RNS Number:1408Z
Lincat Group PLC
27 June 2007
Lincat Group plc - Tender Offer
Lincat Group plc
27 June 2007
This announcement is not for release, publication or distribution in or into the
United States, the Republic of South Africa, Canada, Australia, New Zealand or
Japan
27 June 2007
LINCAT GROUP PLC
Proposed Tender Offer by Evolution Securities Limited to purchase up to
1,925,925 Ordinary Shares at 675 pence per Ordinary Share, Capital Reduction,
Transfer from the Official List to AIM, Introduction of Long-Term Incentive Plan
and Employee Benefit Trust, Amendments to the Company's borrowing powers in its
articles of association and to the existing Sharesave Scheme, and Notice of
Extraordinary General Meeting
Introduction
The Circular, to be posted to Shareholders today, announces major changes to
Lincat Group plc, all of which are designed to benefit the Shareholders. Please
read the whole of this document carefully and, if appropriate, take professional
advice concerning the decisions that you will need to make in relation to these
changes.
The Circular sets out the formal terms and conditions of, and seeks your
authority to implement, the Tender Offer. It also explains the proposed
introduction of the LTIP and EBT, the proposed amendments to the Company's
articles of association and the Sharesave Scheme, including its proposed
extension until 20 November 2013, and the proposed Capital Reduction,
resolutions in respect of all of which will be proposed at the EGM convened to
take place on 20 July 2007, notice of which can be found on pages 38 to 39 of
the Circular. It is also the purpose of the Circular to give the reasons for,
and details of, the proposed Transfer and to seek your approval of the proposed
cancellation of the Company's Listing at the EGM as required by the listing
rules of the UK Listing Authority. The Tender Offer is dependent upon, and
conditional on, the passing of Resolution 1 contained in the Notice of EGM,
which seeks an increase in the Company's borrowing powers under the Company's
articles of association, and the passing of Resolution 2 contained in the Notice
of EGM, which gives the necessary authority to the Company to repurchase its own
Ordinary Shares. The Capital Reduction is subject to approval both by
Shareholders and by the High Court and will be implemented by the Company
whether or not the Tender Offer proceeds.
Tender Offer, Capital Reduction and Transfer
The Company intends to return capital of up to approximately #13 million to
Shareholders by way of the Tender Offer, pursuant to which Evolution, acting as
principal, will offer to purchase up to 1,925,925 Ordinary Shares, representing
26.75 per cent of the Company's issued share capital, at 675 pence per Ordinary
Share from Qualifying Shareholders, following which the Company has agreed under
the Repurchase Agreement to repurchase for cancellation from Evolution, on
market and at the Tender Price, all those Ordinary Shares purchased under the
terms of the Tender Offer. The Tender Offer is dependent upon, and conditional
on, inter alia, the passing of Resolutions 1 and 2 contained in the Notice of
EGM. The Capital Reduction will be implemented by the Company whether or not the
Tender Offer proceeds. The Capital Reduction is, however, dependent on the
Company receiving both the approval of Shareholders to the Capital Reduction at
the EGM and confirmation of the same by the High Court.
The Board believes that the proposed Tender Offer is an appropriate means of
returning capital to Shareholders as (subject to the provisions relating to
Overseas Shareholders set out in Part IV of the Circular) it gives all
Qualifying Shareholders the choice of whether or not to participate. Qualifying
Shareholders may opt to tender either none or up to 26.75 per cent of their
shareholding (being their Basic Entitlement) for cash, with such tenders being
satisfied in full. Qualifying Shareholders will also be able to tender Ordinary
Shares in excess of their Basic Entitlement, but such excess tenders will only
be satisfied pro rata to the extent that other Qualifying Shareholders tender
less than their Basic Entitlement. If Qualifying Shareholders choose to retain
all of their Ordinary Shares, they will increase the percentage of the Company's
issued share capital held by them in the event that the Tender Offer is
completed successfully.
