19th Mar 2007 07:04
Lupus Capital PLC19 March 2007 Not for release, publication or distribution into the United States, Canada, Japan or Australia Lupus Capital plc ("Lupus Capital" or "the Company") Proposed acquisition of the Security Systems Division of The Laird Group PLC ("Laird Security Systems") Summary • Lupus Capital announces that it has conditionally agreed to acquire the Security Systems Division of The Laird Group PLC for approximately £242.5 million in cash. Approximately £230 million of the consideration will be payable on Completion with a further £12.5 million deferred and payable 12 months after Completion. • Laird Security Systems is a leader in the design, development, manufacture and distribution of innovative products and solutions, which aim to improve performance and thermal efficiency and enhance protection and security, for homes and buildings within the UK and US residential building and home improvement markets. • For the year ended 31 December 2006, Laird Security Systems had sales of £237.7 million and generated operating profit after divisional management costs and before management charges, exceptional items and amortisation of acquired intangible assets of £31.6 million. • The consideration will be funded partly through a £136 million underwritten equity offering and partly through a new debt facility of up to £120 million to be provided by HSBC, HBOS and RBS. • HSBC has irrevocably undertaken to underwrite a £136 million equity offering to finance part of the proposed acquisition. The timing and terms of the Equity Offering will be announced in due course. It is expected that the Equity Offering will be launched once the required Prospectus in relation to the offering has been finalised and approved by the UK Listing Authority. • Lupus Capital's shares were suspended from trading on 14 March 2007. The shares will remain suspended until publication of the Prospectus. • The Acquisition is conditional, inter alia, on the Resolutions being passed by Lupus Capital Shareholders at the EGM, the receipt of US antitrust clearance under the Hart-Scott-Rodino Act and approval of the transaction by the shareholders of The Laird Group PLC. • The Acquisition is categorised as a reverse take-over for Lupus Capital under the AIM Rules for Companies and as such requires the consent of Lupus Capital shareholders to be sought at the EGM expected to be held in April 2007. • Lupus Capital announced its preliminary results for the year ended 31 December 2006 on 2 March 2007. These results are stated in UK GAAP. • HSBC is acting as nominated adviser and broker to Lupus Capital and has irrevocably undertaken to underwrite the Equity Offering. Commenting on the Acquisition, Greg Hutchings, Executive Chairman of LupusCapital, said: "Following our recent announcement of record results, together with thesuccessful integration of the Schlegel Building Products business, we aredelighted to announce the acquisition of Laird Securities Systems. Theacquisition is an exciting opportunity for Lupus and its shareholders and isentirely in line with our strategy of acquiring asset based, positive cash flowcompanies operating in industrial manufacturing, processes or services and is asignificant step in creating a successful growing international business." This summary should be read in conjunction with the full text of the followingannouncement and the Prospectus to Shareholders relating to the Acquisition andEquity Offering, which will be posted to Shareholders shortly. Enquiries: Equity Development 020 7405 7777 Alan Frame HSBC Bank plc: Investment Banking Rupert Faure Walker 020 7992 2101 James Pincus 020 7992 2121 Equity Capital Markets Nick Donald 020 7991 1504 James Taylor 020 7992 2179 Further information on Lupus Capital plc is available on the company's website(www.lupuscapital.co.uk) Not for release, publication or distribution into the United States, Canada, Japan or Australia HSBC is acting exclusively for Lupus Capital plc and no one else in relation tothe Acquisition and Equity Offering referred to in this announcement and willnot be responsible to anyone other than Lupus Capital for providing theprotections afforded to their clients or for providing advice in relation to theAcquisition and Equity Offering or any other matter referred to in thisannouncement. No offer or invitation to acquire shares in Lupus Capital plc is being made byor in connection with this announcement. Any such offer will be made solely bymeans of the Prospectus to be published by Lupus Capital plc in due course andany acquisition of Ordinary Shares should be made on the basis of theinformation contained in such Prospectus. The Prospectus containing details of, inter alia, the Acquisition, the EquityOffering and a notice of an Extraordinary General Meeting of the Company, to beheld at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY, isexpected to be posted to Shareholders shortly, together with supportingdocumentation and separate form of proxy for use at the Extraordinary GeneralMeeting. Copies of the Prospectus will also be available to the public, free ofcharge, from the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YYand the registered office of the Company up until Admission. This announcement and the information contained herein are not an offer for saleof securities in or into the United States, Australia, Canada