RNS Number:3567O
Full Circle Investments PLC
7 December 2001
PART 1
Capital Bars plc
Not for release, publication or distribution, in whole or in part, in or into
the United States, Canada, Australia or Japan.
RECOMMENDED CASH OFFER FOR CAPITAL BARS PLC ('Capital Bars')
BY DAVY CORPORATE FINANCE LIMITED
on behalf of
FULL CIRCLE INVESTMENTS PLC ('Full Circle'),
a company owned and controlled by Messrs. William and Desmond O'Dwyer
7 December, 2001
The board of Full Circle and the Independent Directors of Capital Bars jointly
announce that they have agreed the terms of a recommended cash offer to be
made by Davy Corporate Finance Limited on behalf of Full Circle, to acquire
the entire issued and to be issued ordinary share capital of Capital Bars (the
'Offer').
* The Offer will be 21 pence in cash for each Ordinary Share, valuing the
issued share capital of Capital Bars at approximately #7.1 million and the
Enlarged Share Capital at approximately #12 million.
* The Offer represents a premium of approximately 56% to the mid-market
price per share of 13.5 pence at the close of business on 16 November 2001
(being the last Business Day prior to the commencement of the Offer
Period).
* Full Circle has received irrevocable undertakings to accept the Offer in
respect of 16,062,791 Capital Bars Shares representing approximately 48%
of the existing issued ordinary share capital of Capital Bars as at 6
December, 2001. These undertakings cease to be binding in the event of a
competing offer for Capital Bars being made before 28 December, 2001 and
being recommended by Mr. Robert Gunlack and Mr. Robert Breare.
* Capital Bars Shareholders accepting the Offer may elect to receive Euro
Loan Notes as an alternative to cash as consideration.
* Full Circle is an Irish incorporated public limited company, recently
formed for the purpose of making the Offer and is wholly owned and
controlled by Mr. William O'Dwyer, who is currently chief executive of
Capital Bars and Mr. Desmond O'Dwyer, a non-executive Director of Capital
Bars.
Independent Directors' Recommendation
The Independent Directors, who have been so advised by ING Barings, consider
the terms of the Offer to be fair and reasonable. In providing advice to the
Independent Directors, ING Barings has taken into account the Independent
Directors' commercial assessments. The Independent Directors unanimously
recommend all Capital Bars Shareholders to accept the Offer, as they intend to
do in respect of their own beneficial holdings of Capital Bars Shares,
comprising in aggregate 56,000 Capital Bars Shares, representing approximately
0.17% of Capital Bars' existing issued ordinary share capital.
The conditions and certain further terms of the Offer are set out in Appendix
I of the full text of this announcement. Appendix II hereof contains
information on the Euro Loan Note Alternative. Appendix III hereof contains
information on certain sources and bases of information used herein. Appendix
IV hereof contains definitions of certain expressions used in this
announcement.
This summary should be read in conjunction with, and is subject to, the text
of the full announcement which is attached.
Enquiries
For Davy Corporate Finance Limited
Mr. Ivan Murphy
Director
Telephone: 00 353 (0)1 679 6363
For ING Barings Limited
Mr. Ben Money-Coutts
Director
Telephone: 00 44 (0)207 767 5700
Mr. Robert MacKay
Vice President
Telephone: 00 44 (0)207 767 5706
The Offer will not be made, directly or indirectly, in or into, or by use of
the mails or by any means or instrumentality (including without limitation,
facsimile transmissions, telex or telephone) of interstate or foreign
commerce, or of any facility of a national securities exchange of, the United
States, nor will it be made in or into Canada, Australia or Japan and the
Offer cannot be accepted by any such use, means, instrumentality or facility
from or within the United States, Canada, Australia or Japan. Accordingly,
copies of this announcement or any related offer documents are not being and
may not be transmitted or otherwise distributed or sent in, into or from the
United States, Canada, Australia or Japan. All persons receiving this
announcement (including nominees, trustees and custodians) who may have a
contractual or legal obligation (or may otherwise intend) to forward it into
any jurisdiction outside Ireland and the United Kingdom, may not mail or
otherwise forward or distribute it into or from the United States, Canada,
Australia or Japan. Notwithstanding the foregoing restrictions, Full Circle
will reserve the right to permit the Offer to be accepted from such
jurisdictions, if in its sole discretion, it is satisfied that the transaction
in question is exempt from or not subject to the legislation or regulation
giving rise to the restrictions in question.
