RNS announcement

 

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX AND THE INFORMATION CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR NEW ZEALAND OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.  THIS ANNOUNCEMENT AND THE APPENDIX DO NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF PITVOT CAPITAL PLC OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.

Palace Capital plc

("Palace Capital" or the "Company") 

 

Acquisition of R.T. Warren (Investments) Limited
Placing and Open Offer to raise £70 million

 

Palace Capital, the property investment company that focuses on commercial property outside London, is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of R.T. Warren (Investments) Limited ("RT Warren"), for a total cash consideration of £53.3 million, subject to adjustment (the "Acquisition"). In addition, a bank loan of £14.5 million is being retained by RT Warren. To finance the Acquisition, the Company is proposing to undertake a placing to raise £70 million (the "Placing"), of which £4.3 million is subject to clawback under an open offer to Qualifying Shareholders (the "Open Offer") (together the "Placing and Open Offer").

 

Acquisition highlights:

 

·      RT Warren owns a portfolio of 21 commercial properties, comprised of 15 office buildings, 4 predominantly retail properties and 2 industrial holdings. Over 90 per cent of the commercial properties are located in the Home Counties of England.

 

·      RT Warren also owns 65 residential properties predominately located around the London Borough of Hillingdon. It is the Company's intention to sell the residential assets, subject to being able to achieve an acceptable price.

 

·      RT Warren has £14.5 million of debt from Barclays and it is currently intended that this will remain in place following completion of the Acquisition.

 

·      The properties in the RT Warren Portfolio have been individually valued on an open market and fair value basis by Cushman & Wakefield at £71.8 million.

 

·      The Acquisition is conditional on, inter alia, the completion of the Placing and the passing of certain resolutions at a general meeting, further details of which are set out below.

 

Placing and Open Offer highlights:

 

·      To finance the Acquisition, the Company is raising a total of £70 million (before expenses), comprising a firm placing to raise £65.7 million and a conditional placing, subject to clawback under an Open Offer, to raise an additional £4.3 million. The Placing and Open Offer have been arranged by Arden, acting as Lead Broker and Bookrunner, and Allenby Capital, acting as Joint Broker.

 

·    The Placing is to be conducted by way of an accelerated bookbuilding process (the "Bookbuild") which will commence immediately following this Announcement in accordance with the terms and conditions set out in the Appendix to this Announcement.

 

·    Completion of the Placing and the Open Offer are subject, inter alia, to Shareholder approval of certain resolutions to enable the issue of the New Ordinary Shares, which will be sought at a General Meeting of the Company expected to be held at 10.00 a.m. on 6 October 2017.

 

·    The New Ordinary Shares issued pursuant to the Placing and Open Offer will qualify for an interim dividend of 9.5 pence per Ordinary Share payable on 29 December 2017, to Shareholders on the register on 8 December 2017.

 

·   A Circular containing further details of the Placing and the Open Offer and including a notice convening the General Meeting is expected to be despatched to Shareholders following completion of the Bookbuild and will thereafter be available on the Company's website at www.palacecapitalplc.com.

 

·    Open Offer to Qualifying Shareholders on the basis of 1 New Ordinary Share for every 20 Existing Ordinary Shares held on the Record Date.

 

Neil Sinclair, Chief Executive of Palace Capital, commented: 

 

"RT Warren represents the most exciting portfolio offered to Palace Capital for over 2 years. We consider the location of the commercial properties to be complementary to our existing portfolio, as well as being located in regions of the UK that are experiencing a shortage of both industrial and office space, the latter being due to Permitted Development Rights. We consider that there is a significant opportunity for considerable rental growth from this portfolio.

 

"Previously we had indicated our intention to move to the Official List of the London Stock Exchange and I am very pleased to say that we will commence this process once this transaction completes."

 

 

Expected timetable:	2017
Record date for entitlements under the Open Offer	15 September
Announcement of the Placing and Open Offer; Bookbuild commences	7.00 a.m. on 19 September
Publication of the Circular, the Application Form and Form of Proxy	19 September
Ex-entitlement date for the Open Offer	8.00 a.m. on 19 September
Latest time and date for receipt of completed Forms of Proxy and receipt of electronic proxy appointments via the CREST system for the General Meeting	10.00 a.m. on 4 October
General Meeting	10.00 a.m. on 6 October
Announcement of results of General Meeting and Open Offer	6 October
Admission and commencement of dealings in the New Ordinary Shares on AIM	8.00 a.m. on 9 October

 

Each of the times and dates above refer to London time and are subject to change by the Company. Any such change will be notified to Shareholders by an announcement on a Regulatory Information Service.  The circular will contain further details of the expected timetable for the Acquisition, Placing and Open Offer, General Meeting and Admission.

 

Further information on the Acquisition, Placing and Open Offer and Admission is included in the section headed 'Additional Information' below. Attention is also drawn to the section headed 'Important Information' of this Announcement and the terms and conditions of the Placing (representing important information for Placees only) in the Appendix to this Announcement.

 

Capitalised terms used but not defined in this Announcement shall have the meanings given to such terms in the section headed 'Definitions' below save that any capitalised term defined in the Appendix shall have such meaning in the Appendix to the exclusion, in the Appendix only, of any definition of such term elsewhere in this Announcement.

 

This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). In addition, market soundings (as defined in MAR) were taken in connection with the Placing as a result of which certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received such inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

 

19 September 2017

 

For further information please contact:

 

Palace Capital plc

Neil Sinclair, Chief Executive

Stephen Silvester, Finance Director

Tel. 44 (0)20 3301 8331

 

Allenby Capital Limited (Nominated Adviser and Joint Broker)

Nick Naylor / James Reeve / Asha Chotai

Tel. 44 (0)20 3328 5656

 

Arden Partners plc (Lead Broker and Bookrunner)

Chris Hardie / Ciaran Walsh

Tel. 44 (0)207 614 5900

 

Capital Access Group (Financial PR)

Scott Fulton

Tel. 44 (0)20 3763 3400

 

About Palace Capital plc (www.palacecapitalplc.com):

 

Palace Capital is a UK property investment company admitted to trading on the AIM Market of the London Stock Exchange (LSE: PCA). The Company is not sector specific and looks for opportunities where it can enhance the long-term income and capital value through asset management and strategic capital development in locations outside London. In its last reported financial year, Palace Capital produced a 20.0% increase in adjusted profit before tax, a 7.0% uplift in EPRA NAV per share and a 16.0% increase in dividends.

 

ADDITIONAL INFORMATION

1.       INTRODUCTION

 

On 18 September 2017, the Company entered into a conditional agreement to acquire the entire issued share capital of RT Warren. The consideration payable by the Company in cash for all of the issued shares of RT Warren is £53.3 million, subject to adjustment based on a cash free, debt free completion balance sheet. It is the Company's current intention to retain the existing bank loan of approximately £14.5 million from Barclays to RT Warren.

 

RT Warren owns a portfolio of 21 commercial properties, over 90 per cent. of which are located in the Home Counties of England, and 65 residential properties predominately located in the London Borough of Hillingdon. The RT Warren portfolio is comprised of 15 office buildings, 4 predominantly retail properties, 2 industrial holdings and 65 residential units. The properties in the portfolio have been individually valued on an open market and fair value basis by Cushman & Wakefield at £71.8 million pursuant to the Valuation Report. A summary of the properties in the RT Warren Portfolio is contained below.

 

To finance the Acquisition and (if necessary) to provide sufficient funds to repay the Barclays Loan, the Board has announced a fundraising to raise a total of £70 million (before expenses), comprising; i) a Firm Placing to raise £65.7 million; and ii) a Conditional Placing, subject to clawback under an Open Offer, to raise an additional £4.3 million. The Placing and the Open Offer are being arranged by Arden and Allenby Capital. The Placing is not being underwriten.

