RNS Number:0278O
Orbis PLC
28 July 2003
Orbis PLC
Proposed reduction of Existing Senior Facilities, Proposed issue of Convertible
Preference Shares and Proposed Share Reorganisation, Proposed transfer from the
Official List to the Alternative Investment Market, Announcement of Unaudited
Preliminary Results and Notice of Extraordinary General Meeting
Summary
- On 28 November 2002, following the appointment of a permanent Chief
Executive and Finance Director, the Board confirmed its intention to effect a
long-term arrangement to replace the Existing Senior Facilities which the
Company is unable to repay when they expire on 31 July 2003.
- Following extensive negotiations with the Senior Lenders, the Board
of Orbis has today issued a Circular to Ordinary Shareholders which details the
Company's proposed capital restructuring to effect such long-term arrangements
and incentivise the management team to develop and grow the business.
- In summary, the terms of the Proposals provide for:
* the securing of #49 million five year senior facilities, with no
principal repayment for two years and a reduced interest coupon; and
* a #15 million reduction in the Company's senior debt balance in
consideration for the issue of zero coupon convertible preference shares with a
nominal value of #15 million to the Senior Lenders.
- Post conversion, Ordinary Shareholders receive 9.9 per cent. of the
equity value up to the point where the #15 million nominal value of the
Convertible Preference Shares has been fully recovered and two-thirds of all
equity value above this level. This structure incentivises Ordinary
Shareholders and the Senior Lenders to support the growth and development of the
Group.
- In conjunction with the Proposals, the Company intends to transfer
its listing from the Official List to AIM, reflecting its reduced market
capitalisation.
- The Proposals and the management incentive scheme are conditional on
the approval of the Resolutions to be put to Ordinary Shareholders at the EGM
which has been convened for 11.00 a.m. on 20 August 2003. Irrevocable
undertakings to vote in favour of the Proposals have been received from the
holders of 40.8 per cent. of Ordinary Shares.
- In the event that the Proposals are not implemented the Company would
then only be able to continue to meet its obligations as they fall due with the
ongoing support of the Senior Lenders. Based on discussions to date, the Board
believes that, should the Proposals not be implemented, there would be no
guarantee of obtaining this support from the Senior Lenders. In such
circumstances the Company might be forced to seek appointment of an
administrative receiver or pursue other insolvency proceedings.
- Orbis has also today separately announced its unaudited preliminary
results for the year-ended 31 March 2003.
Commenting on the Proposals, John Leach, Chairman of Orbis, said:
"I am pleased to announce that, following extensive negotiations with the Senior
Lenders, conditional agreement has been reached on a restructuring of the
Group's capital structure which will secure the long-term support of the Senior
Lenders and reduce the level of debt being carried by the Company. The
restructuring is critical for the Company's future and will allow a new
growth-orientated business strategy to be implemented for the benefit of all
stakeholders."
Orbis PLC 01895 465 500
John Leach, Chairman
Michael Holmes, Chief Executive
Close Brothers Corporate Finance Limited 020 7655 3100
Martin Gudgeon
Gareth Davies
Holborn Public Relations 020 7929 5599
David Bick
Chris Steele
Close Brothers Corporate Finance Limited, which is regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Orbis and
for no one else in connection with the Proposals and the proposed admission to
AIM and will not be responsible to any other persons for providing the
protections afforded to clients of Close Brothers Corporate Finance Limited or
for advising any such person on the contents of this document or any matter
referred to herein. The responsibilities of Close Brothers Corporate Finance
Limited, as nominated adviser, are owed solely to the London Stock Exchange.
Orbis plc ("Orbis")
Proposed reduction of Existing Senior Facilities, Proposed issue of Convertible
Preference Shares and Proposed Share Reorganisation, Proposed transfer from the
Official List to the Alternative Investment Market, Announcement of Unaudited
Preliminary Results and Notice of Extraordinary General Meeting
1. Introduction
Since the initial breach of the Existing Senior Facilities in September 2001,
the Company has undertaken an ongoing dialogue with its Senior Lenders regarding
the stabilisation of its capital structure. On 28 November 2002, following the
appointment of a permanent Chief Executive and Finance Director, the Board
confirmed its intention to effect a long-term arrangement with the Senior
Lenders to replace the Existing Senior Facilities which the Company is unable to
repay when they expire on 31 July 2003.
