TIDMAXN
RNS Number : 1626I
Alexon Group PLC
05 March 2010
This document (and the information contained herein) is not for release,
publication or distribution, directly or indirectly, in or into the United
States (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED
STATES AND THE DISTRICT OF COLuMBIA), Australia, Canada, SOUTH AFRICA or Japan.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD
NOT SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT
EXCEPT ON THE BASIS OF THE INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY
ALEXON GROUP PLC TODAY IN CONNECTION WITH THE CAPITAL RAISING. COPIES OF THE
PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE COMPANY'S
REGISTERED OFFICE.
5 March 2010
Alexon Group plc
Capital Raising, Property Portfolio Reorganisation and New Bank Facilities
Overview
The Board of Alexon Group plc today announces that it is proposing to raise
approximately GBP20.3 million (GBP18.5 million net of expenses) by way of a Firm
Placing and Placing and Open Offer of New Ordinary Shares in the Company.
33,333,333 New Ordinary Shares will be issued through the Firm Placing at 20
pence per Firm Placed Share and 68,267,652 New Ordinary Shares will be issued
through the Placing and Open Offer at 20 pence per Open Offer Share. The Firm
Placed Shares do not qualify for the Open Offer. The Open Offer is being made to
Qualifying Shareholders on the basis of 3 Open Offer Shares for every 2 existing
Ordinary Shares held by Qualifying Shareholders at the Record Date. The Capital
Raising will result in the issue of 101,600,985 New Ordinary Shares
(representing approximately 69.1 per cent. of the enlarged share capital of
Alexon).
The Issue Price represents a 40.7 per cent. discount to the Closing Price of
33.75 pence per Ordinary Share on 4 March 2010 (being the last business day
prior to this announcement).
The Capital Raising is conditional on, amongst other things, the passing of the
Capital Raising Resolutions at the Extraordinary General Meeting and upon the
Placing Agreement becoming unconditional in all respects and not being
terminated prior to Admission.
The Capital Raising is fully underwritten by Investec, on, and subject to, the
terms of the Placing Agreement.
The ex-entitlement date for the Open Offer is 8.00 a.m. on Monday 8 March.
Highlights of the Property Portfolio Reorganisation
· Alexon has identified 63 specific onerous leases on account of their
unfavourable commercial terms and/or inappropriate locations (the "Prioritised
Leases")
· The Group has reorganised its property portfolio by exiting from eight
Prioritised Leases; entering into option agreements to terminate liabilities
under 26 Prioritised Leases and an assignment (subject to landlord consent) in
respect of one further Prioritised Lease; reaching agreement in principle to
terminate or assign seven Prioritised Leases; and deciding not to renew one
significant Prioritised Lease which will expire in September 2010
· Aggregate annualised cash cost savings for the Group from the items
outlined above are expected to be approximately GBP5.2 million
· In addition, Alexon expects to achieve further savings in respect of
another six Prioritised Leases through a combination of renegotiation of the
terms with the landlords and / or rebranding
· A further two significant stores with Prioritised Leases are being
actively marketed with a view to securing assignments to third parties in due
course
· Whilst no agreement has been reached with the landlords in respect of the
remaining twelve Prioritised Leases, Alexon will continue to explore possible
solutions for these leases
· The Group has also negotiated improved commercial terms in respect of ten
non-Prioritised Leases which will result in an annualised net rent reduction of
approximately GBP0.3 million
Other highlights
· Of the net proceeds of the Capital Raising of approximately GBP18.3
million, approximately GBP10 million will be used to satisfy the consideration
payable for the Property Portfolio Reorganisation plus associated costs
· The balance of approximately GBP8 million will be used to invest in the
Group's outdated systems; re-fit the Group's existing concessions and invest in
new concessions and new store openings
· Alexon will enter into New Bank Facilities with Barclays to replace the
Existing Bank Facilities. The New Bank Facilities are conditional upon Admission
· The New Bank Facilities expire in March 2013 and comprise an GBP8 million
revolving credit facility, a GBP6 million amortising term loan and GBP6,154,000
ancillary facilities
· The Group's loss from continuing operations before exceptional items,
interest and taxation for the 52 weeks to 30 January 2010 is not expected to be
greater that GBP1.0 million
· Since the start of the new financial year, trading has continued on an
encouraging trend, with the rate of like-for-like sales decline reducing to
minus 3.7 per cent. for the four weeks to 28 February 2010
Richard Handover, Chairman of Alexon, commented:
"Alexon Group has strong brand equity and has historically been profitable and
cash generative but in recent times the Group has lost market share due to
underinvestment over several years. In addition the Group's financial
performance continues to be significantly affected by a large number of onerous
property leases, as well as cash constraints on investment. The new management
team has developed a turnaround strategy which is now being implemented and
there is good evidence of this working.
Today's announcement will enable Alexon to accelerate its turnaround plan and is
in the best interests of Alexon, its Shareholders and other stakeholders. The
Property Portfolio Reorganisation will establish a more appropriate operational
structure for the business, whilst the increased investment in systems,
concessions and store openings will ensure Alexon has a strong platform to grow
going forward."
A conference call for analysts and investors will be held at 2.30 p.m. today.
Please call Zoe Bird at Brunswick on 020 7404 5959 to obtain dial in details.
For further information, please contact:
Alexon Group Plc Tel: 01582 723131
Jane McNally, Chief Executive
John Boyle, Finance Director
Investec Investment Banking Tel: 020 7597 5970
Chris Treneman
James Rudd
Brunswick Tel: 020 7404 5959
Simon Sporborg
James Olley
Zoe Bird
IMPORTANT INFORMATION
This announcement is for information only and does not constitute an offer to
sell, or the solicitation of an offer to buy or subscribe for, securities of the
Company in the United States or in any other jurisdiction. This announcement
should not be forwarded, published or distributed directly or indirectly, in or
into the United States or any of the other Extended Territories.
This announcement has not been approved by the Financial Services Authority or
by any other regulatory authority. This announcement is an advertisement and not
a prospectus and investors should not subscribe for or purchase any securities
referred to in this announcement except on the basis of information provided in
the Prospectus which is expected to be published by the Company later today.
Copies of the prospectus will, following publication, be available for
inspection at the Company's registered office at 40 - 48 Guildford Street,
Luton, LU1 2PB, United Kingdom, at the Company's website at
www.alexongroup.co.uk and at the UK Listing Authority's Document Viewing
Facility, which is situated at 25 North Colonnade, Canary Wharf, London, E14
5HS.
This document (and the information contained herein) is not for release,
publication or distribution, directly or indirectly, in or into the United
States (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED
STATES AND THE DISTRICT OF COLuMBIA), Australia, Canada, SOUTH AFRICA or Japan.
These written materials do not constitute or form part of any offer or
solicitation to purchase or subscribe for securities in the United States.
Securities may not be offered or sold in the United States unless they are
registered under the US Securities Act of 1933, as amended, or are exempt from
such registration. The Firm Placed Shares, the Open Offer Entitlements, the Open
Offer Shares and the Application Forms have not been and will not be registered
under the US Securities Act or under any securities laws of any state or other
jurisdiction of the United States. No money, securities or other consideration
from any person inside the United States is being solicited and, if sent in
response to the information contained in these written materials, will not be
accepted. Subject to certain exceptions, the securities referred to herein may
not be offered or sold in Australia, Canada, South Africa or Japan or to, or for
the account or benefit of, any national, resident or citizen of Australia,
Canada, South Africa or Japan. The offer and sale of the securities referred to
herein has not been and will not be registered under the applicable securities
laws of Australia, Canada, South Africa or Japan. There will be no public offer
of the New Ordinary Shares in the United States.
The New Ordinary Shares have not been approved or disapproved by the US
Securities and Exchange Commission, any state securities commission in the
United States or any US regulatory authority, nor have any of the foregoing
authorities passed upon or endorsed the merits of the offering of the New
Ordinary Shares or the accuracy or adequacy of this announcement. Any
representation to the contrary is a criminal offence in the United States.
The New Ordinary Shares have not been or will not be registered under the
securities legislation of any province or territory of Canada. Subject to
certain exceptions, the New Ordinary Shares will not be directly or indirectly
offered for subscription or purchase, taken up, sold, delivered, renounced or
transferred in or into Canada. Therefore, subject to certain exceptions, no
offer or sale of New Ordinary Shares will be made within Canada and no
Application Forms will be sent to, nor will any Open Offer Entitlements be
credited to a stock account in CREST on behalf of any Shareholder with a
registered address or who is resident or located in Canada.