 

The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of New Ordinary Shares at the Issue Price.

 

Dividend forecast

 

The Company announces that it is proposing to pay an interim dividend of 9.5 pence per Ordinary Share on 29 December 2017 to Shareholders on the register on 8 December 2017. The New Ordinary Shares will rank for the interim dividend. Following this, the Company is proposing to commence the payment of a quarterly dividend. Further details on the variation to the dividend policy is set out below.

 

 

2.       INFORMATION ON RT WARREN

 

RT Warren was established in 1935 to focus on development of commercial assets and residential dwellings in the South East of England. It was originally formed to hold residential houses built by the then construction company but in 1980 RT Warren ceased its construction activities and has since expanded to hold commercial and residential units.

 

The RT Warren portfolio contains 21 commercial properties, comprised of 15 office buildings, 4 mainly retail properties and 2 industrial holdings as well as 65 residential properties. The portfolio has been valued, on an open market and fair value basis, by Cushman & Wakefield at £71.8 million pursuant to the Valuation Report. The current total annual income of the portfolio is circa £3.7 million.

 

RT Warren's commercial assets include offices, retail units and industrial units and are a mix of purpose built and converted buildings. The properties total 255,374 sq ft and are spread over fourteen geographical locations. The entire commercial portfolio is held freehold and currently comprises 21 assets. 58 leases have been granted on these properties. Approximately 80 per cent. of RT Warren's income is attributable to the commercial portfolio, which equates to approximately £2.9 million per annum at an average of only £11.45 per sq ft which the Directors consider to be low. In the Directors' view, this is capable of significant growth in the medium term. The commercial portfolio has a vacancy rate of 14.7 per cent. with an average ownership period of 23 years. The commercial portfolio has a WAULT of 4.5 years to break and 6.1 years to expiry. The Company considers some of the commercial assets to have potential for alternative use, subject to the relevant planning consents.

 

The residential assets are comprised of 61 houses and four flats in 9 locations. The residential portfolio has close to 100 per cent. occupancy with a current gross income of £0.8 million per annum, representing 20 per cent. of RT Warren's annual income. 80 per cent. of the residential dwellings are located in the London Borough of Hillingdon.

 

RT Warren currently has a facility of £14,515,500 with Barclays (pursuant to the Barclays Facility Agreement) at a margin of 1.95 per cent. over Libor, which expires on 31 January 2018. It is the Company's current intention that the Barclays Loan will remain in place following completion of the Acquisition. The Company intends to renew it if satisfactory terms can be agreed with Barclays.

 

Prior to completion of the Acquisition, RT Warren's seven employees (comprising the six current directors and the company secretary) will either resign or be made redundant and will all enter into settlement agreements under which they will waive any employment claims they may have against RT Warren. Any associated costs will fall on the Sellers rather than the Company.

 

As at 31 March 2017, RT Warren had net assets of £58.9 million, principally represented by property assets of £77.0 million and the Barclays Loan of £14.5 million. Rental income for the year ended 31 March 2017 was £3.6 million and profit after tax was £5.3 million, after administrative costs of £0.6 million, which are not expected to continue after completion of the Acquisition.

 

3.       BACKGROUND TO AND REASONS FOR THE ACQUISITION AND PLACING

 

Background

 

The Company's strategy is focused on maximising shareholder returns through carefully selected corporate and direct property acquisitions in key regional UK towns and cities, enhancing sustainable recurring income through active asset management and generating capital growth through refurbishment and development opportunities. The Directors seek to provide attractive income returns for Shareholders through the Company's progressive dividend policy, as well as through capital growth.

 

Summary of the Company's portfolio activity

 

On 21 October 2013, the Company completed the acquisition of the Sequel Portfolio (which comprised 24 properties around the UK) from Quintain Ltd and Buckingham Properties Limited for a consideration of £39.25 million. At the time of this acquisition the properties in the Sequel Portfolio had an aggregate market value of £44.2 million, with a net rent receivable of £5.2 million per annum. The Board has undertaken a programme of active management and as at 31 March 2017 (the Company's last year end) the Company had completed the sale of seven properties from the Sequel Portfolio, at sale prices either at or above book value. As at 31 March 2017, the remaining Sequel Portfolio was independently valued at £66.9 million and the annual net rent receivable was £3.98 million reflecting disposals and the intentional vacancies at Hudson House in York.

 

Since the completion of the acquisition of the Sequel Portfolio, the Company has remained active in acquiring assets which are in line with the Company's strategy to focus on the UK secondary property market outside London.

 

On 26 August 2014, the Company completed the acquisition of the PIH Portfolio, for a consideration of £32.0 million. At the time of the acquisition of the PIH Portfolio, PIH held 17 properties split into 55 individual units. Since the acquisition of PIH, the Company has sold part of two properties for £2.58 million either at or above book value. As at 31 March 2017, the remaining properties in the PIH Portfolio were valued at £37.8 million and the annual net rent receivable was £2.62 million.

 

Since completing the acquisition of the PIH Portfolio the Company has completed the following acquisitions:

 

·     Bank House, Leeds, for a consideration of £10.0 million (1 April 2015);

·     Sol Central, Northampton, for a consideration of £20.7 million (17 June 2015);

·     46-54 High Street, Sutton, for a consideration of £3.9 million (17 August 2015);

·     249 Midsummer Boulevard, Milton Keynes, for a consideration of £7.2 million (29 February 2016);

·     Broad Street Plaza, Halifax, for a consideration of £24.18 million (14 March 2016);

·     Boulton House, Manchester, for a consideration of £10.95 million (22 August 2016); and

·     St James Gate, Newcastle, for a consideration of £20.0 million (6 August 2017).

 

Following the transactions set out above and as at 18 September 2017, the loan to value on the Company's portfolio net of cash was 43 per cent.

 

Reasons for the Acquisition

 

In the opinion of the Directors, the South, the South East and South West of England is experiencing a shortage of quality office space as a result of the recent changes to permitted development rights, which allows the change of use of a building from offices to residential without the requirement for planning permission. This has resulted in an increase in the rental incomes achievable in these regions. A report by BNP Paribas Real Estate predicts that average rents will grow faster in the South-East office market over the next two years than in both London and the rest of the UK as a result of such shortages.

 

The Directors consider the RT Warren Portfolio to be an attractive portfolio of good quality commercial properties, which the Directors believe have historically been undermanaged. The Directors believe there to be an opportunity to improve the rental income on the portfolio through applying the Company's brand of active management. There may also be opportunities to enhance certain of the assets within the portfolio by applying for planning permission for a change of use. They further consider that the RT Warren Portfolio is complementary to the Company's existing portfolio, due to approximately 50 per cent. of the Company's assets being in the South and South West of England.

 

Following completion of the Acquisition, the Directors will review the strategy for the residential portfolio. Whilst it is intended that the Company's focus will remain on commercial property, any sale of the residential assets will only be done at a price that is acceptable to the Board. Subject to this being achievable, the Company will seek to sell the residential assets in the RT Warren Portfolio by the end of Summer of 2018. Any sale of residential assets would provide the Company with further funding to pursue additional acquisition opportunities in line with the Company's stated criteria.

 

Following completion of the Acquisition, it is expected that the Company's pro forma loan to value net of cash will be under 35 per cent.

