9th Jun 2006 12:01
Cape PLC09 June 2006 Cape PLC Scheme of Arrangement Further to the Company's announcement on 25 May 2006, Cape is pleased toannounce that the High Court today sanctioned the Scheme in respect of Cape and12 of its subsidiaries (collectively being 13 of the 14 companies described inthe announcement of 25 May 2006 and referred to below as "the SchemeCompanies"). The Court is still considering whether to sanction the Scheme inrelation to Altitude Scaffolding Limited, where only one creditor attended andvoted at the creditors' meetings. The Scheme will become effective upon the Court orders sanctioning the Schemebeing delivered to the Registrar of Companies. The orders will be deliveredimmediately following Cape's drawdown of the monies to be borrowed under the newfacility from Barclays Bank which are to provide part of the initial Schemefunding. Drawdown is expected to take place on or shortly after 12 June 2006. Afurther announcement will be made when the orders have been delivered. Key elements of the Scheme * The establishment of long-term funding of a great majority of asbestos-related claims arising out of the UK activities of Cape and its subsidiaries. The long-term funding will be held and ring fenced in Cape Claims Services Limited ("CCS"), a subsidiary of Cape, and will be under the control of the board of directors of CCS which includes two independent Scheme Directors. * The initial funding of £40m comprises: - £22m from the proceeds of the fund raising in July 2005 from Cape's shareholders, - £3m from the Group's existing resources, and - £15m from a new bank facility with Barclays Bank. * The initial level of funding represents not less than the estimate of an independent actuary (Tillinghast) of the amounts payable by the Scheme Companies (together with the other subsidiaries of Cape which originally proposed the Scheme) in respect of claims not met by insurance recoveries (including recoveries from the Financial Services Compensation Scheme) over at least the following eight years (starting from 1 January 2006) and the running costs of CCS for the next three years. * Starting in 2008, the level of funding will be reviewed every three years to determine the level of funding required to cover expected claims against the Scheme Companies over the next nine years. If there is a shortfall, Cape will top up the funding over the next three years out of available cash flows. The intention is that following each top-up payment there should be sufficient monies available to CCS to fund the payment of claims against the Scheme Companies for the following six years together with three years of CCS's running costs ("the Scheme Funding Requirement"). * Cape's obligations to top up the fund will be limited to 70% of the consolidated adjusted operational cashflow of the Group. * Should Cape be unable to meet its top-up obligations as the result of insufficient cash flows and the level of funding falls below a specified level, only a percentage of each Scheme claim will be paid unless and until funding is restored to that specified level. In the event of no future funds being available, pro-rata payments will be made until the funding is exhausted. * In return for the setting up of the initial funding and the top-up obligations, the Scheme creditors of the Scheme Companies will be bound, except in certain limited circumstances, to recover payment of their agreed or settled Scheme claims only from CCS and not from the relevant Scheme Company. * CCS will pay all Scheme claims in full for as long as the Scheme Funding Percentage (being the amount of Scheme assets expressed as a percentage of the Scheme Funding Requirement) is 60% or greater. Should the Scheme Funding Percentage fall below 60%, CCS will pay Scheme creditors at a rate determined by Scheme Directors until it is able to recommence full payments. * In order to protect the interests of Scheme creditors a special voting share has been created in each of CCS and Cape, currently held on trust for Scheme creditors by the Law Debenture Trust Corporation p.l.c. The rights attaching to these shares are designed to ensure that Scheme assets are only used to settle Scheme claims, ancillary costs and impose restrictions on dividends and other distributions by Cape. As such, Cape cannot pay any dividend until 2008 and thereafter may only pay a dividend where the amount of funding available to CCS is greater than 110% of projected Scheme claims in the current and following five years plus three years of CCS's running costs and is expected to remain at not less than 110% of that amount until the end of the next year. Martin May, Chairman of Cape PLC commented: "Cape's proposals for the long term management of asbestos-related claims aretruly ground breaking and I am delighted that the Scheme has been sanctioned bythe High Court. By creating a structure to provide for the long-term financingof Cape's future asbestos-related claims we believe that we have significantlyincreased the likelihood that Cape will be able to satisfy all Scheme claims infull. We believe it is far better for claimants to be in this Scheme as it helpsto minimise the risk to their future payments. We reiterate that the £40m fund is the initial size of the fund and we arecommitted to making top-up payments as and when they are due. The Company alsoremains committed to the fund for as long as there are Scheme claims, currentlyestimated to be not less than 46 years. The Scheme provides considerable de-risking for Cape, removes a significantobstacle to the Group's growth and leaves the Group better able to generate theresources needed to secure the continued payment of compensation to claimants.In the meantime, I am pleased to confirm that trading in the first half of 2006has been ahead of expectations. I will be making a detailed statement at the AGMto be held on 19 June." For further information, please contact: Cape PLCMartin May, Chairman +44 (0) 1924 876 276 Bell Pottinger Corporate & FinancialNick Lambert +44 (0) 20 7861 3232 / +44 (0) 7811 358 764 Notes to editors Cape PLC is the parent company of a number of service providing organisations(the 'Group') operating primarily in the oil and gas, petrochemical and powergeneration industries. The Group has turnover of c. £260 million and employsaround 7,700 people in 23 countries worldwide. The Group's sole operating business is Cape Industrial Services ('CIS'). CISspecialises in the provision of scaffolding, insulation, fire protection andother essential services to major industrial clients in the energy sector. CIS operates in Bahrain and Saudi Arabia under the name RB Hilton. In the UK, CIS also operates as Cape Hire and Cape Security. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CIU.L