TIDMGBR
RNS Number : 1052U
Global Brands S.A.
16 December 2011
16 December 2011
Global Brands S.A. ("Global Brands" or "the Company")
Update regarding Delisting and Restructuring
Proposed Demerger of the Pizza Business, Share Split and
Reduction of Capital, Adoption of Investing Policy, Funding and
Notice of Extraordinary General Meeting
Global Brands S.A. (AIM: GBR), an international business
developing branded food operations in Europe, including being the
master franchise owner of Domino's Pizza in Switzerland, Luxembourg
and Liechtenstein, provides an update on key developments following
its announcement on 1 December 2011 of a proposed delisting.
Following this announcement the Company was approached by several
parties who expressed an interest in preserving the listed company
as a vehicle for other transactions. After studying the feasibility
of such a restructuring, the board of directors of the company
("the Board") today has decided to follow this path of action,
subject to shareholder approval.
Highlights:
-- Global Brands will no longer seek a delisting and become an
Investing Company which will continue to be listed. An Investing
Company is a company which has, as its primary business and
objective, the investing of its funds in securities, businesses or
assets.
-- The current business of Company, the "Pizza Business" will be
demerged into a private Swiss company.
-- Global Brands shareholders will retain their shareholdings in
the listed entity and will receive one new share in the Swiss
entity for every Global Brands share held following a capital
reorganisation.
-- The restructuring has necessitated the postponement of the
Extraordinary General Meeting of the shareholders from 27 December
2011 to 2 January 2012.
-- In order to fund the Company's immediate working capital requirements ahead of the EGM:
o the Company's major shareholder, NobleRock has undertaken to
provide funding of up to GBP200,000 which is intended be introduced
via a subscription for new equity in Global Brands.
o Bruce Vandenberg, the CEO, has undertaken to provide funding
of up to GBP100,000 which is intended to be introduced via a
subscription for new equity in Global Brands.
Should the required resolutions to the restructuring not be
approved by Shareholders and/or the Notary or should the Company
not be able to successfully raise funding in the manner described,
the Board would need to explore urgently other financing
opportunities for the Company including possible third party
finance. Should the Company not raise such third party finance,
there is a significant risk that the Company would lose the
Domino's Pizza Master Franchise Agreement for Switzerland,
Luxembourg and Liechtenstein and would cease trading.
Chairman Simon Bentley commented:
"We have spent considerable efforts on behalf of shareholders to
find the best way to protect shareholders interests, and believe
what we are proposing does this.
This restructuring, which would maintain a listing and allow the
Company to remain as an investing vehicle, whilst demerging our
core pizza business operations into a private Swiss company, will
provide shareholders with an opportunity to maintain shares in a
listed business as well as creating a potential upside from an
investing company.
The Board believes this restructuring would be most beneficial
to preserve shareholders interests. If this does not get
shareholder approval, then the Company risks ceasing to trade. As
shareholders, Bruce Vandenberg and I will be voting for this; and
we would urge other shareholders to also vote in favour."
For further details please see below.
-Ends-
For further information:
Global Brands S.A.
Simon Bentley, Chairman Tel: (0) 20 7317 8022
Bruce Vandenberg, CEO www.globalbrands.ch
Libertas Capital
Thilo Hoffmann Tel: (0) 20 7569 9650
www.libertascapitalpartners.com
Alexander David Securities Ltd
Bill Sharp Tel: (0) 20 7448 9820
Fiona Kinghorn Tel: (0) 20 7448 9832
www.ad-securities.com
FTI Consulting
Jonathon Brill Tel: (0)20 7831 3113
Caroline Stewart www.fticonsulting.com
1. Introduction:
Global Brands proposes to demerge its existing business, the
Pizza Business, into its Swiss subsidiary, Domino's Pizza
Switzerland AG, and transfer the shares of that company to the
Shareholders. Under Luxembourg law, the Demerger will be treated as
a reduction in capital in specie. If the Demerger is effected,
Global Brands will then become an Investing Company under the AIM
Rules.
The Demerger would result in Shareholders holding shares in two
distinct entities with separate strategic, capital and economic
characteristics and management teams:
-- Global Brands S.A. will be an Investing Company which will
target investment opportunities in line with its Investing Policy;
and
-- Domino's Pizza Switzerland AG will own the Master Franchise
Agreement for Domino's Pizza in Switzerland, Luxembourg and
Lichtenstein and will carry on the Pizza Business as a private
company.
The Demerger will constitute a fundamental change of business of
the Company which, under Rule 15 of the AIM Rules, requires
Shareholder approval. In accordance with the AIM Rules, the Company
is required to send a circular to Shareholders setting out the
reasons for, and principal terms of, the Demerger. The circular
will also provide details of the proposed Share Split and
Reductions of Capital, the Investing Policy and Placing and seeks
Shareholders' approval for the Demerger, the share split and
Reduction of Capital and adoption of the Investing Policy.
Should the required resolutions not be approved by Shareholders
and/or the Notary or should the Company not be able to successfully
raise funding in the manner described in this Document, the Board
would need to explore urgently other financing opportunities for
the Company, including possible third party finance. Should the
Company not raise such third party finance, there is a significant
risk that the Company would lose the Domino's Pizza Master
Franchise Agreement and would need to cease trading.
2. Demerger of the Pizza Business
Background to and Reasons for the Demerger
The Company was admitted to trading on AIM in September 2005
raising GBP2.8m of capital to be used to grow the company to 23
stores in three years. In addition, it was contemplated that the
Company would utilise its listing on AIM to raise further capital
to diversify both its brand portfolio and its operations
geographically.
The performance of the Company since admission has been mixed
and well documented. The significant reduction in losses and the
move toward breakeven has been a difficult and slow process.
Whilst the Directors appreciate the support of all Shareholders,
they believe that the historic performance of the Company and the
recent lack of interest to fund the Austrian opportunity is a clear
indication of current investor sentiment.
The Directors remain confident that the Pizza Business will
continue to improve and ultimately grow through diversification,
however they believe that investor sentiment will not significantly
improve until the Company has reported a number of years of
profitable performance. Without the opportunity to grow quickly by
opening a new market such as Austria, growth will be organic and
take time. During this time, the business would continue to incur
the costs associated with its listing but without the principal
benefits that it should bring, through access to capital. Therefore
the Directors are recommending to Shareholders to Demerge the Pizza
Business from the Company.
In preparing their recommendation in favour of the Demerger, the
Directors have taken into account the following:
-- The primary purpose of the admission to trading on AIM was
the ability to raise capital. This has now been severely
compromised, meaning that either capital will not be available or
only available at a price that is not in the best interests of
Shareholders.
-- Capital could be available to the Company from sources other
than those seeking publicly traded investments and these would be
more easily accessible if the Pizza Business was not owned by a
publicly traded company.
-- In these circumstances, the on-going costs and regulatory
requirements, together with the management time of maintaining the
admission to trading on AIM, are not a justifiable expense.
Accordingly, the Board has considered alternative options for
the Company including delisting the Company from AIM and more
recently a proposal to change the business of the Company to that
of an Investing Company, i.e. a company which has as its primary
business, the investing of its funds in securities, business or
assets, but also to maintain the Pizza Business in another, more
cost effective corporate entity.
The Board believes that, given the current financial and trading
position of the Company, the proposal to change the business of the
Company to that of an Investing Company is in the best interests of
the Shareholders as a whole.
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