TIDMSDY
RNS Number : 6544I
Speedy Hire PLC
01 September 2016
1 September 2016
Speedy Hire Plc
("Speedy" or the "Company")
Response to Toscafund statements
Important facts for all Shareholders
As previously announced on 12 August 2016, Toscafund has
procured the requisition of a General Meeting to consider two
resolutions: the first to remove Jan Åstrand as Chairman, and the
second to appoint David Shearer as a Director of the Company.
Since 22 July 2016 Toscafund has published a number of
statements. The Independent Board today publishes a circular which
responds to those statements and provides all Shareholders with
important facts:
1. David Shearer's candidacy - his experience is no longer relevant
2. David Shearer's independence from Toscafund - not proven
3. Robert Contreras' independence as a Non-Executive Director - confirmed
4. Jan Åstrand's role as Executive Chairman - temporary and appropriate
5. Jan Åstrand and Russell Down - strong and stable leadership
6. HSS merger - analysed in detail and rejected
7. Speedy's recovery - well underway
The Independent Board continues to believe that the Resolutions
are, in each case, NOT in the best interests of all Shareholders
and continues to unanimously and strongly recommend that
Shareholders VOTE AGAINST BOTH RESOLUTIONS.
The full text of the Independent Board's letter is contained in
this announcement and is being sent to all Shareholders.
Enquiries:
Instinctif Partners Tel: 020 7457 2020
Mark Garraway
Helen Tarbet
All terms used within this announcement will have the same
meaning as applied within the circular posted to Shareholders on 12
August 2016 (the "Circular") and are defined at the end of this
announcement.
A copy of the circular to be posted to Shareholders today will
be submitted to the National Storage Mechanism and will shortly be
available for inspection at: www.morningstar.co.uk/uk/nsm and on
the Company's website at
http://investors.speedyservices.com/investors/shareholder-information/general-meeting-information/
Letter to Shareholders
Registered Office:
Chase House
16 The Parks
Newton-le-Willows
Merseyside
WA12 0JQ
Independent Board Directors:
Robert Contreras (Senior Independent
Director)
Robert Barclay (Non-Executive
Director)
Russell Down (Chief Executive)
Chris Morgan (Group Finance Director)
1 September 2016
Dear Shareholder,
VOTE AGAINST BOTH RESOLUTIONS
As you will be aware Toscafund has procured the requisition of a
General Meeting to consider two resolutions: the first to remove
Jan Åstrand as Chairman, and the second to appoint David Shearer as
a Director of the Company.
Since 22 July 2016 Toscafund has published a number of
statements. The purpose of this letter is to respond to those
statements and provide all Shareholders with the important facts.
This we do on the following pages.
For the reasons set out in both the Circular and in this letter,
your Independent Board continues to believe that the Resolutions
are, in each case, NOT in the best interests of all Shareholders,
and continues to unanimously and strongly recommend that you VOTE
AGAINST BOTH RESOLUTIONS.
Yours faithfully,
Robert Contreras Robert Barclay
Senior Independent Director Non-Executive Director
Russell Down Chris Morgan
Chief Executive Group Finance Director
IMPORTANT FACTS
1. David Shearer's candidacy - his experience is no longer relevant
-- Following the announcement of the departure of Chris Masters
and James Morley as Non-Executive Directors on 18 November 2015 and
20 November 2015 respectively, the only Directors of the Company
were Jan Åstrand and Russell Down.
-- During November 2015, several replacement non-executive
candidates were considered by the Chairman, including those
suggested by advisers and shareholders.
-- At this time, David Shearer was introduced by Toscafund as a
potential non-executive director candidate with financial
experience. He is currently a non-executive director of five
companies including being the Chairman of Aberdeen New Dawn
Investment Trust plc and the Senior Independent Director of STV
Group plc. He was previously a non-executive director of HBOS plc
during the three years to April 2007.
-- Jan Åstrand met with David Shearer who stated he was not able
to commit immediately to Speedy as he was assessing several other
opportunities. As a result, David Shearer's candidacy was not
pursued.