No communication or information relating to the offer of New Ordinary Shares may
be disseminated to the public in jurisdictions other than the United Kingdom
where prior registration or approval is required for that purpose. No action has
been taken that would permit an offer of the New Ordinary Shares in any
jurisdiction where action for that purpose is required, other than in the United
Kingdom.
Investec is acting as Sponsor, Financial Adviser, Bookrunner and Underwriter to
Alexon in respect of the Capital Raising.
This announcement has been issued by and is the sole responsibility of Alexon.
No representation or warranty, express or implied, is or will be made as to, or
in relation to, and no responsibility or liability is or will be accepted by
Investec or by any of their respective affiliates or agents as to, or in
relation to, the accuracy or completeness of this announcement or any other
written or oral information made available to or publicly available to any
interested party or its advisers, and any responsibility or liability therefore
whether arising in tort, contract or otherwise is expressly disclaimed.
Investec is acting for Alexon and no one else in connection with the Capital
Raising and will not regard any other person as a client in relation to the
Capital Raising and will not be responsible to anyone other than Alexon for
providing the protections afforded to their respective clients or for providing
advice in relation to the Capital Raising or any matters referred to in this
announcement.
Certain statements made in this announcement constitute forward-looking
statements. Forward-looking statements can be identified by the use of words
such as "may", "will", "should", "predict", "assurance", "aim", "hope", "risk",
"expect", "intend", "estimate", "anticipate", "believe", "plan", "seek",
"continue" or other similar expressions that are predictive or indicative of
future events. All statements other than statements of historical facts included
in this announcement, including, without limitation, those regarding the Group's
expectations, intentions and beliefs concerning, amongst other things, the
Group's results of operations, financial position, growth strategy, prospects,
dividend policy and the industries in which the Group operates, are
forward-looking statements. By their nature, such forward-looking statements
involve known and unknown risks, uncertainties and other factors, many of which
are outside the control of the Group and its Directors, which may cause the
actual results, performance, achievements, cash flows, dividends of the Group or
industry results to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. As
such, forward-looking statements are no guarantee of future performance.
Such forward-looking statements are based on numerous assumptions regarding the
Group's present and future business strategies and the environment in which the
Group will operate in the future. Among the important factors that could cause
the Group's actual results, performance or achievements to differ materially
from those in the forward-looking statements include, among others, economic
conditions in the relevant markets of the world, market position of the Company
or its subsidiaries, earnings, financial position, cash flows, return on capital
and operating margins, political uncertainty, the actions of competitors,
activities by governmental authorities such as changes in taxation or
regulation, changing business or other market conditions and general economic
conditions and such other risk factors identified in the "Risk Factors" section
of the Prospectus. Forward-looking statements should, therefore, be construed in
light of such risk factors and undue reliance should not be placed on
forward-looking statements. These forward-looking statements speak only as of
the date of this announcement and are not intended to give assurance as to
future results.
Alexon Group plc
Capital Raising, Property Portfolio Reorganisation and New Bank Facilities
Introduction
The Board of Alexon announces today that it is proposing to raise approximately
GBP20.3 million (GBP18.5 million net of expenses) by way of the Firm Placing and
the Placing and Open Offer of New Ordinary Shares in the Company. The proceeds
of the Capital Raising will be used to satisfy the consideration payable for the
Property Portfolio Reorganisation and to provide additional funding for the
Group's investment programme.
33,333,333 New Ordinary Shares will be issued through the Firm Placing at 20
pence per Firm Placed Share and 68,267,652 New Ordinary Shares will be issued
through the Placing and Open Offer at 20 pence per Open Offer Share. The Company
is proposing to offer Open Offer Shares, pursuant to the Placing and Open Offer,
to Qualifying Shareholders (other than, subject to certain exceptions,
Shareholders with a registered address in, or who are resident in, the United
States or any of the other Excluded Territories). The Open Offer is being made
to Qualifying Shareholders on the basis of 3 Open Offer Shares for every 2
existing Ordinary Shares held by Qualifying Shareholders at the Record Date.
The Capital Raising is fully underwritten by Investec on, and subject to, the
terms of the Placing Agreement.
The Issue Price of 20 pence per New Ordinary Share represents a 40.7 per cent.
discount to the Closing Price of 33.75 pence per existing Ordinary Share on 4
March 2010 (being the last business day prior to the announcement of the Capital
Raising).
The Capital Raising is conditional upon, among other things, the approval of the
Resolutions by Shareholders at the Extraordinary General Meeting being convened
for 11.00 a.m. on 23 March 2010.
Information on Alexon
Alexon is a retailer of women's fashion, trading under a portfolio of six
brands. The brands operate mainly as concessions within host department stores
in the UK, such as House of Fraser, Debenhams and major independent department
stores, as well as in Belgium, Germany and the Republic of Ireland. The Group
also operates a chain of standalone stores in the UK and a clearance chain
(known as "Stock Trading"), which it uses to clear old seasons' stock. As at 30
January 2010, the Group had 1,139 outlets in total, of which 892 are concessions
in the UK, 145 are concessions in Europe and 102 are UK standalone stores. The
Group also retails through its own websites and through the host websites of
House of Fraser (all brands) and the John Lewis Partnership (Kaliko) and has
successfully trialled retailing through third party catalogues.
The Group's six brands are:
Eastex (252 UK concessions and 28 European concessions as at 30 January 2010)
This is a range of easy to care for clothes for women of 65 years plus who take
pride in their appearance. The Directors believe this brand enjoys a high degree
of customer loyalty. Eastex has been a consistently high profit generator within
the Group and has been the subject of recent expansion (both through an
increased number of outlets and the number of catalogues through which this
brand is sold).
Dash (176 UK concessions, 21 European concessions and 12 standalone UK stores as
at 30 January 2010)
This is a strong performing brand that seeks to offer practical, comfortable and
stylish clothes. Dash is positioned for the 45 years plus woman looking for
co-ordinated leisure outfits with a focus on trims and detailing. Additional
expansion of this brand is underway, including the launch of a new sub-brand
"Pure Dash".
Ann Harvey (65 UK concessions, 29 European concessions and 51 standalone UK
stores as at 30 January 2010)
This is a niche retail brand catering for the plus size mature woman, size 16 to
32. Ann Harvey is positioned to provide stylish clothes for all occasions, which
work for a larger silhouette. The offer is targeted at the 45 years plus
customer looking for value for money. Recent Ann Harvey store refits have been
well received and the brand's online sales are rapidly expanding. The Directors
also believe that this brand has overseas growth potential.
Kaliko (132 UK concessions, 23 European concessions and 11 standalone UK stores
as at 30 January 2010)
This is a boutique style, feminine offering with co-ordinated outfits for all
occasions for women of 40 years plus. The brand has been adversely affected by
space reductions but the range has shown early signs of recovery and a public
relations campaign is underway. Again, this brand has been trading successfully
online.
Minuet Petite (106 UK concessions and 19 European concessions as at 30 January
2010)
This is an established, niche brand offering of smart occasion wear for the
petite customer of 45 years plus. There has been an increase in the number of
concessions in House of Fraser and independent stores which has partly offset
the reduction in the number of concessions operated in John Lewis Partnership
stores. The Directors also believe that this brand has the potential to expand
via online channels.
Alexon (151 UK concessions, 25 European concessions and 3 standalone UK stores
as at 30 January 2010)
This brand, which was established in 1929, provides a premium retail offer
positioned for the woman looking for an accessible price point within the luxury
event wear market. The products encompass co-ordinated outfits and are tailored
for the more mature customer (55 years plus). Alexon has recently experienced
space reductions. The Directors are planning to address the poor performance of
this brand by launching a new product direction and the creation of a design led
sub-brand (which it expects to launch for the 2010 Autumn/Winter season).
Stock Trading, the Group's chain of clearance outlets which sells prior season
stock for all of the Group's brands, operates 10 UK concessions and 8 standalone
UK stores as at 30 January 2010.
Recently the three major department stores, being House of Fraser, Debenhams and
the John Lewis Partnership, have been increasing their "own label" product as a
substitute for concession product. The impact of this trend has been mitigated
by a number of independent department stores approaching the Group to expand
their "branded" fashion offering.
