Company Announcements

Proposed Firm Placing, Placing & Open Offer & OFS

Source: RNS
RNS Number : 9020C
Shaftesbury PLC
22 October 2020
 

NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA (SUBJECT TO CERTAIN LIMITED EXCEPTIONS), AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL CONSTITUTE AN OFFERING OF NEW SHARES. NEITHER THIS COMMUNICATION NOR ANY PART OF IT SHALL FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH OR ACT AS AN INDUCEMENT TO ENTER INTO ANY CONTRACT OR COMMITMENT WHATSOEVER. ANY DECISION TO PURCHASE, SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY NEW SHARES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE PUBLISHED OR DISTRIBUTED ELECTRONICALLY. COPIES OF THE PROSPECTUS WILL BE AVAILABLE LATER TODAY ON THE WEBSITE OF SHAFTESBURY PLC AT WWW.SHAFTESBURY.CO.UK.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014) ("MAR").

22 October 2020

SHAFTESBURY PLC

 ("Shaftesbury", the "Company" or "the Group")

Proposed Firm Placing, Placing and Open Offer and Offer for Subscription

Shaftesbury has today announced its intention to raise gross proceeds of approximately £297.0 million by way of a fully underwritten Firm Placing and Placing and Open Offer. Up to a further approximately £10.0 million in gross proceeds may also be raised by way of an Offer for Subscription which is not underwritten (the "Offer for Subscription", together with the Firm Placing and Placing and Open Offer, the "Capital Raising").

The New Shares will be issued at an Issue Price of 400 pence per New Share.

 

 Highlights of the Share Issue

·      Issue of up to 37,147,884 New Shares through the Firm Placing, raising gross proceeds of up to £148.6 million at the Issue Price. The Firm Placed Shares are not subject to clawback and are not part of the Placing and Open Offer

·      Issue of 37,102,116 New Shares through the Placing and Open Offer, raising gross proceeds of £148.4 million at the Issue Price

·      Under the Open Offer, Qualifying Shareholders will have an Open Offer Entitlement of 7 Open Offer Shares for every 58 Existing Shares held

·     The Firm Placing and Placing are being conducted by way of an accelerated bookbuild process (the "Bookbuild"), which will be launched immediately following this announcement and is subject to the terms and conditions set out in the appendix to this Announcement (which forms part of this Announcement) (the "Appendix")

·    Issue of up to 2,500,000 New Shares through a non-underwritten Offer for Subscription, in order to raise gross proceeds of up to £10.0 million at the Issue Price. It is expected that the Offer for Subscription will open on 23 October 2020 and allow interested parties an opportunity to subscribe for New Shares

·      Total net proceeds of the Firm Placing, Placing and Open Offer of approximately £285.0 million, which could be increased by Offer for Subscription, to a net total of approximately £294.7 million

·     The Company has received commitments from shareholders representing 52.2% of the issued share capital of the Company undertaking to participate in the Firm Placing and Placing and Open Offer by subscribing for an aggregate of at least 35 million New Shares in the Firm Placing and Placing and Open Offer and to vote in favour of all  resolutions at the General Meeting (other than any resolution which is required to approve that shareholder's acquisition of New Shares pursuant to the Capital Raising) at the General Meeting

 

J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") and Liberum Capital Limited ("Liberum") are each acting as Joint Bookrunner, Joint Underwriter and Joint Global Coordinator (together the "Joint Underwriters"). Liberum is also acting as Sponsor.

 

Commenting on the Capital Raise, Brian Bickell, Chief Executive said:

"The Capital Raising announced today will ensure the Group maintains the financial flexibility and resources to navigate the unprecedented near-term operational challenges caused by the Covid-19 pandemic, and that we will be well-placed to benefit from the gradual return to more-normal patterns of life and activity that have always made London's West End an unrivalled global destination.

We are grateful for the support of our shareholders and new investors, and particularly our cornerstone investors CapCo and Norges, with whom we share a commitment to, and belief in, the long-term prospects for the West End."

 

Background to, and reasons for, the Capital Raising

Shaftesbury has a virtually impossible-to-replicate real estate portfolio that extends to 16 acres in the heart of London's West End. In common with many city centres across the world, the Covid-19 pandemic and the measures to contain it have had a significant impact on London and the West End. The continuing restrictions implemented by the Government, and the uncertainty regarding their duration and extent, has had, and continues to have, a material adverse effect on normal patterns of activity and business in the West End. The Group has seen a material deterioration in domestic and international footfall and trading conditions faced by its food, beverage and retail occupiers. Office occupiers, particularly those with direct or indirect exposure to consumer-facing businesses, and residential tenants have also been affected, but to a lesser extent. In turn, this has affected occupiers' ability to meet both rental and other lease obligations and occupancy levels across the portfolio.

Having assessed the Group's financial position in light of the implications of the Covid-19 pandemic for its short- and medium-term prospects, the Board has decided to issue equity by way of a Firm Placing and Placing and Open Offer and Offer for Subscription to help ensure the Group maintains a strong financial base, is positioned to return to long-term growth as pandemic issues recede and, should conditions improve, is able to invest further in its exceptional portfolio.

 

Use of proceeds

The Group intends to use the net proceeds of the Firm Placing and Placing and Open Offer of approximately £285.0 million to prioritise the maintenance of a strong balance sheet and maintain its liquidity as follows, set out in order of priority:

·              Maintain a strong balance sheet:

o    The Board is focussed on eliminating short-term financing risk while Covid-19 disruption and uncertainty continues to materially affect the Group's operating performance. The Company intends, subject to the completion of the Firm Placing and Placing and Open Offer, to cancel the currently undrawn 1997 RCF of £125 million early, and replenish that liquidity with a portion of the Firm Placing and Placing and Open Offer net proceeds. This facility has a contractual maturity in May 2022. In doing so, the Group will benefit from:

§   removing the risks associated with expected requests for further interest cover waivers until the contracted expiry of the facility and the need to either renew or refinance this facility during a period of uncertainty regarding near-term income cash flows and property valuations; and

§   releasing £252 million of charged properties (based on the valuation at 15 September 2020). This will increase the Group's pool of uncharged assets to £686 million, based on the 15 September 2020 valuation, giving the Group greater protection against the risk of failing to meet loan-to-value covenants in its other Debt Facilities.

The 2018 RCF, of £100 million, has a contracted maturity in February 2023. This facility is currently fully drawn and £100 million of the net proceeds of the Firm Placing and Placing and Open Offer will be used to repay these drawings, which will be available to be re-drawn, provided that all requirements in the loan agreement are complied with, including the financial covenants. In view of the expected need to request income-related covenant waivers under the 2018 RCF, until such time as operating conditions improve, net proceeds of the Firm Placing and Placing and Open Offer will ensure the Group retains sufficient liquidity to repay drawings under this facility, or if appropriate, part cancel or terminate the facility earlier than its contractual maturity, in the event that such waivers are not granted, or are subject to restrictions which the Board finds unacceptable.

Up to £12 million would be set aside to fund deposits under the Group's Term Loans as cash cures which are permitted under the relevant loan agreements in the event the Group does not meet the interest cover covenants in either of those facilities and the Group does not have the benefit of a waiver at that point in time. In the Company's reasonable worst case scenario for the working capital statement in the Prospectus expected to be published later today, through the use of cash cure mechanisms, the Group anticipates meeting the interest cover covenants beyond the expiry of the waivers it currently has in respect of those facilities for the twelve months from the date of the Prospectus. 

·         Maintain appropriate levels of liquidity by funding expected short-term cash outflows from operating and financing activities: In the Company's reasonable worst case scenario prepared for the working capital statement, the Board expects a cash outflow from operating activities and interest payments of approximately £45 million in the year ending 30 September 2021. In the absence of the Firm Placing and Placing and Open Offer, this, together with its investment commitments, would reduce liquidity available to the Group below the level the Board considers appropriate. Accordingly, if needed, the Group will use a portion of the net proceeds of the Firm Placing and Placing and Open Offer to fund operating cash outflows net of interest payments.

·            Fund investment in existing and future schemes, and ensure vacant properties are refurbished to maximise their letting prospects: The Group estimates that it will use up to £65 million of the net proceeds to fund capital expenditure on improvement schemes, including capital commitments, as at 15 September 2020, of approximately £32 million in respect of current refurbishment and reconfiguration schemes.

The Group will maintain its usual disciplined approach to acquisitions. Until such time as current trading conditions improve sufficiently that waivers are no longer required to maintain certain of its Debt Facilities, the Board will prioritise its prudent approach to maintaining liquidity. However, by exception, should rare opportunities arise to secure particular, long-sought acquisitions in its core ownership clusters, which will provide valuable long-term compound benefits, the Group will consider deploying its available liquidity. The continual review of the Group's existing ownerships to identify and dispose of buildings no longer considered core, has the potential to add to the Group's available liquidity.

·             Maintain liquidity: The Group intends to use the balance of the net proceeds (and any additional proceeds raised by way of the Offer for Subscription) to maintain a prudent level of liquidity, but should conditions improve, to provide some capacity for portfolio investment.

In summary, the use of proceeds is as follows:

Use of proceeds(i)

£ million

Repay 2018 RCF (but associated liquidity remains available to the Group subject to compliance with the 2018 RCF)

100

Potential cash cures to interest cover covenants in the Group's term loans

12

Fund operating losses and financing costs in FY2021

45

Capital expenditure over FY2021 and FY2022

65

To maintain a prudent level of liquidity but should conditions improve, provide some capacity for portfolio investment

63

Net proceeds

285

(i)            The planned early cancellation of the 1997 RCF, which is currently undrawn, in connection with the successful completion of the Capital Raising, will reduce available liquidity by £125 million.

In the current uncertain environment, the Board considers it appropriate to retain a degree of flexibility as to the appropriate best use of the net proceeds of the Firm Placing and Placing and Open Offer and their deployment among the categories described above, in light of its over-riding objective of maintaining the Group's resilient capital structure.

 

Dividend policy

The Board has a policy of long-term, progressive growth in dividends, which reflects the long-term trend in the Group's income and adjusted EPRA earnings.

Following the outbreak of Covid-19, the Board announced on 24 March 2020 that, in view of the likely reduction in rent collections and, in turn, adjusted EPRA earnings, it had taken the decision not to declare an interim dividend to preserve liquidity. A further announcement was made on 25 September 2020 that, in view of current conditions and uncertain near-term outlook, no final dividend would be declared in respect of the year ended 30 September 2020.

The Board intends to resume dividend payments as soon as it considers prudent, maintaining its policy of sustainable dividend growth over the long-term. The pace and resilience of the post-pandemic recovery period, bearing in mind the Group's REIT property income distribution obligations, will be a key factor in the Board's near-term decisions on declaring dividends.

 

Director participation

Each Director who holds (and/or whose PCA holds) Existing Shares has irrevocably undertaken to vote (and/or, where applicable, to procure that his or her PCA votes), in favour of the Resolutions to be proposed at the General Meeting to approve the Capital Raising in respect of such holdings, amounting in aggregate to 3,650,538 Existing Shares, representing 1.2% of the issued share capital of the Company as at the Latest Practicable Date.

In addition, the Directors intend to subscribe for up to 76,960 New Shares at the Issue Price.

 

Shareholders undertaking

CapCo which holds 80,721,003 Existing Shares as at the Latest Practicable Date (representing approximately 26.3% of the Company's issued ordinary share capital as at the Latest Practicable Date), has given an undertaking to the Company pursuant to which it has agreed to subscribe, and to procure that its affiliates subscribe, for 8,130,008 New Shares at the Issue Price pursuant to the Firm Placing and to take up their rights in respect of Existing Shares to subscribe for 8,119,992 New Shares at the Issue Price as a Conditional Placee pursuant to the Placing and Open Offer (subject to such number of Conditional Placing Shares being reduced on a share-for-share basis in the event that CapCo exercises its right of offset in respect of its entitlement to New Shares under the Open Offer) (representing gross proceeds of approximately £65,000,000). CapCo has also agreed to procure that it shall and it shall procure that its affiliates shall, vote in favour of all resolutions (other than any resolution which is required to approve CapCo's acquisition of New Shares pursuant to the Capital Raising) at the General Meeting.

Norges which holds 79,680,278 Existing Shares as at the Latest Practicable Date (representing approximately 25.9% of the Company's issued ordinary share capital as at the Latest Practicable Date), has given an undertaking to the Company pursuant to which it has agreed to subscribe for 9,628,447 New Shares at the Issue Price pursuant to the Firm Placing and to take up in full their rights in respect of Existing Shares to subscribe for 9,616,585 New Shares at the Issue Price pursuant to the Placing and Open Offer (representing gross proceeds of approximately £76,980,128). Norges has also agreed to vote in favour of all resolutions (other than any resolution which is required to approve Norges' acquisition of New Shares pursuant to the Capital Raising) at the General Meeting.

The agreement of each of CapCo and Norges to participate in the Capital Raising is subject to the terms of their respective undertakings.

 

 

Publication of Prospectus

The Prospectus will, following publication, be sent to Shareholders and made available on the Company's website, www.shaftesbury.co.uk.

Any capitalised terms used but not otherwise defined in this announcement have the meaning given to them in Appendix I.

 

For more information, please contact:

Shaftesbury PLC

+44 207 333 8118

J.P. Morgan Cazenove (Joint Global Coordinator, Joint Bookrunner, and Joint Underwriter)

+44 207 742 4000

Bronson Albery

Barry Meyers

Paul Hewlett

Tara Morrison

 

 

Liberum Capital Limited (Sponsor, Joint Global Coordinator, Joint Bookrunner and Joint Underwriter)

+44 203 100 2000

Richard Crawley

Jamie Richards

Louis Davies

Miquela Bezuidenhoudt

 

 

Blackdown Partners (Independent Adviser to the Board of Shaftesbury PLC)

+44 203 807 8484

Peter Tracey

Tom Fyson

 

 

RMS Partners

+44 203 735 6551

Simon Courtenay

 

 

MHP Communications

+44 203 128 8788

Reg Hoare / Oliver Hughes / Giles Robinson

shaftesbury@mhpc.com

 

+44 203 128 8193

 

Expected Timetable of principal events(i)(ii)(iii)

Record Date for Open Offer Entitlements

close of business on Wednesday 21 October 2020

Announcement of the Capital Raising

7.00 a.m. on Thursday 22 October 2020

Ex-Entitlements Time for the Open Offer

8.00 a.m. on Thursday 22 October 2020

Publication of the Prospectus

Thursday 22 October 2020

Announcement of the results of the Firm Placing through a Regulatory Information Service

Before 5.00 p.m. on Thursday 22 October 2020

Posting of the Prospectus, Application Form (to Qualifying Non-CREST Shareholders only), Offer for Subscription Application Form and Proxy Forms

Friday 23 October 2020

Offer for Subscription opens

Friday 23 October 2020

Open Offer Entitlements and Excess Open Offer Entitlements enabled in CREST and credited to stock accounts in CREST (Qualifying CREST Shareholders only)

as soon as practicable after 8.00 a.m. on 23 October 2020

Recommended latest time for requesting withdrawal of Open Offer Entitlements and Excess Open Offer Entitlements from CREST(iv)

4.30 p.m. on Tuesday 10 November 2020

Latest time and date for depositing Open Offer Entitlements and Excess Open Offer Entitlements into CREST(v)

3.00 p.m. on Wednesday 11 November 2020

Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)

3.00 p.m. on Thursday 12 November 2020

Latest time and date for receipt of Proxy Forms or electronic proxy appointments

10.00 a.m. on Friday 13 November 2020

Record date for voting at the General Meeting

6.30 p.m. on Friday 13 November 2020

Latest time and date for receipt of completed Application Forms and payments in full and settlement of CREST instructions (as appropriate)

11.00 a.m. on Monday 16 November 2020

Latest time and date for receipt of completed Offer for Subscription Application Forms

11.00 a.m. on Monday 16 November 2020

Announcement of the results of the Placing and Open Offer and Offer for Subscription through a Regulatory Information Service

Tuesday 17 November 2020

General Meeting

10.00 a.m. on Tuesday 17 November 2020

Results of General Meeting announced through a Regulatory Information Service

Tuesday 17 November 2020

Admission and dealings in New Shares commence on the London Stock Exchange

by 8.00 a.m. on Wednesday 18 November 2020

New Shares credited to CREST stock accounts (uncertificated holders only)

as soon as possible after 8.00 a.m. on  Wednesday 18 November 2020

Expected date of despatch of definitive share certificates for the New Shares to be held in certificated form

within 10 Business Days of Admission

Notes:

 

(i)          The ability to participate in the Placing and Open Offer and the Offer for Subscription is subject to certain restrictions relating to persons with registered addresses or located or resident in countries outside the UK, details of which will be set out in Part IX (Terms and Conditions of the Firm Placing, the Placing and Open Offer) and Part X (Terms and Conditions of the Offer for Subscription) of the Prospectus to be published.

(ii)         These times and dates and those mentioned throughout this announcement and the Application Form are indicative only and may be adjusted by the Company in consultation with the Sponsor and the Joint Underwriters, in which event details of the new times and dates will be notified to the FCA, the London Stock Exchange and, where appropriate, Qualifying Shareholders.

(iii)          Any reference to time in this announcement is to London Time, unless otherwise specified.

(iv)         If your Open Offer Entitlements and Excess Open offer Entitlements are in CREST and you wish to convert them to certificated form.

(v)           If your Open Offer Entitlements and Excess Open Offer Entitlements are represented by an Application Form and you wish to convert them to uncertificated form.

