REG - Purplebricks Group - Proposed sale of business and assets to Strike Ltd

PurplebricksAnnouncement

17/05/2023 09:00

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RNS Number : 7212Z  Purplebricks Group PLC  17 May 2023

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OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

This announcement contains inside information for the purposes of article 7 of
Regulation 596/2014 as amended and transposed into UK law in accordance with
the European Union (Withdrawal) Act 2018 ("UK MAR").

17 May 2023

Purplebricks Group plc

("Purplebricks" or the "Company")

 

Proposed sale of business and assets to Strike Limited ("Strike")

Completion of Strategic Review, Termination of Formal Sale Process

Proposed cancellation of admission to trading on AIM

Proposed re-registration as a private company and change of name

Board Changes

and

Publication of Circular and Notice of General Meeting

 

Purplebricks Group plc (AIM: PURP) announces the completion of its Strategic
Review, termination of its Formal Sale Process and entry into a conditional
agreement to effect the transfer of substantially all of its trading business
and assets to Strike (other than certain excluded assets) through its
subsidiary Strike Bidco Limited (the "Purchaser") for a consideration of £1
and the assumption of substantially all of the Company's liabilities (other
than the excluded liabilities) by the Purchaser (the "Proposed Sale"). The
Proposed Sale results in the Company's cash balance on Completion (up to a
maximum of £5.5 million) being retained by the Company with the intention
that the net cash proceeds after the deduction of certain costs and expenses
to meet the excluded liabilities (the "Net Cash Proceeds"*) are distributed to
Shareholders following and subject to completion of (i) the legal formalities
around the transfer of assets and (ii) a members' voluntary liquidation.

The Proposed Sale is expected to deliver a small return to Purplebricks
shareholders and preserves the Company's business and brand for the benefits
of its consumer customers, employees, funding partners and other stakeholders.

Summary

·    Completion of the Company's Strategic Review and termination of
Formal Sale Process, which concludes the offer period in respect of the
Company (as defined in the Takeover Code).

·    The Board of Purplebricks launched the Strategic Review on 17
February 2023 to consider the options available to the Company considering
both the value being offered to Shareholders, and the ability to deliver
certainty for the Group and its stakeholders in a short timeframe. Following
preliminary conversations around the potential for an equity fund raise and
having received several credible expressions of interest in relation to the
sale of the Company or some or all of the Group's business and assets, the
Formal Sale Process was launched on 1 March 2023 to fully explore a potential
sale of the Group.

·    After a period of engagement with a significant number of potential
offerors and upon conclusion of several rounds of bidding designed to identify
the most credible potential offerors, among other options, the Company
received a proposal from Strike for the acquisition of the Company's business
and assets. The Board did not consider the other potential offers provided
either sufficient certainty or would be deliverable in the timeframe needed to
resolve the Group's short term funding issues arising from the agreement with
its pay later financing provider being close to expiry and the Company's cash
balance declining.

·    However, the proposal from Strike offered the ability to conclude a
transaction in the short term that results in the Company retaining a cash
balance for distribution to shareholders ( as part of a distribution to
shareholders after payment of certain transaction costs and expenses and after
completing the transfer of assets that can only be passed to Strike post
Completion (such as contracts requiring counterparty consent)) whilst also
protecting the future of the Company's business, brand, existing customers in
the process of selling their houses and those employees to be retained for the
ongoing success of the business as well as providing greater certainty for
funding partners and other supplier relationships.

·    The Proposed Sale will constitute a fundamental change of business
for the purposes of Rule 15 of the AIM Rules as the Company will cease to own,
control or conduct all of its existing trading business, activities and
assets. It is also potentially deemed "frustrating" action under Rule 21.1 of
the Takeover Code. As such, the Proposed Sale is conditional upon the approval
of the Shareholders at the General Meeting.   The Circular, setting out
further details on the Proposed Sale and containing a notice to convene the
General Meeting, is being sent to Shareholders later today.  The General
Meeting will be held at 9 a.m. on 2 June 2023.

·    The Board has also concluded that, on the basis that the Company
would no longer have a trading business following Completion, it is in the
best interests of the Company and the Shareholders to seek Shareholder
approval to cancel the admission of the Company's Ordinary Shares to trading
on AIM. Following cancellation of the Ordinary Shares on AIM, the Company
proposes to re-register as a private company, thereby changing its name to
Bricks Newco Limited and adopting the New Articles.

·    With effect from Completion of the Proposed Sale, Helena Marston is
resigning from her role as CEO. The rest of the Company's Board (other than
Dominique Highfield, the Company's CFO) have indicated their intention to step
down following the cancellation of the Ordinary Shares to trading on AIM. All
other employees will transfer to Strike, however it is anticipated that there
will be reductions in headcount in the short term as part of a wider cost
reduction in the business, which are expected to impact on the size of the
field teams and certain central functions.

