Move to Official List and Cov
LONDON & STAMFORD PROPERTY LIMITED
Registration No. 47816
Registered Office:
2ND FLOOR, REGENCY COURT, GLATEGNY ESPLANADE, ST. PETER PORT,
GUERNSEY, GY1 3NQ.
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TELEPHONE: + 44 1481 720321
FACSIMILE: + 44 1481 716117
EMAIL: Funds@bfgl.com
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR AUSTRALIA.
This announcement is an advertisement and not a prospectus.
Neither London & Stamford Property Limited ("LSP") nor London & Stamford Property Plc (the "Company") is offering any new ordinary shares or other securities in connection with the proposals described in this announcement.
This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any shares in LSP or the Company or securities in any other entity, in any jurisdiction, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.
Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of the final prospectus to be published by the Company and any supplement thereto in connection with the admission of ordinary shares of the Company to the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities.
The contents of this announcement have been prepared by and are the sole responsibility of LSP.
London & Stamford Property Limited announces proposals for the:
Establishment of London & Stamford Property Plc as the holding company of London & Stamford Property Limited by way of a scheme of arrangement under part VIII of the Companies (Guernsey) Law, 2008;
Admission of London & Stamford Property Plc to the Main Market and the Official List;
Election for UK-REIT status; and
Acquisition of the business of LSI Management LLP
SUMMARY OF THE PROPOSALS
LSP (AIM: LSP.L), a closed-ended investment company incorporated in Guernsey, announces that the following proposals have been agreed in principle:
(a) The establishment of London & Stamford Property plc as the holding company of LSP by way of a scheme of arrangement under Part VIII of the Companies (Guernsey) Law, 2008 (the "Scheme");
(b) The applications to the UKLA and the London Stock Exchange for admission of the Company's ordinary shares to the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange ("Admission");
(c) The election by the Enlarged Group for UK-REIT status (the "Election"); and
(d) The internalisation of the management of the business by acquiring the business and assets of LSI (the "Acquisition"),
(together with the Scheme, Admission, the Election, the "Proposals".)
The Scheme requires the approval of a majority in number of those LSP Shareholders present and voting (either in person or by proxy) at a Guernsey Court-convened general meeting, who represent at least 75 per cent. in nominal value of the shares. The shareholder approval must then be sanctioned by the Guernsey Court for the Scheme to become effective on Admission. The Acquisition is also subject to an LSP Shareholder vote at an extraordinary general meeting of LSP and requires a vote in favour of 50 per cent. of the votes cast in person (or in the event of a poll, by proxy) by the LSP Shareholders.
Two separate resolutions will be put to LSP Shareholders, one to approve the Scheme and one to approve the Acquisition. LSP Shareholders may approve the resolution to effect the Scheme without approving the Acquisition Resolution, but not vice versa.
LSP expects shortly to enter into the Acquisition Agreements and to publish and post the Scheme Circular in connection with the Proposals to LSP Shareholders. A Prospectus relating to Admission will follow and be published in September 2010. It is intended that Admission of the Company will take place no later than 1 October 2010.
BENEFITS OF THE PROPOSALS
The LSP Board believes that the long-term future of the business and the interests of LSP Shareholders as a whole is best served by converting to UK-REIT status, becoming a permanent life vehicle to capture fully the long-term benefits of REIT conversion and by internalising its management.
Admission to Main Market and REIT conversion
· The move to the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange from AIM is considered more appropriate for the Company given LSP's current market capitalisation, and may confer a number of associated benefits, in particular, access to a broader range of investors and improved liquidity.
· The Company's new Board of Directors will consist of Raymond Mould as Executive Chairman, Patrick Vaughan as Chief Executive Officer and Martin McGann as Finance Director. The Non-Executive Directors will be Mark Burton, Charles Cayzer, Richard Crowder, James Dean and Humphrey Price.
· LSP is not currently eligible to elect for group UK-REIT status, principally due to LSP's shares not being listed on a recognised stock exchange and because it is not resident for tax purposes in the UK (which is a requirement for the holding company of a group UK-REIT). However, with the move to the Main Market of the London Stock Exchange, the Company will satisfy these requirements.
· On Admission, the Company will enter the UK-REIT regime. The key advantage of electing for group UK-REIT status is that the companies within the Enlarged Group will be largely exempt from future corporation tax on both rental profits and chargeable gains on disposal of investment properties. The LSP Board believe that the tax savings from the Election will provide for the REIT conversion charge to be re-paid within two years, subject to full investment of cash resources.
Acquisition of LSI Management LLP
· LSP's external property advice and management function, currently provided by LSI, is to be brought within the Enlarged Group by way of the Acquisition. The consideration payable pursuant to the Acquisition Agreements will be £55 million to be satisfied by the issue of new Ordinary Shares ("consideration shares") by the Company to LSI Management Members of which £10 million is subject to a clawback arrangement if certain performance conditions are not satisfied in the three years ending 30 September 2013.
· The Acquisition creates a strong alignment of interest between the Management Team and the PLC Shareholders. Following completion of the Acquisition and the Scheme becoming effective, the Management Team, which includes Raymond Mould, Patrick Vaughan and Martin McGann, will hold 49,580,406 New Ordinary Shares in aggregate representing 9.1% of the issued share capital of the Company.
· The PLC Board expect a reduction to the Enlarged Group's ongoing administrative costs in respect of fees payable under the Property Advisory Agreement. Fees paid pursuant to the Property Advisory Agreement totalled £10.8 million during the year ended 31 March 2010.
· All fees earned pursuant to the Green Park Property Advisory Agreement will be due to the Enlarged Group and to the benefit of Shareholders. Fees paid pursuant to the Green Park Property Advisory Agreement for the year to 31 March 2010 totalled £12.6 million.
· The Individual Management Members will agree with the Company not to dispose of any Consideration Shares within the three year period after Admission, subject to certain exceptions.
· The Individual Management Members agree not to be subject to any long-term incentive arrangements for three years.
· The Acquisition is expected to confer operational benefits with a simpler decision-making process as opposed to the complexities of an external investment manager making investment recommendations.
Raymond Mould, the Non-Executive Chairman of London & Stamford Property Limited, said:
"We believe that converting to a REIT, moving to the Official List and internalising management is the best way forward for shareholders. We are pleased to be announcing these proposals which we believe will enable us to enhance shareholder returns as we continue to grow the business and take advantage of the significant opportunities we see to deploy LSP's capital at attractive long term cash yields."
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For further information contact: |
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London & Stamford Property Limited |
Tel: +44 (0)1481 733315 |
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Rochelle Thompson, Butterfield Fulcrum Group (Guernsey) Ltd Company Secretary |
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KBC Peel Hunt Ltd (Nominated Adviser, Joint Sponsor, Joint Financial Adviser and Joint Broker) |
Tel: +44 (0)20 7418 8900 |
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Capel Irwin / David Anderson/ Kate Barlow |
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Credit Suisse Securities (Europe) Limited (Joint Sponsor, Joint Financial Adviser and Joint Broker) |
Tel: +44 (0)20 7888 1000 |
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George Maddison / Robert Mayhew / Murdo Montgomery |
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Kreab Gavin Anderson |
Tel: +44 (0)20 7074 1800 |
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Richard Constant / James Benjamin / Anthony Hughes |
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The summary above should be read in conjunction with the full text of the following announcement.
Capitalised terms used in this announcement have the meanings ascribed to them in the "Definitions" section.
Notes:
LSP is an authorised closed-ended investment company incorporated in October 2007 in order to exploit opportunities that it anticipated in the UK property cycle. LSP invests in commercial property, including office, retail and industrial real estate assets, principally in the UK, and has a Property Portfolio comprising of fifteen investments, all of which are located in the UK.
