RNS Number:5646I
Towergate Partnership Limited
27 November 2007
Offer for Broker Network HOLDINGS plc
Not for release, publication or distribution, in whole or in part, in or into or
from any jurisdiction where to do so would constitute a violation of the
relevant laws of such jurisdiction
FOR IMMEDIATE RELEASE
27 November 2007
Recommended Cash Offer
by
Towergate Partnership Limited ("Towergate")
for
Broker Network Holdings plc ("Broker Network")
Summary
* The Broker Network Board and the Towergate Board are
pleased to announce that they have reached agreement on the terms of a
recommended cash offer to be made by Towergate for the entire issued and to be
issued share capital of Broker Network.
* The Offer will be 605 pence in cash for each Broker Network
Share valuing the entire existing issued and to be issued share capital of
Broker Network at approximately #95 million in aggregate.
* The Offer Price represents a premium of approximately:
(i) 15.8 per cent. to the Closing Price
of 522.5 pence per Broker Network Share on 26 November 2007, being the last
Business Day prior to the date of this announcement;
(ii) 27.6 per cent. to the Closing Price
of 474 pence per Broker Network Share on 11 October 2007, being the last
Business Day prior to Broker Network announcing that it had received an approach
that may or may not lead to an offer; and
(iii) 92.7 per cent. over the average
Closing Price of 314 pence per Broker Network Share for the 12 months from 12
October 2006 to 11 October 2007 being the last Business Day prior to the
commencement of the Offer Period.
* Towergate has received irrevocable undertakings to accept
or procure the acceptance of the Offer in respect of a total of 8,499,420 Broker
Network Shares representing approximately 55.2 per cent. of the existing issued
share capital of Broker Network.
* Towergate is the UK's largest independently owned insurance
intermediary, offering approximately 200 specialist insurance products and
employing more than 3,400 people in 100 offices. Since its foundation in 1997,
the Towergate Group has completed more than 130 acquisitions and now controls
run-rate gross written premium of #1.1 billion per annum. In the year ending 31
December 2006, Towergate achieved revenues of #238 million and EBITDA of
approximately #95 million.
* Towergate believes that the acquisition of Broker Network
will provide Towergate with a large network presence in the UK and will be the
foundation upon which the Towergate Directors expect to continue to expand the
Towergate Group through additional network acquisitions. Towergate believes
that Broker Network is an attractive and well-run business that has experienced
growth in both its network and owned broker businesses and will therefore
provide the foundation on which to continue its expansion.
* The Broker Network Directors, who have been so advised by
Cenkos Securities Limited, consider the terms of the Offer to be fair and
reasonable.
* The Broker Network Directors unanimously recommend that
Broker Network Shareholders accept the Offer, as they have irrevocably
undertaken to do or to procure to be done in respect of their entire beneficial
shareholdings and the shareholdings of any person whose interest in relevant
securities a Broker Network Director is taken to be interested in pursuant to
Part 22 of the Companies Act 2006, comprising in aggregate 3,815,588 Broker
Network Shares, representing 24.8% per cent. of Broker Network's entire issued
share capital.
* Commenting on the Offer, Peter Cullum, the Executive
Chairman of Towergate, said:
"We are delighted to announce this transaction. This is a deal that makes great
sense for employees, brokers and customers alike of Broker Network - our two
organisations complement each other perfectly. I have known Grant Ellis for
many years and I know we both share the same passion for promoting the role and
value of a broker. We also share the same enthusiasm for how Broker Network
could flourish under our ownership and continue to be run as a first class
business for its broker members. Grant Ellis's proposed position as the
Chairman of the Network Division of Towergate demonstrates our commitment to
offering the leading UK network proposition."
* Commenting on the Offer, Grant Ellis, the Chief Executive of Broker Network
said:
"The Broker Network Board feels that the offer made by Towergate is in the best
interests of the Broker Network Shareholders and indeed in the best interests of
the Broker Network business, its network members and its people too. Towergate
is a major presence in the UK insurance market and joining forces with them
presents Broker Network and its members with further opportunities to expand and
prosper, which I'm very excited about."
Enquiries:
Lexicon Partners Tel: 020 7653 6000
Stuart Britton
Joe Suddaby
Tulchan Communications Tel: 020 7353 4200
Paul Harris
Cenkos Securities Tel: 020 7397 8900
Ian Soanes
Fox-Pitt, Kelton Tel: 020 7663 6000
Ryan Brown
Broker Network PR and Communications Tel: 01423 554147
Kelly-Ann Knight
The above summary should be read in conjunction with the full text of the
attached announcement. The full text of the conditions of the Offer and the
bases and sources of assumptions and calculations are set out in Appendices 1
and 2 respectively, each of which form part of and should be read with this
announcement. Defined terms have the meanings set out in Appendix 3 which also
forms part of and should be read in conjunction with this announcement.
This announcement does not constitute or form part of an offer for, or
solicitation of any offer for, or invitation to sell or purchase or subscribe
for any securities. The Offer will be made solely by means of the Offer
Document and the Form of Acceptance accompanying the Offer Document which will
contain the full terms and conditions of the Offer, including details of how it
may be accepted.
Lexicon Partners is acting exclusively for Towergate and no-one else in
connection with the Offer and will not be responsible to anyone other than
Towergate for providing the protections afforded to clients of Lexicon Partners
nor for providing advice in relation to the Offer or any matter referred to in
this announcement. Lexicon Partners is authorised and regulated in the United
Kingdom by the Financial Services Authority.
Cenkos Securities is acting exclusively for Broker Network and no-one else in
connection with the Offer and will not be responsible to anyone other than
Broker Network for providing the protections afforded to clients of Cenkos
Securities nor for providing advice in relation to the Offer or any matter
referred to in this announcement. Cenkos Securities is authorised and regulated
in the United Kingdom by the Financial Services Authority.
Fox-Pitt, Kelton Limited is acting exclusively for Broker Network and no-one
else in connection with the Offer and will not be responsible to anyone other
than Broker Network for providing the protections afforded to clients of
Fox-Pitt, Kelton nor for providing advice in relation to the Offer or any matter
referred to in this announcement. Fox-Pitt, Kelton is authorised and regulated
in the United Kingdom by the Financial Services Authority.
The availability of the Offer to Broker Network Shareholders who are not
resident in the United Kingdom may be affected by the laws of the relevant
jurisdiction in which they are resident. Persons who are not resident in the
United Kingdom should inform themselves of, and observe, any applicable
requirements.
Unless otherwise determined by Broker Network and permitted by applicable law
and regulation, the Offer will not be made, directly or indirectly, in, into or
from, or by use of mails or any means or instrumentality (including, without
limitation, facsimile transmission, telephone or internet) of interstate or
foreign commerce of, or any facilities of a national, state or other securities
exchange of any jurisdiction where to do so would constitute a violation of the
relevant laws of such jurisdiction, and the Offer will not be capable of
acceptance by any such use, means, instrumentality or facilities or from or
within any such countries or jurisdiction. Accordingly, copies of any documents
relating to the Offer must not be, directly or indirectly, mailed, transmitted
or otherwise forwarded, distributed or sent, in whole or in part, in, into or
from any jurisdiction if to do so would constitute a violation of the relevant
laws of such jurisdiction and persons receiving such documents (including
custodians, nominees and trustees) must not directly or indirectly mail,
transmit or otherwise forward, distribute or send them in, into or from any such
jurisdiction as to do so may invalidate any such purported acceptance of the
Offer.
All statements other than statements of historical fact included in this
announcement may be "forward-looking statements". Often, but not always,
forward-looking statements can be identified by the use of the words such as
"will", "may", "should", "continue", "plans", "estimates", "forecasts",
"believes", "expects", "intends", "anticipates" or variations (including
negative variations) of such words and phrases, or they can state that certain
actions, events or results "may", "could\", "should", "would", "might", "will" or
"continue to" be taken, occur or be achieved. Forward-looking statements
involve risks and uncertainties and other factors that may cause the actual
results, performance or achievements of Broker Network, Towergate and/or their
subsidiaries to be materially different from those expressed or implied by the
forward-looking statements. Factors that would cause actual results to differ
materially from those described in this announcement include, but are not
limited to: costs and terms related to the acquisition of Broker Network; the
economic environment of the sectors in which Broker Network and Towergate
operate; failure to retain management; regulatory change in the industry; and/or
the general economic environment. This list is not exhaustive of the factors
that may affect the forward-looking information. These and other factors should
be considered carefully and undue reliance should not be placed on such
forward-looking information. Although this announcement has attempted to
identify important factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements, there may
be other factors that cause actions, events or results to differ materially from
those anticipated, estimated or intended and therefore there can be no assurance
that forward-looking statements will prove to be accurate. Forward-looking
statements contained in this announcement in respect of Broker Network and/or
Towergate are made as of the date of this announcement based on the opinions and
estimates of management. Subject to requirements to update under any applicable
regulation or law, Towergate and/or Broker Network disclaims any obligation to
update any forward-looking statements, whether as a result of new information,
estimates or opinions, future events or results or otherwise.
