Tender Offer

RNS Number : 0135G

Aurora Russia Limited

01 May 2014

 



Aurora Russia Limited

01 May 2014

TENDER OFFER FOR AGGREGATE GROSS CONSIDERATION OF APPROXIMATELY £8.25 MILLION

UPDATES ON TRADING AND MANAGEMENT ARRANGEMENTS

TENDER OFFER

The Company announces a tender offer to Shareholders for up to 29,651,549 Shares, being approximately 39.9 per cent. of the current issued share capital of the Company, at a price of 27.5454p per Share (the "Repurchase Price").  The Directors have the power to effect a repurchase of the Shares subject to certain conditions including satisfaction of statutory solvency tests.

The Repurchase Price has been calculated by reference to the Unaudited Net Asset Value of   27.8464p per Share as at 31 March 2014 and after deducting 0.3010p per Share of costs of the Tender Offer (such costs representing approximately 1.1 per cent. of the Unaudited Net Asset Value per Share).

The remainder of the Company's cash reserves, which amounted to some £9.1 million as at 31 March 2014, will be retained by the Company for on-going working capital purposes, to cover possible expenses for up to two years and to cover possible further investment if this becomes necessary in one or more of the Company's two residual investments. Such further investment will only be undertaken if it is absolutely necessary to protect the Company's existing investment in them. For example this may be necessary if new capital is to be raised from third parties to support an investment.

The Board's priority remains to return capital to Shareholders through the realisation of its residual investments rather than to make further commitments but further capital may need to be invested in the investee companies in exceptional circumstances. The Board intends to sell the residual assets as quickly as possible within the two year time frame but, as will be apparent from the trading updates set out below, trading conditions remain difficult for the Company's investments, in particular in the case of Superstroy. The trading environment has not been helped by the current economic and political situation in Russia which is likely to make what is already a difficult environment for selling investments even more tortuous.

The Board may make one or more tender offers in the future acting in their absolute discretion in order to give effect to such returns of capital.  There is no guarantee that any such tender offers will be made.

Further detail of the Tender Offer is set out at the end of this announcement and in a circular which is expected to be posted to Shareholders shortly.

EXPECTED TIMETABLE OF EVENTS

	2014
Record Date for the Tender Offer	Close of business on 30 May
Latest time and date for receipt of Tender Forms and TTE Instructions	1.00 p.m. on 30 May
Results of the Tender Offer announced	On or around 3 June
Cheques despatched and CREST accounts credited with proceeds in respect of successfully tendered Shares	On or around 11 June
Balancing Share certificates dispatched, TFE Instructions and credits to CREST accounts in respect of any unpurchased Eligible Shares	On or around 11 June

Note: All times are London times.  Times and dates are subject to change.

TRADING UPDATE

Superstroy

For the year ended 31 December 2013, Superstroy's unaudited management accounts showed sales in line with 2012 at RUR9.6 billion (£192.9 million), with retail showing a 5 per cent. growth year on year to RUR7.1 billion (£142.7 million), but wholesale a 11 per cent. reduction to RUR2.5 billion (£50.2 million). Both the 2013 gross profit of RUR2.9 billion (£58.2 million), and gross margin of 29.9 per cent. were in line with 2012. EBITDA was lower than in 2012 by 12 per cent. at RUR211 million (£4.2 million) compared to RUR240 million (£4.8 million).

In the first two months of 2014 sales were down by 4 per cent. for the period at RUR1.2 billion (£23.9 million).  The decline in performance of Superstroy can be attributed to the market which remains weak, but also due to pricing pressure from increased competition entering the market with a view to gaining market share through low pricing strategies.   Lower sales resulted in lower gross margins with gross profit down 19 per cent. at RUR318 million (£6.4 million) for the two months to 28 February 2014.

Unistream

For the year ended 31 December 2013, Unistream's unaudited management accounts showed volumes higher than 2012 by 4 per cent. at RUR161.2 billion (£3.2 billion) up from RUR155.0 billion (£3.1 billion). Total commissions for the year were 2 per cent. lower than in 2012 at RUR2.46 billion (£49.4 million) down from RUR2.51 billion (£50.4 million).  Unistream's operating income was RUR1.23 billion (£24.7 million) down 3 per cent. from RUR1.27 billion (£25.6  million) and profit before tax was down by 3 per cent. at RUR130.8 million (£2.6 million).  Management accounts show EBITDA at RUR172.5 million (£3.4 million), slightly below the RUR178.6 million (£3.6 million) that Unistream achieved in 2012.  Average commissions for the year were 1.52 per cent. below the 1.62 per cent. achieved in 2012.