 

Dealing codes

Ticker                                                                                                                                                     SHB

ISIN of the Existing Shares (and the New

Shares once admitted to trading)                                                                                                     GB0007990962

ISIN of the Open Offer Entitlement                                                                                                  GB00BLPJPH03

ISIN of the Excess Open Offer Entitlement                                                                                    GB00BLPJPJ27

SEDOL                                                                                                                                                 0799096 (in respect of Ordinary Shares traded in Sterling)

IMPORTANT NOTICE

This announcement has been issued by and is the sole responsibility of the Company. This announcement is not a prospectus but an advertisement and investors should not acquire any Shares referred to in this announcement except on the basis of the information contained in the Prospectus to be published by the Company in connection with the Capital Raising. 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.

Copies of the Prospectus when published will be available on the Company's website at www.shaftesbury.co.uk provided that the Prospectus is not, subject to certain exceptions, available (through the website or otherwise) to Shareholders in the United States or any other Excluded Territory. Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement. The Prospectus provides further details of the New Shares being offered pursuant to the Capital Raising.

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 Shares in any jurisdiction. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for the New 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 persons in the United States or any other Excluded Territory, and should not be distributed, forwarded to or transmitted in or into any jurisdiction, where to do so might constitute a violation of local securities laws or regulations.

This announcement is not an offer of securities for sale in the United States. The New Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (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, into or within the United States 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. There will be no public offer of the New Shares in the United States. The New Shares are being offered and sold only (i) outside the United States in reliance on Regulation S under the US Securities Act ("Regulation S"); and (ii) in the United States, subject to certain limited exceptions, either to persons reasonably believed to be "qualified institutional buyers" ("QIBs") as defined in Rule 144A under the US Securities Act ("Rule 144A") in reliance on Rule 144A or to QIBs pursuant to an exemption from or transaction not subject to the registration requirements of the US Securities Act. Prospective investors are hereby notified that the offerors and sellers of the New Shares may be relying upon the exemption from the provisions of Section 5 of the US Securities Act provided by Rule 144A.

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 exceptions, this announcement, the Prospectus (once published) and the Application Forms and Offer for Subscription Application Forms (once printed) should not be distributed, forwarded to or transmitted in or into the United States or any other Excluded Territory.

This announcement does not constitute a recommendation concerning any investor's options with respect to the Capital Raising. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each Shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

This announcement includes forward-looking statements within the meaning of the securities laws of certain applicable jurisdictions. These forward-looking statements include, but are not limited to, statements other than statements of historical facts contained in this announcement, including, without limitation, those regarding the Group's intentions, beliefs or current expectations concerning, among other things, their future financial condition and performance and results of operations; their strategy, plans, objectives, prospects, growth, goals and targets; future developments in the industry and markets in which the Group participate or are seeking to participate; and anticipated regulatory changes in the industry and markets in which the Group operate. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "aim", "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "guidance", "intend", "may", "plan", "project", "should" or "will" or, in each case, their negative, or other variations or comparable terminology.

By their nature, forward-looking statements are subject to known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future, many of which are beyond the Group's control. Shareholders and potential investors are cautioned that forward-looking statements are not guarantees or assurances of future performance and that the Group's actual financial condition, results of operations, cash flows and distributions to shareholders and the development of their financing strategies, and the development of the industry in which they operate, may differ materially from the impression created by the forward-looking statements contained in this announcement. In addition, even if their financial condition, results of operations, cash flows and distributions to shareholders and the development of their financing strategies, and the development of the industry in which they operate, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods.

Undue reliance should not be placed on these forward-looking statements. These forward-looking statements are made as at the date of this announcement and are not intended to give any assurance as to future results. The Group will update this announcement as required by applicable law, including the Listing Rules, Prospectus Regulation Rules, MAR, the Disclosure Guidance and Transparency Rules and the requirements of the LSE, but otherwise the Group and the Joint Underwriters expressly disclaim any obligation or undertaking to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may or may not occur.

 

Notice to all investors

Before subscribing for any New Shares, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus when published. The value of Shares is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. The price and value of securities can go down as well as up, and investors may get back less than they invested or nothing at all. Potential investors should consult an independent financial advisor as to the suitability of the securities referred to in this advertisement for the person concerned. Any investment should be long term in nature. Further details including relevant details of all charges and minimum subscription amounts will be set out in the prospectus, when published.

J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove) is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and authorised and regulated in the United Kingdom by the FCA (as defined below) and the PRA. Liberum Capital Limited is authorised and regulated by the FCA. The Joint Underwriters are not acting for anyone other than the Company and will not be responsible to anyone (whether or not a recipient of this announcement) other than the Company for providing the protections afforded to their clients or for providing advice in relation to the Capital Raising or matters referred to in this announcement.

 

Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Joint Underwriters by the FSMA or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where the exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, none of the Joint Underwriters nor any of their respective subsidiaries, branches, affiliates, associates, directors, officers, employees or advisers accepts any duty, liability or responsibility whatsoever (whether direct or indirect) to any person for the contents of this announcement or makes any representation or warranty, express or implied, as to the contents of this announcement, including its accuracy, completeness, verification or sufficiency or for any other statement made or purported to be made by it, or on its behalf in connection with the Company, the New Shares or Admission or the Capital Raising and nothing in this electronic transmission or the attached document is, or will be, relied upon as a promise or representation in this respect, whether or not as to the past, present or future. The Joint Underwriters and their respective subsidiaries, branches, affiliates, associates, directors, officers, employees and advisers each accordingly disclaim to the fullest extent permitted by law all and any duty, liability and responsibility whether arising in tort, contract, statute or otherwise (save as referred to above) in respect of this announcement or any such statement or otherwise. No representation or warranty, express or implied, is made by any of the Joint Underwriters or any of their subsidiaries, branches, affiliates, associates, directors, officers, employees and or advisers as to the accuracy, completeness, verification or sufficiency of the information set out in this announcement, and nothing in this announcement will be relied upon as a promise or representation in this respect, whether or not as to the past, present or future.

No person has been authorised to give any information or to make any representations other than those contained in this announcement, the Prospectus, the Application Forms and the Offer for Subscription Application Forms, and, if given or made, such information or representations must not be relied on as having been authorised by the Company, the Group, J.P. Morgan Cazenove or Liberum. Subject to the Listing Rules, the Prospectus Rules and the Transparency Rules of the Financial Conduct Authority and the Disclosure Requirements (as such term is defined in the Listing Rules), the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this announcement or that the information in it is correct as at any subsequent date.

In connection with the Capital Raising, the Joint Underwriters and any of their respective affiliates, in accordance with applicable legal and regulatory provisions and subject to the Underwriting and Sponsor's Agreement, may engage in transactions in relation to the New Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise. In connection with the Capital Raising, the Joint Underwriters and any of their respective affiliates, acting as investors for their own accounts may acquire New Shares as a principal position and in that capacity may retain, acquire, purchase, sell, offer to sell or otherwise deal for their own accounts in such New Shares and other securities of the Company or related investments in connection with the Capital Raising or otherwise. Accordingly, references in the Prospectus to the New Shares being issued, offered, acquired, placed or otherwise dealt in should be read as including any issue, offer, subscription, acquisition, placing or dealing by each of the Joint Underwriters and any of their affiliates acting as investors for their own accounts. In addition, certain of the Joint Underwriters or their affiliates may enter into financing arrangements (including swaps or contracts for difference) with investors in connection with which such Joint Underwriters (or their affiliates) may from time to time acquire, hold or dispose of New Shares. The Joint Underwriters may also coordinate a sell-down in the event that any underwriting crystallises as a result of the Capital Raising. Except as required by applicable law or regulation, the Joint Underwriters and their respective affiliates do not propose to make any public disclosure in relation to such transactions.

In the event that the Joint Underwriters acquire New Shares which are not taken up by Qualifying Shareholders, the Joint Underwriters may co-ordinate disposals of such shares in accordance with applicable law and regulation. Except as required by applicable law or regulation, the Joint Underwriters and their respective affiliates do not propose to make any public disclosure in relation to such transactions.

Information to Distributors

Solely for the purposes of the product governance requirements contained within (a)  EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the MiFID II Product Governance Requirements), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment").  Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Capital Raising. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Joint Underwriters will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the Placing Shares and determining appropriate distribution channels.

Further information in relation to the Capital Raising

Introduction

The Board has considered a range of options to optimise the Group's long-term capital structure including property disposals, bond issuance, repayment of existing Debt Facilities and alternative forms of capital raising including both debt and equity. The Board concluded that:

·             while the short- and medium-term outlook for rental income and property values remains uncertain, the Group should prioritise maintaining a strong financial base and its liquidity, focusing on debt and gearing levels; and

·              a material level of disposals to address financing risks would not be in the long-term interests of the Group.

Accordingly, the Board has determined that it is in the long-term interests of the Group to raise equity by way of the Capital Raising.

This section sets out the background to, and reasons for, the Capital Raising, including the Group's strategy, strengths, impact of, and response to the Covid-19 pandemic, the financial impact of the Capital Raising, the proposed use of proceeds, and explains why the Board considers the Capital Raising to be in the best interests of the Group and Shareholders as a whole and to seek your approval of the Resolutions to be proposed at the General Meeting, which will provide the Board with the authorities to carry out the Capital Raising.

The Capital Raising is conditional on, among other things, the passing of those Resolutions by Shareholders at the General Meeting, which is scheduled to take place at 10.00 a.m. on 17 November 2020. A notice convening the General Meeting, together with explanatory notes, will be set out in the Prospectus.

The Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as each of the Directors intends to do in respect of their own beneficial holding of Shares.

Underwriting

Subject to the approval of the Resolutions, the Firm Placing and Placing and Open Offer has been fully underwritten by J.P. Morgan Securities plc (on behalf of its affiliate, J.P. Morgan Cazenove) and Liberum pursuant to the terms and conditions of the Underwriting and Sponsor's Agreement. The Offer for Subscription is not underwritten.

Background to, and reasons for, the Capital Raising

The Company's purpose and strategy

The Company's purpose is to curate vibrant and thriving areas in the heart of London's West End. At its core is a holistic approach to patient, long-term curation of its Villages for the benefit of its stakeholders, by providing distinctive and appealing experiences for visitors, occupiers, their customers and residents. The Company's long-term strategic objectives are to:

·              deliver long-term growth in rents and portfolio value;

·              grow recurring earnings and cash flow;

·              minimise the environmental impact of its operations;

·              deliver sustainable, long-term benefits for its stakeholders;

·              attract, develop and retain talented people; and

·              make a positive, long-lasting contribution to London's West End.

The Company achieves this through its long-term business strategy, which has the following core elements:

·            investing exclusively in the heart of London's West End, concentrating on iconic, high footfall locations close to its major employment locations, transport hubs and visitor attractions. This investment strategy was born out of the Group's experience in the severe property and economic recession of 1990 to 1993. In contrast to national conditions, the Group's then modest holdings in Chinatown saw sustained tenant demand, and resilient rental levels and cash flows. Capital values declined much less, and recovered more quickly, than the wider London or UK market in that challenging period. The Group saw similar economic performance in the global financial crisis of 2007 to 2010;

·           establishing and extending ownership clusters in its chosen locations, which enables the Company to implement a cohesive, long-term management strategy to unlock rental and capital value potential while compounding the benefits of individual improvements it makes such as improved footfall and spending, and higher rental tones, across the Group's nearby holdings;

·              focusing on uses which, in the West End, have a long history of occupier demand exceeding availability of space. The Group's mixed-use buildings typically include food, beverage, retail and leisure uses on the lower floors (together, representing 67% of the ERV of Group's wholly-owned portfolio at 15 September 2020) and offices and residential on upper floors (together, 33% of the ERV of the Group's wholly-owned portfolio at 15 September 2020). These complementary uses provide an ecosystem of visitors, workers and residents which provide footfall and life in its areas; and

·        adopting a long-term, holistic approach to the curation of the Group's Villages to provide distinctive, welcoming environments for its visitors, commercial occupiers and residents. The combination of high footfall, ever-evolving curation and competitively-priced space provides the Group's restaurants, cafés, pubs and shops with an environment within which they can prosper. This drives sustained occupier demand and high occupancy levels, which supports the Group's ability to deliver long-term income growth.

Key features of the management strategy include:

clustering of property uses and selecting occupiers to ensure the Group's distinctive, lively and popular destinations maintain their enduring appeal to visitors, occupiers and residents. The Group favours new concepts, independent operators and international brands making their UK debut, and prefers mid-market, innovative formats, rather than formulaic national chains;

adopting a modern approach to leasing, including shorter lease terms, trialling concepts and including turnover-related top ups in new restaurant leases. This approach allows the Group to adapt to ever-changing consumer trends and occupier requirements, whilst offering occupiers greater flexibility and less onerous lease commitments. From October 2020, the Group is offering all commercial tenants the option to pay rents monthly, rather than quarterly in advance;

adapting the Group's buildings, through reconfiguration or repurposing space, enabling the Group to provide accommodation which meets both current occupier requirements and anticipates market trends. When buildings become vacant, the Group considers how the space can be repurposed to extend the building's useful economic life and enhance its long-term income prospects;

promoting the Group's locations to a wide audience by working closely with occupiers to hold events, marketing and social media campaigns, raising the profile and awareness of the Group's areas with the aim of growing visitor numbers and spending; and

improving the public realm in the Group's Villages. The Group's experience is that creating safe and welcoming environments is an important catalyst for long-term growth in footfall and spending.

Shaftesbury's strengths

The Group's key strengths are as follows:

·            Location in London: London's pre-eminent position amongst the world's leading cities continues to underpin the long-term prospects for the Group's portfolio, which is located in the heart of the West End, a vibrant and popular destination. In normal times drawing exceptional local and domestic footfall, and attracting visitors from around the world, the West End provides an all-round experience, from its unrivalled concentration of entertainment and cultural attractions, historic buildings and public spaces, to a world-class variety of shopping and some of London's best and most-innovative restaurants, cafés, bars and clubs. It is also a location for a wide range of global, national and local businesses, and a popular place to live. The Group's Villages are all close to high profile locations (such as Regent Street, Oxford Street and Leicester Square) and major Underground stations. Over the longer term, the Group's portfolio is well-placed to benefit from increased visits, spending and changing footfall patterns expected once the Elizabeth Line is fully operational. 

·              Structural resilience of London and the West End: The largest city in Western Europe, London is a global creative, financial and commercial centre and one of the world's most popular visitor destinations. In 2017, its economy generated nearly 23% of UK Gross Value Added (GVA).1 London's global appeal brings prosperity and gives it a broad and resilient economic base which is not reliant solely on the fortunes of the wider UK economy.

In normal times, it is estimated the West End attracts in excess of 200 million visits annually, comprising Londoners, a large working population of over 700,000 across a wide range of sectors, and exceptional numbers of domestic and international tourists. Together, they provide a dynamic and prosperous seven-days-a-week economy.

The broad-based economies of London and the West End have a long history of structural resilience, having weathered many episodes of near-term challenges and uncertainties. In the post-pandemic recovery, the Board believes that these economic characteristics will underpin the return to prosperity and sustained long-term growth.

1Source: Office for National Statistics, ' Regional economic activity by gross value added (balanced), UK: 1998 to 2017', dated 12 December 2018

·            Virtually impossible-to-replicate portfolio: The Group's portfolio has taken 34 years to accumulate. The buildings the Group seeks to acquire are typically in long-term private, rather than institutional, ownership and existing owners are generally averse to selling assets which are usually considered to offer security, high occupancy, reliable cash flow and long-term growth prospects. Consequently, it would be virtually impossible now to assemble and replicate a portfolio such as the Group's in the West End.

·              Structural imbalance between supply of, and demand for, space across the areas in which the Group invests: In the West End, listed building and conservation area legislation and local planning policies, together, limit the opportunity for large-scale redevelopment to increase the supply of new accommodation materially, particularly at lower-floor levels. Furthermore, the policies of both the City of Westminster and the London Borough of Camden discourage a material increase in restaurant and bar uses, and new late-night trading and alcohol licences are rarely granted. Against this backdrop of constrained supply of space, there is a long history, in the West End, of sustained occupier demand from a wide variety of national and international occupiers, for food, beverage, retail and leisure accommodation, particularly in the Group's carefully curated, affordable locations. Consequently, the Group's portfolio has historically benefited from high occupancy levels and growing income levels, which together underpin the long-term prospects for rental growth.

·              Compound benefits of ownership clusters: Establishing and extending ownership clusters in its chosen locations enables the Company to implement a cohesive, long-term management strategy to unlock rental and capital value potential while compounding the benefits of individual improvements it makes, such as improved footfall and spending, and higher rental tones, across the Group's nearby holdings.

·         Mixed-use buildings with management flexibility: The Group's portfolio of mostly smaller, mixed-use buildings provides considerable management flexibility. This includes the ability to improve, reconfigure and repurpose space, enabling the Group to adapt its buildings to meet current and anticipate future market trends in demand and occupier requirements.

Evolving the mix of uses is an important factor in the long-term growth of the Group's rental income and capital values. The Group's strategy in recent years has been to grow the number of interesting casual dining and leisure concepts in its popular and busy locations through changes of use, repurposing less valuable retail space, extending existing units or by acquisition. The Group's 317 restaurants, cafés, pubs and bars are important drivers of footfall, dwell-time and trading in its Villages and, at 15 September 2020, accounted for 37% of the Group's ERV, up from 32% at 30 September 2010. Over that same period, the proportion of ERV from retail has fallen from 40% to 30%.

Similarly, the Group has in recent years repurposed its smallest offices, which no longer met the needs of modern businesses, to residential accommodation.

·              Limited capital expenditure requirements: The Group focuses on uses which reduce its exposure to obsolescence. With its focus on retail and leisure uses, which traditionally have been provided in shell form and fitted out by occupiers, and by reusing and adapting, rather than redeveloping its buildings, the Group's capital expenditure is modest, an important factor in long-term shareholder value creation. Typically, annual capital expenditure is less than 1% of portfolio value. Often, the loss of income during works being carried out is a significant part of the overall cost of a scheme.

