Notice of GM, Share Buyback and Rule 9 Waiver
1 August 2023
ME GROUP INTERNATIONAL PLC
("ME Group" or "the Group" or "the Company")
Notice of General Meeting, Proposed Share Buyback and Rule 9 Waiver
ME Group International plc (LON: MEGP), the instant-service vending equipment group, announces that today it has posted a Circular to Shareholders giving Notice of a General Meeting, to be held at 10.00 a.m. on 18 August 2023 at the offices of Hudson Sandler LLP, 25 Charterhouse Square, London, EC1M 6AE.
Proposed Share Buyback and Rule 9 Waiver
The Company proposes to seek Shareholder approval to have the authority to buy back up to 10 per cent of the Company's issued share capital. It is the intention that this Share Buyback Programme will run until the authority expires at the Company's next AGM or such other date prior to then should it be completed sooner.
Assuming utilisation of the full buyback authority, the Company's largest shareholder, Tibergest PTE Ltd, and persons acting in concert with it, may own up to 40.60 per cent of the voting rights in the Company. Therefore, the Independent Shareholders will be asked to waive an obligation on the Concert Party to make a general offer for the entire issued, and to be issued, share capital of the Company which may arise under Rule 9 of the Takeover Code as a result of the Company purchasing its Ordinary Shares.
The Company has historically sought authority and received approval from its shareholders to make market purchases of its own shares, with the most recent authority being granted at the Company's AGM on 28 April 2023, permitting the Company to repurchase up to 37,805,164 ordinary shares, equal to 10 per cent of the Company's issued ordinary share capital at the latest practicable date before publication of the Notice of AGM, being 28 February 2023. However, despite this authority having already been granted, the Company has been restricted from using it owing to the Concert Party being interested in more than 30 per cent but less than 50 per cent of the total voting rights of the Company (and therefore, any repurchases of shares under such buyback authority being liable to trigger an obligation for the Concert Party to make an offer, in cash, for the entire issued and to be issued share capital of the Company, pursuant to Rule 9 of the City Code).
With a strong cash balance, that the Board believes will increase, the Board has concluded that it wishes to have the flexibility to utilise the Proposed Buy Back Authority in circumstances which it decides are in the best interests of the Company. Accordingly, this announcement sets out the background to, and reasons why the Board believes it to be in the best interests of Shareholders as a whole for the Company to reapply for authority, as necessary under the City Code, to make market purchases of its Ordinary Shares under the same parameters as previously approved, being that any share repurchases are made at a price:
(i) no less than the nominal value of an Ordinary Share, being 0.5 pence;
(ii) no higher than an amount which is not more than 5 per cent above the average of the closing middle market quotations for an Ordinary Share, as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the date on which that Ordinary share is contracted to be purchased; or,
(iii) the higher of the price of the last independent trade of an ordinary share or the highest current independent bid on the London Stock Exchange.
Share Buy Back Programme
Should the Proposed Buy Back Authority be approved, the Board announces its intention to undertake an initial buyback programme of up to 2 per cent of the Company's issued share capital, subject to the parameters described above. The Company's dividend policy remains unchanged.
The full Circular to Shareholders will be made available on ME Group's website, https://me-group.com/. Defined terms used in this announcement are the same as those defined in the Circular unless the context requires otherwise.
Enquiries:
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ME Group International plc |
+44 (0) 1372 453 399 |
|
Serge Crasnianski, CEO |
|
|
Stéphane Gibon, CFO |
|
|
Hudson Sandler |
+44 (0) 20 7796 4133 |
|
Wendy Baker Nick Moore Ben Wilson
|
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014, which was incorporated into UK law by the European Union (Withdrawal) Act 2018, until the release of this announcement.