The Board believes that the proposed Tender Offer will carry a number of
commercial benefits. These include an improvement in earnings per share by
reducing the number of Ordinary Shares in issue (assuming maintenance of
pre-interest earnings at a constant level), an increase in the Group's gearing
to a level that better reflects the cash generative nature of its business, and
active management of the Shareholder base by returning surplus capital to
Shareholders, including the cash generated by the sale of the Douglas Machines
Corporation business, the Group's former US subsidiary, in June 2006. The
Capital Reduction is considered prudent to protect the ability of the Company to
pay dividends in the future by potentially increasing the level of the Company's
distributable reserves.
In addition, your Board has decided that it would be in the best interests of
Shareholders for the Company to transfer from the Official List to AIM, which is
a market more suited to a company of the nature and size of Lincat.
The Tender Offer is being made available to Shareholders on the register of
members at 6.00 p.m. on 27 July 2007. The Directors are making no recommendation
as to individual Qualifying Shareholders' participation or otherwise in the
Tender Offer.
Shareholders who are in any doubt as to their participation should seek
appropriate advice. Shareholders should read the whole of the Circular.
Long-Term Incentive Plan (2007), Employee Benefit Trust and Sharesave Scheme
Historically, the Company has not operated a long-term incentive scheme. In the
light of current market practice the Board, on the recommendation of the
Remuneration Committee, has decided to propose the adoption by the Company of a
new long-term incentive plan to be known as the Lincat Group plc Long-Term
Incentive Plan (2007) at the EGM. The principal terms of the LTIP, which will
enhance the Group's ability to incentivise, motivate and retain senior
executives and management (though all employees of the Company or of any
subsidiary of the Company are eligible to be granted an award under the LTIP),
are summarised in Section A of Part III of the Circular.
The LTIP shall be operated in conjunction with a proposed employee benefit
trust, to be known as the Lincat Group plc Employee Benefit Trust, the main
terms of which are summarised in Section B of Part III of the Circular.
The Company currently operates the Sharesave Scheme for all employees of the
Group. The Company is proposing to make a number of amendments to the rules of
the Sharesave Scheme as a result of the Transfer. The background to and reasons
for the amendments are set out in more detail below in this letter and the
actual amendments to the Sharesave Scheme that are proposed are set out in
Section C of Part III of the Circular.
Background to and reasons for the Tender Offer and Capital Reduction
Since October 2000, a total of 2,541,960 Ordinary Shares, representing
approximately 26 per cent of the issued share capital of the Company at October
2000, have been bought back and cancelled. As at the date of the Circular, the
total number of Ordinary Shares in issue is 7,199,599. The unaudited Interim
Results show that, as at 31 December 2006, the Group had cash of #2.2 million
(30 June 2006: #3.4 million), following the sale of its US operation, Douglas
Machines Corporation, for #3.3 million in June 2006, and total indebtedness of
#nil (30 June 2006: #0.2 million). Since 31 December 2006, the Group has
continued to perform well with continued strong levels of cash generation. In
addition, as announced on 25 June 2007, the anticipated sale of IMC's
Hertfordshire site is expected to generate a cash receipt of #7.5 million to
#8.5 million for the Group. Cash generative and profitable companies, such as
Lincat, are able to secure term bank funding at attractive rates, in this case
specifically in order to return capital to Shareholders by way of the Tender
Offer and thereby enhance total shareholder returns.
The Board recognises that the Company has capital that is surplus to its
requirements and that, following the sale of Douglas Machines Corporation and
the anticipated sale of the site of IMC's former factory in Hertfordshire, the
ongoing capital requirements of the Group will reduce. As a consequence of this
and in light of the continued generation of cash which the Directors consider
surplus to the Company's anticipated requirements and which could be used to
service additional levels of debt, the Company now proposes to return capital of
up to approximately #13 million to Shareholders by means of the Tender Offer
which, as mentioned earlier, is considered by the Directors to have a number of
commercial benefits for the Company. The return of capital will be funded by new
tern loan facilities totalling #10 million and from the Company's existing
resources.