The Board is pleased to report that the terms of the proposed arrangement have
now been finalised. The Proposals provide, inter alia, for (i) a #15,000,000
reduction in the Existing Senior Facilities in consideration for the issue of
#15,000,000 of zero coupon Convertible Preference Shares to the Senior Lenders
and (ii) other amendments to the Existing Senior Facilities, including an
extension of the maturity by five years to 31 July 2008, a period of two years
during which no principal debt repayments will be made and a material reduction
in the ongoing annual interest payments to be made by the Company.
The Proposals are conditional upon the approval of Ordinary Shareholders at the
EGM which has been convened for 11.00 a.m. on 20 August 2003 by the notice set
out at the end of the Circular.
If implemented, the Board believes the Proposals will provide the Company with
the long-term financial support of the Senior Lenders and enable the Company to
implement its business plan to the benefit of all stakeholders, whilst
incentivising Ordinary Shareholders and the Senior Lenders to support the growth
and development of the Group. The Proposals are the outcome of extensive
negotiations with the Senior Lenders and, in certain circumstances, provide for
the enhancement of Ordinary Shareholders' economic interests.
The Senior Lenders have agreed a temporary suspension of their rights under the
Existing Senior Facilities, to provide Ordinary Shareholders with the
opportunity of voting in favour of the Proposals. In the event that the
Proposals are not implemented the Company will be unable to repay the
outstanding balance of the Existing Senior Facilities as required under its
terms and would then only be able to continue to meet its obligations as they
fall due with the ongoing support of the Senior Lenders. Based on discussions
to date, the Board believes that, should the Proposals not be implemented, there
would be no guarantee of obtaining this support from the Senior Lenders. In
such circumstances the Company might be forced to seek appointment of an
administrative receiver or pursue other insolvency proceedings. If such
circumstances prevailed, Ordinary Shareholders would almost certainly receive no
value for their Existing Ordinary Shares.
2. Background to and reasons for the Proposals
In the period between 1999 and 2001 Orbis undertook a series of acquisitions
aimed at consolidating its market share in void protection services and
expanding into areas such as security alarms, vehicle tracking systems, lone
worker protection systems and regeneration services. A problem with certain of
these acquisitions was their poor integration into the Group's existing
operations and, in some circumstances, a failure to address fully operational
issues as and when they arose. In addition, the diversification into technology
related areas failed to deliver the benefits expected by the Group.
The cost of this acquisition strategy was high. By 30 September 2001 the
Company had accumulated a senior debt balance of #55.5 million whilst the
anticipated improvements in financial performance from the acquisitions had not
materialised. On 29 November 2001 the Company announced that the
under-performance in the first six months of the financial year ending 31 March
2002 had resulted in a breach of its banking covenants. Revised short-term
banking arrangements were put in place until May 2002 and a number of changes
were made to the senior management, including the resignation of the then
chairman, chief executive and finance director. John Leach was appointed
Chairman in January 2002 to oversee the turnaround of operations, appointment of
a new executive management team and long-term stabilisation of the Group's
capital structure.
On 27 June 2002, the Company announced that a further interim arrangement had
been agreed with the Senior Lenders for a 13 month period ending 31 July 2003,
with the expectation of securing long-term financial stability following the
appointment of a permanent Chief Executive and Finance Director. During the
second half of 2002 a new executive management team was recruited, with the
appointment of Michael Holmes as Chief Executive and John Jukes as Finance
Director in September and October 2002, respectively. Subsequently, a detailed
strategic plan has been developed aimed at addressing the operational issues in
the UK and generating growth in the European void property markets.
The Board believes that securing the long-term financial support of the Senior
Lenders and deleveraging the balance sheet are pre-requisites to the successful
implementation of the strategic plan. The Board further believes that the
debt-laden balance sheet and consequent limited financial resources have been
impeding the development of the Company for some time and that there is a
significant risk of further deterioration in the Group's financial position
unless the debt burden is reduced.
Against this background the Company has held extensive discussions with the
Senior Lenders with the aim of agreeing a consensual restructuring proposal
which meets the key objective of achieving a sustainable balance sheet with a
level of debt that can be supported by the Group's operations. During these
discussions a range of alternatives have been considered, which have ultimately
focused on a reduction of the Existing Senior Facilities, and therefore the
ongoing debt service obligations of the Company, by way of a debt conversion.
The Board believes the Proposals achieve the key objectives of: (i) securing
long-term financial support from the Senior Lenders; (ii) deleveraging the
balance sheet to enable implementation of the strategic plan; (iii) reducing the
ongoing annual interest payments to be made by the Company; and (iv)
incentivising both Ordinary Shareholders and the Senior Lenders to support the
development and growth of the Group.
