REG - MJ Hudson Group PLC - Company Update

MJ HudsonAnnouncement

11/04/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230411:nRSK7190Va&default-theme=true

RNS Number : 7190V  MJ Hudson Group PLC  11 April 2023

MJ Hudson Group plc

(the "Company", "Group" or "MJ Hudson")

 

Proposed Sale of Data & Analytics and Business Outsourcing Divisions,

Cancellation of Admission of Ordinary Shares to Trading on AIM,

Amendments to the Company's articles of association

and

Notice of General Meeting

 

 

MJ Hudson Group plc (AIM:MJH), announces that, on 6 April 2023, it has
conditionally agreed to sell its Data & Analytics (which includes the
Company's Investment Advisory business) and Business Outsourcing Divisions,
being substantially all of the Group's remaining operating divisions, to Apex
Consolidation Entity Ltd, being a company within the Apex Group and an
affiliate of Genstar Capital Partners LLC.

 

The aggregate cash consideration for the transaction is up to approximately
£40 million on a debt free basis (the "Disposal") payable as set out below.

 

The Business Outsourcing Division includes multiple regulated entities which
will require certain mandatory and suspensory regulatory consents for a change
of ownership. The Disposal will therefore be completed in stages to facilitate
early completion of the unregulated Data & Analytics Division.  The sale
of the Data & Analytics Division is expected to complete following
Shareholder approval at the General Meeting, whilst completion and the sale of
the Business Outsourcing Division is expected to complete at various times
following receipt or waiver of the Regulatory Consent(s) relevant to that part
of the Business Outsourcing Division.

 

Further steps may need to be considered in relation to the remaining group
structure in order to optimise the return to the Group stakeholders.

 

Consideration:

The total consideration shall be apportioned as follows:

·    Data & Analytics Division: up to £15 million payable on the
completion of the sale of the Data & Analytics Division,

·    Business Outsourcing Division: a total of up to approximately £25
million payable in tranches on the completion of the constituent parts of the
sale of the Business Outsourcing Business as follows:

o  £13 million for the Irish business;

o  £4 million for the Luxembourg business;

o  £4 million for the Guernsey business; and

o  £4 million for the Jersey business

 

The consideration for the sale of both the Data & Analytics Division and
the Business Outsourcing Division will be subject to Holdback Amounts as
outlined in the appendix to the announcement.

 

Application of Proceeds:

As at 31 March 2023, the Group owed approximately £33.7 million under its
facilities and overdrafts with its Senior Lender and it is expected that
further funding will be required to the point of completion of the sale of the
Business Outsourcing Division.  The majority of the consideration will
therefore be applied to reducing the debt owed to the Senior Lender.

 

While there are a number of potential outcomes, given the level of creditors
of the business expected at the point of final completion of the Business
Outsourcing Sale, it should be noted that it is highly unlikely that there
will be a substantial, or any, amount available to Shareholders following
payment of all creditors and costs.

 

Shareholder consent to the transaction under the AIM Rules:

Upon final completion of the sale of the Business Outsourcing Division
following receipt (or waiver) of all the Regulatory Consents, the Company will
be regarded as an AIM Rule 15 cash shell, having ceased to own, control or
conduct all or substantially all, of its existing trading business, activities
or assets. The Disposal is therefore conditional on the consent of
Shareholders at the General Meeting and certain other conditions.  The
General Meeting is expected to be convened on 3 May 2023.

 

Cancellation of Admission

In addition, the Company is seeking Shareholders' approval to cancel the
admission of its Ordinary Shares to trading on AIM. In accordance with Rule 41
of the AIM Rules, the Company has notified the London Stock Exchange of the
proposed Cancellation. Assuming the passing of Resolutions 1 and 2, it is
expected that Cancellation will occur on 12 May 2023.

 

Amendment to the Articles

The following are the proposed procedural amendments to the articles of
association of the Company, to reduce the time required to hold EGMs:

 

•             to remove the requirement for 72 hours' notice to
hold Board meetings pursuant to Article 124 (subject to notice having been
given to the Directors) given this period was felt to be impractical by the
Directors;

•             to reduce the period by which notices of EGMs /
AGMs are deemed to be served pursuant to Article 162. The amendment proposes
that notice will be deemed served on the day following posting of the relevant
circular, as opposed to on the fifth day following posting, which the Board
considered unnecessarily extended the time it took for the Company to call
such meetings. Following the amendment, such meetings shall be capable of
being held in the more usual period of 14 clear days' notice from the date of
notice; and

•             to remove the defined term "Holder" given this
term is not used in the articles of association and so which is a tidying
amendment.

 

 

Other steps to re-organise the Group

In addition, as part of the reorganisation of the Group, the Company intends to give notice to the SRA of the proposed closure of its legal business and certain further steps may need to be considered in relation to the remaining group structure in order to optimise any return to the Group stakeholders.

 

General Meeting & Importance of the vote

The General Meeting will be held at Forum 4, Grenville Street, St. Helier,
Jersey JE4 8TQ, Channel Islands at 2 p.m. on 3 May 2023 at which the following
Resolutions will be proposed:

 

•             Resolution 1 (to approve the Disposal)

•             Resolution 2 (to approve the proposed
Cancellation)

•             Resolution 3 (to approve certain amendments to the
Existing Articles).

