TIDMEWG
RNS Number : 9569I
European Wealth Group Limited
23 June 2017
THIS ANNOUNCEMENT, INCLUDING THE APPICES, AND THE INFORMATION
CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF
SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE
UNLAWFUL TO DO SO.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT 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 OF EUROPEAN WEALTH GROUP LIMITED IN ANY JURISDICTION IN
WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
European Wealth Group Limited
("EWG", the "Company" or the "Group")
Subscription, Fully Underwritten Open Offer and Debt
Conversion
Successful Application for Accelerated Whitewash
Current Trading
European Wealth (AIM: EWG, EWGL), the integrated wealth
management group that today has released its audited accounts for
the year to 31 December 2016, is pleased to confirm that the
Company has entered into a subscription and underwriting agreement
with Astoria and Kingswood to raise total gross proceeds of
approximately GBP9.2 million.
The Fundraising comprises a subscription by Astoria and
Kingswood to raise gross proceeds of GBP6.14 million through the
issue of 48,003,580 New Ordinary Shares at 12.8 pence per New
Ordinary Share, and an open offer to shareholders, which is fully
underwritten by Astoria and KPI, to raise gross proceeds of
approximately a further GBP3.07m through the issue to Qualifying
Shareholders of up to 24,001,790 New Ordinary Shares.
The net proceeds of the Fundraising, being approximately
GBP8.8m,will be used to repay all sums owing under the Kingswood
Bridge Facility (as announced on 8 June 2017), approximately GBP2.0
million of other loans and accrued interest and to settle the
potential GBP1.14m of deferred consideration that is due to be paid
out in cash between now and December 2018 to vendors of firms
acquired by the Group; leaving the Company debt free with working
capital flexibility and balance sheet strength to allow it to
pursue its stated strategy. The Board believes that the potential
value creation for the medium to long term benefit of Shareholders
arising from the Fundraising outweighs the dilutive effects of the
Subscription.
Definitions used in this announcement are set out in Appendix 1
hereto.
Successful Application for Accelerated Whitewash
The Board of Directors of the Company is also pleased to
announce that it has successfully applied for a dispensation from
making a General Offer under Rule 9 of the City Code on Takeovers
and Mergers in relation to the Fundraising.
A Rule 9 Waiver has been granted by the Panel as described in
further detail below with respect to the issue of the Subscription
Shares and Open Offer Shares by the Company.
Background to the Fundraising
Since its inception, the Group has been funded, in part, by
debt. In the audited results for the year to 31 December 2016,
which were released today, the Group announced further growth in
AUM to around GBP1.65bn, an increase of over 45% from the beginning
of last year and over 16% from the beginning of this year. Since
revenues lag AUM, this growth will feed through into the results
for the latter half of this year and into 2018. Despite this strong
performance, the Board believes that the Company's share price has
been adversely affected by its capital structure, due to
uncertainty over how the debt would be redeemed and concerns that
interest payments absorb too much cash flow and reduce the Group's
ability to invest in the future.
The Board has explored a number of options and believes that the
Fundraising is the best option available to the Group to
re-capitalise its balance sheet and build a strong platform from
which to pursue its stated strategy more effectively.
Through the Subscription, the Board is pleased to have secured
the support of two new major shareholders, Kingswood and Astoria.
Both support the Group's vision and intend to play an active role
in helping accelerate the development of the business.
KPI (Nominees) Limited
Kingswood is a wholly owned subsidiary of Kingswood Property
Finance Limited Partnership ("Kingswood Property Finance"), which
is a private investment partnership wholly owned and controlled by
Gary Wilder and Jonathan Massing. Formed in 2004, it has undertaken
a range of long-term investments and financial transactions
including: participating in real estate investments; private equity
investments incorporating equity and loan capital to the SME
sector; subscribing for equity warrants and options; dealing in
financial assets; trading in listed equities, fixed income and
currencies. Kingswood Property Finance is managed by its General
Partner, Kingswood Investment Partners Limited, which is authorised
and regulated by the Financial Conduct Authority.
Astoria Investments Limited
Astoria is an investment company, based in Mauritius and listed
on the Stock Exchange of Mauritius (ticker: ATIL.NOOO), the
Johannesburg Stock Exchange (ticker: ARA) and the Namibian Stock
Exchange (ticker: NRO). Its investments are managed by Anchor
Capital (Mauritius) Limited, a subsidiary of Anchor Capital
(www.anchorcapital.co.za). Anchor Capital is one of South Africa's
fastest growing asset management companies and has established
itself as one of South Africa's leading providers of asset
management services, in both local and offshore markets.
Current Trading
European Investment Management has had a positive start to the
year. Two new revenue generators were recruited in the first three
months of 2017 and they should be contributing to the Group's
revenue in a very short space of time. The investment management
business has recently received all the necessary regulatory
authorisations from the FSA in South Africa and the Board expect
the speed of clients transferring from Towry to European Investment
Management to accelerate over the next few months. Recent political
turmoil within South Africa is also expected to accelerate the
development of the Group's business in the region. The Fixed
Interest team has been awarded mandates over a further GBP150m
since the start of the year, together with some of the existing
clients adding additional funds to their portfolios.