LSI Management provides LSP with investment advisory and property management services and is authorised by the FSA to carry out certain regulated activities.
LSP is traded on AIM (LSP.L). Further information on LSP is available from LSP's website www.londonandstamford.com.
KBC Peel Hunt which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for LSP and the Company and for no one else in connection with the Proposals and will not be responsible to any person other than LSP and the Company for providing the protections afforded to clients of KBC Peel Hunt, nor for providing advice in relation to the Proposals, the content of this announcement or any matter referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on KBC Peel Hunt by FSMA or the regulatory regime established thereunder, neither KBC Peel Hunt nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of KBC Peel Hunt in connection with this announcement, any statement contained herein or otherwise, nor makes any representation or warranty, express or implied, in relation to, the contents of this announcement, including its accuracy, completeness or verification or for any other statement purported to be made by KBC Peel Hunt, or on behalf of KBC Peel Hunt in connection with LSP, the LSP Existing Ordinary Shares or the Proposals. KBC Peel Hunt accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability to any person who is not a client of KBC Peel Hunt, whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.
Credit Suisse which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for LSP and the Company and for no one else in connection with the Proposals and will not be responsible to any person other than LSP and the Company for providing the protections afforded to clients of Credit Suisse, nor for providing advice in relation to the Proposals, the content of this announcement or any matter referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Credit Suisse by FSMA or the regulatory regime established thereunder, neither Credit Suisse nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse in connection with this announcement, any statement contained herein or otherwise, nor makes any representation or warranty, express or implied, in relation to, the contents of this announcement, including its accuracy, completeness or verification or for any other statement purported to be made by Credit Suisse, or on behalf of Credit Suisse in connection with LSP, the LSP Existing Ordinary Shares or the Proposals. Credit Suisse accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability to any person who is not a client of Credit Suisse, whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.
FORWARD-LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding LSP's and the Company's intentions, beliefs or current expectations concerning, among other things, the Enlarged Group's result of operations, financial condition, prospects, growth strategies and the industries in which the Enlarged Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position, LSP's and the Company's, earnings, financial position, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future.
Subject to LSP's and the Company's continuing obligations under the AIM Rules for Companies, the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and FSMA, neither LSP nor the Company undertakes any obligation to update publicly or revise any forward looking statement whether as a result of new information, future events or otherwise. None of the statements made in this announcement in any way obviates the requirements of LSP and the Company to comply with the AIM Rules for Companies, the Listing Rules, the Prospectus Rules, the Disclosure and Transparency Rules and FSMA.
GENERAL NOTICE TO OVERSEAS SHAREHOLDERS
The availability of the Scheme Circular to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not so resident should inform themselves about and observe any applicable requirements in those jurisdictions.
Securities may not be offered or sold in the United States unless they are registered under the Securities Act of 1933, as amended (the "Securities Act") or are exempt from such registration requirements. The New Ordinary Shares proposed to be issued pursuant to the Scheme and Acquisition have not been and will not be registered under the Securities Act but will be issued in reliance on the exemption provided by Section 3(a)(10) thereof. The New Ordinary Shares will not be registered under the securities laws of any state of the United States, and will be issued in the United States pursuant to the Scheme in reliance on available exemptions from such state law registration requirements. Neither the United States Securities and Exchange Commission nor any US state securities commission has or will have reviewed or approved this announcement, the Scheme Circular, the Acquisition or the issue of the New Ordinary Shares, and any representation to the contrary is a criminal offence in the United States.
Establishment of London & Stamford Property Plc as the holding company of London & Stamford Property Limited by way of a scheme of arrangement under part VIII of the Companies (Guernsey) Law, 2008;
Admission of London & Stamford Property plc to the Main Market and the Official List;
Election of UK-REIT status; and
Acquisition of LSI Management LLP
INTRODUCTION
Today LSP announces the following proposals which have been agreed in principle:
(a) the establishment of the Company as the holding company of LSP by way of a scheme of arrangement under Part VIII of the Companies (Guernsey) Law, 2008;
(b) the applications to the UKLA and the London Stock Exchange for admission of the PLC Existing Ordinary Shares and the New Ordinary Shares to the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange;
(c) the election by the Company and its subsidiaries for UK-REIT status and to undertake a number of proposals to enable it to do so; and
(d) the internalisation of the management of the Enlarged Group by acquiring the business and assets of LSI Management.
If the Scheme becomes effective, following the requisite approval of LSP Shareholders and the sanction of the Court:
• existing LSP Shareholders will cease to own shares in LSP and will instead own shares in the Company (in the same proportions as their current shareholdings in LSP, save as a result of the issue of the Consideration Shares under the LSI Acquisition Agreement);
• the Company will own the entire issued share capital of LSP;
• the Company will also own the entire issued share capital of LSI (Investments) Limited, which is the owner of the LSP Group's properties at Stoke-on-Trent and Newcastle-Under-Lyme;
• LSP will continue to own the Property Portfolio;
• the Company will be listed on the premium segment of the Official List and the PLC Existing Shares and the New Ordinary Shares will be traded on the Main Market of the London Stock Exchange. LSP Existing Ordinary Shares will cease to be traded on AIM and the PLUS Market; and
• the Enlarged Group will be a group UK-REIT upon Admission. The Company will be the principal company of the group UK-REIT.
If the Acquisition is completed, following the requisite approval of LSP Shareholders and satisfaction of other applicable conditions, the Company will own the entire issued share capital of LML. LML will own all of the business and assets which are currently owned by LSI Management. The effect of the Acquisition is that the property advice and management functions required by the Enlarged Group will be provided internally. Raymond Mould, Patrick Vaughan and Martin McGann are also LSI Management Members and will, therefore, benefit from the Acquisition. Accordingly, in respect of the Acquisition, Messrs Mould, Vaughan and McGann are considered "related parties" for the purposes of the AIM Rules for Companies.
Two separate resolutions will be put to LSP Shareholders, one to approve the Scheme and one to approve the Acquisition Resolution. LSP Shareholders may approve the resolution to effect the Scheme without approving the Acquisition Resolution, but not vice versa.
If the Scheme becomes effective, it will be binding on all LSP Shareholders, irrespective of whether or not they attended and/or voted at the Scheme Court Meeting (and if they attended and voted, whether or not they voted in favour).
If the Scheme is not sanctioned by the Court or does not become effective for any other reason, the Company will not apply for, or will withdraw any application for Admission. Further, if the Scheme does not become effective, LSP will remain admitted to trading on AIM and the PLUS Market and will continue to be externally managed. As a consequence, conversion to a UK-REIT will not occur.
The election of the Company for UK-REIT status will become effective on the date of Admission and the Enlarged Group will be a group UK-REIT.
Your attention is drawn to the expected timetable of principal events at the end of this announcement.
BACKGROUND TO AND REASONS FOR THE PROPOSALS
The dislocation in UK real estate that has taken place in the period since LSP was launched on AIM has been greater than the Management Team had originally anticipated. Consequently:
• LSP has been able to deploy a greater amount of capital than was originally anticipated (undertaking a second equity raising in July 2009);
• LSP has acquired a portfolio of assets of a greater investment quality than was originally expected (for example Meadowhall and One Fleet Place);
• LSP has built up assets that continue to provide shareholders with attractive, long-term cash yields;
• the LSP Board believes that the UK commercial real estate market will continue to provide the Management Team with opportunities to deploy capital because amongst other things:
• UK banks have significant real estate loan portfolios they are looking to reduce;
• distressed real estate borrowers will continue to seek equity capital; and
• the Management Team has earned a reputation for being able to transact quickly and efficiently.
