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Quarto Group Inc (QRT)

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Wednesday 15 January, 2020

Quarto Group Inc

Intention to launch an Open Offer

RNS Number : 9520Z
Quarto Group Inc
15 January 2020
 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA ("UNITED STATES")), AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SHARES OR OTHER SECURITIES OF THE QUARTO GROUP INC. IN THE UNITED STATES (OR TO ANY U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT")), AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THIS ANNOUNCEMENT NOR ANYTHING CONTAINED HEREIN SHALL FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, ANY SUCH OFFER, SOLICITATION OR COMMITMENT WHATSOEVER IN ANY OF THOSE JURISDICTIONS. NO MONEY, SECURITIES OR OTHER CONSIDERATION IS BEING SOLICITED FROM ANY PERSON IN THOSE JURISDICTIONS AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED HEREIN, WILL NOT BE ACCEPTED.

This announcement is an advertisement for the purposes of the Prospectus Regulation Rules and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in any prospectus published by The Quarto Group Inc. in connection with the Open Offer to be made to shareholders and not in reliance on this announcement.  The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change. 

When published, a copy of the prospectus will be, subject to certain access restrictions, available for inspection on the Company's website (www.quarto.com) and at the Company's principal place of business being The Old Brewery, 6 Blundell Street, London, N7 9BH.  This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase, investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

This announcement contains inside information for the purposes of the Market Abuse Regulation (596/2014).

 

The Quarto Group Inc.

("Company", "Quarto" or "Group")

The Quarto Group Inc., the illustrated book publisher and distribution group, today announces that it is in the late stages of organising an equity fundraising by way of an open offer to the Company's existing shareholders to raise approximately £13.9 million (approximately $18.2 million) in gross proceeds (£12.8 million (approximately $16.7 million) net of expenses) by the issue of 20,444,550 new shares ("New Common Shares") of common stock, par value $0.10 per share ("Common Shares"), of the Company at 68 pence per share of Common Stock ("Open Offer"). It is expected that the Open Offer will be conducted on the basis of 1 New Common Share for every 1 existing Common Share held. The Open Offer is expected to be fully underwritten by two groups of the Company's shareholders, namely the 1010 Printing Limited ("1010 Printing") and Sergio Giunti and Andrea Giunti Lombardo through an entity ultimately controlled by them (together the "Giunti Parties" and with 1010 Printing, the "Underwriters"), who will be entering into separate underwriting agreements with the Company ("Underwriting Agreements").

The Group has also been in discussions with its banking syndicate to extend the final repayment date of its existing facilities agreement and to extend certain of its covenants. Such amendments would be conditional on completion of the Open Offer. Furthermore, the Group intends to use the net proceeds of the Open Offer to reduce the Group's existing bank debt.

A further announcement in relation to the Open Offer will be made in due course, including details of a prospectus and circular setting out the reasons for and procedures for participating in the Open Offer.

 

                        

Terms of the Underwriting Agreements and sell down undertakings

It is expected that each of the Underwriters will separately agree with the Company to take up in full their pro-rata entitlements under the Open Offer ("Open Offer Entitlements") but not to take up any additional New Common Shares under an excess application facility made available by the Company to enable shareholders to take up New Common Shares in excess of their Open Offer Entitlements. In addition under their Underwriting Agreement, the Giunti Parties are expected to undertake to subscribe for up to 6,187,820 New Common Shares which will result in the Giunti Parties holding up to a maximum of 20 per cent. of the Company's enlarged share capital following admission of the New Common Shares ("Admission"). Pursuant to the terms of its Underwriting Agreement, 1010 Printing is expected to undertake to subscribe for all New Common Shares which are not subscribed for by qualifying shareholders under the Open Offer or by the Giunti Parties pursuant to their Open Offer Entitlements or the terms of the Giunti Parties' Underwriting Agreement.

If no qualifying shareholders (other than the Underwriters) take up their Open Offer Entitlements, the Underwriters are expected to subscribe for all of the New Common Shares available pursuant to the Open Offer which will result in 1010 Printing, Lion Rock Group Limited (parent company of 1010 Printing) ("Lion Rock") and Chuk Kin Lau (the ultimate controller of Lion Rock and 1010 Printing and CEO of the Company) (together, the "Lau Parties"), together, holding such number of Common Shares so as to give them control of 49.25 per cent. of the enlarged share capital following Admission and the Giunti Parties holding, together, such number of Common Shares so as to give them control of 20 per cent. of the enlarged share capital following Admission.

