TIDMCVR
RNS Number : 5212I
Conviviality PLC
21 March 2018
THIS ANNOUNCEMENT INCLUDING THE APPIX AND THE INFORMATION
CONTAINED HEREIN IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION,
DISTRIBUTION OR FORWARDING, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA,
JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR ANY
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION IS
UNLAWFUL.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION,
OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE
OR DISPOSE OF ANY SECURITIES IN CONVIVIALITY PLC OR ANY OTHER
ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT
OF ITS DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON IN
CONNECTION WITH, ANY INVESTMENT DECISION IN RESPECT OF CONVIVIALITY
PLC.
PLEASE SEE THE IMPORTANT NOTICE AT THE OF THIS ANNOUNCEMENT.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
("MAR").
21 March 2018
Conviviality Plc
(the "Company")
Update on Progress, Potential Equity Fundraising and Trading
Update
Update on progress
Further to the Company's announcement of 16 March 2018, the
Board of Conviviality is providing an update on a number of actions
it has been taking with regards to working through its funding
requirements:
-- Customers and suppliers continue to remain supportive of the
Company and continue to work closely and constructively with the
Company at this time;
-- Constructive discussions with our lenders are continuing;
-- PwC has undertaken a review of the business and its future
funding requirements and will continue to provide assistance to the
Company going forward;
-- PwC are continuing to work and support the Company in its
discussions with key stakeholders; and
-- The Company has held constructive discussions with HM
Revenues and Customs ("HMRC") regarding the GBP30.0 million payment
due on the 29 March 2018.
Equity fundraising
On 16 March 2018, the Company announced that it was engaging
with its advisers and broker regarding the possibility of an equity
fundraise to effect a recapitalisation of the business. The Board
of the Company today announces that, through its broker, Investec
Bank plc, meetings with institutional investors have been arranged
for the coming days starting today to effect an equity placing to
raise gross proceeds of GBP125.0 million (the "Placing"), which the
Directors believe will provide the necessary funding to
recapitalise the business. The GBP125.0 million gross proceeds from
the Placing will, amongst other things, provide capital for the
Company to:
-- Resolve overdue payments with its creditors and return them to normalised trading terms;
-- Settle payments with HMRC;
-- Repay the Company's GBP30.0 million revolving credit facility in its entirety; and
-- Provide working capital headroom and fund costs associated
with the work undertaken to recapitalise the business.
In addition, should the Placing prove successful, the Directors
intend to make an open offer of up to the pound sterling equivalent
of EUR5.0 million (the "Open Offer"), the maximum permitted without
requiring the Company to publish a prospectus under the EU
Prospectus Directive, which would be made available to all existing
Conviviality shareholders. The Open Offer would allow those
shareholders who could not participate in the Placing to have the
opportunity to invest.
Both the Placing and Open Offer would be subject to the approval
of Conviviality shareholders at a general meeting of the
Company.
Trading update
On the 13 March 2018, Conviviality announced it expected
adjusted EBITDA for the year ending 29 April 2018 to be in the
range of GBP55.3 million - GBP56.4 million. In addition, net debt
was expected to be GBP150.0 million as at 29 April 2018.
Assuming the Placing is successful, the Board would expect that
the adjusted EBITDA* for the year ending 29 April 2018 to be in the
range of GBP45.5 million to GBP46.0 million and net debt to be
below GBP100.0 million. For the financial year ending 28 April
2019, the Board expects adjusted EBITDA* to show modest growth
compared to the expected outcome for the current financial
year.
The reduction in the expected adjusted EBITDA outturn for the
current financial year from that announced on 13 March is
principally due to (i) the Company managing its customer and
supplier base through the issues associated with its short term
funding requirements and (ii) the deferral of franchise income
arrangements as a consequence of the Board delaying completion of
further franchise agreements.
The Company remains in compliance with its existing banking
covenants and as noted above, the Company is in constructive
discussions with its lending banks. In addition, as also noted
above, if successful the proceeds from the Placing will reduce the
amount of covenant debt by GBP30.0 million with the repayment and
cancellation of the revolving credit facility.
