BEALE LTD
PART I
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY RESTRICTED JURISDICTION OR OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
EMBARGOED FOR RELEASE AT 9.30 AM
19 January 2015
RECOMMENDED CASH OFFER
FOR
BEALE PLC ("Beales" or the "Company")
BY
ENGLISH ROSE ENTERPRISES LIMITED ("English Rose")
Summary
The boards of Beales and English Rose, a company controlled by Andrew Perloff,
announce that they have reached agreement on the terms of a recommended cash
offer by English Rose for the entire issued and to be issued ordinary share
capital of Beales (the "Offer").
Under the terms of the Offer, Beales Shareholders who accept the Offer will be
entitled to receive 6p in cash for each Beales Share.
The Offer values the entire issued ordinary share capital of Beales at
approximately £1.23 million. The Offer Price represents a discount of
approximately 48 per cent. to the Closing Price of 11.5p per Beales Share on 16
January 2015, being the last business day prior to the date of this
announcement.
The Board of Beales believes that the Offer Price is disappointing and that in
different circumstances it could have achieved a price that would value the
business and assets of Beales more fully. However, the complex capital
structure inherited by the current Beales Board imposes a number of
restrictions on Beales' ability to fund its activities, including the
requirement for the Concert Party to agree to any of the alternative funding
options the Beales Board has identified. As a result, Beales may be unable to
generate sufficient cash flows to meet its financial commitments in the
future. Accordingly, the Beales Board believes that Beales Shareholders should
carefully consider the future risks facing the Beales Group and may wish to
accept the Offer, depending on their own individual circumstances and appetite
for risk. The Beales Board has sought to summarise the risks associated with
declining the Offer and retaining Beales Shares in paragraph 3 of Part II of
this announcement.
In addition, if the Offer becomes or is declared wholly unconditional, Portnard
has committed to support the Beales business with additional capital which is
expected to improve the future security of the business, its employees and the
Beales pension schemes
Therefore the Board of Beales, which has been so advised by Smith Square
Partners, considers the terms of the Offer to be fair and reasonable taking
account of the circumstances (which are set out in more detail in Part II of
this announcement), and intends to unanimously recommend that Beales
Shareholders accept the Offer, as the Beales Directors have irrevocably
undertaken to do in respect of their entire legal and beneficial holdings,
which, in aggregate, amount to 20,000 Beales Shares, representing approximately
0.10 per cent. of the issued ordinary share capital of Beales. In providing
advice to the Board of Beales, Smith Square Partners has taken into account the
commercial assessments of the Beales Directors.
English Rose, which is incorporated in England and Wales, is a company
wholly-owned by Portnard, which is owned by Andrew Perloff and family trusts of
Andrew and Harold Perloff, Andrew Perloff's brother. English Rose does not
hold any Beales Shares at the date of this announcement. Panther, which is
controlled by Andrew Perloff and members of his family, holds approximately
19.85 per cent. of Beales' issued ordinary share capital. Andrew Perloff is
also the sole beneficiary of the Maland Pension Fund, which holds approximately
8.71 per cent. of Beales' issued ordinary share capital. Andrew Perloff and
his wife hold approximately 1.16 per cent. of Beales' issued ordinary share
capital. The Concert Party is therefore interested in 6,100,000 Beales Shares,
representing approximately 29.72 per cent. of the issued ordinary share capital
of Beales.
In addition to the irrevocable undertakings to accept the Offer received from
the Beales Directors, English Rose has also received irrevocable undertakings
to accept the Offer from all the members of the Concert Party, in respect of,
in aggregate, 6,100,000 Beales Shares. Accordingly, English Rose has received
irrevocable undertakings to accept the Offer in respect of, in aggregate,
6,120,000 Beales Shares, representing approximately 29.82 per cent. of the
issued ordinary share capital of Beales.
The Offer is conditional, inter alia, upon valid acceptances being received
(and not, where permitted, withdrawn) by not later than 1.00 pm on the date
which is 21 days after the date on which the Offer Document is circulated to
Beales Shareholders (or such later times and/or dates as English Rose may,
subject to the rules of the Code or with the consent of the Panel, decide) in
respect of not less than 75 per cent. (or such lower percentage as English Rose
may decide in its absolute discretion) in nominal value of the Beales Shares,
as further detailed in paragraph 1 of Appendix I. The Offer will also be
subject, inter alia, to the satisfaction or waiver (if permitted) of the
Conditions and certain further terms set out in Appendix I to this announcement
and to be set out in the Offer Document and, in respect of Beales Shares held
in certificated form, the Form of Acceptance.
Commenting on the Offer, William Tuffy, Chairman of Beales, said:
"English Rose's proposal offers the certainty of a cash exit for shareholders
today and improves the medium term financial security of the Beales business.
Despite the significant progress made by the current management team in first
stabilising and then greatly improving operating performance, the business
continues to face significant challenges and financial constraints. The Board
of Beales has explored all other realistic alternatives to raise additional
capital to address these challenges and constraints but none could be delivered
without the Concert Party's agreement and consequently, we believe that this
proposal represents a better alternative for all stakeholders than the business
continuing with its current capital structure, given the level of risk this
would entail."
Terms used in this summary but not defined herein shall have the meaning given
to them in the full text of the announcement.
This summary should be read in conjunction with, and is subject to, the full
text of the following announcement (including the Appendices). The Offer will
be subject to the conditions and the further terms set out in Appendix I of the
following announcement, the full conditions and further terms which will be set
out in the Offer Document being issued shortly and, in respect of Beales Shares
held in certificated form, the Form of Acceptance. Any response in respect of
the Offer or other response in relation to the Offer should be made only on the
basis of the information contained in the forthcoming Offer Document, documents
incorporated into it by reference and, in respect of Beales Shares held in
certificated form, the accompanying Form of Acceptance.
Appendix II contains the sources and bases of certain information used in this
summary and in the following announcement. Appendix III contains definitions
of certain terms used in this summary and the following announcement.
A copy of this announcement will be available, subject to certain restrictions
in relation to persons resident in Restricted Jurisdictions, on English Rose's
parent company's website at www.portnard.co.uk and on Beales' website at
www.beales.co.uk until the end of the Offer Period.
In accordance with Rule 2.10 of the Code, Beales confirms that as at the date
of this announcement, it has in issue 20,524,797 ordinary shares of 5p each.
The International Securities Identification Number (ISIN) of the ordinary
shares is GB0002559291.
Enquiries
English Rose Enterprises Limited
Andrew Perloff/Simon Peters Tel. no.: 01707 667 300
Sanlam Securities UK Limited (Financial
adviser to English Rose)
David Worlidge/Simon Clements Tel. no.: 020 7628 2200
Beale PLC
Michael Hitchcock Tel. no.: 01202 203 462
Smith Square Partners LLP (Financial adviser to Beales)
John Craven/Jade Jack Tel. no.: 020 3696 7260
Buchanan Communications Ltd (PR adviser to Beales)
Charles Ryland/Sophie McNulty Tel. no.: 020 7466 5000
This announcement does not constitute or form part of any offer or invitation
to sell or purchase any securities or the solicitation of an offer to purchase,
otherwise acquire, subscribe for, sell or otherwise dispose of any securities,
pursuant to the Offer or otherwise, nor shall there be any sale, issue or
transfer of the securities referred to in this announcement in or into any
jurisdiction in contravention of any applicable law. The Offer will be made
solely by the Offer Document (together with, in the case of Beales Shares in
certificated form, the Form of Acceptance), which will contain the full terms
and conditions of the Offer, including details of how the Offer may be
accepted. Beales Shareholders should carefully read the Offer Document (and,
if they hold their Beales Shares in certificated form, the Form of Acceptance)
in its entirety before making a decision with respect to the Offer.
Sanlam Securities, which is authorised and regulated in the United Kingdom by
the FCA, is acting exclusively for English Rose and no-one else in relation to
the Offer and will not be responsible to anyone other than English Rose for
providing the protections afforded to the customers of Sanlam Securities or for
providing advice in relation to the Offer or in relation to the contents of
this announcement or any transaction or arrangement referred to herein, save as
imposed by the Financial Services and Markets Act 2000 or the regulatory regime
established thereunder.
Smith Square Partners, which is authorised and regulated in the United Kingdom
by the FCA, is acting exclusively for Beales and no-one else in relation to the
Offer and will not be responsible to anyone other than Beales for providing the
protections afforded to the customers of Smith Square Partners or for providing
advice in relation to the Offer or in relation to the contents of this
announcement or any transaction or arrangement referred to herein.
Smith Square Partners has given and not withdrawn its consent to the
publication of this announcement with the inclusion of the recommendation and
opinions provided by Smith Square Partners in the form and context in which
they are included.
The Offer shall be made solely by English Rose and neither Sanlam Securities
nor any of its affiliates are making the Offer.
To the extent permitted by applicable law, in accordance with, and to the
extent permitted by, the Code and normal UK market practice, English Rose or
its nominees or brokers (acting as agents) or their respective affiliates may
from time to time make certain purchases of, or arrangements to purchase,
Beales Shares, other than pursuant to the Offer, before or during the period in
which the Offer remains open for acceptance. These purchases may occur either
in the open market at prevailing prices or in private transactions at
negotiated prices. Such purchases, or arrangements to purchase, will comply
with all applicable UK rules, including the Code and the rules of the London
Stock Exchange to the extent applicable. In addition, in accordance with, and
to the extent permitted by, the Code and normal UK market practice, Sanlam
Securities and its affiliates may engage in purchasing activities consistent
with their respective normal and usual practice and applicable law. Any
information about such purchases will be disclosed on a next day basis to the
Panel and will be available from any Regulatory Information Service, including
the Regulatory News Service on the London Stock Exchange website,
www.londonstockexchange.com.
The distribution of this announcement in jurisdictions other than the United
Kingdom may be restricted by the laws of those jurisdictions and therefore
persons into whose possession this announcement comes should inform themselves
about and observe any such restrictions. Failure to comply with any such
restrictions may constitute a violation of the securities laws of any such
jurisdiction.