The UK concessions, European concessions and UK standalone stores accounted for
approximately 70 per cent., 13 per cent. and 17 per cent. respectively of the
Group's revenue from continuing operations for the 26 weeks to 1 August 2009.
Background to and reasons for the Capital Raising
Following the appointment of Jane McNally as Chief Executive in June 2008, the
Group undertook a detailed strategic review. Despite the Group's proven track
record of achieving profitability for the right brands in the right locations,
this review identified a number of issues within the business in an increasingly
competitive market. In particular: a weakened brand identity in four of the
Group's then seven brands; an operational structure and legacy leases that were
not aligned to the forward strategy; a lack of investment and best practice in
many areas; and a depleted management team.
Notwithstanding these issues, the Board believed that there was an exciting
opportunity to build on the heritage of the Alexon brands; exploiting a growing
customer demographic - the ageing UK population, improving the benefits of
diversified niche brands, and capitalising on a business model with low fixed
costs. Accordingly, a turnaround plan for the Group was developed.
The Group's priorities for the business were split into immediate next steps,
medium term priorities and longer term priorities:
· Immediate next steps - develop a strategy to deal with the Group's
onerous leases; strengthen the management team and operational structures to
improve buying, reduce aged stock and develop clearer brand strategy; secure
support from the Group's Lender, suppliers and host stores; establish a web
presence; address legacy issues through the exit from Bay Trading, the closure
to further accrual of the Group's pension scheme and the closure of the Group's
manufacturing division;
· Medium term - secure bank and equity financing for: a property
portfolio reorganisation, renegotiation of commercially unfavourable leases and
the Group's investment programme (investment in web, MIS and other IT
infrastructure needs, concession growth and development and limited store
expansion); and
· Long term - commence with the implementation of the Group's investment
programme and continue the turnaround of the Group's brands.
The immediate next steps of the turnaround plan have largely been completed. The
Group has strengthened the management team and operational structures, improved
its buying, reduced aged stock and been proactive in developing a clearer brand
strategy. The Group also secured the support of its Lender, suppliers and host
stores and begun to establish a web presence. In April 2009, the Group exited
its loss-making value brand, Bay Trading, which had been facing increasingly
intense competition in its market segment, closed the Group's pension scheme to
further accrual and closed the Group's manufacturing division.
Despite this progress in the Group's turnaround plan, the Group's financial
performance has been and continues to be significantly affected by a large
number of onerous property leases. As part of the turnaround plan, the Group
prioritised 63 specific onerous leases (the "Prioritised Leases") on account of
their unfavourable commercial terms and/or inappropriate locations. These
Prioritised Leases represent an annualised cash cost to the Group of
approximately GBP7.0 million (excluding contingent costs) and annualised sales
of approximately GBP14.6 million.
Details of the initiatives taken to address the Prioritised Leases are set out
below. These are expected to cost the Group approximately GBP10 million
(including legal fees and contingency) and result in significant cash cost
savings for the Group. Accordingly, the Board has concluded that the Property
Portfolio Reorganisation is in the best interests of the Group and its
Shareholders as a whole and will establish a more appropriate operational
structure for the business which will accelerate the Group's turnaround plan.
The Group therefore intends to raise approximately GBP18.5 million (net of
expenses) by way of the Capital Raising to satisfy the consideration payable for
the Property Portfolio Reorganisation and to provide additional funding for the
Group's investment programme.
Summary of the Property Portfolio Reorganisation
Of the 63 Prioritised Leases, the Group has:
· already exited from eight Prioritised Leases;
These leases were exited at a cost of approximately GBP0.2 million before
expenses).
· entered into option agreements to terminate liabilities under 26
Prioritised Leases (the "Options to Terminate") and an assignment in respect of
one further Prioritised Lease (the "Assignment");
The leases and guarantees of leases to which the Options to Terminate and the
Assignment relate have an average outstanding term of 5.1 years. Upon exercise
of the 26 Options to Terminate and completion of the Assignment, an aggregate
cash consideration of approximately GBP5.7 million (before expenses) will become
payable to landlords and the assignee representing a cost of exit equivalent to
approximately 15 months' rent. The Options to Terminate are not conditional and
do not provide for any contractual rights in respect of termination or
revocation. The Assignment is subject to landlord consent (although such consent
may not be unreasonably withheld).
On exercise of certain Options to Terminate, the Group will be required to enter
into: (i) short leasebacks on improved terms in respect of the relevant premises
so as to facilitate an orderly wind down of the relevant stores; and/or (ii) new
leases to replace certain other existing leases (which were not identified as
Prioritised Leases). As a result of these new leases the Group will occupy the
relevant premises for an extended term but at a reduced annual rent.
The Options to Terminate may be exercised by the Group at any time prior to 31
May 2010. The exercise of certain Options to Terminate is inter-conditional. The
Group intends to exercise all of the Options to Terminate as soon as practicable
following completion of the Capital Raising. If the Capital Raising does not
take place, the Directors will consider the extent to which it is in the Group's
interests to exercise any of its rights under the Options to Terminate.
· reached agreement in principle to terminate or assign seven Prioritised
Leases;
Assuming these Prioritised Leases are terminated or assigned, an aggregate cash
consideration of approximately GBP0.8 million (before expenses) will become
payable by the Group, representing a cost of exit equivalent to approximately 16
months' rent. Although no binding agreement has been entered into in respect of
such arrangements as at the date of this announcement, the Group expects to
formalise these arrangements shortly.
· decided not to renew one significant Prioritised Lease which will
expire in September 2010;
The Directors expect that the aggregate annualised cash cost savings for the
Group from the actions outlined above would be approximately GBP5.2 million.
In addition, the Directors expect to achieve further annualised cash cost
savings in respect of a further six Prioritised Leases through a combination of
renegotiation of the terms with the landlords and/or rebranding (i.e. changing
the goods sold at the location from one Alexon brand to another more appropriate
Alexon brand) and other operational actions. The Directors expect to incur costs
of approximately GBP1.1 million (before expenses) to realise these savings.
A further two significant stores with Prioritised Leases are being actively
marketed with a view to securing assignments to third parties in due course
which, if successful, would result in further annualised cash cost savings. The
Directors expect to incur costs of approximately GBP1.0 million to realise these
savings.
Whilst no agreement has been reached with the landlords in respect of the
remaining 12 Prioritised Leases, the Directors will continue to explore possible
solutions for these leases.
As a result of the Property Portfolio Reorganisation the Group's UK standalone
store portfolio will reduce from 101 stores (comprising 85 open stores and 16
sublet or vacant stores) to 66 open stores. The current store portfolio and
store portfolio following the Property Portfolio Reorganisation are set out
below:
+-----------------------------+---------+-------------+-------------+-------+
| UK store portfolio as at 5 | | | | |
| March 2010 | | | | |
+-----------------------------+---------+-------------+-------------+-------+
| | | UK | European | |
+-----------------------------+---------+-------------+-------------+-------+
| Brand | UK | concessions | concessions | Total |
| | shops | | | |
+-----------------------------+---------+-------------+-------------+-------+
| Eastex | 0 | 252 | 28 | 280 |
+-----------------------------+---------+-------------+-------------+-------+
| Dash | 12 | 176 | 21 | 209 |
+-----------------------------+---------+-------------+-------------+-------+
| Ann Harvey | 51 | 65 | 29 | 145 |
+-----------------------------+---------+-------------+-------------+-------+
| Minuet Petite | 0 | 106 | 19 | 125 |
+-----------------------------+---------+-------------+-------------+-------+
| Alexon | 3 | 151 | 25 | 179 |
+-----------------------------+---------+-------------+-------------+-------+
| Kaliko | 11 | 132 | 23 | 166 |
+-----------------------------+---------+-------------+-------------+-------+
| Clearance - "Stock Trading" | 8 | 10 | 0 | 18 |
+-----------------------------+---------+-------------+-------------+-------+
| Sub-let or vacant | 16 | 0 | 0 | 16 |
+-----------------------------+---------+-------------+-------------+-------+
| Total | 101 | 892 | 145 | 1,138 |
+-----------------------------+---------+-------------+-------------+-------+
| Store portfolio following | | | |
| the Property Portfolio | | | |
| Reorganisation | | | |
+-----------------------------+-----------------------+-------------+-------+
| | | UK | European | |
+-----------------------------+---------+-------------+-------------+-------+
| Brand | UK | concessions | concessions | Total |
| | shops | | | |
+-----------------------------+---------+-------------+-------------+-------+
| Eastex | 0 | 252 | 28 | 280 |
+-----------------------------+---------+-------------+-------------+-------+
| Dash | 10 | 176 | 21 | 207 |
+-----------------------------+---------+-------------+-------------+-------+
| Ann Harvey | 33 | 65 | 29 | 127 |
+-----------------------------+---------+-------------+-------------+-------+
| Minuet Petite | 0 | 106 | 19 | 125 |
+-----------------------------+---------+-------------+-------------+-------+
| Alexon | 2 | 151 | 25 | 178 |
+-----------------------------+---------+-------------+-------------+-------+
| Kaliko | 11 | 132 | 23 | 166 |
+-----------------------------+---------+-------------+-------------+-------+
| Clearance - "Stock Trading" | 8 | 10 | 0 | 18 |
+-----------------------------+---------+-------------+-------------+-------+
| Sub-let or vacant | 2 | 0 | 0 | 2 |
+-----------------------------+---------+-------------+-------------+-------+
| Total | | 892 | 145 | 1,103 |
| | 66(1) | | | |
+-----------------------------+---------+-------------+-------------+-------+
Note (1): This figure excludes the 14 short leasebacks and a 12 month licence
agreed to as part of the Property Portfolio Reorganisation. These short
leasebacks have an average term of 20 months. Many of the short leasebacks
include break provisions which may be exercised by the Group (subject to the
terms of the relevant leaseback).