 

Reasons for the Placing and Open Offer

 

The Company is undertaking the Placing and the Open Offer to finance the Acquisition and (if necessary) to provide sufficient funds to repay the Barclays Loan. The Company is undertaking an Open Offer to ensure that Existing Shareholders are given an opportunity to participate in the proposed issue of New Ordinary Shares at the Issue Price.

 

4.       CURRENT TRADING

 

Subsequent to its financial year ended 31 March 2017, the Company has announced the following developments:

 

·     the acquisition of SM Newcastle OB Ltd, now Palace Capital (Newcastle) Ltd, for a consideration of £20 million, which owns the freeholds of 1, 2, & 3 St James' Gate, Newcastle-upon-Tyne as well as the Jury's Inn Newcastle-upon-Tyne;

·     securing planning consent for the redevelopment of the two-acre Hudson House site in York close to the Railway Station to provide a total net area of 132,800 sq ft including 34,000 sq ft of offices, 5,000 sq ft of other commercial and 127 apartments;

·     conclusion of the first letting at Boulton House, Chorlton Street, Manchester following completion of the building's refurbishment. The Company acquired Boulton House in August 2016 and subsequently embarked on a scheme of refurbishment on the common parts and 18,000 sq ft of vacant offices which was completed in February 2017; and

·     the sale of the long leasehold interest in Stratton House, Bristol, for a consideration of £2.25 million, equivalent to current book value.

 

The Board, which will continue to actively manage the Company's properties, believes there are further opportunities to increase Shareholder value and considers that current trading for the year ending 31 March 2018 is in line with management's expectations.

 

The Directors have previously announced the intention for the Company to join the Official List of the London Stock Exchange. The Directors intend to commence this process following completion of the Transaction.

 

5.       VARIATION TO DIVIDEND POLICY - DIVIDEND FORECAST

 

In respect of the financial year ended 31 March 2017, the Company paid an interim dividend of 9 pence per share on 30 December 2016 and a final dividend of 9.5 pence per share on 28 July 2017 making a total dividend for the year of 18.5 pence. The Company remains committed to its brand of active asset management and is confident that it will be able to grow its income which will support its progressive dividend policy.

 

The Directors have undertaken a review of the current dividend policy and the Directors have decided that it is appropriate for the Company to move to a quarterly dividend. The Company intends to pay an interim dividend of 9.5 pence on 29 December 2017, payable to those Shareholders on the register as at 8 December 2017. The New Ordinary Shares issued pursuant to the Placing and the Open Offer will rank for the interim dividend. Following this payment, the Company will switch to quarterly payments, with the first quarterly dividend being paid in April 2018 in respect of the quarter to 31 March 2018.

 

6.       DETAILS OF THE ACQUISITION AGREEMENT

 

On 18 September 2017, the Company entered into the Acquisition Agreement with the Sellers to acquire the entire issued share capital of RT Warren (subject to Admission and certain other conditions). The consideration payable is £53.3 million (subject to adjustment in accordance with the terms of the Acquisition Agreement), to be satisfied in cash within three Business Days of Completion and is subject to retentions. The consideration will be decreased on a pound for pound basis to the extent that the net assets of RT Warren are less than £53.3 million and a further sum will be paid by the Company on a pound for pound basis to the extent the net assets of RT Warren are more than £53.3 million.

 

Completion of the Acquisition is conditional on:

 

·     certain of the Resolutions being passed (without material amendment) by 6 October 2017;

·     the Placing and Open Offer Agreement not being terminated and becoming unconditional in accordance with its terms (save for any condition relating to Admission, the allotment of the Placing Shares and the Acquisition Agreement becoming unconditional or being completed); and

·     Admission occurring by 8.00 a.m. on 9 October 2017 (or such later date as the Company and the Sellers' Representative may agree, not being later than 27 October 2017).

 

In addition, the Company is entitled to terminate the Acquisition Agreement in certain circumstances, including inter alia if, at any time before Completion, there is any breach of any of the warranties which is material in the context of the purchase by the Company of RT Warren or if anything occurs which has, or might reasonably be expected to have, a material adverse effect on the financial or trading position, operations or prospects of RT Warren.

 

Each of the Sellers has provided customary warranties as to title, capacity and solvency (the "Fundamental Warranties") with respect to himself/herself and his/her shares in RT Warren. The Majority Sellers have, in addition, provided customary warranties (the "Business Warranties") and a customary tax covenant (containing tax warranties) with regard to RT Warren and the properties being acquired.

 

The maximum liability of the Sellers with respect to the Fundamental Warranties, Business Warranties and the tax covenant (including tax warranties) is £1 and the Company's recourse in the event of a claim for breach of such warranties or under the tax covenant will be under the W&I Policy.

 

The W&I Policy has an aggregate limit of £10.5 million and retention of nil. It covers claims for breach of the Fundamental Warranties, Business Warranties and under the tax covenant. The time limit for notification of claims under the W&I Policy is (in respect of the Business Warranties) two years from Completion and (in respect of the Fundamental Warranties and claims under the tax covenant) seven years from Completion.

 

7.       DETAILS OF THE PLACING AND OPEN OFFER

 

The Company is proposing to raise £70 million (before expenses) pursuant to the Placing and Open Offer.  The Placing will be conducted by the Company in accordance with the terms and conditions set out in the Appendix to this Announcement. The Placing is being conducted through an accelerated bookbuilding process which will commence immediately following this Announcement.  

 

The Bookbuild will determine final demand for and participation in the Placing.  The Bookbuild is expected to close not later than 4.30 p.m. (London) today, 19 September 2017, but may be closed at such earlier or later time as Arden may after consultation with Allenby Capital, in its absolute discretion, determine.  The allocations will be determined at the absolute discretion of Arden after consultation with Allenby Capital and will be confirmed orally or by email by Arden following the close of the Bookbuild.  A further announcement will be made following the completion of the Bookbuild (the "Bookbuild Announcement").

 

Certain directors of the Company have indicated that they intend to participate in the Placing. In addition, the Company will, today, be issuing Ordinary Shares to certain Directors under the Company's LTIP and granting options under the Company's deferred bonus scheme shortly following the publication of this announcement. Further details will be announced in the Bookbuild Announcement.

 

The Appendix (which forms a part of this Announcement) contains the detailed terms and conditions of the Placing.

IMPORTANT INFORMATION

 

This Announcement has been issued by, and is the sole responsibility, of the Company.  No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Allenby Capital or Arden or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

 

This Announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it form the basis of or be relied on in connection with any contract or as an inducement to enter into any contract or commitment with the Company. In particular, the Placing Shares and Offer Shares have not been, and will not be, registered under the United States Securities Act of 1933 as amended or qualified for sale under the laws of any state of the United States or under the applicable laws of any of Canada, Australia, the Republic of South Africa, Japan or New Zealand and, subject to certain exceptions, may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as such term is defined in Regulation S under the Securities Act) or to any national, resident or citizen of Canada, Australia, the Republic of South Africa,  Japan or New Zealand.

 

The distribution or transmission of this Announcement and the offering of the New Ordinary Shares in certain jurisdictions other than the UK may be restricted or prohibited by law or regulation. Persons distributing this Announcement must satisfy themselves that it is lawful to do so. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No action has been taken by the Company that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company to inform themselves about, and to observe, such restrictions. In particular, this announcement may not be distributed, directly or indirectly, in or into the United States, Canada, the Republic of South Africa, Australia, Japan or New Zealand. Overseas Shareholders and any person (including, without limitation, nominees and trustees), who have a contractual or other legal obligation to forward this document to a jurisdiction outside the UK should seek appropriate advice before taking any action.

 

This Announcement includes "forward-looking statements" which includes all statements other than statements of historical fact, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this Announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless required to do so by applicable law or the AIM Rules for Companies.

