in the Topco Articles (as amended from time to time).
Any fractional entitlements of a Loungers Shareholder to Topco Ordinary Shares
and Topco B Preference Shares under the Increased and Final Alternative Offer
will be rounded down to the nearest whole number of Topco Ordinary Shares and
Topco B Preference Shares. Fractional entitlements to Topco Ordinary Shares
and Topco B Preference Shares will not be allotted or issued to such Loungers
Shareholder but will be disregarded.
Loungers Shareholders may elect to take up the Increased and Final Alternative
Offer in respect of all or part of their holding of Loungers Shares.
The maximum number of Rollover Units available to eligible Loungers
Shareholders under the Increased and Final Alternative Offer will be limited
to such aggregate amount which, based on an exchange ratio of one Rollover
Unit for each Loungers Share, represents 37.17 per cent. of the fully diluted
share capital of Loungers at completion of the Acquisition (the "Alternative
Offer Maximum").
If valid elections are received from eligible Loungers Shareholders in respect
of a number of Loungers Shares that would, subject to the implementation of
the Rollover Process, require the issue of Rollover Units exceeding the
Alternative Offer Maximum, such elections will not be capable of being
satisfied in full. In these circumstances the amount of Bidco Rollover
Securities and Rollover Units to be issued to each eligible Loungers
Shareholder who has validly elected for the Increased and Final Alternative
Offer will be reduced on a pro rata basis (being pro rata to the number of
Loungers Shares in respect of which valid elections have been received), and
the balance of the consideration due to each such Loungers Shareholder will be
paid in cash in accordance with the terms of the Increased and Final Cash
Offer. For the avoidance of doubt, the Revised Exchange Ratio would continue
to apply on the same basis.
The availability of the Increased and Final Alternative Offer is conditional
upon valid elections being made that would, subject to the implementation of
the Rollover Process, require the issue of such number of Rollover Units as,
based on an exchange ratio of one Rollover Unit for each Loungers Share,
represent at least 25 per cent. of the fully diluted share capital of Loungers
at completion of the Acquisition (the "Minimum Alternative Offer Threshold"),
failing which it will lapse. In these circumstances, no Bidco Rollover
Securities will be issued and the consideration payable in respect of each
Loungers Share will be settled entirely in cash in accordance with the terms
of the Increased and Final Cash Offer. However, given the irrevocable
undertakings received from certain Loungers Directors, Lion and certain other
Loungers Shareholders include undertakings to elect for the Increased and
Final Alternative Offer in respect of, in aggregate, a total 38,990,788
Loungers Shares owned or expected to be owned by them at completion of the
Acquisition, representing approximately 37.5 per cent. of Loungers' existing
issued ordinary share capital on 14 January 2025, being the latest practicable
date prior to the date of this announcement, and representing approximately
35.8 per cent. of the fully diluted share capital of Loungers at completion of
the Acquisition, the Increased and Final Alternative Offer is not anticipated
to lapse for this reason.
If the Scheme becomes Effective, Loungers Shareholders who do not validly
elect to receive their consideration by means of the Increased and Final
Alternative Offer will automatically receive the full amount of the Increased
and Final Cash Offer for their entire holding of Loungers Shares.
Unless otherwise determined by Bidco and permitted by applicable law and
regulation, the Increased and Final Alternative Offer will not be made, and
neither the Bidco Rollover Securities, Midco Rollover Securities nor the
Rollover Units will be offered, sold or delivered, directly or indirectly, in
or into any Restricted Jurisdiction and individual acceptances of the
Increased and Final Alternative Offer will be valid only if all regulatory
approvals (if any) required by a Loungers Shareholder to acquire the Bidco
Rollover Securities and, subject to the implementation of the Rollover
Process, the Rollover Units, have been obtained.
The Rollover Units will comprise securities in a private and unquoted company,
they will not be listed or admitted to trading on any exchange or market for
the trading of securities, and they will therefore be illiquid. The Rollover
Units do not have a public valuation.
The Rollover Units are described in paragraphs 4 and 5 of Part II (Explanatory
Statement) and Part V (Details of the Rollover Units) of the Scheme Document.
2. Purpose
This Revised Estimated Value has been provided to the director of Bidco (the
"Bidco Director") solely for the purposes of complying with the requirements
of Rule 24.11 of the Takeover Code in connection with the Acquisition and
shall not be used or relied upon for any other purpose whatsoever. It is not
addressed to, and may not be relied upon by, any third party for any purpose
whatsoever and HSBC Bank plc ("HSBC") expressly disclaims any duty, liability
or responsibility (whether direct or indirect, whether in contract, tort,
under statute or otherwise) to any third party with respect to the contents of
this letter.