The Directors also believe that the Tender Offer will satisfy their objective of
returning capital to Shareholders in a manner that is earnings enhancing and
that enables all Shareholders to choose whether or not to participate.
If fully taken up, the Tender Offer will result in unaudited pro-forma total
indebtedness immediately after the repurchase by the Company of the Ordinary
Shares tendered of #10 million. New term loan facilities for a total of #10
million repayable over a period of seven years have been agreed with The Royal
Bank of Scotland plc, subject to the satisfaction of certain conditions
precedent including the proposed amendment to the Company's articles of
association concerning the Company's borrowing powers and the non-occurrence of
certain events of default and materially adverse changes. On the basis of the
2006 financial results, had the new debt been in place over the whole of the
year, interest cover (defined as operating profit divided by net interest paid)
would have been 5.3 times and total debt servicing costs (defined as capital
repayments plus interest) would have been covered 1.8 times by operating cash
flow. Your Directors view this level of interest and debt servicing cover as
appropriate for the Group, given the Group's strong operating cash flows and the
anticipated sale of IMC's Hertfordshire site.
The Directors have considered various ways of returning capital to Shareholders
and have concluded that the Tender Offer is the most appropriate, as Qualifying
Shareholders may choose to tender either none or any number of Ordinary Shares,
subject to possible scaling down to no less than their Basic Entitlement, as
explained in Part IV, paragraph 1.7 of the Circular. In addition, the Board
considers that the Capital Reduction is prudent in order to help create
additional distributable reserves to seek to protect the ability of the Company
to pay dividends in the future.
Background to and reasons for the Transfer
The Board has for some time been considering the possibility of a transfer of
the issued share capital of the Company from the Official List to AIM. The Board
believes that AIM is a more appropriate market for a company of Lincat's size
and resources. Being on AIM will also enable the Company to react more quickly
should acquisition or other development opportunities arise.
AIM was launched by the London Stock Exchange in 1995. The market was
specifically designed for smaller companies and provides a simplified regulatory
environment.
The obligations of an AIM company are similar to those of a company on the
Official List with certain exceptions, of which the significant ones are
referred to below:
* Under the listing rules of the UK Listing Authority, a broad range of
transactions require shareholder approval. For AIM companies, prior
shareholder approval is only required for reverse takeovers and disposals
that result in a fundamental change of business (being transactions that
exceed 75 per cent of various size tests, such as the ratio of the
consideration of the transaction to the market capitalisation);
* There is no requirement under the AIM Rules for a minimum percentage of
shares to be held in public hands, whereas under the listing rules of the UK
Listing Authority there is a requirement of a 25 per cent minimum;
* The Combined Code does not apply to AIM companies. However, shareholders
expect that AIM companies should use the Combined Code as a reference point
for establishing their own good corporate governance regime;
* It is not possible to hold shares traded on AIM in a Personal Equity
Plan ("PEP") or Individual Savings Account ("ISA");
* There is no requirement under the AIM Rules for admission documents for
further issues of securities, except as otherwise required by law or on
admission of a new class of securities to trading; and
* Under the AIM Rules, a nominated adviser is required at all times and
has ongoing responsibilities to both the Company and the London Stock
Exchange.
Companies whose shares are traded on AIM are deemed to be unlisted for the
purposes of certain areas of UK taxation. Following the Transfer, individuals
who hold Ordinary Shares may benefit from certain capital gains tax and/or
inheritance tax advantages. It is not however possible to hold shares traded on
AIM in a Personal Equity Plan ("PEP") or Individual Savings Account ("ISA") and
the tax advantages that arise from doing so will cease to be available following
the Transfer. Following Admission, Shareholders will have 30 days to decide
whether to transfer their Ordinary Shares into their own name or to sell the
holding and retain the proceeds within the PEP or ISA. You are strongly advised
to seek your own personal financial advice from your stockbroker, accountant or
other independent financial adviser authorised under the FSMA in relation to any
taxation implications of the Transfer.
