REG - Rosebank Industries - Acquisition of ECI and Capital Raise
06/06/2025 07:00
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RNS Number : 7775L Rosebank Industries PLC 06 June 2025
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
6 June 2025
Rosebank Industries plc
Acquisition of ECI and Capital Raise
Rosebank is very pleased to announce the acquisition of Electrical Components
International (ECI), a private US-based market leader in critical electrical
distribution systems, financed through debt facilities and a fully
underwritten Institutional Capital Raise of approximately £1.14 billion at an
issue price of £3.00 per share. This will be Rosebank's first acquisition
under management's successful "Buy, Improve, Sell" model of shareholder value
creation via the transformation of industrial businesses in the US and Europe,
and has the following highlights:
· ECI is an electrical components business focused on North
America, which accounts for approximately 80% of its c. $1.3 billion 2024
revenues at adjusted operating margin of c. 13%, and where it has market
leading positions principally producing wire harnesses and controls, often for
large blue-chip customers in the industrial, electrification, HVAC and
appliance end markets
· ECI will be acquired for cash for an enterprise value of less
than $1.9 billion on a debt and cash free basis representing approximately 9x
expected 2025 Adjusted EBITDA (9.8x 2024 Pro forma Adjusted EBITDA)
· Rosebank is targeting 5 percentage points of operating margin
improvement through untapped cost saving and restructuring initiatives, which
would take adjusted operating margin to at least 18% and Adjusted EBITDA
margin to at least 20%, unlocking the additional potential of the business
· ECI has performed creditably in the first four months of 2025
with Adjusted EBITDA and adjusted operating margin increasing by approximately
2% and has fully recovered all tariffs
· We intend to significantly improve ECI's cash generation through
profit improvement, working capital optimisation and reducing leverage to 2.5x
to 3x EBITDA range, more than halving the current debt service costs
· Through the execution of these performance improvement measures,
we intend to double shareholders' investment in a 3-5 year time period
· In addition, we intend to continue ECI's acquisition strategy of
buying smaller, complementary, high margin businesses with attractive exposure
to high growth end markets funded through ongoing cash flows, creating
opportunities for substantial synergies and multiple arbitrage. Any such
acquisitions, together with any possible larger adjacent acquisitions, would
provide further upside to the intended doubling of shareholder value
· The acquisition is being funded through a fully underwritten
Institutional Capital Raise of approximately £1.14 billion at an issue price
of £3.00 per share, which comprises an institutional placing in the UK and
elsewhere and a private placement to a limited number of institutional
investors in the US, plus $900 million of New Debt Facilities split across a
$400 million term loan and a $500 million revolving credit facility. Rosebank
also intends to raise up to approximately €8 million through the Open Offer
to allow Rosebank's shareholders who have not been invited to participate in
the Institutional Capital Raise to subscribe for New Ordinary Shares at the
Issue Price
· The completion of the acquisition is subject to the satisfaction
of certain customary regulatory conditions, as well as approval of Rosebank
shareholders, which will be sought at a general meeting on 1 July 2025
This acquisition represents the first step in Rosebank's journey and
management has identified numerous further acquisition targets for its "Buy,
Improve, Sell" model. M&A opportunities generally, and for ECI, are
enhanced by the turbulence of recent months. Subject to the successful
implementation of its improvement strategy for ECI, Rosebank hopes to be able
to return to shareholders in the near future with the next step in the
journey.
Simon Peckham, Rosebank CEO, said: "We are grateful for the strong support
from shareholders. This is the first step on the journey and we are very
confident that we can help ECI to fully realise its potential for the benefit
of its employees, customers and our shareholders."
The preceding summary should be read in conjunction with the full text of the
following announcement and its appendices.
Enquiries for Rosebank:
Rosebank Via Montfort Communications
Simon Peckham, Matthew Richards
Montfort Communications +44 7739 701 634 / +44 7921 881 800
Nick Miles, Charlotte McMullen
Barclays Bank PLC +44 (0) 20 7623 2323
(Financial Adviser and Joint Global Coordinator)
Yuri Shakhmin, Chris Madderson, Callum West
Citigroup Global Markets Limited +44 (0) 20 7986 4000
(Financial Adviser, Joint Global Coordinator and Joint Corporate Broker)
Michael Lavelle, Greg Dalle, Patrick Evans
Investec Bank plc +44 (0) 20 7597 5970
(Nominated Adviser, Financial Adviser, Joint Global Coordinator and Joint
Corporate Broker)
Carlton Nelson, Christopher Baird, Duncan Smith
Enquiries for Cerberus and ECI:
Rothschild & Co + 44 (0) 20 7280 5000
(Financial Adviser)
Ravi Gupta, Sid Mehta
Goldman Sachs +44 (0) 207 774 1000
(Financial Adviser)
Dan Blank, Alexander Mielke
Barclays Bank PLC, Citigroup Global Markets Limited and Investec Bank plc have
been appointed as Joint Global Coordinators in respect of the Placing and
Investec Bank plc is acting as the Company's Nominated Adviser in connection
with Admission and Readmission. BNP PARIBAS is acting as Co-Bookrunner in
respect of the Placing.
The person responsible for arranging for the release of this announcement on
behalf of Rosebank is Joff Crawford.
About Rosebank
Rosebank was established in 2024 to acquire businesses whose performance the
Directors believe can be improved so as to create shareholder value.
Rosebank's strategy is to acquire quality industrial or manufacturing
businesses with strong fundamentals whose performance may be improved. Through
investing in acquired businesses, changing management focus and delivering
operational improvements, Rosebank seeks to increase and realise the value in
such businesses, typically over a three-to-five-year investment horizon and to
return the proceeds to shareholders.
About ECI
Founded in 1953, ECI is one of the world's leading suppliers of electrical
distribution systems, control box assemblies, and other critical engineered
components for a range of diversified end markets ranging from consumer
appliances to smart industrial equipment. With approximately 20,000 employees
and 39 global manufacturing locations, ECI is the trusted partner to over 450
customers with leading positions in respective end markets. ECI powers smart,
connected, and electrified solutions that enable the most advanced
technologies to solve the most complex challenges.
ECI provides end-to-end solutions for the design, manufacturing, assembly, and
integration of wire harnesses, control boxes, and other value-added components
across various industries and markets. Leveraging extensive product,
technology, and systems knowledge, it aims to deliver efficient, high-quality
products. Its tailored engineering solutions are aligned with the product and
process innovations required for sustainability. ECI partners with customers
throughout this journey to not only meet their specific needs but also to
support their growth and success in the market.
ECI has continued to invest as part of its overall strategy to diversify and
expand into high growth
end markets through acquisitions. These acquisitions expand ECI's expertise in
diversified markets and allow ECI to continue to provide the most advanced
electrical solutions to customers across the globe.
Rosebank Industries plc
Acquisition of ECI and Capital Raise
1. Introduction
Rosebank has entered into an agreement with an affiliate of Cerberus Capital
Management, L.P. ("Cerberus") to acquire Electrical Components International
("ECI"), a predominantly US-based, market-leading manufacturing business
providing critical electrical distribution systems to a range of diversified
industrial end markets (the "Acquisition").
With a full spectrum of engineering capabilities, ECI has over 450 customers
globally. It offers a wide range of electrical and electronic solutions across
industrial technology, electrification, as well as appliances and HVAC end
markets. ECI has approximately 20,000 employees worldwide and 39 manufacturing
locations globally, with North America representing approximately 78% of its
2024 revenue. ECI reported Pro forma Revenue of $1,281 million, Pro forma
Adjusted EBITDA of $193 million and Pro forma Adjusted Operating Profit of
$166 million for 2024. Headquartered in St. Louis, Missouri and founded in
1953, ECI has been privately owned by funds managed and/or advised by Cerberus
since 2018.
ECI will be acquired, for cash, for an enterprise value of less than $1.9
billion (£1.5 billion) on a debt and cash free basis, subject to customary
adjustments, representing approximately 9x expected 2025 Adjusted EBITDA and
9.8x 2024 Pro forma Adjusted EBITDA.
The Acquisition represents Rosebank's first step in executing its strategy of
acquiring quality industrial businesses with performance improvement
potential. Drawing on management's strong track record and experience gained
when executing the same strategy at Melrose Industries PLC, the Rosebank Board
believes that there is a significant opportunity to drive operational
improvement at ECI to deliver its full potential. Rosebank has identified
several cost and investment opportunities to unlock future profitability and
growth which are expected to improve Adjusted EBITDA margin from approximately
15% in 2024 to at least 20% and Adjusted Operating Profit margin from
approximately 13% in 2024 to at least 18%. Conservatively, the Rosebank Board
believes that shareholders' investment in this asset can be doubled within a
similar timeframe to Rosebank management's prior investments whilst leading
Melrose.
Rosebank proposes to finance the Acquisition, together with repayment of part
of the existing debt of ECI, from the net proceeds of an issue of 380 million
New Ordinary Shares (i) by way of a firm placing to certain institutional
investors in the United Kingdom and elsewhere (the "Placing"), and (ii) by way
of a private placement by the Company to a limited number of institutional
investors in the United States (the "US Private Placement"), in each case at a
price of £3.00 per New Ordinary Shares (the "Issue Price") (together, the
"Institutional Capital Raise"), raising gross proceeds of approximately £1.14
billion ($1.48 billion). The balance of the debt repayment will be funded
through a partial drawdown pursuant to the Facilities Agreement.
Rosebank also intends to raise up to approximately €8 million through the
Open Offer to allow Rosebank's shareholders who have not been invited to
participate in the Institutional Capital Raise to subscribe for New Ordinary
Shares at the Issue Price. As part of the Capital Raise and at the same time
as the Institutional Capital Raise, the Rosebank Co-Founders and the Rosebank
Non-Executive Directors have agreed to subscribe for New Ordinary Shares at
the Issue Price (the "Connected Persons Subscription") with the proceeds to be
used as working capital for the Enlarged Group. The Connected Persons will not
be eligible to participate in the Open Offer. As a result, it is expected that
the Rosebank Co-Founders and Non-Executive Directors will invest approximately
£13.1 million in aggregate, equal to approximately 1.1% of the estimated
aggregate gross proceeds of the Institutional Capital Raise and Open Offer.
The Placing is to be conducted by way of an accelerated bookbuild process
which will commence immediately following this announcement. A further
announcement confirming the closing of the Book Build and the number of New
Ordinary Shares to be issued pursuant to the Institutional Capital Raise is
expected to be made in due course.
The Capital Raise is not conditional upon Acquisition Completion. In the
unlikely event that the Capital Raise proceeds but Acquisition Completion does
not take place, the Rosebank Board currently intends to invest the net
proceeds of the Capital Raise on a short-term basis while the Rosebank Board
evaluates other acquisition opportunities and, if no acquisitions can be found
on acceptable terms, the Rosebank Board will consider how best to return
surplus capital to Rosebank's shareholders in a timely manner. Such return
could carry fiscal costs for certain of Rosebank's shareholders, would have
costs for Rosebank and would be subject to applicable securities laws.
The Rosebank Board has received financial advice from Barclays, Citigroup and
Investec in relation to the Acquisition. In providing advice to the Rosebank
Board, Barclays, Citigroup and Investec have each relied upon the commercial
assessments of the Rosebank Board.
The Rosebank Board considers that the Acquisition and Capital Raise are in the
best interests of the Company and its Shareholders as a whole and accordingly
unanimously recommends that all Shareholders vote in favour of the
Resolutions, as the Directors and the Rosebank Co-Founders have undertaken to
do, or procure to do, in respect of their own existing shareholdings, which
comprise a total of 1,729,730 Existing Ordinary Shares, representing
approximately 8.6% of the Existing Ordinary Shares.
2. Background to and reasons for the Acquisition
ECI is a US-based, market-leading manufacturing business providing critical
electrical solutions to a range of diversified industrial end markets ranging
from smart industrial equipment to specialist vehicle manufacturers,
appliances and HVAC.
ECI has been privately owned by funds managed and/or advised by Cerberus since
2018. ECI has been successful at achieving growth from smaller acquisitions;
recent and possible further acquisitions provide further future synergy
opportunities and a tail of manufacturing facilities that can be optimised.
Rosebank has identified significant opportunities for profit improvement at
ECI under its ownership.
The Rosebank Board believes that the Acquisition is an excellent first
transaction for Rosebank's "Buy, Improve, Sell" strategy and that it will
deliver excellent returns for Rosebank's shareholders, for the following
reasons:
ECI is a good industrial business with:
A. A strong position across several critical markets
· Approximately 80% of ECI's revenue is derived from markets in
North America where it is an overall market leader
· ECI has established leading positions in key sectors: it holds a
leading position in the Access Equipment & Machinery, Mirrors, and
Agriculture & Construction markets in North America. Additionally, ECI
maintains a leading presence in the energy transition market across North
America, as well as being a market leader in Appliances and HVAC in North
America
· ECI is deeply embedded across a diverse set of large blue-chip
customers and their supply chains with its ability to provide flexible and
customised solutions
· ECI has performed creditably in spite of economic volatility in
2025 with EBITDA and Operating margin increasing by approximately 2%, due to
delivery of agreed pricing and operational efficiencies. ECI is gaining market
share from smaller and less flexible competitors. Sales headwinds are
primarily confined to certain end market for its specialty transportation
segment, with other segments proving resilient.
B. End markets benefit from electrification growth trends
· ECI is well positioned to capitalise on the high-growth trends in
energy transition, smart industrial applications, automation, data centres,
industry AI, and the semiconductor markets. The global shift towards
electrification and automation is advantageous for ECI's Electrification and
Industrial division, which is well placed to benefit from significant market
growth
· ECI's Electrification and Industrial division accounted for
approximately 44% of 2024 revenue and approximately 55% of 2024 Adjusted
EBITDA (excluding central costs), achieved through expansion into favourable
end markets via M&A
· The Electrification and Industrial division is expected to
benefit from higher regulatory standards tied to safety and energy transition
and increased infrastructure spending
· The Electrification and Industrial division is also expected to
benefit from market opportunities, such as the opportunity to capture
increased share with existing customers, an increasing content per unit trend,
and increasing demand for wire harness suppliers with dual capabilities
· The design of electrical systems across these end markets is
becoming increasingly complex and ECI is well positioned to benefit from
increasing content-per-unit trends
· Further margin improvement is already built into ECI's sales
pipeline with approximately 76% of the pipeline coming from the higher margin
Electrification and Industrial division. Achieving this new revenue mix will
naturally lead to margin improvement
C. Well-positioned geographical footprint
· ECI is a global business, with approximately 78% of its revenues
coming from North American customers. ECI operates in a region with a
fast-growing economy and significant opportunities for global expansion
D. Clean balance sheet
· ECI boasts a clean balance sheet, presenting opportunities for
future growth
· Reduced leverage levels paired with deleveraging under Rosebank
is expected to assist further M&A and investment in product development
E. High quality and experienced management team
· ECI is led by a high-quality and experienced management team who
will continue the journey of improving ECI with the support of Rosebank
· ECI's CEO, Mike Balsei, has 30+ years of experience working for
global businesses in the electrical distribution systems industry, having
joined ECI in 2020. ECI's CFO, Alex DeDominicis, has 30+ years of experience
leading global finance in the manufacturing industries, having joined ECI in
2019
F. Strong positioning to mitigate potential tariff impact
· ECI's top 35 customers have either accepted the full pass through
of any applicable tariffs or, in limited cases, agreed to the transfer of
production or an alternative mechanism in order to mitigate the tariffs
· Approximately 95% of ECI's imports from Mexico are USMCA
compliant and therefore tariff free. Tariffs have been fully recovered on the
remaining 5%
· Tariff protection has been agreed in the Acquisition Agreement
against 100% of pre-completion and 5/6th of post-completion unrecovered
US-Mexican tariffs until June 2026
· Tariffs regarding rest of the world remain de-minimis and ECI are
working with customers to relocate production away from China where necessary.
ECI has previous experience of relocating significant production from Chinese
to other facilities
Rosebank believes there are opportunities to improve ECI, including:
A. Operational restructuring
· There are a number of ongoing restructuring projects with full
run-rate impact becoming visible in 2025 and further margin improvement
projects in the pipeline. Currently the restructuring efforts are focused on
cost savings, end market development, and operational performance improvement
through enhanced inventory management, procurement savings, insourcing,
pricing discipline, and improving efficiency in plants, warehouses, and
logistics
· ECI is also looking to move production and manufacturing
capabilities to more cost-effective regions, including continuing the
expansion into Asia, and migration to the interior of Mexico and Central
America, as part of its strategy to further reduce costs
· ECI is exploring opportunities for consolidation, such as
combining its head offices and realising synergies from historic M&A, as
well as optimisation of its geographical presence across its 39 global
manufacturing locations
· Profit improvement initiatives implemented by ECI in 2024 are not
yet fully visible in its financial results, but once visible, and following
additional Rosebank initiatives, Rosebank targets an increase of ECI Adjusted
EBITDA margin from approximately 15% in 2024 to at least 20% and Adjusted
Operating Profit margin expansion from approximately 13% to at least 18%
B. Increased investment
· ECI plans to continue increasing its investment to enhance the
quality and efficiency of its operations, including through select strategic
acquisitions
· ECI has cultivated strong relationships with wire harness
businesses both in North America and globally, is well positioned to
capitalise on high-growth industrial end markets and is in a prime position to
execute deals in these end markets at disciplined prices with an active
M&A pipeline
· ECI will only pursue positive multiple arbitrage and transactions
with extensive synergies, which will provide opportunities to expand its
platform and grow shareholder value
C. Refocused product mix
· ECI intends to focus on new product launches and new sales
opportunities that are weighted (approximately 76%) toward the high margin,
high growth end markets served by the Electrification and Industrial division,
achieving a new revenue mix that will naturally lead to group-level margin
improvement
D. Cost recovery, including through appropriate pricing
· In addition to focusing on growth, ECI is also refining its
approach to cost recovery, including through appropriate pricing. ECI is
implementing measures to address low-margin work and inflationary pressures by
reducing central costs and selling, general and administrative expenses
("SG&A"), consolidating footprint, and introducing appropriate pricing
strategies, which is in line with Rosebank's standard approach
· ECI is also instituting new contracts with minimum gross margin
acceptance levels and inflation-recovery clauses while exiting work with no
associated profit and no potential for margin improvement, ultimately
increasing its focus on its higher margin Electrification and Industrial
division
E. Reduction in debt burden
· ECI's existing debt burden currently stands at approximately $950
million
· Rosebank aims to reduce ECI's net debt to a level of
approximately $550 million and operate at no more than a 3x Adjusted EBITDA
leverage ratio, which would allow for more balance sheet flexibility as a
result of a reduction in interest expense from approximately $110 million to
$40-50 million and room to invest and grow via both organic and inorganic
means which could not be previously achieved in full due in part to capital
structure
· After an initial restructuring period, the business is expected
to be highly cash generative. Leverage will further reduce as EBITDA grows,
and Rosebank's Directors expect levered free cash flow to significantly
improve under Rosebank ownership
· These strategic initiatives position ECI to capitalise on both
its established market leadership and emerging opportunities in high-growth
sectors, positioning it with strong underlying cash flows, good visibility
over margin improvement actions, and a clear path to achieve targeted returns
within Rosebank's usual timetable
3. Market Overview
Industry
Rosebank will operate ECI through two business segments - (i) Electrification
and Industrial; and (ii) Appliances and HVAC. The underlying markets for both
segments are underpinned by secular megatrends and are expected to grow
further, benefitting from overall market recovery. For example, innovation is
required to address the impact of energy transition, developing new solutions
that increase demand, especially for industrial, appliances and HVAC
solutions, while constant technological development drives demand for new
opportunities for ECI's Electrification and Industrial division.
Electrification and Industrial
Rosebank sees the Electrification and Industrial division as a key growth
driver, with increasing demand for electrification and emerging industrial
applications in diverse customer end markets.
The segment is expected to see significant customer spending driven by
heightened regulatory standards related to safety and energy transition. The
markets are also expected to benefit from increased infrastructure spending
and a greater need for automation in manufacturing, warehouses and fulfilment
centres. The electrification of specialty transportation fleet represents
another area of emerging growth. ECI is favourably geared towards high growth
and high value end market segments like data centres, AI and high-tech
industrial applications.
Rosebank believes that there is significant opportunity to increase share with
existing customers as the markets see a continued trend for increased
complexity and content per unit, which plays well to ECI's strengths as a
leading player in these markets.
The highest growing underlying markets include Energy Transition, estimated to
grow at approximately 10-12% CAGR between 2024-26, Commercial LED / Smart
Lighting at approximately 5%, and Automation & Data Technologies at
approximately 6% in the same period. Some of these subsectors have experienced
some slowdown in recent years due to the macro environment, but they are
showing increasing market momentum that supports recovery.
Appliances and HVAC
Outdated appliances consume more energy compared to similar, newer units.
Increased energy efficiency comes with more technologically advanced devices,
increasing the amount of wire harness content and technology per device. The
home appliances market volume is forecasted to see an approximately 2% CAGR
between 2024-26.
HVAC solutions are relevant in both residential and commercial applications.
The industry is rapidly evolving as global demand continues to grow and new
use cases are developed. Industry drivers include heightened regulatory focus
on energy efficiency, but also lowering interest rates are a tailwind for
increased commercial construction and new housing starts for both single and
multi-families, driving spending across appliances and HVAC. Overall HVAC
market volume is expected to grow at a 4% CAGR between 2024-26. Another avenue
of significant growth in HVAC comes from data centre cooling, AI and high-tech
industrial sectors, which have seen significant investment in recent years.
Similar to the electrification and industrial segments, there is a growing
focus on the ability to handle complexity in units and support customers with
high-quality engineering solutions, areas in which ECI excels.
4. Strategy of the Enlarged Group
Rosebank's strategy is to acquire quality industrial or manufacturing
businesses with strong fundamentals whose performance may be improved. Through
investing in acquired businesses, changing management focus and delivering
operational improvements, Rosebank seeks to increase and realise the value in
such businesses typically over a three-to-five-year investment horizon and to
return the proceeds to shareholders.
The Acquisition is the first transaction for Rosebank's "Buy, Improve, Sell"
strategy. Rosebank's strategy is to further improve ECI's existing strong
platform through operational restructuring, increased investment, focused
product mix, cost recovery and leverage reduction as follows:
· executing the identified restructuring projects to deliver
improvements with significant further opportunities available;
· capturing the opportunities to drive the quality and efficiency
of the businesses including through acquisitions;
· focusing new opportunities and designs toward high margin and
high growth end markets, served by the Electrification and Industrial
division;
· enhancing focus on appropriate margin targets and inflation
recovery; and
· leverage is expected to further reduce as EBITDA grows, and
Rosebank expects levered free cash flow to significantly improve under
Rosebank ownership, opening a wider scope for driving restructuring and
growth.
Since 2021, ECI has made eight strategic investments as part of its overall
strategy to diversify and expand into favourable end markets through mergers
and acquisitions. Through this transition, ECI has positioned itself to
benefit from high-growth electrification and industrial end markets including
energy transition, smart industrial applications, automation and data centres.
Information regarding ECI's historical strategic investments is as follows:
1. acquisition of Flex-Tec, Inc. in June 2024, a premier supplier of
high-quality electrical wire harnesses and cable assemblies to leading
customers in the commercial LED, smart lighting controls and industrial
technology end markets;
2. acquisition of Aerosystems International, Inc. in April 2023, a
specialty manufacturer and supplier of electrical distribution and control
systems primarily serving the aerospace end market;
3. acquisition of Manufacturing Resource Group Inc. in December 2022, a
provider of specialised manufacturing and in-house engineering services for
customers serving key industrial tech end markets;
4. acquisition of Britech in December 2022, a specialty manufacturer of
wire harnesses, cable assemblies and box builds primarily serving the
semiconductor industry as well as HVAC and related industrial technology end
markets;
5. acquisition of BHC Cable Assemblies in January 2022, a manufacturer of
wire harnesses, cable assemblies and electromechanical assemblies for the
medical, aerospace, renewable energy and entertainment markets;
6. acquisition of Rochester Industrial Control in August 2021, a
manufacturer of high-voltage wire harnesses, cables and electromechanical
assemblies for the commercial electric vehicle, oil and gas and medical
markets;
7. acquisition of Promark Electronics Inc. in July 2021, a manufacturer of
wire harnesses and electromechanical assemblies utilised by commercial
electronic vehicles and other technically-complex, mission-critical products;
and
8. acquisition of Omni Connection International in May 2021, a
manufacturer of wire harnesses and connection systems for automotive
suppliers.
ECI does not have any joint ventures or material investments that are in
progress. However, Rosebank plans to continue making select strategic
acquisitions to expand ECI's platform and grow shareholder value. Reduced
leverage after the initial restructuring period will support the pursuit of
attractive opportunities and will allow Rosebank to continue increasing ECI's
presence in the electrification and industrial markets. Rosebank has an
extensive list of potential targets with which ECI has an existing
relationship. Rosebank will only pursue acquisitions that deliver positive
multiple arbitrage with extensive synergies, which will provide opportunities
to expand its platform and grow shareholder value.
Rosebank intends to continue its "Buy, Improve, Sell" model and sees further
significant opportunities to acquire industrial or manufacturing businesses
whose full potential can be realised, with ECI being the first step of the
journey.
5. Key terms of the Acquisition
On 6 June 2025, the Company entered into a share purchase agreement with the
Seller (the "Acquisition Agreement") pursuant to which the Company has
conditionally agreed to acquire all of the issued and outstanding shares of
common stock of ECI Equity Holding Company, Inc.
ECI will be acquired, for cash, for an enterprise value of $1.894 billion
(£1.457 billion) on a debt and cash free basis, subject to customary
adjustments. The consideration payable under the Acquisition Agreement is
approximately $1.0 billion, which will be satisfied on Acquisition Completion
by the Company in cash, subject to certain adjustments, including locked box
purchase price protections.
Acquisition Completion is conditional on, inter alia, the approval of the
Transaction Resolutions at the General Meeting, Admission occurring and
certain regulatory conditions.
If the conditions to Acquisition Completion are not satisfied by 6 March 2026
(or such later date as parties may agree) ("Longstop Date") or any fact occurs
which prevents the conditions from being satisfied by that date, either party
may elect to terminate the Acquisition Agreement.
The Acquisition Agreement
Key terms of the Acquisition Agreement include the following:
Consideration
The consideration payable by Rosebank to the Seller is approximately $1.0
billion, subject to certain adjustments, including locked box purchase price
protections.
In light of the imposition of tariffs on imports into the US from Canada,
Mexico, and China by the Current US Administration on 4 March 2025, the ECI
Group has implemented certain measures to mitigate against the potential
impact of such tariffs and managed to demonstrate full recovery of all tariffs
incurred to date. In addition, the Seller has agreed to certain protections
under the terms of the Acquisition Agreement, which shall apply to the extent
these measures do not mitigate the impact of tariffs imposed on imports into
the US from Mexico.
Acquisition Conditions
Acquisition Completion is subject to several conditions precedent, including:
· certain antitrust and other regulatory clearances;
· the passing of the Transaction Resolutions at the General Meeting
(or any adjournment thereof);
· Admission becoming effective; and
· certain warranties being true and accurate at Acquisition
Completion, save to the extent a breach would not constitute a material
adverse effect.
Rosebank has agreed to use all reasonable endeavours to procure the
satisfaction of the conditions to Acquisition Completion.
Acquisition Completion
It is intended that Acquisition Completion will occur no later than ten
business days after all conditions precedent (other than those which, by their
nature, shall be satisfied by Acquisition Completion) have been satisfied or
(if applicable) waived. Acquisition Completion will take place shortly before
Readmission.
Title to the shares in ECI will pass from the Seller to Rosebank, and the
consideration payable by Rosebank will pass to the Seller, at Acquisition
Completion.
Pre-Acquisition Completion covenants
The Acquisition Agreement includes conduct of business covenants by the Seller
in respect of the period until Acquisition Completion, including to conduct
the business of ECI in the ordinary and usual course, and to consult on and
obtain the consent of Rosebank for certain material matters.
Warranties, indemnities and limits of liability
The Acquisition Agreement contains customary warranties given by the Seller in
relation to its capacity, solvency, and ownership of the shares in ECI and in
relation to the accounts of certain members of the ECI Group.
In most cases (barring fraud), Rosebank will have no recourse to the Seller
for breach of warranties and limited recourse for certain other breaches of
the Acquisition Agreement. Rosebank has obtained warranty and indemnity
insurance, which provides coverage for any breaches of warranty. As a result,
Rosebank will direct any claims for breach of warranty to the insurer rather
than the Seller. The insurance policy excludes cover for items specifically
identified during, or carved out of the scope of, the due diligence process
and any breach of warranty of which certain Rosebank employees have actual
knowledge, as well as certain other customary exclusions, for which Rosebank
will have no recourse.
Rosebank has also given customary warranties in favour of the Seller,
including in relation to capacity, authority, solvency and certainty of funds
in respect of the Acquisition.
Termination
The Acquisition Agreement may be terminated prior to Acquisition Completion in
the following circumstances:
· by any party where any condition precedent remains outstanding
and is not waived at the Longstop Date (as may be extended by agreement
between the parties); or
· if a party fails to comply with its material obligations to give
effect to Acquisition Completion, the other party may terminate the
Acquisition Agreement.
Governing Law
The Acquisition Agreement is governed by the laws of England and Wales.
6. Equity and Debt Financing
The Acquisition will be funded through a combination of the Institutional
Capital Raise and New Debt Facilities, as further described below.
Institutional Capital Raise
The Institutional Capital Raise is expected to raise gross proceeds of
approximately £1.14 billion ($1.48 billion) through an issue of 380 million
New Ordinary Shares at the Issue Price by way of:
(i) the Placing on the terms and conditions set out in
Appendix IV to this Announcement; and
(ii) the US Private Placement conducted by the Company.
Connected Persons Subscription
As part of the Capital Raise and at the same time as the Institutional Capital
Raise, the Connected Persons Shares will be issued at the Issue Price, with
the proceeds to be used as working capital for the Enlarged Group. The
Connected Persons will not be eligible to participate in the Open Offer.
New Debt Facilities
On 6 June 2025, the Company entered into a debt commitment letter with certain
of its relationship banks ("Debt Commitment Documents") under which the
relevant arranging and underwriting banks agreed to provide on a fully
underwritten basis, a US dollar denominated term loan facility in an amount of
$400,000,000 (the "Facility A") and a multicurrency revolving facility in an
amount of $500,000,000 (the "Facility B" and together with Facility A, the
"New Debt Facilities"). Pursuant to the terms of the debt commitment letter
the New Debt Facilities will be made available under a senior term and
revolving facility agreement (the "Facilities Agreement") that will be
executed after the date of this announcement and will replace the debt
commitment letter. The proceeds advanced under the Facility A shall be applied
towards the repayment of existing indebtedness of the ECI Group and/or
transaction costs and other fees, costs and/or expenses. The proceeds of the
Facility B shall be applied towards repayment of ECI indebtedness, financing
the ECI Group's working capital requirements and general corporate purposes.