The Panel wishes to draw attention to certain UK dealing disclosure requirements
following the announcement of the Offer. An "offer period" is deemed to
commence at the time when an announcement is made of a proposed or possible
offer, with or without terms. Accordingly, the offer period began on 12 October
2007.
The disclosure requirements are set out in more detail in Rule 8 of the City
Code. Under the provisions of Rule 8.3 of the City Code, if any person is, or
becomes, "interested" (directly or indirectly) in 1% or more of any class of "
relevant securities" of Broker Network or Towergate, all "dealings" in any "
relevant securities" of that company, (including by means of an option in
respect of, or a derivative referenced to, any such "relevant securities") must
be publicly disclosed by no later than 3.30 pm (London time) on the business day
following the date of the relevant transaction. This requirement will continue
until the date on which the Offer becomes, or is declared, unconditional as to
acceptances, lapses or is otherwise withdrawn or on which the "offer period"
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest" in "relevant
securities" of Broker Network or of Towergate, they will be deemed to be a
single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of Broker Network or of Towergate, by Towergate or Broker Network,
or by any of their respective "associates", must be disclosed by no later than
12.00 noon (London time) on the business day following the date of the relevant
transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at http://
www.thetakeoverpanel.org.uk/.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should contact an independent
financial adviser authorised under the Financial Services and Markets Act 2000
if you are resident in the UK or, if not, an appropriately authorised
independent financial adviser or consult the Panel's website at http://
www.thetakeoverpanel.org.uk/ or contact the Panel on +44 207 382 9026; fax: +44
207 236 7005.
Not for release, publication or distribution, in whole or in part, in into or
from any jurisdiction where to do so would constitute a violation of the
relevant laws of such jurisdiction
FOR IMMEDIATE RELEASE
27 November 2007
Recommended Cash Offer
by
Towergate Partnership Limited ("Towergate")
for
Broker Network Holdings plc ("Broker Network")
1. Introduction
The Broker Network Board and the Towergate Board are pleased to announce that
they have reached agreement on the terms of a recommended cash offer, to be made
by Towergate to acquire the entire issued and to be issued share capital of
Broker Network.
The formal Offer will be set out in the Offer Document, which is expected to be
despatched to Broker Network Shareholders and (for information only) to the
Broker Network Optionholder shortly.
2. The Offer
The Offer, which will be made on the terms and subject to the conditions set out
in Appendix 1of this announcement and the further terms and conditions to be set
out or referred to in the Offer Document and Form of Acceptance, will be made on
the following basis:
for each Broker Network Share 605 pence in cash
The Offer, which is wholly in cash, values the entire issued and to be issued
share capital of Broker Network subject to the Offer at approximately #95
million in aggregate.
The Offer Price represents a premium of approximately:
(i) 15.8 per cent. to the Closing Price
of 522.5 pence per Broker Network Share on 26 November 2007, being the last
Business Day prior to the date of this announcement;
(ii) 27.6 per cent. to the Closing Price
of 474 pence per Broker Network Share on 11 October 2007, being the last
Business Day prior to Broker Network announcing that it had received an approach
that may or may not lead to an offer; and
(iii) 92.7 per cent. over the average
daily Closing Price of 314 pence per Broker Network Share for the 12 months from
12 October 2006 to 11 October 2007 being the last Business Day prior to the
commencement of the Offer Period.
The Broker Network Shares will be acquired by Towergate pursuant to the Offer
fully paid, with full title guarantee and free from all liens, equitable
interests, charges, mortgages, encumbrances, rights of pre-emption and any other
third party rights or interests of whatever nature and together with all rights
attaching thereto, including all voting rights and the right to receive and
retain all dividends, distributions and other returns of capital (if any)
declared, made or paid in respect of Broker Network Shares on or after the date
of this announcement.
3. Recommendation
The Broker Network Directors, who have been so advised by Cenkos Securities,
consider the terms of the Offer to be fair and reasonable. In providing advice
to the Broker Network Directors, Cenkos Securities has taken into account the
commercial assessments of the Broker Network Directors.
Accordingly, the Broker Network Directors unanimously recommend that Broker
Network Shareholders accept the Offer as they have irrevocably undertaken to do
or procure to be done in respect of their entire beneficial shareholdings and
the shareholdings of any person whose interest in relevant securities a Broker
Network Director is taken to be interested in pursuant to Part 22 of the
Companies Act 2006, such beneficial shareholdings comprising in aggregate
3,815,588 Broker Network Shares representing 24.8 per cent. of Broker Network's
entire issued share capital.
4. Irrevocable undertakings and letters of intent
Towergate has received irrevocable undertakings to accept, or procure the
acceptance of, the Offer from the persons referred to below in respect of a
total of 8,499,420 Broker Network Shares representing approximately 55.2 per
cent. of the existing issued share capital of Broker Network.
The Broker Network Directors have entered into irrevocable undertakings with
Towergate pursuant to which they have irrevocably undertaken to accept, or
procure the acceptance of, the Offer in respect of their entire beneficial
shareholdings and the shareholdings of any person whose interest in relevant
securities a Broker Network Director is taken to be interested in pursuant to
Part 22 of the Companies Act 2006. These shareholdings in the share capital of
Broker Network amount in aggregate to 3,815,588 Broker Network Shares,
representing approximately 24.8 per cent. of the existing issued share capital
of Broker Network. These undertakings remain binding even if a higher offer is
made by a third party.
David Belgian, an individual investor in Broker Network, has entered into an
irrevocable undertaking with Towergate, pursuant to which he has irrevocably
undertaken to accept, or procure the acceptance of, the Offer in respect of his
entire beneficial shareholding and the shareholdings of any other person whose
interest in relevant securities he is taken to be interested in pursuant to Part
22 of the Companies Act 2006. These shareholdings in the share capital of
Broker Network amount in aggregate to 1,250,000 Broker Network Shares,
representing approximately 8.1 per cent. of the existing issued share capital of
Broker Network. These undertakings remain binding even if a higher offer is
made by a third party.
In addition, Hargreave Hale Limited, Ennismore Fund Management Limited, Artemis
Investment Management Limited and Axa Framlington Investment Management Limited
have entered into irrevocable undertakings with Towergate pursuant to which they
have irrevocably undertaken to accept or procure the acceptance of the Offer in
respect of their entire registered and/or beneficial shareholdings. These
shareholdings in the share capital of Broker Network amount in aggregate to
3,433,832 Broker Network Shares representing approximately 22.3 per cent. of the
existing issued share capital of Broker Network. These undertakings will cease
to be binding if a higher offer of more than 10 per cent. of the value of the
consideration of the Offer is made by a third party.
In addition, Towergate has received non-legally binding letters of intent to
accept the Offer in respect of, in aggregate, 1,223,500 Broker Network Shares,
representing approximately 7.9 per cent. of Broker Network's existing issued
share capital.
Further details of these irrevocable undertakings and letters of intent are set
out in paragraph 2 in Appendix 2 to this announcement.
5. Background to and reasons for the recommendation of the Offer
Broker Network was listed on AIM in May 2004 and its shares began trading at a
price of 71p per Broker Network Share. Since its admission to AIM, Broker
Network has successfully implemented a strategy of organic growth by attracting
more members to its network and by acquiring retail insurance broking
businesses. The Broker Network Group is a large network for independent
commercial insurance brokers in the UK, providing members with the benefits of
being part of a national business including mutually beneficial relationships
with insurers.
Broker Network operates in a very competitive marketplace but has been able to
grow strongly by offering diverse products and support services which benefit
its members' business as well as growing its own community-based, wholly-owned
broking business. The Broker Network Directors believe that generating growth
will become increasingly challenging in the future and that building scale will
be a key driver of added value to the network and therefore to Broker Network's
business. The Broker Network Directors believe that the combination of Broker
Network's business with that of the Towergate Group, the largest independently
owned insurance intermediary in the UK, will bring scale benefits to the Broker
Network Group and its members, such as enhanced terms with underwriters, which
Broker Network would otherwise not be able to achieve.
The Broker Network Directors consider that the terms of the Offer appropriately
reflect the value that Broker Network is expected to bring to the Towergate
Group. The Broker Network Directors consider, having taken account of the
competitive environment in which Broker Network operates and the on-going risks
involved in the execution of its strategy, that the Offer fairly reflects the
value of Broker Network.