 

A circular incorporating a notice of general meeting is being provided to
Shareholders today with information on the background to, and reasons for, the
Disposal, the proposed Cancellation and the proposed amendments to the
Existing Articles, to explain why the Directors consider the Disposal, the
proposed Cancellation and the proposed amendments to the Existing Articles to
be in the best interests of the Company and Shareholders.

 

A copy of the Circular will be posted to Shareholders on 11 April 2023 and
will be available on the Company's website at https://mjhudson.com/investors/
(https://mjhudson.com/investors/) shortly.

 

Shareholders should note that, in the event that the Resolution 1 is not
passed, no part of the Disposal will occur and the Company will not have
sufficient certainty of funds to continue as a going concern.  In such
situation, it is the view of the Board that there is a significant risk that
the Company's creditors would take action to put the whole or parts of the
Group into an insolvency process, as the Board does not believe that there is
any alternative funding available or purchaser for the assets on equal or
better terms.

 

The Directors recommend that Shareholders vote in favour of all the
Resolutions to be proposed at the General Meeting, as the Directors intend to
do in respect of their own beneficial holdings of, in aggregate, 6,076,508
Ordinary Shares, representing approximately 2.99 per cent. of the Company's
existing issued ordinary share capital.

 

The Company has received irrevocable undertakings to vote, or procure a vote in favour of Resolution 1 from certain institutional and other Shareholders in respect of, in aggregate, 60,715,557 Ordinary Shares representing approximately 29.85 per cent. of the Company's existing issued ordinary share capital;

 

The Company has also received letters of intent to vote, or procure a vote, in
favour of Resolution 1 from certain institutional and other Shareholders in
respect of, in aggregate, 31,348,356 Ordinary Shares representing
approximately 15.41 per cent. of the Company's existing issued ordinary share
capital;

 

For further information, please contact:

 

MJ Hudson Group plc

Geoff Miller, Executive Chairman

 

Cenkos Securities plc (Nomad and Broker)

Giles Balleny

Stephen Keys

Callum Davidson

+44 20 7397 8900

 

Buchanan (PR Adviser)

Chris Lane

Jack Devoy

George Cleary

+44 20 7466 5000

mjhudson@buchanan.uk.com

 

About Apex Group Ltd.

 

Apex Group is a global financial services provider, delivering the broadest
range of solutions in the industry via its single-source solution model. Apex
Group has continually improved and evolved its breadth of service capabilities
and delivers a full suite of solutions to asset managers, capital markets,
family offices and institutional investors; including digital banking,
custody, depositary, ManCo services, fund administration, corporate solutions
and a pioneering ESG Ratings and Advisory service for private companies. Apex
has over 12,000 employees across more than 80 offices in 38 countries.

 

 

 

 

 

 

 

 

Extract from the Circular

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS
 

 

 Announcement of the Disposal and the proposed Cancellation pursuant to AIM  11 April 2023
 Rule 41

 Publication of this document                                                11 April 2023

 Posting of this document                                                    11 April 2023

 Latest time and date for receipt of Forms of Proxy for the                  2 p.m. on 2 May 2023

 General Meeting

 General Meeting                                                             2 p.m. on 3 May 2023

 Completion of the Data & Analytics Sale                                     11 May 2023

 Cancellation of the Ordinary Shares from trading on AIM                     12 May 2023

 Completion of the Business Outsourcing Sale                                 Expected late 2023*

 

Each of the times and dates refer to London (UK) time and are subject to
change by the Company (with the agreement of Cenkos), in which case details of
the new times and dates will be notified to the London Stock Exchange and the
Company will, if appropriate, make an announcement through a Regulatory
Information Service.  Certain of the events in the above timetable are
conditional upon, inter alia, the approval of one or more of Resolutions to be
proposed at the General Meeting.  References to times in this document are to
London (UK) time.

 

*Completion of the Business Outsourcing Sale is expected to complete at
various times following the receipt (or waiver) by the Company of the relevant
Regulatory Consent(s) relevant to that part of the Business Outsourcing
Division.

 

 

 

 

1.         Introduction

 

The Company today announced that it has conditionally agreed to sell its Data
& Analytics Division and its Business Outsourcing Division, being
substantially all of the Group's remaining operating divisions, to Apex
Consolidation Entity Ltd, being a company within the Apex Group and an
affiliate of Genstar Capital Partners LLC (the "Buyer") for an aggregate cash
consideration of up to approximately £40 million on a debt free basis (the
"Disposal"). Completion of the Disposal is subject to Shareholder approval.
Certain defined terms used in this document are explained in the section
headed 'Definitions'.

The Business Outsourcing Division includes multiple regulated entities which
will require certain mandatory and suspensory regulatory consents for a change
of ownership. The Disposal will therefore be completed in stages to facilitate
early completion on the unregulated Data & Analytics Division. The sale of
the Data & Analytics Division is expected to complete shortly following
Shareholder approval at the General Meeting ("Data & Analytics Sale"),
whilst completion and the sale of the Business Outsourcing Division is
expected to complete at various times following receipt or waiver of the
Regulatory Consent(s) relevant to that part of the Business Outsourcing
Division ("Business Outsourcing Sale").

