TIDMCNT TIDMFNT
RNS Number : 6716V
Connaught PLC
15 July 2009
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR
IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION
OF THE RELEVANT LAWS OF SUCH JURISDICTION.
15 July 2009
RECOMMENDED SHARE OFFER
by
CONNAUGHT PLC
for
FOUNTAINS PLC
Further to the announcement released by Fountains on 5 November 2008 in which it
confirmed that it had received approaches from interested parties relating to a
possible offer for the Company, the Boards of Connaught and Fountains are
pleased to announce that they have reached agreement on the terms of the
recommended share offer by Connaught for the entire issued and to be issued
ordinary share capital of Fountains. It is intended that the Offer be
implemented by way of a scheme of arrangement under Part 26 of the 2006 Act.
Summary
* Connaught is a leading provider of integrated services to both the public and
private sectors in the UK, with operations in social housing, environmental and
compliance markets. Connaught's environmental business currently provides
grounds maintenance, estates management, and street cleansing to local
authorities and housing associations.
* Fountains is a market leader in the environmental management market, based in
Banbury. Fountains is an expert in grounds maintenance, vegetation and tree
management. Fountains works with clients in central and local government, power
and utility companies, the transport industry, rural environments and the
private commercial sector. Clients include EDF, National Grid, British
Waterways, London Borough of Wandsworth, and London Borough of Tower Hamlets.
* Scheme Shareholders will receive 0.2377 New Connaught Shares for each Fountains
Share held, valuing:
- each Fountains Share at approximately 88.0 pence based on the Closing
Bid Price of a Connaught Share on 14 July 2009 (being the last business day
immediately prior to the Announcement Date); and
- the Fully Diluted Share Capital of Fountains at GBP13.3 million.
* Based on the Closing Bid Price of a Connaught Share on 14 July 2009, the Offer
Consideration represents a premium of:
- 43.1 per cent. to the Closing Price per Fountains Share of 61.5
pence on 14 July 2009, the last business day prior to the Announcement Date;
- 51.7 per cent. to the Closing Price per Fountains Share of 58.0
pence on 4 November 2008, the last business day prior to the commencement of the
Offer Period; and
- 74.0 per cent. to the average Closing Price of 50.6 pence per
Fountains Share for the six month period prior to the Announcement Date.
* If the Scheme becomes effective and based on the Fully Diluted Share Capital of
Fountains, Connaught will be expected to issue to the Scheme Shareholders
approximately 3.6 million New Connaught Shares, representing approximately 2.8
per cent. of the enlarged issued share capital of Connaught.
* The Offer has compelling strategic rationale for Connaught and Fountains. For
Connaught, the Offer will deliver a step-change in its operational scale in the
environmental market, further enhancing its service offering and supporting its
long term growth prospects:
- The environmental management market is large and fragmented,
estimated to be worth GBP1.5 billion per annum, and is consolidating in response
to demand from clients for an integrated environmental service, which presents
Connaught with significant growth potential;
- Fountains brings a range of environmental management streams, which
when integrated with Connaught will create a substantial environmental division
with a national capability, offering a wide range of environmental services to a
broad base of high quality clients; and
- Connaught will also benefit from the cost synergies that will be
generated through the integration of two complementary businesses.
* For Fountains, given the trend towards the provision of integrated services in
the environmental market, the benefit of increased scale and a reduced cost
base, the Fountains Directors believe that the prospects of the business and its
competitive position will be enhanced by being part of the Enlarged Group.
* At its interim results for the six months ended 31 March 2009, Fountains
announced revenues of GBP21.2 million (2008: GBP20.7 million), and profit before
tax (before exceptionals) of GBP0.8 million (2008: GBP0.7 million). For the year
ended 30 September 2008, Fountains reported revenues of GBP41.8 million (2007:
GBP44.7 million) and a loss before tax (before exceptionals) of GBP0.01 million
(2007: profit GBP1.9 million). As at 31 March 2009, Fountains reported gross
assets of GBP20.5 million (2008: GBP21.5 million).
* Fountains' management team, led by Chief Executive, Richard Haddon, and Finance
Director, Matthew Turnock, will be retained by Connaught in its enlarged
environmental division.
* The Fountains Directors, who have been so advised by Collins Stewart Europe
Limited ("Collins Stewart"), consider the terms of the Offer to be fair and
reasonable and unanimously recommend that Scheme Shareholders vote in favour of
the Scheme Resolutions to give effect to the Scheme, as Richard Haddon, the only
Director who owns Fountains Shares, has irrevocably undertaken to do in respect
of his beneficial holding of Fountains Shares. In providing advice to the
Fountains Directors, Collins Stewart has taken into account the commercial
assessments of the Fountains Directors.
* Connaught has received irrevocable undertakings and non-binding letters of
intent, including from Richard Haddon, the only Fountains Director who holds
Fountains Shares, to vote in favour of the Scheme Resolutions in respect of, in
aggregate, 5,208,753 Fountains Shares, representing approximately 34.7 per cent.
of the existing issued share capital of Fountains.
The Offer will be implemented by way of a scheme of arrangement between
Fountains and Scheme Shareholders under Part 26 of the 2006 Act and in order to
approve the terms of the Offer, the Fountains Shareholders will need to vote in
favour of the Scheme Resolutions to be proposed at two Shareholder Meetings (the
Court Meeting and the General Meeting) to be convened and held in August 2009.
It is anticipated that the Scheme Document containing the notice of the two
Shareholder Meetings will be sent to Fountains Shareholders on or around 22 July
2009 following the Court application to convene the Court Meeting.
Commenting on the Offer, Mark Tincknell, Executive Chairman of Connaught, said:
"I am delighted to announce the recommended offer for Fountains, which will
enhance Connaught's environmental business, allowing for a nationwide
capability. Connaught operates in large, fragmented markets, with strong growth
potential and has sought to grow its market share organically and by selected
acquisition, and today's announcement is a continuation of that successful
strategy."
Commenting on the Offer on behalf of the Fountains Directors, Michael Holmes,
Chairman of Fountains said:
"The Fountains Board is pleased to announce to Fountains Shareholders this
recommended offer from Connaught. The Fountains Board believes that there is a
strong strategic and operational fit between Fountains and Connaught's
environmental division and that the prospects of the business and its
competitive position will therefore be enhanced as part of the Enlarged Group.
The Offer in shares constitutes an opportunity for Fountains Shareholders,
employees and customers to participate in the success of the Enlarged Group."
Close Brothers Corporate Finance Limited ("Close Brothers") is acting as
financial adviser to Connaught and Collins Stewart is acting as financial
adviser to Fountains.
This summary should be read in conjunction with the accompanying full text of
the following announcement which sets out further details of the Offer and which
forms an integral part of this announcement. The Offer will be subject to the
conditions set out in Appendix A to this announcement and the conditions and
further terms, which will be set out in the Scheme Document. Appendix D contains
definitions of certain expressions used in this summary and the following
announcement.
In accordance with Rule 19.11 of the City Code, a copy of this announcement will
be published on the following websites:
www.connaught.plc.uk
www.fountainsplc.com
Enquiries:
+----------------------------------------------------+----------------------+
| Connaught plc | Tel: +44 (0) 1392 |
| | 444 546 |
+----------------------------------------------------+----------------------+
| Mark Davies, Chief Executive Officer | |
+----------------------------------------------------+----------------------+
| Stephen Hill, Financial Director | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Close Brothers Corporate Finance | Tel: +44 (0) 207 655 |
| Limited (financial adviser to Connaught) | 3100 |
+----------------------------------------------------+----------------------+
| Peter Alcaraz | |
+----------------------------------------------------+----------------------+
| Jonathan Arrowsmith | |
+----------------------------------------------------+----------------------+
| Sam Barnett | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Altium Capital Limited (broker to Connaught) | Tel: +44 (0) 161 831 |
| | 9133 |
+----------------------------------------------------+----------------------+
| Phil Adams | |
+----------------------------------------------------+----------------------+
| Mike Fletcher | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Finsbury Limited (Connaught's public relations) | Tel: +44 (0) 207 251 |
| | 3801 |
+----------------------------------------------------+----------------------+
| Faeth Birch | |
+----------------------------------------------------+----------------------+
| Gordon Simpson | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Fountains plc | Tel: +44 (0) 1295 |
| | 750 000 |
+----------------------------------------------------+----------------------+
| Richard Haddon, Chief Executive Officer | |
+----------------------------------------------------+----------------------+
| Matthew Turnock, Financial Director | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Collins Stewart Europe Limited (financial adviser | Tel: +44 (0) 207 523 |
| and broker to Fountains) | 8350 |
+----------------------------------------------------+----------------------+
| Mark Dickenson | |
+----------------------------------------------------+----------------------+
| Bruce Garrow | |
+----------------------------------------------------+----------------------+
| Stewart Wallace | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Abchurch Communications (Fountains' public | Tel: +44 (0) 207 398 |
| relations) | 7706 |
+----------------------------------------------------+----------------------+
| Charlie Jack | |
+----------------------------------------------------+----------------------+
| Mark Dixon | |
+----------------------------------------------------+----------------------+
In accordance with Rule 2.10 of the City Code, Connaught confirms that it has
122,654,623 ordinary shares of 2 pence each in issue.
The International Securities Identification Number (ISIN) for Connaught's
ordinary shares is GB00B139BQ35.
Close Brothers, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Connaught and is acting
for no-one else in connection with the Offer and will not be responsible to
anyone other than Connaught for providing the protections afforded to clients of
Close Brothers, nor for providing advice in connection with the Offer or any
other matters referred to herein.
Collins Stewart, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting as financial adviser to Fountains and is
acting for no-one else in connection with the Offer and will not be responsible
to anyone other than Fountains for providing the protections afforded to clients
of Collins Stewart, nor for providing advice in connection with the Offer or any
other matters referred to herein.
This announcement is not intended to and does not constitute or form any part
of, an offer to sell or an invitation to purchase or the solicitation of an
offer to subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Offer or otherwise, nor shall there
be any purchase, sale or exchange of securities or such solicitation in any
jurisdiction in which such offer, solicitation or sale or exchange would be
unlawful prior to registration or qualification under the laws of such
jurisdiction.
This announcement does not constitute a prospectus or a prospectus equivalent
document.