Disclaimer
finnCap Ltd, which is authorised and regulated by the Financial Services Authority (FCA), is acting as Financial Adviser to the Company in connection with the matters described in this announcement. finnCap Ltd will not be responsible to anyone other than the Company for providing the protections afforded to clients of finnCap Ltd or for advising any other person on the Proposed Buy-Back Authority and the Rule 9 Waiver or any other arrangements described in this announcement. finnCap Ltd has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by finnCap Ltd for the accuracy of any information or opinions contained in this announcement or for the omission of any information.
The below text has been extracted from the Circular without adjustment.
1. Introduction
The Company has historically sought authority and received approval from its shareholders to make market purchases of its own shares, with the most recent authority being granted at the Company's AGM on 28 April 2023, permitting the Company to repurchase up to 37,805,164 ordinary shares, equal to 10 per cent of the Company's issued ordinary share capital at the latest practicable date before publication of the Notice of AGM, being 28 February 2023. However, despite this authority having already been granted, the Company has been restricted from using it owing to the Concert Party being interested in more than 30 per cent but less than 50 per cent of the total voting rights of the Company (and therefore, any repurchases of shares under such buyback authority being liable to trigger an obligation for the Concert Party to make an offer, in cash, for the entire issued and to be issued share capital of the Company, pursuant to Rule 9 of the City Code).
With a strong cash balance, that the Board believes will increase, the Board has concluded that it wishes to have the flexibility to utilise the Proposed Buy Back Authority in circumstances which it decides are in the best interests of the Company. Accordingly, this letter sets out the background to, and reasons why the Board believes it to be in the best interests of Shareholders as a whole for the Company to reapply for authority, as necessary under the City Code, to make market purchases of its Ordinary Shares under the same parameters as previously approved, being that any share repurchases are made at a price:
(i) no less than the nominal value of an Ordinary Share, being 0.5 pence;
(ii) no higher than an amount which is not more than 5 per cent above the average of the closing middle market quotations for an Ordinary Share, as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the date on which that Ordinary Share is contracted to be purchased; or,
(iii)
the higher of the price of the last independent trade of an ordinary share or the highest current independent bid on the London Stock Exchange.
If the Company buys-back shares under the Proposed Buy-Back Authority and at the time the voting rights attributable to the interests in Ordinary Shares of the Concert Party exceeds more than 30 per cent of such voting rights, an obligation under Rule 9 of the Takeover Code would arise on one or more of the Concert Party to make a cash offer for the issued shares of the Company not already owned by them.
The Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise on the Concert Party as a result of the buy-back by the Company of any Ordinary Shares and under the proposed Buy-Back Authority subject to approval on a poll by the Independent Shareholders of the Repurchase Resolution as set out in the Notice of GM.
This Circular sets out details of the existing buy back authority and contains at the end of this document the Notice of GM to be held at 10:00 a.m. on 18 August 2023 to consider and approve both the Repurchase Resolution and the Waiver Resolution.
2. Background to and reasons for the recommendation
Rationale for using the share buy-back authority
The Board, believe it to be in the best interests of Shareholders as a whole for the Company to have authority to purchase its Ordinary Shares in the market.
The Directors believe that the Proposed Buy-Back Authority would be a productive use of the Company's cash reserves, whilst at the same time enhancing earnings per share. The Directors also believe that the Proposed Buyback Authority would provide Shareholders with the flexibility, but without any compulsion, to realise value in respect of all or some of their shareholdings and is a tax efficient method of returning surplus cash to certain Shareholders.
The Board is mindful of the financial impact a share buy-back may have on the Company and has therefore conducted a thorough exercise with regards to the capital requirements of the Group, its prospects and its funding available, whilst also taking into account the merits of providing greater short-term liquidity for Ordinary Shares. The Board will only proceed to make market purchases at prices which make sense for the Company and its Shareholders as a whole. The Directors have confirmed that none of them will, nor do they have any current intention to, sell any of the Ordinary Shares which they beneficially own (or are owned by any persons connected with them within the meaning of sections 252-255 of the Act) to the Company should the Company utilise the Proposed Buy-Back Authority.
