10th Mar 2008 09:54
Stobart Group Limited10 March 2008 Not for release, publication or distribution in whole or in part, in or into theUnited States of America, Canada, Australia, the Republic of South Africa, Japanor any other jurisdiction if to do so would constitute a violation of therelevant laws of such jurisdiction Stobart Group Limited ("Stobart"or the "Company") Proposed acquisitions of the Irlam Group and WA Developments Placing and Open Offer Stobart Group, a leading provider of multimodal transport and logisticssolutions, has today announced the proposed acquisitions of the Irlam Group andWA Developments, an option agreement for the acquisition of the entire issuedshare capital of Carlisle Airport and a placing and open offer of new OrdinaryShares. HIGHLIGHTS • Proposed acquisition of the entire issued share capital of the Irlam Group, a substantial road transport and logistics business, for a total consideration of £59.9 million (£36.2 million in cash, £10.0 million in shares and £13.7 million in Loan Notes). David Irlam will join the Stobart Group Board. • Proposed acquisition of WA Developments, a transport infrastructure engineering specialist, for a total consideration of £10.0 million in cash. • Option agreement for the acquisition of Carlisle Airport, a company that owns a strategic site on which Stobart proposes to develop a new logistics centre. • Proposed Placing and Open Offer to raise £75.0 million (approximately £70.0 million after expenses) via a placing and open offer of 57,675,188 new Ordinary Shares at 130p per share. • The acquisitions of Irlam and WA Developments are expected to enhance earnings in the first full year following Completion • The proceeds from the Placing and Open Offer will be used to finance, inter alia, the cash and loan note elements of the consideration for the Acquisitions. A prospectus setting out further details of the Proposals and convening an EGMand Class Meetings is being posted to shareholders today. Rodney Baker-Bates, Chairman of Stobart Group Limited, commented: "These proposals represent another step towards establishing Stobart as the UK'sleading multimodal transport and logistics provider. James Irlam & Sons is acompany with a strong track record for solid delivery and first class customerservice with an operating ethos very similar to that of Eddie Stobart. The Boardis pleased to welcome David Irlam as Executive Director and is confident thathis experience will be valuable in helping the company deliver sustainablegrowth." There will be a briefing for analysts at Lanson's office, 24a St John Street,London, EC1M 4AY at 2pm today. If you wish to attend this briefing, pleasecontact Kim Atkins on 020 7566 9728. For further information, contact: Stobart Group 01925 605 400Andrew Tinkler, Chief Executive OfficerBen Whawell, Chief Financial Officer Cenkos Securities 020 7397 8921Ian SoanesAdrian Hargrave Lansons Communications 020 7490 8828Tony Langham 07979 692287Charlie Field 07884 001148Karen Mignon 07766 651327 Cenkos Securities plc, which is authorised and regulated by the FinancialServices Authority, is acting for Stobart Group Limited and no one else inconnection with the matters referred to in this announcement and will not beresponsible to anyone other than Stobart Group Limited for providing theprotections afforded to its customers or for providing advice to any otherperson in relation to the matters referred to in this announcement. This announcement does not constitute or form part of any offer or invitation tosell or issue, or any solicitation of any offer to acquire, purchase orsubscribe for any securities. This announcement has not been examined orapproved by the FSA or the London Stock Exchange or any other regulatoryauthority. The distribution for this announcement in certain jurisdictions maybe restricted by law and therefore persons into whose possession thisannouncement comes should inform themselves about and observe any suchrestrictions. Any failure to comply with these restrictions may constitute aviolation of the securities laws of any such jurisdiction. Any purchase of orapplication for shares in the Placing and the Open Offer should only be made onthe basis of information contained in the formal prospectus to be issued inconnection with the Placing and the Open Offer and any supplement thereto. The information contained herein is not for publication or distribution in orinto the United States of America. These materials are not an offer ofsecurities for sale in the United States. The securities referred to hereinhave not been and will not be registered under the U.S. Securities Act of 1933(the "Act"), as amended, and may not be offered or sold in the United Statesabsent registration under the Act or an available exemption from registration.No public offering of the securities referred to herein will be made in theUnited States. The information contained in this announcement is not for publication ordistribution to persons in Australia, Canada, Japan or the Republic of SouthAfrica. The shares referred to herein may not, directly or indirectly, beoffered, sold, taken up or delivered in, into or from Australia, Canada, Japanor the Republic of South Africa. Certain statements in this announcement are forward looking statements. Bytheir nature, forward looking statements involve a number of risks,uncertainties and assumptions because they relate to events and/or depend oncircumstances that may or may not occur in the future and could cause actualresults to differ materially from those expressed in, or implied by, the forwardlooking statements. These include, among other factors: the Group's ability toobtain capital/additional finance; the limitations of the Group's internalfinancial controls; any increase in competition; an unexpected decline inturnover; legislative, fiscal and regulatory developments including, but notlimited to, changes in environmental and safety regulations; and currency andinterest rate fluctuations. These and other factors could adversely affect theoutcome and financial effects of the plans and events described herein. Forwardlooking statements contained in this announcement based on past trends oractivities should not be taken as a representation that such trends oractivities will continue in the future. Subject to any requirement under theListing