The Offer will be made solely through the Scheme Document which will contain the
full terms and conditions of the Scheme, including details of how to vote in
favour of the Scheme Resolutions. Fountains will prepare the Scheme Document to
be distributed to Fountains Shareholders. Fountains and Connaught urge Fountains
Shareholders to read the Scheme Document when it becomes available because it
will contain important information relating to the Offer.
The making of the Offer in, or to persons resident in, or to nationals or
citizens of, jurisdictions outside the United Kingdom or to nominees of, or
custodians or trustees for, citizens or nationals of other countries ("Overseas
Shareholders") may be prohibited or affected by the laws of the relevant
jurisdictions. It is the responsibility of such Overseas Shareholders to inform
themselves about and observe any applicable legal requirements. Any failure to
comply with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by the
applicable law, the companies involved in the proposed Offer disclaim any
responsibility or liability for the violation of such restrictions by any
person. Further details in relation to Overseas Shareholders will be contained
in the Scheme Document.
The New Connaught Shares to be offered pursuant to the Offer as described in
this announcement have not been and will not be registered under the US
Securities Act, or under the securities laws of any state, district or other
jurisdiction of the United States, or of Canada, Japan, Australia or New
Zealand. Accordingly, New Connaught Shares may not be offered, sold or
delivered, directly or indirectly, in or into such jurisdictions except pursuant
to exemptions from applicable requirements or jurisdictions.
Should Connaught issue any New Connaught Shares to a US Person pursuant to the
Scheme, such securities will be issued in reliance upon the exemption from the
registration requirements of the US Securities Act provided by Section 3(a)(10)
thereof and, as a consequence, will not be registered thereunder or under the
securities laws of any state or other jurisdiction of the United States. For the
purposes of qualifying for the exemption from the registration requirements of
the US Securities Act (as described above), Connaught and Fountains will advise
the Court that its sanctioning of the Scheme will be relied upon by Connaught
and Fountains as an approval of the Scheme following a hearing on its fairness
to Fountains Shareholders at which hearing all such holders are entitled to
attend in person or through counsel to support or oppose the sanctioning of the
Scheme and, with respect to which, notification has been given to all such
holders. Connaught will not register the New Connaught Shares under the
Securities and Exchange Act of 1934, and thus will not be required following the
completion of the Scheme to file any reports with the US Securities and Exchange
Commission.
This announcement has been prepared for the purpose of complying with English
law and the applicable rules and regulations of the Financial Services
Authority, the London Stock Exchange and the City Code and the information
disclosed may not be the same as that which would have been disclosed if this
announcement had been prepared in accordance with the laws of jurisdictions
outside England.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
"interested" (directly or indirectly) in 1 per cent. or more of any class of
"relevant securities" of Connaught or Fountains, all "dealings" in any "relevant
securities" of that company (including by means of an option in respect of, or a
derivative referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 p.m. (London time) on the London business day
following the date of the relevant transaction. This requirement will continue
until the Scheme Effective Date or the date on which the Scheme lapses or
is otherwise withdrawn or on which the "offer period" (for the purposes of the
City Code) otherwise ends. If two or more persons act together pursuant to an
agreement or understanding, whether formal or informal, to acquire an "interest"
in "relevant securities" of Connaught or Fountains, they will be deemed to be a
single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of Fountains by Connaught, or of Connaught by Fountains, or by any
of their respective "associates", must be disclosed by no later than 12.00 noon
(London time) on the London business day following the date of the relevant
transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at
www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.
Forward-looking Statements
This announcement contains statements about Connaught, Fountains and the
Enlarged Group that are or may be forward looking statements. All statements
other than statements of historical facts included in this announcement may be
forward looking statements. Forward looking statements often use words such as
"target", "plan", "believe", "expect", "aim", "intend", "will", "should",
"could", "would", "may", "consider", "anticipate",
"estimate", "synergy", "cost saving", "project", "goal" or "strategy" or words
or terms of similar substance or the negative thereof. Forward looking
statements include statements relating to the following: (i) the expected
timetable for implementing the Scheme, future capital expenditures, expenses,
revenues, earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects of Connaught,
Fountains or the Enlarged Group; (ii) business and management strategies and the
expansion and growth of Connaught's, Fountains' or the Enlarged Group's
operations and potential synergies resulting from the acquisition of Fountains
by Connaught; and (iii) the effects of government regulation on Connaught's,
Fountains' or the Enlarged Group's business.
These forward looking statements are not guarantees of future performance. They
have not been reviewed by the auditors of Connaught or Fountains. These forward
looking statements involve known and unknown risks, uncertainties and other
factors which may cause them to differ from the actual results, performance or
achievements expressed or implied by such forward looking statements. These
forward looking statements are based on numerous assumptions regarding the
present and future business strategies of such persons and the environment in
which each will operate in the future. Investors are cautioned not to place
undue reliance on the forward looking statements, which speak only as of the
date they were made. All subsequent oral or written forward looking statements
attributable to Connaught, Fountains or the Enlarged Group or any of their
respective members, directors, officers or employees or any persons acting on
their behalf are expressly qualified in their entirety by the cautionary
statement above. All forward looking statements included in this announcement
are based on information available to Connaught and Fountains on the date hereof
and are made only as of the Announcement Date. Undue reliance should not be
placed on such forward looking statements. Subject to compliance with the City
Code, neither Fountains nor Connaught intends, or undertakes any obligation, to
update any information contained in this announcement.
All subsequent written and oral forward-looking statements attributable to
Fountains or Connaught or persons acting on behalf of either of them are
expressly qualified in their entirety by the cautionary statements above.
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR
IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION
OF THE RELEVANT LAWS OF SUCH JURISDICTION.
RECOMMENDED SHARE OFFER
by
CONNAUGHT PLC
for
FOUNTAINS PLC
1.Introduction
Further to the announcement released by Fountains on 5 November 2008 in which it
confirmed that it had received approaches from interested parties relating to a
possible offer for the Company, the Boards of Connaught and Fountains are
pleased to announce that they have reached agreement on the terms of the
recommended share offer by Connaught for the entire issued and to be issued
ordinary share capital of Fountains. It is intended that the Offer be
implemented by way of a scheme of arrangement under Part 26 of the 2006 Act.
This announcement sets out the key terms of the Offer, which is to be effected
by way of a scheme of arrangement under Part 26 of the 2006 Act, and explains
the background to the Offer and reasons why the Fountains Directors intend
unanimously to recommend that Fountains Shareholders vote in favour of the
Scheme Resolutions, as Richard Haddon, the only Director who owns Fountains
Shares, has irrevocably undertaken to do in respect of his beneficial holding of
Fountains Shares.
In order to approve the terms of the Offer, Fountains Shareholders will need to
vote in favour of the Scheme Resolutions to be proposed at the Shareholder
Meetings (the Court Meeting and the General Meeting) to be held in August
2009. It is anticipated that the Scheme Document containing a notice of the
Shareholder Meetings will be sent to Fountains Shareholders on or around 22 July
2009 following a hearing of the Court application to convene the Court Meeting.
2.The Offer
The Offer will be effected by way of a scheme of arrangement between Fountains
and Scheme Shareholders under Part 26 of the 2006 Act. If the Scheme becomes
effective, the Fountains Shares will be cancelled and an equivalent number of
new Fountains Shares will be issued to Connaught. By way of consideration for
this cancellation, those holders of Scheme Shares on the register of members of
Fountains at the Scheme Record Time will receive:
for each Fountains Share 0.2377 New Connaught Shares
Fractional entitlements to New Connaught Shares will not be issued to Scheme
Shareholders but will be sold in the market for the benefit of Connaught. No
compensation will be payable to Scheme Shareholders for these fractions.
An application will be made for the New Connaught Shares to be admitted to
listing on the Official List and to trading on the London Stock Exchange's main
market for listed securities. It is anticipated that Admission will become
effective and dealing in New Connaught Shares will commence at 8.00 a.m. on the
Scheme Effective Date.
On the basis of the Closing Bid Price of a Connaught Share of 370.25 pence on 14
July 2009 (being the last business day prior to the Announcement Date), the
Offer values each Fountains Share at approximately 88.0 pence and values the
Fully Diluted Share Capital of Fountains, at GBP13.3 million. This represents a
premium of:
?43.1 per cent. to the Closing Price per Fountains Share of 61.5 pence on 14
July 2009, the last business day prior to the Announcement Date;
?51.7 per cent. to the Closing Price per Fountains Share of 58.0 pence on 4
November 2008, the last business day prior to the commencement of the Offer
Period; and
?74.0 per cent. to the average Closing Price of 50.6 pence per Fountains Share
for the six month period prior to the Announcement Date.
If the Scheme becomes effective and based on the Fully Diluted Share Capital of
Fountains, Connaught will be expected to issue to the Scheme Shareholders
approximately 3.6 million New Connaught Shares, representing approximately 2.8
per cent. of the enlarged issued share capital of Connaught.
As Fountains' record date of 3 July 2009 has passed for the dividend of 1.25
pence per Fountains Share declared on 18 May 2009, Fountains Shareholders will
receive the benefit of the dividend.
3.Recommendation
The Fountains Directors, who have been so advised by Collins Stewart, consider
the terms of the Offer to be fair and reasonable and unanimously recommend that
Scheme Shareholders vote in favour of the Scheme Resolutions to give effect to
the Scheme, as Richard Haddon, the only Director who owns Fountains Shares, has
irrevocably undertaken to do in respect of his beneficial holding of Fountains
Shares. In providing its advice to the Fountains Directors, Collins Stewart has
taken into account the commercial assessments of the Fountains Directors.
4.Irrevocable undertakings and letters of intent
Connaught has received irrevocable undertakings and non-binding letters of
intent to vote in favour of the Scheme Resolutions as follows:
(A) Directors of Fountains
Richard Haddon, the only Fountains Director who holds Fountains Shares, has
irrevocably undertaken to vote in favour of the Scheme Resolutions in respect of
his beneficial holding of 53,000 Fountains Shares, representing approximately
0.35 per cent. of the existing issued share capital of Fountains (being
15,033,943 Fountains Shares). This undertaking remains binding in all
circumstances, save where the Scheme lapses or is withdrawn or otherwise fails
to become effective before the Long Stop Date.
(B)Other Scheme Shareholders
Connaught has also received non-binding letters of intent to vote in favour of
the Scheme Resolutions from Octopus Investments Limited, Barry Gamble, Knox
D'Arcy Investment Management Ltd and Hargreave Hale Limited in respect of
5,155,753 Fountains Shares in aggregate, representing approximately 34.3 per
cent of the issued share capital of Fountains.
