3rd Apr 2006 14:52
Candover Investments plc (the "Company")3 April 2006The Company has today published a circular (the "Circular") with details of aproposed Return of Cash to Shareholders of approximately 457 pence per OrdinaryShare, representing approximately ‚£100 million in aggregate. Terms used in thisannouncement have the same meaning as set out in the Circular.Introduction to the ProposalsAs announced in the publication of the Group's preliminary results on 13 March2006, the Board has concluded a review of the appropriate capital structure forthe Group. Taking into account the Company's historic and current cashbalances, the Company's commitment to the 2005 Fund and potential investmentsand realisations, the Board proposes to return cash of approximately 457 penceper Ordinary Share to Shareholders (the "Return of Cash").The Return of Cash totals approximately ‚£100 million in aggregate, representingapproximately 22.22 per cent. of the Company's market capitalisation, afterallowing for the final dividend proposed in respect of the year ended 31December 2005. This is based on the closing mid-market price of 2091 pence perOrdinary Share on 30 March 2006 (being the latest practicable date prior to thepublication of the Circular) and the proposed final dividend of 32 pence perOrdinary Share, and represents approximately 26.8 per cent. of the Group's netassets as at 31 December 2005 (being the date of the Group's most recentaudited consolidated balance sheet) after allowing for the proposed finaldividend referred to above.The Proposals will involve a bonus issue of B Shares and C Shares to giveShareholders a choice between receiving the cash in the form of income orcapital, and, so far as practicable, to give those who choose capital somechoice as to when the return is made. The Proposals have also been structuredin a manner which is consistent with the Company's status as an investmenttrust.The Proposals are conditional upon the approval by Shareholders of theResolution which is to be proposed at the Extraordinary General Meeting, to beheld at Stationers' Hall, Ave Maria Lane, London EC4M 7DD at 12.30 p.m. on 8May 2006 (or as soon thereafter as the Annual General Meeting convened for 12noon on the same day and at the same place shall have concluded or beenadjourned).Background to the ProposalsThe Board has considered the appropriate capital structure for the Group,taking account of the factors referred to above. The Company's unaudited cashbalances as at 30 March 2006, being the latest practicable date prior to thepublication of the Circular, were approximately ‚£194.7 million. The Boardbelieves that the Proposals are in the best interests of Shareholders as awhole and that following the Return of Cash, Candover will have adequateresources including borrowing facilities, where the Board deems it appropriate,to meet its anticipated commitments. The Board has therefore concluded thatShareholders' interests would be best served by returning to them 457 pence perOrdinary Share.Although the Directors currently expect the Return of Cash to take place,Shareholders should note that the Return of Cash is conditional on theResolution being passed by Shareholders at the EGM and that the Companyreserves the right, even if the Resolution is passed, not to implement theReturn of Cash if circumstances change such that, in the opinion of the Board,the Proposals (or any part of them) are no longer in the best interests of theCompany and Shareholders as a whole. In the event the Board does not implementthe Return of Cash, the Purchase Offer will not be made nor will the B ShareRedemption take place.Activities and OutlookThe Company's principal activity is identifying, organising and investing inlarger buy-outs and buy-ins in Europe. Its approach to such investments is towork in close partnership with management teams in businesses which have marketleading positions and significant growth potential. The Company makes almostall of its investments under co-investment agreements with third party fundswhich are managed by its subsidiary, Candover Partners Limited. The onlyCandover fund whose investment period is extant to which the Company currentlyhas commitments is the 2005 Fund. It has committed to invest a maximum of ¢â€š¬500million (of which ¢â€š¬24.5 million has already been invested) into investmentsmade by the 2005 Fund during its five years investment period. Such investmentswill be made on the same basis as those made by the 2005 Fund.The Company's approach has proved successful and the Company has a consistentlystrong track record over its 25 year history. Private equity returns have beenstrong relative to other