TIDMMAX
RNS Number : 9273M
Max Property Group PLC
22 July 2014
22 July 2014
Max Property Group Plc
("Max" or the "Company" or the "Group")
PROPOSED SALE OF THE GROUP'S PROPERTY BUSINESS,
RETURN OF CASH TO SHAREHOLDERS, WINDING UP AND DELISTING
NOTICE OF EXTRAORDINARY GENERAL MEETING
SUMMARY
-- The Board of Max Property Group Plc announces the proposed
disposal of its entire property business to Marina Topco (Jersey)
Limited (the "Purchaser"), a company controlled by Blackstone Real
Estate Partners Europe IV and its affiliates ("Blackstone"), in a
deal valuing the Group, before exit costs, at GBP447.7 million
(inclusive of the recently approved return to Shareholders of GBP33
million), equivalent to an enterprise value for the Group of more
than GBP650 million.
-- The proposed transaction comprises the sale for GBP414.2
million in cash of MPG Opco, a wholly owned subsidiary of the
Company which owns the entire property business of the Group. The
price excludes GBP33 million cash being returned by the Company to
Shareholders on 23 July 2014 and GBP500,000 of cash retained by the
Company.
-- The Sale is conditional only on approval by more than 50% of
the votes cast (in person or by proxy) at the Extraordinary General
Meeting (the "Sale Resolution"). Irrevocable undertakings to vote
in favour of the Resolutions at the Extraordinary General Meeting
have already been received from holders representing 46% of the
Company's shares.
-- The valuation of the Group (net of exit costs) at GBP447.7
million reflects a 22% increase over the net assets (adjusted to
add back provisions for management incentives for a like for like
comparison) reported in the Group's 31 March 2014 annual report.
This represents an uplift of 112% in headline net asset value
before incentive provisions over the five and a quarter years since
Max was established with a limited life strategy.
-- The net cash return to Shareholders following completion of
the proposals, net of all exit costs and inclusive of the GBP33
million cash distribution payable on 23 July 2014, is expected to
be 184.2 pence per share, representing an annual compound growth
rate on net funds invested of 13.2% per annum and a 23% premium to
the average share price for the 12 months to 21 July 2014
(adjusting share prices to include the 15 pence per share
distribution since the 16 July 2014 ex-dividend date).
-- Following the Sale, the business of the Group will be
substantially complete and the Board proposes to oversee a
liquidation process during which the majority of the net cash
proceeds of the Sale will be distributed to Shareholders at the
earliest opportunity. This is currently expected to amount to a
distribution of 168.7 pence per share on 21 August 2014 (this being
in addition to the 15 pence per share payable on 23 July 2014). At
the conclusion of the liquidation a final distribution of up to a
further 0.4 pence per share will be made.
-- Having received an approach from Blackstone offering a cash
price at a level that the Board believes represents an attractive
return for investors, the Board has given careful consideration to
the net returns for Shareholders, weighing up the offer in the
context of the level and timing of the cash return and risks
inherent in delivering a piecemeal disposal of the Group over
approximately the next two years. The Board has concluded that the
interests of all Shareholders are best served with an earlier
disposal in a single and fast transaction with low execution risk
where nearly all of the net cash proceeds can be returned to
Shareholders as soon as possible following completion of the
Sale.
-- The Board is, therefore, unanimously recommending that
Shareholders approve the Sale by voting in favour of the
Resolutions to be put to the Extraordinary General Meeting on 11
August 2014.
BACKGROUND AND RATIONALE
-- Max was established in 2009 at a time of turbulence and
distress in property, finance and investment markets. At the time
of listing, the Board anticipated that delivery of the Group's
strategy would take some seven and a half years, allowing time to
build a portfolio, work the assets acquired to enhance value and
ultimately for Shareholders to benefit from an anticipated upwards
trajectory in property values following the expected recovery after
the market crash of 2008.
-- The Company's investment period came to an end in May this
year. The majority of the asset management initiatives have been
completed and the portfolio has been substantially de-risked, with
major refurbishment programmes at or near completion and void rates
now significantly lower than at purchase. In light of this, coupled
with the strength of capital currently flowing into the market, the
question for the Board has not been "Will the property portfolios
be sold?", but "When will they be sold?", together with careful
consideration of the most efficient and appropriate manner in which
to make these disposals in order to maximise the net cash returns
to Shareholders.
-- It is also the Board's view that the prospects of achieving
higher prices for the Group's investments over its remaining life,
whether as a result of the market potentially continuing its rapid
rise and/or through the results of further intensive asset
management, are outweighed by the downside risks for Shareholders
from the execution risk and market risk arising from a phased
disposal programme over approximately the next two years. In the
opinion of the Board, the potential increase in returns that might
be achieved through a phased disposal programme provides inadequate
compensation for the risks in doing so.
-- With this in mind, the Board believes that Blackstone is one
of only a few substantial property investors with access to very
significant financial resources and the management capability to
immediately absorb some complex multiple asset management
situations in a large and diverse group of assets.
-- The attractiveness of the pricing, the reliability and speed
of execution able to be delivered by Blackstone and the relatively
low property disposal costs payable in a sale of the entire
business in a single transaction have all been taken into account
by the Directors in arriving at their conclusion to unanimously
recommend this transaction to Shareholders.