3. Impact on Ordinary Shareholders
The Proposals provide, inter alia, for a #15,000,000 reduction in the Existing
Senior Facilities in exchange for the issue of #15,000,000 of Convertible
Preference Shares to the Senior Lenders.
In the event of an Offer for the Company the Convertible Preference Shares will
be convertible into a maximum of 90.1 per cent. of the Fully Diluted Ordinary
Share Capital of the Company. Therefore, the conversion terms of the
Convertible Preference Shares provide Ordinary Shareholders with 9.9 per cent.
of the equity value of any Offer up to the point at which the #15,000,000
nominal value of the Convertible Preference Shares has been fully recovered.
This represents an improvement in the economic position of the Ordinary
Shareholders as currently no value will be received until the Existing Senior
Facilities have been repaid in full (approximately #63 million was outstanding
as at 31 March 2003).
The conversion terms of the Convertible Preference Shares are structured such
that the incremental equity value accruing to the Convertible Preference
Shareholders above the point at which the full #15,000,000 nominal value of the
Convertible Preference Shares has been recovered is reduced from 90.1 per cent.
to 331/3 per cent., with the Ordinary Shareholders receiving the remaining 662/3
per cent. This more closely aligns the interests of the Convertible Preference
Shareholders with those of the Ordinary Shareholders in growing and developing
the Group.
Other than on a liquidation, the Convertible Preference Shareholders may only
convert all #15,000,000 of the Convertible Preference Shares in full, only for
the purposes of accepting an Offer for the Company (as defined in the City Code)
and only in circumstances where such acceptance would make the Offer capable of
being declared unconditional as to acceptances. This restricts the conversion
rights of the Convertible Preference Shareholders to the point of a future sale
of the Company with Ordinary Shareholders retaining control of the Company until
that point.
The Company must redeem the Convertible Preference Shares in full, at par, as
part of any refinancing or repayment in full of the New Senior Facilities. In
the event that the Company's performance improves and support for a refinancing
is forthcoming from the Ordinary Shareholders or other investors, the Board
would therefore redeem the Convertible Preference Shares as part of any
refinancing.
The following table summarises (in the case of acceptance of an Offer) the
impact of the Proposals on the economic interests of both the Ordinary
Shareholders and the Convertible Preference Shareholders post conversion of the
Convertible Preference Shares:
Split of equity value
Convertible
Ordinary Preference
Shareholders Shareholders
Values up to full recovery of the Convertible Preference Shares 9.9% 90.1%
Incremental values above full recovery of the Convertible Preference 662/3 of increment 331/3 of increment
Shares
In consideration for the proposed changes to the capital structure, the Company
has: (i) secured the long-term support of the Senior Lenders through a five year
maturity extension to the Existing Senior Facilities; (ii) deleveraged the
balance sheet by the conversion of #15,000,000 Existing Senior Facilities into
#15,000,000 of zero coupon Convertible Preference Shares; (iii) agreed a period
of two years during which no principal debt repayment will be made; and (iv)
achieved a reduction in the ongoing annual interest payments to be made.
Ordinary Shareholders should note that the terms of both the Convertible
Preference Shares and the New Senior Facilities contain a block on dividends for
the New Ordinary Shares.
The Proposals are the outcome of extensive negotiations with the Senior Lenders
and, in certain circumstances, provide for the enhancement of Ordinary
Shareholders' economic interests. The Board believes that the Proposals will
enable the Company to implement its strategic plan and invest in the development
of the Group for the benefit of Ordinary Shareholders and the Senior Lenders,
whilst more closely aligning their interests to grow and develop the Group.
4. Management incentive arrangements
To incentivise the Executive Directors to implement the strategic plan and
deliver growth in the Group's value, new incentive arrangements are also
proposed. The detailed terms of the incentive arrangements are set out in the
Circular sent to Ordinary Shareholders today. In summary they provide for a
payment to the Executive Directors in the event of either: (i) a refinancing of
the New Senior Facilities and the Convertible Preference Shares; or (ii) a sale
of the ordinary share capital of the Company, based on the Enterprise Value (as
defined below) at that date above a pre-determined level.
In the event of a refinancing the Enterprise Value will be the aggregate of: (i)
the total amount of New Senior Facilities and Convertible Preference Shares
refinanced or redeemed; and (ii) the amount of any prior repayment of the New
Senior Facilities in the period from implementation of the Proposals. In the
event of a sale of the ordinary share capital of the Company, the Enterprise
Value will be the aggregate of: (i) the amount paid for the Ordinary Shares of
the Company; (ii) the amount of the New Senior Facilities and Convertible
Preference Shares repaid/refinanced at the time of sale; and (iii) any previous
repayment of the New Senior Facilities in the period from implementation of the
Proposals.
