Proposed Rights Issue and Sha
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM, THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.
Galliford Try plc ('Galliford Try' or the 'Group')
PROPOSED RIGHTS ISSUE AND SHARE CONSOLIDATION
Along with its results for the year ended 30 June 2009, Galliford Try today announces a proposed fully underwritten Rights Issue to raise gross proceeds of £125.6 million and a proposed Share Consolidation.
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Taking into account the Share Consolidation, the Rights Issue is being made on a 7 for 6 basis at an Issue Price of 285 pence per new 50 pence Ordinary Share:
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The Issue Price is equivalent to 28.5 pence per share pre-consolidation;
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The Issue Price represents a discount to the theoretical ex-rights price of 39.4 per cent. based on the Closing Price adjusted for the final dividend; and
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The Rights Issue is subject to shareholder approval.
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Proposed Share Consolidation under which the existing 5 pence ordinary shares will be consolidated on a one for ten basis into New Ordinary Shares of 50 pence nominal value.
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The Board believes that in light of the position in the market Galliford Try now has, and the opportunities it now sees, the time is right to raise equity to reinvest in land and significantly expand its Housebuilding business, positioning the Group to become one of the UK’s foremost housebuilders while maintaining an appropriate capital structure to allow financial flexibility in the current environment.
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The Rights Issue proceeds will:
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Support the strategic expansion of Galliford Try’s Southern based Housebuilding business;
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Expand Galliford Try’s landbank through the pursuit of its pipeline of attractive land opportunities that its land teams have identified and from opportunities that the Board expects to arise in the future; and
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Support the continuing development of Galliford Try’s Construction business where greater demonstrable financial strength aids selection for major construction contracts.
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The rate of expenditure of the Rights Issue proceeds will be strictly controlled and will be aligned with opportunities as they come to fruition, with Galliford Try taking advantage, where possible, of land contracts conditional on planning, staged payments and phased build releases.
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The land acquired will be used to develop homes in both the private and affordable markets and enable Galliford Try to increase its share of the markets as they improve, which the Board believes will result in the achievement of attractive margins.
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The Rights Issue proceeds that are not immediately invested in new land acquisitions or build costs will be used to offset the drawdown under Galliford Try’s bank facilities or be held as cash deposits.
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The Rights Issue has been fully underwritten by RBS Hoare Govett, KBC Peel Hunt, HSBC, Barclays and Lloyds TSB Corporate Markets.
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Greg Fitzgerald, Chief Executive of Galliford Try, said:
'Galliford Try is amongst the best placed in the housebuilding industry to take advantage of the opportunities currently arising.
Galliford Try took early and decisive actions to deal with the effects of the economic downturn. As a result, and in contrast to many of our competitors, Galliford Try has operated within its banking covenants and continues to pay dividends.
We also retained most of our Senior Management infrastructure. This has enabled us since July 2008 to identify and acquire 1,100 land plots, and, since the beginning of 2009, agree terms on a further 1,400 plots of land with offers pending on 4,200 plots.
The rights issue proceeds will allow us to take advantage of the improved land market liquidity we are witnessing and build homes at attractive margins.'
Rothschild is acting as financial adviser and joint sponsor to Galliford Try with respect to the Rights Issue.
RBS Hoare Govett is acting as joint bookrunner and joint sponsor and KBC Peel Hunt is acting as joint bookrunner.
Analyst presentation
A meeting for analysts and investors will be hosted by Greg Fitzgerald, Chief Executive of Galliford Try. The details of the meeting are as follows:
Venue:
RBS Hoare Govett
250 Bishopsgate
EC2M 4AA
Date & Time: 10.00 a.m., 10 September 2009
Registration will commence at 9.30 a.m.
Expected timetable
Each of the times and dates in the table below is indicative only and may be subject to change.
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2009
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Expected publication of the Prospectus
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10 September
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General Meeting
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10.00 a.m. on 6 October
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Dealings in New Ordinary Shares, nil paid, commence on the London Stock Exchange
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7 October
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Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters
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11.00 a.m. on 21 October
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Dealings in New Ordinary Shares, fully paid, commence on the London Stock Exchange
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by 8.00 a.m. on 22 October
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Notes: |
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Subject to certain restrictions relating to Shareholders with registered addresses outside the United Kingdom, details of will be set out in the Prospectus. |
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The times and dates set out in the expected timetable of principal events above and mentioned throughout this Announcement may be adjusted by the Company with agreement of the Joint Bookrunners, in which event details of the new times and dates will be notified to the FSA, the London Stock Exchange and, where appropriate, Shareholders. |
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References to times in this timetable are to London times unless otherwise stated. |
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This summary should be read in conjunction with the full text of this Announcement.
A Prospectus containing details of the Rights Issue and the Share Consolidation is expected to be posted to shareholders shortly and will be available on the Group's website, www.gallifordtry.co.uk.
Contacts
For further information, please contact:
Galliford Try plc: +44 (0)1895 855 001
Greg Fitzgerald
Frank Nelson
Richard Barraclough
Rothschild (Financial Adviser and Joint Sponsor): +44 (0)20 7280 5000
John Deans
Adam Young
Kevin Ramsden
RBS Hoare Govett Limited (Joint Bookrunner and Joint Sponsor): +44 (0)20 7678 8000
Simon Hardy
Luke Simpson
Lee Morton
KBC Peel Hunt (Joint Bookrunner): +44 (0)20 7418 8900
Julian Blunt/David Anderson (Corporate Finance)
Marianne Woods/Nicholas Marren (Corporate Broking)
Shareholder enquires
If you have questions, please telephone the Shareholder Helpline on the numbers set out below. This Shareholder Helpline is available from 8.30 a.m. to 5.30 p.m. London time, Monday to Friday (except bank and other public holidays). Calls to this number are charged at 8 pence per minute from a BT landline. Calls to the Shareholder Helpline from outside the UK are charged at applicable international rates.