·    The Directors, taking into account the comprehensive exploration of
sale options via the Formal Sale Process, the current trading performance of
the Company, the liquidity position of the Company, the near term expiry of a
key funding partner relationship and the potential challenges in securing, in
the short term, the future ownership of the Group, have unanimously concluded
that it is in the best interests of the Company to proceed with Proposed Sale.

·    Accordingly, the Directors intend to unanimously recommend
Shareholders to vote in favour of the Resolutions to be proposed at the
General Meeting as they have irrevocably undertaken to do in respect of their
own beneficial holdings and the shareholdings in which they are interested
amounting, in aggregate, to 19,402,865 Ordinary Shares, representing
approximately 6.3% of the Company's issued share capital.

·    The Company has also received an irrevocable undertaking to vote in
favour of the Resolutions at the General Meeting from AVIV Group in respect of
81,384,638 Ordinary shares representing approximately 26.5% of the Company's
issued share capital.

·    In addition, the Company has also received a letter of intent from
JNE Master Fund LP in respect of 33,620,000 Ordinary Shares representing
approximately 11% of the Company's issued share capital, confirming that it
intends to vote in favour of the Resolutions at the General Meeting.

·    Accordingly, the Company has therefore received irrevocable
undertakings and/or letters of intent in respect of a total 134,407,503
Ordinary Shares representing, in aggregate, approximately 43.8% of the
Company's issued share capital on 16 May 2023 (being the last Business Day
before the date of this Announcement), further details of which are set out
below.

Rule 21 of the Takeover Code

Prior to the Company terminating the Formal Sale Process by way of this
Announcement, all parties who had approached the Company were notified of the
rejection of their approach with regard to making an offer for the Company and
also of the termination of the Formal Sale Process.

As at the date of this Announcement, no firm proposal has been made to the
Company by any potential offerors.

Rule 2.8 of the Takeover Code

Shareholders will be aware that on 10 May 2023, Strike released an
announcement confirming that it did not intend to make an offer for the
Company. This statement is subject to Rule 2.8 of the Takeover Code and under
Rule 2.8(f) of the Takeover Code, Strike would be prohibited from purchasing,
agreeing to purchase or make any statement which raises or confirmed the
possibility that it is interested in purchasing assets which are significant
in relation to the Company for a period of six months from 10 May 2023.  With
regard to reservation a) in the announcement made by Strike on 10 May 2023,
the Board of the Company has agreed that this restriction may be set aside for
the purposes of Strike and the Purchaser entering into the Asset Purchase
Agreement.

Paul Pindar, Chairman of Purplebricks, commented:

"It is the unanimous opinion of the Board that the Proposed Sale to Strike is
in the best interests of stakeholders and Shareholders should vote in favour
of the Proposed Sale. This conclusion has been informed by the Strategic
Review in which all options, including an equity fund raise, have been
considered and an extensive Formal Sale Process, which involved inbound and
outbound approaches from and to interested parties within and outside of the
industry. I am disappointed with the financial value outcome, both as a 5%
Shareholder myself and for Shareholders who have supported the Company under
my and the Board's stewardship. However, there was no other proposal or offer
which provided a better return for shareholders, with the same certainty of
funding and speed of delivery necessary to provide the stability the Company
needs.

On behalf of the entire Board I would like to thank Helena for her leadership
of the business through the most challenging of times and wish her the very
best for the future.  She has implemented a difficult but necessary change
agenda over the last 12 months which has laid the foundations for a more
secure future."

Helena Marston, CEO of Purplebricks, commented:

"When I became CEO 12 months ago, my focus was a wholesale raising of
standards within the business and to chart a course towards positive cash
generation. This included delivering £21m of cost savings, stabilising
lettings, new revenue streams, raising our prices and much improved financial
transparency and control. We have achieved many of these goals, but my view
and that of the Board in February was that we would be better placed to
realise our full potential under private ownership. However, the Strategic
Review and Formal Sale Process created increased uncertainty in the business
resulting in a need to draw this process to conclusion, which has also been
accentuated by the timing of expiry of our relationship which lets us provide
pay later solution.

Taking the actions we did has allowed us to secure a solvent outcome, which
protects the future of the business and the Purplebricks consumer driven
brand, alongside the benefits of further investment. It has been a challenging
and uncertain time but the passion and commitment of our people has been
tremendous and I sincerely wish everyone the very best for the future."

Sir Charles Dunstone, Partner, Freston Ventures (Joint Major Shareholder of
Strike), commented:

 "We remain committed to the online model, which offers customers a much
better experience at a far lower cost. This is a positive outcome for anyone
looking to sell their home and save money doing so. Purplebricks has
dramatically changed the industry by driving down the cost of estate agency
and we aim to combine its significant brand recognition with an even more
disruptive business model.

In bringing together the two brands, we will supercharge Strike's mission to
democratise house selling by empowering customers to have more control over a
process that has barely changed for 200 years.

At Freston Ventures we are focused on building household brands that are
trusted by consumers across the UK. We believe there is a better way to sell
your house and through this deal, we are developing the market-leading brand
to deliver it."