·             Experienced management team: With an average of 14.5 years of experience working for the Company, Executive Directors and Senior Managers have a forensic knowledge of the West End market and experience of different property and economic cycles. Also, they have considerable experience in dealing with, and adapting, heritage buildings in the West End.

·           The Group curates its portfolio, making decisions based on long-term strategic priorities rather than short-term gains: Through patient assembly of its ownerships and its ever-evolving strategy, the Group has a long record of delivering high occupancy, sustainably growing the portfolio's rental potential, and, crucially, converting this potential into contracted income. In turn, this has driven sustained growth in earnings and dividends.

Over the ten years to 30 September 2019, compound annual growth in annualised current income, ERV, rental income and dividends per share were as follows:

annualised current income: 4.2%;

ERV: 4.8%;

rental income: 6.9%; and

dividends per share: 5.3%.

During that period, average EPRA vacancy and underlying EPRA vacancy across the wholly-owned portfolio represented 2.9% and 2.4%, respectively, of the portfolio total ERV.

·            Low appetite for financing risk: The Board adopts a prudent approach to financing. Key aspects to its financing policy include conservative leverage, diversified sources of finance and a spread of debt maturities. The core of the Group's debt finance is secured, long-term arrangements, consistent with the long-term nature of its portfolio and income streams, and with the majority of interest fixed. Working capital is provided through secured, medium-term revolving credit facilities.

The Board aims to maintain:

significant levels of available liquidity to cover contractual commitments and afford the Group speed of execution when acquisitions become available;

a prudent Group loan-to-value ratio with headroom above loan-to-value covenants in its Debt Facilities; and

a pool of unsecured properties which could be used to top up debt security if necessary, to comply with loan-to-value covenants.

The Company's approach to managing financing risk has been, and continues to be, a factor in constructive discussions with lenders from the outset of the pandemic, particularly in obtaining waivers for its interest cover covenants, which historically have been well covered. 

At 30 June 2020, the Group's loan-to-value ratio was 29.1%, up from 26.7% and 23.9% at 31 March 2020 and 30 September 2019 respectively, largely due to decline in the portfolio valuation. The valuation of the Group's wholly-owned properties at 15 September 2020 showed a further decline since 30 June 2020, from £3,291.9 million to £3,135.8 million.

The Group's individual debt arrangements have specifically charged assets as security, although the relative amounts of collateral charged, compared with the amount of each facility, are not uniform. However, through charging its unsecured properties, which were valued at £434 million at 15 September 2020, the Group estimates it could withstand a 34% decrease in valuations (from the 15 September 2020 valuation) before it reaches the limit of the loan-to-value covenants in its borrowing arrangements.

The Company's reasonable worst case scenario, modelled for the purpose of the working capital statement, assumes a further valuation decrease of 25% from 15 September 2020 to the end of the 12 month period following the date of the Prospectus expected to be published later today. Whilst the Company expects to remain compliant with loan-to-value covenants under this scenario (either by meeting the existing thresholds with the current level of security or by providing uncharged properties as security), significantly higher loan-to-value ratios will increase the Group's financing risk beyond the Board's tolerance and may compromise further covenant waiver and facility renewal negotiations.

·              Social responsibility: The Company has three key pillars to its social responsibility strategy:

Property: The Company reuses and improves, rather than redevelops, the Group's heritage buildings. In doing so, it extends their useful economic lives, enhances their environmental performance and improves their income prospects.

People: The Company focuses on strong relationships with its tenants, local authorities and the local communities where it operates. The Company's values recognise the importance it places on being community minded and of playing an integral part in its Villages.

Employees: The Company operates an open and inclusive culture in the workplace. At the heart of Shaftesbury is its team, who share a passion and ambition for "making great places even better". It is committed to building upon its working culture, developing a diverse and inclusive team from the widest talent pools and ensuring Shaftesbury is a great place to work.

·             Effective governance: The Board is committed to maintaining the high standards of governance across all aspects of its business it has demonstrated for many years. For the Board, governance is not just about compliance but includes encouraging the right behaviours, being open, transparent and engaged with the Group's stakeholders, leading the strategic priorities, challenging and adding value across the Group's activities.

Current trading and prospects in light of the Covid-19 pandemic

In the UK, Government restrictions began to be eased during the summer. In late June, non-essential shops were permitted to re-open, followed in July by restaurants, cafés, and pubs. However, various social distancing measures have continued and large public gatherings remained prohibited, preventing the re-opening of live entertainment venues, clubs and events spaces. From August, Government advice to work from home wherever possible was modified to encourage a return to offices where suitable measures were in place to ensure it was safe to do so.

In response to the sharp rise in UK infection rates in September, the Government reintroduced restrictions including localised lockdowns, extending self-isolation requirements for arrivals from certain countries, territories or regions, a limit on social gatherings, a 10pm curfew for food and beverage businesses, and a reversal of their "return to the office" advice. On 12 October 2020, the Government announced a Covid-19 three-tier alert system which, depending on infection rates, will determine the extent of restrictions to be introduced locally or across wider areas. London, as at the date of this announcement, has been assessed as a Tier Two risk, meaning current restrictions will continue but with further restrictions on social distancing indoors and restrictions on households mixing in hospitality settings, which is likely to significantly affect trading for food, beverage and retail operators. In the event the assessment of risk is changed to, for instance, Tier Three, the Group's pubs and bars would be required to close, except where serving substantial meals, but otherwise shops, restaurants and cafés would not be affected. Restrictions on households mixing in hospitality settings in Tiers Two and Three would be expected to result in a significant reduction in trade.

Until the current Covid-19 pandemic situation is brought under control, there is a risk that the Government may implement further measures or tighten existing restrictions.

Covid-19 measures: first stages of West End recovery but recently announced restrictions causing renewed uncertainty

With over 200 million visits annually, the West End's economy has traditionally benefited from London's reputation as a leading international destination, with a diverse economy spanning a broad range of business sectors, along with world-class education and research facilities, and cultural and leisure attractions. This exceptional daily footfall has traditionally provided a prosperous, seven-days-a-week trading environment for the leisure and retail businesses which have chosen to locate here.

The effective closure of the West End, starting in February, had an immediate and very challenging impact on all consumer-facing, footfall-reliant businesses, which are inevitably cash-flow sensitive. After the initial relaxation of Government restrictions in June to August began to take effect, the West End saw a gradual recovery in footfall, particularly noticeable in the vicinity of Oxford Street and Regent Street, its major shopping streets, and Soho and Leicester Square, its major dining and leisure destinations. In Seven Dials, after a slower start, footfall patterns recovered in line with these locations.

The improvement since July was initially due to a return of local and domestic day visitors, and which was supplemented in early September by a gradual return of the local office-based workforce, until Government advice was reversed. Daily visits to the West End are now around 40% of normal pre-pandemic volumes and are concentrated in the lunchtime to early evening period. At present, the UK's international business and leisure visitor numbers are not expected to recover to pre-pandemic levels until 20242, due to their reliance on long-haul markets.

The course of the pandemic in the short- and medium-term will continue to dictate the extent of restrictions imposed by the UK and other governments to contain the spread of the Covid-19 virus, with implications for the global economy and the pace of recovery. As an international destination, local trading conditions in the West End will inevitably be affected by these macro uncertainties.

2 Source: Tourism Economics. City Tourism Outlook and Ranking: Coronavirus Impacts and Recovery

Support for the Group's occupiers

The Company's focus since the beginning of the pandemic and lockdown has been to help the Group's occupiers through this challenging period by providing financial and other practical support, alongside the Government's various initiatives such as provision of financial support, business rate relief, employee furloughing and the "Eat Out to Help Out" scheme. It is the Board's belief that maintaining occupancy across the Group's portfolio, wherever possible, will position the Group's business for sustained recovery over the medium- and long-term, as the post-pandemic recovery progresses.

Food and beverage, leisure and retail.  After an extended period of closure, most of the Group's 611 restaurants, cafés, pubs and shops have now reopened. They have adapted their operations to ensure effective social distancing measures are in place, and many have adopted revised trading hours to reflect current footfall patterns. Food and beverage businesses have benefited from the use of outdoor seating, especially in the Group's permanently pedestrianised streets and courtyards in Carnaby and Chinatown. Elsewhere, Westminster City Council's temporary street closures and time-limited permissions to use external seating have been extended to the end of October. The temporary closure by Camden Council of streets around Seven Dials outside servicing hours is presenting the opportunity to trial a traffic-reduction scheme.

Despite the improvement in footfall during the summer, many of the Group's occupiers, particularly retailers, continue to report considerably lower turnover than in normal conditions, and it is likely the return to the healthy trading volumes across the West End, even when sustained, will be gradual. The Group has continued its dialogue with occupiers to agree bespoke packages of rental and other measures to support their recovery, including rent payment plans, waivers, deferrals, lease restructuring, service charge reductions and marketing initiatives.

In view of growing uncertainty surrounding the timing of the return to more-normal footfall and trading conditions in the West End, and the impact of the re-introduction of restrictions by the Government, the Group has extended its support arrangements by a further three months to the end of 2020. An extension of restrictions, including an elevated risk of a local or London-wide temporary closure of restaurants, cafés, pubs and bars, could have a material impact on visitor footfall and spending across the Group's locations, adversely affecting the operations and financial viability of its tenants. The Group currently anticipates that further measures to support its occupiers will be required and their extent will depend on trading conditions in the important period leading up to Christmas and the New Year, as well as the prospects for the early months of 2021 and beyond.

Offices.  The Group has over 225 office occupiers, many of which are small and medium-sized enterprises (SMEs) operating in the media, creative, fashion and technology sectors, and which often have direct or indirect exposure to businesses which themselves have been affected significantly by the pandemic, such as those in retail, food and beverage, and the performing arts. Despite this, rent collections were significantly less affected than from the Group's retail, food and beverage tenants and, accordingly, limited concessions have been granted on a case-by-case basis.

Residential.  Typically, the Group's 622 apartments are occupied by those seeking a base in the West End for either work or study, and are particularly popular with younger people from overseas. As a result of the lockdown restrictions, many tenants chose to return overseas, leaving flats unoccupied. With the continuing uncertainty, many of these overseas tenants chose not to return to the UK for the time being and vacated permanently. In these circumstances, the Group waived any commitments under their tenancy agreements. Where appropriate, the Group is offering support to residential tenants to assist them in meeting their rental commitments.

Collection of rents falling due in the period 25 March 2020 to 28 September 2020

It is the Group's priority to continue to support its occupiers through the period of pandemic disruption. In order to provide certainty for those businesses, the Group's discussions and agreements with them, initially focused on a six-month period from 25 March 2020 to 28 September 2020.

The table below summarises the collection of rents as at 25 September 2020 for contracted rent due in respect of the period from 25 March 2020 to 28 September 2020:

 

F&B and leisure

£m

Retail

£m

Offices

£m

Residential

£m

Total

£m

 

Contracted rent due for the period 25 March to 28 September 2020

22.7

18.0

9.5

7.1

57.3

100%

 

 

 

 

 

 

 

Collected by 25 September 2020

5.0

7.5

6.7

5.7

24.9

44%

Amounts expected to be subject to deferred collection arrangements

5.2

1.9

0.2

-

7.3

13%

Contracted rents waived

8.8

3.9

0.4

0.1

13.2

22%

Rent outstanding at 25 September 2020

3.7

4.7

2.2

1.3

11.9

21%

 

The eventual recovery of amounts deferred and outstanding will depend on tenants' ability to meet these commitments. The future viability of their businesses will be influenced by pandemic-related factors including the re-introduction of lockdown and other measures which could adversely affect trading conditions and the implications of a protracted recovery period. 

From 1 October 2020, the Group commenced providing commercial occupiers with the option to pay rent and service charges monthly rather than quarterly in advance, in order help to align the Group's revenue collection with the cash flows of its occupiers.

In the Longmartin Joint Venture, by 25 September 2020, 77% of rent for the two quarters to 28 September 2020 had been collected, 9% had been waived and 14% remained outstanding. The higher relative collection rate, compared with that for the wholly-owned portfolio, mainly reflected the higher proportion of office rental income from its portfolio.

Occupancy and occupier demand

The uncertain outlook for the national economy and consumer spending is having a significant impact on business confidence and investment, which is unlikely to improve materially until pandemic concerns abate. Retailers, particularly those exposed to structural changes in shopping habits nationally and internationally, which were clearly evident before the onset of the pandemic, have been accelerating their review of space requirements, both in terms of location and size of shops. Similarly, over-extended food and beverage chains continue to retrench their operations to focus only on the most profitable locations and sites.

EPRA vacancy at 15 September 2020

 

Rental value of available to let vacant properties

% of ERV of the wholly-owned portfolio

 

F&B and leisure

Retail

Offices

Residential

Total

15 September 2020

30 September 2019

 

£m

£m

£m

£m

£m

%

%

 

 

 

 

 

 

 

 

Under offer

0.8

0.6

0.2

0.2

1.8

1.3%

1.5%

Available-to-let

2.5

3.6

2.1

3.7

11.9

8.5%

1.9%

At 15 September 2020

3.3

4.2

2.3

3.9

13.7

9.8%

3.4%

 

 

 

 

 

 

 

 

At 30 September 2019

1.4

3.2

0.8

0.1

5.5

 

 

 

 

 

 

 

 

 

 

Area of available to let vacant properties ('000 sq. ft.)

 

 

15 September 2020

45

48

38

72

203

 

 

30 September 2019

16

46

12

1

75

 

 

 

Although the West End has a long-term availability/demand imbalance, the Group has seen a decline in portfolio occupancy over this unprecedented period. Compared with the 10-year pre-Covid-19 average of 2.9%, EPRA vacancy increased by 6.1% to 9.8% during the period from 1 October 2019 to 15 September 2020.

The increase in EPRA vacancy over the period affected all uses and included an exceptional increase in vacant apartments (ERV: £3.9 million), completion of refurbishment schemes, space handed back by commercial tenants, and the continuing significant reduction in letting activity since February 2020. Lettings and lease renewals during this period amounted to £22.1 million, compared with £33.5 million in the previous year.

Tenant insolvencies since the lockdown in March 2020 have accounted for approximately 2% of ERV. The trend in the months ahead will depend on footfall and trading levels following the introduction of the latest Government restrictions.

Available-to-let commercial vacancy at 15 September 2020 comprised:

·              21 restaurants and cafés (45,000 sq. ft.): total ERV of £3.3 million;

·              34 shops (48,000 sq. ft.): total ERV of £4.2 million;

9 were larger shops (those with an ERV of greater than £150,000): total ERV of £2.5 million; and,

25 were smaller shops: total ERV of £1.7 million; and

·              43 office suites (38,000 sq. ft.): total ERV of £2.3 million.

Enquiries for commercial space continue but at a considerably lower volume than the Company would normally expect. Generally, occupiers in all sectors have been looking for greater flexibility when entering into new leasing commitments and, in particular, a rent suspension in the event of further lockdowns. In the case of shops and food and beverage premises, a higher specification of landlords' basic fit out, rather than taking space in shell condition, is becoming market standard practice. The Group has begun providing fully fitted out space in some of the Group's office schemes.

Residential vacancy, which prior to the pandemic has been minimal, was unusually high at 140 apartments with an ERV of £3.9 million at 15 September 2020. This rapid increase was mainly due to occupiers from overseas returning home when government restrictions were introduced, and the collapse in demand from long-stay international business and leisure travellers.

Across the West End, many landlords who would usually let out their flats short-term or let to serviced apartment operators, have been attempting to find long-term tenants. This has resulted in a near-term over-supply of apartments to let, causing downward pressure on rents. Given the long-term structural shortage of accommodation in West End, the Board believes that this is a short-term challenge in respect of the Group's residential portfolio.

Despite challenging market conditions, and the new vacancies in a number of apartments, the Group has seen improved levels of letting activity, with good interest for the Group's newer studios and one-bedroom apartments. Demand for larger two-and three-bedroom properties, which would normally attract interest from overseas corporates, is much reduced and may not improve significantly in the near term.

In the Longmartin Joint Venture, the Group's share of ERV from available to let space at 15 September 2020 was £0.8 million (30 September 2019: £0.9 million).

Recent portfolio activity

The Group has always adopted a disciplined and focused approach when considering additions to its portfolio.  It has a long experience of investing in the West End, gained over 34 years since the Company was formed, and a forensic knowledge of its local investment and occupational markets.

With the West End's broad-based economy global appeal and resilience, in the long experience of the Group, existing private owners are traditionally reluctant to sell other than in periods of uncertainty or financial pressure. The unprecedented operational disruption to West End footfall, trading, demand for space and occupancy resulting from pandemic-related measures, is beginning to unsettle current owners. The Group has recently announced three strategic acquisitions in Carnaby and Soho, totalling £13.3 million:

·              the Group purchased a dilapidated, mixed-use building fronting Kingly Street and Kingly Court in Carnaby, which had been in the same ownership since 1982. The Group has sought to acquire it since its purchase of the Carnaby Estate in 1997. Plans are already being progressed for a refurbishment and reconfiguration scheme extending to two adjoining buildings; and

·              two freeholds recently acquired in the Group's emerging cluster in Berwick Street adjoin existing ownerships and will offer the opportunity, in time, to reconfigure or add space.

Discussions continue with regard to the purchase of a long leasehold interest at 90-104 Berwick Street but there can be no certainty this acquisition will proceed.

The Company keeps the Group's portfolio under review to identify and sell individual buildings which, through change of circumstances, it no longer considers to be of core importance to its long term strategy, and where disposals will not damage the integrity and long-term value of its portfolio.

Use of Proceeds

The Group intends to use the net proceeds of the Firm Placing and Placing and Open Offer of approximately £285.0 million to prioritise the maintenance of a strong balance sheet and maintain its liquidity as follows, set out in order of priority.