Rules of the UK Listing Authority, neither the Company nor CenkosSecurities plc undertakes any obligation to update or revise any forward lookingstatements, whether as a result of new information, future events or otherwise.You should not place undue reliance on forward looking statements, which speakonly as of the date of this announcement. Not for release, publication or distribution in whole or in part, in or into theUnited States of America, Canada, Australia, the Republic of South Africa, Japanor any other jurisdiction if to do so would constitute a violation of therelevant laws of such jurisdiction Stobart Group Limited ("Stobart"or the "Company") Proposed acquisitions of the Irlam Group and WA Developments Placing and Open Offer Introduction Stobart is pleased to announce the proposed acquisition of the Irlam Group, asubstantial road transport logistics business, along with two smallertransactions and an equity fundraising to finance, inter alia, the cash and loannote elements of the consideration for the Acquisitions. Stobart has entered into a conditional agreement to acquire the entire issuedshare capital of Irlam and the business and assets of Irlam Storage LLP for anaggregate consideration of £59.9 million. The Irlam Sellers will receive £36.2million in cash, £10.0 million in new Ordinary Shares and £13.7 million in LoanNotes. The Company has entered into an option agreement for the acquisition of theentire issued share capital of Carlisle Airport, a company that owns a strategicsite covering 460 acres of development land in Carlisle where Stobart proposesto develop a new logistics centre. The Company has also entered into aconditional agreement to acquire WA Developments, a transport infrastructureengineering specialist, for consideration of £10.0 million to be satisfied incash on Completion. The Company also proposes to raise approximately £75.0 million before expensesby means of a placing and open offer of 57,675,188 new Ordinary Shares at 130pper share. The net proceeds of the Placing and Open Offer of approximately £70.0million will be used to finance, inter alia, the cash and loan note elements ofthe consideration for the Acquisitions. The Placing and Open Offer isconditional, inter alia, upon the approval of Shareholders at the EGM and oncompletion of the Irlam Acquisition. Owing to the size and value of Irlam in relation to Stobart the IrlamAcquisition is a Class 1 transaction for the purposes of the Listing Rules and,as such, is conditional upon, inter alia, the approval of Shareholders at theEGM. The Irlam Acquisition is also conditional on completion of the Placing andOpen Offer. WA Developments is owned by Andrew Tinkler and William Stobart, Chief ExecutiveOfficer and Chief Operating Officer respectively of Eddie Stobart. For thisreason, the WA Developments Acquisition is a related party transaction for thepurposes of the Listing Rules and, as such, is conditional upon, inter alia, theapproval of Shareholders at the EGM. The WA Developments Acquisition is alsoconditional on completion of the Placing and Open Offer. Background to and reasons for the Proposals The Irlam Group is a long-established business operating in the same market asStobart and is well-known to the Company. The Irlam Acquisition will bring newcustomers to the Group and strengthen the relationship with some existingcustomers. It will also bring a strong operational team of managers with aproven record with whom Eddie Stobart has a long-standing working relationship.The Irlam Group is a competitor of Eddie Stobart but also has a tradingrelationship with Eddie Stobart as a subcontractor for certain Stobartcontracts. At present Eddie Stobart operates from six sites around Carlisle in the NorthWest of England. Eddie Stobart intends to consolidate these operations onto asingle, purpose-built site and plans have been created for a new logisticscentre on the site of Carlisle airport which is owned by Carlisle Airport, theultimate parent company of which is WAD Holdings, a company owned and controlledby Andrew Tinkler and William Stobart. The Current Directors consider thatownership of the freehold to the development site would give the Company theopportunity to develop the new logistics centre to their own specification andpotentially to develop aviation activities, including air freight, from the sitein the future. They consider that there could be significant commercialadvantages to owning the site as opposed to entering into a lease with itspresent owner and they have therefore entered into the Carlisle Airport OptionAgreement, pursuant to which Stobart has the right to acquire Carlisle Airporton or before 4 July 2008 on the terms set out below. Prior to this date theCompany will undertake feasibility and value studies on Carlisle Airport. Uponconclusion of these studies the Board will decide whether exercising theCarlisle Airport Option is in the best interests of the Company. Exercise of theCarlisle Airport Option is conditional upon the consent of Cenkos, the Company'ssponsor in relation to the Proposals. A final decision on whether to exercisethe Carlisle Airport Option will be taken after consultation with Cenkos andwill be announced via a regulatory information service. The merger between Westbury and the Eddie Stobart Group presented the Group'smanagement team with the opportunity to create a multi-modal logistics group. Inorder to capitalise on that opportunity the Group requires additional skills andresources. Since the merger, WA Developments, a company owned by Andrew Tinklerand William Stobart has provided significant support in the development of theGroup's plans for its port operations at Weston Point, Runcorn. The CurrentDirectors consider it important to bring in-house the skills required for thecontinued development of the Group and it has therefore agreed terms for theacquisition of WA Developments. The Placing is being used, inter alia, to finance the cash consideration for theAcquisitions. The proceeds from the Placing will also be used by the Company toprovide further funding for Plantation Place. Extraordinary General Meeting A notice convening an EGM is being posted to shareholders today. At the EGM, thefollowing resolutions will be proposed: (a) an ordinary resolution to approve the increase in authorised share capitalof the Company; (b) an