 

No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

 

Allenby Capital Limited, which is authorised and regulated by the FCA in the United Kingdom, is acting as nominated adviser and joint broker to the Company for the purposes of the AIM Rules for Companies in connection with the Placing and the Open Offer and, as nominated advisor, its responsibilities are owed solely to the London Stock Exchange and are not owed to the Company and the Directors or to any other person or entity. Allenby Capital Limited will not be responsible to any person other than the Company for providing the protections afforded to clients of Allenby Capital Limited or for providing advice to any other person in connection with the Placing and the Open Offer or any acquisition of shares in the Company. Allenby Capital Limited is not making any representation or warranty, express or implied, as to the contents of this Announcement. Allenby Capital Limited has not authorised the contents of, or any part of, this Announcement, and no liability whatsoever is accepted by Allenby Capital Limited for the accuracy of any information or opinions contained in this Announcement or for the omission of any material information.

 

Arden Partners plc, which is authorised and regulated by the FCA in the United Kingdom, is acting as lead broker and bookrunner to the Company in connection with the Placing and Open Offer. Arden Partners plc will not be responsible to any person other than the Company for providing the protections afforded to clients of Arden Partners plc or for providing advice to any other person in connection with the Placing and the Open Offer or any acquisition of shares in the Company. Arden Partners plc is not making any representation or warranty, express or implied, as to the contents of this Announcement. Arden Partners plc has not authorised the contents of, or any part of, this Announcement, and no liability whatsoever is accepted by Arden Partners plc for the accuracy of any information or opinions contained in this Announcement or for the omission of any material information.

 

The New Ordinary Shares will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange.

 

The Appendix to this Announcement (which forms part of this Announcement) sets out the terms and conditions of the Placing. By participating in the Placing, each person who is invited to and who chooses to participate in the Placing by making or accepting an oral and legally binding offer to acquire Placing Shares will be deemed to have read and understood this Announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions set out in this Announcement and to be providing the representations, warranties, undertakings and acknowledgements contained in the Appendix.

 

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this Announcement.

 

 

 

SUMMARY OF THE RT WARREN PORTFOLIO

The following data has been extracted from the Valuation Report completed by Cushman & Wakefield in respect of the RT Warren Portfolio, as at 18 August 2017.

 

Property	Tenure	Market value in Valuation Report (£)
BANBURY: Units 1&2 Thorpe Drive	Freehold	£780,000
BANBURY: Queensway Shopping Centre	Freehold	£1,150,000
BEACONSFIELD: Old Post House	Freehold	£1,200,000
BEACONSFIELD: Millbarn Medical Centre	Freehold	£850,000
BRIGHTON: Pelham House	Freehold	£1,200,000
FAREHAM: Admiral House	Freehold	£950,000
GERRARDS CROSS: Westminster House	Freehold	£1,300,000
GOSPORT: Aldi Supermarket	Freehold	£4,700,000
ICKENHAM: 2-4 High Road	Freehold	£650,000
PORTSMOUTH: Harbour Court	Freehold	£4,660,000
SOUTHAMPTON: Briton House	Freehold	£4,350,000
SOUTHAMPTON: London Court	Freehold	£1,500,000
SOUTHAMPTON: Kings Park House	Freehold	£4,000,000
THAME: Warren House	Freehold	£850,000
UXBRIDGE: 122-123 High Street	Freehold	£1,500,000
UXBRIDGE: Old School House	Freehold	£1,350,000
VERWOOD: 25 & 27 Black Moor Road	Freehold	£6,100,000
WINCHESTER: Staple House	Freehold	£3,925,000
WINCHESTER: Regency House	Freehold	£1,700,000
WINCHESTER: Hyde Abbey House	Freehold	£1,250,000
YORK: Lendal/Museum Street	Freehold	£4,500,000
Total (commercial assets)	£48,465,000
65 residential properties	Freehold/Leasehold	£23,342,500
Total	£71,807,500

 

The aggregate estimated rental value in relation to the commercial assets is £3,606,065 per annum and the aggregate estimated rental value in relation to the residential properties is £934,780 per annum. Thus, the aggregate estimated rental value in relation to the entire RT Warren portfolio is £4,540,845 per annum.

 

DEFINITIONS

 

The following definitions apply throughout this Announcement unless the context otherwise requires:

 

"Acquisition"	the proposed acquisition by the Company of the entire issued share capital of RT Warren
"Act"	the Companies Act 2006 (as amended)
''Admission''	admission to trading on AIM of the New Ordinary Shares becoming effective in accordance with Rule 6 of the AIM Rules
''AIM''	the market of that name operated by the London Stock Exchange
''AIM Rules for Companies''	the AIM Rules for Companies, as published and amended from time to time by the London Stock Exchange
''Allenby Capital''	Allenby Capital Limited, a private limited company incorporated in England & Wales under registered number 06706681 and having its registered office at 5 St. Helen's Place, London EC3A 6AB, the Company's nominated adviser and joint broker for the purposes of the Placing, Open Offer, and Admission
"Announcement"	this announcement, including the Appendix
"Appendix"	the appendix to this Announcement
"Application Form"	the application form on which Qualifying Non-CREST Shareholders may apply for Ordinary Shares under the Open Offer
''Arden''	Arden Partners plc, a public limited company incorporated in England & Wales under the registered number 04427253 and having its registered office at 5 George Road, Edgbaston, Birmingham B15 1NP, the Company's lead broker and bookrunner for the purposes of the Open Offer, Placing and Admission
"Articles"	the articles of association of the Company (as amended from time to time)
"Barclays"	Barclays Bank plc
"Barclays Loan"	a £14,515,500 loan facility with Barclays
''Board'' or "Directors''	the directors of the Company or any duly authorized committee thereof
"certificated" or "in certificated form"	where an Ordinary Share is not in uncertificated form (i.e. not in CREST)
"Circular"	the circular in relation to the Placing and Open Offer to be dispatched to Shareholders
"Chairman"	the chairman of the Board
"Company" or "Palace Capital"	Palace Capital plc
"Conditional Placees"	subscribers for Conditional Placing Shares
"Conditional Placing"	the placing of new Ordinary Shares by Arden and Allenby Capital on behalf of the Company as referred to in this announcement
"Conditional Placing Shares"	1,257,354 of the New Ordinary Shares, the subject of the Conditional Placing
"Conditions"	the conditions of the Placing as set out in the Appendix to this Announcement
"CREST"	the relevant system for the paperless settlement of trades and the holding of uncertificated securities operated by Euroclear UK & Ireland Limited in accordance with the CREST Regulations
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001/3755) including any enactment or subordinate legislation which amends or supersedes those regulations and any applicable rules made under those regulations or any such enactment or subordinate legislation for the time being in force
"DVP"	delivery versus payment
"Ex-entitlement Date"	the date on which the Existing Ordinary Shares are marked "ex" for entitlement under the Open Offer, being 19 September 2017
"Existing Ordinary Shares"	the Ordinary Shares in issue at the date of this Announcement
"FCA"	the Financial Conduct Authority of the United Kingdom
"Firm Placees"	subscribers for Firm Placing Shares
"Firm Placing"	the placing of new Ordinary Shares by Arden and Allenby Capital on behalf of the Company as referred to in this announcement
"Firm Placing Shares"	19,330,882 of the New Ordinary Shares the subject of the Firm Placing
"Form of Proxy"	the form of proxy for use by Shareholders in relation to the General Meeting
"FSMA"	the Financial Services and Markets Act 2000 (as amended)
"General Meeting"	the general meeting of the Company to be convened for 10.00 a.m. on 6 October 2017 or any adjournment thereof in order to consider, and if thought fit pass, the Resolutions
''Group''	the Company and its Subsidiaries (as defined in the Act)
"Issue Price"	340 pence per New Ordinary Share
"LTIP"	the Palace Capital Long Term Incentive Plan
"London Stock Exchange"	London Stock Exchange plc
"Notice of General Meeting"	the notice convening the General Meeting set out in the Circular
"New Ordinary Shares"	the Placing Shares and the Offer Shares
"Offer Shares"	the 1,257,354 new Ordinary Shares being made available to Qualifying Shareholders pursuant to the Open Offer
"Open Offer"	the conditional invitation made to Qualifying Shareholders to apply to subscribe for new Ordinary Shares at the Issue Price on the terms and subject to the conditions set out in the Circular and, where relevant, in the Application Form
"Ordinary Shares"	ordinary shares of 10 pence each in the capital of the Company in issue from time to time
"Overseas Shareholders"	a Shareholder with a registered address outside the United Kingdom
"pence"	pence sterling, the lawful currency of the UK
"Placees"	the Firm Placees and the Conditional Placees
"Placing"	the placing by Arden and Allenby Capital on behalf of the Company of the Firm Placing Shares and Conditional Placing Shares with certain institutional investors and existing Shareholders, otherwise than on a pre-emptive basis, at the Issue Price
"Placing Agents"	mean together, Allenby Capital as joint broker and Arden as lead broker and book runner for the purposes of the Placing and Open Offer, and each a Placing Agent
"Placing Shares"	the 20,588,236 new Ordinary Shares the subject of the Placing
"Prospectus Directive"	the Directive of the European Parliament and of the Council of the European Union 2003/71/EC
"PTM levy"	a flat rate charge of £1.00 on all share trades in excess of £10,000
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Existing Ordinary Shares in certificated form
"Qualifying Shareholders"	holders of Existing Ordinary Shares on the register of members of the Company at the Record Date (but excluding any Overseas Shareholder who has a registered address in the United States or any other Restricted Jurisdiction)
"Record Date"	6.00 p.m. on 15 September 2017 being the latest time by which transfers of Existing Ordinary Shares must be received for registration by the Company in order to allow transferees to be recognised as Qualifying Shareholders
"Regulation S"	Regulation S under the Securities Act
"Resolutions"	the resolutions to be proposed at the General Meeting, which will be set out in the Notice of General Meeting; references to numbered Resolutions are those as numbered in the Notice of General Meeting
"Restricted Jurisdiction"	United States of America, Canada, Australia, Japan, New Zealand and the Republic of South Africa and any other jurisdiction where the extension or availability of the Placing or Open Offer would breach any applicable law
"Regulatory Information Service"	has the meaning given to it in the AIM Rules for Companies
"RT Warren"	R.T. Warren (Investments) Limited, a company incorporated in England & Wales and with company number 00305050
"Securities Act"	US Securities Act of 1933 (as amended)
"Shareholders"	the holders of Existing Ordinary Shares, and the term "Shareholder" shall be construed accordingly
''United Kingdom'' or ''UK''	the United Kingdom of Great Britain and Northern Ireland
"United States" or "US"	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and any other area subject to its jurisdiction
"£"	UK pounds sterling, being the lawful currency of the United Kingdom

