Update on Financing Arrangements
Source: RNS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
26 May 2023
RECOMMENDED CASH ACQUISITION
of
SURESERVE GROUP PLC ("Sureserve" or the "Company")
by
CAP10 4NETZERO BIDCO LIMITED ("Bidco"),
a newly incorporated company indirectly owned by funds managed and/or advised
by
CAP10 PARTNERS LLP ("Cap10")
Update on Financing Arrangements
On 21 April 2023, the Boards of Bidco and Sureserve announced that they had reached agreement on the terms of a recommended all cash offer by Bidco for the entire issued and to be issued ordinary share capital of Sureserve (the "Acquisition") to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 (the "Scheme"). The circular in relation to the Scheme was published on 17 May 2023 (the "Scheme Document") and the Court Meeting and General Meeting have been convened for 9 June 2023.
Capitalised terms used in this announcement (the "Announcement") shall, unless otherwise defined, have the same meanings as set out in the Scheme Document.
On 21 April 2023, it was announced that Bidco has entered into a financing commitment letter, an interim facilities agreement (the "Interim Facilities Agreement"), and a related fee letter (together, the "Financing Commitment Documents") in relation to the financing of the Acquisition, in each case, with certain funds managed and/or advised by Pemberton Capital Advisors LLP.
On 25 May 2023, Bidco (as borrower), Volt Midco (CP) Limited ("Midco") (as parent and obligor), certain funds managed and/or advised by Pemberton Capital Advisors LLP (certain of such funds being the original lenders (the "Original Lenders") and certain others of such funds being the arrangers (the "Arrangers")), Kroll Agency Services Limited (as agent) (the "Agent") and Kroll Trustee Services Limited (as security agent) (the "Security Agent") entered into a facilities agreement (the "Facilities Agreement"). The Facilities Agreement replaced the Interim Facilities Agreement, with the related guarantees and security granted in connection with the Interim Facilities Agreement discharged in full upon such replacement. A summary of the Facilities Agreement is set out in the Appendix to this Announcement.
As a result of increased fee amounts being payable pursuant to the Facilities Agreement, on 25 May 2023 the Equity Commitment Letter was amended to provide for an increased commitment of £114,213,693.81.
Copies of the Scheme Document, the Facilities Agreement, the Equity Commitment Letter (as amended) and certain other documents relating to the Facilities Agreement will be available free of charge subject to certain restrictions relating to persons resident in certain jurisdictions, on Bidco's website at https://www.cap10partners.com/recommended-offer-for-sureserve-group-plc and on Sureserve's website at https://www.sureservegroup.co.uk/plc/investors/recommended-cash-acquisition-of-sureserve-group-plc by no later than 12:00 p.m. on the Business Day following the date of this Announcement.
IMPORTANT NOTICES
N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to Cap10 and Bidco and no one else in connection with the Acquisition and will not be responsible to anyone other than Cap10 and Bidco for providing the protections afforded to clients of Rothschild & Co nor for providing advice in connection with the Acquisition or any matter or arrangement referred to herein. Neither Rothschild & Co nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Rothschild & Co in connection with the Acquisition, any statement contained herein or otherwise.
Evercore Partners International LLP ("Evercore"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to Sureserve and no one else in connection with the matters described in this Announcement and will not be responsible to anyone other than Sureserve for providing the protections afforded to clients of Evercore nor for providing advice in connection with the matters referred to herein. Neither Evercore nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Evercore in connection with this Announcement, any statement contained herein, any offer or otherwise. Apart from the responsibilities and liabilities, if any, which may be imposed on Evercore by the Financial Services and Markets Act 2000 and successor legislation, or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, neither Evercore nor any of its affiliates accepts any responsibility or liability whatsoever for the contents of this Announcement, and no representation, express or implied, is made by it, or purported to be made on its behalf, in relation to the contents of this Announcement, including its accuracy, completeness or verification of any other statement made or purported to be made by it, or on its behalf, in connection with Sureserve or the matters described in this Announcement. To the fullest extent permitted by applicable law, Evercore and its affiliates accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this Announcement or any statement contained herein.
Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited (together or individually, "Shore Capital"), which are authorised and regulated by the Financial Conduct Authority in the United Kingdom, are acting as nominated adviser and corporate broker to Sureserve and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than Sureserve for providing the protections afforded to clients of Shore Capital nor for providing advice in connection with the matters referred to in this Announcement. Neither Shore Capital nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Shore Capital in connection with the matters referred to in this Announcement.
Further information
If you have any questions about this Announcement, the Scheme Document, the Facilities Agreement or the Equity Commitment Letter (as amended) or are in any doubt as to how to complete and return the Forms of Proxy or to appoint a proxy through the CREST electronic proxy appointment service or otherwise, please contact Link Group on +44 (0) 371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for training purposes. Lines are open between 9.00 a.m. and 5:30 p.m. (London time), Monday to Friday, excluding public holidays in England and Wales. The helpline cannot provide advice on the merits of the Acquisition nor give any financial, legal or tax advice.