When LSP was established, it provided shareholders with the ability on the fifth anniversary from LSP's admission to trading on AIM to vote on whether or not to liquidate LSP's assets in the 12 months following the seventh anniversary of its admission to trading on AIM. As a consequence of the Proposals, shareholders will not retain this right, thereby providing certainty for the Company's future and enabling the Company to focus on its objectives of creating superior returns and delivering value to shareholders over the medium to long term.
The LSP Board believes that the long-term future of the business is best served by converting to UK-REIT status, becoming a permanent life vehicle to fully capture the long-term benefits of REIT conversion, and internalising its management. The LSP Board believes that following the Proposals, the Company will be well positioned to create significant value for PLC Shareholders.
On a pro forma basis and assuming that the Proposals had occurred on 31 March 2010, on an IFRS basis the Enlarged Group's unaudited net assets would have increased by approximately £42 million to approximately £642.6 million, but decreased the net assets per share by approximately 2p from 120p to 118p per LSP Ordinary Share. Further information on the pro forma impact of the Proposals on the consolidated net assets and liabilities of the Enlarged Group will be set out in the Scheme Circular.
Benefits of election for UK-REIT status
The LSP Board considers that it would be beneficial for the Enlarged Group to become a group UK-REIT. The Enlarged Group will have to pay an entry charge of approximately £11.5 million, equivalent to 2 per cent. of its qualifying gross assets.
However, the key advantage of electing for group UK-REIT status is that the companies within the Enlarged Group will be largely exempt from future corporation tax on both rental profits and chargeable gains on disposals of investment properties. The LSP Board, therefore, believes that tax savings from UK-REIT status will provide for the conversion charge to be re-paid within two years, subject to the full investment of cash resources. In addition, UK-REIT status will give the company access to a broader range of investors.
The Company will be required to distribute to PLC Shareholders 90 per cent. of the profits of the Property Rental Business for each year.
LSP is not currently eligible to elect for group UK-REIT status, principally due to LSP's shares not being listed on a recognised stock exchange (such as the Main Market of the London Stock Exchange) and because LSP is not resident for tax purposes in the UK (which is a requirement for the holding company of a group UK-REIT). However, subject to Admission and the Scheme becoming effective, the Company will satisfy these requirements.
Following completion of the Share Purchase Agreement (as a result of which all of the Company's assets will comprise Property Rental Business assets) and, subject to Admission, the Company will be eligible for group UK-REIT status. A key requirement of maintaining the Enlarged Group's UK-REIT status is that it spends sufficient cash by 1 April 2013 so that at least 75 per cent. of its assets relate to its Property Rental Business. As at the date of this announcement, the Property Rental Business includes the Property Portfolio other than the LSP Group's interest in Meadowhall and the Bridges Wharf, Battersea asset. Following Admission and the Scheme becoming effective (when the Company will become the holding company of the LSP Group), at least 60 per cent. of the Enlarged Group's assets will relate to the Property Rental Business. The LSP Board believes that achieving the 75 per cent. threshold is feasible although there is a risk that this is not achieved or there is a change of law.
Benefits of transferring to the Official List
As a consequence of the PLC Existing Ordinary Shares and the New Ordinary Shares being admitted to the premium segment of the Official List and the UK-REIT status of the Company and its group, the Company may have access to a broader range of investors than LSP is able to access as an AIM or a PLUS Market traded company and will also be able to access additional specialised international real estate investors. In addition, given LSP's market capitalisation, the LSP Board considers the premium segment of the Official List status to be more appropriate than LSP's current admission to trading on AIM or the PLUS Market. A listing on the premium segment of the Official List may also improve liquidity of trading in the Company's shares compared to AIM and the PLUS Market, and allow the Company to benefit from index tracking funds.
Benefits of the Acquisition
A reduction is expected to the Enlarged Group's ongoing administrative costs in respect of fees payable pursuant to the Property Advisory Agreement. Fees payable pursuant to the Property Advisory Agreement totalled £10.8 million and £5.2 million during the years ended 31 March 2010 and 31 March 2009 respectively. The 31 March 2010 fee only takes account of eight months of management fees on the £219.5 million (after expenses) of new capital raised in July 2009, in addition to LSP's existing capital.
The Enlarged Group will benefit from the Green Park Property Advisory Agreement which forms part of LSI Management's assets and all fees earned pursuant to the Green Park Property Advisory Agreement will be due to the Enlarged Group and to the benefit of PLC Shareholders. Fees payable to LSI Management pursuant to the Green Park Property Advisory Agreement totalled approximately £12.6 million and approximately £1.2 million during the years ended 31 March 2010 and 31 March 2009 respectively.
Pursuant to the agreement in respect of the joint venture between LSP and Green Park, should Green Park invest further capital up to its commitment of £200 million of equity, fees which would have been earned by LSI Management as the property adviser and investment adviser will be due to the Enlarged Group.
Further, should the Enlarged Group secure management of other third party equity, there would be the potential for additional fee income to be payable to the Enlarged Group.
The Acquisition is expected to confer operational benefits with a simpler decision-making process as opposed to the complexities of an investment manager making investment recommendations to an offshore board of directors. In addition, as a result of the Acquisition, the Enlarged Group will benefit from the members of the Investment Committee being employees of the Enlarged Group rather than external advisors and with the additional benefits of securing the members of the Investment Committee for the long-term and providing greater transparency on remuneration.
Due to the consideration proposed to be payable pursuant to the LML Acquisition Agreement being in New Ordinary Shares, the Acquisition creates a strong alignment of interest between the members of the Management Team and PLC Shareholders. The Independent Directors believe an internal management structure is more appropriate for a permanent life, UK-REIT company through securing management for the Enlarged Group for the longer-term.
SCHEME OF ARRANGEMENT
The Scheme will involve the Company issuing New Ordinary Shares to LSP Shareholders in consideration for the transfer of their Scheme Shares to the Company. All of the Scheme Shares will be transferred to the Company under the Scheme.
The Scheme will be between the Scheme Shareholders and LSP under Part VIII of the Companies (Guernsey) Law, 2008.
If the Scheme becomes effective, Scheme Shareholders will receive one New Ordinary Share for every one Scheme Share held.
The Scheme is subject to the following conditions which will be set out in the Scheme Circular:
(a) the Scheme being approved by a majority in number of those Scheme Shareholders present and voting, either in person or by proxy, at the Scheme Court Meeting (or at any adjournment thereof) representing not less than 75 per cent. in nominal value of the Scheme Shares held by such Scheme Shareholders;
(b) the Scheme being sanctioned by the Court;
(c) in the event that the Acquisition Resolution proposed at the Extraordinary General Meeting is passed:
(i) the LML Acquisition Agreement becoming unconditional and being completed in accordance with its terms; and
(ii) the LSI Acquisition Agreement becoming unconditional and being completed in escrow in accordance with its terms;
(d) the UKLA approving the Prospectus and the Company publishing the Prospectus, as required by law, prior to the Scheme Court Hearing;
(e) Admission; and
(f) the Scheme becoming effective not later than 31 December 2010 or such other date as LSP and the Company agree or is sanctioned by the Court.
The Scheme will become effective on Admission, subject to the above conditions being satisfied.
The Scheme will not substantially alter the assets and liabilities of the LSP Group as a whole. Upon the Scheme becoming effective and subject to the Acquisition and the proposed buyback of the PLC Existing Ordinary Shares pursuant to the Initial Shares Buyback Agreements, a PLC Shareholder will have the same proportionate interests in the profits, net assets and dividends of the Enlarged Group as a holder of New Ordinary Shares as he has as an LSP Shareholder in the profits, net assets and dividends of the LSP Group before the Scheme becomes effective.
If the Scheme becomes effective, it will be binding on all LSP Shareholders, irrespective of whether or not they attended and/or voted at the Scheme Court Meeting (and if they attended and voted, whether or not they voted in favour).