* Net Cash Proceeds available to be returned to Shareholders is an estimate
and will be dependent on a number of factors outlined in the additional
information section below

Enquiries

 

 Purplebricks
 Helena Marston (CEO) and Dominique Highfield (CFO)        Via M7 Communications Ltd
 Zeus (Financial Adviser, Nominated Adviser & Broker)      + 44 (0) 20 3829 5000
 Jamie Peel, James Hornigold (Investment Banking)
 Benjamin Robertson (Corporate Broking)
 PricewaterhouseCoopers LLP (Financial Adviser)            +44 (0) 20 7583 5000
 Jon Raggett
 M7 Communications
 Mark Reed                                                 +44 (0) 7903 089 543

                                                           mark@m7communications.co.uk
 Strike                                                    +44(0)1273 013432
 Via FieldHouse Associates                                 strike@fieldhouseassociates.com
 Teneo (Financial Adviser to Strike)                       + 44 (0) 20 7260 2700
 Chris Nicholls, Craig Lukins

The person responsible for arranging for the release of this announcement on
behalf of the Company is Dominique Highfield, Chief Financial Officer.

 

Additional information

Background to the Proposed Sale and reasons for Recommendation

On 17 February 2023, the Company announced a trading update for the financial
year ending 30 April 2023 ("FY23") and the commencement of its Strategic
Review. The Company announced, amongst other items, that the implementation of
its turnaround plan laid out at its half year results for HY23 (the
"Turnaround Plan") had taken place but involved more disruption to the sales
field than originally envisaged in order to achieve the required cost savings
and efficiency improvements. As a result of this disruption, instruction
numbers achieved in Q3 FY23 were lower than the Board's expectations and as
such, expectations for the full year were revised.

In addition to the trading update, the Company also announced the commencement
of its Strategic Review, recognising that the potential of the Group may be
better realised under an alternative ownership structure. Throughout the
Strategic Review, consideration of all options available to the Company was
given, including the potential for an equity fund raising and the sale of the
Company or some or all of the Group's business and assets, changing the
Group's payment processor for 'pay now' instructions and/or changing the basis
of the Company's customer offering or the arrangements under which it offers
pay later terms to its customers.

Following the launch of the Strategic Review, the Group received several
credible expressions of interest that the Board wished to pursue in a
co-ordinated fashion, alongside having the ability to engage with a wider
range of potentially interested parties, in relation to a potential
acquisition of the Company or some or all of the Group's business and assets.
To facilitate this, on 1 March 2023, the Company announced an update to the
Strategic Review and the launch of the Formal Sale Process.

Following launch of the Formal Sale Process, the Company engaged with a
significant number of potential offerors, both via outbound and inbound
approaches. The Formal Sale Process involved several rounds of bidding
designed to identify the most credible potential offerors, considering both
the value being offered to Shareholders and the ability to deliver certainty
for the Group and its stakeholders in a short timeframe, taking into account
the Company's cash and trading position and the upcoming expiry (and prospect
of renewal) of the arrangements under which the Company is able to offer its
'pay later' terms (which account for c. 70% of the Group's revenues).

On 9 May 2023, the Company released a trading update for FY23 and an update on
the Strategic Review and Formal Sale Process. The Company outlined that:

·    instruction levels for Q4 FY23 had not increased as previously
anticipated, which is expected to impact on revenue and EBITDA for FY24;

 

·    in light of the Group's current financial position, the Group's
payment processor for 'pay now' instructions had exercised its right to
withhold a portion of remittances to the Group;

 

·    this withholding and reduction in anticipated instructions had
impacted the Company's cash position, which as at 30 April 2023 was estimated
to have stood at c. £9.1 million;

 

·    the Board expected that the previously anticipated return to cash
generation in early FY24 is unlikely, given the trading performance of the
Group and whilst the Strategic Review and resultant uncertainty around the
future of the Group remain ongoing;

 

·    the Company had secured a short term extension to the contractual
arrangements with the funding partner which enables the Group to offer its pay
later terms to its customers, with such arrangements having been due to expire
on 30 April 2023;

 

·    should the Group not be able to agree revised terms for the financing
to support its pay later offering, or should those terms be disadvantageous to
the Group or its customers, this would accelerate the Group's utilisation of
its remaining cash reserves.  Any further increased rate of withholding by
the Group's payment processor for pay now instructions would also accelerate
the Group's utilisation of its remaining cash reserves;

 

·    the Board believed it was necessary to conclude the Strategic Review
and the Formal Sale Process promptly and in a manner that provided more
certainty around the Group's future ownership, that provided the business with
access to additional funding and resulted in a longer term extension to the
finance for its pay later offering; and

 

·    in the view of the Board, a conclusion to the process was necessary
in the interests of Shareholder value, and to create greater stability and
clarity for the future of the Company, its employees, its funding partners and
its customers.

The Directors have taken into account the comprehensive exploration of options
as part of the Strategic Review, the current trading performance of the
Company, the liquidity position of the Company and the near term expiry of its
key funding partner relationships as well as the potential challenges in
securing, in the short term, the future ownership of the Group.

