TIDMABL
RNS Number : 8074A
Ablon Group Limited
25 March 2013
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 OR
REGULATIONS OF SUCH JURISDICTION
For Immediate Release 25 March 2013
Ablon Group Limited
("Ablon" or the "Company")
Response by the Independent Directors
to the unconditional mandatory cash offer by
CPI Group, a.s.
for the entire issued and to be issued share capital of
Ablon
not already owned by CPI
The Independent Directors of Ablon announce that the Company has
today posted a response document (the "Response Circular") setting
the views of the Independent Directors on the unconditional
mandatory cash offer by CPI Group, a.s. ("CPI") to acquire all of
the issued and to be issued Ordinary Shares not already owned by
CPI (the "Offer") for the purposes of the City Code on Takeovers
and Mergers (the "Code"). A document containing the full terms and
conditions of the Offer was posted to Shareholders by CPI on 13
March 2013.
The Response Circular sets out the background to the Offer and
the arguments for and against accepting the Offer and contains the
recommendation of the Independent Directors to Shareholders to
accept the Offer.
The procedure for acceptance of the Offer is set out on pages 11
to 14 of the Offer Document and, in respect of Ordinary Shares in
certificated form, in the Form of Acceptance. To accept the Offer
in respect of Ordinary Shares in certificated form, you must
complete and return the Form of Acceptance as soon as possible and,
in any event, so as to be received by the Receiving Agent, Neville
Registrars Limited, by post, or by hand (during normal business
hours only) at Neville Registrars Limited, Neville House, 18 Laurel
Lane, Halesowen, B63 3DA by no later than 1.00 p.m. (London time)
on 3 April 2013. Acceptances in respect of Ordinary Shares in
uncertificated form (that is, in CREST) should be made
electronically through CREST so that the TTE instruction settles no
later than 1.00 p.m. (London time) on 3 April 2013. If you are a
CREST sponsored member, you should refer to your CREST sponsor as
only your CREST sponsor will be able to send the necessary TTE
instruction to Euroclear.
The information contained in this announcement is derived from,
and should be read in conjunction with, the Response Circular.
Shareholders should read the whole of the Response Circular, in
particular the letter from the Independent Directors of Ablon, and
not rely solely upon the information set out below.
LETTER FROM THE INDEPENDENT DIRECTORS
OF
ABLON GROUP LIMITED
1. Introduction
Shareholders should have received a copy of the Offer Document
dated 13 March 2013 containing, inter alia, the terms of the Offer
being made by CPI for the entire issued and to be issued share
capital of Ablon not already owned by it and a copy of the Form of
Acceptance. The purpose of this letter is to explain the background
to, and reasons for, the opinion of the Independent Directors in
relation to the Offer and to set out the factors Shareholders
should consider in assessing whether or not to accept the
Offer.
2. Background to the Offer
On 22 February 2013, CPI acquired 39,237,704 Ordinary Shares
from Uri Heller, former director and CEO of Ablon, at a price of
22.5 pence per Ordinary Share, increasing its shareholding from
30,443,938 Ordinary Shares, representing approximately 22.23 per
cent. of the relevant securities of the Company to 69,681,642
Ordinary Shares, representing approximately 50.89 per cent. of the
relevant securities of the Company. The acquisition of these
Ordinary Shares triggered a requirement under Rule 9 of the Code to
make a mandatory cash offer for the entire issued ordinary share
capital of the Company (other than those Ordinary Shares that are
already owned by CPI) at the highest price paid by CPI for an
Ordinary Share over the last 12 months, being 22.5 pence. As at the
date of the Offer CPI held Ordinary Shares carrying more than 50
per cent. of the voting rights of the Company so the Offer was
wholly unconditional from the outset. In addition, following the
purchase of these Ordinary Shares CPI has become the parent company
of the Group. Subsequently on 21 March 2013, CPI announced that
acceptances to the Offer had been received and accepted in respect
of a total of 33,117,575 Ordinary Shares, increasing CPI's
shareholding to 102,799, 217 Ordinary Shares, representing 75.07
per cent. of the Issued Share Capital.
As noted in paragraph 12 of the Letter from CPI Group of the
Offer Document, on 4 December 2012, the Company and CPI entered
into a Standby Underwriting Agreement pursuant to which the Company
and CPI agreed that they would negotiate in good faith with a view
to finalising an underwriting agreement to be entered into in
connection with a proposed rights issue by the Company (the "Rights
Issue"). The Company and CPI committed to a price of 15 pence per
new Ordinary Share in the Company for the Rights Issue. The Company
agreed that it would take all of the actions necessary to implement
the Rights Issue, including preparing and submitting a prospectus
to the UKLA. CPI, subject to certain conditions, undertook to
subscribe for a number of new Ordinary Shares at 15 pence so that
its stake of the issued capital and voting rights in the Company,
on a fully diluted basis post completion of the Rights Issue, was
between 29.90 per cent. and 29.99 per cent. At the time, CPI held
no Ordinary Shares in the Company but reserved the right, but not
the obligation, subject to applicable laws and regulations to
acquire additional Ordinary Shares (or interests in additional
Ordinary Shares) prior to, during or following the Rights Issue
(and whether pursuant to the Rights Issue or otherwise).