In aggregate, therefore, Connaught has received irrevocable undertakings and
non-binding letters of intent to vote in favour of the Scheme Resolutions in
respect of 5,208,753 ?Fountains Shares, representing approximately 34.7% per
cent. of the existing issued share capital of Fountains.
Further details of the irrevocable undertakings and non-binding letters of
intent are set out in Appendix C.
5.Information on Fountains
Fountains was originally established as a forestry management operation in South
West England in 1957. The forestry management base subsequently grew in scale
and the Company established a nationwide presence and diversified into
specialist vegetation management contracts for the utilities, transport and
grounds maintenance sectors. It also established a separate forestry division in
the United States.
Fountains was admitted to trading on AIM in 1996 and currently operates through
two divisions, the contracting division and the consulting division with
revenues of GBP35.1 million and GBP6.7 million respectively for the year ended
30 September 2008 (audited). The contracting division provides environmental
support services to a wide array of clients, either supported by long term
contracts (in particular in the utility and public sectors) or framework
agreements (in particular in the rail and highway sectors). The consulting
division provides forestry management services in the UK and the US, as well as
providing asset management services.
A revised strategy was implemented in 2006, after operating losses of
approximately GBP2.0 million in the six months to 31 March 2006 were incurred
(primarily on a fixed price rail contract). This revised strategy aimed to
create a more diversified business with greater cost base flexibility. Improved
visibility of future earnings was achieved by securing larger, longer term
contracts, resulting in the business becoming less reliant on sectors offering
short-term lower value opportunities.
The year to 30 September 2007 produced record results, with turnover of GBP44.7
million, and operating profit before goodwill and exceptional items of GBP1.9
million (audited). However, despite the successes achieved in implementing the
revised strategy and securing a longer term contract base in the business, a
residual exposure to work with shorter term visibility caused a break even
position to be achieved for the full year to 30 September 2008.
Recent contract wins have allowed Fountains to further its stated strategy, and
increase its service range offering. This has increased the size of the markets
which Fountains addresses. On 18 May 2009, the Company reported encouraging
interim results for the six months ended 31 March 2009, with the successful win
of a long term contract with British Waterways, operating profit before
significant items was up by 33 per cent. to GBP0.8 million (unaudited) and
Fountains announced an increased dividend.
6.Current trading and prospects
On 25 February 2009, Fountains announced that based on the current order book
and the recent new contract wins, it was confident that it would achieve
revenues in the current financial year in excess of those seen in 2007. In the
financial year ended 30 September 2007, Fountains generated revenues of GBP44.7
million (audited).
On 18 May 2009, Fountains announced interim results with revenues of GBP21.2
million (2008: GBP20.7 million) and operating profit before significant items up
33 per cent. to GBP0.8 million (2008: GBP0.6 million) (unaudited) and that in
spite of an uncertain economic climate, the Company continued to perform well.
On 6 July 2009, the Company announced that it had secured a 6 year vegetation
management contract with EDF, extendable on the same terms for a further two
periods of three years each, estimated to be worth up to GBP9 million of revenue
per annum, with a guaranteed minimum GBP6 million in the first 12 months. The
Fountains Directors believe that this contract, on which negotiations began in
2008, is likely to generate revenues such that it may represent the largest
contract that the Company has ever won and is further evidence of the success of
the revised strategy to secure contracted revenues with longer term visibility.
While certain areas of Fountains' business have seen weaker underlying trading
since the Company's interim results, with either decreased levels of activity or
contract and workflow delays, overall performance to date has been
counterbalanced by improved margins on certain of the Company's contracts.
Fountains' current order book including the new EDF contract is valued at
approximately GBP200 million (compared to approximately GBP102 million as at the
interim announcement date in May 2009), including approximately GBP32 million
expected under framework agreements.
7.Information on Connaught
Connaught is a leading provider of integrated services to both the public and
private sectors in the UK. The company operates in the social housing,
environmental and compliance markets and currently employs more than 8,000
people across a network of 150 offices throughout the UK.
Having been founded in 1982, Connaught was admitted to trading on AIM in 1998,
following which the company has grown significantly, both organically and
through acquisitions. On 6 November 2006 Connaught's shares were admitted to the
Official List. Since then Connaught has continued to grow and as at 14 July
2009, being the last business day immediately prior to the Announcement Date,
based on the Closing Bid Price for Connaught Shares, Connaught had a market
capitalisation of GBP454.1 million.
For the year ended 31 August 2008, Connaught's consolidated turnover (audited)
was GBP552.9 million (2007: GBP395.9 million) and its profit before taxation
(audited) was GBP21.7 million (2007: GBP15.8 million). Connaught has an order
book in excess of GBP2.7 billion, representing approximately 4.9 times Group
turnover for the year ended 31 August 2008, and this provides high visibility of
earnings for the years ended 31 August 2009 and 2010.
Connaught can also confirm that it is in the final stage of negotiations to
acquire two complementary, bolt-on, compliance services businesses which it
expects to announce in the near future. Both these acquisitions are in line with
Connaught's stated strategy of establishing a national capability in all of its
key services in order to deliver an integrated compliance solution.
8.Background to and reasons for recommending the Offer
On 5 November 2008, the Company announced that it had received more than one
approach which may or may not lead to an offer being made for the Company. The
Company has since been in discussions with multiple parties in order to
investigate whether a recommendable offer might be forthcoming. All discussions
with interested parties, with the exception of Connaught, have ceased. The Board
has progressed discussions with Connaught which, following a process of due
diligence and the negotiation of terms, have led to the Offer.
Whilst Fountains is winning and delivering contracts that are larger than ever
before, the Fountains Directors feel that the Company's full potential remains
hindered by the costs associated with maintaining its quoted status relative to
its scale. The Fountains Directors believe the prospects of the business and its
competitive position will therefore be enhanced as part of the Enlarged Group.
The Fountains Directors believe that there is a strong strategic and operational
fit between Fountains and Connaught's environmental division and that as a
result of the Acquisition, Connaught's enlarged environmental division will have
a greater scale and broader range of skills and capabilities, strengthening its
service offering across the UK environmental services market. Furthermore, an
enlarged environmental division will provide greater opportunities for the
Enlarged Group to take advantage of cross-selling opportunities, as customers
increasingly seek to award multiple outsourced services contracts to a single
provider.
The Connaught Directors believe the Acquisition will deliver enhanced
earnings(i) for Connaught in the financial year
ended August 2010, being the first full year following completion of the
Acquisition. Consequently, the all share structure of the Offer will enable
Fountains Shareholders to benefit from the future success of the Enlarged Group.
Given the historic lack of liquidity in Fountains Shares and the comparatively
liquid market in Connaught Shares, due to its status as a FTSE 250 company, the
Fountains Directors believe that the Offer also represents a good opportunity
for Fountains Shareholders who wish to realise their investment, compared with a
continued holding of Fountains Shares.
Fountains Shareholders representing, in aggregate, approximately 34.7 per cent.
of Fountains' existing issued share capital have already indicated their support
for the Offer, as set out in Appendix C.
The Fountains Directors have considered a broad range of factors in arriving at
a recommendation of the Offer, including, but not limited to, its price,
deliverability and the liquidity it provides to Fountains
Shareholders. Therefore, for the reasons stated above and in light of the
competitive sale process which has taken place since the announcement on 5
November 2008 that the Company had received more than one approach, the
Fountains Directors recommend that Scheme Shareholders vote in favour of the
Scheme Resolutions.
Note:
(i)The statement that the Acquisition is expected to deliver enhanced earnings
for Connaught in 2010 (the first full year following completion of the
Acquisition), relates to future actions and circumstances which, by their
nature, involve risks, uncertainties and other factors. This statement does not
constitute a profit forecast and should not be interpreted to mean that the
earnings per share for that year or any subsequent financial period would
necessarily match or be greater than those for any preceding financial
period. Earnings in the context are earnings after tax before the amortisation
of intangible assets and non-operating items.
9.Financing of the Offer
If the Scheme becomes effective and based on the Fully Diluted Share Capital of
Fountains, Connaught will be expected to issue to the Scheme Shareholders
approximately 3.6 million New Connaught Shares, representing approximately 2.8
per cent. of the enlarged issued share capital of Connaught.
10.Effect of implementing the Offer and strategic plans for Fountains
Connaught has confirmed to the Fountains Directors that Connaught intends that
Fountains will be fully integrated into Connaught's management and information
systems. However, due to the complementary nature of the businesses, the
Fountains Directors understand that the Connaught Board anticipates that
Fountains will initially operate within the Enlarged Group alongside existing
Connaught businesses with close liaison with respect to cross selling and other
revenue enhancing opportunities. The Fountains Directors understand from the
Connaught Board that separate market-facing identity and branding will be
retained where this is considered to have a recognisable value in its particular
market.
Connaught has confirmed to the Fountains Directors that Connaught intends to
carry out an operational review in the period following the Acquisition in order
to identify opportunities for functional alignment and overhead cost savings. In
particular, the Fountains Directors understand that Connaught will assess how
best to integrate the head office and back office functions of Fountains during
the period following the Acquisition. The Fountains Directors understand that
given the complementary nature of Fountains' business and Connaught's
environmental division, Connaught intends to redeploy Fountains' fixed assets
within the enlarged division.
Connaught considers both Fountains' Chief Executive Officer, Richard Haddon, and
Finance Director, Matthew Turnock, to be essential to the successful integration
of Fountains within the Enlarged Group and to the future growth of Connaught's
environmental division. Accordingly, after the Scheme Effective Date, their
services will be retained by Connaught. It is expected that Fountains'
non-executive Directors will stand down from their positions on the
Fountains Board.
The Fountains Directors have given due consideration to Connaught's intentions
for the operations of the Enlarged Group, the integration of the Fountains
business within Connaught and in arriving at their recommendation of the
Acquisition whilst recognising at the same time both the strong commercial and
financial logic of the Enlarged Group.
11.Management and Employees
Connaught has advised the Fountains Directors that the Board of Connaught
recognises the importance of the skills and experience of the existing employees
of Fountains. In particular, Connaught has advised the Fountains Directors that
the strategic plans for Fountains, set out above, are not expected to have a
material impact on employment or the locations of Fountains' places of business
and are not expected to result in any material changes in the conditions of
employment for Fountains Group employees.
