TIDMEQPI TIDMEQPC
RNS Number : 5513Q
Equity Partnership Inv Co PLC
04 August 2010
This replaces RNS 5486Q released at 16:15 today.
4 August 2010
The Equity Partnership Investment Company PLC
("EPIC" or the "Company")
Disposal of the Private Equity Portfolio
The Board of EPIC is pleased to announce that it has entered into a conditional
agreement with the ESO Fund (a limited partnership majority owned by EPE Special
Opportunities plc ("ESO")) to dispose of the Private Equity Portfolio to the ESO
Fund for a total consideration of GBP22.0 million. The Disposal is in line with
the Board's objective of realising the Company's illiquid investments in a
timely manner ahead of the Company's winding up at the end of July 2011.
Completion of the Disposal is conditional upon, among other things, the approval
of EPIC's Capital Shareholders.
Highlights:
· Proposed disposal of the Private Equity Portfolio for a total
consideration of GBP22.0 million
· Proposed disposal will convert illiquid assets, comprising the
Private Equity Portfolio, valued at GBP26.4 million (as at 31 January 2010),
into GBP10.0 million of cash, GBP2.0 million of semi-liquid assets and GBP10.0
million of Convertible Loan Notes
· Completion of the disposal will result in full liquid asset coverage
for the redemption of the ZDPs and full liquid, semi-liquid and dated loan stock
(loans dated to mature within the life of the Company) coverage for the
redemption of the Income Shares
· Irrevocable undertakings received to vote in favour of the disposal
from Capital Shareholders in respect of, in aggregate, 20,863,000 Capital
Shares, representing approximately 51.76 per cent. of the Capital Shares in
issue at the date of this announcement.
Enquiries:
+---------------------------------+--------------------------------+
| The Equity Investment | 01624 681 250 |
| Partnership Company PLC | |
| Philip Scales | |
+---------------------------------+--------------------------------+
| | |
+---------------------------------+--------------------------------+
| Strand Hanson Limited | 020 7409 3494 |
| James Harris, Richard Tulloch, | |
| James Spinney | |
+---------------------------------+--------------------------------+
This announcement is for information purposes only and does not constitute an
offer or invitation to acquire or dispose of any securities or investment advice
in any jurisdiction.
Shareholders should read the whole of the circular to be sent to them shortly
and not just rely on the summarised information set out in this announcement.
Strand Hanson Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting for the Company and for no one
else in connection with the Disposal and the contents of this announcement and
will not be responsible to anyone other than the Company for providing the
protections afforded to customers of Strand Hanson Limited in relation to the
Disposal and the contents of this announcement or any other matters referred to
in this announcement.
Proposed Disposal of the Private Equity Portfolio
1. Introduction
The Board of EPIC is pleased to announce that the Company had entered into a
conditional agreement with the ESO Fund (a limited partnership majority owned by
EPE Special Opportunities plc) to dispose of the Private Equity Portfolio to the
ESO Fund for a total consideration of GBP22.0 million. The disposal of the
Private Equity Portfolio is in line with the Board's objective of realising the
Company's illiquid investments in a timely manner ahead of the Company's winding
up at the end of July 2011.
Owing to the size of the Disposal relative to the size of the Company, the
Disposal constitutes a Class 1 transaction for the purpose of the Listing Rules.
Completion of the Disposal is therefore conditional upon, among other things,
the approval of Capital Shareholders at the Extraordinary General Meeting to be
held at the offices of the Registrar at IOMA House, Hope Street, Douglas, Isle
of Man IM1 1AP.
2. Background to and reasons for the Disposal
Following Capital Shareholders' approval at the 2008 AGM of the resolution that
the Company should not continue as an investment company beyond the end of July
2011, the Board has stated that its priority is to ensure that the ZDPs and
Income Shares have their final entitlements, which are due on 31 July 2011,
backed by liquid (cash and cash equivalents) and semi-liquid (listed or quoted
securities) assets. Achieving this objective will then ensure that all
subsequent realisations and any future initiatives to monetise the Company's
assets can be focussed on achieving returns for Capital Shareholders.
The assets of the Company are categorised as liquid (cash and cash equivalents),
semi-liquid (listed or quoted securities), dated loan stock (loans dated to
mature within the life of the Company) and illiquid (private equity assets and
other unlisted specialist funds). The redemption value of the ZDPs is currently
fully covered by a combination of liquid and semi-liquid assets. However, the
redemption value of the Income Shares is currently only partially covered by
liquid, semi-liquid and dated loan stock assets with approximately 50 per cent.
being made up by illiquid assets, meaning that the Company has a funding
requirement which must be met by 31 July 2011.