If the Scheme is not sanctioned by the Court or does not become effective for any other reason, the Company will not apply for, or will withdraw any application for Admission. Further, if the Scheme does not become effective, LSP will remain admitted to trading on AIM and the PLUS Market and will continue to be externally managed as at present. As a consequence, conversion to UK-REIT status will not occur.
ACQUISITION
Subject to approval of the Scheme and the Acquisition Resolution the Company proposes to internalise its management function which is currently being performed by LSI Management.
Subject to the Scheme becoming effective and the Acquisition completing, the PLC Directors' interests in the New Ordinary Shares on Admission are expected to be as follows:
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Name |
Number of New Ordinary Shares on Admission |
Percentage of issued share capital on Admission |
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Raymond Mould |
18,942,380 |
3.47% |
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Patrick Vaughan |
18,383,510 |
3.37% |
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Martin McGann |
3,823,795 |
0.7% |
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Charles Cayzer* |
- |
- |
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Mark Burton |
- |
- |
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Richard Crowder |
100,000 |
0.02% |
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Humphrey Price |
2,143,127 |
0.39% |
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James Dean |
- |
- |
Note: These figures do not include the PLC Existing Ordinary Shares which are subject to the Initial Shares Buyback Agreements.
*Charles Cayzer is a director of Caledonia Investments and the Cayzer Trust Company Ltd, which hold 31,497,094 and 2,785,506 ordinary shares respectively in the capital of LSP (representing 6.3% and 0.6% respectively of the issued share capital of the Company)
At the date of the Acquisition, LSI Management will have net tangible assets of £Nil. However, on completion of the Acquisition the Green Park Property Advisory Agreement will be capitalised as an intangible asset of approximately £20.1 million, a deferred tax asset of approximately £7.3 million will be provided for on the purchase of the Property Advisory Agreement and subject to the Lock-In Arrangements a share based prepayment of approximately £41.3 million (based on the agreed share price of the Acquisition of 120.1p per New Ordinary Share) will be created.
The Acquisition will be implemented in two stages:
Stage 1: Transfer of the business and assets of LSI to LML
LML, LSI Management and the LSI Management Members intend to enter into the LML Acquisition Agreement to transfer the whole of the business and assets of LSI Management to LML in exchange for the issue of shares in LML to the Individual Management Members and the issue of a receivable to GEAM.
LML intends to enter into the GEPT Agreement to acquire GEPT's interests in LSI Management in exchange for the issue of shares in LML and will then acquire GEAM.
Stage 2: Acquisition of the entire issued share capital of LML
The Company and the LSI Vendors and the LSI Management Members intend to enter in to the LSI Acquisition Agreement pursuant to which the Company has agreed to acquire the entire issued share capital of LML (after completion of the LML Acquisition Agreement, under which the business of the Property Adviser will be transferred to LML) in consideration of an issue of shares in the Company. The issued share capital of LML will, following completion of the LML Acquisition Agreement, comprise a total of 55,000,000 ordinary shares of no par value held by the LSI Management Members LSI Vendors.
The consideration payable by the Company under the LSI Acquisition Agreement is the sum of £55 million, to be satisfied by the issue of the Consideration Shares to the LSI Vendors at a price of 120.1 pence per New Ordinary Share (equivalent to the NAV per LSP Ordinary Share at 31 March 2010).
The Individual Management Members have agreed with the Company not to dispose of any of their Consideration Shares within the period of three years after Admission (the "Lock-In Arrangement"). GEPT are free to dispose of their Consideration Shares during this period free of the Lock-In Arrangement. The Lock-In Arrangement is subject to certain exceptions.
If an Individual Management Member leaves the Company within the period of three years after Admission, he or she will be deemed to be a Bad Leaver and will be required to sell all his or her Consideration Shares back to the Company for an aggregate nominal sum of £1, unless he or she ceases to be a director or employee on account of death, ill-health, redundancy or dismissal (except where dismissal is a consequence of not being re-elected at an annual general meeting of the Company). The PLC Board will also be able to waive any requirement for an Individual Management Member to sell his or her Consideration Shares back to the Company for a nominal sum.
A certain proportion of the consideration for the acquisition of LML ("Clawback Consideration") is subject to a clawback arrangement if certain performance targets are not met in the three years to 30 September 2013 (the "Clawback Arrangement"). The total amount of Clawback Consideration is £10,000,000 represented by 8,326,395 Consideration Shares ("Clawback Shares").
The performance targets are to achieve a year on year increase in Adjusted Net Asset Value of the Enlarged Group of at least 11.5 per cent. The target is calculated after adding back in dividends but taking off the amount of any new issue of shares. By way of example, if the Adjusted Net Asset Value at 1 October 2010 is £100 million, the performance targets will be to achieve an increase in Adjusted Net Asset Value as follows:
- at 30 September 2011: £111.5 million
- at 30 September 2012: £124.3 million
- at 30 September 2013: £138.6 million
"Adjusted Net Asset Value" for these purposes means net asset value of the Enlarged Group attributable to equity shareholders, subject to adjustments to exclude any amounts in respect of the carrying value of any intangibles, share based payment prepayment and deferred tax assets arising in the Relevant Accounts as a result of accounting for the acquisition of LML, after making a fair value adjustment in respect of derivatives and related deferred tax balances.
The starting Adjusted Net Asset Value will be the Adjusted Net Asset Value on 30 September 2010 but further adjusted to take into account the costs of the Proposals and the cost of the Enlarged Group entering the UK-REIT regime.
If the performance target for a Performance Year is met, then one-third of the Clawback Shares (i.e. 2,775,465 Consideration Shares) will be released to the LSI Vendors free of the Clawback Arrangement and for their own absolute beneficial ownership. If the performance target for a Performance Year is not met, then the Clawback Shares (except any previously released) will continue to be subject to the Clawback Arrangement.
If the performance target for the first Performance Year is not met but the cumulative target for the second Performance Year is met, then two-thirds of the Clawback Shares (i.e. 5,550,930 Consideration Shares) will be released to the LSI Vendors.
The Clawback Arrangement is only enforced after the end of the third Performance Year once the Adjusted Net Asset Value at 30 September 2013 is determined.
If the Adjusted Net Asset Value at 30 September 2013 meets the cumulative target (£138.6 million in the above example) then none of the Clawback Shares will be subject to clawback.
If the Adjusted Net Asset Value at 30 September 2013 does not meet the cumulative target (£138.6 million in the above example) all of the Clawback Shares will be subject to clawback, except those that have been previously released to the LSI Vendors as mentioned above.
The effect of Clawback Shares becoming subject to clawback is that those Clawback Shares will be bought back by the Company for the aggregate nominal sum of £1 for each LSI Vendors.
In the event that the Company is the subject of a takeover during the life of the Clawback Arrangement, the Clawback Shares will vest in their entirety.
An LSI Vendors will be entitled to retain any dividends or other distributions previously paid to that LSI Vendors in respect of any Consideration Shares that are bought back by the Company under any of the above arrangements.
The LSI Acquisition Agreement is conditional on:
(a) the same conditions as the LML Acquisition Agreement;
(b) the LML Acquisition Agreement having become unconditional and having been completed in accordance with its terms;
(c) the Restated Property Advisory Agreement and the Restated Green Park Property Advisory Agreement having been entered into;
(d) approval of the share buy back element of the LSI Acquisition Agreement being approved by the independent shareholders of the Company by special resolution in general meeting prior to Admission; and
(e) Admission.
ELECTION FOR UK-REIT STATUS
The PLC Directors have decided to give notice to HMRC to treat the Company and members of its group as a group UK-REIT. It is proposed that the Company will be the principal company of the group UK-REIT.
