Tender Offer and Trading Update

RNS Number : 9972R

James Halstead PLC

14 November 2011

 

14 November 2011

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND AND THE REPUBLIC OF SOUTH AFRICA AND ANY OTHER RESTRICTED JURISDICTION

James Halstead plc ("James Halstead" or the "Company")

Tender Offer and Trading Update

Proposed Tender Offer to purchase up to 2.5 per cent. of the issued ordinary shares of 5p each in the capital of the Company

The Company today announces its intention to return capital to Shareholders by way of a tender offer (the "Tender Offer"), pursuant to which Altium Capital Limited ("Altium"), acting as principal, will offer to purchase up to 2.5 per cent. of the Company's Shares, following which the Company will repurchase from Altium and cancel all those Shares purchased by Altium under the terms of the Tender Offer.

The Tender Offer Price will be calculated as 105 per cent. of the average closing middle market price per Share for the five Business Days immediately preceding the date on which Shares are purchased. However, the Tender Offer is conditional on, inter alia, the Tender Offer Price being not less than £4.20 per Share and the aggregate consideration to be paid by the Company in respect of the Tender Offer being no more than £11 million.

The Circular providing more information in relation to the Tender Offer and setting out the formal terms and conditions of the Tender Offer is expected to be posted to Shareholders today (the "Circular").

Background to and reasons for the Tender Offer

In previous years, the Company has returned significant cash to Shareholders by means of special dividends, most recently when £7.8 million of surplus capital was paid to Shareholders in January 2010. The Company continues to trade robustly and generate cash in excess of that which is required for the Company's operations. The Board has therefore considered and approved a further return of capital to Shareholders.

The Directors believe that the Tender Offer will achieve their objective of returning capital to Shareholders in a manner that is earnings enhancing and enables all Qualifying Shareholders to participate pro rata to their shareholding, should they so choose.

Details of the Tender Offer

 
The Tender Offer is to be effected by Altium purchasing, as principal, up to 2.5 per cent. of the issued ordinary shares in the capital of the Company at the Tender Offer Price, being 105 per cent. of the average middle market price per Share as derived from the Daily Official List of the London Stock Exchange for the five Business Days immediately preceding the date on which the Shares will be purchased. The average middle market quotation for a Share so derived for the five Business Days immediately preceding the date of this announcement is £4.62. For illustrative purposes only, if the Tender Offer is undertaken at 105 per cent. of this price and is taken up in full, approximately £11 million will be returned to Shareholders in total. It is proposed that the actual Tender Offer Price will be calculated on 29 November 2011.

The Shares purchased by Altium under the Tender Offer (or otherwise a corresponding number of Shares) will be subsequently purchased by the Company under the terms of the Repurchase Agreement and will then be cancelled.

If, on closing of the Tender Offer and calculation of the Tender Offer Price, the aggregate consideration to be paid by the Company for the tendered Shares is more than £11 million, the applications will be scaled back on a pro rata basis between the Qualifying Shareholders.  In the event of scaling back, tenders will be rounded down to the nearest whole number of Shares.

The Tender Offer will close at 1.00 p.m. on 29 November 2011 and will only be available to Shareholders on the register of members at the Record Date (being 5.00 p.m. on 29 November 2011). Under the Tender Offer, Qualifying Shareholders may tender any number of Shares up to their Maximum Entitlement, being 2.5 per cent. of the Shares registered in such Qualifying Shareholder's name on the Tender Offer Record Date, rounded down to the nearest whole number. In the event that a Qualifying Shareholder tenders more than their Maximum Entitlement, such tender will be treated as a tender of Shares up to their Maximum Entitlement.

Shareholders do not have to tender any Shares but, once submitted, a Tender Form is irrevocable and cannot be withdrawn. Shareholders should note that, once tendered, Shares may not be sold, transferred, charged or otherwise disposed of.