Similarly, all members of the Concert Party have confirmed that none of them will, nor do they have any current intention to, sell any of the Ordinary Shares which they beneficially own (or are owned by any persons connected with them within the meaning of sections 252-255 of the Act) to the Company should the Company utilise the Proposed Buy-Back Authority.
Purchases of Own Shares
The Board is seeking the authority, in accordance with Section 701 of the Act, for the Company to make market purchases of its own shares (within the meaning of Section 693(4) of the Act) providing such purchases do not exceed, in aggregate 10 per cent of the Company's issued ordinary share capital as at the latest practicable date before publication of this document, being 28 July 2023, being 378,454,879 Ordinary Shares, and subject to such pricing restrictions as described in Paragraph 1 above.
The Board is seeking the flexibility to buy back shares should they consider it appropriate to do so. However, the Board will only exercise the authority after taking account of the overall financial position of the Company and in circumstances where they believe that to do so would result in either an increase or protection of value for the remaining Shareholders and be in the best interests of Shareholders as a whole.
Any Ordinary Shares purchased under the Proposed Buy-Back Authority will either be cancelled and the number of Ordinary Shares in issue reduced accordingly, or will be held in treasury. Shares held in treasury may be used, to the extent necessary to satisfy the exercise of options by existing shareholders whilst at the same time minimising dilution to existing shareholders.
City Code on Takeovers and Mergers
The City Code applies to the Company. Under Rule 9 of the Code, any person who acquires an interest in shares which, taken together with shares in which that person or any person acting in concert with that person is interested, carry 30 per cent or more of the voting rights of a company which is subject to the Code is normally required to make an offer to all the remaining shareholders to acquire their shares.
Similarly, when any person, together with persons acting in concert with that person, is interested in shares which in the aggregate carry not less than 30 per cent of the voting rights of such a company but does not hold shares carrying more than 50 per cent of the voting rights of the company, an offer will normally be required if such person or any person acting in concert with that person acquires a further interest in shares which increases the percentage of shares carrying voting rights in which that person, and any persons acting in concert with that person, are interested.
An offer under Rule 9 must be made in cash at the highest price paid by the person required to make the offer, or any person acting in concert with such person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.
Under Rule 37 of the City Code, when a company purchases its own voting shares, the resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purpose of Rule 9 of the City Code (although a shareholder who is neither a director nor acting in concert with a director will not normally incur an obligation to make an offer under Rule 9 in these circumstances).
Current and potential shareholdings of the Concert Party
For the purposes of the City Code, Serge Crasnianski, Tibergest PTE Ltd, Stephane Crasnianski, Michel Crasnianski, Jean-Marc Janailhac, JMG Partners S.A. (Luxembourg) and Tania Crasnianski are considered to be acting in concert (the "Concert Party").
The Concert Party currently holds, in aggregate, 138,283,646 Ordinary Shares representing an aggregate interest of 36.54 per cent of the Company's issued ordinary share capital of 378,454,879 as at 28 July 2023 (being the latest practicable date prior to the publication of this document). In addition, the Concert Party holds a total of 2,513,283 Options.
The details of the effect of the Repurchase Resolution on the aggregate interests of Concert Party are set out in paragraph 3 below and paragraph 5.4 Part II of this Document.
2. The Waiver Resolution
As mentioned in paragraph 2 above, and given that the Concert Party's current percentage interest in Ordinary Shares is between 30 and 50 percent of the of the voting rights of the Company, any increase in any member of the Concert Party's percentage interest in Ordinary Shares (which includes any increase caused by way of a share buyback) would have the effect of triggering Rule 9 of the City Code and result in that Concert Party being under an obligation to make a general offer to all Shareholders.