The total consideration shall be apportioned between the Data & Analytics
Sale and the Business Outsourcing Sale such that a total of up to
approximately £15 million will be allocated to the Data & Analytics
Division (the "Data & Analytics Consideration") and a total of up to
approximately £25 million to the Business Outsourcing Division payable in
tranches on the completion of the constituent parts of the Business
Outsourcing Sale (the "Business Outsourcing Consideration") as follows: £13
million for the Irish business; £4 million for the Luxembourg business; £4
million for the Guernsey business; and £4 million for the Jersey business.

The majority of the consideration will be applied to reducing the debt owed to
the Senior Lender.  While there are a number of potential outcomes, it should
be noted that it is highly unlikely that there will be a substantial, or any,
amount available to Shareholders following payment of all creditors and costs.

Upon final completion of the Business Outsourcing Sale following receipt (or waiver) of all the Regulatory Consents, the Company will be regarded as an AIM Rule 15 cash shell, having ceased to own, control or conduct all or substantially all, of its existing trading business, activities or assets. The Disposal is therefore conditional on the consent of Shareholders at the General Meeting and certain other conditions.
 
In addition, as part of the reorganisation of the Group, the Company intends to give notice to the SRA of the proposed closure of its legal business and certain further steps may need to be considered in relation to the remaining group structure in order to optimise any return to the Group stakeholders.
 
The Company is seeking Shareholders' approval to cancel the admission of its Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the proposed Cancellation. Assuming the passing of Resolutions 1 and 2, it is expected that Cancellation will occur in 12 May 2023.
 
 
Shareholders should note that, in the event that Resolution 1 is not passed, no part of the Disposal will occur and the Company will not have sufficient certainty of funds to continue as a going concern.  In such situation, it is the view of the Board that there is a significant risk that the Company's creditors would take action to put the whole or part of the Group into an insolvency process, as the Board does not believe that there is any alternative funding available or purchaser for the assets on equal or better terms.
 
The purpose of this document is to provide you with information on the background to, and reasons for, the Disposal, the proposed Cancellation and the proposed amendments to the Existing Articles, to explain why the Directors consider the Disposal, the proposed Cancellation and the proposed amendments to the Existing Articles to be in the best interests of the Company and Shareholders and why the Directors recommend that Shareholders vote in favour of all the Resolutions to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings of, in aggregate, 6,076,508 Ordinary Shares, representing approximately 2.99 per cent. of the Company's existing issued ordinary share capital.
 
The Company has received irrevocable undertakings to vote, or procure a vote in favour of Resolution 1 from certain institutional and other Shareholders in respect of, in aggregate, 60,715,557 Ordinary Shares representing approximately 29.85 per cent. of the Company's existing issued ordinary share capital.

 

The Company has also received letters of intent to vote, or procure a vote, in
favour of Resolution 1 from certain institutional and other Shareholders in
respect of, in aggregate, 31,348,356 Ordinary Shares representing
approximately 15.41 per cent. of the Company's existing issued ordinary share
capital.

 

 
2.         Background to, and reasons for, the Disposal

 

Introduction

On 17 October 2022, the Company announced that it had been in discussions with
its auditors in relation to the treatment of revenue recognition on one major
contract and certain costs included in Adjusted EBITDA and that, as a
consequence, it was unlikely to be in a position to meet prior guidance.  The
Company later announced on 12 December 2022 that the Board had become aware of
additional issues, including in relation to the reporting of historical
trading of the business in relation to FY 2022, the full impact of which
remains unclear. The Group applied to suspend trading of the Ordinary Shares
on AIM, pending clarification.  The Board confirmed that it had appointed an
external accounting and financial services firm to assist it.

On 16 January 2023, the Board confirmed that it had received inbound
indications of interest for certain divisions of the business and had engaged
restructuring and M&A advisers to look at a potential sale of one or a
number of its business lines.  At this point, the Board was looking at
reducing costs, strengthening the balance sheet and working closely with its
key stakeholders.

On 13 February 2023, the Group announced the resignation of its external
auditors and two days later it announced the resignation of its founder and
CEO Matthew Hudson.

The Group's restructuring and M&A advisers, Alvarez & Marsal Europe
LLP, assisted in undertaking an accelerated M&A process to seek to protect
the value in the business and they identified and contacted a number of
potential purchasers for some or all of the Company's business units, which
resulted in a high level of initial interest.  The requirement for speed
ruled out a number of bidders who had initially expressed interest.

On 10 March 2023, the Group exchanged on the sale of its UK Fund Management
Business for £1.0 million in cash plus £15,000 each month for three months
following exchange and £30,000 each month thereafter until completion, to be
paid on completion.  On completion, the inter-company loans between the Group
and the UK Fund Management Business entities will be reorganised and
extinguished.  Completion will take place once regulatory approval from the
Financial Conduct Authority is received.