The interest cost of gross drawn down debt will be approximately 6.75%.
The New Debt Facilities shall be available for drawing for purposes of
financing the Acquisition and certain Acquisition related purposes on
customary European certain funds conditionality subject to Acquisition
Completion.
7. Use of Proceeds
If Acquisition Completion occurs, the Acquisition, related expenses and the
repayment of part of the existing debt of ECI will be funded by gross
Institutional Capital Raise proceeds of approximately £1.14 billion ($1.48
billion).
The balance of the debt repayment will be funded through a partial drawdown
pursuant to the Facilities Agreement. The proceeds of the Open Offer and the
Connected Persons Subscription are intended to be used as working capital for
the Enlarged Group.
Prior to Acquisition Completion, and in line with the Company's treasury
policy, the Rosebank Board intends to invest the net proceeds of the Capital
Raise on a short-term basis in government securities and gilts, money market
funds and/or cash on deposit.
8. Reverse takeover, Completion and Listing
The Acquisition constitutes a reverse takeover for the purposes of Rule 14 of
the AIM Rules for Companies (the "AIM Rules") and, accordingly, is conditional
upon, among other things, the approval of Rosebank's shareholders. Rosebank's
shareholders will also be asked to approve certain other resolutions and
authorities in connection with the allotment of New Ordinary Shares to be
issued in connection with the Capital Raise (together with the resolution to
approve the Acquisition, the "Transaction Resolutions") in addition to the
renewal of certain standing authorities to allot shares and disapply
pre-emption rights based on the issued share capital of the Company on
Admission comprising the Existing Ordinary Shares and the New Ordinary Shares
(the "Enlarged Share Capital"). Accordingly, the Rosebank General Meeting
("General Meeting") will be convened for 11:00 a.m. (London time) on 1 July
2025 at the offices of Investec Bank plc, 30 Gresham Street, London, EC2V 7QP.
Pursuant to Rule 14 of the AIM Rules, the Company's Existing Ordinary Shares
will remain suspended from trading on AIM until the Admission Document is
published, which is expected to be at or around 7.00 a.m. (London time) on or
around 11 June 2025.
Admission of the New Ordinary Shares is expected to take place at 8.00 a.m.
(London time) on 3 July 2025 (or such later date determined by the Company in
consultation with the Joint Global Coordinators being no later than 14
September 2025) (the "Closing Date") and dealings in the New Ordinary Shares
are expected to commence at that time.
Subject to the satisfaction or, where appropriate, waiver of the conditions to
the Acquisition, it is expected that Acquisition Completion will occur in the
third quarter of 2025. On Acquisition Completion, in accordance with AIM Rule
14, the admission of the Ordinary Shares will be cancelled and application
will be made for Readmission of the Enlarged Group.
As stated in the July 2024 Admission Document, it is the intention of the
Directors that, at an appropriate time after completing the Acquisition,
Rosebank will seek the admission of the Ordinary Shares to the Equity Shares
(Commercial Companies) (ESCC) category of the Official List and to trading on
the Main Market for listed securities of the London Stock Exchange.
9. Information relating to ECI
Founded in 1953, ECI is one of the world's leading suppliers of electrical
distribution systems, control box assemblies, and other critical engineered
components for diversified markets. With approximately 20,000 employees and 39
global manufacturing locations, ECI is the trusted partner to blue chip
companies with over 450 customers and a best-in-class customer retention rate.
ECI powers smart, connected, and electrified solutions that enable the most
advanced technologies to solve the most complex challenges. ECI provides
end-to-end solutions for the design, manufacturing, assembly and integration
of wire harnesses and other value-added components across various industries
and markets. Leveraging extensive product, technology and systems knowledge,
it aims to deliver efficient, high-quality products. Its tailored engineering
solutions are aligned with the product and process innovations required for
sustainability.
ECI is also one of the world's leading suppliers of electrical Low Voltage
("LV") and High Voltage ("HV") distribution systems, control box assemblies
and other critical engineered components for diversified markets. ECI holds
extensive LV capabilities with newly acquired and expanding HV capabilities;
it recently opened the largest dedicated HV wire harness facility for
Commercial, Industrial and Recreational EVs in North America.
Moreover, ECI continues to grow through strategic partnerships and
acquisitions. These partnerships expand ECI's expertise in diversified markets
and allow ECI to continue to provide the most advanced electrical solutions to
customers across the globe.
10. Financial information relating to ECI
The financial information set out in: (i) section A to Appendix VI to this
announcement has been extracted from the audited consolidated financial
statements relating to the ECI Group for FY2022, FY2023 and FY2024, prepared
in accordance with US GAAP; and (ii) section B to Appendix VI to this
announcement has been adjusted based on certain alternative performance
measures, and includes adjusted financial information for the four months
ended 30 April 2025. The financial information from which such adjusted
financial information for the four months ended 30 April 2025 has been derived
is extracted from the unaudited management accounts of ECI, is unaudited and
is prepared on a consistent basis with the accounting policies applied to the
audited consolidated financial statements presented in section A of Appendix
VI of this announcement (as it relates the financial information presented).
11. Rosebank current trading and outlook
There has been no change to the Rosebank Board's expectation since the
publication of its annual report and accounts for the seven month period ended
31 December 2024 (available at: https://www.rosebankindustries.com
(https://www.rosebankindustries.com) ).
The Rosebank Board is excited about the opportunity presented by the
Acquisition, which offers a number of operational improvement possibilities
and is expected to benefit from growth opportunities in key markets.
12. ECI current trading and outlook
ECI performed well to improve margins since the start of the year, as
operational efficiencies and agreed pricing start to flow through. Certain end
markets in the Speciality Transportation segment continue to face headwinds,
which are not expected to ease before the year end. End markets for the rest
of the business remain resilient and ECI's strong customer relationships are
enabling it to be nimble and proactive to mitigate any impact from recent
volatility, including from tariffs.
13. ECI financial guidance
Rosebank has identified several investment and rationalisation opportunities
to unlock future profitability and growth which are expected to improve
Adjusted EBITDA margin from approximately 15% in 2024 to at least 20%, and
Adjusted Operating Profit margin from approximately 13% in 2024 to at least
18%.
14. Dividend policy
Until completion of a major acquisition (being either the Acquisition or,
failing that, another acquisition identified by the Directors), the Directors
do not intend to pay a dividend. Following such an acquisition, the Directors
will determine an appropriate dividend policy. The Directors intend to return
surplus capital by dividend, but also, where appropriate, through returns of
capital and share buybacks.
15. Further information
Further details in relation to the Open Offer will be provided in the
Admission Document which is expected to be published on the Company's website
and be posted to shareholders on or around 11 June 2025.
In addition, Rosebank intends that its presentational currency will be US$
post Acquisition Completion, with debt facilities expected to be predominantly
drawn in US$ in line with its ongoing profit profile, limiting any foreign
exchange exposure on its debt facilities.
APPENDIX I
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Suspension of the Company's Existing Ordinary Shares from trading on AIM 2 June 2025
Announcement of the Acquisition and Capital Raise 7.00 a.m. on 6 June 2025
Record Date for entitlements under the Open Offer 9 June 2025
Ex-Entitlement Date for the Open Offer 11 June 2025
Publication of the Admission Document (including Notice of General Meeting), 11 June 2025
Application Form (if applicable) and the Form of Proxy
Existing Ordinary Shares recommence trading on AIM 11 June 2025
Open Offer Entitlements credited to stock accounts in CREST of CREST 12 June 2025
shareholders
Recommended latest time and date for requesting withdrawal of Open Offer 4.30 p.m. on 23 June 2025
Entitlements from CREST
Latest time and date for depositing Open Offer Entitlements into CREST 3.00 p.m. on 24 June 2025
Latest time and date for receipt of Forms of Proxy and receipt of 11.00 a.m. on 27 June 2025
electronic proxy appointments
Latest time and date for receipt of completed Application Forms and payment in 11.00 a.m. on 27 June 2025
full under the Open Offer and settlement of relevant CREST instructions (as
appropriate)
General Meeting 11.00 a.m. on 1 July 2025
Announcement of the results of the Open Offer 1 July 2025
Admission and commencement of dealings in the New Ordinary Shares on AIM 8.00 a.m. on 3 July 2025
Expected date for CREST accounts to be credited (where applicable), in 3 July 2025
relation to Capital Raise
Despatch of definitive share certificates, in relation to the Capital by 17 July 2025
Raise
Acquisition Completion, Readmission and commencement of dealings in the Expected during Q3 2025
Enlarged Share Capital on AIM
APPENDIX II
SOURCES AND BASES OF INFORMATION
Unless otherwise stated in this announcement:
1. Currency conversion is based on USD / GBP exchange rate of 1.3 and EUR
/ GBP exchange rate of 1.2.
2. Expected levered free cash flow is calculated prior to restructuring,
M&A and Rosebank dividends.
3. Certain financial and statistical information contained in this
announcement has been rounded to the nearest whole number or the nearest
decimal place.
APPENDIX III
RISK FACTORS
Any investment in the Company is subject to a number of risks. Accordingly,
investors should consider carefully all of the information set out in this
announcement and the risks attaching to an investment in the Company,
including, in particular, the specific risks described below, before making
any investment decision. The information below does not purport to be an
exhaustive list and investors should consider carefully whether an investment
in the Ordinary Shares is suitable for them in light of the information in
this announcement and their personal circumstances. Before making any final
decision, prospective investors in any doubt should consult with an
independent adviser authorised under the FSMA (or the corresponding
legislation in the jurisdiction in which a prospective investor is resident).
If any of the following risks were to materialise, the Company's business,
financial position, results and/or future operations may be materially
adversely affected. The market value/price of the Ordinary Shares and the
income from them may go up or down and an investor may lose all or part of
their investment. Additional risks and uncertainties not presently known to
the Directors, or which the Directors currently deem immaterial, may also have
an adverse effect upon the performance and value of the Company. An investment
in the Company is only suitable for financially sophisticated investors who
are capable of evaluating the merits and risks of such an investment and who
have sufficient resources to be able to bear any losses that may arise
therefrom (which may be equal to the whole amount invested). There can be no
certainty that the Company will be able to implement successfully the strategy
set out in this announcement. No representation is or can be made as to the
performance of the Company and there can be no assurance that the Company will
achieve its objectives.
A. RISKS RELATING TO THE ACQUISITION
The Acquisition is subject to a number of conditions which may not be
satisfied or waived
Acquisition Completion is subject to the satisfaction (or waiver) of a number
of conditions within the Acquisition Agreement, including regulatory
approvals, Admission occurring and the approval of the Acquisition by
Shareholders at the General Meeting.
There can be no assurances that the regulatory conditions will be satisfied,
or that Shareholder approval will be forthcoming.
If the conditions to Acquisition Completion are not satisfied or, where
applicable, waived by the Longstop Date (or such later date as the Company and
the Seller may agree) or any condition becomes incapable of being satisfied by
that date, then either the Company or the Seller may elect to terminate the
Acquisition Agreement and the Acquisition will not complete.
If the Acquisition does not complete, the benefits expected to result from the
Acquisition will not be achieved, the Company's reputation may be adversely
impacted, and its ability to deliver value for Shareholders, or to implement
its strategy, may be prejudiced. The Company will also have incurred
significant transaction costs in connection with the Acquisition, the Capital
Raise and the New Debt Facilities which cannot be recouped. Accordingly, the
market price of the Ordinary Shares may be adversely affected.
Material facts or circumstances may not be revealed in the due diligence
process
The Company has undertaken customary due diligence on ECI to a level
considered reasonable and appropriate by the Company. However, these efforts
may not reveal all facts or circumstances that would have a material adverse
effect upon the value of the investment. In undertaking due diligence, the
Company has utilised its own resources and relied upon third parties to
conduct certain aspects of the due diligence process.
Any due diligence process involves subjective analysis and there can be no
assurance that due diligence will reveal all material issues related to ECI or
that previously undisclosed underperformance, liabilities or other adverse
matters will not only come to light or be identified following Acquisition
Completion. Any failure to reveal all material facts or circumstances relating
to ECI may have a material adverse effect on the business, financial
condition, results of operations and prospects of the Enlarged Group.
Limited recourse under the Acquisition Agreement
By virtue of the Acquisition, the Company will be exposed to a variety of
risks and potentiality liabilities associated with ECI and its business,
including without limitation:
· a deterioration in ECI's results of operation;
· liabilities associated with ongoing litigation to which ECI is a
party, or any new claims to which it may become subject; and
· other liabilities associated with ECI or its business that are
not known to the Company.
Under the Acquisition Agreement, the Company is receiving warranties in
relation to certain matters from the Seller and from certain members of the
ECI management team. However, in most cases (barring fraud), the Company will
have no recourse to the Seller or the ECI management team for breach of
warranties and limited recourse for certain other breaches of the Acquisition
Agreement.
Rosebank has obtained the W&I Insurance Policy, which provides the Company
with the ability to claim for loss in the event of a breach of the warranties
under the Acquisition Agreement or the Management Warranty Deed for certain
specified periods of time following Acquisition Completion. The W&I
Insurance Policy excludes cover for items specifically identified during, or
carved out of the scope of, the due diligence process and any breach of
warranty of which certain Rosebank employees have actual knowledge, as well as
certain other customary exclusions, for which Rosebank will have no recourse.
The Enlarged Group may not realise the desired operational improvements
following the Acquisition or the benefits of the Acquisition may fail to
materialise or be lower than expected
The Directors are targeting operational improvements for the Enlarged Group
following the Acquisition. Achieving the expected improvements from the
Acquisition will depend partly on the rapid and efficient management and
co-ordination of the activities of Rosebank and ECI, which in the case of ECI,
are of significant size and with geographically dispersed operations.
There is a risk that the benefits of the Acquisition anticipated by the
Directors, such as achieving the targeted Adjusted EBITDA margin of at least
20% and Adjusted Operating Profit margin of at least 18%, fail to materialise,
that they are materially lower than have been estimated, take longer or cost
more to achieve, or that ECI fails to perform as expected. If the Enlarged
Group is unable to realise expected benefits, or these benefits take longer
to achieve or cost more than planned, this could have a significant impact on
the profitability of the Enlarged Group going forward and a material adverse
effect on the Enlarged Group's business, financial condition, prospects
and/or results of its operations.
In addition, the cost of funding these operational improvements may exceed
expectations. Such eventualities may have a material adverse effect on the
financial condition of the Enlarged Group.
B. RISKS RELATING TO THE COMPANY'S BUSINESS
The Company's strategy and its ability to complete future acquisitions could
lead to potential loss on investments
The Company's strategy and future success is dependent upon its continued
ability to not only identify opportunities but also to execute successful
acquisitions and/or investments. There can be no assurance that the Company
will be able to conclude agreements with any target business and/or
shareholders in the future and failure to do so could result in the loss of an
investor's investment. In addition, the Company may not be able to raise the
additional funds required to acquire any additional target business and fund
its working capital requirements.
The Company's strategy therefore carries inherent risks and there can be no
guarantee that any appreciation in the value of ECI or other businesses
acquired in the future (referred to as an "Acquired Business") will occur or
that the objectives of the Company will be achieved. For example (i) an
Acquired Business may experience trading difficulties after acquisition by the
Company or may not be able to improve its performance to the level the
Rosebank Board anticipated; (ii) the success of the Company's acquisition may
depend in part on the Company's ability to implement the necessary
technological, strategic, operational and financial change programmes in order
to transform the Acquired Business and improve its financial performance and
any inability to do so could have a material adverse impact on the Company's
performance and prospects; (iii) the successful realisation of value through
the sale or otherwise of the whole or part of any Acquired Business will
depend on a number of factors and there can be no guarantee that these factors
will allow the Company to realise such value when the Directors consider it
appropriate or (iv) the Company may not be able to achieve any intended
valuation or exit route from an Acquired Business.
The Company has a lack of trading history on which to base an investment
The Company has, since incorporation, carried on minimal trading activities.
Accordingly, as at the date of this announcement, the Company has no
meaningful historical financial data upon which prospective investors may base
an evaluation of the Company. The value of any investment in the Company is,
therefore, wholly dependent upon the successful implementation of the
Company's 'Buy, Improve, Sell' business model as described in this
announcement. As such, the Company is subject to all of the risks and
uncertainties associated with any newly established business enterprise
including the risk that the Company will not achieve its investment objectives
and that the value of an investment in the Company could decline and may
result in the loss of capital invested. The past performance of companies,
assets or funds managed by the Rosebank Co-Founders, or persons affiliated
with them, in other ventures in a similar sector or otherwise, is not
necessarily a guide to the future business, results of operations, financial
condition or prospects of the Company. Investors will be relying on the
ability of the Company and the Rosebank Co-Founders to identify potential
acquisition targets including following the Acquisition, evaluate the merits
of such potential acquisition targets, and conduct diligence and negotiations.
The Company is exposed to risks associated with concentration of investments
The Company will continue to focus on acquisitions of businesses operating in
the industrial or manufacturing sectors, which means that it will be exposed
to a particular business sector and possibly specific geographical locations.
The intended strategy does not envisage a spread of businesses that may
mitigate risk and as a result the Company will be exposed to industry
fluctuations and trends in these sectors.
The Company could incur costs for future transactions that may ultimately be
unsuccessful
There is a risk that the Company may incur substantial legal, financial,
advisory and other expenses arising from unsuccessful transactions which may
include public offer and transaction documentation, legal, accounting and
other due diligence which could have a material adverse effect on the
business, financial condition, results of operations and prospects of the
Company.
The Company may face significant competition for future acquisition
opportunities
There may be significant competition in some or all of the future acquisition
opportunities that the Company may explore. Such competition may come, for
example, from strategic buyers, sovereign wealth funds, special purpose
acquisition companies and public and private investment funds, many of which
are well established and have extensive experience in identifying and
completing acquisitions. A number of these competitors may possess greater
technical, financial, human and other resources than the Company. The Company
cannot assure investors that it will be successful against such competition.
Such competition may cause the Company to be unsuccessful in executing any
future acquisitions or may result in a successful acquisition being made at a
significantly higher price than would otherwise have been the case which could
materially adversely impact the business, financial condition, result of
operations and prospects of the Company.
The Company will be subject to risks related to acquisitions, disposals or
other material transactions
In the ordinary course of business, the Company will engage in a continual
review of opportunities to acquire new investments or to dispose of
investments that are no longer consistent with the Company's strategy. Any
such acquisition opportunity could be material to the Company. Such
acquisitions and disposals or other transactions may have other
transaction-specific risks associated with them, including risks related to
the completion of the transaction and the assets being acquired. In relation
to disposals, a transaction may be structured so that the Company receives the
relevant consideration over a period of time rather than being paid all
amounts due on completion. In such transactions, the Company will be subject
to counterparty risk for so long as it is owed sums by the acquirer. In the
event that a material adverse event occurs in relation to that counterparty
which results in the Company not receiving funds owed to it when expected, or
at all, its result of operations may be adversely affected.
C. RISKS RELATING TO ECI AND THE ENLARGED GROUP'S BUSINESS
In the discussion below, references to the "Enlarged Group" are to the Group
following Acquisition Completion and therefore incorporate the ECI Group.
However, prior to Acquisition Completion, and in the event that Acquisition
Completion does not occur, the risk factors below that are expressed to be
applicable to the Enlarged Group will remain applicable to the Group
(excluding the ECI Group) and in this context references to the "Enlarged
Group" shall instead be deemed to be references to the Group. References to
"ECI" are risks that will not be applicable to the Group should Acquisition
Completion not occur.
ECI is dependent upon certain levels of remodeling and new construction
activity, which may be negatively impacted by economic downturn and
instability of the credit markets
Critical factors affecting ECI's future performance, including its level of
sales, profitability and cash flows, are the levels of residential and
non-residential remodeling, replacement and construction activity as
appliances and HVAC end markets represent approximately 56% of its 2024
revenues. The level of new residential and non-residential construction
activity and, to a lesser extent, the level of residential remodeling and
replacement activity are affected by seasonality and cyclical factors such as
interest rates, inflation, consumer spending, employment levels and other
macroeconomic factors, over which ECI has no control. Any decline in economic
activity as a result of these or other factors typically results in a decline
in new construction and, to a lesser extent, residential remodeling and
replacement purchases, which would result in a decrease in ECI's sales,
profitability and cash flows. Instability in the credit and financial markets,
troubles in the mortgage market, the level of unemployment and the decline in
home values could have a negative impact on residential new construction
activity, consumer disposable income and spending on home remodeling and
repair expenditures. These factors could have an adverse effect on ECI's
operating results.
Wider economic environment and exposure to cyclical industries
ECI sells products to customers in cyclical industries (such as appliances,
agriculture, advanced mobility, automation, construction, HVAC,
transportation) that are subject to significant downturns that could
materially adversely affect its business, financial condition and operating
results. Notably, ECI's Electrification and Industrial division experienced
reduced customer demand in 2024. ECI sells products to customers in cyclical
industries that have experienced economic and industry downturns through
reduced infrastructure spending, fleet replacement, automation activity and
commodity prices. The markets for ECI's products have softened in the past and
may again soften in the future. ECI may face reduced end-customer demand,
underutilisation of its manufacturing capacity, changes in its revenue mix and
other factors that could adversely affect its results.
ECI's customers may cancel their orders, change production quantities or delay
production
ECI generally receives volume estimates, but not firm volume commitments from
its customers, and may experience reduced or extended lead times in customer
orders. Customers may cancel orders, change production quantities and delay
production for a number of reasons including the use of additional suppliers
(including change to a dual-source or multi-source operating model). Uncertain
economic and geopolitical conditions may result in some of ECI's customers
delaying the delivery of some of the products it manufactures for them and
placing purchase orders for lower volumes of products than previously
anticipated. Cancellations, reductions or delays by a significant customer or
by a number of customers may harm ECI's results of operations by reducing the
volumes of products it manufactures and sells, as well as by causing a delay
in the recovery of its expenditures for inventory in preparation for customer
orders, or by reducing its asset utilisation, resulting in lower
profitability.
Substantial portion of ECI's revenues is from a small number of customers
ECI depends on a small number of customers for a substantial portion of its
business, and changes in the level of its customers' orders have, in the past,
had a significant impact on its results of operations. If a major customer
significantly delays, reduces, or cancels the level of business it does with
ECI, there could be an adverse effect on its business, financial condition and
operating results. Significant pricing and margin pressures exerted by a major
customer could also materially adversely affect its operating results. Any
decrease in orders from these customers could have an adverse effect on ECI's
business, financial condition and operating results.
The impacts of inflationary pressures and market competition could adversely
impact ECI's operating results
If the costs of goods continue to increase, ECI's suppliers may seek price
increases. If ECI is unable to mitigate the impact of these matters through
price increases, cost savings to offset cost increases, hedging arrangements,
or other measures, its results of operations and financial condition could be
adversely impacted. If its competitors maintain or substantially lower their
prices, ECI may lose customers. Its profitability may be impacted by prices
that do not offset the inflationary pressures, which may impact its margins.
Even if ECI is able to raise the prices of its products, it may not be able to
sustain such price increases. Temporary or sustained price increases may also
lead to a decrease in demand for ECI's products as competitors may not adjust
their prices which could lead to a decline in sales volume and loss of market
share.
US government trade actions could have a material adverse effect on the
Enlarged Group's business
Recent and anticipated changes in US trade policy have created ongoing
uncertainties in international trade relations, and it is unclear what future
actions governments will or will not take with respect to tariffs or other
international trade agreements and policies. During the 2024 presidential
campaign, the Current US Administration had expressed various intentions to
impose tariffs on imports, including 60% tariffs on goods imported from China,
25% tariffs on goods imported from Mexico and between 10% and 20% tariffs on
other imports. The Current US Administration has since imposed tariffs of 30%
on goods imported from China, and has paused the imposition of tariffs of 25%
on USMCA compliant goods and services imported from Mexico and Canada. On 26
March 2025, the Current US Administration announced universal 25% tariffs on
automobiles which were intended to come into effect on 3 April 2025.
Subsequently, on 2 April 2025, the Current US Administration imposed universal
10% tariffs on imports from all countries, other than Canada and Mexico which
were exempted. Canada and Mexico faced no new tariffs from the US and the
exemption given to most USMCA compliant goods was extended indefinitely. The
25% tariffs on automobiles were extended to automobile parts on 3 May 2025,
although USMCA compliant automobile parts made in Mexico or Canada which were
exempt from such extension. Many of the tariffs imposed by the Current US
Administration are being challenged in US federal court. It is unclear what
further action the Current US Administration or Congress will take with
respect to further proposals for increased tariffs or what the outcome of
various lawsuits challenging tariffs will be. Ongoing or new trade wars or
other governmental action related to tariffs or international trade agreements
or policies could reduce demand for the Enlarged Group's products and
services, increase the Enlarged Group's costs, reduce its profitability,
adversely impact the Enlarged Group's supply chain or otherwise have a
material adverse effect on the Enlarged Group's business and results of
operations.
ECI has significant exposure to any tariff policies imposed on imports from
Mexico into the US. In 2024, ECI US imported goods from ECI Mexico worth
approximately $494 million. The ability of ECI to mitigate the impact of any
such tariffs could have an adverse effect on ECI's business, financial
condition and operating results.
ECI is also exposed to any tariff policies imposed on imports from Canada and
China (among other countries) into the US. In response to the 2018 China
tariffs, ECI relocated production away from China (transferring approximately
36% of its China revenues to Mexico and the US).
The Enlarged Group could be adversely affected by any disruption to its supply
chain
ECI's success depends on its ability and future ability to secure raw
materials and components (including, but not limited to, copper and copper
wiring) on commercially acceptable terms; however, this ability may be
impacted by numerous factors, including global demand or other factors
limiting the availability, cost or quality of supply, which would impact ECI's
performance. Suppliers are subject to operational risks, including, among
other things, mechanical and IT system failure, work stoppages, increases in
transportation costs and the impact of global shortages and supply chain
issues. In addition, ECI may not be able to obtain raw materials and
components from its current or alternative suppliers at reasonable prices in
the future or may not be able to obtain these items on the scale and within
the time frames it requires. The concentration of suppliers of raw materials
(such as copper) may also expose ECI to market fluctuations in prices.
Further, if ECI's suppliers are unable to meet its supply requirements, it
could experience supply interruptions and/or cost increases. Such disruption
could have an adverse effect on the ability of ECI manufacture its products
and meet the contractual timescales required by end customers.
Manufacturing ECI's products is dependent on the timely delivery of components
by third parties. If ECI encounters problems with its supply chain or loses
key suppliers, its ability to meet customer expectations, manage inventory,
complete sales and achieve operating efficiencies could be adversely affected.
If any of these events occur, ECI could incur significantly higher costs and
longer lead times to the dissatisfaction of its customers, which could have a
material adverse effect on its business, financial condition, results of
operations and prospects.
The Enlarged Group could be adversely impacted if the distribution of its
products were affected by disruption to the global transport and logistics
ecosystem
ECI's international footprint includes manufacturing facilities and suppliers
in North America, Europe, the Middle East and Asia with major customers in a
number of other international locations. As a result, ECI has a globally
distributed supply chain, which can be affected from time to time by macro
events, specifically those which affect the cost and duration of transport and
logistics for ECI's products and key components, which are beyond its control.
The Enlarged Group could be adversely affected if it is unable to recover
increases in input and operating costs from its customers or reduce or
eliminate those costs
ECI's input and operating costs, such as commodity, energy, labour and
transportation costs, can be impacted by a variety of factors outside ECI's
control including, among others, changes in trade laws, tariffs, macroeconomic
conditions and global political events. For example, ECI's products require
copper and energy to manufacture, and so its operating results may be affected
by the prices and availability of such commodities. ECI passes over 90% of the
commodity price of copper through to its customers via commercial agreements
and currently has a policy to hedge the remaining exposure for the next 24
months in full and the Enlarged Group may also in the future experience energy
supply risks in certain geographies, which may increase its energy costs and
reduce its ability to meet customer demand. Additionally, if recent
dislocations in global supply chains persist or recur, such as port congestion
or truck driver shortages, the Enlarged Group's transportation costs may
increase. The realisation of any of these risks could have a material adverse
effect on the Enlarged Group's results of operations, business and financial
condition.
Input and operating costs have risen sharply over the past two years,
reflecting higher rates of inflation globally. ECI continues both to work with
customers to address material cost increases by way of pass-through and other
measures and to take a range of measures to improve efficiency and to reduce
its cost base generally. Any past success ECI has had in recovering or
reducing such cost increases can provide no assurance that increases in such
costs will not adversely impact the Enlarged Group's results of operations,
business and financial condition in the future.
Failure to innovate and risk of technological change
To ensure its long-term success, ECI's products need to remain relevant in
regard to the markets in which it operates. It is therefore imperative that
ECI can innovate to produce products which adhere to the future requirements
of its customers. If ECI fails to meet the changing needs of its customers,
there is a risk that its revenues will suffer as a result. Products and
technologies used within ECI's current marketplace are constantly evolving and
improving and ECI may not possess the adequate technology or technical
know-how to meet customer demand. Therefore, there is a risk that ECI's
current product offering may become outdated or obsolete as improvements in
products and technology are made.
Any failure of ECI to ensure that its products and other technologies remain
up to date with the latest technology may have a material adverse effect on
ECI's business, prospects, results of operation and financial condition.
ECI's, and following Acquisition Completion, the Enlarged Group's, success
will depend, in part, on its ability to develop and adapt to any technological
changes and industry trends.
Contravention of environmental, safety and other laws and regulations could
have an adverse impact on the Enlarged Group
ECI's, and following Acquisition Completion, the Enlarged Group's, operations,
including its manufacturing facilities, are subject to environmental, safety
and other laws, permits and regulations, including those governing the use of
hazardous materials and the nature of ECI's operations exposes it to the risk
of liabilities or claims with respect to such matters. Any breach of such
requirements could result in fines or other substantial costs and/or constrain
ECI's ability to operate its business, which could have a material adverse
effect on its business, prospects, financial results and results of
operations. In addition, irrespective of the adequacy of insurance cover, ECI
could experience disruption and claims related to incidents regardless of
cause which could have a material adverse effect on ECI's, and following
Acquisition Completion, the Enlarged Group's, business and financial
condition. Similarly, many of ECI's suppliers and customers are subject to
similar laws and regulations. Contravention of these laws and regulations by
any such parties, as well as the costs to be paid in order to comply with such
laws and regulations, could also have an adverse impact on ECI, and following
Acquisition Completion, the Enlarged Group.
