Sutton Harbour : Offer by FB Investors LLP

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FB Investors LLP ­

Offer by FB Investors LLP

Released 13:11 23­Nov­2017

RNS Number : 3807X FB Investors LLP

23 November 2017

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM, ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

23 November 2017

RECOMMENDED PARTIAL CASH OFFER by FB Investors LLP for up to 67,393,960 ordinary shares, representing 70 per cent. of the issued share capital, of Sutton Harbour Holdings plc and PROPOSED SHARE SUBSCRIPTION Summary

• The members of the FB Investors Executive Committee and the SHH Directors are pleased to announce that they have reached agreement on the terms of a recommended partial cash offer to be made by FB Investors to acquire up to 67,393,960 SHH Shares, representing 70 per cent. of the issued ordinary shares in the capital of SHH (the "Partial Offer") by way of a contractual offer under the Takeover Code.

• Under the terms of the Partial Offer, accepting SHH Shareholders will receive

  29.5 pence in cash for each SHH Share sold by them pursuant to the Partial Offer.

• The Offer Price represents a premium of approximately:

  • 13.46 per cent. to the Closing Price per SHH Share of 26 pence on 20 April 2016 (being the last Business Day prior to the start of the Offer Period);

• 12.38 per cent. to the Closing Price per SHH Share of 26.25 pence on 22 November 2017 (being the last Business Day prior to the date of this Announcement); and

• 6.51 per cent. to the average Closing Price per SHH Share of approximately 27.70 pence for the period from 21 April 2016 (being the date on which the Offer Period commenced) to 22 November 2017 (being the last Business Day prior to the date of this Announcement).

• The Partial Offer values (i) the entire issued ordinary share capital of SHH at approximately £28.40 million and (ii) the SHH Shares subject to the Partial Offer at approximately £19.88 million.

• The Partial Offer will provide those SHH Shareholders who accept (or procure the acceptance of) the Partial Offer the opportunity to exit at 29.5 pence in cash in respect of 70 per cent. of their shareholding.

• The Partial Offer will also provide those SHH Shareholders who accept (or procure the acceptance of) the Partial Offer the opportunity to exit at 29.5 pence in cash in respect of more than 70 per cent. of their shareholding to the extent that other SHH Shareholders accept for less than this amount (although acceptances in respect of more than 70 per cent. of a SHH Shareholder's SHH Shares may be subject to scaling down as set out in paragraph 2 of the full text of this Announcement). Furthermore, the Partial Offer will provide those SHH Shareholders who do not wish to accept the Partial Offer in respect of all, some or any of their SHH Shares to retain an ongoing equity interest in SHH.

• In connection with the Partial Offer, FB Investors and SHH have entered into a conditional subscription agreement pursuant to which FB Investors has agreed to subscribe for 9,322,034 new SHH Shares (the "Subscription Shares") at a price of 29.5 pence per Subscription Share, being equal to the Offer Price (the "Share Subscription"). The Share Subscription is conditional upon (i) the Partial Offer becoming, or being declared, wholly unconditional in accordance with its terms and (ii) SHH Shareholders approving at the SHH General Meeting the Resolutions necessary to grant the SHH Directors sufficient authorities to issue the Subscription Shares pursuant to the Share Subscription Agreement.

• The Share Subscription, assuming it is approved by SHH Shareholders, will provide SHH with proceeds equal to £2.75 million. Approximately £2 million of such proceeds would be applied to assist SHH in pursuing the potential development of Sugar House directly and without contracting this to a third party developer; the remaining proceeds would be used as additional working capital and assist with the payment of the costs which SHH has incurred in connection with the Formal Sale Process.

• If valid acceptances are received in respect of all of the 67,393,960 SHH Shares which are the subject of the Partial Offer and the Share Subscription completes in accordance with the terms of the Share Subscription Agreement, FB Investors would hold 76,715,994 SHH Shares, representing, in aggregate, approximately

  72.65 per cent. of the enlarged issued ordinary share capital of SHH following completion of the Partial Offer and the Share Subscription.