Connaught has given assurances to the Fountains Directors that on the Scheme
Effective Date, the accrued employment rights, including pension rights, of all
management and employees of the Fountains Group will be fully safeguarded.
12.Fountains Share Option Scheme
Appropriate proposals will be made to Fountains Optionholders as soon as
reasonably practicable after the date of the Scheme Document. Further details
will be contained in the Scheme Document.
On 14 July 2009, Richard Haddon entered into an agreement which is conditional
upon the Scheme becoming effective, whereby all of his 100,000 Fountains Options
exercisable between 30/01/10 - 30/01/17, and 169,144 of his Fountains Options
exercisable between 15/01/11 - 15/01/18 will be surrendered in return for a cash
sum equal to 88 pence for each of such Fountains Options (subject to the
deduction of income tax and employee's national insurance contributions) and the
remainder of his Fountains Options exercisable between 15/01/11 - 15/01/18 will
be surrendered for nil consideration.
Further, pursuant to the same agreement, Fountains and Richard Haddon agreed
that the commitment given by Fountains (pursuant to the terms of his original
letter of appointment dated 26 October 2006 and subsequently affirmed by letter
from Fountains dated 28 September 2007) to grant further options to him to
subscribe for a further 100,000 Fountains Shares would be satisfied by the
payment to him in cash of the sum of GBP88,000 (subject to deduction of income
tax and employee's national insurance contribution), being 88 pence for each
such ungranted option.
On 14 July 2009, Matthew Turnock entered into an agreement which is conditional
upon the Scheme becoming effective, whereby all of his 60,000 Fountains Options
exercisable between 29/12/09 - 29/12/16, and 73,222 of his Fountains Options
exercisable between 15/01/11 - 15/01/18 will be surrendered in return for a cash
sum equal to 88 pence for each of such Fountains Options (subject to the
deduction of income tax and employee's national insurance contributions) and the
remainder of his Fountains Options exercisable between 15/01/11 - 15/01/18 will
be surrendered for nil consideration.
13.Structure of the Scheme
The implementation of the Scheme will require the approval of Fountains
Shareholders at the Court Meeting and the General Meeting. It is expected that
those meetings will be held in August 2009, however, the exact dates and time
will only be determined following the application to Court to convene the Court
Meeting. The Scheme Document will contain the notices of the Court Meeting and
the General Meeting.
The special resolution to be proposed at the General Meeting is to approve the
Scheme and other related matters, including, inter alia, the reduction of
capital of Fountains, the subsequent issue of new Fountains Shares to Connaught,
amendments to the Fountains Articles required to implement the Scheme and the
cancellation of the admission to trading of Fountains Shares on AIM. The special
resolution will require votes in favour of not less than 75 per cent. of the
votes cast by Scheme Shareholders present and voting in person or by proxy at
the General Meeting in order to be passed.
Voting at the Court Meeting will be by poll and each Scheme Shareholder present
in person or by proxy will be entitled to one vote for each Scheme Share held by
him. The approval required at the Court Meeting is that those voting to approve
the Scheme must represent:
(i)a majority in number of; and
(ii)at least seventy five per cent. in value of the Scheme Shares held by,
those Scheme Shareholders present and voting in person or by proxy.
The implementation of the Scheme can only take place if all of the Conditions
have been satisfied or, where relevant, waived. Assuming the satisfaction, or
where appropriate, waiver of the Conditions, the Scheme will become effective on
the delivery to the Registrar of Companies in England and Wales by Fountains of
the Court order sanctioning the Scheme (and related capital reduction) and the
registration of such Court order. If the Scheme becomes effective, it will be
binding on all holders of Scheme Shares, including any holders who did not vote
to approve the Scheme, or who voted against the Scheme.
The Scheme Document setting out full terms of the Offer and the Scheme, together
with notices of the Court Meeting and General Meeting and the expected
timetable, will be posted on or around 22 July 2009 following a hearing of the
application in Court to convene the Court Meeting.
In order that the Court can be satisfied that the votes cast constitute a fair
representation of the view of Scheme Shareholders, it is important that as many
votes as possible are cast at the Court Meeting. Scheme Shareholders are
therefore strongly urged to return their Forms of Proxy as soon as possible.
14.Implementation Agreement and Non-Solicitation and Inducement Fee Agreement
On 14 July 2009, Fountains and Connaught entered into the Implementation
Agreement which sets out the arrangements between them in relation to the
implementation of the Scheme. Each party to the Implementation Agreement has
agreed to implement the Scheme and to co-operate with the other on the terms set
out in the Implementation Agreement. In addition, Fountains has given certain
undertakings concerning the conduct of its business during that period. Further
details of the Implementation Agreement will be set out in the Scheme Document.
Pursuant to the terms of a non-solicitation and inducement fee agreement (the
"Non-Solicitation and Inducement Fee Agreement") entered into between Fountains
and Connaught on 14 July 2009, Fountains has agreed to pay Connaught an
inducement fee (inclusive of VAT, save to the extent recoverable) equal to 1 per
cent. of the value of the Fully Diluted Share Capital of Fountains under the
Offer calculated by reference to the Closing Bid Price of a Connaught Share on
the last business day immediately prior to the Announcement Date. Such fee shall
be payable if, following the release of this announcement:
(A) a competing offer is announced (under Rule 2.5 of the Code or otherwise)
and subsequently becomes or is declared, unconditional in all respects or is
otherwise completed or implemented and, subsequent to the announcement of such
competing offer, the Scheme is withdrawn, lapses or fails to become effective;
(B) the Fountains Directors withdraw or adversely modify for whatever reason
the terms, as set out in this announcement, of their recommendation of the Offer
and subsequently the Scheme is withdrawn, lapses or fails to become effective;
(C) the Fountains Directors fail, within 48 hours of being requested by
Connaught publicly to repeat or reconfirm their recommendation of the Offer and
as a result, the Scheme lapses, is withdrawn or fails to become effective;
(D)Fountains undertakes without the prior consent of Connaught (whether with or
without the consent of its shareholders) any action for which Shareholders'
consent is stated as required under Rule 21.1(a) to (b) (inclusive) of the Code
and as a result, the Scheme lapses, is withdrawn or fails to become effective;
(E)the Scheme fails to become effective, lapses or is withdrawn as a result of a
breach by Fountains of clause 2 or 3 of the Implementation Agreement (relating
to the implementation of the Scheme); and
(F) the Scheme fails to become effective, lapses or is withdrawn after the
Fountains Directors exercise their ability under the Implementation Agreement to
withdraw the Scheme in the event of a higher competing offer.
For these purposes a competing offer means an offer, scheme of arrangement,
recapitalisation, or other transaction (whether or not on a pre-conditional
basis) which, if it becomes unconditional would result in the acquisition of an
interest or interests in securities (as defined in the Code) of Fountains by
persons other than Connaught or persons who are associates of, or acting in
concert with, Connaught (as defined in the Code), such as to give control (as
defined in the Code) of Fountains to that party or in the acquisition of the
whole or substantially the whole, of the undertaking, assets and/or business of
the Fountains Group.
Pursuant to Rule 21.2 of the City Code, Collins Stewart and Fountains have
confirmed to the Panel that they consider these arrangements to be in the best
interest of Fountains Shareholders.
The Non-Solicitation and Inducement Fee Agreement also states that Fountains
will not be obliged to pay any amount to the extent to which the Panel
determines it would not be permitted by Rule 21.2 of the Code.
The Non-Solicitation and Inducement Fee Agreement also states that for the
period from the date of this announcement until the earliest of the date on
which the Scheme becomes effective, the date on which the inducement fee is
paid, 31 October 2009 and the date upon which the Implementation Agreement
terminates, Fountains may not, and shall procure that no member of the Fountains
Group will, directly or indirectly, seek, encourage, induce, initiate, invite or
solicit or otherwise seek to procure any competing offer (as defined above), or
initiate enquiries, or enter into or continue any negotiations or discussions,
with any third party with a view to any person making a competing offer.
15.Suspension and cancellation of admission to trading on AIM
A detailed timetable of the principal events setting out, among other things,
the last day of trading in Fountains Shares on the AIM market of the London
Stock Exchange and the expected timing of the commencement of dealings in New
Connaught Shares will be set out in the Scheme Document. The last day of
dealings in Fountains Shares is expected to be the business day immediately
prior to the Scheme Effective Date and no transfer of Fountains Shares will be
registered after 6.00pm on that date. On the Scheme Effective Date, Fountains
share certificates shall cease to be valid and Scheme Shareholders should, if so
requested by Fountains, send their Fountains share certificates to Fountains
following the issue of definitive certificates for the New Connaught Shares.
Entitlements to Fountains Shares held within the CREST system will be cancelled
on the Scheme Effective Date.
In addition to the cancellation of the admission to trading on AIM of Fountains
Shares, Fountains will be re-registered as a private company as part of the
Scheme.
16.Disclosure of interests in relevant securities of Fountains
As at 14 July 2009, being the latest practicable date prior to the Announcement
Date, save in respect of the Fountains Shares which are the subject of the
irrevocable undertakings described in paragraph 4 above, neither Connaught nor
any of the Connaught Directors, nor (so far as the Connaught Directors are
aware) any person acting, or deemed to be acting, in concert with Connaught nor
any person who is a party to an arrangement of a kind referred to in Note 6 on
Rule 8 of the City Code relating to relevant securities with Connaught or any
person acting, or presumed to be acting, in concert with Connaught:
(i)had an interest in, or a right to subscribe for, relevant securities of
Fountains;
(ii)engaged in any dealing in relevant securities of Fountains during the
disclosure period;
(iii)had any short position in, was party to any agreement to sell, or was
subject to any delivery obligation in respect of, or had the right to require
another person to purchase or take delivery of, relevant securities of
Fountains;
(iv) had procured an irrevocable commitment or letter of intent to accept the
Offer in respect of relevant securities of Fountains; or
(v)had borrowed or lent any relevant securities of Fountains (except for any
borrowed shares which have been either on-lent or sold).
17.Overseas shareholders
The implications of the Scheme for Overseas Shareholders may be affected by the
laws of the relevant jurisdiction. Such Overseas Shareholders should inform
themselves about and observe any applicable legal requirements. It is the
responsibility of each Overseas Shareholder to satisfy himself as to the full
observance of the laws of the relevant jurisdiction in connection therewith,
including the obtaining of any governmental, exchange control or other consents
which may be required, or the compliance with other necessary formalities which
are required to be observed and the payment of any issue, transfer or other
taxes due in such jurisdiction.