In the first two months of 2014 volumes were up by 1 per cent. for the period at RUR20.6 billion (£414 million).  Total commission remained on par for the same period in 2013 at RUR313.1 million (£6.2 million).  The money transfer market in Russia remains extremely competitive with pricing the most important factor for money transfer customers thereby putting continued pressure on pricing.

FUTURE ARRANGEMENTS FOR MANAGEMENT OF THE COMPANY'S RESIDUAL INVESTMENTS

The current management agreement between the Company and Aurora Investment Advisers Limited ("AIAL") has been terminated with effect from 30 April 2014 on terms set out in a Termination Agreement described below. Subject as mentioned in that paragraph no further fees are payable to AIAL other than residual performance fees (currently at the rate of 1.28 per cent. of the disposal price) on the realisation of the remaining investments. The rate at which such performance fees are payable has been reducing each year since 1 January 2012 by 20 per cent. and will continue to do so until the right to receive such fees terminates on 31 March 2018.

The Board has decided that it would be inappropriate for the Company to continue to bear the cost of a full time manager, particularly in the light of a reduced portfolio. The Board is of the view that its members have more than sufficient relevant experience and capability to monitor the progress of the remaining investments if supplemented by suitable local advice in Russia. The Board has identified and agreed terms in principle with such an adviser and an appointment will be made once terms are agreed and suitable references are obtained. Pending this appointment AIAL has agreed to continue to provide advisory assistance up to 30 June 2014 on a reduced fee basis.

ENQUIRIES
Aurora Russia Limited
Gilbert Chalk	[phone]
Numis Securities Limited	[phone]
Nominated Adviser: Hugh Jonathan
Corporate Broking: Nathan Brown
FTI Consulting	[phone]
Jack Hickey

IMPORTANT INFORMATION

Defined terms used in this announcement shall, unless the context otherwise requires, have the same meanings set out in the Company's circular expected to be posted to Shareholders on 1 May 2014.

This announcement and the information contained herein is not for publication, release or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any jurisdiction in which the same would be unlawful.

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and is acting for no-one else in connection with the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice in relation to the Tender Offer or any other matter referred to herein. To the fullest extent permitted by law recipients agree that Numis shall not have any liability (direct or indirect) for or in connection with this announcement or any matters arising out of or in connection herewith. Numis has not authorised the contents of, or any part of, this announcement.

EXTRACTS FROM CIRCULAR

PART I - CHAIRMAN'S LETTER

1          Introduction

On 1 May 2014, following the announcement on 28 April 2014, the Company announced that it is making a tender offer to Shareholders for up to 29,651,549 Shares, being approximately 39.9 per cent. of the current issued share capital of the Company.  The Directors have the power to effect a repurchase of the Shares subject to certain conditions including satisfaction of statutory solvency tests.

A full explanation of the terms and conditions of the Tender Offer is set out in Part III.

The purpose of this document is to explain the mechanics of the Tender Offer, provide Shareholders with the terms and conditions of the Tender Offer, and to explain how they may tender their Shares, should they wish to do so.

This letter is not a recommendation for Shareholders to tender their Shares under the Tender Offer.  Whether or not Shareholders tender their Shares will depend on, among other things, their own view of the Company's prospects and their own individual circumstances, including their tax position, on which they should seek their own independent advice.

2          Background to and reasons for the Tender Offer

The Board has previously made several announcements with regard to its intention to undertake a programme of realisations in relation to the Company's assets, subject to market conditions.  In accordance with its stated policy, the Board intends to distribute the proceeds of realisations to Shareholders.  The method by which proceeds will be returned, the timing of the distributions and the quantum will be determined by the Board, and announcements will be made in relation to each such disposal.

The Company made its first tender offer to Shareholders on 30 April 2013, which resulted in 38,237,383 Shares being purchased at a price of 52.3048p per Share to raise £20.15 million before expenses.  This followed the sale by the Company of OSG in March 2013 for up to £30.3 million in fixed and contingent consideration in respect of which the Company finally received £28.31 million (the final payment of US$4.625 million having been received in December 2013).