Shareholder Helpline telephone numbers
0871 384 2937 (inside the United Kingdom) or +44 121 415 0260 (outside the United Kingdom)
Please note that, for legal reasons, the Shareholder Helpline is only able to provide information contained in the Prospectus and information relating to the Company's register of members and is unable to give advice on the merits of the Rights Issue or provide legal, financial, tax or investment advice.
IMPORTANT NOTICE
This Announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction into which the same would be unlawful.
This Announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in Australia, Canada, Japan or the Republic of South Africa, or the United States or in any jurisdiction to whom or in which such offer or solicitation is unlawful. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada, Japan, the Republic of South Africa or the United States or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan, the Republic of South Africa or the United States. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan, the Republic of South Africa or the United States. There will be no public offer of the securities in the United States. The availability of the Rights Issue to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Such persons should inform themselves about and observe any applicable requirements.
The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States or under any securities laws of Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction where to do so would be unlawful and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States, or within any of Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction where to do so would be unlawful. There will be no public offer of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares or the Provisional Allotment Letters in the United States.
The distribution of this Announcement and the Provisional Allotment Letters and the offering of the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares in jurisdictions other than the United Kingdom may be restricted by law. No action has been taken by the Company or any of Rothschild, RBS Hoare Govett Limited, KBC Peel Hunt Ltd, HSBC Bank plc, Barclays Bank PLC or Lloyds TSB Bank plc that would permit an offering of such rights or shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and each of Rothschild, RBS Hoare Govett Limited, KBC Peel Hunt Ltd, HSBC Bank plc, Barclays Bank PLC and Lloyds TSB Bank plc to inform themselves about, and to observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Announcement is for information only and does not constitute or form part of any offer or invitation to issue, acquire or dispose of any securities or investment advice in any jurisdiction.
This Announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any New Ordinary Shares referred to in this Announcement in connection with the Rights Issue except on the basis of information contained in the Prospectus.
The Prospectus will shortly be available to view on the Group's website (www.gallifordtry.co.uk) or can be inspected at the offices of Galliford Try plc, Cowley Business Park, Cowley, Uxbridge, Middlesex UB8 2AL.
This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied is, or will be made as to, or in relation to, and no responsibility or liability is, or will be, accepted by any of Rothschild, RBS Hoare Govett Limited, KBC Peel Hunt Ltd, HSBC Bank plc, Barclays Bank PLC or Lloyds TSB Bank plc or by any of their affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
Each of Rothschild, RBS Hoare Govett Limited, KBC Peel Hunt Ltd, HSBC Bank plc, Barclays Bank PLC and Lloyds TSB Bank plc are authorised and regulated in the UK by the FSA and are acting exclusively for the Company in connection with the Rights Issue and not for any other person and will not be responsible to any other person for providing the protections afforded to their respective customers, or for providing advice in relation to the Rights Issue, the contents of this document and the accompanying documents or any arrangements referred to therein.
Proposed Rights Issue and Share Consolidation
1. Introduction
Galliford Try has today announced its intention to raise approximately £119.2 million (net of expenses) by way of a rights issue. The Rights Issue will take place alongside the Share Consolidation under which the Existing Ordinary Shares are to be consolidated into 50 pence Ordinary Shares on a one for ten basis. Pursuant to the Rights Issue, the Directors propose to offer New Ordinary Shares at 285 pence per share to all Qualifying Shareholders on the basis of 7 New Ordinary Shares for every 60 Existing Ordinary Shares that each Qualifying Shareholder holds at the close of business on the Rights Issue Record Date.
Taking into account the Share Consolidation, the Rights Issue offer is being made on a 7 for 6 basis at the Issue Price of 285 pence per 50 pence New Ordinary Share.
In effect, the Issue Price represents a 39.4 per cent. discount to the theoretical ex-rights price of 47.1 pence based on the closing middle-market price of 69.75 pence per Existing Ordinary Share, adjusted for the final dividend, on 9 September 2009 (being the last business day prior to the date of this Announcement).
The Rights Issue has been fully underwritten by RBS Hoare Govett, KBC Peel Hunt, HSBC, Barclays Capital and Lloyds TSB Corporate Markets on, and subject to, the terms of the Underwriting Agreement. Rothschild is acting as Financial Adviser to Galliford Try in respect of the Rights Issue.
The Rights Issue and Share Consolidation are conditional, inter alia, on the passing, without material amendment, of the Resolution at the General Meeting being convened for 10.00 a.m. on 6 October 2009 and on the Underwriting Agreement becoming unconditional and not being terminated.
In order to take up their entitlement to the New Ordinary Shares, Qualifying Shareholders need to make payment in full on acceptance by no later than 11.00 a.m. on 21 October 2009 (or such later date as may be notified by Galliford Try).
2. Background to and reasons for the Rights Issue
Galliford Try is a leading UK housebuilding and construction enterprise. The Group's Housebuilding business, predominantly based in the South, Midlands and Eastern counties of England, is the UK's sixth largest listed housebuilder (based on volumes to the year ended 30 June 2009) and is a highly respected specialist in the affordable housing and regeneration sectors. The Group's Construction business is one of the UK's leading providers of building and infrastructure services and is well positioned, profitable and cash generative, operating with a high proportion of work in the public and regulated sectors. Galliford Try's strategy is to grow profits by expanding its Housebuilding business while maintaining a profitable market position in construction.
