TIDMCOO
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR
FROM ANY RESTRICTED JURISDICTION OR OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
28 October 2011
RECOMMENDED CASH OFFER WITH A SHARE ALTERNATIVE
FOR
COOLABI PLC ("COOLABI")
BY
NORTH PROMOTIONS LIMITED ("NORTH")
Summary of the Offer
* The boards of North and Coolabi are pleased to announce the terms of a
recommended offer for cash with a share alternative to be made by North, a
company which is funded by Edge Performance VCT plc ("EPVCT"), for the
entire issued and to be issued share capital of Coolabi (the "Offer").
* The Offer will be made by North. North was incorporated in 2010 and is
funded by EPVCT. EPVCT, which is managed by Edge Investment Management
Limited ("EIM"), is Coolabi's largest shareholder.
* Following their recent investment, Jeremy Banks, Tim Ricketts and William
Harris, directors of Coolabi, (the "Coolabi Management Directors") are all
North shareholders. Further details of arrangements made between them and
North are set out in paragraph 10(b) below.
* William Harris has also recently been appointed to the board of North as a
Non-Executive Director. Mr Harris's appointment to the board of North
occurred upon entry into the Investment Agreement. His appointment was
approved by the Independent Directors and is primarily to facilitate the
Offer being made in a VCT compliant environment. Upon the Offer becoming or
being declared unconditional in all respects, Jeremy Banks and Tim
Ricketts, who are currently Chief Executive and Finance Director of Coolabi
respectively, will be appointed as directors of North with William Harris.
Jeremy Banks and Tim Ricketts will continue as the management team of the
Enlarged Group.
* Under the terms of the Offer, the consideration is either:
* 7.75p in cash per Coolabi Share; or
* 10 North shares for every 100 Coolabi Shares (rounded down to the nearest
100 Coolabi Shares), of which seven will be North Preference Shares and
three will be North Investor Ordinary Shares. Both classes of shares will
be issued at the same price.
Any residual consideration which is still due following a Coolabi Shareholder's
election for the Share Alternative will be satisfied in cash pursuant to the
terms of the Offer.
* The value of the North Shares issued pursuant to the Share Alternative will
be limited to GBP3.4 million an amount which, with the further funding
referred to below, will, in the opinion of North, avoid the need to issue a
prospectus pursuant to the Prospectus Rules.
* The Offer values the entire existing issued share capital of Coolabi at
approximately GBP4.3 million (and the Offer values the fully diluted share
capital at approximately GBP4.95 million).
* The Offer will be funded from a combination of the existing cash resources
of North and from a loan facility provided by EPVCT to North.
* With regard to the current trading of Coolabi, North has identified a
working capital requirement and intends, post the Offer becoming or being
declared unconditional in all respects, to provide GBP1 million of funding
for this purpose. North intends to offer all North shareholders, at that
time, the opportunity to participate provided such offer does not require
North to issue a prospectus pursuant to the Prospectus Rules.
* The Independent Directors, who have been so advised by Evolution
Securities, consider the terms of the Offer to be fair and reasonable to
Coolabi Shareholders. In providing the Independent Directors with such
advice, Evolution Securities has taken account of the commercial
assessments of the Independent Directors.
* Accordingly, the Independent Directors intend to recommend unanimously that
Coolabi Shareholders accept the Offer and the Independent Directors have
irrevocably undertaken to do so in respect of their entire holding in
Coolabi (comprising, in aggregate, 462,859 Coolabi Shares, representing
approximately 0.83 per cent. of the existing issued ordinary share capital
of Coolabi). The terms of the recommendation are described in paragraph 6
of the full text of this announcement.
* North has received irrevocable undertakings from the Coolabi Management
Directors and Avonglen Limited, a company through which certain of the
Coolabi Management Directors provide services and indirectly hold Coolabi
Shares, EPVCT and certain other shareholders to accept the Offer in respect
of a total of 34,258,512 Coolabi Shares, representing 53.66 per cent., of
the issued share capital of the Company assuming conversion of the
Convertible Loan Notes. In addition, North has obtained a letter of intent
from BlackRock Investment Managers (UK) Limited ("BlackRock") to accept the
Offer in respect of its holding of 4,127,876 Coolabi Shares, representing
6.47 per cent. of the issued share capital the Company, assuming conversion
of the Convertible Loan Notes. Further details of these irrevocable
undertakings and letter of intent are set out in Appendix III to this
announcement.
* North has also received irrevocable undertakings from the Independent
Directors and certain other shareholders to vote in favour of the Ordinary
Resolution to approve the Offer in respect of a total of 18,193,220 Coolabi
Shares, representing 41.24 per cent., of the votes that may be cast in the
resolution.
* Further, the irrevocable undertakings North has received from the Coolabi
Management Directors, EPVCT and Avonglen Limited elect for the Share
Alternative in respect of a total of 19,730,309 Coolabi Shares,
representing 30.90 per cent. of the issued share capital of the Company
assuming conversion of the Convertible Loan Notes.
* A price of 7.75 pence per Coolabi Share represents a premium of 11.67 per
cent. to 6.94 pence, being the closing mid-market price per Coolabi Share
on 29 July 2011 (being the last Business Day prior to the date of the
submission to the board of directors of Coolabi of the accepted proposal);
a premium of 3.33 per cent. to 7.5 pence, being the closing mid-market
price per Coolabi Share on 8 August 2011, being the last Business Day prior
to the commencement of the Offer Period; and a premium of 14.81 per cent.
to 6.75 pence, being the closing mid-market price per Coolabi Share on 27
October 2011, being the last Business Day prior to the Announcement Date.
* The Offer will be subject to a number of conditions including North
receiving acceptances amounting to not less than 90 per cent. of the
Coolabi Shares to which the Offer relates (or such lesser percentage as
North may decide, but not less than 50 per cent.) and the passing of the
Ordinary Resolution at the Coolabi General Meeting. Certain of the
Conditions as detailed in Appendix I can be waived with the exceptions of
condition 1 and condition 2.
* It is expected that the Offer Document will be posted to Coolabi
Shareholders as soon as practicable and, in any event, (save with the
consent of the Panel) within 28 days of the date of this announcement.
* North attaches great importance to the skills and experience of the
existing Coolabi management and employees of Coolabi. North has given
assurances to the Independent Directors that, on the Offer becoming or
being declared unconditional in all respects, the existing employment
rights, including pension rights, of all Coolabi Group employees will be
observed. North has no current intention to change the location of the
Coolabi Group's place of business.
Commenting on the Offer, Gordon Power, Chairman of EIM said:
"Edge is excited to strengthen its involvement with Coolabi. Coolabi has a
well-respected portfolio of assets and management team and, with the addition
of Edge's financial support, its prospects are excellent. We have supported the
business since becoming a shareholder in November 2009 and we believe that the
business will continue to develop under the strategies being pursued by the
executive management team. We are pleased to have received the Independent
Directors' recommendation and we are looking forward to developing further
Coolabi's business."
Jeremy Banks, Chief Executive of Coolabi, said:
"The skills and experience of the Coolabi team, when coupled with the funds of
EPVCT and the industry know-how of EIM is compelling. There can be no doubt
that Coolabi will only benefit from significant new investment and an increased
focus on acquisitive growth."
Stuart Lindsay, Non-Executive Director of Coolabi, said:
"The Independent Directors are supportive of the Company's current strategy and
are confident in its future prospects. However, we believe that in order for
the Company to continue to execute its strategy and maximise its future
potential, further funding is required. We acknowledge that North, funded by
EPVCT, intends to support the Company in achieving its commercial and strategic
objectives and will help it grow both organically by investment in existing
properties and through funding acquisition opportunities that would otherwise
be difficult to achieve given the current challenging market for raising new
equity. As a private company, Coolabi will also be able to prioritise strategic
development over consistency of earnings and predictability. In light of the
above, we intend to recommend unanimously that Coolabi Shareholders accept the
Offer."
Terms used in this summary but not defined herein shall have the meaning given
to them in the full text of the announcement.
This summary should be read in conjunction with, and is subject to, the full
text of this announcement including the Appendices.
Appendix I sets out the Conditions and certain further terms of the Offer.
Appendix III contains details relating to the irrevocable undertakings given by
EPVCT, the Independent Directors, the Coolabi Management Directors and certain
other Shareholders and the letter of intent given by BlackRock. Appendix IV
contains details of the North Preference Shares and North Investor Ordinary
Shares offered as consideration by North in connection with the Offer. Appendix
V contains risk factors which are relevant to the North Preference Shares and
North Investor Ordinary Shares. Appendix VI contains the definitions of certain
terms used in this announcement.
A copy of this announcement will be available, subject to certain restrictions
in relation to persons resident in Restricted Jurisdictions, on Coolabi's
website at www.coolabi.com. None of the contents of Coolabi's website, nor the
contents of any other website accessible from hyperlinks on Coolabi's website,
is incorporated into or forms any part of this announcement.
Enquiries:
Evolution Securities Limited (sole financial adviser and Nominated Adviser to
Coolabi)
Jeremy Ellis Tel: +44 (0)20 7071 4300
Chris Clarke
Merchant Securities Limited (sole financial adviser to
North)
David Worlidge Tel: +44 (0)20 7628 2200
Virginia Bull
Key Terms Of The Offer
* Introduction
The boards of North and Coolabi are pleased to announce the terms of a
recommended cash offer with a share alternative to be made by North to acquire
the entire issued and to be issued share capital of Coolabi (the "Offer").
The Offer will be made by North, a company funded by EPVCT, Coolabi's largest
shareholder. Further information about North and EPVCT is given at paragraph 9
below. Following their recent investment, Jeremy Banks, Tim Ricketts and
William Harris are all North Shareholders. Further details are set out in
paragraph 10(b).
William Harris has recently been appointed to the board of North as a
Non-Executive Director. Mr Harris's appointment to the board of North occurred
upon entry into the Investment Agreement. This appointment was approved by the
Independent Directors and is primarily to facilitate the Offer being made in a
VCT compliant environment. Upon the Offer becoming or being declared
unconditional in all respects, Jeremy Banks and Tim Ricketts, Chief Executive
and Finance Director respectively of Coolabi, will be appointed as directors of
North with William Harris. Jeremy Banks and Tim Ricketts will continue as the
management team of the Enlarged Group. Further details of the incentive
arrangements for the Coolabi Management Directors are given at paragraph 10
below.
* The Offer
Under the Offer, which will be subject to the conditions and further terms set
out below and in Appendix I and the full terms and conditions which will be set
out in the Offer Document, Coolabi Shareholders will be entitled to receive:
For each Coolabi Share 7.75 pence in cash.
The Offer values the entire existing issued share capital of Coolabi at
approximately GBP4.3 million (with the fully diluted share capital valued at
approximately GBP4.95 million) and represents:
* a premium of 11.67 per cent. to 6.94 pence, being the closing mid-market
price per Coolabi Share on 29 July 2011 (being the last Business Day prior
to the date of the submission to the board of directors of Coolabi of the
accepted proposal);
* a premium of 3.33 per cent. to 7.5 pence, being the closing mid-market
price per Coolabi Share on 8 August 2011, being the last Business Day prior
to the commencement of the Offer Period; and
* a premium of 14.81 per cent. to 6.75 pence, being the closing mid-market
price per Coolabi Share on 27 October 2011 (being the last Business Day
prior to the Announcement Date).
The Coolabi Shares will be acquired pursuant to the Offer, fully paid and free
from all liens, charges, equitable interests, encumbrances, rights of
pre-emption and any other rights and interests of any nature whatsoever and
together with all rights now and hereafter attaching thereto, including voting
rights and the right to receive and retain in full all dividends and other
distributions (if any) declared, made or paid on or after the Announcement
Date.
As at 27 October 2011, the latest practicable date prior to this announcement,
Coolabi had granted options over an aggregate of 3,168,246 Coolabi Shares and
issued the Convertible Loan Notes which are convertible into an aggregate of
8,327,614 Coolabi Shares. The employees of Coolabi who hold options over
Coolabi Shares have all agreed to waive their rights to options upon the Offer
becoming or being declared unconditional in all respects provided this is
within six months of the Announcement Date. It is intended that the Convertible
Loan Notes will be converted no later than immediately following the Offer
becoming or being declared unconditional in all respects. When EPVCT elects for
the Share Alternative following the conversion of the Convertible Loan Notes,
as it has irrevocably undertaken so to do, the resulting North Shares will
represent approximately 17.18 per cent. of the issued North Investor Ordinary
Shares and approximately 22.96 per cent. of the issued North Preference Shares
assuming that all the Coolabi Shareholders accept the Offer and choose the
Share Alternative and that there is no scale back under the terms of the Share
Alternative.
The Offer will be subject to the Conditions and further terms set out in
Appendix I to this announcement and to be set out in the Offer Document.
The Independent Directors intend to recommend unanimously that all Coolabi
Shareholders accept the Offer and that all Coolabi Shareholders vote in favour
of the Ordinary Resolution at the General Meeting. The terms of this
recommendation are described in paragraph 6 of this announcement.
* The Share Alternative
As an alternative to the cash consideration of 7.75 pence per Coolabi Share to
which they would otherwise be entitled under the Offer, Coolabi Shareholders
who validly accept the Offer (other than US Persons and certain overseas
shareholders) will be able to elect to receive North Shares to be issued
pursuant to the Share Alternative (which does not include the North Management
Ordinary Shares) by North on the following basis:
For every 100 Coolabi Shares Seven North Preference Shares and
Three North Investor Ordinary Shares
and (in multiples of 100 Coolabi Shares) for any greater number of Coolabi
Shares held. Fractions of North Shares will not be issued to accepting Coolabi
Shareholders. Any residual consideration which is still due following a Coolabi
Shareholder's election to receive North Shares will be satisfied in cash
pursuant to the terms of the Offer.
