19th Feb 2009 07:00
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19 February 2009
Low & Bonar PLC - Proposed Placing and Open Offer and Capital Reorganisation to raise net proceeds of £30.0 million
The Board of Low & Bonar PLC ("Low & Bonar" or the "Group") today announces a fully underwritten Placing and Open Offer to raise net proceeds of approximately £30.0 million, which will be used to reduce net indebtedness. The Placing and Open Offer is subject to approval by shareholders of certain related matters at a General Meeting to be held on 11 March 2009.
The Group's audited results for the year ended 30 November 2008 have also been released today in the accompanying announcement.
Highlights
Placing and Open Offer of approximately 132.5 million Open Offer Shares at the Issue Price of 25 pence per Open Offer Share, to raise net proceeds of approximately £30.0 million. The Issue Price represents a discount of 18.0% to Low & Bonar's Closing Price on 18 February 2009. The Open Offer Shares to be issued will represent approximately 46% of the Company's enlarged number of issued Ordinary Shares following the Placing and Open Offer.
The net proceeds will be used to improve significantly the financial position and future prospects of the Group and allow it to be ready to implement its organic growth initiatives and to take advantage of opportunities emerging from the current market environment.
The Group is also undertaking a Capital Reorganisation, for which the approval of Shareholders is being sought, which will result in each existing Ordinary Share being split into one New Ordinary Share with a nominal value of five pence and a Deferred Share with a nominal value of 20 pence. The Open Offer Shares will be New Ordinary Shares.
The Placing and Open Offer is being fully underwritten by the Placing Agents, who are acting as joint bookrunners, placing agents and underwriters to the Company in relation to the Placing and Open Offer.
Commenting on the proposals, Duncan Clegg, the Chairman of Low & Bonar, has said:
"Following its good results for the year ended 30 November 2008, but having given consideration to its strategy and the trading conditions in the period since, the Company has reviewed its financing arrangements and the structure of its balance sheet. The Company is of the opinion that, taking into account the bank and other facilities available to the Group, the Group has sufficient working capital for its present requirements. The Group has experienced material year-on-year sales volume falls since 30 November 2008, although significant cost actions already taken and benefits from falls in the prices of its key raw materials have helped to mitigate the impact on financial performance. These sales volume declines had been anticipated in part due to customer shutdowns and destocking, as well as the impact of the strained economic conditions. Given the inherent seasonality in the Group's markets and the uncertainty surrounding global economic conditions, a clearer picture of underlying trading conditions and the outlook for the Group in 2009 is likely to take some time to emerge. In addition to cost actions taken so far the Group has identified other opportunities to reduce costs should conditions require it. Our strategy of developing diverse product ranges for niche end markets and building leading market positions, allied to the underlying trend growth of the technical textiles industry all give the Board confidence for the medium- to long-term prospects of the Group.
The Board believes that the funds raised from the Placing and Open Offer will improve the financial position and future prospects of the Group significantly and, at the appropriate time, allow it to invest in its planned organic growth initiatives and take advantage of opportunities emerging from the current market environment. As has been said, the Company is also now focusing its activities in segments which the Directors believe have attractive growth prospects, and the proceeds from the Placing and Open Offer are expected to allow the Company to be able to pursue its growth initiatives and improve its competitive position over the next two years. However, whilst economic conditions remain uncertain and trading muted, the Company intends to use the net proceeds of the Placing and Open Offer to reduce net borrowings until such time as it deems it prudent to increase funding to implement its strategic and operational initiatives."
The Placing and Open Offer
Key highlights of the share issue include:
approximately £30.0 million (net of expenses) raised through a Placing and Open Offer of 132.5 million Open Offer Shares at 25 pence per Open Offer Share, representing a discount of 18.0% to Low & Bonar's Closing Price on 18 February 2009
the Open Offer Shares being available for clawback in full by Qualifying Shareholders, who are being offered the opportunity to subscribe for up to a maximum of their pro rata entitlement on the basis of:
6 Open Offer Shares for every 7 existing Ordinary Shares held on 18 February 2009
The Placing and Open Offer has been fully underwritten by Numis Securities Limited, RBS Hoare Govett Limited and Evolution Securities Limited. Rothschild is acting as sole financial adviser and Sponsor to the Company in relation to the Placing and Open Offer. Numis Securities Limited, RBS Hoare Govett Limited and Evolution Securities Limited are acting as joint bookrunners, placing agents and underwriters to the Company in relation to the Placing and Open Offer.
In order to enable the Company to undertake the Placing and Open Offer and in order to provide flexibility with its capital structure in the future, the Placing and Open Offer is conditional on, amongst other things, the approval by Shareholders of the Capital Reorganisation, the issue of the Open Offer Shares at a discount of more than 10 per cent. to the Closing Price and the disapplication of statutory preߛemption rights at the General Meeting. Shareholder approval for the Placing and Open Offer and Capital Reorganisation will be sought at the General Meeting expected to be held at 12.00 noon on 11 March 2009 at The Cumberland Hotel, Great Cumberland Place, London W1A 4RF. Notice of the General Meeting will be posted to Shareholders tomorrow.
Application has been made to the UK Listing Authority and to the London Stock Exchange for the Open Offer Shares and the New Ordinary Shares in issue after the Capital Reorganisation to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission to the Official List will become effective on 12 March 2009 and that dealings in the Open Offer Shares will commence at 8.00 a.m. on that date. It is expected that dealings in the New Ordinary Shares will also commence at 8.00 a.m. on that date. The expected latest time and date for acceptance and payment in full under the Placing and Open Offer is 11.00 a.m. on 5 March 2009.