The Board subsequently felt it was appropriate to seek
Shareholder approval for the implementation of the Rights Issue and
proposed a resolution regarding this at a meeting held on 1
February 2013. The Board would like to draw the attention of
Shareholders to the fact that, at the time of the general meeting
to propose the Rights Issue, the Offeror, through Mr Vitek (who
wholly owns CPI), had already acquired approximately 22.23 per
cent. of the issued share capital of the Company and was
instrumental in the Rights Issue not progressing by voting AGAINST
the resolution at the relevant Shareholder meeting, having
initially agreed with the Company to be an underwriter of the
Rights Issue.
3. Summary of the Offer
The Offer by CPI is being made at a price of 22.5 pence in cash
for each Ordinary Share, and thus values the entire issued ordinary
share capital of Ablon at GBP30.81 million, representing a premium
of approximately 21.62 per cent. to the closing mid-market price of
the Ordinary Shares on 5 February 2013, the day prior to the
commencement of the Offer Period and 4.65 per cent. to the closing
mid-market price of the Ordinary Shares on 21 February 2013, the
last trading day prior to the date of the Announcement.
The Offer has been made at the maximum price paid per Ordinary
Share by CPI in the last 12 months and therefore represents the
minimum price at which the Offer can be made under the Code.
Shareholders should therefore note that the Offer Price does not
represent any premium over and above a price which is required as a
mandatory minimum.
Shareholders should also note that the Offer is being made at a
substantial discount to the Current Net Asset Value of the Company
and, in the view of the Independent Directors, it significantly
undervalues the Company. The Current Net Asset Value of the Company
is GBP107,242,275, or approximately GBP0.783 per Ordinary Share.
Therefore the Offer is at a discount of approximately 71.26 per
cent. to the Current Net Asset Value of the Company. Shareholders
are referred to paragraphs 11.2 and 11.3 of Part II of the Response
Circular for further details on the Current Net Asset Value of the
Company.
4. Factors for consideration by Shareholders in evaluating the Offer
The Independent Directors believe, having been so advised by
Beaumont Cornish, that Shareholders should consider the matters set
out below when considering whether to accept the Offer. In
providing advice to the Independent Directors, Beaumont Cornish has
relied upon the commercial assessments of the Independent
Directors.
4.1 Arguments for accepting the Offer
Offer Price versus Ordinary Share price
The Offer Price of 22.5 pence per Ordinary Share represents a
premium of approximately 21.62 per cent. to the closing mid-market
price of the Ordinary Shares on 5 February 2013, the day prior to
the commencement of the Offer Period and a small premium of 4.65
per cent. to the closing mid-market price of the Ordinary Shares on
21 February 2013, the last trading day prior to the date of the
Announcement.
Since Ablon began trading on the Main Market under the standard
segment of the Official List on 1 July 2011, the closing mid-market
price of an Ordinary Share has decreased from a high of 47.5 pence
on 1 July 2011 to 18.5 pence on 5 February 2013(the day prior to
the commencement of the Offer Period), representing a decrease of
61 per cent.
The average closing mid-market price of an Ordinary Share for
the 12 months preceding the commencement of the Offer Period is
19.3 pence. The Offer Price is at a 16.6 per cent. premium to this
price and is the best price that Shareholders could have achieved
for their Ordinary Shares since 29 May 2012 when the mid-market
closing price was 23.5 pence.
The position of Volksbank in relation to the Offer
The Company has recently been informed by Volksbank, which, as
at the date that the Offer Document was posted, was beneficially
interested in 33,285,001 Ordinary Shares, representing
approximately 24.31 per cent. of the Issued Share Capital, that it
had accepted the Offer in relation to its entire beneficial
holding. In addition the Independent Directors also intend to
accept the Offer in respect of their combined holding of 4,451,383
Ordinary Shares, representing approximately 3.25 per cent. of the
Issued Share Capital. Provided these acceptances are valid and not
withdrawn, CPI's holding in Ablon would represent in excess of 75
per cent. of the Issued Share Capital.
As announced by CPI, as at 1.00 p.m. on 21 March 2013 it had
received valid acceptances in respect of a total of 33,117,575
Ordinary Shares, representing approximately 24.18 per cent. of the
Issued Share Capital. It can be deduced that, 33,117,001 of these
Ordinary Shares represent the majority beneficial holding of
Volksbank.
Financial position of the Company
Although the Offer Price is substantially below the Current Net
Asset Value per Ordinary Share (refer to 'Arguments for not
accepting the Offer' for further information), the share price of
Ablon arguably reflects an element of market perception of the
Company, its operations, history, management and sector and
therefore investor demand for the Ordinary Shares. As referred to
in the Offer Document, Ablon continues to face refinancing and
operational challenges due to the difficult state of the credit and
real estate market in the countries in which it operates. This has
had a continued negative impact on Ablon's ability to access
capital and on its trading performance. As a consequence, Ablon has
limited its development activity while continuing to focus on
generating such positive cash flow as it can. Although Ablon has
been able to extend and restate its loan with Deutsche Pfandbrief
bank, as at 31 December 2012 Ablon was still in breach of two of
its debt covenants and some of its loans have expired.