Enquiries
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Rothschild & Co, financial adviser to Bidco Alistair Allen Rob McCann Matt Jaquiss-Ollier
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+44 (0)161 827 3800 +44 (0)20 7280 5000
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Media Zoo, public relations adviser to Bidco Alex Williams |
+44 (0)7793 207 325
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Sureserve |
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Nick Winks, Peter Smith, Sameet Vohra |
+44 (0)20 3961 5229 |
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Evercore (Financial Adviser to Sureserve) |
+44 (0)20 7653 6000 |
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Dimitrios Georgiou, Wladimir Wallaert, Nirav Amlani, Alex Bennett
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Shore Capital (Nominated Adviser and Corporate Broker to Sureserve) |
+44 (0)20 7408 4090 |
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Stephane Auton, Daniel Bush |
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Camarco (PR Adviser to Sureserve) |
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Ginny Pulbrook |
+44 (0)20 3757 4992 |
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Rosie Driscoll |
+44 (0)20 3757 4981 |
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FURTHER INFORMATION
This Announcement is for information purposes only and is not intended to, and does not constitute, or form part of any offer, invitation, inducement or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of or exercise rights in respect of any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Sureserve in any jurisdiction in contravention of applicable law. The Acquisition will be made and implemented solely through the Scheme Document which contains the full terms and conditions of the Acquisition, including details of how to vote, or procure the vote, in respect of the Acquisition. Any vote or decision in respect of, or other response to, the Acquisition should be made only on the basis of the information contained in the Scheme Document (or, in the event that the Acquisition is to be implemented by way of a Takeover Offer, the Offer Document).
This Announcement does not constitute a prospectus, prospectus equivalent document or an exempted document.
The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them, and publication of this Announcement shall not give rise to any implication that there has been no change in the facts set out in this Announcement since such date.
Publication on website and availability of hard copies
A copy of this Announcement will be available free of charge (subject to any applicable restrictions with respect to persons resident in Restricted Jurisdictions) on Sureserve's and Bidco's website (https://www.sureservegroup.co.uk/plc/investors/recommended-cash-acquisition-of-sureserve-group-plc and https://www.cap10partners.com/recommended-offer-for-sureserve-group-plc respectively) by no later than 12:00 noon (London time) on 30 May 2023.
Neither the contents of these websites, nor the content of any other website accessible from hyperlinks on such websites, is incorporated into, or forms part of, this Announcement.
In accordance with Rule 30.3 of the Takeover Code, you may request a hard copy of this Announcement (and any information incorporated by reference in this Announcement), free of charge, by contacting Sureserve's Company Secretary, John Charlton, telephone no. +44 (0)20 3961 5229 or email john.charlton@sureservegroup.co.uk. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the United Kingdom will be charged at the applicable international rate. Unless you make such a request, a hard copy of this Announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition be in hard copy form.
For persons who receive a copy of this Announcement in electronic form or via a website notification, a hard copy of this Announcement will not be sent unless so requested.
General
Bidco reserves the right to elect, with the consent of the Panel (where necessary), to implement the Acquisition by way of a Takeover Offer for the entire issued and to be issued share capital of Sureserve not already held by Bidco as an alternative to the Scheme. In such an event, a Takeover Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme.
If the Acquisition is effected by way of Takeover Offer, and such Takeover Offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Bidco intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act so as to acquire compulsorily the remaining Sureserve Shares in respect of which the Takeover Offer has not been accepted.
If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.
If you have any questions about this Announcement, the Scheme Document, the Meetings or are in any doubt as to how to complete and return the Forms of Proxy or to appoint a proxy through the CREST electronic proxy appointment service or otherwise, please contact Link Group on +44 (0) 371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for training purposes. Lines are open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday, excluding public holidays in England and Wales. The helpline cannot provide advice on the merits of the Acquisition nor give any financial, legal or tax advice.
Dealing disclosure requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3:30pm (London time) on the tenth business day following the commencement of the offer period and, if appropriate, by no later than 3:30pm (London time) on the tenth business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in one per cent or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3:30pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
APPENDIX
Summary of the Facilities Agreement
Under the terms of the Facilities Agreement, the Arrangers have agreed to make available certain term loans described more particularly below. The Facilities Agreement also sets out the mechanics for establishing additional facilities, subject to the satisfaction of certain conditions (as set out in the Facilities Agreement).
