7th Dec 2009 07:00
Impact Holdings (UK) plc ("IHUK", "the Group" or "the Company") Proposed Acquisition, Director Dealing, Board Change and Notice of General Meeting
Further to the announcement made by the Company on 11 September 2009 with regard to the Company signing heads of agreement with the shareholders of Sutherland Professional Funding Limited ("Sutherland"), the Board is pleased to announce that the Company has entered into a conditional agreement ("Share Purchase Agreement") for the acquisition of the whole of the issued share capital of Sutherland ("Acquisition"). Shareholders have today been sent a circular setting out further details of the Acquisition and convening a General Meeting to seek shareholder approval for the transaction ("GM"). The General Meeting is being convened at 9.30am on 29 December 2009 at the Company's registered office, Manchester International Office Centre, Styal Road, Manchester, M22 5WB.
Pursuant to the terms of the Share Purchase Agreement, the consideration for the Acquisition will be 800,000 to be satisfied by the issue of 1,066,666 ordinary shares of 50p each ("Consideration Shares") to the vendors of Sutherland ("Vendors" or "Concert Party"). Consideration Shares with a value of approximately 350,000 have been placed with the Directors and other third parties. Following issue and placing of the Consideration Shares, the Vendors will hold 1,040,566 Ordinary Shares representing 47.3 per cent. of the Enlarged Share Capital.
Ordinarily, the issue and allotment of the Consideration Shares to the Vendors would trigger an obligation on the Concert Party to make a general offer to Shareholders for the entire issued share capital of Company pursuant to Rule 9 of the Takeover Code ("the Code"). Under Rule 9 of the Code, when a person acquires an interest in shares which (when taken together with shares in which he and persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company subject to the Code, such person (or persons acting in concert) would usually be required to make a general offer to shareholders. The Panel has agreed, however, to waive the obligation of the Concert Party to make a general offer ("Waiver"), subject to the shareholders (excluding the Concert Party) ("Independent Shareholders") voting in favour of a resolution to approve the Waiver by the Panel. Issue of the Consideration Shares is also therefore subject to the Independent Shareholders voting in favour of the resolution to approve the Waiver. In the event of Shareholder approval of the Proposals, application will be made to the London Stock Exchange for the Consideration Shares to be admitted to trading on AIM. Admission is expected to become effective and trading in the Ordinary Shares to commence on 30 December 2009.
Furthermore as John Russell is already a substantial shareholder in the Company, the Acquisition constitutes a Related Party Transaction as defined by the AIM Rules. However, the Directors, who have been so advised by the Company's nominated adviser, Daniel Stewart, believe that the terms of the transaction are fair and reasonable so far as the Shareholders are concerned.
The other resolution on which the Shareholders will be asked to vote is a special resolution to authorise the Directors under section 560 of the Companies Act 2006 to issue Ordinary Shares up to an aggregate nominal amount of 533,333 to the Vendors in consideration for the Acquisition.
BACKGROUND INFORMATION ON SUTHERLAND
Sutherland was incorporated in 1996 and commenced trading in November 1997 with a strategy to provide loans to the accountancy, insurance and legal professions. The company is owned by Tim Sutherland, Morag Sutherland, John Russell and John G. Russell (Transport) Limited, having initially been set up by Tim Sutherland when he retired from The Royal Bank of Scotland.
Based in Edinburgh with a small team of employees with banking experience, Sutherland operates primarily in the north of England but has customers throughout the UK. Sutherland establishes and maintains strong relationships with the practices to, and through, which it provides finance.
Sutherland offers finance both to law firms (practice funding) and individual clients of legal practices (loans to individuals) in relation to:-
* Personal injury fees and outlays funding; and
* General fees and outlays funding.
Sutherland made a loss of 430,608 for the year ended 31 May 2009 and had net assets of 512,132 as at that date.
REASONS FOR THE ACQUISITION
The Enlarged Group will bring together the operational knowledge and IT platform of the Company and the numerous business relationships of the Sutherland business. The Company is already providing day to day management of Sutherland's loan book on an outsourced basis.
The Directors are confident about the future prospects of the Enlarged Group and believe that it will have the following key strengths:
* the increased scale of the business will give access to further funding lines; * the combined client base will create access to significant cross selling opportunities; * the acquisition can be integrated into the infrastructure and operating platforms of the existing Impact business creating synergistic gains through economies of scale; and, * the Board will be further strengthened by the appointment of John Russell as a Non-Executive Director.