The availability of the Offer to Beales Shareholders who are not resident in
the United Kingdom may be affected by the laws of the relevant jurisdictions in
which they are located or of which they are citizens. Such persons should
inform themselves of, and observe, any applicable legal or regulatory
requirements of those jurisdictions.
The Offer is not intended to be made, directly or indirectly, in, into or from
any Restricted Jurisdiction and the Offer will not be capable of acceptance
from or within any Restricted Jurisdiction. Accordingly, copies of this
announcement are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in, into or from any Restricted
Jurisdiction and persons receiving this announcement (including custodians,
nominees and trustees) must not mail or otherwise distribute or send it in,
into or from any Restricted Jurisdiction, as doing so may invalidate any
purported acceptance of the Offer. Further details in relation to overseas
Beales Shareholders will be contained in the Offer Document.
This announcement has been prepared for the purpose of complying with English
law and the 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 the UK.
Forward-looking statements
This announcement, including information included in this announcement,
contains "forward-looking statements" concerning English Rose and Beales and
the Beales Group that are subject to risks and uncertainties. Certain
information in this announcement relating to Beales has been compiled from
published sources. Generally, the words "will", "may", "should", "continue",
"believes", "expects", "intends", "anticipates" or similar expressions identify
forward-looking statements. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in the forward-looking statements. Many of these risks and
uncertainties relate to factors that are beyond English Rose's ability to
control or estimate precisely, such as future market conditions, changes in
regulatory environment and the behaviour of other market participants. English
Rose cannot give any assurance that such forward-looking statements will prove
to have been correct. The reader is cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
announcement. English Rose does not undertake any obligation to update or
revise publicly any of the forward-looking statements set out herein, whether
as a result of new information, future events or otherwise, except to the
extent legally required.
Nothing contained herein shall be deemed to be a forecast, projection or
estimate of the future financial performance of English Rose or any member of
the Beales Group following completion of the Offer unless otherwise stated.
No profit forecast
No statement in this announcement is intended as a profit forecast or a profit
estimate, and no statement in this announcement should be interpreted to mean
that the future earnings per Beales Share for current or future financial years
will necessarily match or exceed the historical or published earnings per
Beales Share.
Disclosure requirements under the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% 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%
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 of the Code).
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.
You should note that, for the purposes of the above summary of Rule 8 of the
Code, English Rose is not treated as a securities exchange offeror and
therefore there is no requirement to disclose interests or dealings in shares
of English Rose or any other members of the Concert Party under Rule 8 of the
Code. English Rose will be disclosing later today the details required to be
disclosed by it under Rules 8.1(a) and 8.3(a) and any further disclosure in
respect of all persons acting in concert with English Rose in accordance with
Rules 8.1(a) and 8.3(a) and Notes 2(a)(i) and 2(b)(i) on Rule 8 will be made as
soon as possible thereafter.
Information relating to Beales Shareholders
Addresses, electronicaddresses and certain information provided by Beales
Shareholders, persons with information rights and other relevant persons for
the receipt of communications from Beales may be provided to English Rose
during the Offer Period as requested under Section 4 of Appendix 4 of the Code.
Publication on websites
In accordance with Rule 26.1 of the Code, a copy of this announcement will be
made available, subject to certain restrictions relating to persons resident in
a Restricted Jurisdiction, free of charge, on English Rose's parent company's
website at www.portnard.co.uk and on Beales' website at www.beales.co.uk by no
later than 12 noon (London time) on 20 January 2015.
For the avoidance of doubt, neither the content of the websites referred to
above nor the contents of any website accessible from hyperlinks on any such
website (or any other website) is incorporated into, or forms part of, this
announcement nor, unless previously published by means of a Regulatory
Information Service, should any such content be relied upon in reaching a
decision regarding the matters referred to in this announcement.
In accordance with Rule 30.2, a person may request a copy of the announcement
in hard copy form. A person may also request that all future documents,
announcements and information in relation to the Offer should be in hard copy
form.
A hard copy of the announcement will not be sent unless so requested. A hard
copy may be obtained by sending a request to Sanlam Securities, 10 King William
Street, London EC4N 7TW or by contacting Sanlam Securities on +44 (0)20 7628
2200.
PART II
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY RESTRICTED JURISDICTION OR OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
EMBARGOED FOR RELEASE AT 9.30 AM
19 January 2015
RECOMMENDED CASH OFFER
FOR
BEALE PLC ("Beales" or the "Company")
BY
ENGLISH ROSE LIMITED ("English Rose")
1. Introduction
The boards of Beales and English Rose, a company controlled by Andrew Perloff,
announce that they have reached agreement on the terms of a recommended cash
offer by English Rose for the entire issued and to be issued ordinary share
capital of Beales (the "Offer").
2. Terms of the Offer
Under the terms of the Offer, which will be subject to the conditions and
further terms set out below and in Appendix I and the full terms and conditions
which will be set out in the Offer Documentand, in respect of Beales Shares
held in certificated form, the Form of Acceptance, Beales Shareholders who
accept the Offer will be entitled to receive:
for each Beales Share 6p in cash
The Offer values the entire issued ordinary share capital of Beales at
approximately £1.23 million.
The Offer Price represents a discount of approximately 48 per cent. to the
Closing Price of a Beales Share of 11.5p on 16 January 2015, the business day
immediately preceding the date of this announcement. The Beales 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.
The Offer Document and (in the case of Beales Shareholders who hold their
Beales Shares in certificated form) the Form of Acceptance containing the full
terms and conditions of the Offer will be posted to Beales Shareholders (other
than Beales Shareholders in a Restricted Jurisdiction) in due course.
3. Background to the Recommendation
The Board of Beales has carefully considered the terms of the Offer. Under the
Code, the Beales Directors are required to obtain independent advice on the
Offer and to make the substance of such advice and its own views known to
Beales Shareholders.
The Offer Price represents a discount of approximately 48 per cent. to the
Closing Price of 11.5p per Beales Share on 16 January 2015, being the last
business day prior to the date of this announcement. The Board of Beales
believes that the Offer Price is disappointing and that in different
circumstances it could have achieved a price that would value the business and
assets of Beales more fully. However, the complex capital structure inherited
by the current Beales Board imposes a number of restrictions on Beales' ability
to fund its activities, including the requirement for the Concert Party to
agree to any of the alternative funding options the Beales Board has
identified. As a result, Beales may be unable to generate sufficient cash
flows to meet its financial commitments in the future. Accordingly, the Beales
Board believes that Beales Shareholders should carefully consider the future
risks facing the Beales Group and may wish to accept the Offer, depending on
their own individual circumstances and appetite for risk. The Beales Board has
summarised below what it believes are the risks associated with declining the
Offer and retaining Beales Shares. The Beales Board believes that the
principal factors underlying these risks have been publicly disclosed by Beales
over the course of the last few years.
Balance sheet issues
In May 2011, prior to the current Beales Directors' involvement in the
business, Beales acquired 19 stores from ARCS, now known as CEC. To enable it
to satisfy part of the consideration owing in respect of these stores, Beales
issued 8,500,000 Preference Shares, of which 7,983,953 remain unredeemed
today. The Preference Shares will start to accrue dividends from May 2016 at a
rate of 8 per cent. per annum, increasing to 9 per cent. per annum from May
2020. The Preference Shares are due for redemption in instalments of £500,000
made at six monthly intervals commencing on 31 May 2017.
As part of that transaction, J E Beale Plc, a wholly owned subsidiary of
Beales, also entered into a £2.5 million term loan facility with ARCS, of which
£1.0 million remains outstanding. A capital repayment of £125,000 was due on
31 October 2014, the payment of which has been delayed with the agreement of
the lenders (see below). Further capital repayments of £125,000 are due in
April and October each year until the whole loan is repaid.
On 30 April 2013, the benefit of the outstanding Term Loan was assigned to
Maland Pension Fund, a pension fund established for the sole benefit of Andrew
Perloff, and Harold Perloff, Andrew Perloff's brother, by CEC in an independent
transaction. In addition, on that date, Portnard agreed to purchase 8,193,388
Preference Shares from CEC. Portnard completed the purchase of 7,000,000 of
those shares in July 2014 and is due to complete the purchase of any unredeemed
balance of those Preference Shares held by CEC on 30 April 2016.
Based on forecast trading, and in the absence of additional capital investment,
Beales may experience difficulty in generating sufficient cash flows to meet
its obligations to pay interest and principal owing in respect of the Term Loan
and to pay dividends on, and redeem the Preference Shares, as they fall due,
which could lead to additional interest charges owing on the Term Loan and the
accrued dividend on the Preference Shares increasing by an additional 4 per
cent. per annum.
In addition, the Beales Group has an outstanding asset-based lending facility
of £12.0 million with Wells Fargo Capital Finance. As at 16 January 2015,
approximately £1.5 million was drawn against the Facility, but the Beales
Group's borrowings were at that date close to their annual low point and will
increase significantly over the next few months as deliveries of Spring/Summer
stock are made in the normal course of business and consistent with prior
years.
The Facility, Preference Shares and the Term Loan all contain change of control
clauses which means that the Beales Group could (in the case of the Preference
Shares, subject to the requirements of the Companies Act) be required to repay
all of the outstanding amounts due on a change of control of Beales or on a
sale of all, or substantially all, of the assets of the Beales Group. Such
payments would need to be made prior to any future distribution to Beales
Shareholders.
The Concert Party
The Concert Party holds, in aggregate, approximately 29.72 per cent. of the
issued ordinary share capital of Beales. In addition, Portnard holds
7,000,000 of the 7,983,953 of outstanding Preference Shares with an agreement
to purchase the balance; Maland Pension Fund and Harold Perloff hold the
benefit of the £1.0 million Term Loan; and Panther is the landlord of 10 of
Beales' 29 stores, some of which have landlord break options, with an option to
acquire one other store from its current third party owner.
