TIDMBONH
RNS Number : 6156P
Bonhill Group PLC
10 February 2023
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IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW.
THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL OR A SOLICITATION TO BUY
SECURITIES IN ANY JURISDICTION, INCLUDING THE UNITED STATES,
CANADA, AUSTRALIA, JAPAN AND THE REPUBLIC OF SOUTH AFRICA. NEITHER
THIS ANNOUNCEMENT NOR ANYTHING CONTAINED HEREIN SHALL FORM THE
BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, ANY OFFER OR
COMMITMENT WHATSOEVER IN ANY JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 2014/596/EU (WHICH FORMS PART OF
DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018), AS AMED. IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT
OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT
CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL
THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
10 February 2023
Bonhill Group plc
("Bonhill", the "Company" or the "Group")
Proposed Disposal of the Business and Assets of Bonhill Media UK
Limited and the Entire Issued Share Capital of Last Word Media
(Asia) Pte. Limited
and
Proposed Reduction of Capital
Bonhill (AIM: BONH), a leading B2B media business specialising
in financial services providing media, events and data &
analytics, announces that it has exchanged contracts with MA
Financial Media, a member of the Mark Allen Group, and an ultimate
subsidiary of Mark Allen Holdings Limited, regarding the
conditional disposal of the business and assets of Bonhill Media UK
Limited ("Bonhill Media") and the entire issued share capital of
Last Word Media (Asia) Pte. Limited ("Last Word Asia") (together
the "UK and Asia Businesses") for a total cash consideration of
GBP6.5 million. Due to its size, under the AIM Rules, the Disposal
is conditional on Shareholders' approval.
Highlights
-- Disposal of the UK and Asia Businesses agreed with MA
Financial Media, subject to shareholder approval, for GBP6.5
million in cash
-- The Disposal represents a fundamental change of business for
the Company pursuant to Rule 15 of the AIM Rules and is therefore
subject to Shareholders' approval which is to be obtained at the
General Meeting
-- The UK business and brands of Bonhill Media (being Bonhill
Create, Portfolio Advisor, Expert Investor, International Advisor,
ESG Clarity, Content Clarity, Future Flows, What Investment and Tax
Guide) are to be sold to MA Financial Media
-- The disposal of Last Word Asia will be undertaken by way of
the acquisition by the entire issued share capital of Last Word
Asia by MA Financial Media
-- Due diligence by a US media buyer on InvestmentNews is continuing
-- As soon as practicable following both Completion and
Completion of the US Disposal, the Company intends to return
substantially all of its cash to Shareholders by way of a tender
offer
-- In order for the Board to effect the proposed return of
capital to Shareholders (howsoever it is structured), the Company
will need to create further distributable reserves by way of the
Proposed Capital Reduction
-- Following Completion, Patrick Ponsford, the Group CEO, will
resign as a Director and will be joining the Mark Allen Group. Jon
Kempster, a Non-Executive Director, has notified the Board of his
intention to resign as a Director with effect from 31 March
2023
Further details of the Disposal and Proposed Capital Reduction
in the form of extracts from the Circular are set out below. The
Company intends later today to post a Circular to Shareholders
regarding the Disposal and Proposed Capital Reduction , which
includes a notice convening the General Meeting at 10.00 a.m. on 27
February 2023 . A copy of the Circular will be published on the
Company's website at www.bonhillplc.com . Capitalised terms used
but not defined in this announcement will have the same meaning
given to them in the Circular.
Commenting, Jonathan Glasspool, Non-Executive Chair of Bonhill,
said :
"We are pleased to announce today the conditional exchange of
contracts with MA Financial Media, which represents the first stage
of the sale of the distinct parts of the Group. I would like to
take this opportunity to thank Patrick Ponsford for leading the
business since he was appointed last year as Group CEO and
successfully navigating the sale process thus far.
The Board is committed to completing the proposed sale of
InvestmentNews as soon as reasonably practicable. Once that has
been achieved, we will focus on returning substantially all of the
Company's cash to shareholders."
For further enquiries please contact:
Bonhill Group plc
Jonathan Glasspool, Non-executive Chairman +44 (0)207 638 6378
Patrick Ponsford, Group CEO +44 (0)7714 660
Sarah Thompson, Chief Financial Officer 943
Shore Capital (Financial Adviser, Nominated
Adviser and Broker)
Tom Griffiths/David Coaten +44 (0)20 7408 4050
About Bonhill Group plc
Bonhill Group plc is a leading, AIM-quoted, B2B media company
providing Business Information, Events and Data & Insight
propositions to the global Financial Services community. Bonhill
operates multiple digital platforms, has market leading media
brands, hosts over 100 events per annum, offers a portfolio of data
& analytics propositions and provides a range of content
marketing solutions.
Bonhill operates exclusively in the financial services space
where its brands and services are acknowledged as market leaders.