The UK-REIT regime operates to enable companies that meet certain criteria and carry on a property rental business to elect to enjoy a favourable tax regime. In essence, a UK-REIT structure aims to replicate the tax treatment of a direct investment in property and move the incidence of taxation from the company to the investors, removing one level of taxation. To achieve this, rental income and gains on disposal of investment properties are exempt at the REIT level, but are taxed at the investor level. Dividends declared to UK-REIT investors are deemed to be property rental income, and are taxed accordingly. As a result, LSP Shareholders may enjoy an overall benefit from the Company's group UK-REIT status. LSP Shareholders who are in any doubt as to their tax position, or who are subject to tax in any other jurisdiction, should consult their professional adviser as soon as possible.
The UK-REIT benefits described above are subject to various conditions being fulfilled and remaining satisfied and rules being followed.
The UK-REIT regime allows an exemption from UK tax on any income and gains arising from the Property Rental Business. This is subject to the payment of an entry charge equal to two per cent. of the market value of the investment properties in the relevant company or group's portfolio.
The Company expects to enter the UK-REIT regime on Admission.
Information regarding taxation in the UK in connection with the Scheme, Admission and the proposals to give notice to HMRC to treat the Company and members of its group as a group UK-REIT will be set out in the Scheme Circular and the Prospectus
BOARD
The PLC Directors are responsible for the determination of the investment policy of the Company and its overall supervision, including compliance with the Corporate Governance Code. The PLC Directors are as follows:
(a) Raymond Mould (Executive Chairman) qualified as a solicitor in 1964 and in 1976 was a co-founder of Arlington, of which he became chairman in 1990, having been involved in the UK property market since 1970. Arlington was floated in 1986 and sold to British Aerospace in 1989 for £287 million. He was a director of BAE Systems plc from 1991 to 1992. Mr Mould was instrumental in the establishment of Pillar in 1991 and became its chairman in 1994 when Pillar was floated, a position he held until 2005 when Pillar was sold to British Land plc for £811 million. Until recently Mr Mould served as non-executive chairman of Arena Leisure plc.
(b) Patrick Vaughan (Chief Executive Officer) has also been involved in the UK property market since 1970 and was a co-founder of Arlington in 1976 and of Pillar in 1991. He was chief executive of Arlington, which was floated in 1986, from 1990 to 1993 and of Pillar, which was floated in 1994, from 1994 to 2005. Mr Vaughan also served as an executive director of British Land plc from July 2005 to July 2006, following British Land's acquisition of Pillar.
(c) Martin McGann (Finance Director) joined London & Stamford Property Limited in September 2008. From 2002 to 2005 he worked for Pillar, latterly as finance director. Between 2005 and 2008, Mr McGann was a director of Kandahar Real Estate. Prior to joining Pillar, Mr McGann was finance director of the Strategic Rail Authority, a body with responsibility for the strategic planning for UK railways and head of real estate finance for Railtrack PLC. Mr. McGann is a qualified chartered accountant having trained and qualified with Deloitte.
(d) Mark Burton (Non-executive Director) was the chief investment officer for Real Estate for the Abu Dhabi Investment Council until his retirement in June 2010. A chartered surveyor and banker during his career, Mr. Burton started working at London-based Cluttons in 1967. In 1982 he joined the United Bank of Kuwait, where he worked until 1999 when he joined AXA Investment Managers. After less than a year with AXA, Mr. Burton joined AIG Global Real Estate Investment (Europe) before joining the Abu Dhabi Investment Authority in 2001. He currently also holds a range of non-executive directorships and advisory roles, all in real estate and on a global basis.
(e) Charles Cayzer (Non-executive Director) having gained experience in merchant banking, commercial banking and corporate and project finance with Baring Brothers, Cayzer Irvine and Cayzer Ltd, was appointed a director of Caledonia Investments in 1985. Mr Cayzer is also chairman of Easybox, Edinmore and The Sloane Club and a non-executive director of Eredene Capital, Quintain and Varun Shipping.
(f) Richard Crowder (Non-executive Director) joined London & Stamford in October 2007 and holds a range of directorships and consultancy appointments. Having worked as an investment manager with Ivory & Sime in Edinburgh and as a head of investment research with W.I. Carr in the Far East, he undertook a wide range of responsibilities for Schroders in London and the Far East, culminating in the role of managing director for Schroders' Singapore associate. Having then worked as chairman of Smith New Court Far East and director of Smith New Court Plc, Mr. Crowder was the founding managing director of Schroders' Channel Islands subsidiary from 1991 until he became a non-executive director in 2000. Mr. Crowder is a member of the Securities and Investment Institute.
(g) James Dean (Non-executive Director) is a Chartered Surveyor, Mr Dean has worked with Savills plc since 1973 and was a director from flotation in 1988 to 1999. He is a non-executive Director of Daniel Thwaites plc and Branston Holdings, a partner in Heracles LLP and also Chairman of Pearlcrown, London & Lincoln and Patrick Dean which are family property investment and farming businesses.
(h) Humphrey Price (Non-executive Director) was finance director of Arlington Securities plc from 1982 to 1992. Mr. Price was a director of Pillar Property plc from its formation and finance director from 1993 to 2004, resigning from the board in 2005 on its sale to British Land plc. Mr. Price was a non-executive director of London & Stamford Property Limited from incorporation until April 2009. Mr Price is a qualified Chartered Accountant
The Company regards the non-executive directors to be independent within the meaning of the Corporate Governance Code, except for Humphrey Price.
The Company's senior independent director is Charles Cayzer. James Dean will be the chairman of the Remuneration Committee and Humphrey Price will be the chairman of the Audit Committee.
INVESTMENT COMMITTEE
The PLC Board will be assisted in relation to the Enlarged Group's property investment activities by an investment committee. The investment committee will report to the PLC Board and will be responsible for identifying new investment opportunities for the Enlarged Group, performing due diligence and conducting negotiations in relation to those investment opportunities and managing the Property Portfolio.
The investment committee comprises Raymond Mould, Patrick Vaughan and Martin McGann together with Stewart Little, Jeremy Bishop, Jadzia Duzniak, Jackie Jessop and Michael Tyler.
Jeremy Bishop joined LSI Management in 2006. He previously worked for the Pears Group where he was responsible for establishing the overseas real estate investment and asset management operation overseeing the acquisition of approximately £300 million of European real estate investments. Prior to his time at Pears, Mr. Bishop spent four years at Citigroup structuring real estate co-investment transactions and eight years at Guardian Properties in fund management.
Stewart Little joined LSI Management in 2006, prior to which he spent six years in the real estate asset management business at Deutsche Bank and before that six years within the retail agency division of Healey & Baker.
Michael Tyler joined LSI Management in 2009 as head of asset management. Mr. Tyler is a Chartered Surveyor with twenty-three years asset management experience including five years spent developing and managing the property assets of Pillar. Prior to joining LSI Management, he was a director of Kandahar Real Estate where he spent five years as head of asset management.
Jadzia Duzniak joined LSI Management in 2007 after over 12 years with Portfolio Holdings Limited initially as a financial controller and from 2001 as finance director. Ms Duzniak is a chartered accountant, qualifying with PricewaterhouseCoopers, and is experienced in corporate and tax structuring, raising debt finance, project appraisal, financial reporting and management.
Jackie Jessop joined LSI Management from British Land in 2006 and is financial controller. Ms Jessop qualified as a chartered accountant with PricewaterhouseCoopers in 1993, joined Pillar in the following year where she worked in the finance team for the next 11 years.
INVESTMENT POLICY
Key principles of the investment policy
The Enlarged Group will focus on investing in commercial property, including office, retail and industrial real estate assets, principally in the UK and may also consider opportunities overseas, where the PLC Directors consider the opportunity exists to extract above-average returns for shareholders. The LSP Group has been an active investor and the Enlarged Group will continue to implement strategies to enhance the quality and value of acquired assets and improve annual rental values.