asset classes over recent years and Candover'sperformance has reflected this.The financial information set out in the remainder of this section has beenextracted without material adjustment from the Company's audited report andaccounts for the year ended 31 December 2005.As at 31 December 2005, the net assets attributable to the Ordinary Shares were‚£380.3 million compared to ‚£320.9 million at 31 December 2004. Net assets pershare were 1740p compared with 1468p at 31 December 2004 (and 1656p at 30 June2005). This increase in net assets per share over the 12 months to 31 December2005 of 18.5 per cent. compares with an increase of 18.1 per cent. in the FTSEAll-Share Index over the same period. The increase in net assets per share overthe six months to 31 December 2005 was 5.1 per cent. compared to an increase inthe FTSE All-Share Index over the same period of 11.2 per cent..The compound growth in net assets on a five and ten year basis was 9.4 percent. and 13.8 per cent. respectively, compared to a decrease in the FTSEAll-Share Index over five years of 0.9 per cent. and an increase over ten yearsof 4.7 per cent..The European buyout market enjoyed another record year during 2005, with theamounts invested rising 41.2 per cent. on the prior year to ¢â€š¬115.2 billion.This growth was driven by a number of very large transactions and also by dealsin the mid-market sector, which has been on a consistent upward trend over thelast five years.The environment for European buy-outs looks positive, and the Board believesthat Candover should be well positioned to assess interesting investmentopportunities over the coming year. As always, Candover will maintain itsproven policy of careful selection, as well as closely monitoring theperformance of investee companies to ensure performance is in line withexpectations.Summary of the ProposalsThe Board will put the Proposals before Shareholders at the EGM, to be held on8 May 2006. The purpose of the Proposals is to: i. return approximately ‚£100 million in cash in aggregate to Shareholders; and ii. give Shareholders a choice of receiving the Return of Cash by way of income or capital and, so far as practicable, to give those who choose capital some choice as to when the return is made. Under the Share Reorganisation, Shareholders will receive: one B Share or one C Share for each Ordinary Share held by them on the Record Date.In order for the Return of Cash to take place, the Share Reorganisation must beimplemented. The Share Reorganisation comprises a bonus issue of B Shares and CShares and the amendments to the Articles which are necessary to set out therights and restrictions attaching to the B Shares and C Shares.Shareholders should note that the price at which the Ordinary Shares are tradedis likely to decrease as a consequence of the Return of Cash. Trading in theOrdinary Shares will be otherwise unaffected.The Income Alternative: B SharesShareholders who choose the Income Alternative will receive B Shares in respectof whatever number of their Optional Entitlements they elect. In electing forthe Income Alternative they must specify a whole number which does not exceedthe total of their Optional Entitlements and take into account any electionthey make for the Capital Alternative. If Shareholders are deemed to havechosen the Income Alternative they will receive B Shares in respect of whateverproportion of their Optional Entitlements they are deemed to have elected forthe Income Alternative. The B Shares are expected to be redeemed one day aftertheir issue and shareholders will be entitled to receive the B Share RedemptionPayment of 457 pence for each B Share they elected for, or were deemed to haveelected for. Shareholders will also receive the Accrued Dividend in respect oftheir B Shares, which will have accrued between the date of the issue of the BShares and the date of the B Share Redemption. If the B Shares are redeemed, asexpected, on 10 May 2006, the Accrued Dividend in respect of their B Shareswill be less than one penny per B Share.The Capital Alternative: C SharesShareholders who choose the Capital Alternative will receive C Shares inrespect of whatever number of their Optional Entitlements they elect. Inelecting for the Capital Alternative they must specify a whole number whichdoes not exceed the total of their Optional Entitlements and take into accountany election they make for the Income Alternative. In addition, they may alsochoose to have some or all of their C Shares bought by JPMorgan Cazenove,acting as principal, pursuant to the Purchase Offer to be made on 10 May 2006,for 457 pence plus an amount in respect of Accrued Dividend per C Share, freeof