On 22 February 2013, Mr. Vitek, through a subsidiary of Czech
Property Investments, a.s., Beta, entered into a non-binding heads
of terms with Volksbank to acquire the Company's portfolio of land
bank loans ("Land Bank Portfolio") with a total capital amount of
EUR29,421,222 plus interest and fees payable as at 31 December
2012, together with the related security (the "Land Bank Portfolio
Acquisition Agreement") at a 50 per cent. discount to the nominal
value. This Land Bank Portfolio consists of the loans between
Volksbank and the Company which had expired and which if the
Company had been requested to re-pay, and were it unable to raise
sufficient sales proceeds from the disposal of the Group's interest
in the properties secured against such loans, would have been in
default. In addition, subject to completion of the acquisition of
the Land Bank Portfolio and relevant requests being sent to
Volksbank by the yielding loan counterparties, Volksbank agreed,
inter alia, to adjust the terms of certain of the Company's
yielding loan facilities (the "Yielding Loan Adjustments").
The Independent Directors, having been so advised by Beaumont
Cornish, are of the opinion that the Land Bank Portfolio
acquisition and the Yielding Loan Adjustments are in the best
interests of the Company and of Shareholders as a whole and on that
basis have provided, to Volksbank, the requested consent to the
transfer of the Land Bank Portfolio, and accordingly have no
objection to the Land Bank Portfolio acquisition and the Yielding
Loan Adjustments proceeding. The Independent Directors, as so
advised by Beaumont Cornish, are not in a position to opine on
whether the terms of the Land Bank Portfolio acquisition and the
Yielding Loan Adjustments are fair and reasonable in so far as
Independent Shareholders are concerned. In coming to this decision
the Independent Directors have taken into account, inter alia, the
following factors:
1. the Offer Price has been set solely by reference to the
requirements of Rule 9 of the Code following the acquisition by CPI
of Mr Uri Heller's entire shareholding of 39,237,704 Ordinary
Shares on 22 February 2013, which took CPI's interest in the Issued
Share Capital from 22.23 per cent. to 50.89 per cent., and not by
any commercial negotiations to arrive at a price which, in the view
of Independent Directors, reflects a fair value of the Ordinary
Shares or the benefits of entering into the Land Bank Acquisition
Agreement and the Yielding Loan Adjustment agreement being received
by Volksbank, CPI and the Company and not by the Independent
Shareholders. Independent Shareholders should refer to the
'Recommendation' paragraph of this announcement where they will
note that despite the fact that the Independent Directors believe
that the Offer substantially undervalues the Company they are
recommended to accept the Offer;
2. in so far as Independent Shareholders who accept the Offer
are concerned, the Land Bank Portfolio acquisition and the Yielding
Loan Adjustments are of no consequence given that they will no
longer be Shareholders in the Company due to the cash exit which is
effectively guaranteed by the wholly unconditional cash Offer;
3. the Land Bank Portfolio acquisition and the Yielding Loan
Adjustments would help to stabilise the financial position of the
Company for any remaining Shareholders (bearing in mind the
recommendation of the Independent Directors and the Offeror's
stated intention to acquire the Ordinary Shares of any minority
should the circumstances permit, which means that Independent
Shareholders cannot be guaranteed the option of remaining so) in
the short term; and
4. although there is no active secondary market in the debt, it
is being acquired by CPI from Volksbank at a 50 per cent. discount
to nominal value, the benefit of which flows to CPI and not to
Independent Shareholders.
Cash exit
The Offer provides Shareholders with the opportunity to exit
their investment at a premium to the share price prior to the
commencement of the Offer Period, with the certainty of cash. It
will also enable Shareholders to exit their investment free of
dealing costs. Accepting the Offer would eliminate the investment
risks and uncertainties associated with holding Ordinary
Shares.
Lack of viable alternative options
Given that the Company is now controlled by CPI, the current
Board is no longer in a position independently to consider
alternative courses of action in order to create value for
Shareholders. Accordingly, it is not possible for the Board to
consider any sale of assets and use the proceeds to repay debt with
any surplus being returned to Shareholders, and it is also
effectively a bar to any other competing offeror from providing an
alternative and potentially more attractive offer for the
Company.
The Directors believe that the ability to realise Ablon's assets
and the value at which they could be realised is uncertain and
dependent upon various factors, including (i) the marketability of
such assets, (ii) the availability and pricing of similar assets in
the market, and (iii) the economic environment in Central Eastern
Europe.
Controlling shareholder
As announced by CPI on 21 March 2013, CPI is already interested
in 102,799,217 Ordinary Shares, representing approximately 75.07
per cent. of the relevant securities of the Company. As a result,
CPI has the ability to exercise effective control over Ablon and
exert significant influence over its strategic direction. Given
that CPI is already interested in over 75 per cent. of the issued
share capital of Ablon, they currently hold sufficient voting
rights to ensure the approval or rejection of ordinary resolutions
of Ablon, including resolutions relating to the appointment and
removal of its executive and non-executive directors. CPI could
therefore remove the existing Directors and appoint a board
comprised solely of their own representatives. In addition, as CPI
controls in excess of 75 per cent, of the votes attaching to the
Ordinary Shares. CPI will therefore be able to amend the Ablon
articles of incorporation to affect the rights attaching to
Ordinary Shares and pass special resolutions.
