Offer for eProp Services PLC

Source: RNS
RNS Number : 8368A
Tosca Acquisition Limited
31 May 2019
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

 

31 May 2019

RECOMMENDED MANDATORY CASH OFFER

for

EPROP SERVICES PLC

by

TOSCA ACQUISITION LIMITED

Tosca Acquisition Limited ("TAL") has today acquired 1,941,275 ordinary shares in eProp Services plc ("eProp" or the "Company") at a price of 50 pence per share from a single shareholder, Robert Ellice, who is a director of eProp (the "Share Acquisition"). Following the Share Acquisition, TAL, together with persons acting in concert with it, hold 14,559,398 eProp Shares representing 40.79 per cent. of the existing issued share capital and voting rights of eProp.

As a result of the Share Acquisition, under Rule 9 of the Takeover Code, TAL is required to make a mandatory cash offer (the "Offer") for the entire issued and to be issued share capital of eProp not already owned, or agreed to be acquired, by TAL or the Tosca Funds, at a price of 50 pence per eProp Share (such price being no less than the highest price paid by TAL or persons acting in concert with it for an eProp Share during the 12 months prior to the date of this announcement). The Offer will be implemented by means of a takeover offer within the meaning of Part 28 of the Companies Act 2006.

Summary

·              Under the terms of the Offer, eProp Shareholders who accept the Offer will be entitled to receive:

50 pence in cash for each eProp Share

·              The Offer Price values the current issued share capital of eProp at approximately £17.85 million.

·              The Offer will be conditional upon receipt of valid acceptances which will result in TAL and persons acting in concert with it holding eProp Shares which, together with the eProp Shares acquired, or agreed to be acquired, by TAL and persons acting in concert with it before or during the Offer Period, carry, in aggregate, over 50 per cent. of the voting rights then normally exercisable at general meetings of eProp.

Recommendation

·              The Independent eProp Directors, who have been so advised by finnCap as to the financial terms of the Offer, unanimously consider the terms of the Offer to be fair and reasonable. Therefore, having carefully considered all of the factors set out in paragraph 6 of this announcement, the Independent eProp Directors believe that accepting the Offer is in the best interests of eProp Shareholders and the Independent eProp Directors intend to recommend unanimously that eProp Shareholders accept the Offer. In providing its advice to the Independent eProp Directors, finnCap has taken into account the commercial assessments of the Independent eProp Directors.

·              finnCap is providing independent financial advice to the Independent eProp Directors for the purpose of Rule 3 of the Code. Matthew Siebert is appointed to the eProp Board as a non-executive director, representing the Tosca Funds' shareholding, and therefore has taken no part in the consideration of the Offer.

·              Notwithstanding the above advice to eProp Shareholders, certain of the Independent eProp Directors do however, in their capacity as eProp Shareholders, continue to believe in the merit and longer-term potential of the Company's business and the eProp Directors' strategy, as more fully described in paragraph 6 of this announcement and the prospect of continuing to execute this with a supportive majority shareholder. Accordingly, Jon Cooke and Marcus Whewell are not intending to accept the Offer in respect of their shareholdings, being 2,588,627 eProp Shares representing 7.25 per cent. in aggregate of the issued eProp Shares. In making this decision, in their personal capacities as eProp Shareholders, and electing to not accept the Offer, each relevant Independent eProp Director is fully aware of, and prepared to accept, the associated risks.

Other information

·              In so far as any dividend or other distribution or return of value is authorised, declared, made, paid or payable by eProp on or after the date of this announcement, TAL will be entitled to reduce the Offer Price by the amount of any such dividend, other distribution or return of value per eProp Share except where the eProp Shares are or will be acquired on a basis which entitles TAL to receive the dividend, other distribution or return of value and retain it.

This summary should be read in conjunction with the following full announcement and the Appendices.

Appendix I sets out the Acceptance Condition and certain further terms of the Offer. Appendix II sets out the bases of calculation and sources of information contained in this announcement. Certain terms used in this announcement are defined in Appendix III.

The Offer will be subject to the Acceptance Condition and further terms set out in this announcement and to the full terms and conditions that will be set out in the Offer Document and the Form of Acceptance.

It is intended that the Offer Document and Form of Acceptance containing further details of the Offer will be despatched to eProp Shareholders (other than to persons in a Restricted Jurisdiction) as soon as practicable following the publication of eProp's audited accounts for the financial year ended 31 December 2018, which eProp expects to publish by the end of June 2019.

Enquiries:

Toscafund Asset Management LLP

 

 

Nigel Gliksten

Tel: +44(0) 207 845 6100

 

 

Whitman Howard Limited (financial adviser to Toscafund and TAL)

 

Nick Lovering

Christopher Furness

 

Tel: +44(0) 207 659 1234

 

eProp Services PLC

 

Lucie Heanley

Charles Hobley

 

Tel: +44(0) 20 7079 1555

 

finnCap Limited (financial adviser to eProp)             

 

Henrik Persson

Kate Bannatyne

Teddy Whiley

Tel: +44(0) 207 220 0500

 

Whitman Howard Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Whitman Howard Limited is acting as financial adviser exclusively for Toscafund and TAL and no-one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than Toscafund and TAL for providing the protections afforded to clients of Whitman Howard Limited, nor for providing advice in relation to any matter referred to herein.

finnCap Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority. finnCap Limited is acting as financial adviser exclusively for eProp and no-one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than eProp for providing the protections afforded to clients of finnCap Limited, nor for providing advice in relation to any matter referred to herein.

IMPORTANT NOTES

This announcement is for information purposes only. It is not intended to and does not constitute, or form part of, an offer or invitation or the solicitation of any offer to sell or purchase any securities or the solicitation of any offer to otherwise acquire, subscribe for, sell or otherwise dispose of any security pursuant to the Offer or otherwise. The Offer will be made solely by means of the Offer Document and the Form of Acceptance, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in those documents.

This announcement does not constitute a prospectus or prospectus equivalent document.

Code dispensations

The Panel has granted TAL and eProp a dispensation from the requirements under the Code that announcements must be published via a Regulatory Information Service ("RIS"). TAL and eProp are instead required to publish all announcements on eProp's website at www.epropservices.com/investor-relations. No announcements other than this Announcement will be sent in hard copy form to eProp Shareholders.