The value of the North Shares issued pursuant to the Share Alternative will be
limited to GBP3.4 million an amount which, with the further funding referred to
below, will in the opinion of North avoid the need to issue a prospectus
pursuant to the Prospectus Rules. In the event that elections are made for the
Share Alternative in excess of the maximum referred to above, Coolabi
Shareholders electing to receive the Share Alternative will be scaled back on a
pro rata basis until the Offer becomes or is declared unconditional in all
respects. In the event that the maximum limit referred to above is not exceeded
when the Offer becomes or is declared unconditional in all respects, Coolabi
Shareholders who subsequently elect to receive the Share Alternative will
receive their full entitlement on a first come first served basis until the
maximum limit referred to above is reached.
The Share Alternative is conditional on the Offer becoming or being declared
unconditional in all respects. North reserves the right to close the Share
Alternative at any time after the Offer is declared unconditional as to
acceptances.
The North Shares to be issued pursuant to the Offer will represent
approximately 62.25 per cent. of the issued North Investor Ordinary Shares and
approximately 83.19 per cent. of the issued North Preference Shares, assuming
that all Coolabi Shareholders choose to accept the Offer and receive the Share
Alternative (and that the Convertible Loan Notes are converted) and assuming no
scale back under the terms of the Share Alternative. The North Shares will, on
issue, rank in full for all dividends, interest, capital, redemption and other
distributions declared after their issue in respect of the North Investor
Ordinary Shares and North Preference Shares share capital.
Further details of North's share capital are set out in Appendix IV.
* North Shares
Pursuant to paragraph 3, North has decided to offer a share alternative for the
Offer. The North Preference Shares and the North Investor Ordinary Shares will
each have a nominal value of 0.13 pence.
The North Preference Shares will have no voting rights and will confer on the
holders a non-compounding six per cent. per annum dividend. The dividend
accrues from the later of the date of issue and the first North Preference
Shares being issued in consideration for the Offer and is rolled up until 31
December 2014 and is to be paid on that date and quarterly thereafter. The
North Preference Shares are redeemable on 31 December 2016 or, if earlier,
immediately prior to, and conditional upon, the occurrence of a sale, listing
or winding up.
The North Investor Ordinary Shares will carry at least 85 per cent. of the
votes capable of being cast on a poll at any general meeting (the North
Management Ordinary Shares having the other 15 per cent.). The holders of North
Investor Ordinary Shares will have proportional voting rights across their
holdings and the North Investor Ordinary Shares will rank pari passu in all
economic respects, except that EPVCT may not vote more than 50 per cent. of the
votes on a poll or at a general meeting in respect of the North Investor
Ordinary Shares or receive more than 50 per cent. of any distribution or the
assets on any winding up. The North Investor Ordinary Shares, like the North
Management Ordinary Shares, will not receive any dividends unless and until all
the North Preference Shares have been redeemed. Following the redemption of the
North Preference Shares, the North Investor Ordinary Shares confer the right on
the holders to receive a pro rata percentage of any dividend not allocated to
the North Management Ordinary Shares. The North Management Ordinary Shares
confer the right to 50 per cent. of any dividends provided that until such time
as the Investors have received an IRR of 18 per cent. in respect of their
holdings of North Investor Ordinary Shares and North Preference Shares the rate
shall be 15 per cent. The North Investor Ordinary Shares are not redeemable.
In addition, in the event of a sale or winding up of North the surplus assets
of North, the Existing Loan Notes having been repaid, shall be applied first to
pay an amount equal to the redemption amount on each North Preference Share and
the balance will be distributed amongst the holders of North Investor Ordinary
Shares and the holders of North Management Ordinary Shares. The amount of this
balance distributable to the holders of the North Management Ordinary Shares
shall range between 60 per cent. and 15 per cent. depending on certain target
values having been attained.
It is not intended that the North Shares will be admitted to trading on AIM or
any other stock exchange.
Further details about the North Shares are set out in Appendix IV. Further
details about the risk factors which are relevant to the North Shares are set
out in Appendix V.
* Background to and reasons for the Offer
EPVCT is a publicly quoted investment holding company which undertakes private
equity and public capital market investments and is an existing Coolabi
Shareholder. The investments of EPVCT are managed by EIM.
EIM, via EPVCT, has supported the growth and development of Coolabi since EPVCT
became a shareholder in November 2009. Since this investment, EIM is pleased
with the performance of Coolabi, considering the extremely difficult market
conditions. This is, in the opinion of EIM, due to the experience and the
calibre of the Coolabi Management Directors, together with the high quality of
the intellectual property rights which Coolabi owns, manages and licenses. EIM
believes that it can continue to foster Coolabi's development through
significant new investment.
North believes that the current subdued market conditions have led to numerous
intellectual property assets becoming available. Certain of these opportunities
would be an ideal fit for Coolabi and could be well leveraged by a management
team of the calibre of the Coolabi Management Directors. North believes that
there is an opportunity for a well-placed, well-funded team to acquire and
develop these assets and thus to establish a reputation as the `go to' team for
leveraging media intellectual property.
Following the Offer becoming or being declared unconditional in all respects,
North intends, with the support of EPVCT and EIM, to take significant steps
aimed at implementing this strategy and accelerating Coolabi's growth.
Coolabi's core activities will continue to be developed and strengthened. North
intends that further investment will be made in Coolabi to support organic
growth of the current intellectual property held by Coolabi and that
significant investment will be made if and when suitable acquisition
opportunities can be identified. North intends to utilise the contacts of EIM
to identify and acquire additional high quality intellectual property. North
believes that the support provided by EPVCT will improve Coolabi's ability to
secure new intellectual property opportunities on more attractive terms. North
believes that the experience and capabilities of the executive management team
can be leveraged across more assets to achieve greater growth. As a result of
pursuing this strategic direction, North is targeting enhanced long-term
revenue growth for Coolabi.
North anticipates that, following the Offer, significant additional investment
will be required to accelerate Coolabi's development and to follow the strategy
set out above, EPVCT has been restricted in the amount of investment it can
make while Coolabi Shares remain admitted to trading on a public market. As a
result, to be able to provide Coolabi with the capital it requires to follow
the strategy set out above and to develop to its full potential, North requires
Coolabi to be a private company.
North intends, subject to the Offer being declared wholly unconditional and
that North has received acceptances over not less than 75 per cent. of the
Coolabi Shares to procure that Coolabi makes an application to the London Stock
Exchange to cancel the admission of Coolabi Shares from trading on AIM.
Referring to the current trading of Coolabi, North has identified a working
capital requirement and intends, post the Offer becoming or being declared
unconditional in all respects, to provide GBP1 million of funding for this
requirement. North intends to offer all North shareholders, at that time, the
opportunity to participate in providing this funding provided such offer does
not require North to issue a prospectus pursuant to the Prospectus Rules.
* Recommendation
The Independent Directors, who have been so advised by Evolution Securities,
consider the terms of the Offer to be fair and reasonable so far as Coolabi
Shareholders are concerned. In providing its advice, Evolution Securities has
taken into account the commercial assessments of the Independent Directors.
Accordingly, the Independent Directors believe that the terms of the Offer are
in the best interests of Coolabi Shareholders as a whole and recommend
unanimously that Coolabi Shareholders accept the Offer and that Coolabi
Shareholders vote in favour of the Ordinary Resolution to be proposed at the
General Meeting as the Independent Directors have irrevocably undertaken to do
in respect of their entire holding in Coolabi (comprising, in aggregate,
462,859 Coolabi Shares and representing approximately 0.83 per cent. of the
existing issued share capital of Coolabi). The Independent Directors have all
undertaken to accept the Offer and not to elect for the Share Alternative.
Coolabi Shareholders are recommended to consider carefully, in the light of
their own investment objectives and having taken independent advice appropriate
to their own financial circumstances, if they wish to elect for the Share
Alternative and receive unlisted North Shares.
* Irrevocable undertakings
*
a. Acceptance of the Offer
North has received irrevocable undertakings to accept the Offer from the
Independent Directors, the Coolabi Management Directors and/or companies
through which they provide services and indirectly hold Coolabi Shares,
EPVCT and certain other shareholders in respect of 34,258,512 Coolabi
Shares (representing approximately 53.66 per cent. of the issued share
capital of Coolabi assuming conversion of the Convertible Loan Notes).
North has also obtained a letter of intent from BlackRock to accept the
Offer in respect of its holding of 4,127,876 Coolabi Shares (representing
6.47 per cent. of the issued share capital of Coolabi assuming conversion
of the Convertible Loan Notes). Further details of these irrecoverable
undertakings and letter of intent are set out in Appendix III to this
amendment.
b. Voting in favour of the Ordinary Resolution
In addition, North has received irrevocable undertakings from the
Independent Directors and certain other Coolabi Shareholders to vote in
favour of the Ordinary Resolution relating to the Offer at the General
Meeting in respect of Rule 16.2 of the City Code, as described in paragraph
10(b) of this announcement, in respect of 18,193,220 Coolabi Shares (being
approximately 41.24 per cent. of the Coolabi Shares whose shareholders are
entitled to vote at the meeting).
c. Election for the Share Alternative
Further, North has received irrevocable undertakings to elect for the Share
Alternative from the Coolabi Management Directors, EPVCT and Avonglen
Limited in respect of 19,730,309 Coolabi Share (representing approximately
30.90 per cent. of the issued share capital of Coolabi, assuming conversion
of the Convertible Loan Notes and assuming no scale back under the Share
Alternative).
Further details of these irrevocable undertakings are set out in Appendix
III to this announcement.
+
Background to and reasons for the recommendation
Over the past five years, Coolabi has delivered on its strategy of building
a diversified portfolio of intellectual property assets that have
international appeal across a broad range of media platforms. This has been
achieved organically and, where appropriate opportunities have presented
themselves, through acquisition.
Coolabi is currently facing challenging market conditions that are
adversely affecting the sectors in which it operates. These have been
particularly felt in the licensing and merchandising industry, where
agreements with potential licensees are taking longer than usual to
conclude. This, in turn, has had an impact on Coolabi's working capital
requirements.
Against this market backdrop, the Independent Directors, in consultation
with Coolabi's major shareholders, have considered alternative options
available to Coolabi in the absence of the Offer, including continuing its
current strategy of organic growth and an equity fundraising for the
development of the business.
The Independent Directors are supportive of Coolabi's current strategy and
are confident of its future prospects. However, they believe that in order
for Coolabi to continue to execute its strategy and maximise its future
potential, further funding is required. The Independent Directors
acknowledge that North, funded by EPVCT, intends to support Coolabi in
achieving its commercial and strategic objectives and will help it grow
both organically by investment in existing properties and through funding
acquisition opportunities (if suitable opportunities present themselves)
that would otherwise be difficult to achieve given the current challenging
market for raising new equity on the public market. As an unlisted company,
Coolabi will also be able to prioritise strategic development over
consistency of earnings and predictability.
As set out in paragraph 12 of this announcement, North attaches great
importance to the skills and experience of the management and employees of
Coolabi and intends that they should play a key role in the development of
the Coolabi Group. North has given assurances to the Independent Directors
that, on the Offer becoming or being declared unconditional in all
respects, the existing employment rights, including pension rights, of all
Coolabi Group employees will be observed. North has no current intention to
change the location of Coolabi Group's place of business.
In light of the factors set out above, the Independent Directors intend to
recommend unanimously that Coolabi Shareholders accept the Offer.
+ Information relating to North, EPVCT and EIM and the financing of the
Offer
+ (a) North
North was incorporated in England and Wales under the Act on 17 March 2010
by EPVCT and currently has a total issued share capital of 455,407 North
Management Ordinary Shares, 1,161,289 North Investor Ordinary Shares and
903,225 North Preference Shares each with a nominal value of 0.13p each and
two deferred shares of nominal value of 0.1p each. North was founded to
engage in the acquisition, development and creative management of
intellectual property assets, particularly in the field of character
merchandising. Since the time of incorporation North has been actively
seeking suitable opportunities. North has had three fundraising rounds
since incorporation, during which EPVCT has invested GBP3 million in
aggregate. North has not traded prior to the date of this Announcement
(other than entering into transactions relating to the Offer). The Coolabi
Management Directors are all existing North shareholders. The Directors of
North are Gordon Power and William Harris. William Harris was appointed to
the board of North at the time of entry into the Investment Agreement. This
appointment was approved by the Independent Directors and is primarily to
facilitate the Offer being made in a VCT compliant environment.
+
North currently has approximately GBP2.9 million in cash. North has
entered into the Loan Facility to fund the portion of the Offer and
transaction costs which will not be covered by North's existing cash
resources. The Loan Facility is an unsecured term loan of GBP654,210.99,
which accrues simple interest at a rate of 4.2 per cent. per annum but
accrues a repayment premium of 70 per cent. of such amount as would
give the lender an IRR of 19.75 per cent. on the principal amount
repaid (less the principal amount repaid). It is intended that if
Coolabi Shareholders accept cash that requires funding over and above
the existing cash resources of North, that part of the consideration
will be drawn down by North from the Loan Facility and that each amount
drawn down will be capitalised by EPVCT, at some point after the Offer
becomes or is declared unconditional in all respects, into North Shares
on the same terms as the Offer, possibly during the course of the next
tax year.