ordinary resolution to approve the acquisition by the Company of both theentire issued share capital of Irlam and the business and assets of IrlamStorage LLP; (c) an ordinary resolution to approve the acquisition by the Company of theentire issued share capital of WA Developments; and (d) a special resolution to amend the Articles of Association. Resolution (d) proposes the adoption of certain amendments to the Company'sArticles of Association. The changes are proposed by the Board primarily toreflect the Company's recent change to UK-resident tax status and alterations tothe composition of the Board. Notices convening two Class Meetings have alsobeen posted to Shareholders today. The purpose of each of these meetings is topropose extraordinary resolutions of the holders of each class of OrdinaryShares and Income Shares in general meeting to approve the amendments to theArticles of Association as proposed in Resolution 4 of the notice of EGM. Information on the Irlam Group Information on the Irlam Group The Irlam Group, consisting of Irlam and Irlam Storage LLP, is one of thelargest independently-owned road transport logistics businesses in the UK. JamesIrlam, the father of current shareholders David, Michael and Stewart Irlam,founded Irlam in 1964 and developed the business mainly by transporting milkchurns to Manchester dairies and returning with supplies for local farms. The Irlam business was expanded in the 1980s, starting with investment in newtrucks and the company won its first major contract in 1986. The Irlam Group nowoperates logistics services (including transport), over 600,000 square feet ofwarehousing and contract packing and a national ambient distribution service fora blue chip customer base, primarily from the fast moving consumer goods sector.Irlam, the main trading company of the group, currently operates 263 trucks, 633trailers and employs 674 staff. Customers of Irlam include Proctor & Gamble,Coca Cola, Britvic, Danone Waters, Tesco and Johnson & Johnson. Irlam StorageLLP owns warehousing space and the Stoke and Chelford sites from where Irlamprincipally operates. The Irlam Group's head office is located in Chelford, Cheshire. This site alsoincludes vehicle maintenance bays, transport and warehousing facilities. Afurther four acres of mixed commercial, brown field and green belt land areattached to the site. The main operating centre is based in Stoke and includescustomer services, the maintenance department, maintenance bays and vehicle washfacilities. There is a further facility at Normanton, West Yorkshire, withoffices, transport and maintenance facilities and other leased and licensedfacilities in Essex, Melton Mowbray, Lutterworth, and a number of customer sitesincluding Trafford Park, Warrington, Skelmersdale and Elton. Irlam has enjoyed strong and consistent growth since David Irlam joined thebusiness and it won the Motor Transport Haulier of the Year Award in 2001reflecting a clear commitment to professionalism and customer care. It haspositioned itself to be a leader in the transport of ambient goods for theconsumer goods industry. The majority of Irlam Group's customers are contracted with the company for aperiod of between one and five years. Irlam operates a national network coveringthe UK. By carefully targeting certain customers and routes, Irlam has beensuccessful in building a network of complementary routes around the heart of theUK motorway network from the South East to the North West and Yorkshire. Thisnetwork has ensured that Irlam does not need to rely on non-contracted work tofill in "empty legs" and therefore keeps empty mileage to a minimum. This has a benefit, not only to Irlam in terms of operational efficiency, butalso to the environment in terms of emissions and reducing congestion. Summary financial information on the Irlam Group In the year ended 30 April 2007 the Irlam Group generated a profit before tax of£1.2 million (2006: £1.5 million) on turnover of £50.0 million (2006: £43.0million). This profit is stated after the deduction of remuneration and paymentsto the present owners which will not continue of £4.7 million (2006: £4.0million). Principal terms of the Irlam Acquisition Under the terms of the Irlam Acquisition Agreement, Stobart will purchase theentire issued share capital of Irlam and the business and assets of IrlamStorage LLP. The consideration payable pursuant to the Irlam AcquisitionAgreement is £59.9 million. The Irlam sellers will receive £36.2 million incash, £10.0 million in new ordinary shares and £13.7 million in Loan Notes. Information on Carlisle Airport Information on Carlisle Airport Carlisle Airport owns 460 acres of land in Carlisle, on which Eddie Stobartproposes to build a new logistics centre to consolidate its facilities in theregion. Carlisle Airport's ultimate parent company is WAD Holdings, a companycontrolled by Andrew Tinkler and William Stobart. Planning permission is beingsought for the development of a new logistics centre on the site comprising28,600 square metres of high bay warehouses, 9,100 square metres of office andother accommodation and 20,000 square metres of vehicle parking. Plans for EddieStobart's move to the site were in place before the merger of Stobart Holdingsand Westbury. The Current Directors regard the site as the ideal location forthe new logistics centre which will provide Eddie Stobart with theinfrastructure in the region that it needs to continue its growth and has beenearmarked as the future Carlisle site for Eddie Stobart. They also consider that the site offers further future development potential.The site also incorporates Carlisle airport. At present there is very limitedaviation activity at the airport but ownership of Carlisle Airport would giveStobart the opportunity to develop aviation services, including air freightservices. The proximity of the airport to the Lake District could make aredeveloped airport attractive to passenger service operators. If the CarlisleAirport Option is exercised the Company would expect to obtain new debtfacilities to fund the construction of the logistics centre. If a decision wastaken to commence commercial air freight or passenger services the Company wouldneed to make additional investment in airport facilities. In the year ended 31 July 2006, Carlisle Airport generated a profit before taxof £156,000 (2005: loss of £760,000) on turnover of £865,000 (2005: £801,000).Carlisle Airport has changed its accounting reference date to 28 February 2007.The draft accounts for the 7 month period ended 28 February 2007 show anoperating loss of £1,633,000 on turnover of £466,000 and management accounts forthe nine month period ended 30 November 2007 show an operating loss of £546,000on turnover of £890,000. Net liabilities at 30 November 2007 were £1,959,000. Information on the Carlisle Airport Option The Directors consider there to be significant value in Carlisle Airport interms of both the logistics centre development plan and potential aviationoperations and believe that ownership of Carlisle Airport could bringsignificant longer-term benefits to the Stobart Group. However there arematerial uncertainties at present, including the fact that planning permissionhas not yet been obtained, which have prevented the Company and CarlisleAirport's present ultimate parent, WAD Holdings, (a company controlled by AndrewTinkler and William Stobart), from reaching definitive agreement on valuation.The parties have therefore agreed to enter into the Carlisle Airport OptionAgreement in order to enable the Company to conduct a thorough appraisal of theopportunity. The Company will pay £50,000 in cash, which is non-refundable except in certainlimited circumstances, to acquire the Carlisle Airport Option which gives it theright, up to and including 4 July 2008, to acquire Carlisle Airport on the termsof the Carlisle Airport Acquisition Agreement. Prior to making a decision onwhether to exercise the Carlisle Airport Option, the Company will undertake afeasibility study and a valuation, including obtaining a third party expertvaluation of the land in its proposed use, and will seek the approval ofShareholders whose consent is required for the exercise of the Carlisle AirportOption. Principal Terms of the Carlisle Airport Acquisition Under the terms of the Carlisle Airport Acquisition Agreement, Stobart wouldpurchase the entire issued share capital of Carlisle Airport. The considerationfor the Carlisle Airport Acquisition would be up to £15 million, which would besatisfied by a payment of £2.5 million in cash and the issue of the CarlisleAirport Consideration Shares. Additionally, Stobart would reimburse the sellerin cash in respect of airport operating losses on the basis set out in theCarlisle Airport Acquisition Agreement to a maximum of £0.3 million subject tothe option period being extended along with any capital investment made in thedevelopment of the logistic facility which will be agreed with the Company inadvance. Information on WA Developments Information on WA Developments WA Developments was formed in 1993 by Andrew Tinkler and is a transportinfrastructure engineering specialist. Its principal activity in recent yearshas been the provision of engineering services either directly or indirectly toNetwork Rail. After a period of growth and high levels of profitability thecompany's profitability reduced in recent years following the unsuccessfulappointment of a new management team. Management changes were made in April 2007and WA Developments is delivering significantly improved financial results inthe current year. In the past six months Stobart has employed WA Developments to provide advice onthe redevelopment of the AHC Widnes site. WA Developments' expertise ingroundworks and civil engineering has enabled WA Developments to propose a novelsolution for the remediation of part of the site which, the Current Directorsconsider, has created a saving for the Group of several million pounds. Thisexample is indicative of the value the Current Directors consider that WADevelopments will bring to the Enlarged Group following its acquisition. The draft accounts for the year ended 31 May 2007 WA Developments show a lossbefore tax of £1.6 million (2006: profit before tax £0.1 million) on turnover of£28.9 million (2006: £30.1 million). These results have been reported afterprovisions against revenue recognised in previous years which is now considerednon-recoverable were made by new management in the year to 31 May 2007. Theresults for the year ended 31 May 2006 are also stated after management andother charges which will not recur under the Company's ownership. Managementaccounts show that if the provisions against revenue were allocated to theperiods in which the revenue was recorded and non-recurring charges were addedback the result before tax in the year to 31 May 2007 would have improved by£1.0 million (2006: £0.4 million) and turnover would have increased by £1.1million (2006: £0.1 million). For the six months ended 30 November 2007 management accounts show a muchimproved profit before tax, after adding back non-recurring charges, of £733,000on turnover of £12.0 million. The Current Directors expect that the Group will spend significant amounts oncivil engineering contractors in the coming years. They believe that WADevelopments is ideally suited to perform this work and that the WA DevelopmentsAcquisition will not only bring to the Group a business with both profitablethird party operations and necessary expertise, but it will also allow the Groupcapture the margin on the planned civil engineering work that would otherwisehave been placed with external contractors. Principal Terms of the WA Developments Acquisition Under the terms of the WA Developments Acquisition Agreement, Stobart willpurchase the entire issued share capital of WA Developments. The considerationpayable pursuant to the WA Developments Acquisition Agreement is £10 million tobe satisfied in cash, subject to repayment of up to £5.0 million on the basis of£10 for every £1 by which WA Developments' adjusted audited profit before taxthe financial year ending 31 May 2008 (as adjusted for non-recurring managementand other charges) is less than £1 million and £1 for every £1 by which itsaudited net asset value as at that date is less than £5.5 million. Financial effects of the Acquisitions The Irlam Acquisition will add significantly to the scale of the Group's coreroad transport and storage business and is expected to enhance earnings in thefirst full year following completion of the acquisition. The Current Directors believe that the Carlisle Airport Acquisition, which isthe subject of the Carlisle Airport