 

Disposal of the Data & Analytics and Business Services Divisions and AIM
Rule 15

The Company today announced that it has entered into a binding conditional
sale and purchase agreement for substantially all of the subsidiaries and
assets of the Group to the Buyer for a maximum aggregate cash consideration of
up to approximately £40 million on a debt free basis.

The Data & Analytics Sale is conditional upon the Reorganisation Condition
being effected and upon Shareholder approval of Resolution 1 at the General
Meeting. Completion of the Data & Analytics Sale is therefore expected to
occur five Business Days following the passing of Resolution 1 at the General
Meeting. Upon Completion of the Data & Analytics Sale, the Buyer will pay
£12 million and will retain £3 million as part of the Holdback Amount.

The Business Outsourcing Sale is split into four separate parcels of corporate
entities, being the Guernsey parcel, the Jersey parcel, the Irish parcel and
the Luxembourg parcel. The sale of each of these parcels within the Business
Outsourcing Sale is conditional upon the same Shareholder approval condition
as the Data & Analytics Sale. In addition, the sale of each of the parcels
is also subject to obtaining the Regulatory Consents relevant to that parcel.
Upon Completion of the sale of a parcel, the Buyer will pay the consideration
apportioned to that parcel (being £13 million for the Irish parcel; £4
million for the Luxembourg parcel; £4 million for the Guernsey parcel; and
£4 million for the Jersey parcel) less a deduction equal to 18% of the
consideration payable for the parcels within the Business Outsourcing Sale,
which will be applied towards the Holdback Amount.

While the Board is confident that all of the appropriate Regulatory Consents
will be granted, there can be no guarantee that this is the case.

 

The assets being sold as part of the Disposal are the following:

Data & Analytics: ESG consulting, Custodian Bank Benchmarking, IR &
Marketing, Investment Advisory and Quantitative Solutions.  The operating
profit attributable to the Data & Analytics assets being sold for the
audited year ended 30 June 2021 was approximately £1.5m and operating profit
for the unaudited year ended 30 June 2022 was approximately £2.6m. The value
of the Data & Analytics Business on the Group's balance sheet, as at June
2021, was approximately £(0.1) million.

 

Business Outsourcing: the Irish and Luxembourg ManCo businesses and the
Channel Islands based Fund Administration and Fiduciary businesses. The
operating profit attributable to the Business Outsourcing assets being sold
for the audited year ended 30 June 2021 was approximately £1.5m and operating
profit for the unaudited year ended 30 June 2022 was approximately £3.1m. The
value of the Business Outsourcing Business on the Group's balance sheet, as at
June 2021, was approximately £3.7 million.

 

Use of proceeds of the sale

The consideration payable pursuant to the Disposal is up to approximately £40
million on a debt free basis. Of this the Data & Analytics Consideration
of up to approximately £15 million is expected to be payable in early May
2023, with the Business Outsourcing Consideration of up to approximately £25
million payable in tranches following the receipt of the relevant Regulatory
Consent(s) referred to above. The consideration payable is subject to
deductions from the Holdback Amount. One of the Sellers will enter into a
transitional services agreement which will deal with the provision of certain
services on a transitional basis to the various businesses following their
sale. The employment of certain employees (including some of the Directors) of
the Sellers will transfer to the Buyer.

As at 31 March 2023, the Group owed approximately £33.7 million under its
facilities and overdrafts and it is expected that further funding will be
required to the point of completion of the sale of the Business Outsourcing
Division.  The majority of the Consideration will therefore be applied to
reducing Remaining Group's debt. While there are a number of potential
outcomes, given the level of creditors of the business expected at the point
of final completion of the Business Outsourcing Sale, it should be noted that
it is unlikely that there will be a substantial amount available to
Shareholders following payment of all creditors and costs, if any.

 

In accordance with AIM Rule 15, the Disposal constitutes a fundamental change
of business of the Company. The Disposal is therefore conditional on the
approval of Shareholders at the General Meeting.

 

On completion of the Disposal, the Company will cease to own, control or
conduct all or substantially all of its existing trading business, activities
or assets. The Company will therefore become an AIM Rule 15 cash shell. As
there is no intention by the Directors to make an acquisition or acquisitions
which constitute a reverse takeover under AIM Rule 14 (including seeking
re-admission as an investing company (as defined under the AIM Rules)) on or
before the date falling six months from completion of the Business Outsourcing
Sale or be re-admitted to trading on AIM as an investing company under the AIM
Rules (which requires the raising of at least £6 million), the Directors are
seeking Shareholder approval for Cancellation, as detailed below.

 

3.         Background to, and reasons for, the proposed Cancellation

 

In light of the conditional agreement entered into today to effect the
Disposal, the Board expects that following completion of the Data &
Analytics Sale and, in due course subject to Regulatory Approval, the Business
Outsourcing Sale, the Company will become an AIM Rule 15 cash shell with no
trading business.  Furthermore, as noted above, it is expected that obtaining
all the Regulatory Consents will take a number of months.  During this
period, the Company is not likely to be able to make suitable use of being
admitted to AIM as it is expected that the Ordinary Shares will remain
suspended due to it being unlikely to be in a position to publish its FY 2022
audited accounts. Under the AIM Rules, if the Company remains suspended for
six months following its suspension on 12 December 2022, the admission of its
shares to AIM will be cancelled in any event.

