Tender Offer
26/01/2023 07:00
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RNS Number : 8954N Rotala PLC 26 January 2023
26 January 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
Rotala Plc
("Rotala", the "Company" or the "Group")
Proposed Tender Offer of up to 18,181,818 Shares at 55 pence per Share
Rotala plc (AIM:ROL), an operator of bus routes in the UK for businesses,
local authorities and the general public, announces that it proposes to return
up to £10.0 million by way of a tender offer pursuant to which Eligible
Shareholders are invited to tender some or all of their Shares. Each Eligible
Shareholder is entitled to tender 35.7 per cent. of the Shares held by them at
the Record Date, rounded down to the nearest whole number of Shares at a price
of 55 pence per Share ("Basic Entitlement").
The Tender Price of 55 pence per Share represents:
• a premium of 34.1 per cent. to the closing price of 41.0 pence per
Share on the Latest Practicable Date; and
• a premium of 51.9 per cent. to the volume weighted average price
per Share over one month to the Latest Practicable Date.
A table showing the closing price for the Shares on the first Business Day of
each of the six months before the date of this announcement and on the Latest
Practicable Date is set out below.
The Company expects to post later today a circular (the "Circular") to
shareholders explaining details of the Tender Offer and including a Notice
of General Meeting containing a resolution to repurchase up to 18,181,818
Shares (the "Resolution"). The Resolution shall be proposed at the General
Meeting which will be convened at 10.00 a.m. on 16 February 2023. The
Directors are unanimously recommending Shareholders to vote in favour of the
Resolution as they have irrevocably undertaken to do in respect of their own
beneficial holdings of Shares amounting, in aggregate, to 16,198,934 Shares,
representing approximately 31.82 per cent. of the Company's issued share
capital.
A copy of the Circular will be published on the Company's website later today
at http://www.rotalaplc.com/our-investors/key-shareholder-documents.html
(http://www.rotalaplc.com/our-investors/key-shareholder-documents.html) . A
Tender Form for use by Shareholders who hold their Ordinary Shares in
certificated form in connection with the Tender Offer is also being despatched
with the Circular. Capitalised terms used but not defined in this announcement
will have the same meaning given to them in the Circular.
The Tender Offer is being made available to all Eligible Shareholders who are
on the Register at the Record Date.
The Tender Offer is to be effected by Shore Capital Stockbrokers (acting as
principal and not as agent, nominee or trustee) purchasing Shares from
Eligible Shareholders. Shore Capital Stockbrokers in turn, has the right to
require the Company to purchase from it, and can be required by the Company to
sell to it, such Shares at the Tender Price pursuant to the terms of the
Repurchase Agreement. The Company proposes to hold up to 4,188,684 of the
Shares purchased pursuant to the Repurchase Agreement in treasury with any
remaining shares being cancelled as it intends to use such shares, together
with the 1,721,316 Shares already held in treasury, to satisfy any allotment
of shares required upon the valid exercise of existing share options in the
Company.
The Board is making no recommendation to Shareholders in relation to their
participation in the Tender Offer. Whether or not Eligible Shareholders decide
to tender all or any of their Shares will depend on, among other things, their
view of Rotala's prospects, further details of which are set out below, and
their own individual circumstances, including their tax position. Eligible
Shareholders should make their own decision and are recommended to consult a
duly authorised independent financial adviser. However, Shareholders should
note that certain Directors, being John Gunn, Non-Executive Chairman, Simon
Dunn, Chief Executive, and Robert Dunn, Managing Director - North West, (see
below), who, in aggregate, hold approximately 23.62 per cent. of the number of
Shares available for tender on the Latest Practicable Date, have irrevocably
undertaken that they shall not tender any of their beneficial holdings of
Shares in the Tender Offer whilst the other Directors, being Kim Taylor, Group
Finance Director, Graham Peacock, Independent Non-Executive Director, and
Graham Spooner, Non-Executive Deputy Chairman and Senior Independent Director,
who hold, in aggregate, 4,574,722 Shares, representing approximately 9.30 per
cent. of the number of Shares available for tender on the Latest Practicable
Date, have irrevocably undertaken to tender an aggregate of 1,358,909 Shares,
representing approximately 2.76 per cent. of the number of Shares available
for tender on the Latest Practicable Date, in the Tender Offer.
