TIDMPNE
RNS Number : 0728N
Preston North End PLC
04 June 2010
Not for release, publication or distribution in whole or in part in or into the
United States, Canada, Australia or Japan or any jurisdiction if to do so would
constitute a violation of the relevant laws of such jurisdiction.
Preston North End Plc
("PNE" or the "Company")
Rule 2.5 Announcement
Mandatory Offer under Rule 9 of the City Code, by way of Cash Offer, to acquire
shares in PNE to be made by Deepdale PNE Holdings Limited.
1. Introduction
Deepdale PNE Holdings Limited ("DPNE" or "Offeror") has today acquired certain
ordinary shares of GBP1 each in the capital of PNE ("Ordinary Shares" or
"Shares"), at a price of 5p per Ordinary Share, from the following shareholders:
+---------------------+---------------------+---------------------+
| Shareholder Name | Number of Shares |Consideration (GBP) |
+---------------------+---------------------+---------------------+
| Guild Ventures | 923,765 | 46,188.25 |
| Limited | | |
+---------------------+---------------------+---------------------+
| Friends of Preston | 687,497 | 34,374.85 |
| North End Limited* | | |
+---------------------+---------------------+---------------------+
| Ribble Valley | 24,222 | 1,211.10 |
| Shelving Limited** | | |
+---------------------+---------------------+---------------------+
| Derek Shaw & | 24,768 | 1,238.40 |
| Gillian Platt Sun | | |
| Trust Limited*** | | |
+---------------------+---------------------+---------------------+
| Derek Shaw | 1,120 | 56.00 |
+---------------------+---------------------+---------------------+
| H R Sutton | 33,064 | 1,653.20 |
+---------------------+---------------------+---------------------+
* Derek Shaw, a director of the Company, has an interest in 33% of the shares
held by Friends of Preston North End Limited, being 229,166 Ordinary Shares in
the Company
** Derek Shaw, a director of the Company, is beneficially interested in all the
shares held by Ribble Valley Shelving Limited.
*** Derek Shaw is a director of the Company
DPNE now holds 1,694,436 Ordinary Shares representing 51.41% of the total issued
share capital of the Company.
Under Rule 9 of the City Code, as DPNE holds more than 29.9% of the issued share
capital of the Company, DPNE is obliged to make a mandatory unconditional offer
for the Shares not already held by it at a price of 5 pence per Share in cash,
being a price not less than the highest price paid for the Shares by DPNE, in
the 12 months prior to the announcement of such mandatory offer.
DPNE is wholly owned and controlled by Grovemoor Limited, a company registered
in the Isle of Man. Both Grovemoor Limited and Guild Ventures Limited ("Guild")
are ultimately owned by the Hemmings family interests (including interests of
Trevor Hemmings).
The definitions of capitalised terms used in this announcement are contained in
the Appendix to this announcement.
2. Terms of the Offer
Under the terms of the Offer (and subject to further terms and conditions set
out in Appendix I below and in the Form of Acceptance) it is proposed that PNE
Shareholders will receive:
5 pence for every 1 Share held ("Offer Price")
The terms of the Offer value the entire issued share capital of PNE at
approximately GBP164,784. The Shares were suspended from trading on AIM with
effect from 17 May 2010 with a final closing price of 95p per Share.
The Offer extends to all Shares not already owned by the Offeror which are
unconditionally allotted or issued and fully paid up on the date of the Offer.
The Offer also extends to any Shares not already owned by the Offeror which are
unconditionally allotted or issued and fully paid while the Offer remains open
for acceptance.
The Shares will be acquired pursuant to the Offer fully paid free from all
liens, charges, equitable interests and encumbrances and together with all
rights attaching now, and in the future, including voting rights and the rights
to receive and retain all dividend and other distributions (if any) declared,
made or paid thereafter.
The Offeror does not currently intend to increase the Offer Price but reserves
the right to do so in the following circumstances:
? following the announcement by a third party offeror or potential
offeror of an offer or possible offer for PNE; or
? with the agreement or recommendation of the board of directors of
PNE; or
? following the release or announcement of any material new information
by PNE.