Following two years of challenging conditions in the housebuilding sector and wider housing market, the Board believes that the market is stabilising and is starting to offer attractive opportunities for reinvestment in land. Leading indicators are generally starting to show improving trends with:
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House prices beginning to rise:
- the Nationwide House Price Index has indicated price rises in five of the last six months (source: Nationwide); and
- the Halifax House Price Index shows more mixed data, but has recently begun pointing to house price rises, with increases in May and July 2009 (source: Halifax);
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Increasing volume of housing sales:
- Land Registry figures show the volume of housing sales rising from a low of around 26,000 transactions in England and Wales in January 2009, to a level of around 43,000 transactions in May 2009 (source: Land Registry);
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Increasing mortgage lending:
- Gross mortgage lending in July 2009 was 77 per cent. higher than in July 2008 and 7.4 per cent. higher than June 2009 (source: British Bankers' Association); and
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Confidence returning to housebuilders:
- Monthly building starts have progressively increased over the last six months from a low of around 4,250 new starts in December 2008 to around 8,300 new starts in June 2009 (source: National House-Building Council), although this is still a very substantial reduction on pre-'credit crunch' build-start rates.
Since July 2008, the Group has acquired 1,100 plots, with a value of £28 million, including the five sites totalling 147 plots acquired when the Group bought the housing assets of Wright Homes out of administration in May 2009. Since the beginning of 2009, the Group has witnessed an improvement in the liquidity of the land market and has agreed terms on a further 1,400 plots of land with a value of £74 million.
The Board believes that Galliford Try is amongst the best placed in the housebuilding industry to take advantage of the opportunities currently arising.
Crucially, the Board took early and decisive actions to deal with the effects of the downturn on the Group's businesses. These included early measures to reduce stock and preserve cash as well as maintaining its level of infrastructure and geographical footprint by, for example, operating a four-day week from January to July 2009 rather than making a disproportionate number of employees redundant.
In addition, the Group should benefit from its bias towards the South of England, the area the Board believes will lead the recovery of the housing market. Likewise its strong presence in the affordable housing sector, which withstood the downturn better than the private market, is expected to show increasing levels of activity with the continued benefit of Government assistance schemes.
The Group also benefits from its cash-generative Construction business, which helps to offset the cash requirements of the Housebuilding business, although this may not be maintained at recent levels as the economic slowdown affects the construction market.
Due to the Group's cash management, Galliford Try has operated within the covenants of the Group's banking facilities and thus alleviated any possible need to renegotiate its facilities; as a result, the Group continues to enjoy relatively low cost debt finance terms. The proceeds of the Rights Issue will further strengthen the Group's financial position providing further headroom within those covenants.
As a result of the above the Board believes that Galliford Try is in a minority of well-funded housebuilders with a relatively small legacy landbank of low margin historic sites and an ability to create value by deploying capital, on a phased basis, in selected land development opportunities.
The Board therefore believes that in light of the position in the market Galliford Try now has, and the opportunities it now sees, the time is right to raise equity to reinvest in land and significantly expand its Housebuilding business, positioning the Group to become one of the UK's foremost housebuilders. This is intended to be achieved while maintaining an appropriate capital structure to allow financial flexibility in the current environment. In addition, the enlarged capital base of the Group will support the continuing development of the Construction business, where greater demonstrable financial strength aids selection for major construction contracts.
3. Use of proceeds
The Board intends to use the proceeds to expand Galliford Try's landbank through the pursuit of its pipeline of attractive land opportunities that the Group's land teams have identified, and from the opportunities that the Board expects to arise in the future. The rate of expenditure will be strictly controlled and will be aligned with opportunities as they come to fruition, with the Group taking advantage, where possible, of contracts conditional on planning, staged payments and phased build releases. This land will be used to develop homes in both the private and affordable markets and enable Galliford Try to increase its share of the markets as they improve, which the Board believes will result in the achievement of attractive margins.
The Board believes that due to land availability increasing, and as one of the few housebuilders pursuing land opportunities in the market, the Group has developed an extensive pipeline of potential acquisitions. In addition to the 1,100 plots secured at a land value of £28 million since July 2008, the Group has agreed terms on a further potential £74 million (at estimated cost) of land, representing around 1,400 plots. The Group also has offers pending on a further £180 million (at estimated cost) of land, representing around 4,200 plots. Although the Group does not expect to take up all of these opportunities, the Board believes that the majority can be acquired for development at attractive levels of profit. Further land acquisitions may also come through the acquisition of small distressed housebuilders that have desirable landbanks and are available at attractive prices.
Aside from direct land acquisition, the Group is also engaged in negotiations on a number of attractive potential projects with a range of partners, notably owners of distressed housing assets, which would include both land and work in progress on site. These opportunities may be structured as joint ventures and the Group would seek to invest some of the proceeds of the Rights Issue in financing its share of these joint ventures. The Board expects the Group to generate returns which are commensurate with its participation in these joint ventures.
The net proceeds of the Rights Issue will be invested in new land acquisitions and build costs under a phased investment programme. The proceeds that are not immediately invested will be used to offset the drawdown under the Group's bank facilities or will be held as cash deposits.
4. Financial effects of the Rights Issue
Had the Rights Issue taken place at the date of the Group's last published balance sheet, being 30 June 2009, the effect on the balance sheet would have been an increase in cash equal to the net proceeds of the Rights Issue and had the Rights Issue taken place at the commencement of the financial year ended 30 June 2009, the effect on earnings for the financial year ended 30 June 2009 would have been an increase equal to the interest on the net proceeds of the Rights Issue.