• FB Investors will finance the Partial Offer and the Share Subscription from its existing cash resources.

• The Partial Offer is conditional upon, amongst other things:

  • FB Investors receiving valid acceptances (which have not been validly withdrawn) in respect of, and/or having otherwise acquired, or agreed to acquire, at least 55,840,710 SHH Shares, representing 58 per cent. of the SHH Shares in issue as at 22 November 2017 (being the last Business Day prior to the date of this Announcement); and

  • SHH Shareholders holding shares carrying over 50 per cent. of the voting rights of SHH approving the Partial Offer.

    The acceptance condition and the approval condition are expected to be satisfied pursuant to, and in accordance with, the terms of the irrevocable undertakings.

• FB Investors intends to maintain SHH's admission to trading on AIM, and has further agreed not to vote in relation to any resolution put to SHH Shareholders to cancel its admission to trading on AIM pursuant to Rule 41 of the AIM Rules for a minimum period of two years following the Partial Offer becoming, or being declared, wholly unconditional in accordance with its terms unless such resolution is recommended by those members of the Board not appointed by FB Investors pursuant to the Relationship Agreement.

• FB Investors is an English limited liability partnership which was incorporated on

  13 November 2017. The members of FB Investors are Beinhaker Design Services and 1895 Management Holdings Company. Beinhaker Design Services is a family investment company of Philip Beinhaker's family and was incorporated on 29 May 2015. Philip Beinhaker is chairman of Beinhaker Design Services and Corey Beinhaker and Joshua Mishkin are executives of Beinhaker Design Services. The share capital of Beinhaker Design Services is held by Corey Beinhaker. 1895 Management Holdings Company is an investment holding company wholly­owned by Albert Friedberg which was incorporated on 29 September 2016 in Nova Scotia. Albert Friedberg and Dan Scheiner are the only directors and officers of 1895 Management Holdings Company.

• SHH is an award­winning waterfront regeneration specialist, based in Plymouth on the South Coast of England. Plymouth promotes itself as "Britain's Ocean City" and has a heritage going back more than 500 years. The area of Sutton Harbour remains one of the city's oldest quarters and a popular place to visit. The SHH Group operates in the following four business areas: marine and fisheries, car parking, real estate and regeneration. During the financial year ended 31 March 2017, SHH employed an average of 33 people, had annual turnover of £6.7 million and made a profit before tax of £53,063. SHH has been admitted to trading on AIM since 1996.

• The SHH Directors, who have been so advised by Rothschild as to the financial terms of the Partial Offer, consider the terms of the Partial Offer to be fair and reasonable. In providing its advice to the SHH Directors, Rothschild has taken into account the commercial assessments of the SHH Directors.

• Accordingly, the SHH Directors intend to recommend unanimously that SHH Shareholders accept (or procure the acceptance of) and approve (or procure the approval of) the Partial Offer. The SHH Directors also intend to recommend unanimously that SHH Shareholders vote (or procure the vote) in favour of the Resolutions to enable the Share Subscription to proceed at the SHH General Meeting to be convened in due course.

• The SHH Directors have entered into irrevocable undertakings to (i) accept (or procure the acceptance of) the Partial Offer at the Offer Price, (ii) approve (or procure the approval of) the Partial Offer and (iii) vote (or procure the vote) in favour of the Resolutions at the SHH General Meeting, in each case in respect of all of the SHH Shares in which they, or members of their immediate families, related trusts and any other persons whose interests in securities the SHH Directors are deemed to be interested in pursuant to Part 22 of the Companies Act 2006, have a beneficial interest, which, in aggregate, represent approximately

  0.30 per cent. of the SHH Shares in issue on 22 November 2017 (being the last Business Day prior to the date of this Announcement), in each case conditional upon (amongst other things) the Offer Document being published before midnight (London time) on 21 December 2017.

