Offer for AFA Systems PLC
Microgen PLC
13 August 2004
Press Release
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO
ANY RESTRICTED JURISDICTION INCLUDING THE US, CANADA, AUSTRALIA OR JAPAN.
FOR IMMEDIATE RELEASE
13 August 2004
RECOMMENDED
OFFER
by
UBS INVESTMENT BANK
on behalf of
MICROGEN PLC
for
the ordinary share capital of
AFA SYSTEMS PLC
AND
PLACING OF 4,300,000 NEW ORDINARY SHARES
• The Boards of both Microgen and AFA Systems announce the terms of a
recommended offer for the ordinary shares of AFA Systems.
• Microgen's Offer is 4.51 pence in cash and 0.18168 Microgen Shares for
each AFA Systems Share, implying a total of 15.32 pence per share (based on the
average Closing Price of 59.5 pence per Microgen Share over the five business
days prior to the date of this Announcement).
• The Offer values the whole of the existing issued ordinary share
capital of AFA Systems at approximately £7.2 million. The Offer also contains a
Mix-and-Match alternative.
• Subject to the Offer being declared wholly unconditional, Microgen has
also agreed to acquire the £1.5 million Loan Notes in AFA Systems from the Loan
Notes Holder for £1.5 million, to be satisfied by £441,580 in cash and
£1,058,420 by the issue of 1,778,857 Microgen Shares.
• Microgen has received irrevocable undertakings and non-binding letters
of intent to accept the Offer in respect of 22,731,692 AFA Systems Shares,
representing approximately 48.18 per cent. of AFA Systems' existing issued
ordinary share capital.
• Placing of 4,300,000 new ordinary shares of Microgen at 57.0 pence per
share.
Commenting on the Offer, Martyn Ratcliffe, Executive Chairman of Microgen plc,
said:
'The acquisition of AFA Systems strengthens Microgen's presence and offerings in
the financial services market. AFA Systems has a strong underlying business
that complements Microgen's existing activities in this sector and the combined
operations will benefit from the greater scale achieved through consolidation
and integration.'
Commenting on the Offer, Mike Hart, Chairman and Chief Executive of AFA Systems
plc said:
'We are pleased to become part of the Microgen Group and believe that a
combination of Microgen and AFA Systems will improve the product offering and
market position of the Enlarged Group to benefit both companies, their
shareholders and customers. Microgen operates in areas that are complementary
to AFA Systems, and the AFA Systems Board believes that the greater strength of
its balance sheet will provide greater sales opportunities for AFA Systems'
suite of quality products.'
The conditions and further terms of the Offer are set out in Appendix I to the
full Announcement. Appendix III contains further information and conditions
relating to the Placing. This summary should be read in conjunction with, and is
subject to, the full text of the following Announcement. Terms used in this
summary shall have the meanings given to them in Appendix IV to the full
Announcement. Appendix II contains bases, sources and other information.
PRESS ENQUIRIES:
For further information contact:
Microgen AFA Systems
Martyn Ratcliffe, Executive Chairman Mike Hart, Chairman and Chief Executive
Mike Phillips, Group Finance Director Henry Sallitt, Group Finance Director
Phone: 01753 847123 Phone: 020 7337 7250
UBS Investment Bank Bridgewell
Nick Adams Greg Aldridge
Phone: 020 7567 8000 Nick Lovering
Phone: 020 7003 3000
Financial Dynamics Smithfield
Giles Sanderson Reg Hoare
Phone: 020 7831 3113 Will Swan
Phone: 020 7360 4900
The Offer will not be being made, directly or indirectly, in or into, or by the
use of the mails of, or by any means or instrumentality (including, without
limitation, telephonically or electronically) of interstate or foreign commerce
of, or any facility of a national securities exchange of, the United States,
Canada, Australia or Japan. This Announcement does not constitute an offer in or
into the United States, Canada, Australia or Japan and the Offer should not be
accepted by any such use, means, instrumentality or facility or from within the
United States, Canada, Australia or Japan. Accordingly, this Announcement is not
being, and must not be, mailed or otherwise distributed or sent in, into or from
the United States, Canada, Australia or Japan and persons receiving the same
(including nominees, trustees or custodians) must not distribute or send this
Announcement in, into or from the United States, Canada, Australia or Japan.
The New Microgen Shares to be issued pursuant to the Offer, the Loan Note
Acquisition Agreement and the Placing have not been and will not be registered
under the United States Securities Act of 1933 (as amended) or under the
securities laws of any jurisdiction of the United States, nor has a prospectus
in relation to the New Microgen Shares been lodged with, or registered by, the
securities commission of any province or territory of Canada or the Australian
Securities and Investments Commission or the Ministry of Japan. Accordingly, the
New Microgen Shares may not be offered, sold, re-sold or delivered, directly or
indirectly, in or into the United States (unless they are registered or exempt
from registration), Canada, Australia or Japan or any other jurisdiction outside
the United Kingdom in which the offer of New Microgen Shares would constitute a
violation of relevant laws or require registration thereof. There will be no
public offer of the securities in the United States.
This Announcement contains certain statements that are or may be
forward-looking. These statements typically contain words such as 'intends', '
expects', 'anticipates', 'estimates' and words of similar import. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements. These factors include, but are not limited to, factors identified
elsewhere in this Announcement as well as the following possibilities: future
revenues are lower than expected; costs of difficulties relating to the
integration of the businesses of Microgen and AFA Systems, or of other future
acquisitions, are greater than expected; expected cost savings from the
transaction or from other future acquisitions are not fully realised or realised
within the expected time frame; competitive pressures in the industry increase;
general economic conditions or conditions affecting the relevant industries,
whether internationally or in the places where Microgen and AFA Systems do
business, are less favourable than expected; and/or conditions in the securities
market are less favourable than expected.
UBS is acting exclusively for Microgen in connection with the Acquisition and
the Placing and no one else and will not be responsible to anyone other than
Microgen for providing the protections afforded to clients of UBS, or for
providing advice in relation to the Acquisition or the Placing.
Bridgewell, which is regulated in the United Kingdom by the Financial Services
Authority, is acting for AFA Systems and no one else and will not be responsible
to anyone other than Microgen for providing the protection afforded to clients
of Bridgewell, or for providing advice in relation to the Acquisition.
Press Release
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO
ANY RESTRICTED JURISDICTION INCLUDING THE US, CANADA, AUSTRALIA OR JAPAN.
FOR IMMEDIATE RELEASE
13 August 2004
RECOMMENDED OFFER
by
UBS INVESTMENT BANK
on behalf of
MICROGEN PLC
for
the ordinary share capital
AFA SYSTEMS PLC
AND
PLACING OF 4,300,000 NEW ORDINARY SHARES
1 Introduction
The Boards of Microgen and AFA Systems announce the terms of a recommended offer
for the whole of the issued and to be issued ordinary share capital of AFA
Systems and a placing of 4,300,000 Microgen Shares at 57.0 pence per share. The
Offer will be made by UBS Investment Bank on behalf of Microgen.
2 The Offer and the Loan Note Acquisition
Agreement
The Offer will be made on the following basis:
for each AFA Systems Share 4.51 pence in cash and 0.18168 Consideration Shares
The Offer values each AFA Systems Share at 15.32 pence, based on the average
Closing Price of 59.5 pence per Microgen Share over the five business days prior
to the date of this Announcement, and values the whole of AFA Systems' existing
issued share capital at approximately £7.2 million.
The Offer represents a premium of approximately 2.1 per cent. to the average
Closing Price per AFA Systems Share over the five business days prior to this
Announcement.
Based on the Closing Price of 59.5 pence per Microgen Share on 12 August 2004
(the last dealing day prior to the date of this Announcement), the Offer values
each AFA Systems Share at approximately 15.32 pence.
In view of AFA Systems' size in relation to Microgen, the Acquisition is
conditional, inter alia, on the approval of Microgen's shareholders which is to
be sought at an EGM.
AFA Systems has in place the £1.5 million Loan Notes and the £250,000 Loan
Notes. The £1.5 million Loan Notes convert into AFA Systems Shares once an
offer for AFA Systems is declared wholly unconditional. Microgen and AFA
Systems have reached agreement with the Loan Notes Holder that, subject to the
Offer becoming or being declared wholly unconditional, Microgen will acquire the
£1.5 million Loan Notes from the Loan Notes Holder for £1.5 million, to be
satisfied by £441,580 in cash and £1,058,420 by the issue of 1,778,857
Consideration Shares. The £250,000 Loan Notes are redeemable for cash on the
Offer becoming or being declared wholly unconditional.
A circular to Shareholders including notice of EGM, the Offer Document to AFA
Systems Shareholders and Listing Particulars of Microgen containing further
information about the Acquisition and AFA Systems will be posted shortly.
AFA Systems Shareholders who validly accept the Offer may elect in respect of
some or all of their AFA Systems Shares, under the Mix and Match Election, to
receive as consideration either:
(i) all Consideration Shares and no cash, on the basis of 0.25748
Consideration Shares for each AFA Systems Share in respect of which an election
is made; or
(ii) all cash and no Consideration Shares, on the basis of 15.32 pence in
cash for each AFA Systems Share in respect of which an election is made;
instead of the combination of Consideration Shares and cash provided under the
basic terms of the Offer.
However, whilst it is possible for the Offer to be satisfied entirely in
Microgen Shares, the total amount of consideration satisfied in cash will not
exceed at any time £2.16 million.
The Offer will be conditional on, amongst other things, the approval of
Microgen's shareholders and will be subject to the conditions and the further
terms set out in Appendix I and those to be set out in the Offer Document and
the Form of Acceptance.
3 The Placing
The Placing Shares represent approximately five per cent. of Microgen's issued
share capital prior to the Placing, the Acquisition and the completion of the
Loan Note Acquisition Agreement, and are to be placed with institutional
investors at a price of 57 pence per share. The net proceeds of the Placing
(approximately £2.43 million) received by Microgen will be retained by the
Microgen Group for ongoing corporate purposes. The total number of New Microgen
Shares that will be issued as a result of the Placing, upon completion of the
Loan Note Acquisition Agreement (assuming the Offer becomes or is declared
wholly unconditional) and completion of the Acquisition, under the basic terms
of the Offer, will be 14,650,982.
The maximum amount of New Microgen Shares that could be issued under the
Placing, Acquisition and Loan Note Acquisition Agreement is 18,227,419.
Applications will be made to the UK Listing Authority for the Placing Shares and
the Consideration Shares to be admitted to the Official List and to the London
Stock Exchange for admission to trading on its market for listed securities.