The Open Offer Shares will, when issued and fully paid, rank equally in all respects with the New Ordinary Shares, including the right to receive all further dividends or distributions made, paid or declared after the date of their issue.
Shareholders should note that the Open Offer is not a rights issue. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market on behalf of or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, but will be subscribed for under the Placing for the benefit of the Company.
The full text of the Chairman's letter to Shareholders concerning the Placing and Open Offer is attached to this announcement including further detail on reasons for the Placing and Open Offer and use of proceeds. The Prospectus is being sent to Shareholders tomorrow. Further details of the Placing and Open Offer are set out in the Prospectus, a copy of which will be available to be viewed on the Company's website www.lowandbonar.com later in the day.
The Capital Reorganisation
It is proposed that the Placing and Open Offer will be undertaken at 25 pence per Open Offer Share which is equal to the current nominal value of an Ordinary Share. Under the Companies Act, it is not permissible to issue shares at a discount to their nominal value. Therefore, in order to provide the Company with flexibility with its capital structure in the future, the Placing and Open Offer is conditional on, amongst other things, the completion of the Capital Reorganisation, which will involve: (i) the subdivision and reclassification of each issued Ordinary Share into one New Ordinary Share of five pence and one Deferred Share of 20 pence; and (ii) the subdivision of each authorised but unissued Ordinary Share into five New Ordinary Shares of five pence each. On completion of the Capital Reorganisation, each Ordinary Shareholder will hold one New Ordinary Share and one Deferred Share for each Ordinary Share currently held.
The rights attaching to the New Ordinary Shares will, save for the change in nominal value, be identical in all respects to those of the Ordinary Shares. The Deferred Shares created on the Capital Reorganisation becoming effective will have no voting or dividend rights and, on a return of capital, will have the right to receive the amount paid up thereon only after the holders of the Preference Stock have received all amounts to which they are entitled in priority to the payment of the holders of any other class of shares in the Company (in accordance with the rights attaching to the Preference Stock as set out in the Articles) and, in addition, the holders of the New Ordinary Shares have received, in aggregate, the amount paid up thereon plus £10,000,000 per New Ordinary Share.
The effect of the Capital Reorganisation will mean that each New Ordinary Share will have a nominal value of five pence and the number of ordinary shares of the Company listed on the Official List and admitted to trading on the London Stock Exchange's main market for listed securities shall remain the same. Consequently, the market price of a New Ordinary Share immediately after completion of the Capital Reorganisation should, theoretically, be the same as the market price of an existing Ordinary Share immediately prior to the Capital Reorganisation.
Dividends
In light of the Placing and Open Offer, a final dividend will not be recommended for the year ended 30 November 2008. It is the Board's intention, subject to the Group's trading position and prevailing economic circumstances, to resume dividend payments for the year to 30 November 2009. It is also the Board's intention that the level of the dividend payment would be established at a sustainable level with the dividend per share to be covered at least twice by earnings per share (before amortisation and non-recurring items).
Key dates
|
2009 |
|
|
Record date for entitlement under the Open Offer |
Wednesday 18 February |
|
Announcement of the Open Offer |
Thursday 19 February |
|
Ex-entitlement date for the Open Offer |
Thursday 19 February |
|
Posting of the Prospectus and Application Forms |
On or before Friday 20 February |
|
Open Offer closes |
11am Thursday 5 March |
|
General Meeting |
12 pm Wednesday 11 March |
|
Admission and commencement of dealings in Open Offer shares |
Thursday 12 March |
This summary should be read in conjunction with the full text of this Announcement.
Enquiries:
LETTER FROM THE CHAIRMAN OF LOW & BONAR
(Registered in Scotland. Company registration number SC008349)
19 February 2009
To Qualifying Shareholders (in respect of the Placing and Open Offer), to Shareholders (in respect of the Capital Reorganisation and the General Meeting) and, for information only, to holders of Preference Stock
Dear Shareholder,
Proposed Capital Reorganisation and Placing and Open Offer at 25 pence per Open Offer Share
1. Introduction
The Directors announced today that the Company proposes to raise approximately £30.0 million (net of expenses) by way of a Placing and Open Offer of 132,489,559 Open Offer Shares at 25 pence per Ordinary Share.
The Placing and Open Offer has been fully underwritten by the Placing Agents. The Open Offer Shares to be issued pursuant to the Placing and Open Offer, when fully paid, will rank pari passu with the Ordinary Shares and, after the Capital Reorganisation, the New Ordinary Shares.
Before proceeding with the Placing and Open Offer, the Company's Ordinary Share capital will be reorganised by means of the Capital Reorganisation which will involve: (i) the subdivision and reclassification of each issued Ordinary Share into one New Ordinary Share of five pence and one Deferred Share of 20 pence; and (ii) the subdivision of each authorised but unissued Ordinary Share into five New Ordinary Shares of five pence each. On completion of the Capital Reorganisation, each Ordinary Shareholder will hold one New Ordinary Share and one Deferred Share for each Ordinary Share currently held.
In view of the requirement to seek authority from Shareholders inter alia, to effect the Capital Reorganisation, allot the Open Offer Shares and disapply statutory pre-emption rights, there will be a General Meeting on 11 March 2009. Notice of this meeting is set out at the end of the Prospectus.
The purpose of the Prospectus is to provide you with details of the Capital Reorganisation and the Placing and Open Offer and to explain why the Directors consider them to be in the best interests of the Company and its Shareholders as a whole, and to recommend that you vote in favour of the Resolutions to be proposed at the General Meeting.