The total payment to the Executive Directors will be calculated on the following
basis:
Enterprise Value Quantum
(a) Up to 0
(b) Between #35.0 million* and #50.0 million 6.4 per cent. of the amount between #35.0 million and
#49.99 million
(c) Between #50.0 million and #66.5 million 8.0 per cent. of the amount between #50.0 million and
#66.49 million plus the full amount payable under (b)
(d) Above #66.5 million 10.0 per cent. of any amount over #66.5 million plus
the full amount payable under (c)
* Increasing to #40 million in the case of a Management Buy Out
The adoption of the management incentive arrangements is conditional upon the
approval of the Ordinary Shareholders at the EGM. Under the Listing Rules, the
Executive Directors are related parties and therefore the management incentive
arrangements constitute a related party transaction. As such, the Executive
Directors will abstain from voting on Resolution 3.
5. Proposed move to the Alternative Investment Market
Due to the reduced value of the Company's market capitalisation the Board
believes that, in connection with the Proposals, it is in the best interests of
the Company and the Ordinary Shareholders for the Company's listing to be
transferred from the Official List to AIM.
The Company hereby gives notice to Ordinary Shareholders that, conditional on
the implementation of the Proposals and the move to AIM, it intends to cancel
its listing on the Official List.
In order to obtain admission to AIM, the Company is required by the London Stock
Exchange to submit certain information in support of its application, including
an annual report and accounts for a financial year-end not more than nine months
prior to the proposed date for admission. The Group's annual report and
accounts for the year ended 31 March 2003, an unaudited preliminary announcement
of which has been made separately this morning, will not be available until
after the EGM. Once these have been finalised in a suitable form, reflecting
the implementation of the Proposals, the Board intends to give notice to the
London Stock Exchange of the Company's desire to seek admission to AIM, in
conjunction with its cancellation from listing on the Official List. It is
anticipated that the cancellation of the Company's listing on the Official List
and its admission to AIM should take place on or around 24 September 2003,
following satisfaction of the requisite notice periods for the application.
The AIM Rules require that the Company appoints a nominated adviser and broker
before its ordinary shares are admitted to trading on AIM. Conditional on the
implementation of the Proposals, Close Brothers has agreed to act as nominated
adviser and Collins Stewart has agreed to continue to act as broker.
The admission of the New Ordinary Shares to trading on AIM will not affect the
way in which Ordinary Shareholders buy or sell New Ordinary Shares.
It should be noted that circumstances which apply to certain Ordinary
Shareholders may prohibit them from investing in AIM shares. The shares of a
company listed on AIM cannot be held in personal equity plans or individual
savings accounts. Ordinary Shareholders are advised to review their position in
this respect as soon as possible and to seek appropriate independent financial
advice if they are in any doubt as to their position.
6. Announcement of unaudited preliminary results
The Company's statement of unaudited preliminary results for the year ended 31
March 2003 has been announced separately this morning.
7. Summary of the principal terms of the Proposals
7.1 Amendments to the Existing Senior Facilities
The Existing Senior Facilities expire on 31 July 2003. The Senior Lenders have
agreed a temporary suspension of their rights under the Existing Senior
Facilities, to provide Ordinary Shareholders with the opportunity of voting in
favour of the Proposals. Implementation of the Proposals will reduce the
principal amount of the Existing Senior Facilities by #15,000,000 and extend
their maturity by five years to 31 July 2008. Other amendments provide for
reduced interest payments and a period of two years during which no principal
debt repayments will be made.
7.2 Issue of the Convertible Preference Shares
The Existing Senior Facilities will be reduced by #15,000,000 in exchange for
the issue of #15,000,000 of Convertible Preference Shares to the Senior Lenders
which they have undertaken to subscribe pursuant to the Subscription Agreement.
The Subscription Agreement is conditional, inter alia, on Resolutions 1 and 2 to
be proposed at the EGM being passed. Full details of the Subscription Agreement
are set out in the Circular.
