Proposed Tender Offer & Notice of General Meeting

RNS Number : 9400D

Cenkos Securities PLC

30 October 2015

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW

30 October 2015

Cenkos Securities plc

("Cenkos" or the "Company")

Proposed Tender Offer and Notice of General Meeting

The Board announced, on 22 September 2015, in the Company's interim report for the six months ended 30 June 2015 that as a result of the Company's strong financial performance in the first half of 2015, it was, in addition to the announcement of an interim dividend payment of 7.0 pence per Ordinary Share in respect of the first half of 2015, planning to launch a tender offer as soon as was practicable to return a further £8.0 million of surplus capital to shareholders.

The Company today announces a proposed tender offer to be made by Smith & Williamson to Qualifying Shareholders to purchase and/or procure the purchase by an Affiliate of up to 4,450,000 Ordinary Shares, representing 7.28 per cent. of the Company's issued Ordinary Shares, at a fixed price of £1.80 per Ordinary Share, in accordance with the terms and conditions of the Tender Offer set out in Part II of the Circular being sent to Shareholders shortly.  

The Circular will shortly be available from the Company's website at www.cenkos.com.

The implementation of the Tender Offer requires the approval of Shareholders and a Notice of General Meeting accompanies the Circular which convenes a General Meeting to be held at 6.7.8 Tokenhouse Yard, London EC2R 7AS at 9.30 a.m. on 24 November 2015. The Resolution to approve the purchase of Ordinary Shares pursuant to the Tender Offer at a fixed price of £1.80 pence per Ordinary Share will be proposed at the General Meeting.

Capitalised terms used in this announcement shall have the meanings given to them in the Circular referred to above.

The Tender Offer

Smith & Williamson, acting as principal, is proposing to make a Tender Offer to purchase, and/or procure the purchase by an Affiliate (in each case, acting as principal) of, up to 4,450,000 Ordinary Shares, representing 7.28 per cent. of the Company's issued share capital as at 29 October 2015 (being the latest practicable date prior to the posting of the Circular), at the Tender Offer Price. The Tender Offer Price represents a premium of approximately 1.52 per cent. to the average middle market closing price per Ordinary Share of £1.773 per Ordinary Share as derived from the LSE for the five Business Days ended on 29 October 2015 (being the latest practicable date prior to the posting of the Circular).

The Tender Offer is open to all Qualifying Shareholders on the Company's share register at the Record Time. Qualifying Shareholders are invited to participate in the Tender Offer by tendering up to a maximum of 7.28 per cent. of the Ordinary Shares registered in their name at the Record Time (rounded down to the nearest whole Ordinary Share), such percentage to be adjusted downwards in the event that any Ordinary Shares are issued before the Record Time whether pursuant to the exercise of an Option or otherwise. Qualifying Shareholders are entitled to tender such lower proportion of their Tender Offer Entitlement as Qualifying Shareholders may see fit.

The Tender Offer will also present Qualifying Shareholders with an opportunity to sell more than their Tender Offer Entitlement to the extent that other Qualifying Shareholders tender less than their full Tender Offer Entitlement. If the number of Ordinary Shares validly tendered exceeds 4,450,000 and if and to the extent that any Qualifying Shareholder has tendered less than his/her Tender Offer Entitlement, surplus tenders will be accepted in proportion to the number of additional Ordinary Shares tendered so that the total number of Ordinary Shares purchased pursuant to the Tender Offer does not exceed 4,450,000.

Full terms and conditions of the Tender Offer are set out in Part II of the Circular.

Expected Timetable of Events

Announcement of the Tender Offer and posting of the Circular, Notice of General Meeting, Forms of Proxy and Tender Forms	30 October 2015
Tender Offer opens	30 October 2015
Latest time and date for receipt of Forms of Proxy	9.30 a.m. on 20 November 2015
General Meeting	9.30 a.m. on 24 November 2015
Latest time and date for receipt of Tender Forms and TTE Instructions from CREST Shareholders	1.00 p.m. on 24 November 2015
Record Time for the Tender Offer	5.00 p.m. on 24 November 2015
Announcement of the results of the Tender Offer	25 November 2015
Cheques despatched for certificated Ordinary Shares purchased pursuant to the Tender Offer and payment through CREST for uncertificated Ordinary Shares purchased pursuant to the Tender Offer	On or before 4 December 2015
CREST accounts credited with uncertificated Ordinary Shares unsuccessfully tendered and despatch of balance share certificates for unsold certificated Ordinary Shares	On or before 4 December 2015

Notes:

1. The above times and/or dates are indicative only and may change. If any of the above times and/or dates change, the revised times and/or dates will be notified by announcement through a Regulatory Information Service.