2. Reasons for the Placing and Open Offer and use of proceeds
Strategic realignment
Following the disposal of its Floors Division in September 2008, the Group has focused its business into two areas of activity in the international technical textiles industry: the production and supply of (a) technical coated fabrics for use in the transport, print and architectural markets; and (b) other performance technical textiles, including: (i) three dimensional polymeric mats for use in diverse industrial markets and non-woven fabrics for use in carpet backing; (ii) yarns for carpet backing and artificial grass; and (iii) woven and non-woven industrial fabrics, geotextiles, agrotextiles and fibres. The Company believes it has created a portfolio of leading niche market positions and focused the business in markets which will be capable of sustaining higher earnings growth potential than the Group's businesses as a whole prior to that disposal. The Group has set a medium-term target of 12 per cent. local operating margins for its businesses overall.
2008 final results
Low & Bonar today announced its preliminary financial results for the year ended 30 November 2008. Selected financial information about Low & Bonar is included in the Prospectus as set out in Part V - "Operating and Financial Review Relating to Low & Bonar".
Group turnover in the year ended 30 November 2008 grew by 59.4 per cent. to £335.2 million (2007 (restated): £210.3 million; 2007: £311.8 million) and Group operating profit before amortisation and non-recurring items grew by 89.4 per cent. to £26.7 million (2007 (restated): £14.1 million; 2007: £26.1 million) and underlying divisional operating margins also grew from 8.5 per cent. in the year ended 30 November 2007 (restated) to 9.6 per cent. in the year ended 30 November 2008. The Group's profit before tax, amortisation and non-recurring items in the year ended 30 November 2008 was £16.0 million (2007 (restated): £10.4 million; 2007: £22.4 million).
Capitalisation and indebtedness
The Group repaid approximately £108.5 million of net debt out of the proceeds from the sale of the Floors Division in September 2008. Total net indebtedness as at 30 November 2008 amounted to £104.5 million and taking into account the proceeds from the Placing and Open Offer would be further reduced to approximately £74.5 million on a pro forma basis at that date. The Group's Debt Facilities have a final maturity date in December 2011 and continue to be available to the Group.
Working capital
The Company is of the opinion that, taking into account the bank and other facilities available to the Group, the Group has sufficient working capital for its present requirements, that is for at least 12 months from the date of publication of the Prospectus.
Current trading
The Group has experienced material year-on-year sales volume falls since 30 November 2008, although significant cost actions already taken and benefits from falls in the prices of its key raw materials have helped to mitigate the impact on financial performance. These sales volume declines had been anticipated in part due to evidence of early and prolonged closure of customers' factories, customers seeking to reduce their working capital by reducing stocks (a factor exacerbated by their awareness of falls in raw materials prices for the Group and other suppliers) and the impact of the strained economic conditions.
Given the inherent seasonality in the Group's markets and the uncertainty surrounding global economic conditions, a clearer picture of underlying trading conditions and the outlook for the Group in 2009 is likely to take some time to emerge. The Group has already implemented an initial phase of its cost reduction programme and has identified other opportunities to reduce costs should conditions require it.
The Group's strategy of developing diverse product ranges for niche end markets and building leading market positions, allied to the underlying trend growth of the technical textiles industry all give the Directors confidence for the medium to long-term prospects of the Group.
Investment opportunities and financing
Following its good results for the year ended 30 November 2008 but having given consideration to its strategy and current trading conditions, the Company has reviewed its financing arrangements and the structure of its balance sheet. Economic conditions have been strained worldwide and are highly uncertain and have increasingly given rise to funding requirements which the Board did not foresee at the time of the announcement of the disposal of the Floors Division in July 2008. Therefore, the Board believes that identified investment opportunities for organic earnings growth are being lost or delayed through the need to conserve cash. These opportunities include initiatives to reduce capacity constraints and costs and improve cash generation capabilities. Under more favourable economic conditions and if finance were to be available, the Board would be likely to pursue such opportunities. Initiatives to grow sales include capacity expansion projects related to supplying growth markets such as civil engineering and artificial grass, geographic expansion, removing capacity constraints in weaving, research and development expenditure in woven textiles and yarns and the need to fund the working capital consequences of such growth in due course. Proposed cost reduction initiatives include process automation in Colbond and manufacturing productivity enhancements in MTX. The Company typically targets cash payback from cost reduction projects of one to three years and three to four years for organic sales growth projects. The Company believes that these initiatives, if implemented, will support the upward trend in operating profit margins and enhance its strategic position.
Cash generation initiatives
Cash generation is a key focus for the Group. Therefore, in light of the prevailing circumstances and mindful of the need to take prudent measures in good time, the Group has taken cost actions which are designed to help mitigate the impact of lower sales and hence sustain cash generation. These actions, which will incur one-off cash costs amounting to approximately £3.1 million, include an overall headcount reduction of approximately 10 per cent., changed working practices in Belgium and Germany and a reduction in discretionary spending of approximately £2.4 million on an annualised basis. The Company has taken a conscious decision that the Group should maintain current staffing levels in sales, marketing and research and development as a result of their significance to the Group in assisting sales growth. Lower energy costs and other purchasing benefits are also being sought to assist profit generation and the Group is also looking to accelerate specific sales development initiatives. It has benefited from falls in the prices of its key raw materials and expects to continue to do so for the remainder of the year. Other initiatives which the Group has or is pursuing to conserve cash include a reduction in working capital of approximately €10.0 million in MTX (which is ahead of the Group's expectations at the time of acquisition), targeting an additional working capital reduction across the Group in 2009, limiting capital expenditure to 75 per cent. of anticipated depreciation in the year to 30 November 2009 (excluding its investment in BETY) and entering into a more cash-effective hedging policy. The Group's dividend policy will also enable it to conserve cash resources in the short term. Unfortunately, the Group has also postponed some of the capital expenditure it would have been likely to have undertaken in the year to pursue identified organic growth opportunities.