Revenues from the Trading team were adversely influenced by a
reduction in dealing volumes after the strong run in the last
quarter of 2016. May however, saw an upswing in activity producing
an exceptional performance, offsetting all the disappointment for
the first four months.
Within the financial planning business, the recurring income
remains strong but new business has been below expectations over
the first quarter. However, as for the Trading team, May was ahead
of budget and the Board expects the shortfall in new business to
pick up over the remainder of the year.
Overall, it has been an encouraging first five months; the
Group's funds under management have continued to grow, with
revenues and EBIT on budget and ahead of the same period last year.
This progress has been achieved despite the demands of the
Fundraising process, which has been quite time consuming for
management. Moreover, whilst the Board expects the Group's
underlying operating profit to continue increasing, this year will
now be adversely affected by the significant costs associated with
the Fundraising.
Looking ahead, the Group is on track for achieving its
short-term target of GBP2.0bn of AUM; the benefit of which will
reflect in Group revenue as the year progresses and into 2018. With
a recapitalised balance sheet and management able to focus solely
on the business, the Board is confident that the Company is well
placed to exploit the various organic and acquisitive growth
opportunities that lie ahead.
The Subscription and Open Offer
The Fundraising has been structured to be available as to one
third for Kingswood; one third for Astoria and one third for
existing shareholders. This allows both existing shareholders to
participate in the Fundraising and two new institutional investors
to invest in the Company. The Open Offer permits shareholders who
are on the Company's register of members at the close of business
on 22 June 2017 to participate through the Open Offer.
Qualifying Shareholders are being given the opportunity to
subscribe for the Open Offer Shares at a price of 12.8 pence per
Open Offer Share, pro rata to their holdings of existing ordinary
shares at the close of business on 22 June 2017 on the basis of 9
Open Offer Shares for every 10 existing ordinary shares.
Qualifying Shareholders are also being given the opportunity,
provided they take up their Basic Entitlements in full, to
subscribe for up to 18 Open Offer Shares for every 10 Existing
Ordinary Shares held under the Excess Application Facility in
excess of their Basic Entitlement. This will potentially allow
Qualifying Shareholders to maintain their pro-rata shareholding in
the Company after the issue of the Subscription Shares and Open
Offer Shares.
If the Open Offer is not fully taken up by Qualifying
Shareholders, up to 1,562,500 Open Offer Shares will be offered for
subscription to employees of the Group at the Issue Price.
Kingswood and Astoria will then be required to subscribe for any
Open Offer Shares not taken up by Qualifying Shareholders or
employees.
Subscription and Underwriting Agreement
Pursuant to the Subscription and Underwriting Agreement each of
Kingswood and Astoria have agreed to subscribe for 24,001,790 New
Ordinary Shares and to each underwrite half of the Open Offer. If
one of the Subscribers exercises its rights to terminate the
Subscription and Underwriting Agreement, or in the event that a
condition of the Subscription is not fulfilled and one Subscriber
does not agree to waive such condition but the other Subscriber
does, then in each case the other Subscriber may, at its option,
elect to subscribe for some or all of the Subscription Shares and
to fulfil some or all of the other Subscriber's underwriting
obligations in respect of the Open Offer.
The Subscription and Open Offer are conditional, inter alia,
on:
-- the passing of the Resolutions at an extraordinary general
meeting to be convened by the Company;
-- admission of the Subscription Shares and the Open Offer
Shares to trading on AIM becoming effective by no later than 8.00
a.m. on 31 August 2017; and
-- the conditions in the Subscription and Underwriting Agreement
being satisfied or (if applicable) waived and the Subscription and
Underwriting Agreement not having been terminated in accordance
with its terms prior to Admission.
Accordingly, if any of these conditions are not satisfied or, if
applicable, waived, the Fundraising will not proceed.
Under the terms of the Subscription and Underwriting Agreement,
each Subscriber is entitled to receive a fee from the Company of 2%
of the aggregate gross proceeds of the Subscription subscribed for
by the Subscriber and, to the extent that the Subscribers are
required to subscribe for Open Offer Shares in accordance with
their underwriting obligations, 2% of the gross proceeds of such
further subscription.
As at the date of this announcement, the Company has obtained
irrevocable undertakings from certain shareholders, including the
Directors, to vote in favour of the proposed Resolutions in respect
of, in aggregate, 14,832,948 Ordinary Shares, representing 55.62
per cent. of the Existing Ordinary Shares.