The Panel has also granted a dispensation from the requirement in Note 3 on Rule 8 of the Code that disclosures made under Rule 8 of the Code must be made to a RIS. Therefore, any Opening Position Disclosures and Dealing Disclosures required under Rule 8 of the Code may be made to eProp by email to investor.relations@epropservices.com and will be published on eProp's website at www.epropservices.com/investor-relations. A copy must also be sent to the Panel's Market Surveillance Unit by fax (+44 (0) 20 7236 7013) or by email (monitoring@disclosure.org.uk).

Overseas jurisdictions

The release, publication or distribution of this announcement in, and the availability of the Offer to persons who are residents, citizens or nationals of, jurisdictions other than the United Kingdom may be restricted by laws and/or regulations of those jurisdictions. Therefore any persons who are subject to the laws and regulations of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements in their jurisdiction. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction.

In particular, copies of this announcement and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in or into or from any Restricted Jurisdiction. Unless otherwise permitted by applicable law and regulation, the Offer may not be made, directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

The receipt of cash pursuant to the Offer by eProp Shareholders may be a taxable transaction under applicable national, state and local, as well as foreign and other tax laws. Each eProp Shareholder is urged to consult their independent professional adviser regarding the tax consequences of accepting the Offer.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside of England and Wales.

Notice to US investors

The Offer will be made for securities in an English company and eProp Shareholders in the United States should be aware that this announcement, the Offer Document, the Form of Acceptance and any other documents relating to the Offer have been, or will be, prepared in accordance with the City Code and UK disclosure requirements, format and style, all of which differ from those in the United States. All financial information that may be included in the Offer Document or any other documents relating to the Offer, have been, or will be, prepared in accordance with UK GAAP and therefore may not be comparable to financial statements of US companies or companies whose financial statements are prepared in accordance with US GAAP.

The Offer, if required to be made, will be made in the United States pursuant to applicable exemptions under the US tender offer rules and securities laws and otherwise in accordance with the requirements of the City Code and the Panel. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and law. In the United States, the Offer will be made solely by TAL and not by its financial adviser.

Both eProp and TAL are companies incorporated under the laws of England and Wales. All of the assets of eProp and TAL are located outside of the United States. As a result, it may not be possible for eProp Shareholders in the United States to effect service of process within the United States upon eProp or TAL or their respective officers or directors or to enforce against any of them judgments of the United States predicated upon the civil liability provisions of the federal securities laws of the United States. It may not be possible to sue eProp or TAL or their respective officers or directors in a non-US court for violations of the US securities laws. There is also a substantial doubt as to enforceability in the United Kingdom in original actions, or in actions for the enforcement of judgments of US courts, based on civil liability provisions of US federal securities laws.

Cautionary note regarding forward-looking statements

This announcement, including the information included in this announcement, contains certain forward-looking statements. These statements are based on the current expectations of eProp, TAL and/or Toscafund (as the case may be) and are naturally subject to uncertainty and changes in circumstances. These forward-looking statements may include statements about the expected effects on eProp, TAL and/or Toscafund of the Offer, the expected timing and scope of the Offer, strategic options and all other statements in this announcement other than historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "budget", "schedule", "forecast", "project", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", "subject to", or other words of similar meaning. By their nature, forward-looking statements involve known and unknown risks and uncertainties, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results, outcomes and developments to differ materially from those expressed in or implied by such forward-looking statements and such statements are therefore qualified in their entirety by the risks and uncertainties surrounding these future expectations. Many of these risks and uncertainties relate to factors that are beyond the entities' ability to control or estimate precisely, such as, but not limited to, general business and market conditions both globally and locally, political, economic and regulatory forces, industry trends and competition, future exchange and interest rates, changes in government and regulation including in relation to health and safety, the environment, labour relations and tax rates and future business combinations or dispositions. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, none of eProp, TAL or Toscafund can give any assurance, representation or guarantee that such expectations will prove to have been correct and such forward-looking statements should be construed in light of such factors and you are therefore cautioned not to place reliance on these forward-looking statements which speak only as at the date of this announcement. None of eProp, TAL or Toscafund assumes any obligation to update or correct the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law or regulation.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Relevant securities in issue

In accordance with Rule 2.9 of the Code, eProp confirms that, as at the Latest Practicable Date, it had 35,694,926 ordinary shares of 10 pence each in issue.

Dealing and Opening Position Disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1 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 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th 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 Code, any person who is, or becomes, interested in 1 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, 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 3.30 pm (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.

Purchases outside the Offer

TAL or its nominees or brokers (acting as agents) may purchase eProp Shares otherwise than under the Offer, such as through privately negotiated purchases. Such purchases shall comply with the City Code.

Publication on website and hard copies

A copy of this announcement and other documents in connection with the Offer will, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, be available free of charge for inspection on eProp's website at www.epropservices.com/investor-relations. The contents of that website are not incorporated into, and do not form part of, this announcement.

eProp Shareholders may request a hard copy of this announcement by contacting Lucie Heanley or  Charles Hobley on +44(0) 20 7079 1555 during business hours or by submitting a request by email to investor.relations@epropservices.com or writing to Investor Relations at eProp Services plc, 121 Park Lane, Mayfair, London W1K 7AG.

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, accountant or independent financial adviser, duly authorised under FSMA if you are resident in the United Kingdom, or from another appropriately authorised independent financial adviser.

Information relating to eProp Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by eProp Shareholders, persons with information rights and other relevant persons for the receipt of communications from eProp may be provided to TAL during the Offer Period as required under Section 4 of Appendix 4 of the City Code.



 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

 

31 May 2019

RECOMMENDED MANDATORY CASH OFFER

for

EPROP SERVICES PLC

by

TOSCA ACQUISITION LIMITED

1          Introduction

Tosca Acquisition Limited ("TAL") has today acquired 1,941,275 ordinary shares in eProp Services plc ("eProp" or the "Company") at a price of 50 pence per share from a single shareholder, Robert Ellice, who is a director of eProp (the "Share Acquisition"). Following the Share Acquisition, TAL, together with persons acting in concert with it, hold 14,559,398 eProp Shares representing 40.79 per cent. of the existing issued share capital and voting rights of eProp.

As a result of the Share Acquisition, under Rule 9 of the Takeover Code, TAL is required to make a mandatory cash offer (the "Offer") for the entire issued and to be issued share capital of eProp not already owned, or agreed to be acquired, by TAL or the Tosca Funds, at a price of 50 pence per eProp Share (such price being no less that the highest price paid by TAL or persons acting in concert with it for an eProp Share during the 12 months prior to the date of this announcement). The Offer will be implemented by means of a takeover offer within the meaning of Part 28 of the Companies Act 2006.

