TIDMWFCA
RNS Number : 8354C
WFCA PLC
14 March 2011
WFCA Plc
("WFCA", "the Company" or "the Group")
Subscription
Approval of waiver of Rule 9 of the Takeover Code
and
Notice of General Meeting
WFCA plc (AIM: WFCA.L), a leading regional advertising and
marketing agency, announces that it has today sent a circular to
Shareholders (the "Circular") seeking their approval to raise
further finance by means of a subscription of 177,500,000 Ordinary
Shares at 1 pence per Ordinary Share raising gross proceeds of
GBP1,775,000. The Subscription is conditional upon Shareholder
approval at a General Meeting to be held at 11.30 a.m, on 30 March
2011 at the offices of the Company at Vale House, Clarence Road,
Tunbridge Wells, Kent TN1 1HE.
Set out below is a summary and extracts of the information
contained in the Circular. The full document is available at the
offices of the Company, Vale House, Clarence Road, Tunbridge Wells,
Kent TN1 1HE GM and on the Company's website, www.wfca.co.uk..
For further information please contact:
WFCA plc
Stephen Latter, Financial Director Tel: 01892 703 201
Daniel Stewart & Company Plc
Oliver Rigby/James Felix Tel: 020 7776 6550
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2011
Latest time and date for receipt of Forms
of Proxy 11.30 a.m., 28 March
General Meeting 11.30 a.m., 30 March
Admission to trading on AIM of the Subscription
Shares 07.00 a.m., 31 March
Expected date for CREST accounts to be credited On Admission
5 Business Days after
Expected date for posting of share certificates Admission
If any details contained in the timetable above should change,
the revised times and dates will be notified by means of an
announcement through a regulatory information service.
SUBSCRIPTION STATISTICS
Subscription Price 1 pence
Number of Ordinary Shares in issue at the
date of this announcement 268,466,008
Maximum number of new Ordinary Shares the
subject of the Subscription 177,500,000
Number of Ordinary Shares in issue immediately
following completion of the Subscription 445,966,008
Estimated gross proceeds of the Subscription up to GBP1,775,000
Proposed Placing, Subscription and Notice of General Meeting
1. Introduction
The Company today announces that it proposes to raise further
finance by means of a subscription of 177,500,000 Ordinary Shares
at the Subscription Price raising gross proceeds of GBP1,775,000.
The Subscription is being undertaken by Hawk, a company which Bob
Morton, Chairman of WFCA, wholly owns with his wife, John Foley,
Steve Latter, Herald and Williams De Broe. The gross proceeds will
be used to repay the Seraffina Debt and to provide further working
capital. Seraffina is a Company that is owned by a trust for the
benefit of Bob Morton's adult son and is therefore also connected
to Bob Morton.
The Subscription is classified as a related party transaction
under the AIM Rules as a result of Bob Morton's role acting as the
Non-Executive Chairman of the Company, Steve Latter's role as Group
Finance Director and John Foley's role as a Non Executive Director.
The Related Party Independent Directors consider, having consulted
with Daniel Stewart (the Company's nominated adviser), that the
Subscription is fair and reasonable insofar as the Company's
shareholders are concerned.
In addition, as a result of commercial, financial and personal
relationships, Hawk, John Foley and Bob Morton are deemed to be
acting in concert with each other. As at the date of this
announcement, the Concert Party is interested in approximately 20
per cent. of the Issued Share Capital. Following the Concert Party
Subscription, the Concert Party will, assuming no further Ordinary
Shares are issued, be interested in approximately 41.1 per cent. of
the Enlarged Share Capital. Ordinarily, the issue and allotment of
the Subscription Shares would trigger an obligation on the Concert
Party to make a general offer to shareholders for the entire issued
share capital of the Company pursuant to Rule 9 of the Takeover
Code. Under Rule 9 of the Takeover Code, when a person acquires an
interest in shares (which taken together with shares in which he
and persons acting in concert with him are interested) carry 30 per
cent. or more of the voting rights of a company subject to the
Takeover Code, such person (or persons acting in concert) would
usually be required to make a general offer to shareholders.
The Panel has agreed, however, to waive the obligation to make a
general offer that would arise on the part of the Concert Party
members, either collectively or individually with respect to Hawk,
as a result of the issue of the Subscription Shares, subject to
approval on a poll by the Independent Shareholders of the Rule 9
Waiver. Further details are set out below.
The Subscription Shares will be issued credited as fully paid
and will rank pari passu with the Company's existing Ordinary
Shares (including the right to receive all dividends or other
distributions declared, made or paid thereon). It is expected that,
should the relevant approvals be obtained at the General Meeting,
the Subscription Shares will be admitted to trading on AIM on 31
March 2011.