Our view as expressed in this letter is limited to an estimate of the net
present value of the Rollover Units being offered to eligible Loungers
Shareholders under the Increased and Final Alternative Offer as at 15 January
2025 and is given and valid as at such date only. The Revised Estimated Value
assumes both a willing buyer and seller of equal bargaining power, neither
being under any compulsion to buy or sell, dealing on an arm's length basis
and where each party has knowledge of all relevant information.
The Revised Estimated Value does not represent the value that a holder of
Rollover Units may realise on any future sale of such Rollover Units, it being
noted that such value realised on any future sale of Rollover Units may be
higher or lower than the figure in this letter. The Revised Estimated Value
may also differ substantially from estimates available from other sources.
HSBC assumes no obligation to update or revise the Revised Estimated Value at
any date in the future based upon circumstances or events occurring after the
date hereof, unless it is otherwise required to by the Takeover Code.
3. Information
In arriving at the Revised Estimated Value, we have reviewed and considered or
otherwise taken into account, among other things:
· certain publicly available financial statements as well as
certain other publicly available business and financial information relating
to Loungers;
· certain information (including information derived from due
diligence materials made available to Bidco by Loungers) provided by Bidco
relating to the business, operations, financial condition and prospects of
Loungers;
· the financial projections of Loungers (the "Financial
Projections"), including certain financial analyses and forecasts, prepared by
or at the direction of representatives of Bidco and the Bidco Director
relating to the business, operations, financial condition and prospects of the
Topco Group;
· the commercial assessments of representatives of Bidco and
the Bidco Director and investment teams of the shareholders of Bidco with
respect to the business, operations, financial condition and prospects of the
Topco Group;
· the rights and restrictions attached to the Rollover Units as
summarised in the Scheme Document, and contained in the Revised Topco
Shareholders' Agreement and the Topco Articles (as applicable), although our
review should in no way be construed as constituting legal advice;
· the non property net debt position of Loungers (excluding
property leases) as at 6 October 2024 of £12.2 million comprising a term loan
of £20 million and cash and cash equivalents of £7.8 million;
· the total existing issued ordinary share capital on 14
January 2025 (being the latest practicable date prior to the date of this
announcement) of 103,960,391 Loungers Shares;
· the terms of the Acquisition and its proposed financing; and
· such other financial analyses and such other information as
we deemed appropriate for the purposes of this letter.
In addition, we have met with certain members of the investment advisory teams
of Fortress to discuss the above, as well as the Acquisition and other matters
we believed to be relevant to our enquiry, and we have considered and relied
upon their commercial assessments.
In performing our analyses, we have relied upon and assumed the accuracy and
completeness of all information that was publicly available or which was
furnished to or discussed with us by or on behalf of Bidco or Fortress or
otherwise reviewed by or for us, and we have not independently verified (nor
have we assumed responsibility or liability for independently verifying) any
such information or its accuracy or completeness. We have not conducted any
valuation or appraisal of any assets or liabilities of the Topco Group, nor
have we been provided with any appraisal of any assets or liabilities of the
Topco Group, nor have we evaluated the solvency of the Topco Group under any
applicable laws relating to bankruptcy, insolvency or similar matters. In
relying on financial analyses, projections and forecasts provided to us or
derived therefrom, we have assumed that they have been reasonably prepared
based on assumptions reflecting the best currently available estimates and
judgements by the Bidco Director as to the expected future results of
operations and financial condition of the Topco Group to which such analyses,
projections or forecasts relate. We express no view as to such analyses,
projections or forecasts or the assumptions on which they were based.
We have assumed for the purposes of this letter that Rollover Units are
already in issue, that the Acquisition has become effective in accordance with
its terms (with no modification or delay), that the conditions to the issue
and allotment of the Rollover Units and the Increased and Final Alternative
Offer have been satisfied or (if applicable) waived (without adverse effect)
and that Bidco has acquired the entire issued and (if applicable) to be issued
ordinary share capital of Loungers.
If any of the information or assumptions relied upon prove to be incorrect,
the actual value of a Rollover Units may be different from, including
potentially considerably less than or more than, the Revised Estimated Value.
Our view as expressed in this letter is necessarily based on economic, market
and other conditions, the prospects of the Topco Group and other factors which
generally influence the valuation of companies and securities, in each case as
they exist at the date hereof and on the information made available to us as
of the date of this letter. It should be understood that subsequent
developments and/or changes to prevailing financial, economic and market
conditions, the financial condition and prospects of the Topco Group (and
other factors which generally influence the valuation of companies and
securities) may affect the views provided in this letter and that we assume no
obligation to update, revise or reaffirm the views expressed in this letter,
unless otherwise required to by the Takeover Code.