The key features of the Convertible Preference Shares are as follows:
* convertible only to accept an Offer for the Company (made by a
party independent of the Convertible Preference Shareholders) and only in
circumstances where such acceptance would make that Offer capable of being
declared unconditional as to acceptances;
* convertible only in full;
* convertible into a number of New Ordinary Shares being the lower of:
(i) the number of New Ordinary Shares which would provide the
Convertible Preference Shareholders with 90.1 per cent. of the Fully Diluted
Ordinary Share Capital of the Company; and
(ii) the number of New Ordinary Shares which will provide the
Convertible Preference Shareholders with (a) #15,000,000 in value and (b) 331/3
per cent. of the economic value of the Fully Diluted Ordinary Share Capital
above the level at which the #15,000,000 nominal value of the Convertible
Preference Shares has been fully recovered;
* transferable only to a party connected to the Convertible Preference
Shareholders;
* zero coupon; and
* redeemable in full at the #15,000,000 nominal value by the
Company in conjunction with a refinancing or repayment of all of the New Senior
Facilities.
The date on which the conversion terms of the Convertible Preference Shares
become exercisable is not set, as it is dependent on an Offer being made by a
third party for the Company. As such, if an Offer were made by a third party at
any time following the issue of the Convertible Preference Shares, the
conversion rights would arise at that point.
7.3 Share Reorganisation
As at 25 July 2003, the capital of the Company was divided into 174,819,675
issued Existing Ordinary Shares of 10 pence each. For several months these have
traded at a discount to their nominal value. Due to the Companies Act
prohibiting the issue of shares at values below nominal value, a reorganisation
of the share capital of the Company needs to be effected as part of the
Proposals.
A resolution will therefore be proposed at the EGM: (i) to subdivide each of the
issued Existing Ordinary Shares into one hundred Interim Ordinary Shares of 0.1
pence each; (ii) to reclassify 92 out of each 100 of these Interim Ordinary
Shares as Deferred Shares of 0.1 pence each with no rights to income or capital
from the Company nor any rights to vote at general meetings; (iii) to
consolidate every remaining 100 Interim Ordinary Shares held by individual
Ordinary Shareholders into one New Ordinary Share of 10 pence, with Interim
Ordinary Shares representing fractional entitlements to New Ordinary Shares
being re-designated as Deferred Shares; and (iv) following this
re-classification for the Company to purchase all the Deferred Shares so created
for an aggregate amount of #1, and cancel them.
Entitlements to New Ordinary Shares will be calculated on the basis of each
individual Ordinary Shareholder's holding of Existing Ordinary Shares on the
Record Date, being the close of business on the day before the EGM. The New
Ordinary Shares will be re-admitted to trading at the opening of business on the
day following the EGM and, as a result, during the course of trading on 20
August 2003 (the EGM date), the Existing Ordinary Shares will be disabled for
settlement in CREST.
For CREST Holders, CREST accounts will be credited on 21 August 2003 in respect
of their holding of New Ordinary Shares. For non-CREST holders, new share
certificates are expected to be dispatched by 27 August 2003. Any previously
issued share certificates will be valueless and can therefore be destroyed.
Following the Share Reorganisation but before the conversion of the Convertible
Preference Shares the Company will have up to 13,985,574 New Ordinary Shares of
10 pence each in issue.
As a result of the consolidation proposed as part of the Share Reorganisation,
certain Ordinary Shareholders, being those who hold 12 Existing Ordinary Shares
or less on the Record Date, will not receive any New Ordinary Shares. The
Directors have carefully considered this aspect of the Share Reorganisation and,
notwithstanding this outcome, consider that, in order to maintain liquidity and
marketability in the New Ordinary Shares, it is an integral part of the
Proposals and in the best interests of the Company.
8. The City Code
Rule 9 of the City Code
Rule 9 of the City Code, which applies to the Company, is designed to prevent
the acquisition of control of a company without a general offer being made to
all ordinary shareholders of that company. Under Rule 9 any person who acquires
shares which, taken together with shares already held by him or shares held or
acquired by persons acting in concert with him, carry 30 per cent. or more of
the voting rights of a company which is subject to the City Code, is normally
required to make a general offer to all the remaining shareholders to acquire
their shares.
An offer under Rule 9 must be in cash and at the highest price paid within the
preceding 12 months for any shares in the company by the person required to make
the offer, or any person acting in concert with him.
Consequences of Rule 9
The Senior Lenders are deemed to be acting in concert for the purposes of the
City Code. On conversion in full by the Senior Lenders of the Convertible
Preference Shares issued as part of the Proposals (and assuming the Company
issues no New Ordinary Shares and no other person exercises their right to
subscribe for New Ordinary Shares following the implementation of the Proposals)
the Senior Lenders could, between them, own up to 127,282,851 New Ordinary
Shares, representing a maximum of 90.1 per cent. of the Company's Fully Diluted
Ordinary Share Capital.