Reflecting the above, the Board has prioritised proposals that would deliver
short term certainty for the Group and its stakeholders, including in
particular its consumer customer base, as well seeking to deliver an outcome
that protected employee rights, offered a future for a proportion of employees
and offered a favourable outcome for the Group's partners and suppliers. The
Board considers that the Proposed Sale is in line with these objectives and as
such, the Company has entered into the Asset Purchase Agreement.  It should
be noted that the timeframe for completion of an acquisition of all of the
shares in the Company could be a lengthy period, in particular because of a
requirement to obtain prior approval of the Financial Conduct Authority of the
change in control of the Company.  The Proposed Sale will be completed in a
much shorter timeframe than a takeover of the Company.

Furthermore, in addition to considering some of the factors and objectives
outlined above, as part of its assessment of the Proposed Sale, the Board has
considered with its advisers the potential alternative implications of a
failure to agree satisfactory terms for an extension to its pay later
financing arrangements, the payment processor for pay now increasing its
withholding of remittances, the potential accelerated utilisation of its cash
reserves and wider uncertainties around its financial and trading outlook.
Were such circumstances to arise, absent other financing solutions being
identified or an alternative transaction being consummated to secure the
future ownership of the Group in the short term, the prospect of the Company
entering into administration or some other form of insolvency procedure would
increase.  In their assessment of such scenarios, the Board consider that the
prospects for recovery of any value by Shareholders would be highly unlikely.

In terms of the anticipated future of the Company's business under the
arrangements for the Proposed Sale, the Directors have considered the
investment Strike intends to make in the Company's business, the opportunity
for the future success of the business within Strike's group and the finance
arrangements that the Purchaser has secured for the continued offering of the
Company's pay later terms, which is a key part of the Group's consumer driven
proposition.

The Directors understand Strike is of the view that the Proposed Sale ending
the uncertainty around the Formal Sale Process and the Company's future
ownership should bring stability to the business which may lead to increases
revenue and the rate of new instructions.  Strike nonetheless considers there
will be a need to reduce costs in the business, with the extent of cost
reductions required itself a function of the performance of the business.
While there will be cost savings associated with the Company no longer being
admitted to trading on AIM, Strike has also indicated such cost reductions
will include reducing the employee base, which will impact on the size of the
field teams and certain central functions. While this will require
comprehensive planning, Strike has indicated it would like to complete this
planning and initiate a redundancy consultation process, with the Company's
assistance, that would likely involve all of the Company's employees as soon
as practicable and possibly prior to Completion. Strike has however assured
the Board that its firm intention is to grow the business, which will require
continued employee support and that any employees affected by redundancy will
be treated fairly and equitably, consistent with Strike's culture of
respect.   The Directors would also note that all of the advanced talks held
by the Company with potential offerors have involved some proposals to reduce
or otherwise change the Company's workforce.

Taking into account all of the factors above, the Directors believe that the
Proposed Sale achieves the short term certainty the business requires and
offers the best chance of a secure outcome for and respecting the rights of
all of its stakeholders, including in particular its consumer customer base.
Accordingly, the Directors intend to recommend that Shareholders vote in
favour of all Resolutions to be proposed at the General Meeting, as they have
irrevocably undertaken to do in respect of their own shareholdings of, in
aggregate, 19,402,865 shares representing 6.3% of the total issued share
capital.

The Board strongly hopes that Shareholders will understand its views as set
out above and will vote in favour of the Proposed Sale and the Cancellation at
the General Meeting.  While further details will be set out in the Circular,
Shareholders should be aware that if the Proposed Sale is not approved by
Shareholders and does not proceed, the continued uncertainty around the
Group's future ownership could have a significant impact on the Group's
ability to operate as it currently does, in particular with regard to its
continued ability to offer of its pay later terms and, in due course, the
Company may not be able to meet is respective financial obligations as they
fall due.

Details of the Proposed Sale

The Company has entered into the Asset Purchase Agreement on terms and
conditions which effect the transfer of substantially all of the Purplebricks
trading business and assets to the Purchaser (other than certain excluded
assets) for a consideration of £1 and the assumption of substantially all of
the Company's liabilities (other than the excluded liabilities) by the
Purchaser. The obligations of the Purchaser under the Asset Purchase Agreement
are guaranteed by Strike.

The principal terms of the Asset Purchase Agreement are as follows:

·    The cash consideration under the Asset Purchase Agreement payable by
the Purchaser to the Company is £1 and the assumption of substantially all of
the Company's liabilities (other than certain transaction costs and expenses)
by the Purchaser. In addition, it should be noted that the Company is entitled
to retain up to £5.5m in cash, depending on the cash position of the Group at
Completion.

·    The Proposed Sale is only conditional upon the Proposed Sale
Resolution and, namely, approval of the requisite majority of Shareholders at
the General Meeting.

·    The Purchaser has agreed to an assumption of liabilities supported by
broad indemnification provisions in favour of the Company, should any
liabilities (save for the excluded liabilities for transaction costs and
expenses) remain for the Company to pay.