Use of proceeds
The Company has today launched a Placing and Open Offer to generate net proceeds of approximately £30.0 million for the Company. The Board believes that the funds raised from the Placing and Open Offer will improve the financial position and future prospects of the Group significantly and, at the appropriate time, allow it to invest in its planned organic growth initiatives and take advantage of opportunities emerging from the current market environment. As has been said, the Company is also now focusing its activities in segments which the Directors believe have attractive growth prospects, and the proceeds from the Placing and Open Offer are expected to allow the Company to be able to pursue its growth initiatives and improve its competitive position over the next two years. However, whilst economic conditions remain uncertain and trading muted, the Company intends to use the net proceeds of the Placing and Open Offer to reduce net borrowings until such time as it deems it prudent to increase funding to implement its strategic and operational initiatives.
In order to enable the Company to undertake the Placing and Open Offer, the Placing and Open Offer is conditional on, amongst other things, the approval by Shareholders of the Capital Reorganisation and the disapplication of statutory pre-emption rights at the General Meeting. The disapplication of statutory pre-emption rights in relation to the Placing and Open Offer will, if approved, allow the Company to avail itself of recent amendments to the London Stock Exchange's Admission and Disclosure Standards which have reduced the open offer timetable by five business days.
3. Undertakings by Directors and existing shareholders
The Directors who are entitled to take up shares under the Placing and Open Offer (holding in aggregate 1,395,375 Ordinary Shares) intend, to the extent that they are able, to take up, or procure that their nominees take up, their entitlements in respect of the Open Offer Shares.
4. Principal terms of the Placing and Open Offer
Qualifying Shareholders are being invited to apply for any number of Open Offer Shares up to and including their pro rata entitlement at the Issue Price of 25 pence per Open Offer Share, to raise approximately £33.1 million (before costs and expenses). To the extent Open Offer Shares are not taken up under the Open Offer, subject to certain conditions, the Placing Agents have agreed to acquire such Open Offer Shares at the Issue Price.
Subject to the fulfilment of, amongst others, the conditions described in Part III - "Terms and Conditions of the Open Offer" of the Prospectus, Qualifying Shareholders are being given the opportunity under the Open Offer to apply to acquire Open Offer Shares at the Issue Price on the following basis:
6 Open Offer Shares for every 7 existing Ordinary Shares
held and registered in their name at 5.00 p.m. on 18 February 2009 and so in proportion to any other number of Ordinary Shares then held.
Assuming that the market price of a New Ordinary Share immediately after completion of the Capital Reorganisation remains the same as the market price of an existing Ordinary Share immediately prior to the Capital Reorganisation, the Issue Price of 25 pence per Open Offer Share represents a 18.0 per cent. discount to the Closing Price of 30.5 pence per Ordinary Share on 18 February 2009 (being the latest practicable date before the announcement of the terms of the Placing and Open Offer). The Capital Reorganisation does not affect the number of Open Offer Shares to which a Qualifying Shareholder is entitled under the Open Offer.
Fractions of Open Offer Shares will not be allotted to any Qualifying Shareholders and entitlements will be rounded down to the nearest whole number of Open Offer Shares. Any Shareholder with only six or fewer Ordinary Shares will not be entitled to Open Offer Shares. Such fractions will be aggregated and, if possible, placed as soon as practicable after the commencement of dealings in the Open Offer Shares. The net proceeds of such placings (after deduction of expenses) will be aggregated and will ultimately accrue for the benefit of Low & Bonar.
The Placing and Open Offer will result in the issue of 132,489,559 Open Offer Shares (representing approximately 85.7 per cent. of the existing issued Ordinary Shares and 46.2 per cent. of the New Ordinary Shares immediately following the completion of the Capital Reorganisation and the Placing and Open Offer). The Open Offer Shares will, when issued and fully paid, rank equally in all respects to the New Ordinary Shares, including the right to receive all further dividends or distributions made, paid or declared after the date of their issue. Application has been made for the Open Offer Shares to be admitted to CREST and held in uncertificated form. The Open Offer Shares are capable of being held in certificated form.
In order to facilitate the Placing and Open Offer, and subject to the passing of the Resolutions, it is proposed that the Company's authorised ordinary share capital be increased from 200,000,000 Ordinary Shares to 514,204,951 New Ordinary Shares, representing an increase of approximately 157.1 per cent. of the existing authorised ordinary share capital.
The Issue Price represents a discount of 18.0 per cent. to the Closing Price at the time of the announcement of the Placing and Open Offer. Under the Listing Rules, the Company is required to seek the approval of the Shareholders where an offer or placing is made at a discount of more than 10 per cent.
The Placing and Open Offer is conditional upon:
(a) the passing of all of the Resolutions without material amendment at the General Meeting, and not, except with the prior written consent of the Sponsor and the Placing Agents, at any adjournment thereof;
(b) Admission becoming effective by not later than 8.00 a.m. on 12 March 2009 (or such later time and/or date as the Sponsor, the Placing Agents and Low & Bonar may agree); and
(c) the Placing Agreement otherwise having become unconditional in all respects and not having been terminated in accordance with its terms prior to Admission.
