18th Jun 2008 07:01
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For Immediate Release |
18 June 2008 |
An analyst briefing will be held at the offices of Buchanan Communications, 45 Moorfields, London, EC2Y 9AE at 10.00am
CareTech Holdings PLC
Acquisition of Valeo Limited for up to £15.3m
Issue of equity
Placing of New Ordinary Shares to raise £30m
Notice of General Meeting
CareTech Holdings PLC (AIM: CTH), a leading UK provider of learning disability care services, is pleased to announce the acquisition of the entire issued share capital of Valeo Limited for a total consideration of up to £15.3 million. In addition, the Board is pleased to announce a placing of 7,142,857 New Ordinary Shares at 420p per share conditional on the approval of certain resolutions at a General Meeting to be held on 7 July 2008.
Acquisition of Valeo
The Company has agreed on 17 June 2008 to acquire the entire issued share capital of Valeo for up to £15.3 million. The initial consideration of £12.5 million, has been satisfied as to £11 million in cash, the assumption of £0.5 million of liabilities and £1 million by the issue of 200,000 Ordinary Shares at a price of 500 pence per share. Under the terms of the Acquisition Agreement, deferred consideration of up to £2.8 million (to be satisfied by the allotment of Ordinary Shares at 525 pence per share) may become payable subject to the achievement of certain performance targets.
Valeo provides a range of specialist services for adults with learning difficulties including residential care and supported living schemes. Valeo has 10 care homes located in Yorkshire, with a total capacity of 71 beds. All of the residential properties are freehold or long leasehold. This acquisition continues the Company's strategy to take advantage of the consolidation opportunities in the PLD market and to increase the number of beds and homes it operates, reinforcing the Company's position as a market leader in its niche.
Issue of equity
Pursuant to the Acquisition Agreement, the Board has issued and allotted 200,000 new Ordinary Shares to the vendors of Valeo. Application for the admission of these shares to trading on AIM will be made as soon as practicable.
Placing of New Ordinary Shares
The Company intends to raise approximately £30 million by way of the Placing of New Ordinary Shares with institutional investors and certain Directors subject to the approval by shareholders of certain resolutions at the General Meeting. In addition, as part of the Placing, 600,000 Existing Ordinary Shares are being sold on behalf of the interests of two Directors. Further details are set out below.
Subject to Shareholders' approval of the Resolutions, it is intended that the Company will raise cash of £30 million (before expenses) by way of a placing of 7,142,857 New Ordinary Shares at 420 pence per share arranged by Brewin Dolphin. This represents a discount of 3.4 per cent to the mid-market closing price of 435 pence of an Existing Ordinary Share on 17 June 2008.
The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares. Application will be made for admission of the New Ordinary Shares to trading on AIM and it is envisaged that Admission will take effect on 8 July 2008 and dealings in the New Ordinary Shares will commence immediately thereafter. Details of the proposed use of the proceeds are set out later in this document.
For the avoidance of doubt, the New Ordinary Shares will be issued after the Record Date in respect of the interim dividend declared today and so will be issued ex-dividend.
Issue of equity
Notice of the General Meeting to be held at 10.00 am on 7 July 2008 at West Lodge Park Hotel, Cockfosters Road, Barnet, Hertfordshire EN4 0PY will be sent to shareholders today.
For further information, please contact:
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CareTech Holdings PLC |
01707 652053 |
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Farouq Sheikh, Executive Chairman |
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David Spink, Finance Director |
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Buchanan Communications |
020 7466 5000 |
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Diane Stewart |
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Tim Anderson |
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Carrie Clement |
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Brewin Dolphin Investment Banking |
0845 270 8600 |
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Matt Davis |
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Andrew Emmott |
CareTech Holdings PLC
18 June 2008
Acquisition of Valeo Limited for up to £15.3m
Issue of equity
Proposed Placing of New Ordinary Shares to raise £30m
Notice of General Meeting
The Board of CareTech Holdings plc is pleased to announce the acquisition of Valeo Limited for a total consideration of up to £15.3 million dated 17 June 2008. In addition, the Board is pleased to announce a placing of 7,142,857 New Ordinary Shares at 420p per share conditional on the approval of certain resolutions at a General Meeting to be held on 7 July 2008.