The Board expects that the increased number of Ordinary Shares in issue following the Rights Issue will be dilutive to the Group's earnings per share before exceptionals (taking into account the effect of the Rights Issue) in the financial years ending 30 June 2010 and 30 June 2011, respectively, and then materially enhancing to the Group's earnings per share before exceptionals from the financial year ending 30 June 2012.
5. Current trading and prospects
Galliford Try today announced its audited annual results for the twelve months to 30 June 2009. In that period, Group revenue was £1,461 million (2008: £1,832 million). The Group achieved a Profit From Operations of £31.2 million (2008: £85.4 million). The pre exceptional profit before tax was £24.5 million (2008: £71.8 million).
Following a review of the value of its housing assets due to the market downturn, the Group has recorded net exceptional costs of £51.4 million (2008: £11.5 million), comprising write downs of housing related assets of £50.4 million (2008: £9.1 million and a £0.5 million commitment for onerous leases) and redundancy costs of £1.0 million (2008: £1.9 million). The post exceptional loss before tax was therefore £26.9 million (2008 profit: £60.3 million). Basic pre exceptional earnings per share are 4.9 pence (2008: 13.6 pence) with a post exceptional loss per share of 4.8 pence (2008 earnings per share: 11.4 pence). Shareholders funds at 30 June 2009 stood at £294.6 million compared to £325.3 million at the end of the previous financial year.
Galliford Try's Construction business continued to generate cash balances which exceeded forecasts throughout the year. This, together with the effect of the controls applied throughout the Housebuilding business, resulted in a net cash position of £34.1 million (2008 net debt: £1.7 million) at the year end.
Since 30 June 2009, the Directors have been encouraged by the continuation of the improvement in the housing market. Having entered the new financial year with housebuilding sales carried forward of £161 million (2008: £150 million) and with the market maintaining the recovery of the last six months, cumulative sales in the first two months of the new financial year have exceeded the Board's forecast. The Construction business meanwhile is performing in line with expectations and remains in a resilient position for trading through the current difficult market conditions.
The Group now plans to recommence its growth strategy in housebuilding and take advantage of its strong presence in the public and regulated sectors to maintain Galliford Try's position as one of the UK's leading construction businesses.
6. Dividends and dividend policy
The Board regularly reviews the Company's dividend policy and recommends dividend payouts, having regard to the Company's immediate trading environment, balance sheet and longer-term considerations. A final dividend of 1.05 pence per Existing Ordinary Share for the year ended 30 June 2009 was recommended by the Directors on 10 September 2009 and, subject to the relevant resolution being approved at the Annual General Meeting, will be paid on 13 November 2009 to Shareholders who are registered in the Company's register of members on 18 September 2009. This final dividend will not be payable in respect of any New Ordinary Shares. Assuming that the Share Consolidation becomes effective, the final dividend will be 10.5 pence per Ordinary Share of 50 pence each. All other future dividends will be adjusted for the bonus element of the Rights Issue.
The Board has continued to pay a dividend throughout the current economic cycle and the Board remains committed to a progressive dividend policy over the medium term, which will take into account the effect of the Rights Issue.
7. Principal terms of the Rights Issue
Subject to the Resolution being passed, the Directors propose to offer New Ordinary Shares by way of rights to all Qualifying Shareholders (other than, subject to certain exceptions, Restricted Shareholders), payable in full on acceptance, on the following basis:
7 New Ordinary Shares of 50 pence each for every 60 Existing Ordinary Shares of 5 pence each
that each Qualifying Shareholder holds and has registered in that Shareholder's name at the close of business on the Rights Issue Record Date, and so in proportion to any other number of Existing Ordinary Shares each Qualifying Shareholder then holds. In effect, the Rights Issue offer is being made on the following basis:
7 New Ordinary Shares of 50 pence each for every 6 Ordinary Shares of 50 pence each
that a Qualifying Shareholder holds taking into account the Share Consolidation and at the Issue Price of 285 pence per New Ordinary Share.
In effect, the Issue Price represents a 39.4 per cent. discount to the theoretical ex-rights price of 47.1 pence based on the closing middle-market price of 69.75 pence per Ordinary Share, adjusted for the final dividend, on 9 September 2009, (being the last business day prior to the date of this Announcement). If a Qualifying Shareholder does not take up any of their entitlement to New Ordinary Shares, their proportionate shareholding will be diluted by 53.8 per cent. However, if a Qualifying Shareholder takes up their rights in full, they will, following the Share Consolidation and the Rights Issue being completed and subject to the treatment of fractions, have the same proportional voting rights and entitlements to distributions as they had on the Rights Issue Record Date.
New Ordinary Shares representing fractional entitlements will not be allotted to Qualifying Shareholders and, where necessary, entitlements to New Ordinary Shares will be rounded down to the nearest whole number.
The Nil Paid Rights or Fully Paid Rights represented by a Provisional Allotment Letter may be converted into uncertificated form, that is, deposited into CREST (whether such conversion arises as a result of a renunciation of those rights or otherwise). Similarly, Nil Paid Rights or Fully Paid Rights held in CREST may be converted into certificated form, that is, withdrawn from CREST.
In determining the Issue Price the Directors have considered the price at which the New Ordinary Shares need to be offered to investors with a view to ensuring the success of the Rights Issue, which involves raising a significant amount of equity compared with the current market capitalisation of the Company. The Directors believe that both the Issue Price and the discount are appropriate.
