TIDMVCP
RNS Number : 9825C
Victoria PLC
23 October 2020
For Immediate Release 23 October 2020
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Victoria PLC
('Victoria', 'Company', or the 'Group')
GBP29.91 million Share Buy-Back by Victoria
and
GBP43.75 million Ordinary Share purchase by Koch Equity
Development ("KED")
Company share buy-back
Victoria's mission statement is "To create wealth for
shareholders". To that end, and due to the Directors' firmly-held
view that the Company's Ordinary Shares are materially under-valued
and a buyback at these levels represents very good value for the
Shareholders, the Board of Victoria refers to its announcement
yesterday and confirms that, in conjunction with the proposed
Preferred Equity investment by KED, the Company has now entered
into a conditional agreement to purchase off-market 8,546,095 of
its ordinary shares, representing 6.82% of the Company's issued
share capital of the Company, at GBP3.50 per share (the "Company
Buyback").
In arriving at their decision to pursue the buy-back, the
Directors have carefully considered the following:
-- The Company's existing strong cash position will be further
enhanced following the Preferred Equity investment by KED,
announced yesterday. The Directors are confident that Victoria has
more than adequate liquidity to meet its operational needs in all
reasonable scenarios. It is useful to remember that, even during
the lockdowns of Q1, Victoria's operational cash flow was close to
neutral due to the business's low operational gearing and decisive
management actions. In addition, as outlined in our recent trading
update, the Group has very substantial undrawn credit facilities
and is now cash flow positive, positive like-for-like sales, and
there is visibility into continued strong order backlog through
year-end.
-- The Directors believe that the Group has excellent long-term
prospects. Flooring will always be needed and continually upgraded
and refreshed and the Directors believe Victoria is better placed
than many of its competitors to efficiently meet this demand.
-- Following the material investments made in fiscal years 2019
and 2020 set out earlier to shareholders, it is the Directors view
that the Company will continue to be significantly cash generative
in the short-medium term future.
-- Finally, capital allocation is, over time, the single largest
determinant of value creation at a company. Therefore, the
Directors have thoughtfully reviewed alternative uses for the
Group's cash resources and, following that review, are firmly of
the view that the Buyback as proposed is a good use of capital at
this time and will be value-enhancing for the Shareholders
The Company Buyback will be financed from the Company's existing
cash resources and those shares will be transferred into
treasury.
KED Ordinary Share purchase
The Company further announces that a separate conditional
agreement has been entered into between KED and Invesco for KED to
purchase off-market 12,500,000 ordinary shares in the Company from
Invesco, representing 9.97 % of the Company's the issued ordinary
share capital, also at a price of GBP3.50 per ordinary share (the
"KED Purchase").
This KED Purchase of GBP43.75 million in ordinary shares is in
addition to the up to GBP175 million preferred share investment
described in the announcement released yesterday.
Spruce House Partnership LLC Ordinary Shares purchase
The Company further announces that a separate conditional
agreement has been entered into between Spruce House Partnership
LLC, an existing 14.8% shareholder of Victoria, and Invesco to
purchase off-market 3,600,000 ordinary shares (being 2.87% of the
issued share capital of the Company) from Invesco at GBP3.50 per
share (the "Spruce House Purchase").
The total shares proposed to be acquired pursuant to Company
Buyback, the KED Purchase, and the Spruce House Purchase being
19.65% of the issued share capital of the Company, represent all of
ordinary shares in the Company held by funds managed by
Invesco.
Shareholder Approval
The Company Buyback, KED Purchase, Spruce House Purchase, and
issue of preferred shares referred to in the announcement released
yesterday are conditional, inter alia, upon resolutions necessary
to complete the transactions described above being passed at a
general meeting of the Company's ordinary shareholders (the
"General Meeting").
The Directors all intend to vote their own ordinary shares in
favour.
The Company intends to post a circular (including notice of
meeting) to ordinary shareholders in respect of the transaction
outlined above shortly and a further announcement will be made at
such time.