A major fault occurring in a key product
ECI's, and following Acquisition Completion, the Enlarged Group's, business
involves providing customers with reliable products. If a product contains
undetected defects when first introduced or when upgraded or enhanced, ECI may
fail to meet its customers' performance requirements or otherwise satisfy
contract specifications. As a result, it may lose customers and/or become
liable to its customers for damages and this may, amongst other things, damage
ECI's reputation and financial condition. ECI endeavours to negotiate
limitations on its liability in its customer contracts where possible,
however, defects in its solutions could result in the loss of a customer, a
reduction in business from any particular customer, negative publicity,
reduced prospects and/or a distraction to the management team. A successful
claim by a customer to recover such losses may have a material adverse effect
on ECI's, and following Acquisition Completion, the Enlarged Group's,
reputation, business, prospects, results of operation and financial condition.
Any damage to reputation could have a material adverse effect on ECI's, and
following Acquisition Completion, the Enlarged Group's, business, financial
condition, results of operations, future prospects and/or the price of the
Ordinary Shares.
If ECI fails to identify suitable acquisition candidates or successfully
integrate the businesses it has acquired or will acquire in the future, its
business could be negatively impacted
Historically, ECI has engaged in a number of acquisitions, and those
acquisitions have contributed to its growth in sales and operating margins.
However, ECI cannot provide assurance that it will continue to locate and
secure acquisition candidates on terms and conditions that are acceptable to
it. If it is unable to identify attractive acquisition candidates, ECI's
further growth in sales and operating margin could be impaired. Acquisitions
involve numerous risks, including:
· the difficulty and expense that ECI incurs in connection with the
acquisition, including those acquisitions that it pursues but does not
ultimately consummate;
· the difficulty and expense that it incurs in the subsequent
integration of the operations of the acquired company into ECI's operations;
· adverse accounting consequences of conforming ECI's accounting
policies to the Enlarged Group's accounting policies;
· the difficulties and expense of developing, implementing and
monitoring systems of internal controls at acquired companies, including
disclosure controls and procedures and internal controls over financial
reporting;
· the difficulty in operating acquired businesses;
· the diversion of management's attention from ECI's other business
concerns;
· the potential loss of customers or key employees of acquired
companies;
· the impact on ECI's financial condition due to the timing of the
acquisition or the failure to meet operating expectations for the acquired
business; and
· the assumption of unknown liabilities of the acquired company.
There is no assurance that any acquisition ECI has made or may make in the
future will be successfully integrated into its ongoing operations or that it
will achieve any expected cost savings from any acquisition. If the operations
of an acquired business do not meet expectations, ECI's profitability and cash
flows may be impaired, and it may be required to restructure the acquired
business or write-off the value of some or all of the assets of the acquired
business.
Future performance within the Enlarged Group
If ECI is unable to maintain or increase sales to existing and/or new
customers, the business' results and cash flows may not be in line with the
Company's expectations, which could adversely affect the Enlarged Group's
business, financial condition, results or future operations. Furthermore, this
could then lead to the write down of any goodwill which arises on Acquisition
that, whilst not having any cash impact on the Enlarged Group, could have an
adverse effect on the financial condition of the Enlarged Group and the price
of its Ordinary Shares.
Reliance on expertise of Rosebank Co-Founders and loss of key management
The Enlarged Group will be highly dependent on the expertise and continued
service of the Rosebank Co- Founders. However, the retention of their services
cannot be guaranteed and their loss may have an adverse effect on the Enlarged
Group's business. In addition, there is a risk that the Enlarged Group will
not be able to retain current ECI key executives, recruit executives of
sufficient expertise or experience to maximise any opportunities that present
themselves, or that recruiting and retaining those executives is more costly
or takes longer than expected. The failure to attract and retain those
individuals may adversely affect the Enlarged Group's operations.
The Enlarged Group's success depends upon its ability to recruit and retain
skilled personnel
The Enlarged Group's success depends upon its ability to attract and recruit,
retain and incentivise highly skilled employees across all areas of the
business. If the Enlarged Group is unable to retain or successfully attract
and recruit key employees across all and any areas of the business, it could
delay or prevent the implementation of its strategy, which could adversely
affect the Enlarged Group's business, financial condition, results or future
operations.
ECI continues to evaluate potential operational initiatives and integrations
focused on improving future cash flows of the business
While the restructuring initiatives which commenced in 2024 have substantially
been completed, in addition to those initiatives already in progress and
planned for 2025, ECI continues to evaluate potential restructurings, business
optimisation, and integrations focused on improving future cash flows of the
business. Restructurings, business optimisation and integrations involve
numerous risks in their implementation including unforeseen costs, business
disruption, management distraction and potential asset impairment, among
others, and may be unsuccessful. In addition, restructurings of international
operations may be more costly due to differing labour laws, business practices
and governmental restrictions, processes and requirements.
Varying international business practices may adversely impact ECI's business
and reputation
ECI currently purchases raw materials, components and finished products from
various foreign suppliers. To the extent that any such foreign supplier
utilises labour or other practices that vary from those commonly accepted in
the United States and the UK, ECI's business and reputation could be adversely
affected by any resulting litigation, negative publicity, political pressure,
or otherwise.
Entering into new long-term contracts requires active, longer-term risk
management by ECI
ECI enters into contracts which can include commitments relating to pricing,
quality and safety and technical and customer requirements. These are complex
contracts that are often long term in nature, so it is important that the
contracted risk is carefully managed.
A failure to fully understand contract risks, to anticipate technical
challenges and estimate costs accurately at the outset of a contract, to
accurately document the parties' obligations under the contract, or to
accurately and appropriately manage changes to the contract throughout its
life, can lead to unexpected liabilities, increased costs and reduced
profitability, which may in turn have a material adverse effect on the
Enlarged Group's results of operations, business and financial condition
following Acquisition Completion.
The Enlarged Group may be subject to potential legal proceedings and
compliance risks
The Enlarged Group may be subject to a variety of risks in relation to potential legal proceedings, commercial disputes, legal compliance risks and environmental, health and safety compliance risks. ECI, its representatives and the industries in which it operates are subject to continuing scrutiny by regulators, other governmental authorities and private sector entities or individuals in the US, the European Union and other jurisdictions, which may, in certain circumstances, lead to enforcement actions, adverse changes to its business practices, fines and penalties, required remedial actions such as contaminated site clean-up or other environmental claims, or the assertion of private litigation claims and damages that could be material. Additional legal proceedings and other contingencies are expected to arise from time to time. Moreover, ECI sells products and services in growth markets where claims arising from alleged violations of law, product failures or other incidents involving its products and services are adjudicated within legal systems that are less developed and less reliable than those of the US or other more developed markets, and this can create additional uncertainty about the outcome of proceedings before courts or other governmental bodies in those markets.
D. RISKS RELATING TO LEGAL, TAX AND REGULATORY MATTERS
The current regulatory environment in the United States may be impacted by
future legislative developments
The Current US Administration's legislative agenda may include certain
regulatory measures for the US financial services industry, changes to tax
policies and the imposition of further tariffs and other trade restrictions.
Any significant changes in, among other things, economic policy (including
with respect to interest rates and foreign trade), the regulation of the asset
management industry, tax law, immigration policy, environmental protection
and/or climate change policies or regulations and/or government entitlement
programmes could have a material adverse impact on the Enlarged Group's
business. The US has recently proposed or recommended changes to existing tax
laws that could significantly increase the Company's tax obligations and
adversely affect its business, financial condition, and results of operations.
For example, the US House of Representatives recently passed the "One Big
Beautiful Bill Act," which includes, among other provisions, new Section 899
of the Internal Revenue Code. In general, Section 899 of the Internal Revenue
Code would impose retaliatory taxes on the US investments of certain non-US
investors, potentially including members of the Enlarged Group. Passage of
Section 899 of the Internal Revenue Code, or similar legislation, may
therefore subject the Enlarged Group to greater taxation and could make
subsequent US investments less attractive. More generally, legislative acts,
rulemaking, adjudicatory or other activities including in particular by the US
Congress, the US Securities and Exchange Commission, the US Federal Reserve
Board, the Financial Industry Regulatory Authority, Inc. or other
governmental, quasi-governmental or self-regulatory bodies, agencies and
regulatory organisations could make it more difficult (or less attractive) for
the Enlarged Group to achieve its business objectives.
Jersey company law
The Company is incorporated and registered in Jersey. Accordingly, UK
legislation regulating the operations of companies does not generally apply to
the Company. In addition, the laws of Jersey apply with respect to the Company
and these laws provide rights, obligations, mechanisms and procedures that do
not apply to companies incorporated in the UK. The rights of Shareholders are
governed by Jersey law and the articles of association ("Articles"), and these
rights differ in certain respects from the rights of shareholders in the UK
and other jurisdictions.
Tax status of the Enlarged Group
The Enlarged Group's effective tax rate may be affected by changes in, or the
interpretation of, tax laws. The Enlarged Group's effective tax rate in any
given financial year reflects a variety of factors that may not be present in
the succeeding financial year or years. An increase in the Enlarged Group's
effective tax rate in future periods could have a material adverse effect on
the Enlarged Group's financial condition and results of operations.
Taxation of investors
Statements in this announcement in relation to taxation and concerning the
taxation of investors in Ordinary Shares are based on current taxation law and
practice which is subject to change. The attention of potential investors is
drawn to Appendix VII of this announcement on 'Taxation'. The tax rules and
their interpretation relating to an investment in the Company may change
during its life. The levels of and relief from taxation may change. Any tax
reliefs referred to in this announcement are those currently available and
their application depends on the individual circumstances of investors. The
information given in this announcement relates only to certain UK, Jersey and
US tax matters and all investors should seek their own tax advice. Any change
in the Company's tax status or the tax applicable to holding Ordinary Shares
or in taxation legislation or its interpretation, could affect the value of
the investments held by the Company, the Company's ability to provide returns
to Shareholders or alter the post-tax returns to Shareholders. Statements in
this announcement concerning the taxation of the Company and its investors are
based upon current tax law and practice which is, in principle, subject to
change. Investors should consult their own tax advisers about the tax
consequences of an investment in the Ordinary Shares.
The Company may be a "passive foreign investment company" for the current
taxable year and for one or more future taxable years, which may result in
material adverse U.S. federal income tax consequences for U.S. investors.
Generally, if for any taxable year 75% or more of the Company's gross income
is passive income, or at least 50% of the Company's assets are held for the
production of, or produce, passive income, the Company would be characterized
as a passive foreign investment company ("PFIC"), for U.S. federal income tax
purposes. If the Company is a PFIC for any taxable year, or portion thereof,
that is included in the holding period of a U.S. Holder (as defined below in
Appendix VII of this announcement on 'Taxation') of Ordinary Shares, such U.S.
Holder may be subject to certain adverse U.S. federal income tax consequences
and additional reporting requirements. The Company does not believe it is or
will become a PFIC for the current or any future taxable year. However, such
determination depends on the application of complex U.S. federal income tax
rules that are subject to differing interpretations and is a fact-intensive
inquiry made annually after the close of each taxable year and depends, in
part, upon the composition and value of the Company's income and assets, among
other facts, including the timing of Acquisition Completion. In particular,
depending on when Acquisition Completion occurs, it is possible that the
Company will be a PFIC. Should Acquisition Completion occur in Q4 2025, it
is likely the Company would be a PFIC. Accordingly, there can be no assurance
that the Company will not be treated as a PFIC for any taxable year or that
the U.S. Internal Revenue Service ("IRS") would not assert a contrary position
or that such an assertion would not be sustained by a court. If the Company
determines that it is a PFIC in a given year, the Company will use
commercially reasonable endeavours to provide a PFIC annual information
statement for such year to any shareholder or former shareholder who requests
it to permit such requesting shareholder to make a "qualified electing fund"
election (as described below in Appendix VII of this announcement on
'Taxation'), but there can be no assurance that the Company will timely
provide such information. For a more detailed description of the possibility
of whether the Company would qualify as a PFIC, and the consequences thereof,
including the consequences to a shareholder of making a "qualified electing
fund" election, see Appendix VII of this announcement on 'Taxation'. Each
prospective U.S. Holder of Ordinary Shares should consult its own tax advisors
regarding the PFIC rules and the U.S. federal income tax consequences of the
purchase, ownership and disposition of such shares.
AIM shares and "Business Property Relief" from UK Inheritance Tax
The UK Government has announced that, from 6 April 2026, it will restrict the
availability of "business property relief" from UK inheritance tax. Provided
certain conditions are satisfied, "business property relief" is currently
available against 100% of the value of certain "unquoted shares", that is,
shares that are not listed on a recognised stock exchange (which includes
shares admitted to trading on AIM provided such shares are not otherwise
listed on a recognised stock exchange). The Finance Act 2025, which received
royal assent on 20 March 2025 (the "Finance Act"), does not detail the
legislation which will give effect to such changes, though it has been
announced that the rate of relief will be reduced from its current rate of
100% to a rate of 50% in all circumstances for such "unquoted shares". The new
rules will apply for lifetime transfers on or after 30 October 2024 to prevent
forestalling.
The Enlarged Group will be exposed to risks in relation to compliance with
regulatory obligations including anti-corruption and anti-bribery laws and
regulations, export controls, etc.
Conducting business on an international basis will require the Enlarged Group
to comply with the laws and regulations of various jurisdictions. In
particular, the Enlarged Group's international operations will be subject to
anti-corruption laws and regulations, such as the US Foreign Corrupt Practices
Act of 1977 (the "FCPA") and the UK Bribery Act of 2010 (the "Bribery Act").
The FCPA prohibits providing anything of value to foreign officials for the
purposes of obtaining or retaining business or securing any improper business
advantage. The Enlarged Group may, as part of its business, deal with
state-owned business enterprises, the employees of which are considered
foreign officials for the purposes of the FCPA. The provisions of the Bribery
Act extend beyond bribery of foreign public officials and are more onerous
than the FCPA in a number of other respects, including jurisdiction,
non-exemption of facilitation payments and penalties.
As a result of conducting business in foreign countries, the Enlarged Group
will be exposed to a risk of violating anti-corruption laws and sanctions
regulations applicable in those countries where it, its partners or agents
operate. Some of the international locations in which the Enlarged Group
operates may lack a developed legal system and have high levels of corruption.
Continued expansion and worldwide operations by the Enlarged Group, including
in developing countries, development of joint venture relationships worldwide
and the employment by it of local agents in the countries in which it operates
increase the risk of violations of anti-corruption or similar laws. Violations
of anti-corruption laws and sanctions regulations are punishable by civil
penalties, including fines, denial of export privileges, injunctions, asset
seizures, debarment from government contracts (and termination of existing
contracts) and revocations or restrictions of licences, as well as criminal
fines and imprisonment. In addition, any such violations could have a
significant impact on the Enlarged Group's reputation and consequently on its
ability to win future business and could have a material adverse effect on its
reputation, results of operations, business and financial condition.
While the Enlarged Group will have policies and procedures designed to assist
in compliance with applicable laws and regulations, the Enlarged Group will
seek to continuously improve its systems of internal controls, to remedy any
weaknesses that are identified through appropriate corrective action depending
on the circumstances, including additional training, improvement of internal
controls and oversight and deployment of additional resources and to take
appropriate action in case of any breach of the Enlarged Group's rules and
procedures which might include disciplinary measures, suspensions of employees
and ultimately termination of such employees.
Further detecting, investigating, and resolving these matters is expensive and
could consume significant time and attention of the Enlarged Group's senior
management. The Enlarged Group could also face fines, sanctions and other
penalties from authorities in the relevant foreign jurisdictions, including
prohibition of the Enlarged Group from participating in or curtailment of
business operations in those jurisdictions. Any proceedings that may result
from these matters could harm relationships with existing customers,
distributors and agents and the Enlarged Group's ability to obtain new
customers and partners.
There can be no assurance that policies and procedures of the Enlarged Group
will be followed at all times or will effectively detect and prevent
violations of the applicable laws by one or more of its employees,
consultants, agents or partners and, as a result, the Enlarged Group could be
subject to criminal and civil penalties and other remedial measures, which
could have material adverse consequences for the Enlarged Group's results of
operations, business and financial condition if any member of the Enlarged
Group failed to prevent any such violations.
The IRS may not agree with the conclusion that Rosebank is to be treated as a
non-US corporation for US federal income tax purposes following the
Acquisition or may assert that Rosebank is subject to certain unfavourable US
federal income tax rules
For US federal income tax purposes, a corporation organised under non-US law
generally is considered to be a tax resident of the jurisdiction of its
organisation or incorporation. Rosebank is organised under the laws of Jersey
and accordingly, under the generally applicable US federal income tax rules,
is expected to be treated as a non-US corporation (and, therefore, not a US
tax resident) for US federal income tax purposes. However, Section 7874 of the
US Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
provides an exception to this general rule, pursuant to which Rosebank would
be treated as a US corporation for US federal income tax purposes if,
following the Acquisition, at least 80% of its stock (by vote or value) is
considered to be held by former shareholders of ECI by reason of holding stock
of ECI (such percentage referred to as the "ownership percentage"), and
Rosebank and its "expanded affiliated group" do not have "substantial business
activities" in Jersey. If Rosebank was to be treated as a US corporation for
US federal income tax purposes, the Enlarged Group could be subject to
substantial additional US federal income tax obligations and the gross amount
of any dividend payments to Non-US Holders (as defined below in Appendix VII
of this announcement on 'Taxation') of Rosebank Ordinary Shares could be
subject to US withholding tax.
In addition, even if Rosebank is not treated as a US corporation for US
federal income tax purposes, Section 7874 of the Internal Revenue Code may
cause Rosebank or the Enlarged Group to be subject to certain unfavourable US
federal income tax rules in the event that the ownership percentage
attributable to former shareholders of ECI exceeds 60% and Rosebank and its
"expanded affiliated group" do not have "substantial business activities" in
Jersey. If the Enlarged Group was to be subject to these rules, the Enlarged
Group and its subsidiaries could be subject to adverse tax consequences,
including restrictions on the use of ECI's tax attributes with respect to
"inversion gain" recognised over a ten year period following the Acquisition,
the recapture of certain deductions that ECI previously took under Section
965(c) of the Internal Revenue Code at an unfavourable tax rate, the
imposition of an excise tax equal to 1% of the fair market value of stock that
Rosebank repurchases, and the requirement that any of the Enlarged Group's US
subsidiaries treat certain payments to Rosebank as "base erosion payments"
that may be subject to a minimum US federal income tax. In addition, US
Holders of Ordinary Shares could be subject to a higher rate of tax on any
dividends paid by Rosebank.
Based upon the terms of the Acquisition, the rules for determining the
ownership percentage under Section 7874 of the Internal Revenue Code and the
US Treasury regulations promulgated thereunder, and certain factual
assumptions, the Enlarged Group does not currently expect to be subject to
these rules under Section 7874 of the Internal Revenue Code. However, whether
the requirements for such treatment have been satisfied must be finally
determined after consummation of the Acquisition, by which time there could be
adverse changes to the relevant facts and circumstances. In addition, the
rules for determining ownership under Section 7874 of the Internal Revenue
Code are complex, unclear and subject to change. Accordingly, there can be no
assurance that the IRS would not assert that the Enlarged Group should be
subject to the above rules or that such an assertion would not be sustained by
a court.
Additionally, even if the Enlarged Group is not subject to the above adverse
consequences under Section 7874 of the Internal Revenue Code as a result of
the Acquisition, Rosebank could, in certain specific circumstances, be limited
in using its equity to engage in future acquisitions of US corporations.
Shareholders are urged to consult with their tax advisers regarding the
potential application of Section 7874 of the Internal Revenue Code and the US
Treasury regulations promulgated thereunder to the Acquisition.
E. GENERAL RISKS
ECI financial information
The financial information from which the unaudited adjusted financial
information relating to the ECI Group in this announcement for the four months
ended 30 April 2025 as set out in section B of Appendix VI of this
announcement has been derived is extracted from the management accounts of
ECI, which are unaudited. The unaudited management accounts have been prepared
on a consistent basis with the accounting policies applied to the audited
consolidated financial statements presented in section A of Appendix VI of
this announcement (as it relates to the financial information presented). As
at the date of this announcement, this financial information has not been
subject to audit or review by the Company's or ECI's auditors. It should not
be seen as a substitute for audited or reviewed financial information and
there can be no assurance that this financial information will not be subject
to material amendments following completion of the relevant audit procedures.
Investors are cautioned not to place undue reliance on this information. If
any unaudited financial information is subject to amendment following the
completion of audit procedures, this may have an adverse effect on the price
of the Ordinary Shares.
Economic conditions and current economic weakness
The Enlarged Group's, business plan may be subject to changes arising from
relevant economic conditions, including, but not limited to, recessionary or
inflationary trends, equity market levels, consumer credit availability,
interest rates, consumers' disposable income and spending levels, job security
and unemployment and overall consumer confidence. Prevailing market conditions
and macro-economic factors will continue to impact company valuations going
forward and could have a material adverse effect on the Enlarged Group's
business, financial condition, results of operations and cash flows.
The Company may fail to pay dividends or make other returns
There is no guarantee of a dividend on the Ordinary Shares, and the
declaration, payment and growth of any such dividend will depend, among other
things, on the availability of financial resources of the Company and the
Directors authorising any such dividend being able to give the 12-month,
forward-looking, cash flow-based solvency statement in the form required by
the Companies Law. The return of value by way of share redemption, repurchase
or reduction of capital, is similarly dependent on, among other things, the
Directors authorising any such return giving such a solvency statement at the
relevant time.
The Company's ability to pay dividends in the future depends, among other
things, on the Enlarged Group's financial performance and capital requirements
There can be no guarantee that the Company will be able to pay dividends in
the future. As a holding company, the Company's ability to pay dividends in
the future will be affected by a number of factors, including its ability to
receive sufficient dividends from subsidiaries. The ability of companies
within the Enlarged Group to pay dividends and the Company's ability to
receive distributions from its investments in other entities are subject to
restrictions. If the performance of the companies within the Enlarged Group is
below market expectations, then their capacity to pay dividends to the Company
will suffer.
Fluctuations in foreign exchange rates could have a negative impact on the
Enlarged Group's business
The revenues, expenses, assets and liabilities denominated in currencies other
than US dollars were converted into US dollars for the purposes of compiling
the historical financial statements set out in this announcement. Over 90% of
ECI's EBITDA is generated by US dollar functional entities, with approximately
5% generated in Euros and less than 5% in other currencies. The translational
impact of an approximate 10% strengthening of the Euro and other foreign
exchange currencies against the US$ is approximately US$1 million. A large
proportion of ECI's historical revenues are denominated in currencies other
than US dollars, particularly the Mexican peso. ECI's reported results of
operations will fluctuate with average exchange rates and its reported net
assets will fluctuate with year-end exchange rates.
ECI currently uses and has in the past used hedging strategies to provide
appropriate short and medium-term cover for foreign exchange exposures. ECI's
current main currency pairing is US dollar/Mexican peso and ECI has introduced
a hedging policy for its foreign exchange exposure: (i) over the next 12
months, to provide 100% cover; (ii) for the next 12 to 24 months, to provide
70-100% cover; and (iii) for the next 24 months to 36 months, to provide
40-60% cover. ECI currently has minimal risk in other currency pairing
exposures relating to US dollar/Euro and Euro/Polish złoty. The Enlarged
Group may in the future use, hedging strategies to manage and minimise the
impact of exchange rate fluctuations on its cash flow and economic profits.
There are complexities inherent in determining whether and when foreign
exchange exposures will materialise, in particular given the possibility of
unpredictable revenue variations arising from schedule delays and contract
postponements. Furthermore, if the Enlarged Group uses hedging strategies in
the future, it could be exposed to the risk of non-performance of its hedging
counterparties. Additionally, the successful implementation of its hedging
strategy in the future may depend on the willingness of hedging counterparties
to extend credit. Accordingly, no assurances may be given that the Enlarged
Group's exchange rate hedging strategy would protect it from significant
changes or fluctuations in revenues, expenses, assets and liabilities
denominated in a currency other than US dollars. The materialisation of any or
all of these risks could have a material adverse effect on the Enlarged
Group's results of operations, business and financial condition.
Overseas Shareholders may be subject to exchange rate risk
The Ordinary Shares are, and any dividends to be paid in respect of them will
be, denominated in pounds sterling. An investment in the Ordinary Shares by an
investor whose principal currency is not pounds sterling exposes the investor
to foreign currency exchange rate risk. Any depreciation of pounds sterling in
relation to such foreign currency will reduce the value of the investment in
the Ordinary Shares or any dividends in foreign currency terms.
Borrowing and liquidity
Existing debt may adversely impact the Enlarged Group's ability to obtain new
debt financing on favourable terms in the future, particularly if coupled with
downgrades of its credit ratings or a deterioration of capital markets
conditions more generally. There can be no assurance that the Enlarged Group
will not face future credit rating downgrades as a result of factors such as
the performance of its businesses or changes in rating application or
methodology, and future downgrades could adversely affect its cost of funds,
liquidity and competitive position. In addition, if the Enlarged Group is
unable to generate cash flows in accordance with its plans or face unforeseen
needs for capital, it may adopt changes to its capital allocation plans (such
as plans related to the timing or amounts of investments or capital
expenditures, share repurchases or dividends) or take other actions.
Factors outside the Enlarged Group's control, such as fires, floods and other
natural disasters, any epidemics or pandemics, any major disruption to the
Enlarged Group's information systems, or man-made problems such as computer
viruses, theft of critical data, terrorism, protests or other harassment could
have a material adverse effect on its results of operations, business and
financial condition
The Enlarged Group's sources for components or other supplies, as well as
shipments of manufactured goods, are vulnerable to damage or interruption from
fires, floods, pandemics, power losses, telecommunications failures, terrorist
attacks, human errors, break-ins and similar events. A significant natural
disaster, such as a fire or flood, whether at a facility owned by the Enlarged
Group or at a third-party facility which holds stock belonging to the Enlarged
Group, could have a material adverse effect on the Enlarged Group's results of
operations, business and financial condition, and the Enlarged Group's
insurance coverage may be insufficient to compensate it for losses that may
occur. Any damages or contractual penalties the Enlarged Group is entitled to
in the event that a supplier of the Enlarged Group does not meet its
obligations with respect to timeliness and quality, may fail to mitigate the
harm to the Enlarged Group's business caused by any such contractual breaches.
In particular, shortages or interruptions in the supply of components or
delays in the shipment of manufactured goods as a result of such an event
could delay shipments of the Enlarged Group's products or increase its
production costs. This in turn could have a material adverse effect on the
Enlarged Group's results of operations, business and financial condition.
The Enlarged Group could be impacted negatively by information technology
security threats including unauthorised access to intellectual property or
other controlled information or cyber or ransomware attacks intended to
disrupt the Enlarged Group's operations. Interruptions to the Enlarged Group's
information systems could adversely affect its day-to-day operations. A major
disruption to information systems could have a material adverse effect on the
Enlarged Group's results of operations, business and financial position. The
loss of confidential information, intellectual property or controlled data
could result in fines, liability to customers and other counterparties and
damage to the Enlarged Group's reputation, and could adversely affect its
ability to win future contracts.
IT systems and cyber security threats
Should the Enlarged Group's technical and communication infrastructure systems
not operate as intended or any third parties to whom the Enlarged Group
outsources any of its IT services fail to deliver as expected, its ability to
transact business across its international businesses would be significantly
impaired. In addition, the Enlarged Group's IT systems and those it outsources
are vulnerable to damage or interruption from circumstances beyond the
Enlarged Group's control, including fire, natural disasters, power loss or
disruptions, hacker attacks, computer systems failures, viruses, delays or
disruptions due to system updates, malicious attacks, accidents,
telecommunication failures, acts of terrorism or war, physical or electronic
break-ins or similar events or disruptions. These information systems have
been, and will likely continue to be, subject to attack. The failure of the
Enlarged Group's IT systems to perform as anticipated could disrupt the
Enlarged Group's business and could result in decreased sales, increased
overhead costs, excess inventory and product shortages, causing the Enlarged
Group's business and results of operations to suffer. In addition, unforeseen
vulnerabilities in the Enlarged Group's security systems and policies could
result in potential data misuse, resulting in damage to the Enlarged Group's
reputation and an adverse effect on its results of operations, business or
financial condition.
Information security and cyber threats are currently a priority across all
industries and remain a key UK government agenda item. Cybersecurity breaches
of the Enlarged Group's information technology systems could result in the
misappropriation or unauthorised disclosure of confidential information
belonging to it or to its customers, partners, suppliers, or employees. Any
breach of data security could result in a disruption of the Enlarged Group's
services or improper disclosure of personal data or confidential information,
which could harm the Enlarged Group's reputation, require it to expend
resources to remedy such a security breach or defend against further attacks
or subject it to liability under laws that protect personal data, resulting in
increased operating costs or loss of revenue. Like many businesses, the
Enlarged Group may have a potential exposure in this area.
F. RISKS RELATING TO THE ORDINARY SHARES AND THE CAPITAL RAISE
References in this announcement to the "Enlarged Group" are to the Group
following Acquisition Completion and therefore incorporate the ECI Group.
However, prior to Acquisition Completion, and in the event that Acquisition
Completion does not occur, the risk factors below that are expressed to be
applicable to the Enlarged Group will remain applicable to the Group
(excluding the ECI Group) and in this context references to the "Enlarged
Group" shall instead be deemed to be references to the Group.
The market price of the Ordinary Shares could be negatively impacted by sales
of substantial amounts of Ordinary Shares, particularly following expiry of
the lock-in period
Subject to or following the expiry of any undertakings given pursuant to
lock-in agreements or similar arrangements with significant Shareholders,
such Shareholders could sell a substantial number of Ordinary Shares in the
public market following Admission and/or Readmission. Such sales, or the
perception that such sales could occur, may materially adversely affect the
market price of the Ordinary Shares. This may make it more difficult for
Shareholders to sell the Ordinary Shares at a time and price that they deem
appropriate and could also impede the Company's ability to issue Ordinary
Shares in the future.
Although there is no present intention or arrangement to do so, the Rosebank
Co-Founders may, following the expiry of the initial three-year lock-in period
they agreed to as part of the July 2024 Admission, sell their Ordinary Shares
without restriction. The market price of Ordinary Shares could decline
significantly as a result of any sales of Ordinary Shares by the Rosebank
Co-Founders following expiry of that initial three-year lock-in period (or
otherwise) or the perception that such a sale could occur.