or Japan or in anyother jurisdiction. The Ordinary Shares, nor any rights to subscribe for suchOrdinary Shares, have not been and are not being registered under the UnitedState Securities Act of 1933, as amended (the Securities Act) and may not beoffered or sold in the United States or to or for the account or benefit of USpersons (as such terms are defined in Regulation S under such Act) absentregistration under, or an exemption from registration under, or in a transactionnot subject to the requirements of, the Securities Act. There will be no publicoffer of securities in the United States. This announcement and the information contained herein does not constitute anoffer to sell, exchange or transfer any securities of Lupus Capital plc and isnot soliciting an offer to purchase, exchange or transfer such securities in anyjurisdiction where the offer, sale, exchange or transfer is not permitted or toany person or entity to whom it is unlawful to make that offer, sale, exchangeor transfer. This announcement contains "forward-looking statements" which include allstatements other than statements of historical facts, including, withoutlimitation, those regarding Lupus Capital's financial position, businessstrategy, plans and objectives of management for future operations and anystatements preceded by, followed by or that include forward-looking terminologysuch as the words "targets", "believes", "estimates", "expects", "aims", "intends", "can", "may", "anticipates", "would", "should", "could" or similarexpressions or the negative thereof. Such forward-looking statements involveknown and unknown risks, uncertainties and other important factors beyond LupusCapital's control that could cause the actual results, performance orachievements of Lupus Capital to be materially different from future results,performance or achievements expressed or implied by such forward-lookingstatements. Such forward-looking statements are based on numerous assumptionsregarding Lupus Capital's present and future business strategies and theenvironment in which Lupus Capital will operate in the future. Theseforward-looking statements speak only as at the date of this announcement. LupusCapital expressly disclaims any obligation or undertaking to disseminate anyupdates or revisions in relation to any forward-looking statements containedherein to reflect any change in Lupus Capital's expectations with regard theretoor any change in events, conditions or circumstances on which any suchstatements are based save as required by FSMA, the Prospectus Rules, Disclosureand Transparency Rules and the AIM Rules. As a result of these factors, theevents described in the forward-looking statements in this announcement may notoccur. Not for release, publication or distribution into the United States, Canada, Japan or Australia Lupus Capital plc ("Lupus Capital" or "the Company") Proposed acquisition of the Security Systems Division of The Laird Group PLC (" Laird Security Systems") 1. Background and introduction: Lupus Capital announces that it has conditionally agreed to acquire the LairdSecurity Systems Division of The Laird Group PLC for approximately £242.5million in cash. Approximately £230 million of the consideration will be payableon Completion with a further £12.5 million deferred and payable 12 months afterCompletion. The consideration will be funded partly through a £136 million underwrittenequity offering and partly through a new debt facility of up to £120 million tobe provided by HSBC, HBOS and RBS. HSBC has irrevocably undertaken to underwrite a £136 million equity offering tofinance part of the proposed acquisition. The timing and terms of the EquityOffering will be announced in due course. It is expected that the EquityOffering will be launched once the required Prospectus in relation to the EquityOffering has been finalised and approved by the UK Listing Authority. For the year ended 31 December 2006, Laird Security Systems had sales of £237.7million and generated operating profit after divisional management costs andbefore management charges, exceptional items and amortisation of acquiredintangible assets of £31.6 million. The Acquisition is categorised as a reverse take-over for Lupus Capital underthe AIM Rules for Companies and as such requires the consent of the ExistingShareholders to be sought at the EGM expected to be held in April 2007. Lupus Capital's shares were suspended from trading on 14 March 2007. The shareswill remain suspended until the publication of the Prospectus. The Acquisition is conditional, inter alia, on the Resolutions being passed byLupus Capital Shareholders at the EGM, the receipt of US antitrust clearanceunder the Hart-Scott-Rodino Act and approval of the transaction by theshareholders of The Laird Group PLC. HSBC is acting as nominated adviser and broker to Lupus Capital and hasirrevocably undertaken to underwrite the Equity Offering. The Directors of Lupus Capital believe that Laird Security Systems is aprofitable and highly cash generative business with an internationalmanufacturing capability that makes good margins and operates in a sector thatthe Lupus Capital management team know well. Laird Security Systems owns anumber of brands recognised throughout the industry and the business has goodmarket shares in its key markets. Laird Security Systems represents a very strong fit with Lupus Capital'sstrategy of