Maintain a strong balance sheet

The intention of the Board is to ensure the Group maintains a strong financial base, is positioned to return to long-term growth as pandemic issues recede and, should conditions improve, is able to invest further in its exceptional portfolio.

The Group expects its rental income and occupancy levels to continue to be adversely affected throughout the current financial year and into the following year. This has, and will, put pressure on the interest cover covenants in its Revolving Credit Facilities and Term Loans. It has, to date, arranged waivers with respect to the interest cover covenants with its lenders as follows:

Debt facility

Amount (£m) and type of facility

Debt maturity

Interest cover covenant

Waiver expiry

1997 RCF1

£125 million revolving credit facility

May 2022

1.5:1

30 December 2020

2018 RCF2

£100 million revolving credit facility

February 2023

1.5:1

31 January 2021

CLL Facility Agreement

£134.8 million term loan

May 2029

1.4:1

20 July 2021

AV Facility Agreement

£250 million term loan

March 2030 (£130 million)

August 2035 (£120 million)

1.5:1

20 April 2021

Note:

1.             to be cancelled early following the Capital Raising

2.             to be repaid with the net proceeds of the Firm Placing and Placing and Open Offer, but remains available to re-draw.

The Group has recently secured an extension of the CLL Facility interest cover covenant waiver to 20 July 2021 and discussions continue with the providers of the 1997 RCF, 2018 RCF and the AV Facility. However, there can be no assurance that further extensions, which are likely to be required across the Debt Facilities until the rental income outlook improves, will be granted. 

The 1997 RCF and 2018 RCF have interest cover waivers until 31 December 2020 and 31 January 2021, respectively.  These facilities provide short-term liquidity for the Group. Currently, the 2018 RCF is fully drawn and the 1997 RCF is undrawn, although the Group expects that, unless the Firm Placing and Placing and Open Offer completes or the Company takes other action, it would make drawings against this facility in the coming year. The Group will need to renew or refinance the 1997 RCF on or before its contractual maturity. There is no assurance that the Group will be able to do so, either on acceptable terms, or at all while visibility over near-term income may be low.

The Group anticipates requiring an extension to the 1997 RCF's current interest cover waiver when it expires and is in discussions with the provider of this facility. However, this extension is not yet agreed and is unlikely to cover periods later than June 2021. Should this extension be secured, the Group anticipates it may need further extensions which it cannot rely upon to be granted, especially given the short period to maturity of the facility in May 2022. Without extensions to the interest cover covenant, there is a risk that the Group may be required to repay drawings under the facility, which would reduce liquidity, and if the Group did not have sufficient liquidity at that point in time, there is a risk of default and cross default to the Bonds and the 2018 RCF. The Board therefore believes that it is in the best interests of the Company to eliminate these risks by replacing the liquidity provided by the 1997 RCF with equity pursuant to the Firm Placing and Placing and Open Offer. In doing so, the Group would release £252 million of collateral, as at the 15 September 2020 valuation date, currently charged against the 1997 RCF.

Of the net proceeds of the Firm Placing and Placing and Open Offer, £100 million will be used to repay the 2018 RCF, which will be available to be re-drawn, provided that all requirements in the loan agreement are complied with, including the financial covenants. The Firm Placing and Placing and Open Offer is also intended to provide the Group with sufficient working capital to avoid being reliant on an extension to the 2018 RCF's interest cover covenant (or any further extensions) by providing the Group with the option of cancelling all, or part, of that facility should it be necessary or desirable to do so, while maintaining a prudent level of liquidity. If the Group cancels all or part of that facility, the Group would have more unsecured property to offer its remaining lenders, if needed.

Under the terms of the CLL Facility Agreement and AV Facility Agreement, the Group can remedy interest cover ratio shortfalls with cash deposits although there are restrictions on the number of times these remedies can be used, and such use would be subject to available liquidity. In the Company's reasonable worst case scenario modelled for the working capital statement, the Group expects that it will meet its obligations under the CLL Facility Agreement and AV Facility Agreement during the 12 months from the date of the Prospectus expected to be published later today through the waivers it currently has in place and, subsequently, by, if necessary, placing funds (on a limited number of occasions) on deposit with the lenders to enable it to meet the interest cover covenants. In its modelling for the Company's reasonable worst case scenario for the working capital statement, the Board has assumed up to £12 million of liquidity will be required for cash deposits to remedy interest cover shortfalls. Currently, the Group is in discussions to extend the interest cover covenant waiver from the provider of the AV Facility; should this be agreed, the amount required for the interest cover cash deposits may fall by up to approximately £7 million.

The Group was compliant with its financial covenants under the Bonds at 31 March 2020 and has remained compliant with the terms of the covenants at 30 September 2020. However, the Board will continue to monitor the covenants in light of the impact of the Covid-19 pandemic and take available action if required.

At 30 June 2020, the Group's loan-to-value ratio was 29.1%, up from 26.7% and 23.9% at 31 March 2020 and 30 September 2019 respectively, largely due to decline in the portfolio valuation. The valuation of the Group's wholly-owned properties at 15 September 2020 showed a further decline since 30 June 2020, from £3,291.9 million to £3,135.8 million.

At 15 September 2020, the Group had unsecured properties valued at £434 million. Whilst the relative amounts of collateral charged against each debt arrangement, compared with the amount of each facility, are not uniform, through charging these unsecured properties, the Board estimates the Group could withstand a further 34% decrease in valuations (from the 15 September 2020 valuation) before the Group reaches the limit of the loan-to-value covenants in its Debt Facilities.

The Company's reasonable worst case scenario, modelled for the working capital statement, assumes a valuation decrease of 25% from 15 September 2020 to the end of the 12 month period following the date of the Prospectus expected to be published later today. The Group expects to remain compliant with loan-to-value covenants under this scenario (either by meeting the existing thresholds with the current level of security or by providing uncharged properties as security). This would result in significantly higher loan-to-value ratios which would increase the Group's financing risk beyond the Board's tolerance and may compromise further interest covenant waiver and facility renewal negotiations. The Firm Placing and Placing and Open Offer will allow the Group to cancel the currently undrawn 1997 RCF of £125 million early, releasing £252 million of charged properties and increasing the Group's pool of uncharged assets to £686 million (both figures as at 15 September 2020). The Group estimates this will increase the loan-to-value covenant headroom from 34% to 42%, giving greater protection against the risk of failing to meet these covenants.

To ensure the Group maintains appropriate levels of liquidity by funding expected short-term cash outflows from operating and financing activities

At 30 June 2020, the Group's available liquidity was £227.8 million, comprising cash and cash equivalents of £127.8 million and £100 million undrawn under the 1997 RCF. Between then and 30 September 2020, the Group repaid drawings of £25 million under the 1997 RCF and there were other cash outflows of approximately £31 million including for acquisitions amounting to £13.3 million, capital expenditure, and operating cash flows net of finance costs. At 30 June 2020, the Group had capital commitments in respect of improvement schemes totalling £38.2 million. At 15 September 2020, the amount had decreased to approximately £32 million. Discussions continue with regard to the purchase of a strategic long leasehold interest at 90-104 Berwick Street but there can be no certainty this acquisition will proceed.

The Group's focus through the challenging period of pandemic disruption has been, and will continue to be to help its occupiers by providing financial and other practical support. The Board believes that maintaining occupancy across its portfolio, wherever possible, will position the business for sustained recovery over the medium- and long-term, as the post-pandemic recovery progresses. The Board expects a gradual recovery to pre-pandemic levels of footfall and trading, which in the near term will continue to weigh on rent collections and occupancy levels across the West End. In the Company's reasonable worst case scenario for the working capital statement included in the Prospectus expected to be published later today the Group expects a cash outflow from operating activities net of finance costs of approximately £45 million in the year ending 30 September 2021, before a gradual recovery in the following year. The Board considered this against the backdrop of available liquidity of £227.8 million at 30 June 2020.  In the absence of the Firm Placing and Placing and Open Offer, the expected cash outflows from operating losses, financing costs, capital expenditure, acquisitions since 30 June 2020, and the potential purchase of 90-104 Berwick Street would reduce available liquidity below the minimum level the Board considers appropriate for the Group to meet its continuing operating and capital expenditure commitments, especially given the likely need for further interest cover covenant waivers which may not be granted.

In addition, absent the Firm Placing and Placing and Open Offer, if interest cover covenant waivers cannot be extended, the Group would not have sufficient liquidity to repay drawings under both the 1997 and 2018 RCFs. 

To fund investment in existing and future schemes, and ensure vacant properties are refurbished to maximise their letting prospects

 

Of the net proceeds of the Firm Placing and Placing and Open Offer, up to £65 million will be used to fund capital expenditure over the coming two years including capital commitments, as at 15 September 2020, of approximately £32 million in respect of current refurbishment and reconfiguration schemes, to continuing its strategy of improving the Group's existing portfolio, enabling it to provide accommodation which meets both current occupier requirements and anticipates market trends.

 

To maintain liquidity

The Group intends to use the balance of the net proceeds to maintain a prudent level of liquidity, but should conditions improve, to provide some capacity for portfolio investment.

The financial effect of the Capital Raising

The completion of the Firm Placing and Placing and Open Offer would increase the Group's liquidity by approximately £285.0 million. Assuming the successful completion of the Firm Placing and Placing and Open Offer, the Group's net debt would decline to £672.0 million on a pro forma basis as at 30 June 2020.

A pro forma statement of net assets illustrating the hypothetical effect of the Firm Placing and Placing and Open Offer on the Group's net assets as at 30 June 2020 as if the Firm Placing and Placing and Open Offer had been undertaken at that date is set out in the Prospectus. This information is unaudited and has been prepared for illustrative purposes only. It shows that net proceeds from the Firm Placing and Placing and Open Offer of £285.0 million would lead to a pro-forma movement in net assets from £2,466.2 million to £2,751.2 million as at 30 June 2020 and a corresponding movement in total assets from £3,566.4 million to £3,751.4 million. At 30 June 2020, the Group's LTV ratio was 29.1%. On a pro forma basis, adjusting for the proceeds of the Firm Placing and Placing and Open Offer, it would be 20.4%. On a pro forma basis, adjusting for the proceeds of the Firm Placing and Placing and Open Offer, and the decrease in investment property valuation from 30 June 2020 to 15 September 2020, amounting to £156.1 million, the Group's LTV ratio was 21.4%.

The Capital Raising

The Company is proposing to raise proceeds of approximately £285.0 million (net of fees, costs and expenses) (excluding any proceeds from the Offer for Subscription) by way of:

i.      a Firm Placing of 37,147,884 New Shares. The New Shares issued will not carry an entitlement to participate in the Open Offer; and

ii.     a Placing and Open Offer of  37,102,116 New Shares,

In addition, the Company is proposing to raise proceeds of up to £10 million (£9.7 million net of commissions) by way of an Offer for Subscription of up to 2,500,000 New Shares. The New Shares issued will not carry an entitlement to participate in the Open Offer.

In each case, the New Shares shall be issued at an Issue Price of 400 pence per New Share. The New Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Shares, including the right to receive dividends or distributions made, paid or declared after the date of issue of the New Shares, save in respect of any dividend or distribution with a record date falling before the date of issue of the New Shares. The Firm Placing and Placing and Open Offer are fully underwritten by the Joint Underwriters on the terms and subject to the conditions of the Underwriting and Sponsor's Agreement. The Offer for Subscription is not underwritten.

The Board has considered the best way to structure the proposed equity capital raising in light of the Group's current financial position. The decision to structure the equity capital raising by way of a combination of a Firm Placing, a Placing and Open Offer and an Offer for Subscription takes into account a number of factors, including the total net proceeds to be raised and the Board's view (having sought advice) that it provides a lower level of market risk than a rights issue in the current market environment. The Board believes that the Firm Placing will enable the Company to satisfy demand from current Shareholders wishing to increase their equity positions in the Company as well as potential new investors. Further, the Offer for Subscription will allow an opportunity for other potential investors, including employees and retail investors, to become shareholders in the Company. The Board has sought to balance the dilution to existing Shareholders arising from the Firm Placing and Offer for Subscription with the benefit of bringing in substantial investors with firm commitments to ensure the success of the Capital Raising.  As a result, 50.0% of the New Shares being issued (excluding the impact of the Offer for Subscription, 48.3% assuming full take up under the Offer for Subscription) will be available to existing Shareholders through the Open Offer on a pro rata basis.  The Board is seeking the approval of Shareholders, by way of the Resolutions at the General Meeting, to the proposed Capital Raising.

Applications have been or will be made to the FCA for the New Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the New Shares to be admitted to trading on the Main Market. It is expected that Admission of the New Shares will become effective and that dealings in the New Shares will commence on the London Stock Exchange by 8.00 a.m. (London time) on 18 November 2020.

The Existing Shares are admitted to CREST. It is expected that all of the New Shares, when issued and fully paid, will be capable of being held and transferred by means of CREST.

Issue Price

The Firm Placing, the Placing and Open Offer and Offer for Subscription will each be made at an Issue Price of 400 pence per New Share. The Issue Price of 400 pence per New Share represents a discount of 19.7% to the LSE Closing Price of 498 pence per Share on 21 October 2020 (being the Business Day prior to the announcement of the Capital Raising). The Issue Price (and discount) have been set by the Directors following their assessment of the prevailing market conditions and anticipated demand for the New Shares.  The Board, having taken advice from its advisers, believes that the Issue Price (including the discount) is appropriate in the circumstances.

Firm Placing

The Company proposes to issue 37,147,884 Firm Placing Shares to Firm Placees at the Issue Price, on a non-pre-emptive basis. The Firm Placing will not be subject to clawback to satisfy Open Offer Entitlements and Excess Open Offer Entitlements taken up by Qualifying Shareholders.

Pursuant to the Underwriting and Sponsor's Agreement, the Joint Underwriters have severally agreed to use reasonable endeavours to procure subscribers for the Firm Placing Shares at the Issue Price. To the extent that: (i) the Joint Underwriters fail to procure subscribers in the Firm Placing for the underwritten Firm Placing Shares (including in the event that a prospective Firm Placee fails to take up any or all of the Firm Placing Shares which have been allocated to it or which it has agreed to take up at the Issue Price); and/or (ii) any Firm Placees procured other than by the Joint Underwriters fails to subscribe for any or all of the underwritten Firm Placing Shares allotted to it in the Firm Placing (including in the event that such prospective Firm Placee fails to take up any or all of the underwritten Firm Placing Shares which have been allocated to it or which it has agreed to take up at the Issue Price), then each of the Joint Underwriters has agreed, on the terms and subject to the conditions set out in the Underwriting and Sponsor's Agreement, severally (and not jointly or jointly and severally) to subscribe for such Firm Placing Shares  at the Issue Price in its agreed proportion.

Placing and Open Offer

Under the Open Offer, Qualifying Shareholders are being given the opportunity to subscribe for New Shares pro rata to their current holdings on the basis of:

7 New Shares for every 58 Existing Shares

held by them and registered in their name on the Record Date (and so in proportion to any other number of Existing Shares then held) on the terms and subject to the conditions set out in the Prospectus expected to be published later today (and, in the case of Qualifying Non-CREST Shareholders, the Application Form).

Qualifying Shareholders may apply for any whole number of Open Offer Shares up to their Open Offer Entitlements. Fractions of Open Offer Shares will not be allotted and each Qualifying Shareholder's Open Offer Entitlements will be rounded down to the nearest whole number. Any fractional entitlements to Open Offer Shares will be aggregated and made available under the Excess Application Facility. Accordingly, Qualifying Shareholders with fewer than 58 Existing Shares will not be entitled to take up any Open Offer Shares but may be able to apply for Excess Open Offer Shares under the Excess Application Facility. Holdings of Existing Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating Open Offer Entitlements.

Pursuant to the Underwriting and Sponsor's Agreement, the Joint Underwriters have also severally agreed to use reasonable endeavours to procure Conditional Placees to subscribe for New Shares not validly taken-up by Qualifying Shareholders under the Open Offer ("Non-Taken Up Shares"). To the extent that: (i) the Joint Underwriters fail to procure subscribers in the Placing for such underwritten Non-Taken Up Shares (and/or to the extent that any Conditional Placee so procured fails to subscribe for any or all of the Non-Taken Up Shares allocated to it in the Placing (including by defaulting in paying the Issue Price in respect of the underwritten Non-Taken Up Shares so allocated to it or which it has agreed to subscribe at the Issue Price); and/or (ii) any Conditional Placee procured other than by the Joint Underwriters fails to subscribe for any or all of the Non-Taken Up Shares allocated to it in the Placing (including by defaulting in paying the Issue Price in respect of such Non-Taken Up Shares allocated to it), then each of the Joint Underwriters has agreed, on the terms and subject to the conditions set out in the Underwriting and Sponsor's Agreement, severally (and not jointly or jointly and severally) to subscribe for such Open Offer Shares at the Issue Price in its agreed proportion.

Excess Application Facility

Qualifying Shareholders are also being given the opportunity to apply for Excess Open Offer Shares at the Issue Price through the Excess Application Facility. The total number of Open Offer Shares is fixed and will not be increased in response to any applications under the Excess Application Facility. Fractions of Excess Open Offer Shares will not be issued under the Excess Application Facility and entitlements to apply for Excess Open Offer Shares will be rounded down to the nearest whole number. If applications under the Excess Application Facility are received for more than the number of Excess Open Offer Shares available following take up of Open Offer Entitlements, applications will be scaled back at the Company and the Joint Underwriters' absolute discretion. Applications under the Excess Application Facility shall be allocated in such manner as the Directors and the Joint Underwriters may determine, at their absolute discretion, and no assurance can be given that your application for Excess Open Offer Shares will be met in full or in part or at all.