Acquisition of Valeo
The Company has agreed on 17 June 2008 to acquire the entire issued share capital of Valeo for up to £15.3 million. The initial consideration of £12.5 million, has been satisfied as to £11 million in cash, the assumption of £0.5 million of liabilities and £1 million by the issue of 200,000 Ordinary Shares at a price of 500 pence per share. Under the terms of the Acquisition Agreement, deferred consideration of up to £2.8 million (to be satisfied by the allotment of Ordinary Shares at 525 pence per share) may become payable subject to the achievement of certain performance targets.
Valeo provides a range of specialist services for adults with learning difficulties including residential care and supported living schemes. Valeo has 10 care homes located in Yorkshire, with a total capacity of 71 beds. All of the residential properties are freehold or long leasehold. This acquisition continues the Company's strategy to take advantage of the consolidation opportunities in the PLD market and to increase the number of beds and homes it operates, reinforcing the Company's position as a market leader in its niche.
Valeo will be integrated into the Group's Midlands region and the Directors believe that Valeo will bring to the Group a successful management team and additional clinical expertise that will complement the existing Midlands regional care team.
The accounts of Valeo for the year ended 31 October 2007 (being the latest period on which Valeo's auditors have reported) show a profit from continuing operations before exceptional items, interest and taxation of £409,197, turnover of £4,804,269 and net assets of £3,237,940. These figures include certain costs that will not be incurred under the Company's ownership.
The Acquisition has been funded out of the Group's existing debt facility and the Directors anticipate that it will be earnings enhancing in the first full year of ownership.
Issue of equity
Pursuant to the Acquisition Agreement, the Board has issued and allotted 200,000 new Ordinary Shares to the vendors of Valeo. Application for the admission of these shares to trading on AIM will be made as soon as practicable.
Placing of New Ordinary Shares
The Company intends to raise approximately £30 million by way of the Placing of New Ordinary Shares with institutional investors and certain Directors subject to the approval by shareholders of certain resolutions at the General Meeting. Notice of the General Meeting to be held at 10.00 am on 7 July 2008 at West Lodge Park Hotel, Cockfosters Road, Barnet, Hertfordshire EN4 0PY will be sent to shareholders today.
Subject to Shareholders' approval of the Resolutions, it is intended that the Company will raise cash of £30 million (before expenses) by way of a placing of 7,142,857 New Ordinary Shares at 420 pence per share arranged by Brewin Dolphin. This represents a discount of 3.4 per cent to the mid-market closing price of 435 pence of an Existing Ordinary Share on 17 June 2008. The New Ordinary Shares have been placed conditionally with institutional investors (including certain existing shareholders). The Placing is conditional, inter alia, upon Admission taking place by 8.00 a.m. on 18 July 2008 (or such later date as the Company and Brewin Dolphin agree, being not later than 8.00 a.m. on 1 August 2008).
The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares. Application will be made for admission of the New Ordinary Shares to trading on AIM and it is envisaged that Admission will take effect on 8 July 2008 and dealings in the New Ordinary Shares will commence immediately thereafter. Details of the proposed use of the proceeds are set out later in this document.
For the avoidance of doubt, the New Ordinary Shares will be issued after the Record Date in respect of the interim dividend declared today and so will be issued ex-dividend.