Debt Conversion and Related Party Transaction
Kenneth West, the Group Chairman, lent GBP100,000 to the Company
pursuant to an agreement dated 31 March 2016. Under the terms of
this agreement, Mr West has the option to convert this loan into
equity. The Company and Mr West have entered into the Debt
Conversion Agreement pursuant to which, conditional upon the
Subscription and Open Offer becoming unconditional in all respects
(save only for Admission), the Company will issue Mr West 781,250
New Ordinary Shares at the Issue Price.
The Debt Conversion is deemed a related party transaction
pursuant to the AIM Rules. The Independent Directors, having
consulted with the Company's nominated advisor, finnCap, consider
that the terms of the Debt Conversion Agreement are fair and
reasonable insofar as Shareholders are concerned.
FCA Approval
Each Subscriber has received an unconditional approval notice
from the FCA confirming that the FCA has no objection to the
Subscribers becoming controllers of the Company by virtue of each
Subscriber holding between 10% and 50% of the Enlarged Share
Capital.
New Directors
Under the Subscription and Underwriting Agreement, Kingswood has
the right to nominate two directors to the Board whilst it holds
more than 20% of the Company's issued share capital and Astoria has
the right to nominate one director whilst it holds more than 20% of
the Company's issued share capital.
Admission
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM. The New
Ordinary Shares will rank pari passu in all respects with the
Existing Ordinary Shares, including the right to receive all
dividends and other distributions declared, made or paid in respect
of the Ordinary Shares following Admission. It is expected that
Admission will become effective, and that dealings on AIM will
commence, at 8.00 a.m. on 20 July 2017.
Waiver of the obligation to make a general offer under Rule 9 of
the Code
The Subscription and Open Offer
Following the Subscription and Open Offer, the maximum
shareholdings of Kingswood and Astoria and their proposed minimum
and maximum voting rights in the Enlarged Share Capital will be as
set out in the tables below:
If both parties participate in the Fundraising:
Shareholder Interest New Ordinary Minimum interest Maximum Maximum
in Existing Shares in Enlarged New interest
Ordinary to be Share Capital Ordinary in Enlarged
Shares issued following Shares Share Capital
through Fundraising to be following
Subscription issued Fundraising
through
Open
Offer
------------- --------------- -------------- ------------------- ----------- -------------------
Number % Number % Number %
------------- --------- ---- -------------- ----------- ------ ----------- ----------- ------
Kingswood 0 0.0 24,001,790 24,001,790 24.13 12,000,895 36,002,685 36.20
------------- --------- ---- -------------- ----------- ------ ----------- ----------- ------
Astoria 0 0.0 24,001,790 24,001,790 24.13 12,000,895 36,002,685 36.20
------------- --------- ---- -------------- ----------- ------ ----------- ----------- ------
If only one party participates in the Fundraising:
Shareholder Interest New Ordinary Minimum Maximum Maximum
in Existing Shares interest New Ordinary interest
Ordinary to be in Enlarged Shares in Enlarged
Shares issued Share Capital to be Share Capital
through following issued following
Subscription Fundraising through Fundraising
Open
Offer
------------- --------------- -------------- ------------------- -------------- ------------------
Number % Number % Number %
------------- --------- ---- -------------- ----------- ------ -------------- ----------- -----
Kingswood
OR Astoria 0 0.0 48,003,580 48,003,580 48.27 24,001,7900 72,005,370 72.4
------------- --------- ---- -------------- ----------- ------ -------------- ----------- -----
The Subscription and the Open Offer give rise to certain
considerations under the Code. Brief details of the Code and the
protection this affords Shareholders will be included in the
Circular.
The Panel, based on information provided from the Company, have
confirmed that Kingswood and Astoria are not acting in concert for
the purposes of the Code.
As set out in the table above, Kingswood and/or Astoria might,
as a result of the Subscription and Open Offer acquire shares which
carry more than 30% of the voting rights of the Company. The
Subscription and Open Offer might, absent Rule 9 Waiver, give rise
to an obligation on Kingswood and/or Astoria to make a general
offer for the entire issued share capital of the Company.
Waiver of Rule 9 obligation
Under Note 1 on the Notes on the Dispensations from Rule 9, the
Panel will normally waive the requirement for a general offer to be
made in accordance with Rule 9 (a "Rule 9 offer") if, inter alia,
those shareholders of the company who are independent of the person
who would otherwise be required to make an offer and any person
acting in concert with him and do not have any interest in the
Fundraising which may compromise their independence ("the
Independent Shareholders") pass an ordinary resolution on a poll at
a general meeting ("a Whitewash Resolution") approving such a
waiver. The Panel may waive the requirement for a Whitewash
Resolution to be considered at a general meeting (and for a
circular to be prepared in accordance with Section 4 of Appendix 1
to the Code) if Independent Shareholders holding more than 50 per
cent. of the company's shares capable of being voted on such a
resolution confirm in writing that they would vote in favour of the
Whitewash Resolution were one to be put to the shareholders of the
company at a general meeting.