Davy Corporate Finance Limited, which is authorised by the Central Bank of
Ireland, is acting exclusively for Full Circle and for no one else in
connection with the Offer and will not be responsible to anyone other than
Full Circle for providing the protections afforded to customers of Davy
Corporate Finance Limited or for providing advice in relation to the Offer.
ING Barings Limited, which is regulated by The Financial Services Authority,
is acting exclusively for the Independent Directors and for no one else in
connection with the Offer and will not be responsible to anyone other than the
Independent Directors for providing the protections afforded to customers of
ING Barings nor for providing advice in relation to the Offer.
This announcement has been duly approved by Davy Corporate Finance Limited for
the purposes of Section 21 of the Financial Services and Markets Act 2000 of
the United Kingdom.
Responsibility Statements
a. The directors of Full Circle accept responsibility for the information
contained in this announcement other than that relating to the Capital
Bars Group and the directors of Capital Bars, their immediate families,
related trusts and persons connected with them and the recommendation and
associated opinions from the Independent Directors 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.
b. The Directors of Capital Bars accept responsibility for the information
contained in this announcement relating to the Capital Bars Group,
themselves, their immediate families, related trusts and persons connected
with them but, save as set out below, are not responsible for the
recommendation and associated opinions from the Independent Directors in
this announcement, for which only the Independent Directors accept
responsibility as specified in paragraph (c) below. 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.
c. The Independent Directors accept responsibility for their views and
opinions set out in this announcement, including their recommendation of
the Offer. 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.
* * * *
Not for release, publication or distribution in whole or in part in or into
the United States, Canada, Australia or Japan.
RECOMMENDED CASH OFFER FOR CAPITAL BARS PLC ('Capital Bars')
BY DAVY CORPORATE FINANCE LIMITED
on behalf of
FULL CIRCLE INVESTMENTS PLC ('Full Circle'),
a company owned and controlled by Messrs. William and Desmond O'Dwyer
7 December, 2001
1. Introduction
The board of Full Circle and the Independent Directors of Capital Bars jointly
announce that they have agreed the terms of a recommended cash offer to be
made by Davy Corporate Finance Limited on behalf of Full Circle, to acquire
the entire issued and to be issued ordinary share capital of Capital Bars.
The Offer will be 21 pence in cash for each Ordinary Share, valuing the issued
share capital of Capital Bars at approximately #7.1 million and the Enlarged
Share Capital at approximately #12 million.
Full Circle also announces that the document containing the formal Offer and
the Form of Acceptance to Capital Bars Shareholders will be despatched today.
2. Independent Directors' Recommendation
The Independent Directors, who have been so advised by ING Barings, consider
the terms of the Offer to be fair and reasonable. In providing advice to the
Independent Directors, ING Barings has taken into account the Independent
Directors' commercial assessments. The Independent Directors unanimously
recommend all Capital Bars Shareholders to accept the Offer, as they intend to
do in respect of their own beneficial holdings of Capital Bars Shares,
comprising in aggregate 56,000 Capital Bars Shares, representing approximately
0.17% of Capital Bars' existing issued ordinary share capital.
3. The Offer
The Offer, which will be subject to the conditions and further terms set out
below, in Appendix I, in the Offer Document and in the Form of Acceptance,
will be made on the following basis:
for each Capital Bars Share 21 pence in cash
The Offer represents a premium of approximately 56% to the mid-market price
per share of 13.5 pence at the close of business on 16 November 2001 (being
the last Business Day prior to the commencement of the Offer Period).