The Capital Raise is conditional on the passing of the Transaction Resolutions
but not conditional upon Acquisition Completion
The Capital Raise is not conditional upon Acquisition Completion and will
complete shortly following the approval of the Acquisition by Shareholders at
the General Meeting and Admission. In the unlikely event that the Capital
Raise proceeds but Acquisition Completion does not occur, the Directors'
current intention is that the net proceeds will be invested on a short-term
basis while the Directors evaluate other acquisition opportunities and, if no
acquisitions can be found on acceptable terms, the Directors will consider how
best to return surplus capital to Shareholders in a timely manner. Such a
return could carry fiscal costs for certain Shareholders, will have costs for
Rosebank and would be subject to applicable securities laws. There can be no
assurance that in such circumstances surplus capital can be returned to
Shareholders in a timely manner or at all.
The Enlarged Group may be unable to transfer to an appropriate listing venue
It is the intention of the Directors that, at an appropriate time after
completing the Acquisition, Rosebank will seek the admission of its Ordinary
Shares to the Equity Shares (Commercial Companies) (ESCC) category of the
Official List and to trading on the Main Market of the London Stock Exchange.
There can be no guarantee that the Company will meet the required eligibility
criteria for the ESCC category of the Official List or that a transfer to the
ESCC category of the Official List or other appropriate listing venue will be
achieved. A failure to change listing venue may have an adverse effect on the
valuation of the Ordinary Shares.
The Company may be subject to restrictions in offering its Ordinary Shares in
certain jurisdictions
The Company may offer its Ordinary Shares or other equity securities as part
of the consideration to fund, or in connection with, future acquisitions.
However, certain jurisdictions may restrict the Company's use of its Ordinary
Shares or other securities for this purpose, which could result in the
requirement for the Company to use alternative sources of consideration. Such
restrictions may limit the Company's available acquisition opportunities or
make certain acquisitions more costly which may have an adverse effect on its
operations.
The ability of overseas Shareholders to bring actions or enforce judgments
against the Company or the Directors may be limited
The ability of an overseas Shareholder to bring an action against the Company
may be limited under law. The Company is a public limited company incorporated
and registered in Jersey. The rights of holders of the Company's Ordinary
Shares are governed by Jersey law and by the Articles. Jersey law limits
significantly the circumstances under which the shareholders of Jersey
companies may bring derivative actions. Under Jersey law, in most cases, only
the Company may be the proper plaintiff for the purposes of maintaining
proceedings in respect of wrongful acts committed against it and, generally,
neither an individual shareholder, nor any group of shareholders, has any
right of action in such circumstances. Jersey law does not afford appraisal
rights to dissenting shareholders in the form typically available to
shareholders in a US company, for example. In addition, it may not be possible
for an overseas Shareholder to enforce any judgments in civil or commercial
matters or any judgments in securities laws of countries other than the UK
against some or all of the Directors or executive officers of the Company who
are resident in the UK or countries other than those in which judgment is
made.
Ordinary Shares traded on AIM
AIM securities are not admitted to the Official List. An investment in
Ordinary Shares quoted on AIM may carry a higher risk than an investment in
shares quoted on the Official List. AIM has been in existence since June 1995
but its future success, and liquidity in the market for the Ordinary Shares,
cannot be guaranteed. AIM is a market designed primarily for emerging or
smaller companies to which a higher investment risk tends to be attached
compared with larger or more established companies. A prospective investor
should be aware of the risks of investing in such companies and should make
the decision to invest only after careful consideration and, if appropriate,
consultation with an independent financial adviser duly authorised under the
FSMA (or the corresponding legislation in the jurisdiction in which a
prospective investor is resident) who specialises in advising on the
acquisition of shares and other securities.
Liquidity
The Company can give no assurance that an active trading market for the
Ordinary Shares will be maintained. If an active trading market is not
maintained, the liquidity and trading price of the Ordinary Shares could be
adversely affected and Shareholders may have difficulty selling their Ordinary
Shares. The market price of the Ordinary Shares may drop below the price at
which a Shareholder purchased Ordinary Shares. Any investment in the Ordinary
Shares should be viewed as a long-term investment. Shareholders have no right
to have their Ordinary Shares repurchased by the Company at any time and
therefore Shareholders wishing to realise their investment in the Company will
be required to dispose of their Ordinary Shares through the stock market.
Whilst the Directors retain the right to effect repurchases of Ordinary
Shares, they are under no obligation to use such powers at any time and
Shareholders should not place any reliance on the willingness of the Directors
so to act. Market liquidity in the shares of similar companies to the Company
is frequently inferior to the market liquidity in shares issued by larger
companies traded on the London Stock Exchange. There can be no guarantee that
a liquid market in the Ordinary Shares will exist. Accordingly, Shareholders
may be unable to realise their Ordinary Shares at the quoted market price or
at all.
The market price for the Ordinary Shares may be volatile and subject to wide
fluctuations in response to numerous factors, many of which are beyond the
Company's control
In recent years, financial markets have experienced significant price and
volume fluctuations that have often been unrelated to the operating
performance, underlying asset values or prospects of such companies.
Additionally, these factors, as well as other related factors, may cause
decreases in asset values, which may result in impairment losses resulting in
the deferral or ultimately the loss of future income. Any recessionary
economic environment, and the resulting increased levels of volatility and
related market turmoil, could have a material adverse effect on the Company's
future investment-related income, business, operations, financial condition,
share price and ability to pay a dividend or return capital to Shareholders.
Dilution of Shareholders' interest as a result of the Capital Raise or
additional equity issues
If Shareholders do not or are unable to take up the offer of Ordinary Shares
under the Institutional Capital Raise their proportionate ownership and voting
interests in the Company will be reduced as a result of the Institutional
Capital Raise and the percentage that their Ordinary Shares will represent of
the Enlarged Share Capital will be reduced accordingly. Eligible Shareholders
may be diluted in connection with the Open Offer.
Further, the Company may choose to issue additional Ordinary Shares in
subsequent public offerings or private placements to fund acquisitions or as
consideration for acquisitions. The Company is seeking renewed standing
authorities to allot shares and disapply pre-emption rights based on its
Enlarged Share Capital at the General Meeting. In addition, the Company may
issue additional Ordinary Shares not for cash or to satisfy entitlements of
participants in the LTIP arising on crystallisation of a series of Incentive
Shares. Future placings or other issues of Ordinary Shares when pre-emption
rights have been disapplied would result in the dilution of the interests of
existing Shareholders. The extent of such dilution will depend on the number
of Ordinary Shares placed or otherwise issued on each occasion, and the price
(if any) at which such Ordinary Shares are issued. The perceived risk of
dilution may cause the market price of the Ordinary Shares to reflect a lesser
sensitivity to increases in the underlying value of Ordinary Shares than might
otherwise be expected.
General investment risk and possible volatility of the price of Ordinary
Shares
Investors should be aware that the market price of Ordinary Shares may be
volatile and may go down as well as up and Shareholders may therefore be
unable to recover their original investment and could even lose their entire
investment. This volatility could be attributable to various factors and
events, including the availability of information for determining the market
value of the Ordinary Shares, any regulatory or economic changes affecting the
Enlarged Group's operations, variations in the Enlarged Group's operating
results, developments in the Enlarged Group's business or its competitors, or
changes in market sentiment towards the Ordinary Shares. In addition, the
Enlarged Group's operating results and prospects from time to time may be
below the expectations of market analysts and investors. Market conditions may
affect the Ordinary Shares regardless of the Enlarged Group's operating
performance or the overall performance of the sector in which the Enlarged
Group operates. Share market conditions are affected by many factors,
including general economic outlook, movements in or outlook on interest rates
and inflation rates, currency fluctuations, commodity prices, changes in
investor sentiment towards particular market sectors and the demand and supply
for capital. Accordingly, the market price of the Ordinary Shares may not
reflect the underlying value of the Enlarged Group's net assets, and the price
at which investors may dispose of their Ordinary Shares at any point in time
may be influenced by a number of factors, only some of which may pertain to
the Enlarged Group while others of which may be outside the Enlarged Group's
control. If the Enlarged Group's revenues do not grow, or grow more slowly
than anticipated, or if its operating or capital expenditures exceed
expectations and cannot be adjusted sufficiently, the market price of its
Ordinary Shares may decline. In addition, if the market for securities of
companies in the same sector or the stock market in general experiences a loss
in investor confidence or otherwise falls, the market price of the Ordinary
Shares may fall for reasons unrelated to the Enlarged Group's business,
results of operations or financial condition. Therefore, Shareholders might be
unable to resell their Ordinary Shares at or above the price at which they
have purchased their Ordinary Shares.
APPENDIX IV
TERMS AND CONDITIONS OF THE PLACING
THE ANNOUNCEMENT INCLUDING THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND
IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, DISTRIBUTION OR FORWARDING,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED
STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY JURISDICTION IN WHICH
THE SAME WOULD BE UNLAWFUL (EACH A "RESTRICTED TERRITORY").
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING (AS DEFINED
BELOW). THE ANNOUNCEMENT INCLUDING THE TERMS AND CONDITIONS SET OUT IN THIS
APPENDIX IS DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EEA WHO ARE
"QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 2(E) OF THE EU PROSPECTUS
REGULATION ("QUALIFIED INVESTORS"); OR (B) IN THE UNITED KINGDOM, "QUALIFIED
INVESTORS" WITHIN THE MEANING OF ARTICLE 2(E) OF THE UK PROSPECTUS REGULATION,
WHO (I) ARE PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO
INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS
ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"); OR (II)
ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM
IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING
REFERRED TO AS "RELEVANT PERSONS"); OR (C) IN AUSTRALIA, THE FOLLOWING PERSONS
TO WHOM A DISCLOSURE DOCUMENT IS NOT REQUIRED TO BE PROVIDED UNDER PART 6D.2
OF THE CORPORATIONS ACT 2001 (CTH) ("CORPORATIONS ACT"): (I) "SOPHISTICATED
INVESTORS" WITHIN THE MEANING OF SECTION 708(8) OF THE CORPORATIONS ACT; OR
(II) "EXPERIENCED INVESTORS" MEETING THE CRITERIA IN SECTION 708(10) OF THE
CORPORATIONS ACT; OR (III) "PROFESSIONAL INVESTORS" WITHIN THE MEANING OF
SECTION 708(11) OF THE CORPORATIONS ACT) (ALL SUCH PERSONS TOGETHER BEING
REFERRED TO AS "WHOLESALE INVESTORS"). THIS APPENDIX AND THE TERMS AND
CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON: (I) IN THE UNITED
KINGDOM, BY PERSONS WHO ARE NOT RELEVANT PERSONS; (II) IN ANY MEMBER STATE OF
THE EEA, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS; AND (III) IN AUSTRALIA,
BY PERSONS WHO ARE NOT WHOLESALE INVESTORS. ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THE ANNOUNCEMENT INCLUDING THE TERMS AND CONDITIONS SET OUT
HEREIN RELATES IS AVAILABLE ONLY TO: (I) RELEVANT PERSONS IN THE UNITED
KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED
KINGDOM; (II) QUALIFIED INVESTORS IN MEMBER STATES OF THE EEA; AND (III)
WHOLESALE INVESTORS IN AUSTRALIA.
THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF,
OR A SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR OR OTHERWISE ACQUIRE,
ANY SECURITIES IN THE COMPANY.
THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR UNDER THE SECURITIES
LAWS OF ANY OTHER JURISDICTION, HAVE NOT BEEN RECOMMENDED BY, OR APPROVED BY,
THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR ANY OTHER UNITED
STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY, AND MAY
NOT BE OFFERED, SOLD, PLEDGED, TAKEN UP, EXERCISED, RESOLD, TRANSFERRED OR
DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT EXCEPT PURSUANT TO AN APPLICABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE WILL BE NO
PUBLIC OFFER OF THE SECURITIES MENTIONED HEREIN IN THE UNITED KINGDOM, THE
UNITED STATES, ANY OTHER RESTRICTED TERRITORY OR ELSEWHERE.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS,
FINANCIAL AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES (AS DEFINED
BELOW). THE PRICE OF SHARES AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN AS
WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON DISPOSAL
OF SHARES.
The distribution of the Announcement and the Placing and/or the offer or sale
of the Placing Shares in certain jurisdictions may be restricted by law. No
action has been taken by the Company or by the Banks or any of its or their
respective affiliates or any of its or their respective agents, directors,
officers or employees which would, or is intended to, permit an offer of the
Placing Shares or possession or distribution of the Announcement or any other
offering or publicity material relating to such Placing Shares in any
jurisdiction where action for that purpose is required.
The Announcement is being distributed and communicated to persons in the UK
only in circumstances to which section 21(1) of the FSMA does not apply.
Subject to certain exceptions, the securities referred to in the Announcement
may not be offered or sold in any Restricted Territory or to, or for the
account or benefit of, a citizen or resident or person located in, or a
corporation, partnership or other entity created or organised in or under the
laws of a Restricted Territory.
The Banks are acting exclusively for the Company and no one else in connection
with the Placing and are not, and will not be, responsible to anyone
(including the Placees) other than the Company for providing the protections
afforded to their clients nor for providing advice in relation to the Placing
and/or any other matter referred to in the Announcement.
None of the Company or the Banks or any of its or their respective affiliates
or any of its or their respective agents, directors, officers or employees
makes any representation or warranty, express or implied to any Placees
regarding any investment in the Placing Shares under the laws applicable to
such Placees.
Persons who are invited to and who choose to participate in the Placing of new
ordinary shares (the "Placing Shares") in the capital of the Company, by
making an oral or written offer to acquire Placing Shares, including any
individuals, funds or others on whose behalf a commitment to acquire Placing
Shares is given (the "Placees"), will be deemed: (i) to have read and
understood the Announcement, including this Appendix, in its entirety; and
(ii) to be making such offer on the terms and conditions contained in this
Appendix, including being deemed to be providing (and shall only be permitted
to participate in the Placing on the basis that they have provided) the
representations, warranties, acknowledgements and undertakings set out herein.
Notice to Canadian Investors
The distribution of Placing Shares in Canada is to be made on a private
placement basis only, exempt from the requirement that the Company prepare and
file a prospectus with the relevant Canadian securities regulatory authorities
and only to those who are both "accredited investors" within the meaning of
National Instrument 45-106 - Prospectus Exemptions (or section 73.3(1) of the
Securities Act (Ontario), as applicable) and "permitted clients" within the
meaning of National Instrument 31-103 - Registration Requirements, Exemptions
and Ongoing Registrant Obligations. In connection with any such sale made to
investors in the Placing that are located in Canada, the Placee will be
required to provide a signed investor qualification statement, confirming its
eligibility to participate in the Placing.
The Company is not a "reporting issuer", as such term is defined under
applicable Canadian securities legislation, in any province or territory of
Canada, its securities are not listed on any stock exchange in Canada and
there is currently no public market for the Placing Shares in Canada. The
Company currently does not intend to file a prospectus or similar document
with any securities regulatory authority in Canada qualifying the resale of
the Placing Shares to the public in any province or territory of Canada or
listing its securities on any stock exchange in Canada. Therefore, there will
be no public market in Canada for the Placing Shares and the resale or
transfer of the Placing Shares will be subject to restrictions. Accordingly,
any resale of the Placing Shares of the Company must be made in accordance
with applicable securities laws, and which may require resales to be made in
accordance with exemptions from registration and prospectus requirements.
Securities legislation in certain provinces or territories of Canada may
provide a purchaser with remedies for rescission or damages if this offering
memorandum (including any amendment thereto) contains a misrepresentation,
provided that the remedies for rescission or damages are exercised by the
purchaser within the time limit prescribed by the securities legislation of
the purchaser's province or territory. The purchaser should refer to any
applicable provisions of the securities legislation of the purchaser's
province or territory for particulars of these rights or consult with a legal
advisor.
The Announcement is not, and under no circumstances is it to be construed as,
an advertisement or a public offering of the Placing Shares in Canada. No
securities commission or similar regulatory authority in Canada has reviewed
or in any way expressed an opinion about the Placing Shares and any
representation to the contrary is an offence.
In particular each such Placee represents, warrants and acknowledges that:
(a) if it is in the United Kingdom, it is a Relevant Person (as
defined above) and undertakes that it will acquire, hold, manage or dispose of
any Placing Shares that are allocated to it for the purposes of its business;
(b) if it is a person in a member state of the EEA, it is a
Qualified Investor (as defined above);
(c) if it is in Australia, it is a Wholesale Investor (as defined
above);
(d) it is and, at the time the Placing Shares are acquired, will be
outside the United States and is acquiring the Placing Shares in an "offshore
transaction" in accordance with Rule 903 or Rule 904 of Regulation S under the
Securities Act ("Regulation S"); or
(e) if it is a financial intermediary, as that term is used in
Article 2(d) of the EU Prospectus Regulation and Article 2(d) of the UK
Prospectus Regulation, that it understands the resale and transfer
restrictions set out in this Appendix and that any Placing Shares acquired by
it in the Placing will not be acquired on a non-discretionary basis on behalf
of, nor will they be acquired with a view to their offer or resale to, persons
in circumstances which may give rise to an offer of securities to the public
other than an offer or resale in a member state of the EEA to Qualified
Investors or in the United Kingdom to Relevant Persons, or in circumstances in
which the prior consent of the Banks has been given to each such proposed
offer or resale.
The Company and the Banks will rely on the truth and accuracy of the foregoing
representations, warranties and acknowledgements.
The Placing Shares are being offered and sold outside the United States in
accordance with Regulation S.
Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of this Appendix or
the Announcement of which it forms part should seek appropriate advice before
taking any action. Persons into whose possession the Announcement comes are
required by the Company and the Banks to inform themselves about, and to
observe, any such restrictions.
Details of the Placing Agreement and the Placing Shares
Barclays, BNPP, Citigroup and Investec have entered into a placing agreement
with the Company (the "Placing Agreement") under which the Banks have
severally (and not jointly or jointly and severally) agreed on the terms and
subject to the conditions set out therein, to use their reasonable endeavours
to procure Placees to take up the Placing Shares or to the extent that Placees
are not procured or any Placee defaults in paying the Issue Price in respect
of any of the Placing Shares allotted to it, the Banks have severally (and not
jointly or jointly and severally) agreed to subscribe for such Placing Shares
at the Issue Price.
The Placing Shares will, when issued, be credited as fully paid and will rank
pari passu in all respects with the existing Ordinary Shares of no par value
in the capital of the Company, including the right to receive all dividends
and other distributions declared, made or paid on or in respect of the
Ordinary Shares after the date of issue of the Placing Shares, and will on
issue be free of all claims, liens, charges, encumbrances and equities.
Applications for listing and admission to trading
Application will be made to the London Stock Exchange for admission to trading
of the Placing Shares on AIM market operated by the London Stock Exchange
("AIM") ("Admission").
It is expected that Admission will become effective not later than 8.00 a.m.
(London time) on 3 July 2025 (or such later date determined by the Company in
consultation with the Joint Global Coordinators being no later than 14
September 2025) (the "Closing Date") and that dealings in the Placing Shares
will commence at that time.
Book Build
The Banks will today commence the bookbuilding process in respect of the
Placing (the "Book Build") to determine demand for participation in the
Placing by Placees. The book will open with immediate effect. This Appendix
gives details of the terms and conditions of, and the mechanics of
participation in, the Placing. No commissions will be paid to Placees or by
Placees in respect of any Placing Shares.
The Banks and the Company shall be entitled to effect the Placing by such
alternative method to the Book Build as they may, in their sole discretion,
determine.
Participation in, and principal terms of, the Placing
1. The Banks are acting as joint global coordinators and joint
bookrunners in relation to the Placing severally, and not jointly, nor jointly
and severally, as agents of the Company. Participation in the Placing will
only be available to persons who may lawfully be, and are, invited to
participate by any of the Banks. Each of the Banks and their respective
affiliates are entitled to enter bids as principal in the Book Build.
2. The single price payable in respect of the Placing Shares
will be 300 pence per Placing Share.
3. To bid in the Book Build, prospective Placees should
communicate their bid by telephone or in writing to their usual sales contact
at one of the Banks. Each bid should state the number of Placing Shares which
the prospective Placee wishes to acquire at the Issue Price. Bids may be
scaled down by the Banks on the basis referred to in paragraph 6 below.
4. A bid in the Book Build will be made on the terms and
subject to the conditions in this Appendix and will be legally binding on the
Placee on behalf of which it is made and except with the relevant Bank's
consent will not be capable of variation or revocation after the time at which
it is submitted. Each Placee will also have an immediate, separate,
irrevocable and binding obligation, owed to the relevant Bank, to pay it (or
as it may direct) in cleared funds an amount equal to the product of the Issue
Price and the number of Placing Shares that such Placee has agreed to acquire.
Each Placee's obligations will be owed to the relevant Bank.
5. The Book Build is expected to close around 2.00 p.m.
(London time) on 6 June 2025, but may be closed earlier or later, at the
discretion of the Banks. The Banks may, in agreement with the Company, accept
bids that are received after the Book Build has closed.
6. Each prospective Placee's allocation will be agreed by the
Banks and the Company and will be confirmed to Placees orally by the relevant
Bank following the close of the Book Build, and a trade confirmation will be
dispatched as soon as possible thereafter. Subject to paragraph 4 above, the
relevant Bank's oral confirmation to such Placee will constitute an
irrevocable legally binding commitment upon such person (who will at that
point become a Placee) in favour of such Bank and the Company, under which
such Placee agrees to acquire the number of Placing Shares allocated to it and
to pay the relevant Issue Price for each such Placing Share on the terms and
conditions set out in this Appendix and in accordance with the Company's
corporate documents. To the fullest extent permitted by law, each Placee shall
have no right to rescind, terminate or otherwise withdraw from such
commitment.
7. The Banks will, in effecting the Placing, agree with the
Company the identity of the Placees and the basis of allocation of the Placing
Shares. The Banks may choose to accept bids, either in whole or in part, on
the basis of allocations determined in agreement with the Company and may
scale down any bids for this purpose on such basis as it may determine. The
Banks may also, notwithstanding paragraphs 3 and 6 above, in agreement with
the Company: (i) allocate Placing Shares after the time of any initial
allocation to any person submitting a bid after that time; and (ii) allocate
Placing Shares after the Book Build has closed to any person submitting a bid
after that time. The Company reserves the right (upon agreement with the
Banks) to reduce or seek to increase the amount to be raised pursuant to the
Placing, at its absolute discretion. The acceptance of the bids shall be at
the relevant Bank's absolute discretion, subject to agreement with the
Company.
8. Except as required by law or regulation, no press release
or other announcement will be made by the Banks or the Company using the name
of any Placee (or its agent), in its capacity as Placee (or agent), other than
with such Placee's prior written consent.
9. Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing Shares to be
acquired pursuant to the Placing will be required to be made at the same time,
on the basis explained below under "Registration and Settlement".
10. All obligations under the Book Build and Placing will be
subject to fulfilment or (where applicable) waiver of the conditions referred
to below under "Conditions of the Placing" and to the Placing not being
terminated on the basis referred to below under "Right to terminate under the
Placing Agreement".
11. By participating in the Book Build, each Placee agrees that
its rights and obligations in respect of the Placing will terminate only in
the circumstances described below and will not be capable of rescission or
termination by the Placee after confirmation (oral or otherwise) by a Bank.
12. To the fullest extent permissible by law, none of the Banks,
the Company nor any of their respective affiliates, directors, officers,
employees or agents of any of them nor any person acting on their respective
behalf shall have any responsibility or liability (whether in contract, tort
or otherwise) to any Placee (or to any other person whether acting on behalf
of a Placee or otherwise). In particular, none of the Banks, nor the Company,
nor any of their respective affiliates, directors, officers, employees or
agents of any of them nor any person acting on their respective behalf shall
have any responsibility or liability (whether in contract, tort or otherwise
and including to the fullest extent permissible by law, any fiduciary duties)
in respect of the Banks' conduct of the Book Build or of such alternative
method of effecting the Placing as the Banks and the Company may agree.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming unconditional
and not having been terminated in accordance with its terms. The Banks'
obligations under the Placing Agreement are conditional on, among others:
(a) the Acquisition Agreement not having terminated, lapsed or ceased to be
capable of completion in accordance with its terms, prior to Admission;
(b) Admission occurring not later than 8:00 a.m. (London time) on the
Closing Date;
(c) the passing without amendment (or with such amendments as the Banks and
the Company may agree in writing) of the Transaction Resolutions at the
General Meeting (or such later date (not later than 14 September 2025) as
determined by the Company following consultation with the Banks); and
(d) the new Ordinary Shares having been admitted as participating securities
within CREST with effect from Admission;
If: (i) any of the conditions contained in the Placing Agreement, including
those described above, are not fulfilled or (where applicable) waived by the
Banks by the relevant time or date specified; or (ii) the Placing Agreement is
terminated in the circumstances specified below, the Placing will lapse and
the Placees' rights and obligations hereunder in relation to the Placing
Shares shall cease and terminate at such time and each Placee agrees that no
claim can be made by it in respect thereof.
The Banks may, at their discretion and upon such terms as they think fit,
waive compliance by the Company with the whole or any part of any of the
Company's obligations in relation to the conditions contained in the Placing
Agreement save that conditions (a), (b) and (d) above may not be waived. Any
such waiver will not affect Placees' commitments as set out in the
Announcement.
By participating in the Placing each Placee agrees that none of the Banks nor
any of their affiliates, nor any of their respective directors, officers,
employees or agents shall have any liability (whether in contract, tort or
otherwise) to any Placee (or to any other person whether acting on behalf of a
Placee or otherwise) in respect of any decision it may make as to whether or
not to waive or to extend the time and/or date for the satisfaction of any
condition to the Placing or in respect of the Placing generally, and by
participating in the Placing each Placee agrees that any such decision is
within the absolute discretion of the Banks.
By participating in the Book Build, each Placee agrees that its rights and
obligations hereunder terminate only in the circumstances described above and
under "Right to terminate under the Placing Agreement" below, and will not be
capable of rescission or termination by the Placee.
Right to terminate under the Placing Agreement
The Banks are entitled, at any time before Admission, to terminate the Placing
Agreement in accordance with its terms in certain customary circumstances.
Upon termination of the Placing Agreement, the parties to the Placing
Agreement shall be released and discharged (except for any liability arising
before or in relation to such termination) from their respective obligations
under or pursuant to the Placing Agreement, subject to certain exceptions.
By participating in the Placing, Placees agree that the exercise or
non-exercise by any Bank of any right of termination or other discretion
arising under the Placing Agreement shall be within the discretion of the
relevant Bank, and neither the Company nor the Banks need to make any
reference to, or consultation with, Placees and neither the Company nor the
Banks nor any of their respective affiliates, directors, officers, employees
or agents of any of them shall have any liability to Placees whatsoever in
connection with any such exercise or failure to exercise.
Lock-up
The Company has undertaken to the Banks that, between the date of the Placing
Agreement and the date which is 180 days after Admission, it will not, without
the prior written consent of the Banks (not to be unreasonably withheld or
delayed), enter into certain transactions involving or relating to the
Ordinary Shares, subject to certain carve-outs agreed between the Banks and
the Company.
By participating in the Placing, Placees agree that the exercise by the Banks
of any power to grant consent to the undertaking by the Company of a
transaction which would otherwise be subject to the lock-up under the Placing
Agreement shall be within the discretion of the Banks and that it need not
make any reference to, or consultation with, Placees and that it shall have no
liability to Placees whatsoever in connection with any such exercise of the
power to grant consent or failure to exercise such power.
No Prospectus
No offering document or prospectus has been or will be submitted to be
approved by the FCA or the London Stock Exchange (or any other authority) in
relation to the Placing or Admission and no such prospectus is required (in
accordance with the FSMA or the UK Prospectus Regulation) to be published.
Placees' commitments will be made solely on the basis of the information
contained in the Announcement (including this Appendix). Each Placee, by
accepting a participation in the Placing, agrees that the content of the
Announcement (including this Appendix) and all other publicly available
information previously or simultaneously published by the Company by
notification to a Regulatory Information Service or otherwise filed by the
Company is exclusively the responsibility of the Company and confirms that it
has neither received nor relied on any other information, representation,
warranty, or statement made by or on behalf of the Company or the Banks or any
other person and none of the Company, the Banks nor any of their respective
affiliates, nor any other person will be liable for any Placee's decision to
participate in the Placing based on any other information, representation,
warranty or statement which the Placee may have obtained or received
(regardless of whether or not such information, representation, warranty or
statement was given or made by or on behalf of any such persons). Each Placee
acknowledges and agrees that it has relied on its own investigation of the
business, financial or other position of the Company in accepting a
participation in the Placing. Nothing in this paragraph shall exclude the
liability of any person for fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN: JE00BSBJ5M88)
following Admission will take place in CREST, subject to certain exceptions.
The Banks and the Company reserve the right to require settlement of, and
delivery of, some or all of the Placing Shares to Placees by such other means
that they deem necessary if delivery or settlement is not practicable in CREST
within the timetable set out in the Announcement or would not be consistent
with the regulatory requirements in the Placee's jurisdiction.
Following the close of the Book Build for the Placing, each Placee allocated
Placing Shares in the Placing will be sent a trade confirmation in accordance
with the standing arrangements in place with the relevant Bank stating the
number of Placing Shares allocated to it at the Issue Price, the aggregate
amount owed by such Placee to the Banks and settlement instructions. Each
Placee agrees that it will do all things necessary to ensure that delivery and
payment is completed in accordance with the standing CREST or certificated
settlement instructions in respect of the Placing Shares that it has in place
with the relevant Bank (unless otherwise agreed).
It is expected that settlement will be no later than 3 July 2025 in accordance
with the instructions set out in the trade confirmation.
In the event of any difficulties or delays in the admission of the Placing
Shares to CREST or the use of CREST in relation to the Placing, the Company
and the Banks may agree that the Placing Shares should be issued in
certificated form. The Banks reserve the right to require settlement for the
Placing Shares, and to deliver the Placing Shares to Placees, by such other
means as they deem necessary if delivery or settlement to Placees is not
practicable within the CREST system or would not be consistent with regulatory
requirements in a Placee's jurisdiction.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of two
percentage points above SONIA as determined by the Banks.
Each Placee is deemed to agree that, if it does not comply with these
obligations, the Banks may sell any or all of the Placing Shares allocated to
that Placee on such Placee's behalf and retain from the proceeds, for the
Banks' account and benefit, an amount equal to the aggregate amount owed by
the Placee plus any interest due. The relevant Placee will, however, remain
liable for any shortfall below the aggregate amount owed by it and may be
required to bear any stamp duty or stamp duty reserve tax or other stamp,
securities, transfer, registration, execution, documentary or other similar
impost, duty or tax imposed in any jurisdiction (together with any interest,
fines or penalties) which may arise upon the sale of such Placing Shares on
such Placee's behalf. By communicating a bid for Placing Shares, each Placee
confers on the Banks all such authorities and powers necessary to carry out
any such sale and agrees to ratify and confirm all actions which the Banks
lawfully take in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the trade confirmation is copied and delivered
immediately to the relevant person within that organisation.