-- In 2009 Max was established and the Management Team and its
partners and affiliates subscribed for 11.5% of the shares issued
at the offer price. At that time, an incentive arrangement was put
in place that was designed to be demanding while also further
aligning their interests with those of all Shareholders with
incentive fees payable only if the Company returned to Shareholders
in cash the original GBP211 million net capital raised plus returns
equivalent to 11% per annum, following which the recipients of the
incentive payments are then eligible to receive up to 20% of the
total cash surpluses of the Group above the net initial cash
raised. Should the Sale be approved by Shareholders and the Return
of Cash concluded, the threshold amount for returns to Shareholders
will have been exceeded and affiliates of the Management Team and
Och-Ziff, original cornerstone investors in the Company, will
receive 17.2% of the total surplus over net funds invested
amounting to an incentive payment of 18.3 pence per share or
GBP40.3 million being GBP9.1 million payable to Och-Ziff and
GBP31.2 million to affiliates of the Management Team.
-- Prestbury will have no further involvement with the portfolio
following completion of the Sale and a short transitional period
allowing for the handover of the companies sold to Blackstone.
ADDITIONAL DETAILS
-- Shareholders' approval is being sought for the proposed Sale,
the Winding Up and the Delisting at an Extraordinary General
Meeting to be held at 26 New Street, St Helier, Jersey JE2 3RA at
10 a.m. on 11 August 2014.
-- Subject to approval of the Resolutions and completion of the
Sale, trading in the Ordinary Shares on AIM and the CISE will be
cancelled with effect from 7.00 a.m. on 19 August 2014.
-- It is expected that the Circular containing further
information in relation to the Proposed Transaction, together with
a Notice of the Extraordinary General Meeting and a Form of Proxy,
will be posted to Max Shareholders shortly.
Aubrey Adams, Chairman of Max Property Group, commented:
"Max has performed extremely strongly since its listing in 2009,
achieving its key objectives of acquiring a substantial portfolio
of assets at a time of market distress and managing them
intensively to generate market leading returns.
"As Max was established with a limited life strategy, the Board
has always been mindful of its duty to identify the best possible
route to crystallise the Company's success in a way that would
secure the optimal exit for Shareholders. Management were set
robust targets to achieve and will have more than met them with the
outcome of this transaction. This approach from Blackstone, one of
the world's largest and best funded property investors, delivers
that opportunity at a price which fully recognises Max's current
and future value and - through the structure and timing of the Sale
and related proposals - offers our Shareholders a clean exit with
no market or execution risk."
Ken Caplan, Head of European Real Estate at Blackstone,
commented:
"We are excited to be entering into this transaction with Max as
it reflects our continued confidence in the strengthening UK
markets. These properties are great additions to our London office
portfolio as well as our growing UK industrial and logistics
platform."
This summary should be read in conjunction with, and is subject
to, the full text of the following announcement.
Enquiries:
Max Property Group c/o FTI Consulting
Aubrey Adams +44 20 3727 1000
Prestbury Investments LLP
Nick Leslau / Mike Brown / Sandy Gumm +44 20 7647 7647
Blackstone
Andrew Dowler +44 20 7451 4275
Oriel Securities Limited (Nominated
Adviser to Max)
Mark Young / Nicholas How +44 20 7710 7600
FTI Consulting (Financial PR for Max)
Stephanie Highett / Nina Legge +44 20 3727 1000
Morgan Stanley & Co International
(for the Purchaser)
Morgan Stanley & Co. International
plc is advising the entity established
by Blackstone through which it intends
to complete the acquisition of MPG
Opco
Nick White / Ian Hart +44 20 7425 8000
EXPECTED TIMETABLE OF EVENTS
Latest time and date for receipt 10 a.m. on 9 August 2014
of Form of Proxy for Extraordinary
General Meeting
------------------------------------ ----------------------------
Extraordinary General Meeting 10 a.m. on 11 August 2014
------------------------------------ ----------------------------
Completion of the Sale 18 August 2014
------------------------------------ ----------------------------
Record date for participation 7.00 a.m. on 19 August 2014
in Return of Cash
------------------------------------ ----------------------------
Commencement of the Winding 19 August 2014
Up
------------------------------------ ----------------------------
Delisting from AIM and CISE 7.00 a.m. on 19 August 2014
------------------------------------ ----------------------------
First cash liquidation distribution 21 August 2014
to Shareholders pursuant to
the Return of Cash
------------------------------------ ----------------------------
Notes
-- References to times in this announcement are to London time.
All dates and times are subject to change. If any of the above
dates and times should change, the revised dates and/or times will
be notified to Shareholders by an announcement on a Regulatory
Information Service.
-- All events following the Extraordinary General Meeting are
conditional upon approval by Shareholders of the relevant
Resolutions required to give effect to the event concerned.
This announcement 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
of 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 laws of any such jurisdiction.
This announcement contains forward looking statements including,
without limitation, statements containing the words "believes",
"estimates", "anticipates", "expects", "intends", "may", "will", or
"should" or, in each case, their negative or other variations or
similar expressions. Such forward looking statements involve
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievement of the Company, or
industry results, to be materially different from future results,
performance or achievements expressed or implied by such forward
looking statements.
Given these uncertainties, persons reading this announcement are
cautioned not to place any undue reliance on such forward looking
statements. These forward looking statements apply only as at the
date of this announcement. Subject to its legal and regulatory
obligations, the Company expressly disclaims any obligations to
update or revise any forward looking statement contained herein to
reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based unless required to do so by law or any
appropriate regulatory authority.
Max is an unregulated exchange-listed fund and is not regulated
in Jersey. The Jersey Financial Services Commission (the "JFSC")
has neither evaluated nor approved: (a) this document; or (b) the
parties involved in the promotion, management or administration of
Max. The JFSC has no ongoing responsibility to monitor the
performance of Max, to supervise the management of Max or to
protect the interests of investors in Max.