In addition to the 63 Prioritised Leases, there are a further 20 leases for
which onerous lease provisions have been made and which the Group intends to
address through initiatives such as negotiating more attractive commercial terms
and improved trading. The Group has to date negotiated more attractive
commercial terms in respect of ten of the non-Prioritised Leases which the
Directors expect will result in an annualised net rent reduction for the Group
of approximately GBP0.3 million.
New Bank Facilities and Warrants
The Company announced today that it has entered into New Bank Facilities with
Barclays Bank plc to replace the Existing Bank Facilities.
The New Bank Facilities expire in March 2013 and comprise an GBP9,504,000
million revolving credit facility, a GBP6 million amortising term loan and
GBP5,650,000 on-demand facilities.
The New Term and RCF Bank Facilities contain financial covenants based on actual
EBITDA, EBITDAR and net debt for the three quarters ending 31 January 2011. From
April 2011, the financial covenants are a leverage ratio (Net debt/EBITDA), an
interest cover ratio (EBITDA/Interest) and a fixed charge cover ratio
(EBITDAR/(Rent plus interest) to be tested quarterly. In addition, there is an
asset based financial covenant based around eligible property, eligible stock
and eligible debtors and restrictions on capital expenditure.
The Company has agreed to pay the Lender an arrangement fee of GBP210,000 on the
date of signing of the New Term and RCF Bank Facilities, an amendment fee of 100
basis points calculated on the aggregate commitments of the New Bank Facilities,
together with a further fee of GBP600,000 by no later than 31 August 2010. The
interest margin payable is 350 basis points.
It is a condition precedent to utilisation of the New Term and RCF Bank
Facilities that Alexon grants the Lender Warrants to subscribe for Ordinary
Shares in aggregate equal to one per cent. of Alexon's issued share capital
immediately following completion of the Capital Raising at a strike price
equivalent to the Issue Price. The Warrants will expire six years after
completion of the Capital Raising, if not exercised prior to that date and are
conditional upon completion of the Capital Raising.
The New Bank Facilities are conditional upon the Company receiving a minimum of
GBP15,504,000 by way of net proceeds from the Admission. If the Company does not
receive a minimum of GBP15,504,000 by way of net proceeds from the Admission,
the New Bank Facilities will not replace the Existing Bank Facilities.
Use of proceeds and financial effects of the Capital Raising and the Property
Portfolio Reorganisation
Of the net proceeds of the Capital Raising of approximately GBP18.5 million,
approximately GBP10 million will be used to satisfy the consideration payable
for the Property Portfolio Reorganisation plus associated costs. It is expected
that successful completion of all elements of the Property Portfolio
Reorganisation (some of which have not yet reached the stage of binding
agreements) would result in annualised cash cost savings for the Group of at
least GBP5.2 million.
The balance of the net proceeds of approximately GBP8 million will be used as
follows:
· approximately GBP3.5 million will be invested in improving the Group's
outdated systems (certain of which are over 15 years old) and infrastructure.
The Directors conservatively expect a payback period of approximately two years
on this key investment. This investment will comprise:
· GBP0.75 million on website development in order to increase the Group's
online sales which currently comprise only 2 per cent. of the Group's total
sales. Online sales are predicted to rise to 11.9 per cent. of the total
clothing market by 2013;
· GBP2.75 million on the development of a new management information and
logistics system which is expected to drive efficiency, improve the overall
speed to market of product, help to deliver an uplift in online sales and result
in lower mark downs and lower terminal stock levels, and therefore improved
margins;
· approximately GBP2.5 million will be used to:
· re-fit the Group's existing concessions, at an average cost of GBP9,000
per concession. Historic capital expenditure on the Group's concessions has been
negligible in the last five years and the Directors believe that such re-fits
are a prerequisite to securing premium space in host department stores. Recent
concession re-fits by the Group have demonstrated an average like-for-like
linear sales density improvement of 18 per cent. The payback period on the
investment in re-fitting the Group's operating concessions is expected by the
Directors to be approximately three years; and
· invest in new concessions, at an average cost of GBP10,000 per
concession. The Group has identified locations for 150 new concessions, with
approximately 50 of these in existing UK host stores, 50 in new UK host stores
and 50 in Europe. The Group has also successfully trialled the concession format
in UK garden centres and the Directors believe that this format provides an
attractive opportunity for new concessions. The payback period on the investment
in new concessions is expected by the Directors to be less than 12 months;
· approximately GBP2 million will be earmarked for new store openings by
the Group. Initial analysis by the Group has identified significant potential
for new, profitable stores which match the demographics of the Group's brand
portfolio, particularly Kaliko and Minuet Petite. The Directors believe that
current market conditions offer the opportunity to secure new leases on
attractive terms and intend to adopt a rigorous and disciplined approach to new
store openings. The Directors do not intend to open new stores unless the
payback period on the capital investment required to open a new store is less
than 18 months. Up to 25 new stores are envisaged in the current financial year
(subject to completion of the Capital Raising).
The Property Portfolio Reorganisation is expected to reduce the Group's onerous
lease provision by approximately GBP12 million (assuming successful completion
of all elements of the Property Portfolio Reorganisation). The cash cost of the
Property Portfolio Reorganisation is approximately GBP10 million and an
estimated further GBP2 million of ongoing cash costs will be incurred and
utilised against the provision during the 4 month orderly wind-down period
following the Property Portfolio Reorganisation during which stores where the
lease is being terminated and no re-let will continue to trade. There is not
expected to be any impact to the profit and loss account from the onerous leases
in the year to 29 January 2011.
An ongoing onerous lease provision of approximately GBP6.7 million will be
retained following the Property Portfolio Reorganisation in respect of onerous
leases not being terminated.
The onerous lease provision represents the lowest net avoidable cost of a lease
contract and is calculated as the lower of the estimated cost of exiting the
lease and the cumulative losses expected to be incurred over the remainder of
the lease term, unless it is considered highly unlikely that the lease could be
terminated for a one-off payment in which case the provision is based on
estimated future losses.
In view of the existing onerous lease provisions made by the Group, the
Directors do not expect the surrender of the leases funded by the Capital
Raising to have a material impact on the future earnings of the Group.
As a result of accumulated trading losses to 30 January 2010 the Group does not
expect to incur a UK corporation tax charge in the financial year ending 29
January 2011.
Strategy
Following the Property Portfolio Reorganisation, the Group's strategy is to
become an established multi-channel retailer through a combination of increasing
its concession outlets in host and new department stores in the UK and Europe,
repositioning and expanding its standalone shops, expanding its online sales
through its own websites and selected host store websites and further expansion
into third party catalogues. As outlined above, a portion of the funds raised
pursuant to the Capital Raising will be employed in order to implement this
strategy.