In addition, two significant Shareholders, namely Nigel Wray who is the
beneficial owner of 7,662,400 Shares, representing approximately 15.57 per
cent. of the number of Shares available for tender on the Latest Practicable
Date, and Mrs Susan Tobbell, who holds 3,184,166 Shares, representing
approximately 6.47 per cent. of the number of Shares available for tender on
the Latest Practicable Date, have signed letters of intent to tender a minimum
of 2,500,000 Shares and 909,091 Shares respectively in the Tender Offer.
In order to finance the Tender Offer, the Company has drawn down £10.0
million on its existing revolving commercial loan facility ("Revolving Loan")
from HSBC Bank plc ("HSBC") which is available to it for general corporate
purposes. HSBC has made it a condition of the draw down under the Revolving
Loan for the purposes of the Tender Offer that each of John Gunn (and 181 Fund
Ltd, with which he is deemed to be acting in concert), Simon Dunn, and Robert
Dunn does not tender any Shares in the Tender Offer. The Company intends to
repay the sums drawn down under the Revolving Loan to finance the Tender Offer
from the net proceeds of the Proposed Disposal, as defined below (assuming
such disposal completes accordingly). The termination date of the Revolving
Loan is 14 March 2025.
Expected timetable of principal events
2023
Announcement of the Tender Offer, Tender Offer opens and date of this document 26 January
Latest time and date for receipt of Forms of Proxy and votes via CREST 10.00 a.m. on 14 February
(applicable to CREST shareholders only) for the General Meeting
General Meeting 10.00 a.m. on 16 February
Announcement of result of the General Meeting 16 February
Closing Date - latest time and date for receipt of Tender Forms and settlement 1:00 p.m. on 16 February
of TTE Instruction(s)
Record Date for the Tender Offer 6.00 p.m. on 16 February
Announcement of result of the Tender Offer 17 February
Unconditional Date for the Tender Offer and completion of purchase of Shares 17 February
under the Tender Offer
CREST accounts credited with Tender Offer proceeds for uncertificated Shares by 3 March
Despatch of cheques for Tender Offer consideration in respect of certificated by 3 March
Shares sold under the Tender Offer and any balance certificates in respect of
any unsold certificated Shares
Background to and reasons for the Tender Offer
Further to the Company's announcement on 23 December 2022, the Board has
resolved to return up to £10.0 million of cash to Shareholders in
anticipation of, and by way of preparation for, the proposed disposal by the
Company of its bus depot in Bolton, Greater Manchester, including the related
fixtures, fittings, plant and machinery, and the majority of its Bolton bus
fleet (the "Proposed Disposal"), further details of which are set out below.
The Board considers the Tender Offer to be beneficial to Shareholders for the
following principal reasons:
· it is available to all Eligible Shareholders regardless of the size
of their holding;
· it permits Shareholders who wish to retain their current investment
in the Company and their Shares to do so, as no Shareholder is required to
participate in the Tender Offer, and thus provides Shareholders with
flexibility; and
· it provides Eligible Shareholders who wish to reduce their holdings
of Shares with an opportunity to do so at a premium of 34.1 per cent. to the
closing price per Share on the Latest Practicable Date.
Use of Capital Released by the Proposed Disposal
During FY 2022, the Company's requirements for new vehicles were very limited,
being restricted to vehicles for new work or contracts won. Aside from the new
vehicles for the Small Franchise contracts won in the GMCA area included in
the table in the Company's announcement of 23 December 2022, subject to any
additional requirements for new business, the Company does not expect to
acquire a material number of new vehicles in FY 2023. The Company does expect
that in FY 2024, it will begin a fresh cycle of fleet replacement. It is
intended that these vehicles will be electric and not diesel fuelled.