It specialises in enhancing the relationship and flow of
information between the global community of financial services
providers and the advisers who recommend their products. Bonhill
was early to recognise the growing importance of ESG in asset
allocation and fund selection and now owns the leading global
platform in this space, serving the adviser community.
Flagship brands include: InvestmentNews, ESG Clarity, Portfolio
Adviser, Fund Selector Asia, Expert Investor Europe, UK Adviser and
International Adviser.
Offices in New York, London, Singapore and Hong Kong.
For more information visit www.bonhillplc.com .
About Mark Allen Holdings Limited
Mark Allen Holdings Limited is the parent company of a
privately-owned group of operating companies, including MA
Healthcare, MA Business, MA Agriculture, MA Education, MA
Exhibitions, MA Music Leisure & Travel and MA Dentistry Media.
Founded in 1985, the group has grown to be a global business with a
team of nearly 500 people and a diverse portfolio of market-leading
brands, digital products and events providing quality content and
information services to specialist business and consumer
communities.
IMPORTANT NOTICES
Shore Capital is authorised and regulated in the United Kingdom
by the Financial Conduct Authority ("FCA") and is acting
exclusively as Financial Adviser, Nominated Adviser and Broker and
for no one else in connection with the subject matter of this
announcement and will not be responsible to anyone other than
Bonhill for providing the protections afforded to its clients nor
for providing advice in relation to the subject matter of this
announcement.
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise.
This announcement (including any information incorporated by
reference in this announcement), oral statements made regarding the
formal sale process, and other information published by the Group
contain statements about the Group that are or may be deemed to be
forward looking statements. Without limitation, any statements
preceded or followed by or that include the words "targets",
"plans", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "projects" or words or terms of similar
substance or the negative thereof, may be forward looking
statements.
These forward-looking statements are not guarantees of future
performance. Such forward-looking statements involve known and
unknown risks and uncertainties that could significantly affect
expected results and are based on certain key assumptions. Many
factors could cause actual results to differ materially from those
projected or implied in any forward-looking statements. Due to such
uncertainties and risks, readers should not rely on such
forward-looking statements, which speak only as of the date of this
announcement. The Group disclaims any obligation or responsibility
to update publicly or review any forward-looking or other
statements contained in this announcement, except as required by
applicable law.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
PART I
1. Introduction
The Company announces that it has exchanged contracts with MA
Financial Media, a member of the Mark Allen Group, and an ultimate
subsidiary of Mark Allen Holdings Limited, regarding the
conditional disposal of the business and assets of Bonhill Media UK
Limited ("Bonhill Media") and the entire issued share capital of
Last Word Media (Asia) Pte. Limited ("Last Word Asia") (together
the "UK and Asia Businesses") for a total cash consideration of
GBP6.5 million. Due to its size, under the AIM Rules, the Disposal
is conditional on Shareholders' approval.
This announcement provides the background to the Disposal and to
explain why the Independent Directors consider that it is in the
best interests of the Company and its Shareholders as a whole and
why they recommend that Shareholders should vote in favour of the
Resolutions to be proposed at the General Meeting. A notice
convening the General Meeting to be held at the offices of Charles
Russell Speechlys LLP, 5 Fleet Place, London EC4M 7RD at 10.00 a.m.
on 27 February 2023 will be set out at the end of the Circular.
Patrick Ponsford, the Group's CEO, will resign upon Completion as
he is joining the Mark Allen Group, and therefore he has not
participated in the Board's consideration of, and recommendation to
proceed with, the Disposal.
2. Background to and reasons for the Disposal
Following board changes in April 2022 and an equity fundraising
of GBP1.1 million at 5.5 pence per share, which was completed in
May 2022, the Board set about divesting or discontinuing all low
margin and non-core business previously undertaken by the Group.
This resulted in the sale in late August 2022 of the Company's
Business Solutions and Governance division ("BSG") for a cash
consideration of GBP0.723 million to Stubben Edge Limited. At the
time, the Company stated that the sale of the BSG division would
enable it to achieve approximately GBP0.6 million in annual cost
savings from streamlining central support headcount, reduced office
space and lower IT costs, the full benefit of which would be
achieved in 2023. Furthermore, following the disposal of the BSG
division, the Group would be more focused, less capital intensive,
less complex and would generate higher margins.
However, as first announced by the Company in its unaudited
interim results for the six months ended 30 June 2022, which were
released on 8 September 2022, market turbulence over the period had
led to a weakening in traditional media and content projects, as
the Group's clients had held off on discretionary marketing spend.
Since then, as further announced on 2 November 2022 and 9 December
2022, due to ongoing political uncertainty, particularly in the UK,
and economic uncertainty in the UK and the US, the Company's
markets had continued to soften and trading conditions continued to
deteriorate, leading to major content projects, which had been
budgeted for Q4 2022, slipping into Q1 2023.