6. Background to and reasons for the Offer
A key element of Towergate's growth strategy is to establish an insurance
broking network alongside its existing owned brokers and underwriting managing
general agents. The Towergate Directors believe that membership of a network is
a preferred option for many smaller brokers and aims to build a network
proposition that will represent a source of enhanced benefits to such brokers.
Broker Network operates a network of 169 independent commercial insurance
brokers in the UK. The Towergate Directors believe that the acquisition of
Broker Network will provide Towergate with a large network presence in the UK
and will be the foundation upon which the Towergate Directors expect to continue
to expand the Towergate Group either through additional network acquisitions or
acquisitions of existing members of the Broker Network network in circumstances
where such members wish to consider changes in ownership in the future.
The Towergate Directors believe that a proportion of the existing premium volume
controlled by Broker Network may attract enhanced margins under Towergate's
ownership. Given Towergate's focus on the commercial and specialist classes of
business in which it currently operates, the wholly-owned broking subsidiaries
of Broker Network, which are active in these areas, would be natural additions
to the Towergate Group.
Broker Network has seen strong growth in income and profit in recent years as
the size of its network has increased and additionally as Broker Network has
acquired and integrated other insurance brokers from both within and outside its
network. The Towergate Directors believe that Broker Network is an attractive
and well-run business that should continue to perform strongly as part of the
Towergate Group.
7. Information relating to the Towergate Group
The Towergate Group is the UK's largest independently owned insurance
intermediary offering approximately 200 specialist insurance products and
employing more than 3,400 people in 100 offices. The business consists of a
number of specialist underwriting agencies and regional brokers providing a wide
range of specialist and non-specialist general insurance products in partnership
with a core group of capacity providers with whom the underwriting risk is
placed. Since its establishment in 1997, Towergate has completed more than 130
acquisitions and controls run-rate gross written premium in excess of #1.1
billion per annum. The Towergate Group achieved revenues of #238 million and
EBITDA of approximately #95 million in the year ending 31 December 2006 and
completed a #580 million refinancing in November 2006, which included a bank
facility of #235 million to support future acquisitions. Shortly afterwards,
two institutional investors, Reservoir Capital and Och-Ziff, invested #100
million in securities issued by the Towergate Group.
8. Information relating to Broker Network
Broker Network is an AIM-listed insurance broking business, employing over 450
people in 25 offices around the UK. Broker Network operates a network of
independent general insurance brokers, acting as an intermediary between them
and the insurance companies and by 26 November 2007, the number of members in
Broker Network's network had reached 169. The Broker Network Group also owns a
number of insurance brokers, acquired from both within and outside the network
and to date has completed 22 acquisitions of insurance brokers. Although a
number of non-network member brokers have been acquired during that time by the
Broker Network Group, most acquisitions have been related to the retirement of
network member principals. Broker Network is a fully accredited Lloyd's of
London broker and, as such, it gives its group and its network members direct
access to Lloyd's of London and the London insurance market.
For the financial year ended 30 April 2007, Broker Network reported turnover of
#23.26 million, profit before tax and goodwill amortisation of #6.53 million and
fully diluted earnings per share of 20.33p.
9. Financing of the Offer
The consideration payable under the Offer is being funded by Towergate's
existing committed debt facilities ("Debt Facilities") which were originally
arranged for Towergate by the Bank of Scotland plc and Lloyds TSB Bank plc in
November 2006.
The Banks have agreed, subject to certain conditions, to provide Towergate with
a facility to fund the acquisition of the entire issued and to be issued share
capital of Broker Network, the repayment of Broker Network's outstanding
financial indebtedness and to pay certain fees and expenses associated with the
Offer.
Towergate has agreed with the Banks to use the funds advanced to it pursuant to
the Debt Facilities, inter alia, in satisfying the cash consideration due to
Broker Network Shareholders pursuant to the Offer. Towergate has agreed not to
waive or amend any term or condition of the Offer without the prior consent of
the Banks.
Lexicon Partners, in its capacity as financial adviser to Towergate, has
confirmed that the necessary financial resources are available to Towergate to
satisfy full acceptance of the Offer.
10. Management and employees
The Towergate Board has discussed with the Broker Network Directors their plans
for the Broker Network management and employees within the Enlarged Group.
Towergate has stated that it attaches great importance to the skills and
experience of the existing management and employees of Broker Network and
believes that they will be an important factor for the continuing success of the
Enlarged Group. The Towergate Directors have given assurances that, upon the
Offer becoming or being declared unconditional in all respects, the existing
employment rights, including pension rights, of all employees will be fully
safeguarded.
Towergate plans to work with Broker Network's management to develop and
integrate the Broker Network business within the Towergate Group. Given the
complementary nature of the businesses of Towergate and Broker Network, the
Towergate Directors do not currently envisage any substantial changes to Broker
Network's management and employees to result from the Offer. The Broker Network
Board and Towergate Board both believe that there will be opportunities for
Broker Network employees to develop their careers within the broader framework
of the Enlarged Group.
Grant Ellis, Julie Hale, Mark Wood and Nigel Law, currently the Chief Executive,
Finance Director and executive directors of Broker Network respectively, will
each continue to work in a senior management capacity within the Enlarged Group.
Each of their existing service contracts will continue to remain in place
following the Offer becoming or being declared unconditional in all respects and
there is no current intention that such contracts will be amended or varied.
As at the date of this announcement, no formal commitments or promises have been
made to any of the executive directors of Broker Network regarding the nature of
any incentive arrangements which they may be offered following the Offer
becoming or being declared unconditional in all respects. If any such incentive
arrangements are considered in the future they will likely include the Towergate
Board granting a value appreciation right to some or all of the executive
directors of Broker Network, which would entitle each such director to a cash
amount related to the growth in Broker Network achieved under the Towergate
Group's ownership, which may become payable on one of the following events: (i)
Towergate sells Broker Network pursuant to a trade sale or (ii) 90 per cent. or
more of the Towergate Shares are listed on a public market. In addition, the
Towergate Board may also consider offering Grant Ellis the opportunity to
purchase up to #1 million of Towergate Shares following the Offer becoming or
being declared unconditional in all respects. However, no formal commitments or
promises have been entered into as at the date of this announcement.
The non-executive directors of Broker Network will remain in office on the same
terms following the Offer becoming or being declared unconditional in all
respects.
11. Broker Network share scheme
The Offer extends to any Broker Network Shares unconditionally allotted or
issued and fully paid whilst the Offer remains open for acceptance (or by such
earlier time and/or date as Towergate may, subject to the City Code, determine)
including any shares acquired by participants pursuant to the Broker Network
Incentive Plan and also including any shares allotted or issued and fully paid
as a result of the exercise of the Broker Network EMI Options. Towergate will
make appropriate proposals in due course to the Broker Network Optionholder.
12. Disclosure of interests in Broker Network Relevant Securities
Save as disclosed in Appendix 2 of this announcement, as at 26 November 2007,
being the last practicable Business Day prior to this announcement, neither
Towergate nor, so far as Towergate is aware, any person acting in concert with
Towergate, had an interest in or right to subscribe for relevant securities of
Broker Network or had any short position in relation to relevant securities of
Broker Network (whether conditional or absolute and whether in the money or
otherwise), including any short position under a derivative, any agreement to
sell or any delivery obligation or right to require another person to purchase
or take delivery of any relevant securities of Broker Network nor has any such
person borrowed or lent therein.
Save for the irrevocable undertakings and letters of intent described above,
neither Towergate nor any person acting in concert with Towergate has any
arrangement in relation to Broker Network Shares, or any securities convertible
or exchangeable into Broker Network Shares or options (including trading
options) in respect of, or derivatives referenced to, Broker Network Shares.
For these purposes, "arrangement" includes any indemnity or option arrangement,
any agreement or understanding, formal or informal, of whatever nature, relating
to relevant securities which is, or may be, an inducement to deal or refrain
from dealing in such securities.
13. Inducement fee
As an inducement to Towergate to make the Offer, Broker Network has agreed to
pay Towergate an inducement fee of #950,000 (exclusive of VAT to the extent that
VAT is recoverable by Broker Network), in the event the Offer is withdrawn or
lapses and, prior to such withdrawal or lapse:
(a) any person or entity (other than Towergate or any person
acting in concert with it, as such term is defined in the City Code) publicly
announces a firm intention to make an offer or proposal (however effected) to
acquire 30 per cent. or more of the voting rights attributable to the issued and
to be issued share capital of Broker Network ("Competing Offer") and either (i)
such Competing Offer or any other Competing Offer subsequently becomes or is
declared unconditional in all respects or is otherwise completed, or (ii) such
Competing Offer or any other Competing Offer is (whether at the time a Competing
Offer is announced publicly or subsequently) recommended by the Broker Network
Board or a committee of the Broker Network Board or any Broker Network Director;
or
(b) the Broker Network Board or any committee of the Broker
Network Board or any Broker Network Director withdraws or modifies, in a manner
adverse to Towergate, its or his recommendation to the Broker Network
Shareholders in respect of the Offer; or
(c) Broker Network (and/or any member(s) of Broker Network's
Group) enters into any agreement, arrangement or understanding to dispose of any
of its (or any of the companies in Broker Network's Group's) assets of a
material amount (as such an amount would be determined in accordance with the
terms of Note 2 to Rule 21.1 of the City Code) without the prior written consent
of Towergate.