Given the size of the Concert Party's interests in the ordinary share capital
of Beales, the Concert Party has the ability to block any special resolution
proposed by the Board of Beales. In addition, any alternative offeror would be
required to redeem the Preference Shares (subject to the requirements of the
Companies Act) and repay the Term Loan in full on a change of control. This
severely restricts the ability of the Beales Board to deliver any alternative
offer from a third party which provides any additional value for Beales
Shareholders.
It should also be noted that, upon the Offer becoming or being declared
unconditional in all respects, Portnard may exercise its right under the Beales
Articles to convert some or all of the Preference Shares held by it into a
maximum of 9.99 per cent. of the fully-diluted issued ordinary share capital of
Beales, increasing the Concert Party's holding accordingly.
Capital requirement and review of alternatives
As was seen in early Autumn/Winter 2014 when the UK retail sector suffered a
period of weak trading given the unseasonably warm weather, the Beales Group's
trading remains volatile and difficult to predict. Importantly, the Board of
Beales, giving consideration to its statutory and regulatory obligations to
consider the medium to long term prospects of the Beales Group, believes that
the business requires additional capital to maintain and accelerate the pace of
the turnaround of the business, so as to ensure that it is robust in the event
of further negative market dynamics and/or future balance sheet commitments
which could otherwise have a significantly detrimental impact on the Beales
Group.
In this context, the Board of Beales appointed PwC in October 2014 to review
the Beales Group's financial position and to consider options to raise
additional capital. As part of this exercise, Beales and PwC held discussions
with the two largest shareholders of Beales and with Wells Fargo Capital
Finance. A number of options were considered, but the Beales Board believed
that none could realistically deliver greater value to Beales Shareholders
without the agreement of the Concert Party. As an alternative, English Rose
has put forward the Offer.
Employees and the ongoing business
If the Offer becomes or is declared wholly unconditional, the Concert Party has
committed to support the Beales business with additional capital which is
expected to improve the future security of the business, its employees and the
Beales pension schemes.
Conditional upon the Offer becoming or being declared unconditional in all
respects and on no event of default having arisen (save where such event of
default has been waived by Wells Fargo Capital Finance) under the Facility,
Portnard has agreed that it will procure the lodging of a £2.0 million deposit
with Wells Fargo Capital Finance. On receipt of such deposit, under the terms
of the Collateralised Term Loan Facility, Wells Fargo Capital Finance will make
£1.0 million available for immediate use by Beales (subject to the Facility
continuing to be available for drawdown at that time and in addition to any
current ability to draw down on the Facility), with a further amount up to a
maximum of £1.0 million potentially being made available to Beales by Wells
Fargo Capital Finance (through the Collateralised Term Loan Facility) subject
to the re-registration of Beales as a private company and to further conditions
which may be agreed and which may include recommendations arising from English
Rose's detailed operational and strategic review with Beales' management.
As set out in more detail in paragraph 12 below, English Rose has indicated its
intention to work closely with management to assess the options available to
Beales to protect, promote and develop its business. English Rose has
confirmed that, following completion of the Offer, the existing employment
rights of all Beales employees will be honoured, that no changes are proposed
with regard to the accrual of pension benefits for existing members or the
admission of new members, and that no changes to the terms and conditions of
employment of any Beales' employees or to pension contributions are currently
envisaged.
Trading and outlook
Since the current CEO, Michael Hitchcock, joined the business in May 2012 as
interim CFO, considerable progress has been made to generate and secure value
for Beales Shareholders during a period of uncertainty for secondary and
tertiary high street retailers and at a time when material risks have faced the
business. In particular, initiatives were put in place to refinance the
business and to rebuild and refocus the brand with material consequential
improvements to gross margin and operating performance.
Beales expects to publish its preliminary results for the year ended 1 November
2014 on 27 February 2015.
Total Beales Group sales including concessions and VAT were 1.1% lower for the
26 weeks to 1 November 2014 and 3.7% lower for the 52 weeks to 1 November 2014,
compared to the same periods in the prior year.
These sales decreases include the impact of the decision taken by the Board of
Beales to close certain loss making stores on cessation of leases and the
forced exit from stores by landlords on cessation of leases due to site
redevelopment.
Like-for-like sales including concessions and VAT were 1.0% higher for the 26
weeks to 1 November 2014 and 1.1% lower for the 52 weeks to 1 November 2014,
compared to the same periods in the prior year.
The cessation of 'mega' promotions which, in the prior year, generated
increased sales at little or no margin, the exit from the loss-making TV/Audio
category and the slow start to the current financial year on the back of lower
real disposable incomes, all had a depressive effect on sales.
In common with most general retailers selling seasonal products across various
categories, trading over the 9 weeks to 3 January 2015 has proven to be both
challenging and variable, with a weak Autumn followed by a strong Christmas and
New Year period. However, the underlying net positive momentum generated
through the mildly improving macro-economic environment, more positive consumer
sentiment and operational improvements, continues.
Tactical store closures meant that total Beales Group sales including
concessions and VAT were 1.1% lower for the 9 weeks to 3 January 2015 compared
to the same period in the prior year. However, like-for-like sales including
concessions and VAT were 1.5% higher for the 9 weeks to 3 January 2015 compared
to the same period in the prior year, on an improved margin.
Intention to de-list
Beales Shareholders should note that English Rose has stated its intention to
cancel the standard listing of Beales Shares on the Official List and the
trading of Beales Shares on the London Stock Exchange's main market for listed
securities (which will only require a board resolution rather than a special
resolution of Beales Shareholders) and to re-register Beales as a private
limited company (which requires the approval of a special resolution at a
general meeting of Beales), should the Offer be successful. If Beales is
de-listed and re-registered as a private company, this will significantly
reduce the liquidity and marketability of any Beales Shares not assented to the
Offer at that time and the value of any such shares may be affected as a
consequence.
Beales Shareholders should note that, as minority shareholders of a private and
unlisted company, they would not be afforded the same level of protection and
disclosure as was afforded to them whilst Beales was a listed public company.
The Board of Beales believes that these factors should be taken into
consideration by Beales Shareholders when deciding whether or not to accept the
Offer. However, there may also be other factors relevant to Beales
Shareholders' personal circumstances which will need to be considered.
If you are in any doubt about the Offer or the action you should take with
regard to the Offer, you should consult with your own appropriate independent
professional adviser.
4. Recommendation
Taking all of the factors set out above into account, in particular the complex
capital structure inherited by the current Beales Board and the restrictions
this imposes on Beales' ability to fund its activities, including the
requirement for the Concert Party to agree to any of the alternative funding
options the Beales Board has identified (which means that Beales may be unable
to generate sufficient cash flows to meet its financial commitments in the
future), the Board of Beales, which has been so advised by Smith Square
Partners, considers the terms of the Offer to be fair and reasonable.
Accordingly, the Beales Board intends to unanimously recommend that Beales
Shareholders accept the Offer, as the Beales Directors have irrevocably
undertaken to do in respect of their entire legal and beneficial holdings,
which, in aggregate, amount to 20,000 Beales Shares, representing approximately
0.1 per cent. of the issued ordinary share capital of Beales. In providing
advice to the Board of Beales, Smith Square Partners has taken into account the
commercial assessments of the Beales Directors.
5. Background to the Offer
As set out above, the Beales Board approached the Concert Party in late
November 2014, in light of its significant interests in Beales, and both sought
and made proposals seeking the Concert Party's support and assistance to help
the Beales Group move forward, particularly with regard to the Preference
Shares and Term Loan. In order to protect its investment, the Concert Party
instead made a proposal to the Board of Beales broadly on similar terms to
those represented by the Offer.
Conditional upon the Offer becoming or being declared unconditional in all
respects and on no event of default having arisen (save where such event of
default has been waived by Wells Fargo Capital Finance) under the Facility,
Portnard has committed to Beales to procure the lodging of a £2.0 million
deposit with Wells Fargo Capital Finance to provide additional collateral
security in respect of the Facility. On receipt of such deposit, Wells Fargo
Capital Finance will make £1.0 million available for immediate use by Beales
(subject to the Facility continuing to be available for drawdown at that time
and in addition to any current ability to draw down on the Facility), with a
further amount up to a maximum of £1.0 million potentially being made available
to Beales by Wells Fargo Capital Finance subject to the re-registration of
Beales as a private company and to further conditions which may be agreed and
which may include recommendations arising from English Rose's detailed
operational and strategic review with Beales' management. It is intended that
such review will be completed within four months of the Offer becoming or being
declared unconditional in all respects.
The commitment to provide the £2.0 million deposit described above is set out
in a deed signed by Portnard and English Rose and addressed to Beales and is
therefore not deemed to be a post-offer undertaking for the purposes of Rule
19.7 of the Code.
6. Intentions of English Rose with regard to Beales
The Concert Party has had access to extensive information on the operational
and strategic decision making of Beales historically through Panther's
representation on the Board of Beales up until 21 July 2014. The Concert Party
has received further information on the Beales Group since late November 2014
through discussions with Beales' management. However, in light of the
important Christmas trading period the Concert Party has not had sufficient
time to conduct a detailed review of the Beales management's operational and
strategic plans. Accordingly, in view of the proposal to introduce further
financial support to the Beales Group, the English Rose Directors consider it
appropriate to satisfy themselves that the operational and strategic decisions
facing the Beales Group in the near to medium term will be addressed in an
optimal manner.
The English Rose Directors therefore intend to work with Beales' management in
undertaking a thorough review of the operational and strategic options
available to the Beales Group. The Concert Party has structured its proposed
provision of additional capital backing for the benefit of the business in a
way which reflects this requirement. Accordingly, Portnard has committed to
Beales that it will procure the lodging of a £2.0 million deposit with Wells
Fargo Capital Finance immediately upon the Offer becoming or being declared
unconditional in all respects whereupon Beales will have the ability to draw
down £1.0 million under the Collateralised Term Loan Facility (subject to the
Facility continuing to be available for drawdown at that time and in addition
to any current ability it may have to draw down funds under the Facility), with
a further amount up to a maximum of £1.0 million potentially being made
available to Beales by Wells Fargo Capital Finance subject to the
re-registration of Beales as a private company and further conditions which may
be agreed which may include recommendations arising from English Rose's
detailed operational and strategic review with Beales' management.