Insofar as Placing Shares are settled in a Placee's name or that of its
nominee or in the name of any person for whom a Placee is contracting as agent
or that of a nominee for such person, such Placing Shares should, subject as
provided below, be so settled free from any liability to UK stamp duty or
stamp duty reserve tax. If there are any circumstances in which any other
stamp duty or stamp duty reserve tax (and/or any interest, fines or penalties
relating thereto) is payable in respect of the allocation, allotment, issue or
delivery of the Placing Shares (or for the avoidance of doubt if any stamp
duty or stamp duty reserve tax is payable in connection with any subsequent
transfer of or agreement to transfer Placing Shares), none of the Banks nor
the Company shall be responsible for the payment thereof.
Representations, Warranties and Further Terms
By submitting a bid and/or participating in the Placing, each Placee (and any
person acting on such Placee's behalf) irrevocably acknowledges, confirms,
undertakes, represents, warrants and agrees (for itself and for any such
prospective Placee) with the Banks and the Company, in each case as a
fundamental term of its application for Placing Shares, the following:
1 it has read and understood the Announcement in its entirety
(including this Appendix), and that its participation in the Book Build and
the Placing and its subscription for and purchase of Placing Shares is subject
to and based upon all the terms, conditions, representations, warranties,
indemnities, acknowledgements, agreements and undertakings and other
information contained herein and undertakes not to redistribute or duplicate
the Announcement;
2 that it has made its investment decision based solely upon its
own judgement, due diligence and analysis and not upon any view expressed or
information provided by or on behalf of the Banks or any other person
otherwise than as set out in the Announcement;
3 that no offering document, offering memorandum, admission
document or prospectus has been or will be prepared in connection with the
Placing or is required under the AIM Rules, FSMA, the UK Prospectus Regulation
or any other applicable law and it has not received and will not receive a
prospectus or other offering document in connection therewith;
4 that none of the Banks, the Company, nor any of their
respective affiliates or any person acting on behalf of any of them has
provided, nor will provide it, with any information regarding the Placing
Shares, the Book Build, the Placing or the Company other than the
Announcement; nor has it requested any of the Banks, the Company, any of their
affiliates or any person acting on behalf of any of them to provide it with
any such information;
5 that the Company's Ordinary Shares are listed on the AIM
market of the London Stock Exchange and the Company is therefore required to
publish certain business and financial information in accordance with the
Market Abuse Regulation (EU) No.596/2014 (as it forms part of the laws of the
United Kingdom by virtue of the European Union (Withdrawal) Act 2018, as
amended from time to time) ("Market Abuse Regulation") and the rules and
practices of the London Stock Exchange (including the AIM Rules)
(collectively, the "Exchange Information"), which includes a description of
the Company's business and the Company's financial information, including
balance sheets and income statements, and similar statements for preceding
financial years and that it is able to obtain or access the Exchange
Information without undue difficulty and that it has reviewed such Exchange
Information as it has deemed necessary;
6 that the content of the Announcement is exclusively the
responsibility of the Company and that none of the Banks, nor any of their
respective affiliates nor any person acting on behalf of any of them has or
shall have any liability for any information, representation or statement
contained in, or omission from, the Announcement or any information previously
published by or on behalf of the Company, including, but not limited to, the
Exchange Information, and will not be liable for any Placee's decision to
participate in the Placing based on any information, representation or
statement contained in the Announcement or otherwise. Each Placee further
represents, warrants and agrees that the only information on which it is
entitled to rely and on which such Placee has relied in committing itself to
acquire Placing Shares is contained in the Announcement and any information
previously or simultaneously published by the Company by notification to a
Regulatory Information Service, such information being all that such Placee
deems necessary or appropriate and sufficient to make an investment decision
in respect of the Placing Shares and that it has neither received nor relied
on any other information given, or representations, warranties or statements
made, by any of the Banks or the Company nor any of their respective
affiliates and none of the Banks or the Company will be liable for any
Placee's decision to accept an invitation to participate in the Placing based
on any other information, representation, warranty or statement, provided that
nothing in this paragraph excludes the liability of any person for fraudulent
misrepresentation made by that person;
7 that it may not rely, and has not relied, on any investigation
that the Banks, any of their respective affiliates or any person acting on
behalf of any of them, may or may not have conducted with respect to the
Placing Shares or the Company, and none of such persons has made any
representation, express or implied, with respect to the Company, the Placing
Shares or the accuracy, completeness or adequacy of the Exchange Information
or any other information;
8 that it has conducted its own investigation with respect to
the Company and the Placing Shares, received and reviewed all information that
it believes is necessary or appropriate in connection with its purchase of
Placing Shares and made its own assessment and has satisfied itself concerning
the relevant tax, legal, regulatory, currency and other economic
considerations relevant to its investment in the Placing Shares;
9 that none of the Banks, nor any of their respective affiliates
or any person acting on behalf of any of them has or shall have any liability
for any information made publicly available by or in relation to the Company
or any representation, warranty or statement relating to the Company or the
Group contained therein or otherwise, provided that nothing in this paragraph
excludes the liability of any person for fraudulent misrepresentation made by
that person;
10 that it is and, at the time the Placing Shares are acquired, will
be outside the United States and is acquiring the Placing Shares in an
"offshore transaction" in accordance with Rule 903 or Rule 904 of Regulation
S;
11 that it: (i) has such knowledge and experience in financial,
business and international investment matters as is required to be capable of
evaluating the merits and risks of an investment in the Placing Shares; (ii)
will not look to the Banks, any of their respective affiliates or any person
acting on behalf of any of them for all or part of any such loss it may
suffer; (iii) is experienced in investing in securities of this nature in this
sector and is aware that it might be required to bear and is able to bear the
economic risk of an investment in the Placing Shares for an indefinite period
of time; (iv) is able to sustain a complete loss of an investment in the
Placing Shares; and (v) has no need for liquidity with respect to its
investment in the Placing Shares;
12 unless otherwise specifically agreed with the Banks, that they
are not, and at the time the Placing Shares are acquired, neither it nor the
beneficial owner of the Placing Shares will be, a resident of, or located in,
a Restricted Territory or any other jurisdiction in which it would be unlawful
to make or accept an offer to acquire the Placing Shares, subject to certain
restrictions;
13 that the Placing Shares have not been and will not be registered
under the Securities Act, that the Placing Shares have not been recommended
by, or approved by, the SEC or any other United States federal or state
securities commission or regulatory authority, and that a prospectus will not
be published in respect of any of the Placing Shares under the securities laws
or legislation of the United States or any state or jurisdiction thereof, and
that the Placing Shares have not been and will not be registered and that a
prospectus will not be published in respect of any of the Placing Shares under
the securities laws or legislation of Australia, Canada, South Africa or Japan
and, subject to certain exceptions, may not be offered, sold, or delivered or
transferred, directly or indirectly, in or into any of these jurisdictions or
any other jurisdiction where to do so would be unlawful;
14 that it is not acquiring any of the Placing Shares as a result of
any form of directed selling efforts (as defined in Regulation S);
15 that it is not an affiliate (as defined in Rule 501(b) under the
Securities Act) of the Company, and is not acting on behalf of an affiliate of
the Company;
16 that the allocation, allotment, issue and delivery to it of
Placing Shares or to the person specified by it as the person to whom such
Placing Shares are allocated will not give rise to a liability under any of
sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and
clearance services) and that the Placing Shares are not being acquired in
connection with arrangements to issue depositary receipts or to issue or
transfer Placing Shares into a clearance service for the purposes of those
sections;
17 that it has complied with its obligations under the Criminal
Justice Act 1993 and the Market Abuse Regulation and in connection with money
laundering and terrorist financing under the Proceeds of Crime Act 2002, the
Terrorism Act 2000, the Anti-Terrorism Crime and Security Act 2001, the
Terrorism Act 2006, the Money Laundering, Terrorist Financing and Transfer of
Funds (Information on the Payer) Regulations 2017 and the Money Laundering
Sourcebook of the FCA and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any government agency having
jurisdiction in respect thereof and it is not a person: (a) with whom
transactions are prohibited under the Foreign Corrupt Practices Act of 1977 or
any economic sanction programmes administered by, or regulations promulgated
by, the Office of Foreign Assets Control of the U.S. Department of the
Treasury; (b) named on the Consolidated List of Financial Sanctions Targets
maintained by HM Treasury of the United Kingdom; or (c) subject to financial
sanctions imposed pursuant to a regulation of the European Union or a
regulation adopted by the United Nations (together the "Regulations") and, if
making payment on behalf of a third party, that satisfactory evidence has been
obtained and recorded by it to verify the identity of the third party as
required by the Regulations;
18 that its commitment to acquire Placing Shares on the terms set
out herein will continue notwithstanding any amendment that may in future be
made to the terms and conditions of the Placing and that Placees will have no
right to be consulted or require that their consent be obtained with respect
to the Company's or the Banks' conduct of the Placing;
19 that it is acting as principal only in respect of the Placing or,
if it is acting for any other person: (i) it is duly authorised to do so and
has full power to make the acknowledgements, representations and agreements
herein on behalf of each such person; and (ii) it is and will remain liable to
the Company and/or the Banks for the performance of all its obligations as a
Placee in respect of the Placing (regardless of the fact that it is acting for
another person);
20 that it understands that any investment or investment activity to
which the Announcement relates is available only to Relevant Persons (as
defined above) in the United Kingdom, Qualified Investors (as defined above)
in any member state of the EEA and Wholesale Investors (as defined above) in
Australia and will be engaged in only with such persons, and further
understands that the Announcement must not be acted on or relied on by persons
who are not Relevant Persons in the United Kingdom, Qualified Investors in any
member state of the EEA or Wholesale Investors in Australia;
21 if it is a person in a member state of the EEA that it is a
Qualified Investor (as defined above) and, to the extent applicable, any funds
on behalf of which it is acquiring the Placing Shares that are located in a
member state of the EEA are each themselves such a Qualified Investor;
22 if in the United Kingdom, that it is a Relevant Person (as
defined above) and undertakes that it will acquire, hold, manage or dispose of
any Placing Shares that are allocated to it for the purposes of its business;
23 if in Australia, that:
a) the Placee is a Wholesale Investor (as defined above);
b) no prospectus, product disclosure statement, offering memorandum or
other form of disclosure document has been prepared for lodgement or will be
lodged with the Australian Securities and Investments Commission in connection
with the Placing or the Placing Shares;
c) Rosebank has not taken any action and will not take any action to
satisfy the criteria required under the Corporations Act 2001 (Cth) to permit
the Placee or any other person to transfer and on-sell the Placing Shares in
Australia without restriction following allotment of the Placing Shares;
d) Rosebank is not issuing or transferring (as applicable) the Placing
Shares with the purpose of the Placee or any other person selling or
transferring them, or granting, issuing or transferring interests in, or
options or warrants over, them;
e) the Placee is not acquiring the Placing Shares with the purpose of
selling or transferring them, or granting, issuing or transferring interests
in, or options or warrants over, them;
f) the Placee is not a related party of Rosebank within the meaning of
section 228 of the Corporations Act 2001 (Cth);
g) the Placee is in in compliance with the requirements (subject to any
applicable exemptions or modifications) of the Anti-Money Laundering and
Counter Terrorism Financing Act 2006 (Cth) and the Criminal Code Amendment
(Bribery of Foreign Public Officials) Act 1999 (Cth) and with the requirements
(subject to any applicable exemptions or modifications) of any equivalent laws
and regulations (including anti-money laundering and counter-terrorism
financing laws and regulations) in the jurisdictions in which the Placee is
incorporated or carries on business, in each case, to the extent that those
laws and regulations apply to the Placee's participation in the Placing;
h) the Placee is not (and is not acting for) a person that is or is owned
or controlled by a person that is the subject of any sanctions administered or
enforced by the Australian Government Department of Foreign Affairs and Trade
or any other relevant sanctions authority; and
i) the Placee is an "institutional investor" for the purposes of
paragraph 1(A) of the class no-action letter issued by ASIC on
2 February 2024 in respect of sections 12BF(2A) and (2C) of the Australian
Securities and Investments Commission Act 2001 (Cth) and sections 912A(1)(c)
and 912D(1) of the Corporations Act 2001 (Cth) (available at
https://afma.com.au/standards/standard-documentation/unfair-contract-termsasic-class-no-action-letter
(https://afma.com.au/standards/standard-documentation/unfair-contract-termsasic-class-no-action-letter)
) as amended or updated from time to time, as applicable;
24 if a financial intermediary, as that term is used in Article 2(d)
of the EU Prospectus Regulation and Article 2(d) of the UK Prospectus
Regulation, that the Placing Shares purchased by it in the Placing will not be
acquired on a non-discretionary basis on behalf of, nor will they be acquired
with a view to their offer or resale to, persons in a member state of the EEA
other than Qualified Investors or persons in the United Kingdom other than
Relevant Persons, or in circumstances in which the prior consent of the Banks
has been given to the offer or resale;
25 that it has not offered or sold and will not offer or sell any
Placing Shares to persons in the United Kingdom prior to Admission, except to
Relevant Persons or otherwise in circumstances which have not resulted and
which will not result in an offer to the public in the United Kingdom within
the meaning of section 85(1) of the FSMA or the UK Prospectus Regulation;
26 that it has not offered or sold and will not offer or sell any
Placing Shares to persons in the EEA prior to Admission except to Qualified
Investors or otherwise in circumstances which have not resulted in and which
will not result in an offer to the public in any member state of the EEA
within the meaning of the EU Prospectus Regulation;
27 that it has not offered or sold and will not offer or sell any
Placing Shares to persons in Australia in circumstances which contravene Part
6D.2 of the Corporations Act 2001 (Cth);
28 that it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21 of the
FSMA) relating to the Placing Shares in circumstances in which section 21(1)
of the FSMA does not require approval of the communication by an authorised
person;
29 that it has complied and will comply with all applicable laws
with respect to anything done by it in relation to the Placing Shares
(including all relevant provisions of the FSMA in the United Kingdom);
30 if it is resident in Canada:
i. it understands that the offering of the Placing Shares is being made
on a private placement basis only in the provinces of Ontario, Alberta,
British Columbia and Quebec(the "Canadian Private Placement Provinces") on a
basis exempt from the requirement that the Company prepare and file a
prospectus with the relevant securities regulatory authorities in Canada and
as such, any resale of the Placing Shares must be made in accordance with an
exemption from, or in a transaction not subject to, the prospectus
requirements of applicable securities laws;
ii. it is resident in one of the Canadian Private Placement Provinces;
iii. it is purchasing the Placing Shares as principal, or is deemed to be
purchasing as principal in accordance with applicable Canadian securities
laws, for investment only and not with a view to resale or redistribution;
iv. it is not an individual;
v. it is an "accredited investor" as such term is defined in section 1.1
of National Instrument 45-106 Prospectus Exemptions, or, in Ontario, as such
term is defined in section 73.3(1) of the Securities Act (Ontario), as
applicable;
vi. it is a "permitted client" as such term is defined in section 1.1 of
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing
Registrant Obligations;
vii. it understands the Company is not a "reporting issuer", as such term is
defined under applicable Canadian securities legislation, in any province or
territory of Canada, its securities are not listed on any stock exchange in
Canada and there is currently no public market for the Placing Shares in
Canada. It further understands the Company currently does not intend to file a
prospectus or similar document with any securities regulatory authority in
Canada qualifying the resale of the Placing Shares to the public in any
province or territory of Canada or listing its securities on any stock
exchange in Canada and therefore, there will be no public market in Canada for
the Placing Shares;
viii. it understands that any resale of the Placing Shares acquired by it in
the Placing must be made in accordance with applicable Canadian securities
laws, which may vary depending on the relevant jurisdiction, and which may
require resales to be made in accordance with Canadian prospectus
requirements, a statutory exemption from the prospectus requirements, in a
transaction exempt from the prospectus requirements or otherwise under a
discretionary exemption from the prospectus requirements granted by the
applicable local Canadian securities regulatory authority and that these
resale restrictions may under certain circumstances apply to resales of the
Placing Shares outside of Canada;
ix. it understands that information regarding the Placing and the Placing
Shares has not been prepared with regard to matters that may be of particular
concern to Canadian Placees and accordingly, should be read with this in mind.
It further understands, the Placing Shares are not denominated in Canadian
dollars. Therefore, the value of the Placing Shares to a Canadian Placee will
fluctuate with changes in the exchange rate between the Canadian dollar and
the currency of the Placing Shares;
x. to the best of its knowledge, none of the funds to be provided by or on
behalf of it for subscription to the Company or its agents are being tendered
on behalf of a person or entity who has not been identified to it; and
xi. it understands that for purposes of compliance with Canada's Anti-Spam
Legislation, by submitting a bid and/or participating in the Placing is
considered consent to receive communications from the Company and its
representatives and that such communications will contain the appropriate
instructions for opting out of future communications.
31 it understands securities legislation in the Canadian Private
Placement Provinces may provide it with remedies for rescission or damages if
materials regarding the Placing delivered to it contains a misrepresentation,
provided that the remedies for rescission or damages are exercised by it
within the time limit prescribed by the securities legislation of its province
of residence. It further understands it should refer to any applicable
provisions of the securities legislation of its province of residence for
particulars of these rights or consult with a legal advisor.
32 that it and any person acting on its behalf is entitled to
acquire the Placing Shares under the laws of all relevant jurisdictions and
that it has all necessary capacity and has obtained all necessary consents and
authorities to enable it to commit to this participation in the Placing and to
perform its obligations in relation thereto (including, without limitation, in
the case of any person on whose behalf it is acting, all necessary consents
and authorities to agree to the terms set out or referred to in this Appendix)
and will honour such obligations;
33 that it (and any person acting on its behalf) has the funds
available to pay for, and will make payment in respect of the Placing Shares
allocated to it, in accordance with this Appendix on the due time and date set
out herein (unless otherwise agreed), failing which the relevant Placing
Shares may be placed with other acquirers or sold as the Banks may in their
sole discretion determine and without liability to such Placee, who will
remain liable for any amount by which the net proceeds of such sale falls
short of the product of the Issue Price and the number of Placing Shares
allocated to it and may be required to bear any stamp duty, stamp duty reserve
tax or other similar taxes (together with any interest, fines or penalties)
which may arise upon the sale of such Placee's Placing Shares;
34 that it (and any person acting on its behalf) is entitled to
purchase the Placing Shares under the laws of all relevant jurisdictions which
apply to it and that it has fully observed such laws and obtained all such
governmental and other guarantees, permits, authorisations, approvals and
consents which may be required thereunder and complied with all necessary
formalities and that it has not taken any action or omitted to take any action
which will or may result in the Banks, the Company or any of their respective
affiliates, directors, officers, agents, employees or advisers of any of them
acting in breach of the legal or regulatory requirements of any jurisdiction
in connection with the Placing;
35 that none of the Banks, nor any of their respective affiliates,
nor any person acting on behalf of them, is making any recommendations to it,
advising it regarding the suitability of any transactions it may enter into in
connection with the Placing and that participation in the Placing is on the
basis that it is not and will not be a client of any Bank or any of their
respective affiliates and that the Mangers and any of their respective
affiliates have no duties or responsibilities to it for providing the
protections afforded to its respective clients or customers or for providing
advice in relation to the Placing nor in respect of any representations,
warranties, undertakings or indemnities contained in the Placing Agreement nor
for the exercise or performance of any of the Banks' rights and obligations
thereunder including any rights to waive or vary any conditions or exercise
any termination right;
36 that the person whom it specifies as the person to whom the
Placing Shares are allocated will be: (i) itself; (ii) its nominee, as the
case may be; or (iii) a person for whom it is contracting as agent or nominee.
None of the Banks, any of their respective affiliates or the Company will be
responsible for any liability to stamp duty or stamp duty reserve tax or other
similar taxes (together with any interest, fines or penalties) resulting from
a failure to observe this requirement ("Indemnified Taxes"). Each Placee and
any person acting on behalf of such Placee agrees to participate in the
Placing and it agrees to indemnify the Company, the Banks and their respective
affiliates on an after-tax basis in respect of any Indemnified Taxes;
37 that, if it is an existing shareholder of the Company to whom any
Placing Shares are allocated, it acknowledges that it will be excluded from
the Open Offer and further irrevocably agrees not to subscribe for any new
Ordinary Shares of the Company as part of the Open Offer and to inform any
nominee or custodian holding Ordinary Shares on its behalf that it is not
permitted to participate in the Open Offer and to instruct them not to
subscribe for any new Ordinary Shares as part of the Open Offer on its behalf
accordingly;
38 that any agreements entered into by it pursuant to the terms and
conditions set out in this Appendix, and all non-contractual or other
obligations arising out of or in connection with them, shall be governed by
and construed in accordance with the laws of England and Wales and it submits
(on behalf of itself and on behalf of any person on whose behalf it is acting)
to the exclusive jurisdiction of the English courts as regards any claim,
dispute or matter arising out of any such contract (including any dispute
regarding the existence, validity or termination of such contract or relating
to any non-contractual or other obligation arising out of or in connection
with such contract), except that enforcement proceedings in respect of the
obligation to make payment for the Placing Shares (together with any interest
chargeable thereon) may be taken by either the Company or the Banks in any
jurisdiction in which the relevant Placee is incorporated or in which any of
its securities have a quotation on a recognised stock exchange;
39 to indemnify on an after tax basis and hold the Company, the
Banks and their respective affiliates, directors, officers, employees or
agents of any of them harmless from any and all costs, claims, liabilities and
expenses (including legal fees and expenses) arising out of or in connection
with any breach of the representations, warranties, acknowledgements,
agreements and undertakings in this Appendix and further agrees that the
provisions of this Appendix shall survive after completion of the Placing;
40 that if it has received any inside information about the Company
in advance of the Placing, it has not: (i) dealt in the securities of the
Company; (ii) encouraged another person to deal in the securities of the
Company; or (iii) disclosed such information to any person except as permitted
by applicable law, prior to such information being made publicly available;
41 that the Placing Shares are expected to be issued to it through
CREST;
42 where it is acquiring the Placing Shares for one or more managed
accounts, that it is authorised in writing by each managed account to acquire
the Placing Shares for each managed account and it has full power to make the
acknowledgements, representations and agreements herein on behalf of each such
account;
43 if it is a pension fund or investment company, that its purchase
of Placing Shares is in full compliance with applicable laws and regulations;
and
44 that the Company, the Banks and their respective affiliates and
others will rely upon the truth and accuracy of the foregoing representations,
warranties, acknowledgements and undertakings which are given to each Bank on
its own behalf and on behalf of the Company and are irrevocable.
The agreement to settle a Placee's acquisition of Placing Shares (and/or the
acquisition by a person for whom such Placee is contracting as agent or
nominee) free of UK stamp duty and stamp duty reserve tax depends on the
settlement relating only to an acquisition by it and/or such person for whom
it is contacting as agent or nominee direct from the Company for the Placing
Shares in question. Such agreement also assumes that the Placing Shares are
not being acquired in connection with arrangements to issue depositary
receipts or to issue or transfer the Placing Shares into a clearance service.
If there are any such arrangements, or the settlement relates to any other
dealing in the Placing Shares, stamp duty or stamp duty reserve tax or other
similar taxes may be payable, for which neither the Company nor the Banks nor
their respective affiliates will be responsible and the Placees shall
indemnify the Company, the Banks and their respective affiliates on an
after-tax basis for any stamp duty or stamp duty reserve tax paid by them in
respect of any such arrangements or dealings. If this is the case, each Placee
should seek its own advice and notify the Banks accordingly.
In addition, Placees should note that they will be liable for any stamp duty
and all other stamp, issue, securities, transfer, registration, documentary or
other duties or taxes (including any interest, fines or penalties relating
thereto) payable outside the UK by them or any other person on the acquisition
by them of any Placing Shares or the agreement by them to acquire any Placing
Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that
the Banks and their respective affiliates do not owe any fiduciary or other
duties to any Placee in respect of any acknowledgments, confirmations,
representations, warranties, undertakings or indemnities in the Placing
Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and
agrees that any Banks or any of their affiliates may, at their absolute
discretion, agree to become a Placee in respect of some or all of the Placing
Shares.
When a Placee or person acting on behalf of the Placee is dealing with a Bank,
any money held in an account with such Bank on behalf of the Placee and/or any
person acting on behalf of the Placee will not be treated as client money
within the meaning of the rules and regulations of the FCA made under the
FSMA. Each Placee acknowledges that the money will not be subject to the
protections conferred by the client money rules; as a consequence, this money
will not be segregated from such Bank's money in accordance with the client
money rules and will be used by such Bank in the course of its own business
and the Placee will rank only as a general creditor of such Bank.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser.
The rights and remedies of the Banks and the Company under these terms and
conditions are in addition to any rights and remedies which would otherwise be
available to each of them and the exercise or partial exercise of one will not
prevent the exercise of others.
All times and dates in the Announcement may be subject to amendment. The Banks
shall notify the Placees and any person acting on behalf of the Placees of any
changes.
APPENDIX V
DEFINITIONS
The following definitions apply in this announcement, unless the context
otherwise requires:
"2024 Credit Agreement" credit agreement dated 10 May 2024 between certain subsidiaries of ECI and
among others, Alter Domus (US) LLC as term agent and PNC Bank, National
Association as revolving agent
"Acquired Business" a company or business acquired by the Company pursuant to its strategy as
described in Appendix III (Risk Factors) of this announcement
"Acquisition" the proposed acquisition by the Company of ECI
"Acquisition Agreement" the share purchase agreement between the Company and the Seller in relation to
the Acquisition, dated 6 June 2025
"Acquisition Completion" completion of the Acquisition in accordance with the Acquisition Agreement
"Admission" the admission of the New Ordinary Shares to trading on AIM becoming effective
in accordance with the AIM Rules
"Admission Document" the AIM admission document to be published by the Company in connection with
the Open Offer, Admission and Readmission
"AIM" AIM, the market of that name operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the London Stock Exchange from time
to time
"Arrangers" has the meaning given to it in Appendix VIII (Additional Information) of this
announcement
"Articles" the articles of association of the Company adopted by special resolution of
the Company passed on 8 July 2024 and which became effective on 11 July 2024
"Banks" Investec, Barclays, BNPP and Citigroup, and each, a "Bank"
"Barclays" Barclays Bank PLC
"Basic Entitlement" entitlement to subscribe for Open Offer Shares, allocated to a Shareholder
pursuant to the Open Offer and available only to Qualifying Shareholders
"BNPP" BNP PARIBAS
"Bribery Act" UK Bribery Act of 2010
"Book Build" the accelerated book building process in connection with the Placing
"Capital Raise" the Placing, the US Private Placement, the Open Offer and the Connected
Persons Subscription
"Citigroup" Citigroup Global Markets Limited
"Companies Law" the Companies (Jersey) Law 1991 (as amended) and subordinate legislation
thereunder
"Company" or "Rosebank" Rosebank Industries plc
"Connected Persons" the Rosebank Co-Founders and the Non-Executive Directors
"Connected Persons Shares" the 4,359,010 Ordinary Shares to be subscribed for in connection with the
Connected Persons Subscription
"Connected Persons Subscription" the subscription by the Connected Persons for the Connected Persons Shares,
conditional on Admission, at the Issue Price at the time of the Placing, the
US Private Placement and the Open Offer but outside of the Placing, the US
Private Placement and the Open Offer
"CREST" the relevant system (as defined in the CREST Regulations) in respect of which
Euroclear is the Operator (as defined in those CREST Regulations)
"CREST Regulations" as applicable, the UK Uncertificated Securities Regulations 2001 or the
Companies (Uncertificated Securities) (Jersey) Order 1999, in each case as
amended from time to time
"Current US Administration" means the US administration inaugurated on 20 January 2025
"DCFX" deal contingent foreign exchange forward(s) entered into with certain
financial institution(s)
"Debt Commitment Documents" the debt commitment letter entered into between the Company and certain of its
relationship banks on 6 June 2025
"Directors" the directors of the Company, whose names are set out in Appendix VIII
(Additional Information) of this announcement
"EBITDA" net income adjusted for interest, tax, depreciation and amortisation
"ECI" Electrical Components International
"ECI Group" ECI and its subsidiaries from time to time
"ECI Supplier" ECI and Electrical Components International S.a.r.l.
"EEA" European Economic Area
"Energy Holdings" Energy Holdings (Cayman) Ltd
"Enlarged Group" the Group including ECI following Acquisition Completion
"Enlarged Share Capital" the issued share capital of the Company on Admission comprising the Existing
Ordinary Shares and the New Ordinary Shares
"Euroclear" Euroclear UK & Ireland Limited, the Operator (as defined in the CREST
Regulations) of CREST
"EU Prospectus Regulation" Regulation (EU) 2017/1129 (as amended)
"Ex-Entitlement Date" the date on which the Ordinary Shares are marked 'ex' for entitlement by the
London Stock Exchange under the Open Offer, being 11 June 2025
"Excess Entitlement" Open Offer Shares in excess of the Basic Entitlement, but not in excess of the
total number of Open Offer Shares, allocated to a Shareholder, pursuant to the
Open Offer and available only to Qualifying Shareholders
"Executive Directors" Simon Peckham and Matt Richards
"Existing Ordinary Shares" the Ordinary Shares in issue at the date of the Admission Document
"Facilities" Facility A and Facility B
"Facilities Agreement" senior term and revolving credit facilities agreement to be entered into
between the Original Obligors and the Lenders, among others
"Facility A" term loan commitments in an aggregate principal amount of $400,000,000
pursuant to the Debt Commitment Documents
"Facility B" multi-currency revolving commitments in an aggregate principal amount of
$500,000,000 pursuant to the Debt Commitment Documents
"FCPA" US Foreign Corrupt Practices Act of 1977
"Financial Conduct Authority" or "FCA" the UK Financial Conduct Authority
"Flex-Tec" Flex-Tec, Inc.