The Placing is conditional, inter alia, on Admission of the Placing Shares but
it is not conditional on the Offer becoming or being declared wholly
unconditional or on the acquisition of the £1.5 million Loan Notes.
4 Recommendation
The AFA Systems Board, which has been so advised by Bridgewell, considers the
terms of the Offer to be fair and reasonable. In providing advice to the AFA
Systems Board, Bridgewell has taken into account the commercial assessments of
the AFA Systems Directors.
Accordingly, the AFA Systems Directors unanimously recommend AFA Systems
Shareholders to accept the Offer.
5 Support of AFA Systems Shareholders and
Microgen Shareholders
Microgen has received irrevocable undertakings to accept the Offer in respect of
a total of 15,678,940 AFA Systems Shares representing approximately 33.23 per
cent. of the existing issued AFA Systems Shares, as detailed below.
Irrevocable undertakings to accept (or use all reasonable endeavours to procure
the acceptance of) the Offer have been received from the AFA Systems Directors
in respect of beneficial holdings of 3,414,002 AFA Systems Shares representing
approximately 7.24 per cent. of the existing issued AFA Systems Shares. These
irrevocable undertakings are binding even in the event of a higher competing
offer but will cease to be binding if the Offer lapses or is withdrawn.
Microgen has also received irrevocable undertakings to accept (or use all
reasonable endeavours to procure the acceptance of) the Offer from certain
institutional and other shareholders in respect of 12,264,938 AFA Systems Shares
representing approximately 25.99 per cent. of the issued share capital of AFA
Systems. These irrevocable undertakings are binding even in the event of a
higher competing offer but will cease to be binding if the Offer lapses or is
withdrawn.
In addition to the irrevocable undertakings, Microgen has received non-binding
letters of intent to accept the Offer from certain institutional shareholders in
respect of a total of 7,052,752 AFA Systems Shares representing approximately
14.95 per cent. of the existing issued AFA Systems Shares.
In aggregate, therefore, Microgen has received irrevocable undertakings and
non-binding letters of intent to accept the Offer in respect of 22,731,692 AFA
Systems Shares, representing approximately 48.18 per cent. of the existing
issued AFA Systems Shares.
The Microgen Board will vote in favour of the resolutions relating to the Offer,
details of which are in paragraph 16 below and which are to be proposed at
Microgen's EGM, in respect of their own beneficial holdings of 9,674,066
Microgen Shares, representing approximately 11.12 per cent. of the existing
issued share capital of Microgen.
6 Finance
Full acceptance of the Offer and completion of the Loan Note Acquisition
Agreement would require a maximum cash payment of approximately £2.60 million by
Microgen, which will be funded out of Microgen's existing cash resources. UBS
is satisfied that sufficient financial resources are available for Microgen to
satisfy the consideration payable as a result of full acceptance of the Offer
and completion of the Loan Note Acquisition Agreement even if the Placing does
not go ahead.
7 Loan Notes
As part of the consideration payable on the acquisition of Strategic Asset
Management Solutions Limited ('SAMS'), AFA Systems issued to the Loan Notes
Holder the £250,000 Loan Notes and the £1.5 million Loan Notes.
The £250,000 Loan Notes will be repayable in cash upon the Offer becoming or
being declared wholly unconditional.
It has, however, come to the AFA Systems Board's attention that the announcement
by AFA Systems and the circular sent to AFA Systems Shareholders ('the AFA
Systems Documents') both dated 7 November 2003 did not contain a complete
summary of the change of control provisions of the £1.5 million Loan Notes
because the second part of the applicable formula for conversion was omitted.
The AFA Systems Documents stated that in the event of a change of control of AFA
Systems, all outstanding unredeemed and unconverted £1.5 million Loan Notes will
be converted into AFA Systems Shares at a conversion rate of one AFA Systems
Share for every £0.36 nominal amount of the notes being converted ('the
Conversion Rate'). The conditions of the £1.5 million Loan Notes in fact
provide that upon a change of control of AFA Systems, all unredeemed £1.5
million Loan Notes then in issue shall be automatically converted into AFA
Systems Shares at whichever of the following rates would yield the higher number
of AFA Systems Shares: (i) the Conversion Rate; and (ii) at a price per AFA
Systems Share equal to the average of the mid market valuations of AFA Systems
Shares as quoted by the London Stock Exchange plc over the 10 business days
immediately preceding the date on which either a controlling interest (being the
ability to exercise or control the exercise of in the aggregate more than 50 per
cent of the total voting rights (within the meaning of section 736A(2) of the
Act) capable of being exercised at general meetings of AFA Systems) in AFA
Systems, or the date on which the Offer is declared wholly unconditional
(whichever is the earlier).
The conditions of the £1.5 million Loan Notes were varied pursuant to the Loan
Note Variation such that for the purposes of the Offer only the £1.5 million
Loan Notes (i) become transferable (whereas prior to the variation they were not
transferable); and (ii) do not convert to AFA Systems Shares automatically upon
a change of control of AFA Systems.
Microgen has entered into the Loan Note Acquisition Agreement by which Microgen
agrees to purchase the £1.5 million Loan Note from the Loan Notes Holder. The
Loan Note Acquisition Agreement is conditional upon the Offer becoming or being
declared unconditional in all respects and provides that upon the Offer becoming
or being declared unconditional Microgen shall pay to the Loan Note Holder £1.5
million consisting of £441,580 in cash and £1,058,420 satisfied by the issue of
1,778,857 Microgen Shares. The £1.5 million Loan Note will then be held by
Microgen who shall have the right (but not the obligation) to convert the £1.5
million Loan Note into AFA Systems Shares.
Further information on the £250,000 Loan Notes and the £1.5 million Loan Notes
will be included in the Offer Document which it is intended will be issued
shortly.
8 Background to and reasons for the Offer
Background
The Microgen Board believes that the small-cap software and IT services sector
in the UK is fragmented and that selective consolidation is likely to serve the
interests of small companies and their shareholders by creating larger, better
capitalised companies with complementary products and service offerings and by
eliminating duplicated management and infrastructure costs. The Microgen Board
wishes Microgen to be an active participant in such consolidation and believes
that the acquisition of AFA Systems will strengthen Microgen's position as an IT
services and solutions provider in the UK Market.
AFA Systems reported operating losses of £1.2 million in the six months to 30
June 2004 after charging group costs of £0.6 million. Specific opportunities to
reduce the cost base have been identified by Microgen including:
o The elimination of duplicated PLC and group costs
o The elimination of excess property facilities
o The consolidation of business operations
o The migration of the SAMS development activities to South Africa, an
action already initiated by the AFA Systems Board.
In addition, Microgen has identified further cost savings which may be derived
from the consolidation of the two businesses which have not yet been fully
quantified.
As at 31 December 2003, the AFA Systems Group had accumulated tax losses of in
excess of £12 million, subject to final agreement of the 2003 tax computations
with the Inland Revenue. Microgen will seek to utilise these losses over future
years, however, there is no guarantee that these losses will be capable of being
utilised.
Benefits of the Acquisition for Microgen
The Microgen Board believes that the acquisition of AFA Systems strengthens
Microgen's presence and offering in the financial services market, increasing
the scale of the Group's vertical sector business and significantly expanding
the Group's customer base.
Prospects for the Enlarged Group
The Directors believe that the Acquisition will strengthen Microgen's position
as an IT services and solutions provider in the financial services market. The
Enlarged Group is expected to benefit from having an increased presence and
expanded client base, with a broader range of software and service offerings
with which to develop cross-selling opportunities.
Historically, Microgen has adopted a rigorous approach to cost control. This
same management discipline will be brought to the Enlarged Group, enabling
rationalisation of duplicated infrastructure costs. The benefits of the
Acquisition are likely to be reflected in the Enlarged Group's financial year
ending 31 December 2005 and subsequent periods, with the costs of
rationalisation of approximately £2 million being reported in the second half of
2004.
If the Offer is accepted by AFA Systems Shareholders, the Acquisition will
provide greater scale and new opportunities for the Microgen Group.
Furthermore, the increased size of the Enlarged Group will enable the Microgen
Board to explore further strategic opportunities in the IT sector.
Any statement or inference that the Acquisition is expected to be earnings
enhancing for the Enlarged Group should not be interpreted to mean that the
earnings per share in the financial year following the Acquisition, or in any
subsequent period, will necessarily be greater than those for the relevant
preceding financial period.
9 Details of the Placing and application of proceeds
Pursuant to the Placing, which has been arranged by UBS on behalf of Microgen,
the Placing Shares are being conditionally placed with institutional and other
investors at the Placing Price.
The Placing will raise approximately £2.45 million before expenses
(approximately £2.43 million net of expenses) for Microgen.
The Placing Shares represent approximately five per cent. of the existing issued
share capital of Microgen prior to the Placing, the Acquisition and completion
of the Loan Note Acquisition Agreement. The Placing Shares will be issued
credited as fully paid and will rank pari passu with the existing Microgen
Shares, including the right to receive all dividends and other distributions
declared, made or paid after these are issued. Microgen has applied for
Admission of the Placing Shares and it is expected that Admission of the Placing
Shares will take place and that trading will commence in the Placing Shares on
18 August 2004.
The Placing is conditional, inter alia, on:
(a) the Placing Agreement becoming unconditional and not having
been terminated in accordance with its terms prior to Admission of the Placing
Shares; and
(b) Admission of the Placing Shares becoming effective no later
than 18 August 2004.
After payment of the expenses of the Placing, the net proceeds of the Placing
(approximately £2.43 million) received by Microgen will be retained by the
Microgen Group for ongoing corporate purposes. In the event that the Placing is
not successful, Microgen has sufficient existing resources to complete the
Acquisition and the acquisition of the £1.5 million Loan Note.
The Placing is not conditional upon the Acquisition and if the Acquisition is
not completed, the net proceeds from the Placing will be first applied in
satisfying costs incurred by the Microgen Group in relation to the Acquisition.
The remaining funds will be placed on deposit and retained to finance the
further development of the Microgen Group. If a suitable opportunity arose, the
proceeds would also be available to fund other acquisitions in line with the
Microgen Group's publicly stated strategy.
10 Information on Microgen
In terms of both operating results and the strategic development of the Microgen
Group, the 2003 financial year was one of considerable success. Despite the
difficult market environment, the Board of Microgen reported a strong
performance for the year ended 31 December 2003 for its continuing businesses,
due largely to the disciplined management approach maintained during the period.
The two acquisitions of M.M.T. Computing plc and Imago QA Limited, completed
towards the end of the 2003 financial year substantially increased the size of
the Microgen Group, providing an expanded customer base and broader product and
service offerings. In both acquisitions, the integration has been rapid and
effective to reduce the cost base and realize the benefits from the increased
scale. The benefits derived from the acquisition and integration of these
businesses is affirmed in the Microgen unaudited results for the first six
months which were released on 15 July 2004.