3. Background and Reasons for the Offer
On 3 June 2010, the Offeror acquired 1,694,436 Ordinary Shares representing
51.41% of the total issued share capital of the Company. As a result of the
Acquisition, under Rule 9 of the City Code, the Offeror is required to make a
mandatory unconditional cash offer for all outstanding issued and to be issued
Shares not already owned by the Offeror at a price of 5p per Share, being the
highest price paid by the Offeror for any Share within the last 12 months.
Current Financial Position
As at the 3 June 2010 the Group had total indebtedness of GBP29,660,000
comprising a bank overdraft of GBP5,225,000, an outstanding bank loan of
GBP1,020,000, the funds from which were used for working capital purposes; a
further outstanding bank loan of GBP8,280,000, which was utilised to construct
the new Invincible Pavilion Stand and GBP15.135 million of other loans, which
includes GBP13.33m loans from Guild and also a GBP1,119,000 loan provided by the
Friends of Preston North End Limited ("FPNE"). The FPNE loan accrues interest at
a rate of 3% over Bank of England LIBOR and is repayable on 31 January 2011
unless FPNE and PNE mutually agree an extension.
The aggregated loans from Guild accrue interest at two separate rates, dependent
upon the date at which the money was lent. Interest accrues at a rate of 3% over
Bank of England LIBOR for sums advanced before September 2009 (which currently
totals GBP9.35m) and interest accrues at a rate of 8% over Bank of England LIBOR
for the remainder (currently totalling GBP3.98m). All loan amounts advanced by
Guild are repayable on 31 January 2011 unless Guild and PNE mutually agree an
extension. Initially the loans were made by Guild at the request of the
Chairman of PNE to assist in the purchase of new players when the Club faced
potential relegation from the Championship in the 2007/2008 football season, but
latterly have been made for working capital purposes, to ensure the financial
survival of the Group including paying players wages and meeting the Group's
liabilities to HMRC.
Furthermore, the Group has been recording operating losses averaging GBP4
million per annum over the last three years, the most significant being an
operating loss of GBP5.9 million in 2009, predominantly as a result of increased
player wages. After amortisation, interest and finance costs the pre-tax loss
for the Company, in 2009 was GBP9.1 million against a turnover in that same
financial year of GBP8.5 million.
The Group has been significantly dependent upon Guild to fund its working
capital position for a number of years. The Board has carried out a detailed
financial review of the Group's financial position and has concluded that,
without significant player sales and a reduction in player wages, a further
injection of GBP5 million cash investment is required to enable the Group to
reach a break even position and be in a position to fund the next football
season.
In addition, some of the Group's bank facilities (more particularly, the bank
overdraft of GBP5,225,000, and the outstanding bank loan of GBP1,020,000) are
due for renewal or refinancing at the end of June 2010. The Board does not
believe that it will be able to renew or refinance these facilities without
confirmation of ongoing financial support from Guild.
Future Financial Position
If the Offer is not accepted by sufficient PNE Shareholders (determined at the
discretion of the Offeror) then the Offeror and Guild have indicated that the
financial support provided by Guild will be withdrawn and no financial support
will be provided by DPNE. The Board believes that without continued financial
support from Guild, the Board would almost certainly have to conclude that there
is no reasonable prospect of avoiding an insolvent liquidation, in which event
the Group would cease to trade and would be forced into some form of insolvency
procedure. As PNE Shareholders are already aware, HMRC has issued a winding up
petition against the Company's subsidiary for failure to pay PAYE and National
Insurance contributions. Without a further injection of capital from Guild the
Group has no way to meet this obligation.
In addition, over the last few months football clubs such as Portsmouth FC
(through its holding company) and Crystal Palace FC have entered into
administration and Chester City FC has entered liquidation. Both Crystal Palace
FC and Portsmouth FC will be in the Championship with the Club next season, and
the Board believes both are in the process of looking for purchasers to come in
to acquire the underlying business from those companies. It is the Board's
opinion that there are fewer and fewer genuine third parties looking to acquire
football clubs and accordingly there is no certainty that anyone would acquire
the underlying business from any administrator of the Group, which could result
in the Group ultimately being wound up.