-- In conjunction with Lygon Partners, the search agency, an
assessment of the merits of the other candidates was
undertaken.
-- Robert Contreras was considered the preferred candidate given
his extensive asset rental, sector and turnaround experience and
his appointment was announced on 10 December 2015. See point 3 on
page 3 for further information on the Robert Contreras appointment
process.
-- The Board was further strengthened by the appointment on 3
December 2015 of Chris Morgan as Group Finance Director, first on
an interim basis and confirmed as a permanent appointment on 31
March 2016. Chris Morgan was previously Group Financial Officer at
Go Outdoors and Focus DIY, and before that held a number of senior
finance positions at Tesco, including Group Controller.
-- Having made progress on Speedy's turnaround, and following
the appointment of Robert Contreras and Chris Morgan, the Board's
focus turned to operational improvement with a particular emphasis
on sales and marketing to SME customers.
-- Consequently, the Nomination Committee conducted an external
search in order to appoint a Non-Executive Director with experience
in the construction sector; sales and marketing; and in driving
revenue growth from a multi-site network. Lygon Partners were
appointed to advise on this search and provide a list of suitable
candidates. David Shearer's experience did not match the criteria
required. He was therefore not considered a suitable candidate by
the Board. A shortlist of two individuals was identified with
Robert Barclay selected as the preferred candidate given his
relevant experience as Managing Director UK, Ireland and Middle
East of SIG plc, a FTSE 250 company specialising in the
distribution of building products.
-- The Independent Board believes that it now has an excellent
balance of financial, commercial and operating capabilities and is
very well-equipped to meet the opportunities and challenges that
lie ahead.
-- Given these facts, the Independent Board believes that David
Shearer does not have the relevant experience nor skills to enhance
the Board at this time.
2. David Shearer's independence from Toscafund - not proven
-- In the light of Toscafund procuring a resolution for the
appointment of David Shearer to the Board as a Non-Executive
Director, the Independent Board has naturally raised concerns as to
David Shearer's independence from Toscafund. To date, Toscafund has
not allayed those concerns.
-- Toscafund originally proposed David Shearer for a place on
the Board in November 2015, and has on numerous occasions promoted
his appointment to the Board in the months since.
-- In a meeting with Robert Contreras on 6 July 2016, David
Shearer made it clear that he would only consider joining the Board
if Jan Åstrand resigned and he, David Shearer, was appointed
Chairman. David Shearer offered no explanation for this stance,
which is in full alignment with the objectives of the Resolutions
procured by Toscafund.
-- Toscafund has now stated that "David Shearer has never
previously been appointed to the board of any Company at the
request of Toscafund". However, the Independent Board has noted
media articles suggesting that David Shearer has recently been a
candidate to be appointed Chairman at Findel plc, a company at
which Toscafund is a 9.9% shareholder.
3. Robert Contreras' independence as a Non-Executive Director - confirmed
-- Following the announcement of the departure of Chris Masters
and James Morley as Non-Executive Directors of the Board on 18
November 2015 and 20 November 2015 respectively, the only Directors
of the Company were Jan Åstrand and Russell Down. As a consequence
the Board moved swiftly to appoint a new Non-Executive
Director.
-- During November 2015, several candidates were considered by
the Chairman including those suggested by advisers and
shareholders. Having noted the unavailability at that time of David
Shearer as a potential candidate, an assessment of the merits of
the available candidates was undertaken in conjunction with Lygon
Partners. Robert Contreras was considered the preferred candidate
given his extensive asset rental, sector and turnaround experience.
He was then presented to the Board and references obtained.
Following receipt of satisfactory references, the decision was made
to offer Robert Contreras, currently Chief Executive of Northgate
plc, the role of Non-Executive Director and Chairman of the Audit
Committee.
-- The Board, having regard to the UK Corporate Governance Code,
considered and continues to consider Robert Contreras to be
independent. His appointment has also been approved by Shareholders
at the Company's Annual General Meeting in July 2016.