Impact of not applying for New Shares

Any New Shares which are not applied for under the Open Offer will be allocated to Conditional Placees pursuant to the Placing. Pursuant to the Underwriting and Sponsor's Agreement, the Joint Underwriters have severally agreed to use reasonable endeavours to procure conditional subscribers (subject to clawback to satisfy Open Offer Entitlements and Excess Open Offer Entitlements taken up by Qualifying Shareholders) for the New Shares at the Issue Price. If the Joint Underwriters are unable to procure subscribers for any New Shares that are not taken up by Qualifying Shareholders pursuant to the Open Offer (including in the event that a prospective Conditional Placee fails to take up any or all of the Firm Placing Shares which have been allocated to it or which it has agreed to take up at the Issue Price), then each of the Joint Underwriters has agreed, on the terms and subject to the conditions set out in the Underwriting and Sponsor's Agreement, severally (and not jointly or jointly and severally) to subscribe for such New Shares at the Issue Price in its agreed proportion.

Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying Non-CREST Shareholders should note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST, and be enabled for settlement, the Open Offer Entitlements and Excess Open Offer Entitlements will not be tradeable or listed and applications in respect of the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. New Shares for which application has not been made under the Open Offer (including the Excess Application Facility) will not be sold in the market for the benefit of those who do not apply under the Open Offer (including the Excess Application Facility) and Qualifying Shareholders who do not apply to take up their entitlements will have no rights, and will not receive any benefit, under the Open Offer. Any Open Offer Shares which are not applied for under the Open Offer (including the Excess Application Facility) will be allocated to Conditional Placees pursuant to the Placing.

Offer for Subscription

Up to 2,500,000 New Shares are available under the Offer for Subscription at the Issue Price, representing gross proceeds of up to approximately £10.0 million (approximately £9.7 million net of fees, costs and expenses). The Offer for Subscription is only being made in the United Kingdom but, subject to applicable law, the Company may allot New Shares on a private placement basis to applicants in other jurisdictions. The Offer for Subscription is not underwritten. The Offer for Subscription is separate to, and does not form part of, the Firm Placing and Placing and Open Offer. New Shares may be issued pursuant to the Offer for Subscription regardless of whether the Offer for Subscription is subscribed in full.

Dilution

If a Qualifying Shareholder who is not a Placee does not take up any of their Open Offer Entitlements (assuming he or she or it does not participate in the Offer for Subscription), such Qualifying Shareholder's holding, as a percentage of the Enlarged Issued Share Capital, will be diluted by 19.5% (excluding the impact of the Offer for Subscription) or 20.0% (assuming full take up under the Offer for Subscription) as a result of the Capital Raising.

If a Qualifying Shareholder who is not a Placee takes up their Open Offer Entitlements in full (assuming he or she or it does not participate in the Excess Application Facility or in the Offer for Subscription), such Qualifying Shareholder's holding, as a percentage of Enlarged Share Capital, will be diluted by 9.7% (excluding the impact of the Offer for Subscription) or 10.3% (assuming full take up under the Offer for Subscription) as a result of the Capital Raising.

Subject to certain limited exceptions, shareholders in Excluded Territories will not be able to participate in the Open Offer nor in the Offer for Subscription and will therefore experience dilution as a result of the Capital Raising (subject to any participation in the Firm Placing and Placing).

Shareholders who are otherwise not Qualifying Shareholders will not be able to participate in the Open Offer and will therefore experience dilution as a result of the Capital Raising.

Conditionality

The Capital Raising is conditional upon:

i.      all of the Resolutions being passed by Shareholders at the General Meeting;

ii.     the  undertakings from CapCo and Norges being duly executed and not having been breached or terminated prior to Admission;

iii.   the Underwriting and Sponsor's Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been rescinded or terminated in accordance with its terms prior to Admission; and

iv.   Admission occurring not later than 8.00 a.m. on 18 November 2020 or such later time and/or date (being not later than 2 December 2020) as the Company and the Joint Underwriters may agree.

If any condition is not satisfied or, if applicable, waived or if the Underwriting and Sponsor's Agreement is rescinded or terminated in accordance with its terms prior to Admission, then the Capital Raising will not take place. In such circumstances, application monies will be returned (at the applicant's risk) without payment of interest, as soon as practicable thereafter.

Shareholder undertakings

CapCo which holds 80,721,003 Existing Shares as at the Latest Practicable Date (representing approximately 26.3% of the Company's issued ordinary share capital as at the Latest Practicable Date), has given an undertaking to the Company pursuant to which it has agreed to subscribe, and to procure that its affiliates apply to subscribe, for 8,130,008 New Shares at the Issue Price pursuant to the Firm Placing and to take up their rights in respect of Existing Shares to subscribe for 8,119,992 New Shares at the Issue Price as a Conditional Placee pursuant to the Placing and Open Offer (subject to such number of Conditional Placing Shares being reduced on a share-for-share basis in the event that CapCo exercises its right of offset in respect of its entitlement to New Shares under the Open Offer) (representing gross proceeds of approximately £65,000,000).  CapCo also agreed to procure that it shall and it shall procure that its affiliates shall, vote in favour of all resolutions (other than any resolution which is required to approve CapCo's acquisition of New Shares pursuant to the Capital Raising) at the General Meeting.

Norges which holds 79,680,278 Existing Shares as at the Latest Practicable Date (representing approximately 25.9% of the Company's issued ordinary share capital as at the Latest Practicable Date), has given an undertaking to the Company pursuant to which it has agreed to subscribe for 9,628,447 New Shares at the Issue Price pursuant to the Firm Placing and to take up in full their rights in respect of Existing Shares to subscribe for 9,616,585 New Shares at the Issue Price pursuant to the Placing and Open Offer (representing gross proceeds of approximately £76,980,128).  Norges has also agreed to vote in favour of all  resolutions (other than any resolution which is required to approve Norges' acquisition of New Shares pursuant to the Capital Raising) at the General Meeting.

The agreement of each of CapCo and Norges is subject to the terms of their respective undertakings.

Action to be taken in respect of the Open Offer

The latest time for acceptance by Qualifying Shareholders under the Open Offer is expected to be 11.00 a.m. (London time) on 16 November 2020, unless otherwise announced by the Company.

If you are in any doubt as to what action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser authorised under the FSMA if you are resident in the United Kingdom or, if you are not, from another appropriately authorised independent financial adviser.

Action to be taken in respect of the Offer for Subscription

The latest time for applications under the Offer for Subscription is expected to be 11.00 a.m. (London time) on 16 November 2020, unless otherwise announced by the Company.

If you are in any doubt as to what action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser authorised under the FSMA if you are resident in the United Kingdom or, if you are not, from another appropriately authorised independent financial adviser.

Overseas Persons

Subject to certain exceptions, neither this announcement, the Prospectus expected to be published later today, the Application Form nor the Offer for Subscription Application Form will be sent to Qualifying Non-CREST Shareholders with registered addresses, or who are resident, in any of the Excluded Territories, nor will the CREST stock account of Qualifying CREST Shareholders with registered addresses, or who are resident, in any of the Excluded Territories be credited with Open Offer Entitlements or Excess Open Offer Entitlements. Any person with a registered address outside the United Kingdom or who is resident in an Excluded Territory who obtains a copy of this announcement, the Prospectus expected to be published later today or an Application Form is required to disregard it or them, except with the consent of the Company.

Notwithstanding any other provision of this announcement, the Prospectus expected to be published later today, the Application Form or the Offer for Subscription Application Form the Company and the Joint Underwriters reserve the right to permit any Shareholder on the Register of Members at the Record Date to take up its, his or her rights if it is established to the satisfaction of the Company and the Joint Underwriters that the transaction in question will not violate applicable laws.

In particular, persons who have registered addresses in or who are resident in, or who are citizens of, countries other than the United Kingdom should consult their professional advisers whether they require any governmental or other consents or need to observe any formalities to enable them to take up their entitlements in the Open Offer.

Working capital statement

The Company is of the opinion that, taking into account the net proceeds of the Firm Placing and Placing and Open Offer and available facilities, the Group will have sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of publication of the Prospectus expected to be published later today. 

Impact of the Covid-19 pandemic

In preparing this working capital statement, the Company is required to identify, define and consider a reasonable worst case scenario, which has involved making certain assumptions regarding the Covid-19 pandemic and its potential impact on the Group.

The Covid-19 pandemic has had, and is anticipated to continue to have, a significant impact on the Group's near-term performance. Given the considerable uncertainties as to the continuing potential future impact of the Covid-19 pandemic on the Group and its business, the Board believes that it is appropriate to provide additional disclosure of the key Covid-19 assumptions underpinning the Company's reasonable worst case scenario, while also noting that changes in these assumptions could have a material impact on the financial performance and financial position of the Group.

Reasonable worst case assumptions relating to the Covid-19 pandemic

In preparing its reasonable worst case scenario, the Company has made assumptions regarding the need for more severe Covid-19 containment measures adversely affecting footfall and trading in the West End, occupancy in the Group's property portfolio and a slower recovery than assumed in the Company's base case scenario. The reasonable worst case therefore includes certain Covid-19 related sensitivities, as set out in the following key assumptions:

·          Continuing Government social distancing measures with a gradual return of West End footfall and improvement in trading conditions from July 2021;

·            A decline in total rent collection to 25% of contracted rent from 1 October 2020 to 30 June 2021, rising to 35% and 45% in the quarters ending 30 September 2021 and 31 December 2021 respectively;

·              EPRA vacancy at 20% of ERV throughout the period from 1 October 2020 to 31 December 2021;

·              An increase in irrecoverable property costs of £4.0 million for the period from 1 October 2020 to 30 September 2021;

·              ERV decline (on all new letting events) in the year ending 30 September 2021 of 20%, with a further decline of 10% in the year ending on 30 September 2022; and

·              A decrease in the valuation of the Group's wholly-owned portfolio and the Longmartin Joint Venture properties of 25% from 15 September 2020 to the end of the 12 month period following the date of the Prospectus.

Basis of preparation of the working capital statement

The working capital statement included in the Prospectus expected to be published later today has been prepared in accordance with the ESMA recommendations, and the technical supplement to the FCA Statement of Policy published on 8 April 2020 relating to the Covid-19 pandemic.

Directors' intentions and recommendation

Each Director who holds (and/or whose PCA holds) Existing Shares has irrevocably undertaken to vote (and/or, where applicable, to procure that his or her PCA votes), in favour of the Resolutions to be proposed at the General Meeting to approve the Capital Raising in respect of such holdings, amounting in aggregate to 3,650,538 Existing Shares, representing 1.2% of the issued share capital of the Company as at the Latest Practicable Date.

In addition, the Directors have irrevocably undertaken to subscribe for (or procure their PCAs to subscribe for) up to 76,960 New Shares at the Issue Price

General Meeting

In light of the COVID-19 outbreak, the Board take the well-being of the Company's employees and Shareholders very seriously. The UK Government has introduced measures to deal with the coronavirus crisis which include guidance on social distancing and restrictions on non-essential travel and public gatherings, which affect the manner in which the General Meeting can be conducted.

The Board regrets that to ensure Shareholders' safety, Shareholders will not be permitted to attend the General Meeting in person. Any person attempting to attend the General Meeting in person will be refused admission. In order to comply with relevant legal requirements, the General Meeting will be convened with the minimum necessary quorum. This will be facilitated by the Company.

Further details will be set out in the Prospectus when published.

Importance of your vote

Your attention is again drawn to the fact that the Capital Raising is conditional and dependent upon, amongst other things, the Resolutions, all of which are inter-conditional, being passed at the General Meeting.

Shareholders are asked to vote in favour of all of the Resolutions at the General Meeting in order for the Capital Raising to proceed. Having assessed the Group's financial position in light of the implications of the Covid-19 pandemic for its short- and medium-term prospects, the Board believes that the Capital Raising will help ensure the Group maintains a strong financial base, is positioned to return to long-term growth as pandemic issues recede, and, should conditions improve, is able to invest further in its exceptional portfolio. The Group intends to use the net proceeds of the Firm Placing and Placing and Open Offer of approximately £285.0 million to maintain a strong balance sheet, support its liquidity and fund expected short-term cash outflows from operating and financing activities and enable the Group to invest in its exceptional portfolio.  See "Use of Proceeds".

The Board has considered a range of options to optimise the Group's long-term capital structure including property disposals, bond issuance, repayment of existing Debt Facilities and alternative forms of capital raising including both debt and equity. The Board concluded that:

·             while the short- and medium-term outlook for rental income and property values remains uncertain, the Group should prioritise maintaining a strong financial base and its liquidity, focusing on debt and gearing levels; and

·              a material level of disposals to address financing risks would not be in the long-term interests of the Group.

Related to this analysis, if the Firm Placing and Placing and Open Offer do not complete, the Company is of the opinion that it will not have sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of publication of the Prospectus, and would need to take alternative actions to provide liquidity. The Group would endeavour to reach agreements with the lenders under the Debt Facilities (the "Lenders") for further waivers and/or restructured or otherwise amended facilities.  While the Company believes that its relationships with its Lenders would help achieve acceptable agreements with them in such circumstances, a belief supported by the waivers it has been able to obtain to date, there can be no assurance that the Group would ultimately be successful in doing so, not least because of the potentially different trading environment the Group might find itself in at that time. Either in the absence of any such agreement with its Lenders, or potentially as conditions to reaching such agreement, the Group would also reduce or eliminate the discretionary portion of its capital expenditure plans and would consider selling  properties within its portfolio to raise cash in order to rectify working capital shortfalls as they arose, including any such shortfalls associated with prepaying all or some of the Debt Facilities (and any accrued but unpaid interest and prepayment penalties).  The Company believes, however, that in such a scenario, and in light of uncertainty in property markets, the Group could find it challenging to raise sufficient cash either absolutely, or in time, to avoid the shortfalls associated with prepaying all or some of the Debt Facilities (and any accrued but unpaid interest and prepayment penalties). If the Group is not successful in achieving any of the options set out above, the Group would not have sufficient funds available to repay the obligations under the Debt Facilities as they fall due, and, enforcement action by the Lenders, by way of insolvency proceedings or other actions, would likely result in Shareholders losing all of the value of their investment in the Group.

The Firm Placing and Placing and Open Offer is important because the Company cannot guarantee that it will be granted extensions to interest cover covenant waivers from the providers of its Debt Facilities. The availability of liquidity provided by the 1997 RCF and the 2018 RCF will be subject to the further grant of waivers by lenders in the period to their contractual maturities and there can be no guarantee that these will be granted. The prospects for obtaining any such waivers would also be damaged in the absence of adequate assurance that waivers under the other Debt Facilities were either not required or would be given.  In the absence of the Firm Placing and Placing and Open Offer, if the applicable interest cover covenant waivers are not extended, the Group will lose the liquidity available under the 1997 RCF on 31 December 2020 (when the existing waiver in respect of that facility expires) and the lender under the 2018 RCF will become entitled to declare that £100 million currently drawn (if not repaid or otherwise cancelled) on that facility plus accrued and unpaid interest is immediately due and payable following 31 January 2021 (when the existing waiver in respect of that facility expires) whereupon these amounts will need to be repaid.  In the absence of the Firm Placing and Placing and Open Offer, the Company does not anticipate being able to repay these amounts and such a situation.  Any failure and/or inability to pay these amounts when due could result in a cross default or other breach under other Debt Facilities, in accordance with their terms.

Interest cover covenant waivers in respect of the CLL Facility Agreement and the AV Facility Agreement expire on 20 July 2021 and 20 April 2021 respectively and there can be no assurance that those waivers would be extended. Cure rights in respect of the interest cover covenants are available a limited number of times by depositing an amount of cash in a secured bank account to top up the relevant rental income shortfall or, in respect of the AV Facility Agreement, such facility agreement also allows for the prepayment of the loans outstanding thereunder (subject to the payment of a prepayment premium) by an amount necessary to reduce the interest payable to ensure compliance. 

In the absence of the Firm Placing and Placing and Open Offer, however, the Group would not have the liquidity that would be needed for any such cash deposits or prepayments to remedy the interest cover ratio shortfalls.  Under the Company's reasonable worst case scenario for its working capital statement, the Company anticipates needing £11.9 million for such cash deposits in order to remedy the anticipated interest cover ratio shortfalls. If the waivers in respect of the CLL Facility Agreement and the AV Facility Agreement are not extended, in the absence of the liquidity to make the requisite cash deposits, the Group may need further liquidity that it would not have in the amount of £384.8 million plus any accrued, unpaid interest and prepayment premiums, less amounts held on deposit with the providers of the term loans, to be able to repay the CLL Facility Agreement and the AV Facility Agreement to avoid the resulting events of default under those facilities. Amounts held on deposit under the CLL Facility Agreement and the AV Facility Agreement currently stand at £11.1 million. Any failure and/or inability to pay the amounts under these facilities when due may well also result in an event of default arising under other Debt Facilities,in accordance with their terms.

If the Group does not cancel the 1997 RCF and replenish its liquidity with the net proceeds of the Firm Placing and Placing and Open Offer, the Group would also not be able to release the security over the properties currently charged under the 1997 RCF and the Group would not therefore be able to use those properties to secure its obligations under one or more of its other Debt Facilities if it needs to, in order to withstand a decrease in valuations that risks breaching the limit of the loan-to-value covenants in its Debt Facilities. The Company's reasonable worst case scenario, modelled for the working capital statement, assumes a further valuation decrease of 25% from 15 September 2020 to the end of the 12 month period following the date of the Prospectus. Whilst the Group expects to remain compliant with loan-to-value covenants under this scenario (either by meeting the existing thresholds with the current level of security or by providing currently uncharged properties as security), significantly higher loan-to-value ratios will increase the Group's financing risk beyond the Board's tolerance and may compromise further interest cover waiver negotiations. Any failure and/or inability to pay the amounts under these facilities when due may well also result in an event of default arising under other Debt Facilities, in accordance with their terms.