Due to being AIM quoted, the Company is burdened with a fixed
set of annual overheads currently amounting to approximately GBP0.4
million which, given that the Group is loss making and not cashflow
positive, is becoming harder to justify. In addition, due to the
size of the Company's market capitalisation, which has been below
GBP10.0 million for some time, and consequently the shares are
becoming increasingly more illiquid with reduced day-to-day share
trading, in the Board's opinion, there are therefore very few
reasons for the Ordinary Shares to remain admitted to trading on
AIM ("Admission"). While cancellation of Admission is an option,
given the cash consumptive nature of the Company and as access to
the requisite equity capital would be much reduced as a private
unquoted company, the Board considers that the Group, its brands
and employees would be better placed as part of a larger group.
As announced on 10 October 2022, given the challenging
macro-economic situation, and following discussions with certain of
the Company's major shareholders, the Board decided to undertake a
strategic review which might or might not result in the sale of the
Group as a whole or of either of the Company's principal trading
businesses, InvestmentNews LLC (" InvestmentNews ") in the US or
Bonhill in the UK and Asia. As the Company is subject to the City
Code and as a potential sale of the Group was being considered, a
formal sale process under the City Code ("Formal Sale Process") was
launched. As previously announced, the Board was pleased by the
strong level of interest received from a range of bona fide
potential buyers following the commencement of the Formal Sale
Process, including for the Group in its entirety and separate parts
of the Group.
At the same time as it announced the Formal Sale Process, the
Company announced that as at 30 September 2022 it had cash of
GBP1.0 million and net debt, including leases of GBP2.6 million,
totalling GBP1.7 million. However, given the macro-economic
conditions, as a precautionary measure, it had entered into a
standby loan facility ("Loan Facility") with Rockwood Strategic Plc
("Rockwood"), its largest shareholder. The Loan Facility, which
runs to 1 May 2023, was initially for up to GBP0.8 million in cash
at a monthly compound interest rate of 2 per cent. on funds drawn
down, which would be capitalised. It has an arrangement fee of 5
per cent., may be drawn down in tranches of GBP200,000 and would be
used for working capital purposes. On 6 February 2023, the Company
and Rockwood agreed to increase the size of the Loan Facility to
GBP1.0 million. All other terms of the Loan Facility remain
unchanged.
In its announcement of 9 December 2022 referred to above, the
Company stated that it expected to have cash at 31 December 2022 of
GBP0.3 million and that it continued to manage its cash well,
including the use of the Loan Facility where required. As at 31
January 2023, the Company had cash of GBP0. 5 million and net debt
of GBP2.6 million, including leases of GBP2.2 million and GBP0.8
million drawn down under the Loan Facility. On 6 February 2023, the
Company drew down the remaining GBP0.2 million under the Loan
Facility.
On 9 December 2022, the Company announced that, subject to the
completion of satisfactory due diligence, it had received a
conditional offer of GBP6.6 million in cash (equating to a price
per share of approximately 5.5 pence) from a privately owned UK
media company for the business and assets of its UK and Asia
businesses. On the same date, the Company also announced that it
had received indicative conditional offers for InvestmentNews.
After exploring the various options, the Board has concluded that a
sale of the UK and Asia Businesses to MA Financial Media, a member
of the Mark Allen Group, and an ultimate subsidiary of Mark Allen
Holdings Limited, (along with the separate sale in due course of
InvestmentNews) represents the best value for Shareholders and
therefore the Company has entered into the Sale and Purchase
Agreements, further details of which are set out below.
If the Disposal is not approved by Shareholders at the General
Meeting, the Board believes that the Company will need to raise
further equity capital. There is no guarantee that the price per
share would be at or above 5.5 pence, being the price at which the
new shares were issued in the fundraising in May 2022, referred to
above.
Having concluded the strategic review and Formal Sale Process as
it is no longer in discussions with, nor in receipt of an approach
from, any potential offeror relating to an acquisition of its
issued and to be issued share capital, the Company announced on 6
February 2023 that it was no longer conducting the Formal Sale
Process. As such, the Company ceased to be in an "offer period" as
defined in the City Code and the disclosure requirements pursuant
to Rule 8 of the City Code are therefore no longer applicable.
3. Current trading and prospects
On 6 February 2023, the Company announced that, since its
announcement on 9 December 2022, certain clients had continued to
delay the release of planned marketing spend in the year ended 31
December 2022 ("FY2022") (equating to approximately GBP0.2 million
of revenue and GBP0.1 million of EBITDA) and, as a result, the
Board expected FY2022 revenue of GBP13.6 million and LBITDA of
GBP1.5 million. Furthermore, the Company announced that it
continued to manage its cash well, including the use of the Loan
Facility, with an expected year end net cash position of GBP0.7
million. Subsequently, as set out above, the Company and Rockwood
agreed to increase the size of the Loan Facility to GBP1.0
million.