The Offer values the issued share capital of Capital Bars at approximately #
7.1 million and the Enlarged Share Capital at approximately #12 million.
Capital Bars Ordinary Shares will be acquired under the Offer fully paid and
free from all liens, charges, equities, encumbrances, rights of pre-emption
and other third party rights and other interests of any kind whatsoever and
together with all rights attaching thereto on the date hereof including,
without limitation, the right to receive and retain all dividends and other
distributions, announced, declared, made or paid hereafter.
4. The Euro Loan Note Alternative
As an alternative to any or all of the cash consideration of 21p per Ordinary
Share that would otherwise be payable under the Offer, accepting Shareholders
(other than certain Overseas Shareholders) may elect to receive Euro Loan
Notes to be issued on the following basis:
For every #1 of cash consideration EUR 1.5949 nominal of Euro Loan Notes
The Euro Loan Notes will be issued by Full Circle, credited as fully paid, in
integral multiples of EUR 1 nominal amount; all fractional entitlements will
be rounded down to the nearest euro. The Sterling value of the cash
consideration was converted into euro amounts at the exchange rate of EUR 1:
62.7p prevailing on 5 December 2001, being the last practicable date prior to
this announcement. The Euro Loan Notes will be redeemable at any time within 2
years of issue at the option of Full Circle. If not redeemed within 2 years,
the Euro Loan Notes become repayable in full on the second anniversary of
their issue. The Euro Loan Notes will bear a zero coupon and will carry a
premium on redemption of 4% if redeemed within the first 12 month period and
of 8% if redeemed within the second 12 month period. The Euro Loan Notes will
not be secured or guaranteed. The Euro Loan Notes will not be transferable. No
application has been made, nor is it intended that one should be made, to any
stock exchange for the Euro Loan Notes to be listed or otherwise traded.
Summary terms of the Euro Loan Notes are set out in Appendix II hereof.
Davy Stockbrokers has advised that, based on current market conditions, the
estimated value of the Euro Loan Notes, if they had been issued on 6 December,
2001, being the last practicable dealing day prior to this announcement, would
have been approximately 91c per EUR 1 nominal value.
The Euro Loan Note Alternative is conditional on the Offer becoming or being
declared unconditional in all respects, and will remain open for election for
so long as the Offer remains open for acceptance.
5. Irrevocable Undertakings to accept the Offer
Full Circle has received irrevocable undertakings to accept the Offer in
respect of 16,062,791 Capital Bars Shares representing approximately 48% of
the existing issued ordinary share capital of Capital Bars as at 6 December,
2001. These undertakings cease to be binding in the event of a competing offer
for Capital Bars being made before 28 December, 2001 and being recommended by
Mr. Robert Gunlack and Mr. Robert Breare.
6. Preliminary results for the year ended 30 September 2001
The Company announced today its preliminary audited results for the year ended
30 September 2001.
Turnover from continuing operations for the 12 months ended 30 September 2001
was EUR 42.7 million as compared to EUR 41.0 million for the 18 months ended 2
October 2000. The underlying increase for the 12 month period was 30%. The
operating profit from continuing operations was EUR 0.9 million (EUR 2.2
million for the 18 months ended 2 October 2000) and the loss attributable to
Shareholders was EUR 0.1 million (EUR 3 million for the 18 months to 2
October, 2000). No dividend on the Ordinary Shares has been paid or
recommended in respect of the year.
As at 30 September 2001, the Group's net assets were EUR 23.6 million
including EUR 19.5 million goodwill. Net borrowings at that date were EUR 19
million or EUR 22.0 million including the 8.75% preference shares which were
due for redemption on 1 July 2001 and which have been redeemed today.