The English Rose Directors and Beales' management are in broad alignment on a
number of matters relating to the future of the business, including:
- the need for investment in selective store refurbishments;
- the availability of additional working capital to reinforce the Beales Group's
trading position and to help insulate it against further market volatility;
- the need to review and address the operation of certain loss-making stores; and
- the requirement to safeguard the interests of pension scheme members.
The review will focus on these matters and on agreeing the details of how these
goals should be addressed. Given that the review is yet to take place, English
Rose cannot rule out the possibility of exiting stores that are not
commercially or economically viable (in line with management's own ongoing
strategic review, as set out in the 2013 Annual Report and Accounts).
7. Financing of the Offer
English Rose is providing the cash consideration payable under the Offer from
facilities made available to it by Portnard.
Sanlam Securities, financial adviser to English Rose, is satisfied that
sufficient resources are available to satisfy in full the cash consideration
payable to Beales Shareholders under the terms of the Offer.
8. The Concert Party's holding of Beales Shares
Panther currently owns 4,074,493 Beales Shares, representing approximately
19.85 per cent. of the issued ordinary share capital of Beales. Maland Pension
Fund owns 1,788,000 Beales Shares, representing approximately 8.71 per cent. of
the issued ordinary share capital of Beales. Andrew Perloff and his wife have
a beneficial interest in a further 237,507 Beales Shares, representing
approximately 1.16 per cent. of the issued ordinary share capital of Beales.
Therefore, in aggregate, the Concert Party holds approximately 29.72 per cent.
of the issued ordinary share capital of Beales which it intends to assent to
the Offer.
Upon the Offer becoming or being declared unconditional in all respects,
English Rose will make an appropriate proposal to the holders of the Preference
Shares. Under the terms of the Beales Articles, all the Preference Shares
outstanding are redeemed upon such an event. However, as Beales is unable to
effect the redemption of all the Preference Shares outstanding, the holders of
the Preference Shares have the right, under the terms of the Beales Articles,
to convert some or all of the Preference Shares into Beales Shares at the then
existing market price (averaged over the prior ten dealing days) into a maximum
of 9.99 per cent. of the fully-diluted issued ordinary share capital of
Beales. Portnard, which holds 7,000,000 Preference Shares, has indicated that
it may exercise its conversion rights under the Beales Articles to the extent
necessary to hold an additional 9.99 per cent. of the fully-diluted issued
ordinary share capital of Beales.
9. Irrevocable undertakings
English Rose has received binding irrevocable undertakings from the members of
the Concert Party to accept the Offer in respect of a total of 6,100,000 Beales
Shares, representing, in aggregate, approximately 29.72 per cent. of Beales'
issued ordinary share capital.
Percentage of
Number of Beales Beales Shares
Name Shares in issue
Panther 4,074,493 19.85
Maland Pension Fund 1,788,000 8.71
Andrew Perloff 212,507 1.04
Kimberley Perloff 25,000 0.12
Total 6,100,000 29.72
In addition, English Rose has received binding irrevocable undertakings from
the Beales Directors to accept the Offer in respect of a total of 20,000 Beales
Shares, representing, in aggregate, approximately 0.10 per cent. of Beales'
issued ordinary share capital.
Percentage of
Number of Beales Beales Shares in
Name Shares issue
William Tuffy 10,000 0.05
Tony Richards 10,000 0.05
Total 20,000 0.10
These undertakings will continue to be binding even in the event of a higher
offer for Beales.
10. Information relating to the Concert Party
a. English Rose
English Rose is a company registered in England and Wales with number 9327747.
Its registered office is at Deneway House, 88-94 Darkes Lane, Potters Bar,
Hertfordshire EN6 1AQ. English Rose is a wholly-owned subsidiary of Portnard,
which is owned by Andrew Perloff and family trusts of Andrew and Harold
Perloff, Andrew Perloff's brother and is incorporated in Jersey but which has
elected to be UK resident for tax purposes.
b. Panther
Panther, which is quoted on AIM, is controlled by Andrew Perloff and members of
his family.
c. Maland Pension Fund
Maland Pension Fund is a pension fund established for the sole benefit of
Andrew Perloff.
d. Andrew Perloff
Andrew Perloff is Executive Chairman of Panther. He has over 50 years'
experience in the property sector, including 40 years' experience of being a
director of a public listed company, primarily as Panther's Chairman. He has
significant experience of corporate activity including several takeover
transactions and has also served on the board of directors of six other public
listed companies.
11. Information on Beales
Beales operates 29 department stores across the United Kingdom. The Beales
Group was founded in 1881 and has its flagship store and corporate headquarters
in Bournemouth, UK. The Beales Group has been listed on the main market of the
London Stock Exchange since 1995.
12. Management, employees and intentions regarding Beales
English Rose values the capabilities, skills and experience of Beales'
management team and the work undertaken in the last two years to generate and
secure value for the Beales Shareholders. English Rose also attaches great
importance to the continued participation and continued commitment of Beales'
employees.
Accordingly, English Rose confirms that, following completion of the Offer, the
existing contractual and statutory employment rights, including in relation to
pensions, of all Beales employees will be fully safeguarded. In addition,
except for any potential redundancies that may arise from the operational and
strategic review to be undertaken with Beales' management or as a result of
exiting stores that are not commercially or economically viable (as set out in
paragraph 6 above), English Rose intends to maintain the Beales head office and
most of its store locations and to continue to employ its employees on the
terms and conditions currently in place.
William Tuffy and Catherine Norgate-Hart have indicated their intention to
resign as non-executive directors of the Beales Board conditionally upon the
Offer becoming or being declared wholly unconditional and with effect from
completion of the Offer. Michael Hitchcock and Tony Richards will remain on
the Beales Board upon completion of the Offer. English Rose intends, upon the
Offer becoming or being declared wholly unconditional, to appoint Stuart Lyons
as non-executive Chairman and Andrew Perloff and Simon Peters as non-executive
directors of Beales.
13. Conditions of the Offer
The Offer is conditional, inter alia, upon valid acceptances being received
(and not, where permitted, withdrawn) by not later than 1.00 pm on the date
which is 21 days after the date on which the Offer Document is circulated to
Beales Shareholders (or such later times and/or dates as English Rose may,
subject to the rules of the Code or with the consent of the Panel, decide) in
respect of not less than 75 per cent. (or such lower percentage as English Rose
may decide in its absolute discretion) in nominal value of the Beales Shares,
as further detailed in paragraph 1 of Appendix I. The Offer will also be
subject, inter alia, to the satisfaction or waiver (if permitted) of the
Conditions and certain further terms and conditions set out in Appendix I to
this announcement and to be set out in the Offer Document and, in respect of
Beales Shares held in certificated form, the Form of Acceptance.
14. Expected timetable
The Offer Document containing further details and the terms and conditions of
the Offer will be despatched to Beales Shareholders shortly and, in any event,
within 28 days of this announcement pursuant to Rule 24.1(a) of the Code.
15. Compulsory acquisition, cancellation of trading and re-registration
If English Rose receives acceptances of the Offer in respect of, and/or
otherwise acquires or contracts to acquire, 90 per cent. in nominal value of
the Beales Shares to which the Offer relates and assuming that all of the other
Conditions have been satisfied or waived (if capable of being waived), English
Rose intends to exercise its rights pursuant to the provisions of Part 28 of
the Companies Act, as applicable, to acquire compulsorily any remaining Beales
Shares to which the Offer relates on the same terms as the Offer.
Following the Offer becoming, or being declared, unconditional in all respects
and subject to any applicable requirements of the Listing Rules, English Rose
intends to procure that Beales applies to the UK Listing Authority and to the
London Stock Exchange for the cancellation of the admission of the Beales
Shares to listing on the Official List and to trading on the London Stock
Exchange's main market for listed securities. It is anticipated that such
cancellation will take effect no earlier than 20 business days after the Offer
becomes, or is declared, unconditional in all respects, subject to compliance
with the applicable requirements of the Listing Rules. English Rose will
notify Beales Shareholders of the anticipated date of cancellation.
The cancellation of the listing of the Beales Shares will significantly reduce
the liquidity and marketability of any Beales Shares not acquired by English
Rose and their value may be affected as a consequence. Any remaining Beales
Shareholders would become minority shareholders in a majority controlled public
limited company and may be unable to sell their Beales Shares and there can be
no certainty that any dividends or other distributions would be made by Beales
or that Beales Shareholders would again be offered an opportunity of selling
their Beales Shares on terms which are equivalent to or no less advantageous
than those available under the Offer.
It is also intended that, following the Offer becoming, or being declared,
unconditional in all respects and, assuming the cancellation of the listing of
the Beales Shares occurs, Beales will be re-registered as a private company
under the relevant provisions of the Companies Act.
16. Preference Shares and the Beales Performance Share Plan
Upon the Offer becoming or being declared unconditional in all respects,
English Rose will make an appropriate proposal to the holders of the Preference
Shares.
Beales operates a Performance Share Plan. On the basis that all of the
Performance Share Plan awards have expired or been forfeited, with the consent
of the Panel, English Rose does not intend to make any offer or proposal to
participants in the Performance Share Plan.
17. Disclosure of interests in Beales Shares
English Rose confirms that it is making, on the date of this announcment, an
Opening Position Disclosure, which discloses the details required to be
disclosed by it under Rule 8.1(a) of the Code.
18. Offer Document
It is expected that the Offer Document and, in respect of Beales Shares held in
certificated form, Forms of Acceptance will be posted as soon as practicable
and, in any event, (save with the consent of the Panel) within 28 days of this
announcement. The Offer Document and Forms of Acceptance will be made
available to all Beales Shareholders from the offices of Sanlam Securities, 10
King William Street, London EC4N 7TW at no charge to them.