Directors and their interests in the Placing
As part of the Placing, Farouq Sheikh and Haroon Sheikh, both Directors, and their associates, Westminster (Westminster Holdings Limited, a Nevis incorporated company wholly owned by the trustees of the Westminster Trust, a discretionary trust of which the beneficiaries may include Haroon Sheikh, Farouq Sheikh and their respective families), the Cosaraf Trust (a trust for the benefit of the children of Farouq and Haroon Sheikh of which both Farouq and Haroon Sheikh are the trustees) and the Cosaraf Pension Fund (a Self Administered Scheme of which both Farouq Sheikh and Haroon Sheikh are the beneficiaries), will subscribe in aggregate for 200,000 New Ordinary Shares at a total value of £840,000. In addition, Mills & Reeve Trust Corporation Limited (on behalf of David Spink and his wife Christina Spink) and Autovibe Limited (on behalf of Stewart Wallace's wife, Wendy Wallace), will sell 200,000 Existing Ordinary Shares and 400,000 Existing Ordinary Shares respectively.
Farouq Sheikh and Haroon Sheikh together with their associates, Westminster, the Cosaraf Trust and the Cosaraf Pension Fund, currently hold 13,272,500 Existing Ordinary Shares representing 35.5 per cent of the issued share capital and will hold 13,472,500 Ordinary Shares representing 30.25 per cent following the Placing. Details of the separate holdings are set out in the table below.
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Immediately prior to the Placing |
Immediately after the Placing |
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Number of Ordinary Shares |
Percentage of issued share capital |
Number of Ordinary Shares |
Percentage of issued chare capital |
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Farouq Sheikh |
450,000 |
1.2 |
485,000 |
1.1 |
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Haroon Sheikh |
450,000 |
1.2 |
485,000 |
1.1 |
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Farouq and Haroon Sheikh (Westminster Holdings Limited)1 |
10,347,500 |
27.7 |
10,422,500 |
23.4 |
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Farouq and Haroon Sheikh (Cosaraf Trust)2 |
2,025,000 |
5.4 |
2,060,000 |
4.6 |
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Farouq and Haroon Sheikh (the Cosaraf Pension Fund)5 |
0 |
0 |
20,000 |
0.0 |
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David Spink3 |
880,000 |
2.4 |
680,000 |
1.5 |
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Stewart Wallace4 |
1,186,250 |
3.2 |
786,250 |
1.8 |
Westminster Holdings Limited, a Nevis incorporated company wholly owned by the trustees of the Westminster Trust, a discretionary trust of which the beneficiaries may include Haroon Sheikh, Farouq Sheikh and their respective families.
Farouq Sheikh and Haroon Sheikh hold these shares as trustees of the Cosaraf Trust, a trust of which the beneficiaries include the children of Farouq Sheikh and Haroon Sheikh.
Ordinary Shares held by Mills & Reeve Trust Corporation Limited, a trust in which David Spink and his wife Christina Spink are the sole beneficiaries.
Comprises 719,750 Ordinary Shares held by Autovibe Limited, a company wholly owned by Wendy Wallace, the wife of Stewart Wallace and 466,500 Ordinary Shares held by Stewart Wallace. The Sale Shares will be deducted from the Ordinary Shares held by Autovibe Limited.
Farouq Sheikh and Haroon Sheikh hold these shares in the Cosaraf Pension Fund a Self Administered Scheme for the benefit of Haroon and Farouq Sheikh.
THE CITY CODE
Under Rule 9 of the City Code, when a person or a group of persons acting in concert acquires an interest in shares in a company which is subject to the City Code and such shares, when taken together with shares already held, would result in such person or persons being interested in shares carrying 30 per cent or more of the voting rights of the company, such person or group is normally obliged by the Panel to make a general offer to all shareholders for the remaining shares in the capital of the company.
Rule 9 of the City Code also provides that where any person or group of persons acting in concert is interested in shares which in aggregate carry not less than 30 per cent of the voting rights but does not hold more than 50 per cent of the voting rights of a company which is subject to the City Code, such person or group of persons is normally obliged by the Panel to make a general offer to all shareholders if any further shares are acquired in the company.