It should be noted that the conversion rights of the Convertible Preference
Shares are sufficiently restrictive so as only to allow conversion (other than
in a liquidation) in order to accept an Offer made by a third party for the
entire issued and to be issued New Ordinary Share capital of the Company,
pursuant to the rules of the City Code, where such acceptance would make the
Offer capable of being declared unconditional as to acceptances. In that event,
the Senior Lenders will decide whether to convert their Convertible Preference
Shares to accept such an Offer by reference to the circumstances which exist at
that time.
A table showing the respective maximum individual holdings of New Ordinary
Shares of each of the Convertible Preference Shareholders in the Fully Diluted
Ordinary Share Capital following a conversion is set out below (based on
13,985,574 New Ordinary Shares in issue following the Share Reorganisation):
Maximum number
of New
Convertible Preference Shareholder Percentage of the Ordinary
Fully Diluted Shares
Ordinary Share
Capital
Dresdner London 57.5% 81,193,349
Bank of Scotland 22.2% 31,453,731
CIC 10.4% 14,635,771
90.1% 127,282,851
The Panel has agreed, however, subject to the approval of the Ordinary
Shareholders, to waive the obligations that would otherwise arise under Rule 9
for the Senior Lenders to make a general cash offer for the whole of the
Company's issued share capital as a result of the conversion by them of the
Convertible Preference Shares.
Ordinary Shareholders' approval for the waiver of Rule 9 is sought by Resolution
1 to be proposed at the EGM which, as required by the City Code, will be taken
on a poll.
Ordinary Shareholders should note that if the Proposals are implemented the
Senior Lenders will, on conversion of the Convertible Preference Shares, between
them hold more than 50 per cent. of the voting share capital of the Company.
For so long as the Senior Lenders continue to be treated as acting in concert
they may accordingly increase their aggregate shareholding in the circumstances
detailed without incurring any further obligation under Rule 9 of the City Code
to make a general offer.
9. Existing share option arrangements
Under the rules of the Group's current Share Schemes, should the Proposals be
implemented, the Board may adjust the number of shares subject to options and
the price per share at which those options may be exercised, subject to the
auditors' confirmation that the adjustments are fair and reasonable. It is
therefore intended to adjust the options to reflect the changes to the Company's
share capital made by the Share Reorganisation.
The purpose of the adjustment is to ensure that option holders are neither
advantaged nor disadvantaged by the Share Reorganisation.
10. Extraordinary General Meeting
Set out in the Circular is a notice convening an Extraordinary General Meeting
of the Company to be held at the offices of Ashurst Morris Crisp at Broadwalk
House, 5 Appold Street, London EC2A 2HA at 11.00 a.m. on 20 August 2003, at
which the Resolutions will be proposed (of which Resolution 1 and 3 will be
proposed as ordinary resolutions and Resolution 2 as a special resolution).
Ordinary Shareholders should note that their approval is required for the
following matters to allow for the implementation of the Proposals and the
management incentive arrangements:
10.1 Waiver of Rule 9 of the City Code (Resolution 1)
As set out in section 8 above, as part of the Proposals the Company is seeking
to obtain a waiver under Rule 9 of the City Code. In accordance with the
requirements of the Panel for granting a waiver of the requirement for the
Senior Lenders to make a general offer under Rule 9 of the City Code, Resolution
1 will be taken on a poll.
10.2 Share Reorganisation (Resolution 2)
As set out in section 7.3 above, in order to implement the Proposals it is
necessary for the Company to undertake the Share Reorganisation, comprising the
subdivision, reclassification and deferral of the Existing Ordinary Shares and
the purchase of the Deferred Shares. The following also require approval:
10.2.1 Articles of association
As part of the Proposals it is necessary for the Company to adopt new articles
of association. Full details of the amendments that will be made to the
existing articles of association as a result of the proposed adoption of the New
Articles are set out in Part IX of the Circular.
Full terms of the proposed amendments to the Articles of Association will be
available for inspection today until the close of the Extraordinary General
Meeting at the registered office of the Company and at the offices of Ashurst
Morris Crisp, Broadwalk House, 5 Appold Street, London EC2A 2HA and at the venue
of the EGM for at least 15 minutes prior to and during the meeting.
10.2.2 Authority to allot
In order to effect the Proposals, the Board will need to allot #15,000,000 in
nominal value of Convertible Preference Shares. Accordingly, it will be
necessary for the Ordinary Shareholders to sanction such allotment.
