Tender Offer and Share Consol

RNS Number : 8024C

SMG PLC

05 September 2008

 



SMG plc
5 September 2008

NOT FOR RELEASE IN OR INTO AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES

Proposed return of up to £30m to Shareholders by way of Tender Offer,
Share Consolidation,
Change of Name to stv group plc
and
Notice of General Meeting

Highlights

• The Board intends to return to Shareholders up to £30 million of cash which will be made available through the Tender Offer;

• Qualifying Shareholders may tender their SMG Shares at prices between 9 pence and 15 pence (inclusive) per SMG Share, in increments of 0.5 pence only;

• The Tender Offer will be structured using a Strike Price mechanism. All successfully tendered SMG Shares will be acquired at the Strike Price;

• Assuming the Tender Offer is fully subscribed, the Tender Offer will result in the purchase (and subsequent cancellation) of between 200,000,000 SMG Shares if the Strike Price is the maximum price in the Price Range and 333,333,333 SMG Shares if the Strike Price is the minimum price;

• The Tender Offer is being made available to all Qualifying Shareholders who are on the Register at 5.00 p.m. on 25 September 2008;

• Gives small Shareholders (being Shareholders who hold 10,000 or fewer SMG Shares) the opportunity to liquidate their entire holdings of SMG Shares;

• Following the Tender Offer, the Share Consolidation will reduce the number of SMG Shares in issue so that Shareholders will receive 1 New SMG Share for every 20 existing SMG Shares;

• The Board also proposes to change the name of SMG plc to stv group plc;

• The Tender Offer, the Share Consolidation and the Change of Name are all conditional on shareholder approval. A general meeting of Shareholders has been convened for 10.30 a.m. on Tuesday 23 September 2008; and

• The Circular (containing the details of the resolutions being put to Shareholders and the terms and conditions of the Tender Offer and the Share Consolidation), the Notice of General Meeting, the Form of Proxy, the Shareholder Tender Form and a Q&A are being posted to Shareholders today.

      For further information please contact:

SMG plc                                                                                               [phone]

Rob Woodward, Group Chief Executive                 
George Watt, Chief Financial Officer
Debbie Johnston, Head of Communications 

RBS Hoare Govett Limited                                                                  [phone]

Sara Hale

Lee Morton

This announcement does not constitute an offer to purchase any securities or the vote in any jurisdiction. The full terms and conditions of the Tender Offer will be set out in the Circular. Shareholders are advised to read carefully the formal documentation in relation to the Tender Offer once it has been despatched. The Tender Offer is not being made, directly or indirectly, in or into Australia, Canada, Japan or the United States and neither this announcement nor the Tender Offer documentation may be distributed or sent in or into or from Australia, Canada, Japan, or the United States. 

RBS Hoare Govett Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company and no one else in connection with the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to customers of RBS Hoare Govett Limited or for giving advice in relation to the Tender Offer.  Introduction

On 2 June 2008, the Board announced its intention to return approximately £30 million to Shareholders following the completion of the sale of Virgin Radio Holdings Limited to TIML Golden Square Limited. As the Company announced on 28 August 2008, the Board intends to implement the return of cash by way of a tender offer. In addition, once the Tender Offer is complete, the Board proposes to effect a share consolidation and that SMG changes its name to 'stv group plc'. The Tender Offer, the Share Consolidation and the Change of Name require the approval of Shareholders at a General Meeting which is being convened for 10.30 a.m. on Tuesday 23 September 2008. 

The details set out below in relation to the Tender Offer, the Share Consolidation and the Change of Name are only a summary. Full details (including terms and conditions) of the Tender Offer, Share Consolidation and Change of Name are set out in the Circular which is being sent to shareholders today.

Tender Offer

Following SMG's rights issue in November 2007, and the successful disposal of Virgin Radio Holdings Limited and its subsidiaries in June 2008, the Board believes that SMG has funds that are surplus to the operational requirements of its continuing activities. The Board therefore believes that now is an appropriate time to return up to £30 million of cash to its Shareholders. In arriving at the proposed amount to be returned to Shareholders, the Board has taken into account the level of funding necessary to enable SMG to meet its working capital requirements.

The Tender Offer is being made available to all Qualifying Shareholders who are on the Register at 5.00 p.m. on 25 September 2008. Qualifying Shareholders can decide whether they want to tender all or any of their SMG Shares in the Tender Offer, but they are not obliged to tender all or any of their SMG Shares if they do not wish to do so.