Prior to making the Offer and publication of the Offer document, North will
re-register as a public limited company. Accordingly it is expected that
the Offer will be made by North as North Promotions plc rather than North
Promotions Limited.
The North Articles cover certain aspects of the governance of North
including the sale and transfer of securities. Further details concerning
the North Articles are set out in Appendix IV.
The assets and liabilities of a consolidated Enlarged Group would comprise
the assets and liabilities of Coolabi at the date of acquisition, the cash
currently in North (to the extent not utilised to pay the cash
consideration and transaction fees pursuant to the Offer), the Existing
Loan Notes and the drawn down portion of the Loan Facility, save that the
extent and amount of any fair value adjustments post acquisition is not yet
known. EPVCT has confirmed that it intends to capitalise the drawn down
portion of the Loan Facility (if any) at some point after the Offer becomes
or is declared unconditional in all respects, possibly during the course of
the next tax year. The capitalisation of the amount drawn down under the
Loan Facility will be on the same terms as the Offer.
The earnings of the consolidated Enlarged Group, assuming full acceptance
of the Offer, would comprise the earnings of Coolabi.
+ (b) Edge Performance VCT plc
+ EPVCT is a UK based publicly quoted investment holding company which
undertakes private equity and public capital market investments. EPVCT
is focused on investing in the entertainment industry. The investments
of EPVCT are managed by EIM. EPVCT was established on 8 September 2005.
It currently has approximately GBP85 million of assets under management.
+ (c) EIM
+ EIM is a UK based investment manager which was established in July 2005
for the purpose of managing the investments of EPVCT. The members of
the board of EIM are Gordon Power, David Glick, Alasdair George, Harvey
Goldsmith CBE and Kate Glick ACA, CTA.
+ (d) Arrangements between EPVCT, EIM and North
+ EPVCT has irrevocably undertaken to accept the Offer in respect of its
entire shareholding in Coolabi (including the 8,327,614 Coolabi Shares
which it will receive following the conversion of the Convertible Loan
Notes), further details of which are set out in paragraph 7 above.
EPVCT intends to convert the Convertible Loan Notes by no later than
immediately after the Offer becomes or has been declared unconditional
in all respects and has irrevocably undertakes to elect to receive its
consideration in North shares. Accordingly, if the Offer is successful,
after conversion of the Convertible Loan Notes, EPVCT will receive
1,233,246 North Preference Shares and 528,534 North Investor Ordinary
Shares in respect of its entire shareholding in Coolabi (assuming no
scale back under the terms of the Share Alternative). Since EPVCT is an
existing shareholder in North, EPVCT will then own 2,136,471 North
Preference Shares and 1,689,823 North Investor Ordinary Shares,
representing 39.77 per cent. of the North Preference Shares and 54.92
per cent. of the North Investor Ordinary shares (assuming full
acceptance of the Offer, all Coolabi Shareholders electing to receive
the Share Alternative and no scale back under the terms of the Share
Alternative).
(e) Financing of the Offer
The maximum amount of cash consideration payable by North to accepting
Coolabi Shareholders in relation to the Offer will be approximately GBP4.95
million. This amount will be funded using North's existing cash resources
and the Loan Facility provided by EPVCT to North.
Merchant Securities is satisfied that sufficient financial resources are
available to North to satisfy in full the total cash consideration of
approximately GBP4.95 million that is payable under the Offer.
+ Arrangements with Management
(a) Executive Management
Jeremy Banks (ACA) joined Coolabi plc as Chief Executive in September 2006.
Prior to joining Coolabi, he had been Group Commercial Director and Group
Finance Director at Chorion plc from 2001 until its acquisition by 3i in
2006. Previously, Jeremy had worked for Guinness Mahon Development Capital
shortly before it was bought out by its management to form ProVen Private
Equity, the niche venture capital house whose focus was media and branded
content transactions. Jeremy is a chartered accountant.
Tim Ricketts (ACA) is Finance Director of Coolabi. Tim has significant
experience in the commercial, operational and financial management of media
and technology businesses both in the UK and worldwide. During nine years
with United News & Media plc, Tim held various senior posts including
Finance Director of Anglia Television Limited, Meridian Broadcasting
Limited and United Newspapers Limited. In 2000 he was responsible for an
operational review of United News & Media plc, the then FTSE-100 business,
which achieved over GBP60 million in savings per annum. In 2001 he became the
Group Finance Director of Gullane Entertainment PLC. Following Gullane's
takeover by HIT Entertainment plc in 2002, Tim co-founded and ran the
online betting data and technology group Turf Trax Holdings Limited as
Group Managing Director.
William Harris is Chairman of Coolabi. He was Chief Executive of Gullane
Entertainment plc until 2002. He helped grow the business from a six-person
company with GBP400,000 turnover into a London Stock Exchange listed company
with a turnover of over GBP50 million, 150 employees and offices in the UK,
US, Canada and Japan. As Chief Executive he led the transformation of
Gullane from a one-property company (Thomas the Tank Engine) into a broadly
based family entertainment studio, through organic growth and a series of
acquisitions of rights and properties, including the underlying rights to
Thomas the Tank Engine, Guinness World Records, Media Merchants, Fireman
Sam and David & Charles Children's Books. During this period Gullane's
share price increased from GBP1.30 to GBP4.30, its market capitalisation from GBP
31 million to GBP133 million and earnings per share from 6.66p to 20.85p.
Gullane was acquired by HIT Entertainment PLC in September 2002. William
Harris was appointed to the board of North as a Non-Executive Director upon
entry into the Investment Agreement. This appointment to the board of North
was approved by the Independent Directors and is primarily to facilitate
the Offer being made in a VCT compliant environment. Further details of the
Investment Agreement are set out in paragraph 10(b) below.
(b) Arrangements between the Executive Management and North
Under the terms of the Investment Agreement, Jeremy Banks, Tim Ricketts and
William Harris have subscribed for 259,582, 108,159 and 43,264 North
Management Ordinary Shares, respectively. In addition, Zoe Scurfield and
Michael Dee have subscribed for 17,761 and 26,641 North Management Ordinary
Shares. Zoe Scurfield and Michael Dee are both senior managers of Coolabi
and are not Coolabi Shareholders. The North Management Ordinary Shares are
not being offered to any other Coolabi Shareholders and will not rank pari
passu with the rest of the issued share capital of North.
The structure of the North Management Ordinary Shares is intended to
provide an incentive to the Coolabi Management Directors and the senior
managers referred to above.
Assuming 445,407 North Management Ordinary Shares will remain in issue they
will represent 15 per cent. of the votes capable of being cast on a poll at
any general meeting. The North Management Ordinary Shares will rank pari
passu in all economic respects. The North Management Ordinary Shares, like
the North Investor Ordinary Shares, will not carry the right to receive any
dividends unless and until all the North Preference Shares have been
redeemed. Following the redemption of the North Preference Shares, the
North Management Ordinary Shares shall confer the right on the holders to
receive 50 per cent. of all dividends provided that Investors have received
an 18 per cent. internal rate of return calculated on all the cash flows
associated with the North Investor Ordinary Shares, the North Preference
Shares and the Existing Loan Notes issued to EPVCT. Prior to that point the
North Management Ordinary Shares will confer the right to 15 per cent. of
all dividends. The North Management Ordinary Shares do not form part of the
Share Alternative.
Specifically, the North Management Ordinary Shares are a mechanism to
provide differing levels of compensation once certain thresholds of returns
to other North shareholders are reached. The North Management Ordinary
Shares are in addition to the North Investor Ordinary Shares which will be
issued to the Coolabi Management Directors as a result of accepting the
Share Alternative in respect of their holding of Coolabi Shares.
Further details about the North Management Ordinary Shares are set out in
Appendix IV.
The Independent Shareholders will be asked at the General Meeting to
approve the Executive Management Transactions described in this paragraph
(b) by voting on the Ordinary Resolution in compliance with the
requirements of Rule 16.2 (c) of the Code. The Coolabi Management Directors
and EPVCT will not be entitled to vote on the Ordinary Resolution and
voting on this resolution will be by way of a poll.
For the purposes of Rule 16.2 of the Code, Evolution Securities considers
the terms of the Executive Management Transactions to be fair and
reasonable in so far as the Coolabi Shareholders are concerned.
For the purposes of Rule 25.2 of the Code, Coolabi Management Directors are
deemed to have a conflict of interest with Coolabi due to the Executive
Management Transactions. Accordingly a committee of the board of Coolabi
was established comprising the Independent Directors for the purpose of
considering any offers for the Company and making any recommendations to
the Coolabi Shareholders.
+ Information relating to Coolabi
(a) Background
+ Coolabi specialises in the ownership, development, creative management
and exploitation of high quality intellectual property assets.
Coolabi's current properties include Poppy Cat, Purple Ronnie, The
Large Family, King Arthur's Disasters, The Worst Witch, Fungus The
Bogeyman and Scarlett & Crimson. In addition, Coolabi also licenses
rights to selected properties that include the Oliver Postgate and
Peter Firmin trio of properties Bagpuss, The Clangers and Ivor The
Engine. The strategy for Coolabi has been to build a diversified
portfolio of cash-generative intellectual property assets that have
international potential across a broad range of media platforms.
+ The Coolabi business started as Alibi Communications plc ("Alibi"),
which was formed in 1999 and was admitted to trading on AIM in the same
year. Alibi was a producer of prime time television drama and
children's television drama. In 2004, Alibi merged with Coolebah
Limited, a business engaged in licensing and children's animated
television production. The company changed its name to Coolabi in 2005.
+ In September 2006, Coolabi acquired the children's division of Zenith
Entertainment Limited (out of administration). In May 2007 Coolabi
acquired Purple Enterprises Limited and in September of that year,
acquired Indie Kids. In November 2008, Coolabi acquired Licensing By
Design. In 2009, Coolabi acquired the literary estates of Eric Ambler,
Michael Innes and John Creasey.
+ Coolabi is incorporated in England and Wales and currently trades on
AIM under the ticker COO and has a total issued share capital of
55,517,449 Coolabi Shares and 490,520,871 deferred shares of 0.95p
each.
(b) Current trading and prospects
The Company's interim results for the six months ended 30 June 2011 were
released on 20 September 2011 and the Company reported revenue of GBP0.61
million (H1 2010: GBP0.96 million), adjusted EBITDA loss of GBP0.3 million (H1
2010: EBITDA of GBP0.02 million) and net debt of GBP1.35 million (30 June 2010:
GBP0.73 million).
The following are edited details from the statements made by the Company in
its interim results for the six months ended 30 June 2011, as released on
20 September 2011:
"The first half of 2011 has seen a period of intense activity across the
business with the principal focus being the continued roll-out of our
pre-school animated TV property, Poppy Cat. We are pleased with the
progress made to date. Important strategic deliverables, such as the
broadcast premiere on Nick Jr in the UK and the contracting of Sprout as
our US broadcast partner, have been achieved. In addition, key
value-driving initiatives such as the securing of ten UK licences,
including a Master Toy Partner have also been concluded in the first half.
However, all of this has taken longer to achieve than it might have done in
better economic times.
As in 2010, we expect the results to be heavily weighted towards the second
half. There is still much to do in order to realise management's
expectations for the full year, particularly in the light of current
trading conditions. Successful attendance at important trade fairs over the
next couple of months will be crucial to their achievement.
However, we are currently facing challenging market conditions that are
adversely affecting the sectors in which we operate. These have been
particularly felt in the licensing and merchandising industry, where
agreements with potential licensees are taking longer than usual to
conclude. This, in turn, has had an impact our on working capital
requirements."
The full text of the announcement containing the unaudited interim results
for the six months ended 30 June 2011 is available on the Company's website
www.coolabi.com.
+ Coolabi management, employees and locations
North attaches great importance to the skills and experience of the
management and employees of Coolabi and intends that they should play a key
role in the development of the Coolabi Group.
William Harris was appointed to the board of North as a Non-Executive
Director upon entry into the Investment Agreement. His appointment was
approved by the Independent Directors and is primarily to facilitate the
Offer being made in a VCT compliant environment. Further details of the
Investment Agreement are set out in paragraph 10(b) above. In addition, it
is expected that Jeremy Banks (Chief Executive) and Tim Ricketts (Finance
Director) will remain with the Coolabi Group and will also become directors
of North.
The remaining members of the Coolabi board (Stuart Lindsay, Nicholas James
and Linda James) have agreed to resign with effect from the date upon which
the Offer becomes or is declared wholly unconditional.
The existing employment rights, including pension rights, of all Coolabi
Group employees will be observed. North has no current intention to change
the location of Coolabi Group's place of business.
+ Coolabi Share Option Scheme
Participants in Coolabi's Share Option Scheme have all agreed to waive
their rights to options, subject to the Offer becoming or being declared
wholly unconditional.
+
Disclosure of interests in Coolabi Shares
As at close of business on 27 October 2011, the last practicable date prior
to the Announcement Date, other than as disclosed below, neither North, nor
any directors of North, nor, so far as North is aware, any person acting in
concert with North, has any interest in or right to subscribe for any
relevant Coolabi securities.