2. Reasons for the proposed Subscription
WFCA is a leading regional marketing and advertising company,
providing effective solutions across all marketing services,
including television, radio, press, on-line, outdoor and direct
mail. In addition and in accordance with standard industry
practice, the Company acts as a financial principal in placing
substantial media booking orders on behalf of its clients.
The Company has today announced that its net profit before
taxation, exceptional items and discontinued operations for the six
months ended 31st December 2010 was GBP127,073 compared to a profit
of GBP416,189 for the six months ended 31st December 2009. The
result follows the loss of two major clients reported to the market
in previous statements. Cost cutting measures were made to
substantially mitigate the lost income but there will be a period
of reduced activity while the Company continues to rebuild its
client base and turnover.
Turnover in the period was GBP8,073,019 (2009, GBP15,198,936)
with a gross profit of GBP1,770,486 (2009, GBP2,729,658). The loss
of these high turnover but lower margin 'media' clients has
resulted in the overall gross margin increasing from 18% to 22%.
Basic earnings per share are -0.03p (2009 0.11p).
In the light of market conditions and in recognition of the
Company's proven operating skills in these areas, the Board has
refocused its business strategy to concentrate on taking medium
sized challenger brands through to being mature retailers. This
provides a clear differentiation between the Company and the main
London agencies. The approach is already demonstrating its
attraction as shown by recently secured new business wins for Nom
Dairies, Clarence Court, Armour Group, Infinity and Pataks,
together with a series of smaller appointments. These clients,
along with a growing pipeline of new opportunities, provide a
platform to rebuild underlying profitability. However, as mentioned
above, there will be a reduced level of activity during the balance
of the financial year as revenues from these new clients take time
to come on stream.
This new capital will provide sufficient funds to allow the
Group to repay the Serrafina Debt and to provide the necessary
financial stability to enable it to explore acquisition
opportunities in order to expand its service offering and sector
reach.
3. The Subscription
The Company proposes to raise GBP1,775,000 via the subscription
for 177,500,000 new Ordinary Shares at the Subscription Price. The
Subscription will be used to repay the Seraffina Debt and for
additional working capital.
4. City Code onTakeovers and Mergers
The Proposals give rise to certain considerations under the
Takeover Code. Brief details of Rule 9 of the Takeover Code are
described below. The Takeover Code is issued and administered by
the Panel. The Takeover Code applies to all takeover and merger
transactions, however effected, where the offeree company is, inter
alia, a listed or unlisted public company with its place of central
management and control in the United Kingdom. The Company is such a
company and its shareholders are entitled to the protection
afforded by the Takeover Code.
Under Rule 9 of the Takeover Code, any person who acquires an
interest (as defined in the Takeover Code) in shares which, taken
together with shares in which he is already interested and in which
persons acting in concert with him are interested, carry 30 per
cent. or more of the voting rights of a company which is subject to
the Takeover Code, is normally required to make a general offer to
all the remaining shareholders to acquire their shares. Similarly,
when any person, together with persons acting in concert with him,
is interested in shares which in aggregate carry not less than 30
per cent. of the voting rights of the company but does not hold
shares carrying more than 50 per cent. of such voting rights, a
general offer will normally be required if a further interest in
shares is acquired by any such person, or any person acting in
concert with him.
An offer under Rule 9 must be made in cash and at the highest
price paid by the person required to make the offer, or any person
acting in concert with him, for any interest in shares of the
Company during the 12 months prior to the announcement of the
offer.
For the purposes of the Takeover Code, a concert party arises
where persons acting in concert pursuant to an agreement or
understanding (whether formal or informal) actively co-operate to
obtain or consolidate control of a company or to frustrate the
successful outcome of an offer for a company. Control for the
purposes of the Takeover Code is defined as an interest, or
interests, in shares carrying in aggregate 30 per cent. or more of
the voting rights of a company, irrespective of whether such
interest or interests give de facto control.
The Concert Party Members are Hawk, John Foley and Bob Morton.
They are currently interested in 53,183,343 Ordinary Shares,
representing 19.8 per cent. of the Company's Issued Share Capital.
On issue of the Subscription Shares the members of the Concert
Party would be interested in 183,183,343 Ordinary Shares,
representing approximately 41.1 per cent. of the Company's Enlarged
Share Capital.