In any event, and in addition to the above, if the Group is wound up or placed
into administration, the Club would incur an automatic ten point penalty at the
start of next season for a breach of regulation 12.3 of The Football League
Regulations. The advantage of the proposed Offer is that, subject to the Offeror
receiving sufficient acceptances from PNE's Shareholders (determined at the
discretion of the Offeror), the Offeror and/or Guild would advance further funds
to meet the short term cash flow requirements of the Group and therefore, as
long as there is no insolvency procedure or compromise with the creditors, the
ten point penalty for a breach of regulation 12.3 of The Football League
Regulations can be avoided.
In summary, if the Offer is not accepted by sufficient PNE Shareholders, the
financial support of Guild will be withdrawn and no financial support will be
provided by DPNE. It is highly unlikely that any of the Group's assets will have
any immediate realisable value and the Board would have no option but to take
steps to place the Group into an insolvency procedure. A liquidation (or any
other form of insolvency procedure) would offer no return to PNE Shareholders
and would be hugely detrimental to the prospects of the Club. Having few
tangible assets there would be little value realised on a winding up for the
repayment of the Group's creditors.
Position if Offer is Successful
If the Offeror receives sufficient acceptances for the Offer from PNE
Shareholders (determined at the discretion of the Offeror), Guild or the Offeror
will fund the Group's short term cash flow requirements and continue to support
the Group in its negotiations for renewal of its facilities with the Group's
bank.
The Offeror is therefore seeking acceptance of the Offer by PNE Shareholders to
achieve the following objectives:
(a) to resolve the Group's ongoing financial difficulties;
(b) to avoid insolvency proceedings for the Group and the associated
sanctions and points deductions made by the Football League in the event that
Guild withdraws its current financial support;
(c) to provide PNE Shareholders with a better return than they would
achieve in a liquidation of the Group.
4. Cancellation of Admissions and Dealings
PNE Shareholders are given notice that, subject to the conditions of the Offer
being met and the consent of not less than 75% of the votes cast at a general
meeting of the Company, the Offeror intends to procure the making of an
application for the cancellation of the Shares from trading on AIM. Such
cancellation would significantly reduce the liquidity and marketability of any
Shares in respect of which acceptance of the Offer are not submitted. The
Offeror intends to re-register PNE as a private limited company as soon as it is
appropriate to do so.
5. Information on the Company
PNE is a UK incorporated public limited company whose shares are admitted to
trading on AIM. Its principal activity is the operation of the Club.
On 19 November 2009 the Company announced its final results for the twelve
months ended 30 June 2009 and on 30 March 2010 the Company announced its interim
results for the 6 months ended 31 December 2009. These documents are available
on the Company's website www.pnefc.net/page/companydetails.
6. Information on the Offeror
DPNE is a UK incorporated private limited company, which was incorporated on 22
April 2010. It is wholly owned and controlled by Grovemoor Limited, a company
registered in the Isle of Man. Both Grovemoor Limited and Guild Ventures
Limited are ultimately owned by the Hemmings family interests (including
interests of Trevor Hemmings). Guild has advanced loans to PNE in various
amounts over the last two and a half years. As set out above, together with
accrued interest, as at 3 June 2010, the total of PNE's indebtedness to Guild
stands at GBP13.33 million.
7. Management and Employees
The Offeror's current intention is that the existing employment rights,
including pension rights, of the management and employees of the Group will not
be affected by the Offer.
8. Financing of the Offer
It is estimated that full acceptance of the Offer would require payment by the
Offeror, under the terms of the Offer, of an amount approximately GBP80,062 in
cash, which will be satisfied out of the Offeror's existing cash resources.
Halliwells LLP, 3 Hardman Square, Manchester, M3 3EB is satisfied that the
necessary financial resources are available to the Offeror to enable them to
satisfy in full the maximum cash consideration payable to PNE Shareholders under
the terms of the Offer.
9. Irrevocable Undertakings
The Offeror may seek irrevocable undertakings from certain PNE Shareholders
prior to posting the Offer Document.
10. Disclosure of interests in the Company
As set out above, the Offeror holds 1,694,436 Ordinary Shares representing
51.41% of the total issued share capital of the Company.
Save for the interests of the Offeror described above, neither the Offeror nor
any person acting in concert with the Offeror has any interest in, or right to
subscribe for, any relevant securities in the Company, or any short positions
(whether conditional or absolute and whether in the money or otherwise),
including any short position under a derivative, any agreement to sell or any
delivery obligation or right to require another person to purchase or take
delivery.