LETTER FROM THE CHAIRMAN OF MAX PROPERTY GROUP PLC
"Dear Shareholder,
Proposed Sale of the Group's property business, Return of Cash
to Shareholders, Winding Up, Delisting and Notice of Extraordinary
General Meeting
1 Introduction
The Board of Max announced today the proposed disposal of its
entire property business to Marina Topco (Jersey) Limited, a
company controlled by Blackstone Real Estate Partners Europe IV and
its affiliates in a deal valuing the Group, before exit costs, at
GBP447.7 million (inclusive of the recently approved return to
Shareholders of GBP33 million), equivalent to an enterprise value
for the Group of more than GBP650 million.
The cash receivable from the Sale reflects valuation of the
Group, before exit costs, at a 22% increase over the net assets
(adjusted to add back management incentives for a like for like
comparison) reported in the Group's 31 March 2014 annual report.
This represents an uplift of 112% in headline net asset value
(before incentive provisions) over the five and a quarter years
since Max was established with a limited life strategy. This growth
has been achieved with no additional share issues following
listing. The Sale is conditional on the passing of the Sale
Resolution by more than 50% of the votes cast (in person or by
proxy). Irrevocable undertakings to vote in favour of the Sale have
been received from holders of 46% of the Company's shares.
The net cash return to Shareholders following completion of the
Proposals, net of all exit costs and inclusive of the GBP33 million
cash distribution payable on 23 July 2014, is expected to be 184.2
pence per share, representing an annual compound growth rate on net
funds invested of 13.2% per annum and a 23% premium to the average
share price for the 12 months to 21 July 2014 (adjusting share
prices to include the 15 pence per share distribution since the 16
July 2014 ex-dividend date).
Should the Proposals be approved by Shareholders, it will
represent the swift completion of the delivery of the Board's
strategy for the Company established at the outset, which was to
take advantage of property investment opportunities near the bottom
of the market with a view to achieving attractive risk adjusted
cash returns for Shareholders over the course of the investment
cycle through judicious purchases and hands on management together
with prudent levels of gearing.
Max was established in 2009 at a time of turbulence and distress
in property, finance and investment markets. At the time of
listing, the Board anticipated that delivery of the Group's
strategy would take some seven and a half years, allowing time to
build a portfolio, work the assets acquired to enhance value and
ultimately for Shareholders to benefit from an anticipated upwards
trajectory in property values following the anticipated recovery
after the market crash of 2008.
Having received an approach from Blackstone offering a cash
price for the business at a level that the Board believes
represents an attractive return for Shareholders, the Board has
given careful consideration to the net returns for Shareholders. In
considering the attractiveness of the offer the Board has taken
into account the advantages of the speed and efficiency of a single
corporate transaction to deliver an exit for Shareholders, the
market and execution risks entailed in a more conventional disposal
programme and the higher property sale costs that would be incurred
in delivering a phased disposal. The Board has concluded that the
interests of all Shareholders are best served by an earlier
disposal in a single and fast transaction with low execution risk
where nearly all of the net cash proceeds can be returned to
Shareholders as soon as possible following completion of the
Sale.
The proposed transaction comprises the sale for GBP414,200,000
in cash of MPG Opco, a wholly owned subsidiary of the Company,
which owns the entire property business of the Group, conditional
only on the passing of the Sale Resolution. The Company retains
approximately GBP500,000 of net cash excluding the proceeds of the
Sale and also currently retains GBP33 million which will be
returned to Shareholders on 23 July 2014 in accordance with the B
Share Circular. Taking all of this together, the Sale values the
Group before exit costs at GBP447,700,000.
Following completion of the Sale the business of the Group will
be substantially complete, and, subject to the Winding Up
Resolution and Delisting Resolution being passed, the Board
proposes to oversee a liquidation process during which the majority
of the net cash proceeds of the Sale will be distributed to
Shareholders at the earliest opportunity. It is proposed that all
but a net cash balance of GBP900,000 or approximately 0.4 pence per
share (which the Directors will hold as a reserve against
liabilities of the Remaining Group to be settled in the course of
the Winding Up) will be distributed to Shareholders as soon as
possible after the passing of the Resolutions, by payment of an
initial liquidation distribution of approximately 168.7 pence per
share (this being in addition to the 15 pence per share payable on
23 July 2014) which should, if the Resolutions are passed, be
payable on 21 August 2014. Once the liabilities of the Remaining
Group have been settled a further and final distribution of up to a
further 0.4 pence per share will be paid.
Pence per
Ordinary
GBP'000 Share
Cash receivable on the Sale 414,200 188.3
Distribution payable on 23 July
2014 as set out in the B Share
Circular 33,000 15.0
Net cash value in Remaining Group 500 0.2
---------- ----------
447,700 203.5
Expected costs of sale:
Professional fees and expenses (2,300) (1.0)
Incentive fees payable (40,267) (18.3)
---------- ----------
Net cash attributable to Shareholders 405,133 184.2
Cash to be returned to Shareholders
on 23 July 2014 as set out in the
B Share Circular (33,000) (15.0)
---------- ----------
Residual cash to be returned to
Shareholders pursuant to the Proposals 372,133 169.2
---------- ----------
The returns shown above, other than the distribution of 15 pence
per share on 23 July 2014, are conditional on the Resolutions being
passed. The incentive fees shown above are calculated on the basis
of the expected timetable whereby the majority of the net cash
proceeds would be distributed on 21 August 2014. In the event that
the anticipated date of completion of the Sale or the Extraordinary
General Meeting is delayed, the incentive payments would be subject
to change, however it is not expected that the net cash return to
Shareholders would vary materially in that event.