·    Pending Completion, the Company is obliged to operate its business in
the ordinary course as carried on prior to the date of the Asset Purchase
Agreement. There are also certain restrictions on the Company with regard to
the operation of its business including, amongst other things, disposing of
(or creating an encumbrance over) any assets which are subject to the sale and
entering into, amending or terminating a material contract.

·    The Purchaser will be entitled to terminate the Asset Purchase
Agreement if at any time prior to Completion there has been a material breach
of the warranties or pre-completion undertakings given by the Company or if
there is an insolvency event in relation to the Company.

It is anticipated that, following Completion, there will be a transitional
period ("Transitional Period") needed to move the business and assets to the
Purchaser. Following Completion and any transfers of business and assets which
transfer after Completion, the Company intends to distribute the Net Cash
Proceeds to Shareholders. Further details on the intended distribution of the
Net Cash Proceeds are set out below and will be set out in the Circular.

As the Proposed Sale will include a transfer of substantially all of the trade
and assets of the Group, the losses attributable to the Proposed Sale are
equal to the loss after tax presented in the Group's Annual Report and
Accounts for the financial year ending 30 April 2022 of £42.0 million.

Information on Strike and the Purchaser

Strike is an online estate agent providing property sales, mortgages, and
conveyancing services to customers, and operates throughout England.

The Purchaser is a wholly-owned subsidiary of Strike which has been
incorporated in order to carry out the Proposed Sale.

Rule 21 of the Takeover Code - frustrating action

As noted above, following the launch of the FSP the Company received a number
of proposals.

Prior to the Company terminating the Formal Sale Process by way of this
Announcement, all parties who had approached the Company were notified of the
rejection of their approach with regard to making an offer for the Company and
also of the termination of the Formal Sale Process.

As at the date of this Announcement, no firm proposal has been made to the
Company by any potential offerors.  If the Company receives an approach from
any interested party at any time prior to the General Meeting confirming that
they are interested in making a potential offer for the Company, the Company
will inform shareholders without delay by way of RIS announcement.  In the
event that such an announcement is made, any potential offeror, will be
subjected to a deadline in accordance with Rule 2.6(a) of the Takeover Code
such that by not later than 5.00pm (London time) on the 28th day following the
date of the announcement by the Company in which such potential offeror is
first identified, such potential offeror must either announce a firm intention
to make an offer for the Company in accordance with Rule 2.7 of the Takeover
Code or announce that it does not intend to make an offer, in which case the
announcement will be treated as a statement to which Rule 2.8 of the Takeover
Code applies.  Any such deadline may be extended with the consent of the
Panel in accordance with Rule 2.6(c) of the Takeover Code.

During the Formal Sale Process, however, the Directors did not consider that
indications of interest received provided either sufficient certainty or
deliverability in the timeframe needed to resolve the Group's short term
funding issues, in the context of its key funding partner agreements being
close to expiry and the Company's cash balance declining, as outlined above.
The Directors will continue to apply such criteria in its assessment of any
further proposals that are received.

Based on the exploration of sale options conducted as part of the Formal Sale
Process, and that such process has been running since 1 March 2023, the
Directors currently consider that it is unlikely that any proposals that may
be under consideration by any potential offerors would lead to a firm offer
for the Company that could be made in a timely manner or deliver more
certainty to Shareholders than, or value to Shareholders in excess of, the
Proposed Sale.

Given the impact of Completion of the Proposed Sale on the ability of any
potential offeror to make an offer for the Company in its current state, the
Proposed Sale is potentially deemed "frustrating" action under the Takeover
Code.  Accordingly, it is a requirement of Rule 21.1 of the Takeover Code
that the Proposed Sale is conditional upon the approval of Shareholders in
General Meeting. As noted above, the Circular incorporating the Notice of
General Meeting and with further details for the purposes of Rule 21 of the
Takeover Code, is being sent to Shareholders later today.

Return to Shareholders and use of Net Cash Proceeds

As noted above, the Directors intend that the Net Cash Proceeds will be
distributed to Shareholders.  It is anticipated that any distribution will be
conducted through a members' voluntary liquidation of the Company following
the Transitional Period.

Timing of return to Shareholders

The Directors intend that the Net Cash Proceeds will be returned to
Shareholders as soon as reasonably practicable.  However, prior to such
return being implemented, (i) certain legal formalities will need to be
completed during the Transitional Period and (ii) the members' voluntary
liquidation will need to be carried out to effect the return to
Shareholders.  While the timing of the return of the Net Cash Proceeds will
depend on completion of these matters, the current expectation is that such
return will not be capable of being effected before Q1 2024 at the earliest.
The timing of the return to Shareholders will depend on a number of factors
such as (i) the complexity of the business transfer; (ii) the resolution of
liabilities which cannot effectively be transferred to the Purchaser without
the cooperation of third parties, in particular where the Company remains a
named party to Court proceedings; (iii) the resolution of any new matters
which may be brought to the appointed liquidators' attention following
commencement of the liquidation; (iv) the timing of submission of the
Company's pre-liquidation corporation tax returns and other indirect tax
returns; and (v) timely receipt of tax clearance to close the liquidation from
HM Revenue & Customs.