At the extraordinary general meeting held on 29 May 2013 a resolution was passed to give the Company sufficient authority to make one or more tender offers by way of market acquisitions in relation to all of its issued share capital (less one share).

On 3 March 2014 the Company announced that it had completed the sale of Flexinvest Limited, the holding company of FlexBank for a consideration of RUR189.1 million (approximately £3.2 million) in cash plus the transfer of mortgages held by FlexBank with a nominal value of RUR144.2 million (approximately £2.4 million) to the Company's wholly owned subsidiary Kreditmart. The cash proceeds of the sale net of expenses were RUR172.2 million (approximately £2.9 million).

On 28 April 2014 the Company announced the sale of Kreditmart for a total consideration of RUR100 million (approximately £1.7 million) plus US$450,000 (approximately £267,500) which was Kreditmart's cash balance at the time of the transaction.

Kreditmart's non-cash assets were held in the books of the Company at RUR140 million (approximately £2.4 million). The Board agreed to the sale of Kreditmart at a discount in the light of the current Russian market for banking assets and the difficult nature of the portfolio, being the rump of the FlexBank mortgage book, which could only otherwise be disposed of on a protracted piecemeal basis, which would be a lengthy and uncertain process.

The Board has resolved to return up to £8,256,890 to Shareholders from the Company's cash reserves.  The Board has concluded that it would be tax efficient, and therefore in the best interests of Shareholders, for this payment to be made by way of a tender offer.  Accordingly, on 1 May 2014 the Company announced that the proposed return of capital to Shareholders would be in the net amount of up to £8,167,640, to be implemented by means of the Tender Offer.  Shareholders will have the opportunity to tender up to 29,651,549 Shares at a price of 27.5454p per Share (the "Repurchase Price") for an aggregate gross consideration of £8,256,890.

The Repurchase Price has been calculated by reference to the Unaudited Net Asset Value of   27.8464p per Share as at 31 March 2014 and after deducting 0.3010p per Share of costs of the Tender Offer (such costs representing 1.1 per cent. of the Unaudited Net Asset Value per Share).

The remainder of the Company's cash reserves, which amounted to some £9.1 million as at 31 March 2014, will be retained by the Company for on-going working capital purposes, to cover possible expenses for up to two years and to cover possible further investment if this becomes necessary in one or more of the Company's two residual investments. Such further investment will only be undertaken if it is absolutely necessary to protect the Company's existing investment in them. For example this may be necessary if new capital is to be raised from third parties to support an investment.

The Board's priority remains to return capital to Shareholders through the realisation of its residual investments rather than to make further commitments but further capital may need to be invested in the investee companies in exceptional circumstances. The Board intends to sell the residual assets as quickly as possible within the two year time frame but, as will be apparent from the trading updates set out below, trading conditions remain difficult for the Company's investments, in particular in the case of Superstroy. The trading environment has not been helped by the current economic and political situation in Russia which is likely to make what is already a difficult environment for selling investments even more tortuous.

The Board may make one or more tender offers in the future acting in their absolute discretion in order to give effect to such returns of capital.  There is no guarantee that any such tender offers will be made.

Unaudited Net Asset Value

As at 31 March 2014, the Unaudited Net Asset Value was £20,679,467.91, equivalent to 27.8464p per Share (compared with the Company's unaudited net assets of £30.2 million as at 30 September 2013 as shown in the condensed statement of financial position, equivalent to 40.7p per Share).

The Unaudited Net Asset Value is based, inter alia, on the Directors' estimate as at the date of this document of the fair value of the Company's assets and on the Company's aggregate cash holding as at 31 March 2014 of £9.1 million.

For the purposes of preparing the Unaudited Net Asset Value the Directors have attributed £9.8 million of value to the Company's remaining portfolio investments (namely the Superstroy and Unistream businesses) (compared with £17 million as at 30 September 2013) by utilising valuation methodologies consistent with those used by the Company as at 30 September 2013. The valuation methodologies adopted in arriving at the Unaudited Net Asset Value as at 31 March 2014 are broadly similar to those employed as at 30 September 2013 save that in the case of Superstroy the valuation has been based wholly on a multiple of EBITDA with no weighting given to turnover.