 

 

APPENDIX

TERMS AND CONDITIONS OF THE PLACING

 

 (IMPORTANT INFORMATION FOR PLACEES ONLY CONCERNING THE PLACING AND ASSOCIATED OPEN OFFER)

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR NEW ZEALAND OR ANY OTHER JURISDICTION IN OR INTO WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. 

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT AND REFERRED TO HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY ARDEN PARTNERS PLC ("ARDEN") WHO ARE (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE "QUALIFIED INVESTORS", AS DEFINED IN ARTICLE 2.1(E) OF DIRECTIVE 2003/71/EC AS AMENDED FROM TIME TO TIME AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE (THE "PROSPECTUS DIRECTIVE") AND (B) IF IN THE UNITED KINGDOM, PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS WHO FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 AS AMENDED (THE "FPO") OR FALL WITHIN THE DEFINITION OF "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" IN ARTICLE 49(2)(A) TO (D) OF THE FPO AND (II) ARE "QUALIFIED INVESTORS" AS DEFINED IN SECTION 86 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA") OR (C) PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS.

The Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. No public offering of the Placing Shares is being made in the United States. The Placing (as defined below) is being made solely outside the United States to persons in offshore transactions (as defined in Regulation S) meeting the requirements of Regulation S. Persons receiving this Announcement (including custodians, nominees and trustees) must not forward, distribute, mail or otherwise transmit it in or into the United States or use the United States mails, directly or indirectly, in connection with the Placing.

This Announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction including, without limitation, the United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand or any other jurisdiction where the extension or availability of the Placing would breach applicable law (a "Restricted Jurisdiction"). This Announcement and the information contained herein are not for publication or distribution, directly or indirectly, to persons in a Restricted Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction. No action has been taken by Palace Capital plc, Arden or Allenby Capital or any of their affiliates or agents that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons receiving this Announcement are required to inform themselves about and to observe any such restrictions.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.

Arden and Allenby Capital which are each authorised and regulated in the United Kingdom by the FCA are each acting exclusively for the Company and no one else in connection with the Placing and the Open Offer and Admission and will not regard any other person (whether or not a recipient of this document as a client in relation to the Placing, the Open Offer or Admission, and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for affording advice in relation to the Placing, the Open Offer, Admission or any other matters referred to in this document.

By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") by making or accepting an oral and/or written legally binding offer to subscribe for Placing Shares is deemed to have read and understood this Announcement in its entirety (including this Appendix) and to be providing the representations, warranties, undertakings, agreements and acknowledgements contained herein.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, REGULATORY, TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR PLACING SHARES.

A Circular explaining the background to and reasons for the Placing and the Open Offer, making the Open Offer and containing the Notice of General Meeting is expected to be posted to shareholders following the close of the Bookbuilding Process. A copy of the Circular and the Notice of General Meeting will thereafter be made available on the Company's website: www.palacecapital.com.

Details of the Placing and Open Offer Agreement and the New Ordinary Shares

Arden is acting as lead broker and bookrunner and Allenby Capital is acting as joint broker for the purposes of the Placing and the Open Offer and have entered into the Placing and Open Offer Agreement with the Company under which they have severally agreed to use their respective reasonable endeavours to procure Placees to subscribe for New Ordinary Shares in the Placing and to assist the Company in implementing the Open Offer, in each case, on the terms and subject to the conditions set out therein.  The Placing Agents are acting as agents of the Company and for no one else in connection with the Placing and the Open Offer

The Placing comprises a firm placing of 19,330,882 New Ordinary Shares (the "Firm Placing Shares") and the conditional placing of 1,257,354 New Ordinary Share, subject to clawback to satisfy valid applications under the Open Offer (the "Conditional Placing Shares").  The commitments of Placees under the Placing will comprise both Placing Shares (the "Firm Placing") and Conditional Placing Shares (the "Conditional Placing").  Subject to fulfilment or, where applicable, waiver of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under the "Right to terminate" Conditional Placing Shares which are not clawed back to satisfy valid applications under the Open Offer will be issued to Placees pursuant to the Conditional Placing.

The Placing is not being underwritten.

The Placing Shares will, when issued, be subject to the articles of association of the Company, credited as fully paid and rank pari passu in all respects with each other and with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares after the date of issue of the Placing Shares.

 The Placing Shares will be issued free of any encumbrance, lien or other security interest.