Microgen businesses
The business activities of Microgen include:
Consultancy. The Microgen Group's consultancy services currently contribute the
greatest proportion of revenue to Microgen. These activities include IT
consultancy services such as information management, integration and software
testing & acceptance, but also include more business-specific consultancy
services associated with IT, particularly in the financial services sector where
the deployment of Microgen's software applications typically require both
technical and domain expertise.
Managed services. Microgen provides added-value transactional services in
billing, payment and hosted database and document management, where Microgen
adds value by processing, distributing, storing and analysing data for a wide
variety of applications, including the Microgen Group's billing and document
management services. Microgen also provides application support services for the
ongoing support of developments made by the consultancy operations and/or third
party software/consultancy projects.
Software. Microgen has a number of software offerings, including:
• Microgen-OST Business Rules is a rules-driven integration tool,
which also provides a core technology for additional products such as
Reconciliation software and Microgen's Financial Data Repository. This
technology is also being used in the development of new products, such as the
replacement for the Cortex Derivatives system.
• Microgen is a leading provider of BACS payment software and
solutions in the UK. With the launch of BACS-IP, all UK customers using BACS
payment transfers will need to upgrade their software over the next two years
and Microgen has developed a completely new range of products to maximise the
potential from this opportunity.
• Microgen also provides systems for the management of customer
acquisition and processing for suppliers of utility services in deregulated
energy markets.
Financial information
The summary financial information for the three years ended 31 December 2003 and
the six months ended 30 June 2004 shown below is extracted, without material
adjustment, from the financial information on Microgen to be set out in the
Listing Particulars expected to be published shortly. However, AFA Systems
Shareholders should read the whole of the Listing Particulars and should not
rely on the summarised information provided here.
Six months Year ended Year ended Year ended
ended 30 June 2004 31 December 31 December 31 December
2003 2002 2001
£m £m £m £m
Turnover * 21.1 24.2 25.3 21.0
Operating profit from 2.5 2.3 2.0 1.1
continuing operations **
Profit before tax** 2.6 2.5 2.2 1.7
Net assets 54.9 54.4 43.8 36.2
* excludes exceptional items
** excluding exceptional items and goodwill amortisation
As at 30 June 2004, Microgen had net cash (and cash equivalents) of
approximately £9.1 million. The market capitalisation of Microgen based on the
Closing Price of 59.5 pence per Microgen Share on 12 August 2004 (the last
dealing day prior to this Announcement) was £51.7 million.
11 Information on AFA Systems
AFA Systems business
AFA Systems is listed on the Alternative Investment Market and develops, sells,
implements and supports a range of financial software for the banking and asset
management sectors.
AFA Systems operates in two business sectors within the financial services
market:
Wholesale Banking and Capital Markets
AFA Systems provides banking solutions, which are primarily targeted at
applications in Treasury/ Capital Markets and Derivatives Trading.
Asset Management
AFA Systems provides a range of software solutions aimed at both institutional
and private client fund managers.
Financial information
The summary financial information for the three years ended 31 December 2003
(audited) and the six months ended 30 June 2004 (unaudited) shown below is
extracted, without material adjustment, from the financial information on AFA
Systems to be set out in the Listing Particulars expected to be published
shortly. However, the whole of the Listing Particulars should be read and the
summarised information provided here should not be relied upon.
Six months to/ as at 30 Year ended/ as at 31 December
June 2004
2003 2002 2001
£m £m £m £m
Turnover 4.1 6.5 6.0 8.1
Operating profit/(loss)* (1.2) (1.6) (2.4) (0.5)
Profit/(loss) before tax* (1.2) (1.5) (2.3) (0.4)
Net assets 9.8 11.8 10.8 21.4
* excluding exceptional items and goodwill amortisation
As at the close of business on 12 August 2004, being the last practicable date
prior to the release of this Announcement, the market capitalisation of AFA
Systems was approximately £7.1 million. As at 30 June 2004, AFA Systems had
cash (and cash equivalents) of approximately £0.7 million as stated in AFA
Systems' unaudited interim financial statements.
12 Current trading and prospects of AFA Systems
AFA Systems' first half performance was disappointing given that further losses
were incurred and underlying sales excluding SAMS were down. The anticipated
recovery in the market has to date not been reflected in new sales. The AFA
Systems Board remains confident in the level of business from existing
customers.
13 Directors, management and employees
Microgen intends to safeguard the existing employment rights, including pension
rights, of the management and employees of AFA Systems. AFA Systems' employees
will be given the opportunity to transfer onto Microgen's standard terms and
conditions in the event that the Offer becomes or is declared wholly
unconditional.
Mike Hart (the Chairman and Chief Executive of AFA Systems) will remain on the
board of AFA Systems as a non-executive director to assist in the integration of
the two companies upon the Offer becoming or being declared wholly
unconditional. The other directors of AFA Systems have agreed to resign upon
the Offer becoming or being declared wholly unconditional.
14 AFA Systems Share Option Schemes
The Offer will extend to any further AFA Systems Shares unconditionally allotted
or issued on or prior to the time and date on which the Offer closes (or by such
earlier time and date as Microgen may, subject to the City Code or with the
consent of the Panel, determine) as a result of the exercise of options granted
under any of the AFA Systems Share Option Schemes or otherwise. As the Offer
Price is below the exercise price of all existing AFA Systems Options, Microgen
will not make any proposals to holders of AFA Systems Options in the event that
the Offer becomes or is declared wholly unconditional. A separate resolution is
being proposed at Microgen's EGM in respect of options to be granted to key AFA
Systems Employees who transfer onto the standard Microgen employment terms and
conditions.
15 Inducement Fee
Microgen has entered into an inducement fee letter agreement with AFA Systems
dated 13 August 2004. In that letter agreement, AFA Systems has agreed to pay
Microgen a fee of £72,293 in the event that the AFA Systems Board withdraws or
adversely qualifies its recommendation of the Offer prior to the Offer becoming
wholly unconditional as to acceptances, lapsing or being withdrawn in accordance
with its terms, or if a competing third party offer is announced which
subsequently becomes wholly unconditional. Also in a separate compensation fee
letter agreement, Microgen has agreed to pay AFA Systems a fee of £72,293 in the
event that Shareholders do not give the necessary approvals for the Offer to
proceed at the EGM or Microgen Directors change their recommendation of the
Acquisition to Microgen Shareholders. In both cases, the fee to be paid is in
respect of the time, costs and expense of the parties in performing due
diligence and negotiating the terms of the Offer.
16 Shareholders' approval
In view of the relative sizes of the two companies, the Offer is conditional,
inter alia, upon the approval of Microgen Shareholders at an EGM to be convened
at 11 Park Street, Windsor, Berkshire SL4 1LU. Resolutions will be proposed in
order to approve and effect the Offer.
Accordingly, a circular convening an EGM will be posted to Shareholders as soon
as possible. The Microgen Board will vote in favour of the resolutions relating
to the Offer to be proposed at the EGM in respect of their own beneficial
holdings of 9,674,066 Microgen Shares representing approximately 11.12 per cent.
of the existing issued share capital of Microgen.
17 Compulsory acquisition and cancellation of listing of AFA
Systems Shares
Following the Offer becoming or being declared unconditional in all respects
Microgen intends to use the procedures set out in sections 428 to 430F of the
Act to acquire compulsorily any outstanding AFA Systems Shares to which the
Offer relates. Microgen will also procure the making of an application by AFA
Systems to the Alternative Investment Market of the London Stock Exchange for
the cancellation of the listing of AFA Systems Shares on the Alternative
Investment Market and to the London Stock Exchange for the cancellation of the
admission to trading of AFA Systems Shares.
An announcement will be made following either (i) the Offer becoming or being
declared unconditional in all respects or (ii) the commencement of the
compulsory acquisition procedures under sections 428 to 430F of the Act in
respect of the AFA Systems Shares, stating the anticipated time and date when
the listing and admission to trading will be cancelled being not less than 20
business days following such event.
The cancellation of the listing of AFA Systems Shares will significantly reduce
the liquidity and marketability of any AFA Systems Shares not assented to the
Offer and their value may be affected as a consequence.
18 Overseas Shareholders
The availability of the Offer to persons not resident in the United Kingdom may
be affected by the laws of their relevant jurisdictions. Any persons who are
subject to the laws of any jurisdiction other than those of the United Kingdom
should inform themselves about and observe any applicable legal and regulatory
requirements in their jurisdiction.
It is the responsibility of any Overseas Shareholder wishing to accept the Offer
to satisfy themselves as to the full observance of the laws and regulatory
requirements of the relevant territory in connection therewith, including the
obtaining of any governmental, exchange control or other consents which may be
required or the compliance with other necessary formalities needing to be
observed and the payment of any issue, transfer or other taxes or duties due in
such jurisdiction.
The Offer will not be made, directly or indirectly, in or into the United
States, Canada, Australia or Japan. The New Microgen Shares to be issued
pursuant to the Offer have not been and will not be registered under the United
States Securities Act of 1933 (as amended) or under the securities laws of any
jurisdiction of the United States, nor has a prospectus in relation to the New
Microgen Shares been lodged with, or registered by, the Securities Commission of
any province or territory of Canada or the Australian Securities and Investments
Commission or the Ministry of Japan.
Further details of the bases and sources of the financial information relating
to the Offer are set out in Appendix II.
19 General
The Offer will be subject to the applicable requirements of the Code. The Offer
Document and Listing Particulars and the Form of Acceptance containing the full
terms and conditions of the Offer will be posted to AFA Systems Shareholders
(other than those AFA Systems Shareholders to whom the Offer will not be made,
described in Paragraph 18) as soon as practicable.
In deciding whether or not to accept the Offer in respect of their AFA Systems
Shares, AFA Systems Shareholders should rely on the information contained in,
and follow the procedures described in, the Offer Document and Form of
Acceptance.
Neither Microgen nor any of its directors, nor, so far as Microgen is aware, any
party acting in concert with it, owns or controls any AFA Systems Shares or
holds any options to purchase AFA Systems Shares or has entered into any
derivative referenced to securities of AFA Systems which remain outstanding.
The conditions to and certain further terms which will relate to the Offer are
set out in Appendix I.
The bases and sources of certain financial information contained in this
Announcement are set out in Appendix II, further information and conditions
relating to the Placing is set out in Appendix III and definitions of certain
expressions used in this Announcement are contained in Appendix IV.
This Announcement does not constitute an offer or an invitation to purchase any
securities.