The Private Equity Portfolio, which consists of investments in nine UK-based
small and medium sized enterprises operating across eight sectors, accounts for
approximately 90 per cent. of the Company's illiquid assets. On Completion of
the disposal of the Private Equity Portfolio, the Company's illiquid assets will
be significantly reduced with an increase in its liquid and semi-liquid assets
resulting in full liquid asset coverage for the redemption obligation of the
ZDPs and full liquid, semi-liquid and dated loan stock (loans dated to mature
within the life of the Company) coverage for the redemption obligation of the
Income Shares. The Disposal is therefore in line with the Company's objective to
ensure that the final entitlements of the ZDPs and Income Shares are backed by
liquid and semi-liquid assets.
The total consideration for the Private Equity Portfolio is GBP22.0 million,
which represents a discount of approximately 17 per cent. from the unaudited
total asset value, less cash and cash equivalents, of the Private Equity
Portfolio of GBP26.4 million as at 31 January 2010. The consideration payable
to the Company comprises a combination of cash, Consideration Shares and
Convertible Loan Notes to be issued by ESO, meaning that the Company has the
prospect of sharing in the future performance of the Private Equity Portfolio.
The Board believes that the disposal of the Private Equity Portfolio achieves an
exit from all of its private equity investments in an orderly manner. It avoids
the Company having to dispose of each of its private equity investments on an
individual basis which the Directors believe would be expensive and time
consuming and which may not result in the realisation of all of the Company's
investments or achievement of a price comparable with the total consideration,
particularly given current market conditions.
Furthermore, the Board believes that the Disposal represents the most achievable
solution to the illiquidity of the Private Equity Portfolio. It is noted that
ESO's investment adviser is EPE, which is also the investment adviser to the
LLPs in respect of the Private Equity Portfolio. EPE is therefore very familiar
with the Private Equity Portfolio and well positioned to seek to ensure that
there are no complications with the transfer of the Private Equity Portfolio to
ESO.
Additionally, EPIC has not given any representations or warranties to ESO or the
ESO Fund in respect of the Disposal other than in relation to its interest in
the LLPs, capacity and accuracy of certain information, enabling EPIC to realise
the Private Equity Portfolio. In addition, the Company's liability in respect
of the warranties given pursuant to the Disposal Agreement will terminate on 31
July 2011.
The Board draws shareholders attention to the following highlights of the
Disposal:
· the Disposal will convert illiquid assets, comprising the Private
Equity Portfolio, of GBP26.4 million (as at 31 January 2010) into GBP10.0
million of cash, GBP2.0 million of semi-liquid assets and GBP10.0 million of
Convertible Loan Notes (which will be classed as semi-liquid assets upon the
admission of the Convertible Loan Notes to trading on an appropriate exchange);
· this will result in full liquid asset coverage for the redemption
obligation of the ZDPs and full liquid, semi-liquid and dated loan stock (loans
dated to mature within the life of the Company) coverage for the redemption
obligation of the Income Shares;
· the Convertible Loan Notes carry an interest rate of 7.5 per cent.
per annum. By way of illustration only, the annual return on the Convertible
Loan Notes is in excess of the cash interest received by the Group from the
Private Equity Portfolio in the financial year ended 31 July 2009;
· current market conditions significantly limit the opportunities for
advantageous exits of small private equity assets on an individual basis and the
Disposal enables the Company to realise the Private Equity Portfolio in a timely
and cost effective manner without significant value erosion;
· third party debt, which alternative potential acquirers are likely
to require in order to purchase the Private Equity Portfolio, is not freely
available;
· EPE is waiving its right to its Carried Interest entitlement in
respect of the Private Equity Portfolio which would stand at GBP1.3 million were
the Private Equity Portfolio realised at its unaudited total asset value, less
cash and cash equivalents, of GBP26.4 million as at 31 January 2010. After
adjusting the unaudited total asset value, less cash and cash equivalents, of
the Private Equity Portfolio as at 31 January 2010 for the estimate of EPE's
Carried Interest entitlement, the total consideration would represent a discount
of approximately 12 per cent. as opposed to a discount of approximately 17 per
cent. prior to the adjustment; and
· subsequent to Completion, the Company will hold Ordinary Shares
representing approximately 20.0 per cent. of ESO's Enlarged Issued Ordinary
Share Capital, and Convertible Loan Notes with a nominal value of GBP10.0
million. On the winding up of the Company at the end of July 2011, the Board
will seek to provide Capital Shareholders with the option to elect to receive a
pro rata entitlement to the remaining Ordinary Shares and Convertible Loan Notes
which will give them an opportunity to participate substantially in further
growth in the value of the Private Equity Portfolio. It is intended that
Ordinary Shares and Convertible Loan Notes which Capital Shareholders elect not
to receive, will be sold by EPIC for the benefit of those Capital Shareholders.