EPVCT
As at close of business on 27 October 2011, the last practicable date prior
to the Announcement Date, EPVCT held interests in 9,290,196 Coolabi Shares
and GBP562,114 Convertible Loan Notes which it intends to convert into
8,327,614 Coolabi Shares by no later than immediately following the Offer
becoming or being declared wholly unconditional.
William Harris
As at close of business on 27 October 2011, the last practicable date prior
to the Announcement Date William Harris held interests in 954,166 Coolabi
Shares. In addition, William Harris owns 33.33 per cent. of Avonglen
Limited, a company of which he is also a director. Avonglen Limited owns
458,333 Coolabi Shares.
Jeremy Banks
As at close of business on 27 October 2011, the last practicable date prior
to the Announcement Date, Jeremy Banks held interests in 700,000 Coolabi
Shares.
Tim Ricketts
As at close of business on 27 October 2011, the last practicable date prior
to Announcement Date, Tim Ricketts did not directly hold an interest in
Coolabi Shares, however, he owns 33.33 per cent. of Avonglen Limited, a
company of which he is also a director. Avonglen Limited owns 458,333
Coolabi Shares.
+ Offer Document
It is expected that the Offer Document and the Forms of Acceptance
accompanying the Offer Document will be posted as soon as practicable and,
in any event, (save with the consent of the Panel) within 28 days of this
announcement. The Offer Document and Forms of Acceptance (in respect of
Coolabi Shareholders who hold their Coolabi Shares in certificated form)
will be made available to all Coolabi Shareholders at no charge to them on
the Coolabi website, www.coolabi.com.
Coolabi Shareholders are urged to read the Offer Document and, if the
Coolabi Shares are held in certificated form, the Form of Acceptance when
they are sent to them because they will contain important information.
+ Compulsory acquisition, cancellation of AIM admission and
re-registration as a private company
If North receives acceptances under the Offer in respect of 90 per cent. or
more of Coolabi Shares to which the Offer relates, North intends to
exercise its rights pursuant to the provisions of Part 28 of the Act, as
applicable, to acquire compulsorily the remaining Coolabi Shares in respect
of which the Offer has not been accepted on the same terms as the Offer.
If North is able to compulsorily acquire the remaining Coolabi Shares,
Coolabi Shareholders who do not return a Form of Acceptance in respect of
certificated Coolabi Shares or send or procure their CREST sponsor sends
the Relevant Transfer to Escrow instruction in respect of uncertificated
Coolabi Shares according to the instructions which will be contained in the
Offer Document and the Form of Acceptance (if appropriate) will be deemed
to have made an election to receive cash pursuant to the Offer.
If the Offer becomes or is declared unconditional in all respects, and
sufficient acceptances under the Offer are received, North intends to
procure that Coolabi makes an application to the London Stock Exchange to
cancel the admission of Coolabi Shares to trading on AIM. Cancellation of
admission of Coolabi Shares to trading on AIM is likely to significantly
reduce the liquidity and marketability of any Coolabi Shares in respect of
which the Offer has not been accepted.
It is anticipated that, subject to any applicable requirements of the
London Stock Exchange, cancellation of admission to trading on AIM will
take effect no earlier than 20 Business Days after either (i) the date on
which North has, by virtue of its shareholdings and acceptances of the
Offer, acquired or agreed to acquire issued share capital carrying 75 per
cent. of the voting rights of Coolabi or (ii) the first date of issue of
compulsory acquisition notices under Part 28 of the Act, as applicable.
North will notify Coolabi Shareholders when the required 75 per cent.
acceptance threshold has been attained and will confirm that the notice
period has commenced and the anticipated date of cancellation.
Following such cancellation, North intends to procure that Coolabi
re-registers as a private limited company under the relevant provisions of
the Companies Act 2006.
+ General
The Offer will be made on the terms and subject to the conditions and
further terms set out herein and in Appendix I to this announcement. The
bases and sources of certain financial information contained in this
announcement are set out in Appendix II to this announcement. A summary of
the irrevocable undertakings given by the Coolabi Directors (including the
circumstances in which they will fall away) is contained in Appendix III to
this announcement. Certain terms used in this announcement are defined in
Appendix VI to this announcement.
FURTHER INFORMATION
This announcement is not intended to, and does not, constitute or form part
of an offer to sell, or otherwise dispose of, or constitute an invitation
or the solicitation of an offer to purchase, subscribe for or otherwise
acquire any securities or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Offer or otherwise. The Offer will be made
solely by means of the Offer Document, which will contain the full terms
and conditions of the Offer (including details of how to accept the Offer).
Any acceptance of the Offer should be made only on the basis of the
information contained in the Offer Document. Coolabi Shareholders are
advised to read the formal documentation in relation to the Offer
carefully.
Please be aware that addresses, electronic addresses and certain other
information provided by Coolabi Shareholders, persons with information
rights and other relevant persons for the receipt of communications from
Coolabi may be provided to North during the offer period as required under
Section 4 of Appendix 4 of the Code.
Merchant Securities is authorised by the Financial Services Authority.
Merchant Securities is acting exclusively for North and no one else in
connection with the Offer and will not be responsible to anyone other than
North for providing the protections afforded to clients of Merchant
Securities, or for providing advice in connection with the Offer or any
matter referred to herein.
Evolution Securities is acting exclusively for Coolabi and no one else in
connection with the Offer and will not be responsible to anyone other than
Coolabi for providing the protections afforded to clients of Evolution
Securities or for providing advice in connection with the Offer or any
matter referred to herein.
Overseas Shareholders
This announcement is for information purposes only and does not constitute
an offer to sell or an invitation to purchase any securities or the
solicitation of an offer to buy any securities, pursuant to the Offer or
otherwise. The Offer will be made solely by means of an Offer Document and
the Form of Acceptance accompanying the Offer Document in respect of
Coolabi Shares in certificated form, which will contain the full terms and
conditions of the Offer, including details of how the Offer may be
accepted.
This announcement has been prepared for the purpose of complying with
English law and the City Code and the information disclosed may not be the
same as that which would have been disclosed if this announcement had been
prepared in accordance with the laws of jurisdictions outside the United
Kingdom.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law. Persons who are not resident in the
United Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements.
Unless otherwise determined by North or required by the City Code, and
permitted by applicable law and regulation, the Offer will not be made,
directly or indirectly, in, into or from a Restricted Jurisdiction where to
do so would violate the laws in that jurisdiction, and the Offer will not
be capable of acceptance from or within a Restricted Jurisdiction.
Accordingly, copies of this announcement and all documents relating to the
Offer are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in, into or from a Restricted
Jurisdiction where to do so would violate the laws in that jurisdiction,
and persons receiving this announcement and all documents relating to the
Offer (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as
doing so may invalidate any purported acceptance of the Offer.
The availability of the Offer to Coolabi Shareholders who are not resident
in the United Kingdom may be affected by the laws of the relevant
jurisdictions in which they are resident. Persons who are not resident in
the United Kingdom should inform themselves of, and observe, any applicable
requirements.
Forward looking statements
This announcement contains statements about North and Coolabi that are or
may be forward looking statements. All statements other than statements of
historical facts included in this announcement may be forward looking
statements. Without limitation, any statements preceded or followed by or
that include the words "plans", "believes", "expects", "aims", "intends",
"will", "may", "anticipates", "estimates", "projects" or words or terms of
similar substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to the following:
(i) future capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend policy,
losses and future prospects; (ii) business and management strategies and
the expansion and growth of North or Coolabi's operations and potential
synergies resulting from the Offer; and (iii) the effects of government
regulation on North or Coolabi's business.
Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key
assumptions. Many factors could cause actual results to differ materially
from those projected or implied in any forward looking statements. Due to
such uncertainties and risks, readers are cautioned not to place undue
reliance on such forward looking statements, which speak only as of the
date hereof. North disclaims any obligation to update any forward looking
or other statements contained herein, except as required by applicable law.
Responsibility statements
The North Directors each accept responsibility for the information
contained in this announcement except for the information relating to: EIM,
directors of EIM ("EIM Directors") and members of their immediate families,
related trusts and connected persons; the recommendations and opinions of
the Independent Directors; and Coolabi, the Coolabi Directors and members
of their immediate families, related trusts and connected persons. To the
best of the knowledge and belief of the North Directors (who have taken all
reasonable care to ensure that such is the case), the information contained
in this announcement for which they are responsible is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
The EIM Directors each accept responsibility for the information contained
in this announcement relating to EIM and the EIM Directors and members of
their immediate families, related trusts and connected persons. To the best
of the knowledge and belief of the EIM Directors (who have taken all
reasonable care to ensure that such is the case), the information contained
in this announcement for which they are responsible is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
The Independent Directors each accept responsibility for the recommendation
and opinions of the Independent Directors relating to the Offer contained
in the Key Terms Of The Offer of this announcement. To the best of the
knowledge and belief of the Independent Directors (who have taken all
reasonable care to ensure that such is the case), the information contained
in this announcement for which they are responsible is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
The Coolabi Directors each accept responsibility for the information
contained in this announcement relating to Coolabi, the Coolabi Directors
and members of their immediate families, related trusts and connected
persons. To the best of the knowledge and belief of the Coolabi Directors
(who have taken all reasonable care to ensure that such is the case), the
information contained in this announcement for which they are responsible
is in accordance with the facts and does not omit anything likely to affect
the import of such information.
Disclosure requirements of the Takeover Code (the "Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent.
or more of any class of relevant securities of an offeree company or of any
paper offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in
cash) must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in which any
paper offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any paper offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the
offer period and, if appropriate, by no later than 3.30 pm (London time) on
the 10th business day following the announcement in which any paper offeror
is first identified. Relevant persons who deal in the relevant securities
of the offeree company or of a paper offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing
Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in
1 per cent. or more of any class of relevant securities of the offeree
company or of any paper offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
paper offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any paper offeror, save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a
person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a paper offeror,
they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and
by any offeror and Dealing Disclosures must also be made by the offeree
company, by any offeror and by any persons acting in concert with any of
them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be
made can be found in the Disclosure Table on the Takeover Panel's website
at http://www.thetakeoverpanel.org.uk , including details of the number of
relevant securities in issue, when the offer period commenced and when any
offeror was first identified. You should contact the Panel's Market
Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to
whether you are required to make an Opening Position Disclosure or a
Dealing Disclosure,
Evolution Securities confirms that it has given and not withdrawn its
consent to the publication of this announcement with the inclusion of its
recommendation and opinion in the form and context in which it is included.
Publication on Website
In accordance with Rule 30.4(c) of the Code, a copy of this announcement
will be made available, subject to certain restrictions relating to persons
resident in a Restricted Jurisdiction, free of charge, on Coolabi's website
at www.coolabi.com by no later than 12 noon on 31 October 2011.
In accordance with Rule 30.2, a person may request a copy of this
announcement in hard copy form. A person may also request that all future
documents, announcements and information in relation to the Offer should be
in hard copy form.
In accordance with Rule 26.1, the following documents will also be made
available, subject to certain restrictions relating to persons resident in
a Restricted Jurisdiction, free of charge, on Coolabi's website at
www.coolabi.com by no later than 12 noon on 31 October 2011:
+ The irrevocable undertakings referred to at Appendix III;
+ The Non-Disclosure Agreement;
+ The Loan Facility agreement between North and EPVCT; and
+ The articles of association of North.
APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
The Offer
The Offer, which will be made by North, will comply with the City Code and
will be governed by English law and subject to the jurisdiction of the
English courts. In addition, the Offer will be subject to the terms and
conditions to be set out in the Offer Document. The Offer will be subject
to the following conditions:
+ valid acceptances of the Offer being received (and not, where
permitted, withdrawn) by no later than the first closing date as set
out in the Offer Document (or such later time(s) and/or date(s) as
North may, subject to the rules of the Code, decide) in respect of not
less than 90 per cent. (or such lesser percentage as North may decide)
of the Coolabi Shares to which the Offer relates, provided that this
condition will not be satisfied unless North shall have acquired or
agreed to acquire (whether pursuant to the Offer or otherwise) Coolabi
Shares carrying in aggregate more than 50 per cent. of the voting
rights normally exercisable at a general meeting of Coolabi. For the
purposes of this condition:
1. Coolabi Shares which have been unconditionally allotted but not issued
shall be deemed to carry the voting rights which they will carry upon
issue;
2. the expression "Coolabi Shares to which the Offer relates" shall be
construed in accordance with Part 28 of the Act; and
3. valid acceptances shall be deemed to have been received in respect of
Coolabi Shares which are treated for the purposes of Part 28 of the Act
as having been acquired or contracted to be acquired by North by virtue
of acceptances of the Offer,
provided that, unless North otherwise determines, this condition 1 shall be
capable of being satisfied only at a time when all of the other conditions
2 to 8 inclusive have either been satisfied, fulfilled or, to the extent
permitted, waived;
+ the Ordinary Resolution being passed by a simple majority by the
Independent Shareholders on a poll at the General Meeting.