 

The Directors believe It is therefore in the best interests of the Company and
its Shareholders to seek Shareholders' approval to cancel the admission of the
Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM
Rules, the Company has notified the London Stock Exchange of the proposed
Cancellation. Assuming the passing of Resolutions 1 and 2 and completion of
the Data & Analytics Sale, it is expected that Cancellation will occur on
or around 12 May 2023.

 

Pursuant to Rule 41 of the AIM Rules, Resolution 2 (relating to the
Cancellation) requires the approval of not less than 75 per cent. of the votes
cast by Shareholders (whether present in person or by proxy) at the General
Meeting. Resolution 2 is conditional upon: (i) Resolution 1 being approved;
and (ii) the completion of the Data & Analytics Sale.

 

The Directors have conducted a review of the benefits and disadvantages to
the Company and its Shareholders in retaining its admission to trading on AIM.
The Directors believe that the Cancellation is in the best interests of the
Company and its Shareholders as a whole. Following the Disposal, the Company
will have no trading business and limited cash resources. Maintaining the
Company's admission to trading on AIM requires significant management time,
legal and regulatory obligations, and comes with material financial costs
(such as professional fees, London Stock Exchange fees and other costs
associated with being an AIM-traded company) that the Directors believe are
disproportionate to the benefits to the Company.

 

4.         Process for, and principal effects of, the Cancellation

 

Under the AIM Rules, the Company is required to give at least 20 clear
Business Days' notice of the Cancellation. Pursuant to Rule 41 of the AIM
Rules, the Cancellation is also conditional upon the approval of not less than
75 per cent. of the votes cast by Shareholders (whether present in person or
by proxy) at the General Meeting. The Notice of General Meeting contains
Resolution 2 which proposes that admission to trading of the Ordinary Shares
on AIM be cancelled. Additionally, Cancellation will not take effect until at
least five clear Business Days have passed following the passing of Resolution
2 (and only if the Data & Analytics Sale completes).

 

Assuming the passing of Resolutions 1 and 2 and completion of the Data &
Analytics Sale, it is expected that Cancellation will occur on or around 12
May 2023. Shareholders should note that Cancellation will not take place if
Resolutions 1 and 2 are not both duly passed at the General Meeting.
Resolution 2 is conditional upon: (i) Resolution 1 being duly approved; and
(ii) the completion of the Data & Analytics Sale.

 

Following Cancellation and up to the eventual liquidation the Company may seek
to implement a matched bargain facility so that there will be a market for
Shareholders to effect transactions in the Ordinary Shares following
Cancellation.  However, no matched bargain facility is currently in place and
there can be no certainty that a matched bargain facility will be put in place
or that, if it is, it will remain for any extended period following
Cancellation.

 

The principal effects of the Cancellation will be that:

 

·           there will be no public market on any recognised
investment exchange or multilateral trading facility for the Ordinary Shares
and, consequently, there can be no guarantee that a Shareholder will be able
to purchase or sell any Ordinary Shares;

 

·           while the Ordinary Shares will remain freely
transferable, it is likely that the liquidity and marketability of the
Ordinary Shares will, in the future, be more constrained than at present and
the secondary market value of such Ordinary Shares may be adversely affected
as a consequence;

 

·           in the absence of a formal market and quote, it may be
more difficult for Shareholders to determine the market value of their
investment in the Company at any given time;

 

·           the regulatory and financial reporting regime
applicable to companies whose shares are admitted to trading on AIM will no
longer apply;

 

·           the levels of disclosure and corporate governance
within the Group may not be as stringent as those for a Company quoted on AIM;
however the Company will continue to be subject to the City Code for a period
of at least ten years from the date of Cancellation;

 

·           Shareholders will no longer be afforded the protections
given by the AIM Rules, such as the requirement to be notified of certain
events and the requirement that the Company seek Shareholder approval for
certain corporate actions, where applicable, including substantial
transactions, financing transactions, reverse takeovers, related party
transactions and fundamental changes in the Company's business, including
certain acquisitions and disposals;

 

·           in order to increase the cost saving by becoming a
private company, following the Cancellation, the Company will no longer be
obligated to produce and publish half-yearly reports and related financial
statements;

 

·           the Company will cease to have a nominated adviser and
broker;

 

·           whilst the Company's CREST facility will remain in
place following the Cancellation, the Company's CREST facility may be
cancelled in the future and, in that event, although the Ordinary Shares will
remain transferable, they will cease to be transferable through CREST.  In
this instance, Shareholders who hold Ordinary Shares in CREST will receive
share certificates; and

 

·           the Cancellation may have taxation consequences for
Shareholders.  Shareholders who are in any doubt about their tax position
should consult their own professional independent tax adviser.

 

Shareholders should be aware that if the Cancellation takes effect, they will
at that time cease to hold shares in a quoted company and will become
Shareholders in an unquoted company which will be likely significantly to
reduce the marketability and liquidity of the Ordinary Shares and the
principal effects referred to above will automatically apply to the Company
from the date of the Cancellation.