2. All references to times in this announcement are to London times unless otherwise stated.

The Tender Offer is not being made, directly or indirectly, in or into, or by any means or instrumentality of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa or any other Restricted Jurisdiction. Copies of the Tender Form are not being and must not be mailed or otherwise distributed or sent in or into the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa including to Shareholders with registered addresses in these jurisdictions or to persons whom the Company knows to be trustees, nominees or custodians holding Ordinary Shares for such persons.

Smith & Williamson Corporate Finance, which is authorised and regulated by the Financial Conduct Authority, is acting for the Company. Neither Smith & Williamson Corporate Finance nor Smith & Williamson nor Smith & Williamson's Affiliates are acting for anyone else in connection with the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Smith & Williamson Corporate Finance and/or Smith & Williamson and/or its Affiliates or for affording advice in relation to the Tender Offer, the contents of the Circular or any transaction, arrangement or other matter described in the Circular.

Neither Smith & Williamson Corporate Finance nor Smith & Williamson nor its Affiliates has authorised the contents of, or any part of, this announcement or the Circular and no liability whatsoever is accepted by Smith & Williamson Corporate Finance, Smith & Williamson or Smith & Williamson's Affiliates for the accuracy of any information or opinions contained in this announcement or the Circular or for the omission of any information. Smith & Williamson Corporate Finance, as nominated adviser and broker to the Company, owes certain responsibilities to the London Stock Exchange which are not owed to the Company or the Directors.

Enquiries:
Jim Durkin Chief Executive Officer      Cenkos Securities plc	[phone]
Dr Azhic Basirov / David Jones / Ben Jeynes Nominated Adviser Smith & Williamson Corporate Finance Limited	[phone]
David Rydell / Duncan Mayall Bell Pottinger	[phone]

Background to and reasons for the Tender Offer

Following the Company's strong financial results in the first half of 2015 reported in the Company's interim results announced on 22 September 2015, the Board announced that it was planning, in addition to the interim dividend to be paid on 5 November 2015, to launch a tender offer as soon as was practicable to return a further £8.0 million of surplus capital to Shareholders. The outturn for the year ended 31 December 2015 is anticipated to be in line with current market expectations. Although the Board intends to retain sufficient capital and reserves to meet the Company's regulatory capital and cash requirements after taking account of the likely future working capital needs and potential growth requirements of the Company, the Tender Offer will now return up to approximately £8.0 million to Shareholders.

Benefits of the Tender Offer

The benefits of the Tender Offer, compared to other available options for a return of capital to

Shareholders, are that the Tender Offer:

(a)   provides those Qualifying Shareholders who wish to sell Ordinary Shares with the opportunity to do so;

(b)  allows the Company to broaden the return of cash to include those Qualifying Shareholders whose Ordinary Shares might not otherwise be purchased by the Company through a buy back in the market;

(c)   enables Qualifying Shareholders to decide whether to tender none, some, all, or in excess of their Tender Offer Entitlement within the overall limits of the Tender Offer;

(d)   enables those Qualifying Shareholders who do not wish to receive capital at this time to maintain their full investment in the Company;

(e)   enables Ordinary Shares to be sold free of commissions or charges that would otherwise be payable if Qualifying Shareholders were to sell their shares through their broker; and

(f)    enhances earnings per share in respect of Ordinary Shares not tendered under the Tender Offer.

The Tender Offer

Smith & Williamson, acting as principal, is proposing to make a Tender Offer to purchase, and/or procure the purchase by an Affiliate (in each case, acting as principal) of, up to 4,450,000 Ordinary Shares, representing 7.28 per cent. of the Company's issued share capital as at 29 October 2015 (being the latest practicable date prior to the posting of the Circular), at the Tender Offer Price. The Tender Offer Price represents a premium of approximately 1.52 per cent. to the average middle market closing price per Ordinary Share of £1.773 per Ordinary Share as derived from the LSE for the five Business Days ended on 29 October 2015 (being the latest practicable date prior to the posting of the Circular).