An application has been made to the London Stock Exchange for
the cancellation of the admission to trading on AIM of the Ordinary
Shares and an equivalent application has been made to the CISE in
respect of the cancellation of the admission of the Ordinary Shares
to the Daily Official List of the CISE. Subject to completion of
the Sale and the passing of the Winding Up Resolution and the
Delisting Resolution at the Extraordinary General Meeting, it is
expected that cancellation of the admission of the Company's
Ordinary Shares to trading on AIM and cancellation of the admission
of the Company's Ordinary Shares to the Daily Official List of the
CISE will each occur at 7.00 a.m. on 19 August 2014.
Shareholders' approval is being sought for the proposed Sale,
the Winding Up and the Delisting at the Extraordinary General
Meeting to be held at 10.00 a.m. on 11 August 2014.
Shareholders representing 46% of the Ordinary Shares, including
the Management Team's 11.5% holding and all of the Directors'
holdings, have signed irrevocable undertakings to vote in favour of
the Resolutions.
Shareholders should read the whole of the Circular and not rely
solely on the summarised information set out in this letter.
2 Background to and effects of the Sale
In the most recent annual report of the Company for the year
ended 31 March 2014, the Board reported that
"Improving economic growth combined with strong capital flows
seeking to enter the UK property market provides a favourable
backdrop to Max's business...Given the excesses of the previous
boom and severity of the downturn, the return of a buoyant property
market has prompted some to question its sustainability. Property
yields are compressing but, for the property sectors in which Max
operates, this reflects genuinely improving fundamentals. Whilst
yields may be edging towards historic lows for Central London
offices, the outlook for rental growth is excellent with falling
vacancy rates, strong occupational demand and a limited speculative
development response. Meanwhile in the regions, secondary
industrial yields have until recently remained at elevated levels
reflecting the previously fragile nature of the recovery and we
invested with the expectation of a rebound in prices once economic
confidence returned. It is, therefore, pleasing to see growing
optimism and positive sentiment now starting to be reflected in
these markets."
The rate of capital flowing into the property sector has
continued at a remarkable pace and the optimism and positive
sentiment referred to in the 2014 annual report is now being even
more strongly reflected in the investment market across a range of
subsectors, including those in which the Company is invested.
The Company's investment period came to an end in May this year.
The majority of the asset management initiatives have been
completed and the portfolio has been substantially derisked, with
major refurbishments at or near completion and void rates now very
significantly lower than at purchase. Consequently, in the context
of the strength of capital flowing into the market and the
assessment that the majority of the returns to be delivered to
Shareholders from asset management initiatives have already been
achieved, the question for the Board has not been "Will the
property portfolios be sold?", but "When will they be sold?",
together with careful consideration of the most efficient and
appropriate manner in which to make these disposals in order to
maximise the net cash returns to Shareholders.
The approach from Blackstone to acquire the whole of the
business reflects a substantial 22% premium to the net assets
before incentive fee provisions, based on the now 14 week old 31
March 2014 independent property valuations, resulting in net
returns to Shareholders that will reflect an 8% premium to the
Company's share price as at 21 July 2014 and a 23% premium to the
average share price for the 12 months to 21 July 2014 (adjusting
share prices to include the 15 pence per share distribution since
the 16 July 2014 ex-dividend date).
The proposed transaction represents an enterprise value of more
than GBP650 million which is cash funded and not subject to any
financing or other conditions. The Board believes that Blackstone
is one of only very few substantial property investors with access
to very significant financial resources and the management
capability to absorb the whole of the Company's investment
portfolio, comprising a large and diverse group of assets requiring
not only extensive financial resources but also a management
platform that is able to immediately take on some complex asset
management situations across a variety of property sectors.
In the Board's view, the prospects of achieving higher prices
for the Group's investments over its remaining life as a result of
the market potentially continuing its rapid rise and/or through the
results of further intensive asset management are outweighed by the
downside risks for Shareholders from the execution risk and market
risk arising from a phased disposal programme over approximately
the next two years. The attractiveness of the pricing, the
reliability and speed of execution able to be delivered by
Blackstone and the relatively low property disposal costs payable
in a sale of the entire property business in a single transaction
enabling the majority of the value of the Group to be returned to
Shareholders as soon as possible following completion of the Sale,
have all been taken into account by the Board in arriving at its
unanimous conclusion to recommend this transaction to
Shareholders.
The offer from Blackstone does not contain an apportionment of
the value attributable to every portfolio. The Company has carried
out its own apportionment exercise to illustrate property yields
(based on the rental income receivable today and CBRE's rental
valuation carried out at the end of March 2014 in connection with
the Group's property valuations at that date) that would produce a
headline price at the level offered, and this illustrative analysis
is shown below.
Net initial Equivalent Yield Reversionary
yield Yield
St Katharine
Docks 4.1% 5.4% 6.6%
High Holborn
Estate 1.9% 5.3% 6.6%
London pubs 5.0% 6.4% 4.9%
Industrious 8.0% 8.4% 8.8%
Provincial offices 7.9% 8.3% 10.3%
Overall 5.8% 6.9% 7.6%
Blackstone management will have made their own judgement about
applicable valuation yields and therefore valuations and value
apportionments, the value of other net assets of the Group, the
potential for liabilities to arise within the corporate structure
in future and their own deal costs, so their assessment may be
different to that shown above.
