8th May 2007 18:16
Watermark Group PLC08 May 2007 For immediate release 8 May 2007 Watermark Group Plc (the "Company") Posting of Circular and Related Party and Class 2 Transactions Further to the announcement made on 1 May 2007, the Company confirms that acircular containing full details of the proposed placing and offer of £8,000,000principal amount of Secured Fixed Rate Convertible Bonds due 2010 (the"Convertible Bonds"), including a notice of the extraordinary general meeting tobe held at 11.00 a.m. on 4 June 2007 (the "EGM"), has been posted to theCompany's shareholders (the "Circular"). As described in the Circular, the placing and offer comprises (1) a firm placingof £1,741,500 in principal amount of Convertible Bonds with Strategic EquityCapital Plc ("SEC"), Strategic Recovery Fund II and its co-investment vehicleSVG Capital Plc (together "SRFII"), Dawnay, Day Properties Limited and NorthAtlantic Value LLP (together the "Underwriters"), and (2) the offer of up to£6,258,500 in principal amount of Convertible Bonds made by the Company toshareholders who hold at least 204,453 ordinary shares of 1p each in the Company("Ordinary Shares"), excluding the Underwriters and shareholders in certainoverseas jurisdictions (a "Qualifying Investor") on a basis proportional totheir existing shareholdings and entitlement to Ordinary Shares. The ConvertibleBonds are being offered to Qualifying Shareholders on the basis of 1 £1denomination Convertible Bond for every 5.84 Ordinary Shares held or which theCompany is contracted to issue on 30 April 2007 (the "Record Date"). The placingand offer are conditional, inter alia, on approval by shareholders, which willbe sought at the EGM. The Circular contains details of related party transactions in relation to theplacing and offer of the Convertible Bonds which are Class 2 transactions forthe purposes of the listing rules made by the UK Listing Authority (the "ListingRules") details of which are set out below. Further to the announcement made on 1 May 2007, also set out below are detailsof the service agreements with Stephen Yapp and Peter Fitzwilliam, who were atthe time proposed directors of the Company. Related Party and Class 2 Transactions 1. The Company is seeking to place in aggregate £700,000 in principal amount of Convertible Bonds at par value to SEC, which is a substantial shareholder for the purposes of the Listing Rules and therefore a related party as it holds in excess of 10 per cent. of the entire issued share capital of the Company, and to place in aggregate £529,647 in principal amount of Convertible Bonds at par value to SRFII, an associate of SEC. Such placing of Convertible Bonds to SEC and SRFII is on a basis proportional to SEC's existing shareholding at the Record Date. A resolution has been proposed in the Circular to approve this non pre-emptive placing of Convertible Bonds, as it is being made to a related party and an associate of a related party for the purposes of the Listing Rules. 2. The Company is offering the Max Ostro Children's Trust, the Max Ostro Grandchildren's Trust, Violette Management Limited, Radiance Services Limited and Media on the Move Holdings Limited (the "Ostro Trusts"), of which Maurice Ostro is a potential beneficiary, and therefore each of which is considered to be an associate of a related party for the purposes of the Listing Rules, the opportunity to subscribe for a total of £709,380 in principal amount of the Convertible Bonds at par value. The Company has contracted to issue Ordinary Shares to some of the Ostro Trusts pursuant to a share purchase agreement dated 20 January 2004 for the purchase by the Company of Air Fayre Limited; such Ordinary Shares had not been entered on the register of members of the Company at the Record Date, but will be counted by the Company when calculating the proportionate entitlement of the Ostro Trusts and Qualifying Investors to subscribe for Convertible Bonds. Such offers of Convertible Bonds are otherwise as described above on a basis proportional to their existing shareholding. A resolution has been proposed to approve this non pre-emptive offer of Convertible Bonds as it is being made to associates of a related party for the purposes of the Listing Rules. 3. The Company is offering John Caulcutt, who was a director of the Company within the last 12 months, to subscribe for a total of £799,050 in principal amount of Convertible Bonds at par value. Such offer of Convertible Bonds is on a basis proportional to his existing shareholding at the Record Date. A resolution has been proposed to approve this non pre-emptive offer as it is being made to a related party for the purposes of the Listing Rules. 4. The Company is offering John Anstruther-Gough-Calthorpe, who was a director of the Company within the last 12 months, to subscribe for a total of £452,412 in principal amount of Convertible Bonds at par value. Such offer of Convertible Bonds is on a basis proportional to his existing shareholding at the Record Date. A resolution has been proposed to approve this non pre-emptive offer as it is being made to a related party for the purposes of the Listing Rules. The Company believes that the related party transactions set out above should beapproved and should be made on a non pre-emptive basis because this willmaximise the distribution of Convertible Bonds that are issued pursuant to theplacing and offer to Qualifying Investors. Accordingly, in the Circular, theCompany has recommended that shareholders vote in favour of the relevantresolutions, as set out above, at the EGM. These Convertible Bonds will alsocontribute towards the Company repaying a proportion of its indebtedness. Convertible Bonds The Convertible Bonds bear interest from 4 June 2007 (the "Closing Date")payable semi-annually in arrear on 4 June and 4 December each year (each, an"Interest Payment Date") at the rate of 15.5 per cent. per annum, which interestis payable by delivery of further Convertible Bonds, provided that, subject