Connaught will not despatch to Restricted Overseas Shareholders certificates for
New Connaught Shares that would ordinarily be despatched under the terms of the
Offer. Instead, Connaught will issue either the New Connaught Shares to a
nominee appointed by Connaught on behalf of such Restricted Overseas
Shareholders on the terms that the nominee shall sell the New Connaught Shares
so issued and remit the cash proceeds of the sale to such Restricted Overseas
Shareholders or issue the New Connaught Shares and sell them on behalf of such
Restricted Overseas Shareholders with the cash proceeds being remitted to such
holders.
Overseas Shareholders who are not Restricted Overseas Shareholders shall not be
prevented from receiving the New Connaught Shares pursuant to the Offer.
Further details in relation to Overseas Shareholders will be contained in the
Scheme Document.
18.General
Save as disclosed in this announcement, there are no agreements or arrangements
to which Connaught is a party which relate to the circumstances in which it may
or may not invoke or seek to invoke a condition to the Offer.
Your attention is drawn to the further information contained in the Appendices
which form part of this announcement.
The summaries of further terms in relation to the Scheme set out in Appendix A
to this announcement form part of, and should be read in conjunction with, this
announcement.
Appendix B to this announcement provides details of the bases of calculations
and sources of certain information included in this announcement.
Appendix C to this announcement contains details of the irrevocable undertakings
and non-binding letters of intent received in relation to the Offer.
Appendix D to this announcement contains definitions of certain terms used in
this announcement.
The Offer will be subject to the applicable requirements of the City Code. The
formal Scheme Document, setting out details of the Offer, is expected to be
dispatched to Fountains Shareholders shortly and, in any event, within 28 days
of the date of this announcement unless the Panel otherwise consents. This
announcement does not constitute an offer or an invitation to purchase any
securities.
This announcement is not intended to and does not constitute or form any part
of, an offer to sell or an invitation to purchase or the solicitation of an
offer to subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Offer or otherwise, nor shall there
be any purchase, sale or exchange of securities or such solicitation in any
jurisdiction in which such offer, solicitation or sale or exchange would be
unlawful prior to registration or qualification under the laws of such
jurisdiction.
This announcement does not constitute a prospectus or prospectus equivalent
document.
The Offer will be made solely through the Scheme Document which will contain the
full terms and conditions of the Scheme, including details of how to vote in
favour of the Scheme Resolutions. Fountains will prepare the Scheme Document to
be distributed to Fountains Shareholders. Fountains and Connaught urge Fountains
Shareholders to read the Scheme Document when it becomes available because it
will contain important information relating to the Offer.
The making of the Offer in, or to persons resident in, or to nationals or
citizens of, jurisdictions outside the United Kingdom or to nominees of, or
custodians or trustees for, citizens or nationals of other countries may be
prohibited or affected by the laws of the relevant jurisdictions. It is the
responsibility of such Overseas Shareholders to inform themselves about and
observe any applicable legal requirements. Any failure to comply with the
applicable restrictions may constitute a violation of the securities laws of any
such jurisdiction. To the fullest extent permitted by the applicable law, the
companies involved in the proposed Offer disclaim any responsibility or
liability for the violation of such restrictions by any person. Further details
in relation to Overseas Shareholders will be contained in the Scheme Document.
The New Connaught Shares to be offered pursuant to the Offer as described in
this announcement have not been and will not be registered under the US
Securities Act, or under the securities laws of any state, district or other
jurisdiction of the United States, or of Canada, Japan, Australia or New
Zealand. Accordingly, New Connaught Shares may not be offered, sold or
delivered, directly or indirectly, in or into such jurisdictions except pursuant
to exemptions from applicable requirements or jurisdictions.
Should Connaught issue any New Connaught Shares to a US Person pursuant to the
Scheme, such securities will be issued in reliance upon the exemption from the
registration requirements of the US Securities Act provided by Section 3(a)(10)
thereof and, as a consequence, will not be registered thereunder or under the
securities laws of any state or other jurisdiction of the United States. For the
purposes of qualifying for the exemption from the registration requirements of
the US Securities Act (as described above), Connaught and Fountains will advise
the Court that its sanctioning of the Scheme will be relied upon by Connaught
and Fountains as an approval of the Scheme following a hearing on its fairness
to Fountains Shareholders at which hearing all such holders are entitled to
attend in person or through counsel to support or oppose the sanctioning of the
Scheme and, with respect to which, notification has been given to all such
holders. Connaught will not register the New Connaught Shares under the
Securities and Exchange At of 1934, and thus will not be required following the
completion of the Scheme to file any reports with the US Securities and Exchange
Commission.
This announcement has been prepared for the purpose of complying with English
law and the applicable rules and regulations of the Financial Services
Authority, the London Stock Exchange and the City Code and the information
disclosed may not be the same as that which would have been disclosed if this
announcement had been prepared in accordance with the laws of jurisdictions
outside England.
Close Brothers, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Connaught and is acting
for no-one else in connection with the Offer and will not be responsible to
anyone other than Connaught for providing the protections afforded to clients of
Close Brothers, nor for providing advice in connection with the Offer or any
other matters referred to herein.
Collins Stewart, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting as financial adviser to Fountains and is
acting for no-one else in connection with the Offer and will not be responsible
to anyone other than Fountains for providing the protections afforded to clients
of Collins Stewart, nor for providing advice in connection with the Offer or any
other matters referred to herein.
In accordance with Rule 19.11 of the City Code, a copy of this announcement will
be published on the following websites:
www.connaught.plc.uk
www.fountainsplc.com
Enquiries:
+----------------------------------------------------+----------------------+
| Connaught plc | Tel: +44 (0) 1392 |
| | 444 546 |
+----------------------------------------------------+----------------------+
| Mark Davies, Chief Executive Officer | |
+----------------------------------------------------+----------------------+
| Stephen Hill, Financial Director | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Close Brothers Corporate Finance Limited | Tel: +44 (0) 207 655 |
| (financial adviser to Connaught) | 3100 |
+----------------------------------------------------+----------------------+
| Peter Alcaraz | |
+----------------------------------------------------+----------------------+
| Jonathan Arrowsmith | |
+----------------------------------------------------+----------------------+
| Sam Barnett | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Altium Capital Limited (broker to Connaught) | Tel: +44 (0) 161 831 |
| | 9133 |
+----------------------------------------------------+----------------------+
| Phil Adams | |
+----------------------------------------------------+----------------------+
| Mike Fletcher | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Finsbury Limited (Connaught's public relations) | Tel: +44 (0) 207 251 |
| | 3801 |
+----------------------------------------------------+----------------------+
| Faeth Birch | |
+----------------------------------------------------+----------------------+
| Gordon Simpson | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Fountains plc | Tel: +44 (0) 1295 |
| | 750 000 |
+----------------------------------------------------+----------------------+
| Richard Haddon, Chief Executive Officer | |
+----------------------------------------------------+----------------------+
| Matthew Turnock, Financial Director | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Collins Stewart Europe Limited (financial adviser | Tel: +44 (0) 207 523 |
| and broker to Fountains) | 8350 |
+----------------------------------------------------+----------------------+
| Mark Dickenson | |
+----------------------------------------------------+----------------------+
| Bruce Garrow | |
+----------------------------------------------------+----------------------+
| Stewart Wallace | |
+----------------------------------------------------+----------------------+
| | |
+----------------------------------------------------+----------------------+
| Abchurch Communications (Fountains' public | Tel: +44 (0) 207 398 |
| relations) | 7706 |
+----------------------------------------------------+----------------------+
| Charlie Jack | |
+----------------------------------------------------+----------------------+
| Mark Dixon | |
+----------------------------------------------------+----------------------+
Appendix A:
Section A
CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME AND OFFER
The Offer will not be completed unless the Scheme becomes effective and all the
conditions set out below have been satisfied (or, if capable of waiver, waived)
by 6.00 p.m (London time) on 31 October 2009, or, subject to the requirements of
the Code or the Panel, such later date as Connaught and Fountains may agree
and the Court may approve ("Long Stop Date").
The Scheme is conditional upon:
1. Scheme conditions
1.1 the approval of the Scheme by a majority in number of the holders of
Scheme Shares present and voting at the Court Meeting, either in person or by
proxy, or at any adjournment of that meeting representing not less than seventy
five per cent. in value of the Scheme Shares held by such holders who are so
present and voting;
1.2 the special resolution required to approve and implement the Scheme and
related matters set out in the notice of General Meeting being passed by the
requisite majority at the General Meeting or at any adjournment of that meeting;
1.3 the Scheme being sanctioned by the Court (with or without modifications
on terms reasonably acceptable to Connaught and Fountains) and confirmation of
the reduction of capital involved therein by the Court;
1.4 delivery to the Registrar of Companies for registration of an office copy
of the Court Order sanctioning the Scheme and confirming the cancellation of
share capital which forms part of it and registration of the Court Order by him;
and
1.5Admission of the New Connaught Shares.
Application to the Court to sanction the Scheme will not be made unless the
Conditions in paragraphs 1.1 to 1.2 of Section A of this Appendix A have been
satisfied and the Conditions in paragraphs 2 to 8 of Section A of this Appendix
A have been satisfied or, if capable of waiver, waived.