Shareholders should be aware that there are no provisions of
Guernsey law which confer rights of pre-emption in respect of the
issue or allotment of any class of shares to protect Shareholders
from dilution of their shareholdings.
There can be no certainty as to how the Group will be managed in
the future under CPI's ownership and how and at what stage any
value will be realised for the benefit of any Shareholders who do
not accept the Offer and are able to remain as Shareholders.
Shareholders should note that there has been little or no
interaction with the Directors or the Company's advisers in regard
to what an appropriate level of offer would be for the minority
Shareholders.
CPI has renegotiated the arrangements with Volksbank
substantially without reference to the Independent Directors and
therefore any minority Shareholders who wish to remain as such do
so very much at their own risk as they will be without any
protections afforded by a listing or an independent board and there
will be no guarantee that the Company will retain any systems of
corporate governance.
Potential loss of Official Listing
CPI has stated that it will seek to procure that the Board
applies to the UKLA for the removal and de-listing of its Ordinary
Shares from the standard segment of the Official List of the UKLA
and to the London Stock Exchange for cancellation of trading in its
Ordinary Shares on the Main Market as soon as practicable.
As noted above, CPI is currently interested in Ordinary Shares
representing in excess of 75 per cent. of the relevant securities
of the Company and has the ability to appoint and remove Board
directors. Although the Company stated in its Standard Listing
Prospectus, dated 28 June 2011, that it would adopt Listing Rule
5.2.5 and seek Shareholder approval for any Cancellation there is
no guarantee that CPI will seek such approval and in addition,
given that CPI is now interested in over 75 per cent. of the Issued
Share Capital the result would be a foregone conclusion. If no
Shareholder approval is sought, through the appointment of a new
board, CPI would have the ability to enforce the Cancellation in
any event.
Even if it was not the intention of CPI to initiate the
Cancellation, given the lack of Ordinary Shares held in public
hands the Company may no longer meet the minimum specifications
required of a company on the standard segment of the Official List
and it is likely that the Company would be de-listed in any
event.
The Independent Directors believe that without a listing, the
liquidity, marketability and value of the Ordinary Shares is likely
to be reduced to the detriment of minority Shareholders.
Furthermore, Shareholders who do not accept the Offer would no
longer benefit from the Shareholder protections provided by the
Listing Rules and the DTRs and other related regulations applicable
to a Company with a Standard Listing.
Compulsory acquisition of Ordinary Shares
If the Offeror receives acceptances under the Offer in respect
of, and/or otherwise acquires or contracts to acquire, 90 per cent.
or more in nominal value of the Ordinary Shares to which the Offer
relates (excluding any Ordinary Shares held as treasury shares) and
of the voting rights attaching to those Ordinary Shares, the
Offeror intends to exercise its rights in accordance with section
337 of the Companies (Guernsey) Law, 2008, as amended, to acquire
compulsorily the remaining Ordinary Shares on the same terms as the
Offer.
In these circumstances a Shareholder would be forced to sell
their Ordinary Shares to CPI whether or not they wish to accept the
Offer. By accepting, they will receive their consideration
sooner.
Shareholders should note that, given the acceptances to the
Offer to date and the intention of the Independent Directors to
accept the Offer, in excess of 55 per cent. of those Ordinary
Shares to which the Offer relates (excluding any Ordinary Shares
held as treasury shares) and of the voting rights attaching to
those Ordinary Shares have effectively accepted and therefore the
likelihood of such a compulsory acquisition is high.
Liquidity and marketability
As a result of the concentration of the majority of Ordinary
Shares with CPI at present and following the Offer, and other
blocks currently held by other significant Shareholders, the
Ordinary Shares may become increasingly illiquid. If Shareholders
do not accept the Offer, it is possible that Shareholders may be
unable to sell their Ordinary Shares at a price equivalent to that
available under the Offer for some time, if ever.
CPI holds a significant stake in Ablon. In the unlikely event
that Ablon remains admitted to trading on the standard segment of
the Main Market, and CPI seeks to sell its Ordinary Shares, this
may have a significant negative effect on Ablon's share price.
4.2 Arguments for not accepting the Offer
Offer Price versus Current Net Asset Value
The Offer Price represents a discount of approximately 71.26 per
cent. to Ablon's Current Net Asset Value per Ordinary Share of
GBP0.783. If Shareholders accept the Offer, they will be prevented
from benefitting from any future cash realisations of Ablon's
assets and any consequent capital returns to Shareholders, which
may be higher than the value of the Offer.
The Offer has been made at the maximum price paid per Ordinary
Share by CPI in the last 12 months and therefore represents the
minimum price at which the Offer can be made under the Code.
Shareholders should therefore note that the Offer Price does not
represent any premium over and above a price which is required as a
mandatory minimum.