 

The above considerations are not exhaustive, and Shareholders should seek
their own independent advice when assessing the likely impact of the
Cancellation on them.

 

5.         General Meeting

 

Set out at the end of this document is the notice of the General Meeting to be
held at Forum 4, Grenville Street, St. Helier, Jersey JE4 8TQ, Channel Islands
at 2 p.m. on 3 May 2023 at which the following Resolutions will be proposed:

 

·           Resolution 1 (to approve the Disposal)

·           Resolution 2 (to approve the proposed Cancellation)

·           Resolution 3 (to approve certain amendments to the
Existing Articles)

 

Resolution 1 is being proposed as an ordinary resolution and will require
approval by more than 50 per cent. of those votes cast (by persons present in
person or by proxy) at the General Meeting.  Resolution 2 is being proposed
as a 'shareholder consent' resolution and, in accordance with the requirements
of Rule 41 of the AIM Rules for Companies and article 52.2 of the Company's
articles of association, will require approval by at least 75 per cent. of
those votes cast (by persons present in person or by proxy) at the General
Meeting.  Resolution 3 is being proposed as a special resolution and will
require approval by at least two thirds of those votes cast (by persons
present in person or by proxy) at the General Meeting.

 

Completion of the Disposal (and any part of it) is conditional, inter alia, on
Shareholders passing Resolution 1. If Shareholders do not pass Resolution 1,
completion of the Disposal (or any part of it) will not proceed.

 

Completion of the Cancellation is conditional, inter alia, on Shareholders
passing Resolution 1 and Resolution 2. If Shareholders do not pass both
Resolution 1 and Resolution 2, the Cancellation will not proceed.

 

Amending the Existing Articles is conditional only on passing Resolution 3
and, if that Resolution is passed, the proposed amendments will become
effective immediately.  A summary of the proposed principal changes to the
Existing Articles is set out in Part III of this document and a document
showing these changes (and all other proposed changes) and a clean copy of the
Amended Articles will be available at:
www.mjhudson.com/investors/shareholder-information/
(http://www.mjhudson.com/investors/shareholder-information/) until the
conclusion of the General Meeting.

 

6.         Action to be taken
 

The Resolutions are set out in the Notice of General Meeting at the end of
this document.

 

Shareholders can submit their vote electronically using the link
www.signalshares.com. Shareholders can use this service to vote or appoint a
proxy electronically by logging into their Signal shares account, or register
if they have not previously done so, by no later than 2.00 p.m. on 2 May 2023
(or, in the case of an adjournment of the General Meeting, not less than 24
hours before the time fixed for the holding of the adjourned General Meeting
(at the discretion of the Directors, excluding any part of a day that is not a
Business Day)).

 

Shareholders who have elected to vote by post will have received a hard copy
Form of Proxy for the General Meeting with this document.

 

If you hold your Ordinary Shares in uncertificated form (that is, in CREST)
you may vote using the CREST proxy voting service in accordance with the
procedures set out in the CREST manual (please also refer to the accompanying
notes to the Notice of the General Meeting set out at the end of this
document). Proxies submitted via CREST must be received by the Company's agent
(ID: RA10) by no later than 2 p.m. on 2 May 2023 (or, in the case of an
adjournment of the General Meeting, not less than 24 hours before the time
fixed for the holding of the adjourned General Meeting (at the discretion of
the Directors, excluding any part of a day that is not a Business Day)).

 

Appointing a proxy in accordance with the instructions set out above will
enable your vote to be counted at the General Meeting in the event of your
absence. Completing a Form of Proxy, voting electronically or using the CREST
proxy voting service will not prevent you from attending, speaking and voting
at the General Meeting, or any adjournment of it, in person should a
Shareholder wish to do so.

 

If Shareholders need help with voting, they should contact the Company's
Registrar, Link Group, on tel: 0371 664 0391. Calls are charged at the
standard geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. Lines are open
between 9.00 a.m. to 5.30 p.m., Monday to Friday (excluding public holidays in
England and Wales), or by email at shareholderenquiries@linkgroup.co.uk.

 

7.         Recommendation

 

The Board believes that the Resolutions, Disposal, Cancellation and amendments
to the Existing Articles are in the best interests of the Company and the
Shareholders as a whole.

 

Accordingly, the Board unanimously recommends that Shareholders vote in favour
of the Resolutions to be proposed at the General Meeting, as all of the
Directors holding Ordinary Shares intend to do in respect of their own
beneficial holdings of, in aggregate, 6,076,508 Ordinary Shares representing
approximately 2.99 per cent. of the Company's existing issued ordinary share
capital.

 

The Company has received irrevocable undertakings and letters of intent to vote, or procure a vote, in favour of Resolution 1 in respect of, in aggregate, 92,063,913 Ordinary Shares representing approximately 45.27 per cent. of the Company's existing issued ordinary share capital.
 

 

PART II
SUMMARY OF KEY TERMS AND CONDITIONS OF THE SPA

 

The SPA is made between the Sellers and the Buyer and relates to the Data
& Analytics Sale and the Business Outsourcing Sale.