Background to and reasons for the introduction of the LTIP and EBT
Historically, the Company has not operated a long-term incentive scheme. The
Remuneration Committee has reviewed this position and considers that an
effective long-term incentive arrangement will enhance the Group's ability to
incentivise, motivate and retain senior executives and management and will align
the Group more closely with current market practice. Accordingly, the
Remuneration Committee has recommended that the Company adopt the LTIP and the
EBT.
The LTIP is specifically designed to link the remuneration of executive
directors and senior management with the Group's long-term financial performance
and to help retain executive directors and senior management who are considered
to be integral to the long-term financial success of the business.
Under the LTIP, options over Ordinary Shares will be awarded to executive
directors of the Company and certain members of the senior management teams of
the Company's subsidiaries. The exercise of such options will be subject to
demanding performance conditions, so that an award will generally only be
capable of delivering value to a participant if the performance conditions to
which that award is subject are satisfied.
Details of the principal terms of the LTIP and of the performance conditions
intended to apply to the awards initially granted are set out in Section A of
Part III of the Circular. The use of these measures should reinforce the
Company's commitment to enhancing Shareholder value and aligning the interests
of executive directors, senior management and Shareholders.
The Company proposes to establish the EBT to be operated in conjunction with the
LTIP. The EBT will be funded by the Company to acquire newly issued Ordinary
Shares and to make market purchases of Ordinary Shares, in both cases to satisfy
awards under the LTIP. The use of the EBT enables awards under the LTIP to be
structured as options to acquire Ordinary Shares for zero consideration, whereas
nil cost options cannot be granted directly by the Company itself. It is
intended that the Trustee shall grant awards under the LTIP if and when
recommended to do so by the Remuneration Committee and that the Trustee will
satisfy such awards with Ordinary Shares held in the EBT. The EBT may also be
used in conjunction with any other employee share scheme that the Company may
operate from time to time.
Background to and reasons for the amendments to the Sharesave Scheme
The Sharesave Scheme was adopted by the Company on 20 November 2003.
The rules of the Sharesave Scheme provide that no options may be granted under
it more than five years after its date of adoption unless its continued use
after that date has been approved by a resolution of Shareholders in general
meeting.
The fifth anniversary of the date of adoption of the Sharesave Scheme will be 20
November 2008. The Board is putting a resolution to Shareholders at the EGM to
approve the continued use of the Sharesave Scheme after 20 November 2008 until
the tenth anniversary of the date of its date of adoption. If this resolution is
passed, the Sharesave Scheme will expire on 20 November 2013.
As a result of the Transfer, amendments will be required to the rules of the
Sharesave Scheme to delete redundant references to the Model Code and the
Official List (which will no longer apply to the Company when its shares are
traded on AIM) and to remove the requirement to admit the Ordinary Shares
resulting from option exercises to trading on the Official List. The redundant
references to the Model Code and the Official List will, under the proposed
amendments to the Sharesave Scheme, be replaced by appropriate references to the
AIM Rules and to AIM and the obligation to admit Ordinary Shares to trading on
the Official List will be replaced by a requirement to admit such Ordinary
Shares to trading on AIM.
The rules of the Sharesave Scheme currently contain a limit that no more than
five per cent of the nominal value of the Ordinary Shares in issue from time to
time may be issued over a rolling five year period for the purpose of satisfying
options granted under the Sharesave Scheme, ("the 5 per cent limit"). This limit
does not reflect the current guidelines issued by the Association of British
Insurers for non-discretionary share-based incentive schemes, which recommend
that commitments to issue shares under all of a company's share incentive
schemes should not exceed 10 per cent of the issued share capital of the company
in any rolling 10 year period ("the 10 per cent limit") and that Remuneration
Committees should operate appropriate policies regarding flow rates to spread
the issue of new shares over the life of the relevant share incentive schemes.