Significant investment has been made during the year in the Group's estate,
primarily on the redevelopment of Cafe en Seine (opened on 30 November 2001)
and Sosume (opened 2 June 2001) and the refurbishment of the Savannah
night-club. Apart from Planet Hollywood, which is currently closed and may be
either sold or redeveloped, the Group has no further developments in the
pipeline.
The Directors believe that, with the development of the Group's estate now
largely complete, the contribution from the new units should lead to a
material improvement in the overall trading of the Group. The Directors also
believe that the combination of the cash flows from the Group's operating
assets and a lower level of capital expenditure going forward should lead to a
reduction in the Group's borrowings over time.
7(a). Background to and Reasons for the Offer
The Capital Bars Group has delivered a poor trading performance for a number
of years. In order to help address this issue, the Board disposed of Capital
Bars' loss making UK activities in October 2000 to focus on the Dublin bar,
restaurant and hotel market. Unfortunately, as shown by the preliminary
statement of results for the year ended 30 September, 2001 announced today,
the Group has experienced challenging trading conditions in the Dublin market
during the past year and there are signs that the tourism and leisure sector
in which the Group operates is likely to continue to be difficult in the short
term.
The Group's poor trading has impacted negatively on the share price
performance. This has been compounded by the stock's lack of liquidity and
concentration of ownership in relatively few hands, factors which the
Directors believe are likely to remain over the long term. A further 23.5
million Ordinary Shares are due to be issued following the completion of the
acquisition of the O'Dwyer interests in certain pubs, bars and restaurants in
Dublin. As a result the O'Dwyers will control, directly or indirectly, 44% of
the Enlarged Share Capital of Capital Bars.
In these circumstances, and taking into account the Company's small market
capitalisation, the Board has concluded that the aggregate costs of being a
listed public company outweigh the benefits for Capital Bars and that
shareholder value could best be maximised by selling the Company.
The Independent Directors consider the terms of the Offer to be fair and
reasonable and unanimously recommend all Capital Bars Shareholders to accept
the Offer, as they intend to do in respect of their own beneficial holdings of
Capital Bars Shares, comprising in aggregate 56,000 Capital Bars Shares,
representing approximately 0.17% of Capital Bars' existing issued ordinary
share capital.
Acceptance of the Offer allows Shareholders to crystallise the value in their
Ordinary Shares at a price which represents a significant premium to the
middle market price per share of 13.5 pence at the close of business on 16
November 2001 (being the last Business Day prior to the commencement of the
Offer Period).
7(b). Background to and Reasons for the Independent Directors' Recommendation
of the Offer
Consistent with the conclusion of the full Board, as outlined above, that
shareholder value could best be maximised by selling the Company, the
Independent Directors, in recommending the Offer, have had regard to the
concentration of ownership of the Company's Ordinary Shares and that the Offer
represents a significant premium to Capital Bars' share price prior to the
announcement that the Group had received an approach from certain members of
the management team.
8. Information on Full Circle and the financing of the Offer
Full Circle is a public limited company, recently incorporated in Ireland and
established specifically for the purpose of making the Offer for Capital Bars.
Messrs William and Desmond O'Dwyer own all of the issued share capital of Full
Circle and are the only directors. Full Circle has not traded since its
incorporation nor has it entered into any obligations other than in connection
with the Offer and the financing of the Offer.
The consideration for the Offer comprises cash and/or unsecured Euro Loan
Notes. The cash consideration and expenses of the Offer will be satisfied by a
loan denominated in euro but equivalent at the date of draw down to #6.5
million from Anglo Irish Bank Corporation plc ("Anglo Irish Bank").
The loan from Anglo Irish Bank is repayable on or before 31 May, 2002.
Interest is set at the aggregate of 3% above Euribor plus Reserve Asset Cost
and is payable monthly. The repayment and the interest on the loan to Anglo
Irish Bank does not depend to any significant extent on the business of
Capital Bars.