Pursuant to Rule 21.2 of the City Code, Cenkos Securities and Broker Network
have confirmed to the Panel that they consider the terms of the inducement fee
to be in the best interests of Broker Network Shareholders.
14. Compulsory acquisition, de-listing and re-registration
If Towergate receives acceptances under the Offer in respect of, and/or
otherwise acquires, 90 per cent. or more in value of the Broker Network Shares
to which the Offer relates and not less than 90 per cent. of the voting rights
carried by those shares and the Offer becomes or is declared unconditional in
all respects, Towergate intends to exercise its rights pursuant to Chapter 3 of
Part 28 of the Companies Act 2006, to compulsorily acquire all remaining Broker
Network Shares on the same terms as the Offer.
It is Towergate's intention that, following the Offer becoming or being declared
unconditional in all respects, Broker Network will apply for the admission to
trading of Broker Network Shares on AIM to be cancelled. 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. Such cancellation
would significantly reduce the liquidity and marketability of any Broker Network
Shares not assented to the Offer and their value may be affected as a
consequence.
It is also proposed that, subject to the Offer becoming or being declared
unconditional in all respects and following completion of the compulsory
acquisition procedure referred to above, Towergate will seek to procure the
re-registration of Broker Network as a private limited company under the
relevant provisions of the Companies Act 2006.
15. General
The Offer Document, together with the Form of Acceptance, will be posted to
Broker Network Shareholders and (for information only) to the Broker Network
Optionholder shortly.
The Offer will be made subject to the conditions and on the terms contained in
this announcement and on the further terms and conditions to be set out or
referred to in the Offer Document and the Form of Acceptance. The Offer will be
governed by the laws of England and Wales, the rules and regulations of the FSA,
the rules of the London Stock Exchange, AIM, the Panel and the City Code and
will be subject to the jurisdiction of the courts of England and Wales.
The bases and sources of certain financial information contained in this
announcement are set out in Appendix 2. Certain terms used in this announcement
are defined in Appendix 3.
Enquiries:
Lexicon Partners Tel: 020 7653 6000
Stuart Britton
Joe Suddaby
Tulchan Communications Tel: 020 7353 4200
Paul Harris
Cenkos Securities Tel: 020 7397 8900
Ian Soanes
Fox-Pitt, Kelton Tel: 020 7663 6000
Ryan Brown
Broker Network PR and Communications Tel: 01423 554147
Kelly-Ann Knight
This announcement does not constitute, or form part of, an offer for, or any
solicitation of any offer for, or invitation to sell or purchase or subscribe
for any securities. The Offer will be made solely by means of the Offer
Document and the Form of Acceptance accompanying the Offer Document, which will
contain the full terms and conditions of the Offer including details of how it
may be accepted.
The full text of the conditions of the Offer and the bases and sources of
assumptions and calculations are set out in Appendices 1 and 2 respectively,
each of which form part of, and should be read with, this announcement. Defined
terms have the meanings set out in Appendix 3, which also forms part of, and
should be read in conjunction with, this announcement.
Lexicon Partners is acting exclusively for Towergate and no-one else in
connection with the Offer and will not be responsible to anyone other than
Towergate for providing the protections afforded to clients of Lexicon Partners
nor for providing advice in relation to the Offer or any matter referred to in
this announcement. Lexicon Partners is authorised and regulated in the United
Kingdom by the Financial Services Authority
Cenkos Securities is acting exclusively for Broker Network and no-one else in
connection with the Offer and will not be responsible to anyone other than
Broker Network for providing the protections afforded to clients of Cenkos
Securities nor for providing advice in relation to the Offer or any matter
referred to in this announcement. Cenkos Securities is authorised and regulated
in the United Kingdom by the Financial Services Authority
Fox-Pitt, Kelton Limited is acting exclusively for Broker Network and no-one
else in connection with the Offer and will not be responsible to anyone other
than Broker Network for providing the protections afforded to clients of
Fox-Pitt, Kelton nor for providing advice in relation to the Offer or any matter
referred to in this announcement. Fox-Pitt, Kelton is authorised and regulated
in the United Kingdom by the Financial Services Authority.
Unless otherwise determined by Broker Network and permitted by applicable law
and regulation, the Offer will not be made, directly or indirectly, in into or
from, or by use of mails or any means or instrumentality (including, without
limitation, facsimile transmission, telephone or internet) of interstate or
foreign commerce of, or any facilities of a national securities exchange of, nor
will it be made in, into or from any jurisdiction whereof to do so would
constitute a violation of the relevant laws of such jurisdiction, and the Offer
will not be capable of acceptance by any such use, means, instrumentality or
facilities. Accordingly, copies of any documents relating to the Offer must not
be, directly or indirectly, mailed, transmitted or otherwise forwarded,
distributed or sent, in whole or in part, in, into or from any jurisdiction if
to do so would constitute a violation of the relevant laws of such jurisdiction
and persons receiving such documents (including custodians, nominees and
trustees) must not directly or indirectly mail, transmit or otherwise forward,
distribute or send them in, into or from any such jurisdiction as to do so may
invalidate any such purported acceptance of the Offer.
All statements other than statements of historical fact included in this
announcement may be "forward-looking statements". Often, but not always,
forward-looking statements can be identified by the use of the words "will",
"may", "should", "continue", "plans", "estimates", "forecasts", " believes",
"expects", "intends", "anticipates" or variations (including negative
variations) of such words and phrases, or they can state that certain actions,
events or results "may", "could", "should", "would", "might", "will" or
"continue to" be taken, occur or be achieved. Forward-looking statements
involve risks and uncertainties and other factors that may cause the actual
results, performance or achievements of Broker Network, Towergate and/or their
subsidiaries to be materially different from those expressed or implied by the
forward-looking statements. Factors that would cause actual results to differ
materially from those described in this announcement include, but are not
limited to: costs and terms related to the acquisition of Broker Network; the
economic environment of the sectors in which Broker Network and Towergate
operate; failure to retain management; regulatory change in the industry; and/or
the general economic environment. This list is not exhaustive of the factors
that may affect the forward-looking information. These and other factors should
be considered carefully and undue reliance should not be placed on such
forward-looking information. Although this announcement has attempted to
identify important factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements, there may
be other factors that cause actions, events or results to differ materially from
those anticipated, estimated or intended and therefore there can be no assurance
that forward-looking statements will prove to be accurate. Forward-looking
statements contained in this announcement in respect of Broker Network and/or
Towergate are made as of the date of this announcement based on the opinions and
estimates of management. Subject to requirements to update under any applicable
regulation or law, Towergate disclaims any obligation to update any
forward-looking statements, whether as a result of new information, estimates or
opinions, future events or results or otherwise.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
"interested" (directly or indirectly) in 1% or more of any class of "relevant
securities" of Broker Network or Towergate, all "dealings" in any "relevant
securities" of that company, (including by means of an option in respect of, or
a derivative referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 pm (London time) on the business day following
the date of the relevant transaction. This requirement will continue until the
date on which the Offer becomes, or is declared, unconditional as to
acceptances, lapses or is otherwise withdrawn or on which the "offer period"
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest" in "relevant
securities" of Broker Network or Towergate, they will be deemed to be a single
person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of Broker Network or Towergate, by Towergate or Broker Network, or
by any of their respective "associates", must be disclosed by no later than
12.00 noon (London time) on the business day following the date of the relevant
transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at http://
www.thetakeoverpanel.org.uk/.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should contact an independent
financial adviser authorised under the Financial Services and Markets Act 2000
if you are resident in the UK or, if not, an appropriately authorised
independent financial adviser or consult the Panel's website at http://
www.thetakeoverpanel.org.uk/ or contact the Panel on +44 207 382 9026; fax: +44
207 236 7005.