The Company has arranged for the Placing and Open Offer to be fully underwritten by Numis Securities Limited, RBS Hoare Govett Limited and Evolution Securities Limited to provide certainty as to the amount of capital to be raised. A summary of the material terms of the Placing Agreement is set out in paragraph 16.1 of Part IX - "Additional Information" of the Prospectus. Rothschild is acting as sole financial adviser and sponsor to the Company in relation to the Placing and Open Offer. Numis Securities Limited, RBS Hoare Govett Limited and Evolution Securities Limited are acting as joint bookrunners, placing agents and underwriters to the Company in relation to the Placing and Open Offer.
Shareholders should note that the Open Offer is not a rights issue. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market on behalf of or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, but will be subscribed for under the Placing for the benefit of the Company.
5. The Capital Reorganisation
Reasons for the Capital Reorganisation
It is proposed that the Placing and Open Offer will be undertaken at 25 pence per Open Offer Share which is equal to the current nominal value of an Ordinary Share. Under the Companies Act, it is not permissible to issue shares at a discount to their nominal value. Therefore, in order to provide the Company with flexibility in relation to its capital structure in the future, the Placing and Open Offer is conditional on, amongst other things, the completion of the Capital Reorganisation, which will result in the nominal value of each New Ordinary Share being reduced to five pence.
Information about the Capital Reorganisation
It is proposed that:
(i) each issued Ordinary Share is subdivided and reclassified into one New Ordinary Share of five pence and one Deferred Share of 20 pence; and
(ii) each authorised by unissued Ordinary Share is subdivided into five New Ordinary Shares of five pence each.
The rights attaching to the New Ordinary Shares will, save for the change in nominal value, be identical in all respects to those of the Ordinary Shares.
No new share certificates will be issued in respect of the New Ordinary Shares and existing share certificates for Ordinary Shares will remain valid for the New Ordinary Shares arising after the subdivision.
The Deferred Shares created on the Capital Reorganisation becoming effective will have no voting or dividend rights and, on a return of capital, will have the right to receive the amount paid up thereon only after the holders of the Preference Stock have received all amounts to which they are entitled in priority to the payment of the holders of any other class of shares in the Company (in accordance with the rights attaching to the Preference Stock as set out in the Articles) and, in addition, the holders of the New Ordinary Shares have received, in aggregate, the amount paid up thereon plus £10,000,000 per New Ordinary Share.
No share certificates will be issued in respect of the Deferred Shares, nor will CREST accounts of Shareholders be credited in respect of any entitlement to Deferred Shares, nor will they be listed on the Official List or admitted to trading on the London Stock Exchange or any other investment exchange. It is the Board's intention, at the appropriate time, to effect a repurchase of the Deferred Shares, to make an application to the High Court for the Deferred Shares to be cancelled, or for the Company to cancel the Deferred Shares, with the approval of its Shareholders, using the new solvency statement procedure available under the Companies Act 2006.
The effect of the Capital Reorganisation will mean that each New Ordinary Share will have a nominal value of five pence and the number of ordinary shares of the Company listed on the Official List and admitted to trading on the London Stock Exchange's main market for listed securities shall remain the same. Consequently, the market price of a New Ordinary Share immediately after completion of the Capital Reorganisation should, theoretically, be the same as the market price of an existing Ordinary Share immediately prior to the Capital Reorganisation.
6. Strategy
The Group's core business is the high value-added manufacture and supply of performance materials based primarily on technical textiles, for strategically attractive niche markets. The Group is focused on becoming a global performance materials business, based primarily but not exclusively on technical textiles, which aims to provide distinct and sustained added-value to its customers' businesses. The Company believes that pursuing this strategy, backed by a stable management team, will result in higher returns and above-market growth rates. It is the Company's belief that a material increase in scale through the adoption of this strategy will give benefits in purchasing capability, utilisation of commercial infrastructure, scope to invest in state-of-the-art production equipment and shared knowledge and depth of pocket in research and development.
The Group's strategy is to develop a portfolio of leading global positions in carefully chosen niche markets and to realise purchasing, production and cross-selling synergies as appropriate. Cost and quality leadership is sought through constant process redesign and improvement. The Company believes that organic expansion will be achieved through further product innovation in all areas, geographic expansion and operational process improvement. This strategy for organic growth may be complemented by acquisitions in segments that are consistent with this strategy or which provide geographic expansion of the Group's core activities.
7. Dividend policy
In light of the Placing and Open Offer, a final dividend will not be recommended for the year ended 30 November 2008. It is the Board's intention, subject to the Group's trading position and prevailing economic circumstances, to resume dividend payments for the year to 30 November 2009. It is the Board's intention that the level of the dividend payment would be established at a sustainable level with the dividend per share to be covered at least twice by earnings per share (before amortisation and non-recurring items).
8. Overseas Shareholders
The attention of Qualifying Shareholders who have registered addresses outside the UK, or who are citizens or residents of countries other than the UK, or who are holding Ordinary Shares or, after the Capital Reorganisation, New Ordinary Shares, for the benefit of such persons, (including, without limitation, custodians, nominees, trustees and agents) or have a contractual or other legal obligation to forward this document, an Application Form and any other document in relation to the Placing and Open Offer to such persons, is drawn to the information which appears in paragraph 6 of Part III - "Terms and Conditions of the Open Offer" of the Prospectus.
In particular, Qualifying Shareholders who have a registered address in, or who are citizens of, countries other than the United Kingdom (including, without limitation, the US and any of the Excluded Territories) should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to take up their entitlements in respect of the Placing and Open Offer.