In order to comply with best practice and to give the Remuneration Committee
flexibility as to how it manages the issue of Ordinary Shares over the life of
the Sharesave Scheme, it is proposed that the 5 per cent limit is removed from
the rules of the Sharesave Scheme.
The rules of the Sharesave Scheme already contain the 10 per cent limit and this
shall remain in the rules of the Sharesave Scheme, to accord with best practice.
As the Sharesave Scheme is subject to the approval of HMRC, it is further
proposed that the references in the Sharesave Scheme to the "Inland Revenue" and
"Shares Valuation" be replaced with the new names adopted by these bodies, being
"HM Revenue & Customs" and "Shares and Assets Valuation" respectively.
Full details of the amendments proposed to be made to the Sharesave Scheme are
set out in Section C of Part III of the Circular.
The Tender Offer
The Board is proposing to return capital of up to approximately #13 million to
Shareholders through the Tender Offer. The Tender Offer is to be effected by
Evolution purchasing, as principal, in aggregate up to 1,925,925 Ordinary Shares
at 675 pence per Ordinary Share from Qualifying Shareholders. Evolution, acting
as principal, has entered into a binding commitment with the Company pursuant to
which it has agreed to sell the Ordinary Shares acquired by Evolution pursuant
to the Tender Offer to the Company, which will purchase them at the Tender Price
for cancellation. The taxation consequences of the Tender Offer are set out in
Part II of the Circular. The purchase of Ordinary Shares by the Company from
Evolution will be effected on-market, pursuant to the authority to be sought by
the Company to repurchase its own Ordinary Shares at the EGM.
The Tender Offer is conditional on valid tenders being received from Qualifying
Shareholders by 3.00 p.m. on the Closing Date in respect of at least 1,079,940
Ordinary Shares representing 15 per cent of the Company's issued ordinary share
capital as at 26 June 2007 and on the satisfaction of other conditions as
specified in Part IV of the Circular.
The Tender Offer is open to all Qualifying Shareholders (subject to the
provisions relating to Overseas Shareholders set out in Part IV of the
Circular), who may participate by tendering any number of their Ordinary Shares.
To the extent that a Qualifying Shareholder validly tenders any number of
Ordinary Shares up to their Basic Entitlement, their tender will be accepted in
full. Tenders in excess of a Qualifying Shareholder's Basic Entitlement will be
satisfied pro rata to the extent that other Qualifying Shareholders tender less
than their Basic Entitlements.
Ordinary Shares purchased by Evolution pursuant to the Tender Offer will be
acquired with full title guarantee, free of all liens, charges, restrictions,
claims, equitable interests and encumbrances and together with all rights
attaching to them.
The maximum number of Ordinary Shares which could be purchased pursuant to the
Tender Offer represents approximately 26.75 per cent of the existing issued
share capital of the Company.
The Directors, their connected parties (within the meaning of section 346(2) of
the Act) and Mrs J Craddock, are the legal and/or beneficial owners of the
Ordinary Shares set out below and the Directors and Mrs J Craddock have given
irrevocable commitments that they will tender, and/or will use their best
endeavours to procure the tender of, Ordinary Shares pursuant to the Tender
Offer as detailed below:
% of issued % of % of issued
share capital Current share capital
Current of the Company Amount to be holding Resultant of the Company*
holding tendered holding
Shareholder
Martin Craddock 1,560,421 21.67 417,412 26.75 1,143,009 21.67
Mrs J Craddock 1,030,532 14.31 275,667 26.75 754,865 14.31
Paul Bouscarle 656,291 9.12 175,557 26.75 480,734 9.12
Terry Storey 2,778 0.04 743 26.75 2,035 0.04
Richard Kemp+ 38,679 0.54 10,346 26.75 28,333 0.54
Alan Schroeder+ 22,553 0.31 6,032 26.75 16,521 0.31
*Assuming that the Tender Offer is fully taken up
+Richard Kemp and Alan Schroeder have each given irrevocable undertakings that
they will tender no less than their Basic Entitlements.