 

The Data & Analytics Sale is conditional upon the Reorganisation Condition
being effected and upon Shareholder approval of Resolution 1 at the General
Meeting. Completion of the Data & Analytics Sale is therefore expected to
occur five Business Days following the passing of Resolution 1 at the General
Meeting. Upon Completion of the Data & Analytics Sale, the Buyer will pay
£12 million and will retain £3 million as part of the Holdback Amount
(approximately).

 

The Business Outsourcing Sale is split into four separate parcels of corporate
entities, being the Guernsey parcel, the Jersey parcel, the Irish parcel and
the Luxembourg parcel. The sale of each of these parcels within the Business
Outsourcing Sale is conditional upon Shareholder approval of Resolution 1 at
the General Meeting. In addition, the sale of each of the parcels is also
subject to obtaining the Regulatory Consents relevant to that parcel and the
relevant regulator not imposing adverse conditions as such Regulatory
Consents. Upon Completion of the sale of a parcel, the Buyer will pay the
consideration apportioned to that parcel (being £13 million for the Irish
parcel; £4 million for the Luxembourg parcel; £4 million for the Guernsey
parcel; and £4 million for the Jersey parcel) less a deduction equal to 18%
of the consideration payable which will be applied towards the Holdback Amount
(approximate numbers).

 

If the relevant Regulatory Consents for the sale of a parcel are not received
by 31 December 2023, the sale of that parcel will lapse. The Buyer has a right
to terminate the SPA in so far as it relates to any parcel if any of the
companies contained within that parcel is the subject of an insolvency event
during the period from the date of the SPA until completion of the sale of
that parcel (the "Interim Period").

 

During the Interim Period the Sellers are obliged to use funding available to
them to continue to operate and provide services to the companies which are
the subject of the SPA. There are the usual positive and negative obligations
placed upon the Sellers for the duration of the Interim Period in relation to
the target companies.

 

The Sellers are providing fundamental, commercial and tax warranties to the
Buyer, together with specific indemnities in relation to certain known risk
items and in relation to the provision of services under the transitional
services agreement. The Sellers' liability under the SPA is limited to the
Holdback Amount and is subject to other usual Sellers' liability protections.

 

The Holdback Amount is to be available to the Buyer to meet claims under the
warranties, tax covenant and indemnities. The Holdback Amount (less the sum of
any agreed or not yet determined claims) will be payable to the Sellers on 30
September 2024 and any sums relating to claims not determined at that point
will continue to be held back until such claims can be determined.

 

 

 

 

PART III
SUMMARY OF THE PROPOSED PRINCIPAL CHANGES TO THE EXISTING ARTICLES

 

The following are the proposed procedural amendments to the articles of
association of the Company, to reduce the time required to hold EGMs:

 

•             to remove the requirement for 72 hours' notice to
hold Board meetings pursuant to Article 124 (subject to notice having been
given to the Directors) given this period was felt to be impractical by the
Directors;

•             to reduce the period by which notices of EGMs /
AGMs are deemed to be served pursuant to Article 162. The amendment proposes
that notice will be deemed served on the day following posting of the relevant
circular, as opposed to on the fifth day following posting, which the Board
considered unnecessarily extended the time it took for the Company to call
such meetings. Following the amendment, such meetings shall be capable of
being held in the more usual period of 14 clear days' notice from the date of
notice; and

•             to remove the defined term "Holder" given this
term is not used in the articles of association and so which is a tidying
amendment.

 

A document showing these changes (and all other proposed changes) and a clean
copy of the Amended Articles is available at:
www.mjhudson.com/investors/shareholder-information/
(http://www.mjhudson.com/investors/shareholder-information/) until the
conclusion of the General Meeting.

 

DEFINITIONS

 

The following definitions apply throughout this document unless the context
requires otherwise:

 "Adjusted EBITDA"                       the profits/losses of the relevant Group segment before interest, tax,
                                         depreciate and amortisation and also before share based payments expenses,
                                         unallocated group expenses and discontinued business losses

 "AIM"                                   the market of that name, operated by the London Stock Exchange

 "AIM Rules"                             together, the AIM Rules for Companies and/or the AIM Rules for Nominated
                                         Advisers (as the context requires)

 "AIM Rules for Companies"               the AIM Rules for Companies published by the London Stock Exchange, as amended
                                         from time to time

 "AIM Rules for Nominated Advisers"      the AIM Rules for Nominated Advisers published by the London Stock Exchange,
                                         as amended from time to time

 "Amended Articles"                      the articles of association of the Company immediately following Resolution 3
                                         being duly passed

 "Board" or "Directors"                  the directors of the Company from time to time

 "Business Day"                          any day on which banks are generally open in England and Wales for the
                                         transaction of business, other than a Saturday, Sunday or public holidays in
                                         England and Wales

 "Business Outsourcing Division"         the Business Outsourcing division comprised of various subsidiary undertakings
                                         of the Company, and whose businesses are the Irish and Luxembourg ManCo
                                         businesses and the Channel Islands based Fund Administration and Fiduciary
                                         businesses