Beales Shareholders are urged to read the Offer Document and, in respect of
Beales Shares held in certificated form, the accompanying Form of Acceptance
when they are sent to them because they will contain important information
about the Offer.
19. Overseas Beales Shareholders
This announcement is for informational purposes only and does not constitute an
offer to sell or an invitation to purchase any securities, or the solicitation
of an offer to buy any securities, pursuant to the Offer or otherwise. The
Offer will be made solely by means of the Offer Document and, in respect of
Beales Shares held in certificated form, the Form of Acceptance, which will
contain the full terms and conditions of the Offer, including details of how
the Offer may be accepted.
This announcement has been prepared for the purpose of complying with English
law and the 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 the United Kingdom.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law. Persons who are not resident in the
United Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements.
Unless otherwise determined by English Rose or required by the Code, and
permitted by applicable law and regulation, the Offer will not be made,
directly or indirectly, in, into or from a Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction, and the Offer will not be
capable of acceptance from or within a Restricted Jurisdiction. Accordingly,
copies of this announcement and all documents relating to the Offer are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in, into or from a Restricted Jurisdiction where to do so
would violate the laws in that jurisdiction, and persons receiving this
announcement and all documents relating to the Offer (including custodians,
nominees and trustees) must not mail or otherwise distribute or send them in,
into or from such jurisdictions as doing so may invalidate any purported
acceptance of the Offer.
The availability of the Offer to Beales Shareholders who are not resident in
the United Kingdom may be affected by the laws of the relevant jurisdictions in
which they are resident. Persons who are not resident in the United Kingdom
should inform themselves of, and observe, any applicable requirements and
consult an appropriate independent professional adviser in their relevant
jurisdiction without delay.
20. Offer-related arrangements
The following contracts are disclosed as offer-related arrangements for the
purposes of Rule 21.2 of the Code:
(a) a non-disclosure agreement between Beales and Panther, dated 26 November 2014,
pursuant to which Panther has undertaken, subject to certain exceptions, to
keep information relating to Beales confidential and not to disclose it to
third parties; and
(b) a commitment by Portnard to Beales, dated 17 January 2015, that it will procure
the lodging of a £2.0 million deposit with Wells Fargo Capital Finance
conditional upon the Offer becoming or being declared unconditional in all
respects and on no event of default having arisen (save where such event of
default has been waived by Wells Fargo Capital Finance) under the Facility,
whereupon Beales will have the ability to draw down £1.0 million under the
Collateralised Term Loan Facility (subject to the Facility continuing to be
available for drawdown at that time and in addition to any current ability it
may have to draw down funds under the Facility), with a further amount up to a
maximum of £1.0 million potentially being made available to Beales by Wells
Fargo Capital Finance subject to the re-registration of Beales as a private
company and further conditions which may be agreed and which may include
recommendations arising from English Rose's detailed operational and strategic
review with Beales' management.
These agreements are available for inspection as referred to in paragraph 21
below.
21. Documents to be published on a website
Copies of the following documents will be available by no later than 12 noon on
the business day immediately following the date of this announcement on English
Rose's parent company's website at www.portnard.co.uk and on Beales' website at
www.beales.co.uk until the end of the Offer Period.
(a) this announcement;
(b) the irrevocable undertakings referred to in paragraph 9 above; and
(c) the agreements referred to in paragraph 20 above.
22. General
The Offer will be made on the terms and subject to the conditions and further
terms set out herein and in Appendix I to this announcement. The bases and
sources of certain financial information contained in this announcement are set
out in Appendix II to this announcement. Certain terms used in this
announcement are defined in Appendix III to this announcement.
Sanlam Securities, which is authorised and regulated in the United Kingdom by
the FCA, is acting exclusively for English Rose and no one else in relation to
the Offer and will not be responsible to anyone other than English Rose for
providing the protections afforded to the customers of Sanlam Securities, or
for providing advice in relation to the Offer or in relation to the contents of
this announcement or any transaction or arrangement referred to herein, save as
imposed by the Financial Services and Markets Act 2000 or the regulatory regime
established thereunder.
Smith Square Partners, which is authorised and regulated in the United Kingdom
by the FCA, is acting exclusively for Beales and no one else in relation to the
Offer and will not be responsible to anyone other than Beales for providing the
protections afforded to the customers of Smith Square Partners, or for
providing advice in relation to the Offer or in relation to the contents of
this announcement or any transaction or arrangement referred to herein.
Enquiries
English Rose Enterprises Limited
Andrew Perloff/Simon Peters Tel. no.: 01707 667 300
Sanlam Securities UK Limited (Financial
adviser to English Rose)
David Worlidge/Simon Clements Tel. no.: 020 7628 2200
Beale PLC
Michael Hitchcock Tel. no.: 01202 203 462
Smith Square Partners LLP (Financial adviser to Beales)
John Craven/Jade Jack Tel. no.: 020 3696 7260
Buchanan Communications Ltd (PR adviser to Beales)
Charles Ryland/Sophie McNulty Tel. no.: 020 7466 5000
Forward-looking statements
This announcement, including information included in this announcement,
contains "forward-looking statements" concerning English Rose and Beales and
the Beales Group that are subject to risks and uncertainties. Certain
information in this announcement relating to Beales has been compiled from
published sources. Generally, the words "will", "may", "should", "continue",
"believes", "expects", "intends", "anticipates" or similar expressions identify
forward-looking statements. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in the forward-looking statements. Many of these risks and
uncertainties relate to factors that are beyond English Rose's ability to
control or estimate precisely, such as future market conditions, changes in
regulatory environment and the behaviour of other market participants. English
Rose cannot give any assurance that such forward-looking statements will prove
to have been correct. The reader is cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
announcement. English Rose does not undertake any obligation to update or
revise publicly any of the forward-looking statements set out herein, whether
as a result of new information, future events or otherwise, except to the
extent legally required.
Nothing contained herein shall be deemed to be a forecast, projection or
estimate of the future financial performance of English Rose or any member of
the Beales Group following completion of the Offer unless otherwise stated.
No profit forecast
No statement in this announcement is intended as a profit forecast or a profit
estimate, and no statement in this announcement should be interpreted to mean
that the future earnings per Beales Share for current or future financial years
will necessarily match or exceed the historical or published earnings per
Beales Share.
Disclosure requirements under the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% 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%
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 of the Code).
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.
You should note that, for the purposes of the above summary of Rule 8 of the
Code, English Rose is not treated as a securities exchange offeror and
therefore there is no requirement to disclose interests or dealings in shares
of English Rose or any other members of the Concert Party under Rule 8 of the
Code. English Rose will be disclosing later today the details required to be
disclosed by it under Rules 8.1(a) and 8.3(a) and any further disclosure in
respect of all persons acting in concert with English Rose in accordance with
Rules 8.1(a) and 8.3(a) and Notes 2(a)(i) and 2(b)(i) on Rule 8 will be made as
soon as possible thereafter.
Information relating to Beales Shareholders
Addresses, electronicaddresses and certain information provided by Beales
Shareholders, persons with information rights and other relevant persons for
the receipt of communications from Beales may be provided to English Rose
during the Offer Period as requested under Section 4 of Appendix 4 of the Code.
Publication on websites
In accordance with Rule 26.1 of the Code, a copy of this announcement will be
made available, subject to certain restrictions relating to persons resident in
a Restricted Jurisdiction, free of charge, on English Rose's parent company's
website at www.portnard.co.uk and on Beales' website at www.beales.co.uk by no
later than 12 noon (London time) on 20 January 2015.
For the avoidance of doubt, neither the content of the websites referred to
above nor the contents of any website accessible from hyperlinks on any such
website (or any other website) is incorporated into, or forms part of, this
announcement nor, unless previously published by means of a Regulatory
Information Service, should any such content be relied upon in reaching a
decision regarding the matters referred to in this announcement.
In accordance with Rule 30.2, a person may request a copy of the announcement
in hard copy form. A person may also request that all future documents,
announcements and information in relation to the Offer should be in hard copy
form.
A hard copy of the announcement will not be sent unless so requested. A hard
copy may be obtained by sending a request to Sanlam Securities, 10 King William
Street, London EC4N 7TW or by contacting Sanlam Securities on +44 (0)20 7628
2200.
APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
The Offer and any acceptances thereunder will be subject to the provisions of
the Code and any other applicable legal or regulatory requirements and the
conditions to be set out in the Offer Document and related Form of Acceptance.
Part A - Conditions of the Offer
1. Acceptance condition
The Offer will be conditional upon: valid acceptances being received (and not,
where permitted, withdrawn) by not later than 1.00 pm (London time) on the
First Closing Date (or such later time(s) and/or date(s) as English Rose may,
subject to the rules of the Code or with the consent of the Panel, decide) in
respect of not less than 75 per cent. in nominal value of the Beales Shares (or
such lower percentage as English Rose may decide). However, this Condition
will not be satisfied unless English Rose has acquired, or agreed to acquire,
Beales Shares carrying, in aggregate, over 50 per cent. of the voting rights
then normally exercisable at general meetings of Beales. For the purposes of
this Condition: (i) Beales 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 Beales Shares that English Rose shall have acquired, or
unconditionally contracted to acquire, pursuant to section 979(8) and, if
applicable, section 979(9) of the Companies Act.