Investment criteria
It is the Enlarged Group's intention to look for opportunities in the UK property market, offering double digit cash on equity yields. Strict selection criteria is applied in assessing investment opportunities.
Properties are considered and evaluated to identify potential for value enhancement as a result of physical improvements, lease restructurings, optimising tenant mix or new build opportunities. The Enlarged Group will work closely with existing tenants with regard to such issues to ensure that the
Enlarged Group understands the demands of tenants in order to anticipate and benefit from future requirements.
The PLC Directors further intend to identify latent potential in the Enlarged Group's property portfolio and realise value, by making sales, when investments have fulfilled expectations or no longer meet the Enlarged Group's performance criteria or investment needs.
The Enlarged Group is able to make investments in property via a number of methods which include:
(a) direct investment in or acquisition of the real estate asset or portfolio of assets;
(b) direct investment in or acquisition of the holding company of the real estate asset or portfolio of assets; and
(c) direct investment in or acquisition of a joint venture vehicle which has a direct investment in or holds the real estate assets or the holding company of the real estate asset or portfolio of assets.
Gearing
The level of gearing of the Enlarged Group will be governed by careful consideration of the cost of borrowing and the ability to mitigate the risk of interest rate increases and the effect of leverage on the returns generated from assets acquired. The PLC Directors intend that the Enlarged Group's level of borrowing will be between 60 and 65 per cent. of the gross value of its real estate assets through the cycle but will not exceed 100 per cent. of the gross value of the Enlarged Group's real estate assets at any one time.
Restrictions
The Enlarged Group will have the following investment restrictions:
(a) not more than 30 per cent. of the Enlarged Group's gross assets will be invested in non-UK real estate assets;
(b) not more than 40 per cent. of its gross assets will be invested in non-commercial real estate assets; and
(c) the Enlarged Group will not acquire a single property unit with a value greater than 40 per cent. of the Enlarged Group's gross assets.
DIVIDEND POLICY
It is the intention of the PLC Directors that the Company will pay dividends from surplus income to the extent that such income is distributable. Where opportunities exist that fit the Enlarged Group's investment criteria, the Enlarged Group may reinvest disposal proceeds.
Following the Company's proposed notice to obtain group UK-REIT status, it will be required to meet a minimum distribution test for each year that it is the principal company of a group UK-REIT. This minimum distribution test requires the Company to distribute 90 per cent. of the income profits of the Property Rental Business for each year. After Royal Assent of the second 2010 Finance Bill, the issue of stock dividends will count towards the minimum distribution test. The PLC Board believes that a continuation of LSP's dividend policy of recent years will enable the Company to meet this minimum distribution requirement.
There can be no guarantee as to the amount of any dividend payable by the Company.
CURRENT TRADING AND PROSPECTS
LSP's profits increased 342 per cent. during the financial year ended 31 March 2010 to £106.1 million (2009: £24.0 million). In addition, LSP's NAV increased 17.4 per cent. to 120.1p (2009: 102.3p). The results reflect the acquisitions made by LSP in early 2009, which have benefited through asset management and yield movement to produce a valuation uplift of £72.1 million. LSP's share of the profit derived from its joint venture with Meadowhall was £29.8 million. The total valuation increase for the financial year ended 31 March 2010 was £101.9 million.
Since the end of the financial year ended 31 March 2010, LSP has acquired Radial Distribution Limited, a portfolio consisting of 16 distribution warehouses, for £208.5 million. LSP has also acquired the long leasehold interests in 58 residential units at Bridges Wharf, Battersea, London for approximately £27.9 million from Weston Homes Plc. The Property Portfolio has been valued as at 30 July 2010 at £622 million, including Radial Distribution Limited at £229.1 million, Bridges Wharf, Battersea at £30 million and the other assets in the Property Portfolio at £363.1 million.
LSP continues to explore property acquisition opportunities and these tend to be for larger lot sizes and more complex portfolio opportunities. The LSP Board continues to believe that the UK commercial real estate market offers significant opportunities to deploy LSP's capital at attractive long term cash yields.
DELISTING AND ADMISSION TO THE OFFICIAL LIST
Following the requisite approval of LSP Shareholders, trading in LSP Existing Ordinary Shares is expected to be cancelled on AIM and the PLUS Market at 7.00am on 1 October 2010. The last day of dealing in the LSP Existing Ordinary Shares is expected to be 30 September 2010. Applications will be made to the UKLA for the PLC Existing Ordinary Shares and the New Ordinary Shares to be admitted to the Official List and to trading on the Main Market. It is expected that Admission will become effective and that dealings in the PLC Existing Ordinary Shares and the New Ordinary Shares will commence at 8.00 a.m. on 1 October2010.
No application is currently intended to be made for the PLC Existing Ordinary Shares or the New Ordinary Shares to be admitted to listing or dealt with on any other exchange.
IRREVOCABLE UNDERTAKINGS
LSP expects to receive irrevocable undertakings from the LSP Directors to vote or procure the vote in favour of the Scheme, in respect of their own beneficial holdings, representing approximately 3.1 per cent. of the existing issued share capital of LSP.
RECOMMENDATION
Regarding the Scheme, UK-REIT election and Admission
The LSP Directors consider the terms of the Scheme, the UK-REIT election and Admission to be fair and reasonable insofar as LSP Shareholders are concerned.
The LSP Directors consider that the Scheme, the UK-REIT election and Admission are in the best interests of LSP and the LSP Shareholders as a whole. Accordingly, the LSP Directors recommend unanimously that Scheme Shareholders vote in favour of the resolution to be proposed at the Scheme Court Meeting, as they intend to do (or procure) in respect of their beneficial and non-beneficial interests.
Regarding the Acquisition
The Independent Directors, who have consulted KBC Peel Hunt in its role as nominated adviser, consider the terms of the Acquisition to be fair and reasonable insofar as LSP Shareholders are concerned. In providing any advice KBC Peel Hunt has relied upon the Independent Directors' commercial assessments.
The Independent Directors consider that the Acquisition is in the best interests of LSP and LSP Shareholders as a whole. Accordingly, the Independent Directors recommend unanimously that LSP Shareholders vote in favour of the Acquisition Resolution at the Extraordinary General Meeting, as they intend to do (or procure) in respect of their beneficial and non-beneficial interests.
CONSEQUENCES OF THE ACQUISITION NOT PROCEEDING
If the Acquisition Resolution is not passed by LSP Shareholders, the Acquisition will not proceed and LSP's management functions will not be internalised. The remaining Proposals may still be implemented provided that LSP Shareholders pass the resolution to approve the Scheme, that the Court sanctions the Scheme and all other requisite conditions are satisfied relating to such Proposals.
If the Acquisition does not proceed but the remaining Proposals do, this will have a number of consequential effects including the following:
(a) the Enlarged Group will continue with LSI Management as its external property adviser under the terms of the Property Advisory Agreement;
(b) the Acquisition Agreements, the Restated Green Park Property Advisory Agreement, the Restated Property Advisory Agreement and the Restated MSC Property Advisory Agreement will lapse and cease to have effect;
(c) the Consideration Shares that would have been issued to the LSI Vendors pursuant to the LSI Acquisition Agreement will not be issued;
(d) the Prospectus will not be published on 20 September 2010 as envisaged but will be published at a later date in order to allow the Prospectus to be drawn up to reflect the effects of the Acquisition not being implemented;
(e) Admission and UK-REIT election by the Company will be delayed by several weeks while the Prospectus is being prepared on the above basis; and
(f) Raymond Mould, Patrick Vaughan and Martin McGann will serve as non-executive directors of the Company instead of becoming executive directors. They will not be independent of the Company's investment manager (namely, LSI). There will be four other non-executive directors, namely Charles Cayzer, Mark Burton, James Dean and Richard Crowder who will be independent of LSI Management. Charles Cayzer will be the Chairman of the PLC Board. Due to Messrs Mould, Vaughan and McGann being senior partners of LSI Management they will be subject to annual re-election to the PLC Board. As the PLC Board will only comprise non executive directors, it is likely it will only operate one board committee, the audit committee.