The Tender Offer is open to all Qualifying Shareholders on the Company's share register at the Record Time. Qualifying Shareholders are invited to participate in the Tender Offer by tendering up to, subject to the below, a maximum of 7.28 per cent. of the Ordinary Shares registered in their name at the Record Time (rounded down to the nearest whole Ordinary Share), such percentage to be adjusted downwards in the event that any Ordinary Shares are issued before the Record Time whether pursuant to the exercise of an Option or otherwise. Qualifying Shareholders are entitled to tender such lower proportion of their Tender Offer Entitlement as Qualifying Shareholders may see fit.

The Tender Offer will also present Qualifying Shareholders with an opportunity to sell more than their Tender Offer Entitlement to the extent that other Qualifying Shareholders tender less than their full Tender Offer Entitlement. If the number of Ordinary Shares validly tendered exceeds 4,450,000 and if and to the extent that any Qualifying Shareholder has tendered less than his/her Tender Offer Entitlement, surplus tenders will be accepted in proportion to the number of additional Ordinary Shares tendered so that the total number of Ordinary Shares purchased pursuant to the Tender Offer does not exceed 4,450,000.

Full terms and conditions of the Tender Offer are set out in Part II of the Circular.

Repurchase Agreement

Under the terms of the Repurchase Agreement, Smith &Williamson has the option to sell, through an on market transaction, all of the Ordinary Shares acquired by it and/or its Affiliate, in each case as principal, pursuant to the Tender Offer to the Company at a price per Ordinary Share equal to the Tender Offer Price (the "Put Option").  Also under the Repurchase Agreement, the Company has the right to require Smith & Williamson to sell (and/or procure the sale of) all of the Ordinary Shares acquired by Smith & Williamson and/or its Affiliate, in each case as principal, pursuant to the Tender Offer to the Company at a price per Ordinary Share equal to the Tender Offer Price (the "Call Option").

The Company intends to cancel any Ordinary Shares purchased by it under the Repurchase Agreement.

Overseas Shareholders

The attention of Qualifying Shareholders who are citizens, residents or nationals of countries outside the UK wishing to participate in the Tender Offer is drawn to the paragraph entitled "Overseas Shareholders" in Part II of the Circular.

The Tender Offer is not available to Shareholders with an address in the United States, Canada, Australia, New Zealand, the Republic of South Africa or Japan or any other Restricted Jurisdiction. Overseas Shareholders should note that they should satisfy themselves that they have fully observed any applicable legal requirements under the laws of their relevant jurisdiction if they tender Ordinary Shares in the Tender Offer.

Taxation

A summary of the taxation consequences of the Tender Offer for UK resident Shareholders is set out in Part III of the Circular. It should be noted that this refers to the current system of taxation. Shareholders are advised to consult their own professional advisers regarding their own tax position.

Qualifying Optionholders

Qualifying Optionholders who wish Ordinary Shares arising upon exercise of Qualifying Options to comprise part of their Tender Offer Entitlement must exercise their Qualifying Options by 12.00 noon on 10 November 2015 in order to be recorded on the Register at the Record Time.

Conditional upon approval of the Resolution by Shareholders and the Tender Offer becoming unconditional, the Company is offering all Qualifying Optionholders the opportunity to cancel up to 7.28 per cent. of their Qualifying Options ("Qualifying Option Entitlement") for a cash option cancellation payment amount which is equal to the Tender Offer Price less a deduction for the exercise price which would otherwise be payable on the equivalent exercise of the Qualifying Option. Such payments will be made subject to PAYE income tax and employee national insurance (or similar charges) withholding. Qualifying Optionholders will be able to cancel more than their Qualifying Option Entitlement to the extent that other Qualifying Optionholders cancel less than their Qualifying Option Entitlement. If applications to cancel Qualifying Options representing in excess of 687,768 Ordinary Shares are made and if and to the extent that any Qualifying Optionholder has sought to cancel less than his/her Qualifying Option Entitlement, surplus applications for cancellation will be accepted in proportion to the number of additional Ordinary Shares represented by Qualifying Options in respect of which application for cancellation has been validly made so that the total Qualifying Options cancelled do not represent Ordinary Shares in excess of 687,768.