acquiring asset based, positive cash flow companies operating inindustrial manufacturing, processes or services. The acquisition of LairdSecurity Systems will provide a number of operational benefits which areexpected to create sustainable value for Lupus Capital shareholders: • The Acquisition gives Lupus Capital a good position in the buildingproducts sector where long term trends towards higher standards of manufactureand build, increased emphasis on personal security, and more stringent thermalefficiency standards are each expected to underpin secular demand. • Laird Security Systems complements Lupus Capital's existing SchlegelBuilding Products business and offers the potential for selling Laird SecuritySystems' products through Schlegel Building Products' extensive internationaldistribution network. • Laird Security Systems' Chinese manufacturing subsidiary and developedFar East sourcing network, allied to Schlegel Building Products' existingarrangements, will help access sourcing from cost efficient locations for bothLaird Security Systems and Schlegel Building Products. • Laird Security Systems has demonstrated a consistent track record ofsales and cash generation over the past three years. The business operates inthe US and UK markets which are both profitable and have long term growthcharacteristics. Lupus Capital will look to use Laird Security Systems as a platform for growthand will work with the management of Laird Security Systems to drive operationalimprovements through the business, to pursue organic growth opportunities and tomake add-on acquisitions where they will add value. 2. Principal terms of the Acquisition The Acquisition Agreement is dated 19 March 2007, and is made between The LairdGroup PLC, Laird Overseas Holdings Limited (the "Seller"), Amesbury AcquisitionHoldings, Inc., Jasper Acquisition Holdings Limited (together "the Buyers") andLupus Capital plc. The Buyers are wholly owned subsidiaries of Lupus Capital.The purchase consideration is approximately £242.5 million in cash withapproximately £230 million of the consideration payable on Completion and afurther £12.5 million deferred and payable 12 months after Completion The Acquisition Agreement is conditional upon the satisfaction of the followingconditions: - the readmission to trading of the Enlarged Share Capital of LupusCapital on AIM following the cancellation of their listing pursuant to Rule 14of the AIM Rules for Companies; - the passing at an Extraordinary General Meeting of Lupus Capital ofany resolution or resolutions required to approve the acquisition of LairdSecurity Systems; - the passing at an Extraordinary General Meeting of The Laird Group PLCof any resolution or resolutions required to approve the disposal of the LairdSecurity Systems (this is because the disposal of Laird Security Systems is,under the Listing Rules, a Class 1 transaction for The Laird Group PLC); - US antitrust clearance under the Hart-Scott-Rodino AntitrustImprovements Act; - The Laird Group PLC having carried out certain pre-completionintra-group transactions such that Laird Security Systems can be disposed of asagreed between the parties; and - The Laird Group PLC having given the requisite notice to novate orprepay certain loan stock issued by Laird Inc. The Acquisition is expected to close approximately four weeks after the LupusCapital EGM, if all of the above conditions are met. Further information on the terms and conditions of the Acquisition will becontained in the Prospectus to be published and sent to shareholders shortly. 3. Information on Laird Security Systems Laird Security Systems is a leader in the design, development, manufacture anddistribution of innovative products and solutions. These aim to improveperformance and thermal efficiency and enhance protection and security, forhomes and buildings within the UK and US residential building and homeimprovement markets. Its wide range of products includes window and doorhardware, composite doors, conservatories, uPVC products and window seals. In recent years, the product range has been broadened and the business is beingrepositioned towards the higher growth segments of its markets. Laird SecuritySystems sources an increasing proportion of its hardware products from its wellestablished supply base in China, both from its own manufacturing facilities andfrom its partner suppliers. For the year ended 31 December 2006, Laird Security Systems had sales of £237.7million (2005: £230.9 million) and generated operating profit after divisionalmanagement costs and before management charges, exceptional items andamortisation of acquired intangible assets of £31.6 million (2005: £31.7million). 4. Information on Lupus Capital Lupus Capital is a holding company whose shares are traded on AIM. Lupus Capitalhas a declared strategy: • to build shareholder value through the acquisition of industrial assets with the potential for development; • to apply the executive team's management skills and systems to improve profitability; and • to use a variety of funding mechanics and exit strategies to enhance shareholder value. Lupus Capital owns two operating businesses, Schlegel Building Products, aninternational manufacturer of window seals and related building products andGall Thomson, which is a supplier of marine and industrial breakaway couplings. On 2 March 2007, Lupus Capital announced its results for the year ended 31December 2006. Lupus Capital recorded sales of £62.9 million (2005: £7.5million) and operating profit of £11.5 million (2005: £2.3 million). Theseresults are as stated under UK GAAP. The Prospectus will contain financialinformation as stated under IFRS. The 2006 results are not directly comparableto 2005 as they include a major acquisition. 