Additional value within the Company
The Directors believe that there may be further significant
value in Ablon that is not reflected in the Offer Price taking into
account a number of factors, including:
(a) completion of the Land Bank Acquisition Agreement and the
Yielding Loan Adjustments whereby CPI has purchased the Land Bank
Portfolio at a 50 per cent discount to the nominal value.
Completion of this transaction will enable CPI to reduce the
gearing of the Group while ensuring loan prolongations and thus
freeing the Company for potential loan restructuring and the
raising of further debt in order to take advantage of further value
creation opportunities within Ablon's real estate;
(b) the quality of the personnel and management team; and
(c) the current value of the Ablon brand that can be further exploited.
The Directors believe that the poor share price performance of
the Company over the six months prior to the commencement of the
Offer Period has primarily been a result of instability in the
composition of the Board and therefore the management of the
Company, directly resulting from the various requisitioned general
meetings by substantial Shareholders. The fact that Volksbank has
not been in a position to extend the Land Bank Portfolio,
containing a number of loans which the Company was servicing, has
also placed the Company into an unstable financial position, the
reasons for which have been beyond the Company's control. The
Independent Directors are therefore of the view that the share
price at the commencement of the Offer Period, and therefore the
price being used to illustrate an Offer premium of 21.62 per cent.,
does not reflect a fair representation of any potential premium as
the base price does not reflect the inherent value within the
Company.
Shareholders who accept the Offer or who are forced to accept
under section 337 of the Companies (Guernsey) Law 2008, as amended,
will be prevented from benefitting from any future recovery in
Ablon's share price which may occur, if in the unlikely event Ablon
maintains its listing.
Ablon may benefit under the control of CPI
Ablon may benefit under the control of its new parent company,
particularly if CPI are supportive of Ablon. Shareholders who
reject the Offer and remain Shareholders may be in a position to
benefit from any increase in the value of Ablon and therefore any
value that CPI may realise in relation to its assets in the future.
However, if CPI receives acceptances under the Offer in respect of,
and/or otherwise acquires or contracts to acquire 90 per cent. or
more in nominal value of the Ordinary Shares to which the Offer
relates and of the voting rights attaching to those Ordinary
Shares, CPI intends to exercise its rights in accordance with
section 337 of the Companies (Guernsey) Law 2008, as amended, to
acquire compulsorily the remaining Ordinary Shares on the same
terms as the Offer.
However, as noted above, there are substantial risks associated
with remaining as a minority Shareholder and there can be no
guarantee that any value will be realised for such remaining
Shareholders. If Shareholders do remain as such then they must
realise that they do so very much at their own risk.
5. The effects of implementation of the Offer
The Independent Directors believe the Offer will result in a
more stable financial position for the Company as part of a
substantial and better capitalised group within CPI, with a revised
loan provider position, which should result in greater
opportunities for potential real estate developments and completion
of existing projects, and there should be ongoing employment
opportunities for the retained management team.
CPI has stated in the Offer Document that it intends to grow
Ablon's business over the coming years and that following
completion of the Offer, CPI intends to work with the Company's
management and employees to ensure that the business is optimally
structured. CPI has further indicated that no material changes to
the employee base are currently anticipated, however, a review is
expected to be carried out within 12 months of the date of the
Offer Document which may result in a reduction in the headcount in
those 12 months where CPI consider it to be appropriate. Following
completion of the Offer, CPI has indicated in the Offer Document
that the existing employment rights of the management and employees
of Ablon will continue to be fully safeguarded.
CPI has further stated that there are no agreements or
arrangements between CPI and management or employees of Ablon in
relation to their on-going involvement in the business and the
Offer is not conditional on reaching agreement with such
persons.
Further, CPI has not entered into any discussions regarding
incentivisation arrangements with Ms. Lovro, who holds 3.21 per
cent. of the Issued Share Capital, but it may be that following a
due diligence exercise, as referred to in paragraph 5 of Part 1 of
the Offer Document, CPI may wish to enter into incentivisation
discussions with Ms. Lovro.
The Independent Directors consider that as there has been little
interaction between the Offeror and the Independent Directors, it
is difficult to provide a view as to the effects of the
implementation of the Offer on employment and the location of the
Company's places of business as set out in the Offer Document. The
Independent Directors would welcome the opportunity to enter into
discussions with CPI over the repercussions on employment
generally.
6. CPI's strategic plan for Ablon
In the Offer Document CPI states that it has no strategic plans
for Ablon that would change, in the short term, its existing focus
or operations, nor does CPI have any intention to change the
location of Ablon's places of business or to redeploy Ablon's fixed
assets. However, in order to crystalise potential financial and
operational benefits, Mr. Vitek and CPI will perform a detailed due
diligence exercise on Ablon, as a result of which Mr Vitek may
undertake a reorganisation of his real estate investment and
management platforms within 12 months of the Offer closing. Such
reorganisation could include a merger of Ablon's operations and
entities with one or more of Mr. Vitek's other investments, such as
Czech Property Investments, a.s., and/or a restructuring of Mr.
Vitek's investments. At present, however, there is no formal plan
in place to implement such reorganisation.