The Company has arranged for the Rights Issue to be underwritten by RBS Hoare Govett, KBC Peel Hunt, HSBC, Barclays Capital and Lloyds TSB Corporate Markets in order to provide certainty as to the amount of capital to be raised. A summary of the material terms of the underwriting arrangements will be contained in the Prospectus.
The Rights Issue is conditional, amongst other things, on:
a. the passing without material amendment of the Resolution at the General Meeting;
b. Admission becoming effective by not later than 8.00 a.m. on 7 October 2009 (or such later time and/or date as the Joint Bookrunners, Rothschild and the Company may agree); and
c. the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission.
Application will be made to the UKLA for the New Ordinary Shares (nil and fully paid) to be admitted to the Official List and to the London Stock Exchange for the New Ordinary Shares (nil and fully paid) to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on the London Stock Exchange, nil paid, at 8.00 a.m. on 7 October 2009. It is expected that dealings in the New Ordinary Shares, fully paid, will commence on the London Stock Exchange at 8.00 a.m. on 22 October 2009.
The Rights Issue is expected to result in the issue of 44,072,789 New Ordinary Shares (representing approximately 53.8 per cent. of the expected Enlarged Share Capital). The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with, and will carry the same voting and dividend rights as, the Existing Ordinary Shares and, following the Share Consolidation, the 50 pence Ordinary Shares, save that they will not be entitled to the recommended final dividend of 1.05 pence per Existing Ordinary Share of 5 pence each for the year ended 30 June 2009.
Some questions and answers, together with details of further terms and conditions of the Rights Issue, including the procedure for acceptance and payment and the procedure in respect of rights not taken up, will be set out in the Prospectus, and where relevant, will also be set out in the Provisional Allotment Letter.
Subject to the terms and conditions of the Underwriting Agreement, the Joint Bookrunners, as agent(s) for the Company, have conditionally agreed to use their reasonable endeavours to procure subscribers for the New Ordinary Shares not taken up in the Rights Issue, failing which the Joint Underwriters and Co-Lead Managers will, as principal(s), subscribe in the Underwritten Proportions for such New Ordinary Shares at the Issue Price.
Overseas Shareholders (particularly Restricted Shareholders) and Qualifying Shareholders (including, without limitation, custodians, nominees and trustees) who have a contractual or legal obligation to forward this document into a jurisdiction outside the UK or who hold Ordinary Shares for the account or benefit of any such person, should refer to the Prospectus for further information on their ability to participate in the Rights Issue.
8. Principal terms of the Share Consolidation
The Directors are proposing to consolidate the Company's existing share capital on the basis described below. The purpose of the Share Consolidation, amongst other things, is to ensure that following the Rights Issue the number of shares in issue and the likely share price is appropriate for a company of Galliford Try's size in the UK market.
The effect of the Share Consolidation will be that Shareholders on the Company's register of members at the close of business on 6 October 2009, being the Share Consolidation Record Date, will following the implementation of the Share Consolidation hold:
one 50 pence Ordinary Share for every ten Existing Ordinary Shares of 5 pence each
and in that proportion for any other number of Existing Ordinary Shares then held. The proportion of the issued ordinary share capital of the Company held by each Shareholder following the Share Consolidation will, save for fractional entitlements, remain unchanged. Apart from having a different nominal value, each 50 pence Ordinary Share will carry the same rights as set out in the Company's Articles of Association that currently attach to the Existing Ordinary Shares.
The Share Consolidation is conditional on the approval by Shareholders of the Resolution at the General Meeting. In addition, to effect the Share Consolidation it may be necessary to issue an additional number of Ordinary Shares of the Company so that the Company's issued share capital following the consolidation is rounded to the nearest whole 50 pence.
Any fractional entitlements arising on the Share Consolidation will be sold in the market on behalf of the Shareholder so entitled save that where the net proceeds are less than five pounds (£5) per entitled Shareholder then the net proceeds of such sale will be retained for the benefit of the Company.
Subject to the Resolution being approved, a request will be made to the UKLA and to the London Stock Exchange to reflect, on the Official List and the London Stock Exchange's main market for listed securities respectively, the consolidation of the Existing Ordinary Shares into 50 pence Ordinary Shares.
New share certificates in respect of the 50 pence Ordinary Shares are expected to be posted at the risk of Shareholders by 14 October 2009 to those Shareholders who, at the Share Consolidation Record Date, hold their shares in certificated form. These will replace existing certificates, which should then be destroyed. Pending the receipt of new certificates, transfers of 50 pence Ordinary Shares held in certificated form will be certified against the register of members of the Company.
50 pence Ordinary Shares are expected to be credited to stock accounts in CREST at 8.00 a.m. on 7 October 2009.
9. Structure of the Rights Issue
The Rights Issue has been structured in a way that is expected to have the effect of realising distributable reserves approximately equal to the net proceeds of the Rights Issue less the par value of the New Ordinary Shares issued by the Company. The Company and RBS Hoare Govett have agreed to subscribe for ordinary shares in Newco. Equiniti will receive, into an account set up specifically for the purpose, monies from Qualifying Shareholders or renouncees taking up New Ordinary Shares under the Rights Issue, as agent for and on behalf of RBS Hoare Govett. Provided certain conditions are met, RBS Hoare Govett will use the proceeds held by Equiniti on their behalf, to subscribe for redeemable preference shares in Newco.
The Company will allot and issue the New Ordinary Shares to those persons entitled thereto in consideration for RBS Hoare Govett transferring its holdings of ordinary shares and redeemable preference shares in Newco to the Company. Accordingly, instead of receiving cash as consideration for the issue of the New Ordinary Shares, at the conclusion of the Rights Issue the Company will own the entire issued share capital of Newco, whose only asset will be its cash reserves, which will represent an amount equivalent to the net proceeds of the Rights Issue. The Company will be able to utilise this amount by Newco redeeming the redeemable preference shares that the Company will hold in Newco or, alternatively, by procuring either that Newco lends the amount to the Company prior to any redemption or that Newco pays a dividend to the Company.