tothe consent of Barclays Bank PLC (the "Bank") under the terms of anintercreditor deed (between Capita Trust Company Limited as trustee of theConvertible Bonds (the "Trustee"), the Bank and the Company) while amounts areoutstanding under a term loan facility agreement dated 30 April 2007 between theCompany, various subsidiaries of the Company (acting as guarantors) and theBank: (a) the Company may, provided that no Holder's Cash Payment Election (as definedbelow) has been made in respect of the relevant Convertible Bonds, on not lessthan 10 business days' notice delivered to those holders of the ConvertibleBonds which have not made the Holder's Cash Payment Election to the Trustee andLaw Debenture Corporate Services Limited (the "Registrar") prior to any InterestPayment Date falling on or after 4 December 2008, irrevocably elect to pay suchinterest in cash on such Bonds as from the interest period commencing on thatInterest Payment Date; and (b) at any time following the declaration by the Company of a dividend which isto be paid in cash (in whatever currency), any holder of Convertible Bonds may,on not less than 10 business days' notice given prior to any Interest PaymentDate, elect to require the Company to pay interest in cash on its holding ofConvertible Bonds as from the interest period commencing on that InterestPayment Date (such election, the "Holder's Cash Payment Election"); in which case as from the Interest Payment Date on which such election becomeseffective the Convertible Bonds will bear interest at the rate of 10 per cent.per annum. A Convertible Bond which is converted into Ordinary Shares will cease to bearinterest as of the Interest Payment Date preceding conversion save in limitedcircumstances further described in the Circular. A holder of Convertible Bonds requesting conversion no earlier than 30 daysprior to the sixth day prior to 4 June 2010 will not receive interest in respectof the final interest period but instead an additional number of Ordinary Sharesequal to such interest amount divided by the conversion price described in theCircular. Application has been made for the Convertible Bonds to be listed on the ChannelIslands Stock Exchange LBG. Unless previously redeemed or purchased and cancelled, holders of ConvertibleBonds will have the right to convert Convertible Bonds for Ordinary Shares atthe then applicable conversion price at any time from 4 December 2007 or, ifearlier, a firm offer being made pursuant to the City Code on Takeovers andMergers, to the close of business (at the place where the relevant certificateis delivered for conversion) on the date falling six days prior to 4 June 2010(both days inclusive) or, if such Convertible Bond is to be redeemed at theoption of the Company pursuant to Condition 6.2 or 6.3 of the Convertible Bonds(as further described in Part 4 of the Circular) prior to 4 June 2010, then upto the close of business (at the place where the relevant certificate isdelivered for conversion) on the sixth day before the date fixed for redemptionthereof. Service Contracts Details of service contracts of new directors and proposed directors of theCompany are set out below. 1. Stephen Yapp The Company appointed Stephen Yapp, conditional on the passing of theresolutions at the EGM, the Executive Chairman of the Company with effect from 4June 2007, and he is required to work a minimum of three days a week for thisrole. Mr Yapp's salary is £170,000 per annum, and he is entitled to an annualsalary review (but there is no obligation on the Company to increase hissalary). Mr Yapp is to be reimbursed for all travel, hotel, entertainment andother out of pocket expenses reasonably and properly incurred by him in thedischarge of his duties, subject to production of evidence as it may require. Heis also entitled to death in service life cover, income protection, medicalexpenses insurance and a monthly payment of £1,000 so as to provide him with amotor car for his use in the performance of his duties. The contract isterminable on the Company giving Mr Yapp 12 months' notice in writing, or on MrYapp giving the Company 6 months' notice in writing. Mr Yapp is entitled to 12months' salary in lieu of notice on a change of control of the Company. 2. Peter Fitzwilliam The Company appointed Peter Fitzwilliam as Chief Financial Officer and CompanySecretary of the Company with effect from 8 May 2007, and he is required todevote sufficient time as is necessary for the proper performance of his duties.Mr Fitzwilliam's salary is £150,000 per annum, and he is entitled to an annualsalary review (but there is no obligation on the Company to increase hissalary). Mr Fitzwilliam is to be reimbursed for all travel, hotel, entertainmentand other out of pocket expenses reasonably and properly incurred by him in thedischarge of his duties, subject to production of evidence as it may require. Heis also entitled to death in service life cover, income protection, medicalexpenses insurance and a contribution of 10 per cent of his basic salary (orsuch other rate as agreed in writing) by the Company to an exempt approvedpersonal pension scheme. The contract is terminable on the Company giving MrFitzwilliam 12 months' notice in writing, or on Mr Fitzwilliam giving theCompany 6 months' notice in writing. Other The Circular has also been submitted to the UK Listing Authority, and willshortly be available for inspection at the UK Listing Authority's DocumentViewing Facility, which is situated at: UK Listing Authority The Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS. The Circular is also currently available for inspection at the offices of SJBerwin LLP during normal business hours at: SJ Berwin LLP 10 Queen Street Place London EC4R 1BE. Enquiries: Peter Fitzwilliam, Chief Financial OfficerWatermark Group plcTel: 020 8606 1300 Jeremy Carey/Matt RidsdaleTavistock CommunicationsTel: 020 7920 3150 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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