4. Details of the Disposal
The UK Business is to be disposed of by way of the acquisition
of certain tangible and intangible assets by MA Financial Media, a
member of the Mark Allen Group, and an ultimate subsidiary of Mark
Allen Holdings Limited. The disposal of Last Word Asia will be
undertaken by way of the acquisition by the entire issued share
capital of Last Word Asia by MA Financial Media.
In the year ended 31 December 2021, the UK and Asia Businesses
generated audited turnover of approximately GBP6.3 million and made
an operating profit of approximately GBP0.3 million. At the same
date, they had audited net assets of approximately GBP1.1
million.
The Disposal will represent a fundamental change of business for
the Company pursuant to Rule 15 of the AIM Rules and is therefore
subject to Shareholders' approval which is to be obtained at the
General Meeting. A notice convening the General Meeting to be held
at the offices of Charles Russell Speechlys LLP, 5 Fleet Place,
London EC4M 7RD at 10.00 a.m. on 27 February 2023 will be set out
at the end of the Circular.
Mark Allen Holdings Limited is the parent company of a
privately-owned group of operating companies, including MA
Healthcare, MA Business, MA Agriculture, MA Education, MA
Exhibitions, MA Music Leisure & Travel and MA Dentistry Media.
Founded in 1985, the group has grown to be a global business with a
team of nearly 500 people and a diverse portfolio of market-leading
brands, digital products and events providing quality content and
information services to specialist business and consumer
communities.
5. Summary of the Sale and Purchase Agreements
On 10 February 2023, the Company entered into the Sale and
Purchase Agreements, pursuant to which it has conditionally agreed
to dispose of the UK and Asia Businesses to MA Financial Media, a
member of the Mark Allen Group, and an ultimate subsidiary of Mark
Allen Holdings Limited for a total cash consideration of GBP6.5
million.
Completion of the Sale and Purchase Agreements, which is
conditional on the passing of Resolution 1 as set out in the
Notice, is expected to take place shortly following conclusion of
the General Meeting.
UK Sale and Purchase Agreement
Pursuant to the UK Sale and Purchase Agreement, the UK business
and brands of Bonhill Media (being Bonhill Create, Portfolio
Advisor, Expert Investor, International Advisor, ESG Clarity,
Content Clarity, Future Flows, What Investment and Tax Guide) are
to be sold to MA Financial Media.
Under the terms of the UK Sale and Purchase Agreement:
-- the purchase price attributable to the UK Business which is
payable by MA Financial Media at Completion shall be GBP5.18
million in cash save that GBP0.2 million is to be retained in
escrow to the later of:
i) six months from Completion; and
ii) cancellation of Admission of the Ordinary Shares; or
iii) a change of control of the Company.
-- in the period between the date of the agreement and
Completion, Bonhill has agreed to carry on the UK Business in the
ordinary course;
-- the Company and Bonhill Media have provided certain
warranties to MA Financial Media in respect of the UK Business;
-- the Company and Bonhill Media are providing a limited number
of indemnities to MA Financial Media in respect of certain agreed
matters; and
-- the Company and Bonhill Media have agreed to certain
non-compete restrictions in respect of the UK Business, including
those brands being disposed of. However, it is not envisaged that
the Company will carry on any trade relating to the UK Business in
the future.
Asia Sale and Purchase Agreement
Pursuant to the Asia Sale and Purchase Agreement, the Company
and Last Word UK are to sell the entire issued share capital of
Last Word Asia to MA Financial Media.
Under the terms of the Asia Sale and Purchase Agreement:
-- the purchase price attributable to the Asia Business shall be
GBP1.32 million in cash which is payable by MA Financial Media at
Completion;
-- in the period between the date of the agreement and
Completion, Bonhill and Last Word Asia have agreed to carry on the
Asia Business in the ordinary course;
-- the Company and Last Word UK have provided certain warranties
to MA Financial Media in respect of Last Word Asia;
-- the Company and Last Word UK are providing a limited number
of indemnities to MA Financial Media in respect of certain agreed
matters; and
-- the Company and Last Word UK have agreed to certain
non-compete restrictions in respect of the Asia Business. However,
it is not envisaged that the Company will carry on any trade
relating to the Asia Business in the future.
6. Board Changes
Upon Completion, Patrick Ponsford, the Group CEO, will resign as
a Director and will be joining the Mark Allen Group. In addition,
Jon Kempster, a Non-Executive Director, has notified the Board of
his intention to resign as a Director with effect from 31 March
2023.
7. The Continuing Group
Following Completion, the Company will comprise solely of its US
businesses, including InvestmentNews.
The Company announced on 6 February 2023, that it had received a
non-binding offer from a US media buyer for the business and assets
of InvestmentNews of $6.5 million in cash (equating to a price per
share of approximately 4.5 pence). Subject to the completion of
satisfactory due diligence, the Company expects to sign a
conditional agreement with the purchaser in March 2023.