4. Methodology
In arriving at the Revised Estimated Value, HSBC has, among other things:
· undertaken a discounted cash flow analysis based on the
Financial Projections;
· referenced the historical trading prices and the implied
trading valuations of Loungers Shares on the London Stock Exchange;
· considered a range of other widely accepted valuation methods
we deemed relevant including, inter alia, trading multiples of comparable
publicly traded companies and transaction multiples of comparable companies;
· taken into account the proposed financing structure for the
Topco and certain estimated transaction expenses expected to be incurred in
relation to the Acquisition; and
· considered the lack of a liquid market for the Rollover Units
and transfer restrictions attached to the Rollover Units as summarised in the
Scheme Document, and contained in the Revised Topco Shareholders' Agreement
and the Topco Articles (as applicable).
The Revised Estimated Value is based on theoretical valuation techniques and
is sensitive to changes in assumptions about the future financial performance
of the Topco Group and the ongoing transformation of Loungers. As a result,
there can be no assurance that the actual value of a Rollover Security will
not be higher or lower than the Revised Estimated Value.
The taxation position of individual Loungers Shareholders will vary and so we
have not taken account of the effect of any taxation exemptions, allowances or
reliefs which may be available for the purposes of income, capital gains,
inheritance or any other applicable tax, duty or levy, notwithstanding that
these may be of significance in the case of certain shareholders.
No account has been taken of any potential transaction costs that a holder of
Rollover Units may incur, including any associated dealing costs, or any
potential costs that may be associated with a sale of Topco (or any other
member of the Topco Group) to a third party or a liquidation of Topco (or any
other member of the Topco Group) and which might be expected to reduce any
return to a holder of Rollover Units upon the occurrence of such an event.
We also note that the valuation of non-publicly traded securities is
inherently imprecise and is subject to certain contingencies, all of which are
difficult to predict and are beyond our control. Reasons for this inherent
uncertainty, include but are not limited to, the following factors relating to
liquidity and rights attached to the Rollover Units:
· The Rollover Units are unquoted and there is no current
expectation that they will be listed or admitted to trading on any exchange or
market for the trading of securities, and will therefore be illiquid;
· The Topco B Preference Shares and Topco Ordinary Shares will
be highly levered and economically subordinated share capital ranking behind
the Topco A Preference Shares (which shall be held by the Fortress Funds) and
the secured and unsecured liabilities of the Topco Group;
· The value and performance of the Rollover Units will be
uncertain and there can be no assurance that any such securities will be
capable of being sold in the future or that they will be capable of being sold
at the value to be estimated by HSBC in this letter;
· Certain rights and protections attaching to the Rollover
Units will depend on the number of Rollover Units held by each Loungers
Shareholder. Loungers Shareholders will have no certainty as to the number of
Rollover Units they would receive;
· The Topco B Preference Shares will have no voting rights and
the Topco Ordinary Shares in Topco will have one vote per share;
· Certain customary matters shall be subject to the prior
approval of: (i) holders of a majority of the Topco A Preference Shares; (ii)
holders of a majority of the Topco B Preference Shares; (iii) holders of at
least 20 per cent. of the Topco Ordinary Shares; and (iv) holders of a
majority of the Topco Ordinary Shares held by the Topco Minority Shareholders,
respectively;
· Payments in respect of Rollover Units will not be guaranteed
or secured and, for so long as the Topco Group has any secured debt or Topco
Preference Shares outstanding, it is not anticipated that Topco will declare
or pay any dividends or make any distributions on any of the Topco Ordinary
Shares;
· No Topco Shares will be transferable during an initial
five-year lock-up period from the Effective Date without the prior written
consent of a majority of the Topco Ordinary Shareholders, except in very
limited circumstances. Following the expiry of the Lock-up Period, any
transfer will be subject to a right of first refusal on the part of all other
holders of Topco Ordinary Shares, unless such right of first refusal has been
waived by holders of a majority of the Topco Ordinary Shares;
· Holders of Rollover Units may be required to sell their
Rollover Units pursuant to the exercise of "drag-along" provisions in the
Revised Topco Shareholders' Agreement by other Topco Shareholders. Although
holders of Rollover Units will be entitled to no less favourable terms than
those applicable to other Topco Shareholders, any transfer involving the
application of "drag-along" rights may be at a value that is less than the
value of the Increased and Final Cash Offer;
· Where other Topco Shareholders elect to sell Topco Ordinary
Shares, "tag-along" rights may apply entitling Topco Shareholders to
participate in the relevant transfer. However, such "tag-along" rights are
subject to a number of exclusions, including customary permitted transfers to
affiliates or in relation to transfers in connection with an IPO, a
reorganisation or a refinancing. Further, holders of Rollover Units who
exercise the "tag-along" rights will be required to agree to pay a
proportionate share of related costs and bear related liabilities and to agree
to the same terms of transfer as the transferring Topco Shareholders,
including in respect of covenants, indemnities and commitments in connection
with such process.