When the business was established, the Management Team and its
partners and affiliates invested GBP25.3 million of cash at the
offer price, representing 11.5% of the issued share capital of the
Company. At that time an incentive arrangement was put in place
that was designed to be demanding while also further aligning the
Management Team's interests with those of all Shareholders. The
arrangements were described in the Listing Document and are also
described in the Company's annual report. The incentive fees are
payable only if the Group returns to Shareholders the original net
proceeds of the share issue on listing in cash plus cash returns
equivalent to 11% per annum. Following return of these cash
priority payments to Shareholders, the recipients of the incentive
payments are then eligible to receive up to 20% of the total cash
surpluses of the Group above the GBP211 million net initial cash
raised. Should the Sale be approved by Shareholders and duly
completed, then upon the Return of Cash, the threshold amount for
returns to Shareholders will have been exceeded and affiliates of
the
Management Team and Och-Ziff, original cornerstone investors in
the Company, will receive 17.2% of the total surplus over net funds
invested. This amounts to an incentive payment of 18.3 pence per
share or GBP40.3 million being GBP9.1 million payable to Och-Ziff
and GBP31.2 million to affiliates of the Management Team. The
recipients of the incentive payments and their affiliates are also
very significant shareholders in the Company, holding between them
27.4% of the issued share capital of the Company, with holdings
valued at the proposed net return to Shareholders of 184.2 pence
per share at approximately GBP111 million.
The Company was established as an externally managed business in
a structure that minimises the costs to Shareholders of
establishing and subsequently dismantling or redeploying staff and
other overheads in the context of the limited life of the business.
Under the terms of the Investment Advisory Agreement entered into
at the time of the Company's listing in May 2009, under which the
Investment Advisor was appointed as external manager, in the
circumstances of a takeover of the whole business the Investment
Advisor is entitled to a fee on termination of the management
contract equal to four times the most recent quarter's management
fee - in this case approximately GBP6.3 million. The Investment
Advisor has volunteered to the Board that this fee will not be
charged to the Group. The Board also notes that a phased disposal
programme would have resulted in the Investment Advisor continuing
to receive its management fee of 1.75% per annum of the net asset
value of the Group through to the final liquidation of the Company
and estimated to be approximately GBP6m per annum, all things being
equal, which has been foregone by the Investment Advisor as a
result of exiting at this stage.
Save for a one month handover period following completion of the
Sale during which the Investment Advisor will provide transitional
services to Blackstone, for which no fees are receivable, the
Investment Advisor will have no further involvement in MPG Opco and
its subsidiaries. Following completion of the Sale, the Investment
Advisor will continue to perform services for the Remaining Group
but will receive no remuneration for doing so in the period from
the completion of the Sale until conclusion of the liquidation of
the Remaining Group.
As the entire property business will be sold if the Sale
Resolution is approved, the Directors have concluded that the
Remaining Group, including the Company, should be placed into
liquidation immediately after completion of the Sale, its
liabilities settled and the majority of the net proceeds of Sale
(save for a retention of approximately GBP900,000 (0.4 pence per
share) of net cash for run-off liabilities) returned immediately to
Shareholders. Resolution 2, which is a special resolution requiring
two thirds of the votes cast (in person or by proxy) to be in
favour, is therefore proposed to approve the liquidation of the
Company. Should that resolution be passed then, provided that the
other Resolutions have been passed and the Sale has been completed,
net proceeds expected to amount to 168.7 pence per share will be
returned to Shareholders as an initial liquidation distribution. To
the extent that the net cash retention of GBP900,000 is not
required, it will be paid out in due course as a final liquidation
distribution.
As part of these Proposals, the Board will cancel the Ordinary
Shares from both admission to trading on AIM and listing on the
Daily Official List of the CISE. Pursuant to Rule 41 of the AIM
Rules, cancellation of the Admission requires the consent of not
less than 75% of votes cast by Shareholders (in person or by proxy)
at a general meeting. The Company has notified the London Stock
Exchange of the proposed cancellation and delisting. If
Shareholders approve the necessary Resolutions, it is anticipated
that the last day of dealings in the Ordinary Shares on AIM will be
18 August 2014 and that the effective date of the Delisting from
AIM will be 19 August 2014.
Pursuant to Listing Rule 3.5.7 of the CISE Listing Rules,
cancellation of the CISE Admission requires the consent of not less
than 75 % of votes cast by Shareholders (in person or by proxy) at
a general meeting. The Company has notified the CISE of the
proposed cancellation and delisting. If Shareholders approve the
Resolutions and the Sale is completed, it is anticipated that the
delisting of the Ordinary Shares from the Daily Official List of
the CISE and the cancellation of the CISE Admission will take place
on 19 August 2014.
Further details on the proposed Delisting are set out in section
5 below.
3 The Sale and the Share Purchase Agreement
On 21 July 2014, the Company and Max Property L.P. entered into
a sale and purchase agreement with the Purchaser, Marina Topco
(Jersey) Limited, a company controlled by Blackstone, pursuant to
which Max Property L.P. agreed to transfer the entire issued share
capital of MPG Opco to the Purchaser in consideration for the
payment of GBP414,200,000 in cash in aggregate in consideration for
shares and by way of repayment of shareholder debt.
Completion of the Share Purchase Agreement is conditional only
upon Shareholders passing the Sale Resolution on or before 21
August 2014 (or such other date as Max and the Purchaser may agree
in writing) and is contracted to occur five business days after the
Sale Resolution is passed.