The Scheme is also conditional upon:
2. Effects of the Offer
2.1 no government or governmental, quasi governmental, supranational,
statutory, regulatory, environmental, administrative, fiscal or investigative
body, court, trade agency, association, institution or any other body or person
whatsoever in any jurisdiction (each a "Third Party") having taken, instituted,
implemented or threatened any action, proceeding, suit, investigation, enquiry
or reference (or having indicated that it has decided so to do), or having
required any action to be taken or otherwise having done anything or having
enacted, made or proposed any statute, regulation, decision, order or change to
published practice and there not continuing to be outstanding any statute,
regulation, decision or order which is reasonably likely to:
(a) make the Offer, its implementation or the acquisition or proposed
acquisition of any shares or other securities in, or control of, Fountains by
any member of the Wider Connaught Group void, unenforceable and/or illegal under
the laws of any relevant jurisdiction, or otherwise directly or indirectly
restrict, restrain, prohibit, delay or otherwise interfere with the
implementation of, or impose material additional conditions or obligations with
respect to, or otherwise challenge or require amendment of the Offer or the
acquisition of any such shares or securities by any member of the Wider
Connaught Group;
(b)require, prevent or materially delay a divestiture by any member of the Wider
Connaught Group of any shares or other securities (or the equivalent)
in Fountains;
(c) require or prevent or materially delay the divestiture or materially
alter the terms envisaged for such divestiture by any member of the Wider
Connaught Group or by the Wider Fountains Group of all or any part of their
respective businesses, assets or property or impose any limitation on the
ability of any of them to conduct all or any portion of their respective
businesses or to own all or any portion of their respective assets or property
to an extent which is material in the context of the Fountains Group taken as a
whole or the Connaught Group taken as a whole (as the case may be);
(d) impose any limitation on, or result in a material delay in, the ability
of any member of the Wider Connaught Group to acquire or hold or to exercise
effectively, directly or indirectly, all or any rights of ownership in respect
of shares or other securities in any member of the Wider Fountains Group or the
ability of any member of the Wider Connaught Group directly or indirectly to
hold or exercise effectively any rights of ownership in respect of shares or
other securities (or the equivalent) in, or to exercise management control over,
any member of the Wider Fountains Group;
(e) require any member of the Wider Connaught Group or the Wider Fountains
Group to acquire or offer to acquire, directly or indirectly, any shares, or
other securities (or the equivalent) or interest in any member of the Wider
Fountains Group or any asset owned by any third party (other than in the
implementation of the Offer);
(f) result in any member of the Wider Fountains Group ceasing to be able to
carry on business under any name under which it presently carries on business;
(g) impose any material limitation on the ability of any member of the Wider
Connaught Group or any member of the Wider Fountains Group to integrate or
co-ordinate all or any part of its business with all or any part of the business
of any other member of the Wider Connaught Group and/or the Wider Fountains
Group; or
(h) otherwise affect the business, assets, profits or prospects of any member
of the Wider Fountains Group or any member of the Wider Connaught Group in a
manner which is adverse to and material in the context of the Fountains Group
taken as a whole or of the obligations of any members of the Connaught Group
taken as a whole in connection with the Offer,
and all applicable waiting and other time periods during which any such Third
Party could decide to take, implement, threaten or institute any such action,
proceeding, suit, investigation, enquiry or reference or take any other step
under the laws of any jurisdiction in respect of the Offer or the acquisition or
proposed acquisition of any Fountains Shares or otherwise intervene having
expired, lapsed or been terminated;
2.2 all statutory and regulatory obligations in relation to the Offer in any
jurisdiction having been complied with and all authorisations, orders, grants,
recognitions, confirmations, consents, clearances, licences, permissions,
exemptions and approvals necessary or appropriate or required for or in respect
of the Offer ("Authorisations") (including, without limitation, its
implementation) or the proposed acquisition of any shares or other securities
in, or control of, Fountains by any member of the Wider Connaught Group having
been obtained on terms and in a form reasonably satisfactory to Connaught from
all appropriate Third Parties or (without prejudice to the generality of the
foregoing) from any persons or bodies with whom any member of the Wider
Connaught Group or the Wider Fountains Group has entered into contractual
arrangements and all such Authorisations necessary or appropriate to carry on
the business of any member of the Wider Fountains Group in any jurisdiction
having been obtained in each case where the absence of such Authorisation would
have a material adverse effect on the Wider Fountains Group taken as a whole and
all such Authorisations remaining in full force and effect at the time at which
the Scheme becomes effective and there being no intimation or notice of any
intention to revoke, suspend, restrict, modify or not renew such Authorisation;
3. Consequences of the Offer
3.1 save as Disclosed to Connaught, there being no provision of any,
agreement, arrangement, licence, permit, lease or other instrument, including
any statute, regulation, decision or order to which any member of the Wider
Fountains Group is a party or by or to which any such member or any of their
assets may be (or may become) bound, entitled or be subject or any event or
circumstance which, as a consequence of the Offer or the acquisition or proposed
acquisition by any member of the Wider Connaught Group of any shares or other
securities in Fountains or because of a change in the control or management of
any member of the Wider Fountains Group or otherwise, could or might reasonably
be expected to result in, in each case, to an extent which is material and
adverse in the context of the Fountains Group taken as a whole:
(a) any moneys borrowed by, or any other indebtedness (actual or contingent)
of, or any grant available to, any member of the Wider Fountains Group being or
becoming repayable, or capable of being declared repayable, immediately or
earlier than its or their stated repayment date or maturity date, or the ability
of any such member to borrow monies or incur any indebtedness becoming or being
withdrawn or inhibited;
(b) the rights, liabilities, obligations, business or interests of any member
of the Wider Fountains Group or any member of the Wider Connaught Group under
any such arrangement, agreement, licence, permit, lease or instrument or the
interests or business of any member of the Wider Fountains Group or any member
of the Wider Connaught Group in or with any other firm or company or body or
person (or any agreement or arrangement relating to any such business or
interests) being terminated or adversely modified or affected or any onerous
obligation or liability arising or any adverse action being taken thereunder;
(c) any assets or interests of, or any asset the use of which is enjoyed by,
any member of the Wider Fountains Group being or falling to be disposed of or
charged in any manner howsoever, or any right arising under which any such asset
or interest could be required to be disposed of or charged in any manner or
could cease to be available to any member of the Wider Fountains Group,
otherwise than in the ordinary course of business;
(d)the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of any
member of the Wider Fountains Group;
(e) the value or financial or trading position of any member of the Wider
Fountains Group being prejudiced or adversely affected;
(f) any member of the Wider Fountains Group ceasing to be able to carry on
business under any name under which it currently does so;
(g) the creation of liability (actual or contingent) by any member of the
Wider Fountains Group, otherwise than in the ordinary course of business;
(h) the ability of any member of the Wider Fountains Group to carry on its
business as currently carried on being adversely affected;
(i) a divestiture by any member of the Wider Connaught Group of any shares or
other securities (or the equivalent) in Fountains being required, prevented or
materially delayed;
(j) the imposition of any material limitation on the ability of any member of
the Wider Connaught Group or any member of the Wider Fountains Group to
integrate or co-ordinate all or any part of its business with all or any part of
the business of any other member of the Wider Connaught Group and/or the Wider
Fountains Group;
(k) any liability of any member of the Wider Fountains Group to make any
severance, termination, bonus or other payments to any of its directors or other
officers;
(l) the Offer, its implementation or the acquisition or proposed acquisition
of any shares or other securities in, or control of, Fountains by any member of
the Wider Connaught Group being or becoming void, illegal and/or unenforceable
under the laws of any relevant jurisdiction, or would otherwise directly or
indirectly prohibit, or restrain, restrict, delay or otherwise interfere with
the implementation of, or impose additional material conditions or obligations
with respect to, or otherwise challenge or require amendment of the Offer or the
acquisition of any such shares or securities by any member of the Wider
Connaught Group; or
(m) the imposition of any limitation on, or material delay in, the ability of
any member of the Wider Connaught Group directly or indirectly to acquire or
hold or to exercise effectively all or any rights of ownership in respect of
shares or other securities in Fountains or on the ability of any member of the
Wider Fountains Group or any member of the Wider Connaught Group directly or
indirectly to hold or exercise effectively any rights of ownership in respect of
shares or other securities (or the equivalent) in, or to exercise management
control over, any member of the Wider Fountains Group;
4. Corporate action
4.1 no member of the Wider Fountains Group having since 30 September 2008,
save as Disclosed to Connaught:
(a) (save as between Fountains and wholly?owned subsidiaries of Fountains
prior to the Announcement Date and save for options granted and for any
Fountains Shares allotted upon exercise of options granted under the Fountains
Share Schemes) issued or agreed to issue or authorised or proposed the issue of
additional shares of any class, or securities or securities convertible into, or
exchangeable for, or rights, warrants or options to subscribe for, or acquire,
any such shares or convertible securities;
(b) redeemed, purchased, repaid or reduced or agreed to or announced any
proposal to purchase, redeem, repay or reduce any of its own shares or other
securities or, save in respect of the matters mentioned in sub-paragraph (a)
above, made any other change to any part of its share capital;
(c) approved, recommended, declared, paid or made or proposed to recommend,
declare, pay or make any dividend, bonus or other distribution proposed (whether
payable in cash or otherwise) other than to Fountains or any wholly-owned
subsidiary of Fountains;
(d) (save for transactions between Fountains and its wholly-owned
subsidiaries, merged with (by statutory merger or otherwise) or demerged from or
acquired by any body corporate, partnership or business or acquired or disposed
of, or transferred, mortgaged or charged, or created or granted any security
interest over, any assets or any right, title or interest in any asset
(including shares and trade investments) or authorised, proposed, announced any
intention or agreed to do so (otherwise than in the ordinary course of
business);
(e) save as between Fountains and its wholly-owned subsidiaries or between
such wholly-owned subsidiaries made, authorised, proposed or announced an
intention to propose any change in its share or loan capital;
(f) issued, authorised or proposed the issue of any debentures or (save as
between Fountains and its wholly-owned subsidiaries or between such wholly-owned
subsidiaries) incurred or, save in the ordinary course of business, increased
any borrowings or indebtedness or become subject to any liability (actual or