Current Trading

In its preliminary results statement for the year ended 30 June 2011, which was issued on 3 October 2011, the Chairman of the Company stated: "[W]e have increased revenue beyond £200 million to achieve a new record level of £213.9 million (2010: £186.4 million), an increase of 14.8 per cent.

"Our profit before tax at £38.5 million (2010: £35.8 million) is also a record achievement, and 7.6 per cent. ahead of the comparative."

"Notwithstanding these figures, it was a difficult year. The UK economy and the construction sector in particular faced an austere backdrop. Additional challenges were the price, and at times availability, of basic raw materials. This resulted in an inevitable degree of margin erosion. Having said this, the UK turnover progressed by 2.7 per cent."

"Our success in overseas markets was impressive with a 22 per cent. increase in revenue over the prior year and some 66 per cent. of our turnover is now outside the UK."

"Investment continued throughout the year. Polyflor has completed a major refurbishment and upgrade to its production lines in Manchester and in Oldham our marketing and distribution facilities were completed with a showroom facility that has welcomed many of our partners."

"In addition to this, Polyflor Australia has extended its warehouse facilities and Phoenix has relocated a short distance to modern premises. In addition, Riverside Flooring (Teesside) has successfully brought our newest facility into production."

The Chairman further stated: "Although the prevailing challenge of this year was the increasing cost of raw materials and energy we remain vigilant to the fragile state of our home market. The coming year will be testing as our competitors look to our volume growth and seek to take back market share. I am, however, of the firm belief that as a result of the key structural investments that we have made and our worldwide experience we will continue to progress in the coming year."

Since the announcement of its preliminary results, the Company has continued to trade robustly, and in line with the Board's expectations.

Overseas Shareholders

The Tender Offer is not available to Shareholders with a registered address in any 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 Shares in the Tender Offer.

Director Participation in the Tender Offer and Parties Acting in Concert

For the purpose of the Tender Offer it could be considered that certain parties are acting in concert. These parties, including Mark Halstead, the Chief Executive of the Company, and Geoffrey Halstead, the Chairman of the Company, have irrevocably undertaken to participate in the Tender Offer at their Maximum Entitlement.

Related Parties

Geoffrey Halstead, Mark Halstead and Anthony Wild, all of whom are directors of the Company, and Colette Halstead, Emma Halstead, Evelyn Halstead, Gayle Halstead, Susan Podesta-Oliver, Helen Ralston, Lt Col Warren and Mavis Warren are all deemed to be related parties of the Company ("Related Parties"), as defined in the AIM Rules for Companies, for the purposes of the Tender Offer by virtue of their being (a) directors of the Company, (b) substantial shareholders of the Company, or an associate of (a) or (b) (within the meaning of "Related Party" as set out in the AIM Rules for Companies). Their aggregate interests in the Company equate to 31,524,994 Shares (certain of which are held in trust, the beneficiaries of which are both Related Parties and non-Related Parties). Altium, in its capacity as nominated adviser to the Company, considers that the terms of the Related Parties' participation in the Tender Offer are fair and reasonable insofar as Shareholders are concerned.

The Directors accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

Expected Timetable

Announcement of the Proposals and Tender Offer opens	14 November 2011
Latest time for receipt of Tender Forms and TTE Instructions in relation to the Tender Offer	1.00 p.m. on 29 November 2011
Record date for Tender Offer	5.00 p.m. on 29 November 2011
Announcement of results of Tender Offer	30 November 2011
Posting of cheques in respect of the Tender Offer, along with any balance certificates or the crediting of CREST accounts	by 14 December 2011

Enquiries:

James Halstead:	Telephone: [phone]
Mark Halstead, Chief Executive
Gordon Oliver, Finance Director
Altium:	Telephone: [phone]
Ben Thorne Paul Chamberlain
Hudson Sandler:	Telephone: [phone]
Nick Lyon

Altium Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for the Company and no-one else in connection with the Tender Offer and will not regard any other person (whether or not a recipient of the Circular) as a client in relation to the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to its customers or for providing advice in relation to the Tender Offer or any matters referred to in this announcement.

 

END

 

 

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