Number of
Ordinary Percentage Number of
Shares held holding as at Ordinary Percentage
as at the the date of Shares holding
date of this this following following
Name announcement announcement Admission Admission
Hawk 42,916,677 16% 162,916,677 36.5
John Foley 10,266,666 3.8% 20,266,666 4.5
The issue of the Subscription Shares to the members of the
Concert Party would, together, trigger an obligation on the members
of the Concert Party to make a general offer to the Shareholders
pursuant to Rule 9 of the Takeover Code. The Panel has agreed to
waive the obligation to make a general offer that would otherwise
arise as a result of the issue of the Subscription Shares being
issued to the Concert Party, if the Independent Shareholders pass
an ordinary resolution on a poll approving the Rule 9 Waiver.
Members of the Concert Party will not be entitled to vote on these
resolutions. Further details of the Concert Party and its holdings
are set out in the Circular.
Shareholders should be aware that, following Completion, members
of the Concert Party would hold between 30 per cent. and 50 per
cent. between them in the Enlarged Share Capital of the Company and
will therefore (for so long as they are treated as acting in
concert) not be entitled to increase their interest in the voting
rights of the Company without incurring a further obligation under
Rule 9 of the Code to make a general offer.
5. Intentions of the Concert Party
The members of the Concert Party have confirmed their intention
that, following any increase in their holdings of Ordinary Shares
as a result of the issue of the Subscription Shares, the Group
should continue operating in substantially the same manner as it is
at present, with no major changes. The members of the Concert Party
have also confirmed that the existing employment rights, including
pension rights (where relevant), of all employees of the Group
would be maintained. The members of the Concert Party have no
intention of relocating the business or redeploying the fixed
assets of the Group.
6. General Meeting
You will find set out at the end of the Circular, a notice
convening a General Meeting of the Company to be held at the
offices of the Company at 11.30 a.m. on 30 March 2011 for the
purpose of considering, and if thought fit, passing the following
resolutions:
1. To approve the Rule 9 Waiver;
2. To grant the Directors the authority to issue and allot New
Ordinary Shares up to a nominal value of GBP4,748,076 under section
551 of the Act; and
3. To empower the Directors pursuant to Section 570 of the Act
to allot equity securities (as defined in Section 560(1) of the
Act) for cash pursuant to the authority conferred by point 2 above
as if Section 561(1) of the Act did not apply.
To be passed, Resolution 1 requires a majority of more than 50
per cent. of the Independent Shareholders voting on a poll in
person or by proxy in favour of the Resolution.
Resolution 2 is proposed as an ordinary resolution and therefore
requires more than 50 per cent of Shareholders voting in person or
by proxy in favour of the Resolution.
Resolutions 3 is a special resolution and therefore requires 75
per cent. or more of Shareholders voting in person or by proxy in
favour of each Resolution.
Shareholders should be aware that the Proposals are conditional
upon the passing of all the Resolutions. If any of the Resolutions
is not passed then the proposed injection of capital and the
repayment of the Seraffina Debt will not proceed.
7. General Meeting and action to be taken
A Form of Proxy for use by Shareholders in connection with the
GM is enclosed with the Circular. Whether or not you propose to
attend the GM in person, you are requested to complete the Form of
Proxy in accordance with the instructions printed on it and to
return it to the Company's registrars, Capita Registrars, P4XS 32,
Beckenham Road, Beckenham, BR3 4TH, as soon as possible and in any
event so as to arrive no later than 11.30 a.m. on 28 March 2011.
Completion and return of the Form of Proxy will not preclude you
from attending the GM and voting in person should you so wish.
Please note that only Independent Shareholders are entitled to
vote on the resolution to approve the Rule 9 Waiver and that the
vote will be by way of poll. Accordingly it is very important that
the Form of Proxy is completed and returned.
8. Recommendation
The Rule 9 Independent Directors, who have been so advised by
Daniel Stewart, consider the Proposals to be fair and reasonable
and in the best interests of the Company and its Independent
Shareholders as a whole. In providing its advice to the Rule 9
Independent Directors, Daniel Stewart has taken into account the
Rule 9 Independent Directors' commercial assessments. Accordingly,
the Rule 9 Independent Directors recommend shareholders to vote in
favour of the Resolutions.
The Company has received irrevocable commitments to vote in
favour of the Proposals from the Rule 9 Independent Directors and
third parties in respect of 161,486,461 Ordinary Shares
representing 60% of the Issued Share Capital of the Company.
Further details in respect of the irrevocable undertakings are set
out in the Circular.
In accordance with the provisions of the Takeover Code, the
Concert Party is considered to be interested in the outcome of the
resolution to approve the Rule 9 Waiver and, accordingly, none of
its members will vote on the resolution to approve the Rule 9
Waiver, and they have so confirmed this to the Company.