The Company has approached Independent Shareholders holding
10,229,777 Ordinary Shares, being 50.09% of the Company's shares
being capable of being voted on such a resolution, and has obtained
confirmation in writing (in the form appended to this announcement)
that they would vote in favour of the Whitewash Resolution were
such a resolution to be put to shareholders of the Company at a
general meeting. The Company has subsequently approached the Panel
and successfully obtained its permission to waive the requirement
for a Whitewash Resolution to be considered at a general meeting
and has also now received the Panel's confirmation that the Panel
has granted a waiver of the obligation on Kingswood and / or
Astoria to make a general offer under Rule 9 of the Code to the
extent that such obligation would otherwise arise as a result of
the issue of the Subscription Shares and the Open Offer Shares.
Shareholder Circular and Notice of Extraordinary General
Meeting
The Company intends to publish and post a circular to
shareholders and notice of EGM on or around 26 June 2017, with the
EGM expected to be held on 19 July 2017, and a further announcement
will be made at this time.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
For further details, please contact:
European Wealth Group +44 (0)20 7293
Limited 0730
John Morton www.europeanwealth.com
finnCap Ltd (Nomad
and Broker) +44 (0)20 7220 0500
Adrian Hargrave
Scott Mathieson
FWD Consulting (Financial
PR) +44 (0)20 7280 0651
Roddy Watt +44 (0)7714 770493
About European Wealth Group Limited
European Wealth Group Limited (AIM: EWG, EWGL) is the holding
company for the integrated wealth management business, European
Wealth Management Group Limited. Having commenced trading in 2010,
European Wealth has two operating divisions, European Investment
Management Limited ("EIM") and European Financial Planning Limited
("EFP"). Both are regulated by the Financial Conduct Authority. EIM
has opted for Restricted Adviser status and EFP for Independent
Adviser status. Today the Group's head office is in London with an
expanding network of offices both in the UK and continental Europe.
Core services offered by the Group are financial planning,
corporate pension advisory and investment management in both equity
and fixed interest instruments. For further information on European
Wealth's wealth management and financial planning services, please
go to www.europeanwealth.com
APPIX 1
Definitions
The following definitions apply throughout this announcement
unless the context requires otherwise:
"Admission" admission of the New Ordinary Shares to trading on AIM;
"AIM" the market of that name operated by the London Stock Exchange;
"AIM Rules" together, the AIM Rules for Companies and the AIM Rules for
Nominated Advisers;
"Application Form" the non-CREST Application Form;
"Astoria" Astoria Investments Limited, a company incorporated and
registered in Mauritius with company
number 129785 C1/GBL;
"AUM" assets under management:
"Basic Entitlement(s) the pro rata entitlement of Qualifying Shareholders to
subscribe for 9 Open Offer Shares for
every 10 Existing Ordinary Shares registered in their name as
at the Record Date, on and subject
to the terms of the Open Offer;
"Board" or "Directors" Kenneth West, John Morton, Simon Ray, Kish Gopaul and Marianne
Hay being the directors of
the Company;
"Circular" the circular to be posted to Shareholders on 26 June 2017;
"CLS" the GBP4.2m of quoted convertible loan stock, issued by the
Company in 2014, which were redeemed
on 9 June 2017;
"Code" the City Code on Takeovers and Mergers issued by the Panel on
Takeovers and Mergers;
"Company" or "European Wealth" European Wealth Group Limited, a company incorporated and
registered in Guernsey with company
number 42316;
"CREST" the computerised settlement system (as defined in the CREST
Regulations) operated by Euroclear
UK & Ireland Limited;
"Debt Conversion" the conversion, pursuant to the Debt Conversion Agreement, of
the debt of GBP100,000 owed
by the Company to Mr West into 781,250 New Ordinary Shares at
the Issue Price;
"Debt Conversion Agreement" the agreement between the Company (1) and Mr West (2) pursuant
to which Mr West has agreed
to convert the debt of GBP100,000 he is owed by the Company
into 781,250 New Ordinary Shares;
"EGM" or the extraordinary general meeting of the Company to be held at
"Extraordinary General Meeting" the offices of finnCap, 60
New Broad Street, London EC2M 1JJ at 11.00 a.m. on 19 July
2017, notice of which will be included
in the Circular;
"Enlarged Share Capital" the Company's issued share capital immediately following
Admission;
"Euroclear" Euroclear UK & Ireland Limited;
"Excess Application" Open Offer Shares which may be applied for by Qualifying
Shareholders under the Excess Application
Facility;
"Excess Application Facility" the arrangement pursuant to which Qualifying Shareholders may
apply for additional Open Offer
Shares in excess of their Basic Entitlement in accordance with
the terms and conditions of
the Open Offer;
"Excess Entitlement" in respect of each Qualifying Shareholder, their entitlement to
apply for up to 18 Open Offer
Shares for every 10 Existing Ordinary Shares registered in
their name as at the Record Date,
pursuant to the Excess Application Facility;
"Existing Ordinary Shares" the 26,668,656 Ordinary Shares in issue as at the date of this
announcement;
"FCA" the Financial Conduct Authority;
"finnCap" finnCap Ltd, as Financial Adviser, Nominated Adviser and Broker
to the Company;
"Form of Proxy" the form of proxy attached to the Circular for use by
Shareholders in connection with the
EGM;
"FSMA" Financial Services and Markets Act 2000, as amended;