Appendix 1
CONDITIONS AND CERTAIN FURTHER TERMS
OF THE OFFER
The Offer will be subject to the following conditions:
1. valid acceptances being received (and not, where permitted,
withdrawn) by not later than 1.00p.m. on the First Closing Date (or such later
time(s) and/or date(s) as Towergate may, with the consent of the Panel or in
accordance with the Code, decide) in respect of not less than 90 per cent (or
such lower percentage as Towergate may decide) (i) in nominal value of Broker
Network Shares to which the Offer relates and (ii) of the voting rights attached
to those shares, provided that this condition shall not be satisfied unless
Towergate and/or any of its wholly-owned subsidiaries shall have acquired or
agreed to acquire, whether pursuant to the Offer or otherwise and whether
directly or indirectly, Broker Network Shares carrying in aggregate more than 50
per cent of the voting rights then normally exercisable at a general meeting of
Broker Network (including for this purpose, to the extent, if any, required by
the Panel, any such voting rights attaching to any Broker Network Shares that
are unconditionally allotted or issued before the Offer becomes or is declared
unconditional as to acceptances, whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise). For the purposes
of this condition:
1.1 Broker Network Shares which have been unconditionally allotted but not
issued before the Offer becomes or is declared unconditional as to acceptances,
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 being entered into the register of members of Broker Network;
1.2 the expression "Broker Network Shares to which the Offer relates"
shall be construed in accordance with Chapter 3 of Part 28 of the Companies Act
2006; and
1.3 valid acceptances shall be treated as having been received in respect
of any Broker Network Shares which Towergate shall, pursuant to section 979(8)
of the Companies Act 2006, be treated as having acquired or contracted to
acquire by virtue of acceptance of the Offer;
2. the Financial Services Authority having given notice in
writing under section 184(1) of the Financial Services Markets Act ("FSMA"), in
terms reasonably satisfactory to Towergate, of its approval in respect of any
acquisition of any member of the Wider Broker Network Group which is a UK
authorised person (as defined in section 178(4) of FSMA) which would result from
the acquisition of Broker Network or any Broker Network Shares, or being treated
as having given its approval by virtue of section 184(2) of FSMA;
3. no Third Party having decided to take, institute, implement
or threaten any action, proceeding, suit, investigation, enquiry (and, in each
case, not having irrevocably withdrawn the same) or reference or having enacted,
made or proposed any statute, regulation, decision or order (and, in each case,
not having irrevocably withdrawn the same) or otherwise taken any step or done
any thing and there not continuing to be outstanding any statute, regulation,
legislation, decision or order which in any of the foregoing cases would or
might reasonably be expected to:
3.1 require, prevent, materially delay or adversely affect the divestiture
by any member of the Wider Broker Network Group or any member of the Wider
Towergate Group, of all or any material portion of their respective businesses,
assets or property or of any Broker Network Shares or other securities in Broker
Network or impose any material limitation on the ability of any of them to
conduct their respective businesses or to own or control any of their respective
assets or properties or any part thereof;
3.2 impose any material limitation on, or result in a material delay in,
the ability of any member of the Wider Towergate Group or any member of the
Wider Broker Network Group, directly or indirectly to acquire or to hold or to
exercise effectively any or all rights of ownership or other rights in respect
of shares or loans or securities convertible into Broker Network Shares or any
other securities (or the equivalent) in any member of the Wider Broker Network
Group or to exercise voting or management control over any such member;
3.3 materially and adversely affect the business, assets, financial
condition or trading position or profits or prospects of any member of the Wider
Broker Network or the Wider Towergate Group;
3.4 make the Offer or its implementation or the acquisition or proposed
acquisition by Towergate or any member of the Wider Towergate Group of any
Broker Network Shares or other securities in, voting rights in, or under the
control of the management of Broker Network or any member of the Wider Broker
Network Group, void, illegal and/or unenforceable in or under the laws of any
relevant jurisdiction, or otherwise, directly or indirectly, restrain, restrict,
prohibit, prevent, delay or otherwise impede, challenge or interfere with the
implementation of, or impose additional conditions or obligations with respect
to, the Offer or otherwise challenge or interfere with the acquisition of any
Broker Network Shares, or control of Broker Network by any member of the Wider
Towergate Group in each case to a material extent;
3.5 require any member of the Wider Towergate Group or the Wider Broker
Network Group to acquire or to offer to acquire any shares or other securities
(or the equivalent) or interest in any member of the Wider Broker Network Group
(other than Broker Network) owned by any Third Party;
3.6 impose any material limitation on the ability of any member of the
Wider Towergate Group or the Wider Broker Network Group to co-ordinate or
integrate its business or any part of it, with the business or any part of the
business of any other members of the Wider Broker Network Group and/or the Wider
Towergate Group; or
3.7 result in any member of the Wider Broker Network Group ceasing to be
able to carry on business in a manner in which it presently does so or under any
name under which it presently does so,
and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could institute, implement, or
threaten any action, proceeding, suit, investigation, enquiry or reference or
any other step under the laws of any jurisdiction in respect of the Offer or the
acquisition or proposed acquisition of any Broker Network Shares, having
expired, lapsed or been terminated;
4.
4.1 all necessary notifications, filings or applications having been made
and all applicable waiting and other time periods (including any extensions
thereof) having expired, lapsed or been terminated in each case under any
applicable legislation and/or regulations in any jurisdiction and all statutory
or regulatory obligations in any jurisdiction having been complied with in each
case in connection with the Offer or its implementation or the acquisition or
proposed acquisition of any Broker Network Shares or other securities in, or
voting rights in, or control or management of, Broker Network or any other
member of the Wider Broker Network Group by Towergate or any other member of the
Wider Towergate Group or the carrying on by any member of the Wider Broker
Network Group of its business;
4.2 all authorisations, orders, recognitions, grants, consents, licences,
confirmations, clearances, permissions and approvals from any Third Party
(collectively "Consents") which are required by any applicable legislation or
regulations in any jurisdiction, or which are necessary or appropriate in any
jurisdiction, in connection with the Offer or its implementation (in each case
where failure to obtain such Consent would have a material and adverse effect on
a material member of the Wider Broker Network Group or the implementation of the
Offer) including, without limitation, the acquisition or proposed acquisition of
any Broker Network Shares or other securities in, voting rights in, or control
or management of Broker Network or any other member of the Wider Broker Network
Group by Towergate or any other member of the Wider Towergate Group in relation
to the continuation of the business of any member of the Wider Broker Network
Group having been obtained, in terms and in a form which do not impose
restrictions or conditions materially adverse to the Wider Towergate Group or
its interest in the Wider Broker Network Group, from all appropriate Third
Parties, including those with whom any member of the Wider Broker Network Group
has entered into contractual arrangements; and
4.3 all such Consents together with all consents necessary or appropriate
to carry on the business of any member of the Wider Broker Network Group, which
are material in the context to the Wider Broker Network Group taken as a whole
or the Wider Towergate Group taken as a whole having been obtained and remaining
in full force and effect and all filings necessary for such purpose having been
made and there being no notice or intimation from any Third Party or other
person of any intention to revoke, suspend, restrict, adversely modify or not to
renew any of the same and all necessary statutory or regulatory requirements in
any jurisdiction having been complied with by each member of the Wider Broker
Network Group at the time at which the Offer becomes or is otherwise declared
unconditional;
5. save as Disclosed, there being no provision of any
agreement, arrangement, authorisation, Consent, permit, other instrument or
arrangement to which any member of the Wider Broker Network Group is a party or
by or to which any such member or any of its assets is, are or may be bound,
entitled or subject, or any circumstance which, in each case as a consequence of
the Offer or the acquisition or proposed acquisition of any Broker Network
Shares, voting rights in, or control or management of, Broker Network by any
member of the Wider Towergate Group or of a change in the control or management
of Broker Network or any other member of the Wider Broker Network Group or
otherwise, would or might reasonably be expected to result in, in any case, to
an extent which is or would be material in the context of the Wider Broker
Network Group taken as a whole:
5.1 any monies borrowed by or any other indebtedness or liabilities
(actual or contingent) of, or grant available to any member of the Wider Broker
Network Group, being or becoming repayable or capable of being declared
repayable immediately or earlier than the statutory 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;
5.2 any such agreement, authorisation, Consent, permit or instrument or
arrangement, or the rights, liabilities, obligations or interests of any member
of the Wider Broker Network Group, being or becoming capable of being terminated
or adversely modified or affected or any obligation or liability arising or any
adverse action being taken thereunder;
5.3 any assets or interests of any member of the Wider Broker Network
Group being or failing to be disposed of or charged or ceasing to be available
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, in each case, other
than in the ordinary course of business;
5.4 the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of any
member of the Wider Broker Network Group or any such security interest (whenever
created, arising or having arisen) becoming enforceable;
5.5 the rights, liabilities, obligations or interests of any member of the
Wider Broker Network Group in, or the business of any such member with, any
other person, firm, company or body (or any arrangement or arrangements relating
to any such interest or business) being terminated or adversely modified or
affected;
5.6 the value of any member of the Wider Broker Network Group or its
financial or trading position or prospects or profits being prejudiced or
adversely affected;
5.7 any member of the Wider Broker Network Group ceasing to be able to
carry on business under any name under which it presently does so;
5.8 the creation of any liability (actual, contingent or otherwise) by any
member of the Wider Broker Network Group; or
5.9 any requirement on any member of the Wider Broker Network Group to
acquire, subscribe for, pay up or repay any shares or other securities,
and no event having occurred which, under any provision of any agreement,
arrangement, authorisation, Consent, permit or other instrument to which any