The Company has prepared the Unaudited Net Asset Value in good faith solely for the purposes of calculating the Repurchase Price.  Shareholders should be aware in making their decision as to whether or not to participate in the Tender Offer that the Unaudited Net Asset Value (and therefore the Repurchase Price) may differ, potentially significantly, from the audited Net Asset Value to be subsequently published in the Company's annual financial report for the year ended 31 March 2014.

3          The Tender Offer

As set out in Part II, Numis Securities is inviting Shareholders to tender 29,651,549 Shares for an aggregate gross consideration of £8,256,890 (the "Aggregate Gross Consideration") at the Repurchase Price.  Each Shareholder shall be entitled to have Numis Securities repurchase a certain percentage of its holding of Shares (the "Basic Entitlement").  This percentage is the same as the percentage which the total number of Eligible Shares capable of being purchased under the Tender Offer represents of the entire issued share capital of the Company (rounded down to the nearest whole number of Shares).

Shareholders will, however, be entitled to tender any percentage of their holdings for purchase under the Tender Offer (the "Excess Application Facility"), but tenders in excess of the Basic Entitlement will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their Basic Entitlement.  Tenders will be rounded down to the nearest whole number of Shares.

The Tender Offer is subject to the Conditions set out in paragraph 2 of Part III.  The results of the Tender Offer are expected to be announced on or around 3 June 2014.

Accordingly:

•           Shareholders (other than Excluded Shareholders) are invited to tender any or all of their Shares by returning a Tender Form specifying the number of Shares that they are prepared to tender to Numis Securities for purchase.  If the Shares are held through CREST Shareholders (other than Excluded Shareholders) should submit the relevant TTE Instruction instead.

•           Each Shareholder shall be entitled to have Numis Securities repurchase the Basic Entitlement.

•           Tendering Shareholders will bear the costs of the Tender Offer through the application of the Tender Discount.  The Tender Discount, which is 1.1 per cent., is equal to the Tender Costs as a percentage of the Aggregate Gross Consideration.

•           The Repurchase Price is equal to the Unaudited Net Asset Value per Share as at 31 March 2014 less the Tender Discount.

•           The maximum aggregate number of Shares the subject of the Tender Offer is equal to the Aggregate Gross Consideration divided by the Repurchase Price, rounded down to the nearest whole number of Shares.

•           The Unaudited Net Asset Value as at 31 March 2014 gives rise to the following:

•        the Aggregate Gross Consideration is £8,256,890;

•        the Maximum Tender is 29,651,549 Shares (being £8,256,890 divided by the Unaudited Net Asset Value per Share, rounded down to the nearest whole share);

•        the Basic Entitlement is 39.928 per cent. (being the Maximum Tender divided by the current issued capital of 74,262,617 Shares of 1p each);

•        the Tender Discount is 1.1 per cent. (being the costs of the Tender Offer as a percentage of the Aggregate Gross Consideration);

•        the Repurchase Price is 27.5454p per Share (being a discount of 1.1 per cent. to the Unaudited Net Asset Value per Share); and

•        the Repurchase Price represents a premium of 21.75 per cent. to the closing mid-market price per Share of 22.625p on 30 April 2014 (being the latest practicable date prior to the printing).

•           Shareholders who validly tender a number of Shares that is less than or equal to their Basic Entitlement will have their tenders satisfied in full, subject to the Tender Offer not having lapsed or been terminated, (the number of Shares subject to such tenders being the "Satisfied Tenders").

•           Shareholders taking advantage of the Excess Application Facility who validly tender a number of Shares that is higher than their Basic Entitlement (such a Shareholder being an "Excess Tender Shareholder" and the number of Shares subject to such tenders being the "Excess Tenders") will, subject to the Tender Offer not having lapsed or been terminated, have their tenders either:

•           satisfied in full if the aggregate of the Excess Tenders is less than or equal to the Maximum Tender less the aggregate of the Satisfied Tenders; or

•           satisfied to the level of their Basic Entitlements plus such number of Shares as is derived from the application of the formula set out in paragraph 1.4.8 of Part III.

Please refer to paragraph 1.4.9 of Part III for a worked example of this formula.

General

The Tender Offer is being made by Numis Securities.  Subject as referred to above, Numis Securities will purchase the Shares tendered as principal and, following the completion of all those purchases, sell the tendered Shares on to the Company at the Repurchase Price pursuant to the terms of the Repurchase Agreement.  Those Shares which the Company acquires from Numis Securities will be cancelled.  All transactions will be carried out on the London Stock Exchange.