William and Desmond O'Dwyer and others have irrevocably agreed to accept Euro
Loan Notes in lieu of cash consideration due to them under the Offer. The
total value of these irrevocables is approximately #1.0 million. The Euro Loan
Notes are repayable at Full Circle's discretion at any time within the 24
months following issue.
9. Information on Capital Bars
The Capital Bars Group's principal activity is the operation of bars, hotels
and restaurants in the Republic of Ireland. The Group operates 13 individually
themed bars/restaurants and 3 hotels in Dublin's city centre. Each unit is
designed and operated to attract a different market segment. The majority of
the bars have capacities in excess of 1,000 people.
Bars
The Capital Bars Group operates the following bars:
Break for the Border
Major Toms Down Under
O'Dwyers
The George
Zanzibar
Savannah Cafe Bar/Club
Sinnotts
Planet Hollywood*
Fireworks
Coyote Lounge
Bobs
Cafe en Seine
Sosume
*(Closed 5 November, 2001, pending redevelopment)
Hotels
The Capital Bars Group operates the following 3 hotels, consisting of a total
of 214 bedrooms, under its Capital Hotels brand:
Trinity Capital (85 bedrooms)
Grafton Capital (75 bedrooms)
Rathmines Capital (54 bedrooms)
All of the units are operated under leasehold.
The Capital Bars Group employed an average of 696 people in the year ended 30
September, 2001.
10. Full Circle's intentions in relation to the Capital Bars Group
Full Circle intends to continue the business of the Capital Bars Group broadly
in its current form. There are no present intentions regarding any major
changes to be introduced to the business.
11. Board, Management and Employees
Full Circle has given assurances to the Independent Directors that, on the
Offer becoming or being declared unconditional in all respects, the existing
employment rights, including pension rights, of the employees of the Capital
Bars Group will be fully safeguarded.
The Independent Directors will resign from the board of Capital Bars if the
Offer becomes or is declared unconditional in all respects.
12. Capital Bars Long Term Incentive Plan
The Offer extends to any Capital Bars Shares that are unconditionally allotted
or issued pursuant to the exercise of existing options under the Capital Bars
Long Term Incentive Plan on or before the date on which the Offer closes (or
such earlier date as Full Circle may, subject to the Code, decide. Proposals
will be put to holders of options in respect of their outstanding options in
due course. There are a total of 2,100,000 options granted and unexercised at
the date of this announcement under the Capital Bars Long Term Incentive Plan
and parallel arrangements.
13. General
a. The availability of the Offer to persons not resident in the UK or in
Ireland may be affected by the laws of the relevant jurisdiction. Any
persons who are subject to the laws of any jurisdiction other than the UK
or Ireland should inform themselves about and observe any applicable
requirements.
b. If the Offer becomes or is declared unconditional in all respects, and if
sufficient acceptances are received, Full Circle intends to apply the
provisions of sections 428 to 430F of the Companies Act 1985 to acquire
compulsorily any outstanding Capital Bars Shares not acquired or agreed to
be acquired pursuant to the Offer or otherwise.
c. It is Full Circle's intention that, following the Offer becoming or being
declared unconditional in all respects and subject to the applicable
requirements of the Irish Stock Exchange and the UK Listing Authority,
Capital Bars will apply to the London Stock Exchange for trading in
Capital Bars Shares to be cancelled and to the UK Listing Authority and to
the Irish Stock Exchange for the Capital Bars Shares to be delisted. It is
anticipated that such cancellation and delisting will take effect no
earlier than 20 Business Days after the date the Offer becomes or is
declared unconditional in all respects. It is also intended that Capital
Bars will be re-registered as a private company.
d. The Conditions of the Offer are set out in Appendix I; information on the
Euro Loan Note Alternative is set out in Appendix II; the sources and
bases of the information set out in this announcement are set out in
Appendix III and the definitions of certain expressions used in this
announcement are contained in Appendix IV.