"Flex-Tec Seller" Charles Ragnar Fitch
"Flex-Tec SPA" stock purchase agreement dated 21 June 2024 between ECI and the Flex-Tec
Seller
"Form of Proxy" the form of proxy to accompany the Admission Document relating to the General
Meeting
"FSMA" the UK Financial Services and Markets Act 2000, as amended
"FY2022" the year ended 31 December 2022
"FY2023" the year ended 31 December 2023
"FY2024" the year ended 31 December 2024
"General Meeting" the general meeting of the Company to be held to approve the Resolutions
"Goldman Sachs" Goldman Sachs International
"Group" the Company and its subsidiary undertakings from time to time
"HVAC" Heating, ventilation and air conditioning
"Incentive Shares" the incentive shares of no par value in the capital of the Company, having the
rights set out in the Articles
"Internal Revenue Code" US Internal Revenue Code of 1986, as amended
"Institutional Capital Raise" the Placing and the US Private Placement
"Investec" Investec Bank plc
"IRS" Internal Revenue Service
"Issue Price" £3.00 per New Ordinary Share
"Jersey" the Bailiwick of Jersey
"Joint Global Coordinators" Investec, Barclays and Citigroup, and each, a "Joint Global Coordinator"
"July 2024 Admission" the admission of the Company to AIM, on 11 July 2024
"July 2024 Admission Document" the admission document published by the Company in connection with the July
2024 Admission
"July Placing" the placing pursuant to the July Placing Agreement
"Latest Practicable Date" means 5 June 2025, being the latest business day prior to the publication of
this announcement
"Lenders" the financial institutions named as original lenders pursuant to the
Facilities Agreement
"London Stock Exchange" the London Stock Exchange plc
"M&A" mergers and acquisitions
"Management Warranty Deed" the management warranty deed in respect of the Acquisition between the Company
and certain members of management of ECI and dated 6 June 2025
"Melrose" Melrose Industries PLC (or, where the context requires, its predecessor
entities)
"Nominated Adviser" Investec
"Non-Executive Directors" Justin Dowley and Christopher Miller
"New Debt Facilities" the debt financing to be made available pursuant to an English law senior term
and revolving facilities agreement to be entered into between, amongst others,
Rosebank Industries Holdings Limited as the company and certain financial
institutions named therein as original lenders
"New Ordinary Shares" the Placing Shares, the US Private Placement Shares, the Connected Persons
Shares and the Open Offer Shares
"Official List" the Official List of the Financial Conduct Authority
"Omni" Omni Connection International, Inc.
"Omni Buyer" Omni Buyer LLC
"Omni Earn-Out" earn-out payable to the Omni Sellers
"Omni Sellers" the sellers pursuant to the Omni SPA, including (amongst others) Henry Cheng
"Omni SPA" stock purchase agreement dated 26 April 2021 between Omni Buyer, Omni Targets
and the Omni Sellers
"Omni Targets" Omni, Zima and Xiamen RH
"Open Offer" the conditional offer to be made available by the Company to Qualifying
Shareholders inviting them to apply for the Open Offer Shares at the Issue
Price on the terms and subject to the conditions to be set out in the
Admission Document
"Open Offer Entitlement" entitlement to subscribe for New Ordinary Shares pursuant to the Basic
Entitlement and Excess Entitlement
"Open Offer Shares" up to 2,248,643 New Ordinary Shares to be issued pursuant to the Open Offer
"Ordinary Shares" the ordinary shares of no par value in the capital of the Company
"Original Obligors" Rosebank (as original parent), RIHL (as the company) and Gilchrist BidCo Corp.
(as bidco)
"Overseas Shareholder" any Shareholder whose registered address is not in the UK or Jersey
"Placee" has the meaning given to it in Appendix IV (Terms and Conditions of the
Placing) of this announcement
"Placing" the proposed placing of the Placing Shares by the Company at the Issue Price
"Placing Agreement" the placing agreement dated 6 June 2025 between Barclays, BNPP, Citigroup,
Investec and the Company relating to the Placing
"Placing Shares" the New Ordinary Shares which are the subject of the Placing
"PRA" the Prudential Regulation Authority
"Previous Joint Bookrunners" the joint bookrunners in relation to the July 2024 Admission
"Qualifying Shareholder" a Shareholder with a registered address in the UK or Jersey on the Record Date
and who has not been invited to participate in the Placing, the US Private
Placement or the Connected Persons Subscription
"Readmission" the admission of the Enlarged Group to trading on AIM becoming effective in
accordance with the AIM Rules
"Record Date" 9 June 2025
"Relevant Person" has the meaning given to it in Appendix IV (Terms and Conditions of the
Placing) of this announcement
"Resolutions" the resolutions to be passed at the General Meeting
"Restricted Period" has the meaning given to it in Appendix VIII (Additional Information) of this
announcement
"Restricted Territory" has the meaning given to it in Appendix IV (Terms and Conditions of the
Placing) of this announcement
"RIHL" Rosebank Industries Holdings Limited
"Rosebank Board" the board of directors of the Company
"Rosebank Co-Founders" the Executive Directors and the Senior Executives
"Rothschild & Co" N.M. Rothschild & Sons Limited
"SDRT" Stamp Duty and Stamp Duty Reserve Tax
"Seller" Energy Cerberus Holdings LP
"Senior Executives" Joff Crawford, Jim Slattery and Geoff Morgan
"Series A Incentive Shares" the Incentive Shares designated as "Series A" and having the rights set out in
the Articles
"Series B Incentive Shares" the Incentive Shares designated as "Series B" and having the rights set out in
the Articles
"Series C Incentive Shares" the Incentive Shares designated as "Series C" and having the rights set out in
the Articles
"Shareholder" a holder of Ordinary Shares
"Transaction Resolutions" the resolutions of the Company to effect the Acquisition and the Capital Raise
"UK" the United Kingdom of Great Britain and Northern Ireland
"UK Prospectus Regulation" the EU Prospectus Regulation as it forms part of the domestic law of the UK by
virtue of the EUWA
"US" or "United States" the United States of America, its territories and possessions, any state of
the United States of America and the District of Columbia
"US GAAP" the United States Generally Accepted Accounting Principles
"USMCA" the United States-Mexico-Canada Agreement
"US Private Placement" the conditional subscription by a limited number of institutional investors in
the United States for the US Private Placement Shares offered by the Company
at the Issue Price at the time of the Placing but outside of the Placing
"US Private Placement Shares" the New Ordinary Shares to be subscribed for in connection with the US Private
Placement
"Warrantors" has the meaning given to that term in the MWD
"Xiamen RH" Xiamen Rei Ho Electronics, Ltd.
"Zima" Zima Corporation
Appendix VI
Historical Financial Information of the ECI Group
ECI, via two further holding companies in its corporate structure, is the
parent company of Energy Holdings (Cayman) Ltd ("Energy Holdings"), which is
the entity within the ECI Group at which level ECI's consolidated financial
statements are prepared and audited. ECI, together with Energy TopCo Ltd and
Energy MidCo Ltd (the "Excluded Entities"), was incorporated in connection
with the acquisition by Cerberus of the ECI Group in 2018, solely for the
purpose of holding the equity interests in Energy Holdings and its
subsidiaries. The Excluded Entities have not traded since their incorporation
and have engaged in limited activity other than ordinary course corporate
actions and filings connected with their ownership of the ECI Group.
Therefore, the financial information referred to below relates to Energy
Holdings and its subsidiaries rather than ECI and its subsidiaries, and
therefore excludes any historical financial information in respect of the
Excluded Entities.
The audited consolidated financial statements for Energy Holdings and its
subsidiaries for the years ended 31 December 2022, 31 December 2023 and 31
December 2024 are set out in section A of this Appendix. Section B of this
Appendix contains adjusted consolidated financial information for Energy
Holdings and its subsidiaries for the years ended 31 December 2022, 31
December 2023 and 31 December 2024, and adjusted financial information for the
four months ended 30 April 2025. The financial information from which the
adjusted financial information for the four months ended 30 April 2025 has
been derived is extracted from the unaudited management accounts of ECI, is
unaudited and is prepared on a consistent basis with the accounting policies
applied to the audited consolidated financial statements presented in section
A of Appendix VI of this announcement (as it relates to the financial
information presented). As at the date of this announcement, this financial
information has not been subject to audit or review by the Company's or ECI's
auditors. It should not be seen as a substitute for audited or reviewed
financial information and there can be no assurance that this financial
information will not be subject to material amendments following completion of
the relevant audit procedures. Accordingly, investors are cautioned not to
place undue reliance on this information. If any unaudited financial
information is subject to amendment following the completion of audit
procedures, this may have an adverse effect on the price of the Ordinary
Shares. For a further discussion of the risks involved please see ECI
Financial Information in section E (General Risks) of Appendix III of this
announcement.
Energy Holdings has historically prepared its consolidated financial
statements in accordance with US generally accepted accounting principles ("US
GAAP") and, unless otherwise indicated, the financial information prepared at
the Energy Holdings level set out in this Appendix has been prepared under US
GAAP. As at the date of this announcement, the Directors have not had
sufficient access to the accounting records of the ECI Group in order to
prepare a complete reconciliation of the US GAAP accounts to IFRS. However,
the Directors believe that there are limited differences between the US GAAP
accounts presented in this Appendix and any conversion of this financial
information under IFRS. Rosebank currently prepares its financial information
under IFRS and (assuming Acquisition Completion occurs) the Enlarged Group
will continue to do so immediately post Readmission.
Unless otherwise specified, the financial information included in this
announcement is presented in pound sterling, in respect of the Company and the
Group, and US$ in respect of the ECI Group, including Energy Holdings and its
subsidiaries.
Non-US GAAP financial measures in connection with the ECI Group
This announcement contains certain non-US GAAP financial measures and ratios
("Non-GAAP Measures"), including EBITDA, Adjusted EBITDA, Adjusted Operating
Profit, Pro forma Adjusted EBITDA, Pro forma Adjusted Operating Profit,
Pre-acquisition EBITDA, Pre-acquisition Operating Profit, Pre-acquisition
Revenue and Pro forma Revenue, that are not required by, or presented in
conformity with, US GAAP.
Management uses these measures to evaluate the operating performance of the
ECI Group and believe that these measures are helpful to investors as a means
of evaluating the ECI Group's performance. However, these Non-GAAP Measures
are not measures of operating performance under US GAAP, or any other
generally accepted accounting principles.
The Non-GAAP Measures are each defined below:
· "EBITDA" is defined as net income adjusted for interest, tax,
depreciation and amortisation;
· "Adjusted EBITDA" is defined as EBITDA before the impact of the
"Adjusting Items";
· "Adjusted Operating Profit" is defined as net income adjusted for
interest, tax, amortisation of intangibles and before the impact of the
"Adjusting Items";
· "Pre-acquisition EBITDA" and "Pre-acquisition Operating Profit"
are defined as the pre-acquisition results of the businesses acquired;
· "Pro forma Adjusted EBITDA" is defined as Adjusted EBITDA
including the Pre-acquisition EBITDA;
· "Pro forma Adjusted Operating Profit" is defined as Adjusted
Operating Profit including Pre-acquisition Operating Profit;
· "Pre-acquisition Revenue" is defined as the pre-acquisition
revenue of the businesses acquired; and
· "Pro forma Revenue" is defined as revenue including
Pre-acquisition Revenue.
Certain of the financial measures above are calculated on an adjusted basis.
"Adjusting Items" include those items presented in section B of this Appendix.
The presentation of financial measures on an adjusted basis is not in
conformity with US GAAP or any other generally accepted accounting principles.
Reconciliations of each of the Non-GAAP Measures to the most directly
comparable measure prepared in accordance with US GAAP are presented in
section B of this Appendix.
You should not consider such measurements as superior to, or substitutes for,
operating profit or profit before tax (determined in accordance with US GAAP)
as a measure of the ECI Group's operating performance. Non-GAAP Measures
presented in this announcement may not be comparable to other similarly titled
measures used by other companies. You should use the Non-GAAP Measures to
supplement, rather than replace, your evaluation of the performance of the ECI
Group under US GAAP.
Section A - Audited consolidated financial statements of Energy Holdings and
its subsidiaries for FY2022, FY2023 and FY 2024
Section B - Alternative performance measures
$m 2022 2023 2024 YTD
Apr 2025
Revenue 1,256 1,365 1,264 404
Pre-acquisition Revenue 79 34 17 -
Pro forma Revenue 1,335 1,399 1,281 404
EBITDA (as derived from US GAAP financial statements) 120 138 132 59
Adjusting Items((1))
Cerberus management fees and costs((2)) 2 4 3 1
Refinancing of Cerberus debt((3)) - - 13 -
Restructuring and footprint optimisation costs((4)) 20 12 12 4
Acquisition earn-out payment((5)) - 3 10 -
Acquisition related costs 4 2 4 1
COVID related costs 1 - - -
Other Adjusting Items((6)) 7 14 15 3
Adjusted EBITDA 154 173 189 68
Pre-acquisition EBITDA 21 9 4 -
Pro forma Adjusted EBITDA 175 182 193 68
Pro forma Adjusted Operating Profit 141 152 166 60
((1)) "Adjusting items" are those classified as non-recurring or exceptional
((2)) Includes sponsor related management fees and consultancy costs
associated with business and management reporting improvement initiatives
((3)) Includes the loss on early extinguishment of debt
((4)) Includes central severance and redundancy costs, as well as certain
Mexican footprint consolidation costs
((5)) Includes the Omni Earn-Out pursuant to the Omni SPA
((6)) Other "Adjusting Items" includes stock compensation expense, unrealised
foreign exchange gains and sundry non-recurring items
((7)) Adjusted results on a divisional level for 2023, 2024 and YTD Apr 2025
are as per the below:
Adjusted Divisional Financials
Revenue ($m) 2023 2024 YTD Apr 2025
Electrification and Industrial 658 557 169
Appliances and HVAC 707 707 235
Total 1,365 1,264 404
Adjusted Operating Profit ($m) (% margin) 2023 2024 YTD Apr 2025
Electrification and Industrial 137 (21%) 117 (21%) 37 (22%)
Appliances and HVAC 55 (8%) 90 (13%) 37 (16%)
Central costs (49) (45) (14)
Total 143 (10%) 162 (13%) 60 (15%)
Adjusted EBITDA ($m) (% margin) 2023 2024 YTD Apr 2025
Electrification and Industrial 151 (23%) 128 (23%) 40 (24%)
Appliances and HVAC 73 (10%) 106 (15%) 42 (18%)
Central costs (49) (45) (14)
Total 175 (13%) 189 (15%) 68 (17%)
Section C - Profit forecast for FY2025
Rosebank has announced that: ECI will be acquired, for cash, for an enterprise
value of less than $1.9 billion (£1.5 billion) on a debt and cash free basis,
subject to adjustments, representing approximately 9x expected 2025 Adjusted
EBITDA and 9.8x 2024 Pro forma Adjusted EBITDA.
This statement amounts to a "profit forecast" for the purposes of the AIM
Rules (the "ECI Profit Forecast").
The ECI Profit Forecast is intended to present Shareholders with information
to assist them in understanding the financial performance and financial
position of ECI. It has been prepared on a going concern basis and in a manner
that is comparable with the preparation of the audited consolidated financial
statements and the adjusted consolidated financial information of Energy
Holdings and its subsidiaries (as set out in sections A and B of this
Appendix). It assumes continuity of normal business activities and the
realisation of assets and settlement of liabilities in the ordinary course of
business, as described in more detail below. The ECI Profit Forecast is
presented for informational purposes only and is not intended to present or be
indicative of future results from operations or financial position for any
future period or as of any future date.
The ECI Profit Forecast is based upon the reasonable assumptions and
predictions listed below over assumed customers, overhead costs and turnover.
The Company cannot be certain that these assumptions will prove to be correct,
and a change in these factors could materially change the outcome of the ECI
Profit Forecast.
· Principal assumptions that are within ECI's control are as
follows:
o no material deterioration in the Enlarged Group's relationship with
customers and suppliers;
o the Enlarged Group's capital expenditure is aligned to expectation;
o no material change in the operational strategy of the Enlarged Group;
o no adverse event that will have a material impact on the Enlarged Group's
future credit ratings; and
o no material change in the current key management.
· Principal assumptions that are outside ECI's control are as
follows:
o continued efficiency improvements and cost savings as a result of the
successful integration of the businesses acquired or to be acquired into its
ongoing operations;
o no change in legislation, tariffs, or regulatory environment in the
Enlarged Group's principal markets that materially impact its operations or
the accounting principles or standards it follows;
o no adverse event that will have a material impact on the Enlarged Group's
supply chain, transportation or logistics networks;
o no adverse event driven by external parties that will have a material
impact on the reputation and the brand value of the Enlarged Group;
o no material change, particularly in regions in which the Enlarged Group
operates, to the current prevailing global macroeconomic and political
conditions (including any recession, geopolitical tension, further escalation
of conflict or war);
o no material change in market conditions within the Electrification and
Industrial division and Appliances and HVAC division in respect of customer
demand or the competitive landscape;
o no material change in relevant foreign exchange rates compared with ECI's
estimates not mitigated by current hedging arrangements;
o no material change in the Enlarged Group's labour, marketing or
manufacturing costs driven by external parties or regulations;
o no material change in inflation, interest rates or tax rates in the
Enlarged Group's principal markets;
o no adverse event that will have a material impact on the Enlarged Group's
financial performance; and
o no litigation, contractual dispute or regulatory action which is material
in the context of ECI.
The Directors of Rosebank confirm that the ECI Profit Forecast has made after
due and careful enquiry. Additionally, Investec (in its capacity as Rosebank's
nominated adviser) confirms to Rosebank that it has satisfied itself that the
ECI Profit Forecast has made after due and careful enquiry by the Directors of
Rosebank.
Section D - Summary of key differences between US GAAP and IFRS
As at the date of this announcement, the Directors have not had sufficient
access to the accounting records of the ECI Group in order to prepare a
complete reconciliation of the US GAAP accounts to IFRS. However, the
Directors believe that there are limited differences between the US GAAP
accounts presented in this Appendix and any conversion of this financial
information under IFRS. Financial information relating to the ECI Group has
historically been prepared under US GAAP and, unless otherwise indicated, the
historical financial information in this Appendix has been prepared under US
GAAP. Rosebank currently prepares its financial information under IFRS and
will continue to do so immediately post Readmission.
IFRS differs in certain respects from US GAAP as applied by the ECI Group in
its historical financial information relating to certain policies for
recognition, measurement and presentation. Based on the limited information
available, the Directors have identified certain differences in accounting
policies between those applied in the US GAAP historical financial information
and the IFRS accounting policies of Rosebank. While the Directors believe that
they have identified the differences, there may be additional differences not
identified and set out below, which may be material. Potential areas of
differences include:
· Under US GAAP, leases are classified as either operating or
finance leases. In contrast, IFRS employs a single recognition and measurement
model for all leases, like the finance lease treatment under US GAAP. IFRS
recognises the lease expenses bifurcated into depreciation of the asset and
interest on the lease liability for all leases whereas under US GAAP the
operating lease expenses are recorded as a single rent expense in the income
statement.
· Under US GAAP, development costs are expensed as incurred,
subject to certain exceptions. Development costs may be capitalised under IFRS
if technical and economic feasibility of a project can be demonstrated in
accordance with certain criteria.
· While both US GAAP and IFRS require consideration of uncertain
tax positions, their recognition and measurement can differ.
· In addition, the application of Rosebank's IFRS accounting
policies to the ECI Group's business post-combination may result in certain
balances and transactions being classified and presented differently to how
they have been presented in its US GAAP historical financial information.
Appendix VII
UK, Jersey and US tax considerations
1. UK Taxation
The following comments are a general guide to certain UK tax considerations
and do not purport to be a complete analysis of all potential UK tax
consequences of acquiring, holding or disposing of Ordinary Shares. They are
based on current UK legislation and what is understood to be the current
practice of HM Revenue & Customs (which may not be binding on HM Revenue
& Customs) as at the date of this document, both of which may change,
possibly with retroactive effect.
Except where otherwise specifically stated, the comments below are intended to
apply only to Shareholders: (i) who are resident in the UK for UK tax purposes
(and, in the case of individuals, who are not eligible for and claiming relief
from the UK taxation of foreign income and gains under Chapter 1, Part 2 of
the Finance Act); (ii) to whom split-year treatment does not apply; (iii) who
are and will be the absolute beneficial owners of their Ordinary Shares and
any dividends paid in respect of them; and (iv) who hold, and will hold,
Ordinary Shares as investments (otherwise than through an individual savings
account or a pension arrangement) and not as securities to be realised in the
course of a trade. The tax position of certain other categories of
Shareholders who are subject to special rules (such as persons acquiring their
Ordinary Shares in connection with employment, dealers in securities,
insurance companies or collective investment schemes) is not considered.
The comments below do not constitute tax advice. Prospective investors who are
in any doubt as to their tax position or who are subject to tax in a
jurisdiction other than the UK should consult their own professional advisers.
1.1. Taxation of Dividends
Where the Company pays dividends no UK withholding taxes are required to be
deducted at source. Shareholders who are resident in the UK for tax purposes
will, depending on their circumstances, be liable to UK income tax or
corporation tax on those dividends.
1.1.1. UK tax resident individuals
When the Company pays a dividend to an individual Shareholder who is resident
(for tax purposes) in the UK (a "UK resident individual shareholder"), the
amount of income tax payable on the receipt, if any, will depend on the
individual's own personal tax position.
No UK income tax should be payable by a UK resident individual shareholder if
the amount of dividend income received, when aggregated with the Shareholder's
other dividend income in the year of assessment, does not exceed the dividend
allowance. The dividend allowance for the tax years 2025/2026 is £500.
Dividend income in excess of the dividend allowance is subject to UK income
tax at the following rates for the tax years 2025/2026:
a) 0% to the extent that it falls within the personal
allowance;
b) 8.75% to the extent that it falls within the basic rate
band;
c) 33.75% to the extent it falls within the higher rate band; and
d) 39.35% to the extent it falls within the additional rate band.
For the purposes of determining which of the taxable bands dividend income
falls into, dividend income is treated as the highest part of a UK resident
individual Shareholder's total income charged to UK income tax (less relevant
reliefs and allowances). In addition, dividend income which is within the
dividend allowance counts towards an individual's basic or higher rate limits
and so will be taken into account in determining whether the threshold for
higher rate or additional rate income tax is exceeded.
1.1.2. Non-UK tax resident individual Shareholders
Individual Shareholders who are not tax resident in the UK and who hold their
Ordinary Shares as an investment and not in connection with any trade,
profession or vocation carried on by them in the UK should generally not be
subject to UK tax on dividends received from the Company. Any such non-UK tax
resident individual Shareholders may be subject to non-UK taxation on any
dividend income they receive, under local law.
1.1.3. Corporate Shareholders within the charge to UK corporation tax
Shareholders within the charge to UK corporation tax that are "small
companies" (for the purposes of the UK taxation of dividends) will generally
not be subject to UK tax on dividends from the Company provided that certain
conditions (including an anti-avoidance condition) are met.
Other Shareholders within the charge to UK corporation tax (which are not
"small companies" for the purposes of the UK taxation of dividends) should not
be subject to UK tax on dividends from the Company, so long as the dividends
fall within an exempt class and certain conditions are met. In general: (i)
dividends paid on non-redeemable "ordinary shares" (that is, non-redeemable
shares that do not carry any present or future preferential rights to
dividends or to the Company's assets on its winding up); and (ii) dividends
paid to a UK resident corporate Shareholder holding less than 10% of the
issued share capital of the class in respect of which the dividend is paid,
should fall within an exempt class and accordingly should not be subject to UK
corporation tax. However, it should be noted that the exemptions are not
comprehensive and are subject to anti-avoidance rules. Such Shareholders will
need to ensure that they satisfy the requirements of an exempt class and that
no anti-avoidance rules apply before treating any dividend as exempt, and seek
appropriate professional advice where necessary.
1.1.4. Non-UK corporate Shareholders
Corporate Shareholders who are not resident in and have no permanent
establishment in the UK and who hold their Ordinary Shares as an investment
and not in connection with any trade carried on by them, should generally not
be subject to UK tax on dividends received from the Company. Any such non-UK
tax resident corporate Shareholders may be subject to non-UK taxation on any
dividend income they receive, under local law.
1.2. Chargeable Gains
1.2.1. UK tax resident individuals
A disposal (or deemed disposal) of the Ordinary Shares by a UK resident
individual shareholder may give rise to a chargeable gain (or allowable loss)
for the purposes of UK capital gains tax, depending on the circumstances and
subject to any available exemption or relief. No indexation allowance will be
available to a UK resident individual shareholder in respect of any disposal
of Ordinary Shares. However, the capital gains tax annual exempt amount may be
available to exempt any chargeable gain, to the extent that the exemption has
not already been utilised. The annual exempt amount for individuals for the
tax years 2025/2026 is £3,000.
Capital gains tax on share disposals by a UK resident individual Shareholder
will generally be charged at 18% to the extent that the total chargeable gains
and total taxable income arising in the tax year of disposal, after all
allowable deductions (including losses, the income tax personal allowance and
the capital gains tax annual exempt amount), are less than the upper limit of
the income tax basic rate band. To the extent that any chargeable gains (or
part of any chargeable gains) arising in the tax year of disposal exceed the
upper limit of the income tax basic rate band when aggregated with any such
income (in the manner referred to above), capital gains tax will generally be
charged at 24%.
1.2.2. Shareholders within the charge to UK corporation tax
A disposal (or deemed disposal) of the Ordinary Shares by a Shareholder within
the charge to UK corporation tax may give rise to a chargeable gain (or
allowable loss) for the purposes of UK corporation tax, depending on the
circumstances and subject to any available exemption or relief. The main rate
of UK corporation tax is currently 25%.
1.2.3. Non-UK tax resident Shareholders
A Shareholder who is not resident for tax purposes in the UK will generally
not be subject to UK taxation on the disposal or deemed disposal of the
Ordinary Shares unless the Shareholder is carrying on a trade, profession or
vocation in the UK through a branch or agency (or, in the case of a corporate
Shareholder, a permanent establishment) in connection with which the Ordinary
Shares are used, held or acquired. Non-UK tax resident Shareholders may be
subject to non-UK taxation on any gain under local law.
An individual Shareholder who is temporarily non-resident for UK tax purposes
may, in certain circumstances, become liable to UK capital gains tax in
respect of gains realised while they were not resident in the UK.
1.3. Stamp Duty and Stamp Duty Reserve Tax ("SDRT")
The statements in this section are intended as a general guide to the current
UK stamp duty and SDRT position. They apply to all Shareholders, regardless of
residence or domicile/deemed domicile.
No stamp duty or SDRT will arise on the issue of the Ordinary Shares.
No stamp duty or SDRT will arise on transfers or agreements to transfer
Ordinary Shares which are admitted to trading on AIM and are not listed on a
recognised stock exchange. If the Ordinary Shares cease to be admitted to
trading on AIM or are listed on a recognised stock exchange, such as the Main
Market of the London Stock Exchange: (i) SDRT will not arise on transfers or
agreements to transfer Ordinary Shares provided that the Ordinary Shares are
not registered in a register kept in the UK by or on behalf of the Company;
and (ii) stamp duty should not be payable on transfers of the Ordinary Shares
which take place solely within the CREST system. The Company does not intend
to register the Ordinary Shares in a register kept within the UK.
2. Jersey Taxation
2.1. General
The following summary of the anticipated treatment of the Company and holders
of Ordinary Shares (other than residents of Jersey) is based on Jersey
taxation law and practice as they are understood to apply at the date of this
document and is subject to changes in such taxation law and practice. It does
not constitute legal or tax advice and does not address all aspects of Jersey
tax law and practice (including such tax law and practice as they apply to any
land or building situate in Jersey). Prospective investors in Ordinary Shares
should consult their professional advisers on the implications of acquiring,
buying, selling or otherwise disposing of Ordinary Shares in the Company under
the laws of any jurisdiction in which they may be liable to taxation.
2.2. Taxation of the Company
The Company is not regarded as resident for tax purposes in Jersey. The
Company is resident in the UK for UK tax purposes by virtue of its place of
central management and control being located in the UK. Therefore, the Company
will not be liable to Jersey income tax other than on Jersey source income
(except where such income is exempted from income tax pursuant to the Income
Tax (Jersey) Law 1961, as amended) and dividends on Ordinary Shares may be
paid by the Company without withholding or deduction for or on account of
Jersey income tax. The holders of Ordinary Shares (other than residents of
Jersey) will not be subject to any tax in Jersey in respect of the holding,
sale or other disposition of such Ordinary Shares.
2.3. Stamp duty
In Jersey, and on the basis that the Ordinary Shares do not confer a direct or
indirect interest in Jersey real estate, no stamp duty is levied on the issue
or transfer of Ordinary Shares except that stamp duty is payable on Jersey
grants of probate and letters of administration, which will generally be
required to transfer Ordinary Shares on the death of a holder of such shares.
In the case of a grant of probate or letters of administration, stamp duty is
levied according to the size of the estate (wherever situated in respect of a
holder of Ordinary Shares domiciled in Jersey, or situated in Jersey in
respect of a holder of Ordinary Shares domiciled outside Jersey) and is
payable on a sliding scale at a rate of up to 0.75% of such estate and such
duty is capped at £100,000.
2.4. Other Jersey taxes
Jersey does not otherwise levy taxes upon capital, inheritances, capital gains
or gifts nor are there other estate duties.
3. US Taxation
The following discussion describes certain United States federal income tax
consequences of the purchase, ownership and disposition of Ordinary Shares.
This discussion deals only with Ordinary Shares that are held as capital
assets by a US Holder (as defined below) and that are acquired pursuant to the
Capital Raise.
For the purposes of this discussion, the term "US Holder" means a beneficial
owner of Ordinary Shares that is, for US federal income tax purposes, any of
the following: (i) an individual who is a citizen or resident of the United
States; (ii) a corporation (or other entity treated as a corporation for US
federal income tax purposes) created or organised in or under the laws of the
United States, any state thereof or the District of Columbia; (iii) an estate
the income of which is subject to US federal income taxation regardless of its
source; or (iv) a trust if it: (a) is subject to the primary supervision of a
court within the United States and one or more US persons have the authority
to control all substantial decisions of the trust; or (b) has a valid election
in effect under applicable US Treasury regulations to be treated as a United
States person.
This discussion is based upon provisions of the United States Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury regulations promulgated
thereunder, administrative rulings and judicial decisions and the current
income tax treaty between the United States and the United Kingdom (the
"Treaty"), all as of the date hereof. Those authorities may be changed,
perhaps with retroactive effect, so as to result in US federal income tax
consequences different from those summarised below.
This discussion does not represent a detailed description of the US federal
income tax consequences applicable to a US investor who is subject to special
treatment under the US federal income tax laws, including a US investor who
is:
· a dealer or broker in securities or currencies;
· a financial institution;
· a regulated investment company;
· a real estate investment trust;
· an insurance company;
· a tax-exempt organisation;
· a person holding Ordinary Shares as part of a hedging, integrated
or conversion transaction, a constructive sale or a straddle;
· a trader in securities that has elected the mark-to-market method
of accounting for its securities;
· a person liable for alternative minimum tax;
· a person who owns or is deemed to own 10% or more of the
Company's stock (by vote or value);
· a partnership or other pass-through entity for US federal income
tax purposes;
· a person required to accelerate the recognition of any item of
gross income with respect to Ordinary Shares as a result of such income being
recognised on an applicable financial statement; or
· a US Holder whose "functional currency" is not the US dollar.
