DJ Pinewood Group PLC Possible Recommended Cash Offer
Bidco has received hard irrevocable undertakings in respect of a total of 37,750,653 shares in Pinewood, representing, in aggregate approximately 65.76 per cent. of the share capital of Pinewood in issue on 27 July 2016. The Irrevocable Undertakings will cease to be binding if (i) Bidco does not release a firm offer announcement at the Possible Offer Price on or before 25 August 2016; and (ii) following release of a firm offer in the circumstances set out in the Appendix.
It is currently the intention of Bidco that any offer, if made, would be implemented by way of a scheme of arrangement (the “Scheme”).
The Terms of the Possible Offer
Under the terms of the Possible Offer, each Pinewood shareholder will be entitled to receive 563.2 pence per share in cash for each Pinewood share held, comprising: — 560 pence in cash for each Pinewood share (the “Possible Offer Price”); plus
— the final dividend of 3.2 pence per Pinewood share announced in the final results announcement for the year ended 31 March 2016, dated 11 July 2016 (the “Agreed Dividend”) which will be paid on 3 October 2016 to holders of Pinewood shares whose names are on the register at the close of business on 2 September 2016.
This values the entire issued and to be issued share capital of Pinewood at GBP323.3 million and represents:
— a premium of 31.0 per cent. to the undisturbed average closing price of 430 pence for the 20 business days ending 9 February 2016, the date prior to the announcement of the strategic review
— a premium of 50.2 per cent. to the 375 pence price of the share placing which completed on 17 April 2015
Irrevocable Undertakings
In accordance with Rule 2.11 of the Code, Bidco announces that, with the consent of the Pinewood Board, the two largest shareholders of Pinewood, Goodweather Investment Mgt. Ltd and Warren James Holdings Ltd, which hold 22,443,396 and 14,983,990 shares in the share capital of the Company, respectively, (being 39.09 per cent. and 26.10 per cent. of the entire issued capital of the Company, respectively) and each of those members of the Pinewood Board who hold shares in Pinewood (323,267 shares in aggregate, representing 0.56 per. cent of the entire issued share capital of the Company), have entered into hard irrevocable undertakings in favour of Bidco in respect of their entire respective shareholdings to vote in favour of or accept any firm offer announced under Rule 2.7 of the Code and which is made by Bidco provided that such offer does not represent a diminution in value of the Possible Offer Price plus the Agreed Dividend (the “Irrevocable Undertakings”).
Accordingly, Bidco has received hard irrevocable undertakings in respect of a total of 37,750,653 shares in Pinewood, representing, in aggregate approximately 65.76 per cent. of the share capital of Pinewood in issue on 27 July 2016.
Each of the Irrevocable Undertakings remains binding in the event of a higher, or any other, bid or offer for Pinewood.
The Irrevocable Undertakings will cease to be binding if, among other things:
(i) Bidco does not release a firm offer announcement at the Possible Offer Price on or before 25 August 2016; or
(ii) the Scheme lapses or is withdrawn, provided that and notwithstanding the foregoing, if Bidco determines at or before, or within one business day after, the time the Scheme lapses or is withdrawn to implement the Transaction by way of contractual offer, the Irrevocable Undertakings will cease to be binding when the contractual offer lapses.
Further details regarding the Irrevocable Undertakings are set out in the Appendix to this announcement.
Pre-condition to the announcement of a firm offer
The announcement of a firm intention to make an offer under Rule 2.7 of the Code (a “Firm Offer”) on the terms of the Possible Offer set out above is pre-conditional only on Bidco completing its financing arrangements, which involves finalising and documenting credit committee approved proposals from third party financing parties. The significant majority of the cash consideration payable by Bidco under the Possible Offer will be provided by PW Fund III, with the balance from the third party finance parties. This pre-condition regarding Bidco’s financing is not waivable.
Intention to recommend
Whilst the Pinewood Board continues to believe in the prospects for the business as a standalone company, the Board also recognises that the Possible Offer represents an attractive valuation and premium to the undisturbed share price. The Possible Offer also provides all shareholders with an opportunity to realise their investment which is not otherwise available to them given the relatively illiquid market for Company’s shares on AIM.
Accordingly, the Pinewood Board intends to recommend unanimously any Firm Offer from Bidco which is made on the same terms as the Possible Offer, subject to reaching agreement on standard terms and conditions customary for a Firm Offer of this nature. As the Pinewood Group includes an FCA-authorised subsidiary, Pinewood Film Advisors Limited, any acquisition will be conditional upon FCA consent to any change of control of Pinewood Film Advisors Limited for the purposes of the controllers regime under Part XII of the Financial Services and Markets Act 2000 (as amended).
Background to the Possible Offer and transaction rationale
On 10 February 2016 Pinewood announced that it had appointed Rothschild to assist with a strategic review of Pinewood’s capital base and structure. The background to the strategic review was that the Company’s shareholder register has been tightly held for a number of years, which has stifled liquidity in the Company’s shares and prevented the Company from obtaining a main market listing. The Board also recognised the requirement for a future funding strategy to be in place in order to build on Pinewood’s successes to date.
