TIDMITQ
RNS Number : 6908I
Chisbridge Limited
21 June 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT
JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
DEFINED TERMS USED BUT NOT DEFINED IN THIS ANNOUNCEMENT HAVE THE
MEANINGS SET OUT IN THE OFFER DOCUMENT
FOR IMMEDIATE RELEASE
21 June 2017
The Management Team strongly urges shareholders to support them
and accept the Offer.
Response to Defence Document
The Offer provides shareholders with a certain cash exit now in
challenging trading conditions:
1. InterQuest Group faces an uncertain future with trading and dividends at risk
2. BREXIT and economic uncertainties already beginning to impact
3. It is becoming increasingly difficult to attract, retain and
incentivise revenue earning consultants. Consultant numbers have
been falling and continue to do so
4. The Offer is from your Management Team who know the business and key consultants best
5. The Offer value at 42p is at a premium to the historic share
price and reflects the views of providers of external funding of
the risks to future trading performance
6. The Offer seeks to safeguard value for all stakeholders in the Company
The Management Team notes the announcement released on 15 June
2017 by the Independent Director concerning the defence circular
(the "Circular") in connection with the Offer.
In the Circular, the Independent Director has put forward a
limited number of reasons why, in his opinion, the Offer should not
be recommended to shareholders.
The Management Team responds below to certain of these
arguments:
Argument 1 - "Chisbridge was formed by the InterQuest executive
Management Team who sees value in the business" and which has
access to information which is not available to all
shareholders.
Management Team Response:
The Management Team acknowledges that, by virtue of their
position, they are in possession of information that is not readily
available to other InterQuest shareholders. This includes detailed
knowledge of the market environment, consultant morale and the
competitive environment in which InterQuest operates in attracting,
retaining and motivating the consultants who drive the value of the
business.
The Management Team is constrained by what it can say in the
prevailing regulatory environment, especially with regard to
current trading. The trading update released on 15 June 2017
provided some limited detail about the current trading environment
and the likely forecast trading performance of the Company. The RNS
announcement by SThree plc, a larger peer group company on 16 June
2017, included the following statement:
"UK&I performance as expected adversely impacted by the
decision of the UK to leave the EU and Public Sector reforms, with
GP down 16%* YoY"
*at constant currency
The RNS announcement by SThree plc defines GP as SThree plc
gross profit
Argument 2 -The Independent Director believes that the Offer
materially undervalues the Company based on its historic share
price.
Management Team Response:
The Management Team believes that an historic share price in
itself is not a good guide to the likely future value of any
company. The future share price performance of InterQuest will be
determined, amongst other things, by its financial performance and
the prevailing economic environment. In addition, the lack of
liquidity in the Company's shares typically means that the price is
simply a function of trades completed by small buyers and
sellers.
In making the Offer at the Offer Price the Management Team was
constrained by the amount of debt which, in the view of its
providers of funding, the business could service after the
transaction.
The amount of debt which the Management Team believes can be
serviced by Chisbridge has been determined principally by the
Management Team's views of InterQuest's likely future financial
performance. The Management Teams' financial models have been
reviewed in detail by the Management Team's funding partners.
The Management Team understands that certain shareholders may
wish the Offer to be at a higher price. However in making its offer
for the Company, the Management Team is seeking to safeguard the
value of the business for all stakeholders in the Company in such
economically uncertain times.
The Management Team is confident that those shareholders who are
or have been employees of the Company will understand the potential
impact of economic uncertainties on staffing organisations and
consequent requirement to retain its best people. The Management
Team strongly believes that this is best achieved as a private
Company.
The Management Team would like to draw Shareholders' attention
to the statement in the Circular by the Independent Director set
out in the last paragraph of section 1 of Appendix 2 that:
"The Independent Director wants shareholders to have a balanced
view on future prospects and to be aware of the cyclical nature of
the recruitment sector and the lack of visibility on future
earnings. InterQuest is predominantly focused in the UK and there
is a high level of political and economic uncertainty around
Brexit, IR35 post-election government and the general economic
environment that makes future performance very difficult to
forecast. Whilst the Company is taking a medium-term view of the
future performance of the business, there are still a number of
market and political challenges that could affect performance in
the short-term."
This statement by the Independent Director provides considerable
support for the rationale behind the Offer.