PRESS ENQUIRIES:
For further information contact:
Microgen AFA Systems
Martyn Ratcliffe, Executive Chairman Mike Hart, Chairman and Chief Executive
Mike Phillips, Group Finance Director Henry Sallitt, Group Finance Director
Phone: 01753 847123 Phone: 020 7337 7250
UBS Investment Bank Bridgewell
Nick Adams Greg Aldridge
Phone: 020 7567 8000 Nick Lovering
Phone: 020 7003 3000
Financial Dynamics Smithfield
Giles Sanderson Reg Hoare
Phone: 020 7831 3113 Will Swan
Phone: 020 7360 4900
The Offer will not be made, directly or indirectly, in or into, or by the use of
the mails of, or by any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facility of a national securities exchange of, the United States, Canada,
Australia or Japan. This Announcement does not constitute an offer in or into
the United States, Canada, Australia or Japan and the Offer should not be
accepted by any such use, means, instrumentality or facility or from within the
United States, Canada, Australia or Japan. Accordingly, this Announcement is not
being, and must not be, mailed or otherwise distributed or sent in, into or
from the United States, Canada, Australia or Japan and persons receiving the
same (including nominees, trustees or custodians) must not distribute or send
this Announcement in, into or from the United States, Canada, Australia or
Japan.
The New Microgen Shares to be issued pursuant to the Offer and the Placinghave
not been and will not be registered under the United States Securities Act of
1933 (as amended) or under the securities laws of any jurisdiction of the United
States, nor has a prospectus in relation to the New Microgen Shares been lodged
with, or registered by, the securities commission of any province or territory
of Canada or the Australian Securities and Investments Commission or the
Ministry of Japan. Accordingly, the New Microgen Shares may not be offered,
sold, re-sold or delivered, directly or indirectly, in or into the United States
(unless they are registered or exempt from registration), Canada, Australia or
Japan or any other jurisdiction outside the United Kingdom in which the offer of
New Microgen Shares would constitute a violation of relevant laws or require
registration thereof. There will be no public offer of the securities in the
United States.
This Announcement contains certain statements that are or may be
forward-looking. These statements typically contain words such as 'intends',
'expects', 'anticipates', 'estimates' and words of similar import. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements. These factors include, but are not limited to, factors identified
elsewhere in this Announcement as well as the following possibilities: future
revenues are lower than expected; costs of difficulties relating to the
integration of the businesses of Microgen and AFA Systems, or of other future
acquisitions, are greater than expected; expected cost savings from the
transaction or from other future acquisitions are not fully realised or realised
within the expected time frame; competitive pressures in the industry increase;
general economic conditions or conditions affecting the relevant industries,
whether internationally or in the places where Microgen and AFA Systems do
business, are less favourable than expected; and/or conditions in the securities
market are less favourable than expected.
UBS is acting exclusively for Microgen in connection with the Acquisition and
the Placing and no one else and will not be responsible to anyone other than
Microgen for providing the protections afforded to clients of UBS, or for
providing advice in relation to the Acquisition or the Placing.
Bridgewell, which is regulated in the United Kingdom by the Financial Services
Authority, is acting for AFA Systems and no one else and will not be responsible
to anyone other than Microgen for providing the protection afforded to clients
of Bridgewell, or for providing advice in relation to the Acquisition.
APPENDIX I
Conditions to and certain further terms of the Offer
Part A: Conditions of the Offer
The Offer, which will be made by UBS on behalf of Microgen, will comply with the
rules and regulations of the Financial Services Authority, the London Stock
Exchange and the City Code. In addition, the Offer will be governed by English
law and will be subject to the jurisdiction of the courts of England and to the
terms and conditions set out below, in the Offer Document and in the Form of
Acceptance.
The Offer will be subject to the following conditions:
(a) valid acceptances of the Offer being received (and not, where
permitted, withdrawn) by not later than 3.00 p.m. (London time) on the first
closing date of the Offer (or such later time(s) and/or date(s) as Microgen may,
subject to the rules of the City Code or with the consent of the Panel, decide)
in respect of not less than 90 per cent. (or such lesser percentage as Microgen
may decide) in nominal value of the AFA Systems Shares to which the Offer
relates, provided that, unless agreed by the Panel, this condition will not be
satisfied unless Microgen and/or any of its wholly-owned subsidiaries shall have
acquired or agreed to acquire (whether pursuant to the Offer or otherwise)
directly or indirectly AFA Systems Shares carrying in aggregate more than 50 per
cent. of the voting rights then normally exercisable at a general meeting of AFA
Systems, including for this purpose (except to the extent, if any, required by
the Panel) any such voting rights attaching to any AFA Systems 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 and, for the purpose
of this condition:
(i) the expression 'AFA Systems Shares to which the Offer relates' shall
be construed in accordance with sections 428 to 430F inclusive of the Act;
(ii) AFA Systems Shares which have been unconditionally allotted
but not issued shall be deemed to carry the voting rights which they will carry
upon being entered in the register of members of AFA Systems; and
(iii) valid acceptances shall be deemed to have been received in
respect of AFA Systems Shares which are treated for the purposes of section 429
(8) of the Act as having been acquired or contracted to be acquired by Microgen
by virtue of acceptances of the Offer;
(b) the admission to the Official List of the Consideration Shares issued
pursuant to the Offer becoming effective in accordance with the Listing Rules
and the admission of such shares to trading becoming effective in accordance
with the Admission and Disclosure Standards of the London Stock Exchange or
(subject to the consent of the Panel) the UK Listing Authority agreeing to admit
such shares to the Official List and the London Stock Exchange agreeing to admit
such shares to trading subject only to (i) the allotment of such shares and/or
(ii) the Offer becoming or being declared unconditional in all respects;
(c) the passing at an extraordinary general meeting of Microgen
(or any adjournment thereof) of all such resolution(s) as may be necessary for
the approval and implementation of the Offer, the required increase in the
authorised share capital of Microgen and the authority to its directors to allot
shares;
(d) insofar as the merger provisions of the Enterprise Act 2002
may be applicable to any aspect of the proposed acquisition of AFA Systems by
Microgen, the Office of Fair Trading not indicating that it intends to refer the
proposed acquisition of AFA Systems by Microgen (its implementation or any
matter of matters arising therefrom) to the Competition Commission;
(e) no Third Party having intervened in a way and there not continuing to
be outstanding any statute, legislation, regulation, decision or order of any
Third Party in each case which would or might reasonably be expected to:
(i) make the Offer, its implementation or the acquisition or proposed
acquisition by Microgen or any member of the Wider Microgen Group of any shares
or other securities in, or control of AFA Systems or any member of the Wider AFA
Systems Group, void, illegal, prohibited and/or unenforceable in or under the
laws of any relevant jurisdiction, or otherwise, directly or indirectly,
restrain, prevent, prohibit, restrict or delay or otherwise interfere with the
Offer or such acquisition or impose additional conditions or obligations with
respect to the Offer or such acquisition, or otherwise, in any material way,
impede, challenge or interfere with the Offer or such acquisition, or require
amendment to the terms of the Offer or the proposed acquisition of any AFA
Systems Shares or the acquisition of control of AFA Systems or any member of the
Wider AFA Systems Group by Microgen;
(ii) require, prevent or delay, the divestiture (or alter the terms
envisaged for any proposed divestiture) by any member of the Wider Microgen
Group of any shares or other securities (or the equivalent) in AFA Systems;
(iii) require, prevent or delay, the divestiture (or alter the terms
envisaged for any proposed divestiture) by any member of the Wider Microgen
Group or by any member of the Wider AFA Systems Group, in any such case of all
or any material portion of their respective businesses, assets or properties or
impose any limitation on the ability of any of them to conduct any of their
respective businesses (or any of them) or to own or dispose of all of their
respective assets or properties or any part thereof,
(iv) impose any limitation on, or result in a delay in, the ability
of any member of the Wider Microgen Group or any member of the Wider AFA Systems
Group to acquire or to hold or to exercise effectively, directly or indirectly,
all or any rights of ownership in respect of shares or loans or securities
convertible into shares or other securities (or the equivalent) in, or to
exercise management control over, any member of the Wider AFA Systems Group or
any member of the Wider Microgen Group;
(v) without limitation to the foregoing, require any member of
the Wider Microgen Group or the Wider AFA Systems Group to acquire, or to offer
to acquire, any shares or other securities (or their equivalent) in any member
of the Wider Microgen Group or any member of the Wider AFA Systems Group or any
asset owned by any third party (other than in implementation of the Offer or
pursuant to Rule 9 of the Code);
(vi) require any member of the Wider Microgen Group or the Wider
AFA Systems Group to sell, or to offer to sell, any shares or other securities
(or their equivalent) of the Wider AFA Systems Group or any interest in any
asset owned by any member of the Wider Microgen Group or Wider AFA Systems
Group;
(vii) impose any limitation on the ability of any member of the Wider
Microgen Group or any member of the Wider AFA Systems Group to integrate or
co-ordinate its business, or any part of it, with all or any part of the
businesses of any other member of the Wider Microgen Group or the Wider AFA
Systems Group;
(viii) result in any member of the Wider AFA Systems Group or the Wider
Microgen Group ceasing to be able to carry on business under any name under
which it presently does so or ceasing to be able to use in its business (or
ceasing to be able to use it on the same terms) any name, trademark or other
intellectual property right which it at present uses where such name or use is
material to the business of the Wider AFA Systems Group or the Wider Microgen
Group taken as a whole; or
(ix) otherwise adversely affect any or all of the business, assets,
financial or trading position, profits or prospects of any member of the Wider
AFA Systems Group or any member of the Wider Microgen Group in a way which is
material in the context of the Wider AFA Systems Group and the Wider Microgen
Group taken as a whole;
and all applicable waiting and other time periods during which any Third Party
could intervene in such a way under the laws of any relevant jurisdiction having
expired, lapsed or been terminated;
(f) all necessary filings, applications and/or notifications having been
made, all applicable waiting and other time periods (including any extensions
thereof) under any applicable legislation or regulation of any relevant
jurisdiction having expired, lapsed or been terminated and all necessary
statutory or regulatory obligations in any relevant jurisdiction having been
complied with in each case in connection with the Offer or the acquisition of
any shares or other securities in, or control of, AFA Systems or any other
member of the Wider AFA Systems Group by any member of the Wider Microgen Group
or any part thereof or any matter arising therefrom or relating thereto and all
necessary Authorisations considered necessary or appropriate by Microgen (or any
other member of the Wider Microgen Group) in any relevant jurisdiction for or in
respect of the Offer or the acquisition or proposed acquisition of any shares or
other securities in, or control of, AFA Systems or any other member of the Wider
AFA Systems Group by any member of the Wider Microgen Group or the carrying on
by any member of the Wider AFA Systems Group of its business or any part thereof
or any matter arising therefrom or relating thereto having been obtained, in
terms and in a form satisfactory to Microgen (acting reasonably), from all
appropriate Third Parties and from any persons or bodies with whom any member of
the Wider AFA Systems Group has entered into any material contractual
arrangements and any conditions or obligations attached to any such
Authorisations being in terms and in a form satisfactory to Microgen (or any
other member of the Wider Microgen Group), and all such Authorisations remaining
in full force and effect and there being no notice or intimation of any
intention to revoke, suspend, restrict, modify or not to renew any of the same