Shareholders are advised that there can be no certainty that any
sale or other transaction will be concluded for InvestmentNews, nor
as to the terms on which any sale or other transaction may be made.
A further announcement will be made in due course.
Should the proposed sale of the business and assets of
InvestmentNews be successful ("Completion of the US Disposal"), the
Company will cease to own, control or conduct all or substantially
all, of its existing trading business, activities or assets. The
Company, which is then expected to have four Directors, being Sarah
Thompson, Laurie Benson, Richard Staveley and myself, and three
employees, will therefore become an AIM Rule 15 cash shell and, as
such, will be required to make an acquisition or acquisitions which
constitute(s) a reverse takeover under AIM Rule 14 (including
seeking re-admission as an investing company (as defined under the
AIM Rules)) on or before the date falling six months from
Completion of the US Disposal or be re-admitted to trading on AIM
as an investing company under the AIM Rules (which requires the
raising of at least GBP6.0 million), failing which, the Ordinary
Shares would then be suspended from trading on AIM pursuant to AIM
Rule 40. Admission to trading on AIM would be cancelled six months
from the date of suspension should the reason for the suspension
not be rectified during that period.
Any failure in completing an acquisition or acquisitions which
constitute(s) a reverse takeover under AIM Rule 14, including
seeking re-admission as an investing company (as defined under the
AIM Rules), would result in the cancellation of the Ordinary Shares
from trading on AIM.
Market conditions may also have a negative impact on the
Company's ability to make an acquisition or acquisitions which
constitute(s) a reverse takeover under AIM Rule 14. There is
therefore no guarantee that the Company would be successful meeting
the AIM Rule 15 deadline as described above.
8. Proposed return of capital to Shareholders
As soon as practicable following both Completion and Completion
of the US Disposal, the Company intends to return substantially all
of its cash to Shareholders. Following consideration and
consultation, the Board has concluded that a tender offer is the
best and most efficient way to return a significant amount of
capital to Shareholders in a short space of time, taking account of
the relative costs, complexity and timeframes of the various
possible methods, as well as the likely tax treatment for
Shareholders (the "Proposed Tender Offer"). Further details of the
Proposed Tender Offer will be sent to Shareholders at the
appropriate time. In the event that the US Disposal does not take
place or is delayed beyond current expectations, the Board will
consider returning certain of the proceeds of the Disposal to
Shareholders with a further return of capital as and when the US
Disposal completes.
9. Capital Reduction
In order for the Board to effect the proposed return of capital
to Shareholders (howsoever it is structured), the Company will need
to create further distributable reserves. It is intended to do this
by: -
-- cancelling the amounts standing to the credit of the
Company's Share Premium Account (the "Share Premium Reduction");
and
-- capitalising the amounts standing to the credit of the
Company's Merger Reserve by issuing B ordinary shares in the
capital of the Company and immediately cancelling such B ordinary
shares (the "Merger Reserve Reduction").
The Share Premium Reduction and the Merger Reserve Reduction
being, together, the "Capital Reduction".
Further details of the Capital Reduction are set out at Part II
of this announcement. The Company intends to commence the process
relating to the Capital Reduction as soon as practicable following
the despatch of the Circular. The Company will make further
announcements in this regard.
Following completion of the Capital Reduction, it is expected
that the Retained Earnings will be approximately GBP8.0 million,
which will allow the Board to distribute substantially all of the
expected proceeds (net of costs) from the Disposal and, if
successful, the US Disposal. It should be noted that the Company
will need to retain a certain amount of such proceeds for its
on-going working capital requirements following both Completion and
Completion of the US Disposal.
10. Shareholders' Approval
Set out at the end of the Circular will be a notice convening
the General Meeting to be held at 10.00 a.m. on 27 February 2023 at
the offices of Charles Russell Speechlys LLP, 5 Fleet Place, London
EC4M 7RD at which the Resolutions will be proposed to approve the:
-
-- sale by the Company of the UK and Asia Businesses to MA
Financial Media for the purposes of Rule 15 of the AIM Rules;
-- Share Premium Reduction;
-- Capitalisation of the Merger Reserve; and
-- Cancellation of the B Shares.
11. Action to be taken by Shareholders
Shareholders will find enclosed with the Circular a Form of
Proxy for use at the General Meeting. They are requested to
complete and return the Form of Proxy to Share Registrars, 3 The
Millennium Centre, Crosby Way, Farnham, Surrey GU9 7XX in
accordance with the instructions printed thereon as soon as
possible but, in any event, to be received no later than 10.00 a.m.
on 23 February 2023 being 48 hours (excluding days that are not
business days) before the time of the General Meeting. Completion
and return of a Form of Proxy will not prevent you from attending
and voting at the meeting in person should you wish to do so.