5. Suspension in trading of Lupus Capital's shares Further to the announcement made by Lupus Capital on 14 March 2007, LupusCapital's shares were suspended from trading with effect from 10.00 a.m. on 14March 2007. The Ordinary Shares will remain suspended until the Prospectus isposted to shareholders. 6. Details of the Equity Offering HSBC has irrevocably undertaken to underwrite a £136 million equity offering tofinance part of the proposed acquisition. The timing and terms of the futureEquity Offering will be announced in due course. It is expected that the EquityOffering will be launched once the required Prospectus in relation to theoffering has been finalised and approved by the UK Listing Authority. 7. Financial effects of the transaction on Lupus Capital The Acquisition will have a transforming impact on the financial position ofLupus Capital. The Directors believe that, taking into account the impact of theEquity Offering, the Acquisition would have been earnings enhancing for theEnlarged Group had it occurred at the start of the 2006 financial year. Thisstatement should not be interpreted to mean that future earnings of the EnlargedGroup will necessarily match or exceed the Group's historical publishedearnings. An unaudited pro forma net assets statement showing the financial effects of theTransaction on Lupus Capital will be set out in the Prospectus to be publishedand sent to shareholders shortly. 8. Trends in current trading and prospects Lupus Capital Gall Thomson's trading in 2007 to date has been good and the business has ahealthy order book. Gall Thomson expects that there will be good prospects forthe offshore oil and gas market over the coming year. This is being driven bythe continuing expansion in the use of sub-sea production technologies, the moveinto deep water areas and the exploitation of marginal fields. KLAW has continued to extend its product range and has increased its marketingefforts to penetrate the industrial couplings market. Schlegel Building Products has started 2007 with encouraging order levels acrossits various businesses and since the year end has traded in line withexpectations. Laird Security Systems Since 31 December 2006, Laird Security Systems has continued to trade in linewith expectations. 9. Directors, Employees and Key Personnel of the Enlarged Group Following Completion, the senior management of Laird Security Systems under theexisting leadership of Rich Koopmann in the US and Nick Whitwell and VinceConroy in the UK will remain with Laird Security Systems. The existing employment rights, including pension rights, of employees of bothLupus Capital and Laird Security Systems will be fully safeguarded. 10. Extraordinary General Meeting It is expected that an Extraordinary General Meeting of the Company will be heldin April 2007 at the offices of Slaughter and May, One Bunhill Row, London EC1Y8YY for the purpose of considering and, if thought fit, passing the Resolutions. Further details will be set out in the Prospectus to be published and sent toshareholders shortly. 11. Recommendation The Board, which has been so advised by HSBC, consider that the Transaction isin the best interests of Lupus Capital's Shareholders. In providing thisadvice, HSBC has taken into account the Directors' commercial assessment of theTransaction. Accordingly, the Board recommends that you vote in favour of theResolutions to be proposed at the EGM as the Directors intend to do in respectof their own beneficial shareholdings, amounting to 33,505,145 Ordinary Sharesrepresenting approximately 5.4 per cent. of the issued share capital of LupusCapital. In addition, the trustees of the LESOT have indicated that they intendto vote in favour of the Resolutions in respect of their holding of 63,385,676Ordinary Shares representing approximately 10.3 per cent. of the issued sharecapital of Lupus Capital. 12. Documentation A Prospectus to Shareholders containing the full terms and conditions of theAcquisition and the Equity Offering, together with the relevant supportingdocumentation is expected to be published and despatched to Lupus CapitalShareholders shortly. The Prospectus to Shareholders will also contain notice of the ExtraordinaryGeneral Meeting of Lupus Capital expected to be held in April 2007 for thepurposes of considering the necessary resolutions to implement the Acquisitionand Equity Offering. Copies of the Prospectus will also be available to the public, free of charge,from the offices of Slaughter and May, at One Bunhill Row, London EC1Y 8YY, andthe registered office of the Company until Admission. Appendix 1: Definitions The following definitions are used throughout this announcement except where thecontext requires otherwise: "Acquisition" the acquisition by Lupus Capital, through the Purchasing Subsidiaries, from The Laird Group PLC, of the Transferred Assets and entire issued share capital of the Transferred Subsidiaries"Acquisition Agreement" the conditional agreement for the Acquisition dated 19 March 2007 between Lupus