An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interests in shares during the twelve months prior to the announcement of the offer.
The Panel deems Farouq Sheikh, Haroon Sheikh, Westminster, Cosaraf Trust, Cosaraf Pension Fund and their associates to be acting in concert (the "Concert Party"). The Concert Party is currently interested in 13,272,500 Ordinary Shares in aggregate representing 35.5 per cent of the issued share capital and will acquire 200,000 Placing Shares in Placing and, following completion of the Placing, will be interested in 30.25 per cent of the Company's Enlarged Share Capital, representing a dilution from the present 35.5 per cent held by the Concert Party. As the Concert Party's interests in shares are being diluted pursuant to the Placing, a general offer to shareholders under Rule 9 of the City Code will not be required as result of their participation in the Placing.
Following completion of the Placing, for so long as the aggregate Concert Party holding does not get diluted to less than 30 per cent of the voting rights, pursuant to Note 11 of Rule 9.1 of the City Code, it will be entitled to acquire an interest in further shares without triggering any obligation under Rule 9 of the City Code to make a general offer to the other shareholders of the Company, subject to no individual member of the Concert Party or any person acting in concert with him acquiring an interest in additional shares which, when taken together with shares already held, would result in him being interested in shares carrying 30 per cent or more of the voting rights of the Company and subject to both of the following limitations:
(a) the total number of shares in which interests may be acquired in any period of 12 months must not exceed 1% of the voting share capital for the time being (and, in determining the number of shares in which interests have been acquired in any such 12 month period, any reductions in the number of shares in which the Concert Party is interested may not be netted off against acquisitions); and
(b) the percentage of shares in which the Concert Party is interested following any acquisition must not exceed the highest percentage of shares in which such person or group of persons was interested in the previous 12 months.
Background to and reasons for the Placing
This section sets out the background to and the reasons for the Placing by providing details of the Group's strategy for growth.
The Company is seeking to raise approximately £29 million net of expenses which the Directors intend to apply in repaying a portion of the Company's revolving credit facility which will in turn provide additional headroom to finance further growth. The capital structure of the Company following the Placing is set out later in this document.
The Directors believe that the Placing will allow the Company to realise its growth plans by taking advantage of the consolidation opportunities that are currently available. CareTech continues to research a number of acquisition opportunities and is in active discussions with a number of potential vendors. CareTech hopes to be able to announce the successful conclusion of a number of further transactions in due course.
Growth strategy
The Directors intend to continue to implement their strategy to grow both organically and through acquisition. The increased availability of credit facilities to the Group which will result from the application of Placing proceeds in repaying a portion of the Company's revolving credit facility will provide the flexibility necessary to continue to grow through acquisition.
Growth achieved since IPO
CareTech was floated on AIM in October 2005 with a strategy of building, through acquisition and organic growth, a leading provider of care services for people with learning disabilities. At the time of the IPO, CareTech operated around 435 care beds from 60 care homes. Growth in client capacity has been achieved both organically and through acquisition
Since IPO CareTech has made the following significant acquisitions (in addition to the Acquisition):
April 2008 - Beacon Care, for a total consideration of up to £22.5 million (utilising part of the Group's new £120 million debt facility with RBS and AIB) and 600,000 Ordinary Shares at a price of 500 pence per share. Beacon Care provides a focused range of specialist services for adults with learning difficulties including residential care and supported living schemes. Beacon Care has 16 homes located in the South East, with a total capacity of 111 beds. All of the properties acquired with Beacon Care are freehold.
July 2007 - One-Step, for a total consideration of £11 million. One-Step provides supported living services and family assessment centre places to 77 clients of which approximately 13 live in self contained flats. One-Step also operates a family support and assessment centre in Reading which provides accommodation and support for up to six families.
November 2006 - Counticare, for a cash consideration of £15 million. Counticare is a provider of residential and day facilities for adults with learning difficulties. The acquisition comprised 12 homes in Kent, with a capacity of 101 beds and a day care centre with a capacity of 150 places.