2. Further conditions:
In addition, subject as stated in Part B below and to the requirements of the
Panel, the Offer will be conditional upon the following Conditions being
satisfied or, where relevant, waived:
Notifications, waiting periods and authorisations
(a) all necessary notifications, filings or applications in connection with the
Offer having been made and all necessary waiting periods (including any
extensions thereof) under any applicable legislation or regulation of any
jurisdiction having expired, lapsed or been terminated (as appropriate) and all
statutory and regulatory obligations in any jurisdiction having been complied
with in each case in respect of the Offer and its implementation and all
authorisations, orders, recognitions, grants, consents, clearances,
confirmations, certificates, licences, permissions and approvals ("
Authorisations") reasonably deemed necessary or appropriate by English Rose in
any jurisdiction for, or in respect of, the Offer and, except pursuant to
Chapter 3 of Part 28 of the Companies Act, the acquisition or the proposed
acquisition of any shares or other securities in, or control or management of,
Beales having been obtained in terms and in a form reasonably satisfactory to
English Rose from any appropriate central bank, government or governmental,
quasi-governmental, supranational, statutory, regulatory, environmental or
investigative body or authority, court, trade agency, professional association,
institution, employee representative body or any other body or person
whatsoever in any jurisdiction (a "Third Party") or (without prejudice to the
generality of the foregoing) from any person or bodies with whom any member of
the Beales Group has entered into contractual arrangements and all such
Authorisations necessary or reasonably appropriate to carry on the business of
any member of the Beales Group in any jurisdiction having been obtained and all
such Authorisations remaining in full force and effect at the time at which the
Offer becomes or is declared otherwise wholly unconditional, all filings
necessary for such purpose having been made and there being no written notice
or written intimation of an intention to revoke, suspend, restrict, modify or
not to renew such Authorisations;
General antitrust and regulatory
(b) the Competition and Markets Authority indicating in terms satisfactory to
English Rose that it does not intend to make a CMA Phase 2 reference of the
proposed acquisition of Beales by English Rose;
(c) no material complaint or reference to any Third Party against or in respect of
any member of the Beales Group having been threatened in writing, announced or
instituted or remaining outstanding and no Third Party having given notice in
writing of a decision to take, institute, implement or threaten any action,
proceeding, suit, investigation, inquiry or reference (and in each case, not
having withdrawn the same), or having required any action to be taken or
otherwise having done anything, or having enacted, made or proposed any
statute, regulation, decision, order or change to published practice (and in
each case, not having withdrawn the same) and there not continuing to be
outstanding any statute, regulation, decision or order which would or might
reasonably be expected in the context of the Offer to:
(i) require, prevent or materially delay or affect the divestiture or
materially prejudice the terms envisaged for such divestiture by any member of
the Beales Group or English Rose of all or any material part of their
respective businesses, assets or property or of any Beales Shares or other
securities in Beales or impose any limitation on the ability of all or any of
them to conduct their businesses (or any material part thereof) or to own,
control or manage any of their assets or properties (or any part thereof);
(ii) except pursuant to Chapter 3 of Part 28 of the Companies Act, require
English Rose to acquire, redeem or repay or offer to acquire, redeem or repay
any shares, other securities (or the equivalent) or interest in and/or repay
any material indebtedness of any member of the Beales Group or any material
asset owned by any Third Party (other than in connection with the
implementation of the Offer);
(iii) impose any limitation on, or result in a delay in, the ability of
English Rose, directly or indirectly, to acquire, hold or to exercise
effectively all or any rights of ownership in respect of shares or other
securities in Beales or on the ability of any member of the Beales Group,
directly or indirectly, to hold or exercise effectively all or any rights of
ownership in respect of shares or other securities (or the equivalent) in, or
to exercise voting or management control over, any member of the Beales Group,
in each case, to an extent which is material in the context of the Beales
Group, taken as a whole;
(iv) otherwise adversely affect any or all of the business, assets,
financial or trading position, profits or prospects of any member of the Beales
Group or English Rose to an extent which is material in the context of the
Beales Group, taken as a whole, or English Rose and the Concert Party, taken as
a whole (as the case may be);
(v) result in any member of the Beales Group or English Rose ceasing to be
able to carry on business to the extent conducted at the date of this
announcement under any name under which it presently carries on business to an
extent which is material in the context of the Beales Group, taken as a whole,
or English Rose and the Concert Party, taken as a whole (as the case may be);
(vi) make the Offer or its implementation, or the acquisition or proposed
acquisition of any shares or other securities in, or control of, Beales by
English Rose, void, unenforceable and/or illegal under the laws of any relevant
jurisdiction, or otherwise, directly or indirectly, materially prevent or
prohibit, restrict, restrain or delay the same or otherwise interfere with the
Offer or its implementation, or impose material additional conditions or
obligations with respect to, or otherwise materially impede, interfere or
require amendment of the Offer or the acquisition, or proposed acquisition, of
any shares or other securities in, or control of, Beales by English Rose to an
extent which is material in the context of the Offer;
(vii) require, prevent or materially delay a divestiture by English Rose of
any shares or other securities (or the equivalent) in any member of the Beales
Group to an extent which is material in the context of the Beales Group, taken
as a whole, or English Rose and the Concert Party, taken as a whole (as the
case may be); or
(vii) impose any limitation on the ability of English Rose to conduct or
integrate all or any part of its business with all or any part of the business
of the Beales Group to an extent which is material in the context of the Beales
Group, taken as a whole, or English Rose and the Concert Party, taken as a
whole (as the case may be),
and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could decide to take, institute,
implement or threaten any such action, proceeding, suit, investigation, enquiry
or reference or take any other step under the laws of any jurisdiction in
respect of the Offer having expired, lapsed or been terminated;
Certain matters arising as a result of any arrangement, agreement, etc.
(d) except as publicly announced by Beales prior to 16 January 2015 through a
Regulatory Information Service or disclosed in writing to English Rose or its
professional advisers or as disclosed in the annual report and accounts of
Beales for the year ended 2 November 2013 there being no provision of any
material arrangement, agreement, lease, licence, franchise, permit or other
instrument to which any member of the Beales Group is a party or by or to which
any such member or any of its assets is, or may be, bound, entitled or subject,
or any event or circumstance which, as a consequence of the Offer or because of
the change in the control of Beales or any other member of the Beales Group
represented by the Offer, would, or might reasonably be expected to, result in:
(i) any monies borrowed by, or any other indebtedness, whether actual or
contingent, of, or any grant available to, any member of the Beales Group being
or becoming repayable, or capable of being declared repayable, immediately or
prior to its or their stated maturity date or repayment date, or the ability of
any such member to borrow monies or incur any indebtedness being withdrawn or
inhibited or being capable of becoming or being withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage, charge or other security
interest over the whole, or any material part, of the business, property or
assets of any member of the Beales Group or any such mortgage, charge or other
security interest (whenever created, arising or having arisen) becoming
enforceable;
(iii) any such arrangement, agreement, lease, licence, franchise, permit or
other instrument being terminated or the rights, liabilities, obligations or
interests of any member of the Beales Group therein being adversely modified or
adversely affected, or any material obligation or liability arising or any
adverse action being taken or arising thereunder;
(iv) any liability of any member of the Beales Group to make any material
severance, termination, bonus or other payment to any of its directors or other
officers;
(v) the rights, liabilities, obligations, interests or business of any
member of the Beales Group under any such arrangement, agreement, lease,
licence, franchise, permit or other instrument, or the interests or business of
any member of the Beales Group in or with any other person, body, firm or
company (or any agreement or arrangement relating to any such interests or
business) being, or becoming capable of being, terminated, or materially and
adversely modified or affected or any onerous obligation or liability arising
or any materially adverse action being taken thereunder;
(vi) any member of the Beales Group ceasing to be able to carry on
business under any name under which it presently carries on business;
(vii) the value of, or the financial or trading position or prospects of,
any member of the Beales Group being materially prejudiced or adversely
affected;
(viii) any material asset or interest of any member of the Beales Group
being or falling to be capable of being disposed of or charged (otherwise than
in the ordinary course of business) or ceasing to be available to any member of
the Beales Group or any right arising under which any such asset or interest
could be required to be disposed of or charged or could cease to be available
to any member of the Beales Group;
(ix) the creation or acceleration of any material liability (actual or
contingent) by any member of the Beales Group other than trade creditors or
other liabilities incurred in the ordinary course of business; or
(x) any material adverse change in the ownership or use of any
intellectual property rights owned or used by any member of the Beales Group,
and no event having occurred which, under any provision of any arrangement,
agreement, lease, licence, franchise, permit or other instrument to which any
member of the Beales Group is a party or by or to which any such member or any
of its assets are bound, entitled or subject, would be expected to result in
any of the events or circumstances as are referred to in Conditions (d)(i) to
(x) (in each case, to an extent which is material in the context of the Beales
Group, taken as a whole).