-- The Board does not consider that Jan Åstrand's previous
position as a director of Northgate plc compromises Robert
Contreras' independence. Crucially, it was his time on the board of
directors of Northgate plc that afforded Jan Åstrand the
opportunity to recognise that Robert Contreras had considerable
experience in the asset rental industry. Your Independent Board
believes that the Company is benefitting from this experience as it
continues to progress in its recovery.
4. Jan Åstrand's role as Executive Chairman - temporary and appropriate
-- Following a profit warning which led to the departure of Mark
Rogerson and the appointment of Russell Down as Chief Executive,
who also retained his role as Group Finance Director pending the
appointment of a successor, Jan Åstrand was appointed Executive
Chairman on a temporary basis on 1 July 2015.
-- During his tenure as Executive Chairman, Jan Åstrand has
worked closely with Russell Down to stabilise the business,
undertake an essential restructuring of the Company and implement
the remedial action programmes which have resulted in recent
performance improvements.
-- Jan Åstrand has played a key role both in the delivery of the
recovery of the Company and in the Board's decision in June 2016
not to pursue at that time merger discussions with HSS which it
believed would have put that recovery in jeopardy.
-- Further to the 17 May 2016 announcement that Jan Åstrand
would return to Non-Executive Chairman in the near future, he has,
as previously announced, agreed with the Board that he will revert
to that role with effect from 30 September 2016.
5. Jan Åstrand and Russell Down - strong and stable leadership
-- The Independent Board believes that the stabilisation of, and
operational and financial recovery underway at, Speedy is the
direct result of the close working relationship between Jan Åstrand
and Russell Down.
-- The Board is pleased to reconfirm its previously stated
support of Russell Down and his strategy for the recovery and
development of the Company.
-- Jan Åstrand and Russell Down confirm they have always had an
excellent working relationship and look forward to providing stable
and effective leadership through the next phase of Speedy's
recovery.
6. HSS merger - analysed in detail and rejected
-- On 25 July 2016 Toscafund stated that it had "presented a
number of papers and recommendations to Jan Åstrand" which
concluded that "the only sure way to achieve adequate returns would
be by way of industry consolidation".
-- However, on 15 August 2016, Toscafund then stated that it
"does not believe sector consolidation is vital". These two
statements are inconsistent.
-- Toscafund first asked the Board to consider a combination
with HSS in January 2015. Following the Board's decision not to
pursue a combination with HSS at that time, Toscafund again
actively promoted merger talks between Speedy and HSS in July 2015
and actively supported engagement between the two companies.
Following Speedy's decision not to pursue a combination with HSS in
December 2015, HSS made contact with Speedy in March 2016 to once
again discuss a possible combination.
-- Discussions with HSS were terminated in June 2016 after the
Board had concluded, following a detailed analysis of the
information available and a considered review of its strategic
options, that to pursue a combination would not be in the best
interest of Shareholders as a whole.
-- During the period between January 2016 and June 2016, funds
managed by Toscafund increased their shareholdings in HSS from
approximately 5.4% to 18.1% and in Speedy from approximately 18.1%
to 19.4%.
-- On the day that the Board confirmed to Toscafund its
intention not to pursue merger talks, Toscafund instructed its
nominee to procure a requisition of a general meeting to consider
the removal of Jan Åstrand from, and the appointment of David
Shearer to, the Board.
-- The decision by the Board to terminate discussions with HSS
in June 2016 was taken to protect the financial recovery of the
Company. The discussions with HSS had been highly preliminary and
there was no proposal made by either party, let alone discussions
regarding a potential post-merger board structure. The Independent
Board believes that these facts disprove Toscafund's assertion that
Jan Åstrand terminated the discussions because he was "aware that
there was unlikely to be a role" for him in a combined
business.
7. Speedy's recovery - well underway
-- The recovery plan, which has been developed and implemented
by Jan Åstrand and Russell Down, has stabilised the business, which
is now showing signs of revenue growth.