In addition, over FY 2023 and FY 2024, the Company expects to begin rebuilding
its Preston bus depot, building a new freehold depot in the Eccles area of
Greater Manchester and acquiring a new freehold depot in the Heathrow area.
Whilst these steps might involve a total outlay of up to £17.0 million, the
Company's hire purchase debt and mortgage debt will continue to amortise in FY
2023 and FY 2024, such that the Company's total net debt will remain within
the target of £40 million set by the Board for 30 November 2022. As set out
in the table above, this target was successfully met.
Therefore, given the historic capacity of the Company to obtain loan capital
and asset finance lines to facilitate business acquisitions, freehold property
acquisition and development, and the renewal of the vehicle fleet, the
Disposal is anticipated to realise capital of which the Company has no current
need.
In light of the above, the Board believes that by way of preparation for the
Proposed Disposal and the arrangements which will need to follow, certain cash
should be returned to Shareholders in advance of such arrangements being
formally completed. Following consideration and consultation, the Board has
concluded that the Tender Offer is the best and most efficient way to return a
significant amount of capital to Shareholders in a short space of time, taking
account of the relative costs, complexity and timeframes of the various
possible methods, as well as the likely tax treatment for Shareholders.
The Tender Offer
The Tender Offer is being made on behalf of the Company by Shore Capital Stockbrokers to all Shareholders who are on the Register at the Record Date save that for legal and regulatory reasons, the Company is unable to make the opportunity to participate in the Tender Offer available to Shareholders who are resident in the Restricted Territories. Full details of the Tender Offer, including the terms and conditions on which it is being made, will be set out in the Circular and, in relation to Eligible Shareholders holding Shares in certificated form, on the Tender Form.
There is no guarantee that any Shares will be acquired pursuant to the Tender
Offer. The Tender Offer is conditional, inter alia, on the passing of the
Resolution at the General Meeting and the satisfaction of the other Conditions
set out in set out in the Circular. The approval of the Resolution requires
not less than 75 per cent. of those voting at the General Meeting in person or
by proxy to vote in favour of the Resolution. It is possible that Shareholders
may not approve the Tender Offer.
The Tender Offer involves the following:
· The Tender Offer is being made to Eligible Shareholders by Shore Capital Stockbrokers for the purchase of up to 18,181,818 Shares. Under the Tender Offer, each Shareholder is entitled to have up to 35.7 per cent. of his or her shareholding purchased by Shore Capital Stockbrokers at the Tender Price (55 pence per Share) together with potentially further purchases depending on the number of Shares tendered by other Shareholders.
· Eligible Shareholders will be able to decide to tender none, some, or all of their Shares within the overall limits of the Tender Offer.
· Tenders in excess of a Shareholder's Basic Entitlement will only be accepted to the extent that other Shareholders tender less than their Basic Entitlement or do not tender any Shares.
· All Shares validly tendered by any Shareholder up to their Basic Entitlement will be accepted in full.
· The Tender Form to be completed by Shareholders who hold their Shares in certificated form contains a box to enable those Shareholders to specify the total number of Shares that they wish to tender. If the number of Shares to be tendered is more than the relevant Shareholder's Basic Entitlement, such tender in excess of such Shareholder's Basic Entitlement will only be satisfied to the extent that other Shareholders tender less than their Basic Entitlement or do not tender any Shares.
· Shareholders who hold their Shares in uncertificated form (i.e. in CREST) and who wish to tender their Basic Entitlement should send a TTE instruction through CREST to the member account, details of which will be set out in the Circular. The Receiving Agent will calculate Eligible Shareholders' Basic Entitlement on the Record Date and return any excess Shares. If Eligible Shareholders wish to tender a different number of Shares to their Basic Entitlement, they should send a TTE Instruction through CREST to the same member account specifying such number of Shares that they wish to tender.