and all necessary statutory and regulatory obligations in any jurisdiction
having been complied with;
(g) save as disclosed by AFA Systems to Microgen in writing prior to 13
August 2004 there being no provision of any arrangement, agreement, licence,
permit, franchise, facility, lease or other instrument to which any member of
the Wider AFA Systems Group is a party or by or to which any member of the Wider
AFA Systems Group or any of its assets is or 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 shares or other securities in, or
control of, AFA Systems or any other member of the Wider AFA Systems Group by
any member of the Wider Microgen Group or any part thereof or any matter arising
therefrom or relating thereto or otherwise, could or might reasonably be
expected to result, (as a consequence of the Offer, or of the proposed
acquisition of any shares in, or control of AFA Systems by Microgen) in:
(i) any monies borrowed by or any other indebtedness or
liabilities, actual or contingent, of, or grant made or available to, any member
of the Wider AFA Systems Group being or becoming repayable or being capable of
being declared repayable immediately or prior to its stated maturity or
repayment date or the ability of any member of the Wider AFA Systems Group to
borrow monies or incur any indebtedness being withdrawn or inhibited or becoming
capable of being withdrawn or inhibited;
(ii) the creation of any mortgage, charge or other security
interest over the whole or any part of the business, property, assets or
interests of any member of the Wider AFA Systems Group (whenever arising or
having arisen) or any such mortgage, charge or other security interest becoming
enforceable or being capable of being enforced;
(iii) any such arrangement, agreement, licence, permit, franchise,
facility, lease or other instrument, or the rights, liabilities, obligations or
interests of any member of the Wider AFA Systems Group thereunder in or with any
other person, firm, company, association or body (or any agreement or
arrangements relating to any such interests or business), being, or becoming
capable of being, terminated or adversely modified or affected or any adverse
action being taken or any onerous obligation or liability arising thereunder;
(iv) any interest, assets or property of any member of the Wider
AFA Systems Group being or falling to be disposed of or charged, or any right
arising under which any such interest assets or property could be required to be
disposed of or charged, in each case otherwise than in the ordinary course of
business;
(v) any member of the Wider AFA Systems Group ceasing to be able to carry
on business under any name under which it presently does so or ceasing to be
able to use in its business any name, trademark or other intellectual property
right which it at present uses, in each case on the same basis and terms as at
present apply;
(vi) the creation of any material liability actual or contingent by any
such member; or
(vii) the financial or trading position profits or prospects or value of
any member of the Wider AFA Systems Group being prejudiced or adversely
affected;
and no event having occurred which, under any provision of any such arrangement,
agreement, licence, permit, franchise, facility, lease or other instrument,
could result in any of the events or circumstances which are referred to in
paragraphs (i) to (vii) of this condition (g);
(h) since 31 December 2003, except as disclosed in the annual
report and accounts for AFA Systems in respect of the financial period then
ended (the 'Report and Accounts'), or as disclosed in the interim statement of
AFA Systems for the six months ended on 30 June 2004 (the 'Interim Statement')
or as otherwise publicly announced by AFA Systems (by the delivery of an
announcement to the Regulatory News Service of the London Stock Exchange or an
appropriate regulatory information service in accordance with the rules of the
London Stock Exchange) prior to 13 August 2004 (such information being 'publicly
announced') no member of the Wider AFA Systems Group having:
(i) issued or agreed to issue or authorised or proposed the issue of
additional shares of any class (including treasury shares), or securities
convertible into or exchangeable for, or rights, warrants or options to
subscribe for or acquire, any such shares or convertible securities, except for
any options granted and any AFA Systems Shares allotted upon the exercise of any
options granted under the AFA Systems Share Option Schemes;
(ii) recommended, declared, paid or made, or proposed the recommendation,
declaration or payment or making of, any bonus in respect of shares, dividend or
other distribution whether in cash or otherwise;
(iii) made or committed to make or authorised or proposed or announced an
intention to propose any material change in its loan capital;
(iv) merged with or demerged or acquired any body corporate or acquired or
disposed of or (save in the ordinary course of business) transferred, mortgaged
or charged or created any security interest over any assets or any right, title
or interest in any assets (including shares and trade investments) or
authorised, proposed or announced its intention so to do;
(v) issued, authorised or proposed or announced an intention to propose
the issue of any debentures or (save in the ordinary course of business) become
subject to any contingent liability or incurred or increased any indebtedness or
contingent liability;
(vi) purchased, redeemed or repaid or announced any proposal for the
purchase, redemption or repayment of any of its own shares or other securities
or reduced or made, or proposed the reduction or making of, any other change to
any part of its share capital;
(vii) entered into or varied or authorised or become bound by or
proposed the entry into or variation of, or announced its intention to enter
into or vary, any contract, transaction, arrangement or commitment (whether in
respect of capital expenditure or otherwise) outside the ordinary course of
business and which:
(A) is of a long term, onerous or unusual nature or magnitude; or
(B) could be restrictive (to a material extent) to the businesses
of any member of the Wider AFA Systems Group or any member of the Wider Microgen
Group; or
(C) involves or could involve an obligation of a long term, onerous
or unusual nature or magnitude which is material in the context of the Wider AFA
Systems Group and the Wider Microgen Group taken as a whole;
(viii) entered into, implemented, effected, authorised or proposed or
announced its intention to enter into, implement, effect, authorise or propose
any contract, reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of business
which is material in the context of the Wider AFA Systems Group taken as a
whole;
(ix) entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any agreement, commitment,
arrangement or contract with any of the directors or senior executives or senior
managers of any member of the Wider AFA Systems Group;
(x) proposed, agreed to provide or modified the terms of any share option
scheme, share scheme, incentive scheme or other benefit relating to the
employment or termination of any senior employee of the Wider AFA Systems Group;
(xi) taken or proposed any corporate action or had any order made or
legal proceedings instituted or threatened in writing against it or petition
presented for its winding-up (voluntarily or otherwise), dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any of its assets
and revenues or for any analogous proceedings or steps having occurred in any
jurisdiction or for the appointment of any analogous person in any jurisdiction;
(xii) made or agreed or consented to any material change to the terms of
the trust deeds constituting the pension schemes established for its directors
and/or employees and/or their dependants or to the benefits which accrue, or to
the pensions which are payable, thereunder, or to the basis on which
qualification for, or accrual of or entitlement to, such benefit or pensions are
calculated or determined or to the basis upon which the liabilities (including
pensions) or such pension schemes are funded or made, or agreed or consented to
any change to the trustees involving the appointment of a trust corporation or
allowed any deficit (actual or contingent) to arise or persist in relation to
the funding of any such scheme;
(xiii) been unable or admitted in writing 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 carrying on all or a
substantial part of its business;
(xiv) waived or compromised or settled any material claim;
(xv) made any material alteration to its memorandum or articles of
association, or any other incorporation document; or
(xvi) entered into any agreement, contract, commitment or arrangement or
passed any resolution or made any offer (which remains open for acceptance) or
proposed with respect to any of the transactions, matters or events referred to
in this condition (h);
(i) since 31 December 2003, except as disclosed in the Report and
Accounts or the Interim Statement or save as publicly announced prior to 13
August 2004, there having been:
(i) no adverse change or deterioration in the business, assets,
financial or trading position or profits, assets or prospects of any member of
the Wider AFA Systems Group;
ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings, to which any member of the Wider AFA Systems Group is or may become
a party (whether as claimant or defendant or otherwise) and no enquiry or
investigation (save as a result of the Offer) by or against or complaint or
reference to any Third Party, in respect of any member of the Wider AFA Systems
Group and no such inquiry, investigation, complaint or reference having been
threatened in writing, announced, implemented or instituted by or remaining
outstanding against or in respect of any member of the Wider AFA Systems Group
which, in any such case, is or may be material in the context of the Wider AFA
Systems Group taken as a whole;
(iii) no contingent or other liability which has arisen or become
apparent or increased which has or might be likely to have a material adverse
effect on the Wider AFA Systems Group taken as a whole; and
(iv) no steps taken which are likely to result in the withdrawal,
cancellation, termination or modification of any licence held by any member of
the Wider AFA Systems Group to an extent which is material in the context of the
Wider AFA Systems Group taken as a whole;
(j) Microgen not having discovered, save as disclosed by AFA Systems to
Microgen in writing prior to 13 August 2004, that:
(i) any financial or business or other information concerning the Wider
AFA Systems Group which has been publicly announced at any time by or on behalf
of any member of the Wider AFA Systems Group, is misleading or contains a
misrepresentation of fact or omits to state a fact necessary to make any
information contained therein not misleading;
(ii) any member of the Wider AFA Systems Group or partnership, company,
limited liability partnership or other entity in which any member of the Wider
AFA Systems Group has an interest and which is not a subsidiary undertaking of
AFA Systems is subject to any liability (contingent or otherwise) which is not
disclosed or adequately provided for in the Report and Accounts or the Interim
Statement; or
(iii) any past or present member of the Wider AFA Systems Group has not
complied with all applicable legislation or regulations of any jurisdiction with
regard to the use, presence, treatment, handling, transport, storage, disposal,
discharge, spillage, leak or emission of any waste or hazardous substance or any
substance likely or capable of causing harm or damage to the environment or
human health, or otherwise relating to environmental matters, or that there has
otherwise been any such use, presence, treatment, handling, transport, storage,
disposal, discharge, spillage, leak or emission (whether or not the same
constituted a non- compliance by any person with any such legislation,
directions, common laws, notices, orders, circulars, guidance or regulations and
wherever the same may have taken place) which, in any such case, would be likely
to give rise to any liability (whether actual or contingent) on the part of any
member of the Wider AFA Systems Group;
(iv) there is, or is likely to be, any liability, whether actual or
contingent, to make good, repair, reinstate or clean up any property or land now
or previously owned, occupied or made use of by any past or present member of
the Wider AFA Systems Group or any controlled waters under any past, present or
future environmental legislation, directives, common laws, notices, orders,
circulars, guidance, regulation or other lawful requirement of any relevant
authority or Third Party or otherwise or to contribute to the cost thereof or
associated therewith or indemnify any person in relation thereto;
(v) circumstances exist which are likely to result in any actual or
contingent liability of any member of the Wider AFA Systems Group under any of
the applicable legislation referred to in sub-paragraph (iii) above to improve,
or modify existing or install new plant and machinery or equipment or to carry
out any changes in the processes currently carried out; or
(vi) circumstances exist whereby a person or class of persons would be
likely to have any claim or claims in respect of any product, by-product or
process of manufacture or service or materials used therein now or previously
manufactured, supplied, sold or in any way dealt with or handled by any past or
present member of the Wider AFA Systems Group.