12. Recommendation
The Independent Directors unanimously recommend Shareholders to
vote in favour of the Resolutions as they intend to do in respect
of their own beneficial shareholdings, which amount, in aggregate,
to 715,818 Ordinary Shares, representing approximately 0.6 per
cent. of the Company's issued share capital.
PART II
1. Capital Reduction
As noted in Part I of this announcement, the Company needs to
undertake the Capital Reduction as a preliminary step in order to
be able to return funds to Shareholders. Further details on the
Capital Reduction are set out in this Part II.
As at 31 December 2022, the Company had Retained Earnings of
approximately GBP4.44 million. As at 31 December 2022, the balance
standing to the credit of the Share Premium Account was
approximately GBP2.52 million. In addition, a sum of approximately
GBP1.97 million was standing to the credit of the Merger
Reserve.
The implementation of the Capital Reduction is subject to a
number of criteria and legal processes, which are explained further
below.
Share Premium Reduction
As at the date of this announcement, the Company has
GBP2,524,929 standing to the credit of its Share Premium
Account.
Share premium forms part of the capital of the Company which
arises on the issue by the Company of Ordinary Shares at a premium
to their nominal value. The premium element is credited to the
Share Premium Account. Under the Act, the Company is generally
prohibited from paying any dividends or making other distributions
in the absence of positive distributable reserves, and the Share
Premium Account, being a non-distributable reserve, can be applied
by the Company only for limited purposes.
However, provided the Company obtains the approval of
Shareholders by way of a special resolution and the subsequent
confirmation by the Court, it may reduce all or part of its Share
Premium Account and the amount by which the Share Premium Account
is cancelled is credited to the Company's Retained Earnings
reserve.
The Board is recommending that the entire amount of the Share
Premium Account be reduced to GBPnil. In order to effect the Share
Premium Reduction, the Company first requires the authority of its
Shareholders by the passing of a special resolution at the General
Meeting.
The Share Premium Reduction will take effect when the order of
the Court confirming it and a statement of capital approved by the
Court have been registered with the Registrar of Companies. The
Effective Date of the Share Premium Reduction is expected to be the
working day following the hearing at which the Capital Reduction is
to be confirmed by the Court. As noted in Part I of this
announcement, the Court process will commence as soon as
practicable following the date of this announcement and further
announcements will be made when appropriate.
Merger Reserve Reduction
In certain circumstances, such as where shares are issued in
consideration for the acquisition of shares in another company,
instead of creating share premium, an amount is credited to a
merger reserve. The Company has GBP1,976,190 standing to the credit
of its Merger Reserve as a result of various acquisitions of
companies in which it has used its Ordinary Shares as
consideration.
As in the case of a share premium account, a merger reserve can
only be used in very limited circumstances. However, unlike the
Share Premium Account, the Merger Reserve is a non-statutory
reserve and the Court does not have the power to reduce
non-statutory reserves.
Therefore, it is proposed to capitalise the entire sum standing
to the credit of the Company's Merger Reserve, being GBP1,976,190,
by applying that sum in paying up, in full, new B ordinary shares
in the capital of the Company (with the nominal value of such
shares being equal to the sum that is obtained by dividing the
number of such shares to be issued into GBP1,976,190) (the "B
Shares") and, on the business day prior to the day of the Court
hearing to confirm the Merger Reserve Reduction, allotting and
issuing such shares by way of a bonus issue to the persons holding
Ordinary Shares as at the Capital Reduction Record Time, on the
basis of one such B Share for every one Ordinary Share held (the
"Bonus Issue").
The B Shares will not be admitted to trading on AIM, or to any
other market or stock exchange. It is a condition of issue of the B
Shares that no share certificates will be issued in respect of
them. The B Shares will have extremely limited rights. In
particular, the B Shares will carry no rights to participate in the
profits of the Company and no rights to participate in the
Company's assets, save on a winding up. The B Shares will be
transferable, but no market will exist in them and it is
anticipated that the Court will confirm their cancellation the day
after they are issued.
A discussion of the United Kingdom tax position relating to the
Bonus Issue is set out in paragraph 2 below.
Other matters concerning the Capital Reduction
In order to approve the Capital Reduction, the Court will need
to be satisfied that the interests of the Company's creditors will
not be prejudiced by the Capital Reduction. The Company could be
required, if the Court is of the view that the interests of
creditors may be prejudiced by the Capital Reduction, to obtain
consent from creditors and/or to provide security in a form
acceptable to the Court. This is in order that the Capital
Reduction can be confirmed by the Court on terms that will permit
any part of the sum released by the Capital Reduction to be
returned to Shareholders as a capital payment.
In such event, if the Company is unable in the timetable
proposed to obtain consent from, or is unable or unwilling to
provide security (where security is required) for all such
creditors, then the amount released by the Capital Reduction, when
the Capital Reduction is confirmed by the Court, will remain
undistributable for the time being until any such outstanding
consents have been obtained, security (where security is required)
has been put in place, or the relevant obligations have been
discharged, and the Company may be required to give an undertaking
to that effect to the Court.