+ all necessary material notifications and filings having been made in
connection with the Offer and all statutory and regulatory obligations
in connection with the Offer in any relevant jurisdiction having been
complied with and all Authorisations deemed reasonably necessary or
appropriate by North in any relevant jurisdiction for, or in respect
of, the Offer and, except pursuant to Part 28, Chapter 3 of the Act,
the acquisition or the proposed acquisition of the Coolabi Shares by
North having been obtained in terms reasonably satisfactory to North
from all appropriate Third Parties, all or any applicable waiting and
other time periods having expired, lapsed or been terminated (as
appropriate) and all such Authorisations (together with all material
Authorisations deemed reasonably necessary or appropriate to carry on
the business of any member of the Wider Coolabi Group) remaining in
full force and effect at the time at which the Offer becomes otherwise
unconditional and there being no notice of any intention to revoke,
suspend, restrict, amend or not to renew any such Authorisations;
+ no Third Party having given notice of a decision to take, institute,
implement or threaten any action, proceeding, suit, investigation or
enquiry, or having required any action to be taken, or otherwise having
done anything, or having enacted, made or proposed any statute,
regulation or order, or taken any other step that would or might
reasonably be expected to:
1. require, prevent or delay the divestiture, or alter the terms envisaged
for any proposed divestiture by North or any member of the Wider
Coolabi Group of all or any material part of their respective
businesses, assets or properties or impose any limitation on the
ability of North or the Wider Coolabi Group to conduct its business (or
any part of it) or to own any of its assets or property or any part of
them which, in any such case, is material in the context of the Wider
Coolabi Group taken as a whole or in the context of the Offer;
2. save pursuant to the Offer or Part 28, Chapter 3 of the Act, require
North or any member of the Wider Coolabi Group to make an offer to
acquire, any shares or other securities (or the equivalent) in any
member of the Wider Coolabi Group owned by any third party where such
acquisition would be material in the context of the Offer;
3. impose any limitation on, or result in a material delay in, the ability
of North directly or indirectly to acquire or to hold or to exercise
effectively directly or indirectly all or any rights of ownership in
respect of shares or loans or securities convertible into shares or any
other securities (or the equivalent) in Coolabi or the ability of North
to hold or exercise effectively any rights of ownership of shares,
loans or other securities in, or to exercise management control over
any member of the Wider Coolabi Group or require a divestiture by North
of any rights or ownership in respect of shares or other securities in
Coolabi, which, in any such case, is material in the context of the
Wider Coolabi Group taken as a whole or in the context of the Offer;
4. otherwise adversely affect the business, assets, liabilities, financial
or trading position, profits or prospects of any member of any member
of the Wider Coolabi Group in each case to an extent which is material
in the context of the Wider Coolabi Group taken as a whole or in the
context of the Offer;
5. make the Offer, its implementation or the acquisition or proposed
acquisition by North of any shares or other securities in, or control
or management of, Coolabi void, unenforceable or illegal, or restrict,
prohibit or delay to a material extent or otherwise materially
interfere with the implementation of, or impose material additional
conditions or obligations with respect to the Offer, or otherwise
materially challenge or require material amendment of, the Offer or the
acquisition or proposed acquisition of any Coolabi Shares or the
acquisition of control of Coolabi or any member of the Wider Coolabi
Group by North.
and all applicable waiting and other time period during which any such
Third Party could decide to take, institute, implement or threaten any such
action, proceedings, suit, investigation or enquiry or take any other step
under the laws of any jurisdiction having expired, lapsed or been
terminated;
+ save as Publicly Announced or as fairly disclosed in writing to North
or its advisers by or on behalf of Coolabi prior to the date of this
announcement, there being no provision of any arrangement, agreement,
lease, licence, permit or other instrument to which any member of the
Wider Coolabi Group is a party or by or to which any such member or any
of its assets is or may be bound or be subject, which as a consequence
of the Offer or the acquisition or the proposed acquisition by North of
any shares or other securities (or the equivalent) in Coolabi or
because of a change in the control or management of any member of the
Wider Coolabi Group or otherwise, would result, in any case to an
extent which is material in the context of the Wider Coolabi Group
taken as a whole or in the context of the Offer, in:
1. any monies borrowed by, or any other indebtedness, actual or
contingent, of, any member of the Wider Coolabi Group being or becoming
repayable, or being capable of being declared repayable immediately or
prior to their or its stated maturity, or the ability of any such
member to borrow monies or incur any indebtedness being withdrawn or
inhibited;
2. the creation or enforcement of any mortgage, charge or other security
interest, over the whole or any part of the business, property or
assets of any member of the Wider Coolabi Group or any such mortgage,
charge or other security interest (whenever arising or having arisen)
becoming enforceable;
3. any such arrangement, agreement, lease, licence, permit or other
instrument being terminated or adversely modified or affected or any
onerous obligation or liability arising or any adverse action being
taken thereunder;
4. any assets or interests of any member of the Wider Coolabi Group being
or falling to be disposed of or charged or any right arising under
which any such asset or interest could be required to be disposed of or
charged;
5. the rights, liabilities, obligations or interests of any member of the
Wider Coolabi Group in, or the business of any such member with, any
person, firm or body (or any arrangement or arrangements relating to
any such interest or business) being terminated, adversely modified or
affected;
6. the value or financial or trading position or profits of Coolabi or any
member of the Wider Coolabi Group being prejudiced or adversely
affected; or
7. the creation of any liability (actual or contingent) by any member of
the Wider Coolabi Group, other than in the ordinary course of business;
in each case, to an extent which is material in the context of the Wider
Coolabi Group taken as a whole;
+ save as Publicly Announced or fairly disclosed in writing to North or
its advisers by or on behalf of Coolabi, in each case prior to the date
of this announcement, no member of the Wider Coolabi Group having since
31 December 2010:
1. issued or agreed to issue or proposed or announced its intention to
issue of additional shares of any class, or securities convertible
into, or exchangeable for, or rights, warrants or options to subscribe
for or acquire, any such shares or convertible securities (save as
between Coolabi and wholly-owned subsidiaries of Coolabi and save for
the issue of Coolabi Shares pursuant to or in connection with the
exercise or vesting of options or awards granted under, or the grant of
options or awards under, the Coolabi Share Option Scheme where such
award or grant is made before the date of this announcement);
2. recommended, declared, paid or made or proposed to recommend, declare,
pay or make any bonus issue, dividend or other distribution whether
payable in cash or otherwise other than dividends (or other
distributions whether payable in cash or otherwise) lawfully paid or
made by any wholly-owned subsidiary of Coolabi to Coolabi or any of its
wholly-owned subsidiaries;
3. other than pursuant to the implementation of the Offer (and save for
transactions between Coolabi and its wholly-owned subsidiaries and
transactions in the ordinary course of business) implemented, effected,
authorised, proposed or announced its intention to implement, effect,
authorise or propose any merger, demerger, reconstruction,
amalgamation, scheme, commitment or acquisition or disposal of assets
or shares (or the equivalent thereof) in any undertaking or
undertakings that is material in the context of the Wider Coolabi Group
taken as a whole or in the context of the Offer or any change in its
share or loan capital (save for the issue of Coolabi Shares on the
exercise or vesting of options or awards granted before the date of
this announcement under the Coolabi Share Option Schemes);
4. (save for transactions between Coolabi and its wholly-owned
subsidiaries and save for transactions in the ordinary course of
business) disposed of, or transferred, mortgaged or created any
security interest over any asset or any right, title or interest in any
asset that is material in the context of the Wider Coolabi Group taken
as a whole or authorised, proposed or announced any intention to do so;
5. (save for transactions between Coolabi and its wholly-owned
subsidiaries) issued, authorised or proposed or announced an intention
to authorise or propose, the issue of any debentures or (save for
transactions between Coolabi and its wholly-owned subsidiaries or
transactions under existing credit arrangements or in the ordinary
course of business) incurred any indebtedness or contingent liability
which is material in the context of the Wider Coolabi Group as a whole
or in the context of the Offer;
6. entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, arrangement, agreement,
transaction or commitment (whether in respect of capital expenditure or
otherwise) which is of a long term, unusual or onerous nature or
magnitude or which involves or is reasonably likely to involve an
obligation of such a nature or magnitude which is, in any such case, or
which is or is likely to be restrictive on the business of any member
of the Wider Coolabi Group, which is, in any such case, material in the
context of the Wider Coolabi Group or in the context of the Offer;
7. entered into or varied to a material extent or authorised, proposed or
announced its intention to enter into or vary to a material extent the
terms of, or make any offer (which remains open for acceptance) to
enter into or vary to a material extent the terms of, any service
agreement with any director or, save for salary increases, bonuses or
variations of terms in the ordinary course, any senior executive of
Coolabi;
8. proposed, agreed to provide or modified the terms of any share option
scheme, incentive scheme or other benefit relating to the employment or
termination of employment of any person employed by the Wider Coolabi
Group which is, in any such case, material in the context of the Wider
Coolabi Group or in the context of the Offer;
9. purchased, redeemed or repaid or announced a proposal to purchase,
redeem or repay any of its own shares or other securities (or the
equivalent) or reduced or made any other change to or proposed the
reduction or other change to any part of its share capital, save for
the allotment of any shares in connection with the Coolabi Share Option
Scheme pursuant to rights granted before the date of this announcement
or as between Coolabi and wholly-owned subsidiaries of Coolabi;
10. waived, compromised or settled any claim otherwise than in the ordinary
course of business which is material in the context of the Wider
Coolabi Group as a whole or in the context of the Offer;
11. terminated or varied the terms of any agreement or arrangement between
any member of the Wider Coolabi Group and any other person in a manner
which would or might reasonably be expected to have a material adverse
effect on the financial position of the Wider Coolabi Group taken as a
whole;
12. made any alteration to its articles of association;
13. been unable, or admitted in writing that it is unable, to pay its debts
or having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of any business which is material
in the context of the Wider Coolabi Group as a whole or in the context
of the Offer;
14. (other than in respect of a company which is dormant and was solvent at
the relevant time) taken or proposed any corporate action or had any
action or proceedings or other steps instituted against it for its
winding-up (voluntary or otherwise), dissolution or reorganisation or
for the appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of all or any material part of its
assets or revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction; or
15. entered into any agreement, arrangement or commitment or passed any
resolution or made any proposal or announcement with respect to, or to
effect, any of the transactions, matters or events referred to in this
condition 6;
+ save as Publicly Announced or fairly disclosed in writing to North or
its advisers by or on behalf of Coolabi, in each case prior to the date
of this announcement, since 31 December 2010 there having been:
1. no adverse change or deterioration in the business, assets, financial
or trading position or profits or prospects of any member of the Wider
Coolabi Group which is material in the context of the Wider Coolabi
Group taken as a whole or in the context of the Offer;
2. no litigation, arbitration proceedings, prosecution or other legal
proceedings having been announced or instituted by or against or
remaining outstanding against or in respect of any member of the Wider
Coolabi Group and no enquiry or investigation by or complaint to any
Third Party against or in respect of any member of the Wider Coolabi
Group having been threatened, announced or instituted or remaining
outstanding, against or in respect of any member of the Wider Coolabi
Group and which in any such case might reasonably be expected to be
material in the context of the Wider Coolabi Group taken as a whole or
in the context of the Offer;
3. no contingent or other liability having arisen or become apparent to
North which might reasonably be expected to adversely affect any member
of the Wider Coolabi Group and which in any such case is material in
the context of the Wider Coolabi Group taken as a whole or in the
context of the Offer; and
4. no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence
held by any member of the Wider Coolabi Group which is necessary for
the proper carrying on of its business which is, in any such case,
material in the context of the Wider Coolabi Group or in the context of
the Offer;
+ save as Publicly Announced or fairly disclosed in writing to North or
its advisers by or on behalf of Coolabi, in each case prior to the date
of this announcement, North not having discovered:
1. that the financial, business or other information concerning the Wider
Coolabi Group publicly announced or disclosed at any time by or on
behalf of any member of the Wider Coolabi Group is materially
misleading, contains a material misrepresentation of fact or omits to
state a fact necessary to make the information contained therein not
materially misleading; or
2. that any member of the Wider Coolabi Group is, otherwise than in the
ordinary course of business, subject to any liability, contingent or
otherwise, which is material in the context of the Wider Coolabi Group
taken as a whole or in the context of the Offer.
North reserves the right to waive, in whole or in part, all or any of the
above conditions 3 to 8 (inclusive).
If North is required by the Panel to make an offer for Coolabi Shares under
the provisions of Rule 9 of the Code, North may make such alterations to
any of the above conditions, including condition 1 above, and terms of the
Offer as are necessary to comply with the provisions of that Rule.
The Offer will lapse unless all the above conditions have been fulfilled
or, where permitted, waived or, where appropriate, have been determined by
North to be or remain satisfied, by the twenty-first day after the later of
the first closing date of the Offer Document and the date on which
condition 1 is fulfilled (or in each case such later date as North may
determine, in accordance with the City Code).
North shall be under no obligation to waive (if capable of waiver), to
determine to be or remain satisfied or to treat as fulfilled any of
conditions 3 to 8 (inclusive) by a date earlier than the latest date for
the fulfilment of that condition notwithstanding that the other conditions
of the Offer may at such earlier date have been waived or fulfilled and
that there are at such earlier date no circumstances indicating that any of
such conditions may not be capable of fulfilment.
If the Offer lapses, the Offer will cease to be capable of further
acceptance and accepting Coolabi Shareholders and North shall cease to be
bound by Forms of Acceptance submitted at or before the time when the Offer
so lapses.
APPENDIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
i. The Offer values the existing issued share capital of Coolabi based
upon 55,517,449 Coolabi Shares being in issue on 27 October 2011, being
the last Business Day prior to the date of this announcement.
i. The closing mid-market price of Coolabi Shares on 27 October 2011,
being the last Business Day prior to the date of this announcement is
taken from the AIM Appendix to the Daily Official List.
ii. Unless otherwise stated, the financial information relating to Coolabi
is extracted from the audited consolidated financial statements of
Coolabi for the financial year to 31 December 2010, prepared in
accordance with IFRS.
iii. Under the Coolabi Share Option Scheme there are outstanding options
which will become exercisable as a result of the Offer in relation to
3,168,246 Coolabi Shares, all of which have been waived conditional
upon the Offer becoming or being declared wholly unconditional.
iv. Conversion of the Convertible Loan Note will result in the issue of
8,327,614 Coolabi Shares.