If this were to occur, it is likely that the Company may no longer comply with the requirements set out in Listing Rule 6.14, being that 25 per cent. of the Company's Common Shares must be held in public hands.  Failure to comply with the Listing Rule 6.14 without a dispensation from the FCA, could result in the FCA either suspending or cancelling the trading of the Common Shares on the premium segment of the Main Market of the London Stock Exchange.

The Company has been in discussions with the FCA regarding these matters and to counteract the risk that the FCA may suspend or cancel the trading of the Common Shares after Admission. Chuk Kin Lau (CEO and shareholder of Quarto) will undertake to the Company to use reasonable endeavours to sell such number of Common Shares as will result in the Company satisfying the Listing Rules' free float requirement of 25 per cent. up to a maximum number of all of the Common Shares held by him following Admission, and to the extent he is unable to sell such Common Shares, to gift such Common Shares as is required to satisfy the Listing Rules' free float requirement to an unrelated third party by not later than the date which falls six months immediately following the date of Admission.  To the extent that the sale or gift of Common Shares by Chuk Kin Lau is insufficient to meet the Listing Rules' free float requirement, 1010 Printing will undertake to sell and/or gift such number of Common Shares as is required to satisfy the Listing Rules' free float requirement up to a maximum number of 1,540,514 Common Shares by not later than the date which falls six months following the date of Admission.

The Quarto Group Inc.


Michael Clarke, Chief Administrative Officer

+44 (0)20 7700 9006



About The Quarto Group

The Quarto Group (LSE: QRT) creates a wide variety of books and intellectual property products, with a mission to inspire life's experiences. Produced in many formats for adults, children and the whole family, our products are visually appealing, information rich and stimulating.

The Group encompasses a diverse portfolio of imprints and businesses that are creatively independent and expert in developing long-lasting content across specific niches of interest.

Quarto sells and distributes its products globally in over 50 countries and 40 languages, through a variety of sales channels, partnerships and routes to market.

Quarto employs c.330 talented people in the US and the UK. The group was founded in London in 1976. It is domiciled in the US and listed on the London Stock Exchange. 

For more information, visit quarto.com or follow us on Twitter at @TheQuartoGroup.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (596/2014) ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

IMPORTANT NOTICE:

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for New Common Shares in any jurisdiction. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for Common Shares will be made in any jurisdiction in which such an offer or solicitation is unlawful. The information contained in this announcement is not for release, publication or distribution to U.S. Persons or persons in Australia, Canada, Japan or South Africa, and should not be distributed, forwarded to or transmitted in or into or from any jurisdiction, where to do so might constitute a violation of local securities laws or regulations.

This announcement is not for release, publication or distribution, directly or indirectly, in or into or from the United States. This announcement is not an offer of securities for sale in the United States. The New Common Shares have not been and will not be registered under the Securities Act or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States, or offered, sold, taken up, exercised, resold, renounced, transferred or delivered to, or for the account or benefit of, U.S. Persons, except pursuant to an applicable exemption from or in a transaction not subject to the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. Hedging transactions in the New Common Shares may not be conducted, directly or indirectly, unless in compliance with the Securities Act. No public offering of securities is being made in the United States. No money, securities or other consideration from any person in the United States is being solicited and, if sent in response to the information contained in this announcement, will not be accepted.

The New Common Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Japan, South Africa or any other jurisdiction where the offer, sale or advertisement of the New Common Shares (or any other transaction contemplated by the Open Offer) would breach applicable law or regulation and, subject to certain limited exceptions, the New Common Shares may not be offered or sold in such jurisdictions or to, or for the account or benefit of, any U.S. Person or resident of such jurisdictions, and there will be no public offer of securities in such jurisdictions.

The distribution of this announcement into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction. In particular, subject to certain limited exceptions, this announcement should not be distributed, forwarded to or transmitted in or into or from the Australia, Canada, Japan, South Africa, the United States or any other jurisdiction where the offer, sale or advertisement of the New Common Shares (or any other transaction contemplated by the Open Offer) would breach applicable law or regulation.

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could", "is confident", or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this announcement and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Quarto's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are: increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment and research and development projects.

The Company is not under any obligation to update or revise publicly any forward-looking statement contained within this announcement, whether as a result of new information, future events or otherwise, other than in accordance with their legal or regulatory obligations (including under the Listing Rules, the Disclosure Guidance and Transparency Rules and the Prospectus Rules).

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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