The Board reserves the right (where necessary by application to
the Court) to abandon, discontinue or adjourn any application to
the Court for confirmation of the Capital Reduction, and hence the
Capital Reduction itself, if the Board believes that the terms
required to obtain confirmation are unsatisfactory to the Company
or if the Board considers that to continue with the Capital
Reduction is inappropriate or not advisable and would not be in the
best interests of the Company and its Shareholders.
The Capital Reduction does not affect the voting or dividend
rights of any Shareholder or the rights of any Shareholder on a
return of capital.
2. United Kingdom taxation
The following comments are intended as a general guide only and
relate only to certain UK tax consequences of receiving the B
Shares under the Bonus Issue. The comments are based on current
legislation and HM Revenue & Customs practice, both of which
are subject to change, possibly with retrospective effect. These
comments deal only with Shareholders who are resident for taxation
purposes in the UK, who are the absolute beneficial owners of the
Ordinary Shares and who hold them as an investment and not on a
trading account. They do not deal with the position of certain
classes of Shareholders, such as dealers in securities, insurance
companies, collective investment schemes or persons regarded as
having obtained their Ordinary Shares by reason of employment.
The Bonus Issue should be treated as a "reorganisation" for the
purposes of UK taxation of chargeable gains ("CGT"), so that a
Shareholder should not be treated as making a disposal of his
Ordinary Shares for CGT purposes upon receipt of the B Shares.
Instead, the B Shares will be treated as the same asset, acquired
at the same time, as their Ordinary Shares. On the basis that the B
Shares will be treated as being paid up for "new consideration"
received by the Company, the issue of the B Shares should not give
rise to any liability under UK income tax (or corporation tax) in a
Shareholder's hands. For CGT purposes, a Shareholder's base cost in
their Ordinary Shares will be apportioned between their B Shares
and their Ordinary Shares based on their respective market values
at the date that the B Shares are cancelled. It is likely that the
market value of the B Shares will be GBPnil for the duration of
their existence. This is because the B Shares will have no voting
rights or rights to income; will have no market on which they can
be traded; and it is anticipated that they will be cancelled for no
payment on the day immediately following the date of their issue.
Consequently, the issue of the B Shares should not impact the base
cost of the Ordinary Shares and there should be no tax charge (nor
any allowable loss) on the cancellation of the B Shares.
No stamp duty or stamp duty reserve tax will be payable on the
issue of the B Shares, or on their cancellation.
This section is intended to be a general guide only and is not
intended to be, and should not be construed to be, legal or
taxation advice to any particular Shareholder. Any Shareholder who
has any doubt about their own taxation position, whether regarding
CGT or otherwise, or who is subject to taxation in any jurisdiction
other than the UK should consult their own professional taxation
advisor immediately.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2023
Latest time and date for receipt of Forms 10.00 a.m. on 23 February
of Proxy
General Meeting 10.00 a.m. on 27 February
Completion on or around 27 February
If any of the details contained in the timetable above should
change, the revised times and dates will be notified to
Shareholders by means of an announcement through a Regulatory
Information Service.
References to time in this announcement and the Notice of
General Meeting are to UK times.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context otherwise requires:
"Act" the Companies Act 2006;
"AIM" AIM, a market operated by the London Stock
Exchange;
"AIM Rules" the rules which set out the obligations and
responsibilities in relation to companies
whose shares are admitted to AIM as published
by the London Stock Exchange from time to
time;
"Asia Sale and the conditional share sale and purchase agreement
Purchase Agreement" dated 10 February 2023 between: (1) the Company;
(2) Last Word UK; and (3) MA Financial Media
relating to the disposal of Last Word Asia;
"B Shares" the B Shares in the capital of the Company
proposed to be issued in connection with the
Merger Reserve Reduction, with the nominal
value of such shares being equal to the sum
that is obtained by dividing the number of
such shares to be issued into GBP1,976,190;
"Board" or "Directors" the board of directors of the Company;
"Bonhill Media Bonhill Media UK Limited
"
"Bonus Issue" the bonus issue of B Shares to be issued in
connection with the Merger Reserve Reduction;
"Capital Reduction" together, the Share Premium Reduction and
the Merger Reserve Reduction;
"Capital Reduction 6.30 p.m. on the date immediately preceding
Record Time" the business day of the Court hearing to confirm
the Merger Reserve Reduction;
"CGT" taxation of chargeable gains;
"Circular" the circular, including the Notice and the