The Capital Reduction
If the Tender Offer proceeds, the Company's distributable reserves will be
reduced by up to approximately #13 million. The Board considers it worthwhile
whether or not the Tender Offer proceeds to enhance the Company's ability to pay
dividends by seeking to increase its distributable reserves. Shareholders should
therefore be aware that the Capital Reduction will proceed (subject to the
passing of the relevant special resolution as set out in the Notice of EGM and
confirmation of the same by the High Court) whether or not the Tender Offer
proceeds. Similarly, the Tender Offer will, subject to Resolutions 1 and 2
contained in the Notice of EGM being passed, proceed whether or not the Capital
Reduction proceeds. If the Capital Reduction does not proceed, the Company may
have a lower level of distributable reserves than it would have had if the
Capital Reduction had been carried out.
Under the Act, the Company can, with the approval of Shareholders given by way
of a special resolution and with the confirmation of the High Court, reduce or
cancel (inter alia) its share premium account and capital redemption reserve.
Such a reduction or cancellation creates a reserve which can, subject to the
protection of creditors, be credited to the Company's profit and loss account
and which may be distributed to Shareholders in the future.
The Company proposes to cancel its share premium account and capital redemption
reserve. The share premium account currently amounts to #1.398 million and the
capital redemption reserve amounts to #0.254 million. If the Tender Offer
proceeds, and the maximum number of Ordinary Shares are purchased pursuant to
the Tender Offer, the capital redemption reserve will increase to #0.447 million
and the share premium account will remain unaltered. Should the Capital
Reduction then proceed and be confirmed by the High Court, a credit of up to
#1.845 million arising from such cancellation may (subject to giving adequate
protection to creditors) be carried to the Company's profit and loss account and
may form part of the Company's distributable reserves.
As soon as reasonably practicable after the EGM, and subject to the resolution
relating to the Capital Reduction being passed by Shareholders, the Company will
petition the High Court for an order to confirm the Capital Reduction. The High
Court is likely to require that the Company takes appropriate steps to protect
the position of creditors that do not consent to the Capital Reduction, if any.
The proposed Capital Reduction will not affect Shareholders' voting rights nor
does it affect their rights in the event of any return of capital by the Company
to Shareholders.
At the end of the Circular you will find set out in the Notice of EGM
Resolutions to approve inter alia the Tender Offer and the Capital Reduction.
Whether or not the Tender Offer is approved, Shareholders are still requested to
pass the Resolution to approve the Capital Reduction.
If the Tender Offer does not proceed, but the Capital Reduction is approved at
the EGM and implemented, the Company's existing share premium account and
capital redemption reserve, amounting to #1.398 million and #0.254 million
respectively, will, subject to High Court approval, be cancelled and a credit of
#1.652 million arising from such cancellation will be carried to the Company's
profit and loss account and (subject to giving adequate protection to creditors)
may form part of the Company's distributable reserves. In the event that both
the Tender Offer and the Capital Reduction are approved at the EGM and
implemented, the Company's capital redemption reserve will increase by the
nominal value of Ordinary Shares repurchased by the Company pursuant to the
Tender Offer up to a maximum amount of #0.193 million (if the maximum number of
Ordinary Shares are purchased pursuant to the Tender Offer) prior to its
cancellation as part of the Capital Reduction. It is expected that the Capital
Reduction, including receipt of confirmation from the High Court, will be
completed between four and six weeks after the date of the EGM.