Amount of return to Shareholders and factors impacting such return

Under the terms of the Asset Purchase Agreement, as noted above, substantially
all of the Company's assets and liabilities will be transferred to and assumed
by the Purchaser, other than certain excluded assets and the excluded
liabilities.

In particular, the cash in hand and at bank at Completion of up to £5.5
million is excluded from the terms of Proposed Sale and will be retained by
the Company. The exact amount of cash retained will depend on trading in the
period prior to the Proposed Sale and the cash retained will be used to pay
existing excluded liabilities on or shortly after Completion and subsequently
satisfy the excluded liabilities as they arise following the Proposed Sale
with the excess (i.e. the Net Cash Proceeds) being returned to Shareholders.

It is currently anticipated that the Net Cash Proceeds will be approximately
£2 million.  The exact amount however of the Net Cash Proceeds available to
be returned to Shareholders in a members' voluntary liquidation will be
dependent on a number of factors, including:

·    the amount of cash in hand and at bank at Completion which depends,
amongst other things, on trading performance in the period up to Completion
and whether such trading performance could be negatively impacted, including
as a result of any disruption in the Company resulting from this Announcement;

·    in respect of the Asset Purchase Agreement, the ability to recover
from the Purchaser under the assumption of liabilities and indemnification
provision; and

·    the timing of the members' voluntary liquidation and the process to
its completion, including whether any presently unknown creditors seek to make
claims, which may draw out the time and cost of the process even if any
amounts claimed are recovered from the Purchaser under the Asset Purchase
Agreement.

Accordingly, as a result of these factors, the amount of the Net Cash Proceeds
to be returned to Shareholders could be more or less than is currently
anticipated and, in the event that the gross amount of cash retained at
Completion is less than £5.5m or unanticipated liabilities arise which cannot
be recovered, it is possible that Shareholders would not receive the amount
anticipated or any return at all.

While there may be uncertainty as to the exact amount of the Net Cash
Proceeds, as noted above the Directors have unanimously concluded that the
Proposed Sale is in the best interest of the Company, its Shareholders and
other stakeholders.

Irrevocable Undertakings

The Directors who hold Ordinary Shares have irrevocably undertaken to vote
(or, in respect of Ordinary Shares where their interest is solely beneficial,
procure the exercise of all such voting rights) in favour of the Resolutions
in respect of a total 19,402,865 shares representing approximately 6.3% of
Purplebricks' issued share capital on 16 May 2023 (being the last Business Day
before the date of this Announcement).

In addition, the Company has received an irrevocable undertaking to vote in
favour of the Resolutions from AVIV Group in respect of a total 81,384,638
Ordinary Shares representing approximately 26.5% of Purplebricks' issued share
capital on 16 May 2023 (being the last Business Day before the date of this
Announcement).

Furthermore, the Company has received a letter of intent to vote in favour of
the Resolutions from JNE Master Fund LP in respect of a total 33,620,000
Ordinary Shares representing approximately 11% of Purplebricks' issued share
capital on 16 May 2023 (being the last Business Day before the date of this
Announcement).

The Company has therefore received irrevocable undertakings and/or letters of
intent in respect of a total 134,407,503 Ordinary Shares representing
approximately 43.8% of Purplebricks' issued share capital on 16 May 2023
(being the last Business Day before the date of this Announcement). The
Directors and AVIV Group have also irrevocably undertaken on similar terms to
the Purchaser's holding Company, Strike, as has JNE Master Fund LP with regard
to its letter of intent.

The irrevocable undertakings shall cease to be binding if the General Meeting
has not taken place by 2 June 2023.

The Cancellation

The Directors have concluded that, as the Company would no longer be a trading
business on Completion, it is in the best interests of the Company and its
Shareholders to seek Shareholders' approval to cancel the admission of the
Company's 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 the Cancellation Resolution, which will be conditional
upon the passing of the Proposed Sale Resolution and Completion, it is
expected that the Cancellation will take place on 16 June 2023.

Pursuant to Rule 41 of the AIM Rules, the Cancellation Resolution requires the
approval of not less than 75% of the votes cast by Shareholders (whether
present in person or by proxy) at the General Meeting.

The Directors have considered the benefits and disadvantages to the Company
and Shareholders in retaining its admission to trading on AIM. The Directors
believe that the Cancellation is in the best interests of the Company and
Shareholders as a whole. Following the Proposed Sale, the Company will have no
trading business and limited cash resources which the Company intends to
distribute to Shareholders through a members' voluntary liquidation.
Furthermore, given the time it takes to conclude a members' voluntary
liquidation and the significant expense the Company would incur as a quoted
company through that time, a members' voluntary liquidation would be adversely
affected if the Company remained as a public company and its shares admitted
to trading on AIM. The Cancellation would preserve cash in the Company and
assist in maximising any distribution made through a members' voluntary
liquidation.