Form of Proxy, to be sent to Shareholders;
"City Code" The City Code on Takeovers and Mergers;
"Company" or Bonhill Group Plc, a company incorporated
"Bonhill" and registered in England and Wales under
the Act, with registered number 02607995;
"Completion" completion of the Disposal;
"Completion of completion of the proposed disposal of the
the US Disposal" business and assets of InvestmentNews;
"Continuing Group" with effect from Completion, the Company and
each of its subsidiaries and subsidiary undertakings,
being Bonhill Finance Limited, Bonhill Group
Inc, Bonhill Media, InvestmentNews and Last
Word UK;
"Court" the High Court of England and Wales;
"Disposal" the conditional disposals by the Company of
the UK and Asia Businesses to MA Financial
Media;
"Effective Date" expected to be the business day after the
Court order confirming the Capital Reduction;
"FCA" the United Kingdom Financial Conduct Authority;
"Form of Proxy" the form of proxy for use by the Shareholders
in connection with the General Meeting;
"FY2022" the financial year ended 31 December 2022
"General Meeting" the General Meeting of the Company to be held
or at the offices of Charles Russell Speechlys
"GM" LLP, 5 Fleet Place, London EC4M 7RD at 10.00
a.m. on 27 February 2023;
"Group" the Company and each of its subsidiaries and
subsidiary undertakings;
"Independent Directors" the Directors of the Company as at the date
of this announcement, other than Patrick Ponsford
who is joining the Mark Allen Group on Completion;
"InvestmentNews" InvestmentNews LLC;
"Last Word Asia" Last Word Media (Asia) Pte. Limited, the Company's
or "Asia Business" Singaporean subsidiary (which is held as to
25 per cent. by the Company and 75 per cent.
by Last Word UK);
"Last Word UK" Last Word Media (UK) Limited, the Company's
wholly owned subsidiary;
"Loan Facility" standby loan facility with Rockwood Strategic
Plc;
"London Stock Exchange" London Stock Exchange plc;
"MA Financial Media" MA Financial Media Limited, a member of the
Mark Allen Group, and an ultimate subsidiary
of Mark Allen Holdings Limited;
"Merger Reserve" the non-distributable capital reserve with
that name in the accounts of the Company;
"Merger Reserve the reduction of the Merger Reserve to be
Reduction" effected by the Bonus Issue and subsequent
cancellation of the B Shares;
"Mark Allen Holdings Mark Allen Holdings Limited, the ultimate
Limited" parent company of MA Financial Media being
the purchaser of the UK and Asia Businesses;
"Notice" the notice of the General Meeting, which will
be set out at the end of the Circular;
"Ordinary Shares" ordinary shares of 1 penny each in the capital
of the Company;
"Proposed Tender the proposed tender offer to return certain
Offer" of the Company's available cash reserves to
Shareholders following Completion and Completion
of the US Disposal;
"Registrars" Share Registrars Limited;
"Regulatory Information a regulatory information service that is approved
Service" by the FCA as meeting the FCA's primary information
provider criteria and that is on the list
of authorised regulatory information service
providers maintained by the FCA;
"Resolutions" the resolutions which are set out in the Notice;
"Retained Earnings" the distributable capital reserve with that
name in the accounts of the Company;
"Rockwood"
Rockwood Strategic Plc;
"Sale and Purchase together, (i) the UK Sale and Purchase Agreement
Agreements" and (ii) the Asia Sale and Purchase Agreement;
"Shareholder(s)" holder(s) of the Ordinary Shares;
"Share Premium the non-distributable capital reserve with
Account" that name in the accounts of the Company;
"Share Premium the cancellation of the amounts standing to
Reduction" the credit of the Share Premium Account;
"Shore Capital" Shore Capital and Corporate and/or Shore Capital
Stockbrokers, as the context requires;
"Shore Capital Shore Capital and Corporate Limited, registered
and Corporate" in England and Wales under company registration
number 02083043, whose registered office is
at Cassini House, 57 St James's Street, London
SW1A 1LD;
"Shore Capital Shore Capital Stockbrokers Limited, registered
Stockbrokers" in England and Wales under company registration
number 1850105, whose registered office is
at Cassini House, 57 St James's Street, London
SW1A 1LD;
"UK and Asia Businesses" the UK Business and Last Word Asia;
"UK Business" the business and assets of Bonhill Media UK
Limited;
"UK Business Disposal" the disposal of the UK Business;
"UK Sale and Purchase the conditional asset sale and purchase agreement
Agreement" dated 10 February 2023 between: (1) the Company;
(2) Bonhill Media; (3) MA Business Limited;
and (4) MA Financial Media relating to the
UK Business Disposal;
"United Kingdom" the United Kingdom of Great Britain and Northern
or Ireland;
"UK"
"US" the United States of America; and
"US Disposal " the proposed disposal of the business and
assets of InvestmentNews.
Unless otherwise stated, the US$/GBP exchange rate used in this
announcement is 1.21
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END
DISGZGMZDGMGFZM
(END) Dow Jones Newswires
February 10, 2023 09:07 ET (14:07 GMT)
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