PGI Pgi Grp

    RNS Number : 9058X
  PGI Group PLC
  30 June 2008
   

    30 June 2008

    PGI Group PLC

    Proposed transaction with a director, possible purchase by the Company of its own securities and resignation of a director
    The directors of PGI Group PLC ("PGI" or the "Company") announce that they have signed a conditional agreement with Mr. S. W. Wayne
("Mr. Wayne"), a director of the Company, which will, subject to shareholder approval, have the following effects:
    *     Mr. Wayne will resign as the Chief Executive of PGI, but will remain chief executive of the Jensen Group;
    *     PGI will retain its current interest in the existing Jensen Group companies;
    *     PGI will release Mr. Wayne and his connected companies from substantially all their obligations not to compete with the business
of the Jensen Group and will not have any entitlement to an interest in the management of any future property funds which may be raised by
Mr. Wayne (subject to paragraph (iv) below);
    *     PGI will have an option to take a 20 per cent. equity interest (which would be protected from dilution) in each of the management
company, the general partner and the carried interest partner of a new fund which the Jensen Group has been preparing to raise (the
"Proposed New Fund");
    *     in consideration for the release of Mr. Wayne and his connected companies from the obligations described above, Mr. Wayne will
procure that Jensen Group Holdings LLC ("Jensen Holdings"), which is connected with Mr. Wayne, will, following shareholder approval of the
transaction, endeavour to sell the 9,200,000 ordinary shares which it holds in PGI in a private placing to be arranged by PGI's brokers,
Panmure Gordon, and will pay to PGI a sum equal to half of the net proceeds of the sale of PGI's shares as are so placed; 
    *     if any shares held by Jensen Holdings in the Company are not sold in the placing described in (v) above, Jensen Holdings shall, in
addition to the payment referred to in (v), sell to the Company for a total aggregate consideration of �1 one half of the unplaced shares in
accordance with a contingent purchase contract to be entered into between Jensen Holdings and the Company (the "Contingent Purchase
Contract"); and
    *     following the placing described in (v) above and the sale of shares to the Company described in (vi), Mr. Wayne shall, in the
interests of the maintenance of an orderly market in the shares of the Company, only sell shares through Panmure Gordon.
    Further details of the transaction are set out below.
    Changes to the PGI Board
    On completion of the proposed transaction Mr. Wayne shall resign as a director and Chief Executive of the Company, but will remain the
chief executive of the Jensen Group. On his resignation, the Board intends to appoint Mr. S.S. Hobhouse, who is currently an executive
director of the Company, as its Chief Executive.

    Background and summary of the proposed transaction

    In April 2005, the Company acquired from Mr. Wayne an 80 per cent. interest in the Jensen Group (consisting of a number of separately
held entities operated by Mr. Wayne) in return for a consideration of 9.2 million ordinary shares of the Company. The business of the Jensen
Group involves real estate investment management and development in Russia. Shortly after completion of that transaction, Mr. Wayne became
Chief Executive of the Company.
    In conjunction with the acquisition of the Jensen Group, the Company entered into a consultancy agreement with Mr. Wayne and Jensen
Management LLC, a company owned by Mr. Wayne, (the "Consultancy Agreement") under the terms of which Jensen Management agreed to provide the
services of Mr. Wayne as chief executive of the Jensen group (and certain other services) to the Company and Mr. Wayne guaranteed the
obligations of Jensen Management. In addition, Jensen Management and Mr. Wayne undertook not (subject to certain exceptions) to engage in
any business activities in direct or indirect competition with the PGI group.
    At the same time, the Company entered into a shareholders' agreement with Mr. Wayne (the "Shareholders' Agreement") pursuant to which
the parties agreed certain aspects of the arrangements for Mr. Wayne's service as chief executive of the Jensen Group. Pursuant to the
Shareholders' Agreement, Mr. Wayne undertook not to be directly or indirectly engaged or interested in any business in direct competition
with the business of Jensen Group during the term of, or for 12 months after the termination of, the Consultancy Agreement. In addition, it
gives the Company an option to purchase Mr. Wayne's holding in the Jensen Group in certain circumstances (including on the termination of
the Consultancy Agreement) and it gives Mr. Wayne an option to require the Company to purchase his holding in certain other circumstances. 
    As part of the acquisition of Jensen Group, it was envisaged by the Board that Mr. Wayne would raise additional property funds that
would be managed by the Jensen Group, and that PGI would (through its shareholding in Jensen Group) be entitled to the major share of the
annual management fees and carried interest derived from managing each of the new property funds.
    In 2006 the Jensen Group formed a fund to invest in Russian real estate ("Fund 1"), which it currently manages. The Company is currently
entitled to approximately 75 per cent. of the management fees and carried interest derived from Fund 1 (which would fall to around 70 per
cent. on the vesting of outstanding options which have been granted to senior managers of the Jensen Group). In addition, the Jensen Group
is currently preparing to raise the Proposed New Fund, although at this stage there is no certainty that this will proceed.
    The Board had assumed that the Jensen Group would continue to hold an equivalent stake in the companies managing any new property funds
which might be raised. However, it has become clear that, in order to incentivise the local management team in Russia, it would be necessary
to provide them with a significantly greater share of the equity in the management companies of the funds than they have in relation to the
management of Fund 1. The Board does not consider that on a long-term basis it would be in the Company's interests to allow its equity
interest in future management companies to be diluted in this way.

