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REG - Local Shopping REIT Thalassa Holdings - Posting of Offer Response





 




RNS Number : 6509S
Local Shopping REIT (The) PLC
12 March 2019
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY (IN WHOLE OR IN PART), IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

 

FOR IMMEDIATE RELEASE.

 

12 March 2019

 

The Local Shopping REIT plc (the "Company" or "LSR")

 

Circular Rejecting Thalassa's Offer

 

The board of The Local Shopping REIT plc (the "LSR Board") announces that it is today publishing its response circular (the "Response Circular") in relation to the unsolicited offer by Thalassa Holdings Ltd ("Thalassa") to acquire the entire issued and to be issued ordinary share capital of the Company not already owned by Thalassa (the "Offer").

 

The LSR Board reaffirms its previous statement that the Offer represents an opportunistic attempt to take control of LSR Shareholders' money and confirms its commitment to returning cash to LSR Shareholders in accordance with the LSR Investment Policy, approved by LSR Shareholders in 2013. 

 

In furtherance of this, the Board has convened a General Meeting of the Company to take place on Friday, 5 April 2019, notice of which is contained in the Response Circular, at which the Company's members will be invited to approve an ordinary resolution (the "Resolution") authorising the LSR Directors to take appropriate action to liquidate the Company and thus achieve the mandated outcome of the LSR Investment Policy, including petitioning the Court for the winding-up of the Company in the event that Thalassa's Offer lapses or is withdrawn.

 

The LSR Board therefore firmly recommends LSR Shareholders to reject Thalassa's Offer, to not complete and return a Form of Acceptance and, instead, to vote in favour of the Resolution at the General Meeting to be held at 10.00 a.m. on 5 April 2019 at the offices of BDO LLP at 150 Aldersgate Street, London EC1A 4AB.

 

Stephen East, non-executive Chairman of The Local Shopping REIT, commented: 

 

"The LSR Board believes that there are compelling reasons for LSR Shareholders to reject Thalassa's Offer and, instead, vote to authorise the LSR Board to seek a return to them of the cash to which they are entitled, including by petitioning the Court for a winding-up order.

 

"The cash element of the Offer is substantially less than the cash to which LSR Shareholders are entitled under the investment policy they adopted in 2013.  It is also nearly 50% short of the first cash distribution which the LSR Board expected LSR Shareholders would already have received under the previously proposed Members' Voluntary Liquidation, which Thalassa blocked.

 

"The LSR Board also considers that shares in Thalassa, comprising the majority of the consideration for the Offer, are unacceptably risky for a number of reasons, including Thalassa's poor record of investment returns; never having paid a dividend; and with future profitability currently dependent on a pre-revenue technology subsidiary and an unfocused investment strategy. 

 

"LSR Shareholders accepting Thalassa's Offer would also be exchanging the shareholder protections and corporate governance arrangements of a UK company with a Premium Listing on the London Stock Exchange for the reduced protections attaching to a BVI company with a Standard Listing.  "Furthermore, by Thalassa's own admission, if its Offer succeeds, it might lose its current listing on the London Stock Exchange, meaning that its shares may not be able to be traded on any exchange or market for listed securities."

 

 

The LSR Board makes its recommendation as to Thalassa's Offer having regard to the considerations summarised below.

 

·    The LSR Board believes that Thalassa is trying to acquire control of LSR Shareholders' cash, which the LSR Board has been seeking to return to them. 

 

·    The basic cash element of Thalassa's Offer Consideration (capped at £9 million, in aggregate) is substantially less that the cash to which LSR Shareholders are entitled and which the LSR Board has been so far prevented by Thalassa from returning to them - despite 99.98% of LSR Shares voted (other than those held by Thalassa) at the Company's general meeting in December 2018 having been voted in favour of that return.  It is also well short of the initial cash distribution that the LSR Board previously stated it expected that LSR Shareholders could by now have received through the Member's Voluntary Liquidation (had Thalassa not blocked it).

 

·    Under the Mix-and-Match Facility in Thalassa's Offer, LSR Shareholders will only be entitled to receive a greater proportion of their Offer Consideration in cash if there are equivalent and off-setting elections by other LSR Shareholders to receive a greater proportion of their Offer Consideration in New Thalassa Ordinary Shares.  This would be the case even if the £9 million cash element of Thalassa's Offer has not been fully utilised.

 

·    The majority of Thalassa's Offer Consideration comprises New Thalassa Ordinary Shares, which the Board considers to be unacceptably risky (including no guarantee that they will be bought back under Thalassa's share buy-back programme).

 

·    LSR Shareholders accepting Thalassa's Offer will, in the LSR Board's opinion, be exposed to risks associated with Thalassa's loss-making trading activity and its unfocused investment strategy.

 

·    LSR Shareholders accepting Thalassa's Offer may end up holding Thalassa Ordinary Shares that Thalassa itself acknowledges may not be able to be traded on any exchange or market for quoted or listed securities.

 

·    Thalassa is incorporated in the British Virgin Islands and its listing on the London Stock Exchange is a Standard Listing, meaning that LSR shareholders accepting Thalassa's Offer would lose many of the shareholder protections they currently enjoy through LSR's status as a UK company with a Premium Listing.