APPENDIX III
IRREVOCABLE UNDERTAKINGS
Directors
The Coolabi Management Directors and their concert parties have given
irrevocable undertakings to accept the Offer and receive the Share
Alternative as follows:
Name Number of Coolabi Shares Percentage of existing
issued ordinary share
capital of Coolabi
William Harris 954,166 2.54
Jeremy Banks 700,000 1.26
Avonglen Limited* 458,333 0.83
Total 2,112,499 3.81
* Avonglen Limited is a company in which William Harris and Tim Ricketts
each hold a 33.33 per cent. shareholding and are both directors.
These undertakings will cease to have effect if:
+ the Offer Document is not posted within 28 days of this announcement
(or within such longer period as Coolabi, with the consent of the
Panel, determines); or
+ the Offer lapses or is withdrawn.
The Independent Directors have given irrevocable undertakings to accept the
Offer, vote in favour of the Ordinary Resolution and receive cash as
follows:
Name Number of Coolabi Shares Percentage of existing
issued ordinary share
capital of Coolabi
Nicholas James 250,000 0.45
Linda James 129,526 0.23
Stuart Lindsay 83,333 0.15
Total 462,859 0.83
These undertakings will cease to have effect if:
+ the Offer Document is not posted within 28 days of this announcement
(or within such longer period as Coolabi, with the consent of the
Panel, determines);
+ a new offer being received from a third party with a value greater than
10 per cent. of the Offer; or
+ the Offer lapses or is withdrawn.
Other Shareholders
Certain other Coolabi Shareholders have given irrevocable undertakings to
accept the Offer and receive cash as follows:
Name Number of Coolabi Percentage of existing
Shares issued ordinary share
capital of Coolabi
MD Barnard & Company 6,940,833 12.50
Limited
Herald Investment 2,990,000 5.39
Management
Amati Global Investors 2,135,883 3.85
Antony Jordon 1,998,628 3.60
Total 14,065,344 25.34
These undertaking will cease to have effect if:
+ the Offer Document is not posted within 28 days of this announcement
(or within such longer period as Coolabi, with the consent of the
Panel, determines); or
+ in the case of MD Barnard & Company Limited, Herald Investment
Management and Anthony Jordan, a new offer being received from a third
party with a value greater than 10 per cent. of the price of the cash
offer; or
+ in the case of Amati Global Investors, a new offer being received from
a third party with a value greater than one per cent. of the price of
the cash offer; or
+ the Offer lapses or is withdrawn.
BlackRock has given a letter of intent stating that it intends to accept
the Offer in relation to its entire holding of 4,127,876 Coolabi Shares,
representing 6.47 per cent. of the fully diluted share capital.
EPVCT have given an irrevocable undertaking to accept the Offer and receive
the Share Alternative as follows:
Name Number of Coolabi Shares Percentage of fully
diluted ordinary share
capital of Coolabi
Edge Performance VCT PLC 17,617,810 27.59
* Includes 8,327,614 Coolabi Shares as a result of conversion of the
Convertible loan Note.
The undertaking from EPVCT will cease to have effect if:
+ the Offer Document is not posted within 28 days of this announcement
(or within such longer period as Coolabi, with the consent of the
Panel, determines); or
+ the Offer lapses or is withdrawn.
APPENDIX IV
SUMMARY OF THE RIGHTS ATTACHING TO THE NORTH SHARES AND THE ARTICLES
In this Appendix the following expressions shall have the following
meanings:-
"Controlling Interest" means an interest in shares giving to the holder or
holders control of North within the meaning of
Section 1124 of the Corporation Tax Act 2010;
"Edge Investor Group" means:
(a) EPVCT;
(b) EIM;
(c) any entity the funds of which are managed by
EIM;
which should also be deemed to include any of their
permitted transferees;
"Edge Investors" means any person, firm or body corporate compromised
in the Edge Investor Group, for so long as such
person, firm or body corporate shall hold any North
Investor Ordinary Shares and any party who
subsequently adheres to the Investment Agreement as
an Edge Investor by entering into a deed of
adherence thereto, and any such person's permitted
transferees;
"Existing Loan Notes" means the GBP700,000 A series secured six per cent.
Loan Notes 2016 of North and the GBP700,000 B series
secured six per cent. Loan Notes 2016 of North, each
constituted by separate loan note instruments dated
30 March 2010 (as amended and restated on 28 October
2011);
"Investor Director means the prior written consent of all of the
Consent" Investor Directors or the consent of all the
Investor Directors given at a meeting of the Board
or an Investor Majority Consent;
"Investors" means the holders of North Investor Ordinary Shares
and, for so long as there are any North Preference
Shares in issue, the holders of the North Preference
Shares and for so long as there are any Existing
Loan Notes in issue, the holders of Existing Loan
Notes;
"Investor Majority means the prior written consent or approval of the
Consent" Investor Majority;
"Investor Majority" means the holder(s) for the time being of over 50
per cent. in nominal value of the North Investor
Ordinary Shares;
"Investor IRR" means an IRR calculated on all the cashflows
associated with the North Preference Shares and
North Investor Ordinary Shares and Existing Loan
Notes issued by North;
"Issue Price" means, in relation to any North Share, the amount
paid up or credited as paid up on such North Share
(including any premium on issue);
"Low Threshold" means such amount as would be necessary to provide
the Investors with an Investor IRR of 18 per cent.;
"Mid Value" means the Target Value divided by 1.15;
"New Securities" means any share or other securities convertible
into, or carrying the right to subscribe for, those
shares, issued by North;
"Preference IRR" means an IRR calculated on each North Preference
Share;
"Redemption Amount" means in relation to any North Preference Share, the
greater of (i) the Issue Price thereof multiplied by
1.43 and (ii) such amount as would give rise to the
holder of such North Preference Share achieving a
Preference IRR of 19.75 per cent;
"Target Value" means such amount as is 15 per cent higher than that
which would be necessary to provide the Investors
with an Investor IRR of 26 per cent if the Investors
were entitled to receive 50 per cent of all proceeds
in excess of the Low Threshold including redemption
of all North Preference Shares;
1. THE SHARE ALTERNATIVE
Summary of rights attaching to the shares in North
The references below to the rights of the holders of the North Management
Ordinary Shares to certain percentages of voting rights, dividends and
return of capital on winding up or sale are based on an assumption of
455,407 North Management Ordinary Shares in issue. If that number is
reduced (for example if North Management Ordinary Shares are redeemed) then
the percentages will reduce pro rata. If that number is increased the
percentages do not increase.
The share capital of the Company comprises three classes of share:-
1. North Investor Ordinary Shares;
2. North Management Ordinary Shares;
3. North Preference Shares;
The respective rights attaching to each class of shares are as follows:-
(a) Voting
The North Preference Shares confer no right to receive notice of, attend or
vote at any general meeting of the Company.
On a show of hands every holder of North Management Ordinary Shares and/or
North Investor Ordinary Shares present in person or by proxy or (being a
corporation) is present by duly authorised representative or by proxy,
shall have one vote.
The North Management Ordinary Shares confer the right as a class to cast 15
per cent. of the votes capable of being cast on a poll at any general
meeting. All remaining votes are exercisable by the holders of the North
Investor Ordinary Shares (as a class).
If, and to the extent that, EPVCT's holding of North Investor Ordinary
Shares confers on it the right to cast more than 50 per cent. of the votes,
the percentage of the votes capable of being cast by EPVCT will be reduced
to 50 per cent. (so as to ensure that EPVCT does not have control of North)
and the votes which EPVCT is unable thereby to cast will be exercisable by
the other holders of North Investor Ordinary Shares pro rata to their
respective holdings.
(b) Dividends
The North Preference Shares confer on the holders thereof a cumulative
non-compounding six per cent. per annum dividend. The dividend accrued from
the date of issue is rolled up until 31 December 2014 and paid on that date
and thereafter is payable quarterly.
No dividends are payable on the North Investor Ordinary Shares or the North
Management Ordinary Shares unless and until all the North Preference Shares
have been redeemed. Once the North Preference Shares have been redeemed the
North Management Ordinary Shares confer the right to 50 per cent. of all
dividends after the Investors have received an Investor IRR of 18 per cent.
Until then the North Management Ordinary Shares confer the right to 15 per
cent. of all dividends.
The North Investor Ordinary Shares confer the right to the percentage of
any dividend not allocated in respect of the North Management Ordinary
Shares.
(c) Redemption
The North Investor Ordinary Shares are not redeemable.
The North Preference Shares are redeemable on 31 December 2016 or, if
earlier, immediately prior to, and conditionally upon, the occurrence of
the earlier of: (a) the sale of a controlling interest in North; (b) the
disposal by North of all or substantially all of its undertaking and
assets; (c) the listing or admission to trading of any shares in North; or
(d) a winding up of North or the appointment of a receiver, manager or
administrative receiver over all or any part of the assets of North or any
of its subsidiaries or the appointment of a liquidator or administrator
over North or any of its subsidiaries. The North Preference Shares are
redeemable at the Redemption Amount.
The North Management Ordinary Shares are redeemable at the Issue Price
thereof if the Offer is not made by 30 November 2011 or, if made, lapses or
is withdrawn. The North Management Ordinary Shares are also redeemable if
held by an employee or consultant who ceases to be employed by, or ceases
to provide consultancy services to, North. Depending on the circumstances
in which such holder ceases to be so employed or provide services to North,
and the date of such cessation, the redemption price will be the nominal
value, the Issue Price or the fair value agreed with the board of North or
determined by North's auditors.
(d) Return of Capital on a Sale or Winding Up
On a winding up of North, the surplus assets of North after the repayment
of the Existing Loan Notes, (the "Surplus Value") shall be applied first in
paying an amount equal to the Redemption Amount on each North Preference
Share and the balance (the "Equity Surplus") will be distributed amongst
the holders of the North Investor Ordinary Shares and the holders of the
North Management Ordinary Shares (pro rata to the number of each of such
class of share held). If the Surplus Value (plus all dividends or interest
paid or monies paid on redemption (other than redemption of any North
Management Ordinary Shares) or other return of capital on each class of
North Shares and the Existing Loan Notes) is: -
i. equal to or in excess of the Target Value, the holders of the North
Management Ordinary Shares (as a class) shall be entitled to 60 per
cent of the Equity Surplus (the percentage of the Equity Surplus to
which the holders of the North Management Ordinary Shares shall be
entitled being the "Management Percentage");
ii. less than the Mid-Value but is an amount such that Investors have
received an amount greater than or equal to the Low Threshold, the
holders of the North Management Ordinary Shares (as a class) shall be
entitled to 50 per cent of the Equity Surplus; or
iii. such that the Investors have received less than the Low Threshold, the
holders of the North Management Ordinary Shares (as a class) shall be
entitled to 15 per cent of the Equity Surplus
but so that if the Investor Equity Surplus is less than the Target Value
but greater than or equal to the Mid-Value then the holders of the North
Management Ordinary Shares (as a class) shall be entitled to a percentage
of the Equity Surplus between 60 and 50 adjusted pro-rata to the difference
between the Mid-Value and the Target Value on a sliding scale. The holders
of the North Investor Ordinary Shares shall be entitled to 100 per cent.
minus the North Management Percentage of the Equity Surplus.
On a sale of the assets of North or a controlling interest in North, the
proceeds of sale will be distributed in the same priority as on a winding
up.
2. ARTICLES
In addition to the rights and restrictions attaching to the shares in the
capital of North summarised above, set out below is a summary of other
provisions of the Articles of Association of North:
(a) Directors
Unless and until North shall otherwise determine by ordinary resolution,
the number of Directors shall be not less than two;
(b) The holders of the North Investor Ordinary Shares shall be entitled to
appoint two persons to act as Directors of North (each an "Investor
Director") and to remove from office any Directors so appointed provided
that:
(i) for so long as the Edge Investors shall hold Investor Ordinary Shares
representing 30 per cent. or more of the issued North Investor Ordinary
Shares the Edge Investors shall be entitled to appoint one of the Investor
Directors (the "Edge Investor Director") and to remove from office any such
Investor Director; and
(ii) for so long as Investor Ordinary Shareholders (other than the Edge
Investors) (the "Non-Edge Investors") shall, between them, hold Investor
Ordinary Shares representing 30 per cent. or more of the issued Investor
Ordinary Shares, Non-Edge Investors holding more than 30 per cent. or more
of the Investor Ordinary Shares shall be entitled to appoint one of the
Investor Directors and to remove from office any such Investor Director.
(c) Proceedings of Directors
The quorum for Directors' meetings shall be three Directors unless at that
time there are only two Directors in which case the quorum shall be two but
the quorum must always include the Edge Investor Director (or if there
shall be no Edge Investor Director in office, any Investor Director);
(d) New Issues of Shares
Under the Articles, the Directors are generally unconditionally authorised
for the purpose of section 551 of the Act to exercise any power of the
Company to:
(i) allot shares: or
(ii) grant rights to subscribe for or convert any securities into shares:
to any persons, at any times and subject to any terms and conditions as the
Directors think proper, provided that this authority:
(i) is limited to a maximum nominal amount of GBP20,000;
(ii) only applies insofar as shareholders of North in general meeting have
not waived or revoked it;
(iii) may only be exercised for a period of 5 years commencing with the
date of adoption of the Articles (28 October 2011), save that the Directors
may make an offer or agreement which would or might require shares to be
allotted or rights granted to subscribe for or convert any security into
shares after the expiry of such authority.