May 2006 - Lonsdale, for a cash consideration of £15 million. Lonsdale, based in the Midlands, is a provider of a range of specialist services for adults with learning difficulties including 159 beds for residential and nursing care, supported living schemes and day care facilities with capacity of 24 places.
May 2006 - Delam Care, for a cash consideration of £8.1 million. Delam Care is a residential care provider for adults and children with mental and learning difficulties. The acquisition comprised 14 homes (including 12 freehold properties) totalling 78 beds in Stoke on Trent and South Staffordshire.
Since the IPO, the Directors have also evaluated other potential acquisition opportunities that, due to issues identified in due diligence, the Directors' commercial assessment of the potential acquisitions or the unrealistic valuation expectations of the vendors, have not been pursued.
CareTech complements its acquisition growth through organic initiatives and smaller single site acquisitions. The Directors intend to continue to finance organic growth through the use of the Group's operating cash flows. The Group has added some 238 beds through organic initiatives since the IPO. As a result of both growth by acquisition and organic growth, the Group currently operates approximately 1,193 beds comprising 159 residential care homes.
In order to provide greater flexibility through choice of care solutions to local authority Care Commissioners, CareTech has broadened the range of services it offers to include day care centres and supported living. The Group currently operates four day care centres with 229 places and 187 supported living places. In aggregate, the Group is now able to provide care solutions for at least 1,193 people together with 229 day places representing growth in capacity of approximately 190 per cent since the IPO. As at 31 May 2008 (being the latest practicable date prior to the publication of this document) occupancy levels at the Group's Mature Homes (The Directors define "Mature Homes" as being those homes that have been owned and occupied for greater than one year) was approximately 94 per cent.
The Directors estimate that the value of the Group's freehold assets is in excess of £190 million.
Earnings before interest, taxes, depreciation and amortisation and profit before tax have grown since IPO from £2.4 million and £1.6 million respectively for the year ended 30 September 2005 to £10.9 million and £6.2 million respectively for the year ended 30 September 2007. This shows a compound annual growth rate of 113 per cent and 96 per cent respectively. Earnings per share has grown from 4.1 pence per share for the year ended 30 September 2005 to 13.7 pence per share for the year ended 30 September 2007. This shows a compound annual growth rate of 83 per cent.
Other than the consideration shares issued to the vendors of Valeo, Beacon Care and One-Step, the growth to date has been funded exclusively out of the Group's operating cash flows and debt facilities.
Managing growth - regional infrastructure
In order to manage growth effectively and to retain the efficiency benefits of having management on the ground, the Directors put in place a regional management structure in October 2006.
The Group's operations are currently organised into three regions, Midlands, Central and South. Each region has a regional operations director reporting into the Board who is supported by a team of area managers and a finance team. The Directors estimate that each regional team is capable of providing care services for up to 500 clients without significant recruitment or restructuring. The Directors believe that CareTech has the capacity to integrate a number of further significant acquisitions and/or organic developments.
Consolidation opportunity
As a consequence of the acquisitions and organic growth to date, the Group, with 159 residential care homes, is one of the market leaders in the residential care market for PLDs. The Directors believe that the Group is well placed to take advantage of the sector consolidation, which has commenced as operators seek to realise synergies and economies of scale. The Directors feel that this sector consolidation is partly due to the increasing legislation and regulation that are making many small and mid sized operators unable to provide the quality of care now demanded and because Care Commissioners are increasingly turning to larger providers, such as CareTech, who can offer high quality care and a broad range of services.
The Directors believe that CareTech's reputation as a specialist care home operator has strengthened since the IPO such that it is now often viewed by potential vendors as the buyer of choice due to its strong care credentials. The Directors also consider that the Group's history of completing acquisitions has enhanced its reputation amongst potential vendors such that it is currently receiving a high level of enquiries regarding potential acquisitions.