The Directors may elect to implement the Rights Issue without using the structure described above if they deem it to be in the Company's interests to do so.
10. Share Option Schemes
The Directors will make such adjustments as they deem appropriate as a result of the Share Consolidation and the Rights Issue, including to the number of Shares under options or awards granted under the Share Option Scheme, to the exercise price, if any, of those options and awards and, where appropriate, the performance conditions applying to those awards, to compensate participants for the impact of the Share Consolidation and the Rights Issue on their options. Any such adjustments shall be made in accordance with the rules of the relevant plan. Where required by relevant plan rules, adjustments shall be made with the prior approval of HMRC and/or the Company's auditors. Participants will be notified in due course of the adjustments to be made to the options or awards.
11. General Meeting
The Share Consolidation and the Rights Issue are subject to a number of conditions, including Shareholders' approval of the Resolution at the General Meeting. A notice convening the General Meeting to be held at the offices of CMS Cameron McKenna LLP, Mitre House, 160 Aldersgate Street, London EC1A 4DD at 10.00 a.m. on 6 October 2009, will be set out at the end of the Prospectus.
The General Meeting is being convened for the purposes of considering and, if thought fit, passing the Resolution which is required to implement the Share Consolidation and the Rights Issue.
Set out below is a summary of the Resolution to be proposed at the General Meeting, which will be proposed as a composite special resolution:
a. the purpose of the first paragraph of the Resolution is to effect the Share Consolidation, by consolidating, with effect from the close of business on 6 October 2009, all the Existing Ordinary Shares in the capital of the Company into 50 pence Ordinary Shares on the basis of one 50 pence Ordinary Share for every ten Existing Ordinary Shares, each 50 pence Ordinary Share having the same rights as those currently attaching to an Existing Ordinary Share;
b. the Company is proposing to remove its objects clause together with all other provisions of the Memorandum of Association which, by virtue of the 2006 Act, are treated as forming part of the Articles of Association as of 1 October 2009. Part (a) of the second paragraph of the Resolution effects the removal of these provisions. The 2006 Act also abolishes the requirement for a company to have an authorised share capital. One consequence of part (a) of the second paragraph of the Resolution is that the statement of the Company's authorised share capital presently in the Memorandum is prevented, once it becomes part of the Articles of Association by virtue of the 2006 Act, from continuing to form part of the Articles of Association and operating as a limit on future issues of shares. Part (b) of the second paragraph of the Resolution deletes a provision stating the Company's authorised share capital that is currently contained in the Articles of Association. The Directors will still be limited as to the number of shares they can at any time allot because an allotment authority continues to be required under the 2006 Act; an allotment authority is proposed in the third paragraph of the Resolution;
c. the third paragraph of the Resolution will grant the Directors authority to allot the New Ordinary Shares in connection with the Rights Issue up to an aggregate nominal amount of £22,036,394.50 (representing approximately 116.7 per cent. of the existing issued share capital of the Company). This authority will expire on the earlier of the date of the Company's annual general meeting in 2010 and 15 months after the date of the passing of the Resolution, save that the Company may allot relevant securities after this authority ends if the allotment is made pursuant to an agreement or offer which is made before this authority ends. The Directors at present intend to allot up to 44,072,789 New Ordinary Shares in connection with the Rights Issue but save as required under the Share Option Schemes, do not, at present, intend to allot any further Ordinary Shares; and
d. the fourth paragraph of the Resolution will empower the Directors to allot, pursuant to section 571 of the 2006 Act, New Ordinary Shares up to an aggregate nominal value of £22,036,394.50 in connection with the Rights Issue, as if the statutory pre-emption rights in section 561(1) of that Act did not apply to such allotment. This authority will expire on the earlier of the date of the Company's annual general meeting in 2010 and 15 months after the date of the passing of the Resolution, save that the Company may allot relevant securities after this authority ends if the allotment is made pursuant to an agreement or offer which is made before this authority ends. The purpose of this fourth paragraph of the Resolution is to provide the Company with the flexibility to deal with legal or other difficulties in making the Rights Issue available to certain Restricted Shareholders.
The authorities and approvals described in the third and the fourth paragraphs of the Resolution will be in addition to and not in substitution for all such existing authorities and approvals.
The Share Consolidation and the Rights Issue are conditional on the passing of the Resolution without material amendment. If the Resolution is not approved at the General Meeting, the Company will be unable to complete the Share Consolidation and the Rights Issue, thus reducing the funds available to Galliford Try for the purposes set out above.
12. Action to be taken in respect of the Rights Issue
You are not required to take any action at present in relation to the Rights Issue. If the Resolution is passed at the General Meeting, it is intended that:
If you sell or have sold or otherwise transferred all of your Existing Ordinary Shares held (other than ex-rights) in certificated form before 7 October 2009, please forward the Prospectus and any Provisional Allotment Letter, if and when received, at once to the purchaser or transferee or the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee, except that such documents should not be sent to any jurisdiction where to do so might constitute a violation of local securities laws or regulations, including, but not limited to the US or any of the other Excluded Territories. If you sell or have sold or otherwise transferred only part of your holding of Existing Ordinary Shares (other than ex-rights) held in certificated form before the Ex-Rights Date, you should refer to the instructions regarding split applications in the Prospectus and in the Provisional Allotment Letter.