The Independent Directors have consulted with the Panel, which has agreed that, subject to approval of the Waiver Resolution by the Independent Shareholders on a poll at the GM, it will grant the Repurchase Waiver. The effect of the Repurchase Waiver, if approved by the Independent Shareholders, would be that the Concert Party would not be required to make a general offer under Rule 9 of the City Code that would otherwise arise due to the increase in the aggregate holding of the Concert Party resulting from the purchase by the Company of its own Ordinary Shares pursuant to the Proposed Buy-Back Authority.
The Waiver Resolution is subject to the approval of Independent Shareholders on a poll, where each Independent Shareholder will be entitled to one vote for each Ordinary Share. Members of the Concert Party are not entitled to vote on this poll as they are not considered to be independent.
Set out below, and also in paragraph 5.4 of part II of this Circular, are details of the maximum percentage of the Company's voting rights which could be held by the Concert Party following the approval of the Repurchase Resolution and the Waiver Resolution as it assumes the full utilisation of the Proposed Buy-Back Authority (assuming no member of the Concert Party participates in the proposed buyback and no further Ordinary Shares are issued by the Company).
Scenario
In the event that:
the Independent Shareholders approve the Waiver Resolution;
the maximum number of Ordinary Shares are repurchased by the Company under the Proposed Buy-Back Authority and no further Ordinary Shares are issued by the Company; and
there are no sales of Ordinary Shares by any member of the Concert Party pursuant to the proposed share buyback or otherwise.
the combined shareholding of the Concert Party of 138,283,646 Ordinary Shares would represent 40.60 per cent of the then issued ordinary share capital of the Company of 340,609,392 Ordinary Shares (excluding any shares held in treasury) as further detailed in paragraph 5.4 of part II of this document.
|
|
Current interests issued of the Concert Party |
|
Interests of the Concert Party assuming full utilisation of the Proposed Buy-Back Authority, the Concert Party does not participate in the share buyback nor sell any Ordinary Shares and no further |
||||
|
Concert Party member |
Number of Ordinary Shares (note 1) |
|
% of current issued share capital (note 1) |
* |
Number of Ordinary Shares |
|
% of current issued share capital* |
|
Tibergest PTE Ltd |
137,739,291
|
|
36.40
|
|
137,739,291
|
|
40.44
|
|
Serge Crasnianski (beneficially) |
63,750 |
|
0.02 |
|
63,750 |
|
0.02 |
|
Tania Crasnianski |
- |
|
0.00 |
|
- |
|
0.00 |
|
Stephane Crasnianski |
253,800 |
|
0.07 |
|
253,800 |
|
0.06 |
|
Michel Crasnianski |
1,250 |
|
0.00 |
|
1,250 |
|
0.00 |
|
Jean-Marc Janailhac2 |
27,000 |
|
0.01 |
|
27,000 |
|
0.01 |
|
JMG Partners S.A. (Luxembourg) |
198,555 |
|
0.05 |
|
198,555 |
|
0.06 |
|
Total |
138,283,646 |
|
36.54 |
|
138,283,646 |
|
40.60 |
* Rounded to two decimal places
Note 1 Being at the latest date practicable prior to publication of this document
Note 2 Held though a nominee account with Credit Agricole
Shareholders should note that the aggregate shareholding of the Concert Party is 255,050 Ordinary Shares higher than previously disclosed in the offer document published in connection with the lapsed mandatory offer for ME Group by Tibergest PTE Ltd. This is due to the addition of the shareholdings of Stephane Crasnianski and Michel Crasnianski, both of whom should have been disclosed in the offer document and whose omission from the offer document was due to an inadvertent mistake. The omission of both Stephane and Michel Crasnianski from the Concert Party had no bearing on the outcome of the lapsed mandatory offer by Tibergest PTE Ltd, or the price at which the lapsed mandatory offer was made.
Shareholders should note that any further increase in the interests of the Concert Party in the Ordinary Shares of the Company, which increases the percentage of the voting rights in which they are interested, whether collectively or individually, other than as a result of the purchase of Ordinary Shares pursuant to the Proposed Buy-Back Authority will be subject to the provisions of Rule 9. Whether or not the Waiver Resolution is passed by the Independent Shareholders, members of the Concert Party will not be restricted from making an offer for the Company.