· If the aggregate value of Shares validly tendered by all Shareholders equates to an amount greater than £10.0 million, tenders will be accepted in the order set out below:
o first, all Shares validly tendered by any Shareholder up to their Basic Entitlement will be accepted in full; and
o second, all Shares validly tendered by Shareholders in excess of their Basic Entitlements will be scaled down pro rata to the total number of such Shares tendered such that the total number of Shares purchased pursuant to the Tender Offer does not exceed 18,181,818, provided that Shore Capital Stockbrokers shall be entitled to exercise its absolute discretion as regards any fractional entitlements resulting from the Tender Offer.
· All successfully tendered Shares purchased by Shore Capital Stockbrokers will be repurchased from Shore Capital Stockbrokers by the Company and will either be held in treasury or cancelled.
· While any rights of Shareholders who choose not to tender their Shares will be unaffected, the reduction in the Company's issued share capital may result in a reduction in the liquidity of the Shares in the secondary market.
Repurchase Agreement
Under the terms of the Repurchase Agreement, the Company has granted a put
option to Shore Capital Stockbrokers which, on exercise by Shore Capital
Stockbrokers, obliges the Company to purchase from Shore Capital Stockbrokers,
at the Tender Price, the Shares purchased by Shore Capital Stockbrokers
pursuant to the Tender Offer. In addition, under the terms of the Repurchase
Agreement, Shore Capital Stockbrokers has granted the Company a call option
which, on exercise by the Company, obliges Shore Capital Stockbrokers to sell
to the Company, at the Tender Price, the Shares purchased by Shore Capital
Stockbrokers pursuant to the Tender Offer. Under the Repurchase Agreement and
pursuant to the Tender Offer generally, Shore Capital Stockbrokers will act as
principal and not as agent, nominee, or trustee.
General Meeting to approve the Resolution
Under CA 2006, the Company will require the authority from Shareholders at a
general meeting to purchase Shares under the Tender Offer. A notice convening
the General Meeting, which is to be held at the Company's registered offices
at Cross Quays Business Park, Hallbridge Way, Tividale, Oldbury, West Midlands
B69 3HW at 10.00 a.m. on 16 February 2023, will be set out in the Circular. At
this meeting, the Resolution will be proposed to authorise the Company to make
the repurchase of Shares which is necessary to enable the Tender Offer to be
implemented. The Resolution will be proposed as a special resolution requiring
the approval of 75 per cent. of the votes cast at the General Meeting. The
Company will not be able to purchase any Shares pursuant to the Tender Offer
unless the Resolution is duly passed.
The authority to repurchase Shares pursuant to the Resolution which is being
sought at the General Meeting will be in addition to, and not in substitution
for, the Company's existing authority relating to market purchases of Shares
obtained at the Company's Annual General Meeting on 19 May 2022. Whether the
Company will be in a position to, or will wish to, use that authority before
the Company's Annual General Meeting due to be held later this year, which is
anticipated to be held in May 2023, will depend upon the outcome of the Tender
Offer. Therefore, at this stage it is not possible to be definitive about this
matter. A further announcement, if necessary, will be made in due course. The
results of the General Meeting will be announced through a Regulatory
Information Service and the Company's website as soon as possible once known.
Irrevocable undertakings and letters of intent
As set out above, the Company has received irrevocable undertakings from
certain Directors, being John Gunn, Simon Dunn, and Robert Dunn, who, in
aggregate, hold approximately 23.62 per cent. of the number of Shares
available for tender, that they shall not tender any of their beneficial
holdings of Shares in the Tender Offer. In addition, the Company has received
irrevocable undertakings from the remaining Directors, being Kim Taylor,
Graham Peacock and Graham Spooner, in respect of, in aggregate, 4,574,722
Shares, representing approximately 9.30 per cent. of the number of Shares
available for tender on the Latest Practicable Date, to tender an aggregate of
1,358,909 Shares, representing approximately 2.76 per cent. of the number of
Shares available for tender on the Latest Practicable Date, in the Tender
Offer. Details of the irrevocable undertakings received by the Company are as
follows:
% held of the Company's total voting rights on the Latest Practicable Date
% of total voting rights held following completion of the Tender Offer(1)
Number of Shares being tendered
Resulting shareholding(1)
Director
John Gunn - 14.89% 7,326,340 23.62%
Simon Dunn - 3.71% 1,827,196 5.89%
Robert Dunn - 5.02% 2,470,676 7.96%
Kim Taylor 181,818 1.20% 408,738 1.32%
Graham Peacock 909,091 6.47% 2,275,075 7.33%
Graham Spooner 268,000 1.63% 532,000 1.71%
(1) Assumes full take up of the Tender Offer
In addition, as set out above, the Company has received letters of intent from
certain significant Shareholders, namely Nigel Wray and Mrs Susan Tobbell, who
hold, in aggregate, 10,846,566 Shares, representing approximately 22.04 per
cent. of the Shares available for tender, to tender a minimum of an aggregate
of 3,409,091 Shares, representing approximately 6.93 per cent. of the Shares
available for tender on the Latest Practicable Date, in the Tender Offer.