Option Agreement, would be an important stepin the development of a new logistics centre in Carlisle. Plans for thelogistics centre are well-advanced and will be continued by the current ownersof the site regardless of whether the Carlisle Airport Option is exercised. Thecurrent owner is currently deploying capital expenditure at the site to completethe first phase of commercial development and allow occupation by Eddie Stobartand other tenants. Should the option to acquire Carlisle Airport be exercised,such expenditure would be re-imbursed to the current owner, in which case theexpenditure is expected to be financed from the Group's debt facilities. Should the option to acquire Carlisle Airport be exercised, and once thedevelopment is completed the Current Directors expect the Group would saveannual rent payments of approximately £l million in aggregate. The Group wouldalso bear the costs of operating Carlisle Airport which may result in continuedsmall trading losses pending introduction, as appropriate, of commercialaviation services provided by the Group or third parties. If the decision istaken to exercise the Carlisle Airport Option an announcement, including detailsof the financial effects of the exercise, will be released via a regulatory newsservice. Should the option not be exercised the Company would expect to enter into alease with the present owner of Carlisle Airport on normal commercial terms. Inthis event a proportion of the rent saving is expected to be achievable. The WA Developments Acquisition is expected to enhance earnings in the firstfull year following its completion regardless of the contribution WADevelopments is expected to make to the development of the Group's rail, waterand storage infrastructure in Runcorn and Widnes. Taking account of the savingsfrom the internalisation of that development work the Current Directors considerthat the financial benefit of the WA Developments Acquisition will beconsiderable. Information on the Enlarged Group Management of the Enlarged Group The senior management structure of the Company has been brought into line withthe Company's recent change to UK-resident tax status by altering thecomposition of the Board. With effect from 1 March 2008, Andrew Tinkler, WilliamStobart and Ben Whawell who were Chief Executive Officer, Chief OperatingOfficer and Chief Financial Officer respectively of Eddie Stobart have becomedirectors of the Company and have assumed those same positions on the Board.Richard Burrell, Nigel Rawlings and Michael Kayser have also joined the Board asnon-executive directors. Save for Michael Kayser all of these new directors havea long-standing involvement with the Group, either through Eddie Stobart, theGroup's principal trading subsidiary, or through Westbury. Provided the Irlam Acquisition completes, David Irlam will be appointed as adirector with effect from Admission. Strategy of the Enlarged Group The Enlarged Group intends to invest in its port and rail interests to create aninter-modal port facility with road, rail, sea and inland waterway accesscapable of handling significant cargo volumes and linked to the existing haulagenetwork. The Enlarged Group expects to further develop its offering in Europeand places particular emphasis on exploring new opportunities with both new andexisting customers. To differentiate itself from its competitors and to facilitate delivery offuture growth in both revenue and operating profit, Stobart has developed androlled out a new costing model to existing and new customers. This model wasaimed at partnering with customers to share more equitably the risk and rewardassociated with transport service delivery. The goal of these new contracts isto agree up front a commitment to share the savings derived from running a moreefficient transport network. This strategy is aimed at maintaining long-termrelationships with customers where value and service is transparent and the newcontract model has been well received by customers of Stobart. The EnlargedGroup will target new contracts in excess of £10 million. The Enlarged Group also intends to further implement Stobart's current strategyof optimising fleet utilisation, so as to reduce the Group's environmental wasteand improve its carbon footprint. Current Trading and Prospects of the Enlarged Group Stobart has grown strongly in each of the last three financial years andcontinues to trade well with new business wins and profitability growing in linewith management's expectations for the current year. Eddie Stobart Group'scontracts protect it from rising fuel prices and despite fears over a downturnin consumer confidence the Directors believe that its differentiated operatingmodel will allow continued future growth even in the event of an economicslowdown. The Company has been in discussions with both existing and potential customersto gauge likely demand for, and income derived from, the accommodation andfacilities proposed within the redeveloped port facility at its Runcorn site.Such discussions are expected, in part, to influence the nature of thisdevelopment, as well as any potential for synergistic operations with Stobart'sexisting rail business. The Acquisitions will provide the Enlarged Group with access to new customers,strengthened management capabilities and synergy benefits. They will allow thebusiness to expand its current transport operations and deliver improvedefficiencies and savings to all customers. Whilst the majority of the Group's investment property portfolio was disposed ofat the time of the acquisition of Stobart Holdings, the Group remains interestedin a small number of investment properties. The Company announced on 22 January2008 that, in line with the current climate in the commercial property sector,the value of its investment property interests is expected to show significantdeterioration by the end of the current financial period. The Company'sprincipal investment is a 21.9 per cent. stake in Plantation Place, a highquality office property in the City of London. Plantation Place is partly debtfinanced and depending on the extent of the fall in the valuation of theproperty it might become necessary to make an additional investment to ensurethat Plantation Place remains in compliance with the terms of its debt financingand thereby protect the Company's interest in