 

·    The LSR Board has sought advice from leading Queens Counsel on the options open to it to return capital to LSR Shareholders and, in particular, the merits of an application to the Court to wind-up the Company in circumstances where:

 

o the LSR Investment Policy, which has been pursued by the LSR Board since its adoption in 2013 (three years before Thalassa's investment in the Company), requires the LSR Board, in summary, to realise the assets of the Company, repay its debts and distribute the surplus to LSR Shareholders;

 

o the LSR Board has determined that the most appropriate way for the distribution to be made is through the liquidation of the Company;

 

o a Members' Voluntary Liquidation has been blocked;

 

o Thalassa's Offer has been rejected by LSR Shareholders; and

 

o the LSR Board does not consider that there is an alternative investment policy that could be adopted which would be consistent with members' expectations and be likely to command the support of a majority of members. 

 

Whilst granting an order to wind-up the Company is at the Court's discretion, on the basis of the advice which it has received (and in respect of which privilege is not waived), the LSR Board considers that, in the circumstances described above, the prospects of the Court making a winding-up order are good.

 

The LSR Board notes that Thalassa states in its Offer Document that "Acceptances of the Offer should be received as soon as possible and, in any event, by no later than 1.00 p.m. (London time) on 27 March 2019".  However, LSR Shareholders should be aware that the earliest date that Thalassa could close its Offer as to acceptances (if it declared it unconditional as to acceptances on its first closing date of 27 March 2019) is, in fact, 1.00 p.m. on Wednesday, 10 April 2019.  The LSR Board will announce the result of voting on the Resolution to be considered at the General Meeting on 5 April 2019 immediately after the meeting.

 

Further information for LSR Shareholders and the full text of the letter from the Chairman of LSR to LSR Shareholders is contained in the Response Circular being published and posted today and which is available on LSR's website at www.thelocalshoppingreit.co.uk.

 

LSR Shareholders will find enclosed with the Response Circular a Form of Proxy for use in connection with the General Meeting (or any adjournment thereof).

 

Whether or not you intend to be present at the General Meeting, LSR Shareholders are asked to complete and sign the Form of Proxy in accordance with the instructions printed on it and return it to Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA as soon as possible but, in any event, so as to arrive by no later than 10.00 a.m. on 3 April 2019 or 48 hours (excluding any part of a day which is not a working day) before the time appointed for the adjourned meeting. A reply-paid envelope for use by LSR Shareholders with registered addresses in the UK will be enclosed with the Response Circular for their convenience. LSR Shareholders who hold their LSR Shares in uncertificated form and who wish to appoint a proxy or proxies through the CREST electronic appointment service should follow the instructions set out in the Response Circular to submit a CREST Proxy Instruction.

 

The attention of LSR Shareholders is drawn to the disclosure requirements of Rule 8 of the Takeover Code, which continue to apply to the Company, and which are summarised below.

 

Please be aware that addresses, electronic addresses and certain other information provided by LSR Shareholders and persons with information rights and other relevant persons for the receipt of communications from LSR may be provided to Thalassa during the Offer Period as required by the City Code.


Save where otherwise defined herein, capitalised words and expressions used in this announcement have the meanings given to them in the Response Circular.

 

Enquiries:

 

The Local Shopping REIT plc

William A Heaney

Company Secretary

020 7355 8800

 

BDO LLP (Independent Rule 3 Adviser to the Company)

John Stephan

Susan Jarram

020 7486 5888

 

Tavistock (Financial PR)

Jeremy Carey

Simon Hudson

020 7920 3150

 

Important Notices

 

BDO LLP ("BDO"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to the Company and no one else in connection with the Offer and will not be responsible to anyone other than the Company for providing the protections afforded to clients of BDO or for providing advice in connection with the Offer or any other matter referred to in this announcement.

 

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities or the solicitation of any vote or approval in any jurisdiction. Any offer (if made) will be made solely by certain offer documentation which will contain the full terms and conditions of any offer (if made), including details of how such offer may be accepted. This announcement has been prepared in accordance with English law and the Code and information disclosed may not be the same as that which would have been prepared in accordance with laws outside the United Kingdom. The release, distribution or publication of this announcement in jurisdictions outside the United Kingdom may be restricted by the laws of the relevant jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.

 

Disclosure requirements of the Takeover Code (the "Code")

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

 

Publication on website

 

A copy of this announcement and the documents (including the Response Circular) required to be published by Rule 26.1 of the Code will, subject to certain restrictions relating to persons resident in restricted jurisdictions, be available on the Company's website at www.localshoppingreit.co.uk by no later than 12 noon on the Business Day following the date of this announcement. For the avoidance of doubt, the content of the website referred to above is not incorporated into and does not form part of this announcement.

 

Forward-looking statements

 

This announcement and the Response Circular contains statements that are or may be forward-looking with respect to the financial condition, results of operations and businesses and achievements of the Company. These statements can be identified by the use of forward-looking terminology such as "believe", "anticipate", "expect", "prospect", "estimated", "should", "may" or the negative thereof, or other variations thereof, or comparable terminology indicating expectations or beliefs concerning future events. These forward-looking statements include risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors which could or may cause actual results, achievements or developments to differ materially from those expressed or implied by such forward-looking statements. The Company assumes no obligation to update or correct the information contained in this announcement or the Response Circular, whether as a result of new information, future events or otherwise, except to the extent required by law or regulation. The statements contained in this announcement and the Response Circular are made as at the date of this announcement or the Response Circular (as the case may be), unless some other time is specified in relation to them, and publication of this announcement and the Response Circular shall not give rise to any implication that there has been no change in the facts set out in this announcement or the Response Circular (as the case may be) since such date. Unless expressly stated to the contrary in this announcement or the Response Circular, no statement in this announcement or the Response Circular is intended as a profit forecast or estimate for any period and no statement in this document should be interpreted to mean that earnings for the Company or earnings per LSR Share, as appropriate, for the current or further financial years would necessarily match or exceed the historical published earnings for the Company or earnings per LSR Share.

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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