TAL is a newly incorporated company formed by Toscafund Asset Management LLP ("Toscafund") for the purpose of making and implementing the Offer. TAL is currently owned 71 per cent. by Tosca Opportunity, 21 per cent. by Tosca Mid Cap and 8 per cent. by The Pegasus Fund Limited. Further information in relation to Toscafund, the Tosca Funds and TAL is set out in paragraph 9 of this announcement.

2          The Offer

Under the terms of the Offer, which will be subject to the Acceptance Condition and further terms set out in Appendix I to this announcement and to the full terms and conditions to be set out in the Offer Document and the Form of Acceptance, eProp Shareholders shall be entitled to receive:

50 pence in cash for each eProp Share

The Offer Price values eProp's issued share capital at approximately £17.85 million on the basis of there being 35,694,926 eProp Shares in issue at the Latest Practicable Date.

The eProp Shares will be acquired pursuant to the Offer fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other rights and interests of any nature whatsoever and together with all rights now and hereafter attaching thereto, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

In so far as any dividend or other distribution or return of value is authorised, declared, made, paid or payable by eProp on or after the date of this announcement, TAL will be entitled to reduce the Offer Price by the amount of any such dividend, other distribution or return of value per eProp Share except where the eProp Shares are or will be acquired on a basis which entitles TAL to receive the dividend, other distribution or return of value and retain it.

3          Interests in eProp Shares

TAL has today acquired 1,941,275 eProp Shares.

Prior to today's acquisition the Tosca Funds, all of which are funds managed by Toscafund, and, together with Toscafund, are acting in concert with TAL, were together interested in 11,678,568 eProp Shares, representing approximately 32.7 per cent. of the entire issued share capital of eProp.

Toscafund, TAL and the Tosca Funds are members of the Toscafund Concert Party, details of which are set out in paragraph 9. Following today's acquisition, the Toscafund Concert Party is interested in, in aggregate, 14,559,398 eProp Shares, representing approximately 40.79 per cent. of the issued share capital of eProp. Members of the Toscafund Concert Party other than Toscafund, TAL and the Tosca Funds are interested in the balance of 939,555 eProp Shares.

4          Information about the eProp Group

The principal activity of the eProp Group is the provision of brands and technology to the UK and international real estate market.

The wholly-owned eProp Group subsidiary GPEA Limited licenses the brand "Fine & Country" as well as operating the membership organisation known as the "Guild of Property Professionals". The eProp Group's subsidiary e-Prop Limited licenses the online estate agency brand "easyProperty" and associated technology. The subsidiary company Property Logic Limited provides technology to estate agents as well as supporting the eProp Group's technology requirements.

The eProp Board's strategy is to grow the Fine & Country and Guild of Property Professionals brands through organic growth, including the provision of a higher quantity and quality of services to eProp's affiliated estate agents and the marketing of these services to an increased number of agents. The eProp Board is currently looking to source third party investment in its easyProperty licensing business.

The eProp Group expects, based on unaudited management information, to report revenue of £10.82m and an operating loss of £0.87m for the financial year ended 31 December 2018, as compared to revenue of £12.41m and an operating loss of £2.65m for the fifteen months to 31 December 2017 (on the basis of audited accounts for that period and on a reverse acquisition accounting basis). Performance for the first quarter of 2019 has been moderately ahead of management's expectations despite a challenging UK housing market. The eProp Group intends to publish its audited accounts for the financial year ended 31 December 2018 by the end of June 2019.

5          Background to the Offer

Funds managed by Toscafund have been investors in eProp since December 2015 and have been supportive of the management team during that time. Toscafund believes that it has obtained a good understanding of eProp's business and developed a productive relationship with its management team.

Toscafund believes that there is disagreement between the significant shareholders of eProp concerning the optimal strategy for the Company, to the detriment of eProp Shareholders as a whole.  Toscafund is supportive of the current executive management of eProp and believes that the Offer provides eProp Shareholders with the opportunity to realise value from their eProp Shares whilst simplifying the shareholder base and providing a more supportive foundation on which to implement a strategy that can deliver value for ongoing stakeholders. Toscafund does not intend to make any material changes to the operational strategy of eProp (other than in respect of its easyProperty business as discussed in paragraph 8 below).

In the event that the Offer does not become or is not declared unconditional in all respects, then Toscafund intends to maintain the shareholdings in eProp of TAL and the Tosca Funds managed by them for the immediate future but will review this position on an ongoing basis.

6          Background to and reasons for the Independent eProp Directors' recommendation

The Independent eProp Directors are pleased by the achievements in restructuring and rebalancing eProp's divisions since the formation of the eProp Group in July 2017. The early signs of positive trading during this financial year give the Independent eProp Directors confidence that the strategy is beginning to bear fruit. eProp has concluded to focus on domestic and international growth in the number of 'Fine & Country' licensees and increasing membership of the 'Guild of Property Professionals' across the UK.

Notwithstanding this, the eProp Group's operations providing services to the estate agency sector and associated licensing model have not been shielded from the challenges faced by UK estate agents, which have suffered as the changing affordability dynamics in the UK housing market resulted in a contracting fee pool and a stagnating secondary housing market. Alongside general market weakness, the online/hybrid model has emerged, which, despite not growing market share, has placed additional pressure on fees, further reducing the addressable market. This has been reflected in the market valuations of comparable listed peers, which have fallen considerably in recent years and in particular since the last fundraising by the eProp Group. This has formed a significant part of the Independent eProp Directors' consideration of the Offer Price.

The Independent eProp Directors do not anticipate a material reversal of these fortunes in the short term and expect that the transactional fee pool will continue to decline, as continued house price inflation is offset by fee pressure and falling existing home transactions. The eProp Group's financial performance is in part dependent on the economic cycle, and while the eProp Group now is better placed to react to any changes to market conditions, there remains significant political and economic uncertainties in the medium and longer-term which may impact future performance. The Independent eProp Directors are also keenly aware that consolidation across the sector is expected.

The eProp Directors have sought to take strong strategic and corporate action to protect the position of the eProp Group. The ability of the eProp Board to implement a coherent plan has been affected by strong differences of opinion amongst eProp's significant shareholders and the Independent eProp Directors welcome the support shown by Toscafund for eProp's existing strategy and the potential simplification of the shareholder register afforded by the Offer. The Independent eProp Directors emphasise that the Offer was not solicited.