· The Rollover Units will be unlisted securities in a private
company and so Loungers Shareholders who, subject to the implementation of the
Rollover Process and the other terms of this announcement and the Scheme
Document, receive Rollover Units will not be afforded protections commensurate
with those from which they currently benefit as a Loungers Shareholder. Except
for limited information to be provided to persons who hold at least 5 per
cent. of the Topco Ordinary Shares, neither the Topco Articles nor the Revised
Topco Shareholders' Agreement will provide holders of Rollover Units with
information rights, and the default information rights available to such
holders of Rollover Units under Jersey law are very limited. A holder of at
least 15 per cent. of the Topco Ordinary Shares shall have customary
information rights;
· The holders of Rollover Units will not enjoy any minority
protections or other rights save for those rights provided for in the Revised
Topco Shareholders' Agreement and the Topco Articles and those rights
prescribed by applicable law;
· Topco is not a company to which the Takeover Code applies and
the protections of the Takeover Code will no longer be available to Loungers
Shareholders electing for the Increased and Final Alternative Offer; and
· The value of Rollover Units will be subject to the same
trading risks as are faced by Loungers currently, including risk in the
trading performance of Loungers.
In performing this analysis, we have made numerous assumptions with respect to
industry performance and general business, economic and market conditions,
many of which are beyond the control of Bidco and Loungers. Consequently, the
view expressed in this letter is not necessarily indicative of the amount
which might be realised upon a sale of Rollover Units.
5. The Revised Estimated Value
On the basis of and subject to the foregoing, it is our view as at the date of
this letter that the Revised Estimated Value of each Rollover Unit is a range
of 240 pence to 285 pence.
The Revised Estimated Value only incorporates an assumed level of discount for
trading illiquidity and reduced rights and protections of the Rollover Units.
The Revised Estimated Value does not incorporate a discount for other
structural features and risk factors pertaining to the Rollover Units; each
eligible Loungers Shareholder should individually take these factors into
account.
Eligible Loungers Shareholders who may be considering either the cash
consideration of 325 pence per Loungers Share or a continuing investment in
the future of Topco and Loungers through the Rollover Units should read
carefully all the information relating to the Increased and Final Alternative
Offer and the Rollover Units contained in this announcement and the Scheme
Document, including, without limitation, Part V (Details of the Rollover
Units) of the Scheme Document. Any decision to elect for the Increased and
Final Alternative Offer and the Rollover Units should be based on independent
financial, tax and legal advice, and a full consideration of this
announcement, the Scheme Document and the other documents in relation to the
Acquisition.
6. General
HSBC is acting as financial adviser to Bidco and no one else solely for the
purposes of providing this letter in accordance with Rule 24.11 of the
Takeover Code in connection with the Acquisition and HSBC will not be
responsible to anyone other than Fortress and Bidco for providing the
protections afforded to clients of HSBC, nor for providing advice in
connection with the Acquisition or any matter referred to in this
announcement, the Scheme Document or this letter.
HSBC will receive fees from Bidco in respect of its services in connection
with the provision of this letter. In addition, Bidco has agreed to indemnify
HSBC for certain liabilities arising out of its engagement. During the five
years preceding the date of this letter, we and our affiliates have had
commercial or investment banking relationships with portfolio companies
managed or advised by affiliates of Fortress for which we and such of our
affiliates have received customary compensation. In the ordinary course of our
businesses, we and our affiliates may actively trade the equity securities of
Loungers for our own account or for the accounts of customers and,
accordingly, we may at any time hold long or short positions in such
securities.
HSBC has not provided, nor will it provide, legal, tax, regulatory, accounting
or other specialist advice, and nothing herein should be taken to reflect any
such advice. For the avoidance of doubt, HSBC expresses no opinion (whether as
to the fairness or otherwise) of the financial terms of the Acquisition, the
Increased and Final Cash Offer or the Increased and Final Alternative Offer.