The principal effects of the Cancellation will be that:

·    the liquidity and marketability of Ordinary Shares is likely to be
reduced as there will be no public market in the Ordinary Shares and no price
for Ordinary Shares will be quoted by any market maker. As such, while the
Ordinary Shares will continue to be freely transferable, interests in Ordinary
Shares are unlikely to be readily capable of sale and, even where a buyer is
identified, it may be difficult to place a fair or market value on any such
sale;

·    the Company would no longer be required to comply with the ongoing
obligations set out in the AIM Rules (or to have a nominated adviser and
broker), including the requirements to disclose material events, such as
interim or final results, substantial transactions or other developments to
the market, and Purplebricks Shareholders would no longer have the ability to
vote on certain matters prescribed by the AIM Rules, thereby removing the
layer of protection in respect of the interests of Purplebricks Shareholders
afforded by the AIM Rules;

·    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 or hold an
annual general meeting;

·    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 to reduce the
liquidity of the Ordinary Shares and the principal effects referred to above
will automatically apply to the Company from the date of the Cancellation.
Upon the Cancellation becoming effective the Board do not propose to implement
a matched bargain facility.

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

Implications of a failure to approve the Cancellation

The Directors strongly believe that for the reasons referred to above the
Company should seek the Cancellation and subsequently a solvent wind-up. In
the event that the Proposed Sale is completed but the Cancellation is not
approved and does not occur, as an AIM Rule 15 cash shell, if the Company does
not make an acquisition or acquisitions constituting a reverse takeover under
the AIM Rules within six months of becoming an AIM Rule 15 cash shell, then
the Ordinary Shares would be suspended from trading on AIM.

Board changes

Helena Marston will resign as Chief Executive Officer with effect from
Completion.

Dominique Highfield, the Group's current Chief Financial Officer, will
continue to act as a director of the Company during the Transitional Period in
order to oversee the arrangements under the Asset Purchase Agreement and
discharge any obligations of the Company to the Purchaser during this time.

To assist Dominique in this process, ensuring that an independent director
remains on the board to safeguard the interests of the Company's shareholders
up to and in the appointment of the liquidators and recognising the expertise
required in this area, the Non-Executive Directors are proposing to appoint a
new director with experience in business transfers and company dissolutions.
The Non-Executive Directors will seek to identify an appropriate candidate in
the period prior to the Cancellation occurring.

Ensuring the Transitional Arrangements are concluded in the manner described
above will require significant time commitments and specific expertise.  As
the Non-Executive Directors were appointed to the Board as a result of their
industry expertise and PLC experience and in light of the different Board
requirements moving forward, they will therefore be resigning from the Board
with effect from Cancellation.

Further details of and background to the board changes that will occur as part
of the Proposed Sale will be set out in the Circular.

Change of name

The proposed change of name to Bricks Newco PLC is to reflect the transfer of
the trade, assets and "Purplebricks" brand name to Strike and is an obligation
under the Asset Purchase Agreement.

Re-registration as a private company

Given that the Company's Shares will no longer be admitted to trading on AIM
or any other public market following the Cancellation and to facilitate the
return of the Net Cash Proceeds to Shareholders, the Directors consider that
converting the Company to a private company is more appropriate than retaining
the Company's status as a public company.

Further details of the proposed re-registration will be set out in the
Circular.

About Purplebricks

Purplebricks is a leading technology-led estate agency business, based in the
UK. Purplebricks combines highly experienced and professional Local Property
Partners and innovative technology to help make the process of selling, buying
or letting more convenient, transparent and cost effective. Purplebricks
shares are traded on the London Stock Exchange AIM market.

Important information

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

This announcement (including any information incorporated by reference in this
announcement) contains statements about the Company that are or may be deemed
to be forward looking statements. Without limitation, any statements preceded
or followed by or that include the words "targets", "plans", "believes",
"expects", "aims", "intends", "will", "may", "anticipates", "estimates",
"projects" or words or terms of similar substance or the negative thereof, may
be forward looking statements.

These forward-looking statements are not guarantees of future performance.
Such forward-looking statements involve known and unknown risks and
uncertainties that could significantly affect expected results and are based
on certain key assumptions. Many factors could cause actual results to differ
materially from those projected or implied in any forward-looking statements.
Due to such uncertainties and risks, readers should not rely on such
forward-looking statements, which speak only as of the date of this
announcement. The Company disclaims any obligation or responsibility to update
publicly or review any forward-looking or other statements contained in this
announcement, except as required by applicable law.

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

Notice related to financial advisers

Zeus Capital Limited, which is authorised and regulated by the Financial
Conduct Authority in the United Kingdom, is acting exclusively for
Purplebricks and for no one else in connection with the subject matter of this
announcement and will not be responsible to anyone other than Purplebricks for
providing the protections afforded to its clients or for providing advice in
connection with the subject matter of this announcement.