A deposit of GBP40,000,000 will be paid into a joint account
within four business days of signing of the Share Purchase
Agreement. The deposit would be forfeited to Max Property L.P. if
the Sale Resolution is duly passed and the Purchaser fails to
complete on the scheduled completion date, subject to Max Property
L.P. having provided its material completion deliverables at such
time.
The Share Purchase Agreement contains certain limited
restrictions on how the Company is to operate MPG Opco and its
subsidiaries during the period between exchange and completion
essentially to ensure that the business continues to be operated in
the normal course, and contains a limited number of warranties and
undertakings in respect of matters including the seller's title to
the shares in MPG Opco, the seller's capacity to enter into the
Share Purchase Agreement and the accuracy of the stated external
secured debt of MPG Opco and its subsidiaries.
The Share Purchase Agreement also contains undertakings given to
the Purchaser not to enter into a similar transaction as the Sale
with another party and not to solicit or encourage such a
transaction.
4 Winding up and Return of Cash
Following passing of all the Resolutions and completion of the
Sale, the Company will commence the Winding Up. The Winding Up will
commence on a date determined by the Board (not to be later than
11.59 p.m. on 31 December 2014), anticipated to be 19 August 2014.
The flexibility with regard to the date of commencement of the
Winding Up is in order to enable the Board to take the necessary
preparatory steps for the Winding Up and the Return of Cash. The
Winding Up will be conducted by the Directors.
In the course of the Winding Up, the Return of Cash will be made
to Shareholders on the register at the Record Date.
(a) Shareholders without CREST accounts
Cheques in respect of the first liquidation distribution are
expected to be despatched on 21 August 2014 to Shareholders who do
not hold their Ordinary Shares in CREST accounts. Cheques will be
despatched at the Shareholders' own risk.
(b) Shareholders with CREST accounts
It is expected that CREST accounts will be credited with the
proceeds of the first liquidation distribution on 21 August
2014.
The Company's CREST facility will be maintained until completion
of the Winding Up to facilitate the payment of the first
liquidation distribution and any residual liquidation distribution.
Payments will be made to Shareholders on the register of members of
the Company as at the Record Date. Payments will be rounded down to
the nearest whole penny.
5 Process for Delisting and its effects
AIM
In accordance with Rule 41 of the AIM Rules, the Company has
notified the London Stock Exchange of the intention to delist,
subject to the passing of the Resolutions and completion of the
Sale. Under the AIM Rules, it is a requirement that the Delisting
is approved by not less than 75% of votes cast by Shareholders (in
person or by proxy) at the Extraordinary General Meeting. Upon the
Delisting becoming effective, the Company will no longer be
required to comply with the rules and corporate governance
requirements to which companies admitted to trading on AIM are
subject, including the AIM Rules and Oriel Securities will cease to
be nominated adviser and broker to the Company.
CISE
Under the CISE Listing Rules, it is a requirement that the CISE
Delisting is approved by not less than 75% of votes cast by
Shareholders (in person or by proxy) at the Extraordinary General
Meeting.
The Listing Sponsor has notified the CISE of the proposed
cancellation and delisting and will, in accordance with CISE
Listing Rule 3.5.7, file a certified copy of the Delisting
Resolution after it has been approved by Shareholders. Following
this, the Listing Sponsor will publish an announcement on the
CISE's website of the Company's intention to delist from the
CISE.
Resolution 3 set out in the notice of Extraordinary General
Meeting seeks Shareholder approval for the Delisting. Subject to
the Delisting Resolution being passed, it is anticipated that
trading in the Ordinary Shares on AIM will cease at the close of
business on 18 August 2014 with Delisting taking effect at 7.00
a.m. UK time on 19 August 2014. It is expected that the CISE
Delisting will take place on the same date and at the same time as
the AIM Delisting.
Following the Delisting, the Ordinary Shares will not be traded
on any public market. The Company's CREST facility will be
cancelled after the Winding Up is completed and all distributions
to Shareholders have been made.
The Ordinary Shares will not be transferable following the
commencement of the Winding Up, except with the written approval of
the Directors.
Existing share certificates remain valid until completion of the
Winding Up.
6 Extraordinary General Meeting and explanation of the Resolutions
In order to complete the Sale, an ordinary resolution of
Shareholders must be passed to approve the Sale. This is the Sale
Resolution, and it will be passed if a simple majority of the votes
cast (in person or by proxy) are in favour. The Sale Resolution is
not conditional on any of the other Resolutions being passed.
Irrevocable undertakings to vote in favour of the Resolutions have
been obtained from the holders of 46% of the issued Ordinary
Shares.
The Return of Cash will only be made in the course of the
Winding Up. The Winding Up Resolution proposes that, conditional
upon the passing of the Sale Resolution and the Delisting
Resolution as well as upon completion of the Sale, the Company
shall be wound up summarily. In terms of the Winding Up Resolution,
such winding up will commence at such time, prior to 11.59 p.m. on
31 December 2014, as the Directors shall in their absolute
discretion think fit, in order for the Directors to manage the
process effectively. The Winding Up Resolution must be passed as a
special resolution, and will be passed if at least two-thirds of
the votes cast (in person or by proxy) are in favour.
The Delisting Resolution proposes that, conditional upon
completion of the Sale and the passing of the Sale Resolution and
the Winding Up Resolution, trading of the Ordinary Shares on AIM
and the listing of the Ordinary Shares on the Daily Official List
of the CISE both be cancelled with effect immediately upon the
commencement of the Winding Up.
In accordance with the AIM Rules and the CISE Listing Rules, the
Delisting Resolution requires at least 75% of the votes cast (in
person or by proxy) to be in favour, and the Delisting Resolution
will be proposed as a special resolution of the Company.