the property. Regardless of thepossible requirement to make additional investments the Company's commercialproperty portfolio, including Plantation Place, remains under review. Tax status of the Company The Company is presently controlled and managed in Guernsey and has beenmaintained as non UK resident for tax purposes since its incorporation. TheBoard has reviewed and taken professional advice on the potential advantages anddisadvantages to the Company of moving the location of its central managementand control of the Company to the UK and considers that it would be in the bestinterests of the Company and its Shareholders as a whole to do so from 1 March2008. This move is expected to result in the Company being treated as residentin the UK for UK tax purposes. Until 29 February 2008, on the basis that the Company was not UK resident fortax purposes, no tax credit is attached to dividends paid to its shareholders.UK resident corporate shareholders of the Company were liable to corporation taxon dividends they receive. Higher rate UK resident individual taxpayers wereliable to income tax on dividends received at the rate of 32.5 per cent.(without the benefit of any tax credit). By contrast, a dividend paid by a UKresident company generally carries a tax credit equal to one-ninth of the netdividend, which equates to 10 per cent. of the dividend plus the tax credit.Since 1 January 2008, the Company has been resident in Guernsey for Guernsey taxpurposes but is taxed at a rate of 0 per cent. in Guernsey. From 1 March 2008, assuming the company is UK tax resident, as noted above, UKtax resident individuals will be entitled to a tax credit equal to one-ninth ofdividends received. Higher rate taxpayers are liable to income tax at a rate of32.5 per cent., against which tax credit may be off-set. UK companies should notbe subject to corporation tax on dividends received from other UK tax residentcompanies. The Company will be liable to UK corporation tax on profits arising after 1March 2008. The mainstream rate of corporation tax is reducing from 30 per cent.to 28 per cent. with effect from 1 April 2008. Dividend Policy Subject to there being sufficient profits available for the purpose, the Boardintends to declare dividends on its Ordinary Shares twice annually at the timeof announcement of its interim and final results. Stobart paid an interimdividend of 2.7 pence per share on 26 October 2007, bringing the total since thebeginning of the current accounting period to 5.7 pence. The Board intends thatin the future the dividend will represent a lower proportion of profits,reflecting the anticipated growth of the business, but expects to maintain astrong dividend. Information on the Placing and Open Offer Cenkos has agreed, as agent for the Company, to invite Qualifying Shareholdersto apply for the Open Offer Shares at the Issue Price payable in full in cash onapplication and free of all expenses on the basis of 1 Open Offer Share forevery 2.785 Existing Ordinary Shares held at the Record Date. Entitlements to Open Offer Shares under the Open Offer will be rounded down tothe nearest whole number of Open Offer Shares. Fractional entitlements to OpenOffer Shares will be aggregated and placed for the benefit of the Company. The Open Offer is not underwritten but Cenkos has pre-placed all of the OpenOffer Shares at the Issue Price subject (save for the Firm Placing Shares) toclawback by Qualifying Shareholders in order to satisfy valid applications underthe Open Offer. Certain Shareholders have irrevocably undertaken not to take up their Open OfferEntitlements in respect of the Firm Placing Shares. Accordingly, Cenkos hasconditionally placed these shares firm (not subject to clawback) withinstitutional investors on behalf of the Company at the Issue Price. The Placing and Open Offer is conditional, inter alia, upon: • the passing of Resolutions 1 and 2 at the EGM (or any valid adjournment thereof); • completion of the Irlam Acquisition; • the Placing Agreement having become unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and • Admission becoming effective by 4 April 2008 or such later date (not being later than 11 April 2008) as the Company and Cenkos may in their discretion determine. If the Placing Agreement does not become unconditional in all respects, then noOpen Offer Shares will be issued under the Placing and Open Offer and all moniesreceived by Capita Registrars will be returned to applicants without interestand at their risk as soon as possible thereafter. Application has been made for the New Ordinary Shares to be admitted to theOfficial List of the UK Listing Authority and to trading on the London StockExchange's market for listed securities and application has also been made forthe Existing Ordinary Shares and the New Ordinary Shares to be admitted tolisting on the Official List of the Channel Islands Stock Exchange. The New Ordinary Shares will, on Admission, rank in full for all dividends andother distributions declared, made or paid on the Ordinary Shares afterAdmission (save that they will not rank for the final dividend declared by theCompany for the year ended 29 February 2008) and will otherwise rank pari passuin all respects with the Existing Ordinary Shares in issue. Qualifying Shareholders should note that the Open Offer is not a rights issueand that New Ordinary Shares not applied for under the Open Offer will not besold in the market for the benefit of Qualifying Shareholders who do not applyunder the Open Offer. Open Offer Entitlements are not transferable except tosatisfy a bona fide market claim and the Application Form, not being a documentof title, cannot be traded. Timetable Record Date for the Open Offer 5 March 2008 Ex-entitlement date for the Open Offer 11 March 2008 Open Offer Entitlements credited to CREST stock accounts 12 March 2008 Recommended latest time for requesting withdrawal of Open Offer 4.30 p.m. on 27 March 2008Entitlements from CREST Latest time for depositing Open Offer Entitlements into CREST 3.00 p.m. on 29 March 2008 Latest time and date for splitting application forms (to satisfy bona 3.00 p.m. on 1 April 2008fide market claims) Latest time and date for receipt of Forms of Proxy 10.45 a.m. on 2 April 2008 Latest time and date for receipt of completed application forms and 11.00 a.m on 3 April 2008Excess CREST