9. Taxation
The taxation consequences of the Capital Reorganisation and the Placing and Open Offer will depend upon the jurisdiction in which the relevant Shareholders are resident for tax purposes. Summaries of the UK tax consequences of the Capital Reorganisation and the Placing and Open Offer for Shareholders resident for tax purposes in the UK are set out in paragraph 18 of Part IX - "Additional Information" of the Prospectus.
This information is intended to be only a general guide to the current tax position in the United Kingdom and Shareholders who are in any doubt as to their tax position or who are subject to tax in any other jurisdiction should consult their own independent professional adviser immediately.
10. General Meeting
The notice convening the General Meeting of the Company to be held at 12 o'clock noon on 11 March 2009 at The Cumberland Hotel, Great Cumberland Place, London, W1A 4RF is enclosed with the Prospectus. The purpose of this meeting is to seek Shareholders' approval of the Resolutions set out in the notice of the General Meeting.
If passed, the Resolutions will:
(1) subject to and conditional upon Resolutions 2, 3, 4 and 5 being passed:
(a) sub-divide and re-classify each issued Ordinary Share into one New Ordinary Share of five pence and one Deferred Share of 20 pence;
(b) sub-divide each unissued Ordinary Share into five unissued New Ordinary Shares of five pence each;
(c) increase the Company's authorised share capital;
(2) subject to and conditional upon Resolutions 1, 3, 4 and 5 being passed, approve the issue of the Open Offer Shares for cash at a price of 25 pence per Open Offer Share;
(3) subject to and conditional upon Resolutions 1, 2 and 4 being passed, authorise the allotment of Open Offer Shares required in connection with the Placing and Open Offer;
(4) subject to and conditional upon Resolutions 1, 2, 3 and 5 being passed, authorise the amendment of the Articles of Association to include the rights and restrictions attaching to the Deferred Shares; and
(5) subject to and conditional upon Resolutions 1, 2, 3 and 4 being passed, authorise the allotment of up to a maximum of 132,489,559 New Ordinary Shares otherwise than in accordance with section 89 of the Companies Act for the purposes of the Placing and Open Offer.
For further information in relation to the Resolutions to be proposed at the General Meeting, see Part IX - "Additional Information" of the Prospectus.
11. Action to be taken
In respect of the General Meeting
You will find enclosed with the Prospectus a Form of Proxy for use at the General Meeting or at any adjournment thereof. Whether or not you intend to be present in person at the General Meeting, you are requested to complete and sign the Form of Proxy in accordance with the instructions printed on it and return it as soon as possible, but in any event so as to be received no later than 12 o'clock noon on 9 March 2009 by Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. The lodging of the Form of Proxy (or the electronic appointment of a proxy) will not preclude you from attending and voting at the General Meeting in person if you so wish.
Only holders of Ordinary Shares may vote at the General Meeting. Holders of Preference Stock are entitled to attend the General Meeting but not to vote thereat.
In respect of the Placing and Open Offer
The latest time for acceptance by Qualifying Shareholders under the Open Offer is 11.00 a.m. on 5 March 2009. The procedure for acceptance and payment is set out in Part III - "Terms and Conditions of the Open Offer" of the Prospectus. Further details will also appear in the Application Form which is being sent to all Qualifying Non-CREST Shareholders (other than Qualifying Non-CREST Shareholders with a registered address in the United States or, subject to certain exceptions, the Excluded Territories).
Qualifying CREST Shareholders who are CREST-sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with the Prospectus and the Placing and Open Offer.
If you have any doubt what action you should take, you should seek your own financial advice from your stockbroker, solicitor or other independent financial adviser duly authorised under FSMA who specialises in advice on the acquisition of shares and other securities immediately.
12. Further Information
Your attention is drawn to the further information set out in Part II - "Some Questions and Answers about the Open Offer" to Part IX - "Additional Information" of the Prospectus and to the Notice of General Meeting set out at the end of the Prospectus. In particular, your attention is drawn to the section entitled "Risk Factors" set out on pages 9 to 14 of the Prospectus. You are advised to read the whole of the Prospectus and not rely solely on the information contained in this letter.
If you have any questions relating to the Prospectus or the completion and return of the Form of Proxy and/or Application Form (which is proposed to be despatched after the General Meeting to Qualifying Non-CREST Shareholders only), please telephone the Shareholder Helpline on 0870 707 1121 (+44 870 707 1121 if you are calling from outside the United Kingdom). This helpline is available from 8.30 a.m. to 5.30 p.m. Monday to Friday (except bank holidays) and will remain open until the end of the Open Offer. Please note that, for legal reasons, the Shareholder Helpline is only able to provide information contained in the Prospectus and information relating to Low & Bonar's register of members and is unable to give advice on the merits of the Placing and Open Offer or to provide financial, tax or investment advice.
13. Recommendation
Your board has received financial advice in relation to the Placing and Open Offer from Rothschild. In providing advice to the Board, Rothschild has relied upon the Board's commercial assessment of the Capital Reorganisation, the Placing and Open Offer and the Group's funding requirements.
The Board considers the Capital Reorganisation, the Placing and Open Offer and the Resolutions to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommends Shareholders to vote in favour of the Resolutions, as the Directors intend to do in respect of their own beneficial holdings of Ordinary Shares.