 "Business Outsourcing Sale"             the sale of the Business Outsourcing Division by the relevant Seller(s) to the
                                         Buyer

 "Buyer"                                 Apex Consolidation Entity Limited, being part of the Apex Group and an
                                         affiliate of Genstar Capital Partners LLC

 "Cancellation"                          the proposed cancellation of the admission to trading on AIM of the Ordinary
                                         Shares, subject to, amongst other things, Resolutions 1 and 2 being duly
                                         passed, and in accordance with Rule 41 of the AIM Rules

 "Cenkos"                                Cenkos Securities plc, the Company's nominated adviser and broker,
                                         incorporated in England & Wales with company registration number 05210733

 "Company"                               MJ Hudson Group Plc, a company incorporated in Jersey with company number
                                         129535

 "Completion"                            completion of the sale of: (i) the Business Outsourcing Division; (ii) the
                                         Data & Analytics Division; and/or (iii) both of the foregoing (as the
                                         context requires)

 "Consideration"                         the maximum aggregate cash consideration to be paid in accordance with the
                                         terms of the Disposal comprising up to approximately £40 million

 "CREST Manual"                          the rules governing the operation of CREST as published by Euroclear

 "CREST Regulations"                     the Uncertificated Securities Regulations 2001 (SI 2001/3755) and the
                                         Companies Uncertificated Securities (Jersey) Order 1999 as amended from time
                                         to time, and any applicable rules made under those regulations

 "Data & Analytics Consideration"        a total of approximately £15 million payable in respect of the Data &
                                         Analytics Sale

 "Data & Analytics Division"             the data & analytics division comprised of various subsidiary undertakings
                                         of the Company, and whose businesses are ESG consulting, Custodian Bank
                                         Benchmarking, IR & Marketing, Investment Advisory and Quantitative
                                         Solutions

 "Data & Analytics Sale"                 the sale of the Data & Analytics Division by the relevant Seller(s) to the
                                         Buyer

 "Disposal"                              the proposed disposal of the Data & Analytics Division and Business
                                         Outsourcing Division

 "Euroclear"                             Euroclear UK & International Limited, the operator of CREST

 "Existing Articles"                     the articles of association as at the date of this document

 "Financial Conduct Authority" or "FCA"  the UK Financial Conduct Authority

 "Form of Proxy"                         the form of proxy relating to the General Meeting being sent to Shareholders
                                         (where applicable) with this document

 "FSMA"                                  the UK Financial Services and Markets Act 2000 (as amended)

 "General Meeting" or "GM"               the General Meeting of the Company to be held at Forum 4, Grenville Street,
                                         St. Helier, Jersey JE4 8TQ, Channel Islands at 2.00 p.m. on 3 May 2023, notice
                                         of which is set out at the end of this document

 "Group"                                 the Company and its subsidiary undertakings

 "Holdback Amount"                       an amount of up to £7.5 million to be withheld by the Buyer from the
                                         Consideration and to be released to the Sellers on 30 September 2024, subject
                                         to deductions for Buyer claims

 "Jersey Companies Law"                  the Companies (Jersey) Law 1991 (as amended)

 "London Stock Exchange"                 London Stock Exchange plc

 "MAR"                                   Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the
                                         European Union (Withdrawal) Act 2018 (as amended)

 "Notice of General Meeting"             the notice convening the General Meeting set out at the end of this document

 "Ordinary Shares"                       ordinary shares of no par value in the capital of the Company

 "Registrar"                             Link Market Services (Jersey) Limited

 "Regulatory Consents"                   the consents required from each of the Central Bank of Ireland, the Commission
                                         de Surveillance du Secteur Financier of Luxembourg, the Jersey Financial
                                         Services Commission, the Guernsey Financial Services Commission and the
                                         Guernsey Competition Regulatory Authority in respect of the relevant parcel of
                                         the Business Outsourcing Sale

 "Remaining Group"                       the Company and its subsidiary undertakings immediately after completion of
                                         the Disposal

 "Reorganisation Condition"              the removal of certain subsidiary entities from the perimeter of the Disposal
                                         and the reorganisation and write off or settlement of certain intercompany
                                         debts owing by the entities within the Disposal perimeter to the Remaining
                                         Group as part of a series of transactions to be agreed between the Sellers and
                                         the Buyer

 "Resolutions"                           the resolutions proposed to be passed by Shareholders at the General Meeting,
                                         as set out in the Notice of General Meeting at the end of this document, and a
                                         reference to a "Resolution" shall be construed accordingly

 "Sellers"                               MJH Group Holdings Limited and certain other subsidiary undertakings of the
                                         Company

 "Senior Lender"                         Santander UK plc

 "Share Purchase Agreement" or "SPA"     the conditional agreement dated 6 April 2023 between (i) the Sellers; and (ii)
                                         the Buyer relating to the Disposal, details of which are set out in this
                                         document

 "Shareholders"                          holders of the Ordinary Shares

 "UK" or "United Kingdom"                the United Kingdom of Great Britain and Northern Ireland

 "£" or "Sterling"                       pounds sterling, the lawful currency of the United Kingdom

 

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  UPDSFLFUSEDSEFL