Taking into account the above considerations and the requirements of the Company
to realise the Private Equity Portfolio and maximise value for Shareholders, the
Board believes that the total consideration of GBP22.0 million represents not
only reasonable value for the Private Equity Portfolio but also gives the
Company the ability to participate in the future performance of the Private
Equity Portfolio.
3. Principal terms and conditions of the Disposal
Under the Disposal Agreement, the Company has agreed to sell its interest in the
LLPs which hold the Private Equity Portfolio to the ESO Fund for a total
consideration of GBP22.0 million. In view of the size of the transaction it is
regarded as a reverse takeover for ESO under the AIM Rules for Companies,
requiring ESO to publish an admission document, for its Ordinary Shares to be
readmitted to AIM and for ESO's shareholders to approve, amongst other things,
the acquisition of the Private Equity Portfolio. In addition, the Disposal also
constitutes a Class 1 transaction for EPIC for the purpose of the Listing Rules,
and as such, Completion of the Disposal is therefore also conditional upon,
among other things, the approval of the Resolution by the Capital Shareholders.
The total consideration payable by ESO for the Private Equity Portfolio under
the Disposal Agreement will be as follows:
· GBP10.0 million in cash;
· Convertible Loan Notes issued to EPIC with a nominal value of
GBP10.0 million; and
· Consideration Shares issued to EPIC with a value of GBP2.0 million
at the Issue Price.
The Convertible Loan Notes will be unsecured and issued by ESO to EPIC subject
to a 7.5 per cent. interest rate per annum payable semi-annually in arrears.
The Convertible Loan Notes will be convertible into Ordinary Shares at the
Initial Conversion Price of 170 pence nominal value of Convertible Loan Notes
per Ordinary Shares. Pursuant to the Deed Poll, ESO has undertaken to use its
reasonable endeavours to seek admission of the Convertible Loan Notes to PLUS or
another appropriate exchange on or before 31 July 2011, being the date of the
winding up of EPIC, to give holders of the Convertible Loan Notes the ability to
trade their respective holdings on market. Until that event the Convertible
Loan Notes will not be listed or quoted on any exchange. The Convertible Loan
Notes will be repayable in full on 31 December 2015 or, if a continuation
resolution is passed by the shareholders of ESO (as described in paragraph 5
below), on 31 December 2016 unless a holder of the Convertible Loan Notes elects
to redeem his Convertible Loan Notes on 31 December 2015.
The Consideration Shares to be issued by ESO to EPIC will be quoted on AIM and
will rank in full for all dividends declared or paid after the date of issue and
otherwise pari passu with ESO's existing Ordinary Shares. The Consideration
Shares will be issued at a price of 55.86 pence per Ordinary Share, which
represents a discount of 20.0 per cent. to ESO's unaudited pro-forma
consolidated net asset value following Completion of 69.83 pence per Ordinary
Share.
The Consideration Shares, and Ordinary Shares arising on the conversion of any
Convertible Loan Notes, will be subject to a lock-in until 31 July 2011 and for
the following 12 months will be subject to orderly marketing requirements so
long as such Consideration Shares and Ordinary Shares are held by the Company.
4. EPIC's investment in ESO
EPIC has been a shareholder of ESO since ESO was formed in 2003 and currently
holds 2,612,718 Ordinary Shares representing approximately 9.8 per cent. of
ESO's current issued share capital. Following Completion of the Disposal, EPIC
will hold a total of 6,193,097 Ordinary Shares (representing approximately 20.0
per cent. of ESO's Enlarged Issued Ordinary Share Capital) and Convertible Loan
Notes convertible into a further 5,882,352 Ordinary Shares at the Initial
Conversion Price. If the Company were to convert all of its Convertible Loan
Notes into Ordinary Shares at the Initial Conversion Price immediately following
Completion, the Company would be interested in 12,075,449 Ordinary Shares,
representing approximately 32.8 per cent. of ESO's then enlarged issued share
capital and the Company would be required to make an offer for ESO in accordance
with Rule 9 of the City Code. The Company has agreed that it will not convert
all or such number of Convertible Loan Notes into Ordinary Shares, if such
conversion would result in the Company and/or any of its concert parties (as
such term is defined in the City Code) being required to make a mandatory offer
for ESO under Rule 9 of the City Code.