"Fundraising" together, the Subscription and Open Offer;
"Group" or "European Wealth Group" the Company and its subsidiaries;
"Independent Directors" John Morton, Simon Ray, Kish Gopaul and Marianne Hay;
"Independent Shareholders" the Shareholders, other than those Shareholders who are
connected with either Subscriber or
who have any potential interest (other than in their capacity
as a Shareholder), whether commercial,
financial or personal, in the outcome of the Fundraising;
"Issue Price" 12.8 pence per New Ordinary Share;
"Kingswood" KPI (Nominees) Limited, a company incorporated in England and
Wales with registered number
5723493;
"London Stock Exchange" London Stock Exchange plc;
"New Ordinary Shares" the 72,786,620 new Ordinary Shares in the capital of the
Company to be issued in connection
with the Fundraising and Debt Conversion;
"Notice of EGM" the notice of the Extraordinary General Meeting which forms
part of the Circular;
"Open Offer" the invitation to Qualifying Shareholders to subscribe for the
Open Offer Shares at the Issue
Price on the terms and subject to the conditions set out in the
Circular and in the case of
Qualifying Non-CREST Shareholders only, the Application Form;
"Open Offer Shares" the 24,001,790 New Ordinary Shares being made available to
Qualifying Shareholders pursuant
to the Open Offer;
"Ordinary Shares" the ordinary shares of 5 pence each in the capital of the
Company;
"Panel" the Panel on Takeovers and Mergers;
"Qualifying CREST Shareholders" Qualifying Shareholders holding Ordinary Shares in
uncertificated form in CREST at the Record
Date;
"Qualifying Non-CREST Shareholders" Qualifying Shareholders holding Ordinary Shares in certificated
form at the Record Date;
"Qualifying Shareholders" holders of Ordinary Shares on the register of members of the
Company at the Record Date with
the exclusion of Shareholders with a registered address or who
are resident in any Restricted
Jurisdiction;
"Record Date" close of business on 22 June 2017;
"Regulatory Information Service" has the meaning given under the AIM Rules;
"Resolutions" the resolutions to be proposed at the EGM, as set out in the
Notice of EGM;
"Restricted Jurisdiction" each and any of Australia, Canada, Japan, the Republic of
Ireland, the Republic of South Africa,
New Zealand and the United States and any other jurisdiction
where the extension or the availability
of the Open Offer would breach any applicable law;
"Rule 9" Rule 9 of the Code;
"Rule 9 Waiver" the waiver granted by the Panel of the obligation which might
otherwise arise under Rule 9
requiring either of the Subscribers to make an offer for all of
the issued share capital of
European Wealth in connection with the Subscription and the
Open Offer;
"Shareholders" holders of Existing Ordinary Shares in the Company;
"Subscribers" Astoria and Kingswood;
"Subscription" the proposed subscription for Subscription Shares by the
Subscribers;
"Subscription and Underwriting Agreement" the conditional subscription and underwriting agreement dated
22 June 2017 between the Subscribers
and the Company, details of which are set out in the letter in
this announcement;
"Subscription Shares" the 48,003,580 new Ordinary Shares to be subscribed for
pursuant to the Subscription;
"UK" or "the United Kingdom" the United Kingdom of Great Britain and Northern Ireland;
"Uncertificated" recorded on the relevant register or other record of the
Ordinary Shares or other security
concerned as being held in uncertificated form in CREST, and
title to which, by virtue of
the CREST Regulations, may be transferred by means of CREST;
"United States", "United States of America" or "US" the United States of America, its territories and possessions,
any state of the United States
of America and the District of Columbia and all areas subject
to its jurisdiction;
"GBP" UK pounds sterling, the lawful currency of the United Kingdom;
and
APPIX 2
Expected Timetable of Principal Events
Record Date for entitlements 6.00 p.m. on 22
under the Open Offer June 2017
Announcement of the Subscription 7.00 a.m. on 23
and the Open Offer June 2017
Ex entitlement date for the 23 June 2017
Open Offer
Dispatch of the Circular, the 26 June 2017
Form of Proxy and, to Qualifying
Non-CREST Shareholders only,
the Application Form
Basic Entitlements and Excess 27 June 2017
Entitlements credited to stock
accounts of Qualifying CREST
Shareholders
Recommended latest time for 4.30 p.m. on 11
requesting withdrawal of Basic July 2017
Entitlements and Excess Entitlements
from CREST
Latest time and date for depositing 3.00 p.m. on 12
Basic Entitlements and Excess July 2017
Entitlements into CREST
Latest time and date for splitting 3.00 p.m. on 13
of Application Forms (to satisfy July 2017
bona fide market claims only)
Latest time for receipt of 11.00 a.m. on 17
Forms of Proxy July 2017
Latest time and date for receipt 11.00 a.m. on 17
of completed Application Forms July 2017
from Qualifying Non-CREST Shareholders
and payment in full under the
Open Offer or settlement of
relevant CREST instructions
(as appropriate)
Extraordinary General Meeting 11.00 a.m. on 19
July 2017
Announcement of the results 19 July 2017
of the Extraordinary General
Meeting and results of the
Open Offer
Issue of New Ordinary Shares 20 July 2017
Admission and commencement 8.00 a.m. on 20
of dealings in the New Ordinary July 2017
Shares expected to commence
on AIM
CREST accounts expected to 20 July 2017
be credited in relation to
the Open Offer
Definitive share certificates 27 July 2017
to be dispatched in relation
to the Open Offer by
Each of the times and dates above is subject to change. Any such
change will be notified by an announcement on a Regulatory
Information Service.