For the purpose of these conditions:
(A) 'Third Party' means any government, government department or
governmental, quasi-governmental, supranational, municipal, statutory,
regulatory, administrative or investigative body, authority (including any
national anti-trust, competition or merger control authorities or similar
authorities), court, trade agency, association, institution or professional or
environmental body or any other person or body whatsoever in any relevant
jurisdiction (including the London Stock Exchange, the Panel and the Inland
Revenue);
(B) a Third Party shall be regarded as having 'intervened' if it has
taken, instituted, implemented or threatened in writing or has notified its
intention to take, institute, implement or threaten any action, proceedings,
suit, investigation, enquiry or reference or made, proposed or enacted any
statute, regulation, decision or order or taken any measures or other steps or
required any action to be taken or information to be provided or otherwise
having done anything and 'intervene' shall be construed accordingly; and
(C) 'Authorisations' means authorisations, orders, grants, recognitions,
determinations, certificates, confirmations, consents, licenses, clearances,
permissions and approvals.
Subject to the requirements of the Panel, Microgen reserves the right to waive,
in whole or in part, all or any of the above conditions except conditions (a),
(b) and (c).
The Offer will lapse unless all the conditions are fulfilled or (if capable of
waiver) waived or, where appropriate, determined by Microgen to be or remain
satisfied by midnight on the later of (i) 21 days after the first closing date
of the Offer; and (ii) the date which is 21 days after the date on which
condition (a) is fulfilled (or in each case such later date as the Panel may
agree). The Offer will lapse if, in relation to the acquisition of AFA Systems
by Microgen or any matters arising therefrom, there is a referral to the
Competition Commission before the later of 3.00 p.m. on (i) the first closing
date of the Offer and (ii) the date on which the Offer becomes or is declared
unconditional as to acceptances whichever is the later.
Microgen shall be under no obligation to waive (if so capable of waiver) or to
determine to be or remain satisfied or to treat as fulfilled any of conditions
(a) to (j) (inclusive) by a date earlier than the latest date specified above
for the fulfillment thereof notwithstanding that the other conditions of the
offer may at such earlier date have been waived or fulfilled and that there are
at such earlier date no circumstances indicating that any of such conditions may
not be capable of being fulfilled.
Each of conditions (a) to (j) inclusive shall be regarded as a separate
condition and shall not be limited by reference to any other condition.
If Microgen is required by the Panel to make an offer for AFA Systems Shares
under the provisions of Rule 9 of the City Code, Microgen may make such
alterations to the conditions of the Offer, including condition (a) above, 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 AFA Systems Shareholders accepting the Offer and Microgen shall upon the
Offer lapsing cease to be bound by acceptances delivered on or before the date
on which the Offer lapses.
Part B: Certain Further Terms of the Offer
The Consideration Shares will be issued credited as fully paid and will rank
pari passu in all respects with the existing Microgen Shares, including the
right to receive all dividends and other distributions declared, made or paid
after the date of issue. Applications will be made to the UKLA for the
Consideration Shares to be admitted to the Official List and to the London Stock
Exchange for the New Microgen Shares to be admitted to trading.
Fractions of Consideration Shares will not be allotted or issued to persons
accepting the Offer. Entitlements to Consideration Shares will be rounded down
to the nearest whole number with the fractional entitlement not being issued.
AFA Systems Shares will be acquired under the Offer free from all liens,
equities, charges, encumbrances and other interests and together with all rights
attaching thereto, including the right to receive all dividends and other
distributions declared, made or paid hereafter.
This Offer will be governed by English law and be subject to the jurisdiction of
the English courts, to the conditions set out above and in the formal Offer
Document and related Form of Acceptance.
APPENDIX II
Bases, sources and other information
1. Bases and sources
Unless otherwise stated:
(a) financial information relating to AFA Systems has been extracted from
the audited annual report and accounts of the AFA Systems Group for the three
years ended 31 December 2003 or the unaudited interim financial statements of
AFA Systems for the six months ended 30 June 2004;
(b) financial information relating to Microgen has been extracted from
the audited annual report and accounts of the Microgen Group for the three years
ended 31 December 2003 or the unaudited interim financial statements for the six
months ended 30 June 2004;
(c) the value of the ordinary share capital of AFA Systems is based upon
47,182,549 AFA Systems Shares in issue on 12August 2004 (the last business day
prior to this Announcement);
(d) all prices quoted for AFA Systems Shares and Microgen Shares are
Closing Prices;
2. Other information
AFA Systems had the following relevant securities in issue as at the close of
business on 12 August 2004:
(a) Ordinary shares of 5 pence each 47,182,549
(b) Options over ordinary shares of 5 pence each 6,474,010
(c) Deferred shares of 20 pence each 24,007,843
Microgen had the following relevant securities in issue as at the close of
business on 12 August 2004:
(a) Ordinary shares of 5 pence each 86,935,040
(b) Options over ordinary shares of 5 pence each 5,040,729
APPENDIX III
Placing Terms and Conditions
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
ANY RESTRICTED JURISDICTION, INCLUDING THE US, CANADA, AUSTRALIA OR JAPAN
IMPORTANT INFORMATION FOR PLACEES ONLY ON THE PLACING
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE DIRECTED ONLY AT
PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING
AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR
BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS
AND WHO FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000
(FINANCIAL PROMOTION) ORDER 2001, AS AMENDED (THE ORDER) OR ARE PERSONS WHO FALL
WITHIN ARTICLE 49(2)(a) TO (d) ('HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC') OF THE ORDER OR TO WHOM IT MAY OTHERWISE LAWFULLY BE
COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS 'RELEVANT PERSONS
'). THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED
ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT
HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY
WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR
SALE OR SUBSCRIPTION OF ANY SECURITIES IN MICROGEN.
Unless otherwise defined in this Appendix, terms used in this Appendix shall
have the same meanings as those set out in Appendix IV.
Relevant Persons choosing to participate in the Placing (each such Relevant
Person a 'Placee') will be deemed to have read and understood this Appendix in
its entirety and to be making or accepting an offer to acquire Placing Shares on
the terms and conditions, and to be providing the representations, warranties
and acknowledgements, contained in this Appendix. In particular each such Placee
represents, warrants and acknowledges that it:
1. is a person whose ordinary activities involve it in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purpose of its business and undertakes that it will acquire, hold, manage or
dispose of any Placing Shares that are allocated to it for the purposes of its
business; and
2. is outside the United States and is purchasing the Placing Shares for
its own account or is purchasing the Placing Shares for an account with respect
to which it exercises sole investment discretion and that it (and any such
account) is outside the United States or it is a dealer or other professional
fiduciary in the United States acting on a discretionary basis for non-US
beneficial owners (other than an estate or trust), in reliance upon Regulation S
under the Securities Act.
This Announcement (including the Appendices) does not constitute an offer to
sell or issue or the solicitation of an offer to buy or subscribe for New
Microgen Shares in any jurisdiction including, without limitation, the United
Kingdom, the United States, Canada, Australia or Japan. This Announcement and
the information contained herein is not for publication or distribution,
directly or indirectly, to persons in the United States, Canada, Australia,
Japan or in any jurisdiction in which such publication or distribution is
unlawful. The New Microgen Shares referred to in this Announcement have not been
and will not be registered under the Securities Act and may not be offered or
sold within the United States except pursuant to an exemption from, or in
transaction not subject to, the registration requirements of the Securities Act.
The New Microgen Shares are being offered and sold outside the United States in
accordance with Regulation S under the Securities Act.
The distribution of this Announcement and the Placing and/or issue of the
Placing Shares in certain jurisdictions may be restricted by law. No action has
been taken by Microgen or UBS that would permit an offer of such Placing Shares
or possession or distribution of this Announcement or any other offering or
publicity material relating to such Placing Shares in any jurisdiction where
action for that purpose is required. Persons to whose attention this
Announcement is drawn are required by Microgen and UBS to inform themselves
about and to observe any such restrictions.
Details of the Placing Agreement and the Placing Shares
UBS has entered into a placing agreement (the 'Placing Agreement') with Microgen
whereby UBS has, subject to the satisfaction of certain conditions set out
therein, undertaken to use its reasonable endeavours as agent of Microgen to
seek to arrange Placees for the Placing Shares and failing which itself to
subscribe for all or any Placing Shares not subscribed by such Placees.
The Placing Shares will when issued be credited as fully paid and will rank pari
passu in all respects with the existing issued ordinary shares of 5p per share
in the capital of Microgen including the right to receive all dividends and
other distributions declared, made or paid in respect of such ordinary shares
after the date of issue of the Placing Shares.
Application for listing and admission to trading
Application will be made to the UK Listing Authority (the 'UK Listing Authority
') for admission of the Placing Shares to the Official List of the UK Listing
Authority (the 'Official List') and to the London Stock Exchange for admission
to trading of the Placing Shares on the London Stock Exchange's market for
listed securities (together 'Admission'). It is expected that Admission of the
Placing Shares will take place at 8.00 a.m. on 18 August 2004 (the 'Commencement
of Trading').
Principal terms of the Placing
1. UBS is arranging the Placing as an agent of Microgen.
2. Participation will only be available to persons invited to
participate by UBS. UBS is entitled to enter bids as principal in the Placing.
UBS will determine in its absolute discretion the extent of each Placee's
participation in the Placing which will not necessarily be the same for each
Placee.
3. The price payable per Placing Share shall be the Placing Price.
4. Participation in the Placing will be made on the terms and conditions
in this Appendix and upon acceptance by UBS, will be legally binding on the
Placee by whom, or on behalf of whom it is made and will not be capable of
variation or revocation.
5. A Placee's allocation will be agreed with and confirmed with it
orally by UBS, and a conditional contract note will be dispatched as soon as
possible thereafter. UBS's oral confirmation to such Placee will constitute a
legally binding commitment upon such Placee to acquire the number of Placing
Shares allocated to it at the Placing Price on the terms and conditions set out
in this Appendix and in accordance with Microgen's Memorandum and Articles of
Association.