contingent) which is material in the context of the Fountains Group taken as a
whole;
(g) entered into or varied or authorised, proposed or announced its intention
to enter into or vary any transaction, arrangement, contract or commitment
(whether in respect of capital expenditure or otherwise) which is of a long
term, onerous or unusual nature or which is or which involves or could involve
an obligation of a nature or magnitude which is likely to be restrictive on the
business of any member of the Wider Fountains Group or on the Wider Connaught
Group;
(h) entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any contract with any of the
directors or senior executives of Fountains or any of the directors or senior
executives of any other member of the Wider Fountains Group;
(i) acquired, disposed of or transferred, mortgaged or charged or encumbered
or created any security interest over any asset or any right, title or interest
in any asset (including, without limitation, shares and trade investments) or
entered into any contract, merger, demerger, reconstruction, amalgamation,
composition, assignment, commitment scheme or other transaction or arrangement
(other than the Offer) otherwise than in the ordinary course of business;
(j) waived or compromised any claim otherwise than in the ordinary course of
business;
(k) taken or proposed any steps, corporate action or had any legal
proceedings instituted or threatened against it in relation to the suspension of
payments, a moratorium of any indebtedness, its winding-up (voluntary or
otherwise), dissolution, reorganisation or for the appointment of any receiver,
administrator, administrative receiver, manager, trustee or similar officer of
all or any of its assets or revenues or any analogous proceedings in any
jurisdiction or appointed any analogous person or had any such person appointed
in any jurisdiction;
(l) been unable, or admitted in writing that it is unable, to pay its debts
or commenced negotiations with one or more of its creditors with a view to
rescheduling or restructuring any of its indebtedness, or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a substantial part of its
business;
(m) made any alteration to its memorandum or articles of association or other
incorporation documents;
(n) the trustees of the relevant pension scheme having;
(i) made or agreed or consented to any change to the terms of the trust deeds
constituting the pension schemes established for its directors, employees or
their dependants or the benefits which accrue;
(ii) made or agreed or consented to any change to the pensions which are
payable under them;
(iii) made or agreed or consented to any change to the basis on which
qualification for, or accrual or entitlement to such benefits or pensions are
calculated or determined;
(iv) made or agreed or consented to any change to the basis upon which the
liabilities (including pensions) of such pension schemes are funded or made or
valued;
(v) agreed or consented to any change to the trustees or trustee directors of
such pension schemes;
(vi) carried out any act which may lead to the commencement of the winding up
of the scheme or which could give rise directly or indirectly to a liability
arising out of the operation of sections 38 to 56 inclusive of the Pensions Act
2004 in relation to such pension schemes; or
(o) proposed, agreed to provide or modified the terms of any share option
scheme or incentive scheme, or other benefit relating to the employment or
termination of employment of any employee of the Wider Fountains Group;
(p) entered into an agreement which will result in the restriction of the
scope of the business of the Fountains Group and will have a material adverse
effect on the Fountains Group taken as a whole;
(q) made any alteration to its memorandum or articles of association or other
incorporation documents (save pursuant to the special resolution to be proposed
at the General Meeting); or
(r) entered into any agreement, arrangement, commitment or contract or passed
any resolution or made any offer (which remains open for acceptance) with
respect to or announced an intention to, or to propose to, effect any of the
transactions, matters or events referred to in this condition;
5. Other events
5.1 since 30 September 2008, save as Disclosed to Connaught:
(a) there having been no adverse event, change or deterioration in the
business, assets, financial or trading position or prospects or profits of any
member of the Wider Fountains Group which is material in the context of the
Fountains Group taken as a whole;
(b) no contingent or other liability having arisen or become known (since the
Announcement Date) to Connaught or increased (which is reasonably likely to
affect the business, assets, financial or trading position or profits or
prospects of any member of the Wider Fountains Group to an extent which is
material to the Fountains Group taken as a whole);
(c) no steps having been taken and no omissions having been made which are
likely to result in the withdrawal, cancellation, termination or modification of
any licence held by any member of the Wider Fountains Group, which is necessary
for the proper carrying on of its business and the withdrawal, cancellation,
termination or modification of which is material and likely adversely to affect
the Fountains Group as a whole; and
(d) no material litigation, arbitration proceedings, prosecution,
investigation, enquiry, complaint, or other legal proceedings or reference to
any relevant person having been announced, instituted, threatened or remaining
outstanding by, against or in respect of, any member of the Wider Fountains
Group or to which any member of the Wider Fountains Group is or may become a
party (whether as claimant, defendant or otherwise) and no enquiry or
investigation by, or complaint or reference to, any third party against or in
respect of any member of the Wider Fountains Group having been announced,
instituted or threatened by or against, or remaining outstanding in respect of,
any member of the Wider Fountains Group;
6. Information
6.1Connaught not having discovered after the Announcement Date:
(a) that any financial, business or other information concerning the Wider
Fountains Group which has been Disclosed to Connaught is misleading or contains
a misrepresentation of fact or omits to state a fact necessary to make the
information contained therein not misleading in each case to an extent which is
material and adverse in the context of the Wider Fountains Group or that any
contingent liability disclosed in such information would or might adversely
affect directly or indirectly the business or profits of the Wider Fountains
Group to an extent which is material and adverse in the context of the Wider
Fountains Group (and which information was not subsequently corrected before the
Announcement Date by disclosure publicly by an announcement to a Regulatory
Information Service or otherwise by updating the information disclosed to
Connaught); or
(b) that any partnership, company or other entity in which any member of the
Wider Fountains Group has an interest and which is not a subsidiary undertaking
of Fountains is subject to any liability, contingent or otherwise, which is or
might reasonably be expected to be material in the context of the Wider
Fountains Group taken as a whole, and which is not disclosed in Fountains'
annual report and accounts for the year ended 30 September 2008; or
(c)any information not Disclosed to Connaught which affects the import of any
information Disclosed to Connaught at any time by or on behalf of any member of
the Wider Fountains Group and which has a material adverse effect on the Wider
Fountains Group which is material in the context of the Wider Fountains Group;
7. Environmental
7.1 in relation to any release, emission, accumulation, discharge, disposal
or other fact or circumstance which has impaired or is likely to impair the
environment (including property) or harmed or is likely to harm human health, no
past or present member of the Wider Fountains Group (i) having committed any
violation of any applicable legislation, statutes, regulations, authorisations,
notices or other requirements of any Third Party of any jurisdiction; and/or
(ii) having incurred any liability (whether actual or contingent) to any Third
Party; and/or being likely to incur any liability (whether actual or
contingent), or being required to make good, repair, remediate, reinstate or
clean up any asset or any other property or any environment in each case to an
extent which is material and adverse in the context of the Wider Fountains
Group; and
8. Criminal property
8.1 no asset of any member of the Wider Fountains Group constituting criminal
property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but
disregarding paragraph (b) of that definition) to an extent which is material in
the context of the Wider Fountains Group taken as a whole.
For the purposes of these conditions of the Offer, "Disclosed to Connaught"
means disclosed to Connaught or its advisers prior to the Announcement Date in
any of the following manners: (i) by inclusion in the annual report and accounts
of Fountains for the financial year ended 30 September 2008, or (ii) in writing
or otherwise fairly disclosed in documents made available for inspection by
Connaught or its advisers in an electronic dataroom provided by DraftSpace Ltd,
or (iii) by delivery of an announcement by or on behalf of Fountains to a
Regulatory Information Service.
Section B
CERTAIN FURTHER TERMS OF THE OFFER
The Conditions in paragraphs 1.1 to 1.4 of Section A of this Appendix A above
may not be waived. Condition 1.5 may only be waived with the consent of both
Fountains and Connaught. Connaught reserves the right to waive, in whole or in
part, all or any of the Conditions 2 to 8 of Section A of this Appendix A
above.
If Connaught is required by the Panel to make an offer for Fountains Shares
under the provisions of Rule 9 of the Code, Connaught may make such alterations
to the above Conditions, including Condition 1, as are necessary to comply with
the provisions of that Rule.
Each of the Conditions set out in paragraphs 1 to 8 of Section A of this
Appendix A shall be regarded as a separate condition and shall not be limited by
reference to any other condition.
Under Rule 13.4 of the Code, Fountains may only invoke a Condition so as to
cause the Offer not to proceed, to lapse or to be withdrawn if the circumstances
which give rise to the right to invoke the Condition are of material
significance to Connaught in the context of the Offer. Condition 1 is not
subject to this provision of the Code.
Connaught shall be under no obligation to waive or treat as satisfied any of the
Conditions by a date earlier than the latest date specified above for the
satisfaction thereof notwithstanding that the other Conditions may at such
earlier date have been waived or fulfilled and that on such earlier date there
are no circumstances indicating that any of such Conditions may not be capable
of fulfillment.
The Offer will lapse and the Scheme will not proceed if, before the Court
Meeting, the acquisition of Fountains by Connaught is referred to the
Competition Commission (as established under section 4 of the Competition Act
1998, as amended).
The Offer complies with the applicable requirements of the AIM Rules and the
Code, is governed by English law and is subject to the jurisdiction of the
courts of England. In addition, it is subject to the terms and conditions as set
out in this Appendix A.
Appendix B
Sources and Bases of Information
In this announcement, unless otherwise stated or the context otherwise requires,
the following bases and sources have been used:
(a) The current market capitalisation of Connaught of GBP454.1 million is based
on 122,654,623 Connaught Shares in issue as at the close of business 14 July
2009 (being the latest date prior to the Announcement Date) and the Closing Bid
Price of a Connaught Share of 370.25 pence on such date. This capital is not
diluted for any of the options granted under the Connaught Share Option Scheme;
(b) Unless otherwise stated, the information on Connaught is extracted from
Connaught's annual reports and accounts for the three years ended 31 August 2008
and its internal records;
(c) The current market capitalisation of Fountains of GBP9.2 million is based
on 15,033,943 Fountains Shares in issue as at the close of business 14 July 2009
(being the latest date prior to the Announcement Date) and the Closing Price of
a Fountains Share of 61.5 pence on such date. This capital is not diluted for
any of the options granted under the Fountains Share Schemes; and
(d)Unless otherwise stated, the information on Fountains is extracted from
Fountains' annual reports and accounts for the three years ended 30 September
2008 and its internal records.