Shareholders' attention is drawn to the letter from Numis Securities set out in Part II and to Part III which, together with the accompanying Tender Form, constitute the terms and conditions of the Tender Offer.  Details of how to tender Shares can be found in paragraph 4 of Part III.

Repurchase Price

As mentioned above the Company has realised a portion of its investment portfolio and will utilise most of the net proceeds to satisfy the cash requirements of the Tender Offer.  The Repurchase Price payable to Numis Securities represents the Unaudited Net Asset Value per Share as at 31 March 2014 less the costs of the Tender Offer per Repurchased Share.  As a result, the costs associated with the Tender Offer will be borne by only those Shareholders that elect for the Tender Offer, not all Shareholders.

Further details of the Repurchase Price are set out in paragraph 3 of Part III.

Conditions of the Tender Offer

The Tender Offer is subject to the Conditions set out in paragraph 2 of Part III.

4          Overseas Persons and Excluded Shareholders

Before participating in the Tender Offer, Shareholders with an address outside the United Kingdom or who are resident outside the United Kingdom should satisfy themselves that they are lawfully entitled to participate in the Tender Offer and should ensure full observance of the laws of any relevant territory in connection therewith (including obtaining any requisite consents, observing any other applicable formalities and paying any taxes required to be paid in such territory).  Tender Forms will not be sent to Excluded Shareholders and the Tender Offer may not be accepted from within the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other Excluded Territory.

Shareholders with registered or mailing address overseas or who are citizens of, or nationals of, or residents in, a jurisdiction other than the United Kingdom should read paragraph 9 of Part III.

5          Taxation

Shareholders who sell their Shares in the Tender Offer may, depending on their individual circumstances and subject to the availability of any exemption or relief, incur a liability to taxation.

The attention of Shareholders is drawn to Part IV, which sets out a general guide to certain aspects of UK taxation law and HMRC published practice.  This information is a general guide and is not exhaustive.  Shareholders should seek advice in relation to their own specific circumstances.

Shareholders who are in any doubt as to their tax position should consult an appropriate professional adviser.

6          Action to be taken in respect of the Tender Offer

Shareholders who hold their Eligible Shares in certificated form and who wish to participate in the Tender Offer should complete the Tender Form in accordance with the instructions set out therein and return the completed Tender Form by post or by hand (during normal business hours only) to the Receiving Agent, Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham Kent BR3 4TU, by no later than 1.00 p.m. on 30 May 2014, and they should also return the share certificate(s) and/or other documents of title in respect of Eligible Shares tendered, as described in paragraph 4.2.1 of Part III.

Shareholders who hold their Eligible Shares in uncertificated form (that is, in CREST) and who wish to participate in the Tender Offer should take the appropriate action in CREST to tender their Eligible Shares and should arrange for the relevant Eligible Shares to be transferred to escrow by no later than 1.00 p.m. on 30 May 2014, as described in paragraph 4.2.2 of Part III.

Shareholders are not obliged to tender any Shares under the Tender Offer and, if they do not wish to participate in the Tender Offer, Shareholders should take no action and should not complete or return their Tender Form or tender their Eligible Shares through CREST.

7          General

Advice

The extent to which Shareholders participate in the Tender Offer is a matter for each Shareholder to decide, and will be influenced by their own individual financial and tax circumstances and their investment objectives.  Shareholders should seek advice from a suitably qualified independent financial adviser authorised under FSMA).

City Code

Shareholders should note the important information in paragraph 2.2 of Part V relating to certain provisions of the City Code.

Notifiable Interests

Those Shareholders who are currently interested in 5 per cent. or more of the aggregate nominal value of all Shares in the issued share capital of the Company (a "Notifiable Interest") should note that they will be required, pursuant to the Articles, to give written notice to the Company within five days following the completion of the Tender Offer if, as a result of their participation in the Tender Offer, they have ceased to hold a Notifiable Interest or if they continue to hold a Notifiable Interest but the percentage level of such interest is not the same as it was prior to the completion of the Tender Offer.

8          Recommendation

The Board, which has received advice from Numis Securities, considers that the Tender Offer is in the best interests of Shareholders as a whole.