The Extraordinary General Meeting to consider and, if thought
fit, pass the Resolutions, will be held at
26 New Street, St Helier, Jersey JE2 3RA, Channel Islands at
10.00 a.m. on 11 August 2014.
7 Irrevocable Undertakings
Pursuant to the terms of the Irrevocable Undertakings, the
Committed Shareholders and the Directors (together holding
101,926,415 Ordinary Shares in aggregate, representing
approximately 46% of the Company's issued Ordinary Shares as at 18
July 2014), have irrevocably undertaken to the Purchaser and the
Company on a several basis:
a) to vote and/or procure the vote of all of their respective
holdings of Ordinary Shares in favour of the Resolutions; and
b) not to sell or transfer or otherwise dispose of any or all of
their respective Ordinary Shares unless and until the Sale is
completed or the Share Purchase Agreement is terminated.
8 Recommendation
The Board is of the opinion that the Sale and the other
Proposals are in the best interests of Shareholders as a whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolutions, as the Directors have
irrevocably undertaken to do in respect of their own, and to
procure to be done in respect of their affiliates', beneficial
holdings amounting in aggregate to 25,375,000 Ordinary Shares
representing approximately 11.5% of the issued ordinary share
capital of the Company.
Yours sincerely,
Aubrey Adams
Chairman"
FURTHER INFORMATION
1. Net Profits
The Group's net profit before and after tax for the financial
years ended 31 March 2013 and 31 March 2014, extracted from the
Group's consolidated audited accounts for those periods, are set
out in the table below. There were no extraordinary items reported
in either period. The Sale will result in the disposal of the
entire property portfolio of the Group and so the results of the
entire Group are shown below. There will be a small net profit or
loss within the Remaining Group represented by interest earned on
cash deposits and the running costs of the Group until it is
liquidated but as liquidation proceedings in respect of the
Remaining Group are proposed to commence very shortly after the
Sale completes, this is not expected to represent a material
amount.
Year ended 31 Year ended 31
March 2014 March 2013
GBP'000 GBP'000
Consolidated profit for
the year:
Profit before tax 74,519 9,436
Profit after tax 73,279 9,369
Profit for the year attributable
to owners of the Company
Profit before tax 63,709 8,382
Profit after tax 62,640 8,269
2. Excess or deficit of consideration over or under book value
The cash payable for MPG Opco is GBP414,200,000 and the
estimated net asset value of the Remaining Group, inclusive of the
GBP33,000,000 cash distribution payable on 23 July 2014, is
GBP33,500,000 implying a total value for the Group (of
GBP447,700,000 or 203.5 pence per share.
The latest published net asset value of the Group attributable
to Shareholders is GBP358,951,000 or 163.2 pence per share. The
published net asset value includes a provision of GBP8,441,000 or
3.8 pence per share for management incentive payments. In order to
compare the pricing of the Sale with book value on a like for like
basis, the provision for incentive payments should be added back to
result in an adjusted book value of GBP367,392,000 or 167.0 pence
per share. The price implied by the terms of the Sale is therefore
22% above the adjusted 31 March 2014 book value.
As is common for real estate companies in Europe, the Company
also discloses in its results its net asset value on a EPRA basis
("EPRA Net Asset Value"), which is net asset value adjusted to
exclude certain items - principally the revaluation of derivative
contracts - which are not considered consistent with the valuation
of a business as a going concern over the long term. The Group's
EPRA Net Asset Value at 31 March 2014 was GBP361,930,000 or 164.5
pence per share. Adjusting in the same way for management
incentives, this is equivalent to an adjusted EPRA Net Asset Value
of GBP370,371,000 or 168.4 pence per share. The Group net asset
value before exit costs implied by the terms of the Sale is
therefore 21% above adjusted EPRA Net Asset Value per share.
3. Effect of the Sale on the Group
Following the Sale, the entire property business of the Group
will have been sold. The Remaining Group will comprise the Company
and three subsidiary entities with an estimated net asset value at
completion of the disposal of GBP500,000 or 0.2 pence per share,
which is expected to be returned to Shareholders as part of the
Return of Cash, as explained in Part 1 of the Circular. The
Remaining Group will be wound up to enable the Return of Cash to be
effected.
4. Application of Sale proceeds
The Sale proceeds will be applied to settle the costs of the
Sale including the management incentive payment, and, subject to
completion of the Sale and the passing of the Resolutions, the net
proceeds, less the costs of the Winding Up and any outstanding
liabilities of the Remaining Group, will be returned to
Shareholders.
5. Financial and trading prospects
The Company was established with a view to investing over an
investment cycle and ultimately returning cash to Shareholders.
Should the Sale complete, the Company will have achieved its
objectives and, subject to the passing of the Winding Up Resolution
and the Delisting Resolution, the Remaining Group will be wound
up.