Appendix C
Details of Irrevocable Undertakings and Non-binding Letters of Intent
1.Directors
The following Fountains Directors have entered into irrevocable undertakings
with Connaught to vote in favour of the Scheme Resolutions in respect of their
beneficial holdings of Fountains Shares:
+-------------------------------------------------+-----------------------+--------------------+
| Name | Total No. of | Percentage of |
| | Fountains Shares | issued ordinary |
| | | share capital |
+-------------------------------------------------+-----------------------+--------------------+
| Richard Haddon | 53,000 | 0.35% |
+-------------------------------------------------+-----------------------+--------------------+
2.Other Fountains Shareholders
The following persons have entered into non-binding letters of intent with
Connaught to vote in favour of the Scheme Resolutions in respect of their legal
and/or beneficial holding and/or connected holdings of Fountains Shares:
+-------------------------------------------------+----------------------+--------------------+
| Name | Total No. of | Percentage of |
| | Fountains Shares | issued ordinary |
| | | share capital |
+-------------------------------------------------+----------------------+--------------------+
| Octopus Investments Limited | 1,587,038 | 10.56% |
+-------------------------------------------------+----------------------+--------------------+
| Barry Gamble | 1,397,677 | 9.30% |
+-------------------------------------------------+----------------------+--------------------+
| Knox D'Arcy Investment Management Ltd | 1,171,460 | 7.79% |
+-------------------------------------------------+----------------------+--------------------+
| Hargreave Hale Ltd | 999,578 | 6.65% |
+-------------------------------------------------+----------------------+--------------------+
Appendix D
Definitions
The following definitions apply throughout this announcement and the Scheme
Document unless the context otherwise requires:
+-----------------------------+---+-----------------------------------------------------------------------+
| "1985 Act" | | the Companies Act 1985, as amended; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "2006 Act" | | the Companies Act 2006, as amended; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Acquisition" | | the proposed acquisition by Connaught of the entire issued and to be |
| | | issued share capital of Fountains pursuant to the Scheme; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Admission" | | admission of the New Connaught Shares to listing on the Official List |
| | | and to trading on the London Stock Exchange's main market for listed |
| | | securities becoming effective in accordance with the Listing Rules; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "AIM" | | AIM, the market of that name operated by the London Stock Exchange; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Announcement Date" | | 15 July 2009; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Australia" | | the Commonwealth of Australia, its states, territories and |
| | | possessions; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Board" | | as the context requires, the board of directors of Fountains or the |
| | | board of directors of Connaught; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "business day" | | a day (other than Saturday or Sunday or UK public bank holidays) on |
| | | which banks are generally open for business in London; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Canada" | | Canada, its provinces and territories and all areas subject to its |
| | | jurisdiction and any political sub-divisions thereof; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Capita", "Capita | | a trading name of Capita Registrars Limited; |
| Registrars" or the | | |
| "Registrar", | | |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Closing Bid Price" | | the closing bid price of a Connaught Share, or, as the case may be, a |
| | | Fountains Share, as derived from the London Stock Exchange's main |
| | | market or AIM, respectively; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Closing Price" | | the closing middle market price of a Connaught Share or, as the case |
| | | may be, a Fountains Share as derived from the London Stock Exchange's |
| | | main market or AIM, respectively; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Code" or "City Code" | | the City Code on Takeovers and Mergers; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Collins Stewart" | | Collins Stewart Europe Limited; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Conditions" | | the conditions to the implementation of the Scheme and the Offer set |
| | | out in Appendix A of this announcement, and "Condition" shall mean |
| | | any one of them; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Connaught" | | Connaught plc, a public limited company incorporated in England and |
| | | Wales, registered under number 03184319; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Connaught Directors" | | the directors of the Connaught at the Announcement Date; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Connaught Group" | | Connaught and its subsidiaries and associated undertakings and, where |
| | | the context permits, each of them; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Connaught Shares" | | the ordinary shares of 2 pence each in the capital of Connaught; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Court" | | the High Court of Justice in England and Wales; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Court Meeting" | | the meeting of Scheme Shareholders (and any adjournment thereof) to |
| | | be convened by the notice set out at the end of the Scheme Document |
| | | pursuant to an order of the Court pursuant to Part 26 of the 2006 Act |
| | | for the purpose of considering the Scheme and, if thought fit, |
| | | approving the Scheme (with or without amendment); |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Court Order" | | the order of the Court sanctioning the Scheme under Part 26 of the |
| | | 2006 Act and confirming under section 137 of the 1985 Act the |
| | | reduction of capital; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Enlarged Group" | | the Connaught Group, as enlarged by the acquisition of Fountains; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains" or the | | Fountains plc, a public limited company incorporated in England Wales |
| "Company" | | registered under number 2391409; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Articles" | | the articles of association of Fountains; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Directors" | | the directors of Fountains as at the Announcement Date; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Group" | | Fountains and its subsidiary and associated undertakings and, where |
| | | the context permits, each of them; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Optionholders" | | the holders of Fountains Options; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Options" | | options to acquire Fountains Shares under the Fountains Share |
| | | Schemes; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Shareholders" | | the holders of Fountains Shares; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Shares" or | | the ordinary shares of 5 pence each in the capital of Fountains; |
| "Shares" | | |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fountains Share Schemes" | | the Share Incentive Plan and the 2006 Performance Share Plan; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "FSA" | | Financial Services Authority; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "FSMA" | | the Financial Services Market Act 2000; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Fully Diluted Share | | 15,093,943 Fountains Shares, being the existing issued share capital |
| Capital" | | of Fountains and assuming exercise of all outstanding Fountains |
| | | Options with an exercise price of less than 88 pence per Fountains |
| | | Share at the Announcement Date, save for those conditionally |
| | | surrendered by Richard Haddon and Matthew Turnock, as described in |
| | | paragraph 12 of this announcement; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "General Meeting" | | the general meeting of Fountains (and any adjournment thereof) to be |
| | | convened by the notice set out at the end of the Scheme Document; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Hearing Date" | | the date on which the Court sanctions the Scheme and confirms the |
| | | reduction of capital which forms part of it; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "holder" | | a registered holder and includes any person entitled by transmission; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "IFRS" | | an individual International Financial Reporting Standard and "IFRSs" |
| | | shall mean International Financial Reporting Standards as a whole; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Implementation Agreement" | | the agreement entered into between Connaught and Fountains dated 14 |
| | | July 2009 for the purposes of implementing the Scheme; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Japan" | | Japan, its cities, prefectures, territories and possessions; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Listing Rules" | | the rules and regulations made by the Financial Services Authority in |
| | | its capacity as the UK Listings Authority under FSMA; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "London Stock Exchange" | | London Stock Exchange plc; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Long Stop Date" | | has the meaning given in Appendix A of this announcement; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "New Connaught Shares" | | the new Connaught Shares to be allotted and issued pursuant to the |
| | | Scheme which, after their issue, will rank pari passu in all respects |
| | | with the existing Connaught Shares; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Offer" | | the recommended offer being made by Connaught to acquire all of the |
| | | Fountains Shares, subject to the terms and conditions set out in the |
| | | Scheme Document including, where the context requires, any subsequent |
| | | revision, variation, extension or renewal of such offer; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Offer Consideration" | | the consideration payable under the Scheme to Scheme Shareholders on |
| | | the basis set out in the Scheme Document, consisting of, for each |
| | | Fountains Share, 0.2377 New Connaught Shares; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Offer Period" | | the period commencing 5 November 2008 and ending on the Scheme |
| | | Effective Date; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Official List" | | the Official List of the UK Listing Authority; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Overseas Shareholders" | | Scheme Shareholders who are resident in, or citizens of, a |
| | | jurisdiction outside the UK; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Panel" | | the Panel on Takeovers and Mergers; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Registrar of Companies" | | the Registrar of Companies in England and Wales; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Restricted Jurisdiction" | | Japan, Australia or any jurisdiction in relation to which the |
| | | extension or acceptance of the Offer to such jurisdiction would be |
| | | unlawful or which Connaught decides, in its sole jurisdiction would |
| | | be likely to involve disproportionate complexity, cost or risk, |
| | | subject to the requirements of Rule 30.3 of the Code; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Restricted Overseas | | an Overseas Shareholder who is resident in, or a citizen of, a |
| Shareholder" | | Restricted Jurisdiction; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Scheme" | | the scheme of arrangement under Part 26 of the 2006 Act between |
| | | Fountains and Scheme Shareholders, as set out in the Scheme Document |
| | | with or subject to any modification, addition or condition which |
| | | Fountains and Connaught may agree and, if required, the Court may |
| | | approve or impose; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Scheme Document | | the document containing the details of the Scheme, setting out the |
| | | terms and conditions of the Offer and the Shareholder Meetings, which |
| | | will be sent to Fountains Shareholders (other than certain Overseas |
| | | Shareholders) on or around 22 July 2009; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Scheme Effective Date" | | the date on which the Scheme becomes effective in accordance with its |
| | | terms; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Scheme Record Time" | | 6.00 p.m. on the business day immediately preceding the Scheme |
| | | Effective Date; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Scheme Resolutions" | | the resolution to be proposed at the Court Meeting and the special |
| | | resolution to be proposed at the General Meeting; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Scheme Shareholders" or | | the holders of Scheme Shares from time to time; |
| "Shareholders" | | |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Scheme Shares" | | means Fountains Shares: |
| | | (i) in issue at the date of the Scheme Document; |
| | | |
| | | (ii) (if any) issued after the date of the Scheme Document and |
| | | prior to the Voting Record Time; and |
| | | |
| | | (iii) (if any) issued at or after the Voting Record Time and |
| | | prior to the Scheme Record Time, on terms that the holder thereof |
| | | shall be bound by the Scheme or, in the case of any subsequent |
| | | holders of any such shares issued prior to the adoption of the |
| | | amendment to the Fountains Articles to be adopted at the General |
| | | Meeting, in respect of which the holder thereof shall have agreed in |
| | | writing to be bound by this Scheme, |
| | | |
| | | save for any Scheme Shares registered in the name of, or beneficially |
| | | held by, Connaught; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Shareholder Meetings" | | the General Meeting and the Court Meeting; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "subsidiary", "subsidiary | | have the meanings given to them by the Act; |
| undertaking", "associate | | |
| undertaking", "undertaking" | | |
| and "holding company" | | |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "UK" or "United Kingdom" | | the United Kingdom of Great Britain and Northern Ireland; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "UK Listing Authority" | | the UK Listing Authority, being the FSA acting as competent authority |
| | | for the purposes of Part VI of the FSMA; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "United States" or "US" | | the United States of America, its territories and possessions, any |
| | | state or political sub-division of the United States of America and |
| | | the District of Columbia; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "US Person" | | a 'US person' as defined in Regulation S under the US Securities Act; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "US Securities Act" | | the United States Securities Act of 1933, as amended, and the rules |
| | | and regulations promulgated thereunder; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Voting Record Time" | | 6.00 p.m. on the date which is two days before the day of the Court |
| | | Meeting, or, if the Court Meeting is adjourned, 6.00p.m. on the date |
| | | which is two days before the day of such adjourned Court Meeting; |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Wider Connaught Group" | | as the context requires, Connaught, its subsidiaries, subsidiary |
| | | undertakings, associated undertakings and any other undertakings in |
| | | which Connaught and/or such undertakings (aggregating their |
| | | interests) have a direct or indirect interest in 20 per cent. or more |
| | | of the total voting rights conferred by the equity capital of an |
| | | undertaking; and |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
| "Wider Fountains Group" | | as the context requires, Fountains its subsidiaries, subsidiary |
| | | undertakings, associated undertakings and any other undertakings in |
| | | which Fountains and/or such undertakings (aggregating their |
| | | interests) have a direct or indirect interest in 20 per cent. or more |
| | | of the total voting rights conferred by the equity capital of an |
| | | undertaking. |
| | | |
+-----------------------------+---+-----------------------------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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