member of the Wider Broker Network Group is a party or by or to which any such
member or any of its assets may be bound, entitled or subject, can or might
reasonably be expected to result in any of the events or circumstances as are
referred to in sub-paragraphs 5.1 to 5.9 of this paragraph which is or would be
material in the context of the Wider Broker Network Group as a whole;
6. save as Disclosed, no member of the Wider Broker Network
Group having, since 30 April 2007:
6.1 issued or agreed to issue, authorised or proposed to authorise the
issue of any shares or any class or securities convertible into or exchangeable
for any shares of any class or rights, warrants or options to subscribe for, or
acquire, any such shares or convertible securities;
6.2 other than to a wholly owned subsidiary or Broker Network,
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;
6.3 save as between Broker Network and wholly owned subsidiaries of Broker
Network, implemented any merger with or demerger from any body corporate,
partnership or business or acquired or disposed of or transferred, mortgaged or
charged or created any security interest over, any assets or any rights, title
or interest in any asset (including shares and trade investments) or authorised
or proposed or announced an intention to propose any merger, demerger,
acquisition or disposal, transfer, mortgage, charge or security interest over
any asset or right, title or interest in any asset, in each case save as to the
extent the same is not material in the context of the Wider Broker Network Group
taken as a whole;
6.4 other than to a wholly owned subsidiary of Broker Network, made or
authorised or proposed or announced an intention to propose any change in its
loan capital or issued, authorised or proposed the issue of any debentures or,
other than in the ordinary course of business between Broker Network and its
wholly owned subsidiaries, incurred or increased any indebtedness or become
subject to any guarantee or other liability (actual or contingent) save to the
extent the same is not material in the context of the Wider Broker Network Group
taken as a whole;
6.5 purchased, redeemed or repaid or authorised or announced any proposal
to purchase, redeem or repay any of its own shares or other securities or
reduced or, save in respect to the matters mentioned in paragraph 6.1 above,
made any other change to any part of its share capital;
6.6 implemented or authorised, proposed or announced its intention to
implement any reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement, other than in the ordinary course of business, other
than between Broker Network and its wholly-owned subsidiaries;
6.7 save in respect of normal annual salary increases in the ordinary
course and in accordance with past remuneration policies, entered into or varied
or made any offer (which remains open for acceptance) to enter into or vary the
terms of any contract, agreement or arrangement with any Broker Network Director
or director or senior executive of any member of the Wider Broker Network Group;
6.8 entered into, varied or terminated or authorised, proposed or
announced its intention to enter into, vary or terminate any contract,
transaction or commitment (whether in respect of capital expenditure or
otherwise) which is of a long-term or onerous nature or magnitude or which is or
can reasonably be expected to be restrictive on the business of any member of
the Wider Broker Network Group or which involves an obligation of such a nature
or magnitude which would be material in the context of the Wider Broker Network
Group taken as a whole;
6.9 been unable, or admitted in writing or announced that it is unable, to
pay its debts or having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease to carry on all
or a substantial part of its business;
6.10 taken or proposed any corporate action or had any legal proceedings
started or threatened against it or petition presented or order made, in each
case for its winding-up (voluntary or otherwise), dissolution or reorganisation
or for the appointment of a receiver, administrative receiver, administrator,
trustee or similar officer of all or any of its assets or revenues or any
analogous proceedings in any jurisdiction or had any such person appointed;
6.11 entered into any contract, transaction or arrangement which would be
restrictive on the business of any member of the Wider Broker Network Group or
the Wider Towergate Group other than to a nature and extent which is normal in
the context of the business concerned and not material in the context of the
Wider Broker Network Group or the Wider Towergate Group (as relevant) taken as a
whole;
6.12 waived, settled or compromised any material claim otherwise than in the
ordinary course of business;
6.13 entered into any contract, commitment, arrangement or agreement or
passed any resolution or made any offer (which remains open for acceptance) with
respect to or announced any intention to, or to propose to, effect any of the
transactions, matters or events referred to in this condition 6;
6.14 made or agreed or consented to:
6.14.1 any change which is or could reasonably be expected to be material in
the context of the Offer or the Wider Broker Network Group taken as a whole to:
6.14.1.1 the terms of the trust deeds constituting the pension scheme(s)
established for its directors, employees or their dependants; or
6.14.1.2 the benefits which accrue to the pensions which are payable
thereunder; or
6.14.1.3 the basis on which qualification for, or accrual or entitlement to
such benefits or pensions are calculated or determined; or
6.14.1.4 the basis upon which the liabilities (including pensions) of such
pension schemes are funded; or
6.14.2 any change which is or could reasonably be expected to be material in
the context of the Offer or the Wider Broker Network Group taken as a whole to
the trustees including the appointment of a trust corporation; or
6.15 made any alteration to its memorandum or articles of association or
equivalent constitutional documents which is, or could reasonably be expected to
be, material in the context of the Offer or the Wider Broker Network Group as a
whole;
7. save as Disclosed and since 30 April 2007:
7.1 no adverse change or deterioration having occurred in the business,
assets, financial or trading position or profits or prospects of any member of
the Wider Broker Network Group which is material in the context of the Wider
Broker Network Group taken as a whole;
7.2 no litigation, arbitration, proceedings, prosecution or other legal
proceedings to which any member of the Wider Broker Network Group is or can
reasonably be expected to become a party (whether as a claimant, defendant or
otherwise) and no enquiry or investigation by or complaint or reference to any
Third Party against or in respect of any member of the Wider Broker Network
Group having been instituted, announced, implemented or threatened by or against
or remaining outstanding against or in respect of any member of the Wider Broker
Network Group which, in any case, is material in the context of the Wider Broker
Network Group taken as a whole;
7.3 no contingent or other liability having arisen or increased or become
apparent to Towergate which would or might reasonably be likely to adversely
affect any member of the Wider Broker Network Group to an extent which, in any
case, is material in the context of the Wider Broker Network Group taken as a
whole;
7.4 no steps having been taken which would or are reasonably likely to
result in the withdrawal, cancellation, termination or modification of any
Consent held by any member of the Wider Broker Network Group which is necessary
for the proper carrying on of its business to an extent which, in any case, is
material in the context of the Wider Broker Network Group taken as a whole;
7.5 no claim having been made, and no circumstances having arisen which
are reasonably expected to lead to a claim being announced, threatened or made,
under any insurance policy taken out by or in favour of any material of the
Wider Broker Network Group, in each case which is or is reasonably expected to
be material in the context of the Wider Broker Network Group taken as a whole;
8. save as Disclosed, Towergate not having discovered that:
8.1 any financial, business or other information concerning any member of
the Broker Network Group contained in the information disclosed (publicly or
otherwise) to Towergate or its advisers at any time by or on behalf of any
member of the Broker Network Group is misleading, contains a misrepresentation
of fact or omits to state a fact necessary to make that information contained
therein not misleading which in any case is material in the context of the
Broker Network Group taken as a whole;
8.2 any member of the Wider Broker Network Group is subject to any
liability (actual, contingent or otherwise) save to an extent the same is not
material in the context of the Wider Broker Network Group taken as a whole;
8.3 any past or present member of the Wider Broker Network Group has not
complied with all applicable legislation or regulations of any jurisdiction with
regard to the storage, disposal, discharge, spillage, leak or emission of any
waste or hazardous substance or any substance likely to impair the environment
or to harm human health or otherwise relating to environmental matters (which
non-compliance might give rise to any liability (whether actual or contingent)
on the part of the Wider Broker Network Group) or that there has otherwise been
any such disposal, discharge, spillage, leak or emission (whether or not the
same constituted a non-compliance by any person with any such legislation or
regulations and wherever the same may have taken place) which in any such case
might give rise of any liability (whether actual or contingent) on the part of
any member of the Wider Broker Network Group and, in any case, which is material
in the context of the Wider Broker Network Group taken as a whole;
8.4 there is or is likely to be any material liability (whether actual or
contingent) to make good, repair, reinstate or clean up any property now or
previously owned, occupied or made use of by any past or present member of the
Wider Broker Network Group or any controlled waters under any environmental
legislation, regulation, notice, circular or order of any relevant authority or
Third Party or otherwise;
8.5 circumstances exist (whether as a result of the making of the Offer or
otherwise) which might reasonably be expected to lead to any relevant authority
instituting or any member of the Wider Broker Network Group or the Wider
Towergate Group being required to institute, an environmental audit or take any
other steps which any such case might result in any actual or contingent
liability to improve or install new plant or equipment or make good, repair
re-instate or clean up any land or other asset now or previously owned, occupied
or made use of by any member of the Wider Broker Network Group and which, in
each case, is material in the context of the Wider Broker Network Group taken as
a whole;
8.6 the Wider Broker Network Group has not complied with any applicable
law or regulation governing the conduct of its business in any respect which is
material in the context of the Wider Broker Network Group taken as a whole;
8.7 the conduct of the business of the Wider Broker Network Group
infringes the intellectual property rights of any third party in any respect
which is material in the context of the Wider Broker Network Group taken as a
whole;
8.8 circumstances exist whereby a person or class of persons might
reasonably be expected to have any claim or claims in respect of any product or
materials used therein now or previously sold by any past or present member of
the Wider Broker Network Group in any respect which is material in the context
of the Wider Broker Network Group taken as a whole; or
8.9 any information which adversely affects the import of any information
disclosed to Towergate and its advisers at any time by or on behalf of any
member of the Wider Broker Network Group and which is material in the context of
the Wider Broker Network Group taken as a whole.