Gilbert Chalk, Peregrine Moncreiffe and Timothy Slesinger, being Directors who hold in aggregate beneficial interests in 10,115,064 Shares, representing 13.62 per cent. of the issued share capital of the Company, intend to tender their Basic Entitlement in respect of such Shares, and will not participate in the Excess Application Facility.

PART II - LETTER FROM NUMIS SECURITIES

1.       Tender Offer

As explained in the letter from your Chairman in Part I, Shareholders are being given the opportunity to tender some or all of their Eligible Shares for purchase under the Tender Offer on the basis set out below and in Part III.  The purpose of this letter is to set out the principal terms and conditions of the Tender Offer.

Numis Securities hereby invites Shareholders on the Register on the Record Date (other than Excluded Shareholders) to tender Eligible Shares for purchase by Numis Securities for cash at 27.5454p per Share, being equal to the Unaudited Net Asset Value per Share as at 31 March 2014 less the costs of the Tender Offer.

Numis Securities will determine the number of Shares it will purchase on the basis of valid tenders received, as determined following the Closing Date.  All Shares repurchased will be repurchased at the Repurchase Price.  Numis Securities will purchase Shares for up to the Aggregate Gross Consideration.

The Tender Offer is made on the terms and subject to the Conditions set out in Part III and the accompanying Tender Form, and those terms and conditions are deemed to be incorporated herein and form part of the Tender Offer.

Shareholders are not obliged to tender any Shares under the Tender Offer and, if they do not wish to participate in the Tender Offer, Shareholders should take no action and should not complete or return their Tender Form or tender their Eligible Shares through CREST.

2.       Key Elements of the Tender Offer

The key elements of the Tender Offer are as follows:

•        Numis Securities is inviting Shareholders to tender Shares for an aggregate gross consideration of up to £8,256,890 at the Repurchase Price.

•        Each Shareholder shall be entitled to have Numis Securities repurchase the Basic Entitlement, being the percentage which the total number of Eligible Shares capable of being purchased under the Tender Offer represents of the entire issued share capital of the Company (rounded down to the nearest whole number of Shares).  Shareholders will, however, be entitled to tender a number of Shares held by them at the Record Date for purchase under the Tender Offer, but tenders in excess of the Basic Entitlement will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their Basic Entitlement.  Tenders will be rounded down to the nearest whole number of Shares.

•        Shareholders (other than Excluded Shareholders) are invited to tender any or all of their Shares specifying the number of Shares that they are prepared to tender to Numis Securities for purchase at the Repurchase Price.

•        Tendering Shareholders will bear the costs of the Tender Offer through the application of the Tender Discount.  The Tender Discount will be equal to the Tender Costs as a percentage of the Aggregate Gross Consideration.

•        The Repurchase Price is equal to the Unaudited Net Asset Value per Share as at 31 March 2014 less the Tender Discount.

•        An aggregate of 29,651,549 Shares are subject to the Tender Offer, being a number equal to the Aggregate Gross Consideration divided by the Repurchase Price, rounded down to the nearest whole number of Shares.

•        Shareholders who validly tender a number of Shares that is less than or equal to their Basic Entitlement will have their tenders satisfied in full (subject to the Tender Offer not having lapsed or been terminated).

•        Shareholders taking advantage of the Excess Application Facility who validly tender a number of Shares that is higher than their Basic Entitlement will (subject to the Tender Offer not having lapsed or been terminated) have their tenders either:

•        satisfied in full if the aggregate of the Excess Tenders is less than or equal to the Maximum Tender less the aggregate of the Satisfied Tenders; or

•        satisfied to the level of their Basic Entitlements plus such number of Shares as is derived from the application of the formula set out in paragraph 1.4.8 of Part III.

•        Eligible Shares will be acquired by Numis Securities as principal and subsequently repurchased by the Company.

•        The Tender Offer will only be open to Shareholders (other than Excluded Shareholders) on the Register at the close of business on 30 May 2014 (the "Record Date") in respect of their Eligible Shares.

3.       Conditions of the Offer

The Tender Offer will not proceed unless it becomes unconditional.  The Tender Offer is conditional on the following:

•        the Repurchase Agreement having been entered into, and Numis Securities having received payment from the Company in respect of the Repurchase Price for the Repurchased Shares;

•        the Board, in its absolute discretion, being satisfied on reasonable grounds and certifying that, immediately following the acquisition by the Company of the Repurchased Shares pursuant to the Repurchase Agreement, the Company will satisfy the Solvency Test (as defined in section 527 of the Companies Law); and

•        Numis Securities being reasonably satisfied that it can acquire the legal and beneficial title to any Shares tendered absolutely and not subject to any Encumbrance.