The capital investment in the Group's systems will create a platform for the
future multi-channel growth. Alongside this capital investment, the Group
intends to strengthen each of its brands with a programme of market research,
promotion and enhanced public relations and to continue to grow the new routes
to market it has identified in the last year with further outlets planned in
garden centres, and increased sales through catalogues and TV shopping channels.
Finally, the Group plans to roll out the new ranges of shoes and accessories
introduced during the year to all its stores and most concession outlets.
Current trading and prospects
On 14 January 2010 Alexon announced its trading update covering the period ended
9 January 2010. The full text of this announcement is set out below:
"Since our last trading update, on 21 November 2009, the first three weeks of
the period continued on an encouraging upward trend, with like-for-like sales of
minus 6.2 per cent. during that period. Since then, like--for-like sales have
been significantly impacted by the extreme weather conditions, resulting in
overall like--for-like sales for the twenty three weeks to 9 January 2010
showing a decline of 14.3 per cent. on the prior year.
We have continued our policy of minimising excess stock ahead of the new season
and this, along with increased promotional activity in the host department
stores and the recent trading conditions will result in
gross margin for the
half being 0.8 per cent. points lower than last year. Accordingly, we now expect
the results for the financial year ended 30 January 2010 to be slightly below
market expectations. Net borrowings remain satisfactorily within the Group's
current facilities.
Looking forward, the initial reaction to the early phases of spring/summer
merchandise has been positive. We have also been encouraged by the very strong
performance of our growing e-commerce business over the period through both our
own online platforms and through partner websites. We believe the 2010 economic
outlook will remain challenging but we are actively pursuing a number of
initiatives, including addressing our onerous property leases, in order to
accelerate the Group's turnaround plan."
Since the start of the new financial year, trading has continued on an
encouraging trend, with the rate of like--for-like sales decline reducing to
minus 3.7 per cent. for the four weeks to 28 February 2010. Whilst the Group has
recently received notice from John Lewis Partnership in respect of the Group's
existing 24 concessions with effect from 31 July 2010 (which accounted for 3 per
cent. of the Group's revenue for the year ended 30 January 2010), the Group has
secured 28 new concessions opportunities with other major and independent
department stores since 1 January 2010. Kaliko will continue to trade on the
John Lewis Partnership website. Accordingly, the Board's overall expectations
for the current financial year remain unchanged.
Profit estimate for the financial year ended 30 January 2010
Profit estimate
The Group's loss from continuing operations before exceptional items, interest
and taxation for the 52 weeks to 30 January 2010 is not expected to be greater
than GBP1.0 million. Exceptional costs from continuing operations are not
expected to be greater than GBP14.0 million. Gains associated with discontinued
operations (after taxation) are expected to be approximately GBP8.0 million.
Basis of preparation
The Profit Estimate has been based upon the unaudited management accounts of the
Group for the 52 weeks to 30 January 2010. The Profit Estimate has been prepared
using the accounting policies adopted by the Group in its annual financial
statements for the 53 weeks to 31 January 2009.
Since the Profit Estimate has not been audited, the actual results reported may
be affected by revisions required due to changes in circumstances, the impact of
unforeseen events and different judgements made by the Directors at the time of
reporting the audited results for the financial year ended 30 January 2010.
Dividends and dividend policy
In the Group's interim results for the 26 weeks to 1 August 2009, it was
announced that the Board had decided not to declare an interim dividend in order
to conserve the Group's cash resources. Similarly the Board does not intend to
declare a final dividend in respect of the financial year ended 30 January 2010.
Following the Capital Raising and Property Portfolio Reorganisation, the Group
intends to adopt a dividend policy which will reflect the earnings and cashflow
performance of the Group, while maintaining an appropriate level of dividend
cover. Subject to the Group delivering a satisfactory performance and the
restrictions on the payment of dividends contained within the New Facilities
Agreement, the Board will consider the payment of a small dividend in respect of
the financial year ending 29 January 2011.
Principal terms and conditions of the Capital Raising
The Company is proposing to raise gross proceeds of approximately GBP20.3
million (approximately GBP18.5 million net of expenses) by way of the Capital
Raising which will consist of:
- a Firm Placing of 33,333,333 Firm Placed Shares at 20 pence per Firm
Placed Share raising gross proceeds of approximately GBP6.7 million; and
- a Placing and Open Offer, pursuant to which Qualifying Shareholders are
being invited to acquire, in aggregate, 68,267,652 Open Offer Shares at 20 pence
per Open Offer Share, raising gross proceeds of approximately GBP13.7 million.
The Capital Raising and the New Bank Facilities are inter-conditional.
Principal terms of the Firm Placing
The Firm Placing comprises in aggregate the issue of 33,333,333 Firm Placed
Shares (representing approximately 73.2 per cent. of Alexon's existing Ordinary
Share capital) to Firm Placees and will therefore raise gross proceeds of
approximately GBP6.7 million. Firm Placees will subscribe for the Firm Placed
Shares at the Issue Price of 20 pence per Firm Placed Share.
The Issue Price represents a 40.7 per cent. discount to the Closing Price of
33.75 pence per existing Ordinary Share on 4 March 2010 (being the last business
day prior to the announcement of the Capital Raising).
The Firm Placees will not be able to participate in the Open Offer in respect of
their Firm Placed Shares. The Firm Placing is conditional upon, amongst other
things, the passing of the Resolutions.
The Firm Placing has been fully underwritten by Investec, on, and subject, to
the terms of the Placing Agreement. Investec has agreed under the Placing
Agreement to procure, as agent for the Company, acquirers for the Firm Placed
Shares or, failing that, to acquire such Firm Placed Shares itself.
The Firm Placed Shares will, when issued and fully paid, rank equally in all
respects with the existing Ordinary Shares, including the right to receive all
dividends or distributions made, paid or declared after the date of this
announcement and will be free from all liens, charges, equitable interests,
encumbrances, rights of pre-emption and any other third party rights or
interests.
The effect of the Firm Placing will be to reduce the proportionate ownership and
voting interests in the Ordinary Shares of holders of existing Ordinary Shares
by 42.7 per cent., ignoring shares currently held in treasury.
Principal terms of the Placing and Open Offer
The Company is proposing to issue 68,267,652 Open Offer Shares pursuant to the
Placing and Open Offer (representing approximately 150 per cent. of Alexon's
existing Ordinary Share capital) and will thereby raise gross proceeds of
approximately GBP13.7 million. The Issue Price of 20 pence per Open Offer Share
represents a 40.7 per cent. discount to the Closing Price of 33.75 pence per
existing Ordinary Share on 4 March 2010 (being the last business day prior to
announcement of the Capital Raising).
Qualifying Shareholders (other than, subject to certain exceptions, Restricted
Shareholders) are being given the opportunity to apply for the Open Offer Shares
at the Issue Price, pro rata to their holdings of existing Ordinary Shares on
the Record Date, on the basis of 3 Open Offer Shares for every 2 existing
Ordinary Shares.
Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders
in the Open Offer and fractional entitlements under the Open Offer will be
rounded down to the nearest whole number of Open Offer Shares, aggregated and
placed ultimately for the benefit of the Company.
The Open Offer Shares will, when issued and fully paid, rank equally in all
respects with the existing Ordinary Shares, including the right to receive all
dividends or distributions made, paid or declared after the date of this
announcement and will be free from all liens, charges, equitable interests,
encumbrances, rights of pre-emption and any other third party interests. No
temporary documents of title will be issued.
The commitments of the Placees are subject to clawback in respect of valid
applications for Open Offer Shares by Qualifying Shareholders pursuant to the
Open Offer.
Qualifying Shareholders who do not take up their entitlements to Open Offer
Shares will have their proportionate shareholdings in Alexon diluted by
approximately 69.5 per cent. (ignoring shares currently held in treasury). Those
Qualifying Shareholders who take up their rights under the Open Offer in full
will, subject to fractions, have had their proportionate shareholdings in Alexon
diluted by approximately 22.8 per cent., assuming no participation in the Firm
Placing and ignoring share currently held in treasury.