The Directors believe that due to the recent turmoil in the credit markets, CareTech's position as a consolidator has been enhanced relative to certain other possible buyers that are owned by private equity houses and often operate in highly leveraged structures which may be unable to attract additional leverage. The Directors believe that this factor has also had a downward impact on vendors' pricing expectations.
The Directors believe that the Placing, together with the new banking facilities and potential sale and leaseback opportunities available to the Group, will provide CareTech with the capacity to continue to grow.
The market for care services for people with learning disabilities
This section sets out the key attributes of the market for people with learning difficulties in which CareTech operates.
Large and fragmented market
The market for the supply of care services for adults and children with learning disabilities and mental illness in the UK was estimated to have been worth over £6 billion in 2007 of which £4 billion was accounted for by independent providers such as CareTech. CareTech, with a turnover of £53 million (year ended 30 September 2007) therefore has an estimated market share of only 1.33 per cent. The market for the provision of care for adults and children with learning disabilities remains highly fragmented with the largest 'for profit' operator providing approximately 2.8 per cent of places. CareTech is one of a small number of larger operators, many of whom are operating under private equity ownership.
Increasing demand & undersupply of places
There are several factors that will drive an increase in the demand for care services for people with learning disabilities which is likely to lead to an increase in the volume of services over the next 20 years and beyond. These include:
population change, which is projected to increase demand by 1 per cent per annum and raise the age profile of service recipients, more of whom are surviving to old age;
increasing unwillingness, or inability, of parents to provide informal care, which may cause latent demand to be expressed more vigorously, especially amongst older parents and single parents, the number of whom have increased; and
medical interventions at birth, which may increase the number and proportion of service users with lifelong severe learning and/or physical disabilities, plus higher rates of abnormalities resulting from women delaying births to a later age.
It was estimated that in 2007 there was a significant undersupply of support services for people with learning disabilities in England. This shortfall was estimated by Professors Emerson and Haton, at the University of Lancaster, to be 25,000 places in supported housing or residential care.
Visible income streams
A distinctive feature of the learning disability market is that the clients stay in care for a long duration, normally measured in years or decades. This gives rise to typical occupancy levels of in excess of 90 per cent, despite the small size of homes.
Growing markets
Almost 100 per cent of adults with learning disabilities or mental illness who receive long term care in homes or supported housing are funded by the public sector. The Directors believe that the quality of care provided is the single most important factor in determining a placement and as a result, the Directors believe that larger independent players such as CareTech who are typically better resourced are able to meet these requirements.
According to the most recent reports, gross budgeted expenditure by the Government on adult social care for people with learning disability and mental health needs has increased significantly, representing an annual growth of 11 per cent between 2004 and 2006. Government expenditure on community support (not including care homes) in 2005/06 was £389 million under the Supporting People budget where adults with learning disability are supported in their own accommodation. A £19 million grant has been made available to help young people with learning disabilities transition to adulthood and a capital sum of £175 million has been allocated to support people with a learning disability to leave NHS care.
Specialisation by independent sector providers has gone hand in hand with public sector outsourcing and this is reflected in the approach of CareTech. The Directors believe that CareTech's approach has become increasingly specialised in recent years, focusing on those with the greatest need and attracting premium level fees. Specialisation is a key defensive characteristic of CareTech and the independent sector more generally, mitigating the otherwise powerful purchasing position of public sector Care Commissioners.
Capital Structure
CareTech announced on 18 April 2008 and 29 April 2008, that it had secured a new banking facility of £120 million with RBS and AIB. This new facility represents an increase of £45 million on the previous facility. The Directors believe that the terms of the new facility are attractive, especially in the current financial markets. Following the Acquisition and the Placing, the Group will have net indebtedness of approximately £85 million.