In particular, the degree of financial investment and management attention required by the eProp Group to compete with the market leaders in online estate agency have proven uneconomic at a time when the market share of the online model as a whole has stalled and there remain no clear signs of it becoming profitable. The eProp Directors are conscious that many of the larger online platforms are in financial distress or have fallen away, and sentiment about the hybrids is declining. It is against this backdrop that the eProp Directors have explored a range of strategic options for easyProperty, the eProp Group's online division, which may entail significant related headcount reductions, regardless of the outcome of the Offer.  The Independent eProp Directors understand that many eProp Shareholders and employees will share their disappointment that the eProp Group's online division, similar to many of its peers, has not performed in line with expectations.

The Independent eProp Directors are also aware that a number of eProp Shareholders have expressed a desire to exit their investment in the Company, and as the degree of liquidity in trading of eProp Shares is currently highly limited, the Independent eProp Directors welcome the opportunity afforded to eProp Shareholders by the Offer to realise their holdings in cash should they wish to do so.

The Independent eProp Directors are also mindful that some eProp Shareholders may not wish to exit their investment or accept the Offer and may wish to remain as eProp Shareholders. As set out in paragraph 7 below, certain of the Independent eProp Directors wish to remain as eProp Shareholders and as a consequence do not intend to accept the Offer in respect of the eProp Shares held by them.

The Independent eProp Directors believe that it is important for eProp Shareholders to understand the risks associated with remaining as a shareholder in eProp should the Offer become wholly unconditional. This is likely to occur since TAL and persons acting in concert with TAL, following the purchase of eProp Shares from Robert Ellice, hold eProp Shares representing 40.79 per cent. of eProp's issued voting rights and that the sole condition to the Offer is the Acceptance Condition (that is to say, the Offer would become unconditional if eProp Shares representing a further 9.22 per cent. of eProp's issued voting rights accept the Offer, or are otherwise acquired by TAL). The Independent eProp Directors are aware that TAL may make further purchases of eProp Shares through privately negotiated purchases.

If TAL and persons acting in concert with it obtain control of in excess of 50 per cent. of the voting rights of eProp, TAL will be free to increase its shareholding without making a further offer for eProp and, as a majority shareholder, TAL will be able to exercise significant influence and control over eProp (notwithstanding that the Independent eProp Directors note Toscafund's stated intentions with regard to eProp as set out in paragraph 8). There can be no certainty around any future exit, or the terms on which any such exit may be offered to the remaining eProp Shareholders, which may be at a value which is different to the Offer Price.

Having carefully considered, with their financial adviser finnCap, the factors set out above (including the Offer Price, the deliverability of the Offer and all of the circumstances and potential implications surrounding the Offer), the Independent eProp Directors intend to recommend unanimously the Offer to eProp Shareholders as set out in paragraph 7 below; but eProp Shareholders should note that certain Independent eProp Directors wish to remain as eProp Shareholders and, while being mindful of the risks of doing so, do not intend to accept the Offer in respect of the eProp Shares held by them.

7          Recommendation and undertakings by the Independent eProp Directors

The Independent eProp Directors, who have been so advised by finnCap as to the financial terms of the Offer, unanimously consider the terms of the Offer to be fair and reasonable. Therefore, having carefully considered all of the factors set out in paragraph 6 above, the Independent eProp Directors believe that accepting the Offer is in the best interests of eProp Shareholders and the Independent eProp Directors intend to recommend unanimously that eProp Shareholders accept the Offer. In providing its advice to the Independent eProp Directors, finnCap has taken into account the commercial assessments of the Independent eProp Directors.

finnCap is providing independent financial advice to the Independent eProp Directors for the purpose of Rule 3 of the Code. Matthew Siebert is appointed to the eProp Board as a non-executive director, representing the Tosca Funds' shareholding, and therefore has taken no part in the consideration of the Offer.

Notwithstanding the above advice to eProp Shareholders, certain of the Independent eProp Directors do however, in their capacity as eProp Shareholders, continue to believe in the merit and longer-term potential of the Company's business and the eProp Directors' strategy, as more fully described in paragraph 6 above and the prospect of continuing to execute this with a supportive majority shareholder. Accordingly, Jon Cooke and Marcus Whewell are not intending to accept the Offer in respect of their shareholdings, being 2,588,627 eProp Shares representing 7.25 per cent. in aggregate of the issued eProp Shares.  In making this decision not to accept the Offer, in their personal capacities as eProp Shareholders, each relevant Independent eProp Director is fully aware of, and prepared to accept, the associated risks.

If any eProp Shareholder, in the light of its own investment objectives and having taken independent advice appropriate to its own financial circumstances, concludes that it is comfortable with the risks and implications of maintaining a shareholding in eProp, following completion of the Offer, it is possible for that Shareholder to take no action and not accept the Offer. In making this assessment, eProp Shareholders should be mindful (amongst other considerations) of the factors set out in paragraph 6 above, including that the Offer is likely to become unconditional such that TAL and persons acting in concert with it will hold in excess of 50 per cent. of eProp's voting rights (with the associated considerations set out in paragraph 6), that the strategy of the eProp Group will have a significantly reduced focus on its online offering in the future (which may dismay many eProp Shareholders), and that no other exit opportunity is apparent to the eProp Board in the short to medium term.

8          Management, employees and locations

Toscafund believes that 'Fine & Country' and the 'Guild of Property Professionals' are well recognised and respected brands in the estate agency and residential property sectors. Toscafund supports a strategy of seeking to grow these brands through organic growth, including the provision of a higher quantity and quality of services to eProp's affiliated estate agents and the marketing of these services to an increased number of agents.

Toscafund attaches great importance to the skills, knowledge and expertise of eProp's existing management and employees. It intends that Jon Cooke and Marcus Whewell (collectively, the "Executive Management") should continue to lead eProp as, respectively, CEO and COO of the Company. Toscafund notes that Mr Cooke and Mr Whewell do not intend to accept the Offer, preferring to remain as equity owners of the Company, and believes that this is appropriate given their continued involvement as members of the senior operational management team. 

Toscafund notes the current efforts being made by the eProp Board to source third party investment in its easyProperty licensing business, one outcome of which may be that eProp does not retain majority economic control over easyProperty. Toscafund is entirely supportive of these efforts. In the event that the Offer is concluded while these discussions are ongoing, then it is Toscafund's intention that these discussions be continued and, if commercially possible, completed. In the event that an acceptable outcome of these discussions cannot be reached in a reasonable timeframe, then Toscafund reserves the right to consider, in conjunction with the Executive Management, other strategic options for easyProperty, one of which may be its closure.