Certain events occurring since 2 November 2013
except as disclosed in Beales' annual report and accounts for the year ended 2
November 2013, or as otherwise publicly announced by Beales on or prior to 16
January 2015 through a Regulatory Information Service or as disclosed in
writing to English Rose or its professional advisers, no member of the Beales
Group having since 2 November 2013:
(i) issued or agreed to issue, or authorised or proposed or announced its
intention to authorise or propose the issue of, additional shares of any class
or securities or securities convertible into, or exchangeable for, or rights,
warrants or options to subscribe for or acquire, any such shares, securities or
convertible securities or transferred or sold, or agreed to transfer or sell,
or authorised or proposed the transfer or sale of Beales Shares out of treasury
(except, where relevant, as between Beales and wholly owned subsidiaries of
Beales or between the wholly owned subsidiaries of Beales);
(ii) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus, dividend or other distribution (whether payable
in cash or otherwise) or dividends (or other distributions whether payable in
cash or otherwise) lawfully paid or made by any wholly owned subsidiary of
Beales to Beales or any of its wholly owned subsidiaries;
(iii) other than pursuant to the Offer (and except for transactions between
Beales and its wholly owned subsidiaries or between the wholly owned
subsidiaries of Beales and transactions in the ordinary course of business)
implemented, effected, authorised or proposed or announced its intention to
implement, effect, authorise or propose any merger, demerger, reconstruction,
amalgamation, scheme, commitment, acquisition or disposal of assets or shares
or loan capital (or the equivalent thereof) in any undertaking or undertakings;
(iv) (except for transactions between Beales and its wholly owned
subsidiaries or between the wholly owned subsidiaries of Beales or otherwise in
the ordinary course of business) disposed of, or transferred, mortgaged or
created any security interest over any material asset or any right, title or
interest in any material asset or authorised, proposed or announced any
intention to do so;
(v) (except for transactions between Beales and its wholly owned
subsidiaries or between the wholly owned subsidiaries of Beales) issued,
authorised or proposed or announced an intention to authorise or propose the
issue of, or made any change in or to the terms of, any debentures or, except
in the ordinary course of business, become subject to any contingent liability
or incurred or increased any indebtedness which, in any case, is material in
the context of the Beales Group, taken as a whole;
(vi) entered into or varied or authorised, proposed or announced its
intention to enter into or vary any material contract, arrangement, agreement,
transaction or commitment (whether in respect of capital expenditure or
otherwise) except in the ordinary course of business which is of a long term
(which shall mean for a fixed term in excess of 12 months and/or not terminable
by the giving of 12 months' notice or less), unusual or onerous nature or
magnitude or which involves an obligation of a nature or magnitude which is
likely to be restrictive on the business of any member of the Beales Group and
which, in any case, is material in the context of the Beales Group, taken as a
whole;
(vii) entered into or varied the terms of, or made any offer (which remains
open for acceptance) to enter into or vary to a material extent the terms of,
any contract, service agreement, commitment or arrangement with any director of
any member of the Beales Group, save as agreed by English Rose;
(viii) proposed, agreed to provide or modified to a material extent the
terms of any share option scheme, incentive scheme or other benefit relating to
the employment, or termination of employment, of any employee of the Beales
Group save as agreed by English Rose or which is required pursuant to the
implementation of the Offer;
(ix) made, or announced any proposal to make, any change or addition to any
retirement, death or disability benefit or any other employment-related benefit
of or in respect of any of its directors, employees, former directors or former
employees;
(x) except in relation to changes made or agreed as a result of, or
arising from, changes to legislation, made or agreed or consented to:
(A) any significant change to: (aa) the terms of the trust deeds (or any other
contractual documentation) or rules constituting the pension scheme(s)
established for its directors, employees or their dependants; or (bb) the
benefits which accrue or to the pensions which are payable thereunder; or (cc)
the basis on which qualification for, or accrual or entitlement to such
benefits or pensions are calculated or determined; or (dd) the basis upon which
the liabilities (including pensions) of such pension schemes are funded or
made; or
(B) any change to the trustees including the appointment of a trust
corporation;
(xi) purchased, redeemed or repaid or announced any proposal to purchase,
redeem or repay any of its own shares or other securities or reduced or, except
in respect of the matters mentioned in sub-paragraph (i) above, made any other
change to any part of its share capital, save as agreed by English Rose or
which is required pursuant to the implementation of the Offer;
(xii) waived, compromised or settled any claim (other than in the ordinary
course of business or between Beales and its wholly owned subsidiaries or
between the wholly owned subsidiaries of Beales) which is material in the
context of the Beales Group, taken as a whole;
(xiii) terminated, or varied the terms of, any agreement or arrangement
between any member of the Beales Group and any other person in a manner which
would have a material adverse effect on the financial position of the Beales
Group, taken as a whole;
(xiv) other than pursuant to the Offer and as envisaged in accordance with
the terms of the Offer, made any alteration to its memorandum or articles of
association or other incorporation documents, in each case, which is material
in the context of the Offer;
(xv) been unable, or admitted in writing that it is unable, to pay its
debts or commenced negotiations with one or more of its creditors with a view
to rescheduling or restructuring any of its indebtedness or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or
ceased, or threatened to cease, carrying on all, or a substantial part of, its
business, in each case, to an extent which is material in the context of the
Beales Group, taken as a whole;
(xvi) (other than in respect of a member of the Beales Group which is
dormant and was solvent at the relevant time) taken or proposed any steps,
corporate action or had any material legal proceedings instituted or threatened
against it in relation to the suspension of payments, a moratorium of any
indebtedness, its winding-up (voluntary or otherwise), dissolution,
striking-off, reorganisation or for the appointment of a receiver,
administrator, manager, administrative receiver, trustee or similar officer of
all, or any material part of, its assets or revenues or any analogous or
equivalent steps or proceedings in any jurisdiction or appointed any analogous
person in any jurisdiction or had any such person appointed;
(xvii) (except for transactions between Beales and its wholly owned
subsidiaries or between the wholly owned subsidiaries of Beales) made,
authorised, proposed or announced an intention to propose any change in its
loan capital;
(xviii) entered into, implemented or authorised the entry into, any joint
venture, asset or profit sharing arrangement, partnership or merger of business
or corporate entities, in each case, which is material in the context of the
Beales Group, taken as a whole;
(xix) save as between Beales and its wholly-owned subsidiaries, granted any
lease or material third party rights in respect of any of the leasehold or
freehold property owned or occupied by it or transferred or otherwise disposed
of any such property;
(xx) entered into any licence or other disposal of intellectual property
rights of any member of the Beales Group which is material in the context of
the Beales Group, taken as a whole, and outside the normal course of business;
(xxi) taken (or agreed or proposed to take) any action which requires, or
would require, the consent of the Panel or the approval of Beales Shareholders
in general meeting in accordance with, or as contemplated by, Rule 21.1 of the
Code; or
(xxii) entered into any agreement, arrangement, commitment or contract or
passed any resolution or made any offer (which remains open for acceptance)
with respect to, or announced an intention to, or to propose to, effect any of
the transactions, matters or events referred to in this Condition (e);
No adverse change, litigation, regulatory enquiry or similar
except as disclosed in Beales' annual report and accounts for the year ended 2
November 2013, or as otherwise publicly announced by Beales on or prior to 16
January 2015 through a Regulatory Information Service or as disclosed in
writing to English Rose or to its professional advisers, since 2 November 2013
there having been:
(i) no adverse change, and no circumstance having arisen which would or
might be reasonably expected to result in any adverse change, in the business,
assets, financial or trading position or profits or prospects or operational
performance of any member of the Beales Group which, in any case, is material
in the context of the Beales Group, taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings (including, without limitation, with regard to intellectual
property rights owned or used by the Beales Group) having been threatened in
writing, announced or instituted by or against or remaining outstanding against
or in respect of, any member of the Beales Group or to which any member of the
Beales Group is, or could reasonably be expected to become, a party (whether as
claimant, defendant or otherwise), in each case, which might reasonably be
expected to have a material adverse effect on the Beales Group, taken as a
whole, or in the context of the Offer;
(iii) no contingent or other liability having arisen or become apparent to
English Rose or increased other than in the ordinary course of business which
would, or might reasonably be expected to, adversely affect the business,
assets, financial or trading position or profits or prospects of any member of
the Beales Group to an extent which is material in the context of the Beales
Group, taken as a whole, or in the context of the Offer; and
(iv) no steps having been taken and no omissions having been made which
are likely to result in the withdrawal, cancellation, termination or
modification of any supplier contract or customer contract or any licence held
by any member of the Beales Group which is necessary for the proper carrying on
of its business and the withdrawal, cancellation, termination or modification
of which might reasonably be expected to have a material adverse effect on the
Beales Group, taken as a whole, or in the context of the Offer; and
9. No discovery of certain matters regarding information, liabilities and
environmental issues
except as publicly announced by Beales prior to 16 January 2015 through a
Regulatory Information Service or disclosed in writing to English Rose or its
professional advisers and save as disclosed in the annual report and accounts
of Beales for the financial year ended 2 November 2013, English Rose not having
discovered:
that any financial, business or other information concerning the Beales Group
publicly announced prior to the date of this announcement or disclosed at any
time in writing to English Rose or to any of its professional advisers by or on
behalf of any member of the Beales Group prior to the date of this announcement
is misleading, contains a misrepresentation of any fact or omits to state a
fact necessary to make that information not misleading, to an extent which, in
any such case, is material in the context of the Beales Group, taken as a
whole;
any information which in the context of the Offer materially affects the import
of any such information as is mentioned in Condition (g)(i) which is material
in the context of the Beales Group taken as a whole;
that any member of the Beales Group or any partnership, company or other entity
in which any member of the Beales Group has a significant economic interest and
which is not a subsidiary undertaking of Beales is, otherwise than in the
ordinary course of business, subject to any liability, contingent or otherwise,
which is material in the context of the Beales Group, taken as a whole, or in
the context of the Offer;
(iv) that any past or present member of the Beales Group has not complied
in any material respect with all applicable legislation, regulations or other
requirements of any jurisdiction or any authorisations relating to the use,
treatment, storage, carriage, disposal, discharge, spillage, release, leak or
emission of any waste or hazardous substance or any substance likely to impair
the environment (including any property) or harm human or animal health or
otherwise relating to environmental matters or the health and safety of humans,
which non-compliance would be likely to give rise to any material liability
including any penalty for non-compliance (whether actual or contingent) on the
part of any member of the Beales Group which, in any case, is material in the
context of the Beales Group, taken as a whole;
(v) that there has been a disposal, discharge, spillage, accumulation,
release, leak, emission or the migration, production, supply, treatment,
storage, transport or use of any waste or hazardous substance or any substance
likely to impair the environment (including any property) or harm human or
animal health from, any land or other asset now or previously owned, occupied
or made use of by any past or present member of the Beales Group which (whether
or not giving rise to non-compliance with any law or regulation), would be
likely to give rise to any material liability (whether actual or contingent,
civil or criminal) or cost on the part of any member of the Beales Group which
in any case is material in the context of the Beales Group, taken as a whole;
(vi) that there is, or is reasonably likely to be, any material obligation
or liability (whether actual or contingent) or requirement to make good,
remediate, repair, reinstate or clean up any property or asset currently or
previously owned, occupied, operated or made use of or controlled by any past
or present member of the Beales Group (or on its behalf), or in which any such
member may have, or previously have had or be deemed to have had, an interest,
under any environmental legislation, common law, regulation, notice, circular,
Authorisation or order of any Third Party in any jurisdiction or to contribute
to the cost thereof or associated therewith or indemnify any person in relation
thereto, which, in any case, is material in the context of the Beales Group,
taken as a whole;
(vii) that circumstances exist (whether as a result of the making of the
Offer or otherwise) which would be reasonably likely to lead to any Third Party
instituting (or whereby any member of the Beales Group would be likely to be
required to institute) an environmental audit or take any steps which would in
any such case be reasonably likely to result in any actual or contingent
liability to improve or install new plant or equipment or to make good, repair,
reinstate or clean up any property of any description or any asset now or
previously owned, occupied or made use of by any past or present member of the
Beales Group (or on its behalf) or by any person for which a member of the
Beales Group is or has been responsible, or in which any such member may have,
or previously have had or be deemed to have had, an interest, which, in any
case, is material in the context of the Beales Group, taken as a whole;
(viii) that circumstances exist whereby a person has, or class of persons
have, or are reasonably likely to have, any legitimate claim or claims against
any member of the Beales Group in respect of any product or process, or
materials, now or previously manufactured, sold, supplied or carried out by any
past or present member of the Beales Group, which, in each case, is material in
the context of the Beales Group, taken as a whole; or
(ix) any member of the Beales Group or any person that performs or has
performed services for or on behalf of any such company is or has at any time
engaged in any activity, practice or conduct which would constitute an offence
under the Bribery Act 2010 or any other applicable anti-corruption legislation
which is material in the context of the Beales Group, taken as a whole.