Subject to Mr. Vitek deciding to implement a reorganisation of
his real estate investment and management platforms as described
above, CPI will act as a holding company for the Ordinary Shares
acquired prior to and in connection with the Offer and CPI's
business, employees, management, conditions of employment and
strategic plans will not be affected by the Offer.
Following the proposed de-listing of the Ordinary Shares, CPI
has no intention of maintaining a trading facility for the Ordinary
Shares.
The Independent Directors consider that as there has been little
interaction between the Offeror and the Independent Directors, it
is difficult to provide a view as to how successful or otherwise
such plans might be. The Independent Directors would welcome the
opportunity to enter into discussions with CPI over the strategic
direction of Ablon and to assist in the due diligence exercise as
they have detailed knowledge of the assets, operations, potential
development opportunities of the Land Bank Portfolio, loan
agreements and realisations as well as over the strengths of the
management team of the Group.
7. Independence
Mr Wolfhard Fromwald is not deemed to be an Independent Director
for the purposes of considering the Land Bank Portfolio
Acquisition, the Yielding Loan Adjustments or for recommending the
Offer as he was appointed to the Board of Ablon through a
requisitioned general meeting requested by VB Real Estate Holding
eins GmbH, a company within the same group as Volksbank, which was
held on 5 December 2012.
8. Employee consultation
In accordance with the requirements of Rule 2.12 of the Code,
Ablon has informed employees of the right of employee
representatives under Rule 25.9 of the Code to require that a
separate opinion of the employee representatives on the effects of
the Offer on employment be appended to the Response Circular.
9. Recommendation of the Independent Directors
Taking into account the fact that the Offer substantially
undervalues the underlying business of the Company and the fact
that the terms of the Offer have been set merely at the lowest
allowable price under Rule 9 of the Code, the Independent
Directors, as so advised by Beaumont Cornish, do NOT consider the
terms of the Offer to be fair and reasonable. In advising the
Independent Directors, Beaumont Cornish have taken into account the
commercial assessments of the Independent Directors.
However, whilst the Independent Directors consider that the
Offer undervalues the Company as evidenced by the discount of
approximately 71.26 per cent. to Ablon's Current Net Asset Value
per Ordinary Share of GBP0.783, the Offer nevertheless represents a
premium to the share price as at the date prior to the commencement
of the Offer Period, (which also reflects investor demand and
market perception of both the Company and the European property
sector). The Independent Directors also recognise that Shareholders
may well not wish to remain a Shareholder in Ablon given the
likelihood that it will be de-listed and the risks associated with
being a minority shareholder in a company with a controlling
shareholder and that the Offer provides such Shareholders an
opportunity to realise their investment in Ablon for cash.
Accordingly the Independent Directors recommend that
Shareholders ACCEPT the Offer as the Independent Directors intend
to do so in respect of the 4,451,383 Ordinary Shares owned by them,
representing approximately 3.25 per cent. of the Issued Share
Capital.
10. Action to be taken to accept the Offer or not to accept the Offer
Your attention is drawn to the procedure for accepting the
Offer, which is set out in paragraph 15 (Procedure for acceptance)
of Part I of the Offer Document.
Shareholders are not obliged to accept the Offer. If you wish to
remain a Shareholder, you should not (i) return the Form of
Acceptance accompanying the Offer Document, (ii) make an Electronic
Acceptance or, (iii) take any other action.
If you are in doubt about the action you should take regarding
the Offer, you are recommended to consult immediately your
stockbroker, bank manager, solicitor, accountant or other
independent financial adviser who specialises in advising on shares
or other securities and, in the case of the UK Shareholders, who is
authorised under the Financial Services and Markets Act 2000.
Enquiries:
Alex Borrelli / Adrienn Lovro
Ablon Group Limited
+44 7747 020 600/+36 1 225 6600
Roland Cornish/Emily Staples
Beaumont Cornish Limited
+44 207 628 3396
The Directors, accept responsibility for the information
contained in this document (other than the opinions of the
Independent Directors relating to the Offer and to the Land Bank
Portfolio acquisition and the Yielding Loan Adjustments for which
only the Independent Directors accept responsibility, as set out
below) save that the only responsibility they accept in respect of
the information contained in this announcement relating to the
Offeror and the Former Directors, which have been compiled from
published sources, is to ensure that it has been correctly and
fairly reproduced and presented. Subject as aforesaid, to the best
of the knowledge and belief of the Directors (who have taken all
reasonable care to ensure that such is the case) the information
contained in this announcement is in accordance with the facts and
there is no omission likely to affect the import of such
information.
The Independent Directors accept responsibility for the opinion
of the Independent Directors relating to the Offer and to the Land
Bank Portfolio acquisition and the Yielding Loan Adjustments
contained in this announcement. To the best of the knowledge and
belief of the Independent Directors (who have taken all reasonable
care to ensure that such is the case), the information contained in
this announcement for which they are responsible is in accordance
with the facts and does not omit anything to affect the import of
such information.
Beaumont Cornish Limited ("Beaumont Cornish") which is
authorised and regulated in the United Kingdom by The Financial
Services Authority is acting for the Company in relation to the
matters described in this announcement and is not advising any
other person, and accordingly will not be responsible to anyone
other than the Company for providing the protections afforded to
customers of Beaumont Cornish or for providing advice in relation
to the matters described in this announcement.