Yours sincerely,
Duncan Clegg
Chairman
APPENDIX
DEFINITIONS
The following definitions apply throughout this announcement, unless the context otherwise requires:
|
"Act" or "Companies Act" |
the Companies Act 1985 (as amended from time to time) or the Companies Act 2006, as the context so requires |
|
"Admission" |
the admission of the Open Offer Shares to the Official List becoming effective in accordance with the Listing Rules (LR 3.2.7G) and of such shares to trading on the market for listed securities of the London Stock Exchange becoming effective in accordance with the requirements contained in paragraph 2.1 of the publication "Admission and Disclosure Standards" dated November 2007, published by the London Stock Exchange and as amended from time to time containing amongst other things the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's market for listed securities |
|
"Application Form" |
the personalised application form on which Qualifying non-CREST Shareholders (other than, subject to certain exceptions, Qualifying non-CREST Shareholders with a registered address in the United States or the Excluded Territories) who are registered on the register of members of Low & Bonar may apply for Open Offer Shares under the Open Offer |
|
"Articles" |
the articles of association of Low & Bonar |
|
"Australia" |
the Commonwealth of Australia, its territories and possessions |
|
"Board" or "Directors" |
the directors of the Company named on page 22 of the Prospectus |
|
"Canada" |
Canada, its provinces and territories and all areas under its jurisdiction and political subsidiaries thereof |
|
"Capital Reorganisation" |
the proposed reorganisation of the Ordinary Shares into New Ordinary Shares and Deferred Shares, as more particularly described in the Prospectus |
|
"certificated" or "in certificated form" |
a share or other security which is not in uncertificated form (that is, not in CREST) |
|
"Closing Price" |
the closing middle market quotation of an Ordinary Share, or a New Ordinary Share (as appropriate), as derived from the Daily Official List |
|
"Company" or "Low & Bonar" |
Low & Bonar PLC |
|
"CREST" |
the relevant system (as defined in the CREST Regulations) for paperless settlement of share transfers and the holding of shares in uncertificated form in respect of which Euroclear is the Operator (as defined in the CREST Regulations) |
|
"CREST sponsor" |
a CREST participant admitted to CREST as a CREST sponsor |
|
"Daily Official List" |
the Daily Official List of the London Stock Exchange |
|
"Debt Facilities" |
the £175.0 million credit facilities made available to the Company pursuant to the Debt Facilities Agreement |
|
"Debt Facilities Agreement" |
a £175.0 million credit facilities agreement dated 7 July 2006, between the Company (as borrower), Bonar Floors Limited, Bonar Yarns & Fabrics Limited and Bonar Tiles Limited (as original guarantors) and RBS, as amended and restated from time to time |
|
"Deferred Shares" |
the non-voting deferred shares of 24 pence each in the capital of the Company created as a result of the Capital Reorganisation, and "Deferred Shares" means one of them |
|
"Disclosure and Transparency Rules" |
the rules relating to the disclosure of information made in accordance with Section 73A(3) of the FSMA, as amended from time to time |
|
"Euroclear" |
Euroclear UK & Ireland Limited, the operator of CREST |
|
"Excluded Territories" |
Australia, Canada, Japan, South Africa and New Zealand and any other jurisdiction where the extension or availability of the Placing and Open Offer (and any other transaction contemplated thereby) would breach any applicable law or regulation |
|
"ex-entitlement date" |
18 February 2009 |
|
"Floors Division" |
the companies comprising the Company's specialist contract flooring division, the disposal of which was completed on 30 September 2008 |
|
"Financial Services Authority" |
the UK Financial Services Authority |
|
"Financial Services and Markets Act" or "FSMA" |
the Financial Services and Markets Act 2000 (as amended from time to time) |
|
"First Cumulative Preference Stock" |
means the £100,000 6 per cent. First Cumulative Preference Stock issued by the Company |
|
"Form of Proxy" |
the form of proxy for use at the general meeting which accompanies the Prospectus |
|
"General Meeting" |
the general meeting of the Company, notice for which is contained in the Prospectus, convened for 12 o'clock noon on 11 March 2009 at the offices of The Cumberland Hotel, Great Cumberland Place, London W1A 4RF and at any adjournment thereof at which the Resolutions will be proposed |
|
"Group" |
the Company, its subsidiaries and its subsidiary undertakings from time to time |
|
"Issue Price" |
25 pence per Placing and Open Offer Share |
|
"Listing Rules" |
the listing rules of the UK Listing Authority (as amended from time to time) made pursuant to section 73A of the FSMA |
|
"London Stock Exchange" |
London Stock Exchange plc or its successor |
|
"MTX" or "Mehler Texnologies" |
the group of companies forming the Group's MTX Group of businesses |
|
"New Ordinary Shares" |
the new Ordinary Shares of one penny each in the capital of the Company following sub-division of the Ordinary Shares as a result of the Capital Reorganisation, and "New Ordinary Share" means one of them |
|
"Official List" |
the official list maintained by the UK Listing Authority pursuant to Part VI of the FSMA |
|
"Open Offer" |
the offer by Low & Bonar to Qualifying Shareholders constituting an invitation to apply for the Open Offer Shares on the terms of and subject to the conditions set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders, in the Application Form |
|
"Open Offer Shares" |
the 132,489,559 New Ordinary Shares to be issued by the Company pursuant to the Placing and Open Offer and "Open Offer Share" means any one of them |
|
"Ordinary Shares" or "Shares" |
existing ordinary shares of 25 pence each in the capital of the Company, and "Ordinary Share" means one of them |
|
"Overseas Shareholders" |
shareholders with registered addresses in, or who are citizens, residents or nationals of, incorporated in, registered in or otherwise resident in, jurisdictions outside the United Kingdom |
|
"Placees" |
the persons with whom a conditional placing of Open Offer Shares (subject, where applicable, to the entitlements of Shareholders under the Open Offer) has been or will be made |
|
"Placing" |
the conditional placing of the Open Offer Shares with placees, subject to the entitlements of Shareholders under the Open Offer, on the terms of and subject to the Placing Agreement, as described in the Prospectus |
|
"Placing Agents" |
Numis Securities Limited, RBS Hoare Govett Limited and Evolution Securities Limited |
|
"Placing Agreement" |
the conditional underwriting and placing agreement between the Company and the Placing Agents relating to the Placing, the principal terms of which are set out in paragraph 16.1 of Part IX-"Additional Information" of the Prospectus |
|
"Placing and Open Offer" |
the Placing and the Open Offer |
|