During the course of the next 12 months, the Board's focus will be to seek to
realise the semi-liquid and dated loan stock assets to increase the proportion
of the Income Shares' final entitlement backed by liquid assets while
maintaining its interest in ESO through the Ordinary Shares and the Convertible
Loan Notes. It is therefore envisaged that on the winding up of EPIC at the end
of July 2011, the Board will seek to provide Capital Shareholders with the
option to elect to receive a pro rata entitlement to the remaining Ordinary
Shares and Convertible Loan Notes which will give them an opportunity to
substantially participate in further value growth of the Private Equity
Portfolio. It is intended that the Ordinary Shares and Convertible Loan Notes
which Capital Shareholders elect not to receive will be sold by EPIC for the
benefit of those Capital Shareholders.
5. Information relating to ESO
ESO is an AIM-quoted private equity investment company which, since its
admission to AIM in 2003, has been focussed on 'special situations' investments
where the investment opportunity is driven by a specific event which may or may
not involve company distress. Where businesses are underperforming at the time
of acquisition, EPE, as ESO's investment adviser, aims to use its restructuring
and refinancing expertise to restore profitability. The current approach of ESO
is long-term private equity investment with an aim to improving portfolio
companies beyond the turnaround phase in order to achieve maximum value at exit.
ESO's portfolio of investments consists of four investments and as at 30 June
2010 ESO had an unaudited net asset value of 73.74 pence per Ordinary Share
(Source: ESO's unaudited monthly net asset value per Ordinary share announcement
announced on 13 July 2010) which is equivalent to an unaudited net asset value
of GBP19.6 million. ESO's two largest investments are in Past Times Holdings
Limited and Whittard of Chelsea. Past Times Holdings Limited has been
successfully returned to profitability following its acquisition in December
2005 and Whittard of Chelsea, which was acquired in December 2008, is now stable
following its restructuring and is expected to return to profitability in the
current financial year
As at 30 June 2010, ESO had cash and cash equivalents of GBP4 million, and as a
result the Directors believe that ESO has available cash reserves to support the
growth of its existing investments and the Private Equity Portfolio to be
acquired from EPIC which will aid in achieving the optimal value for each
investment on exit.
Since ESO's inception and admission to AIM in September 2003, when it raised
GBP30 million (before expenses), ESO has:
· generated gross income of GBP14 million;
· deployed over GBP39 million of capital and already returned GBP27
million to ESO in the form of capital and income, with the majority having been
reinvested;
· paid dividends to shareholders of, in aggregate, GBP5.0 million;
· achieved a consolidated track record of 1.0 times money multiple
(both existing and current investments); and
· completed 17 transactions to date.
EPE, the investment adviser to ESO, has been actively involved in acquiring
distressed assets for ESO since 2003 and has built up an extensive network of
deal sources, advisory partners and financing partners and has investigated over
670 investment opportunities since ESO's inception.
In connection with the Disposal, ESO proposes transferring or procuring the
transfer of the ESO Portfolio to the ESO Fund of which it is a limited partner.
The ESO Fund will also admit ESD as a limited partner in return for a capital
contribution to the ESO Fund of GBP10.0 million at the unaudited net asset value
of GBP35.2 million of the ESO Fund following Completion. ESD is a special
purpose vehicle formed by European Secondary Development Fund IV, L.P. which is
a limited partnership established under the laws of the Bailiwick of Guernsey,
established in 2007 with committed capital of EUR353.7 million. European
Secondary Development Fund IV, L.P.'s investment focus is the purchase of
secondary positions in existing private equity investments, primarily in Europe.
The ARCIS Group acts as specialist investment adviser to European Secondary
Development Fund IV, L.P. Founded in 1993, the ARCIS Group is headquartered in
Europe, with offices in London, Paris and New York. ESD is providing GBP10.0
million of cash to the ESO Fund to facilitate the acquisition of the Private
Equity Portfolio.
The unaudited net asset value of the ESO Fund following Completion will be
GBP35.2 million (being the total consideration of GBP22.0 million for the
Private Equity Portfolio and the unaudited net asset value of the ESO Portfolio
of GBP13.2 million, as at 30 June 2010), and therefore ESD will have 28 per
cent., and ESO will be entitled to the remaining 72 per cent., interest in the
ESO Fund. Both ESD and ESO will be represented on the advisory committee of the
ESO Fund.