Capital, the Purchasing Subsidiaries, Laird Overseas Holdings Limited and The Laird Group PLC"Admission" the admission of the Enlarged Share Capital to trading on AIM"AIM" the Alternative Investment Market"AIM Rules for Companies" the rules published by the London Stock Exchange, which set out the rules and responsibilities in relation to AIM companies, as amended from time to time"Amesbury Acquisition Holdings" Amesbury Acquisition Holdings, Inc, a company incorporated under the laws of the State of Delaware, USA"Business" the building products related businesses as carried out by Laird Security Systems"Companies Act" or "Act" the Companies Act 1985, as amended by the Companies Act 1989"Completion" completion of the Acquisition and the Equity Offering in accordance with the terms of the Equity Offering and Acquisition Agreement"Enlarged Group" the Lupus Capital Group as enlarged by Laird Security Systems"Enlarged Share Capital" the issued ordinary share capital of Lupus Capital immediately following completion of the Equity Offering including the Existing Ordinary Shares and the New Ordinary Shares"Equity Offering" the £136 million equity offering, irrevocably underwritten by HSBC, to part finance the proposed acquisition, the timing and terms of which will be announced in due course"Existing Ordinary Shares" the Ordinary Shares in issue as at the date of this announcement"Existing Shareholders" the holders of the Existing Ordinary Shares"Extraordinary General Meeting" the extraordinary general meeting of Lupus Capital expected to be heldor "EGM" in April 2007, notice of which is set out in the Prospectus"FSA" Financial Services Authority"FSMA" the Financial Services and Markets Act 2000"Gall Thomson" Gall Thomson Environmental Limited, incorporated in England and Wales under the Act with registered number 2852924"HSBC" HSBC Bank plc, a company incorporated in England and Wales under the Act with registered number 14259"IFRS" International Financial Reporting Standards"Jasper Acquisition Holdings Jasper Acquisition Holdings Limited, a company incorporated in EnglandLimited" and Wales under the Act with registered number 6078798"KLAW" KLAW Products Limited, a company incorporated in England and Wales under the Act with registered number 316007"LESOT" the Lupus Capital Employee Share Ownership Trust"Listing Rules" the Listing Rules of the FSA"London Stock Exchange" London Stock Exchange plc"Lupus Capital" Lupus Capital plc, a company incorporated in England and Wales under the Act and domiciled in the UK with registered number 2806007"Lupus Capital Group" or "the Lupus Capital and its subsidiaries, or any one or more of them as theGroup" context requires"LSSD UK Limited" LSSD UK Limited, a company incorporated in England and Wales under the Act with registered number 2838541 "LSSD UK Limited Subsidiaries" Balance UK Limited; Designgarden Limited; ERA Products Limited; Crompton Limited; EWS (Manufacturing) Limited; Intron Limited; Homesafe Doors Limited; Laird Lifestyle Products Limited; Laird Security Hardware Limited; Omega Spring Technology Limited; LSS Trading (Ningbo) Limited; J.K. Furnex Limited; Laird Security Systems (Ningbo) Limited; Amesbury Springs Limited; Feneseal Limited; Hardware Engineering Limited; Euromond Limited; Linear Limited; Lindman Group Limited; Lindman Limited; Securidor (Holdings) Limited; Securidor Limited; Ventrolla Limited; and LSSD UK (No.1) Limited"New Ordinary Shares" the new ordinary shares of 0.5p each to be issued by Lupus Capital pursuant to the Equity Offering"Notice" the notice of the Extraordinary General Meeting of Lupus Capital to be held for the purpose of considering and, if thought fit, passing the Resolutions"Ordinary Shares" ordinary shares of 0.5p each in the capital of Lupus Capital"Prospectus" the prospectus, prepared in accordance with the Prospectus Rules, to be published and despatched to Shareholders shortly"Prospectus Rules" the Prospectus Rules of the Financial Services Authority"Purchasing Subsidiaries" Amesbury Acquisition Holdings, Inc. and Jasper Acquisition Holdings Limited"Resolutions" the ordinary resolutions and special resolutions approving the Acquisition and Equity Offering to be proposed at the EGM"Securities Act" the US Securities Act of 1933, as amended"Shareholders" the holders of Ordinary Shares in Lupus Capital"Share Incentive Arrangements" the LESOT and the EMI Scheme (including the option agreement between Lupus Capital and Greg Hutchings granted under the EMI Scheme) and the subscription agreement between the Trustees and Lupus Capital"Transaction" the Acquisition, Equity Offering and the Resolutions"Trustees" the trustees of the LESOT"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland"UK GAAP" generally accepted accounting principles in the UK"UK Listing Authority" or "UKLA" the Financial Services Authority acting in its capacity as the competent authority for the purpose of Part VI of the Financial Services and Markets Act 2000"Uncertified Share" or " a share or other security which is in an uncertificated formuncertificated share""US", "USA" or "United States" the United States of America, its territories and possessions, any state of the United States and the District of Columbia and all other areas subject to its jurisdiction This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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