The remainder of this announcement should be read and construed accordingly.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
|
Event |
2010 |
|
Acquisition Agreement signed by |
by 11 August |
|
Posting Date of Scheme of arrangement document to LSP shareholders |
16 August |
|
Latest time for receipt of blue Forms of Proxy for the Scheme Court Meeting (1) |
10.00 a.m. on 13 September |
|
Latest time for receipt of white Forms of Proxy for the Extraordinary General Meeting(2) |
10.15 a.m. on 13 September |
|
Voting Record Time(3) |
6.00 p.m. on 13 September |
|
Scheme Court Meeting |
10.00 a.m. on 15 September |
|
Extraordinary General Meeting(4) |
10.15 a.m. on 15 September |
|
Publication of the Prospectus(5) |
20 September |
|
Scheme Court Hearing Date(6) |
28 September |
|
Scheme Record Date(6) |
6.00 p.m. on 30 September |
|
Cancellation of admission to trading on AIM and the PLUS Market, cessation of dealings in LSP Existing Ordinary Shares and disablement of LSP Existing Ordinary Shares in CREST(6) |
7.00 a.m. on 1 October |
|
Admission and dealings in the PLC Existing Ordinary Shares and the New Ordinary Shares expected to commence(6) |
8.00 a.m. on 1 October |
|
Effective Date of the Scheme(6) |
1 October |
|
CREST stock accounts credited in respect of the New Ordinary Shares(6) |
8.00 a.m. on 1 October |
|
Anticipated date for entry into UK-REIT regime |
1 October |
|
Despatch of definitive share certificates for New Ordinary Shares in certificated form |
As soon as practicable following Admission |
Notes:
(1) Blue Forms of Proxy for the Scheme Court Meeting if not lodged by this deadline may be handed to LSP's registrars, Capita Registrars, on behalf of the chairman at the Scheme Court Meeting at any time before taking the poll.
(2) White Forms of Proxy for the Extraordinary General Meeting must be lodged by 10. 15 a.m. on 13 September 2010 in order to be valid or, if the Extraordinary General Meeting is adjourned, not later than 48 hours before the time fixed for the holding of the adjourned meeting.
(3) If either the Scheme Court Meeting or the Extraordinary General Meeting is adjourned, the Voting Record Time of the adjourned meeting(s) will be 48 hours before the time of such adjourned meeting.
(4) The Extraordinary General Meeting is to commence at 10.15 a.m. or, if later, immediately after the conclusion or adjournment of the Scheme Court Meeting.
(5) Subject to the Acquisition Resolution being passed at the Extraordinary General Meeting, the Company intends to publish the Prospectus on 20 September 2010. If the Acquisition Resolution is not passed, the date of publication of the Prospectus will be postponed to a date to be determined by the PLC Directors.
(6) These dates are indicative only and will depend, among other things, on the date of publication of the Prospectus and the date upon which the Court sanctions the Scheme.
The dates set out in the expected timetable of principal events above and mentioned throughout this announcement are based on LSP's current expectations and may be subject to change. If the expected Scheme Court Hearing Date changes, LSP will give adequate notice of the change by issuing an announcement through a Regulatory Information Services. All LSP Shareholders have the right to attend the Scheme Court Meeting.
DEFINITIONS
The following definitions apply throughout this announcement, unless the context otherwise requires:
"Acquisition" the proposed internalisation of the management of the business by acquiring the business and assets of LSI Management;
"Acquisition Agreements" the LSI Acquisition Agreement and the LML Acquisition Agreement;
"Acquisition Resolution" the resolution to be proposed at the Extraordinary General Meeting;
"Admission" admission of the PLC Existing Ordinary Shares and the New Ordinary Shares (or, if the Acquisition Resolution is not passed and the Acquisition consequently does not proceed, only the PLC Existing Ordinary Shares and those New Ordinary Shares proposed to be issued in connection with the Scheme) to the premium listing segment of the Official List and to trading on the Main Market;
"AIM" AIM, a market operated by London Stock Exchange;
"AIM Rules for Companies" the AIM Rules for Companies published by The London Stock Exchange (as amended from time to time);
"Arlington" Supertwice Services Limited, formerly named Arlington Securities Plc (registered in England and Wales under company no. 1277236);
"Australia" the Commonwealth of Australia, its states, territories and possessions and all areas subject to its jurisdiction or subdivision thereof;
"Bad Leaver" in relation to an IndividualManagement Member, where such person ceases to be an employee of the Enlarged Group within the three year period following Admission and is classed as a 'Bad Leaver' for the purposes of the LSI Acquisition Agreement;
"British Aerospace" BAE Systems plc, formerly named British Aerospace plc (registered in England and Wales under company no. 01470151) whose registered office is at 6 Carlton Gardens, London SW1Y 5AD;
"British Land" The British Land Company Public Limited Company (registered in England and Wales under company no. 00621920) whose registered office is York House, 45 Seymour Street, London W1H 7LG;
"Canada" Canada, its provinces and territories and all areas under its jurisdiction and political sub-divisions thereof;
"Capita Registrars" a trading name of Capita Registrars Limited;
"Company" London & Stamford Property plc;
"Corporate Governance Code" the code of best practice including the principles of good governance published by The Financial Reporting Council in June 2008, as amended from time to time (and as will be replaced by The UK Corporate Governance Code dated June 2010);
"Consideration Shares" the 45,795,171 PLC Ordinary Shares proposed to be issued by the Company under the terms of the LSI Acquisition Agreement;
"Court" the Royal Court of Guernsey;
"Credit Suisse" Credit Suisse Securities (Europe) Limited;
"CREST" the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CREST Regulations;
"Disclosure and Transparency Rules" the disclosure and transparency rules of the FSA;
"Election" the proposed election by the Enlarged Group to become a UK-REIT;
"Enlarged Group" the Company and its subsidiaries (including LSP and LML) following completion of the Proposals;
"Extraordinary General Meeting" the extraordinary general meeting of LSP convened by the LSP Directors to be held on 15 September 2010 immediately following the Scheme Court Meeting;
"FSA" the Financial Services Authority;
"FSMA" the Financial Services and Markets Act 2000 as amended from time to time;
"GEAM" GEAM L&S Management Investor (Scotland), a limited partnership registered in Scotland under The Limited Partnership Act 1907 and controlled by GEPT;
"GEPT" GE Asset Management Incorporated, acting in its capacity as investment manager of the General Electric Pension trust;
"GEPT Agreement" the agreement to be entered into between GEPT and LML under which LML will acquire the interests of GEPT in GEAM L&S Management Investor (Scotland) GP Limited and GEAM L&S Management Investor (Scotland) LLC, the entities holding GEPT's interest in LSI Management;
"Green Park" Green Park Investments, a company incorporated in Cayman Islands with registration no. 214124;
"Green Park Property Advisory Agreement" the agreement dated 22 April 2008 (as varied by deeds of variation on 9 February 2009 and 17 November 2009) between LSI Management and Green Park pursuant to which LSI Management provides certain property advisory services to Green Park;
"Hearing Record Time" 6.00 p.m. on the Business Day immediately preceding the Scheme Court Hearing Date;
"HMRC" Her Majesty's Revenue & Customs and, where relevant, any predecessor body which carried out part of its functions, and references to any approval by HMRC shall, where appropriate, include approval by an officer of Her Majesty's Revenue & Customs;
"Independent Directors" Richard Crowder, Lewis Grant, Rupert Evans and Patrick Firth;
"Initial Shares Buyback Agreement" the put and call option agreements entered into on 10 June 2010 between the Company and each of Patrick Vaughan and Martin McGann;
"Individual Management Members" the LSI Management Members other than GEAM;