DEFINITIONS
The following definitions apply throughout this announcement and
in the accompanying Form of Proxy unless the context requires otherwise:
"Act" the Companies Act 2006;
"Admission" the admission of the Subscription Shares to
trading on AIM becoming effective in
accordance with the AIM Rules;
"AIM" AIM, a market operated by London Stock
Exchange plc;
"AIM Rules" the rules for AIM companies published by
London Stock Exchange plc governing
admission to and the operation of AIM (as
amended from time to time);
"Board" or "Directors" the directors of WFCA, being Steve Latter,
Michael Richards, Rodger Braidwood, John
Foley, Rob Hamer and Bob Morton;
"Company" or "WFCA" WFCA Plc;
"Concert Party" together Hawk, Bob Morton and John Foley
(each a "Concert Party Member");
"Concert Party Subscription" the issue of 130,000,000 Subscription Shares
to Hawk and John Foley pursuant to the
Subscription Agreement;
"Daniel Stewart" Daniel Stewart & Company plc;
"Enlarged Share Capital" the enlarged issued ordinary share capital
of the Company immediately following the
issue of the Subscription Shares assuming
that no further shares are issued after the
date of this announcement and before the
issue of the Subscription Shares;
"Form of Proxy" the form of proxy enclosed with the Circular
for use by Shareholders in connection with
the GM;
"GM" or "General Meeting" the general meeting of WFCA to be held at
Vale House, Clarence Road, Tunbridge Wells
TN1 1HE, at 11.30 a.m. on 30 March 2011,
notice of which is set out in the Circular;
"Group" the Company and its subsidiaries;
"Hawk" Hawk Investment Holdings Limited, a company
owned by Bob Morton and his wife;
"Herald" Herald Investment Management Limited;
"Independent Shareholders" shareholders other than members of the
Concert Party;
"Issued Share Capital" the 268,466,008 Ordinary Shares in issue as
at the date of this announcement;
"Loan Agreement" the loan agreements dated 7 October 2010 and
25 January 2011 made between Seraffina and
the Company lending the Company in aggregate
GBP1,200,000 further details of which are
set out in the Circular;
"Non Concert Party Subscription" the issue of 47,500,000 Subscription Shares
to Herald, Steve Latter and Williams De Broe
pursuant to the Subscription Agreement;
"Ordinary Shares" ordinary shares of 1 pence each in the
capital of the Company;
"Panel" the Panel on Takeovers and Mergers;
"Proposals" the approval of the Resolutions, including
a resolution concerning the Rule 9 Waiver;
"Related Party Independent Rodger Gordon Braidwood, Robert Hamer and
Directors" Michael John Richards;
"Resolutions" the resolutions to be proposed at the GM,
as set out in the notice of GM at the end
of the Circular;
"Rule 9 Independent Directors" Steve Latter, Michael John Richards, Rodger
Gordon Braidwood and Robert Hamer;
"Rule 9 Waiver" the waiver of the obligation to make a
general offer under Rule 9 of the Takeover
Code to acquire the Ordinary Shares not
already owned by the Concert Party, which
would otherwise arise as a consequence of
the issue of the Subscription Shares;
"Seraffina" Seraffina Holdings Limited, a company
registered in the British Virgin Islands
under number 538758 wholly owned by a trust
for the benefit of Bob Morton's adult son,
Charles N Morton;
"Seraffina Debt" the GBP1,200,000 owed to Seraffina by the
Company pursuant to the Loan Agreement;
"Shareholders" the holders of Ordinary Shares and
"Shareholder" means any one of them;
"Subscribers" Hawk, Herald, John Foley, Steve Latter and
Williams De Broe;
"Subscription" the Concert Party Subscription and the Non
Concert Party Subscription;
"Subscription Agreement" the agreements entered into between the
Company and the Subscribers, pursuant to
which the Subscribers have agreed to
subscribe for the Subscription Shares at the
Subscription Price;
"Subscription Price" 1 pence per Subscription Share;
"Subscription Shares" the 177,500,000 Ordinary Shares issued
pursuant to the Subscription Agreement;
"Sterling" or "GBP" the lawful currency of the United Kingdom;
"Takeover Code" the City Code on Takeovers and Mergers;
"UK" or "the United Kingdom" the United Kingdom of Great Britain and
Northern Ireland; and
"Williams De Broe" Williams De Broe Limited a company
registered in the UK under company number
02485266 .
This information is provided by RNS
The company news service from the London Stock Exchange
END
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