RECOMMENDATION
The Directors, who have been so advised by Daniel Stewart, consider the Proposals including the waiver of the obligation on the Concert Party under Rule 9 of the Code to be fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole and therefore recommend the Shareholders to vote in favour of the Resolutions to be proposed at the GM, as they intend and have given irrevocable undertakings to do so in respect of their own shareholdings, amounting in aggregate to 196,406 Ordinary Shares, representing 17.4 per cent. of the Existing Ordinary Shares. In giving its advice, Daniel Stewart has taken into account the Directors' commercial assessments.
In addition to the Directors' holdings outlined above the Company has received irrevocable commitments to vote in favour of the Proposals from Shareholders in respect of 310,407 Ordinary Shares representing 27.4 per cent. of the Existing Ordinary Shares of the Company. Therefore, in aggregate the Company has received irrevocable commitments to vote in favour of the Proposals from Shareholders and Directors in respect of Ordinary Shares representing 44.8 per cent. of the Existing Ordinary Shares of the Company. On the basis that members of the Concert Party will not be entitled to vote on these resolutions, the Company has received irrevocable commitments in respect of 52.8 per cent. of the Ordinary Shares entitled to vote on the Waiver.
BOARD APPOINTMENT
On Admission, John Russell (aged 72) will be appointed as Non-Executive Director. His role as a Non-Executive Director is terminable by either party on 3 months' notice. John will be entitled to a fee of 5,000 per annum for the provision of his services. John is an experienced and successful businessman who has significant experience in the strategic development of businesses. John has been on the board of Sutherland since 2003 and his appointment to the Board is an important part of the continuity plan. John has previously been President and Treasurer of the Freight Transport Association and Chairman of the Scottish Business Crime Centre. John is presently a committee member of the CBI Scotland Council, a director of Sutherland Professional Funding Limited, Alloa Warehousing Co Limited, KKR Limited and the Freight Transport Association and is Chairman of John G. Russell Transport Limited, Carntyne Transport Co. Limited, Fife Warehousing Company Limited and Icetech Freezers Limited.
In accordance with Schedule 2 paragraph (g) of the AIM Rules, the Company announces the following information:
Current Appointments
Company Name
Carntyne Transport Company Limited
Deanside Transit Limited
John G. Russell (Transport) Limited
R.D. Spittal Limited
Storage Services (Leith) Limited
Fife Warehousing Company Limited
Alloa Warehousing Company Limited
KKR Limited Fife Self Storage Limited W & F Kelly Limited
Sutherland Professional Funding Limited
Icetech Freezers Limited Norfrost Limited Previous AppointmentsCompany Name
Freight Transport Association Limited
Gerper 42
Appointments at Time of Dissolution
Company Name Combined Transport Limited
Mckechnie Motors (Girvan) Limited
DIRECTOR DEALING
The following Directors are participating in the Vendor Placing and, following completion of the Acquisition, will hold the following Ordinary Shares:
Name Ordinary Shares Price Number of Percentage acquired under (pence per Ordinary Shares Holding the Vendor share) Following following Placing Agreement Admission Admission % Richard Kilsby 26,667 75 155,370 7.06 David Hughes 6,667 75 16,667 0.75 Paul Davies 26,667 75 84,370 3.83 Roger Barlow 26,667 75 26,667 1.21 Stuart Burn 6,666 75 6,666 0.30 John G Russell 266,666* 75 440,566* 20.03
* including the shareholders of other members of the Concert Party.
CIRCULAR
The circular together with the Notice of General Meeting will be available on the Company's website at www.impactholdings.net.
For further information:
Impact Holdings (UK) plc
Paul Davies, Chief Executive Officer Tel: 0161 437 9499
Daniel Stewart & Company plc
Simon Leathers/Oliver Rigby Tel: 020 7776 6550
Notes to Editor:
Impact Holdings (UK) plc through its individual subsidiaries provides short term funding solutions, loans administration and IT support services in two specific sectors:
1. The legal disbursements market;
2. Property based bridging and development market.
In addition Impact will fund other opportunities where debt instruments or debentures provide the primary security and there are opportunities for short term bespoke funding where serviceability precludes larger lenders from entering this area.
Impact is regulated by The Office of Fair Trading through which it is licensed to lend under the Consumer Credit Act 1974.
vendorRelated Shares:
IHUK.L