all dealing expenses and commissions. If the Purchase Offer is made, asexpected, on 10 May 2006, the Accrued Dividend in respect of their C Shareswill be less than one penny per C Share.Shareholders may choose not to accept the Purchase Offer in respect of some orall of the C Shares which they elect to receive, in which case they willcontinue to hold any difference between the number of C Shares they elect toreceive and the number of C Shares they elect to sell to JPMorgan Cazenovepursuant to the Purchase Offer. It is not possible for the number of C Sharesthey sell to JPMorgan Cazenove pursuant to the Purchase Offer to exceed thenumber of C Shares they elect to receive.Shareholders who elect to receive C Shares but who do not elect to sell all oftheir C Shares pursuant to the Purchase Offer should note that although theDirectors expect that a further offer for the C Shares will be made in asubsequent tax year, there can be no guarantee that such an offer will actuallybe made. In addition, if such an offer is made it may be capable of beingaccepted by the Company on behalf of, and without the consent of, the remainingC Shareholders at that time.The Capital Alternative is not being offered to Shareholders in any of theProhibited Territories.In order for the Purchase Offer to be made, the Company is required to enterinto the Purchase Offer Deed, the Put Option Agreement and the Escrow AccountLetter. Under the Companies Act, the Put Option Agreement must be approved byShareholders before it may be entered into. The Put Option Agreement grants toJPMorgan Cazenove the right to require the Company to purchase as an off marketpurchase any C Shares purchased by JPMorgan Cazenove under the Purchase Offer,or any similar offer (whether made on a compulsory basis or otherwise), for anamount equal to the aggregate amount paid by JPMorgan Cazenove for such CShares, including in respect of accrued dividend, as rounded.Extraordinary General MeetingThe Resolution will be proposed at the EGM, to be held at Stationers' Hall, AveMaria Lane, London EC4M 7DD at 12.30 p.m. on 8 May 2006 (or as soon thereafteras the Annual General Meeting convened for 12 noon on the same day and at thesame place shall have concluded or been adjourned), for the purpose ofapproving the Proposals.The Resolution can be summarised as follows: * paragraph 1.1 authorises the Directors to: a. capitalise the sum of ‚£218,566.15 standing to the credit of the Company's share premium account to pay up in full the B Shares and the C Shares; and b. allot and issue the B Shares and C Shares up to an aggregate amount of ‚£ 218,566.15 to Shareholders on the basis of one B Share or C Share, in accordance with their elections, for each Ordinary Share held on the Record Date. As at 30 March 2006, being the latest practicable date before publication of the Circular, the authority referred to above represented one per cent. of the total ordinary share capital in issue. The authority granted to the Directors will expire on the earlier to occur of the conclusion of the Company's Annual General Meeting to be held in 2007 or 15 months from the date the Resolution is passed; * paragraph 1.2 approves the Put Option Agreement; and * paragraph 1.3 makes a number of amendments to the Articles of Association in connection with the Share Reorganisation. Expected TimetableAll references are to London time 2006 Latest time and date for receipt of 3.00 p.m. on 5 May Election Forms Record Date for the Return of Cash 6.00 p.m. on 5 May Latest time and date for receipt of 12.30 p.m. on 6 May Proxy Forms for Extraordinary General Meeting Annual General Meeting Noon on 8 May Extraordinary General Meeting 12.30 p.m. on 8 May, or as soon thereafter as the Annual General Meeting shall have concluded or been adjourned Issue of B Shares and C Shares pursuant 8.00 a.m. on 9 May to the Share Reorganisation Redemption of the B Shares 8.00 a.m. on 10 May JPMorgan Cazenove accepts C Shares for 8.00 a.m. on 10 May purchase under the Purchase Offer by means of an announcement on the Regulatory News Service of the London Stock Exchange Despatch of cheques in respect of 15 May proceeds of the B Share Redemption and the C Shares purchased by JPMorgan Cazenove pursuant to the Purchase Offer Proceeds of the B Share Redemption and 15 May the Purchase Offer credited to CREST accounts Despatch of share certificates in 15 May respect of C Shares which have not been purchased pursuant to the Purchase Offer Enquiries:Candover - Alistair Peel - 020 7489 9848JPMorgan Cazenove - Christopher Smith - 020 7588 2828ENDCANDOVER INVESTMENTS PLCRelated Shares:
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