If a partnership (or other entity or arrangement treated as a partnership for
US federal income tax purposes) holds Ordinary Shares, the tax treatment of a
partner will generally depend upon the status of the partner and the
activities of the partnership. US investors who are a partnership or a partner
of a partnership holding Ordinary Shares, should consult their own tax
advisers.
This discussion does not contain a detailed description of all the US federal
income tax consequences to US investors in light of their particular
circumstances and does not address the Medicare tax on net investment income,
US federal estate and gift taxes or the effects of any state, local or non-US
tax laws. US investors who are considering the purchase of Ordinary Shares,
should consult their own tax advisers concerning the particular US federal
income tax consequences to them of the purchase, ownership and disposition of
Ordinary Shares, as well as the consequences arising under other US federal
tax laws and the laws of any other taxing jurisdiction.
US Federal Income Tax Treatment of the Company
For US federal income tax purposes, a corporation generally is considered to
be a tax resident of the jurisdiction of its organisation or incorporation.
The Company is organised under the laws of Jersey and accordingly, under the
generally applicable US federal income tax rules, the Company expects to be
treated as a non-US corporation (and, therefore, not a US tax resident) for US
federal income tax purposes. However, Section 7874 of the Code provides an
exception to this general rule, pursuant to which a non-US corporation (or
other entity treated as a corporation for US federal income tax purposes) will
be treated as a US corporation for US federal income tax purposes if an 80%
Inversion (as defined below) occurs. These rules are complex and guidance
regarding their application is unclear and incomplete.
Under Section 7874 of the Code, an "80% Inversion" occurs if each of the
following three conditions are met: (i) a non-US corporation, directly or
indirectly, acquires substantially all of the properties held directly or
indirectly by a US corporation (including through the acquisition of all of
the outstanding shares of the US corporation) (a "Domestic Entity
Acquisition"); (ii) the non-US corporation's "expanded affiliated group" does
not have "substantial business activities" in the non-US corporation's country
of organisation or incorporation relative to the expanded affiliated group's
worldwide activities (the "Substantial Business Activities Test"); and (iii)
after the Domestic Entity Acquisition, former shareholders of the acquired US
corporation hold at least 80% (by either vote or value) of the shares of the
non-US acquiring corporation by reason of holding shares in the US acquired
corporation, as determined for purposes of Section 7874 of the Code (the "80%
Ownership Test"). If the Company is treated as a US corporation for US federal
income tax purposes, the Company or the Enlarged Group could be subject to
substantial additional US federal income tax obligations.
Further, Section 7874 of the Code can limit the ability of US corporations and
their US affiliates acquired by "surrogate foreign corporations" to utilise
certain US tax attributes. These limitations can potentially apply if the 80%
Ownership Test would be satisfied if it were applied by substituting "60%" for
"80%" (the "60% Ownership Test"). If the 60% Ownership Test is satisfied,
certain adverse tax consequences may apply to a surrogate foreign corporation
and its subsidiaries, including restrictions on the use of tax attributes of
the acquired US corporation with respect to "inversion gain" recognised over a
10-year period following the Domestic Entity Acquisition, the recapture of
certain deductions previously taken by the surrogate foreign corporation under
Section 965(e) of the Code at an unfavorable rate, the imposition of an excise
tax equal to 1% of the fair market value of stock that the surrogate foreign
corporation repurchases and the requirement that any US subsidiaries treat
certain payments to the surrogate foreign corporation as "base erosion
payments" that may be subject to a minimum US federal income tax. In addition,
dividends paid by a surrogate foreign corporation to non-corporate US
shareholders would not be eligible for the reduced rates of taxation
applicable to "qualified dividend income" (see "-Taxation of Dividends"
below).
Based upon the terms of the Acquisition, the rules for determining the
ownership percentage under Section 7874 of the Code and the Treasury
regulations promulgated thereunder, and certain factual assumptions, the
Company currently expects that former shareholders of ECI will be treated as
holding less than 60% (by either vote or value) of the Company's Ordinary
Shares by reason of holding shares in ECI. Accordingly, the Company does not
expect to be treated as a US corporation for US federal income tax purposes
under Section 7874 of the Code and the Company does not expect the limitations
and other rules described above to apply to the Enlarged Group after the
Acquisition. However, whether the 80% Ownership Test or the 60% Ownership Test
has been satisfied must be finally determined after completion of the
Acquisition, by which time there could be changes to the relevant facts and
circumstances or adverse rule changes. In addition, even if the Enlarged Group
is not subject to the above adverse consequences under Section 7874 of the
Code as a result of the Acquisition, the Company could, in certain specific
circumstances, be limited in using its equity to engage in future acquisitions
of US corporations. The rules for determining ownership under Section 7874 of
the Code are complex, unclear and the subject of ongoing regulatory change.
Accordingly, there can be no assurance that the IRS would not assert a
contrary position to those described above or that such an assertion would not
be sustained by a court.
The remainder of this discussion assumes the Company will not be treated as a
US corporation for US federal income tax purposes under Section 7874 of the
Code and that the Enlarged Group will not be subject to the limitations and
other rules under Section 7874 of the Code.
Taxation of Dividends
Subject to the discussion under "-Passive Foreign Investment Company" below,
the gross amount of distributions on Ordinary Shares will be taxable as
dividends to the extent paid out of the Company's current or accumulated
earnings and profits, as determined under US federal income tax principles. To
the extent that the amount of any distribution exceeds the Company's current
and accumulated earnings and profits for a taxable year, the distribution will
first be treated as a tax-free return of capital, causing a reduction in a US
Holder's tax basis in the Ordinary Shares, and to the extent the amount of the
distribution exceeds the US Holder's tax basis, the excess will be treated as
capital gain recognised on a sale or exchange. The Company, however, does not
expect to determine earnings and profits in accordance with US federal income
tax principles. Therefore, a US Holder should expect that a distribution will
generally be reported as a dividend.
Any dividends received by US Holders will be includable in their gross income
on the day actually or constructively received by them. Such dividends will
not be eligible for the dividends received deduction generally allowed to
corporations under the Code. Subject to applicable limitations (including a
minimum holding period requirement), dividends received by non-corporate US
Holders (including individuals) from a qualified foreign corporation may be
treated as "qualified dividend income" that is subject to reduced rates of
taxation. A qualified foreign corporation includes a foreign corporation that
is eligible for the benefits of a comprehensive income tax treaty with the
United States which the United States Treasury Department determines to be
satisfactory for these purposes and which includes an exchange of information
provision. The United States Treasury Department has determined that the
Treaty meets these requirements.
Notwithstanding the foregoing, the Company will not be treated as a qualified
foreign corporation, and non-corporate US Holders will not be eligible for
reduced rates of taxation on any dividends received from the Company, if it is
a passive foreign investment company in the taxable year in which such
dividends are paid or if it was in the preceding taxable year (see "-Passive
Foreign Investment Company" below). In addition, the jurisdiction of tax
residence of future subsidiaries of the Company and the jurisdiction in which
such subsidiaries operate in the future may impact the eligibility of
dividends received by a US Holder from the Company to be treated as "qualified
dividend income."
The taxable amount of any dividend paid in pounds sterling will equal the US
dollar value of the pounds sterling received calculated by reference to the
exchange rate in effect on the date the dividend is actually or constructively
received by a US Holder, regardless of whether the pounds sterling are
converted into US dollars. If the pounds sterling received as a dividend are
converted into US dollars on the date they are received, the US Holder
generally will not be required to recognise foreign currency gain or loss in
respect of the dividend income. If the pounds sterling received as a dividend
are not converted into US dollars on the date of receipt, the US Holder will
have a basis in the pounds sterling equal to their US dollar value on the date
of receipt. Any gain or loss realised on a subsequent conversion or other
disposition of the pounds sterling will be treated as US-source ordinary
income or loss.
Passive Foreign Investment Company
In general, the Company will be a PFIC for any taxable year in which:
· at least 75% of the Company's gross income is passive income, or
· at least 50% of the value (generally determined based on a
quarterly average) of the Company's assets is attributable to assets that
produce or are held for the production of passive income.
For this purpose, passive income generally includes dividends, interest,
royalties and rents (other than royalties and rents derived in the active
conduct of a trade or business and not derived from a related person). In
addition, cash and other assets readily convertible into cash are generally
considered passive assets. If the Company owns at least 25% (by value) of the
stock of another corporation, for purposes of determining whether the Company
is a PFIC, the Company will be treated as owning the Company's proportionate
share of the other corporation's assets and receiving the Company's
proportionate share of the other corporation's income.
The Company does not believe it is or will become a PFIC for the current or
any future taxable year. However, such determination depends on the
application of complex US federal income tax rules that are subject to
differing interpretations and is a fact-intensive inquiry made annually after
the close of each taxable year and depends, in part, upon the composition and
value of the Company's income and assets, among other facts, including the
timing of Acquisition Completion. In particular, depending on when Acquisition
Completion occurs, it is possible the Company will be a PFIC. Should
Acquisition Completion occur in Q4 2025, it is likely the Company would be a
PFIC. Accordingly, there can be no assurances in this regard and even if the
Company is not a PFIC in the current taxable year, it is possible that it may
become a PFIC in a future taxable year due to changes in the Company's asset
or income composition or in the value of the Company's assets. If the Company
is a PFIC for any taxable year during which a US Holder holds Ordinary Shares,
such US Holder will be subject to special tax rules discussed below.
If the Company is a PFIC for any taxable year during which a US Holder holds
Ordinary Shares and such US Holder does not make a timely mark-to-market
election, as described below, the US Holder will be subject to special tax
rules with respect to any "excess distribution" received and any gain realised
from a sale or other disposition, including a pledge, of Ordinary Shares.
Distributions received in a taxable year will be treated as excess
distributions to the extent that they are greater than 125% of the average
annual distributions received during the shorter of the three preceding
taxable years or the holding period of a US Holder for the Ordinary Shares.
Under these special tax rules:
(i) the excess distribution or gain will be allocated ratably over the
holding period of a US Holder for the Ordinary Shares;
(ii) the amount allocated to the current taxable year, and any taxable
year prior to the first taxable year in which the Company was a PFIC, will be
treated as ordinary income; and
(iii) the amount allocated to each other year will be subject to tax at the
highest tax rate in effect for that year for individuals or corporations, as
applicable, and the interest charge generally applicable to underpayments of
tax will be imposed on the resulting tax attributable to each such year.
Although the determination of whether the Company is a PFIC is made annually,
if the Company is a PFIC for any taxable year in which a US Holder holds
Ordinary Shares, the US Holder will generally be subject to the special tax
rules described above for that year and for each subsequent year in which the
US Holder holds Ordinary Shares (even if the Company does not qualify as a
PFIC in such subsequent years). However, if the Company ceases to be a PFIC,
the US Holder can avoid the continuing impact of the PFIC rules by making a
special election to recognise gain as if the US Holder's Ordinary Shares had
been sold on the last day of the last taxable year during which the Company
was a PFIC. US Holders are urged to consult their own tax adviser about this
election.
In lieu of being subject to the special tax rules discussed above, US Holders
may make a mark-to-market election with respect to their Ordinary Shares
provided such Ordinary Shares are treated as "marketable stock." The Company's
Ordinary Shares generally will be treated as marketable stock if they are
regularly traded on a "qualified exchange or other market" (within the meaning
of the applicable Treasury regulations). Existing Ordinary Shares are listed
on AIM, which must meet certain trading, listing, financial disclosure and
other requirements to be treated as a qualified exchange for these purposes,
and no assurance can be given that the Company's Ordinary Shares will be
"regularly traded" for purposes of the mark-to-market election.
If a US Holder makes an effective mark-to-market election, for each taxable
year that the Company is a PFIC such US Holder will include as ordinary income
the excess of the fair market value of their Ordinary Shares at the end of the
year over their adjusted tax basis in the Company's common shares. US Holders
will be entitled to deduct as an ordinary loss in each such year the excess of
their adjusted tax basis in their Ordinary Shares over their fair market value
at the end of the year, but only to the extent of the net amount previously
included in income as a result of the mark-to-market election. US Holders
adjusted tax basis in their Ordinary Shares will be increased by the amount of
any income inclusion and decreased by the amount of any deductions under the
mark-to-market rules. In addition, upon the sale or other disposition of a US
Holder's Ordinary Shares in a year that the Company is a PFIC, any gain will
be treated as ordinary income and any loss will be treated as ordinary loss to
the extent of the net amount previously included in income as a result of the
mark-to-market election, and thereafter as capital loss.
If a US Holder makes a mark-to-market election, it will be effective for the
taxable year for which the election is made and all subsequent taxable years
unless Ordinary Shares are no longer regularly traded on a qualified exchange
or other market, or the IRS consents to the revocation of the election.
However, because a mark-to-market election cannot be made for any lower-tier
PFICs that the Company may own (as discussed below), the US Holder will
generally continue to be subject to the special tax rules discussed above with
respect to their indirect interest in any such lower-tier PFIC. US Holders are
urged to consult their tax adviser about the availability of the
mark-to-market election, and whether making the election would be advisable in
their particular circumstances.
Alternatively, a US Holder can sometimes avoid the special tax rules described
above by electing to treat a PFIC as a "qualified electing fund" under Section
1295 of the Code. A "qualified electing fund" election requires US Holders to
include currently in income each year their pro rata share of a PFIC's
ordinary earnings and net capital gains (as ordinary income and long-term
capital gain, respectively), regardless of whether or not such earnings and
gains are actually distributed. Thus, US Holders could have a tax liability
with respect to such earnings or gains without a corresponding receipt of
cash. A US Holder's basis in the shares of a qualified electing fund will be
increased to reflect the amount of the taxed but undistributed income.
Distributions of income that had previously been taxed will result in a
corresponding reduction of basis in the shares and will not be taxed again as
a distribution to the US Holder. US Holders must make a qualified electing
fund election if they wish to have this treatment. To make a qualified
electing fund election, US Holders will need to have an annual information
statement from the PFIC setting forth the earnings and capital gains for the
year. If the Company determines that it is a PFIC in a given year, the Company
will use commercially reasonable endeavors to provide a PFIC annual
information statement for such year to any shareholder or former shareholder
who requests it to permit such requesting shareholder to make a "qualified
electing fund" election, but there can be no assurance that the Company will
timely provide such information. In general, US Holders must make a qualified
electing fund election on or before the due date for filing their income tax
return for the first year to which the qualified electing fund election will
apply. Under applicable Treasury regulations, US Holders will be permitted to
make retroactive elections in particular circumstances, including if they had
a reasonable belief that the Company was not a PFIC and filed a protective
election. US Holders should consult their own tax advisers as to the
consequences of making a protective qualified electing fund election or other
consequences of the qualified electing fund election.
If the Company is a PFIC for any taxable year during which a US Holder holds
Ordinary Shares and any of the Company's non-US subsidiaries are also a PFIC,
such US Holder will be treated as owning a proportionate amount (by value) of
the shares of the lower-tier PFIC for purposes of the application of the PFIC
rules. US Holders are urged to consult their tax advisers about the
application of the PFIC rules to any of the Company's subsidiaries.
US Holders will generally be required to file IRS Form 8621 if they hold
Ordinary Shares in any year in which the Company is classified as a PFIC. US
Holders are urged to consult their tax advisers concerning the US federal
income tax consequences of holding Ordinary Shares if the Company is
considered a PFIC in any taxable year.
Taxation of Gains or Losses
For US federal income tax purposes, US Holders will recognise taxable gains or
losses on any sale, exchange or other taxable disposition of Ordinary Shares
in an amount equal to the difference between the amount realised for such
shares and their tax basis in such shares, both determined in US dollars.
Subject to the discussion under "-Passive Foreign Investment Company" above,
such gains or losses will generally be US-source capital gains or losses and
will generally be long-term capital gains or losses if the US Holder held
Ordinary Shares for more than one year. Long-term capital gains of
non-corporate US Holders (including individuals) are eligible for reduced
rates of taxation. The deductibility of capital losses is subject to
limitations.
Information Reporting and Backup Withholding
In general, information reporting will apply to dividends in respect of
Ordinary Shares and the proceeds from the sale, exchange or other disposition
of Ordinary Shares that are paid to US Holders within the United States (and
in certain cases, outside the United States), unless such US Holders establish
that they are an exempt recipient. A backup withholding tax may apply to such
payments if US Holders fail to provide a taxpayer identification number and a
certification that they are not subject to backup withholding or if they fail
to report in full dividend and interest income.
Backup withholding is not an additional tax and any amounts withheld under the
backup withholding rules will be allowed as a refund or a credit against a US
Holder's US federal income tax liability provided the required information is
timely furnished to the IRS.
Appendix VIII
Additional Information
For further information relating to the Company and the Group, investors
should refer to the admission document published by the Company on 9 July 2024
which is available on the Company's website at AIM Admission - Investors -
Rosebank Industries
(https://www.rosebankindustries.com/investors/company-documents/)
(https://www.rosebankindustries.com/investors/company-documents/).
1. Share capital
1.1 As at the date of this announcement, the Company's issued
share capital is as follows:
1.1.1 20,000,000 Existing Ordinary Shares;
1.1.2 88,000 Series A Incentive Shares; and
1.1.3 50,000 Series B Incentive Shares.
1.2 Immediately following Admission, assuming the Open Offer is
fully subscribed, the Company's authorised and issued share capital will be as
follows:
1.2.1 406,607,653 Ordinary Shares;
1.2.2 88,000 Series A Incentive Shares; and
1.2.3 50,000 Series B Incentive Shares.
2. Organisational structure
The Company is the holding company of the Group.
The Company has a wholly-owned subsidiary, Rosebank Industries Holdings
Limited, ("RIHL"). RIHL was incorporated in England and Wales on 21 December
2023.
RIHL has two wholly-owned subsidiaries: (i) RB Industries Advisors Corp.,
which was incorporated in the state of Delaware, United States, on 4 November
2024; and (ii) Gilchrist BidCo Corp. ("Bidco"), which was incorporated in the
state of Delaware, United States, on 20 February 2025.
ECI Target is the holding company of the ECI Group.
ECI Target. has 53 wholly-owned (directly or indirectly) subsidiaries as
listed below:
Entity Name Country of Incorporation
1. Energy Topco Limited Cayman
2. Energy Midco Limited Cayman
3. Energy Holdings (Cayman) Limited Cayman
4. ECI Holding Company (US) LLC United States
5. Energy Acquisition, LP United States
6. Energy Acquisition Company Inc. United States
7. ECI Holdco, Inc. United States
8. Electrical Components International, Inc. United States
9. Aerosystems International Inc. Canada
10. NRI Electronics, Inc. United States
11. Fargo Assembly Company, Inc. United States
12. Fargo ND REO I LLC United States
13. Fargo ND REO II LLC United States
14. Omni Buyer LLC United States
15. Omni Connection, LLC United States
16. Zima Connection, LLC United States
17. Whitepath Fab Tech, Inc. United States
18. Fargo Assembly of PA, Inc. United States
19. Fargo PA REO LLC United States
20. BHC Cable Assemblies Inc. Canada
21. Promark Electronics Inc. Canada
22. BriTech LLC United States
23. Norwood US Holdings, Inc. United States
24. MRG US, LLC United States
25. American Battery Company, LLC United States
26. Champion Battery Sales, LLC United States
27. Flex-Tec, Inc. United States
28. Flex-Tec Mexico, S. de R.L. de C.V. Mexico
29. Cordset Designs, Inc. United States
30. ECM Holding Company United States
31. Electrical Components International (Thailand) Company Limited Thailand
32. Electrical Components International Limited United Kingdom
33. ECI Technology Private, Limited India
34. Electrical Components International S.a.r.l. Luxembourg
35. Electrical Components International S.a.r.l. (Turin Branch) Luxembourg (Italy Branch)
36. Electrical Components International Sp. z o.o. Poland
37. Electrical Components International Sp. z o.o. Poland (Hungary Branch)
38. Electrical Components International Korea Limited South Korea
39. Electrical Components International de Mexico S de R.L. de C.V. Mexico
40. CABIND G.m.b.H Germany
41. Electrical Components International Industria de Componentes Electronicos do Brazil
Brasil Ltda
42. Electrical Components International G.m.b.H Germany
43. Electrical Components International, S.L.U. Spain
44. Electrical Components International Maroc, S.a.r.l. Morocco
45. Electro Componentes de Mexico, S.A. de C.V. Mexico
46. Electrical Components Canada, Inc. Canada
47. ECI Hong Kong Company, Limited Hong Kong
48. Guangzhou Wire Harness Company, Limited China
49. ECI Huizhou Company, Limited China
50. Xiamen Rei Ho Electronics, Limited China
51. OCR Enterprise Philippines Inc. Philippines
52. Nanan Xinshun Electronics Co., Limited China
53. Xiamen Xinjie Trading Co., Limited China
3. Details of the Connected Persons Subscription
Conditional on, inter alia, the passing of the Transaction Resolutions, the
Rosebank Co-Founders and the Non-Executive Directors (together, the "Connected
Persons") have agreed to subscribe for, in aggregate, 4,359,010 Connected
Persons Shares for a total price of £13,077,030, as follows:
· Justin Dowley has agreed to subscribe for 333,334 Connected
Persons Shares for a total price of £1,000,002;
· Simon Peckham has agreed to subscribe for 1,216,216 Connected
Persons Shares for a total price of £3,648,648;
· Matt Richards has agreed to subscribe for 243,243 Connected
Persons Shares for a total price of £729,729;
· Christopher Miller has agreed to subscribe for 729,730 Connected
Persons Shares for a total price of £2,189,190;
· Joff Crawford has agreed to subscribe for 683,333 Connected
Persons Shares for a total price of £2,049,999;
· Jim Slattery has agreed to subscribe for 486,487 Connected
Persons Shares for a total price of £1,459,461; and
· Geoff Morgan has agreed to subscribe for 666,667 Connected
Persons Shares for a total price of £2,000,001.
The Connected Persons Shares will be issued at the Issue Price at the time of
the Placing, the US Private Placement and the Open Offer but will not form
part of the Placing, the US Private Placement or the Open Offer. The Connected
Persons will not be participating in the Open Offer.
The Connected Persons Shares will, when issued, be subject to the Articles, be
credited as fully paid and rank pari passu in all respects with the Existing
Ordinary Shares, the Placing Shares, the US Private Placement Shares and the
Open Offer Shares, including the right to receive all dividends and other
distributions (if any) declared, made or paid on or in respect of Ordinary
Shares after the date of issue of the Connected Persons Shares.
4. Directors' and the Senior Executives' interests
4.1 As at the date of this announcement, the interests of the Directors and
the Senior Executives, all of which are beneficial unless otherwise indicated,
in the issued Ordinary Share capital of the Company which have been notified
to the Company and the interests of persons connected with a Director or
Senior Executive, the existence of which is known or could with reasonable
diligence be ascertained by each of them, is as follows:
Director Number of Ordinary Shares Percentage of the Existing Ordinary Share capital
Justin 108,108 0.54%
Dowley..................................................................
Simon Peckham............................................................... 540,541 2.70%
Matt 108,108 0.54%
Richards...................................................................
Christopher Miller........................................................... 324,325 1.62%
Joff 216,216 1.08%
Crawford...................................................................
Jim 216,216 1.08%
Slattery.......................................................................
Geoff 216,216 1.08%
Morgan...................................................................
4.2 Following the Capital Raise and assuming the Open Offer is fully
subscribed, the interests of the Directors and the Senior Executives, all of
which are beneficial unless otherwise indicated, in the issued Ordinary Share
capital of the Company and the interests of persons connected with a Director
or Senior Executive, the existence of which is known or could with reasonable
diligence be ascertained by that Director or Senior Executive, will be as
follows:
Director Number of Ordinary Shares Percentage of the Enlarged Share capital
Justin 441,442 0.11%
Dowley..................................................................
Simon Peckham............................................................... 1,756,757 0.43%
Matt 351,351 0.09%
Richards...................................................................
Christopher Miller........................................................... 1,054,055 0.26%
Joff 899,549 0.22%
Crawford...................................................................
Jim 702,703 0.17%
Slattery.......................................................................
Geoff 882,883 0.22%
Morgan...................................................................
4.3 The Company's issued share capital includes 88,000 Series A Incentive
Shares and 50,000 Series B Incentive Shares, which are held as follows:
Director Number of Series A Incentive Shares Percentage of authorised Series A Incentive Share Capital Number of Series B Incentive Shares Percentage of authorised Series B Incentive Share Capital
Simon Peckham............... 24,000 24% 10,000 10%
Matt Richards................... 16,000 16% 10,000 10%
Joff Crawford.................... 16,000 16% 10,000 10%
Jim Slattery....................... 16,000 16% 10,000 10%
Geoff Morgan................... 16,000 16% 10,000 10%
In addition, the Rosebank Board has been authorised to allot a further 12,000
Series A Incentive Shares, 50,000 Series B Incentive Shares and 100,000 Series
C Incentive Shares to employees (or an employee share ownership plan trust) at
the discretion of the Rosebank Board or the remuneration committee.
5. Significant shareholders
As at the Latest Practicable Date, the Company is aware of the following
Shareholders who are interested, directly or indirectly, in 3% or more of the
Company's issued share capital:
As at the Latest Practicable Date
Number of
Shareholder Existing Ordinary Shares
GIC Private Limited 3,400,000
BlackRock Inc 2,705,249
Rosebank Industries PLC Directors & Related Parties 1,938,359
Artemis Investment Management LLP 1,773,070
Permian Investment Partners, LP 1,630,000
Norges Bank 1,600,000
Aviva Investors 1,448,640
Select Equity 1,057,782
Schroder Investment Management 703,558
6. Lock-in agreements
Each of the Rosebank Co-Founders and the Non-Executive Directors has
previously agreed, in favour of the Previous Joint Bookrunners and the
Company, save for in those circumstances specified in Rule 7 of the AIM Rules,
not to dispose of any interest in the Existing Ordinary Shares for a period of
12 months following the Company's admission to AIM on 11 July 2024 (the "July
2024 Admission"), or until the Ordinary Shares are admitted to the Official
List and to trading on the Main Market of the London Stock Exchange, if
earlier (the "Restricted Period"). In addition, each of the Rosebank
Co-Founders has previously agreed with the Company, following expiry of the
Restricted Period until three years following the July 2024 Admission, subject
to certain customary exceptions, not to transfer, charge or otherwise dispose
of any of the Existing Ordinary Shares subscribed or held by him at the time
of the July Placing and the Acquisition without the prior written consent of
the Company.
7. Material contracts
Other than as set out in the July 2024 Admission Document, the following are
the only contracts (not being contracts entered into in the ordinary course of
business) which have been entered into by the members of the Enlarged Group
(a) in the two years immediately preceding the publication of this
announcement (or in the case of the Company, since its incorporation), and
which are, or may be, material; or (b) at any time and which contain any
provision under which any member of the Enlarged Group has any obligation or
entitlement which is material to the Enlarged Group as at the date of this
announcement.
Material contracts relating to the Acquisition
7.1 Acquisition Agreement
Details of the Acquisition Agreement are set out in this announcement.
7.2 Management Warranty Deed
7.2.1 A management warranty deed was entered into on 6 June 2025
between Rosebank and certain members of management of ECI (the "Warrantors"),
(the "Management Warranty Deed"). Pursuant to the Management Warranty Deed,
the Warrantors provided certain fundamental, business and tax warranties to
Rosebank with respect to the business of the ECI Group. However, other than in
the event of fraud, the sole recourse for Rosebank for any breach of such
warranties shall be to the W&I Insurance Policy, and Rosebank will not be
able to recover against the Seller or the Warrantors for any claims in respect
of the warranties.
7.2.2 The Management Warranty Deed is governed by the laws of England
and Wales.
7.3 W&I Insurance Policy
7.3.1 A warranty and indemnity insurance policy for the benefit of the
Company was entered into on 6 June 2025 with Euclid Transactional UK Limited
as the primary insurer (the "W&I Insurance Policy"). The W&I Insurance
Policy provides the Company with the ability to claim for loss in the event of
breach of certain fundamental, business and tax warranties in the Acquisition
Agreement and the Management Warranty Deed for certain specified periods of
time following Acquisition Completion. Howden M&A Limited acted as broker
in connection with the placing of the W&I Insurance Policy. The W&I
Insurance Policy provides an overall coverage limit (inclusive of cover
provided by excess insurers) of $105,000,000 (with an applicable retention
(excess) of $9,470,000 applying to general business and tax warranty claims).
The W&I Insurance Policy excludes cover for items specifically identified
during, or carved out of the scope of, the due diligence process and any
breach of warranty of which certain Rosebank employees have actual knowledge,
as well as certain other customary exclusions.
7.4 New Debt Facilities and hedging arrangements
7.4.1 On 6 June 2025, Rosebank entered the Debt Commitment Documents
with, among others, certain financial institutions named therein (each as an
arranger and underwriter) (the "Arrangers"). Pursuant to the Debt Commitment
Documents, the Arrangers have agreed to:
(a) underwrite certain facilities to be made available to the
Company and Gilchrist BidCo Corp, such facilities comprising (i) term loan
commitments in an aggregate principal amount of $400,000,000 ("Facility A")
and (ii) multi-currency revolving commitments in an aggregate principal amount
of $500,000,000 ("Facility B" and, together with Facility A, the
"Facilities"); and
(b) enter into long form debt financing documents on the terms
described in the balance of this paragraph 7.4 (New Debt Facilities) of this
Appendix.
7.4.2 Rosebank (as original parent), RIHL (as the company) and Bidco
(together with Rosebank and RIHL, the "Original Obligors") will enter into a
senior term and revolving credit facilities agreement with, among others,
certain financial institutions named as original lenders (the "Lenders") (the
"Facilities Agreement"). Pursuant to the Facilities Agreement, the Lenders
make the Facilities available to RIHL and Bidco as original borrowers.
7.4.3 The proceeds of Facility A shall be applied towards the
financing or refinancing (directly or indirectly), amongst other things, the
consideration for, and any other amounts payable in connection with, the
Acquisition, the repayment of existing indebtedness of the ECI Group and/or
transaction costs and other fees, costs and/or expenses. The proceeds of
Facility B shall be applied towards financing the ECI Group's working capital
requirements and general corporate purposes.