Under the Articles the Directors are empowered pursuant to Section 570 of
the Act, to allot equity securities (within the meaning of the Act) of
North for cash pursuant to the general authority described above as if
Section 561(1) of the Act did not apply to any such allotment provided that
this power shall be limited to the allotment of equity securities up to an
aggregate nominal amount of GBP20,000. The power conferred shall expire on
the day prior to the fifth anniversary of the date of adoption of the
Articles unless renewed or extended prior to such expiry, except that North
may before the expiry make an offer or agreement which would or might
require equity securities to be allotted after such expiry and the
Directors may allot equity securities in pursuance of such offer or
agreement as if the power conferred had not expired.
Subject to the exceptions described below if the Company proposes to allot
New Securities they must first be offered to the holders of the North
Investor Ordinary Shares and the North Management Ordinary Shares pro-rata
to the number of such shares held. The above described restrictions do not
apply to:
(i) options to subscribe for North Investor Ordinary Shares under any
employment share plan;
(ii) New Securities issued in consideration of the acquisition by the
Company of any company or business which has been approved in writing by an
Investor Majority;
(iii) new securities which the Investor Majority have agreed in writing
should be issued without complying with the procedure described above;
(iv) new securities issued as a result of a bonus issue of shares approved
in writing by an Investor Majority;
(v) shares or options for shares issued or granted in accordance with the
terms of the Investment Agreement;
(vi) North Preference Shares and North Investor Ordinary Shares issued
pursuant to the terms of the Offer; and
(vii) any loan advanced to, or loan note issued by, North which is or are
convertible into North Preference Shares and North Investor Ordinary Shares
or North Preference Shares and North Investor Ordinary Shares issued on
subscription or on conversion or exchange of any loan advance to, or loan
notes issued by, North, as contemplated by the Investment Agreement.
(e) Transfers of shares
No North Management Ordinary Share shall be transferred without an Investor
Majority Consent (save to a Permitted Transferee or described below or in
accordance with the Tag Along or Drag Along provisions described below).
Shares may be transferred by means of an instrument of transfer in usual or
common form. No share may be transferred unless the transfer is made in
accordance with the Articles. If a shareholder transfers or purports to
transfer any share otherwise in any in accordance with the Articles he will
be deemed immediately to have served a Transfer Notice in respect of all
shares held by him.
Save for a transfer as described under "Permitted Transfers" below or
pursuant to the Tag Along or Drag Along provisions described below, any
transfer of shares shall be subject to the pre-emption rights contained in
the Articles. A North shareholder who wishes to transfer shares (a
"Seller") shall, before transferring or agreeing to transfer any shares
give notice in writing (a "Transfer Notice") to North specifying:
(i) the number of shares he wishes to transfer (the "Sale Shares");
(ii) if he wishes to sell the Sale Shares to a third party, the name of the
proposed transferee;
(iii) the price (in cash) at which he wishes to transfer the Sale Shares
(which will be deemed to be fair value (as determined in accordance with
the Articles) of the Sale Shares if no cash price is agreed between the
Seller and the Board (including the Investor Directors));
(iv) whether the Transfer Notice is conditional on all or a specific number
of the Sale Shares being sold.
Except with an Investor Director Consent, no transfer notice, once given or
deemed to have been given under the Articles may be withdrawn.
The Sale Shares will be offered in the following order of priority:
(i) if the Sale Shares are North Management Ordinary Shares, first to any
employee trust that the board may nominate and second to such persons as
may be agreed between the seller and the Directors (with an Investor
Director Consent) or, in the absence of such agreement, as directed by
Investor Director Consent:
(ii) if the Sale Shares are North Investor Ordinary Shares the Sale Shares
shall be offered first to the holders of North Investor Ordinary Shares,
second to any employee trust that the Directors may nominate and third to
the holders of the North Management Ordinary Shares and the North
Preference Shares; and
(iii) if the Sale Shares are North Preference Shares the Sale Shares shall
be offered first to the holders of the North Preference Shares and the
holders of the North Investor Ordinary Shares and second to the holders of
the North Management Ordinary Shares.
(f) Permitted Transfers
A shareholder may transfer all or any of his or its shares to a Permitted
Transferee without restriction as to price or otherwise. For this purpose a
"Permitted Transferee" means:
(i) in relation to a shareholder who is an individual a spouse, civil
partner, child or grandchild (including step or adopted or a illegitimate
child and their issue) of such shareholder or the trustee or trustees of a
family trust (as defined in the Articles) in relation to such shareholder:
(ii) in relation to a shareholder which is an undertaking (a defined in
Section 1161(1) of the Act) any member of the same group;
(iii) in relation to a shareholder which is an investment fund, any member
of the same fund group; and
(iv) in relation to EPVCT:
(i) any member of the same group;
(ii) any member of the same fund group;
(ii) EIM or any entity the funds of which are managed by EIM;
(iv) any financial institution or institutional investor; or
(v) any nominee of any Edge Investor.
A transfer of shares approved by the Investor Majority may be made without
restriction as to price or otherwise.
(g) Compulsory Transfers - General
A person entitled to a share in consequence of the bankruptcy of a
shareholder shall be deemed to have given a Transfer Notice in respect of
that share at any time determined by the Directors.
If a share remains registered in a the name of a deceased shareholder for
longer than one year after the date of his death the Directors may require
the legal personal representatives of that deceased shareholder:
(i) to effect a permitted transfer of such share: or
(ii) to show to the satisfaction of the Directors that a Permitted Transfer
will be effected before or promptly upon the completion of the
administration of the estate of the deceased shareholder.
If either of the above requirements are not fulfilled to the satisfaction
of the Directors a Transfer Notice shall be deemed to have been given in
respect of such share save to the extent that the Directors may otherwise
determine.
If a shareholder which is a company, either suffers or resolves for the
appointment of a liquidator, administrator or administrative receiver over
it or any material part of its assets, the relevant shareholder and all its
Permitted Transferees shall be deemed to have given a Transfer Notice in
respect of all the shares held by the relevant shareholder and its
Permitted Transferees save to the extent that, and at the time, the
Directors may determine.
(h) Compulsory Transfer or Redemption - Employees
If any Employee (being an individual who is employed by or who provides
consultancy services to North or any of its subsidiaries) ceases to be an
Employee the relevant Employee shall be deemed to have given a Transfer
Notice in respect of all shares held by him or any of his Permitted
Transferees and the Transfer Price shall be:
(i) where the relevant Employee is a bad leaver (being a person who ceases
to be an Employee at any time and who is not a good leaver) the lower of
fair value (determined in accordance with the Articles) and the nominal
value of the shares;
(ii) where the relevant Employee is a good leaver (being a person who
ceases to be an Employee by reason of death, sickness or disability,
termination of employment or consultancy in circumstance which do not
justify summary dismissal or whose dismissal is found by a court or
tribunal of competent jurisdiction to be wrongful or constructive or the
Directors, with an Investor Majority Consent, determine that he is a good
leaver) the fair value determined in accordance with the Articles provided
that in relation to any such shares which were acquired by such Employee
within two years of his ceasing to be an Employee, the transfer price shall
be the price at which he acquired the shares concerned.
If directed by Investor Majority the Company will not offer the relevant
shares for sale but will (subject always to the provisions of the Act)
redeem the Employee Shares at the price which would be the applicable
transfer price.
(i) Tag Along
Except in the case of a permitted transfer or a transfer pursuant to the
compulsory transfer provisions, if one or more proposed sellers propose to
transfer in one or a series of transactions any North Investor Ordinary
Shares and/or North Management Ordinary Shares which would, if put into
effect, result in any proposed purchaser (and associates of his or persons
acting in concert with him) acquiring a Controlling Interest in North or
more than 50 per cent. of the North Investor Ordinary Shares, a proposed
seller must before making the proposed transfer procure that the proposed
purchaser makes an offer to the other shareholders to acquire all of the
North Investor Ordinary Shares and North Management Ordinary Shares for a
consideration equal to the highest price per share offered or paid by the
proposed purchaser in the proposed transfer or any related or previous
transaction within the preceding twelve months provided that the price
should be not less per share than the price per share which would have been
payable on a return of capital or on the sale or winding up as described
above.
(j) Drag Along
If the holders of 51 per cent. or more of the Investor Ordinary Shares (the
"Selling Shareholders") wish to transfer all their interests in shares to a
proposed purchaser the Selling Shareholders shall have the option to
require all holders of other shares ("Called Shareholders") to sell and
transfer all their shares to the proposed purchaser. The consideration (in
cash or otherwise) for which the Called Shareholders shall be obliged to
sell each of their shares shall be that to which they would have been
entitled if the total consideration proposed to be paid by the proposed
purchaser for the whole of the issued share capital were distributed to the
holders of all the shares in accordance with the provisions applying on a
return of capital or a sale or winding up as described above.
(k) Variation of Rights
Whenever the share capital of North is divided into different classes of
shares, the special rights attached to any such class may only be varied or
abrogated (either whilst North is a going concern or during or in
contemplation of a winding up) with the consent in writing of the holders
of more than 50 per cent. in nominal value of the issued shares of that
class.
Unless approved by an Investor Majority Consent, the special rights
attaching to the North Investor Ordinary Shares shall be deemed to be
varied by the occurrence of any of the following events in relation to
North or any of its subsidiaries:
(a) the amendment, repeal or waiver of any provision of, or addition to its
articles of association;
(b) other than any redemption of North Preference Shares or North
Management Ordinary Shares in accordance with the Articles or any issue or
grant of options or New Securities as referred to under "New Issues of
Shares" above, the alteration of its issued share capital or the creation,
allotment or issue of any shares or any other security or the grant of any
option or rights to subscribe for or to convert any instrument into such
shares or securities or the waiver of any right to receive payment on any
of its shares issued partly paid or the cancellation or the acceptance of
the surrender of any such right to subscribe or convert;
(c) the reduction of its share capital, share premium account or capital
redemption reserve or the variation of the rights attaching to any class of
shares or the redemption, purchase or other acquisition of any shares or
other securities of that company;
(d) the application by way of capitalisation of any sum in or towards
paying up any shares or of any other security or of any amount standing to
the credit of its share premium account or capital redemption reserve for
any purpose;
(e) the entry into, termination or variation of any material transaction
with any shareholder;
(f) the seeking or entry into, or divulgence of any financial information
or other confidential information in relation to North or any of its
subsidiaries, in respect of any proposed sale of the shares in North or a
flotation;
(g) the cessation of or the effecting of any material change in the nature
of, its business or any of its businesses;
(h) the incorporation of a new subsidiary undertaking or the acquisition of
any share capital or other securities of any body corporate, or in the case
of any subsidiary of North which is at any time dormant, the commencement
of trading;
(i) the establishment of any new branch, agency, trading establishment or
business or the closure of any such branch, agency, trading establishment
or business;
(j) the capitalisation of any of its reserves or application of any amount
for the time being standing to the credit of its share premium account or
capital redemption reserve for any purpose;
(k) the change of its accounting reference date;
(l) the paying or declaration of any dividend or other distribution (as
defined under sections 209, 418 and 419 ICTA) on account of shares in its
capital other than the dividend payable on the North Preference Shares;
(m) the creation of any mortgage or fixed or floating charge, lien or other
encumbrance (other than licences of intellectual property rights entered
into in the ordinary course of business) over the whole or any part of its
undertaking, property or assets.
(n) the establishment, variation, discontinuance, making of any payment in
respect of, or the grant, exercise, cancellation or surrender of any right
under, any pension scheme, share option scheme employee share scheme or any
profit sharing or related scheme other than any grant of options permitted
by the Articles;
(o) the appointment of any committee of its board of directors or any
change to the terms of reference of such a committee, or the grant of any
power of attorney or other delegation of directors' powers; or
(p) the taking of any steps to wind-up or obtain an administration order in
respect of North or any of its subsidiaries.