ESO's board of directors considers that it would be appropriate to provide a
period of certainty for the realisation of assets held in the ESO Fund. The
initial term of the ESO Fund is five years, with a possibility of extension for
up to a further two years with the agreement of the limited partners.
The winding-up date of ESO is 31 December 2016 with a continuation ordinary
resolution to be proposed to ESO shareholders in September 2015 to allow ESO to
continue in existence for a further 5 years. Assuming the continuation ordinary
resolution is approved in 2015, a similar resolution will be proposed every five
years after September 2015.
As part of ESO's proposals to acquire the Private Equity Portfolio, ESO will
also seek the approval of its shareholders to revise its investment strategy to
enable it to target growth and buyout situations as well as special situations
and distressed investments, in small and medium sized companies in the UK, and
will seek to make investments where it believes that pricing is attractive and
the opportunity for value creation is strong.
ESO will look to make new investments of between GBP2.0 million and GBP10.0
million in a range of debt and equity instruments with a view to generating
returns through both yield and capital gain. Whilst in general ESO will aim to
take controlling equity positions, it may seek to develop companies as a
minority investor. ESO will consider making new investments in a broad range of
shareholding structures and across the majority of sectors utilising EPE's
experience in the consumer, retail, manufacturing, financial services,
healthcare, support services and media sectors.
Following the acquisition, ESO and ESD will support the development of the ESO
Fund (which will hold the Private Equity Portfolio and the ESO Portfolio) which
may make bolt-on acquisitions and provide growth capital to its existing
investments as appropriate. However, any new investments made by ESO going
forward (other than follow-on investments in the ESO Fund) are not expected to
be made through the ESO Fund. Instead, any such new investments made by ESO
going forward will be through ESO Investments in which ESO is the sole investor,
in accordance with its revised investment strategy. Any material changes to the
ESO Fund will require unanimous consent from ESO Fund's investors, which consist
of ESO and ESD, including in respect of any changes to its investment strategy
and purpose, duration and investment period and fees and carried interest and
any admission of additional investors to the ESO Fund. On successful
realisation of the ESO Fund and any future investments held in ESO Investments,
and in the absence of any new investment opportunities, deemed attractive by the
board of directors of ESO, ESO may seek to return capital to shareholders.
6. Arrangements with EPE
EPE is currently the investment adviser to the LLPs in respect of the Private
Equity Portfolio and the investment adviser to ESO. Subsequent to the
transaction, EPE's arrangement with EPIC will terminate.
As part of the proposals, EPE has agreed to waive its right to its Carried
Interest entitlement in respect of the Private Equity Portfolio which would
stand at GBP1.3 million were the Private Equity Portfolio realised at its
unaudited total asset value, less cash and cash equivalents of GBP26.4 million
as at 31 January 2010.
EPE, or a subsidiary of EPE, will act as general partner and/or manager of the
ESO Fund and will be entitled to remuneration in that capacity.
7. Financial effects of the Disposal and use of Disposal Proceeds
On Completion, the Company's illiquid assets will be reduced by GBP26.4 million
being the unaudited total asset values of EPIC 1 and EPIC 2 as at 31 January
2010 of GBP26.8 million, less GBP0.4 million of cash and cash equivalents held
by EPIC 1 and EPIC 2 as at 31 January 2010. The cash and cash equivalent held
by EPIC 1 and EPIC 2 at Completion will be repaid to the Group. The Group's
liquid assets will increase by GBP10.0 million, comprising the cash element of
the consideration, the semi-liquid assets will increase by GBP2.0 million, being
the value of the Consideration Shares at the Issue Price, and a new asset class
will be created comprising the Convertible Loan Notes which will have a value of
GBP10.0 million being the nominal value of the Convertible Loan Notes. The
Convertible Loan Notes will be classed as semi-liquid assets upon their
admission to an appropriate exchange.
As a result, the Directors estimate that the Disposal will result in improved
cover for the estimated unaudited final entitlements of the ZDPs and Income
Shares. In particular, the Board believes that following Completion, the ZDPs
will be fully covered by liquid assets and that the Income Shares will be fully
covered by liquid, semi-liquid and dated loan stock (loans dated to mature
within the life of the Company) assets. Therefore, subject to Completion, the
Directors believe that there will be greater certainty that the unaudited final
entitlements of ZDP Holders and Income Shareholders will be met in July 2011.