APPIX 3
Form of Independent Shareholders' confirmation in writing
Dear Sirs
RE: European Wealth Group Limited (the "Company")
Introduction
I confirm that I have been made aware of the proposed
fundraising whereby the Company will issue up to 72,005,370 new
ordinary shares (the "New Ordinary Shares") at a price of 12.8
pence per share by way of a subscription for 48,003,580 New
Ordinary Shares (the "Subscription"), of which Kingswood Property
Finance Limited Partnership ("Kingswood") will subscribe for
24,001,790 New Ordinary Shares and Astoria Investments Limited
("Astoria") will subscribe for 24,001,790 New Ordinary Shares,
together with an open offer of 24,001,790 New Ordinary Shares to
existing shareholders in the Company (the "Open Offer"), being
underwritten by Kingswood and Astoria (together the "Fundraising").
Should either of Kingswood or Astoria not participate for any
reason, the other party will have the right, but not the
obligation, to subscribe for all of the New Ordinary Shares
pursuant to the Subscription and Open Offer. The Company does not
have sufficient authority to issue all of the New Ordinary Shares,
therefore both the Subscription and the Open Offer is conditional
on the consent of the shareholders of the Company being given in a
general meeting to disapply pre-emption rights over and authorise
the allotment of the New Ordinary Shares.
Background and reasons for the Fundraising
Since its inception, the Group has been funded, in part, by a
high level of debt. At the time of the Group's admission to AIM in
May 2014, this debt was aggregated and issued as unsecured
convertible loan stock, quoted on AIM with the ticker EWGL.L
("CLS"). As at the end of May 2017, the outstanding principal due
under the CLS was GBP4.2m with approximately GBP0.5m of accrued
interest. In addition, the Group owed a further GBP1.9m of other
loans and accrued interest and up to GBP1.2m of potential cash
deferred consideration payments that fall due in the next 18
months.
These levels of debt have absorbed a significant proportion of
the Group's cash flow, as can be seen in the summary of the Group's
financial performance set out below:
2016 2015 2014 2013
GBP000's GBP000's GBP000's GBP000's
AUM 1,500,000 1,200,000 1,030,000 629,000
Revenue 9,412 7,653 6,673 5,821
EBITDA 354 (69) (203) (378)
Loss after
tax (757) (991) (667) (998)
On 7 June 2017, the Company entered into the bridge financing
facility for GBP5.25m, which is provided by Kingswood, one of the
proposed subscribers, to repay the CLS and the accrued interest and
other loans. This facility is available to the Company for 90 days
from its constitution, with interest being charged every 30 days.
The first 30 days attracts interest of 1% of the facility, the next
30 days attracts interest of 1.25% of the facility, and the final
30 days attracts interest of 1.5% of the facility. In addition, EWG
is paying an arrangement fee of 1.5% of the facility and an exit
fee of the same.
The Board believes that the use of high levels of debt as part
of the Company's capital structure has had an adverse effect on the
business as the interest payments have absorbed cash flow and
reduced the Group's ability to invest in the future. Despite this,
the Group has achieved further growth in AUM to 31 December 2016 to
around GBP1.75bn, which is an increase of over 45% from the
beginning of 2015 and over 16% from the beginning of 2016. Since
revenues lag AUM, this growth will feed through into the results
for the latter half of this year and into 2018.
The Board has explored a number of options and believes that the
Fundraising is the best option available to the Group to
re-capitalise its balance sheet and build a strong base from which
to exploit the opportunities available to it.
Through the Subscription and the underwriting of the Open Offer,
the Board is pleased to have secured the support of two new major
shareholders, Kingswood and Astoria. Both support the Group's
vision and will play an active role in helping accelerate the
development of the business. In addition, given the short timeframe
prior to the expiration of the convertible loan stock, it has been
necessary for the Company to enter into a bridge financing facility
in order to finance the business prior to completion of the
Fundraising. The proceeds of the Fundraising will be used to repay
the bridge financing in full as well as providing additional
working capital for the Company.