The Board believes that the Placing is the most appropriate
mechanism to recapitalise the business. However, the Company
continues to explore other funding alternatives in the event that
the Placing is unsuccessful. If the Company is unable to raise
funds by way of the Placing or otherwise, it is unlikely to be able
to trade on a going concern basis.
A further announcement will be made in due course.
Temporary Suspension of Trading on AIM
The shares of Conviviality Plc remain suspended pending further
notice.
* References to adjusted EBITDA are stated before the
application of International Accounting Standards Board's IFRS 15,
Revenues from Contracts with Customers, which is to be adopted by
the Company from 30 April 2018. While it has no impact on cash
flow, it is expected to have an impact on the recognition of
franchise income.
Enquiries:
Conviviality Plc Tel: 01270 614 700
David Adams, Executive
Chairman
Mark Moran, Chief Financial
Officer
Investec (Nominated Adviser Tel: 020 7597 5970
and Broker)
Garry Levin / David Flin
/ Daniel Adams
FTI Consulting Tel: 020 3727 1000
Jonathon Brill / Georgina
Goodhew / Fiona Walker
IMPORTANT NOTICE
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of MAR)
prior to its release as part of this announcement. The person
responsible for arranging release of this information on behalf of
the Company is Ciaran Stone, Group Head of Legal & Company
Secretary.
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law and therefore
persons in such jurisdictions into which these materials are
released, published, distributed or forwarded should inform
themselves about and observe such restrictions. The information
contained herein is not for release, publication, distribution or
forwarding, directly or indirectly, in or into the United States
(including its territories and possessions, any state of the United
States and the District of Columbia). Any failure to comply with
any such restrictions may constitute a violation of the securities
laws of such jurisdiction.
This announcement does not contain or constitute an offer to
sell or the solicitation of an offer to purchase securities to any
person with a registered address in, or who is resident in,
Australia, Canada, Japan, New Zealand, the Republic of South Africa
or in any jurisdiction in which such an offer or solicitation is
unlawful. None of the securities referred to herein have been or
will be registered under the relevant laws of any state, province
or territory of Australia, Canada, Japan, New Zealand or the
Republic of South Africa. Subject to certain limited exceptions,
none of these materials will be released, published, distributed or
forwarded in or into Australia, Canada, Japan, New Zealand or the
Republic of South Africa.
This announcement does not contain or constitute an offer for
sale or the solicitation of an offer to purchase securities in the
United States. The securities referred to herein have not been and
will not be registered under the United States Securities Act of
1933, as amended (the "Securities Act") or with any securities
regulatory authority of any state or other jurisdiction of the
United States, and may not be offered, sold, pledged or
transferred, directly or indirectly, in, into or within except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and the
securities laws of any relevant state or other jurisdiction of the
United States.
There is no intention to register any portion of the proposed
Placing in the United States or to conduct a public offering of
securities in the United States or elsewhere.
None of the securities referred to herein, this announcement or
any other document connected with the proposed Placing has been or
will be approved or disapproved by the United States Securities and
Exchange Commission or by any state securities commission or other
regulatory authority in the United States, and none of the
foregoing authorities or any securities commission has passed upon
or endorsed the merits of the offering of any securities or the
accuracy or adequacy of this announcement or any other document
connected with the proposed Placing. Any representation to the
contrary is a criminal offence in the United States.
Investec Bank plc ("Investec") is authorised by the Prudential
Regulatory Authority and regulated in the United Kingdom by the
Prudential Regulation Authority and the Financial Conduct Authority
and is acting exclusively for the Company and no one else in
connection with the proposed Placing, the content of this
announcement and other matters described in this announcement.
Investec will not regard any other person as its client in relation
to the proposed Placing, the content of this announcement and other
matters described in this announcement and will not be responsible
to anyone other than the Company for providing the protections
afforded to its clients or for providing advice to any other person
in relation to the proposed Placing, the content of this
announcement or any other matters referred to in this
announcement.