Definitions
Admission the admission of the Ordinary Shares
to trading on AIM
AIM AIM, a market operated by the London
Stock Exchange
AIM Rules the AIM Rules for Companies published
by the London Stock Exchange, as
amended from time to time
Articles the Articles of Association of the
Company
Blackstone Blackstone Real Estate Partners Europe
IV and its affiliates
Board the board of directors of Max Property
Group Plc
Business Day a day (other than a Saturday, Sunday
or public holiday) on which commercial
banks are open for general business
in London and Jersey
B Share Circular the circular issued by the Company
on 18 June 2014 in relation to the
proposed return of 15 pence per Ordinary
Share to Shareholders by way of one
B share for each Ordinary Share,
amendment to the articles of association
and containing a notice of extraordinary
general meeting
Capita Asset Services Capita Registrars Limited, the registrars
or Registrars of the Company
CISE the Channel Islands Securities Exchange
Authority Limited
CISE Delisting the proposed cancellation of the
CISE Admission
CISE Listing Rules the listing rules made or published
by the CISE from time to time
CISE Admission the admission of the entire issued
share capital of the Company to listing
on the Daily Official List of the
CISE
CREST the relevant system (as defined on
the Regulations) in respect of which
Euroclear UK & Ireland Limited is
the Operator (as defined in the Regulations)
Committed Shareholders Och-Ziff, Mr Dominic Silvester, Mr
Francesco Sidoli, Howick Holdings
Inc, Nome Holdings Limited, Tenorite
Investments Limited, Kerry International
Investments Limited, Munchkin Limited,
Novatrust Limited as trustee of certain
trusts, Oceana Concentrated Opportunities
Fund Limited, Oceana Global Limited,
PIHL Equity LLP and Ms Sandy Gumm
Deferred Shares the unlisted deferred shares of no
par value in the capital of the Company
Delisting the proposed cancellation of the
Ordinary Shares from trading on AIM
and of the listing of the Ordinary
Shares on the Daily Official List
of the CISE.
Delisting Resolution the resolution to be proposed as
a special resolution at the Extraordinary
General Meeting, being Resolution
3, to approve the Delisting
Directors the board of directors of Max Property
Group Plc
Extraordinary General the Extraordinary General Meeting
Meeting of the Company to be held at 10.00
a.m. on 11 August 2014, notice of
which is set out in Part 4 of the
Circular
Investment Advisor or Prestbury Investments LLP, registered
Prestbury Investments with number OC320632 of Cavendish
House, 18 Cavendish Square, London,
W1G 0PJ
Investment Advisory the investment advisory agreement
Agreement dated 21 May 2009 and made between
the Company, Prestbury Investments
and Partnership Incorporations Limited,
read with the deed of termination
and appointment, dated 5 July 2011,
between the same parties and Gallium
Fund Solutions Limited, pursuant
to which the appointment of Partnership
Incorporations Limited as Authorised
Operator was terminated and Gallium
Fund Solutions Limited was appointed
as Authorised Operator in its place
Irrevocable Undertakings the irrevocable undertakings to vote
in favour of the Resolutions from
each of the Committed Shareholders
and each of the Directors
Form of Proxy the form of proxy enclosed with the
Circular, for use by Shareholders
in connection with the Extraordinary
General Meeting
Group the Company and its subsidiaries
and subsidiary undertakings from
time to time
Law Companies (Jersey) Law 1991 (as amended)
Listing Document The listing document for the purposes
of the application for CISE Admission
and also comprising an AIM admission
document drawn up in accordance with
the AIM Rules for the purpose of
Admission published by the Company
and dated 21 May 2009
Listing Sponsor Bedell Channel Islands Limited
London Stock Exchange London Stock Exchange plc
Management Team Mike Brown, Nick Leslau, Sandy Gumm
and Tim Evans, including, where the
context so requires, their affiliates
Max or the Company Max Property Group Plc, registered
in Jersey with registered number
103072
MPG Opco MPG Opco Limited, an operating holding
company registered in Jersey with
a company number 101799 and registered
address at 26 New Street, St Helier,
Jersey JE2 3RA
Och-Ziff OZ UK Real Estate Securities Limited
of 36A, 1 Cayman Financial Centre,
Dr. Roy's Drive, PO Box 2510 Grand
Cayman KY1-1104, Cayman Islands
Ordinary Shares the ordinary shares of no par value
in the capital of the Company
Oriel Securities Oriel Securities Limited, in its
capacity as nominated adviser, of
150 Cheapside, London EC2V 6ET
Proposals the Sale, the Winding Up, the Return
of Cash and the Delisting
Purchaser Marina Topco (Jersey) Limited, a
company controlled by Blackstone
Real Estate Partners Europe IV and
its affiliates
Record Date 7.00 a.m. on the Winding Up Date
Regulations the Uncertificated Securities Regulations
2001 (SI 2001 No. 3755), as amended
from time to time
Remaining Group the members of the Group other than
MPG Opco and its subsidiary undertakings
Resolutions the Sale Resolution, the Winding
Up Resolution and the Delisting Resolution
Return of Cash the return of cash to Shareholders
by way of a liquidation distribution
as described in this Circular
Sale the proposed sale by Max Property
L.P. of the entire issued share capital
of MPG Opco to the Purchaser pursuant
to the terms of the Share Purchase
Agreement
Sale Resolution the resolution to be proposed as
an ordinary resolution at the Extraordinary
General Meeting, being Resolution
1, to approve the Sale
Shareholders holders of Ordinary Shares
Share Purchase Agreement the share purchase agreement dated
21 July 2014 between the Company,
Max Property L.P. and the Purchaser
in respect of the Sale
UK or United Kingdom the United Kingdom of Great Britain
and Northern Ireland
Winding Up the summary winding up of the Company
in accordance with the Law
Winding Up Date the date and time, being prior to
11.59 p.m. on 31 December 2014 that
the Directors determine, in accordance
with the Winding Up Resolution, to
be the date with effect from which
the Company shall be wound up summarily
Winding Up Resolution the resolution to be proposed as
a special resolution at the Extraordinary
General Meeting, being Resolution
2, to approve the Winding Up
This information is provided by RNS
The company news service from the London Stock Exchange
END
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