REG - RBG Holdings PLC - Disposal of Convex Capital & Directorate Change

RBG HoldingsAnnouncement

28/03/2024 13:00

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RNS Number : 7470I  RBG Holdings PLC  28 March 2024

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as retained as part of UK law by virtue of the European
Union (Withdrawal) Act 2018 (as amended). Upon the publication of this
announcement, this inside information is now considered to be in the public
domain.

 

28 March 2024

 

RBG Holdings plc

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

 

Disposal of Convex Capital & Directorate Change

 

RBG Holdings plc (AIM: RBGP), the legal services group, announces that it has
agreed to dispose of the business and certain assets of Convex Capital Limited
("Convex Capital"), the specialist sell-side M&A boutique, to K&S 1
Limited via a management buyout (the "Disposal"). Furthermore, the Group
announces that Vice Chair and Executive Director, Ian Rosenblatt OBE, has
resigned from the Board following the completion of the Disposal.

 

Disposal of Convex Capital

 

The management of Convex Capital has acquired the business from the Group for
a total consideration of up to £2.6 million, comprising an initial cash
consideration of £2.0 million paid on completion and an earn out (the "Earn
Out"). Under the terms of the Earn Out, post completion of the Disposal, the
Company will receive 38% of any gross fees received upon completion of four
existing and named Convex projects up to a maximum of £0.6 million in cash.
Convex Capital was acquired by the Group in 2019 in a move to broaden the
Group's exposure to the wider professional services sector; the disposal will
result in a non-cash loss of £13.5 million.

 

The Disposal is in line with the Group's strategy to reduce its risk profile
and to refocus on and invest in RBG's established legal services businesses -
Rosenblatt and Memery Crystal - where the Board believes it can best maximise
profits. Similarly in 2023, the Group disposed of LionFish Litigation Finance
Limited ("LionFish").

 

As with the sale of LionFish, the proceeds from the Disposal will be used for
working capital purposes and to reduce the net debt of the Group. The Disposal
will reduce the demands on the Company's working capital, through a reduction
of circa £2.2million per annum in ongoing costs in relation to Convex. This
will support the Group in its goal of reducing net debt and growing
organically.

 

As at 31 December 2023 ("FY23"), Convex Capital generated revenues of £2.2
million (FY22: £5.2 million), generating losses after tax of £0.3 million
(FY22: profit of £0.9 million). Convex Capital had net assets of £4.2
million (FY22: £4.5 million).

 

Directorate Change

Following the completion of the Disposal, Ian Rosenblatt has resigned from the
Board with immediate effect. Ian joined the board on 31 July 2023 with a focus
on strategy. Since then, the Company has successfully renewed and extended its
existing borrowing facilities with its current provider, HSBC, completed an
equity fundraising of approximately £3.0 million and today, completed the
Disposal of Convex Capital. The Group is now entirely focussed on its
established legal services businesses - Rosenblatt and Memery Crystal.

Ian is the Group's largest shareholder and individual revenue generator. He
has circa four years remaining on his restrictive covenants and is fully
committed to the Group.

The Board now comprises of four Executive Directors, and three Non-Executive
Directors. The Group is in the process of recruiting another Non-Executive
Director to strengthen the independence of the Board and to ensure strong
corporate governance.

 

Marianne Isamil, Chair, RBG,said: "Convex Capital is an excellent business
however, the Board, the CEO, and the Executive team believe its future is
better served in the hands of its management team. Our focus is on restoring
shareholder value, and this will be achieved by concentrating the Group's
resources on our core legal services businesses to maximise profits, using our
cash to reduce RBG's net debt and to invest in organic growth. The nature of
Convex Capital's work made it hard to forecast revenue, and a simpler Group,
based around more predictable legal services revenue streams will make it
easier for investors to assess the underlying value of the Company.

 

"Along with the rest of the Board, I would like to thank Ian Rosenblatt for
his help and support over the last eight months as we worked to refocus and
strengthen the business."

 

Ian Rosenblatt OBE said: "I joined the Board to support the restructuring and
refocusing of the business and am delighted that the Group is now solely
focused on legal services. I remain fully committed to the Company as
evidenced by my participation in the recent fundraise.  The Group is
significantly larger in scale than the one that was floated on AIM in 2018 and
comprises two of the leading legal brands in their respective markets.  Along
with other shareholders, I now look forward to seeing a return to a valuation
that reflects the return to our roots and the derisking of the business."

 

Related Party Transaction

 

The acquirers of Convex Capital are currently directors of Convex Capital, a
subsidiary of the Group. As such they fall to be treated as related parties
under the AIM Rules for Companies (the "AIM Rules") and as such, the Disposal
is a related party transaction under Rule 13 of the AIM Rules.

 

The directors of RBG all of whom are independent of the Disposal consider,
having consulted with Singer Capital Markets Advisory LLP its nominated
adviser, that the terms of the Disposal are fair and reasonable insofar as its
shareholders are concerned.

 

Enquiries:

 RBG Holdings plc                                                 Via SEC Newgate

 Jon Divers, Chief Executive Officer

 Kevin McNair, Chief Financial Officer
                                                                 Tel: +44 (0)20 7496 3000

 Singer Capital Markets (Nomad and Broker)

 Rick Thompson / Alex Bond / James Fischer (Corporate Finance)

 Tom Salvesen (Corporate Broking)

 SEC Newgate (for media/analyst enquiries)                       Tel: +44 (0)7970 664807

 Robin Tozer / Molly Gretton                                     rbg@secnewgate.co.uk (mailto:rbg@secnewgate.co.uk)

 

About RBG Holdings plc

·    Further information about RBG Holdings plc is available at:
www.rbgholdings.co.uk (http://www.rbgholdings.co.uk)

·    Further information about Rosenblatt (founded in 1989) is available
at:  www.rosenblatt.co.uk (http://www.rosenblatt.co.uk)

·    Further information about Memery Crystal (founded in 1979) is
available at:  www.memerycrystal.com (http://www.memerycrystal.com)

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