The Firm Placing and the Placing and Open Offer is conditional, inter alia, upon
the following:
(a) the passing of the Resolutions;
(b) the New Bank Facilities having become unconditional (save for the condition
relating to the Capital Raising);
(c) Admission taking place by not later than 8.00 a.m. on 24 March 2010 (or such
later time and/or date as the Company and Investec may agree, being not later
than 30 April 2010); and
(d) the Placing Agreement having become unconditional in all respects (save for
the condition relating to Admission) and not having been terminated prior to
Admission in accordance with its terms.
Given that the Issue Price represents a discount of more than 10 per cent. to
the Closing Price of 33.75 pence per existing Ordinary Share on 4 March 2010
(being the last business day prior to this announcement), the Company is
required, under the Listing Rules, to seek approval of its Shareholders for the
issue of the New Ordinary Shares at that discount. Accordingly, the
Extraordinary General Meeting will consider, amongst other things, the approval
of the amount of the discount.
The Firm Placing, the Placing and Open Offer and the New Bank Facilities are
inter-conditional.
The Capital Raising has been fully underwritten by Investec, on, and subject to,
the terms of the Placing Agreement.
Structure of the Capital Raising
The Capital Raising has been structured in a way that creates a merger reserve
approximately equal to the net proceeds of the Firm Placing and the Placing and
Open Offer less the par value of the New Ordinary Shares issued by the Company,
instead of share premium on the issue of the Company's New Ordinary Shares. The
Company and Newco Subscriber have agreed to subscribe for ordinary shares in
Newco. Equiniti will receive, into an account set up specifically for the
purpose, proceeds from the Capital Raising, as agent for and on behalf of Newco
Subscriber. Provided certain conditions are met, Newco Subscriber will use the
proceeds to subscribe for redeemable preference shares in Newco.
The Company will issue and allot the New Ordinary Shares to those persons
entitled thereto in consideration for Newco Subscriber transferring its holdings
of ordinary shares and redeemable preference shares in Newco to the Company.
Accordingly, instead of receiving cash as consideration for the issue of the New
Ordinary Shares, at the conclusion of the Capital Raising, the Company will own
the entire issued share capital of Newco whose only asset will be its cash
reserves, which will represent an amount equivalent to the net proceeds of the
Capital Raising. The Company will be able to utilise this amount by Newco
redeeming the redeemable preference shares that the Company will hold in Newco,
or by procuring that Newco loans or dividends this amount to the Company. To the
extent that the merger reserve is considered to be a realised profit it will be
a distributable reserve facilitating the payment of dividends and any potential
return of capital to Shareholders. This chain of events is governed by the
Subscription and Transfer Deed.
The Company may elect to implement the Firm Placing and/or the Placing and Open
Offer without using the structure described above if it deems it to be in the
Company's interest to do so.
In structuring the Placing and Open Offer and Firm Placing, the Directors have
considered how to form the proposed equity fundraising, having regard to the
current market conditions, the level of the Company's share price and the
importance of pre-emption rights to Shareholders. After considering all these
factors, the Directors have concluded that the Placing and Open Offer and Firm
Placing are, together, the most suitable option available to the Company and its
Shareholders. The Open Offer provides an opportunity for all Qualifying
Shareholders (other than, subject to certain exceptions, Restricted
Shareholders) to participate in the fundraising by subscribing for Open Offer
Shares and the Firm Placing is an opportunity to attract new investors and
additional investment to the Company.
Admission of the New Ordinary Shares
Applications will be made to the UK Listing Authority and to the London Stock
Exchange for the New Ordinary Shares to be admitted to the Official List and to
trading on the London Stock Exchange. It is expected that Admission will take
place, and dealings for normal settlement in the New Ordinary Shares will
commence on the London Stock Exchange's main market for listed securities at
8.00 a.m. on 24 March 2010.
The New Ordinary Shares (which will rank pari passu in all respects with
existing Ordinary Shares) will be capable of being held in certificated or
uncertificated form.
Any New Ordinary Shares to be issued in certificated form will be represented by
definitive share certificates, which are expected to be despatched by 30 March
2010 to the persons entitled thereto to that person's registered address.
Extraordinary General Meeting
The Capital Raising is subject to a number of conditions, including passing of
the Resolutions at the Extraordinary General Meeting. The Extraordinary General
Meeting will be held at the offices of Investec Bank plc, 2 Gresham Street,
London EC2V 7QP, at 11.00 a.m. on 23 March 2010.
The Extraordinary General Meeting is being convened for the purposes of
considering and, if thought fit, passing the Resolutions which are required to
implement the Capital Raising.
Set out below is a summary of the resolutions to be proposed at the
Extraordinary General Meeting:
(a) the first Resolution to be proposed at the Extraordinary General Meeting,
which is an ordinary resolution, will grant the Directors authority to: (i)
allot the Firm Placed Shares and the Open Offer Shares in connection with the
Capital Raising and (ii) grant the Warrants: up to an aggregate nominal amount
of GBP12,884,829,875 (representing, in aggregate, assuming full exercise of the
Warrant, approximately 29.8 per cent. of the existing issued share capital of
the Company excluding treasury shares). This authority will expire on 30 April
2010. This Resolution is necessary under section 551 of the 2006 Act in order
for the Directors to be able to allot the Firm Placed Shares and the Open Offer
Shares and grant the Warrants. The Directors at present intend to allot
33,333,333 Firm Placed Shares in connection with the Firm Placing and 68,267,652
Open Offer Shares in connection with the Placing and Open Offer and to grant the
Warrants (the grant of the Warrants being a condition precedent to draw down
under the New Bank Facilities); and
(b) if the first Resolution is passed, the second Resolution to be proposed at
the Extraordinary General Meeting, which is a special resolution, will empower
the Directors to pursuant to section 571 of the 2006 Act, allot the Firm Placed
Shares and Open Offer Shares in connection with the Capital Raising and the
Warrants, as if the statutory pre-emption rights in section 561(1) of the 2006
Act did not apply to such allotment/grant. This power will expire on 30 April
2010. This Resolution is being sought, under section 571 of the 2006 Act in
order for the Directors to be able to allot the Firm Placing Shares and the Open
Offer Shares other than strictly pro rata to existing Shareholders and to grant
the Warrants (the grant of the Warrants being a condition precedent to draw down
under the New Bank Facilities); and
(c) the third Resolution is required under the Listing Rules to approve the
Issue Price of 20 pence per New Ordinary Share, representing a discount of more
than 10 per cent. to the middle market price of the existing Ordinary Shares at
the time of announcement of the Capital Raising; and
(d) the fourth Resolution to be proposed at the Extraordinary General Meeting
which is an ordinary resolution, will amend the Articles of Association of the
Company by deleting paragraph 5 of the Company's Memorandum of Association
which, by virtue of section 28 of the 2006 Act is to be treated as a provision
of the Company's Articles of Association to enable the Company to benefit from
the abolition of authorised share capital under the 2006 Act and enable it to
issue the New Ordinary Shares and the Ordinary Shares the subject of the
Warrants.
The Board and Directors' current and intended shareholdings
Following the completion of the Capital Raising, it is intended to strengthen
the Board promptly with the appointment of an additional Non-executive Director.
Bandera, one of the Group's existing shareholders, has indicated that it wishes
to put forward a candidate for this appointment. The Board has agreed to
consider Bandera's candidate(s) as part of the appointment process and to
consult with the Company's shareholders.
The Directors do not currently hold any Ordinary Shares. Following the
announcement of the Group's results for the year ended 30 January 2010 which is
expected to be made in April 2010 and which will bring to an end a close period
under the Model Code, Richard Handover, Jane McNally and John Boyle intend to
invest approximately GBP20,000 each in acquiring Ordinary Shares in the market.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Each of the times and dates in the table below is indicative only and may be
subject to change. All times are with reference to London GMT, unless otherwise
stated.