As part of the strategic review process, the Company engaged in discussions with a wide range of interested parties, some of whom, including Bidco, put forward proposals to acquire the Company.
Bidco has now completed due diligence on the Company and their proposal is one which the Pinewood Board believes should be recommended to Pinewood shareholders, if made into a Firm Offer.
It is currently the intention of Bidco that any offer, if made, would be implemented by way of a scheme of arrangement (the “Scheme”).
The Terms of the Possible Offer
Under the terms of the Possible Offer, each Pinewood shareholder will be entitled to receive 563.2 pence per share in cash for each Pinewood share held, comprising: — 560 pence in cash for each Pinewood share (the “Possible Offer Price”); plus
— the final dividend of 3.2 pence per Pinewood share announced in the final results announcement for the year ended 31 March 2016, dated 11 July 2016 (the “Agreed Dividend”) which will be paid on 3 October 2016 to holders of Pinewood shares whose names are on the register at the close of business on 2 September 2016.
This values the entire issued and to be issued share capital of Pinewood at GBP323.3 million and represents:
— a premium of 31.0 per cent. to the undisturbed average closing price of 430 pence for the 20 business days ending 9 February 2016, the date prior to the announcement of the strategic review
— a premium of 50.2 per cent. to the 375 pence price of the share placing which completed on 17 April 2015
Irrevocable Undertakings
In accordance with Rule 2.11 of the Code, Bidco announces that, with the consent of the Pinewood Board, the two largest shareholders of Pinewood, Goodweather Investment Mgt. Ltd and Warren James Holdings Ltd, which hold 22,443,396 and 14,983,990 shares in the share capital of the Company, respectively, (being 39.09 per cent. and 26.10 per cent. of the entire issued capital of the Company, respectively) and each of those members of the Pinewood Board who hold shares in Pinewood (323,267 shares in aggregate, representing 0.56 per. cent of the entire issued share capital of the Company), have entered into hard irrevocable undertakings in favour of Bidco in respect of their entire respective shareholdings to vote in favour of or accept any firm offer announced under Rule 2.7 of the Code and which is made by Bidco provided that such offer does not represent a diminution in value of the Possible Offer Price plus the Agreed Dividend (the “Irrevocable Undertakings”).
Accordingly, Bidco has received hard irrevocable undertakings in respect of a total of 37,750,653 shares in Pinewood, representing, in aggregate approximately 65.76 per cent. of the share capital of Pinewood in issue on 27 July 2016.
Each of the Irrevocable Undertakings remains binding in the event of a higher, or any other, bid or offer for Pinewood.
The Irrevocable Undertakings will cease to be binding if, among other things:
(i) Bidco does not release a firm offer announcement at the Possible Offer Price on or before 25 August 2016; or
(ii) the Scheme lapses or is withdrawn, provided that and notwithstanding the foregoing, if Bidco determines at or before, or within one business day after, the time the Scheme lapses or is withdrawn to implement the Transaction by way of contractual offer, the Irrevocable Undertakings will cease to be binding when the contractual offer lapses.
Further details regarding the Irrevocable Undertakings are set out in the Appendix to this announcement.
Pre-condition to the announcement of a firm offer
The announcement of a firm intention to make an offer under Rule 2.7 of the Code (a “Firm Offer”) on the terms of the Possible Offer set out above is pre-conditional only on Bidco completing its financing arrangements, which involves finalising and documenting credit committee approved proposals from third party financing parties. The significant majority of the cash consideration payable by Bidco under the Possible Offer will be provided by PW Fund III, with the balance from the third party finance parties. This pre-condition regarding Bidco’s financing is not waivable.
Intention to recommend
Whilst the Pinewood Board continues to believe in the prospects for the business as a standalone company, the Board also recognises that the Possible Offer represents an attractive valuation and premium to the undisturbed share price. The Possible Offer also provides all shareholders with an opportunity to realise their investment which is not otherwise available to them given the relatively illiquid market for Company’s shares on AIM.
Accordingly, the Pinewood Board intends to recommend unanimously any Firm Offer from Bidco which is made on the same terms as the Possible Offer, subject to reaching agreement on standard terms and conditions customary for a Firm Offer of this nature. As the Pinewood Group includes an FCA-authorised subsidiary, Pinewood Film Advisors Limited, any acquisition will be conditional upon FCA consent to any change of control of Pinewood Film Advisors Limited for the purposes of the controllers regime under Part XII of the Financial Services and Markets Act 2000 (as amended).
Background to the Possible Offer and transaction rationale
On 10 February 2016 Pinewood announced that it had appointed Rothschild to assist with a strategic review of Pinewood’s capital base and structure. The background to the strategic review was that the Company’s shareholder register has been tightly held for a number of years, which has stifled liquidity in the Company’s shares and prevented the Company from obtaining a main market listing. The Board also recognised the requirement for a future funding strategy to be in place in order to build on Pinewood’s successes to date.
As part of the strategic review process, the Company engaged in discussions with a wide range of interested parties, some of whom, including Bidco, put forward proposals to acquire the Company.
Bidco has now completed due diligence on the Company and their proposal is one which the Pinewood Board believes should be recommended to Pinewood shareholders, if made into a Firm Offer.