7.4.4 Each of the Original Obligors will jointly and severally
guarantee the obligations owed to the lenders, among other finance parties,
under the Facilities Agreement. In addition, the terms of the Facilities
Agreement will require that, following Acquisition Completion and subject to
certain limitations, certain members of the Group accede to the Facilities
Agreement as guarantors in accordance with minimum guarantor coverage
requirements set out therein.
7.4.5 Pursuant to the terms of the Facilities Agreement, each obligor
(which shall include each Original Obligor and each member of the Group
required to accede to the Facilities Agreement as a guarantor), will be
required to make certain customary representations and warranties at various
times throughout the term of the Facilities Agreement. In addition, the terms
of the Facilities Agreement will contain certain restrictions on the
operations of the Group. These include customary positive and negative
covenants including, without limitation, restrictions on mergers,
acquisitions, disposals, incurrence of financial indebtedness and/or loans to
persons outside of the Group and a negative pledge restricting security over
the Group's assets. Rosebank will also be required to comply with certain
information undertakings, including delivery of financial information relating
to the Group for distribution to the lenders.
7.4.6 The Facilities Agreement will contain the following financial
covenants:
(a) Interest Cover, being the ratio of consolidated EBITDA of
the Group to the consolidated net finance charges of the Group, which must not
be less than 3.0:1.0 (for the relevant period ending 30 June 2026) or 3.5:1.0
(for any relevant period ending on or after 31 December 2026); and
(b) Debt Cover, being the ratio of consolidated total net debt
of the Group to consolidated EBITDA of the Group, which must not exceed
4.0:1.0 (for the relevant period ending 30 June 2026); 3.75:1.0 (for the
relevant period ending 31 December 2026) or 30.5:1.0 (for any relevant period
ending on or after 30 June 2027).
7.4.7 Each financial covenant shall be tested bi-annually, by
reference to each set of half-year or annual financial statements and/or each
compliance certificate delivered pursuant to the terms of the Facilities
Agreement. The financial covenants shall be tested for the first time in
respect of the 12-month period ending 30 June 2026.
7.4.8 When determining consolidated EBITDA for the purposes of testing
the financial covenants referred to above, Rosebank shall be permitted to,
amongst other things: (i) include the operating profits of any entity or
business acquired during the relevant period; (ii) exclude the operating
profits of any entity or business sold during the relevant period; (iii)
include certain pro forma adjustments in respect of acquisitions and disposals
(and certain group initiatives implemented during the relevant period) in each
case projected by Rosebank after taking into account the run rate effect of
cost savings and other synergies (including revenue synergies) which the Group
believes can be achieved within a specified timeframe following the relevant
acquisition, disposal and/or group initiative referred to above, provided that
the aggregate amount of pro forma adjustments included in respect of any
relevant period must not exceed 20% of consolidated EBITDA.
7.4.9 The Facilities Agreement will contain certain events of default
including, without limitation, in respect of (i) non-payment (subject to a
grace period), (ii) breach of financial covenant, (iii) misrepresentation
(subject to a materiality threshold and a grace period), (iv) cross default
(subject to a de minimis exemption basket), (iv) insolvency and (v) insolvency
proceedings. Certain of the other events of default are subject to exceptions,
de minimis baskets, materiality thresholds and/or grace periods. The
occurrence of any event of default under the Facilities Agreement would
permit, among other things, the acceleration of any loan and cancellation of
commitments made available under the Facilities.
7.4.10 Subject to certain exceptions, loans made available under each of
Facility A and Facility B shall bear interest at a rate per annum equal to the
aggregate of (i) the applicable base rate (which for loans drawn in US Dollars
is SOFR (or, if applicable, the term SOFR reference rate administered by CME
Group Benchmark Administration Limited), for loans drawn in Euro is EURIBOR
and for loans drawn in Sterling is SONIA) and (ii) a margin, which is subject
to a leverage-based ratchet. The opening margin in respect of Facility A shall
be 1.70% per annum and the opening margin in respect of Facility B shall be
2.10% per annum.
7.4.11 The scheduled maturity date for the Facilities is three years from
the date on which Facility A is drawn to complete the Acquisition. The Company
may extend the maturity date in respect of Facility B up to twice (in each
case by no more than one year) by giving notice to the facility agent not less
than 30 days' prior to (i) the original maturity date or (ii) if after the
first extension of the original maturity date, the first anniversary of the
original maturity date.
7.4.12 The Facilities Agreement will be governed by English law.
7.4.13 The Company intends to enter into DCFX transaction(s). Under the
terms of the DCFX the Company will fix the rate of exchange at which it can
convert into US dollars the pound sterling amount that the Company will
receive in respect of the Institutional Capital Raise. Accordingly, the
Company will mitigate the currency fluctuation risk that would otherwise apply
due to changes of the rate of exchange between pound sterling and the US
dollar (i) from the date of entry into the Placing Agreement and the US
Private Placement Document (ii) to the date upon which the sterling proceeds
for the Institutional Capital Raise are received in full.
The Company will only be required by each counterparty to a
DCFX to exchange the applicable sterling amount into US dollars if the Company
has received in full the amounts to be paid to it in respect of the
Institutional Capital Raise by the long stop date as defined under the terms
of the DCFX. If this has not occurred then the DCFX will lapse at no cost to
the Company.
7.5 Placing Agreement
7.5.1 On 6 June 2025, the Company and the Banks entered into the
Placing Agreement pursuant to which the Banks agree, severally and not jointly
or jointly and severally, subject to certain conditions, to use reasonable
endeavours to procure subscribers for the Placing Shares at the Issue Price
and failing which to subscribe themselves for the relevant Placing Shares at
the Issue Price (in such proportions as set out in the Placing Agreement).
7.5.2 Pursuant to the Placing Agreement the Company agrees to issue
the US Private Placement Shares at the Issue Price to subscribers procured by
it pursuant to the US Private Placement, and, failing subscription for such US
Private Placement Shares by the procured subscribers, the Banks agree,
severally and not jointly or jointly and severally, subject to certain
conditions, to subscribe themselves for the relevant US Private Placement
Shares at the Issue Price (in such proportions as set out in the Placing
Agreement). The Open Offer and the Connected Persons Subscription are not
underwritten.
7.5.3 The Placing and the US Private Placement are conditional, inter
alia, on the approval of the Transaction Resolutions at the General Meeting,
Admission occurring not later than 8:00 a.m. on 3 July 2025 (or such later
date determined by the Company in consultation with the Joint Global
Coordinators being no later than 14 September 2025), and the Placing Agreement
not having been terminated prior to Admission.
7.5.4 The Placing Agreement contains certain warranties, undertakings
and indemnities given by the Company in favour of the Banks which are
customary in agreements of this nature.
7.5.5 Under the Placing Agreement, the Banks will receive a base
commission of 1.50% of the aggregate gross proceeds of the Placing and the US
Private Placement and the Company may pay to the Banks at its absolute
discretion an additional commission of up to 0.25% of the aggregate gross
proceeds of the Placing and the US Private Placement. The Banks will not
receive any commission in relation to the Open Offer or the Connected Persons
Subscription.
7.5.6 The Company has agreed to pay all expenses of or incidental to
the Capital Raise and Admission.
7.5.7 The Banks may terminate the Placing Agreement at any time prior
to Admission in certain customary circumstances set out in the Placing
Agreement.
7.5.8 Under the Placing Agreement, the Company has agreed that it will
not, and will procure that its subsidiaries will not, without the prior
written consent of each of the Banks (not to be unreasonably withheld or
delayed), between the date of the Placing Agreement and the date which is 180
days after Admission, (i) offer, pledge, sell, contract to sell, grant any
option, right, warrant or contract to purchase, purchase any option or
contract to sell, lend or otherwise transfer or dispose of, directly or
indirectly, any Ordinary Shares or other shares in the capital of the Company
or any securities convertible into or exchangeable for Ordinary Shares or
other shares in the capital of the Company or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Ordinary Shares or other shares in the
capital of the Company, provided that the foregoing restrictions shall not
apply to (i) the issue of the New Ordinary Shares in connection with the
Capital Raise and the Placing Agreement; and (ii) the allotment and issue, or
transfer from treasury, of any Ordinary Shares, or the re-designation of any
Incentive Shares as Ordinary Shares, in each case to effect conversion (in
whole or in part) of any Incentive Shares into Ordinary Shares, in accordance
with the Articles.
7.5.9 Each of the Rosebank Co-Founders and the Non-Executive Directors
is subject to certain lock-in arrangements in respect of their respective
holding of Ordinary Shares. Further details of the lock-in arrangements are
set out in paragraph 6 of this Appendix.
7.6 Investor letters
On 5 June 2025, the Company entered into investor letters with certain
institutional investors in the United States in connection with the US Private
Placement pursuant to which each such institutional investor irrevocably
commits to subscribe under the US Private Placement, on the basis of the terms
and conditions set out in the US Private Placement Document, for US Private
Placement Shares at the Issue Price, conditional on, inter alia, Admission
occurring no later than 3 July 2025, or such later date determined by the
Company being no later than 14 September 2025. The investor letters and
related terms and conditions contain customary provisions, including customary
representations and warranties from each institutional investor for the
benefit of the Company. The US Private Placement is fully underwritten by the
Banks.
Material contracts relating to ECI
7.7 Flex-Tec SPA
ECI, Flex-Tec, Inc. ("Flex-Tec") and Charles Ragnar Fitch ("Flex-Tec Seller")
entered into a Stock Purchase Agreement on 21 June 2024, pursuant to which ECI
agreed to purchase and Flex-Tec Seller agreed to sell all the issued and
outstanding shares of Flex-Tec (the "Flex-Tec SPA"). There was an amount of
base consideration payable on closing and there remains an amount of $5
million (together with accrued interest) outstanding under a promissory note,
which becomes payable on 21 June 2026.
The Flex-Tec SPA contains customary representations and warranties relating to
Flex-Tec's title to assets, as well as customary business and commercial
warranties and certain tax warranties, including representations and
warranties related to Flex-Tec's Mexican subsidiary. The Flex-Tec SPA contains
customary representations and warranties relating to the Flex-Tec Seller's
ownership of his shares, as well as customary business and commercial
representations and warranties. The Flex-Tec SPA contained customary business
and commercial representations and warranties relating to Flex-Tec Buyer. The
Flex-Tec SPA also contains limitations on the Flex-Tec Seller's liability
under the Flex-Tec SPA, including time and financial limitations. Except for
certain fundamental representations and warranties, which survive until seven
years after closing or 60 days following the expiration of the applicable
statute of limitations, each of the representations and warranties survive
until 12 months after the closing. The liability of the Flex-Tec Seller in
respect of general representation and warranties claims was limited at a
financial threshold.
The Flex-Tec SPA is governed by the laws of the State of Delaware. The
Flex-Tec transaction has closed.
7.8 Omni SPA
Omni Buyer LLC ("Omni Buyer"), a subsidiary of ECI, Omni Connection
International, Inc. ("Omni"), Zima Corporation ("Zima"), Xiamen Rei Ho
Electronics, Ltd. ("Xiamen RH" and together with Omni and Zima, the "Omni
Targets") and, amongst others, Henry Cheng as a seller and sellers'
representative ("Omni Sellers") entered into a Stock Purchase Agreement on 26
April 2021, pursuant to which the Omni Buyer agreed to purchase and the Omni
Sellers agreed to sell the Omni Targets (the "Omni SPA"). The Omni SPA
provides for an earn-out payable to the Omni Sellers (the "Omni Earn-Out") and
certain other persons. The Omni SPA also provides for an escrow amount, to be
held until 21 May 2026, to serve as security for, and as a source of payment
of, any of the Omni Sellers' indemnification obligations with respect to taxes
and related expenses arising out of the Omni Target's Chinese operations for
the applicable pre-closing tax period, with any remaining funds released to
the Omni Sellers.
The Omni SPA is governed by the laws of the State of Delaware. The Omni
transaction has closed.
7.9 2024 Credit Agreement
Energy Midco Ltd., Energy Holdings, Energy Acquisition LP, Energy Acquisition
Company, Inc. and Electrical Components International, Inc. (each an indirect
subsidiary of ECI) have entered into a credit agreement dated 10 May 2024
with, among others, Alter Domus (US) LLC as term agent and PNC Bank, National
Association as revolving agent (the "2024 Credit Agreement"). Pursuant to the
2024 Credit Agreement, lenders party thereto have made available to each of
Energy Acquisition LP, Energy Acquisition Company, Inc. and Electrical
Components International, Inc. as borrowers facilities comprising (i) term
loan commitments in an aggregate principal amount of $905,000,000, (ii)
delayed draw commitments in an aggregate principal amount of $95,000,000 and
(iii) revolving credit commitments in an aggregate principal amount of
$100,000,000.
The proceeds of the term loans made available under the 2024 Credit Agreement
were applied to refinance certain existing indebtedness of the ECI Group and
to pay certain fees, costs and expenses in connection such refinancing. The
borrowers may utilise the delayed draw facility to finance acquisitions
permitted under the 2024 Credit Agreement. The revolving credit commitments
are available for financing general corporate purposes of the Group (including
capital expenditure).
Certain members of the ECI Group have entered into pledge agreements to secure
obligations owed to the lenders, among other secured parties, under the 2024
Credit Agreement. The assets subject to such security include shares in other
members of the ECI Group and intercompany debts.
The 2024 Credit Agreement contains certain representations and warranties
given by, among others, Energy Holdings. Energy Holdings, among other members
of the Group, is also subject to certain affirmative covenants in respect of,
among other things, delivery of financial reporting to the lenders,
maintenance of the assets and business of the Group, and use of proceeds of
the loans. In addition, certain negative covenants contained in the 2024
Credit Agreement impose restrictions on the ability of the Group to, among
other things, make investments, grant security over its assets, incur
indebtedness and effect certain restricted payments.
The scheduled maturity date under the 2024 Credit Agreement is 10 May 2029.
The borrowers are permitted to prepay loans (together with accrued interest
and, if applicable, break fees) prior to their scheduled maturity. Any
prepayment made prior to 10 May 2026 in connection with a change of control
shall be subject to certain early repayment fees.
The 2024 Credit Agreement is governed by New York law.
7.10 Hedging Arrangements
ECI has entered into certain ISDA master agreements and other FX and swap
agreements with third-party financial institutions for the purposes of hedging
its exposure to foreign exchange fluctuations and commodity prices. ECI has a
number of outstanding trades with each of (i) J. Aron & Company LLC; (ii)
Bank of America, N.A.; (iii) Bannockburn Global Forex, LLC; (iv) Pekao Bank
Poland; (v) BNP Paribas Poland; and (vi) JPMorgan Chase Bank, N.A. under such
agreements.
7.11 Factoring Arrangements
Certain subsidiaries of ECI have entered into factoring arrangements with a
number of financial institutions. Pursuant to these arrangements, each
participating member of the ECI Group finances its accounts receivable with a
financial institution by selling its receivables at a discount. The amount of
factored receivables as of April 2025 was approximately $105.7 million.
Certain of the factoring agreements may be terminated without cause by any
party, on the giving of notice within a prescribed notice period (depending on
the agreement) of up to 60 days.
Certain of the arrangements contain change of control provisions and/or
notification requirements which may be triggered upon Acquisition Completion.
7.12 Supply Chain Financing Arrangements
ECI and PrimeRevenue, Inc. ("PrimeRevenue") entered into a master services
agreement, dated 1 February 2019 (the "SCF Master Agreement"), and a supply
chain finance renewal proposal dated 31 January 2023 governing a supply chain
finance programme managed by PrimeRevenue (the "SCF Programme").
Under the programme, each supplier of ECI which agrees to join the SCF
Programme can sell to certain financial institutions participating in the SCF
Programme invoice receivables owed to it by ECI. Pursuant to the SCF
Programme, ECI benefits from extended payment terms in respect of invoices
submitted to the SCF Programme.
If either ECI or PrimeRevenue breaches a material provision of the SCF Master
Agreement and fails to cure such breach within 15 days of notice from the
non-breaching party of such breach, the non-breaching party may terminate the
SCF Master Agreement.
8. Related Party Transactions
8.1 Other than as set out in this announcement and the July 2024 Admission
Document and save as disclosed in the notes to the audited results of the
Group for the seven months ended 31 December 2024 (available at:
https://www.rosebankindustries.com (https://www.rosebankindustries.com) ), no
member of the Group has entered into any related party transaction since the
date of the Company's incorporation.
8.2 Other than as set out in the notes to the audited financial information
contained in Appendix VI of this announcement, no member of the ECI Group has
entered into any related party transaction since 1 January 2022.
9. Working Capital
The Directors are of the opinion, having made due and careful enquiry that,
after taking into account the net proceeds of the Placing, the US Private
Placement and the New Debt Facilities, the working capital available to the
Enlarged Group will be sufficient for its present requirements, that is, for
at least 12 months from the date of Readmission.
10. Significant Change
There has been no significant change in the financial performance or financial
position of the Group since 31 December 2024, the date to which the last
audited financial statements relating to the Group have been published.
Save as disclosed in this announcement, there has been no significant change
in the financial performance or financial position of the ECI Group since 31
December 2024, the date to which the last audited financial statements
relating to the ECI Group have been published.
11. Litigation
There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Group is aware)
during the 12 months preceding the date of this announcement which may have,
or have had in the recent past, significant effects on the Company and/or the
Group's financial position or profitability.
There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Company is
aware) during the 12 months preceding the date of this announcement which may
have, or have had in the recent past, significant effects on ECI and/or the
ECI Group's financial position or profitability.
12. Investing Policy
The Company is an 'investing company' for the purposes of the AIM Rules.
Following Acquisition Completion, the Company will cease to be an 'investing
company' and as such its Investing Policy will cease to apply.
Pending completion of an initial acquisition, in accordance with its Investing
Policy, the Directors have been using the initial seed capital, after expenses
of the July Placing, to fund transactional due diligence costs and minor
corporate expenses to enable the Company to seek acquisition opportunities and
pursue its strategy and, pending such use, they invested the net proceeds of
the July Placing in government securities and gilts, money market funds and/or
cash on deposit with less than 40% of the total net proceeds held in
investment securities such as corporate bonds. If Acquisition Completion does
not occur, the Directors intend to invest the net proceeds of the Capital
Raise on a short-term basis while the Rosebank Board evaluates other
acquisition opportunities and, if no acquisitions can be found on acceptable
terms, the Rosebank Board will consider how best to return surplus capital to
Shareholders.
In accordance with the AIM Rules, if the Company fails to make an acquisition
or has not substantially implemented its Investing Policy within 18 months of
the July 2024 Admission, the Company will be required to seek Shareholder
approval for its Investing Policy at its next annual general meeting and on an
annual basis thereafter until such time as there has been an acquisition or
the Investing Policy has been substantially implemented. The Directors would,
at any subsequent annual general meeting, ask Shareholders to consider whether
to continue exploring acquisition opportunities or to wind up the Company and
return funds (after payment of the expenses and liabilities of the Company) to
Shareholders.
13. No Prospectus
The Capital Raise has been structured to maximise the pre-emptive entitlement
of Shareholders to the extent reasonably possible without requiring the
publication of an FCA-approved prospectus. The Placing, the US Private
Placement and the Connected Persons Subscription are being carried out
pursuant to exemptions from the requirement to publish an FCA-approved
prospectus. In addition, the maximum amount that can be raised by the Company
under the Open Offer without an FCA-approved prospectus must not exceed the
sterling equivalent of €8 million. This will provide eligible Shareholders,
being those Shareholders with a registered address in the UK or Jersey and who
have not been invited to participate in the Placing, the US Private Placement
or the Connected Persons Subscription, with an opportunity to participate in
the proposed issue of Open Offer Shares on a pre-emptive basis.
The Capital Raise has therefore been structured such that an FCA-approved
prospectus is not required to be published, as to do so would have
necessitated ECI's financial information being converted from US GAAP to IFRS.
The extended timeframe that would be required to do so would have jeopardised
the Company's ability to negotiate the Acquisition in a timeframe acceptable
to the Seller.
IMPORTANT INFORMATION
The defined terms are set out in Appendix V to this announcement.
This announcement has been issued by, and is the sole responsibility of,
Rosebank Industries plc.
The information contained in this announcement is for background purposes only
and does not purport to be full or complete. No reliance may be placed for any
purpose whatsoever on the completeness, accuracy or fairness of the
information or opinions contained in this announcement.
Nothing in this announcement constitutes legal, financial, tax or other advice
or takes into account the particular investment objectives, financial
situation, taxation position or needs of any person.
This announcement is not for publication, release or distribution, directly or
indirectly, in whole or in part, in or into or from the United States,
Australia, Canada, New Zealand, Japan, the Republic of South Africa or any
other state or jurisdiction in which such publication, release or distribution
would be unlawful. This announcement and the information contained herein is
not intended to and does not contain or constitute an offer of, or the
solicitation of an offer to buy or subscribe for, securities to any person in
the United States, Australia, Canada, New Zealand, Japan, the Republic of
South Africa or any other state or jurisdiction in which such an offer would
be unlawful.
The distribution of this announcement may be restricted by law in certain
jurisdictions and persons into whose possession any document or other
information referred to herein comes should inform themselves about and
observe any such restriction. Any failure to comply with these restrictions
may constitute a violation of the securities laws of any such jurisdiction.
The New Ordinary Shares have not been and will not be registered under the US
Securities Act of 1933, as amended, and may not be offered or sold in the
United States, absent registration or an applicable exemption from
registration. The Company has no intention to register any part of the Capital
Raise in the United States or make a public offering of securities in the
United States.
This announcement is being distributed only to: (a) in a EEA Member State,
persons who are 'qualified investors' as defined in Article 2(e) of Regulation
(EU) 2017/1129, as amended (the "EU Prospectus Regulation") ("Qualified
Investors"); (b) in the United Kingdom, persons who are 'qualified investors'
as defined in Article 2(e) of the EU Prospectus Regulation as it forms part of
the domestic law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018 (the "UK Prospectus Regulation") who are: (i) persons
having professional experience in matters relating to investments who fall
within the definition of 'investment professionals' in Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as
amended (the "Order"); or (ii) high net worth entities falling within Article
49(2)(a) to (d) of the Order; or (iii) persons to whom an invitation or
inducement to engage in investment activity (within the meaning of section 21
of the Financial Services and Markets Act 2000, as amended ("FSMA")) in
connection with the sale of any securities of the Company may otherwise
lawfully be communicated or caused to be communicated (all such persons
together being referred to as "Relevant Persons"); and (c) in Australia, the
following persons to whom a disclosure document is not required to be provided
under Part 6D.2 of the Corporations Act 2001 (Cth) ("Corporations Act"): (i)
"sophisticated investors" within the meaning of section 708(8) of the
Corporations Act; or (ii) "experienced investors" meeting the criteria in
section 708(10) of the Corporations Act; or (iii) "professional investors"
within the meaning of section 708(11) of the Corporations Act) (all such
persons together being referred to as "Wholesale Investors"). This
announcement must not be acted on or relied on: (i) in the United Kingdom, by
persons who are not Relevant Persons; (ii) in any EEA Member State, by persons
who are not Qualified Investors; and (iii) in Australia, by persons who are
not Wholesale Investors. Any investment or investment activity to which this
announcement relates is available only to or will be engaged only with: (i)
Relevant Persons in the United Kingdom; (ii) Qualified Investors in any EEA
Member State; and (iii) Wholesale Investors in Australia. Persons into whose
possession this announcement comes are required to inform themselves about and
to observe any such restrictions.
Each of: (i) the Company; and (ii) Barclays Bank PLC ("Barclays"), BNP PARIBAS
("BNPP"), Citigroup Global Markets Limited ("Citigroup") and Investec Bank plc
("Investec") (together, the "Banks"), and in each case, their respective
affiliates as defined under Rule 501(b) of Regulation D under the Securities
Act ("affiliates"), expressly disclaims any obligation or undertaking to
update, review or revise any forward-looking statement contained in this
announcement whether as a result of new information, future developments or
otherwise.
No representation or warranty, express or implied, is made or given by or on
behalf of the Company, the Banks, or any of their respective parent or
subsidiary undertakings or the subsidiary undertakings of any such parent
undertakings, or any of such person's directors, officers, affiliates, agents,
advisers, employees, or any other person, as to the accuracy, completeness or
fairness of the information or opinions contained in this announcement and no
responsibility or liability is accepted for any such information or opinions.
Each of Investec, Barclays and Citigroup are authorised by the Prudential
Regulation Authority (the "PRA") and regulated in the UK by the PRA and the
Financial Conduct Authority (the "FCA"). BNPP is authorised and regulated by
the European Central Bank and the Autorité de contrôle prudentiel et de
résolution, and is authorised by the PRA and is subject to regulation by the
FCA and limited regulation by the PRA. Each Bank is acting exclusively for the
Company and no one else in connection with the Placing and Admission. They
will not regard any other person (whether or not a recipient of this
announcement) as their client in relation to the Placing and Admission and
will not be responsible to anyone other than the Company for providing the
protections afforded to their respective clients nor for giving advice in
relation to the Placing and Admission or any transaction or arrangement
referred to in this announcement.
Each of Rothschild & Co and Goldman Sachs, which are authorised and
regulated by the Financial Conduct Authority in the United Kingdom, are acting
exclusively for Cerberus and ECI and for no one else in connection with the
subject matter of this Announcement and will not be responsible to anyone
other than Cerberus and ECI for providing the protections afforded to its
clients or for providing advice in connection with the subject matter of this
Announcement.
In connection with the Admission and the Placing, the Banks, and any of their
respective affiliates, may take up a portion of the New Ordinary Shares as a
principal position and in that capacity may retain, purchase, sell, offer to
sell or otherwise deal for their own accounts in such Ordinary Shares and
other securities of the Company or related investments in connection with the
Admission, the Placing, or otherwise. Accordingly, references to the New
Ordinary Shares being issued, offered, subscribed, acquired, placed or
otherwise dealt in should be read as including any issue or offer to, or
subscription, acquisition, placing or dealing by the Banks, and any of their
respective affiliates acting in such capacity. In addition, the Banks, and any
of their respective affiliates may enter into financing arrangements
(including swaps or contracts for differences) with investors in connection
with which they may from time to time acquire, hold or dispose of New Ordinary
Shares. Further to any contractual obligations that may be in place between
the Company and the Banks, in the event that the Bank or their respective
affiliates subscribe for New Ordinary Shares in the Institutional Capital
Raise which are not taken up by relevant subscribers, the Banks and their
respective affiliates may for a limited period co-ordinate disposals of such
shares in accordance with applicable law and regulation. Neither the Banks,
nor any of their respective affiliates intend to disclose the extent of any
such investment or transactions otherwise than in accordance with any legal or
regulatory obligations to do so.
Forward looking statements
This announcement includes statements that are, or may be deemed to be,
'forward-looking statements'. These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
'believes', 'estimates', 'plans', 'projects', 'anticipates', 'expects',
'intends', 'may', 'will', or 'should', or, in each case, their negative or
other variations or comparable terminology.
All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors that could
cause the Group's actual results to differ materially from those indicated in
these statements. These factors include, but are not limited to, those
described in Appendix III to this announcement. Any forward-looking statements
in this announcement reflect the Company's current views, intentions, beliefs
or expectations with respect to future events and are subject to these and
other risks, uncertainties and assumptions relating to the Group's operations,
results of operations, growth strategy and liquidity.
These forward-looking statements speak only as at the date of this
announcement. Subject to any applicable obligations, the Company undertakes no
obligation to update publicly or review any forward looking statement, whether
as a result of new information, future developments or otherwise. All
subsequent written and oral forward-looking statements attributable to the
Company or individuals acting on behalf of the Company or the Group are
expressly qualified in their entirety by this paragraph. Prospective investors
should specifically consider the factors identified in this announcement which
could cause actual results to differ before making an investment decision.
For the avoidance of doubt, the contents of the Company's website or any
website directly or indirectly linked to the Company's website are not
incorporated by reference into, and do not form part of, this announcement.
Unaudited and adjusted financial information
ECI is the indirect parent company of Energy Holdings (Cayman) Ltd ("Energy
Holdings") which is the entity within the ECI Group at which level the
financial statements relating to the ECI Group are consolidated.
The financial information from which the unaudited adjusted financial
information for Energy Holdings and its subsidiaries in this announcement for
the four months ended 30 April 2025 as set out in section B of Appendix VI of
this announcement has been derived is extracted from the management accounts
of ECI, which are unaudited. The management accounts have been prepared on a
consistent basis with the accounting policies applied to the audited
consolidated financial statements as set out in section A of Appendix VI of
this announcement (as it relates to the financial information presented). It
should not be seen as a substitute for audited or reviewed financial
information and there can be no assurance that this financial information will
not be subject to material amendments following completion of the relevant
audit procedures. Accordingly, investors are cautioned not to place undue
reliance on this information. If any unaudited financial information is
subject to amendment following the completion of audit procedures, this may
have an adverse effect on the price of the Ordinary Shares.
This announcement also contains certain non-US GAAP financial measures and
ratios (as set out in section D of Appendix VI to this announcement).
Information to distributors
Solely for the purposes of the product governance requirements of Chapter 3 of
the FCA Handbook Product Intervention and Product Governance Sourcebook (the
"UK Product Governance Requirements"), and/or any equivalent requirements
elsewhere to the extent determined to be applicable, and disclaiming all and
any liability, whether arising in tort, contract or otherwise, which any
"manufacturer" (for the purposes of the UK Product Governance Requirements)
may otherwise have with respect thereto, the New Ordinary Shares have been
subject to a product approval process, which has determined that the New
Ordinary Shares are: (i) compatible with an end target market of retail
investors and investors who meet the criteria of professional clients and
eligible counterparties, each as defined in Chapter 3 of the FCA Handbook
Conduct of Business Sourcebook; and (ii) eligible for distribution through all
permitted distribution channels (the "Target Market Assessment").
Notwithstanding the Target Market Assessment, "distributors" (for the purposes
of the UK Product Governance Requirements) should note that: the price of the
New Ordinary Shares may decline and investors could lose all or part of their
investment; the New Ordinary Shares offer no guaranteed income and no capital
protection; and an investment in the New Ordinary Shares is compatible only
with investors who do not need a guaranteed income or capital protection, who
(either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to any
contractual, legal or regulatory selling restrictions in relation to the
Placing. Furthermore, it is noted that, notwithstanding the Target Market
Assessment, the Joint Global Coordinators will only procure investors who meet
the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does not constitute:
(a) an assessment of suitability or appropriateness for the purposes of
Chapters 9A or 10A respectively of the FCA Handbook Conduct of Business
Sourcebook; or (b) a recommendation to any investor or group of investors to
invest in, or purchase, or take any other action whatsoever with respect to
the New Ordinary Shares.
Each distributor is responsible for undertaking its own target market
assessment in respect of the New Ordinary Shares and determining appropriate
distribution channels.
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