Further details have been sent to Qualifying Optionholders separately.

Action to be taken

Tender Offer

The procedure for tendering Ordinary Shares depends on whether Ordinary Shares are held in certificated form or uncertificated form and is summarised below:

(a) Ordinary Shares held in certificated form

Qualifying Shareholders who hold Ordinary Shares in certificated form and who wish to participate in the Tender Offer should follow the instructions on the Tender Form accompanying the Circular and return it to the Receiving Agent to arrive by no later than 1.00 p.m. on 24 November 2015. Qualifying Shareholders who hold their Ordinary Shares in certificated form should also send their share certificate(s) in respect of the Ordinary Shares tendered with their Tender Form.

(b) Ordinary Shares held in uncertificated form

Qualifying Shareholders who hold their Ordinary Shares in uncertificated form (that is, in CREST) and who wish to participate in the Tender Offer should tender electronically through CREST so that the TTE Instruction settles no later than 1.00 p.m. on 24 November 2015.

Further details of the procedures for tendering and settlement are set out in Part II of the Circular.

Shareholders who do not wish to participate in the Tender Offer should not complete the Tender

Form and should not make a TTE Instruction.

General Meeting

Shareholders will find enclosed with the Circular a Form of Proxy for use in connection with the General Meeting. Whether or not Shareholders intend to attend the General Meeting in person, they are asked to complete and sign the Form of Proxy and return it in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received by post to Capita Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF not later than 9.30 a.m. on 20 November 2015.

If Shareholders hold their Ordinary Shares in uncertificated form (that is, in CREST) they may vote using the CREST proxy voting service in accordance with the procedures set out in the CREST manual (please also refer to the accompanying notes to the Notice of the General Meeting set out at the end of the Circular). Proxies submitted via CREST must be received by the Registrars not later than 9.30 a.m. on 20 November 2015.

The appointment of a proxy will not prevent Shareholders from attending and voting in person at the General Meeting, or any adjournment thereof, should they wish to do so.

Intentions of the Directors in relation to the Tender Offer

Jim Durkin, Paul Hodges, Jeremy Warner Allen, Joe Nally and Nicholas Wells have agreed to tender their entire Tender Offer Entitlement, subject to such scaling back as is necessary, at the absolute discretion of Smith & Williamson, to maintain their existing percentage shareholdings in the Company's issued ordinary share capital. Jim Durkin, Paul Hodges, Jeremy Warner Allen, Joe Nally and Nicholas Wells are therefore being treated differently to other Shareholders. The respective interests of the Directors in the Company's issued ordinary share capital as at 29 October 2015 (being the latest practicable date prior to the posting of the Circular) are set out in the table below:

Name	Number of Ordinary Shares	Percentage of current issued share capital (%)
Gerry Aherne	55,000	0.09
Jim Durkin	5,212,524	8.52
Jeff Hewitt	28,121	0.05
Anthony Hotson	32,860	0.05
Mike Chilton	13,941	0.02
Jeremy Warner Allen	1,482,182	2.42
Joe Nally	1,142,074	1.87
Paul Hodges	5,364,711	8.77
Nicholas Wells	2,320,597	3.80

None of the Directors other than Jim Durkin, Paul Hodges, Jeremy Warner Allen, Joe Nally and Nicholas Wells currently intend to tender any of their Ordinary Shares under the Tender Offer.

Recommendation

The Directors consider that the Tender Offer is in the best interests of Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the proposed Resolution.

The Directors, Smith & Williamson Corporate Finance and Smith & Williamson are making no recommendation to Qualifying Shareholders in relation to participation in the Tender Offer itself. Whether or not Qualifying Shareholders decide to tender their Ordinary Shares will depend, amongst other things, on their view of the Company's prospects and on their own individual circumstances (including their own tax position).

If you are in any doubt as to the action you should take, you are recommended to seek your own

independent advice.

 

END

 

 

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