e. This announcement does not constitute an offer or an invitation to purchase
any securities or an offer to sell any securities.
f. The Offer will not be made, directly or indirectly, in or into, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmissions, telex or telephone) of interstate or
foreign commerce, or of any facility of a national securities exchange of,
the United States, nor will it be made in or into Canada, Australia or
Japan and the Offer cannot be accepted by any such use, means,
instrumentality or facility from or within the United States, Canada,
Australia or Japan. Accordingly, copies of this announcement or any
related offering documents are not being and may not be transmitted or
otherwise distributed or sent in, into or from the United States, Canada,
Australia or Japan. All persons receiving this announcement (including
nominees, trustees and custodians) who may have a contractual or legal
obligation (or may otherwise intend) to forward it into any jurisdiction
outside the United Kingdom and Ireland, may not mail or otherwise forward
or distribute it into or from the United States, Canada, Australia or
Japan. Notwithstanding the foregoing restrictions, Full Circle will
reserve the right to permit the Offer to be accepted, if in its sole
discretion, it is satisfied that the transaction in question is exempt
from or not subject to the legislation or regulation giving rise to the
restrictions in question.
g. Full Circle does not currently have any shareholding in Capital Bars. J&E
Davy trading as Davy Stockbrokers, Davy Corporate Finance Limited, Hobson
Audley, and Reddy Charlton McKnight are deemed to be acting in concert
with Full Circle but do not own or control any Capital Bars Shares.
Together with their immediate families, William and Desmond O'Dwyer, the
directors of Full Circle, own or control 7.8% of the issued share capital
of Capital Bars and, taking into account Capital Bars Shares due to be
issued to them under the terms of the 1999 Agreements, the total would
rise to 44.4%, ignoring the dilutive effect of options which may be
exercised under the Capital Bars Long Term Incentive Plan or parallel
arrangements.
h. If any person during the Offer Period owns or controls (directly or
indirectly) 1% or more of the issued share capital of Capital Bars or, as
a result of any transaction will so own or control 1% or more, dealings in
such shares by such person (or other person through whom ownership or
control is derived) must be publicly disclosed to the London Stock
Exchange, in accordance with the requirements of the Code, no later than
12 noon on the Business Day following the date of the transaction.
14. Responsibility
a. The directors of Full Circle accept responsibility for the information
contained in this announcement other than that relating to the Capital
Bars Group and the directors of Capital Bars, their immediate families,
related trusts and persons connected with them and the recommendation and
associated opinions from the Independent Directors 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.
b. The Directors of Capital Bars accept responsibility for the information
contained in this announcement relating to the Capital Bars Group,
themselves, their immediate families, related trusts and persons connected
with them but, save as set out below, are not responsible for the
recommendation and associated opinions from the Independent Directors in
this announcement, for which only the Independent Directors accept
responsibility as specified in paragraph (c) below. 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.
c. The Independent Directors accept responsibility for their views and
opinions set out in this announcement, including their recommendation of
the Offer. 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.
Davy Corporate Finance Limited, which is authorised by Central Bank of
Ireland, is acting exclusively for Full Circle and for no one else in
connection with the Offer and will not be responsible to anyone other than
Full Circle for providing the protections afforded to customers of Davy
Corporate Finance Limited or for providing advice in relation to the Offer.
ING Barings Limited, which is regulated by The Financial Services Authority,
is acting exclusively for the Independent Directors and for no one else in
connection with the Offer and will not be responsible to anyone other than the
Independent Directors for providing the protections afforded to customers of
ING Barings nor for providing advice in relation to the Offer.
Enquiries
For Davy Corporate Finance Limited
Mr. Ivan Murphy
Director
Telephone: 00 353 (0)1 679 6363
For ING Barings Limited
Mr. Ben Money-Coutts
Director
Telephone: 00 44 (0)207 767 5700
Mr. Robert MacKay
Vice President
Telephone: 00 44 (0)207 767 5706
APP
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