In the event that the Concert Party's interest in the voting rights of the Company increases as a result of the exercise of the Proposed Buy-Back Authority, they could not acquire any further interest in the shares of the Company without triggering an obligation under Rule 9.
The Waiver described in the Waiver Resolution, applies only in respect of increases in the percentage interest of the Concert Party resulting from purchases by the Company of its own shares under the Proposed Buy-Back Authority and not in respect of any other increases in the Concert Party's interests in Ordinary Shares by any other means.
3. The intentions of the Concert Party
The members of the Concert Party have each confirmed to the Company that they are not proposing, following any increase in their percentage interests in Ordinary Shares or voting rights as a result of any buy-back of its Ordinary Shares by the Company to seek any change in the composition of the Board or the general nature of the Company's business.
The members of the Concert Party have also each confirmed that they have no intention to make any changes regarding the future of the Company's business, the locations of the Company's places of business and the continued employment of its employees and management (and those of its subsidiaries) as a result of any increase in their percentage interests in Ordinary Shares or voting rights as a result of a buy-back of its Ordinary Shares by the Company nor will there be any redeployment of the fixed assets of the Company as a result of such an increase.
The Company intends to remain quoted on the Official List in the event the Proposed Buy-Back Authority is exercised in whole or in part at any point within the authority being requested.
There have been no changes to the relationship agreement entered into between the Company and Tibergest PTE Ltd on 28 July 2022.
4. Current Trading and Prospects
On 1 June 2023, ME Group provided the following trading update:
"As a consequence of this strong trading performance in H1 2023, the Board is pleased to increase its outlook for the current financial year, ahead of previous expectations, with revenue between £300 million and £320 million, EBITDA between £100 million and £110 million and profit before tax between £64 million and £67 million."
Furthermore on 12 July 2023, in its interim results announcement for the six month period ending 30 April 2023, ME Group repeated the guidance provided in the trading update of 1 June 2023, stating:
"The Board expects the Group to achieve its FY 2023 expectations, as updated in the Trading Update issued on 1 June 2023, of revenue between £300 million and £320 million, EBITDA between £100 million and £110 million and profit before tax between £64 million and £67 million."
As the abovementioned guidance relates to the financial year ended 31 October 2023, at the time of its repetition in this document it constitutes a profit forecast (the "FY23 Profit Forecast").
Furthermore, given that the abovementioned guidance was originally published the before the Company elected to apply for a Rule 9 waiver, pursuant to the Proposed Buy-Back Authority, the requirements of Rule 28.1(c)(i) of the City Code apply in relation to the FY23 Profit Forecast.
Basis of Preparation of the FY23 Profit Forecast
The FY23 Profit Forecast has been prepared based on ME Group's unaudited management accounts for the year ended 31 October 2023. The FY23 Profit Forecast has been prepared on a basis consistent with the accounting policies adopted by ME Group for the year ended 31 October 2022 and those that will be applicable for the year ended 31 October 2023. These policies are in accordance with IFRS.
Directors' confirmation
The Directors have considered the FY23 Profit Forecast and confirm that:
(a) it remains valid as at the date of this document; and
(b) the FY23 Profit Forecast has been properly compiled on a basis of accounting that is consistent with ME Group's accounting policies, which are in accordance with IFRS and are those that ME Group expects to apply in preparing its annual report and accounts for the financial year ending 31 October 2023.
5. General Meeting
A notice convening the General Meeting to be held at 10:00 a.m. on 18 August 2023 is set out at the end of this document.
Owing to their interests in it, the Concert Party members will not be voting on the Waiver Resolution in respect of their combined interests of 138,283,646 Ordinary Shares representing 36.54 per cent of the Company's issued ordinary share capital (excluding treasury shares) as at the 28 July 2023, being the last practicable date prior to the publication of this document.