"Preference Stock " |
the First Cumulative Preference Stock, the Second Cumulative Preference Stock and the Third Cumulative Preference Stock of the Company |
|
"Prospectus" |
the prospectus, dated 19 February 2009, issued by the Company in respect of the Placing and Open Offer, together with any supplements or amendments thereto |
|
"Prospectus Rules" |
the prospectus rules of the UK Listing Authority (as amended from time to time) made pursuant to section 73A of the FSMA and brought into effect on 1 July 2005 |
|
"Qualifying CREST Shareholders" |
Qualifying Shareholders holding Ordinary Shares on the register of members of the Company, at 5.00p.m. on the Record Date, in uncertificated form |
|
"Qualifying nonߛCREST Shareholders" |
Qualifying Shareholders holding Ordinary Shares on the register of members of the Company, at 5.00p.m on the Record Date, in certificated form |
|
"Qualifying Shareholder" |
a Shareholder on the register of members of the Company at 5.00 p.m. on the Record Date |
|
"RBS" |
The Royal Bank of Scotland plc |
|
"Record Date" |
18 February 2009 |
|
"Resolutions" |
means the resolutions to be proposed at the General Meeting, as set out in the notice of General Meeting contained in the Prospectus |
|
"Rothschild" or "Sponsor" |
N M Rothschild & Sons Limited of New Court, St Swithin's Lane, London, EC4P 4DU, financial advisor to the Company and sponsor in respect of the Placing and Open Offer |
|
"Second Cumulative Preference Stock" |
means the £100,000 6 per cent. Second Cumulative Preference Stock issued by the Company |
|
"Securities Act" |
the US Securities Act of 1933, as amended |
|
"Shareholders" |
the holders of Ordinary Shares |
|
"South Africa" |
the Republic of South Africa |
|
"Third Cumulative Preference Stock" |
means the £200,000 5.5 per cent. Third Cumulative Preference Stock issued by the Company |
|
"UK Listing Authority" |
the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act including where the context so permits, any committee, employee, officer or servant to whom any function of the UK Listing Authority may for the time being be delegated |
|
"uncertificated" or "in uncertificated form" |
recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST, the title to which, by virtue of the CREST Regulations may be transferred by means of CREST |
|
"United Kingdom" or "UK" |
the United Kingdom of Great Britain and Northern Ireland, its territories and dependencies |
|
"United States" or "US" |
the United States of America, its territories and possessions, any State of the United States and the District of Columbia |
DISCLAIMER
This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security.
This announcement is an advertisement and does not constitute a prospectus or prospectus equivalent document. Nothing in this announcement should be interpreted as a term or condition of the Placing and Open Offer. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any New Ordinary Shares must be made only on the basis of the information contained in and incorporated by reference into the Prospectus. Copies of the Prospectus will be available on publication from the Company's registered office.
No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, any of the Placing Agents or Rothschild. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this announcement or that the information in it is correct as at any subsequent date.
The information contained herein is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part in, into or from the United States, Canada, Australia, Japan or South Africa or New Zealand or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The New Ordinary Shares have not been and will not be registered under the securities laws of such jurisdictions and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except pursuant to an exemption from and in compliance with any applicable securities laws.
The distribution of this announcement, the Prospectus and/or the Application Form and/or the transfer or offering of the New Ordinary Shares into jurisdictions other than the United Kingdom is or may be restricted by law. Persons into whose possession this announcement or any such document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement does not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The securities referred to in this document have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States, its territories and possessions, or any State of the United States or the District of Columbia, absent registration under the Securities Act or an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offer of securities in the United States.
No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share, or after the Capital Reorganisation, New Ordinary Share, for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share and/or New Ordinary Share (as applicable).
Prices and values of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.
Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.
Cautionary note regarding forward-looking statements
This announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans, "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Company, the Board or the Group (as the case may be) concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies and dividend policy of the Company or the Group and the industries in which they operate.
By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward looking statements are not guarantees of future performance. The Company's or the Group's actual results of operations, financial condition, liquidity, dividend policy and the development of the industries in which it operates may differ materially from the impression created by the forward looking statements contained in this document. In addition, even if the results of operations, financial condition, liquidity and dividend policy of the Company or the Group (as the case may be), and the development of the industries in which they operate, are consistent with the forward looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: the effect of the Placing and Open Offer on the Group; changes in the competitive framework in which the Group operates and its ability to retain market share; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash to service its debt; the Group's ability to control its capital expenditure and other costs; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; and general local and global economic, political, business, and market conditions.
You are advised to read this announcement and, once available the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Company's or the Group's future performance and the industries in which they operate. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.
Other than in accordance with their legal or regulatory obligations (including under the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules), neither the Company, Rothschild nor any of the Placing Agents undertakes any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
END
Related Shares:
LWB.L