The Strike Price for the Tender Offer will be set in the Price Range of 9 pence to 15 pence per SMG Share (inclusive), which at the minimum price is a discount of 9.5 per cent. and at the maximum price a premium of 50.8 per cent. to the middle market closing price of 9.95 pence on 4 September 2008 (being the last practicable date for such calculation before publication of this announcement). Tenders may be made either at a fixed price within the Price Range, or at the Strike Price (in increments of a 0.5 pence). SMG Shares not validly tendered or tendered above the Strike Price will not be purchased.

If the aggregate value of all of the SMG Shares validly tendered is more than £30 million, tenders will be accepted in the following order of priority:

• up to the first 10,000 SMG Shares of any tenders by Qualifying Shareholders at or below the Strike Price will be accepted in full;

• the balance of all tenders by Qualifying Shareholders at or below the Strike Price provided that, to the extent that the aggregate of such tenders from Qualifying Shareholders together with tenders accepted under (i) above would otherwise cause the aggregate purchase value to exceed £30 million, tenders from Qualifying Shareholders at the Strike Price (other than tenders under (i) above) will be scaled back pro rata, commencing with those tendered at the Strike Price and thereafter with those tendered at the next highest immediately below the Strike Price (and so on) to ensure that the total number of SMG Shares purchased does not cause the aggregate amount of the purchase value to exceed £30 million.

If the aggregate value of all of the SMG Shares validly tendered is £30 million or less, all such tenders will be accepted.

The number of SMG Shares in issue at 4 September 2008, being the last practicable date prior to the posting of this document, was 951,673,627. If the Tender Offer is fully taken up by Qualifying Shareholders, the number of SMG Shares in issue will be reduced by between 200,000,000 SMG Shares if the Strike Price is set at the maximum price (approximately 21 per cent. of the current issued share capital) and 333,333,333 SMG Shares if the Strike Price is set at the minimum price (approximately 35 per cent. of the current issued share capital).

If the Tender Offer is fully taken up, the distributable reserves of the Company would be reduced from approximately £48.5 million to £18.5 million. 

SMG Shares validly tendered will be purchased by RBS Hoare Govett, as agent for SMG, free of commissions and dealing charges, and will be cancelled.

Share Consolidation

Following completion of the Tender Offer, the Board proposes to effect the Share Consolidation. The Directors believe that the current trading range of SMG Shares may give rise to both higher dealing costs for investors, due to the minimum automated bid/offer spread of SMG Shares, and to volatility in the underlying share price, as small actual movements in the share price can represent large percentage movements. 

Change of Name

Following the disposals of both Primesight, SMG's outdoor advertising business, and Virgin Radio, SMG's radio business, the Board believes that the name 'SMG plc' no longer accurately reflects the principal activities of the Group, which are focused on its television businesses (comprising broadcast, content and ventures) and which operate under the 'stv' name. Accordingly, the Directors believe that the Company's name should be changed to 'stv group plc'.

Current trends in trading and prospects

SMG released its interim results for the six months to 30 June 2008 on 28 August 2008. Further to the update given at that time, the Board's outlook for 2008 remains unchanged. 

Recommendation to Shareholders

The Board has received financial advice from RBS Hoare Govett in relation to the Tender Offer. In providing this financial advice, RBS Hoare Govett has relied upon the Directors' commercial assessment of the Tender Offer.

The Board considers the Tender Offer, the Share Consolidation and the Change of Name to be in the best interests of Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they intend to do in respect of their own beneficial holdings of SMG Shares, amounting in aggregate to 1,297,274 SMG Shares, representing approximately 0.136 per cent. of the current issued share capital of SMG.

The Board is making no recommendation to Shareholders in relation to participation in the Tender Offer itself. Whether or not Shareholders decide to tender their SMG Shares will depend, among other things, on their view of SMG's prospects and their own individual circumstances. In making their decisions, Shareholders are recommended to consult their duly authorised independent advisers.

Of those Directors who own SMG Shares, David Shearer, Richard Findlay, Jamie Matheson, Rob Woodward and George Watt do not intend to participate.