A copy of this announcement will be made available (subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions) at http://www.ablon-group.com by no later than 12
noon (London time) on 26 March 2013, being the business date
following the date of this announcement.
Copies of the Response Circular will be available, free of
charge, at the offices of Beaumont Cornish Limited, Bowman House,
29 Wilson Street, London EC2M 2SJ and on the Company's website
(www.ablon-group.com).
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise:
"Announcement" the announcement released on 22
February 2013 announcing the Offeror's
firm intention to make the Offer;
----------------------- -------------------------------------------------------
"Beaumont Cornish" Beaumont Cornish Limited, the Company's
financial adviser for the purposes
of Rule 3.1 of the Code;
----------------------- -------------------------------------------------------
"Beta" CPI Beta a.s., a subsidiary of Czech
Property Investments, a.s.;
----------------------- -------------------------------------------------------
"Cancellation" the proposed removal and delisting
of the Ordinary Shares from the
standard segment of the Official
List of the UKLA and the cancellation
of trading in the Ordinary Shares
on the Main Market;
----------------------- -------------------------------------------------------
"certificated" in relation to a share or other
or "in certificated security, a share or other security
form" title to which is recorded in the
relevant register as being held
in certificated form;
----------------------- -------------------------------------------------------
"Code" the City Code on Takeovers and Mergers;
----------------------- -------------------------------------------------------
"Company" or Ablon Group Limited (a company incorporated
"Ablon" in Guernsey and registered with
number 45674) whose registered office
is at Frances House, Sir William
Place, St. Peter Port, Guernsey
GY1 4HQ;
----------------------- -------------------------------------------------------
"CPI" or "Offeror" CPI Group, a.s., a company incorporated
in the Czech Republic with registered
number 281 92 095;
----------------------- -------------------------------------------------------
"CREST" the relevant system (as defined
in the Regulations) in respect of
which Euroclear is the operator
(as defined in the Regulations);
----------------------- -------------------------------------------------------
"CREST member" a person who is, in relation to
CREST, a system member (as defined
in the Regulations);
----------------------- -------------------------------------------------------
"CREST sponsor" a person who is, in relation to
CREST, a sponsoring system
participant (as defined in the Regulations);
----------------------- -------------------------------------------------------
"CREST sponsored a CREST member admitted to CREST
member" as a sponsored member
under the sponsorship of a CREST
sponsor;
----------------------- -------------------------------------------------------
"Current Net the total equity attributable to
Asset Value" the equity holder of Ablon as per
the audited financial statements
of the Company as at 31 December
2012, being EUR131,087,000 (or approximately
GBP107,242,275 when calculated at
an exchange rate of EUR1:GBP0.8181),
further details of which are set
out in paragraphs 11.2 and 11.3
of Part II of the Response Circular;
----------------------- -------------------------------------------------------
"Directors" the directors of the Company whose
or the "Board" names are set out on page 8 of the
Response Circular;
----------------------- -------------------------------------------------------
"DTRs" the Disclosure and Transparency
Rules made by the FSA pursuant to
FSMA governing the disclosure of
information by listed companies;
----------------------- -------------------------------------------------------
"Electronic the inputting and settling of a
Acceptance" TTE instruction which constitutes
or is deemed to constitute an acceptance
of the Offer on the terms set out
in the Offer Document;
----------------------- -------------------------------------------------------
"Euro", "EUR" the Euro, being the official currency
or "EUR" of the European Union's member states;
----------------------- -------------------------------------------------------
"Euroclear" Euroclear UK & Ireland Limited;
----------------------- -------------------------------------------------------
"First Closing the date which is 21 days after
Date" the date of publication of the Offer
Document, being 3 April 2013;
----------------------- -------------------------------------------------------
"Form of Acceptance" the form of acceptance and authority
relating to the Offer sent along
with the Offer Document for use
by the Shareholders holding Ordinary
Shares in certificated form;
----------------------- -------------------------------------------------------
"Former Directors" Mr Radovan Vitek and Martin N meček
being former directors of the Company
who resigned as directors of the
Company on 6 February 2013 in conjunction
with the preliminary approach from
the Offeror;
----------------------- -------------------------------------------------------
"FSA" or "Financial the Financial Services Authority
Services Authority" in its capacity as the competent
authority for the purposes of Part
VI of UK Financial Services and
Markets Act 2000 (as amended from
time to time);
----------------------- -------------------------------------------------------
"Group" the Company and its subsidiaries
as at the date of the Response Circular;
----------------------- -------------------------------------------------------
"HUF" the Hungarian Forint;
----------------------- -------------------------------------------------------
"Independent Alex Borrelli and Adrienn Lovro,
Directors" the directors of Ablon who are deemed
to be independent for the purposes
of the Offer;
----------------------- -------------------------------------------------------
"Independent Shareholders other than CPI and
Shareholders" Volksbank;
----------------------- -------------------------------------------------------
"Issued Share the issued share capital of the
Capital" Company excluding treasury shares;
----------------------- -------------------------------------------------------
"Land Bank as defined in paragraph 4.1 of the
Portfolio Acquisition Letter from the Independent Directors;
Agreement"