Accordingly, the Board has determined that it is in the long-term interests of the business to raise equity by way of the Capital Raising.

Recommendation

The Board believes that the Capital Raising and the Resolutions are in the best interests of the Company and its Shareholders as a whole and unanimously recommends that you vote in favour of the Resolutions.  Each Director who holds (and/or whose person closely associated holds) Existing Shares has irrevocably undertaken to vote (and/or, where applicable, to procure that their person closely associated votes), in favour of the Resolutions.

 The impact on the Group of the Covid-19 pandemic has been, and will continue to be, significant in the near term, presenting operational and financial challenges. The injection of equity through the Capital Raising will enable the Group to maintain a resilient capital structure, support its liquidity and invest in its exceptional portfolio.

Whilst the extent and duration of Government restrictions to control the Covid-19 pandemic, and the pace of future recovery of footfall and trading in the West End, are uncertain, the Board believes that the exceptional long-term qualities of the Group's virtually impossible-to-replicate portfolio, and its strengthened finances, will provide a solid base for medium-term recovery. Together with the benefit of the Group's long-term, evolving management strategy, implemented by an experienced and innovative management team, the Board remains confident in the long-term prospects for this business.

 

 

 

APPENDIX I -

1997 RCF

the Revolving Credit Facility Agreement entered into between the Company and Shaftesbury Covent Garden Limited (as borrowers) and National Australia Bank Limited (as lender) and originally dated 25 February 1997 (as amended, novated, supplemented, extended and/or restated from time to time and as most recently amended and restated on 12 February 2018)

2018 RCF

Revolving Credit Facility Agreement entered into between the Company and Shaftesbury Covent Garden Limited (as borrowers), Lloyds Bank plc and Wells Fargo Bank, NA, London Branch (as mandated lead arrangers and lenders) and Lloyds Bank plc (as agent and security agent) and dated 12 February 2018 (as amended, novated, supplemented, extended and/or restated from time to time

Admission

admission of the New Shares to the premium listing segment of the Official List, and trading on the London Stock Exchange's main market for listed securities

Application Form

the personalised application form on which Qualifying Non-CREST Shareholders may apply for the New Shares under the Open Offer

AV Facility Agreement

the Facility Agreement between Shaftesbury AV Limited (as borrower) and Aviva Commercial Finance Limited (as lender, agent and security agent) originally dated 17 March 2015 (as amended, novated, supplemented, extended and/or restated from time to time and as most recently amended and restated on31 July 2015 and further amended on 21 July 2020)

Board

the board of directors of the Company

Bonds

the £285,000,000 guaranteed first mortgage bonds issued by Shaftesbury Carnaby PLC on 7 October 2016 and which are due in 2031 and the £290,000,000 guaranteed first mortgage bonds issued by Shaftesbury Chinatown PLC on 7 September 2017 and which are due in 2027

Business Day

 

a day (other than a Saturday, Sunday or public holiday) on which banks are open for general business in London

CapCo

 

Capital & Counties Properties PLC

Carnaby

the area centred on Carnaby Street, London W1 and the eleven surrounding streets bounded by Kingly Street, Great Marlborough Street, Marshall Street and Beak Street

CLL Facility Agreement

the Facility Agreement between Shaftesbury CL Limited (as borrower) and Canada Life Limited (as lender) dated 17 April 2014 (as amended, novated, supplemented, extended and/or restated from time to time)

Closing Price

498 pence

Covent Garden

the area comprising the districts of Seven Dials, Coliseum and the Opera Quarter in London WC2

CREST

the relevant system (as defined in the CREST Regulations) for the paperless settlement of trades in listed securities in the United Kingdom, of which Euroclear Limited is the operator (as defined in the CREST Regulations)

Crest Members

a person who has been admitted by Euroclear as a system-member (as defined in the CREST Regulations)

Directors

the executive directors and the non-executive Directors of the Company as at the date of this announcement

Debt Facilities

the Bonds, the Term Loans and/or the Revolving Credit Facilities

Disclosure Guidance and Transparency Rules

the disclosure guidance and transparency rules made by the FCA under Part 6 of the FSMA

EPRA

the European Public Real Estate Association - a real estate industry body which has issued Best Practice Recommendations with the intention of improving the transparency, comparability and relevance of the published results of listed real estate companies in Europe

Excess Application Facility

the facility for Qualifying Shareholders (other than persons who have registered address in, who are incorporated in, registered in or otherwise resident or located in, the United States or any other Excluded Territory) to apply for Excess Shares in excess of their Open Offer Entitlements

Excess Open Offer Entitlements

in respect of each Qualifying Shareholder who has taken up his or her Open Offer Entitlement in full, the entitlement (in addition to the Open Offer Entitlement) to apply for Excess Shares, up to the number of Open Offer Shares, pursuant to the Excess Application Facility, which may be subject to scaling down at the absolute discretion of the Board in consultation with the Joint Underwriters

Excess Shares

New Shares which may be applied for by Qualifying Shareholders in addition to their Open Offer Entitlements pursuant to the Excess Application Facility

Excluded Territory

the United States, the Commonwealth of Australia, its territories and possessions, Canada, Japan, the Republic of South Africa and Switzerland, and any other jurisdiction where the extension or availability of the Open Offer or the Offer for Subscription would breach any applicable law of regulation

Existing Shares

in relation to a particular date, the Shares existing as at that date, or otherwise, the Shares in issue at the date of the Prospectus, as required by the context

FCA

the Financial Conduct Authority

Firm Placed Shares

in aggregate, 37,147,884 New Shares which the Company is proposing to allot and issue pursuant to the Firm Placing

Firm Placees

any persons who have agreed or shall agree to subscribe for Firm Placed Shares pursuant to the Firm Placing

Firm Placing

the subscription by the Firm Placees for the Firm Placed Shares

Firm Placing and Offer for Subscription Resolution

the special resolution to be proposed at the General Meeting to provide the Directors with the necessary authority and power to allot equity securities as if section 561 of the Companies Act did not apply to such allotment in order to undertake the Firm Placing and the Offer for Subscription, to apply until the conclusion of the Annual General Meeting of the Company to be held in 2020

Form of Proxy or Proxy Form

the form of proxy for use at the General Meeting which accompanies the Prospectus

FSMA

the Financial Services and Markets Act 2000 (as amended)

General Meeting

the general meeting of the Company to be held at the Company's registered office at 22 Ganton Street, Carnaby, London, E1F 7FD on 17 November 2020 at 10.00 a.m.,

Group

the Company and its subsidiary undertakings and, where the context requires, its associated undertakings

IFRS

International Financial Reporting Standards as adopted by the EU

Issue Price

400 pence per Share

Latest Practicable Date

the latest practicable date prior to the publication of the Prospectus, being 20 October 2020

Listing Rules

the listing rules made by the FCA pursuant to Part 6 of the FSMA

London Stock Exchange

London Stock Exchange plc

London's West End or the West End

an area of central London to the west of the City of London located around Oxford Circus, Piccadilly Circus, Tottenham Court Road, Leicester Square and Covent Garden

Longmartin Joint Venture

Longmartin Properties Limited, which is owned in equal parts by the Company and The Mercers' Company, and whose registered number is 05291183 and whose registered office is 22 Ganton Street, Carnaby, London,W1F 7FD

New Shares

the new Shares to be issued by the Company pursuant to the Capital Raising

Norges

Norges Bank

Offer for Subscription Application Form

the application form on which Shareholders and other investors may apply for Offer for Subscription Shares under the Offer for Subscription

Open Offer

the conditional invitation to Qualifying Shareholders to subscribe for the Open Offer Shares at the Issue Price on the terms and subject to the conditions set out in Prospectus and, in the case of Qualifying Non-CREST Shareholders only, the Application Form

Open Offer Entitlements

entitlements to subscribe for the Open Offer Shares, allocated to a Qualifying Shareholder pursuant to the Open Offer

 

 

PCA

means a person closely associated as defined in the Market Abuse Regulation (EU) No 596/2014

Placing

the conditional placing, by the Joint Underwriters, as agent of and on behalf of the Company, of the Open Offer Shares subject to clawback pursuant to the Open Offer, on the terms and subject to the conditions contained in  the Underwriting and Sponsor's Agreement

Prospectus

the prospectus and circular issued by the Company in respect of the Capital Raising, together with any supplements or amendments thereto

Prospectus Regulation

the Prospectus Regulation (EU) 2017/1129 and amendments thereto

Prospectus Regulation Rules

the prospectus rules made by the FCA under Part 6 of the FSMA

Qualifying CREST Shareholders

Qualifying Shareholders holding Shares in uncertificated form

Qualifying non-CREST Shareholders

Qualifying Shareholders holding Shares in certificated form

Qualifying Shareholders

Shareholders on the register of members of the Company on the Record Date with the exclusion of persons with a registered address or located or resident in the United States or any Excluded Territory

Record Date

close of business on 21 October 2020

REIT

Real Estate Investment Trust-a tax regime which in the United Kingdom exempts participants from corporation tax both on UK rental income and gains arising on UK investment property sales, subject to certain requirements as set out in the Finance Act 2006

Resolutions

the New Share Issue Resolutions and the Firm Placing and Offer for Subscription Resolution

Revolving Credit Facilities or RCFs

the 2018 RCF and/or the 1997 RCF

Shareholders

holders of Shares

Shares

ordinary shares of £0.25 each in the capital of the Company

Term Loans

the AV Facility Agreement and/or the CLL Facility Agreement

Underwriting and Sponsor's Agreement

the underwriting and sponsors' agreement dated 22 October 2020 between and among the Company, the Sponsor and the Joint Underwriters

Village

the distinctive destination established by the Group, over time, by applying its business strategy of acquiring identifiable clusters of properties and "Villages" means all of the Group's Villages. The Group's established Villages are situated in Carnaby, Soho, Fitzrovia, Chinatown and Covent Garden

 

APPENDIX II - TERMS AND CONDITIONS OF THE FIRM PLACING AND THE PLACING

IMPORTANT INFORMATION ON THE FIRM PLACING AND PLACING FOR INVITED PLACEES ONLY.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM PLACING OR THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING DISTRIBUTED TO: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA"), PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF THE PROSPECTUS REGULATION ("QUALIFIED INVESTORS"); (B) IF IN THE UNITED KINGDOM, PERSONS WHO ARE QUALIFIED INVESTORS AND 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 "ORDER") OR ARE PERSONS FALLING WITHIN ARTICLE 49(2) OF THE ORDER; (C) IF IN THE UNITED STATES, PERSONS REASONABLY BELIEVED TO BE "QUALIFIED INSTITUTIONAL BUYERS" ("QIBS") WITHIN THE MEANING OF RULE 144A UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"); OR (D) ANY OTHER PERSON TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED; AND, IN EACH CASE, WHO HAVE BEEN INVITED TO PARTICIPATE IN THE FIRM PLACING AND THE PLACING BY THE JOINT UNDERWRITERS (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND THE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY IN, INTO OR WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THERE WILL BE NO PUBLIC OFFERING OF THE SECURITIES IN THE UNITED STATES.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN THE PLACING SHARES (AS SUCH TERM IS DEFINED BELOW).

Unless otherwise defined in these terms and conditions, capitalised terms used in these terms and conditions shall have the meaning given to them in this announcement.

If a person indicates to the Joint Underwriters that it wishes to participate in the Firm Placing or the Placing (together, the "Equity Placings") by making an oral or written offer to subscribe for the Firm Placed Shares pursuant to the Firm Placing and Open Offer Shares pursuant to the terms of the Placing (together, the "Placing Shares") (each such person, a "Placee") it will be deemed (i) to have read and understood these terms and conditions in this Appendix and the announcement of which it forms part and the draft prospectus dated 22 October 2020 prepared by, and relating to, the Company (the "Placing Proof") in their entirety, (ii) to be participating and making such offer on the terms and conditions contained in this Appendix, and (iii) to be providing the representations, warranties, indemnities, agreements, undertakings and acknowledgements, contained in this Appendix.

In particular, each such Placee represents, warrants, agrees and acknowledges to the Company and the Underwriters that,

1.   it is a Relevant Person and undertakes that it will subscribe for, acquire, hold, manage and dispose of any of the Placing Shares that are allocated to it for the purposes of its business only;

 

2.    in the case of any Placing Shares subscribed for by it as a financial intermediary, as that term is used in Article 5(1) of the Prospectus Regulation, that (i) the Placing Shares acquired by and/or subscribed for by it in the Equity Placings will not be acquired and/or subscribed for on a non-discretionary basis on behalf of, nor will they be acquired or subscribed for with a view to their offer or resale to, persons in a member state of the EEA or the UK other than Qualified Investors, or in circumstances which may give rise to an offer of securities to the public other than an offer or resale, in a member state of the EEA which has implemented the Prospectus Regulation, to Qualified Investors, or in circumstances in which the prior consent of the Joint Underwriters has been given to each such proposed offer or resale; or (ii) where the Placing Shares have been acquired or subscribed for by it on behalf of persons in any member state of the EEA or the United Kingdom other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Regulation as having been made to such persons;

 

3.    it is and, at the time the Placing Shares are acquired, will be, either (i) outside the United States, and acquiring the Placing Shares in an offshore transaction in compliance with the provisions of Regulation S under the Securities Act ("Regulation S") for its own account or purchasing the Placing Shares for an account with respect to which it exercises sole investment discretion; or (ii) a QIB. These terms and conditions do not constitute an offer to sell or issue or the invitation or solicitation of an offer to buy or acquire the Placing Shares in the United States, Australia, Canada or Japan, or any other jurisdiction where the extension or availability of the Equity Placing would breach any applicable laws or regulations, and "Excluded Territories" shall mean any of them; and

 

4.   it understands (or, if acting for the account of another person, such person understands) the resale and transfer restrictions set out in this Appendix.

These terms and conditions and the information contained herein are not for release, publication or distribution, directly or indirectly, in whole or in part, in or into the United States or any other Excluded Territory, subject to certain exceptions.

In particular, the Placing Shares referred to in these terms and conditions have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and the Placing Shares may not be offered, sold, transferred or delivered, directly or indirectly in, into or within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. There will be no public offering of the Placing Shares in the United States. Subject to certain exceptions, no offering of the Placing Shares will be made in the United States. The Placing Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission, or state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Equity Placings or the accuracy or adequacy of these terms and conditions. Any representation to the contrary is a criminal offence in the United States.

The distribution of these terms and conditions and the offer and/or placing of Placing Shares in certain other jurisdictions may be restricted by law. No action has been or will be taken by the Joint Underwriters or the Company that would, or is intended to, permit an offer of the Placing Shares or possession or distribution of these terms and conditions or any other offering or publicity material relating to the Placing Shares in any jurisdiction where any such action for that purpose is required, save as mentioned above. Persons into whose possession these terms and conditions come are required by the Joint Underwriters and the Company to inform themselves about and to observe any such restrictions.

Each Placee's commitments will be made solely on the basis of the information set out in this announcement (including the Appendix) and the Placing Proof which will be provided to each Placee. Each Placee, by participating in the Equity Placings, agrees that it has neither received nor relied on any other information, representation, warranty or statement made by or on behalf of any of the Joint Underwriters or the Company or any of their respective affiliates. None of the Joint Underwriters, the Company, or any person acting on such person's behalf nor any of their respective affiliates has or shall have liability for any Placee's decision to accept this invitation to participate in the Equity Placings based on any other information, representation, warranty or statement. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Equity Placings. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

No undertaking, representation, warranty or any other assurance, express or implied, is made or given by or on behalf of any of the Joint Underwriters or any of their respective affiliates, or any of their respective directors, officers, employees, agents, advisers, or any other person, as to the accuracy, completeness, correctness or fairness of the information or opinions contained in the Placing Proof or this announcement or for any other statement made or purported to be made by any of them, or on behalf of them, in connection with the Company or the Equity Placings and no such person shall have any responsibility or liability for any such information or opinions or for any errors or omissions. Accordingly, save to the extent permitted by law, no liability whatsoever is accepted by any of the Joint Underwriters or any of their respective directors, officers, employees or affiliates or any other person for any loss howsoever arising, directly or indirectly, from any use of this announcement or such information or opinions contained herein or otherwise arising in connection with the Placing Proof.

These terms and conditions do not constitute or form part of, and should not be construed as, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any Placing Shares or any other securities or an inducement or recommendation to enter into investment activity, nor shall these terms and conditions (or any part of them), nor the fact of their distribution, form the basis of, or be relied on in connection with, any investment activity. No statement in these terms and conditions is intended to be nor may be construed as a profit forecast and no statement made herein should be interpreted to mean that the Company's profits or earnings per share for any future period will necessarily match or exceed historical published profits or earnings per share of the Company.

Proposed Firm Placing of Firm Placed Shares and Placing of Open Offer Shares subject to clawback in respect of valid applications by Qualifying Shareholders pursuant to the Open Offer

Placees are referred to these terms and conditions, this announcement and the Placing Proof containing details of, inter alia, the Equity Placings. These terms and conditions, this announcement and the Placing Proof have been prepared and issued by the Company, and each of these documents is the sole responsibility of the Company.

The Equity Placings consist of a Placing and Open Offer of 37,102,116 Open Offer Shares and a Firm Placing of 37,147,884 Firm Placed Shares. Qualifying Shareholders are being given the opportunity to apply for the Open Offer Shares at the Issue Price on and subject to the terms and conditions of the Open Offer, pro rata to their holdings of Existing Shares on the Record Date. Open Offer Shares will also be made available to Qualifying Shareholders under the Excess Application Facility. Fractional entitlement of Open Offer Shares will be rounded down to the nearest whole number.