If you sell or have sold or otherwise transferred all or some of your Existing Ordinary Shares (other than ex-rights) held in uncertificated form before the Ex-Rights Date, a claim transaction will automatically be generated by Euroclear UK which, on settlement, will transfer the appropriate number of Nil Paid Rights to the purchaser or transferee.
The procedure for acceptance and payment depends on whether, at the time at which acceptance and payment is made, the Nil Paid Rights are in certificated form (that is, are represented by a Provisional Allotment Letter) or are in uncertificated form (that is, are in CREST). The latest time and date for acceptance and payment in full in respect of the Rights Issue is expected to be 11.00 a.m. on 21 October 2009, unless the Company notifies Qualifying Shareholders of a later date or unless otherwise announced by the Company. The procedure for acceptance and payment will be set out in the Prospectus and, in respect of Qualifying Non-CREST Shareholders only, in the Provisional Allotment Letter.
For Qualifying Non-CREST Shareholders, the New Ordinary Shares will be issued in certificated form and will be represented by definitive share certificates, which are expected to be despatched to the registered address of the person(s) entitled to them by no later than 28 October 2009 (or such later date as may be notified by the Company).
For Qualifying CREST Shareholders, the Registrar will instruct CREST to credit the stock accounts of Qualifying CREST Shareholders (other than, subject to certain exceptions, Restricted Shareholders) with their entitlements to New Ordinary Shares. It is expected that this will take place as soon as practicable after 8.00 a.m. on 22 October 2009 (or such later date as may be notified by the Company).
Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsor regarding the action to be taken in connection with the Prospectus and the Rights Issue.
If you are in any doubt as to the action you should take, you should immediately seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the FSMA or, if you are outside the UK, by another appropriately authorised independent financial adviser.
DEFINITIONS
The following expressions have the following meaning where used in this Announcement, unless the context otherwise requires:
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'2005 Executive Plan'
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the Galliford Try 2005 Long-Term Bonus Plan adopted by the Company;
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'2005 SAYE Plan'
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the Galliford Try 2005 Savings Related Share Option Plan adopted by the Company;
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'2006 Act'
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the Companies Act 2006, as amended from time to time;
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'Admission'
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the admission of the New Ordinary Shares (nil paid and fully paid) to the Official List becoming effective in accordance with the Listing Rules and the admission of such shares (nil paid and fully paid) to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with the Admission and Disclosure Standards;
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'Admission and Disclosure Standards'
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the Admission and Disclosure Standards of the London Stock Exchange containing, among other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's main market for listed securities;
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'Annual Bonus Plan'
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the Galliford Try plc Annual Bonus Plan 2007 established by the Remuneration Committee;
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'Annual General Meeting'
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the annual general meeting of Galliford Try to be held on 6 November 2009;
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'Articles of Association' or 'Articles'
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the articles of association of the Company;
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'Barclays'
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Barclays Capital, the investment banking division of Barclays Bank PLC and/or Barclays Bank PLC, as the context requires;
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'Board'
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the board of directors of the Company;
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'certificated' or 'in certificated form'
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where a share or other security is not in uncertificated form;
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'Closing Price'
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the closing, middle market quotation of an Existing Ordinary Share, as published in the Daily Official List;
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'Co-Lead Managers'
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HSBC, Barclays and Lloyds TSB Corporate Markets;
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'Company' or 'Galliford Try'
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Galliford Try plc;
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'CREST'
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the relevant system, as defined in the CREST Regulations, for paperless settlement of share transfers and the holding of shares in uncertificated form (in respect of which Euroclear UK is the operator as defined in the CREST Regulations);
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'CREST Regulations' or 'Regulations'
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the Uncertificated Securities Regulations 2001 (SI 2001 No.3755);
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'CREST sponsor'
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a CREST participant admitted to CREST as a CREST sponsor;
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'CREST sponsored member'
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a CREST member admitted to CREST as a sponsored member;
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'Daily Official List'
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the daily record setting out the prices of all trades in shares and other securities conducted on the London Stock Exchange;
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'Directors'
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the current Executive Directors and Non-executive Directors;
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'Enlarged Share Capital'
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the issued share capital of the Company following completion of the Share Consolidation and the Rights Issue;
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'Equiniti' or 'Registrar'
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Equiniti Limited;
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'Euroclear UK & Ireland' or 'Euroclear UK'
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Euroclear UK and Ireland Limited (formerly CRESTCO Limited), the operator of CREST;
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'Excluded Territories' and each an 'Excluded Territory'
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the US, Canada, Japan, Australia and the Republic of South Africa and any other jurisdiction where the extension or availability of the Rights Issue (and any other transaction contemplated thereby) would breach any applicable law or regulation;
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'Executive Directors'
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Greg Fitzgerald and Frank Nelson;
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'Existing Ordinary Shares'
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the fully paid Ordinary Shares of 5 pence each in the capital of the Company prior to the Share Consolidation becoming effective;
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'Ex-Rights Date'
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the date on which the New Ordinary Shares are expected to commence trading ex-rights, being 7 October 2009;
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'Financial Adviser'
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Rothschild;
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'Financial Services Authority' or 'FSA'
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the Financial Services Authority of the UK in its capacity as the competent authority for the purposes of Part VI of FSMA and in the exercise of its functions in respect of admission to the Official List otherwise than in accordance with Part VI of FSMA;
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'FSMA'
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the Financial Services and Markets Act 2000, as amended from time to time;
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'Fully Paid Rights'
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rights to acquire New Ordinary Shares, fully paid;
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'General Meeting'
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the general meeting of Galliford Try to be held at the offices of CMS Cameron McKenna LLP, Mitre House, 160 Aldersgate Street, London EC1A 4DD on 6 October 2009 at 10.00 a.m., notice of which will be contained in the Prospectus;
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'Group' or 'Galliford Try Group'
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the Company and each of its subsidiaries and subsidiary undertakings from time to time;