Details of the letters of intent received by the Company are as follows:
% held of the Company's total voting rights on the Latest Practicable Date
% of total voting rights held following completion of the Tender Offer(2)
Name of beneficial owner of Shares
Number of Shares being tendered
Resulting shareholding(2)
Nigel Wray 2,500,000(1) 15.57% 5,162,400 16.64%
Susan Tobbell 909,091 6.47% 2,275,075 7.33%
(1) A minimum of 2,500,000 Shares
(2) Assumes full take up of the Tender Offer
Related party transaction
Nigel Wray who so far as the Company is aware holds 7,662,500 Shares,
representing approximately 15.57 per cent. of the Company's total voting
rights, is a substantial shareholder in the Company, therefore his
participation in the Tender Offer is deemed to constitute a related party
transaction under Rule 13 of the AIM Rules for Companies. The independent
Directors (for the purposes of the Tender Offer, being John Gunn, Simon Dunn
and Robert Dunn), having consulted with Shore Capital and Corporate (in its
capacity as the Company's nominated adviser) consider that the terms of Mr
Wray's participation in the Tender Offer are fair and reasonable insofar as
Shareholders are concerned.
Takeover Code
Eligible Shareholders with significant holdings of Shares who do not tender
into the Tender Offer in circumstances where other Eligible Shareholders do
participate in the Tender Offer will see their proportionate holding in the
Company increased, with a corresponding increase in the voting power of the
Shares held by such Shareholders. Such holders of significant holdings of
Shares could exercise their voting rights in a manner that is not aligned with
the interests of other Shareholders. In addition, a decision to sell the
Shares by such a significant Shareholder could have a materially greater
adverse effect on the price for Shares (due to greater proportionate supply)
following the completion of the Tender Offer.
As a public company which has its registered office and central place of
management and control in the United Kingdom, the Company is subject to the
Takeover Code. Under Rule 9 of the Takeover Code, any person who acquires an
interest (as such term is defined in the Takeover Code) in shares which taken
together with the shares in which they and persons acting in concert (as
defined by the Takeover Code) with them are interested, carry 30 per cent or
more of the voting rights in a company which is subject to the Takeover Code
is normally required to make a general offer to all of the remaining
shareholders to acquire their shares.
Similarly, when any person, who together with persons acting in concert with
them, is interested in shares which in aggregate carry not less than 30 per
cent. of the voting rights of a company subject to the Code, but does not hold
shares carrying more than 50 per cent. of the voting rights of such a company,
and such person, or persons acting in concert with them, acquires an interest
in any shares which increases the percentage of shares carrying voting rights
in which they are interested, that person together with the persons acting in
concert with them, is normally required to extend an offer in cash at a price
not less than the highest price paid by them, for shares in the company within
the preceding 12 months, to the holders of any class of equity share capital
whether voting or non-voting and also to the holders of any class of
transferable securities carrying voting rights.
Under Rule 37.1 of the Takeover Code, when a company purchases its own voting
shares, any resulting increase in the percentage of shares carrying voting
rights in which a person or group of persons acting in concert is interested
will be treated as an acquisition for the purpose of Rule 9.