6. Action to be Taken
Please note that a hard copy form of proxy is not included with this notice. If you would like to vote on the Resolutions to be proposed at the GM, you are requested to vote in accordance with the instructions printed below as soon as possible.
You may request a hard copy form of proxy directly from the registrars, Link Asset Services, on Tel: 0371 664 0300 Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. We are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales.
In the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the Notes on page 27.
The instrument appointing a proxy must reach the Company's registrars, Link Asset Services, Link Group at PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL no later than 10:00 a.m. on 16 August 2023.
Shareholders should note that, in order to have the right to vote at the meeting, their holding must be entered on the Company's share register by close of business on 16 August 2023.
7. Recommendation
Repurchase Resolution
The Directors who have been so advised by finnCap consider the Repurchase Resolution is fair and reasonable and in the best interests of Shareholders and the Company as a whole. In providing advice to the Directors, finnCap has taken into account the Directors' commercial assessments.
Accordingly, the Directors recommend all Shareholders to vote in favour of the Repurchase Resolution to be proposed at the GM, as they intend to do in respect of their own beneficial holdings of Ordinary Shares which, as at 28 July 2023, being the last practicable date prior to the publication of this document in aggregate, amount to 138,298,596 Ordinary Shares representing approximately 36.55 per cent of the existing issued ordinary share capital of the Company. The Directors consider the proposals to be in the best interests of the Company and its members as a whole and are most likely to promote the success of the Company for the benefit of its members as a whole.
Waiver Resolution
The Independent Directors who have been so advised by finnCap consider the market purchase by the Company of its Ordinary Shares under the Proposed Buy Back Authority is in the best interests of the Independent Shareholders and the Company as a whole. The Independent Directors who have been so advised by finnCap, believe that the Proposed Buy Back Authority and the Waiver Resolution are fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, finnCap has taken into account the Independent Directors' commercial assessments.
Accordingly, the Independent Directors recommend all Independent Shareholders to vote in favour of the Proposed Buy Back Authority and the Waiver Resolution as they intend to do in respect of their own beneficial holdings of Ordinary Shares which, as at 28 July 2023, being the last practicable date prior to the publication of this document, in aggregate amount to 270,000 Ordinary Shares, representing approximately 0.07 per cent of the existing issued ordinary share capital of the Company (exclusive of treasury shares).
As detailed above, the Concert Party is considered to be interested in the outcome of the Waiver Resolution. Accordingly, no Director who is also a member of the Concert Party (being Serge Crasnianski, Jean-Marc Janailhac and Tania Crasnianski) has participated in the Independent Directors' recommendation and no member of the Concert Party will vote on the Waiver Resolution.
NOTES TO EDITORS
ME Group International plc (LSE: MEGP) operates, sells and services a wide range of instant-service vending equipment, primarily aimed at the consumer market.
The Group operates vending units across 19 countries and its technological innovation is focused on four principal areas:
· Photo.ME - Photobooths and integrated biometric identification solutions
· Wash.ME - Unattended laundry services and launderettes
· Print.ME - High-quality digital printing kiosks
· Feed.ME - Vending equipment for the food service market
In addition, the Group operates other vending equipment such as children's rides, amusement machines, and business service equipment.
Whilst the Group both sells and services this equipment, the majority of units are owned, operated and maintained by the Group. The Group pays the site owner a commission based on turnover, which varies depending on the country, location and the type of machine.
The Group has built long-term relationships with major site owners and its equipment is generally sited in prime locations in areas of high footfall such as supermarkets, shopping malls (indoors and outdoors), transport hubs, and administration buildings (City Halls, Police etc.). Equipment is maintained and serviced by an established network of more than 650 field engineers.
In August 2022 the Company changed its listed entity name to ME Group International plc (previously Photo-Me International plc) to better reflect the Group's diversification focus and business strategy.
The Company's shares have been listed on the London Stock Exchange since 1962.
For further information: www.me-group.com
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