Amendment to borrowing restrictions
The Company also proposes to amend the borrowing restrictions in its articles of
association in order to facilitate the Tender Offer by raising the borrowing
limit, which is currently insufficient to allow the Company to fund the Tender
Offer. The Tender Offer is conditional on such amendment being approved by
Shareholders and the amendment to the borrowing limit is conditional on the
Tender Offer being approved by Shareholders. The Company's current articles of
association permit it to borrow up to twice the "Adjusted Capital and Reserves"
of the Company (as defined in the current articles of association of the
Company). The Directors propose to raise the borrowing limit to four times the
"Adjusted Capital and Reserves" of the Company. The required amendment is
contained in Resolution 1 in the Notice of EGM.
Repurchase Agreement
Under the terms of the Repurchase Agreement, Evolution has a binding commitment
to sell and the Company has a binding commitment to acquire, through an
on-market transaction, all of the Ordinary Shares acquired by Evolution pursuant
to the Tender Offer, at a price per Ordinary Share equal to the Tender Price.
Further information on the Repurchase Agreement is contained in Part II of the
Circular.
Qualifying Shareholders' entitlements
Qualifying Shareholders may participate in the Tender Offer by tendering all or
a proportion of the Ordinary Shares held by them at the Record Date. Tenders up
to a Qualifying Shareholder's Basic Entitlement will be satisfied in full. In
the event that tenders are received (in aggregate) for in excess of 1,925,925
Ordinary Shares, tenders will be scaled back pro rata. Tenders in excess of a
Qualifying Shareholder's Basic Entitlement will be satisfied pro rata to the
extent that other Qualifying Shareholders tender less than their Basic
Entitlement.
Shareholders do not have to tender any Ordinary Shares but, once submitted, a
Form of Tender is irrevocable and cannot be withdrawn. Shareholders should note
that, once tendered, Ordinary Shares may not be sold, transferred, charged or
otherwise disposed of.
The LTIP and EBT
Subject to approval being obtained at the EGM, the Directors intend to establish
the LTIP and the EBT as soon as reasonably practicable following the Transfer.
Further information on the LTIP and the EBT is contained in Sections A and B of
Part III of the Circular.
The Sharesave Scheme
Subject to Shareholder approval of the proposed amendments to the Sharesave
Scheme and its continued use until 20 November 2013 being obtained at the EGM,
the Directors intend to amend the rules of the Sharesave Scheme as soon as
reasonably practicable following the Transfer. Further information on the
amendments to be made to the Sharesave Scheme is contained in Section C of Part
III of the Circular.
Current trading
On 27 February 2007, the Company announced its results for the 26 weeks to 31
December 2006. In that announcement, the Company stated that "Overall we
anticipate that the second half of the financial year will deliver a stronger
operating result than the first half, primarily due to the impact on margins of
IMC's reduced cost base."
Since that date, order levels have remained steady and IMC's results have
reflected its lower cost base following the completion of its move to its
Wrexham site in December 2006. Following IMC's relocation to its new site, its
gross margin increased from 45.5 per cent in the six months to 31 December 2006
to 56.5 per cent in the period from January 2007 to May 2007. Against that, the
stainless steel price paid by the Group, which typically is fixed for 12 months,
increased on 1 January 2007 by a weighted average of 25 per cent. In addition,
monthly stainless steel surcharges continue to increase as a result of high
nickel prices. Overall, the Directors are confident of meeting the market's
current expectations for the full year.
Application for Admission and cancellation of Listing
Subject to the passing of the appropriate Resolution at the EGM, application
will be made for admission of the Company's Ordinary Shares to trading on AIM
and it is expected that dealings in the Ordinary Shares will commence on AIM at
8.00 a.m. on 20 August 2007. In any event, it is anticipated that the Transfer
will not occur until after the Tender Offer has completed, should it proceed. It
is the Board's intention to cancel the Company's Listing immediately prior to
Admission.