Subject to the above comments concerning easyProperty, Toscafund has no intention of reducing headcount within eProp.  Robert Ellice will also resign from the eProp Board on completion of the Offer. Toscafund confirms that it intends to safeguard fully the existing employment and pension rights of all eProp management and employees in accordance with applicable law and to comply with eProp's pension obligations for existing employees. There is no intention to make any material changes to the conditions of employment or the balance of skills and functions of the employees and management of the eProp Group.

Toscafund notes that eProp retains a team who support current software platforms and develop new software for the property market. Toscafund recognises the value of eProp looking to offer innovative products to its customers and affiliates, is supportive of this strategy and does not intend to change the strategy or the structure of eProp as it relates to eProp's research and development function.

Toscafund does not intend to make any material changes with regard to employer contributions into eProp's existing defined contribution pension schemes (unless required to do so in order to comply with applicable legislation). Toscafund understands that these defined contribution pension schemes comply with the Pensions Act 2008, which requires all employers to offer pension schemes which will be offered to all new eligible employees. There is no additional or long-term pension deficit or liability for the eProp Group other than monthly matched salary payments.

Following completion of the Offer, the eProp Group will continue to operate its offices as it did in the 12 months prior to the date of this announcement. Other than as determined in conjunction with the Executive Management, Toscafund expects the headquarters of the eProp Group to remain in Mayfair, London with the headquarters functions all being carried out at that location. Toscafund does not intend to redeploy eProp's existing material fixed assets.

Toscafund has not entered into, and has not had discussions on proposals to enter into, any incentivisation arrangements with members of eProp's management, and no such discussions are expected to take place prior to completion of the Offer.

No statements in this paragraph 8 constitute "post-offer undertakings" for the purposes of Rule 19.5 of the Code.

Response from the Independent eProp Directors

Notwithstanding that the Offer was not solicited by the Independent eProp Directors, the Independent eProp Directors are grateful for the support shown by Toscafund for management and employees of the eProp Group and the strategy that they have sought to implement.

 

The Independent eProp Directors welcome the assurances provided by Toscafund with regard to not reducing the existing headcount (except with regard to easyProperty), maintaining the existing employment and pension rights of all eProp management and employees, and that Toscafund does not intend to make any material changes to the conditions of employment or the balance of skills and functions of the employees and management of the eProp Group (except with regard to easyProperty, as set out above, albeit recognising that this outcome may have been pursued notwithstanding the Offer).

 

9          Information relating to Toscafund, the Tosca Funds, TAL and the Toscafund Concert Party

Toscafund

Toscafund is part of the Old Oak Group, a financial services group based in London, which is engaged in asset management and private equity activities. It was founded in 2000 by Martin Hughes, its Chief Executive. The holding company for the Old Oak Group is Old Oak Holdings Limited, a company established and owned by Martin Hughes. As at 30 April 2019, the Old Oak Group had combined assets under management of approximately US$4 billion.

Toscafund's primary activity is to act as an investment manager/adviser to a number of investment funds and accounts that follow primarily equity investment strategies. It was incorporated in England and Wales on 13 June 2006 and has been authorised by the FCA to conduct investment business since 31 October 2006. It is also registered as an investment adviser with the US Securities and Exchange Commission. Its principal place of business is at 7th Floor, 90 Long Acre, London WC2E 9RA.

Tosca Opportunity

Tosca Opportunity is an exempted company incorporated with limited liability under the laws of the Cayman Islands on 13 December 2004 pursuant to the Companies Law of the Cayman Islands under registration number 143032. Toscafund acts as investment manager to Tosca Opportunity and the investment objective of Tosca Opportunity is to achieve superior total returns through capital appreciation. Toscafund seeks to achieve these returns by following a strategy of investing in the equity and other securities of small and medium sized UK and European companies.

The unaudited net asset value of Tosca Opportunity was US$695,531,536 as at 30 April 2019.

Tosca Mid Cap

Tosca Mid Cap is an exempted company incorporated with limited liability under the laws of the Cayman Islands on 7 November 2007 pursuant to the Companies Law of the Cayman Islands under registration number MC-198692. Toscafund acts as investment manager to Tosca Mid Cap and the investment objective of Tosca Mid Cap is to achieve superior total returns through capital appreciation. Toscafund seeks to achieve these returns by following a strategy of investing in the equity and other securities of small and medium sized UK and European companies.

The unaudited net asset value of Tosca Mid Cap was £157,189,789 as at 30 April 2019.

The Pegasus Fund Limited

The Pegasus Fund Limited is an exempted company incorporated with limited liability under the law of Bermuda on 5 September 1997 under registration number EC/23787.Toscafund acts as investment manager to The Pegasus Fund Limited and the investment objective of The Pegasus Fund Limited is to achieve superior total returns through capital appreciation. Toscafund seeks to achieve these returns by following a strategy of investing in the equity and other securities of small and medium sized UK and European companies.

The unaudited net asset value of The Pegasus Fund Limited was £59,648,050 as at 30 April 2019.

TAL

TAL is a newly incorporated company formed at the direction of Toscafund for the purpose of implementing the Offer and providing management and strategic services to its subsidiaries.

TAL is currently owned 71 per cent. by Tosca Opportunity, 21 per cent. by Tosca Mid Cap and 8 per cent. by The Pegasus Fund Limited. Following the Offer becoming, or being declared, unconditional in all respects, TAL will continue to be wholly owned by funds managed by Toscafund, including the Tosca Funds.

TAL is a private limited company incorporated in England and Wales on 15 May 2019 under the Companies Act with registered number 11997898. It has its registered office at 90 Long Acre, London WC2E 9RA.

The directors of TAL are Martin Hughes and Martin McKay.

The principal activity of TAL, in the event of completion of the Offer, will be to act as a holding company for eProp and to provide certain management and strategic services to the eProp Group. TAL's principal investment is the proposed acquisition of eProp Shares pursuant to the Offer or otherwise.

Save for activities in connection with the making, implementation and financing of the Offer and the Share Acquisition, TAL has not carried on any business prior to the date of this announcement, nor has it entered into any obligations. TAL has not paid any dividends or prepared any historical financial accounts.