Unless approved by an Investor Director Consent, the special rights
attaching to the North Investor Ordinary Shares shall be deemed to be
varied by the occurrence of any the following events in relation to North
or any of its subsidiaries;
(a) the amendment of any Business Plan or the adoption or amendment of a
budget or the taking of any action materially inconsistent with them;
(b) the disposal of, or the dilution of its interest in, (including by way
of lease to a third party) but excluding licences of intellectual property
rights entered into in the ordinary course of business:
(i) an asset having a book or market value greater than GBP50,000; or
(ii) any subsidiary;
(c) save to the extent reflected in the then current budget, the incurrence
of any capital expenditure in excess of GBP50,000 a year and in excess of GBP
10,000 for any single item;
(d) save to the extent reflected in the then current Budget, the entry into
any contract or arrangement with any customer or supplier (whether or not
in the ordinary course of business) where the aggregate revenue under that
contract or arrangement would exceed GBP50,000 or the term of that contract
or arrangement is in excess of 12 months;
(e) the entry into, termination or variation of any liability limitation
agreement (pursuant to the Act) or any similar arrangement with the
auditors of North or any of its subsidiaries;
(f) the making of any change to its bankers or the terms of the mandate
given to such bankers in relation to its accounts(s) or the agreement to
any alteration to any of the terms (other than of a minor nature) of any
facilities provided by its bankers;
(g) the making of any loan or advance to any person, firm, body corporate
or other business in excess of GBP25,000, other than to another of North or
any of its subsidiaries;
(h) the making of any charitable contribution or making any political
donation of any amount;
(i) save pursuant to any loan or other finance facility previously approved
by an Investor Director Consent, the factoring of any of its debts or
incurring of borrowings (or indebtedness in the nature of borrowings other
than normal trade credit) in excess of GBP50,000;
(j) the appointment or removal of any director or (save in accordance with
a decision of any remuneration committee and any audit committee
established by the Company) any alteration (including increases in
emoluments) to be made to service agreements and/or terms of employment and
/or contracts for services from time to time of any employee or consultant
earning a gross remuneration in excess of GBP65,000 a year (a "Senior
Employee") or any director;
(k) the appointment or removal of any Senior Employee or the alteration of
(including increases in emoluments) any service agreement and/or terms of
employment and/or contracts for services from time to time of any Senior
Employee;
(l) the making of any payment (whether gratuitous or in consideration of
past or future services or in satisfaction of any existing liability or
otherwise) to or for the direct or indirect benefit of any director or
Senior Employee other than emoluments, expenses and other payments paid in
accordance with his service agreement and/or terms of employment and/or
contract for services from time to time or dividends lawfully paid in
accordance with the Articles;
(m) the commencement, discontinuance, settlement or compromise of any
legal, arbitrational or tribunal proceedings (in whatever capacity) which
is or may be material, save for any application for an interim injunction
or other application or action (including interim defence) which is
urgently required in the best interests of North or the relevant subsidiary
in circumstances in which it is not reasonably practicable to obtain prior
consent;
(n) the disposal of, or the dilution of its interest in, (including by way
of lease to a third party) the whole or a significant part of its
undertaking;
(o) the entry into, termination or variation of any joint venture,
partnership consortium or other similar arrangement involving an investment
by North or any of its subsidiaries of GBP50,000 or more;
(p) the making of any material change to the level, scope or extent of its
insurance cover involving an increase or decrease in the level of its
premiums of 25 per cent or more;
(q) the changing of its accounting policies, unless the change is required
by law or by virtue of a new statement of standard accounting practice or
financial reporting standard which does not offer any discretion in its
application to North and/or its subsidiaries;
(r) other than in the ordinary and normal course of trading in respect of
the obligations or liabilities of North or any of its subsidiaries, the
giving of any guarantee or indemnity; and
(s) the acquisition of any asset or contract to receive any services or the
disposal of any asset or contract to provide any service otherwise in each
case than on arms' length commercial terms.
Any issue of North Management Ordinary Shares which would result in more
than 455,407 North Management Ordinary Shares being in issue shall
constitute a variation of the rights attaching to the North Management
Ordinary Shares.
APPENDIX V
RISK FACTORS RELATING TO THE NORTH SHARES
1. None of the North Shares will be listed on any stock exchange, nor is
it the current intention to offer any trading facility for the North
Shares.
2. Pursuant to the Articles, for so long as it holds 30 per cent. or more
of the North Investor Ordinary Shares EPVCT will have the right to
appoint a director of North. The holder of 30 per cent. or more of the
North Investor Ordinary Shares (other than EPVCT) will have the right
to appoint a director of North. Such directors are "Investor
Directors". The Articles provide for certain conventional rights of
veto over certain corporate actions with the consent of an Investor
Majority (being the holders of a majority of the North Investor
Ordinary Shares) or an Investor Director Consent (being the consent of
both Investor Directors or the consent of an Investor Majority).
3. North Shares are subject to conventional pre-emption rights on transfer
which restricts the ability to transfer such shares.
4. The holders of North Shares will not enjoy any minority protections or
other rights save for those rights reflected in Appendix IV or as
described in the Offer Document and for those rights prescribed by
applicable law.
5. The value of the North Shares will be uncertain since the North Shares
are unlisted securities and there is no current expectation that they
will be listed or admitted to trading on any recognised exchange or
market for the trading of securities. It is therefore unlikely that
there will be a market for North Shares. The North Shares are likely to
carry a higher risk than shares quoted on a regulated stock market or
stock exchange, as it is likely to be significantly more difficult for
holders of North Shares to realise the value of their holdings in a
company whose shares or other securities are not quoted on a regulated
market.
6. Shareholders in North may be required in the future to sell their North
Shares under the terms of a "drag along" provision in the articles of
association of North. Under the "drag along" provision the holders of
51 per cent. of the North Investor Ordinary Shares wishing to sell such
shares to a third party purchaser may require all other shareholders to
sell their shares to the same purchaser.
7. Holders of North Shares will not be afforded the same level of
protections and disclosure of information that they currently benefit
from as Coolabi Shareholders as a company whose shares are traded on
AIM.
8. The value of North and, hence, North Shares will be subject to the same
sector and trading risks as are currently faced by Coolabi, including
risks associated with the trading performance of the Coolabi Group.
APPENDIX VI
DEFINITIONS
The following definitions apply throughout this announcement unless the
context requires otherwise.
"Act" or "Companies Act" the Companies Act 2006
"AIM Rules" the AIM Rules for Companies as published by
the London Stock Exchange (as amended)
"AIM" AIM Market of the London Stock Exchange
"Announcement Date" the date of this announcement
"Annual Report" the annual report and accounts of Coolabi for
the year ended 31 December 2010
"Authorisations" material authorisations, orders,
recognitions, grants, consents, clearances,
confirmations, certificates, licenses,
permissions and approvals
"Business Day" a day (other than Saturdays, Sundays and
public holidays in the UK) on which banks are
open for business (other than solely for
trading and settlement in Euros) in the City
of London
"City Code" or "Code" the City Code on Takeovers and Mergers
"Conditions" the conditions as set out in Appendix I to
this announcement and a "Condition" shall
mean any one of them
"Convertible Loan Notes" the GBP562,114 7 per cent. convertible loan
notes issued by Coolabi which are repayable
on 17 June 2016. The convertible loan notes
are convertible at a price of 6.75p per share
"Coolabi Directors" the directors of Coolabi as at the date of
this announcement
"Coolabi Group" Coolabi, its subsidiaries and subsidiary
undertaking
"Coolabi Management Jeremy Banks, Tim Ricketts and William Harris
Directors" or "Executive
Management"
"Coolabi Share Options" the 3,168,246 options over Coolabi Shares
which have all been waived subject to the
Offer becoming or being declared wholly
unconditional
"Coolabi Share Option Scheme" the share option scheme operated by Coolabi
"Coolabi Shareholders" or the holders of Coolabi Shares
"Shareholders"
"Coolabi Shares" the existing unconditionally allotted or
issued and fully paid ordinary shares of 1
penny each in the capital of Coolabi and any
further such ordinary shares which are
unconditionally allotted or issued while the
Offer remains open for acceptance or before
such earlier date as North (subject to the
City Code) may determine, not, unless the
Panel so permits, being earlier than the date
on which the Offer is declared unconditional
as to acceptances or, if later, the first
closing date of the Offer
"Coolabi" or the "Company" Coolabi plc
"Daily Official List" the Daily Official List of the London Stock
Exchange
"EIM" Edge Investment Management Limited
"Enlarged Group" North and its subsidiaries from time to time
"EPVCT" Edge Performance VCT plc
"Evolution Securities" Evolution Securities Limited, financial
adviser to Coolabi
"Executive Management the transactions to be undertaken pursuant to
Transactions" the Investment Agreement
"Existing Loan Notes" means the GBP700,000 A series secured six per
cent. Loan Notes 2016 of North and the GBP
700,000 B series secured six per cent. Loan
Notes 2016 of North, each constituted by
separate loan note instruments dated 30 March
2010 (as amended and restated on 28 October
2011)
"Form of Acceptance" the form of acceptance and authority to be
issued in connection with the Offer and which
will in the case of Shareholders who hold
their Coolabi Shares in certificated form
accompany the Offer Document
"FSA" or "Financial Services the Financial Services Authority in its
Authority" capacity as the competent authority for the
purposes of Part VI of the Financial Services
and Markets Act 2000
"General Meeting" the general meeting of Coolabi to be convened
in relation to the Offer
"HMRC" HM Revenue & Customs
"Independent Directors" Stuart Lindsay, Nicholas James and Linda
James
"Independent Shareholders" the shareholders of Coolabi other than EPVCT
and the Coolabi Management Directors
"Investors" means the holders of North Investor Ordinary
Shares and, for so long as there are any
North Preference Shares in issue, the holders
of the North Preference Shares and for so
long as there are any Existing Loan Notes in
issue, the holders of Existing Loan Notes
"Investment Agreement" the investment agreement between North, the
Coolabi Management Directors and EPVCT dated
on or around the Announcement Date
"IFRS" International Financial Reporting Standards
"IRR" Internal rate of return
"ITA" Income Tax Act 2007
"Loan Facility" the loan facility between North and EPVCT
dated 28 October 2011
"London Stock Exchange" London Stock Exchange plc
"Merchant Securities" Merchant Securities Limited, financial
adviser to North, a company incorporated in
England and Wales with registered number
01825671 whose registered office is at 51 -
55 Gresham Street, London EC2V 7HQ and a firm
regulated and authorised by the Financial
Services Authority
"North" North Promotions Limited, to be re-registered
as a public limited company before the Offer
is made
"North Directors" the directors of North as at the date of this
announcement
"North Management Ordinary the 455,407 management ordinary shares of
Shares" 0.13p each in the capital of North, which
have the terms set out in Appendix IV
"North Investor Ordinary The investor ordinary shares of 0.13p each in
Shares" the capital of North, which have the terms
set out in Appendix IV
"North Preference Shares" the preference shares of 0.13p each in the
capital of North, which have the terms set
out in Appendix IV
"Share Alternative" or "North the share alternative to be made available to
Share Alternative" Coolabi Shareholders who accept the Offer
details of which are set out in paragraph 3
of this announcement
"Non Disclosure Agreement" the non disclosure agreement relating to the
Offer dated 23 September 2011 between
Coolabi, North, EPVCT and EIM whereby North,
EPVCT and EIM committed to keep information
provided by Coolabi confidential
"North Shares" together, the North Preference Shares, the
North Investor Ordinary Shares and the North
Management Ordinary Shares
"Offer Document" the document to be despatched on behalf of
North to Coolabi Shareholders (other than
Coolabi Shareholders in a Restricted
Jurisdiction) containing the terms and
conditions of the Offer and, where
appropriate, any other document(s) containing
terms and conditions of the Offer
constituting the full terms and conditions of
the Offer
"Offer Period" the offer period (as defined by the Code)
relating to Coolabi, which commenced on 9
August 2011
"Offer" the recommended cash offer being made by
North to acquire the whole of the issued and
to be issued share capital of Coolabi not
otherwise held by North on the terms and
subject to the conditions to be set out in
the Offer Document and in the case of Coolabi
Shares held in certificated form, the Form of
Acceptance, including, where the context
requires, any subsequent revision, variation,
extension or renewal of such offer
"Opening Position Disclosure" has the same meaning given in Rule 8 of the
Code
"Ordinary Resolution" the ordinary resolution to be proposed at the
Coolabi General Meeting in accordance with
the requirements of the Code to approve
certain arrangements between North and the
Coolabi Management Directors
"Panel" the Panel on Takeovers and Mergers
"Prospectus Rules" the prospectus rules made by the Financial
Services Authority
"Publicly Announced" means fairly disclosed in any public
announcement by Coolabi to any RIS or the
Annual Report
"Registrar" the Registrar of Companies in England and
Wales
"Regulatory Information means a service approved by the London Stock
Service" Exchange for the distribution to the public
of London Stock Exchange announcements and
or "RIS" included within the list maintained on the
London Stock Exchange's website,
www.londonstockexchange.com
"Restricted Jurisdiction" any jurisdiction where local laws or
regulations may result in a significant risk
of civil, regulatory or criminal exposure for
North, any parties acting in concert with it,
any of their respective directors or Coolabi
if information or documentation concerning
the Offer is sent or made available to
Shareholders in that jurisdiction
"Share Alternative" the share alternative to be made available to
Coolabi Shareholders who accept the Offer
details of which are set out in paragraph 3
of this announcement
"Third Party" any central bank, government, governmental,
quasi-governmental, supranational, statutory,
regulatory or similar investigative body,
trade agency, court, professional association
or any other such body or person in any
jurisdiction
"UKLA" the UK Listing Authority, being the Financial
Services Authority Limited acting in its
capacity as the competent authority for the
purposes of Part IV of the Financial Services
and Markets Act 2000
"United Kingdom" or "UK" the United Kingdom of Great Britain and
Northern Ireland
"US Person" a US person as defined in Regulation S under
the United States Securities Act of 1933, as
amended
"Wider Coolabi Group" Coolabi, its subsidiaries, subsidiary
undertakings and associated undertakings and
any other body corporate, partnership, joint
venture or person in which Coolabi and such
undertakings (aggregating their interests)
have a direct or indirect interest of 20 per
cent. or more of the voting or equity capital
or the equivalent
For the purposes of this announcement, "subsidiary", "subsidiary
undertaking", "undertaking" and "associated undertaking" have the
respective meanings given thereto by the Act.
All the times referred to in this announcement are London times unless
otherwise stated.
References to the singular include the plural and vice versa.
END
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