6. Each Placee's obligations will be owed to Microgen and to UBS.
7. The Placing Shares will be offered and sold outside of the United States in
accordance with the terms of Regulation S under the Securities Act.
8. All obligations under the Placing will be subject to fulfilment of the
conditions referred to below under 'Conditions of the Placing'.
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming unconditional and
not having been terminated in accordance with its terms.
UBS's obligations to Microgen in respect of the Placing are conditional on,
inter-alia:
1. Commencement of Trading by no later than 8.00 a.m. on 18 August 2004;
2. none of the representations, warranties or undertakings given by
Microgen in the Placing Agreement having been breached; and
3. Microgen not being in breach of any of its obligations under the
Placing Agreement.
If the conditions above are not satisfied or waived by UBS within the stated
time period (or such later time and/or date UBS may agree) the Placing will
lapse.
UBS may, at its discretion and upon such terms as it thinks fit, waive
compliance by Microgen with the whole or any part of any of Microgen's
obligations in relation to the conditions in the Placing Agreement. UBS reserves
the right to waive or to extend the time and/or date for fulfillment of any of
the conditions in the Placing Agreement. Any such extension or waiver will not
affect Placees' commitments as set out in this Announcement.
Neither UBS or Microgen shall have any liability to any Placee (or to any other
person whether acting on behalf of a Placee or otherwise) in respect of any
decision it may make as to whether or not to waive or to extend the time and/or
date for the satisfaction of any condition to the Placing nor for any decision
they may make as to the satisfaction of any condition.
By participating in the Placing each Placee agrees with UBS that the exercise by
Microgen or UBS of any right or other discretion under the Placing Agreement
shall be within the absolute discretion of Microgen or UBS (as the case may be)
and that neither Microgen or UBS need make any reference to such Placee and that
neither Microgen or UBS shall have any liability to such Placee (or to any other
person whether acting on behalf of a Placee or otherwise) whatsoever in
connection with any such exercise.
By participating in the Placing each Placee agrees that its rights and
obligations terminate only in the circumstances described above and will not be
capable of rescission or termination by it.
Right to terminate under the Placing Agreement
UBS may, by notice to Microgen, terminate the Placing Agreement at any time
before Admission of the Placing Shares becoming effective in certain
circumstances. These include inter alia:
1. any statement contained in this Announcement has become or been
discovered to become untrue, incorrect or misleading;
2. any breach of any of the representations or warranties given by
Microgen in the Placing Agreement or of any obligation of Microgen under the
Placing Agreement;
3. any event occurring or matter arising at any time up to Admission of
the Placing Shares which would have rendered any of the representations and
warranties given by Microgen in the Placing Agreement untrue, inaccurate or
misleading in any respect; and
4. any material adverse change in the financial markets in the United
Kingdom, the United States or in the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international financial, political or economic conditions or currency exchange
rates or exchange controls in each case as would, in the opinion of UBS make it
impractical or inadvisable to market the Placing Shares or to enforce contracts
for the sale of the Placing Shares.
If UBS's obligations under the Placing Agreement are terminated in accordance
with its terms the rights and obligations of each Placee in respect of the
Placing as described in this Announcement (including this Appendix) shall cease
and determine at such time and no claim can be made by any Placee in respect
thereof.
No Prospectus
No offering document or prospectus has been or will be submitted to be approved
by the UK Listing Authority or filed with the Registrar of Companies in England
and Wales in relation to the Placing or the Placing Shares and Placees'
commitments will be made solely on the basis of the information contained in
this Announcement (including this Appendix). Each Placee, by accepting a
participation in the Placing, agrees that the content of this Announcement
(including this Appendix) is exclusively the responsibility of Microgen and
confirms that it has neither received nor relied on any other information,
representation, warranty or statement made by or on behalf of UBS or Microgen
and neither UBS or Microgen will be liable for any Placee's decision to accept
this invitation to participate in the Placing based on any other information,
representation, warranty or statement. Each Placee acknowledges, agrees and
warrants that it has relied on its own investigation of the business, financial
or other position of Microgen in deciding to participate in the Placing. Nothing
in this paragraph shall exclude the liability of any person for fraudulent
misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares following Admission of the
Placing Shares will take place within the CREST system, subject to certain
exceptions. UBS and Microgen reserve the right to require settlement for and
delivery of the Placing Shares to Placees by such other means that it deems
necessary if delivery or settlement is not possible or practicable within the
CREST system within the timetable set out in this Announcement or would not be
consistent with the regulatory requirements in the Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent a conditional
contract note stating the number of Placing Shares allocated to it, the Placing
Price and the aggregate amount owed by such Placee. In accepting the allocation
of Placing Shares set out in the conditional contract note, such Placee agrees
that it will do all things necessary to ensure that delivery and payment is
completed in accordance with either the standing CREST or certificated
settlement instructions which it has in place with UBS.
Settlement will be on a T+3 basis unless otherwise notified by UBS.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of 5
percentage points above prevailing LIBOR.
Each Placee is deemed to agree that if it does not comply with these
obligations, UBS may sell its Placing Shares on such Placees behalf and retain
from the proceeds, for Microgen's account and benefit, an amount equal to the
Placing Price plus any interest due. The relevant Placee will, however, remain
liable for any shortfall below the Placing Price and may be required to bear any
stamp duty or stamp duty reserve tax (together with any interest or penalties)
which may arise upon the sale of such Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the conditional contract note is copied and delivered
immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its
nominee or in the name of any person for whom a Placee is contracting as agent
or that of a nominee for such person, such Placing Shares should, subject as
provided below, be so registered free from any liability to UK stamp duty or
stamp duty reserve tax.
Representations and Warranties
By participating in the Placing each Placee (and any person acting on such
Placee's behalf) unless otherwise agreed by UBS and Microgen:
1. represents and warrants that it has read this Announcement (including
this Appendix) in its entirety;
2. acknowledges that no offering document or prospectus has been
prepared in connection with the placing of the Placing Shares;
3. acknowledges that the content of this Announcement is exclusively the
responsibility of Microgen and that neither UBS or any person acting on their
behalf has or shall have any liability for any information or representation
relating to Microgen. Each Placee further represents, warrants and agrees that
the only information on which it is entitled to rely and on which such Placee
has relied in committing itself to acquire the Placing Shares is contained in
this Announcement, such information being all that it deems necessary to make an
investment decision in respect of the Placing Shares;
4. represents and warrants that it has neither received nor relied on
any other information, representation, warranty or statement made by UBS or
Microgen and neither UBS or Microgen will be liable for any Placee's decision to
accept an invitation to participate in the Placing based on any other
information, representation, warranty or statement. Each Placee further
acknowledges and agrees that it has relied on its own investigation of the
business, financial or other position of Microgen in deciding to participate in
the Placing;
5. undertakes that it will acquire, hold, manage and (if applicable)
dispose of any Placing Shares that are allocated to it for the purposes of its
business;
6. represents and warrants that it is, or at the time the Placing Shares
are acquired it will be, the beneficial owner of such Placing Shares, or that
the beneficial owner of such Placing Shares is not a resident of the United
States, Australia, Canada or Japan;
7. acknowledges that the Placing Shares have not been and will not be
registered under the securities legislation of the United States, Australia,
Canada or Japan and may not be offered, sold, taken up, renounced or delivered
or transferred, directly or indirectly, within those jurisdictions;
8. represents and warrants that in making its investment decision, (i)
it has relied on its own examination of Microgen and the terms of the Placing,
including the merits and risks involved, (ii) it has made its own assessment of
Microgen, the Placing Shares and the terms of the Placing based on such
information as is publicly available, (iii) it has consulted its own independent
advisors or otherwise has satisfied itself concerning, without limitation, the
effects of federal, state and local income tax laws and foreign tax laws
generally and (iv) it has received all information that it believes is necessary
or appropriate in order to make an investment decision in respect of Microgen
and the Placing Shares;
9. represents and warrants that it is purchasing the Placing Shares in
an 'offshore transaction' in accordance with Rule 903 or Rule 904 under the
Securities Act, and has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an investment in
the Placing Shares, is able to bear the economic risk of an investment in the
Placing Shares and is able to sustain a complete loss of the investment in the
Placing Shares and represents and warrants that it is subscribing for the
Placing Shares for its own account as to which it exercises sole investment
discretion for investment purposes and not with a view to any distribution or
for resale in connection with, the distribution thereof in whole or in part, in
the United States;
10. acknowledges that where it is acquiring the Placing Shares for one or
more managed accounts, it represents and warrants that it is authorised in
writing by each managed account to acquire the Placing Shares for each managed
account. Each Placee agrees to indemnify and hold Microgen and UBS harmless from
any and all costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the representations
and warranties in this paragraph 10. Each Placee agrees that the provisions of
this paragraph 10 shall survive the resale of the Placing Shares by or on behalf
of the managed accounts;
11. acknowledges that no representation has been made as to the
availability of Rule 144 or any other exemption under the Securities Act for the
reoffer, resale, pledge or transfer of the Placing Shares;
12. represents and warrants that the issue to it, or the person specified
by it for registration as holder, of Placing Shares will not give rise to a
liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986
(depositary receipts and clearance services);
13. represents and warrants that it has complied with its obligations in
connection with money laundering under the Criminal Justice Act 1993 and the
Money Laundering Regulations (1993) (the 'Regulations') and, if making payment
on behalf of a third party, that satisfactory evidence has been obtained and
recorded by it to verify the identity of the third party as required by the
Regulations;
14. represents and warrants that it and any person acting on its behalf
falls within paragraph 3(a)of Schedule 11 to FSMA, being a person whose ordinary
activities involve it in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of its business, and within
Article 19 and/or 49 of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2001, as amended;
15. represents and warrants that it has not offered or sold and, prior to
the expiry of a period of six months from the Commencement of Trading, will not
offer or sell any Placing Shares to persons in the United Kingdom, except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
business or otherwise in circumstances which have not resulted and which will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995, as amended;
16. represents and warrants that it has only communicated or caused to be
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of
section 21 of FSMA) relating to the Placing Shares in circumstances in which
section 21(1) of FSMA does not require approval of the communication by an
authorised person;
17. represents and warrants that it has complied and will comply with all
applicable provisions of FSMA with respect to anything done by it in relation to
the Placing Shares in, from or otherwise involving the United Kingdom;
18. represents and warrants that it and any person acting on its behalf
is entitled to acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has all necessary capacity and has obtained all
necessary consents and authorities to enable it to commit to this participation
and to perform its obligations in relation thereto (including, without
limitation, in the case of any person on whose behalf it is acting, all
necessary consents and authorities to agree to the terms set out or referred to
in this Announcement);
19. undertakes that it will make payment for the Placing Shares allocated
to it in accordance with this Announcement (including this Appendix) on the due
time and date set out herein, failing which the relevant Placing Shares may be
placed with other subscribers or sold as UBS determines and without liability to
such Placee;
20. acknowledges that participation in the Placing is on the basis that
it is not and will not be a client of UBS and that UBS has no duties or
responsibilities to it for providing the protections afforded to its clients or
for providing advice in relation to the Placing nor in respect of any
representations, warranties, undertakings or indemnities contained in the
Placing Agreement nor for the exercise or performance of any of its rights and
obligations thereunder including any rights to waive or vary any conditions or
exercise any termination right;
21. undertakes that the person who it specifies for registration as
holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case
may be. Neither UBS or Microgen will be responsible for any liability to stamp
duty or stamp duty reserve tax resulting from a failure to observe this
requirement. Each Placee and any person acting on behalf of such Placee agrees
to participate in the Placing and it agrees to indemnify Microgen and UBS in
respect of the same on the basis that the Placing Shares will be allotted to the
CREST stock account of UBS who will hold them as nominee on behalf of such
Placee until settlement in accordance with its standing settlement instructions;
22. acknowledges that any agreements entered into by it pursuant to these
terms and conditions shall be governed by and construed in accordance with the
laws of England and it submits (on behalf of itself and on behalf of any Placee
on whose behalf it is acting) to the 'exclusive' jurisdiction of the English
courts as regards any claim, dispute or matter arising out of any such contract,
except that enforcement proceedings in respect of the obligation to make payment
for the Placing Shares (together with any interest chargeable thereon) may be
taken by Microgen or UBS in any jurisdiction in which the relevant Placee is
incorporated or in which any of its securities have a quotation on a recognised
stock exchange;
23. acknowledges that UBS may (at its absolute discretion) satisfy its
obligations to procure Placees by itself agreeing to become a Placee in respect
of some or all of the Placing Shares or by nominating any connected or
associated person to do so; and
24. agrees that Microgen, UBS and others will rely upon the truth and
accuracy of the foregoing representations, warranties, acknowledgements and
undertakings.