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'HSBC'
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HSBC Bank plc;
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'Issue Price'
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285 pence per New Ordinary Share;
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'Joint Bookrunners'
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RBS Hoare Govett and KBC Peel Hunt;
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'Joint Sponsors'
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Rothschild and RBS Hoare Govett;
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'Joint Underwriters'
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RBS Hoare Govett and KBC Peel Hunt;
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'KBC Peel Hunt'
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KBC Peel Hunt Ltd;
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'Listing Rules'
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the listing rules made by the FSA under Part VI of FSMA (as amended from time to time);
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'Lloyds TSB'
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Lloyds TSB Corporate Markets and/or Lloyds TSB Bank plc as the context requires;
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'London Stock Exchange'
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London Stock Exchange plc;
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'LTIP'
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the Galliford Try 2006 Long-Term Incentive Plan adopted by the Company;
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'Memorandum of Association' or 'Memorandum'
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the memorandum of association of the Company;
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'Newco'
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Gordon Funding (Jersey) Limited, a company incorporated in Jersey;
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'New Ordinary Shares'
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up to 44,072,789 new 50 pence Ordinary Shares to be issued by the Company pursuant to the Rights Issue;
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'Nil Paid Rights'
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rights to acquire New Ordinary Shares, nil paid, provisionally allotted to Qualifying Shareholders pursuant to the Rights Issue;
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'Non-CREST Shareholder'
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a Shareholder who does not hold his Ordinary Shares in CREST;
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'Non-executive Directors'
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David Calverley, Amanda Burton, Peter Rogers and Andrew Jenner;
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'Official List'
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the Official List of the UK Listing Authority;
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'Ordinary Shares'
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ordinary shares of 5 pence each in the capital of the Company and, following implementation of the Share Consolidation, ordinary shares of 50 pence each in the capital of the Company;
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'Overseas Shareholders'
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Shareholders who have registered addresses outside the UK or who are located or resident in, countries outside the UK;
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'Prospectus'
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the document expected to be dated 10 September 2009 comprising a circular and a prospectus relating to the Company for the purposes of the Rights Issue and the Share Consolidation (together with any supplements or amendments thereto);
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'Provisional Allotment Letter' or 'PAL'
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the renounceable provisional allotment letter expected to be sent to Qualifying Non-CREST Shareholders by the Company in respect of the New Ordinary Shares (nil paid) provisionally allotted to them pursuant to the Rights Issue;
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'Qualifying CREST Shareholders'
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Qualifying Shareholders holding Ordinary Shares on the Rights Issue Record Date in uncertificated form;
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'Qualifying Non-CREST Shareholders'
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Qualifying Shareholders holding Ordinary Shares on the Rights Issue Record Date in certificated form;
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'Qualifying Shareholders'
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holders of Ordinary Shares on the register of members of the Company at the Rights Issue Record Date;
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'RBS Hoare Govett'
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RBS Hoare Govett Limited;
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'Remuneration Committee'
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the remuneration committee established by the Board;
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'Resolution'
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the special resolution to be proposed at the General Meeting;
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'Restricted Shareholders'
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Qualifying Shareholders having registered addresses in, or resident or located in, any of the Excluded Territories;
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'Rights Issue'
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the offer by way of rights of the New Ordinary Shares to Qualifying Shareholders at the Issue Price on the terms and subject to the conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders only (other than, subject to certain exceptions, Restricted Shareholders), the Provisional Allotment Letter;
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'Rights Issue Record Date'
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close of business on 2 October 2009;
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'Rothschild'
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N M Rothschild & Sons Limited;
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'Senior Managers'
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Ian Baker, Ken Gillespie and Richard Barraclough;
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'Share Consolidation'
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the proposed consolidation of the Company's existing share capital on the basis described in the Prospectus;
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'Share Consolidation Record Date'
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close of business on 6 October 2009
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'Shareholders'
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holders of Ordinary Shares;
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'Share Option Schemes'
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the 2005 Executive Plan, the LTIP, the 2005 SAYE Plan and the Annual Bonus Plan;
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'Shares'
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Ordinary Shares, or the New Ordinary Shares to be issued pursuant to the Rights Issue, as the context may require;
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'Sterling' or '£' or 'pence'
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the lawful currency of the UK;
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'stock account'
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an account within a member account in CREST to which a holding of a particular share or other security in CREST is credited;
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'UK Listing Authority' or 'UKLA'
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the FSA in its capacity as the competent authority for the purposes of Part VI of FSMA and in the exercise of its functions in respect of the admission to the Official List otherwise than in accordance with Part VI of FSMA;
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'uncertificated' or 'in uncertificated form'
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recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
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'Underwriting Agreement'
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the agreement between the Company, Rothschild, the Joint Underwriters and the Co-Lead Managers dated 10 September 2009, the principal terms of which will be summarised in the Prospectus;
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'Underwritten Proportions'
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as regards RBS Hoare Govett, 60 per cent.; as regards KBC Peel Hunt, 20 per cent.; as regards HSBC, 8 per cent.; as regards Barclays Capital, 6 per cent.; and as regards Lloyds TSB Corporate Markets, 6 per cent.;
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'United Kingdom' or 'UK'
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the United Kingdom of Great Britain and Northern Ireland; and
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'United States' or 'US'
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the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.
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This information is provided by RNS
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