Subject to the requirements of the Panel, Towergate will reserve the right (but
shall be under no obligation) to waive or treat as satisfied, in whole or in
part, all or any of conditions 2 to 8. Conditions 2 to 8 (inclusive) must be
fulfilled or waived by midnight on the date which is the 21st day after the
later of the First Closing Date and the date on which condition 1 is fulfilled
(or in each such case such later date as Towergate may, with the consent of the
Panel, decide), failing which the Offer will lapse. Towergate shall be under no
obligation to waive or treat as fulfilled or satisfied any of the conditions 2
to 8 (inclusive) by a date earlier than the latest date specified above for the
satisfaction thereof, notwithstanding that the other conditions of the Offer may
at any date earlier than such date have been waived or treated as satisfied or
fulfilled and that there are at such earlier date no circumstances indicating
that any of such conditions may not be capable of fulfilment or satisfaction.
Towergate will not invoke any of conditions 2 to 8 so as to cause the Offer to
lapse unless the circumstances which give rise to the right to invoke the
condition are of material significance to Towergate in the context of the Offer.
If following the announcement, any member of Broker Network's network gives
notice that it intends to leave Broker Network's network upon the expiry of such
notice, or if any insurer or underwriter gives notice to terminate its
relationship with Broker Network, Broker Network and Towergate agree that any
member resignations or notices to terminate insurer or underwriter relationships
will not be viewed as grounds for invoking any conditions to the Offer (subject
always to final determination of the Panel).
The conditions are inserted for the benefit of Towergate and no Broker Network
Shareholder shall be entitled to waive any of the conditions without the prior
consent of Towergate.
Each of conditions 1 to 8 (inclusive) shall be regarded as a separate condition
and shall not be limited by reference to any other condition.
The Offer will lapse if the proposed acquisition of Broker Network by Towergate
is referred by the Office of Fair Trading to the Competition Commission before
1.00p.m. (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 Broker Network Shares will be acquired by Towergate fully paid, with full
title guarantee and free from all liens, equitable interests, mortgages charges,
encumbrances, rights of pre-emption and any other third party rights or
interests of whatever nature and together with all rights attaching thereto,
including without limitation, all voting rights and the right to receive and
retain all dividends, distributions, and other returns of capital (if any),
declared, made or paid in respect of Broker Network Shares on or after the date
of this announcement.
Unless otherwise determined by Towergate and permitted by applicable law and
regulation, the Offer will not be made, directly or indirectly, in, into or
from, or by use of the mails of, or by any means or instrumentally (including,
without limitation, facsimile transmission, telex, telephone or email) of
interstate or foreign commerce of, or by any facility of a national securities
exchange of any jurisdiction if to do so would constitute a violation of the
relevant laws of such jurisdiction and the Offer will not be capable of
acceptance by any such use, means instrumentality or facilities. Accordingly,
copies of any documents relating to the Offer must not be, directly or
indirectly, mailed, transmitted or otherwise forwarded, distributed or sent, in
whole or in part, in, into or from any jurisdiction if to do so would constitute
a violation of the relevant laws of such jurisdiction and persons receiving such
documents (including custodians, nominees and trustees) must not directly or
indirectly mail, transmit or otherwise forward, distribute or send them in, into
or from any such jurisdiction as to do so may invalidate any purported
acceptance of the Offer.
The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of the jurisdiction in which they are
resident. Persons who are not resident in the United Kingdom should inform
themselves about, and observe, all applicable requirements.
The Offer is governed by the laws of England and Wales, the rules and
regulations of the FSA, the London Stock Exchange, the AIM Rules, the Panel and
the City Code and is subject to the jurisdiction of the courts of England and
Wales.
If Towergate is required by the Panel to make an offer for Broker Network Shares
under the provisions of Rule 9 of the Code, Towergate may make such alterations
to any of the above conditions as are necessary to comply with the provisions of
that Rule.
If the Offer lapses, the Offer will cease to be capable of further acceptance
and Towergate and the accepting Broker Network Shareholders will cease to be
bound by acceptances submitted at or before the time when the Offer so lapses.
Appendix 2
1. Bases and sources
(a) The value attributed to the existing issued and to be issued
share capital of Broker Network is based upon the 15,404,224 Broker Network
Shares in issue on 26 November 2007 (being the latest practicable Business Day
prior to the publication of this announcement) and on 300,000 Broker Network
Shares to be issued to the Broker Network Optionholder.
(b) Unless otherwise stated in this announcement, all prices for
Broker Network Shares have been derived from the London Stock Exchange and
represent the Closing Price on the relevant date.
(c) Broker Network's average share price of 314 pence for the 12
months ended on 11 October 2007 is derived from data provided by DataStream.
(d) Unless otherwise stated in this announcement, the financial
information relating to Broker Network has been extracted or derived, without
material adjustment, from Broker Network's annual report and accounts for the
financial year ended 30 April 2007.
(e) Unless otherwise stated in this announcement, the financial
information relating to the Towergate Group has been extracted or derived,
without material adjustment, from the Towergate annual report and accounts for
the financial year ended 31 December 2006.
(f) References to existing issued share capital are references
to Broker Network Shares in issue on 26 November 2007 (being the last
practicable Business Day prior to the date of announcement), being 15,404,224
Broker Network Shares.
(g) The Offer premium of 92.7 per cent, over the average daily
Closing Price of 314 pence for Broker Network Shares for the 12 month period
from 12 October 2006 to 11 October 2007 inclusive, as stated in this
announcement, has been calculated using the Closing Price on each Business Day
over the relevant period.
2. Irrevocable undertakings and letters of intent
(a) The Broker Network Directors have given irrevocable
undertakings to accept or procure the acceptance of the Offer in respect of the
following Broker Network Shares beneficially owned by them or any other person
whose interest in relevant securities a Broker Network Director is taken to be
interested in pursuant to Part 22 of the Companies Act 2006:
Name Number of Broker Network Percentage of existing
Shares issued share capital
Faisal Rahmatallah NIL N/A
Grant Ellis 2,036,535 13.2 %
Julie Hale (1) 645 0.0 %
Dr Michael Collins 500,000 3.2 %
Nigel Law NIL N/A
Peter Bates 1,273,800 8.3 %
Michael Pendle NIL N/A
Mark Wood (2) 4,608 0.0 %
Total 3,815,588 24.8 %
(1) Excludes the 1,290 Broker Network Shares to which Julie Hale is entitled
pursuant to the Broker Network Incentive Plan and the 300,000 Broker Network
Shares in respect of which Julie Hale holds Broker Network EMI Options.
Julie Hale has given an irrevocable undertaking to accept or procure the
acceptance of the Offer in respect of (i) the 300,000 Broker Network Shares upon
the exercise of the Broker Network EMI Options as described in paragraph 3 below
and (ii) 1,290 Broker Network Shares upon her becoming entitled to such Broker
Network Shares under the Broker Network Incentive Plan.
(2) Excludes the 9,217 Broker Network Shares to which Mark Wood is entitled
pursuant to the Broker Network Incentive Plan.
Mark Wood has given an irrevocable undertaking to accept, or to procure the
acceptance of, the Offer in respect of 9,217 Broker Network Shares upon him
becoming entitled to such Broker Network Shares under the Broker Network
Incentive Plan.