"International Financial Reporting Standards" or "IFRS" International Financial Reporting Standards maintained by the International Accounting Standards Board (IASB) and which are in force from time to time, as adopted by the European Union;
"Investment Committee" the investment committee established by the PLC Board;
"KBC Peel Hunt" KBC Peel Hunt Ltd;
"LML" LSI Management Limited, a company incorporated in Guernsey with registered number 51383;
"LML Acquisition Agreement" the agreement proposed to be entered into between LML, LSI Management and the LSI Management Members in relation to the acquisition of the business and assets of LSI Management by LML;
"London Stock Exchange" or "LSE" London Stock Exchange plc;
"LSI Acquisition Agreement" the agreement proposed to be entered into between the Company and the LSI Management Members in relation to the acquisition of the entire issued share capital of LML by the Company;
"LSIL" London & Stamford Investments Limited;
"LSI Management" LSI Management LLP, a limited liability partnership incorporated in England and Wales on 28 June 2007 with registered number 00329452 whose registered office is at 21 St James's Square, London SW1Y 4JZ;
"LSI Management Members" the members of LSI Management, being Raymond Mould, Patrick Vaughan, Martin McGann, Humphrey Price, Jackie Jessop, Jadzia Duzniak, Jeremy Bishop, Stewart Little and GEAM;
"LSI Vendors" the Individual Management Members and GEPT;
"LSP" London & Stamford Property Limited;
"LSP Board" or "LSP Directors" the directors of LSP as at the date of this announcement;
"LSP Existing Ordinary Shares" the existing issued ordinary shares of 10 pence each in the capital of LSP;
"LSP Group" LSP and its subsidiaries as at the date of this announcement;
"LSP Ordinary Shares" ordinary shares of 10 pence each in the capital of LSP;
"LSP Shareholder" a holder of LSP Ordinary Shares;
"Main Market" the London Stock Exchange's main market for listed securities;
"Management Team" Raymond Mould, Patrick Vaughan, Martin McGann, Stewart Little, Jeremy Bishop, Jadzia Duzniak and Jackie Jessop;
"Member State" a sovereign state which is a member of the European Union;
"MSC" MSC Property Intermediate Holdings Limited incorporated in England and Wales with (company number 4276612) whose registered office is at York House, 45 Seymour Street, London W1H 7LX;
"MSC Property Advisory Agreement" the property advisory agreement dated 11 February 2009 between British Land, LSI Management and MSC pursuant to which British Land and LSI Management provide property advisory services to MSC and its subsidiaries;
"NAV" or "Net Asset Value" the value of the assets of the LSP Group or the Enlarged Group, as applicable, less its liabilities, determined in accordance with the accounting principles adopted by the LSP Group or the Enlarged Group, as applicable, from time to time or, as the context requires, the net asset value per ordinary share calculated in accordance with LSP's or the Company's, as applicable, accounting policies;
"New Ordinary Shares" the PLC Ordinary Shares to be issued in connection with the Scheme and (if completed) the Acquisition;
"Official List" the Official List of the UKLA;
"Overseas Shareholders" holders of LSP Existing Ordinary Shares with registered addresses outside the United Kingdom or who are citizens of, incorporated in, registered in or otherwise resident in, countries outside the United Kingdom;
"PLC Board" or "PLC Directors" the directors of the Company as at the date of this announcement;
"PLC Existing Ordinary Shares" the 500,000 ordinary shares of 10 pence each in the capital of the Company in issue at the date of this announcement other than the Subscriber Shares;
"PLC Ordinary Shares" ordinary shares of 10 pence each in the capital of the Company;
"PLC Shareholder(s)" a holder of PLC Ordinary Shares;
"Pillar" Pillar Property Group Limited, formerly named Pillar Property plc (registered in England and Wales under company no. 2570618);
"PLUS" PLUS Markets plc;
"PLUS Market" a service operated by PLUS for trading securities;
"Property Advisory Agreement" the property advisory agreement dated 30 October 2007 (as varied by a deed of variation dated 9 July 2009) between LSP and LSI Management pursuant to which LSI Management provides certain property advisory services to certain members of the LSP Group;
"Property Portfolio" the property portfolio of the LSP Group and, following Admission, or the Enlarged Group, as applicable, from time to time;
"Property Rental Business" the qualifying property rental business in the UK and elsewhere of UK resident companies within a UK-REIT and non-UK resident companies within a UK-REIT with a UK qualifying property rental business;
"Proposals" the UK-REIT election, the Scheme, the Acquisition and Admission;
"Prospectus" the prospectus proposed to be published by the Company in connection with Admission in accordance with the Prospectus Rules;
"Prospectus Rules" the prospectus rules made by the FSA for the purpose of Part VI of FSMA;
"Regulatory Information Service" a service provided by the LSE for the distribution to the public of company announcements;
"Restated Green Park Property Advisory Agreement" the agreement to be entered into between LML, LSI Management and Green Park amending and restating the Green Park Property Advisory Agreement;
"Restated MSC Property Advisory Agreement" the agreement to be entered into between LML, LSI Management British Land and MSC amending and restating the MSC Property Advisory Agreement;
"Restated Property Advisory Agreement" the agreement to be entered into between LML, LSI Management and LSP amending and restating the Property Advisory Agreement;
"Scheme" or "Scheme of Arrangement" the proposed change in the corporate structure of the LSP Group by way of a scheme of arrangement under Part VIII of the Companies (Guernsey) Law, 2008 between LSP and the Scheme Shareholders, to be set out in the Scheme Circular;
"Scheme Court Hearing" the hearing by the Court of the application to sanction the Scheme;
"Scheme Court Hearing Date" the date of the Scheme Court Hearing;
"Scheme Court Meeting" the meeting of LSP Shareholders proposed to be convened by an order of the Royal Court of Guernsey and expected to be held on 15 September 2010;
"Scheme Document" or "Scheme Circular" the circular proposed to be sent to LSP Shareholders in connection with the Proposals;
"Scheme Record Date" 6.00 p.m. on the Business Day immediately preceding the date on which the Scheme becomes effective;
"Scheme Shareholder" a holder of Scheme Shares;
"Scheme Shares" (i) the LSP Existing Ordinary Shares in issue at the date of the Scheme Document; (ii) LSP Ordinary Shares (if any) issued after the date of the Scheme Document but before the Voting Record Time; and (iii) LSP Ordinary Shares (if any) issued at or after the Voting Record Time and before the Hearing Record Time on terms that the original or any subsequent holders shall be, or shall have agreed in writing by such time to be, bound by the Scheme;
"Securities Act" the United States Securities Act of 1933, as amended;
"Share Purchase Agreement" the share purchase agreement proposed to be entered into between the Company and London & Stamford Investments Limited in relation to the acquisition by the Company from London & Stamford Investments Limited of the entire issued share capital of LSI (Investments) Limited;
"stock account" an account within a member account in CREST to which a holding of a particular share or other security in CREST is credited;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland, its territories and dependencies;
"UK-REIT" a UK Real Estate Investment Trust under Part 12 of the Corporation Tax Act 2010;
"in uncertificated form" registered 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;
"UK Listing Authority" or"UKLA" the FSA acting in its capacity as the competent authority for the purposes of Part VI of the FSMA;
"US" or "United States" the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
"Voting Record Time" 6.00 p.m. on the day prior to the day immediately before the Scheme Court Meeting or, if the Scheme Court Meeting is adjourned, 48 hours before the time set for such adjourned meeting;
This information is provided by RNS
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