The GBP10.0 million received as cash as part of the total consideration, will be
invested in investments which are readily realisable, pending the winding up of
the Company at the end of July 2011. Such investments could include investments
in quoted and unquoted equities, fixed income securities, structured income
products and investment funds, which is consistent with the Company's existing
investment policy. Investments in unquoted and illiquid assets will only be
entered into if the Company has previously contracted to do so or in the event
that they mature, and are guaranteed to be redeemed in full and in cash, prior
to the end of July 2011. In addition, the Company may also look to use the cash
part of the total consideration to acquire ZDPs, Income Shares and Capital
Shares in the market pursuant to approval of the ZDP Holders at the
extraordinary general meeting of the Company to be held today, 4 August 2010.
8. Future Strategy
As the Company moves into the final year of its life, the Board's focus is
increasingly upon the liquidity of the Company's investments and its ability to
satisfy the expectations of ZDP Holders, Income Shareholders and Capital
Shareholders by the end of July 2011. The Directors believe that the Disposal
will ensure that ZDPs have their final entitlement backed by liquid assets and
that the Disposal will provide greater certainty that Income Shares will have
their final entitlement backed by liquid, semi-liquid and dated loan stock
(loans dated to mature within the life of the Company) assets.
During the course of the next 12 months, the Board's focus will be to seek to
realise the semi-liquid and dated loan stock assets to increase the proportion
of the Income Shares final entitlement backed by liquid assets while maintaining
its interest in ESO through the Consideration Shares and the Convertible Loan
Notes. Achieving this objective will then ensure that all subsequent
realisations and any future initiatives to monetise assets can be focussed on
achieving returns for Capital Shareholders, including realising the remaining
illiquid assets being the equity interests in CCD Leisure Limited, Jupiter Hyde
Park Hedge Fund and EEA Life Settlement Fund, in a timely manner. This is
consistent with the Company's existing investment policy but reflects the time
horizon ahead of the Company's winding up at the end of July 2011.
9. Current trading
Since the Company's interim management statement announced on 14 May 2010, the
Company's performance has been stable with a unaudited net asset value of 50.89
pence per Capital Share as at 23 July 2010, which represents an increase of 6.4
per cent. since 30 April 2010, and is an outperformance of the FTSE All Share
Index which fell by 4.2 per cent. over the same period.
Income Shareholders received a dividend of 3.1217 pence per Income Share on 21
May 2010 and on 22 July 2010, the Company announced that a further dividend of
3.1217 pence per Income Share would be paid on 27 August 2010, and the unaudited
net asset value per Income Share was 99.74 pence as at 23 July 2010. In line
with the Company's strategy, it has continued to seek to realise investments
over the period in less liquid investments where possible and to commit funds to
highly liquid investments or instruments dated to mature before the end of the
Company's life on 31 July 2011.
The Private Equity Portfolio has also remained stable since the interim
management statement, performing in line with expectations. No new investments
have been made since 14 May 2010.
10. Irrevocables
The Company has received irrevocable undertakings to vote in favour of the
Resolution from Capital Shareholders in respect of, in aggregate, 20,863,000
Capital Shares, representing approximately 51.76 per cent. of the Capital Shares
in issue at the date of this announcement.
11. Further information and details of the Disposal
A circular containing further details of the Disposal, including notice of the
Extraordinary General Meeting to seek Capital Shareholders approval for the
Disposal and the recommendation of the Board to vote in favour of the Disposal,
will be sent to Capital Shareholders shortly.
Shareholders should read the whole of the circular to be sent to them shortly
and not just rely on the summarised information set out in this announcement.