All of these undertakings shall lapse if the Offer is withdrawn or lapses
without the Offer having become wholly unconditional or if the Offer Document is
not posted within 28 days following the date of this announcement. These
undertakings will, however, remain binding even if a higher offer is made by a
third party.
(b) The following Broker Network Shareholder has given an
irrevocable undertaking to accept or procure the acceptance of the Offer in
respect of the following Broker Network Shares beneficially owned by him or any
other person whose interest in relevant securities he is taken to be interested
in pursuant to Part 22 of the Companies Act 2006:
Name of Broker Network Number of Broker Network Percentage of existing
Shareholder Shares issued share capital
David Belgian 1,250,000 8.1 %
This undertaking shall lapse if the Offer is withdrawn or lapses without the
Offer having become wholly unconditional or if the Offer Document is not posted
within 28 days following the date of this announcement. This undertaking will,
however, remain binding even if a higher offer is made by a third party.
(c) Irrevocable undertakings to accept, or procure the acceptance
of, the Offer have been received by Towergate from the following persons:
Name of Broker Network Number of Broker Network Percentage of existing
Shareholder Shares issued share capital
Hargreave Hale Limited 1,095,850 7.1%
Ennismore Fund Management 1,053,882 6.8 %
Limited
Artemis Investment Management 862,000 5.6%
Limited*
Axa Framlington Investment 422,100 2.7%
Management Limited*
Total 3,433,832 22.3%
Each of the undertakings referred to in this paragraph (c) cease to be binding
in the event that the Offer is withdrawn or lapses without the Offer having
become wholly unconditional or if the Offer Document is not posted within 28
days of the date of this announcement or if a third party announces a firm
intention to make an offer for Broker Network (in the case of Broker Network
Shareholders marked *, such third party announcement to be made within 20 days
of the date of the Offer Document), the value of which is more than 10 per cent.
higher than the value of the consideration of the Offer.
(d) Towergate has received non-legally binding letters of intent
to accept the Offer from the following persons:
Name of Broker Network Number of Broker Network Percentage of existing
Shareholder Shares issued share capital
Blackrock Investment Management 661,000 4.3%
(UK) Limited
EEA Fund Management Limited 562,500 3.7%
Total 1,223,500 7.9%
3. Julie Hale has agreed to exercise the Broker Network EMI
Options prior to the Offer becoming or being declared unconditional in all
respects. Towergate has agreed, pursuant to the terms of the Loan Agreement, to
loan Julie Hale #60,000, being the exercise price of the Broker Network EMI
Options (the "Loan"). The Loan shall be repaid to Towergate by Julie Hale
pursuant to the terms of the Loan Agreement.
Appendix 3
Definitions
The following definitions apply throughout this announcement unless the context
requires otherwise:
"AIM" AIM a market of that name operated by the London Stock
Exchange
"AIM Rules" the rules governing the operation of AIM and issued by
the London Stock Exchange from time to time in relation
to AIM traded securities comprising of the AIM Rules
for Companies and the AIM Rules for Nominated Advisers
"AIM Rules for Companies" the AIM Rules for Companies and guidance notes as
published by the London Stock Exchange from time to
time
"AIM Rules for Nominated Advisers" the AIM Rules for Nominated Advisers and guidance notes
as published by the London Stock Exchange from time to
time
"Banks" each of the funding institutions that have agreed to
provide commitments under the Debt Facilities
"Broker Network" Broker Network Holdings plc
"Broker Network Directors" or "Broker the directors of Broker Network or the board of
Network Board" directors of Broker Network, as the context dictates
"Broker Network EMI Options" the options granted to Julie Hale pursuant to the
Broker Network enterprise management incentives scheme
"Broker Network Group" Broker Network and each of its subsidiary undertakings,
and where the context permits each of them
"Broker Network Incentive Plan" the Broker Network Incentive Plan dated 10 August 2005
(as amended on 18 July 2007 and 26 November 2007)
"Broker Network Optionholder" the person to whom the Broker Network EMI Options have
been granted over Broker Network Shares
"Broker Network Shares" the ordinary shares of 2 pence each in the capital of
Broker Network
"Broker Network Shareholders" the holders of Broker Network Shares
"Business Day" any day (other than a Saturday, Sunday or a public
holiday) on which banks are generally open in the City
of London for the transaction of normal banking
business
"Cenkos Securities" Cenkos Securities Limited
"City Code" the City Code on Takeovers and Mergers
"Closing Price" the closing middle market quotation of a Broker Network
Share at close of business on the relevant day as
derived from the AIM appendix to the Daily List
"Daily List" the Daily List of the London Stock Exchange
"Disclosed" as disclosed in Broker Network's annual report and
accounts for the year ended 30 April 2007 or as
otherwise publicly announced by, or on behalf of Broker
Network (by the delivery of an announcement to a
Regulatory Information Service) as specified in the AIM
Rules prior to the date of this announcement or as
otherwise fairly disclosed in writing (whether by way
of documentation disclosed by CD-Rom or otherwise) and
made available to Towergate or its advisers, in each
case by or on behalf of Broker Network prior to 26
November 2007 (being the date of this announcement)
"Enlarged Group" Towergate and its subsidiary undertakings following the
Offer becoming or being declared unconditional in all
respects
"Financial Services Authority" or "FSA" the United Kingdom Financial Services Authority
"First Closing Date" the date which is 21 days after the posting of the
Offer Document
"Form of Acceptance" the form of acceptance relating to the Offer which will
accompany the Offer Document
"FPK" Fox-Pitt, Kelton Limited
"GWP" gross written premium being the collective value of all
policy premiums written or sold during an accounting
period
"Lexicon Partners" Lexicon Partners Limited
"Loan Agreement" the loan agreement entered into between Towergate and
Julie Hale on 27 November 2007, pursuant to which
Towergate has agreed to loan Julie Hale #60,000, being
the exercise price of the Broker Network EMI Options
"London Stock Exchange" London Stock Exchange plc
"member" a party with whom The Broker Network Limited, a
subsidiary of Broker Network, has entered into a
membership agreement
"Offer" the recommended cash offer to be made by Towergate to
acquire all of the issued and to be issued Broker
Network Shares (other than any already owned by the
Towergate Group (if any)), on the terms and subject to
the conditions set out in this announcement and to be
set out in the Offer Document and Form of Acceptance
and, where the context so requires, any subsequent
revision, variation, extension or renewal of such offer
"Offer Document" the offer document to be despatched to Broker Network
Shareholders and, for information only, to the Broker
Network Optionholder which will contain, inter alia,
the terms and conditions of the Offer
"Offer Period" the period commencing 12 October 2007 being the date
Broker Network announced that it had received an
approach which may or may not lead to an offer and
ending on the First Closing Date or, if later the date
on which the Offer becomes or is declared
unconditional, or lapses or is withdrawn
"Offer Price" 605 pence per Broker Network Share
"overseas person" any persons resident in or nationals or citizens of
jurisdictions outside the United Kingdom or who are
nominees of, or custodians, trustees or guardians of or
citizens or residents of nationals of jurisdictions
outside the United Kingdom
"Panel" the Panel on Takeovers and Mergers in the United
Kingdom
"Regulatory Information Service" a service approved by the London Stock Exchange for the
distribution to the public of AIM announcements
"Towergate" Towergate Partnership Limited
"Towergate Directors" or "Towergate Board" the directors of Towergate, or the board of directors
of Towergate as the context dictates
"Towergate Group" Towergate and each of its subsidiary undertakings and,
where the context so permits, each of them
"Wider Broker Network Group" Broker Network and its subsidiary undertakings and
their associated undertakings and any other
undertakings (including, without limitation, any joint
ventures, partnerships, firms or bodies corporate) in
which Broker Network and/or such undertakings
(aggregating their interests) have a substantial
interest and for these purposes "substantial interest"
means a direct or indirect interest in 20 per cent or
more of the voting rights or equity share capital (or
the equivalent) of an undertaking
"Wider Towergate Group" Towergate and its subsidiary undertakings and their
associated undertakings and any other undertakings
(including, without limitation, any joint ventures,
partnerships, firms or bodies corporate) in which
Towergate and/or such undertakings (aggregating their
interests) have a substantial interest and for these
purposes "substantial interest" means a direct or
indirect interest in 20 per cent or more of the voting
rights or equity share capital (or the equivalent) of
an undertaking
For the purposes of this announcement "holding company", "subsidiary" and
"subsidiary undertaking" have the meanings given to them in the Companies Act
2006.
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.
References to "#", "pounds sterling", "pence" and "p" are to the lawful currency
of the United Kingdom.
Words importing the singular shall include the plural and vice versa, and words
importing the masculine gender shall include the feminine or neutral gender.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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