Neither the Offeror nor any of its associates has borrowed or lent any relevant
securities of the Company (save for any borrowed relevant securities which have
either been on-lent or sold).
There are no arrangements of the kind referred to in Note 11 (b) on the
definition of acting in concert in the City Code which exist between the Offeror
or any associate of the Offeror and any other person in relation to any relevant
securities of the Company.
For the purposes of this paragraph 10, the terms "acting in concert", "interest"
and "relevant securities" shall have the same meanings as defined in the City
Code.
11. Overseas Shareholders
Overseas Shareholders should inform themselves about and observe any applicable
legal or regulatory requirements. If you are in any doubt about your position,
you should consult your professional advisor in the relevant territory.
The implication of the Offer for persons not resident in the United Kingdom may
be affected by the laws of the relevant jurisdiction. Any persons who are
subject to the laws of any jurisdiction other than the United Kingdom should
inform themselves about and observe any applicable requirement.
The Offer, and acceptances thereof, will be governed by English law and will be
subject to the jurisdiction of the English courts. The Offer will be subject to
the applicable requirements of the City Code and other legal and regulatory
requirements. In deciding whether or not to accept the Offer, PNE Shareholders
should rely on the information contained in the Offer Document and the Form of
Acceptance.
Unless otherwise determined by the Offeror and subject to any dispensation
required from the Panel, the Offer will not be made, directly or indirectly in
or into or by the use of the mails of, or by any means or instrumentality
(including, without limitation, fax, e-mail or telephone) of interstate or
foreign commerce of, or of any facilities of a national securities exchange of,
the Unites States, Canada, Australia, the Republic of Ireland and Japan
("Restricted Jurisdiction"). Accordingly, copies of this announcement are not
being made, and must not be mailed or otherwise forwarded, distributed or sent
into, or from any Restricted Jurisdiction and persons receiving this
announcement should observe these restrictions.
Notwithstanding the foregoing the Offeror will retain the right to permit the
Offer to be accepted and any sale of securities pursuant to the Offer to be
completed, if in its sole discretion, it is satisfied that the transaction in
question can be undertaken in compliance with applicable law and regulation.
12. Number of Relevant Securities in Issue
In accordance with Rule 2.10 of the City Code, the Company confirms that, as at
the close of business on 3 June 2010, its relevant securities in issue consisted
of 3,295,679 ordinary shares of GBP1 each.
The ISIN reference number for the ordinary shares of GBP1 each is GB0007015182.
13. Further Details
The Offer Document, setting out full details of the Offer, will be published as
soon as practicable and in any event within 28 days of 4 June 2010.
This announcement does not constitute, or form part of an offer or an invitation
to purchase or sell Shares or any other securities.
There are no agreements or arrangements to which the Offeror is a party which
relate to the circumstances in which it may or may not invoke or seek to invoke
a pre-condition or a condition to the Offer.
There are no inducements fees or similar arrangements between the Company
and the Offeror.
Halliwells LLP has given and not withdrawn its written consent to the inclusion
in this announcement of the references to it in the form and context in which
they appear.
This announcement has been made by the Offeror and the directors of the
Offeror accept responsibility for the information contained in it other than the
views and opinions of the Board, the information relating to the Company, the
directors of the Company and persons connected with them for which the Company
and the Board accept responsibility. To the best of the knowledge and belief of
the directors of the Offeror (who have taken all reasonable care to ensure 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. To the best of the knowledge and belief
of the Board (who have taken all reasonable care to ensure 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.
14. Disclosure requirements of the City Code
Under Rule 8.3(a) of the City Code, any person who is interested in 1% or more
of any class of relevant securities of an offeree company or of any paper
offeror (being any offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer period and,
if later, following the announcement in which any paper offeror is first
identified. An Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any paper offeror(s). An
Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made
by no later than 3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than 3.30 pm
(London time) on the 10th business day following the announcement in which any
paper offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a paper offeror prior to the deadline
for making an Opening Position Disclosure must instead make a Dealing
Disclosure.
Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in
1% or more of any class of relevant securities of the offeree company or of any
paper offeror must make a Dealing Disclosure if the person deals in any relevant
securities of the offeree company or of any paper offeror. A Dealing Disclosure
must contain details of the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of each
of (i) the offeree company and (ii) any paper offeror, save to the extent that
these details have previously been disclosed under Rule 8. A Dealing Disclosure
by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the relevant dealing. If
two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a paper offeror, they will be deemed to be a
single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any
offeror and Dealing Disclosures must also be made by the offeree company, by any
offeror and by any persons acting in concert with any of them (see Rules 8.1,
8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made can
be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to make
an Opening Position Disclosure or a Dealing Disclosure, you should contact the
Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Appendix - Glossary
The following definitions apply through this announcement, unless the context
requires otherwise:
+---------------------------------+---------------------------------+
| "Acquisition" | the acquisition by the Offeror |
| | of certain shareholdings in PNE |
| | as set out in paragraph 1 of |
| | this announcement; |
| | |
+---------------------------------+---------------------------------+
| "AIM" | AIM, a market operated by the |
| | London Stock Exchange; |
| | |
+---------------------------------+---------------------------------+
| "Board" | the board of directors of PNE; |
| | |
+---------------------------------+---------------------------------+
| "Club" | the professional football |
| | league club, Preston North End |
| | Football Club, operated by the |
| | Group; |
+---------------------------------+---------------------------------+
| "DPNE" or "Offeror" | Deepdale PNE Holdings Limited; |
| | |
+---------------------------------+---------------------------------+
| "City Code" | the City Code on Takeovers and |
| | Mergers, as amended from time |
| | to time; |
| | |
+---------------------------------+---------------------------------+
| "Form of Acceptance" | the form of acceptance relating |
| | to the Offer which will |
| | accompany the Offer Document; |
| | |
+---------------------------------+---------------------------------+
| "Group" | PNE, its subsidiaries and |
| | subsidiary undertakings and, |
| | where the context permits, each |
| | of them; |
| | |
+---------------------------------+---------------------------------+
| "HMRC" | HM Revenue & Customs; |
| | |
+---------------------------------+---------------------------------+
| "London Stock Exchange" | London Stock Exchange Plc; |
| | |
+---------------------------------+---------------------------------+
| "Offer" | the mandatory cash offer being |
| | made by the Offeror to acquire |
| | all the Shares not already |
| | owned by the Offeror on the |
| | terms set out in the Offer |
| | Document and the Form of |
| | Acceptance (including, where |
| | the context so requires, any |
| | subsequent revision, variation, |
| | extension or renewal of such an |
| | offer); |
| | |
+---------------------------------+---------------------------------+
| "Offer Document" | the document to be dispatched |
| | by or on behalf of DPNE to the |
| | PNE Shareholders (other than |
| | certain Overseas Shareholders) |
| | setting out the full terms and |
| | conditions of the Offer; |
| | |
+---------------------------------+---------------------------------+
| "Offer Price" | 5p for each Share; |
| | |
+---------------------------------+---------------------------------+
| "Overseas Shareholders" | PNE Shareholders who are |
| | resident in, or national or |
| | citizens of, jurisdiction |
| | outside the United Kingdom or |
| | who are nominees of or |
| | custodians or trustees for, |
| | residents, citizens or |
| | nationals of other countries; |
| | |
+---------------------------------+---------------------------------+
| "Panel" | the Panel on Takeovers and |
| | Mergers; |
| | |
+---------------------------------+---------------------------------+
| "PNE" or the "Company" | Preston North End plc, a |
| | company incorporated in England |
| | and Wales with company number |
| | 01621060; |
| | |
+---------------------------------+---------------------------------+
| "PNE Shareholders" | the shareholders of PNE from |
| | time to time; and |
| | |
+---------------------------------+---------------------------------+
| "Restricted Jurisdiction" | any jurisdiction where local |
| | laws or regulation may results |
| | in a significant risk of civil, |
| | regulatory or criminal exposure |
| | or prosecution if information |
| | concerning the Offer is sent to |
| | or made available to PNE |
| | Shareholders in that |
| | jurisdiction. |
| | |
+---------------------------------+---------------------------------+
For further information, please contact:-
+---------------------+---------------------+---------------------+
| | | |
| Kevin Abbott | Preston North End | Tel: 0844 856 1964 |
| | plc | |
| | | |
+---------------------+---------------------+---------------------+
| | | |
| Katy Mitchell | WH Ireland Limited | Tel: 0161 832 2174 |
| | | |
+---------------------+---------------------+---------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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