PricewaterhouseCoopers LLP is authorised and regulated in the United Kingdom
by the Financial Conduct Authority and is acting exclusively for the
Purplebricks and for no one else in connection with the subject matter of this
announcement and will not be responsible to anyone other than Purplebricks for
providing the protections afforded to its clients nor for providing advice in
relation to the subject matter of this announcement.

Teneo is acting exclusively for Strike in connection with the Proposed Sale
and will not be responsible to anyone other than Strike for providing the
protections offered to clients of Teneo or for providing advice in relation to
the Proposed Sale, the contents of this announcement or any matters referred
to in this announcement. Teneo is authorised and regulated in the United
Kingdom by the Institute of Chartered Accountants in England and Wales for a
range of investment business activities. Teneo is registered in England and
Wales with Company Number 13192958 and its registered office is 6 More London
Place, London SE1 2DA.

 

 

 

Definitions

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

 Act                             the Companies Act 2006
 AIM                             the market of that name operated by the London Stock Exchange
 AIM Rules                       the AIM Rules for Companies as published by the London Stock Exchange from
                                 time to time
 Articles                        the articles of association of the Company, as in force from time to time
 Asset Purchase Agreement        the agreement between the Company, Strike and the Purchaser for the transfer
                                 of substantially all of the assets and liabilities of the Company to effect
                                 the Proposed Sale
 AVIV Group                      AVIV Group GmbH, a subsidiary of Axel Springer S.E.
 Cancellation                    the cancellation of admission to trading of the Ordinary Shares on AIM in
                                 accordance with Rule 41 of the AIM Rules, subject to passing of the
                                 Cancellation Resolution
 Cancellation Resolution         the resolution to approve the Cancellation as set out in the Notice of General
                                 Meeting
 Change of Status Resolution     the resolution to change the name of the Company, re-register as a private
                                 company and the adoption of the New Articles as set out in the Notice of
                                 General Meeting
 Circular                        the circular to be sent to Shareholders with further background on the
                                 Proposed Sale and incorporating Notice of the General Meeting
 Completion                      completion of the Proposed Sale in accordance with the Asset Purchase
                                 Agreement
 Company or Purplebricks         Purplebricks Group plc
 Directors or Board              the directors of the Company as at the date of this Circular
 excluded liabilities            outstanding and future liabilities which are excluded from the liabilities the
                                 Purchaser is assuming under the Asset Purchaser Agreement being (in summary):

                                 (i)    certain outstanding costs and expenses (including professional fees)
                                 incurred or to be incurred by the Group in connection with the Strategic
                                 Review, the Formal Sale Process, the Proposed Sale (other than in respect of
                                 costs for which the Company is indemnified by the Purchaser), the proposed
                                 return of proceeds to Shareholders and voluntary liquidation and other
                                 non-ordinary course corporate matters which were scheduled for payment on
                                 Completion of the Proposed Sale or are incurred after Completion; and

                                 (ii)   liabilities owed to the Directors (other than Dominique Highfield),
                                 including as a result of them ceasing to be employed or engaged by the
                                 Company, and the costs associated with providing directors' and officers'
                                 liability insurance for the Directors.
 Existing Ordinary Shares        the 306,806,039 Ordinary Shares in issue as at the date of this document
 FSP or Formal Sale Process      the formal sale process launched by the Company on 1 March 2023
 General Meeting                 the General Meeting of the Company to be held at 9 a.m. on 2 June 2023
 Group                           the Company, its subsidiaries and its subsidiary undertakings
 London Stock Exchange           London Stock Exchange plc
 Net Cash Proceeds               the net cash proceeds available to be distributed to Shareholders following
                                 Completion and the deduction of certain costs and expenses to meet the
                                 excluded liabilities
 New Articles                    the new articles of association to be adopted at the General Meeting
 Ordinary Shares                 ordinary shares of 1 pence each in the capital of the Company
 Proposed Sale                   the proposed transfer of substantially all of the Purplebricks trading
                                 business and assets (other than the excluded assets and liabilities) for a
                                 consideration of £1 and the assumption of substantially all of the Company's
                                 liabilities
 Proposed Sale Resolution        the resolution set out in the Notice of General Meeting to approve the
                                 Proposed Sale for the purposes of rule 15 of the AIM Rules and Rule 21 of the
                                 Takeover Code
 Purchaser                       Strike Bidco Limited
 PwC                             PricewaterhouseCoopers LLP
 Regulatory Information Service  has the meaning given to it in the AIM Rules
 Resolutions                     the Proposed Sale Resolution, the Cancellation Resolution and the Change of
                                 Status Resolutions set out in the Notice of General Meeting
 Shareholders                    holders of Ordinary Shares
 Strategic Review                the strategic review launched by the Company on 17 February 2023
 Takeover Code                   the City Code on Takeovers and Mergers, as issued from time to time by or on
                                 behalf of the Takeover Panel
 Takeover Panel                  the Panel on Takeovers and Mergers
 Teneo                           Teneo Financial Advisory Limited
 Zeus                            Zeus Capital Limited

 

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