application forms and payment in full under the OpenOffer or settlement of relevant CREST instruction (as appropriate) Extraordinary General Meeting 10.00 a.m. on 3 April 2008 Class Meeting: Holders of Ordinary Shares 10.30 a.m. on 3 April 2008 Class Meeting: Holders of Income Shares 10.45 a.m. on 3 April 2008 Admission and commencement of dealings in New Ordinary Shares 8.00 a.m. on 4 April 2008 Completion of the Irlam Acquisition and the WA Developments 4 April 2008Acquisition (assuming all conditions are satisfied) CREST accounts credited in respect of the New Ordinary Shares to be 4 April 2008issued in uncertificated form Definitive share certificates expected to be despatched in respect of 11 April 2008New Ordinary Shares in certificated form Cenkos Securities plc, which is authorised and regulated by the FinancialServices Authority, is acting for Stobart Group Limited and no one else inconnection with the matters referred to in this announcement and will not beresponsible to anyone other than Stobart Group Limited for providing theprotections afforded to its customers or for providing advice to any otherperson in relation to the matters referred to in this announcement. This announcement does not constitute or form part of any offer or invitation tosell or issue, or any solicitation of any offer to acquire, purchase orsubscribe for any securities. This announcement has not been examined orapproved by the FSA or the London Stock Exchange or any other regulatoryauthority. The distribution for this announcement in certain jurisdictions maybe restricted by law and therefore persons into whose possession thisannouncement comes should inform themselves about and observe any suchrestrictions. Any failure to comply with these restrictions may constitute aviolation of the securities laws of any such jurisdiction. Any purchase of orapplication for shares in the Placing and the Open Offer should only be made onthe basis of information contained in the formal prospectus to be issued inconnection with the Placing and the Open Offer and any supplement thereto. The information contained herein is not for publication or distribution in orinto the United States of America. These materials are not an offer ofsecurities for sale in the United States. The securities referred to hereinhave not been and will not be registered under the U.S. Securities Act of 1933(the "Act"), as amended, and may not be offered or sold in the United Statesabsent registration under the Act or an available exemption from registration.No public offering of the securities referred to herein will be made in theUnited States. The information contained in this announcement is not for publication ordistribution to persons in Australia, Canada, Japan or the Republic of SouthAfrica. The shares referred to herein may not, directly or indirectly, beoffered, sold, taken up or delivered in, into or from Australia, Canada, Japanor the Republic of South Africa. Certain statements in this announcement are forward looking statements. Bytheir nature, forward looking statements involve a number of risks,uncertainties and assumptions because they relate to events and/or depend oncircumstances that may or may not occur in the future and could cause actualresults to differ materially from those expressed in, or implied by, the forwardlooking statements. These include, among other factors: the Group's ability toobtain capital/additional finance; the limitations of the Group's internalfinancial controls; any increase in competition; an unexpected decline inturnover; legislative, fiscal and regulatory developments including, but notlimited to, changes in environmental and safety regulations; and currency andinterest rate fluctuations. These and other factors could adversely affect theoutcome and financial effects of the plans and events described herein. Forwardlooking statements contained in this announcement based on past trends oractivities should not be taken as a representation that such trends oractivities will continue in the future. Subject to any requirement under theListing Rules of the UK Listing Authority, neither the Company nor CenkosSecurities plc undertakes any obligation to update or revise any forward lookingstatements, whether as a result of new information, future events or otherwise.You should not place undue reliance on forward looking statements, which speakonly as of the date of this announcement. DEFINITIONS The following definitions apply throughout this announcement, unless the contextotherwise requires: Acquisitions the Irlam Acquisition, the WA Developments Acquisition and, if the Company exercises the Carlisle Airport Option, the Carlisle Airport Acquisition Admission the admission of the New Ordinary Shares of the Company to listing on the Official List of the UK Listing Authority and to trading on the London Stock Exchange's market for listed securities becoming effective in accordance with the Listing Rules and the London Stock Exchange's Admission and Disclosure Standards and the admission to listing on the Official List of the Channel Islands Stock Exchange of the Existing Ordinary Shares and the New Ordinary Shares Board the Current Directors Carlisle Airport Stobart Air Limited, incorporated in England and Wales (company number 04185647) Carlisle Airport Acquisition the conditional acquisition of the entire issued share capital of Carlisle Airport by Stobart Carlisle Airport Acquisition Agreement the agreement to be made on the exercise of the Carlisle Airport Option (1) Stobart Air Holdings and (2) the Company relating to the sale and purchase of the entire issued share capital of Carlisle Airport Carlisle Airport Option the option to purchase Carlisle Airport under the terms of the Carlisle Airport Option Agreement Carlisle Airport Option Agreement the agreement dated 10 March 2008 and made between (1) Stobart Air Holdings and (2) the Company relating to the Carlisle Airport Option Carlisle Airport Consideration Shares the new Ordinary Shares to be issued and allotted pursuant to the Carlisle Airport Acquisition should the Carlisle Airport Acquisition proceed Cenkos Cenkos Securities plc, which is authorised and regulated in the United Kingdom by the FSA and is a member of the London Stock Exchange Class Meetings the general meetings of the Company of the holders of