The Toscafund Concert Party

Toscafund, the Tosca Funds and TAL are members of a wider group whom the Panel has ruled are acting in concert in relation to eProp (the "Toscafund Concert Party") which, including the interests in eProp Shares referred in the rest of this paragraph 9 and the eProp Shares acquired by TAL, is interested in aggregate in 14,559,398 eProp Shares, representing approximately 40.79 per cent. of the issued share capital of the Company.

The other members of the Toscafund Concert Party are:

·      Penta Capital LLP ("Penta") which was established in 1999 and is majority owned by its partners. Old Oak Holdings Limited holds an interest of approximately 39% in Penta which operates as the private equity arm of Toscafund. Its principal place of business is 150 St Vincent Street, Glasgow, G2 5NE;

·      Johnny de la Hey: a partner of Toscafund;

·      Steven Scott: a partner of Penta;

·      Charles Schrager Von Altishofen: a partner of Penta;

·      David Calder: a partner of Penta;

·      Michael Kerr-Dineen: a director of Old Oak Holdings Limited, which is the ultimate holding company of the Old Oak Group;

·      William Torquil Macnaughton: a partner of Penta;

·      Paul Cassidy: a partner of Penta

·      Mark Phillips: a former director of eProp; and

·      John Tracey: an associate of Martin Hughes.

10         Financing arrangements of TAL

On 30 May 2019, TAL and Toscafund entered into an equity subscription agreement in respect of TAL, which governs the terms upon which Toscafund shall procure that funds managed by Toscafund shall subscribe for ordinary shares to be issued by TAL for a cash subscription of up to £12.35 million (the "Subscription Agreement"). The purpose of the cash subscription under the Subscription Agreement is to finance the cash consideration payable under the Offer and to pay certain fees, costs and other expenses in connection with the Offer.

TAL will fund the aggregate cash consideration payable under the Offer from share subscriptions by funds managed by Toscafund. Whitman Howard Limited, as financial adviser to TAL, is satisfied that sufficient resources are available to TAL to satisfy in full the cash consideration payable under the Offer.

11         eProp Shares to which the Offer relates

The Offer extends to the remaining eProp Shares not already owned, or agreed to be acquired by, TAL or the Tosca Funds, which represent approximately 61.84 per cent. of eProp's issued share capital.

In addition, the Offer extends to any eProp Shares which are unconditionally allotted or issued and fully paid (or credited as fully paid) on or before the date on which the Offer closes as to acceptances (or such earlier date as TAL may, subject to the Code, decide).

12         Opening Position Disclosure

Each of TAL and eProp confirms that it will make a public Opening Position Disclosure setting out details required to be disclosed by it under Rule 8.1(a) or Rule 8.2(a) of the Code (as applicable) by no later than 12 noon on 14 June 2019.

13         Further terms and conditions of the Offer

The Offer is to be effected by means of a takeover offer within the meaning of Part 28 of the Companies Act.

The Offer will be subject to the Acceptance Condition and the further terms set out in this announcement and to the full terms and conditions to be set out in the Offer Document and the Form of Acceptance.

Appendix II contains bases of calculation and sources of information contained in this announcement. Appendix III contains the definitions of certain terms used in this announcement.

The Offer will be governed by English law. The Offer will be subject to the applicable requirements of the City Code and the Panel.

14         Compulsory Acquisition

If the Offer becomes, or is declared, unconditional in all respects and TAL receives acceptances of the Offer in respect of, and/or otherwise acquires (together with those acting in concert with it), 90 per cent. or more of the eProp Shares to which the Offer relates and 90 per cent. or more of the voting rights attaching to such shares, TAL intends to exercise its rights pursuant to sections 974 to 991 of the Companies Act to acquire compulsorily, on the same terms as the Offer, the remaining eProp Shares in respect of which the Offer has not at such time been accepted.

It is also intended that, if the Offer becomes, or is declared, unconditional in all respects, and TAL receives valid acceptances in respect of eProp Shares which, together with the eProp Shares acquired, or agreed to be acquired, before or during the Offer by TAL and/or the Tosca Funds, represent not less than 75 per cent. of the voting rights attaching to the eProp Shares, TAL will seek to re-register eProp as a private limited company.

15         Overseas Shareholders

The availability of the Offer to eProp Shareholders who are not resident in the UK may be affected by the laws and/or regulations of their relevant jurisdiction. Therefore, any persons who are subject to the laws and/or regulations of any jurisdiction other than the UK should inform themselves about and observe any applicable legal or regulatory requirements in their jurisdiction. If you are in any doubt, you should consult your professional adviser in the relevant jurisdiction without delay.

16         Documents on display

Copies of the following documents will, by no later than 12 noon on the Business Day following the date of this announcement, be published on eProp's website at www.epropservices.com/investor-relations until the end of the Offer Period:

16.1      the Subscription Agreement; and

16.2      this announcement.

17         Expected timetable

It is intended that the Offer Document and Form of Acceptance containing further details of the Offer will be despatched to eProp Shareholders (other than to persons in a Restricted Jurisdiction) as soon as practicable following the publication of eProp's audited accounts for the financial year ended 31 December 2018, which eProp expects to publish by the end of June 2019.

18         General

Your attention is drawn to the further information contained in the Appendices, which form part of, and should be read in conjunction with, this announcement.

Please be aware that addresses, electronic addresses and certain other information provided by eProp Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from eProp may be provided to TAL during the Offer Period as required under Section 4 of Appendix 4 of the Code.

Enquiries:

Toscafund Asset Management LLP

 

 

Nigel Gliksten

Tel: +44(0) 207 845 6100

 

 

Whitman Howard Limited (financial adviser to TAL)

 

Nick Lovering

 

Tel: +44(0) 207 659 1234

eProp Services PLC

 

Lucie Heanley

Charles Hobley

 

Tel: +44(0) 20 7079 1555

 

finnCap Limited (financial adviser to eProp)

 

Henrik Persson

Kate Bannatyne

Teddy Whiley

Tel: +44(0) 207 220 0500

 

Whitman Howard Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Whitman Howard Limited is acting as financial adviser exclusively for Toscafund and TAL and no-one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than Toscafund and TAL for providing the protections afforded to clients of Whitman Howard Limited, nor for providing advice in relation to any matter referred to herein.

finnCap Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority. finnCap Limited is acting as financial adviser exclusively for eProp and no-one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than eProp for providing the protections afforded to clients of finnCap Limited, nor for providing advice in relation to any matter referred to herein.