However, Note 1 of Rule 37.1 states that a person who comes to exceed the
limits in Rule 9.1 as a consequence of a company's redemption or purchase of
its own shares will not normally incur an obligation to make a mandatory offer
unless that person is a director, or the relationship of the person with any
one or more of the directors is such that the person is, or is presumed to be
acting in concert with any of the directors. A person who has appointed a
representative to the board of the company, and investment managers of
investment trusts, will be treated for these purposes as a director.
Shore Capital Stockbrokers will purchase, as principal (not as agent, nominee
or trustee) shares under the Tender Offer which could result in Shore Capital
Stockbrokers acquiring an interest in Shares carrying 30 per cent. or more of
the voting rights of the Company. Promptly following such purchase, under the
terms of the Repurchase Agreement, Shore Capital Stockbrokers will sell all
the Shares purchased by Shore Capital Stockbrokers pursuant to the Tender
Offer to the Company and the Company will buy and thereafter hold up to
4,188,684 Shares in treasury and cancel any remaining Shares which it has
purchased.
Accordingly, a waiver has been obtained from the Panel on Takeovers and
Mergers in respect of the application of Rule 9 to the purchase by Shore
Capital Stockbrokers of the voting shares under the Tender Offer.
Market Quotations
The following table shows the closing price for the Shares as derived from the
AIM Appendix to the Daily Official List on the first Business Day of each of
the six months before the date of this announcement and on 25 January 2023
being the Latest Practicable Date:
Date Share price (pence)
1 August 2022 30.5
1 September 2022 33.5
3 October 2022 33.5
1 November 2022 34.5
1 December 2022 34.0
3 January 2023 35.5
25 January 2023 41.0
Settlement
Subject to the Tender Offer becoming unconditional, payment of the Tender
Price due to Shareholders under the Tender Offer whose tenders have been
accepted (rounded down to the nearest whole penny) is expected to be effected
by the despatch of cheque(s) or the crediting of CREST accounts (as
appropriate) by 3 March 2023.
Recommendation
The Board unanimously recommends Shareholders to vote in favour of the
Resolution to be proposed at the General Meeting, as each of the Directors has
irrevocably undertaken to do in respect of their own aggregate beneficial
holdings of 16,198,934 Shares, representing approximately 32.92 per cent. of
the Company's total voting rights.
The Board is making no recommendation to Shareholders in relation to their
participation in the Tender Offer. Whether or not Eligible Shareholders decide
to tender all or any of their Shares will depend on, among other things, their
view of Rotala's prospects and their own individual circumstances, including
their tax position. Shareholders should make their own decision and are
recommended to consult a duly authorised independent financial or professional
adviser.
Notification of interests
Following the Company's purchase of Shares from Shore Capital Stockbrokers
pursuant to the terms of the Repurchase Agreement, and regardless of whether a
Shareholder tenders any or all of their Shares pursuant to the terms of the
Tender Offer, the number of Shares in which a Shareholder is interested when
taken as a percentage of the Company's aggregate Issued Share capital as a
whole may change. This may give rise to an obligation on the part of such
Shareholder pursuant to the Disclosure Guidance and Transparency Rules to
notify the Company of their interest in Shares within two days of becoming
aware of such change. If you are in doubt as to whether you should notify the
Company, or as to the form of that notification, please consult your
professional adviser.
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the UK version of the EU Market Abuse
Regulation (2014/596) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended and supplemented from time to time.
Rotala Plc 0121 322 2222
John Gunn, Chairman
Simon Dunn, Chief Executive
Kim Taylor, Group Finance Director
Shore Capital 020 7408 4090
Tom Griffiths / James Thomas / Lucy Bowden (Corporate Advisory)
Henry Willcocks (Corporate Broking)
About the business
Rotala provides a range of transport solutions, ranging from local bus
services under contract to local authorities, through to commercial bus
routes. Rotala has operations at Heathrow Airport, in the East and West
Midlands and in the North West. Operating companies are Diamond Bus Ltd,
Diamond Bus (North West) Ltd, Diamond Bus (East Midlands) Ltd, Hallmark
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