+-----------------------------------------------+----------------------+
| | |
+-----------------------------------------------+----------------------+
| | 2010 |
+-----------------------------------------------+----------------------+
| | 5.00 p.m. on 2 March |
| Record Date for entitlements under the Open | |
| Offer | |
+-----------------------------------------------+----------------------+
| | 5 March |
| Announcement of the Capital Raising and | |
| publication of the Prospectus | |
+-----------------------------------------------+----------------------+
| | 5 March |
| Despatch of Prospectus, Forms of Proxy and, | |
| to certain Qualifying Non-CREST Shareholders | |
| only, the Application Forms | |
+-----------------------------------------------+----------------------+
| | 8.00 a.m. on 8 March |
| Ex-entitlement date for the Open Offer | |
+-----------------------------------------------+----------------------+
| | |
| Open Offer Entitlements credited to stock | As soon as possible |
| accounts of certain Qualifying CREST | after 8.00 a.m. on 8 |
| Shareholders in CREST | March |
+-----------------------------------------------+----------------------+
| | 4.30 p.m. on 16 |
| Recommended last time and date for | March |
| withdrawing Open Offer Entitlements from | |
| CREST | |
+-----------------------------------------------+----------------------+
| | 3.00 p.m. on 17 |
| Latest time and date for depositing Open | March |
| Offer Entitlements into CREST | |
+-----------------------------------------------+----------------------+
| | 3.00 p.m. on 18 |
| Latest time and date for splitting | March |
| Application Forms (to satisfy bona fide | |
| market claims only) | |
+-----------------------------------------------+----------------------+
| | 11.00 a.m. on 21 |
| Expected latest time and date for receipt of | March |
| Forms of Proxy and receipt of electronic | |
| proxy appointments via the CREST system | |
+-----------------------------------------------+----------------------+
| | 11.00 a.m. on 22 |
| Latest time and date for receipt of completed | March |
| Application Forms and payment in full under | |
| the Open Offer and settlement of relevant | |
| CREST instructions (as appropriate) | |
+-----------------------------------------------+----------------------+
| | 11.00 a.m. on 23 |
| Extraordinary General Meeting | March |
+-----------------------------------------------+----------------------+
| | 23 March |
| Expected date of announcement of results of | |
| the Extraordinary General Meeting and the | |
| Capital Raising through a Regulatory | |
| Information Service | |
+-----------------------------------------------+----------------------+
| | 8.00 a.m. on 24 |
| Expected date of Admission and commencement | March |
| of dealings in New Ordinary Shares on the | |
| London Stock Exchange and New Ordinary Shares | |
| credited to CREST stock accounts | |
| (uncertificated holders only) | |
+-----------------------------------------------+----------------------+
| | By no later than 30 |
| Expected date of despatch of definitive share | March |
| certificates for New Ordinary Shares (to | |
| Qualifying non-CREST Shareholders only) | |
+-----------------------------------------------+----------------------+
| | |
+-----------------------------------------------+----------------------+
DEFINITIONS
The following definitions apply throughout this announcement, unless the context
otherwise requires:
+------------------------+--------------------------------------------+
| "1985 Act" | the Companies Act 1985, as amended; |
+------------------------+--------------------------------------------+
| "2006 Act" | the Companies Act 2006, as amended; |
+------------------------+--------------------------------------------+
| "Admission" | the admission of the New Ordinary Shares |
| | to the Official List becoming effective in |
| | accordance with the Listing Rules and the |
| | admission of such shares to trading on the |
| | London Stock Exchange's main market for |
| | listed securities becoming effective in |
| | accordance with the Admission and |
| | Disclosure Standards; |
+------------------------+--------------------------------------------+
| "Admission and | the Admission and Disclosure Standards of |
| Disclosure Standards" | the London Stock Exchange containing, |
| | among other things, the admission |
| | requirements to be observed by companies |
| | seeking admission to trading on the London |
| | Stock Exchange's main market for listed |
| | securities; |
+------------------------+--------------------------------------------+
| "Application Form" | the application form on which Qualifying |
| | Non-CREST Shareholders (other than |
| | Qualifying Non-CREST Shareholders with, |
| | subject to certain exceptions, a |
| | registered address in the United States or |
| | any other Excluded Territories) who are |
| | registered on the register of members of |
| | the Company at the Record Date may apply |
| | for Shares under the Open Offer; |
+------------------------+--------------------------------------------+
| "Articles of | the articles of association of the Company |
| Association" or | |
| "Articles" | |
+------------------------+--------------------------------------------+
| "Bandera" | Bandera Partners LLC |
+------------------------+--------------------------------------------+
| "Board" | the board of directors of the Company; |
+------------------------+--------------------------------------------+
| "business day" | any day (excluding Saturdays and Sundays |
| | or public holidays in England and Wales) |
| | on which banks are generally open in |
| | London for the transaction of normal |
| | banking business; |
+------------------------+--------------------------------------------+
| "Capital Raising" | the Firm Placing and the Placing and Open |
| | Offer; |
+------------------------+--------------------------------------------+
| "Closing Price" | 33.75 pence, being the closing mid-market |
| | price of an existing Ordinary Share on 4 |
| | March 2010; |
+------------------------+--------------------------------------------+
| "Companies Act" | means together, the 1985 Act and the 2006 |
| | Act or either of them as the context so |
| | requires; |
+------------------------+--------------------------------------------+
| "Company" or "Alexon" | Alexon Group plc; |
+------------------------+--------------------------------------------+
| "CREST" | the relevant system, as defined in the |
| | CREST Regulations, for paperless |
| | settlement of share transfers and the |
| | holding of shares in uncertificated form |
| | (in respect of which Euroclear UK is the |
| | operator as defined in the CREST |
| | Regulations); |
+------------------------+--------------------------------------------+
| "CREST Regulations" or | the Uncertificated Securities Regulations |
| "Regulations" | 2001 (SI 2001 No. 01/378), as amended; |
+------------------------+--------------------------------------------+
| "Directors" | the current directors of the Company |
+------------------------+--------------------------------------------+
| "EBITDA" | earnings before interest, taxes, |
| | depreciation and amortisation (may be |
| | defined differently in the documents |
| | incorporated by reference); |
+------------------------+--------------------------------------------+
| "EBITDAR" | earnings before interest, taxes, |
| | depreciation, amortisation and rent (may |
| | be defined differently in the documents |
| | incorporated by reference); |
+------------------------+--------------------------------------------+
| "Excluded Territories" | the United States, Canada, Japan, |
| and each an "Excluded | Australia and the Republic of South Africa |
| Territory" | and any other jurisdiction where the |
| | extension or availability of the Firm |
| | Placing and the Placing and Open Offer |
| | (and any other transaction contemplated |
| | thereby) would breach any applicable law |
| | or regulation; |
+------------------------+--------------------------------------------+
| "Existing Bank | the existing overdraft facilities provided |
| Facilities" | to the Group by the Lender |
+------------------------+--------------------------------------------+
| "existing Ordinary | the fully paid Ordinary Shares in issue |
| Shares" | prior to the Capital Raising; |
+------------------------+--------------------------------------------+
| "Ex-Entitlements Date" | the date of which the New Ordinary Shares |
| | are expected to commence trading |
| | ex-entitlements, being 8 March 2010; |
+------------------------+--------------------------------------------+
| "Extraordinary General | the extraordinary general meeting of |
| Meeting" | Alexon to be held on 23 March 2010 at |
| | 11.00 a.m. at the offices of Investec Bank |
| | plc, 2 Gresham Street, London EC2V 7QB |
+------------------------+--------------------------------------------+
| "Firm Placed Shares" | the new Ordinary Shares to be issued by |
| | the Company pursuant to the Firm Placing; |
+------------------------+--------------------------------------------+
| "Firm Placees" | those persons who have agreed to subscribe |
| | for the Firm Placed Shares; |
+------------------------+--------------------------------------------+
| "Firm Placing" | the firm placing of the Firm Placed |
| | Shares; |
+------------------------+--------------------------------------------+
| "FSMA" | the Financial Services and Markets Act |
| | 2000, as amended from time to time; |
+------------------------+--------------------------------------------+
| "Group" or "Alexon | the Company and each of its subsidiaries |
| Group" | and subsidiary undertakings from time to |
| | time; |
+------------------------+--------------------------------------------+
| "Investec" | Investec Bank plc; |
+------------------------+--------------------------------------------+
| "Issue Price" | 20 pence per New Ordinary Share; |
+------------------------+--------------------------------------------+
| "Lender" | Barclays Bank plc; |
+------------------------+--------------------------------------------+
| "Listing Rules" | the listing rules made by the FSA under |
| | Part VI of FSMA (as amended from time to |