Application for Admission

 Application will be made to the London Stock Exchange for the Placing Shares to be admitted to AIM. Subject to the satisfaction of the Conditions, it is expected that Admission will take place and dealings in the Placing Shares will commence on AIM at 8.00 a.m. on 9 October 2017.

Bookbuild

Commencing today, the Placing Agents, as agents of the Company will be conducting an accelerated bookbuilding process (the "Bookbuilding Process") to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. However, the Placing Agents, in consultation with the Company, will be entitled to affect the Placing by such alternative method to the Bookbuilding Process as they may determine in their absolute discretion. No commissions will be paid by or to Placees in respect of any participation in the Placing or subscription for Placing Shares.

Participation in, and principal terms of, the Bookbuilding Process

Participation in the Placing is by invitation only and will only be available to persons who are Relevant Persons and who may lawfully be, and are, invited to participate by either of the Placing Agents.  The Placing Agents and each of their Affiliates are entitled to participate as Placees in the Bookbuilding Process.

The book for the Placing will open with immediate effect. The Bookbuilding Process is expected to close not later than 4.30 p.m. (London) today, but may be closed at such earlier or later time as Arden may after consultation with Allenby, in its absolute discretion, determine. A further announcement will be made following the close of the Bookbuilding Process detailing the results of the Bookbuilding Process, the despatch of the Circular and the making of the Open Offer.

A bid in the Bookbuilding Process may only be made on the terms and conditions in this Announcement and will be legally binding on the Placee on behalf of which it is made and, except with Arden's consent, will not be capable of variation or revocation after the close of the Bookbuilding Process.

A Placee who wishes to participate in the Bookbuilding Process should communicate its bid by telephone to its usual sales contact at Arden or Allenby. Arden will contact and confirm orally to successful Placees following the close of the Bookbuilding Process the size of their respective allocations and a trade confirmation will be despatched as soon as possible thereafter. Arden's oral confirmation of the size of allocations and each Placee's oral commitments to accept the same will constitute an irrevocable legally binding agreement in favour of the Company pursuant to which each such Placee will be required to accept the number of Placing Shares allocated to the Placee at the Issue Price and otherwise on the terms and subject to the conditions set out herein and in accordance with the Company's articles of association. Each Placee's allocation and commitment will be evidenced by a trade confirmation issued to such Placee by Arden. The terms of this Appendix will be deemed incorporated in that trade confirmation.

The Placing Agents reserve the right to scale back the number of Placing Shares to be subscribed by any Placee in the event that the Placing is oversubscribed. The Placing Agent also reserves the right not to accept offers to subscribe for Placing Shares or to accept such offers in part rather than in whole. The acceptance and, if applicable, scaling back of offers shall be at the absolute discretion of Arden after consultation with Allenby.

Following the oral confirmation referred to above, each Placee will have, subject only to any clawback of Conditional Placing Shares under the Conditional Placing an immediate, separate, irrevocable and binding obligation, owed to Arden to pay to Arden (or as Arden may direct) in cleared funds an amount equal to the product of the Issue Price and the number of Placing Shares allocated to such Placee.

To the fullest extent permissible by law, none of the Company, the Placing Agents, any of their Affiliates nor any person acting on their behalf shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither the Company, the Placing Agents nor any of their Affiliates or any person acting on their behalf shall have any liability (including, to the extent legally permissible, any fiduciary duties), in respect of the conduct of the Bookbuilding Process or of such alternative method of effecting the Placing as the Placing Agents, in consultation with the Company may in their sole discretion determine.

All obligations of the Placing Agents under the Placing will be subject to fulfilment of the Conditions.

Conditions of the Placing

The Placing has not been underwritten and is conditional, inter alia, upon:

(a)        the passing of certain Resolutions at the General Meeting or any adjournment thereof;

 

(b)        the Acquisition Agreement becoming unconditional in all respects save in respect of any interconditionality with the Placing and Open Offer Agreement and Admission;

 

(c)        the Placing and Open Offer Agreement becoming unconditional in all respects (other than Admission) and not having been terminated in accordance with its terms; and

 

(d)        Admission occurring by not later than 8:00 a.m. 9 October 2017 (or such later time and/or date as the Company and the Placing Agents may agree, being not later than 8:00 a.m. on 27 October 2017.

Accordingly, if the conditions to which the Placing is subject are not satisfied or, if applicable, waived neither the Placing nor the Open Offer will proceed, the Placing will lapse and each Placee's rights and obligations hereunder shall cease and determine at such time and no claim may be made by a Placee in respect thereof. Neither the Company, the Placing Agents, nor any of their Affiliates shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to which the Placing is subject.

By participating in the Placing, each Placee agrees that its rights and obligations hereunder terminate only in the circumstances described below under "Right to terminate".

Right to terminate

The Placing and Open Offer Agreement contains certain warranties and indemnities from the Company in favour of the Placing Agents.  The Placing Agents may, in their absolute discretion terminate the Placing and Open Offer Agreement in certain circumstances, if, inter alia, the Company fails to comply with its obligations under the Placing and Open Offer Agreement; if there is a material adverse change in business, financial or trading position or prospects, operations or solvency of the Company; or if there is a change in the financial, political, economic or market conditions, which in their reasonable opinion, acting in good faith, make it impractical or inadvisable to proceed with the Placing and Open Offer.

By participating in the Placing, each Placee agrees with the Placing Agents that the exercise by the Placing Agents of any right of termination or other discretion under these terms and conditions shall be within the absolute discretion of the Placing Agents and that the Placing Agents need not make any reference to the Placees in this regard and that, to the fullest extent permitted by law, none of the Placing Agents, any of their Affiliates nor any person acting on their behalf or any of them shall have any liability whatsoever to the Placees in connection with any such exercise or failure to so exercise.

No Prospectus

No offering document or prospectus has been or will be prepared in relation to the Placing or the Open Offer and no such prospectus is required (in accordance with the Prospectus Directive) to be published or submitted to be approved by the FCA and Placees' commitments will be made solely on the basis of the information contained in this Announcement and any information previously published by or on behalf of the Company by notification to a Regulatory Information Service.

Each Placee, by accepting a participation in the Placing, confirms to the Placing Agents that it has neither received nor relied on any information, representation, warranty or statement made by or on behalf of the Placing Agents (other than the amount of the relevant Placing participation in the oral confirmation given to Placees and the trade confirmation referred to below), any Affiliate, any persons acting on its behalf or the Company and none of the Placing Agents, their respective Affiliates, nor any persons acting on their behalf will be liable for the decision of any Placee to participate in the Placing based on any other information, representation, warranty or statement which the Placee may have obtained or received (regardless of whether or not such information, representation, warranty or statement was given or made by or on behalf of any such persons). By participating in the Placing, each Placee acknowledges to and agrees with the Company and the Placing Agents that, except in relation to the information contained in this Announcement, it has relied on its own investigation of the business, financial or other position of the Company in deciding whether to participate in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Registration and settlement

Settlement of transactions in the Placing Shares following Admission will take place within the CREST system, using the DVP mechanism, subject to certain exceptions. The Placing Agents reserve the right to require settlement for and delivery of the Placing Shares to Placees by such other means as they deem necessary, if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation stating the number of Placing Shares allocated to it, the Issue Price, the aggregate amount owed by such Placee to the Company and settlement instructions. Placees should settle against the CREST ID for Arden shown below. Subject to satisfaction or waiver of the conditions to which the Placing is subject, it is expected that such trade confirmation will be despatched on the expected trade date shown below. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which it has in place with Arden.