-- This has been achieved through the strengthening of senior
management, improving customer service and relationships,
significant improvements in management information systems, setting
out clear financial KPIs and driving these through the business.
Encouragingly, the business has retained a number of major
framework contracts since 31 March 2016. In addition, overheads
have been reduced significantly over the last twelve months.
-- As a further illustration of progress, the Group confirmed on
26 August 2016 the disposal of its large mechanical plant fleet for
a total consideration of GBP14.4 million in cash. The sale will
further strengthen the Group's financial position with the proceeds
being used to pay down debt.
VOTE AGAINST BOTH RESOLUTIONS
The shareholding information relating to the Company, HSS and
Findel plc expressed in this announcement has been sourced, in
respect of the Company, from the Company's own share register
analysis and, in respect of HSS and Findel plc, from public
announcements of shareholdings. The shareholding percentages
expressed represent the latest information available for the date
of that event, rather than the shareholding as of each particular
date (shareholders are not obliged to announce all changes in their
shareholdings). All shareholding percentages expressed in this
announcement have been rounded to one decimal place.
The timetable for the General Meeting
Event Date
Latest time and date for receipt 11.00 a.m. on 7 September 2016
of Form of Proxy from Shareholders
Voting Record Time for the General 6.30 p.m. on 7 September 2016
Meeting
Time, date and location of the 11.00 a.m. on 9 September 2016
General Meeting at the offices of Instinctif
Partners, 65 Gresham Street,
London, EC2V 7NQ
Definitions
The following definitions apply throughout this announcement
unless the context otherwise requires:
"Board" the current board of directors of the Company
"Company" or "Speedy" Speedy Hire Plc, a public limited company
registered in England and Wales with registered
number 927680
"Directors" the directors of the Company
"General Meeting" the general meeting of the Company to be
held at 11.00 a.m. on 9 September 2016 (and
any adjournment thereof) for the purposes
of considering and, if thought fit, passing
the Resolutions
"Group" the Company and its Subsidiaries
"HSS" HSS Hire Group plc, a public limited company
in England and Wales with registered number
09378067
"Independent Board" comprising Robert Contreras, Robert Barclay,
Russell Down and Chris Morgan, the Directors
not having a direct or indirect interest
that conflicts with, or may conflict with,
the recommendation to be given to Shareholders
as to how to vote in respect of the Resolutions
proposed by Morgan Stanley Client Securities
Nominees Limited (as nominee of and on the
instructions of Toscafund Asset Management
LLP)
"Independent Board Directors" the Directors comprising the Independent
Board
"Notice" the notice of the General Meeting set out
on pages 19 to 21 (inclusive) of the GM
Circular
"Resolutions" the ordinary resolutions to be proposed
at the General Meeting (and set out in the
Notice):
* to remove Jan Åstrand as a director of the
Company; and
* to replace him with David Shearer
"Shareholder" holders of Shares
"Shares" the ordinary shares of 5 pence each in the
capital of the Company, having the rights
set out in the articles of association of
the Company
"Toscafund" Toscafund Asset Management LLP, a limited
liability partnership registered in England
and Wales with registration number OC320318
"UK Corporate Governance the UK corporate governance code as published
Code" by the Financial Reporting Council
"pence", "pounds sterling", the lawful currency of the United Kingdom
"sterling", "GBP" or "p"
Notes:
Inside Information: This announcement contains inside
information.
Notes to Editors: Founded in 1977, Speedy is the UK's leading
provider of tools, equipment and plant hire services to a wide
range of customers in the construction, infrastructure and
industrial markets, as well as to local trade and industry. Speedy
provides complementary support services through the provision of
training, asset management and compliance services. Speedy is
accredited nationally to ISO50001, ISO9001, ISO14001 and
OHSAS18001. The Group operates from 206 fixed sites across the UK
and Ireland together with a number of on-site facilities at client
locations throughout the UK, Ireland and from an international
office based in Abu Dhabi.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
September 01, 2016 02:00 ET (06:00 GMT)