| | time); |
+------------------------+--------------------------------------------+
| "London Stock | London Stock Exchange plc; |
| Exchange" | |
+------------------------+--------------------------------------------+
| "New Bank Facilities" | the revolving credit facility, term loan |
| | facility (the revolving credit facility |
| | and the term loan facility together the |
| | "New Term and RCF Bank Facilities") and on |
| | demand facilities to be provided to the |
| | Group by the Lendert; |
+------------------------+--------------------------------------------+
| "Newco" | Alexon (Jersey) Limited; |
+------------------------+--------------------------------------------+
| "Newco Subscriber" | Investec in its capacity as subscriber of |
| | certain redeemable preference shares and |
| | certain ordinary shares in Newco; |
+------------------------+--------------------------------------------+
| "New Ordinary | Open Offer Shares and Firm Placed Shares, |
| Share(s)" | or any of them as the context may require; |
+------------------------+--------------------------------------------+
| "Non-CREST | a Shareholder who does not hold his |
| Shareholder" | Ordinary Shares in CREST; |
+------------------------+--------------------------------------------+
| "Notice of the | the notice of the Extraordinary General |
| Extraordinary General | Meeting; |
| Meeting" | |
+------------------------+--------------------------------------------+
| "Official List" | the Official List of the UK Listing |
| | Authority; |
+------------------------+--------------------------------------------+
| "Open Offer" | the invitation by the Company to |
| | Qualifying Shareholders to apply for Open |
| | Offer Shares |
+------------------------+--------------------------------------------+
| "Open Offer | the entitlement of a Qualifying |
| Entitlement" | Shareholder to apply for 3 Open Offer |
| | Shares for every 2 existing Ordinary |
| | Shares held on the Record Date; |
+------------------------+--------------------------------------------+
| "Open Offer Shares" | the 68,267,652 new Ordinary Shares to be |
| | issued by the Company pursuant to the |
| | Placing and Open Offer; |
+------------------------+--------------------------------------------+
| "Ordinary Shares" | ordinary shares of 12.5 pence each in the |
| | capital of the Company (including, where |
| | the context requires, Firm Placed Shares |
| | and/or the Open Offer Shares); |
+------------------------+--------------------------------------------+
| "Placees" | the persons with whom a conditional |
| | placing of Open Offer shares (subject, |
| | where applicable, to the entitlements of |
| | Qualifying Shareholders under the Open |
| | Offer) has been or will be made pursuant |
| | to the Placing and Open Offer; |
+------------------------+--------------------------------------------+
| "Placing" | the conditional placing of the Open Offer |
| | Shares with the Placees at the Issue Price |
| | subject to clawback in respect of valid |
| | applications made by Qualifying |
| | Shareholders under the Open Offer; |
+------------------------+--------------------------------------------+
| "Placing Agreement" | the placing and underwriting agreement |
| | between (1) the Company and (2) Investec |
| | dated 5 March 2010 relating, inter alia, |
| | to the Capital Raising; |
+------------------------+--------------------------------------------+
| "Prioritised Leases" | means leases held by or guaranteed by the |
| | Group which the Directors have prioritised |
| | for action on account of their |
| | unfavourable commercial terms and/or |
| | inappropriate locations; |
+------------------------+--------------------------------------------+
| "Property Portfolio | means the changes or proposed changes to |
| Reorganisation" | the Group's property portfolio comprising |
| | (i) eight leases which have already been |
| | exited; (ii) 26 leases for which Options |
| | to Terminate have been entered into; (iii) |
| | one lease which has been assigned (subject |
| | to landlord consent); (iv) seven leases |
| | for which agreement has been reached in |
| | principle to terminate or assign such |
| | leases; (v) one lease which will expire in |
| | September 2010; (vi) six leases which the |
| | Group expects to renegotiate and/or |
| | rebrand; and (vii) two leases which are |
| | being actively marketed by the Group with |
| | a view to securing assignments to third |
| | parties; |
+------------------------+--------------------------------------------+
| "Prospectus" | the document dated 5 March 2010 comprising |
| | a circular and a prospectus relating to |
| | the Company for the purpose of the Capital |
| | Raising (together with any supplements or |
| | amendments thereto); |
+------------------------+--------------------------------------------+
| "Qualifying CREST | Qualifying Shareholders holding Ordinary |
| Shareholders" | Shares on the Record Date in |
| | uncertificated form; |
+------------------------+--------------------------------------------+
| "Qualifying Non-CREST | Qualifying Shareholders holding Ordinary |
| Shareholders" | Shares on the Record Date in certificated |
| | form; |
+------------------------+--------------------------------------------+
| "Qualifying | holders of Ordinary Shares on the register |
| Shareholders" | of members of the Company at the Record |
| | Date; |
+------------------------+--------------------------------------------+
| "Receiving Agent" | Equiniti Limited; |
+------------------------+--------------------------------------------+
| "Record Date" | close of business on 2 March 2010; |
+------------------------+--------------------------------------------+
| "Registrar" | Equiniti Limited; |
+------------------------+--------------------------------------------+
| "Regulations" | means the Uncertificated Securities |
| | Regulations 2001; |
+------------------------+--------------------------------------------+
| "Regulatory | one of the regulatory information services |
| Information Service" | authorised by the UK Listing Authority to |
| | receive, process and disseminate |
| | regulatory information in respect of |
| | listed companies; |
+------------------------+--------------------------------------------+
| "Resolutions" | all of the resolutions to be proposed at |
| | the Extraordinary General Meeting; |
+------------------------+--------------------------------------------+
| "Restricted | Qualifying Shareholders having registered |
| Shareholders" | addresses in, or resident or located in, |
| | any of the Excluded Territories; |
+------------------------+--------------------------------------------+
| "Shareholders" or | holders of Ordinary Shares; |
| "Members" | |
+------------------------+--------------------------------------------+
| "sterling" or "pound" | the lawful currency of the UK; |
| or "GBP" or "pence" | |
+------------------------+--------------------------------------------+
| "stock account" | an account within a member account in |
| | CREST to which a holding of a particular |
| | share or other security in CREST is |
| | credited; |
+------------------------+--------------------------------------------+
| "Subscription and | the subscription and transfer deed; |
| Transfer Deed" | |
+------------------------+--------------------------------------------+
| "subsidiary" | a subsidiary, as that term is defined in |
| | section 1159 of the 2006 Act; |
+------------------------+--------------------------------------------+
| "subsidiary | a subsidiary undertaking, as that term is |
| undertaking" | defined in section 1162 of the 2006 Act; |
+------------------------+--------------------------------------------+
| "UK Listing Authority" | the FSA in its capacity as the competent |
| | authority for the purposes of Part VI of |
| | FSMA and in the exercise of its functions |
| | in respect of the Admission to the |
| | Official List otherwise than in accordance |
| | with Part VI of FSMA; |
+------------------------+--------------------------------------------+
| "uncertificated" or | recorded on the relevant register of the |
| "in uncertificated | share or security concerned as being held |
| form" | in uncertificated form in CREST and title |
| | to which, by virtue of the CREST |
| | Regulations, may be transferred by means |
| | of CREST; |
+------------------------+--------------------------------------------+
| "Underwriter" | Investec; |
+------------------------+--------------------------------------------+
| "United Kingdom" or | the United Kingdom of Great Britain and |
| "UK" | Northern Ireland; |
+------------------------+--------------------------------------------+
| "United States" or | the United States of America, its |
| "US" | territories and possessions, any state of |
| | the United States of America and the |
| | District of Columbia; |
+------------------------+--------------------------------------------+
| "US Securities Act" | the United States Securities Act of 1933, |
| | as amended; |
+------------------------+--------------------------------------------+
| "US Securities and | the US government agency having primary |
| Exchange Commission" | responsibility for enforcing the federal |
| | securities laws and regulating the |
| | securities industry/stock market; |
+------------------------+--------------------------------------------+
| "Warrants" | means the rights created by Warrant |
| | Instrument entitling the Warrant Holders, |
| | upon valid exercise of such rights, to |
| | subscribe for 1,477,654 Ordinary Shares on |
| | the terms set out in the Warrant |
| | Instrument; |
+------------------------+--------------------------------------------+
| "Warrant Holders" | means the person or persons who is or are |
| | for the time being registered in the |
| | register of warrant holders as the holder |
| | or joint holders of a Warrant; and |
+------------------------+--------------------------------------------+
| "Warrant Instrument" | the warrant instrument to be executed as a |
| | deed prior to Admission creating the |
| | Warrants |
+------------------------+--------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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