Definitions
The following definitions apply throughout this announcement unless the context
requires otherwise:
+--------------------------------+----------------------------------+
| "2008 AGM" | the Company's annual general |
| | meeting held on 29 December 2008 |
| | at which Capital Shareholders |
| | approved the resolution that the |
| | Company should not continue as |
| | an investment company beyond the |
| | end of July 2011 |
+--------------------------------+----------------------------------+
| "AIM" | the AIM Market operated by the |
| | London Stock Exchange |
+--------------------------------+----------------------------------+
| "AIM Rules for Companies" | the rules for companies whose |
| | securities are traded on AIM |
| | published by the London Stock |
| | Exchange as amended from time to |
| | time |
+--------------------------------+----------------------------------+
| "Board" or "Directors" | the board of directors of the |
| | Company |
+--------------------------------+----------------------------------+
| "Capital Shares" | capital shares of 10 pence each |
| | in the capital of the Company |
+--------------------------------+----------------------------------+
| "Capital Shareholders" | holders of Capital Shares from |
| | time to time |
+--------------------------------+----------------------------------+
| "City Code" | the City Code on Takeovers and |
| | Mergers as amended from time to |
| | time |
+--------------------------------+----------------------------------+
| "Carried Interest" | the right of EPIC Carry and EPIC |
| | Carry 2 to receive payments |
| | representing carried interest |
| | under the limited partnership |
| | agreements constituting EPIC 1 |
| | and EPIC 2, respectively |
+--------------------------------+----------------------------------+
| "Completion" | completion of the Disposal |
| | pursuant to the Disposal |
| | Agreement |
+--------------------------------+----------------------------------+
| "Consideration Shares" | the 3,580,379 Ordinary Shares to |
| | be issued by ESO to EPIC in |
| | accordance with the terms of the |
| | Disposal Agreement |
+--------------------------------+----------------------------------+
| "Conversion Shares" | the 5,882,352 Ordinary Shares |
| | issuable on exercise of the |
| | Convertible Loan Notes in full, |
| | at the Initial Conversion Price |
+--------------------------------+----------------------------------+
| "Convertible Loan Notes" | the 10,000,000 unsecured |
| | convertible loan notes of GBP1 |
| | each to be issued by ESO to EPIC |
| | in accordance with the terms of |
| | the Disposal Agreement, to be |
| | constituted by the Deed Poll |
+--------------------------------+----------------------------------+
| "Deed Poll" | the deed poll constituting the |
| | Convertible Loan Notes executed |
| | by ESO on 4 August 2010 |
+--------------------------------+----------------------------------+
| "Disposal" | the proposed disposal by the |
| | Company of the Private Equity |
| | Portfolio to ESO pursuant to the |
| | terms and subject to the |
| | conditions of the Disposal |
| | Agreement |
+--------------------------------+----------------------------------+
| "Disposal Agreement" | means the sale and purchase |
| | agreement dated 4 August 2010 |
| | between the Company, EPIC Carry, |
| | EPIC Carry 2 and EPE LLP (as |
| | sellers), Fund GP, the ESO Fund |
| | (collectively with the Fund GP, |
| | the purchasers) and ESO, |
| | relating to the Disposal |
+--------------------------------+----------------------------------+
| "Enlarged Issued Ordinary | the ordinary share capital of |
| Share Capital" | ESO as enlarged by the issue of |
| | the Consideration Shares and the |
| | EPE Shares |
+--------------------------------+----------------------------------+
| "EPE" | EPIC Private Equity LLP, of 7th |
| | Floor, Billiter Street, London |
| | EC3M 2RY, which acts as the |
| | investment adviser to the LLPs |
| | and as the investment adviser to |
| | ESO |
+--------------------------------+----------------------------------+
| "EPE Shares" | 769,781 Ordinary Shares to be |
| | issued to EPE in respect of its |
| | services to ESO in relation to |
| | the structuring of the Disposal |
| | and formation of the ESO Fund |
+--------------------------------+----------------------------------+
| "EPIC 1" | EPIC Investments LLP, a limited |
| | liability partnership through |
| | which debt and equity |
| | investments in certain of the |
| | companies which comprise the |
| | Private Equity Portfolio are |
| | held |
+--------------------------------+----------------------------------+
| "EPIC 2" | EPIC Investments 2 LLP, a |
| | limited liability partnership |
| | through which debt and equity |
| | investments in certain of the |
| | companies which comprise the |
| | Private Equity Portfolio are |
| | held |
+--------------------------------+----------------------------------+
| "EPIC Securities" | EPIC Securities plc, a |
| | subsidiary of the Company |
+--------------------------------+----------------------------------+
| "ESD" | DES Holding IV (A) LLC, a |
| | limited liability company formed |
| | under the laws of the State of |
| | Delaware by European Secondary |
| | Development Fund IV, L.P. |
+--------------------------------+----------------------------------+
| "ESO Fund" | ESO Investments 1 LP, a limited |
| | partnership majority owned by |
| | ESO, registered in England and |