Resolution 2(h) will authorise the Directors, for the purposes of section 80 of
the Companies Act, to exercise all the powers of the Company to allot relevant
securities (as defined in that section) (i) pursuant to the Proposals and (ii)
otherwise, up to an aggregate nominal amount of #466,185 (representing
approximately one third of the ordinary share capital of the Company as it will
be immediately following the implementation of the Proposals and approximately
2.6 per cent. of the issued ordinary share capital as at the date of this
document).
Such authority shall expire on 19 August 2008.
10.2.3 Disapplication of pre-emption rights
As the Convertible Preference Shares are convertible into New Ordinary Shares,
they constitute equity securities for the purposes of the Companies Act and as
such, their issue, like the issue of ordinary shares, requires the
disapplication of statutory pre-emption rights.
Resolution 2(i) will empower the Directors to allot equity securities for cash
pursuant to the authority referred to at 10.2.2 above, as if section 89(1) of
the Companies Act did not apply to such allotment, inter alia, (i) in connection
with the Proposals and (ii) otherwise, up to an aggregate nominal amount of
#69,927 (699,270 New Ordinary Shares) (representing approximately 5 per cent. of
the ordinary share capital of the Company as it will be immediately following
implementation of the Proposals and approximately 0.4 per cent. of the issued
ordinary share capital as at the date of this document).
10.3 Management incentive arrangements (Resolution 3)
In conjunction with the Proposals management incentive arrangements are to be
put in place as referred to in section 4 above and in the Circular.
11. Action to be taken
A Proxy Form for use at the EGM by Ordinary Shareholders is enclosed. Whether or
not Ordinary Shareholders intend to be present at the EGM, they are requested to
complete, sign and return the Proxy Form in accordance with the instructions
printed thereon as soon as possible and in any event so as to arrive not later
than 11.00 a.m. on 18 August 2003, being 48 hours before the time appointed for
the EGM. The completion and return of a Proxy Form will not preclude an Ordinary
Shareholder from attending and voting in person at the EGM should they wish to
do so.
12. Irrevocable undertakings
Irrevocable undertakings to vote in favour of Resolutions 1 and 2 have been
received from the Directors and other Ordinary Shareholders (including the
largest shareholder, Hg Capital) in respect of an aggregate of 71,350,934
Existing Ordinary Shares representing approximately 40.8 per cent. of the issued
ordinary share capital of the Company.
Irrevocable undertakings to vote in favour of Resolution 3 have been received
from the Independent Directors (being all Directors other than the Executive
Directors) and other Ordinary Shareholders (including the largest shareholder,
Hg Capital) in respect of an aggregate of 69,571,123 Existing Ordinary Shares
representing approximately 39.8 per cent. of the issued ordinary share capital
of the Company.
13. Documentation
A Circular summarising the Proposals, including the notice convening the
Extraordinary General Meeting, is expected to be sent to Ordinary Shareholders
today.
You are recommended to read the whole of the Circular and not just rely on the
summary provided here.
DEFINITIONS
The following definitions apply throughout this announcement and the Circular,
unless the context otherwise requires:
"AIM'' the Alternative Investment Market of the London Stock Exchange
"AIM Rules'' the rules of the London Stock Exchange governing the admission to,
and the operation of, companies on AIM
"Amendment Agreement" a fourth amendment agreement dated 28 July 2003 and made between,
amongst others, the Company, Dresdner London, Bank of Scotland and
CIC (as Banks) and Dresdner London in its respective capacities as
arranger, issuing bank, agent and security trustee
"Auditors" KPMG Audit Plc
"Bank of Scotland" The Governor and Company of the Bank of Scotland with its registered
address at The Mound, Edinburgh EH1 1YZ
"Board'' or "Directors'' the directors of Orbis
"CIC'' Credit Industriel et Commercial SA, a company registered in Paris
(No. 542016381), and whose registered office is at 6, Avenue de
Provence, 75009 Paris
"Circular" the document which is being sent to Ordinary Shareholders
summarising the Proposals and the management incentives, including a
notice convening the EGM
"City Code'' the City Code on Takeovers and Mergers
"Close Brothers'' Close Brothers Corporate Finance Limited
"Collins Stewart'' Collins Stewart Limited
"Companies Act'' the Companies Act 1985 (as amended)
"Company'' or "Orbis'' Orbis PLC
"Convertible Preference Shares'' the zero coupon convertible redeemable preference shares of #1.00