Expected timetable of principal events

Tender Offer Opens	5 September 2008
Latest time and date for receipt of Forms of Proxy for the General Meeting	10.30 a.m. on 21 September 2008
General Meeting	10.30 a.m. on 23 September 2008
Latest time and date for receipt of Shareholder Tender Forms and TTE instructions from CREST in relation to the Tender Offer.	1.00 p.m. on 25 September 2008
Record Date for Tender Offer	5.00 p.m. on 25 September 2008
Announcement of results of the Tender Offer	By 26 September 2008
Record Date for the Share Consolidation	5.00 p.m. on 30 September 2008
Commencement of dealings in New SMG Shares	8.00 a.m. on 1 October 2008
Change of Name effective	1 October 2008
Cheques despatched, and CREST accounts credited, in respect of Tender Offer proceeds	1 October 2008
CREST accounts credited with New SMG Shares reflecting (i) revised shareholdings following the Tender Offer and the Share Consolidation, and (ii) the Change of Name	1 October 2008
Share certificates despatched in respect of New SMG Shares reflecting (i) revised shareholders following the Tender Offer and the Share Consolidation, and (ii) the Change of Name	6 October 2008
The dates and times given are based on SMG's current expectations and may be subject to change. Any changes to the expected timetable will be announced via a Regulatory Information Service.

Definitions

The following definitions apply throughout this announcement unless the context requires otherwise.
Act	the Companies Act 1985 and/or the Companies Act 2006 (as appropriate), in each case as amended
Board	the board of directors of SMG
Change of Name	means the proposed change of name by SMG plc to 'stv group plc'
Form of Proxy	the form of proxy to be used in connection with the General Meeting
Circular	the circular in respect of the Tender Offer, Share Consolidation and Change of Name sent to SMG Shareholders on 5 September 2008
General Meeting	the general meeting of SMG to be held at SMG plc, Pacific Quay, Glasgow, G51 1PQ at 10.30 am on 23 September 2008
Group or SMG Group	SMG and its group undertakings from time to time
group undertakings	the meaning ascribed to it in the Act
New SMG Shares	the ordinary shares of 50 pence each in the capital of SMG following the Share Consolidation
Notice of General Meeting	the notice of the General Meeting which appears at the end of this document
Overseas Shareholders	a Shareholder who is resident in, or citizen of, a jurisdiction outside the United Kingdom
pounds sterling or £	the lawful currency of the United Kingdom
Price Range	the range of prices in which SMG Shares may be tendered pursuant to the terms of the Tender Offer, being 9 pence to 15 pence per SMG Share inclusive in increments of 0.5 pence only
Q&A	a question and answer summary, to be read together with the Circular, which explains to Shareholders the terms and conditions of the Tender Offer, Share Consolidation and Change of Name
Qualifying Shareholders	SMG shareholders other than those with registered addresses in Australia, Canada, Japan or the United States
RBS Hoare Govett	RBS Hoare Govett Limited
Register	the register of members of SMG
Registrar	Capital Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Resolutions	the resolutions to be proposed at the General Meeting, including to obtain the approval of Shareholders for the Tender Offer, the Share Consolidation and the Change of Name, as set out in the Notice of General Meeting
Shareholders	holders of SMG Shares from time to time
Share Consolidation	the proposed consolidation of SMG Shares pursuant to which every 20 existing SMG Shares will be consolidated into one New SMG Share
Shareholder Tender Form	the tender form relating to the Tender Offer, issued to Qualifying Shareholders who hold their SMG Shares in certificated form
Small Shareholders	Qualifying Shareholders with registered holdings of 10,000 or less SMG Shares
SMG or the Company	SMG plc, registered in Scotland with number SC203873 and whose registered office is at Pacific Quay, Glasgow, G51 1PQ
SMG Shares	the ordinary shares of 2.5 pence each in the capital of SMG
Strike Price	the price at which SMG will purchase SMG Shares pursuant to the Tender Offer
Tender Offer	the invitation by SMG to SMG Shareholders (other than certain Overseas Shareholders) to tender SMG Shares on the terms and conditions set out in the Circular and also, in the case of certificated SMG Shares only, the Shareholder Tender Form

This announcement does not constitute an offer to purchase any securities in any jurisdiction. The full terms and conditions of the Tender Offer will be set out in the Circular. Shareholders are advised to read carefully the formal documentation in relation to the Tender Offer once it has been despatched. The Tender Offer is not being made, directly or indirectly, in or into Australia, Canada, Japan or the United States and neither this announcement nor the Tender Offer documentation may be distributed or sent in or into or from Australia, Canada, Japan, or the United States. 

RBS Hoare Govett Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company and no one else in connection with the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to customers of RBS Hoare Govett Limited or for giving advice in relation to the Tender Offer.

 

END

 

 

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