As soon as practicable following the latest time and date for receipt of applications for and payment in respect of New Ordinary Shares (including the settlement of any relevant CREST instructions) offered under the Open Offer, each Placee allocated Conditional Placing Shares in the Placing will be sent a trade confirmation stating the number of Conditional Placing Shares allocated to it under the Conditional Placing, the aggregate amount owed by such Placee pursuant to the Placing and any final settlement instructions.

The Company will deliver the Placing Shares to a CREST account operated by Arden and Arden will enter its delivery (DEL) instruction into the CREST system.  Arden will hold the Placing Shares delivered to this account as nominee for the Placees.  The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

The expected timetable for settlement will be as follows:

Trade Date:	6 October 2017
Settlement Date:	9 October 2017
ISIN Code:	GB00BF5SGF06
SEDOL:	BF5SGF0
Deadline for input instruction into CREST:	3.00 p.m. on 6 October 2017
CREST ID for Arden:	DAQAQ

It is expected that settlement will take place on the Settlement Date shown above on a DVP basis in accordance with the instructions set out in the trade confirmation unless otherwise notified by Arden.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above the base rate of Barclays Bank Plc.

Each Placee is deemed to agree that if it does not comply with these obligations, the Company may sell any or all of the Placing Shares allocated to the Placee on such Placee's behalf and retain from the proceeds, for the Company's own account and profit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The Placee will, however, remain liable for any shortfall below the aggregate amount owed by such Placee and it may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.

If Placing Shares are to be delivered to a custodian or settlement agent, the Placee should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation.

Insofar as Placing Shares are registered in the Placee's name or that of its nominee or in the name of any person for whom the Placee is contracting as agent or that of a nominee for such person, such Placing Shares will, subject as provided below, be so registered free from any liability to PTM levy, stamp duty or stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax is payable in respect of the issue of the Placing Shares, neither the Company nor the Placing Agents shall be responsible for the payment thereof. Placees will not be entitled to receive any fee or commission in connection with the Placing.

 Representations, warranties and terms

By participating in the Placing, each Placee (and any person acting on such Placee's behalf):

1)   represents and warrants that it has read and understood this Announcement in its entirety (including this Appendix) and acknowledges that its participation in the Placing and the issue of the Placing Shares will be governed by the terms of this Announcement (including this Appendix);

 

2)   acknowledges that no prospectus or offering document has been or will be prepared in connection with the Placing and it has not received and will not receive a prospectus or other offering document in connection with the Bookbuilding Process, the Placing or the Placing Shares;

 

3)   agrees to indemnify on an after-tax basis and hold harmless Arden and each of the Arden Affiliates and any person acting on their behalf from any and all costs, losses, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Announcement and further agrees that the provisions of this Announcement shall survive after completion of the Placing;

 

4)   acknowledges that the Placing Shares will be admitted to AIM and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules and other applicable laws and regulations (the "Exchange Information"), which includes a description of the nature of the Company's business, the Company's most recent annual report and interim financial statements, the most recent admission document, and the Company's announcements and circulars published in the past 12 months', and that the Placee is able to obtain or access this Exchange Information without undue difficulty;

 

5)   acknowledges that none of the Company, the Placing Agents, any of their Affiliates or any person acting on their behalf has provided, and will not provide, it with any material or information regarding the Placing Shares or the Company (other than this Announcement); nor has it requested any of the Company, the Placing Agents, any of their Affiliates or any person acting on their behalf to provide it with any such material or information;

 

6)   acknowledges that (i) none of the Placing Agents, their Affiliates or any person acting on behalf of any of them is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of either of the Placing Agents and that the Placing Agents do not have any duties or responsibilities to it for providing the protections afforded to their clients or for providing advice in relation to the Placing nor for the exercise or performance of any of their rights and obligations hereunder including any rights to waive or vary any conditions or exercise any right of termination, and (ii) neither it nor, as the case may be, its clients expect either Placing Agent to have any duties or responsibilities to it similar or comparable to the duties of "best execution" and "suitability" imposed by the Conduct of Business Sourcebook contained in the FCA's Handbook of Rules and Guidance, and that neither Placing Agent is acting for it or its clients, and that neither Placing Agent will be responsible to any person in connection with the Placing for providing protections afforded to their clients;

 

7)   represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing to subscribe for the Placing Shares is contained in this Announcement and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares, and that it has relied on its own investigation with respect to the Placing Shares and the Company in connection with its decision to subscribe for the Placing Shares and acknowledges that it is not relying on any other information or representations made to it, express or implied, with respect thereto;

 

8)   acknowledges that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has had sufficient time to consider and conduct its own investigation  in connection with its subscription for the Placing Shares, including all tax, legal and other economic considerations and has relied upon its own examination of, and due diligence on, the Company, and the terms of the Placing, including the merits and risks involved;

 

9)   represents and warrants that it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting its invitation to participate in the Placing;

 

10) acknowledges that it is not entitled to rely on any information (including, without limitation, any information contained in any presentation given in relation to the Placing) other than that contained in this Announcement (including this Appendix) and represents and warrants that it has not relied on any representations relating to the Placing, the Placing Shares or the Company other than the information contained in this Announcement;

 

11) represents and warrants that (i) it is entitled to acquire the Placing Shares for which it is subscribing under the laws and regulations of all relevant jurisdictions which apply to it; (ii) it has fully observed such laws and regulations and obtained all such governmental and other guarantees and other consents and authorities which may be required  or necessary in connection with its subscription for Placing Shares and its participation in the Placing and has complied with all other necessary formalities in connection therewith; (iii) it has all necessary capacity to commit to participation in the Placing and to perform its obligations in relation thereto and will honour such obligations; (iv) it has paid any issue, transfer or other taxes due in connection with its subscription for Placing Shares and its participation in the Placing in any territory; and (v) it has not taken any action which will or may result in the Company, the Placing Agents, any of their respective Affiliates or any person acting on their behalf being in breach of the legal and/or regulatory requirements of any territory in connection with the Placing;

 

12) represents and warrants that it understands that the Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States and are not being offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

 

13) represents and warrants that its acquisition of the Placing Shares has been or will be made in an "offshore transaction" as defined in and pursuant to Regulation S;

 

14) represents and warrants that it will not offer or sell, directly or indirectly, any of the Placing Shares in the United States except in accordance with Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

 

15) represents and warrants that, if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area which has implemented the Prospectus Directive other than "qualified investors" as defined in Article 2.1(e) of the Prospectus Directive, or in circumstances in which the prior consent of Arden has been given to such an offer or resale;

 

16) represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to the public in any member state of the European Economic Area, except in circumstances falling within Article 3(2) of the Prospectus Directive which do not result in any requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive;

 

17) represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which it is permitted to do so pursuant to section 21 of FSMA;

 

18) represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

 

19) represents and warrants that it has complied with its obligations: (i) under the Criminal Justice Act 1993 and the Market Abuse Regulation (EU 596/2014);  (ii) in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006, the Anti-Terrorism Crime and Security Act 2001, the Counter-Terrorism Act 2008, the Money Laundering Regulations 2007, the Money Laundering Regulations 2017 and that it is not a person: (a) with whom transactions are prohibited under the Foreign Corrupt Practices Act 1977 or any economic sanction programmes administered by, or regulations promulgated by, the Office of Foreign Assets Control of the U.S. Department of the Treasury; (b) named on the Consolidated List of Financial Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c) subject to financial sanctions imposed pursuant to a regulation of the European Union or a regulation adopted by the United Nations ((i), (ii), (a) and (b), together, the "Regulations") and rules and guidance on anti-money laundering produced by the Financial Conduct Authority ("FCA") and, if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

 