----------------------- -------------------------------------------------------
"Land Bank as defined in paragraph 4.1 of the
Portfolio" Letter from the Independent Directors;
----------------------- -------------------------------------------------------
"Listing Rules" the Listing Rules published by the
UKLA;
----------------------- -------------------------------------------------------
"London Stock London Stock Exchange plc;
Exchange"
----------------------- -------------------------------------------------------
"Main Market" the market for Officially Listed
securities operated by the London
Stock Exchange;
----------------------- -------------------------------------------------------
"Offer Document" the document sent to the Shareholders
and dated 13 March 2013 which contains,
inter alia, the terms of the Offer;
----------------------- -------------------------------------------------------
"Offer Period" the offer period (as defined by
the Code) commencing on 6 February
2013 until the First Closing Date
(unless extended);
----------------------- -------------------------------------------------------
"Offer Price" 22.5 pence in cash per Ordinary
Share;
----------------------- -------------------------------------------------------
"Offer" the unconditional mandatory cash
offer made by the Offeror to acquire
the entire issued and to be issued
share capital of the Company not
already owned by the Offeror and,
where the context so requires, any
subsequent revision, variation,
extension or renewal of, or election
available under, such offer;
----------------------- -------------------------------------------------------
"Ordinary Shares" the existing 136,938,116 unconditionally
allotted or issued and fully paid
ordinary shares of EUR0.01 each
in the capital of the Company (other
than the 171,541 shares which are
treasury shares) and any further
such shares which are unconditionally
allotted or issued prior to the
time at which the Offer ceases to
be open for acceptance (or, subject
to the provisions of the Code, such
earlier time and/or date as the
Offeror may decide);
----------------------- -------------------------------------------------------
"Regulations" the Uncertificated Securities Regulations
2001 (SI2001 No. 3755), as amended
from time to time;
----------------------- -------------------------------------------------------
"relevant securities" as defined in the Code;
----------------------- -------------------------------------------------------
"Restricted any jurisdiction where local laws
Jurisdiction" or regulations may result in a significant
risk of civil, regulatory or criminal
exposure if information concerning
the Offer is sent or made available
to the Shareholders in that jurisdiction;
----------------------- -------------------------------------------------------
"Rights Issue" as defined in paragraph 2 of the
Letter from the Independent Directors;
----------------------- -------------------------------------------------------
"Shareholders" holders of Ordinary Shares;
----------------------- -------------------------------------------------------
"Sterling" the lawful currency of the UK;
or "GBP"
----------------------- -------------------------------------------------------
"TTE instruction" a Cash Offer TTE instruction or
other Transfer to Escrow instruction
(as described in the CREST manual
issued by Euroclear) (as the context
requires);
----------------------- -------------------------------------------------------
"UK" or "United the United Kingdom of Great Britain
Kingdom" and Northern Ireland;
----------------------- -------------------------------------------------------
"UKLA" the UK Listing Authority;
----------------------- -------------------------------------------------------
"uncertificated" a share or other security title
or "in uncertificated to which is recorded in the relevant
Form" register of the share or security
as being held in uncertificated
form, in CREST, and title to which,
by virtue of the Regulations may
be transferred by means of CREST;
----------------------- -------------------------------------------------------
"Volksbank" Österreichischen Volksbanken-Aktiengesellschlaft;
and
----------------------- -------------------------------------------------------
"Yielding Loan as defined in paragraph 4.1 of the
Adjustments" Letter from the Independent Directors.
----------------------- -------------------------------------------------------
Note
Unless otherwise stated, references to EUR:GBP exchange rates
are based on calculated rates being the HUF:EUR and the HUF:GBP
cross rates of the mid FX exchange rate of Magyarországi Volksbank
Zrt. taken as at 28 December 2012.
About ABLON Group Limited
Founded in 1993 in Budapest (Hungary), ABLON and its
subsidiaries (together the "ABLON Group") has properties at 33
locations, of which there are 15 completed projects and 23
development projects in Budapest, Prague, Bucharest and Warsaw. Its
portfolio comprises a diversified mix of office, residential,
retail, logistics and hotel developments valued at approximately
EUR370 million by external independent appraiser (Colliers
International) as at 31 December 2012. The ABLON Group had, as at
31 December 2012, approximately 208,800 square metres of existing
and income generating office, residential, hotel, retail and
logistics assets (at 15 locations) in Budapest and Prague, with a
significant development land bank comprising a further circa.
1,164,500 square metres (at 23 locations) in Budapest, Prague,
Bucharest and Warsaw. ABLON's shares are traded on the Main Market
of the London Stock Exchange under the ticker 'ABL'.
Disclosure requirements of the Takeover Code (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 paper 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 paper
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 paper 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 paper offeror
is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a paper 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 paper offeror must make a Dealing
Disclosure if the person deals in any relevant securities of the
offeree company or of any paper 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
paper 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 paper
offeror, they will be deemed to be a single person for the purpose
of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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