The facilities, amounts, and documentation process
The debt financing facilities comprise: (i) a sterling term loan facility in an aggregate amount equal to £76,000,000 ("Facility B GBP"); (ii) a euro term loan facility in an aggregate amount equal to €14,943,500 ("Facility B EUR" and, together with Facility B GBP, "Facility B"); (iii) a multicurrency term loan facility in an aggregate amount equal to £15,000,000 (the "Working Capital Bridge Facility"); and (iv) a multicurrency term loan facility in an aggregate amount equal to £20,000,000 (the "Acquisition/Capex Facility"). The Facilities Agreement replaced the Interim Facilities Agreement, with the related guarantees and security granted in connection with the Interim Facilities Agreement discharged in full upon such replacement.
The Facilities Agreement includes mechanics to establish: (i) additional multicurrency term facilities in an aggregate amount that would not cause net leverage to exceed 3.70:1 (each, an "Additional Facility" and, together with Facility B and the Working Capital Bridge Facility, the "Term Facilities"); and (ii) a multicurrency revolving facility in an amount not exceeding the greater of £20,000,000 and 75% adjusted EBITDA of the Bidco Group (being Bidco, any parent undertaking of Bidco, and any undertaking which is a subsidiary undertaking of Bidco or of any such parent undertaking including, following completion of the Acquisition, the Sureserve Group (as defined below)) (the "Revolving Facility" and, together with the Term Facilities, the "Facilities").
The loans drawn under the Facilities Agreement are to be applied in or towards:
(i) in the case of any loan drawn under Facility B, financing, refinancing or replacing: (a) any amounts payable under or in connection with the Acquisition; (b) existing debt of the Sureserve Group (being Sureserve, and any undertaking which is a subsidiary undertaking of Sureserve); (c) payment of associated transaction costs in respect of the Acquisition or repayment of the existing debt of the Sureserve Group; and/or (d) for any purpose or funding requirement contemplated in the acquisition structure memorandum prepared by PricewaterhouseCoopers LLP (other than in connection with any exit or cash repatriation steps);
(ii) in the case of any loan drawn under the Working Capital Bridge Facility: (a) for any of the purposes set out under point (i) above; (b) for any of the purposes set out under points (iii)(a) to (d) inclusive below; and/or (c) the general corporate and working capital purposes of the Bidco Group (but not towards the repayment or prepayment of any term loan made under the Facilities Agreement);
(iii) in the case of any loan drawn under the Acquisition/Capex Facility or any Additional Facility: (a) payment of any amounts payable under or in connection with a permitted bolt-on acquisition made by any member of the Bidco Group (a "Permitted Bolt-on Acquisition") and any associated transaction costs; (b) refinancing any existing indebtedness of any target which is the subject of any Permitted Bolt-on Acquisition; (c) growth capital expenditure incurred by any member of the Bidco Group; (d) payment of any fees, costs and expenses (including hedge termination and broken funding costs and make-whole payments) related to any of the purposes set out in (iii)(a) to (c) inclusive above; (e) refinancing any loan made under the Revolving Facility set out in point (iv)(a) below); and (f) refinancing any items set out in points (iii)(a) to (d) inclusive above); and
(iv) in the case of any loan drawn under the Revolving Facility: (a) any of the purposes for which the Acquisition/Capex Facility can be applied under points (iii)(a) to (d) inclusive above, provided that such loan is repaid within three months after the relevant utilisation date using the proceeds of a loan made under the Acquisition/Capex Facility or any new shareholder injections; (b) repayment of any loan made under the Working Capital Bridge Facility in full or in part; and (c) the general corporate and working capital purposes of the Bidco Group (but not towards funding the repayment or prepayment of, or payment of interest in respect of, any loan made under a Term Facility (other than any loan made under the Working Capital Bridge Facility), funding investments in Permitted Joint Ventures or funding Permitted Payments (each as defined in the Facilities Agreement) or, in the case of any utilisation of any ancillary facility, towards the repayment or prepayment of any loan made under the Revolving Facility).
Repayment terms - Maturity
Loans under each of Facility B, the Working Capital Bridge Facility and the Acquisition/Capex Facility are repayable in full on the date falling seven years after the date on which the first drawing is made under Facility B (the "Closing Date"). Loans under the Revolving Facility are repayable on the final day of each interest period applicable to the Revolving Facility (subject to customary rollover) and in any event on the date falling 78 months after the Closing Date. Loans under any Additional Facility are repayable in full on the date agreed with the relevant Additional Facility lenders, provided it is no earlier than the final repayment date for Facility B.
Prepayment and repayments terms - Voluntary/mandatory
Loans under Term Facilities may be prepaid in whole or part subject to providing the Agent with three banking days' notice (in the case of term rate loans) or five banking days' notice (in the case of compounded rate loans) (or such shorter period as the Agent acting on the instructions of the lender or lenders whose commitment(s) aggregate more than 66⅔% of the total Facilities at such time or, if the Facilities have been reduced to zero, aggregated more than 66⅔% of the total Facilities immediately before that reduction may agree (the "Majority Lenders")) of the intention to prepay.