The Joint Underwriters have agreed, pursuant to the Underwriting and Sponsor's Agreement, to use reasonable endeavours to procure subscribers for the Firm Placed Shares and Open Offer Shares, as agent for the Company, at the Issue Price. Placees for Open Offer Shares in the Placing are subject to clawback to satisfy valid application by Qualifying Shareholders under the Open Offer. The Firm Placed Shares are not subject to clawback and do not form part of the Placing and Open Offer.  The Firm Placing and Placing and Open Offer have been fully underwritten by the Joint Underwriters on, and subject to, the terms and conditions of the Underwriting and Sponsor's Agreement.

With effect from the completion of the institutional Bookbuild, to the extent that any Placee fails to take up any or all of the Placing Shares which have been allocated to it or which it has agreed to take up at the Issue Price, the Joint Underwriters have agreed, on the terms and subject to the conditions in the Underwriting and Sponsor's Agreement, to each take up 50 per cent. of such Placing Shares at the Issue Price.

Application will be made to the Financial Conduct Authority (the "FCA") and to the London Stock Exchange plc (the "London Stock Exchange") for the Placing Shares to be admitted to the premium segment of the official list of the FCA (the "Official List") and to trading on the London Stock Exchange's main market for listed securities (together, "Admission").

Subject to the conditions below being satisfied, it is expected that Admission will become effective on 18 November 2020 and that dealings for normal settlement in the Open Offer Shares will commence at 8.00 a.m. on the same day. The Placing Shares, when issued and fully paid, will be identical to, and rank pari passu with, the Existing Shares, including the right to receive all dividends and other distributions declared, made or paid on the Existing Shares by reference to a record date on or after Admission.

Placees should note that Firm Placed Shares do not carry any entitlement to participate in the Open Offer. 

The Firm Placing and Placing and Open Offer are conditional, inter alia, upon:

1.     the Resolutions being passed by Shareholders at the General Meeting;

2.    the undertakings from CapCo and Norges being duly executed and not having been breached or terminated prior to Admission;

 

3.    the Underwriting and Sponsor's Agreement having become or been declared unconditional in all  respects (save for the condition relating to Admission) and the Underwriting and Sponsor's Agreement not having been terminated by the Joint Underwriters in accordance with its terms prior to Admission; and

 

4.    Admission occurring not later than 8:00 a.m. on 18 November 2020 (or such later time or date as the Company and the Joint Underwriters may agree, being not later than 2 December 2020).

The full terms and conditions of the Open Offer will be contained in the Prospectus to be issued by the Company in connection with the Capital Raising and Admission. The Prospectus to be issued by the Company will be approved by the FCA under section 87A of the FSMA and made available to the public in accordance with Rule 3.2 of the Prospectus Rules made under Part VI of the FSMA.

Bookbuild of the Equity Placings

Commencing today, the Joint Underwriters will be conducting a bookbuilding process in respect of the Equity Placings ("Bookbuild") to determine demand for participation in the Equity Placings at the Issue Price. The Joint Underwriters will seek to procure Placees as agent for the Company as part of this Bookbuild. These terms and conditions give details of the terms and conditions of, and the mechanics of participation in, the Equity Placings.

Principal terms of the Bookbuild

By participating in the Equity Placings, Placees will be deemed (i) to have read and understood this announcement, these terms and conditions in this Appendix and the Placing Proof in their entirety and (ii) to be participating and making an offer for any Placing Shares on the terms and conditions contained in this Appendix, and (iii) to be providing the representations, warranties, indemnities, agreements, undertakings and acknowledgements, contained in this Appendix.

(a)         The Joint Underwriters are arranging the Equity Placings severally, and not jointly, nor jointly and severally, as agents of the Company.

(b)          Participation in the Equity Placings will only be available to persons who are Relevant Persons and who may lawfully be, and are, invited to participate by any of the Joint Underwriters. The Joint Underwriters and their respective affiliates are entitled to offer to subscribe for Placing Shares as principal in the Bookbuild.

(c)         Any offer to subscribe for Placing Shares should state the aggregate number of Firm Placed Shares and Open Offer Shares that the Placee wishes to subscribe for at the Issue Price. The number of Firm Placed Shares and Open Offer Shares that each Placee receives will be determined by the Joint Underwriters following consultation with the Company. 

(d)         Allocations of Placing Shares will be made in a combination that reflects an approximately 1:1 ratio of Firm Placed Shares to Open Offer Shares.

(e)          The Bookbuild is expected to close no later than 4.00pm on 22 October 2020 but may close earlier or later, at the discretion of the Joint Underwriters and the Company. The timing of the closing of the books and allocations will be agreed between the Joint Underwriters and the Company following completion of the Bookbuild (the "Allocation Policy"). The Joint Underwriters may, in agreement with the Company, accept offers to subscribe for Placing Shares that are received after the Bookbuild has closed.

(f)       An offer to subscribe for Placing Shares in the Bookbuild will be made on the basis of these terms and conditions and the Placing Proof and will be legally binding on the Placee by which, or on behalf of which, it is made and will not be capable of variation or revocation after the close of the Bookbuild.

(g)        Subject to paragraph [(e)] above, the Joint Underwriters (after consultation with the Company) reserve the right not to accept an offer to subscribe for Placing Shares, either in whole or in part, on the basis of the Allocation Policy and may scale down any offer to subscribe for Placing Shares for this purpose.

(h)         If successful, each Placee's allocation will be confirmed to it by the Joint Underwriters following the close of the Bookbuild. Oral or written confirmation (at the Joint Underwriters' discretion) from the Joint Underwriters to such Placee confirming its allocation will constitute a legally binding commitment upon such Placee, in favour of the Joint Underwriters and the Company to acquire the number of Placing Shares allocated to it (and in the respective numbers of Firm Placed Shares and Open Offer Shares (subject to clawback) so allocated) on the terms and conditions set out herein. Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to the Joint Underwriters, to pay to the Joint Underwriters (or as the Joint Underwriters may direct) as agent for the Company in cleared funds an amount equal to the product of the Issue Price and the sum of the number of Firm Placed Shares and, once apportioned after clawback (in accordance with the procedure described in the paragraph entitled "Placing Procedure" below), the Open Offer Shares, which such Placee has agreed to acquire.

(i)          The Company will make a further announcement following the close of the Bookbuild detailing the Issue Price and the number of Placing Shares to be issued (the "Placing Results Announcement"). It is expected that such Placing Results Announcement will be made as soon as practicable after the close of the Bookbuild.

(j)          Subject to paragraphs [(g)] and [(h)] above, the Joint Underwriters reserve the right not to accept bids or to accept bids, either in whole or in part, on the basis of allocations determined at the Joint Underwriters' discretion and may scale down any bids as the Joint Underwriters may determine, subject to consultation with the Company. The acceptance of bids shall be at the Joint Underwriters' absolute discretion, subject to consultation with the Company.

(k)        Irrespective of the time at which a Placee's allocation(s) pursuant to the Equity Placings is/are confirmed, settlement for all Placing Shares to be acquired pursuant to the Firm Placing will be required to be made at the time specified and all Placing Shares to be acquired pursuant to the Placing will be required to be made at the later time specified, on the basis explained below under the paragraph entitled "Registration and Settlement".

(l)          Commissions are payable to Placees in respect of the Placing. No commissions are payable to Placees in respect of the Firm Placing.

(m)       By participating in the Bookbuild, each Placee agrees that its rights and obligations in respect of the Firm Placing and/or the Placing will terminate only in the circumstances described below and will not otherwise be capable of rescission or termination by the Placee. All obligations under the Equity Placings will be subject to the fulfilment of the conditions referred to below under the paragraph entitled "Conditions of the Equity Placings and Termination of the Underwriting and Sponsor's Agreement".

Conditions of the Equity Placings and Termination of the Underwriting and Sponsor's Agreement

Placees will only be called on to acquire the Placing Shares if the obligations of the Joint Underwriters under the Underwriting and Sponsor's Agreement have become unconditional in all respects and the Joint Underwriters have not terminated the Underwriting and Sponsor's Agreement prior to Admission.

The Joint Underwriters' obligations under the Underwriting and Sponsor's Agreement in respect of the Firm Placing and the Placing and Open Offer are conditional upon, inter alia:

(a)         the Company having complied with all of its undertakings, covenants and obligations under the Underwriting and Sponsor's Agreement and under the terms or conditions of the Capital Raising (to the extent that such obligations fall to be performed prior to Admission);

(b)          the Prospectus being approved by the FCA as a circular and prospectus not later than 5.00 p.m. on the date of the Underwriting and Sponsor's Agreement (or such later time and/or date as the Company and the Joint Underwriters may agree in writing);

(c)        Admission occurring not later than 8.00 a.m. on 18 November 2020 or such later time and/or date as the Company and the Joint Underwriters may agree (being not later than 2 December 2020);

(d)         each condition to enable the New Shares to be admitted as a participating security in CREST (other than Admission) being satisfied on or before Admission;

(e)        the representations, warranties and undertakings on the part of the Company as contained in the Underwriting and Sponsor's Agreement being true and accurate in all respects and not misleading in any respect on the date of the Underwriting and Sponsor's Agreement, on the date on which the Company despatches the Prospectus and the Application Forms, on the date of any Supplementary Prospectus, on the last time and date for receipt of completed Application Forms and payment in full and settlement of CREST instructions in respect of the Open Offer and the Offer for Subscription, and immediately prior to Admission, as if they had been repeated by reference to the facts and circumstances then existing;

(f)         the passing of the Resolutions (without amendment) at the General Meeting on 17 November 2020 (or with the Joint Underwriters' consent, at any adjournment of such meeting); 

(g)        in the opinion of the Joint Underwriters (acting in good faith and having consulted with the Company to the extent reasonably practicable), there having been no material adverse change in, or any development reasonably likely to result in a material adverse change in or affecting, the condition (financial, operational, legal or otherwise), prospects, earnings, net asset value, funding position, management, business affairs, solvency or operations of the Group taken as a whole, whether or not arising in the ordinary course of business at any time prior to Admission (whether or not foreseeable at the date of the Underwriting and Sponsor's Agreement);

(h)          each of the undertakings received from CapCo and Norges being duly executed and becoming unconditional subject only to Admission and not having been terminated immediately prior to Admission and neither CapCo or Norges having notified the Company or either of the Joint Underwriters that they do not intend to comply with the terms of their respective undertakings;

(i)           no matter referred to in Article 23 of the Prospectus Regulation or LR 10.5.4R(2) of the Listing Rules having arisen between the publication of the Prospectus and Admission, and no supplementary prospectus being published by or on behalf of the Company before Admission,

(all such conditions included in the Underwriting and Sponsor's Agreement being together the "Conditions").

Either of the Joint Underwriters shall be entitled, in its absolute discretion, to terminate the Underwriting and Sponsor's Agreement at any time prior to Admission, by notice in writing to the Company if in its good faith opinion the effect of certain events, including but not limited to the following, makes it impracticable or inadvisable to market the New Shares or to proceed with the Capital Raising in the manner contemplated in the offer documents, or which may prejudice the success of the Capital Raising:

(a)          the Company's application, either to the FCA or the London Stock Exchange, for Admission is withdrawn by the Company or refused by the FCA or the London Stock Exchange (as appropriate);

(b)       any statement contained in any offer document is, or has become, untrue, inaccurate or misleading in any respect, or any matter has arisen, which would, if such offer document has been issued at that time constitute an omission from such offer document, and which the Joint Underwriters (or either of them) consider in their sole judgement to be (singly or in the aggregate) material in the context of the Capital Raising and/or the underwriting of the Underwritten Shares and/or the issue of the New Shares and/or Admission;

(c)           in the good faith opinion of the Joint Underwriters (or either of them) there has been a material adverse change, whether or not foreseeable at the date of the Underwriting and Sponsor's Agreement; or

(d)           there shall have occurred or it is reasonably likely that there will occur any material adverse change in the international financial, securities or banking markets, any outbreak or escalation of hostilities or any change in political, financial or economic conditions, or any material adverse change or a prospective material adverse change in tax law or regulation in the United States, the United Kingdom or any member state of the EEA.

If any Condition has not been satisfied or waived by the Joint Underwriters as described below or if the Underwriting and Sponsor's Agreement is terminated, all obligations under these terms and conditions will automatically terminate. By participating in the Equity Placings, each Placee agrees that its rights and obligations hereunder are conditional upon the Underwriting and Sponsor's Agreement becoming unconditional in all respects in respect of the Firm Placing (in respect of Firm Placed Shares subscribed for) and/or in respect of the Placing (in respect of Open Offer Shares subscribed for under the Placing) and that its rights and obligations will terminate only in the circumstances described above and will not be otherwise capable of rescission or termination by it after oral or written confirmation by the Joint Underwriters (at the Joint Underwriters' discretion) following the close of the Bookbuild.

The Joint Underwriters may in their absolute discretion in writing waive fulfilment of certain of the Conditions in the Underwriting and Sponsor's Agreement or extend the time provided for fulfilment of such Conditions. Any such extension or waiver will not affect Placees' commitments as set out in these terms and conditions.

By participating in the Equity Placings each Placee agrees that the exercise by the Company or any of the Joint Underwriters of any right or other discretion under the Underwriting and Sponsor's Agreement shall be within the absolute discretion of the Company and each of the Joint Underwriters (as the case may be) and that neither the Company nor any of the Joint Underwriters need make any reference to such Placee (or to any other person whether acting on behalf of any Placee or otherwise) and that neither the Company nor any of the Joint Underwriters shall have any liability to such Placee (or to any other person whether acting on behalf of any Placee or otherwise) whatsoever in connection with any such exercise or failure so to exercise.

To the fullest extent permissible by law, none of the Joint Underwriters, nor the Company, shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither the Joint Underwriters nor any of its affiliates shall have any liability (including to the extent permissible by law, any fiduciary duties) in respect of their conduct of the Bookbuild or of such alternative method of effecting the Equity Placings as the Joint Underwriters and the Company may agree.

Withdrawal Rights

Placees acknowledge that their acceptance of any of the Placing Shares is not by way of acceptance of the public offer made in the Prospectus and (if applicable) the Application Form but is by way of a collateral contract and as such section 87Q of the FSMA does not entitle Placees to withdraw in the event that the Company publishes a supplementary prospectus in connection with the Firm Placing and Placing and Open Offer and Offer for Subscription or Admission. If, however, a Placee is entitled to withdraw, by accepting the offer of a placing participation, the Placee agrees to confirm their acceptance of the offer on the same terms immediately after such right of withdrawal arises. Please note that, in any event, withdrawal rights will not apply once Admission of the Placing Shares has occurred.

Placing Procedure

Placees shall acquire or subscribe for the Firm Placed Shares and Open Offer Shares to be issued pursuant to the Equity Placings (after clawback) and any allocation of the Firm Placed Shares and Open Offer Shares (subject to clawback) to be issued pursuant to the Equity Placings will be notified to them on or around 22 October 2020 (or such other time and/or date as the Company and the Joint Underwriters may agree in writing).

Placees will be called upon to subscribe for, and shall subscribe for, the Open Offer Shares only to the extent that valid applications by Qualifying Shareholders under the Open Offer are not received by 11.00 a.m. on 16 November 2020 (or by such later time and/or date as the Company and the Joint Underwriters may agree) or if applications have otherwise not been deemed to be valid in accordance with the Prospectus and the Application Form.

Payment in full for any Firm Placed Shares and Open Offer Shares so allocated in respect of the Equity Placings at the Issue Price must be made by no later than 16 November 2020 (or such other date as shall be notified to each Placee by the relevant Joint Underwriter) on the closing date for the Firm Placing and the closing date for the Open Offer, respectively (or such other time and/or date as the Company and the Joint Underwriters may agree). The Joint Underwriters will notify Placees if any of the dates in these terms and conditions should change, including as a result of delay in the posting of the Prospectus, the Application Forms or the crediting of the Open Offer Entitlements in CREST or the production of a supplementary prospectus or otherwise.

Registration and Settlement

Settlement of transactions in the Placing Shares following Admission will take place within the CREST system, subject to certain exceptions. The Joint Underwriters and the Company reserve the right to require settlement for, and delivery of, the Placing Shares to Placees by such other means that they deem necessary if delivery or settlement is not possible within the CREST system within the timetable set out in the Placing Proof and/or Prospectus or would not be consistent with the regulatory requirements in the Placee's jurisdiction. Each Placee will be deemed to agree 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 they have in place with the relevant Joint Underwriter, including providing its settlement details in order to enable instruction to be successfully matched in CREST.

Settlement for the Equity Placings will be on a delivery versus payment basis and settlement is expected to take place on or around 18 November 2020. Each Placee is deemed to agree that if it does not comply with these obligations, the Joint Underwriters may sell any or all of the Placing Shares allocated to it on its behalf and retain from the proceeds, for its own account and benefit, an amount equal to the aggregate amount owed by the Placee. By communicating a bid for Placing Shares, each Placee confers on the Joint Underwriters all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which the Joint Underwriters lawfully take in pursuance of such sale. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon any transaction in the Placing Shares on such Placee's behalf.