Part B: Certain further terms of the Offer
Subject to the requirements of the Panel, English Rose reserves the right to
waive, in whole or in part, all or any of the above Conditions 2(a) to (g)
(inclusive). Each of Conditions 2(a) to (g) (inclusive) shall be regarded as a
separate Condition and shall not be limited by reference to any other
condition.
English Rose shall be under no obligation to waive (if capable of waiver), to
determine to be or remain satisfied or to treat as fulfilled any of Conditions
2(a) to (g) (inclusive) by a date earlier than the latest date for the
fulfilment of that Condition notwithstanding that the other Conditions may at
such earlier date have been waived or fulfilled and that there are at such
earlier date no circumstances indicating that any of such Conditions may not be
capable of fulfilment.
If English Rose is required by the Panel to make an offer for Beales Shares
under the provisions of Rule 9 of the Code, English Rose may make such
alterations to any of the above Conditions and terms of the Offer as are
necessary to comply with the provisions of that Rule.
The Offer will lapse, and will not proceed, if there is a Phase 2 CMA reference
or if Phase 2 European Commission proceedings are initiated or if, following a
referral of the Offer by the European Commission under Article 9(1) of the
European Council Merger Regulation to a competent authority in the United
Kingdom, there is a Phase 2 CMA reference, in any such case before 1.00 pm
(London time) on the First Closing Date or the time and date on which the Offer
becomes, or is declared, unconditional as to acceptances (whichever is the
later).
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.
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.
Beales 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.
Under Rule 13.5 of the Code, English Rose may not invoke a condition to the
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 English Rose and the Concert Party, taken as a
whole in the context of the Offer. The conditions contained in paragraph 1 of
Part A and the fourth paragraph of this Part B are not subject to this
provision of the Code.
The Offer and any acceptances under the Offer and any dispute or claim arising
out of or in connection with them or their subject matter, whether of a
contractual or non-contractual nature, will be governed by and construed in
accordance with the laws of England and Wales and will be subject to the
exclusive jurisdiction of the English courts and to the Conditions and further
terms set out in this Appendix I and to be set out in the Offer Document. The
Offer will be subject to the applicable requirements of the Code, the Panel,
the London Stock Exchange, the FCA and the Listing Rules.
APPENDIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
Certain information about the Beales Group has been compiled from published
sources.
Unless otherwise stated:
(a) financial information relating to Beales has been extracted or derived without
material adjustment from the relevant audited annual accounts and, for the
period ended 1 November 2014, from the unaudited year end accounts;
(b) references to the value of the Offer are based on there being 20,524,797 Beales
Shares in issue; and
(c) historical share prices are sourced from the London Stock Exchange website and
represent Closing Prices for Beales Shares on the relevant dates.
APPENDIX III
DEFINITIONS
The following definitions apply throughout this announcement unless the context
requires otherwise.
"AIM " the AIM market, a market operated by the London Stock
Exchange
"ARCS" Anglia Regional Co-Operative Society Limited
"Beales" or the Beale PLC, a company registered in England and Wales under
"Company" company number 2755125
"Beales Articles" the Articles of Association of Beales
"Beales the directors of Beales
Directors" or
"Beales Board"
or "Board of
Beales"
"Beales Group" collectively, Beales and its subsidiaries from time to time
"Beales holders of Beales Shares
Shareholders"
"Beales Shares" ordinary shares of 5p each in the capital of Beales
"business day" a day (excluding Saturdays, Sundays and public holidays) on
which banks are open for business in the City of London
"CEC" Central England Co-operative Limited
"certificated" or where a share or other security is not in uncertificated form
"in certificated (that is, not held in CREST)
form"
"Closing Price" the closing middle-market price of a Beales Share on a
particular day as derived from the Daily Official List
"Code" the City Code on Takeovers and Mergers issued by the Panel,
as amended from time to time
"Collateralised an additional facility to be provided by Wells Fargo Capital
Term Loan Finance to Beales, on financial terms similar to the
Facility" Facility, following the procurement by Portnard of a security
deposit of £2.0 million provided as collateral for the
Facility
"Companies Act" the Companies Act 2006, as amended
"Concert Party" English Rose, Portnard, Panther, Maland Pension Fund and
Andrew Perloff
"Conditions" the conditions of the Offer set out in Part A of Appendix I
to this announcement
"CREST" the relevant system (as defined in the CREST Regulations) of
which Euroclear UK & Ireland Limited is the Operator (as
defined in the CREST Regulations)
"CREST the Uncertificated Securities Regulations 2001 (SI 2001 No.
Regulations" 3755), as amended
"Daily Official the Daily Official List of the London Stock Exchange
List"
"English Rose" English Rose Enterprises Limited, a company incorporated in
England and Wales, with registered number 9327747
"English Rose the directors of English Rose, being Andrew Perloff and Simon
Directors" Peters
"Facility" the asset-based lending facility of £12.0 million between
Wells Fargo Capital Finance and Beales dated 1 February 2013
"FCA" the UK Financial Conduct Authority
"First Closing the date which falls 21 days after the posting of the Offer
Date" Document
"Form of the form of acceptance and authority relating to the Offer
Acceptance" which will, in the case of Beales Shareholders who hold their
Beales Shares in certificated form (other than in respect of
Beales Shareholders in a Restricted Jurisdiction), accompany
the Offer Document
"Listing Rules" the rules and regulations made by the UK Listing Authority
pursuant to Part IV of the Financial Services and Markets Act
2000, as amended from time to time
"London Stock London Stock Exchange plc
Exchange"
"Maland Pension Maland Pension Fund, a pension fund for the sole benefit of
Fund" Andrew Perloff
"Offer" the recommended cash offer to be made by English Rose 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 Beales on the terms and subject to the conditions
set out in this announcement and to be set out in the Offer
Document and, in the case of Beales Shares held in
certificated form, the Form of Acceptance and, where the
context admits, any subsequent revision, variation, extension
or renewal of such offer
"Offer Document" the formal offer document to be sent to Beales Shareholders
(other than Beales Shareholders in a Restricted Jurisdiction)
which will contain, amongst other things, the full terms and
conditions of the Offer
"Offer Period" the period commencing on 19 January 2015 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" 6p per Beales Share
"Official List" the daily official list maintained by the UK Listing
Authority
"Opening Position an announcement containing details of interests or short
Disclosure" positions in, or rights to subscribe for, any relevant
securities of a party to the Offer if the person concerned
has such a position as is described in Rule 8 of the Code
"Panel" or the Panel on Takeovers and Mergers
"Takeover Panel"
"Panther" Panther Securities plc, a company whose shares are quoted on
AIM
"Portnard" Portnard Limited, a company which is owned by Andrew Perloff
and family trusts of Andrew and Harold Perloff, Andrew
Perloff's brother
"Pounds Sterling" UK pounds sterling (and references to "p" shall be construed
or "£" accordingly)
"Preference the 8,500,000 redeemable preference shares of £1 each issued
Shares" by Beales in May 2011 of which 7,983,953 remain unredeemed
at the date of this announcement
"PwC" PricewaterhouseCoopers LLP
"Regulatory a regulatory information service approved by the FCA and that
Information is on the list of regulatory information service providers
Service" maintained by it
"Restricted any jurisdiction where local laws or regulations may result
Jurisdiction" in a significant risk of civil, regulatory or criminal
exposure for English Rose, any parties acting in concert with
it, any of their respective directors or Beales if
information or documentation concerning the Offer is sent or
made available to Beales Shareholders in that jurisdiction
"Sanlam Sanlam Securities UK Limited, financial adviser to English
Securities" Rose
"Smith Square Smith Square Partners LLP, financial adviser to Beales
Partners"
"Term Loan" the £2.5 million loan facility between J E Beale Plc and
ARCS, of which £1.0 million remains outstanding at the date
of this announcement
"United Kingdom" the United Kingdom of Great Britain and Northern Ireland
or "UK"
"UK Listing the FCA acting in its capacity as the competent authority for
Authority" listing in the United Kingdom
"Wells Fargo Wells Fargo Capital Finance, a trading name of Burdale
Capital Finance" Financial Limited
For the purposes of this announcement, "subsidiary", "subsidiary undertaking",
"undertaking" and "associated undertaking" have the respective meanings given
thereto by the Companies Act.
All the times referred to in this announcement are London times unless
otherwise stated.
All references to legislation in this announcement are to English legislation
unless the contrary is indicated. Any reference to any provision of any
legislation shall include any amendment, modification, re-enactment or
extension thereof, save to the extent that any such amendment, modification,
re-enactment or extension imposes any new or extended liability or restriction
on a party.
References to the singular include the plural and vice versa.