IMPORTANT NOTES

This announcement is for information purposes only. It is not intended to and does not constitute, or form part of, an offer or invitation or the solicitation of any offer to sell or purchase any securities or the solicitation of any offer to otherwise acquire, subscribe for, sell or otherwise dispose of any security pursuant to the Offer or otherwise. The Offer will be made solely by means of the Offer Document and the Form of Acceptance, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in those documents.

This announcement does not constitute a prospectus or prospectus equivalent document.

Code dispensations

The Panel has granted TAL and eProp a dispensation from the requirements under the Code that announcements must be published via a Regulatory Information Service ("RIS"). TAL and eProp are instead required to publish all announcements on eProp's website at www.epropservices.com/investor-relations. No announcements other than this Announcement will be sent in hard copy form to eProp Shareholders.

The Panel has also granted a dispensation from the requirement in Note 3 on Rule 8 of the Code that disclosures made under Rule 8 of the Code must be made to a RIS. Therefore, any Opening Position Disclosures and Dealing Disclosures required under Rule 8 of the Code may be made to eProp by email to investor.relations@epropservices.com and will be published on eProp's website at www.epropservices.com/investor-relations. A copy must also be sent to the Panel's Market Surveillance Unit by fax (+44 (0) 20 7236 7013) or by email (monitoring@disclosure.org.uk).

Overseas jurisdictions

The release, publication or distribution of this announcement in, and the availability of the Offer to persons who are residents, citizens or nationals of, jurisdictions other than the United Kingdom may be restricted by laws and/or regulations of those jurisdictions. Therefore any persons who are subject to the laws and regulations of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements in their jurisdiction. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction.

In particular, copies of this announcement and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in or into or from any Restricted Jurisdiction. Unless otherwise permitted by applicable law and regulation, the Offer may not be made, directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

The receipt of cash pursuant to the Offer by eProp Shareholders may be a taxable transaction under applicable national, state and local, as well as foreign and other tax laws. Each eProp Shareholder is urged to consult their independent professional adviser regarding the tax consequences of accepting the Offer.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside of England and Wales.

Notice to US investors

The Offer will be made for securities in an English company and eProp Shareholders in the United States should be aware that this announcement, the Offer Document, the Form of Acceptance and any other documents relating to the Offer have been, or will be, prepared in accordance with the City Code and UK disclosure requirements, format and style, all of which differ from those in the United States. All financial information that may be included in the Offer Document or any other documents relating to the Offer, have been, or will be, prepared in accordance with UK GAAP and therefore may not be comparable to financial statements of US companies or companies whose financial statements are prepared in accordance with US GAAP.

The Offer, if required to be made, will be made in the United States pursuant to applicable exemptions under the US tender offer rules and securities laws and otherwise in accordance with the requirements of the City Code and the Panel. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and law. In the United States, the Offer will be made solely by TAL and not by its financial adviser.

Both eProp and TAL are companies incorporated under the laws of England and Wales. All of the assets of eProp and TAL are located outside of the United States. As a result, it may not be possible for eProp Shareholders in the United States to effect service of process within the United States upon eProp or TAL or their respective officers or directors or to enforce against any of them judgments of the United States predicated upon the civil liability provisions of the federal securities laws of the United States. It may not be possible to sue eProp or TAL or their respective officers or directors in a non-US court for violations of the US securities laws. There is also a substantial doubt as to enforceability in the United Kingdom in original actions, or in actions for the enforcement of judgments of US courts, based on civil liability provisions of US federal securities laws.

Cautionary note regarding forward-looking statements

This announcement, including the information included in this announcement, contains certain forward-looking statements. These statements are based on the current expectations of eProp, TAL and/or Toscafund (as the case may be) and are naturally subject to uncertainty and changes in circumstances. These forward-looking statements may include statements about the expected effects on eProp, TAL and/or Toscafund of the Offer, the expected timing and scope of the Offer, strategic options and all other statements in this announcement other than historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "budget", "schedule", "forecast", "project", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", "subject to", or other words of similar meaning. By their nature, forward-looking statements involve known and unknown risks and uncertainties, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results, outcomes and developments to differ materially from those expressed in or implied by such forward-looking statements and such statements are therefore qualified in their entirety by the risks and uncertainties surrounding these future expectations. Many of these risks and uncertainties relate to factors that are beyond the entities' ability to control or estimate precisely, such as, but not limited to, general business and market conditions both globally and locally, political, economic and regulatory forces, industry trends and competition, future exchange and interest rates, changes in government and regulation including in relation to health and safety, the environment, labour relations and tax rates and future business combinations or dispositions. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, none of eProp, TAL or Toscafund can give any assurance, representation or guarantee that such expectations will prove to have been correct and such forward-looking statements should be construed in light of such factors and you are therefore cautioned not to place reliance on these forward-looking statements which speak only as at the date of this announcement. None of eProp, TAL or Toscafund assumes any obligation to update or correct the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law or regulation.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Relevant securities in issue

In accordance with Rule 2.9 of the Code, eProp confirms that, as at the Latest Practicable Date, it had 35,694,926 ordinary shares of 10 pence each in issue.

Dealing and Opening Position Disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1 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 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th 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 Code, any person who is, or becomes, interested in 1 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, 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 3.30 pm (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.

Purchases outside the Offer

TAL or its nominees or brokers (acting as agents) may purchase eProp Shares otherwise than under the Offer, such as through privately negotiated purchases. Such purchases shall comply with the City Code.

Publication on website and hard copies

A copy of this announcement and other documents in connection with the Offer will, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, be available free of charge for inspection on eProp's website at www.epropservices.com/investor-relations. The contents of that website are not incorporated into, and do not form part of, this announcement.

eProp Shareholders may request a hard copy of this announcement by contacting Lucie Heanley or Charles Hobley on +44(0) 20 7079 1555 during business hours or by submitting a request by email to investor.relations@epropservices.com or writing to Investor Relations at eProp Services plc, 121 Park Lane, Mayfair, London W1K 7AG.

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, accountant or independent financial adviser, duly authorised under FSMA if you are resident in the United Kingdom, or from another appropriately authorised independent financial adviser.

Information relating to eProp Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by eProp Shareholders, persons with information rights and other relevant persons for the receipt of communications from eProp may be provided to TAL during the Offer Period as required under Section 4 of Appendix 4 of the City Code.

