TIDMJLH
RNS Number : 0183Z
John Lewis Of Hungerford PLC
11 May 2023
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
10 May 2023
John Lewis of Hungerford plc
(the "Company")
Sale and leaseback of property, intention to seek cancellation
of trading on AIM and intention to undertake a tender offer to buy
back shares in the Company.
Sale of property and lease back
John Lewis of Hungerford Plc (AIM: JLH), the specialist
manufacturer and retailer of kitchens, bedrooms and freestanding
furniture, is pleased to announce the successful exchange of
contracts of a sale and leaseback transaction in respect of its
freehold purpose-built factory and administrative headquarters in
Wantage, Oxfordshire (the " Property ").
TOF Corporate Trustees Limited (" TOF Corporate Trustees ") ,
which is the Oxford Endowment Fund, a commercial subsidiary of the
University of Oxford , has agreed to pay a total net cash
consideration of GBP3.0 million for the Property. This is
significantly higher than the Property's net book value of GBP2.2
million in the Company's balance sheet at 30 June 2022, following a
formal revaluation exercise completed during the audit in November
2022. The Company expects to complete on the transaction within two
weeks and the gross proceeds are expected to be received by the
Company at this time. The Company has agreed a protected lease with
TOF Corporate Trustees, pursuant to which the Company will lease
the Property for an initial term of 15 years and the Company will
retain the security of tenure and the right to renew. The annual
rent payable by the Company pursuant to the lease will be
GBP192,000.
On 30 June 2020 the Company announced it had entered into a
financing facility with Devon & Cornwall Securities Limited for
GBP1.079 million (the "Facility"), which was drawn down
immediately. This Facility was secured against the Property.
GBP1.079 million of the net proceeds receivable by the Company
(expected to be GBP2.95 million after legal and agents fees) will
be used to redeem the Facility, together with approximately
GBP50,000 of early repayment penalties. In line with current rates
of inflation, the interest rate on the Facility is currently close
to 15%. The interest saved as a result of the sale and leaseback of
the Property, together with expected rates of interest earned on
the funds, will largely offset the rent payable on the new lease,
with the Company's balance sheet materially strengthened.
A portion of the funds received will support the Company's
strategic development plan targeted at growing the Company's
business . This will include funding upgrades to capital assets,
ensuring the Company can continue its high standard of delivery to
its customers, together with a review of the showroom
portfolio.
Intention to seek the cancellation from trading on AIM
The Company also announces that it intends to seek shareholder
approval for the cancellation of the Company's ordinary shares from
trading on AIM ("Cancellation"). The Directors consider that the
limited free float and liquidity of its ordinary shares, together
with costs associated with having the Company's shares admitted to
trading on AIM ("Admission") are not commensurate with the
associated benefits of Admission to the Company.
The considerable cost associated with maintaining the Company's
admission to trading on AIM (such as nominated adviser and broker
fees, London Stock Exchange fees and the costs associated with
being a quoted company in having higher level corporate governance
and audit scope) are, in the Directors' opinion, disproportionately
high, compared to the benefits. The Board have identified circa
GBP250,000 of direct costs related to Admission.
The Board further believes that the additional indirect costs
associated with management time invested in the legal and
regulatory burden associated with maintaining Admission is, in the
Directors' opinion, disproportionate to the benefits to the
Company.
The Company intends to convene a general meeting shortly, at
which it will propose a resolution to approve the Cancellation in
accordance with Rule 41 of the AIM Rules for Companies. For
Cancellation to become effective, the Company will require not less
than 75% of the votes cast by shareholders on the resolution at the
general meeting to be in favour of approving the Cancellation. A
circular setting out, inter alia, the rationale for seeking
Cancellation, along with a notice of general meeting, will be
prepared by the Company and posted to shareholders in due course.
Following the proposed Cancellation, the Company intends to
re-register as a private limited company.
Share buyback through a tender offer
Once re-registered as a private limited company, the Company
intends to undertake a share buyback through the implementation of
a tender offer through which the Company will offer to purchase, as
principal, the Company's shares so as to provide those shareholders
who wish to sell shares in the Company the opportunity to do so.
Any shares successfully tendered for, would be subsequently
cancelled. In order to return surplus cash to shareholders by way
of a tender offer, the Company will need to undertake a capital
reorganisation involving the reduction of the share premium account
and revaluation reserves of the Company, and the creation of
distributable reserves. Once the capital reorganisation is
completed, the revised capital structure will need to be formally
audited. The Company expects to complete the tender offer following
the conclusion of the year-end audit.
The Directors currently anticipate that any tender offer made
would be for approximately 10 per cent of the Company's ordinary
shares, around 1.5p per share, reflecting the Company's average
share price over the most recent 4-week period. The Directors and
several of the largest shareholders have indicated that they do not
intend to tender their shares.
With the Board focused on returning the business to sustained
profitability, the Company expect to improve this further through
the cost savings made from Cancellation, together with a materially
improved balance sheet. It is the intention of the Company to
distribute a proportion of its profits on an ongoing basis in
future years through a combination of further tender offers and/or
dividend payments. The Company also intends to introduce a matched
bargain system, to help facilitate purchases or sales of shares
once a private company.
Further announcements will be made in due course.
Kiran Noonan, Chief Executive Officer and acting Chairman,
commented:
"The sale and leaseback transaction with TOF Corporate Trustees
secures a strong strategic partnership with a fund committed to
developing the Grove Business Park. As the Company continues to
grow, we look forward to working closely with TOF Corporate
Trustees to develop our property requirements over the coming
years.
"The proposed cancellation of trading in our shares on AIM is a
key part of the Board's plan to ensure management time is
exclusively focused on the progress of the Company."
Enquiries:
John Lewis of Hungerford plc
Kiran Noonan - Chief Executive Officer and
Acting Chairman 01235 774300
Allenby Capital Limited (Nominated Adviser
and Broker)
Nick Naylor / George Payne (Corporate Finance)
Matt Butlin / Amrit Nahal (Sales and Corporate
Broking) 020 3328 5656
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END
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May 11, 2023 02:00 ET (06:00 GMT)
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