each in the capital of the Company
"Convertible Preference holders of Convertible Preference Shares
Shareholders''
"CREST'' the relevant System (as defined in the Regulations) in respect of
which CRESTCo Limited is the operator (as such is defined in the
Regulations) in accordance with which quoted securities may be held
and transferred in uncertificated form
"Deferred Shares'' the deferred shares of 0.1 pence each in the capital of the Company
having the rights set out in the New Articles
"Dresdner Bank'' Dresdner Bank AG, a Company incorporated in Germany (registered
number HRB 14000), whose corporate seat is in Frankfurt-am-Main,
Germany and whose registered office is at Jurgen-Ponto-Platz 1,
Frankfurt-am-Main, Germany
"Dresdner London'' The London Branch of Dresdner Bank, registered with the Registrar of
Companies in England and Wales (No. FC007638)
"EGM'' or "Extraordinary General the extraordinary general meeting of the Company to be held at 11.00
Meeting" a.m. on 20 August 2003, convened by the notice set out at the end of
the Circular
"Executive Directors" Michael Harry Holmes, John Kenneth Jukes and Michael Gregory
Warriner
"Existing Ordinary Shares'' the ordinary shares of 10 pence each in the capital of the Company
"Existing Senior Facilities'' the #52,366,546.59 and Euro16,766,299.73 facility agreement, dated 13
July 1999, between amongst others, the Company and Dresdner Lon don
as underwriter, arranger, issuing bank and agent and as security
trustee (as amended and restated on 15 February 2001, 29 November
2001 and 23 July 2002)
"Fully Diluted Ordinary Share the ordinary share capital of the Company as diluted by the issue of
Capital'' New Ordinary Shares pursuant to the conversion of the Convertible
Preference Shares
"Group'' the Company and its subsidiary undertakings
"Hg Capital'' the trading name of Hg Investment Managers Limited and Hg Pooled
Management Limited
"Independent Directors" the Directors other than the Executive Directors
"Interim Ordinary Shares'' the ordinary shares of 0.1 pence each in the capital of the Company
"London Stock Exchange'' London Stock Exchange plc
"New Articles'' the Articles of Association of the Company to be adopted pursuant to
paragraph (e) of Resolution 2 at the EGM
"New Senior Facilities'' the Existing Senior Facilities as amended by the Amendment Agreement
between, amongst others, the Company and Dresdner London
"New Ordinary Shares'' the ordinary shares of 10p each in the capital of the Company
following the implementation of the Proposals
"Offer'' an offer, made pursuant to the rules of the City Code, for the
entire issued and to be issued ordinary share capital of the Company
"Official List'' the Official List of the UK Listing Authority
"Ordinary Shareholders'' Holder(s) of Existing Ordinary Shares
"Panel'' the Panel on Takeovers and Mergers
"Proposals'' the reduction of the Existing Senior Facilities by #15,000,000, the
issue of 15,000,000 Convertible Preference Shares and the Share
Reorganisation
"Proxy Form'' the form of proxy accompanying this document for use by Ordinary
Shareholders in connection with the Extraordinary General Meeting
"Record Date'' 5.30 p.m. on 19 August 2003, being the date and time at which the
shareholders' interests in Ordinary Shares will be ascertained for
the purposes of the Share Reorganisation
"Resolution'' or "Resolutions'' the resolution(s) set out in the Notice of Extraordinary General
Meeting set out in the Circular
"Share Schemes'' the Orbis PLC Executive Share Option Scheme, the Orbis PLC
Unapproved Share Option Scheme, the Orbis 2002 Approved Company
Share Option Plan, the Orbis 2002 Unapproved Company Share Option
Plan, the Orbis Sharesave Scheme 1994 and the Multisecure option
arrangement
"Senior Lenders'' Dresdner London, Bank of Scotland and CIC
"Share Reorganisation'' the reorganisation of the share capital of the Company pursuant to
Resolution 2 to be proposed at the EGM
"Subscription Agreement'' the agreement, dated 28 July 2003, between the Company and the
Senior Lenders, full details of which are set out in the Circular
"Uncertificated'' or "in Uncertificated an Ordinary Share recorded on the Company's share register as being
Form'' held in uncertificated form in CREST and title to which, by virtue
of the Regulations, may be transferred by means of CREST
"UK'' or "United Kingdom'' the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority'' the Financial Services Authority acting in its capacity as the
competent authority for the purposes of Part VI of the Financial
Services and Markets Act 2000 (as amended)
This information is provided by RNS
The company news service from the London Stock Exchange
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