| | Wales with registered number |
| | LP014043, to which it is |
| | proposed the Private Equity |
| | Portfolio be transferred |
+--------------------------------+----------------------------------+
| "ESO Investments" | ESO Investments 2 LLP, a limited |
| | liability partnership in which |
| | ESO is the sole investor, |
| | incorporated in England & Wales |
| | with registered number OC356809 |
+--------------------------------+----------------------------------+
| "ESO Portfolio" | the portfolio of debt and equity |
| | investments held by ESO directly |
| | and/or indirectly in Morada, |
| | Past Times Holdings Limited and |
| | Whittard of Chelsea, except for |
| | any interest accrued but unpaid |
| | on such debt investments on the |
| | date of Admission |
+--------------------------------+----------------------------------+
| "Extraordinary General | the extraordinary general |
| Meeting" or "EGM" | meeting of the Company details |
| | of which will be set out in the |
| | circular to be sent to |
| | Shareholders shortly |
+--------------------------------+----------------------------------+
| "FSMA" | the Financial Services and |
| | Markets Act 2000, as amended |
| | from time to time |
+--------------------------------+----------------------------------+
| "Fund GP" | EPE GP Limited, a private |
| | limited company incorporated in |
| | England & Wales with registered |
| | number 7324310 whose registered |
| | office is at 10 Norwich Street, |
| | London EC4A IBD |
+--------------------------------+----------------------------------+
| "Group" or "EPIC Group" | the Company and its subsidiaries |
+--------------------------------+----------------------------------+
| "Issue Price" | the issue price of the |
| | Consideration Shares of 55.86 |
| | pence per Consideration Share |
| | pursuant to the Disposal |
| | Agreement |
+--------------------------------+----------------------------------+
| "Income Shares" | income shares of 10 pence each |
| | in the capital of the Company |
+--------------------------------+----------------------------------+
| "Income Shareholders" | holders of Income Shares from |
| | time to time |
+--------------------------------+----------------------------------+
| "Initial Conversion Price" | 170 pence nominal value of |
| | Convertible Loan Notes per |
| | Ordinary Share |
+--------------------------------+----------------------------------+
| "LLPs" | EPIC 1 and EPIC 2, the limited |
| | liability partnerships through |
| | which the Private Equity |
| | Portfolio is held |
+--------------------------------+----------------------------------+
| "Listing Rules" | means the Listing Rules of the |
| | UK Listing Authority made under |
| | Part VI of FSMA |
+--------------------------------+----------------------------------+
| "London Stock Exchange" | London Stock Exchange plc |
+--------------------------------+----------------------------------+
| "Morada" | Laneside Holdings Limited, which |
| | trades under the name of |
| | "Morada" |
+--------------------------------+----------------------------------+
| "NAV" | the total of the consolidated |
| | share capital and reserves from |
| | time to time of the Company or |
| | ESO calculated in accordance |
| | with the relevant company's |
| | accounting policies |
+--------------------------------+----------------------------------+
| "Ordinary Shares" | ordinary shares of 5 pence each |
| | in the capital of ESO |
+--------------------------------+----------------------------------+
| "PLUS" | the PLUS-quoted market segment |
| | of PLUS Markets Group plc |
+--------------------------------+----------------------------------+
| "Private Equity Portfolio" | the portfolio of investments to |
| | be acquired by the ESO Fund |
| | through the acquisition of EPIC |
| | 1 and EPIC 2 pursuant to the |
| | Disposal Agreement |
+--------------------------------+----------------------------------+
| "Registrar" | IOMA Fund and Investment |
| | Management Limited, the |
| | Company's registrars |
+--------------------------------+----------------------------------+
| "Resolution" | the resolution to be set out in |
| | the notice of EGM which will be |
| | in the circular to Shareholders |
+--------------------------------+----------------------------------+
| "Shareholders" | holders of Capital Shares and/or |
| | Income Shares from time to time |
+--------------------------------+----------------------------------+
| "UKLA" or "UK Listing | the Financial Services |
| Authority" | Authority, acting in its |
| | capacity as the competent |
| | authority for the purposes of |
| | Part VI of the FSMA |
+--------------------------------+----------------------------------+
| "Whittard of Chelsea" | Hamsard 3145 Limited, a limited |
| | company registered in England & |
| | Wales (with registered number |
| | 6753143 and whose registered |
| | office is at Windrush House, |
| | Windrush Park, Witney, 0X29 |
| | 7DX), which trades under the |
| | name of "Whittard of Chelsea" |
+--------------------------------+----------------------------------+
| "ZDPs" | zero dividend preference shares |
| | of 10 pence each issued by EPIC |
| | Securities |
+--------------------------------+----------------------------------+
| "ZDP Holders" | holders of ZDPs |
+--------------------------------+----------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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