Kingswood
Kingswood is a private investment partnership wholly owned and
controlled by Gary Wilder and Jonathan Massing. Formed in 2004,
Kingswood has undertaken a range of long-term investments and
financial transactions including: participating in real estate
investments; private equity investments incorporating equity and
loan capital to the SME sector; subscribing for equity warrants and
options; dealing in financial assets; trading in listed equities,
fixed income and currencies. Kingswood is managed by its General
Partner, Kingswood Investment Partners Limited, which is authorised
and regulated by the Financial Conduct Authority. Kingswood is
expected to appoint two directors to the Board of the Company upon
completion of the Fundraising.
Astoria
Astoria (www.astoria.mu) is an investment company, based in
Mauritius and listed on the Stock Exchange of Mauritius (ticker:
ATIL.NOOO), the Johannesburg Stock Exchange (ticker: ARA) and the
Namibian Stock Exchange (ticker: NRO). Its investments are managed
by Anchor Capital (Mauritius) Limited, a subsidiary of Anchor
Capital (www.anchorcapital.co.za). Anchor Capital is one of South
Africa's fastest growing asset management companies and has
established itself as one of South Africa's leading providers of
asset management services, in both local and offshore markets.
Astoria is expected to appoint one director to the Board of the
Company upon completion of the Fundraising.
The Company does not consider Kingswood and Astoria to be acting
in concert for purposes of the Takeover Code (the "Code").
Rule 9 of the Takeover Code
I understand that, under Rule 9 of the Code, if any person
acquires an interest in shares which, when taken together with
shares in which he and persons acting in concert with him are
already interested, carry 30% or more of the voting rights of a
company which is subject to the Code, that person is normally
required to make a general offer in cash to all shareholders in the
company at the highest price paid by him or any person acting in
concert with him for an interest in such shares within the
preceding 12 months.
I also understand that Rule 9 provides that if any person,
together with persons acting in concert with him, is interested in
shares which in the aggregate carry not less than 30% of the voting
rights of a company which is subject to the Code but does not hold
shares carrying more than 50% of such voting rights, and such
person, or any person acting in concert with him, acquires an
interest in any other shares which increases the percentage of
shares carrying voting rights in such company in which he is
interested, that person is normally required to make a general
offer in cash to all shareholders in the company at the highest
price paid by him or any person acting in concert with him for an
interest in such shares within the preceding 12 months.
I also understand that Rule 9 provides that if any person,
together with persons acting in concert with him, holds shares
which in aggregate carry more than 50% of the voting rights of the
company which is subject to the Code, and any such person, or any
person acting in concert with him, acquires an interest in any
other shares which increases the percentage of shares carrying
voting rights in such company in which he is interested, that
person is not normally required to make a general offer in cash to
all shareholders in the company.
The Subscription and Open Offer
Following the Subscription and Open Offer, the maximum
shareholdings of Kingswood and Astoria and their proposed minimum
and maximum voting rights in the enlarged share capital of the
Company will be as set out in the table below:
Shareholder Interest New Ordinary Minimum Maximum Maximum
in Existing Shares interest New interest
Ordinary to be in Enlarged Ordinary in Enlarged
Shares issued Share Capital Shares Share Capital
through following to be following
Subscription Fundraising issued Fundraising
through
Open
Offer
------------- --------------- -------------- ------------------- ----------- -------------------
Number % Number % Number %
------------- --------- ---- -------------- ----------- ------ ----------- ----------- ------
Kingswood 0 0.0 24,001,790 24,001,790 24.13 12,000,895 36,002,685 36.20
------------- --------- ---- -------------- ----------- ------ ----------- ----------- ------
Astoria 0 0.0 24,001,790 24,001,790 24.13 12,000,895 36,002,685 36.20
------------- --------- ---- -------------- ----------- ------ ----------- ----------- ------
Therefore, following completion of the Fundraising, I understand
that if both Kingswood and Astoria participate, each of Kingswood
and Astoria could hold 30 per cent. or more of the voting rights of
the Company, but will not hold shares carrying more than 50 per
cent. of such voting rights. Accordingly, should either of
Kingswood or Astoria hold between 30 per cent. and 50 per cent. of
the voting rights of the Company, any further increase in that
interest by either party will incur an obligation under Rule 9 of
the Code to make a general offer.
I also understand that should either of Kingswood or Astoria not
participate in the Fundraising for any reason the other party will
have the right, but not the obligation, to subscribe for all of the
New Ordinary Shares pursuant to the Subscription and Open Offer. In
this situation either of Kingswood or Astoria could hold shares
representing more than 50 per cent. of the voting rights of the
Company and, accordingly, any further increase in that interest by
the relevant party will not trigger the requirement for an offer
for the remaining shares in the Company under Rule 9. The table
below demonstrates the maximum holding for Kingswood and Astoria
should either be the only party acquiring New Ordinary Shares
pursuant to the Fundraising.