• In addition, each of Crystal Amber Fund Limited, Rotolok (Holdings) Limited and Dan McCauley have entered into irrevocable undertakings to (i) accept (or procure the acceptance of) the Partial Offer at the Offer Price, (ii) approve (or procure the approval of) the Partial Offer and (iii) vote (or procure the vote) in favour of the Resolutions at the SHH General Meeting, in each case in respect of all of the SHH Shares in which they are interested, which, in aggregate, represent approximately 58.07 per cent. of the SHH Shares in issue on 22 November 2017 (being the last Business Day prior to the date of this Announcement), in each

  case conditional upon (amongst other things) the Offer Document being published before midnight (London time) on 21 December 2017.

• FB Investors has therefore received irrevocable undertakings to (i) accept (or procure the acceptance of) the Partial Offer at the Offer Price, (ii) approve (or procure approval of) the Partial Offer and (iii) vote (or procure the vote) in favour of the Resolutions at the SHH General Meeting, in each case in respect of a total of 56,194,768 SHH Shares, representing, in aggregate, approximately 58.37 per cent. of the issued share capital of SHH as at 22 November 2017 (being the last Business Day prior to the date of this Announcement).

• Further details of these irrevocable undertakings are set out in Appendix III to this Announcement.

• FB Investors reserves the right to make an equivalent reduction in the Offer Price if SHH announces, declares or pays any dividend or makes any other distribution to SHH Shareholders on or after the date of this Announcement although, in such circumstances, SHH Shareholders would be entitled to retain any such dividend or other distribution paid or made.

This summary should be read in conjunction with, and is subject to, the following full text of this Announcement and the Appendices. Commenting on the Partial Offer, Graham Miller, Chairman of SHH, said: "SHH's operating businesses have performed steadily over recent years and the SHH Board has continued to explore opportunities for unlocking value in our various development sites. However, the SHH Group has been constrained by its capital structure and, as we announced on 21 April 2016, we have been undertaking a strategic review, incorporating a formal sale process, to assess all options to optimise value for SHH Shareholders including a potential sale of the Company.

"The Partial Offer proposed by FB Investors affords SHH Shareholders the opportunity to realise in cash a significant proportion of their investment in the Company at a premium to the prevailing market price of the SHH Shares, while allowing SHH Shareholders to retain a continued interest in the SHH Group which will benefit from the members of FB Investors' longstanding track record of value creation in the property sector. FB Investors also intends to provide an immediate capital injection to underpin the future prospects for the SHH Group via the Share Subscription."

Commenting on the Partial Offer, Jason Schofield, Chief Executive Officer of SHH, said:

"SHH is leading the regeneration of Plymouth's waterfront, with prestigious mixed­use developments created alongside the 5 Gold Anchor Sutton Harbour Marina.

"With the assistance and investment of FB Investors, we will seek to continue to deliver the SHH Group's vision for the area in and around Sutton Harbour, with the aim of establishing Sutton Harbour as a leading waterfront destination in the UK. We are delighted that FB Investors also supports the management team's vision for the former airport site at Plym Vale and will support their long­term aspiration to develop it."

Commenting on the Partial Offer, Philip Beinhaker of FB Investors, said:

"We are delighted to have received the unanimous recommendation of the board of Sutton Harbour Holdings plc to the Partial Offer and Share Subscription, and to have secured the full support of SHH's major shareholders. FB Investors has acquired a good understanding of the local housing market in Plymouth and is enthused by the regeneration potential of SHH's inventory and the opportunities for further enhancement of its existing operating assets, including the marinas, fisheries and surrounding real estate assets with potential for redevelopment. FB Investors believes that with its track record in property development it can enhance significantly SHH's ability to create value from its assets and looks forward to working with SHH's existing management team to create value for all SHH's shareholders."

The Partial Offer will be subject to the Conditions and certain further terms of the Partial Offer set out in Appendix I to this Announcement and the full terms and conditions to be set out in the Offer Document. Appendix II to this