The Directors believe that the Placing provides CareTech with the opportunity to rebalance its capital structure, with growth thus far having been predominately funded from cashflow and debt facilities. In order to maintain an appropriate capital structure going forward, the Board may look to utilise certain of its freehold assets, where appropriate, to obtain additional growth capital from sale and leaseback transactions whilst remaining committed to a predominantly freehold model.
Placing Agreement
On 17 June 2008, CareTech and the Selling Shareholders entered into the Placing Agreement pursuant to which Brewin Dolphin has agreed conditionally, as agent for the Company and the Selling Shareholders, to use its reasonable endeavours to procure subscribers for the New Ordinary Shares at the Placing Price. In the event that subscribers are not obtained for all or any of the New Ordinary Shares at the Placing Price, Brewin Dolphin (or another company nominated by it in its group of companies) will subscribe for, as principal and at the Placing Price, all of those New Ordinary Shares in respect of which subscribers have not been obtained.
The Placing Agreement is conditional (inter alia) upon Admission taking place by 8.00 a.m. on 18 July 2008 (or such later date as CareTech and Brewin Dolphin agree, being not later than 8.00 a.m. on 1 August 2008). The Placing Agreement contains provisions entitling Brewin Dolphin to terminate the Placing Agreement at any time prior to Admission in certain circumstances.
The Placing Agreement contains warranties and indemnities from CareTech in favour of Brewin Dolphin which are customary for this type of agreement.
Following approval of the Resolutions and Admission taking place, CareTech will have 44,538,918 Ordinary Shares in issue.
The New Ordinary Shares will represent approximately 16 per cent of the Enlarged Share Capital at Admission.
Under the Placing Agreement, CareTech has agreed to pay Brewin Dolphin commission on the aggregate value of the New Ordinary Shares placed at the Placing Price, a corporate finance fee and the costs and expenses of the Placing together with any applicable VAT.
The New Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive and retain all dividends and other distributions declared, paid or made in respect of the Ordinary Shares after Admission.
For the avoidance of doubt, the New Ordinary Shares will be issued after the Record Date in respect of the interim dividend declared on 18 June 2008 and so will be issued ex-dividend.
On 17 June 2008, CareTech and the Selling Shareholders also entered into an agreement with Kaupthing pursuant to which CareTech has agreed to pay to Kaupthing a commission in consideration for Kaupthing using its reasonable endeavours to introduce certain institutional investors to the Company. Kaupthing has also agreed, as agent for the Selling Shareholders, to use its reasonable endeavours to procure purchasers for 351,743 Sale Shares at the Placing Price, in consideration of which the Selling Shareholders will pay to Kaupthing commission on the aggregate value of the Sale Shares sold at the Placing Price. This agreement is conditional upon Admission taking place in accordance with the terms of the Placing Agreement, and contains warranties and indemnities from CareTech in favour of Kaupthing in the same terms as those contained in the Placing Agreement.
General Meeting
The GM has been convened for 10.00 a.m. on 7 July 2008 at West Lodge Park Hotel, Cockfosters Road, Barnet, Hertfordshire EN4 0PY, to enable Shareholders to consider and, if thought fit, pass the Resolutions.
The purpose of the Resolutions is to:
increase the authorised share capital of the Company from £259,328.84 to £318,328.95 by the creation of 11,800,022 Ordinary Shares of 0.5 pence each, ranking pari passu with the Existing Ordinary Shares;
authorise the Directors to issue the New Ordinary Shares pursuant to the Placing; and
disapply the statutory pre-emption provisions in relation to the issue of the New Ordinary Shares pursuant to the Placing.
Recommendation
The Directors believe that the Placing as described in this Circular is in the best interests of the Company and its Shareholders. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting. The Directors and their associates intend to vote in favour of these Resolutions in respect of their own beneficial and non-beneficial holdings amounting to 15,398,125 Ordinary Shares representing approximately 41.2 per cent of the Company's issued share capital.
ENDS
Related Shares:
CTH.L