20) if in the United Kingdom, represents and warrants that: (a) it is a person having professional experience in matters relating to investments who falls within the definition of "investment professionals" in Article 19(5) of the FPO, or (b) it is a person who falls within Article 49(2) (a) to (d) ("High Net Worth Companies, Unincorporated Associations etc") of the FPO, or (c) it is a qualified investor as defined in section 86(7) of FSMA, being a person falling within Article 2.1(e)(i), (ii) or (iii) of the Prospectus Directive, or (d) if not a person meeting the criteria set out in (a) or (b) of this paragraph 20 or the other criteria of qualified investors for the purposes of section 86(7) of FSMA, he or she is a director of the Company at the time of the Placing or (d) it is person to whom this Announcement may otherwise lawfully be communicated;

 

21) represents and warrants that its participation in the Placing would not give rise to an offer being required to be made by it or any person with whom it is acting in concert pursuant to Rule 9 of the City Code on Takeovers and Mergers;

 

22) undertakes that it (and any person acting on its behalf) will pay for the Placing Shares acquired by it in accordance with this Announcement and with any trade confirmation sent by Arden (or on its behalf) to it in respect of its allocation of Placing Shares and its participation in the Placing on the due time and date set out herein against delivery of such Placing Shares to it, failing which the relevant Placing Shares may be placed with other Placees or sold as the Company may, in its absolute discretion, determine and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this Announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;

 

23) acknowledges that none of the Placing Agents, nor any of their Affiliates nor any person acting on their behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Placing, and acknowledges that none of The Placing Agents, nor any of their Affiliates nor any person acting on their behalf has any duties or responsibilities to it for providing advice in relation to the Placing or for the exercise or performance of any of the Placing Agent's rights and obligations hereunder, including any right to waive or vary any condition or exercise any right of termination contained herein;

 

24) undertakes that (i) the person whom it specifies for registration as holder of the Placing Shares will be (a) the Placee or (b) the Placee's nominee, as the case may be, (ii) neither the Company nor the Placing Agent nor any of their Affiliates will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement and (iii) the Placee and any person acting on its behalf agrees to acquire the Placing Shares on the basis that the Placing Shares will be allotted to the CREST stock account of Arden which will hold them as settlement agent as nominee for the Placee until settlement in accordance with its standing settlement instructions with payment for the Placing Shares being made simultaneously upon receipt of the Placing Shares in the Placee's stock account on a DVP basis;

 

25) acknowledges that any agreements entered into by it pursuant to these terms and conditions, and any non-contractual obligations arising out of or in connection with such agreements, shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the courts of England and Wales as regards any claim, dispute or matter arising out of any such contract;

 

26) acknowledges that it irrevocably appoints any director of the Company as its agent for the purposes of executing and delivering to the Company and/or the Company's registrar any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares agreed to be taken up by it under the Placing;

 

27) represents and warrants that it is not a resident of any Restricted Jurisdiction and acknowledges that the Placing Shares have not been and will not be registered nor will a prospectus be cleared in respect of the Placing Shares under the securities legislation of any Restricted Jurisdiction and, subject to certain exceptions, may not be offered, sold, taken up, renounced, delivered or transferred, directly or indirectly, within any Restricted Jurisdiction;

 

28) represents and warrants that any person who confirms to a Placing Agent on behalf of a Placee an agreement to subscribe for Placing Shares and/or who authorises a Placing Agent to notify the Placee's name to the Company's registrar, has authority to do so on behalf of the Placee;

 

29) acknowledges that the agreement to settle each Placee's acquisition of Placing Shares (and/or the acquisition of a person for whom it is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to an acquisition by it and/or such person direct from the Company of the Placing Shares in question. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company, the Placings nor any of their Affiliates will be responsible. If this is the case, the Placee should take its own advice and notify the Company and the Placing Agents accordingly;

 

30) acknowledges that when a Placee or any person acting on behalf of the Placee is dealing with Arden, any money held in an account with Arden on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FCA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated in accordance with the client money rules and will be used by Arden in the course of its business; and the Placee will rank only as a general creditor of Arden (as the case may be);

 

31) acknowledges and agrees that in order to ensure compliance with the Money Laundering Regulations 2007 and/or the Money Laundering Regulations 2017 (to come into effect on 26 June 2017), the Company or its registrars may, in their absolute discretion, require verification of its identity. Pending the provision to the Company or the Company's registrar, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at the Company's absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form may be delayed at the Company or the Company's registrars, as the case may be, absolute discretion. If within a reasonable time after a request for verification of identity the Company or the Company's registrars have not received evidence satisfactory to them, the Company may, at its absolute discretion, terminate its commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;

 

32) acknowledges and understands that the Company, the Placing Agents their Affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, undertakings and acknowledgements;

 

33) acknowledges that the basis of allocation will be determined by Arden at its absolute discretion and that the right is reserved to reject in whole or in part and/or scale back any participation in the Placing;

 

34) irrevocably authorises each of the Company and the Placing Agents to produce this Announcement pursuant to, in connection with, or as maybe required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein;

 

35) acknowledges and agrees that time is of the essence as regards its obligations under this Appendix;

 

36) acknowledges and agrees that any document that is to be sent to it in connection with the Placing will be sent at its risk and may be sent to it at any address provided by it to Arden;

 

37) acknowledges and agrees that it will be bound by the terms of the articles of association of the Company; and

 

38) acknowledges and agrees that these terms and conditions in this Appendix and all documents into which this Appendix is incorporated by reference or otherwise validly forms a part and/or any agreements entered into pursuant to these terms and conditions and all agreements to acquire shares pursuant to the Placing will be governed by and construed in accordance with English law and it submits to the exclusive jurisdiction of the English courts in relation to any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by Arden in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange.

The acknowledgements, agreements, undertakings, representations and warranties referred to above are given to the Company and the Placing Agents and, where relevant, each of their Affiliates and any person acting on their behalf and are irrevocable.

No claim shall be made against the Company or any of the Placing Agents or their Affiliates or any other person acting on their behalf by a Placee to recover any damage, cost, loss, charge or expense which it may suffer or incur by reason of or arising from the exercise of any rights available to it pursuant hereto or the performance of its obligations hereunder or otherwise in connection with the Placing.

No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Placing Shares are issued or transferred (as the case may be) into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee.

Any arrangements to issue or transfer the Placing Shares into a depositary receipts system or a clearance service or to hold the Placing Shares as agent or nominee of a person to whom a depositary receipt may be issued or who will hold the Placing Shares in a clearance service, or any arrangements subsequently to transfer the Placing Shares, may give rise to stamp duty and/or stamp duty reserve tax, for which neither the Company nor the Placing Agents will be responsible and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such stamp duty or stamp duty reserve tax undertakes to pay such stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless each of the Company and the Placing Agents in the event that such person has incurred any such liability to stamp duty or stamp duty reserve tax.

In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

Times and dates in this Announcement may be subject to amendment. The Placing Agents, as agents of the Company shall notify the Placees and any person acting on behalf of the Placees of any such changes.

 Each Placee and any person acting on behalf of the Placee acknowledges and agrees that either or Placing Agents and/or any of their Affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

The rights and remedies of the Company and the Placing Agents under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise or partial exercise of one will not prevent the exercise of others.

Each Placee may be asked to disclose in writing or orally to the Placing Agents and, if so, undertakes to provide:

1)   if he is an individual, his nationality; 

 

2)   if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned; and

 

3)   such other "know your client" information as the Placing Agents may reasonably request.

References to time in this Announcement are to London time, unless otherwise stated.

All times and dates in this Announcement may be subject to amendment.