Ordinary Shares and the Income Shares convened for 10.30 a.m. and 10.45 a.m. on 2 April 2008 (or any adjournment thereof) Clawback Placing the conditional placing by Cenkos Securities (on behalf of the Company) of the Open Offer Shares on the terms and subject to the conditions of the Placing Agreement, subject to clawback to satisfy valid applications from Qualifying Shareholders pursuant to the Open Offer Company or Stobart Stobart Group Limited, a limited liability company incorporated in Guernsey (company number 39117) Completion completion of the Irlam Acquisition, the WA Developments Acquisition and the Placing and Open Offer or such of them as the context may require Consideration Shares the Irlam Consideration Shares and the Carlisle Airport Consideration Shares CREST the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) operated by CRESTCo CRESTCo Euroclear UK and Irlam Limited (formerly CRESTCo Limited), the operator of CREST Current Directors the directors of the Company as at the date of 10 March 2008 Directors the Current Directors and the Proposed Director Eddie Stobart Eddie Stobart Limited, the principal trading company of the Eddie Stobart Group, incorporated in England and Wales (company number 995045) Eddie Stobart Group the Eddie Stobart group of companies comprising Stobart Holdings, its subsidiaries and its subsidiary undertakings Enlarged Group the Group as enlarged by the Acquisitions Existing Ordinary Shares the 160,625,401 issued Ordinary Shares in issue as at the date of this announcement Extraordinary General Meeting or EGM the extraordinary general meeting of the Company convened for 10.00 a.m. on 2 April 2008 (or any adjournment thereof) Firm Placing Shares the 21,593,804 Open Offer Shares to which Andrew Tinkler, William Stobart, Stobart Group Limited Employee Benefit Trust and Assura Fund Management LLP have irrevocably undertaken not to take up their Open Offer Entitlements FSA the Financial Services Authority FSMA the Financial Services and Markets Act 2000, as amended Group the Company, its subsidiaries and its subsidiary undertakings from time to time Income Shares income shares of 10p each in the capital of the Company Irlam James Irlam and Sons Limited incorporated in England and Wales (company number 00794305) Irlam Acquisition the conditional acquisition of the entire issued share capital of James Irlam & Sons Limited and the business and assets of Irlam Storage LLP by Stobart Irlam Acquisition Agreement the agreement dated 10 March 2008 and made between (1) the Irlam Sellers,(2) SF Irlam, H Irlam and LV Irlam, (3) Smith, (4) Irlam Storage LLP, (5) the Company and (6) Eddie Stobart Group relating to the sale and purchase of the entire issued share capital of Irlam and the business and assets of Irlam Storage LLP Irlam Consideration Shares the 7,692,306 new Ordinary Shares to be issued and allotted pursuant to the Irlam Acquisition Irlam Group together, James Irlam & Sons Limited and the business and assets of Irlam Storage LLP Irlam Sellers Michael Jonathan Irlam, David James Irlam and Martin Stuart Irlam Irlam Storage LLP Irlam Storage LLP, incorporated in England and WA Developments (limited liability partnership number OC322146) Issue Price 130 pence per New Ordinary Share Loan Notes £13,723,252 million 2008/ 2010 guaranteed unsecured loan noted to be issued by the Company in connection with the Irlam Acquisition London Stock Exchange London Stock Exchange plc New Ordinary Shares the Irlam Consideration Shares and the Open Offer Shares Official List the Official List maintained by the FSA pursuant to Part VI of FSMA and/or the Official List of the Channel Islands Stock Exchange, as the context may require Open Offer the conditional offer to Qualifying Shareholders to subscribe for Open Offer Shares at the Issue Price Open Offer Entitlements the number of Open Offer Shares for which a Qualifying Shareholders is entitled to subscribe under the Open Offer Open Offer Shares the 57,675,188 Ordinary Shares to be allotted and issued by the Company Ordinary Shareholders holders of Ordinary Shares Ordinary Shares ordinary shares of 10p each in the capital of the Company Placing the conditional placing of Open Offer Shares by Cenkos as agent for the Company pursuant to the Placing Agreement subject (other than in respect of the Firm Placing Shares) to recall to satisfy valid applications under the Open Offer Placing Agreement the conditional agreement dated 10 March 2008 between the Company and Cenkos relating to the Placing and Open Offer Proposals the Resolutions, the Irlam Acquisition, the WA Developments Acquisition and the Placing and Open Offer Proposed Director David James Irlam Qualifying Shareholders holders of Ordinary Shares on the register of members of the Company at the Record Date, other than certain overseas Shareholders Record Date the record date for the Open Offer, being 5 March 2008 Related Parties Andrew Tinkler and William Stobart Related Party Acquisitions the Carlisle Airport Acquisition and the WA Developments Acquisition Resolutions the resolutions to be proposed at the EGM Shareholders holders of Shares Shares Ordinary Shares and Income Shares Stobart Air Holdings Stobart Air Holdings Limited incorporated in England and Wales (company number 6179950), the sole shareholder of Carlisle Airport and the subsidiary of WADI Stobart Holdings Stobart Holdings Limited, the holding company of the Eddie Stobart Group, incorporated in England and Wales with registered number 5907280 UK Listing Authority the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the FSMA WAD Holdings W. A. Developments Holdings Limited incorporated in England and Wales (company number 5907289) the sole shareholder of WADI WADI W. A. Developments International Limited incorporated in England and Wales (company number 4163442) WA Developments W.A. Developments Limited incorporated in England and Wales (company number 02821207) WA Developments Acquisition the conditional acquisition of the entire issued share capital of WA Developments by Stobart relating to the sale and purchase of the entire issued share capital of WA Developments WA Developments Acquisition Agreement the agreement dated 10 March 2008 and made between (1) the Related Parties and (2) the Company This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
STOB.L