Appendix I

THE ACCEPTANCE CONDITION AND CERTAIN FURTHER TERMS OF THE OFFER

Part A- THE ACCEPTANCE CONDITION

1          Acceptance Condition

The Offer will be conditional upon valid acceptances being received (and not, where permitted, withdrawn) by not later than 1.00 p.m. (London time) on the First Closing Date of the Offer (or such later time(s) and/or date(s) as TAL may, subject to the rules of the Code or with the consent of the Panel, decide) in respect of such number of eProp Shares which, together with the eProp Shares acquired, or agreed to be acquired, by TAL or any person acting in concert with TAL before or during the Offer Period (whether pursuant to the Offer or otherwise) will result in TAL and any person acting in concert with it holding eProp Shares carrying, in aggregate, over 50 per cent. of the voting rights then normally exercisable at general meetings of eProp.

For the purposes of this Acceptance Condition: (i) eProp Shares which have been unconditionally allotted but not issued before the Offer becomes, or is declared, unconditional, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise, shall be deemed to carry the voting rights they will carry on issue; and (ii) valid acceptances shall be treated as having been received in respect of any eProp Shares that TAL shall have acquired, or unconditionally contracted to acquire, pursuant to section 979(8) and, if applicable, section 979(9) of the Companies Act.

Part B- CERTAIN FURTHER TERMS OF THE OFFER

1          The Offer will lapse, and will not proceed, if the Offer or any matter arising from or relating to it becomes subject to a Phase 2 CMA reference (as defined in the Code) before the First Closing Date or the date when the Offer becomes or is declared unconditional as to acceptances, whichever is the later.

2          The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

3          The Offer will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, internet or e-mail) of interstate or foreign commerce of, or of any facility of a national securities exchange of, any Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

4          eProp Shares which will be acquired under the Offer will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

5          In so far as any dividend or other distribution or return of value is authorised, declared, made, paid or payable by eProp on or after the date of this announcement, TAL will be entitled to reduce the Offer Price by the amount of any such dividend, other distribution or return of value per eProp Share except where the eProp Shares are or will be acquired on a basis which entitles TAL to receive the dividend, other distribution or return of value and retain it.

6          The Acceptance Condition is not subject to Rule 13.5 of the Code, under which an offeror may not invoke a condition to an offer so as to cause the offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to the offeror in the context of the offer.

7          The Offer will be governed by the law of England and Wales and will be subject to the jurisdiction of the English courts and to the Acceptance Condition and further terms set out in this Appendix I and to be set out in the Offer Document.



 

8          The Offer will be subject to applicable requirements of the Code and the Panel.

Appendix II

BASES OF CALCULATION AND SOURCES OF INFORMATION

In this announcement, unless otherwise stated or the context otherwise requires, the bases of calculation and sources of information are used as described below.

1          Unless otherwise stated, financial information relating to the eProp Group has been extracted or derived (without any adjustment) from the audited annual report and accounts for eProp for the period ended 31 December 2017, and unaudited management accounts for the year ended 31 December 2018 and the period ended 31 March 2019.

2          References to the existing issued share capital of eProp are to the number of eProp Shares in issue as disclosed in eProp's statement of capital dated 26 September 2018, which was 35,694,926 eProp Shares.

3          The unaudited net asset values of each of Tosca Opportunity, Tosca Mid Cap and The Pegasus Fund Limited at 30 April 2019 have been extracted from the relevant fund administrator's report.



 

Appendix III

DEFINITIONS

The following definitions apply throughout this announcement, unless otherwise stated or the context otherwise requires.

"Acceptance Condition"

the condition set out in Appendix I to this announcement

"Business Day"

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

"City Code" or "Code"

the City Code on Takeovers and Mergers

"Companies Act"

the Companies Act 2006, as amended from time to time

"eProp" or the "Company"

eProp Services plc, a public limited company incorporated in England and Wales with registered number 09210707

"eProp Board" or "eProp Directors"

the directors of eProp from time to time

"eProp Group"

eProp and its subsidiary and associated undertakings as such terms are defined in the Companies Act

"eProp Shareholders"

the holders of eProp Shares

"eProp Shares"

the ordinary shares of £0.10 each in the capital of eProp, and "eProp Share" shall be construed accordingly

"FCA"

the UK Financial Conduct Authority

"First Closing Date"

the date which falls 21 days after the posting of the Offer Document

"Form of Acceptance"

the form of acceptance and authority relating to the Offer, which will accompany the Offer Document

"FSMA"

the Financial Services and Markets Act 2000, as amended from time to time

"Independent eProp Directors"

the eProp Directors excluding Matthew Siebert

"Latest Practicable Date"

30 May 2019, being the latest practicable date prior to the date of this announcement

"Offer"

the mandatory recommended cash offer to be made by TAL at the Offer Price in accordance with Part 28 of the Companies Act to acquire the entire issued and to be issued ordinary share capital of eProp not already owned, or agreed to be acquired, by TAL and the Tosca Funds, on the terms and subject to the conditions set out in this announcement and to be set out in the Offer Document and the Form of Acceptance and, where the context admits, any subsequent revision, variation, extension or renewal of such offer

"Offer Document"

the document to be sent to eProp Shareholders which will contain, amongst other things, the terms and conditions of the Offer

"Offer Period"

the period commencing on 31 May 2019 and ending on the earlier of the date on which the Offer becomes or is declared unconditional as to acceptances and/or the date on which the Offer lapses or is withdrawn (or such other date as the Panel may decide)

"Offer Price"

50 pence per eProp Share

"Old Oak Group"

the group of companies of which Old Oak Holdings Limited is the ultimate holding company

"Opening Position Disclosure"

an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position

"Panel" or "Takeover Panel"

the Panel on Takeovers and Mergers

"Restricted Jurisdiction"

any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Offer is sent or made available to eProp Shareholders in that jurisdiction

"Share Acquisition"

has the meaning given in paragraph 1 of this announcement

"Subscription Agreement"

the agreement dated 30 May 2019 between TAL and Toscafund as described in paragraph 10 of this announcement

"TAL"

Tosca Acquisition Limited, a private limited company, incorporated in England and Wales with registered number 11997898

"Toscafund"

Toscafund Asset Management LLP, a limited liability partnership registered in England and Wales with number OC320318

"Toscafund Concert Party"

has the meaning given in paragraph 9 of this announcement

"Tosca Funds"

Tosca Opportunity, Tosca Mid Cap and The Pegasus Fund Limited

"UK" or "United Kingdom"

the United Kingdom of Great Britain and Northern Ireland

"UK GAAP"

generally accepted accounting principles in the UK

"US" or "United States"

the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia

"US GAAP"

generally accepted accounting principles in the US

 

 

 


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