This announcement has been issued by, and is the sole
responsibility of the Company. Members of the public will not be
eligible to take part in the proposed Placing. The information
contained in this announcement is for background purposes only and
does not purport to be full or complete. No reliance may or should
be placed by any person for any purpose whatsoever on the
information contained in this announcement or on its accuracy or
completeness. The information in this announcement is subject to
change. Neither the contents of the Company's website nor any
website accessible by hyperlinks on the Company's website is
incorporated in, or forms part of, this announcement. This
announcement should not be considered a recommendation by Investec
or any of its directors, officers, employees, advisers or
affiliates in relation to any purchase of or subscription for
securities. Neither Investec, nor any of its directors, officers,
employees, advisers, consultants or affiliates accepts any
responsibility or liability whatsoever for or makes any
representation or warranty, express or implied, as to this
announcement, including the truth, accuracy, fairness, sufficiency
or completeness of the information or the opinions or beliefs
contained in this announcement (or any part hereof) or for any
other written or oral information made available to, or publicly
available to, any interested party or its advisers or for any other
statements made or purported to be made by it, or on behalf of it,
in connection with the Company or the proposed Placing and nothing
in this announcement shall be relied upon as a promise or
representation in this respect. None of the information in this
announcement has been independently verified or approved by
Investec or any of its directors, officers, employees, advisers,
consultants or affiliates. Save in the case of fraud, no
responsibility or liability is accepted by Investec or any of its
directors, officers, employees, advisers or affiliates for any
errors, omissions or inaccuracies in such information or opinions
or for any loss, cost or damage suffered or incurred howsoever
arising, directly or indirectly, from any use of this announcement
or its contents or otherwise in connection with this announcement
or from any acts or omissions of the Company in relation to the
proposed Placing. No person has been authorised to give any
information or to make any representations other than those
contained in this announcement and, if given or made, such
announcements must not be relied on as having been authorised by
the Company or Investec. Subject to the AIM Rules for Companies,
the Prospectus Rules, the Disclosure Guidance and Transparency
Rules and MAR, the issue of this announcement and any subsequent
announcement shall not, in any circumstances, create any
implication that there has been no change in the affairs of the
Company and its subsidiaries (the "Group") since the date of this
announcement or that the information contained in it is correct as
at any subsequent date.
This announcement may contain and the Company may make verbal
statements containing "forward-looking statements" with respect to
certain of the Company's plans and its current goals and
expectations relating to its future financial condition,
performance, strategic initiatives, objectives and results.
Forward-looking statements sometimes use words such as "aim",
"anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "seek", "may", "could", "outlook" or other words
of similar meaning. By their nature, all forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances which are beyond the control of the Company,
including amongst other things, United Kingdom domestic and global
economic business conditions, market-related risks such as
fluctuations in interest rates and exchange rates, the policies and
actions of governmental and regulatory authorities, the effect of
competition, inflation, deflation, the timing effect and other
uncertainties of future acquisitions or combinations within
relevant industries, the effect of tax and other legislation and
other regulations in the jurisdictions in which the Company and its
respective affiliates operate, the effect of volatility in the
equity, capital and credit markets on the Company's profitability
and ability to access capital and credit, a decline in the
Company's credit ratings; the effect of operational risks; and the
loss of key personnel. As a result, the actual future financial
condition, performance and results of the Company may differ
materially from the plans, goals and expectations set forth in any
forward-looking statements. Any forward-looking statements made in
this announcement by or on behalf of the Company speak only as of
the date they are made. Except as required by applicable law or
regulation (including to meet the requirements of the AIM Rules for
Companies, MAR, the Prospectus Rules and/or the Financial Services
and Markets Act 2000), the Company expressly disclaims any
obligation or undertaking to publish any updates or revisions to
any forward-looking statements contained in this announcement to
reflect any changes in the Company's expectations with regard
thereto or any changes in events, conditions or circumstances on
which any such statements are based. The price of the shares and
any income from them may go down as well as up and investors may
not get back the full amount invested on disposal of such shares.
All subsequent oral or written forward-looking statements
attributed to the Company or any persons acting on its behalf are
expressly qualified in their entirety by the cautionary statement
above. All forward-looking statements contained in this
announcement are based on information available to the directors of
the Company at the date of this announcement, unless some other me
is specified in relation to them, and the posting or receipt of
this announcement shall not give rise to any implication that there
has been no change in the facts set forth herein since such
date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCDFLFLVXFEBBV
(END) Dow Jones Newswires
March 21, 2018 14:00 ET (18:00 GMT)
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