The agreement to settle a Placee's acquisition (and/or the acquisition of a
person for whom such Placee is contracting as agent) free of stamp duty and
stamp duty reserve tax depends on the settlement relating only to an acquisition
by it and/or such person direct from Microgen for the Placing Shares in
question. Such agreement assumes that the Placing Shares are not being acquired
in connection with arrangements to issue depositary receipts or to transfer the
Placing Shares into a clearance service. If there are any such arrangements, or
the settlement related to any other dealing in the Placing Shares, stamp duty or
stamp duty reserve tax may be payable, for which neither Microgen or UBS will be
responsible. If this is the case, each Placee should seek its own advice and
notify UBS accordingly.
When a Placee or person acting on behalf of the Placee is dealing with UBS, any
money held in an account with UBS on behalf of the Placee and/or any person
acting on behalf of the Placee will not be treated as client money (within the
meaning of the rules and regulations of the Financial Services Authority made
under FSMA) which, therefore, will not require UBS to segregate such money, as
that money will be held by it under a banking relationship and not as a trustee.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser.
All times and dates in this Announcement may be subject to amendment. UBS shall
notify the Placees and any person acting on behalf of the Placees of any
changes.
APPENDIX IV
Definitions
The following definitions apply throughout this Announcement unless the context
otherwise requires:
'£250,000 Loan Notes' the £250,000 variable rate convertible unsecured
redeemable loan notes created pursuant to an
instrument dated 2 December 2003 in favour of the Loan
Note Holder
'£1.5 million Loan Notes' the 4,166,667 convertible unsecured redeemable loan
notes of £0.36 each created and issued pursuant to an
instrument dated 2 December 2003 in favour of the Loan
Note Holder
'Acquisition' the proposed acquisition of AFA Systems by way of the
Offer as described in this Announcement
'Act' the Companies Act 1985 (as amended)
'Admission' the admission of the New Microgen Shares to the
Official List in accordance with the Listing Rules and
to trading on the London Stock Exchange's market for
listed securities
'AFA Systems' AFA Systems plc, a company incorporated in England and
Wales with registered number 3188002
'AFA Systems Board' or 'AFA Systems Directors' the directors of AFA Systems and 'AFA Systems
Director' means any one of them
'AFA Systems Group' AFA Systems and its subsidiary undertakings and, where
the context permits, each of them
'AFA Systems Options' options over AFA Systems Shares pursuant to the terms
of the AFA Systems Share Option Schemes
'AFA Systems Shares' the existing, issued or unconditionally allotted and
fully paid ordinary shares of 5p each in the capital
of AFA Systems and any further such shares which are
issued or unconditionally allotted and are fully paid
while the Offer remains open for acceptances (or such
earlier date as Microgen may, subject to the Code,
decide) upon the exercise of any options under the AFA
Systems Share Option Schemes or otherwise
'AFA Systems Shareholders' holders of AFA Systems Shares
'Announcement' this Announcement dated 13 August 2004
'Canada' Canada, its possessions, provinces and territories and
all other areas subject to its jurisdiction and any
political sub-divisions thereof
'certified' or in certificated form' a share or other security which is not in
uncertificated form (that is not in CREST)
'Closing Price' the middle market quotation of a share at the close of
business on a particular trading day as derived from
the Daily Official List of the London Stock Exchange
'Code' or 'City Code' the City Code on Takeovers and Mergers
'Competition Commission' the body established under the Competition Act 1998
'Consideration Shares' the Microgen Shares to be issued in connection with
the Offer or pursuant to the Loan Note Acquisition
Agreement as the case may be
'Enlarged Group' the Microgen Group as enlarged by the Acquisition
'Enlarged Share Capital' the enlarged share capital of Microgen assuming, the
maximum number of New Microgen Shares being issued
pursuant to the Offer and the Placing
'Extraordinary General Meeting' or 'EGM' the extraordinary general meeting of Microgen to be
convened for the purposes of, inter alia, approval of
the Offer
'Form of Acceptance' the form of acceptance, election and authority
relating to the Offer which will accompany the Offer
Document
'FSMA' the Financial Services and Markets Act 2000
'Japan' Japan, its cities and prefectures and possessions
'Listing Particulars' the listing particulars relating to Microgen and the
New Microgen Shares and to be prepared in accordance
with the Listing Rules which will accompany the Offer
Document
'Listing Rules' the listing rules made pursuant to Part VI of FSMA
'Loan Note Acquisition Agreement' the letter agreement relating to the £1.5 million Loan
Note between Microgen and the Loan Note Holder dated
12 August 2004
'Loan Note Variation' the letter agreement varying the terms of the £1.5
million Loan Note between AFA Systems and the Loan
Note Holder dated 12 August 2004
'Loan Notes Holder' Lloyds TSB Development Capital Limited
'London Stock Exchange' London Stock Exchange plc or its successor
'Microgen' Microgen plc, a company incorporated in England and
Wales with registered number 1602662
'Microgen Board' or 'Microgen Directors' the directors of Microgen and 'Microgen Director'
means any one of them
'Microgen Group' Microgen and its subsidiary undertakings and, where
the context permits, each of them
'Microgen Shares' the Consideration Shares and/or the Placing Shares, as
the case may be.
'Mix and Match Election' the facility under which AFA Systems Shareholders who
validly accept the Offer may elect to receive the New
Microgen Shares and/or cash to which would otherwise
be entitled under the Offer indifferent proportions to
that provided under the basic terms of the Offer
'New Microgen Shares' the Consideration Shares and the Placing Shares
'Offer' the offer to be made by UBS on behalf of Microgen to
acquire all of the AFA Systems Shares other than those
already owned by Microgen on the terms and subject to
the conditions to be set out in the Offer Document and
the Form of Acceptance including, where the context
permits, any subsequent revision, variation,
extension, re-introduction or renewal of such offer
'Offer Document' the formal offer document containing the terms and
conditions of the Offer to be sent to AFA Systems
Shareholders
'Offer Period' the period commencing on 13 August 2004 and ending on
the latest of (i) 3.00 p.m. (London time) on the first
closing date of the Offer; (ii) the date when the
offer lapses or is withdrawn; and (iii) the date when
the Offer becomes unconditional as to acceptances
'Offer Price' 15.32 pence for each AFA Systems Share (comprising
4.51 pence in cash and 0.18168 New Microgen Shares
valued by reference to the average Closing Price of
59.5 pence per Microgen Share over the five business
days prior to the date of this Announcement)
'Official List' the official list of the UK Listing Authority
'Overseas Shareholders' AFA Systems Shareholders who are resident in or
nationals or citizens of jurisdictions outside the
United Kingdom or who are nominees of, or custodians
or trustees for, any such residents, citizens or
nationals
'Panel' the Panel on Takeovers and Mergers
'Placing' means the conditional placing of the Placing Shares
with institutional and other investors
'Placing Agreement' means the agreement dated 13 August 2004 between the
Company and UBS in connection with the Placing
'Placing Price' means 57.0 pence per Placing Share
'Placing Shares' means the 4,300,000 Microgen Shares which are to be
issued in connection with the Placing
'Receiving Agent' Capita IRG Plc
'Remuneration Committee' means the remuneration committee of the Microgen Board
'Securities Act' the United States Securities Act of 1933, as amended
'Shareholders' holders of Microgen Shares
'Substantial Interest' a direct or indirect interest in 20 per cent. or more
of the voting equity capital of an undertaking
'treasury shares' the ordinary shares of 5p each in the capital of AFA
Systems (if any) which are, for the time being, held
by AFA Systems as treasury shares (within the meaning
of s.162A of the Act)
'UBS' or 'UBS Investment Bank' UBS Limited
'United Kingdom' or 'UK' the United Kingdom of Great Britain and Northern
Ireland
'UK Listing Authority' the Financial Services Authority acting in its
capacity as the competent authority for the purposes
of Part VI of FSMA.
'United States' or 'USA' the United States of America (including the District
of Columbia), its territories and possessions, any
state of the United States of America
'Wider Microgen Group' Microgen and its subsidiary undertakings and
associated undertakings and other undertakings in
which Microgen and such undertakings (aggregating
their interests) have a Substantial Interest
'Wider AFA Systems Group' AFA Systems and its subsidiary undertakings and
associated undertakings and other undertaking in which
AFA Systems and such undertakings (aggregating their
interests) have a Substantial Interest
This information is provided by RNS
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