    Accordingly, the Company has entered into an agreement with Mr. Wayne, Jensen Management and other companies connected with Mr. Wayne,
conditional upon the Company obtaining shareholder approval of the transaction, under which the Company shall release Mr. Wayne and his
connected companies from obligations under the Shareholders' Agreement and the Consultancy Agreement which would otherwise prohibit them
from taking the steps necessary in raising the Proposed New Fund. Following the proposed transaction the Company will retain its current
interest in the existing Jensen Group companies including its interest in the management fees and carried interest derived from Fund 1. The
Company shall also be granted an option to take a 20 per cent. equity interest (which would be protected from dilution) in each of the
management company, the general partner and the carried interest partner of the Proposed New Fund.

    In consideration for the release of Mr. Wayne and his connected companies from the obligations described above, Mr. Wayne will, after
the transaction has been approved by the Company's shareholders, endeavour to sell the 9,200,000 ordinary shares which he holds (through
Jensen Group Holdings LLC) in the Company in a private placing to be arranged by PGI's brokers, Panmure Gordon, and will pay a sum equal to
half of the net proceeds of the sale to the Company. In the event that Mr. Wayne does not place all of his shares he shall pay to the
Company one half of the net proceeds of the sale of such shares which are sold and, additionally, he shall sell to the Company for a total
aggregate consideration of �1 one half of the unplaced shares in accordance with a contingent purchase contract to be entered into between
Jensen Group Holdings LLC and the Company (the "Contingent Purchase Contract"). The Company intends to hold any such shares it purchases in
treasury.  

    Mr. Wayne has agreed with the Company that, in the interests of the maintenance of an orderly market in the shares of the Company, any
shares which he or his connected companies hold in the Company shall only be sold through Panmure Gordon.

    Current Trading
    The Company issued its first Interim Management Statement on 15 May 2008. Since that date there have been no material events or
transactions affecting the Group and no significant change in the Group's financial position or performance.
    Shareholder approval and General Meeting

    As the proposed transaction with Mr. Wayne involves (i) a transaction with a director and (ii) a purchase by the Company of its own
shares, the transaction requires the approval of the Company's shareholders in general meeting. The proposed transaction is conditional upon
the Company obtaining such approval.

    A transaction with a director requires approval by ordinary resolution of the shareholders. The Contingent Purchase Contract under which
the Company is to have the right to purchase shares in the Company held by Jensen Holdings in the circumstances described above requires the
prior approval of the shareholders by special resolution

    Accordingly, a General Meeting of the Company has been convened for 2.00 p.m. on 24 July 2008 at the Company's registered office at 81
Carter Lane, London EC4V 5EP at which the resolutions necessary to approve the proposed transaction will be proposed.

    The special resolution to approve the entry by the Company into the Contingent Purchase Contract shall be conditional upon the passing
of the ordinary resolution to confirm shareholders' approval of the Proposed Transaction.

    The directors of the Company believe that the proposed transaction is in the best interests of the Company and its shareholders as a
whole. The directors of the Company (other than Mr. Wayne who has undertaken not to vote on account of his interest in the resolutions) will
recommend shareholders to vote in favour of the resolutions required to enable the proposed transaction to proceed, as the directors (save
for Mr. Wayne) and persons connected with them intend to do in respect of the 86,312,533 Ordinary Shares (approximately 66.60 per cent. of
the current issued Ordinary Share capital) in respect of which they are entitled to exercise the voting rights. Mr. S.N. Roditi, a director
of the Company, has irrevocably undertaken to vote in favour of the resolutions in respect of the 85,192,323 Ordinary Shares (approximately
65.73 per cent. of the current issued Ordinary Share capital) in respect of which he is entitled to exercise voting rights. 

    Enquiries:

 PGI                               020 7236 6135
 Geoff Moores, Financial Director

 Panmure Gordon                    020 7459 3600
 Andrew Potts, Corporate Finance
 Tom Nicholson, Corporate Broking



This information is provided by RNS
The company news service from the London Stock Exchange
 
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