Argument 3 - The Independent Director believes that "there are
significant benefits to remaining an AIM quoted company"
He believes these benefits include:
i) To attract, incentivise and retain staff
Management Team Response
The Management Team believes that the significant corporate
governance constraints and compliance obligations placed on the
Company whilst AIM quoted prevents it from offering competitive
incentivisation arrangements to attract and retain staff of an
appropriate calibre. The Company is also constrained, whilst being
AIM quoted, by the number of options it can grant for its
employees. Due to the volatility of the market share price the
Group has chosen to resort to offering share options at par value.
This places a significant tax burden on the option holder,
rendering them, in the opinion of the Management Team, highly
unattractive.
A key reason for the Offer is to seek to reverse the decreasing
number of consultants (on a like for like basis) being attracted
and retained by the Company through incentivisation arrangements
which cannot be offered to employees and potential employees whilst
InterQuest remains a publicly quoted company.
The current share option scheme has only awarded on average
c.GBP4.2k per employee per year since 2005, using a weighted
average tenure of shares. Such incentivisation arrangements are
materially below the market norms. In addition to this, 53% of the
value of option awards since May 2005 were not taken up, either
because they lapsed for non-performance or employees left without
being able to exercise them. This further evidences InterQuest's
current lack of ability to attract, incentivise and retain key
staff, in the opinion of the Management Team.
ii) To provide InterQuest with access to additional capital.
The Management Team would remind shareholders that, other than
at its initial admission to trading on AIM, it has not raised any
money from the stock market and has no current intention to do
so.
Under the heading ii) above the Circular refers to acquisitions
that InterQuest has made, the consideration for which has been paid
partly in shares.
The Management Team believes that being AIM quoted with a
depressed share price limits the ability to use its shares as
consideration in further acquisitions. Furthermore, the Management
Team believes that as a result of the greater flexibility in
incentivisation arrangements which will be available as a private
business, InterQuest's ability to expand its operations organically
will be enhanced.
Recommendation
The Management Team strongly urges shareholders to support them
and accept the Offer.
A copy of this announcement will be published, made available on
Chisbridge's website at www.chisbridge.com and dispatched to
shareholders today.
Enquiries:
Chisbridge Limited
Gary Ashworth Tel: +44 (0)7909 912 800
SPARK Advisory Partners Limited (Financial Adviser)
Matt Davis / Miriam Greenwood Tel: +44 (0)203 368 3550
Apart from the responsibilities, if any, which may be imposed on
SPARK Advisory Partners Limited by the Financial Services and
Markets Act 2000, the European Communities (Markets in Financial
Instruments) Regulations 2007 (as amended) or the regulatory
regimes established thereunder or the Code, SPARK Advisory Partners
Limited does not accept any responsibility whatsoever for the
contents of this announcement or for any statements made or
purported to be made by it or on its behalf in connection with the
Offer, SPARK Advisory Partners Limited accordingly disclaims all
and any liability whether arising in tort, contract or otherwise
(save as referred to above) which it might otherwise have in
respect of this announcement or any such statement.
SPARK Advisory Partners which is regulated in the United Kingdom
by The Financial Conduct Authority is acting exclusively as
financial adviser to Chisbridge and no one else in connection with
the Offer. SPARK Advisory Partners will not be responsible to
anyone other than Chisbridge for providing the protections afforded
to its clients or for providing advice in relation to the Offer or
any other matter referred to in this Announcement or otherwise.
The directors of Chisbridge accept responsibility for the
information contained in this announcement. To the best of their
knowledge and belief (having 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.
This announcement is for information purposes only and is not
intended to, and does not, constitute or form part of any offer,
invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any
securities whether pursuant to this announcement or otherwise. The
distribution of this announcement in jurisdictions outside the
United Kingdom may be restricted by law and therefore persons into
whose possession this announcement comes should inform themselves
about, and observe such restrictions. Any failure to comply with
the restrictions may constitute a violation of the securities law
of any such jurisdiction.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange 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
securities exchange 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
securities exchange 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 securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange 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% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange 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 securities exchange offeror(s), 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
securities exchange 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 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGLGDLXGDBGRB
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June 21, 2017 02:08 ET (06:08 GMT)
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