Assuming that all of the resolutions are passed at the General
Meeting and that all of the other conditions to the Company Buyback
are satisfied at such time, it is expected that completion of the
Company Buyback will take place on two business days following the
day on which the General Meeting takes place.
Related Party Transaction
As Invesco holds 19.65 per cent of the issued ordinary shares
they are considered substantial shareholders (and are therefore a
related party of the Company) for the purposes of the AIM Rules.
Consequently, the proposed purchase of shares pursuant to the
Company Buyback constitutes a related party transaction under Rule
13 of the AIM Rules for Companies. The Directors consider, having
consulted with its nominated adviser, N+1 Singer, that the terms of
the Company Buyback are fair and reasonable so far as the Company's
ordinary shareholders are considered.
Victoria Executive Chairman, Geoff Wilding, said:
"Victoria's business model has proven resilient this year during
the most difficult trading conditions in living memory. So, the
time has now come to again focus on growth and the capital provided
by Koch will enable us to deliver significant value creation while
maintaining stable and secure debt leverage ratios. I am delighted
to bring the capital, resources, and deep industrial expertise of
the largest privately held company in the United States to
Victoria's next phase of growth as we execute on the exceptional
organic growth and acquisition opportunity ahead."
Koch Equity Development Managing Director, Blake Ressel,
commented:
"We are delighted to be partnering with Victoria. We have
conducted due diligence over the last few months, and we are
confident in Victoria's strategy, its management team, and the size
of the market opportunity. We expect our investment to help
Victoria accelerate execution of its growth plans."
For more information contact:Victoria PLC
Geoff Wilding, Executive Chairman
Philippe Hamers, Group Chief Executive
Michael Scott, Group Finance Director +44 (0) 1562 749 610
N+1 Singer (Nominated Adviser and Joint
Broker)
Rick Thompson, Phil Davies, Alex Bond +44 (0) 207 496 3095
Berenberg (Joint Broker)
Ben Wright, Mark Whitmore +44 (0) 203 207 7800
Peel Hunt (Joint Broker)
Adrian Trimmings, Andrew Clark +44 (0) 207 418 8900
Buchanan Communications (Financial PR)
Charles Ryland, Chris Lane, Tilly Abraham +44 (0) 20 7466 5000
About Koch Equity Development and Koch Industries
With offices in Wichita and London, KED focuses its efforts on
strategic acquisitions and industry agnostic principal investments.
Significant recent non-controlling principal investments completed
include Getty Images, MI Windows and Doors, Global Medical
Response, and Meredith/Time Inc. Since 2012, KED has invested
approximately US$30 billion of equity capital.
Koch Industries is one of the largest privately held companies
in the United States, with estimated annual revenues as high as
US$115 billion (according to Forbes) and has a presence in over 70
countries with about 130,000 employees worldwide across the Koch
companies. Founded in 1940, Koch Industries owns a diverse group of
companies. With their long-term investment horizon and existing
interest in segments of the flooring industry in which Victoria
does not operate, the Board believes that Koch Equity Development
and Koch Industries are the ideal long-term partners for Victoria
bringing the possibility of opportunities for international growth
as well as the additional capital to be provided through the
Preferred Equity Investment. Further information about Koch Equity
Development and Koch Industries can be found on their websites,
www.kochequity.com; www.kochind.com.
About Victoria
Established in 1895 and listed since 1963 and on AIM since 2013
(VCP.L), Victoria PLC, is an international manufacturer and
distributor of innovative flooring products. The Group, which is
headquartered in Kidderminster, UK, designs, manufactures and
distributes a range of carpet, flooring underlay, ceramic tiles,
LVT (luxury vinyl tile), artificial grass and flooring
accessories.
Victoria has operations in the UK, Spain, Italy, Belgium, the
Netherlands and Australia and employs approximately 3,400 people
across more than 20 sites. Victoria is the UK's largest carpet
manufacturer and the second largest in Australia, as well as the
largest manufacturer of underlay in both regions.
The Group's strategy is designed to create value for its
shareholders and is focused on consistently increasing earnings and
cash flow per share via acquisitions and sustainable organic
growth. (Further information about Victoria can be found on its
website, www.victoriaplc.com.)
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