Acceptance

By participating in the Equity Placings, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with the Joint Underwriters and the Company, the following (provided that Norge's and Capco's agreement to participate in the Capital Raising is subject to the terms of their irrevocable undertakings):

1.        in consideration of its allocation of a placing participation, to subscribe at the Issue Price for any Placing Shares comprised in its allocation for which it is required to subscribe pursuant to these terms and conditions, subject to clawback of the Open Offer Shares in respect of valid applications from Qualifying Shareholders in the Open Offer;

2.          it has read and understood this announcement (including these terms and conditions) and the Placing Proof in their entirety and that it has neither received nor relied on any information given or any investigations, representations, warranties or statements made at any time by any person in connection with Admission, the Equity Placings, the Company, the New Shares, or otherwise, other than the information contained in this announcement (including these terms and conditions) and the Placing Proof that in accepting the offer of its placing participation it will be relying solely on the information contained in this announcement (including these terms and conditions) and the Placing Proof, receipt of which is hereby acknowledged, and undertakes not to redistribute or duplicate such documents;

3.           its oral or written commitment will be made solely on the basis of the information set out in this announcement and the Placing Proof which will be provided to each Placee, such information being all that such Placee deems necessary or appropriate and sufficient to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given, or representations or warranties or statements made, by or on behalf of any of the Joint Underwriters or the Company nor any of their respective affiliates and none of the Joint Underwriters or the Company nor any of their respective affiliates has or shall have liable for any Placee's decision to participate in the Equity Placings based on any other information, representation, warranty or statement;

4.            the content of this announcement, these terms and conditions and the Placing Proof are exclusively the responsibility of the Company and agrees that none of the Joint Underwriters nor any of their respective affiliates nor any person acting on behalf of any of such persons will be responsible for or shall have liability for any information, representation or statements contained therein or any information previously published by or on behalf of the Company, and none of the Joint Underwriters or the Company, or any of their respective affiliates or any person acting on behalf of any such person will be responsible or liable for a Placee's decision to accept its placing participation;

5.        (i) it has not relied on, and will not rely on, any information relating to the Company contained or which may be contained in any research report or investor presentation prepared or which may be prepared by any of the Joint Underwriters or any of their affiliates; (ii) none of the Joint Underwriters, their affiliates or any person acting on behalf of any of such persons has or shall have any responsibility or liability for public information relating to the Company; (iii) none of the Joint Underwriters, their affiliates or any person acting on behalf of any of such persons has or shall have any responsibility or liability for any additional information that has otherwise been made available to it, whether at the date of publication of such information, the date of these terms and conditions or otherwise; and that (iv) none of the Joint Underwriters, their affiliates or any person acting on behalf of any of such persons makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of any such information referred to in (i) to (iii) above, whether at the date of publication of such information, the date of this announcement or otherwise;

6.           it has made its own assessment of the Company and has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Equity Placings, and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its decision to participate in the Firm Placing and/or the Placing;

7.         it is acting as principal only in respect of the Equity Placings or, if it is acting for any other person (i) it is duly authorised to do so and has full power to make the acknowledgements, representations and agreements herein on behalf of each such person, (ii) it is and will remain liable to the Company and the Joint Underwriters for the performance of all its obligations as a Placee in respect of the Equity Placings (regardless of the fact that it is acting for another person);

8.          it is a Relevant Person and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; and/or if it is a financial intermediary, as that term is used in Article 5(1) of the Prospectus Regulation, that (i) the Placing Shares acquired by and/or subscribed for by it in the Equity Placings will not be acquired and/or subscribed for on a non-discretionary basis on behalf of, nor will they be acquired or subscribed for with a view to their offer or resale to, persons in a member state of the EEA or the UK other than Qualified Investors, or in circumstances which may give rise to an offer of securities to the public other than an offer or resale, in a member state of the EEA which has implemented the Prospectus Regulation, to Qualified Investors, or in circumstances in which the prior consent of the Joint Underwriters has been given to each such proposed offer or resale; or (ii) where the Placing Shares have been acquired or subscribed for by it on behalf of persons in any member state of the EEA or the United Kingdom other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Regulation as having been made to such persons;

9.            if it has received any confidential price sensitive information about the Company in advance of the Equity Placings, it has not (i) dealt in the securities of the Company; (ii) encouraged or required another person to deal in the securities of the Company; or (iii) disclosed such information to any person, prior to the information being made generally available;

10.          it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) 2017 Regulations and the Criminal Justice (Money Laundering and Terrorism Financing) Act 2010 and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government agency having jurisdiction in respect thereof (the "AML Regulations") and, if it is making payment on behalf of a third party, it has obtained and recorded satisfactory evidence to verify the identity of the third party as may be required by the AML Regulations;

11.        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 section 21(1) of FSMA does not require approval of the communication by an authorised person;

12.         it is not acting in concert (within the meaning given in the City Code on Takeovers and Mergers) with any other Placee or any other person in relation to the Company;

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

14.       it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to this participation in the Equity Placings and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in these terms and conditions);

15.          unless otherwise agreed by the Company (after agreement with the Joint Underwriters), it is not, and at the time the Placing Shares are subscribed for and purchased will not be, subscribing for and on behalf of a resident of the United States or any other Excluded Territory and further acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of any Excluded Territory and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions;

16.       it does not expect the Joint Underwriters to have any duties or responsibilities towards it for providing protections afforded to clients under the rules of the FCA Handbook (the "Rules") or advising it with regard to the Placing Shares and that it is not, and will not be, a client of any of the Joint Underwriters as defined by the Rules. Likewise, any payment by it will not be treated as client money governed by the Rules;

17.          any exercise by the Joint Underwriters of any right to terminate the Underwriting and Sponsor's Agreement or of other rights or discretions under the Underwriting and Sponsor's Agreement or the Equity Placings shall be within the Joint Underwriters' absolute discretion and neither of the Joint Underwriters shall have any liability to it whatsoever in relation to any decision to exercise or not to exercise any such right or the timing thereof;

18.          neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee(s) or agent(s) for, and that the Placing Shares will not be allotted to, a person/person(s) whose business either is or includes issuing depository receipts or the provision of clearance services and therefore that the issue to the Placee, or the person specified by the Placee for registration as holder, of the Placing Shares will not give rise to a liability under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depository receipts or to issue or transfer Placing Shares into a clearance system;

19.        the person who it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be, and acknowledges that the Joint Underwriters and the Company will not be responsible for any liability to pay stamp duty or stamp duty reserve tax (together with interest and penalties) resulting from a failure to observe this requirement; and each Placee and any person acting on behalf of such Placee agrees to participate in the Equity Placings on the basis that the Placing Shares will be allotted to a CREST stock account of one of the Joint Underwriters who will hold them as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with it;

20.          where it is acquiring Placing Shares for one or more managed accounts, it is authorised in writing by each managed account to acquire Placing Shares for that managed account;

21.         if it is a pension fund or investment company, its acquisition of any Placing Shares is in full compliance with applicable laws and regulations;

22.         it has not offered or sold and will not offer or sell any New Shares to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the FSMA;

23.          it has not offered or sold and will not offer or sell any New Shares to persons in any member state of the EEA prior to Admission except to persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in any member state of the EEA within the meaning of the Prospectus Regulation;

24.          participation in the Equity Placings is on the basis that, for the purposes of the Equity Placings, it is not and will not be a client of either of the Joint Underwriters and that none of the Joint Underwriters have any duties or responsibilities to it for providing the protections afforded to their clients nor for providing advice in relation to the Equity Placings nor in respect of any representations, warranties, undertakings or indemnities contained in the Underwriting and Sponsor's Agreement or the contents of these terms and conditions;

25.       to provide the Joint Underwriters with such relevant documents as they may reasonably request to comply with requests or requirements that either they or the Company may receive from relevant regulators in relation to the Equity Placings, subject to its legal, regulatory and compliance requirements and restrictions;

26.          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 agreement shall be governed by and construed in accordance with the laws of England and Wales and it submits (on its behalf and on behalf of any Placee on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter (including non-contractual matters) 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 the Joint Underwriters 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;

27.      to fully and effectively indemnify and hold harmless the Company and the Joint Underwriters and each of their respective affiliates (as defined in Rule 501(b) under the Securities Act) and each person, if any, who controls any Joint Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the US Exchange Act of 1934, as amended, and any such person's respective affiliates, subsidiaries, branches, associates and holding companies, and in each case their respective directors, employees, officers and agents (each, an "Indemnified Person") from and against any and all losses, claims, damages, liabilities and expenses (including legal fees and expenses) (i) arising from any breach by such Placee of any of the provisions of these terms and conditions and (ii) incurred by any Indemnified Person arising from the performance of the Placee's obligations as set out in these terms and conditions;

28.          in making any decision to subscribe for the Placing Shares, (i) it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of acquiring the Placing Shares; (ii) 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; (iii) it has relied on its own examination, due diligence and analysis of the Company and its affiliates taken as a whole (including the markets in which the Group operates) and the terms of the Equity Placings (including the merits and risks involved); (iv) it has had sufficient time to consider and conduct its own investigation with respect to the offer and purchase of the Placing Shares, including the legal, regulatory, tax, business, currency and other economic and financial considerations relevant to such investment and (v) will not look to the Joint Underwriters, any of their respective affiliates or any person acting on their behalf for all or part of any such loss or losses it or they may suffer;

29.         the Joint Underwriters and the Company and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgments and undertakings which are irrevocable; and

30.         its commitment to acquire Placing Shares will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Firm Placing and/or the Placing, and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's or the Joint Underwriters' conduct of the Firm Placing and/or the Placing.

Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement assumes that such Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer such Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in such Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor the Joint Underwriters would be responsible and Placees shall indemnify the Company and the Joint Underwriters on an after-tax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold each of the Joint Underwriters and/or the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent. If this is the case, it would be sensible for Placees to take their own advice and they should notify the relevant Joint Underwriter accordingly. 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.

Selling Restrictions

By participating in the Equity Placings, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with the Joint Underwriters and the Company, the following:

1.         it is not a person who has a registered address in, or is a resident, citizen or national of, a country or countries, in which it is unlawful to make or accept an offer to subscribe for Placing Shares;

2.         it has fully observed and will fully observe the applicable laws of any relevant territory, including complying with the selling restrictions set out herein and obtaining any requisite governmental or other consents and it has fully observed and will fully observe any other requisite formalities and pay any issue, transfer or other taxes due in such territories;

3.        if it is in the United Kingdom, it is a Qualified Investor (i) who has professional experience in matters relating to investments and who falls within the definition of "investment professionals" in Article 19(5) of the Order or who falls within Article 19(5) of the Order; or(ii) who falls within Article 49(2) of the Order;

4.         if it is in a member state of the EEA, it is a "qualified investor" within the meaning of Article 2(e) of the Prospectus Regulation;

5.            it is a person whose ordinary activities involve it (as principal or agent) in acquiring, holding, managing or disposing of investments for the purpose of its business and it undertakes that it will (as principal or agent) acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

6.          it is and, at the time the Placing Shares are purchased, will be either (i) outside the United States, purchasing in an offshore transaction pursuant to Regulation S or (ii) a QIB that makes each of the representations, warranties, acknowledgements and agreements set out in paragraph 9 below;

7.          none of the Placing Shares has been or will be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States;

8.            none of the Placing Shares may be offered, sold, taken up or delivered directly or indirectly, in whole or in part, into or within the United States except pursuant to an 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;

9.          if it is in the United States, (i) it is, and at the time of any purchase of the Placing Shares will be, a QIB and is acquiring the Placing Shares for its own account or, if it is acquiring the Placing Shares as a fiduciary or agent for one or more investor accounts, each such account is a QIB, it has investment discretion with respect to each account, and it has full power and authority to make (and it does make) the representations, warranties, undertakings, agreements and acknowledgements herein on behalf of each such account, (ii) any Placing Shares it acquires will be for its own account (or for the account of a QIB) for investment purposes and not with a view to resale or distribution within the meaning of the US securities laws, subject to the understanding that the disposition of its property shall at all times be and remain within its control; (iii) it acknowledges the Placing Shares have not been and will not be registered under the US Securities Act, and that they may not be offered, sold or exercised, directly or indirectly, in the United States, other than in accordance with the terms and conditions set out in this announcement and that the Placing Shares are "restricted securities" within the meaning of Rule 144(a)(3) under the US Securities Act; (iv) if in the future it or any other QIB for which it is acting or any other fiduciary or agent representing such investor decides to offer, sell, transfer, assign, pledge or otherwise dispose of any Placing Shares, it will do so only (a) pursuant to an effective registration statement under the US Securities Act, (b) to a QIB in a transaction meeting the requirements of Rule 144A under the US Securities Act, (c) outside the United States in an "offshore transaction" pursuant to Rule 904 under Regulation S (and not in a pre-arranged transaction resulting in the resale of such Placing Shares into the United States) or (d) otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and, in each case, in accordance with any applicable securities laws of any state or territory of the United States and of any other jurisdiction; (v) it is not acquiring the Placing Shares and as a result of any general solicitation or general advertising (as those terms are defined in Regulation D under the US Securities Act) or any directed selling efforts (as that term is defined in Regulation S) and that its purchase of the Placing Shares is not part of a plan or scheme to evade the registration requirements of the US Securities Act; (vi) it (a) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investments in the Placing Shares, and (b) and any accounts for which it is acting, are able to bear the economic risk, and sustain a complete loss, of such investment in Placing Shares, and it is aware that there is a substantial risk incident to the purchase thereof; (vii) the information contained or incorporated by reference in this document has been prepared in accordance with the requirements of the London Stock Exchange, the laws of the United Kingdom, including without limitation any financial information and any description of the risks and uncertainties regarding the Group, may be materially different from any disclosure that would be provided in a US registered offering. In particular, but without limitation, it acknowledges that the financial information available as part of this document has been prepared in accordance with IFRS, and thus may not be comparable to financial statements of US companies prepared in accordance with US generally accepted accounting principles; (viii)         it will base its investment decision on this announcement and it has not duplicated, distributed, forwarded, transferred or otherwise transmitted this announcement (including electronic copies thereof) to any other person within the United States; (ix) any information regarding the Company which it may access in compliance with applicable securities laws speaks only as of the date of its public release, that it may not be complete or correct as of any time after that date, and that neither of the Joint Underwriters has made any representations, express or implied, to it with respect to the Company, the Placing Shares or the accuracy, completeness or adequacy of any financial or other information concerning the Company and/or the Placing Shares, nor have either of the Joint Underwriters nor any of their affiliates made any representations, express or implied, that there are no material misstatements or omissions in any information regarding the Company which it may access in compliance with applicable securities laws. It acknowledges that it has not relied on any information contained in any research reports prepared by the Joint Underwriters or any of their respective affiliates; (x) it has made its own independent investigation and appraisal of the business, results, financial condition, prospects, creditworthiness, status and affairs of the Group and has made its own investment decision to acquire the Placing Shares solely on the basis of such independent investigation and appraisal. It understands that there may be certain consequences under US and other tax laws resulting from an investment in the Placing Shares, and it will make such investigation and consult such tax and other advisors with respect thereto as it deems appropriate; (xi) it understands that the Placing Shares will be "restricted securities" within the meaning of Rule 144(a)(3) under the US Securities Act and that no representation can be made as to the availability of the exemption provided by Rule 144 under the US Securities Act for the resale of the Placing Shares. It agrees that for so long as the Placing Shares are "restricted securities" (as so defined), they may not be deposited into any American depositary receipt facility established or maintained by a depositary bank, other than a restricted depositary receipt facility, and that such Placing Shares will not settle or trade through the facilities of the Depository Trust Company, the New York Stock Exchange or any other US exchange or clearing system; (xii) it understands and acknowledges that the Company shall have no obligation to recognise any offer, sale, pledge or other transfer made other than in compliance with the restrictions on transfer set forth and described herein and that the Company may make notation on its records or give instructions to any transfer agent of the Placing Shares in order to implement such restrictions; and (xiii) it understands that the foregoing representations, warranties, undertakings, agreements and acknowledgements are required in connection with United States and other securities laws and that the Company, its affiliates, the Joint Underwriters and their respective affiliates, and others are entitled to rely upon the truth and accuracy of and its compliance with the representations, warranties, undertakings, agreements and acknowledgements contained herein. It agrees that if any of the representations, warranties, undertakings, agreements and acknowledgements made herein are no longer accurate or have not been complied with, it will promptly notify the Company and the Joint Underwriters; and

10.          it (on its behalf and on behalf of any Placee on whose behalf it is acting) has (a) fully observed the laws of all relevant jurisdictions which apply to it; (b) obtained all governmental and other consents which may be required; (c) fully observed any other requisite formalities; (d) paid or will pay any issue, transfer or other taxes; (e) not taken any action which will or may result in the Company or the Joint Underwriters (or any of them) being in breach of a legal or regulatory requirement of any territory in connection with the Equity Placings; (f) obtained all other necessary consents and authorities required to enable it to give its commitment to subscribe for the relevant Placing Shares; and (g) the power and capacity to, and will, perform its obligations under the terms contained in these terms and conditions.

Miscellaneous

If a Placee is entitled to participate in the Open Offer by virtue of being a Qualifying Shareholder it will be able to apply to subscribe for Open Offer Shares under the terms and conditions of the Open Offer.

The Company and the Joint Underwriters reserve the right to treat as invalid any application or purported application for Placing Shares that appears to the Company, the Joint Underwriters or their respective agents to have been executed, effected or dispatched from the United States or an Excluded Territory or in a manner that may involve a breach of the laws or regulations of any jurisdiction or if the Company, the Joint Underwriters or their respective agents believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of the share certificates of Placing Shares in, or in the case of a credit of Open Offer Entitlements to a stock account in CREST, to a CREST member whose registered address would be in, an Excluded Territory or the United States, or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates or make such a credit.

When a Placee or person acting on behalf of the Placee is dealing with any of the Joint Underwriters, any money held in an account with any of the Joint Underwriters 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 rules and regulations of the FCA made under the FSMA. 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 from the Joint Underwriters' money in accordance with the client money rules and will be used by each of the Joint Underwriters in the course of its own business; and the Placee will rank only as a general creditor of the relevant Joint Underwriter.

Times

Unless the context otherwise requires, all references to time are to London time. All times and dates in these terms and conditions may be subject to amendment. The Joint Underwriters will notify Placees and any persons acting on behalf of the Placees of any changes.

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