Recommendation
The Board considers the Tender Offer, the Capital Reduction and associated
amendment to the Company's articles of association to be proposed at the EGM to
be in the best interests of Shareholders as a whole. The Board unanimously
recommends Shareholders to vote in favour of the Resolutions relating to the
Tender Offer, the Capital Reduction and the associated amendment to the
Company's articles of association to be proposed at the EGM, as they intend to
do in respect of their own holdings of 2,280,722 Ordinary Shares, representing
approximately 31.68 per cent of the current issued ordinary share capital of the
Company.
The Directors make no recommendation to Shareholders as to whether or not they
should tender their Ordinary Shares under the Tender Offer. Whether or not
Shareholders decide to tender their Ordinary Shares will depend, amongst other
factors, on their view of the Company's prospects and their own individual
circumstances, including their own tax position.
The Board considers the Transfer to be in the best interests of Shareholders as
a whole. The Board unanimously recommends Shareholders to vote in favour of the
Resolution relating to the Transfer to be proposed at the EGM, as they intend to
do in respect of their own holdings of 2,280,722 Ordinary Shares, representing
approximately 31.68 per cent of the current issued ordinary share capital of the
Company.
The Board considers the adoption of the LTIP, the establishment of the EBT and
the continued use of and the amendments proposed to be made to the Sharesave
Scheme to be in the best interests of Shareholders as a whole. The Board
unanimously recommends Shareholders to vote in favour of the Resolution relating
to the adoption of the LTIP and the establishment of the EBT and the Resolution
for the continued use and amendment of the Sharesave Scheme to be proposed at
the EGM, as they intend to do in respect of their own holdings of 2,280,722
Ordinary Shares, representing approximately 31.68 per cent of the current issued
ordinary share capital of the Company.
EXPECTED TIMETABLE OF EVENTS
Tender Offer commences 28 June 2007
Latest time and date for receipt of Forms of Proxy for the 2.00 p.m. on 18 July 2007
Extraordinary General Meeting
Extraordinary General Meeting 2.00 p.m. on 20 July 2007
Closing Date for the Tender Offer 3.00 p.m. on 27 July 2007
Record Date for the Tender Offer 6.00 p.m. on 27 July 2007
Result of Tender Offer announced by 8.00 a.m. on 30 July 2007
Purchase of Ordinary Shares under the Tender Offer 30 July 2007
Anticipated date for the court hearing of the petition to 30 July 2007
confirm
the Capital Reduction, week commencing
Despatch of payments through CREST for 3 August 2007
uncertificated Ordinary Shares sold pursuant to the Tender Offer
CREST accounts credited in respect of any unsold Ordinary Shares 3 August 2007
Despatch of cheques for certificated Ordinary Shares 10 August 2007
sold pursuant to the Tender Offer by
Despatch of balance share certificates in respect 10 August 2007
of any unsold Ordinary Shares by
Anticipated date on which the Capital Reduction becomes 13 August 2007
effective, week commencing
Cancellation of Listing of Ordinary Shares on the Official List 20 August 2007
Admission of Ordinary Shares to trading on AIM 20 August 2007
References in this announcement to time are to London time. If any of the above
times and/or dates change, the revised time(s) and/or date(s) will be notified
to Shareholders by announcement through a Regulatory Information Service.
Circular to Shareholders
A Circular containing full details of the proposals and including the Notice of
Extraordinary General Meeting at which the requisite approvals will be sought
will be posted by the Company to Shareholders today. Copies of that Circular,
which is dated today, will be forwarded to the UK Listing Authority and will
shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Tel: 020 7066 1000
Enquiries: -
Paul Bouscarle/Terry Storey Lincat Group plc Tel: 01522 875 555
Joanne Lake/Angus Gladish Evolution Securities Limited Tel: 0113 243 1619
Notes
This announcement does not constitute an offer to acquire or a solicitation of
an offer to sell any securities.
Terms used in this announcement shall, unless the context otherwise requires,
bear the meanings given to them in the Circular issued by Lincat Group plc dated
27 June 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TENPUUUWQUPMGCM
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