The Term Facilities may be: (i) prepaid in a minimum amount of £250,000 and an integral multiple of £50,000 (or such lesser amount as the Majority Lenders may agree); and/or (ii) cancelled in a minimum amount of £500,000 and an integral multiple of £50,000 or, if less, the entire available Term Facility.
Loans under the Revolving Facility may be prepaid in whole or part subject to providing the Agent with three banking days' notice (in the case of term rate loans) or five banking days' notice (in the case of compounded rate loans) (or such shorter period as the Agent, acting on the instructions of Majority Lenders, may agree) of the intention to prepay.
Loans under any Facility may be cancelled subject to providing the Agent with three banking days' notice (or such shorter period as the Agent, acting on the instructions of the Majority Lenders, may agree) of the intention to prepay.
Interest rates
The rate of interest payable on each loan drawn under Facility B GBP, the Working Capital Bridge Facility, and the Acquisition/Capex Facility is the aggregate of the applicable margin, plus the applicable reference rate (being compounded SONIA for sterling loans, EURIBOR for euro loans, and SOFR for USD loans).
An opening margin rate of 6% per annum shall apply to each loan drawn under Facility B, the Working Capital Bridge Facility, and the Acquisition/Capex Facility (except that an opening margin rate of 5.75% per annum shall apply to each loan drawn under Facility B EUR), in each case from the Closing Date. After the expiry of a period of at least three full financial quarters following the Closing Date, subject to certain conditions, the highest margin rate applicable to loans drawn under: (i) Facility B GBP, the Working Capital Bridge Facility, and the Acquisition/Capex Facility will be 6% per annum, where adjusted net leverage is equal to or greater than 3.20:1, with a step-down to 5.75% per annum, where adjusted net leverage is less than 3.20:1 but equal to or greater than 2.70:1, and with an additional step-down to 5.50% per annum where adjusted net leverage is less than 2.70:1; and (ii) Facility B EUR will be 5.75% per annum, where adjusted net leverage is equal to or greater than 3.20:1, with a step-down to 5.50% per annum, where adjusted net leverage is less than 3.20:1 but equal to or greater than 2.70:1, and with an additional step-down to 5.25% per annum where adjusted net leverage is less than 2.70:1.
The margin applicable to any Acquisition/Capex Facility Loan and/or Working Capital Bridge Facility Loan utilised in dollars shall be increased (at each level of the above ratchet) by 0.15% per annum.
The margin applicable to any Additional Facility and/or the Revolving Facility shall be as agreed with the relevant lenders upon establishment.
Interest is payable on the last day of each interest period applicable to the relevant loan.
Guarantees and security
The Facilities Agreement is secured by an English law debenture dated 25 May 2023 made between Bidco and Midco as chargors and the Security Agent (the "Debenture").
By no later than the date falling 90 days after the Closing Date: (i) material companies of the Bidco Group, having (a) EBITDA representing 5% or more of the EBITDA of the Bidco Group and/or (b) turnover representing 5% or more of the consolidated turnover of the Bidco Group; and (ii) sufficient members of the Bidco Group in order to ensure that the EBITDA and aggregate turnover of the guarantors represents not less than 80% of the EBITDA and consolidated turnover of the Bidco Group, are required to accede to the Facilities Agreement as an Additional Guarantor and grant security in favour of the Security Agent for the benefit of the finance parties. Thereafter, the aforementioned material company and guarantor coverage requirements are required to be complied with on an annual basis.
Representations, warranties, undertakings and events of default
The Facilities Agreement contains customary representations, warranties and undertakings for a facility agreement of this nature, including a negative pledge and restrictions on financial indebtedness and disposals (with agreed carve outs).
The Facilities Agreement includes: (i) a net leverage financial maintenance covenant which is tested with effect from the end of the second complete financial quarter ending after the Closing Date; and (ii) a cap on capital expenditure in any financial year of the greater of (a) £5,000,000 and (b) 20% of adjusted EBITDA for that financial year.
The Facilities Agreement contains customary events of default, including failure to comply with the terms of the Facilities Agreement, misrepresentation, certain insolvency events, and a cross-default clause in relation to any other financial indebtedness of any material member of the Bidco Group where the amount is more than £2,000,000 (or its equivalent in any other currency). Upon the occurrence of an event of default (subject to any applicable remedy periods), the Original Lenders may demand immediate repayment of all loans outstanding under the Facilities Agreement.
Conditions precedent
The Facilities Agreement sets out a number of conditions precedent to first utilisation (both documentary and otherwise) which include, among other things, the delivery of the Debenture and customary officers' certificates.
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