Any decision to elect for the Increased and Final Alternative Offer should be
based on independent financial, tax and legal advice and full consideration of
this announcement, the Scheme Document and the other documents in relation to
the Acquisition, including the Revised Topco Shareholders' Agreement and the
Topco Articles.
Eligible Loungers Shareholders should ascertain whether acquiring or holding
the Rollover Units is affected by the laws of the relevant jurisdiction in
which they reside and consider whether the Rollover Units are a suitable
investment in light of their own personal circumstances and are, therefore,
strongly recommended to seek their own independent financial, tax and legal
advice before deciding whether to elect for the Increased and Final
Alternative Offer. In particular, Loungers Shareholders should note that the
Rollover Units are not transferable except pursuant to limited exemptions,
including where holders of a majority of the Topco Ordinary Shares waive the
lock-up requirement, will not be listed and that no market exists or is
expected to exist in them.
This letter is provided solely for the benefit and use of the Bidco Director
for the purpose of Rule 24.11 of the Takeover Code in connection with the
Acquisition and for no other purpose. This letter is not addressed to, or
provided on behalf of, nor shall it confer any rights or remedies upon, any
shareholder, creditor or any other person other than the Bidco Director for
the aforesaid purpose. Without prejudice to the generality of the foregoing,
this letter does not constitute a recommendation or opinion to, or for the
benefit of, any Scheme Shareholder as to whether such Scheme Shareholder
should vote in favour of the Scheme at the Court Meeting or the Resolution to
be proposed at the General Meeting in order to give effect to the Acquisition
or whether any such Scheme Shareholder should accept the Increased and Final
Cash Offer or make any election pursuant to the Increased and Final
Alternative Offer. Other than as required pursuant to the Takeover Code or as
the Panel or the Court may otherwise require, this letter may not be
disclosed, referred to, or communicated (in whole or in part) to any third
party for any purpose whatsoever except with our prior written approval in
each case. This letter may be reproduced in full in this announcement to be
sent to Loungers Shareholders and others on the basis that no duties or
responsibilities are accepted by HSBC to any person, individually or
collectively, but this letter may not otherwise be published or reproduced
publicly in any manner without our prior written approval.
Yours faithfully,
HSBC Bank plc
Appendix 3
SOURCES AND BASES OF INFORMATION
In this announcement:
1. Unless otherwise stated, historical financial information relating to the Loungers Group has been extracted or derived (without any adjustment) from the audited 2024 Annual Report.
2. As at the close of business on 14 January 2025 (being the latest practicable date prior to the date of this announcement), Loungers had in issue 103,960,391 Loungers Shares. The ISIN for the Loungers Shares is GB00BH4JR002.
3. The fully diluted share capital of Loungers (being 109,052,683 Loungers Shares) is calculated on the basis of:
· the number of issued Loungers Shares referred to in paragraph 2 of this Appendix 3; and
· 5,092,292 Loungers Shares, being the number of Loungers Shares that is expected to be issued on or after the Latest Practicable Date to satisfy the exercise of options or vesting of awards under the Loungers Share Plans, as at the Latest Practicable Date assuming the Scheme becomes Effective in February 2025 and taking into account any leavers since the Announcement Date reducing the number of outstanding options and awards.
4. The value attributable to the entire issued and to be issued ordinary share capital of Loungers is calculated on the basis of:
· the cash consideration of 325 pence per Loungers Share; and
· the fully diluted number of Loungers Shares as referred to in paragraph 3 of this Appendix 3.
5. The enterprise value of Loungers of £366.6 million is derived from the entire issued and to be issued ordinary share capital of Loungers valued at £354.4 million plus the non-property net debt of Loungers of £12.2 million as at the end of H125.
6. The adjusted EBITDA multiples of 8.4x and 9.4x implied by the Acquisition are calculated based on a fully diluted enterprise value of £366.6 million per paragraph 5 of this Appendix 3 and, respectively, the FY24 adjusted EBITDA (before site pre-opening costs) of £43.5 million and the FY24 adjusted EBITDA (after site pre-opening costs) of £38.8 million.
7. Unless otherwise stated, all prices and closing prices for Loungers Shares are closing middle market quotations derived from the London Stock Exchange Daily Official List (SEDOL).
8. The premium calculations to the price per Loungers Share have been calculated by reference to a price of 238.0 pence per Loungers Share, being the closing price on 27 November 2024, the last Business Day prior to the Announcement Date.
9. Volume-weighted average prices per Loungers Shares have been derived from Bloomberg and have been rounded to the nearest single decimal place.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END OUPGLGDBRGBDGUU