Numis Securities will not purchase (or enter into any commitment or contract to purchase) any Eligible Shares pursuant to the Tender Offer unless the Conditions have been satisfied in full (or, where applicable, waived).  If the Conditions are not satisfied (or, where applicable, waived) prior to the close of business on 30 May 2014, the Company may postpone the completion of the Tender Offer until no later than 30 June 2014, after which time the Tender Offer, if not then completed, will lapse.

4.       Procedure for Tendering Shares

Shareholders (other than Excluded Shareholders) who hold their Shares in certificated form and who wish to tender their Eligible Shares should complete the Tender Form in accordance with the instructions set out therein and return the completed Tender Form by post or by hand (during normal business hours only) to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham Kent BR3 4TU so as to be received as soon as possible and, in any event, not later than 1.00 p.m. on 30 May 2014, and they should also return the share certificate(s) and/or other documents of title in respect of the Eligible Shares tendered, as described in paragraph 4.2.1 of Part III.

Shareholders (other than Excluded Shareholders) who hold their Shares in uncertificated form (that is, in CREST) and who wish to participate in the Tender Offer should take the appropriate action in CREST to tender their Eligible Shares and should arrange for the relevant Eligible Shares to be transferred to escrow no later than 1.00 p.m. on 30 May 2014, as described in paragraph 4.2.2 of Part III.

Shareholders (other than Excluded Shareholders) should note that, once tendered, Eligible Shares may not be sold, transferred, charged, lent or otherwise disposed of.

Although the Tender Form must be returned by 1.00 p.m. on 30 May 2014 and the escrow arrangements for uncertificated tender Shares should be in place by the same time, the purchase of any Eligible Shares by Numis Securities will not be effected until on or about 4 June 2014.  Upon having returned a Tender Form, or tendered Eligible Shares through CREST, a Shareholder is deemed to accept that such a tender application may not be withdrawn or cancelled at any time, save with the consent of the Company.

Full details of the procedure for tendering are set out in Part III and in the Tender Form.

5.       Validity of Tenders

Tender Forms which are received by the Receiving Agent, or TTE Instructions which settle, after 1.00 p.m. on 30 May 2014, or which are incorrectly completed or not accompanied by all relevant documents or instructions, may be rejected and returned to Shareholders or their appointed agent, together with any accompanying share certificate(s) and/or other document(s) of title or a satisfactory indemnity in lieu thereof.  However, Numis Securities reserves the right to treat as valid Tender Forms which are not entirely in order or which are not accompanied by all relevant documents (or a satisfactory indemnity in lieu thereof) and Numis Securities shall be entitled (in its sole discretion) to accept late Tender Forms or late transfers to escrow in CREST.

6.       Excluded Shareholders and overseas Shareholders

The Tender Offer is not being made to Excluded Shareholders.  Shareholders who are resident in, or citizens of, the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other Excluded Territory are excluded from the Tender Offer to avoid breaching local laws relating to the implementation of the Tender Offer.  Accordingly, copies of this document, the personalised Tender Form and any related documents are not being and must not be mailed or otherwise distributed in or into the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other Excluded Territory.

Shareholders who are not Excluded Shareholders but who have a registered or mailing address outside the United Kingdom or who are citizens or nationals of, or resident in, a jurisdiction other than the United Kingdom should read paragraph 9 of Part III and the relevant provisions of the Tender Form.

7.       Postponement of the Tender Offer

The Tender Offer may be postponed in the circumstances described in paragraph 2 of Part III and in certain circumstances set out in the Repurchase Agreement.

8.       Settlement

Subject to the Tender Offer becoming unconditional, the distribution proceeds are expected to be despatched (by cheque or by payment through CREST, as appropriate) on or around 11 June 2014 or as soon as practicable thereafter as described in paragraph 5 of Part III, subject to any postponement in the circumstances described in paragraph 2 of Part III.

9.       Further Information

Your attention is drawn to the information contained in the rest of this document including, in particular, the terms and conditions of the Tender Offer set out in Part III.

ENDS

 

END

 

 

TENEADLEDLLLEAF