Shareholder Interest New Ordinary Minimum Maximum Maximum
in Existing Shares interest New Ordinary interest
Ordinary to be in Enlarged Shares in Enlarged
Shares issued Share Capital to be Share Capital
through following issued following
Subscription Fundraising through Fundraising
Open
Offer
------------- --------------- -------------- ------------------- -------------- -------------------
Number % Number % Number %
------------- --------- ---- -------------- ----------- ------ -------------- ----------- ------
Kingswood
OR Astoria 0 0.0 48,003,580 48,003,580 48.27 24,001,790 72,005,370 72.40
------------- --------- ---- -------------- ----------- ------ -------------- ----------- ------
Waiver of Rule 9 obligation
I understand that, under Note 1 on the Notes on the
Dispensations from Rule 9, the Takeover Panel ("the Panel") will
normally waive the requirement for a general offer to be made in
accordance with Rule 9 (a "Rule 9 offer") if, inter alia, those
shareholders of the company who are independent of the person who
would otherwise be required to make an offer and any person acting
in concert with him and do not have any interest in the Fundraising
which may compromise their independence ("the Independent
Shareholders") pass an ordinary resolution on a poll at a general
meeting ("a Whitewash Resolution") approving such a waiver. I also
understand that the Panel may waive the requirement for a Whitewash
Resolution to be considered at a general meeting (and for a
circular to be prepared in accordance with Section 4 of Appendix 1
to the Code) if Independent Shareholders holding more than 50 per
cent. of the company's shares capable of being voted on such a
resolution confirm in writing that they would vote in favour of the
Whitewash Resolution were one to be put to the shareholders of the
company at a general meeting.
Confirmations and Acknowledgements
I hereby confirm the following:
1. that I am the beneficial owner of [--] ordinary shares in the
issued share capital of the Company representing at the date hereof
[--]% of the Company's issued share capital carrying voting rights,
and I have absolute discretion over the manner in which these
shares are voted. These shares are held free of all liens, pledges,
charges and encumbrances;
2. that (a) there is no connection between myself and either of
Kingswood or Astoria, (b) I do not have any interest or potential
interest (other than in my capacity as a shareholder), whether
commercial, financial or personal, in the outcome of the
Fundraising, and (c) I am an Independent Shareholder of the Company
as defined above; and
3. that, in connection with the Fundraising:
(a) I consent to the Panel granting a waiver from the obligation
for either of Kingswood and Astoria to make a Rule 9 offer to the
shareholders of the Company;
(b) I consent to the Panel, subject to Independent Shareholders
of the Company holding more than 50% of the shares capable of being
voted on a Whitewash Resolution to approve the waiver from the
obligation for each of Kingswood and Astoria to make a Rule 9 offer
giving confirmations in writing in a similar form to this letter,
dispensing with the requirement that the waiver from such
obligation be conditional on a Whitewash Resolution being approved
by Independent Shareholders of the Company at a general meeting;
and
(c) I would vote in favour of a Whitewash Resolution to waive
the obligation for each of Kingswood and Astoria to make a Rule 9
offer were one to be put to the Independent Shareholders of the
Company at a general meeting.
In giving the confirmations referred to above, I
acknowledge:
1. that, if the Panel receives such confirmations from
Independent Shareholders of the Company holding more than 50% of
the shares capable of being voted on a Whitewash Resolution, the
Panel will approve the waiver from the obligation for either of
Kingswood or Astoria to make a Rule 9 offer without the requirement
for the waiver having to be approved by Independent Shareholders of
the Company at a general meeting;
2. that if no general meeting is held to approve the Whitewash
Resolution to waive the obligation for either of Kingswood or
Astoria to make a Rule 9 offer:
(a) there will not be an opportunity for any other person to
make any alternative proposal to the Company conditional on such
Whitewash Resolution not being approved by Independent Shareholders
of the Company;
(b) there will not be an opportunity for other shareholders in
the Company to make known their views on the Fundraising; and
(c) there will be no requirement for the Company either (i) to
obtain and make known to its shareholders competent independent
advice under Rule 3 of the Code on the Fundraising and the waiver
of the obligation for either of Kingswood and Astoria to make a
Rule 9 offer or (ii) to publish a circular to shareholders of the
Company in compliance with Appendix 1 of the Code in connection
with this matter.
I consider myself to be a sophisticated investor in relation to
equity investments. I confirm that I have had the opportunity to
take independent financial advice before signing this letter.
I confirm that I will not sell, transfer, pledge, charge, or
grant any option or other right over, or create any encumbrance
over, or otherwise dispose of its shares in the Company until at
least after the conclusion of the proposed General Meeting to
approve the issuance of the New Ordinary Shares pursuant to the
Fundraising.
I, the signee, have full power and authority to sign this letter
on behalf of [--] which is a binding obligation upon it.
Signed for and on behalf of [--].
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEDGGDLLSDBGRD
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