26 Mar 2009 07:30
26 March 2009
MIDAS CAPITAL PLC
("Midas" or the "Company")
Proposed Restructuring, Board Changes and Trading Update
Commenting today, Colin Rutherford, Executive Chairman of Midas, said:
"We have reached a constructive outcome with BoS and we are pleased with their long term support for Midas. The capital structure of the business will be stabilised under these proposals and our key teams can focus fully on investment performance and customer service in a more stabilised working environment."
Enquiries
For further information, please contact:
Colin Rutherford, Executive Chairman, Midas Capital plc 07768 053 054
Roland Cross, Director, Broadgate 020 7726 6111
Richard Vaughan/Matt Stoate, Kinmont 020 7087 9100
(Financial Advisor to Midas)
James Steel, Arbuthnot Securities Limited 020 7012 2000
(Nominated Advisor and Broker to Midas)
Web: www.midascapitalplc.com
Midas is being advised by Kinmont and Travers Smith LLP. Bank of Scotland is being advised by Deloitte Corporate Finance and Lovells LLP. This summary should be read in conjunction with the full text of the following announcement. Capitalised terms used in this summary shall have the meanings ascribed to them below.
Proposed Restructuring
Following the announcement made on 13 February 2009 when the Company announced a waiver of its loan covenants by its bank, Bank of Scotland plc (the "Bank"), and that it intended to seek to restructure its borrowing arrangements with the Bank, Midas announces that it has now reached agreement in principle with the Bank on the terms of a proposed restructuring of its bank facility (the "Restructuring").
The Restructuring is intended to result in a suitable new capital structure for the business. The Restructuring will also permit the Company's shares to continue to trade on AIM.
Under the terms of the Restructuring, Midas will put proposals to shareholders to convert £26.0 million of the £36.5 million owed to the Bank into £14.0 million of cumulative redeemable preference shares (the "Preference Shares") and £12.0 million into a new senior debt facility with an interest rate of 4.0% per annum above LIBOR and repayable in four years. No application will be made for the Preference Shares to be admitted to trading on AIM.
The balance will be applied to subscribe for new ordinary shares and at par warrants to subscribe for such number of further new ordinary shares as represents, in aggregate, 19.99% of the ordinary shares in issue upon completion of the Restructuring.
The at par warrants will only be exercisable on: (i) a change of control of the Company; or (ii) a sale of the whole or substantially the whole of the Midas group's (the "Group") business.
Under the terms of the warrants, if either: (i) £2.5 million in nominal value of the Preference Shares have not been redeemed by the Company by 30 September 2011; or (ii) before that date, £2.5 million in nominal value of the Preference Shares have not been redeemed and the warrants are exercised on a change of control and the Preference Shares are not redeemed in full on that change of control, the Bank may subscribe for an additional number of ordinary shares representing a further 10.0% of the Company's ordinary shares in issue upon completion of the Restructuring (giving it an aggregate holding of 29.99%).
The Preference Shares will accrue dividends at an annual rate of 10.0% above LIBOR from time to time which will be rolled up and only be payable on redemption of the Preference Shares. It is intended that on completion of the Restructuring, the Company will seek to put in place hedging arrangements such that the annual rate will effectively be fixed for a period. No dividends may be paid on the ordinary shares of the Company until the Preference Shares have been redeemed in full.
The Preference Shares will be redeemable at the option of the Company at any time but will have a final redemption date of the earliest of: (i) the expiry of 7 years from the date of their issue; (ii) a change of control of the Company; or (iii) a sale of the whole or substantially the whole of the Group's business. On any return of capital, the holders of the Preference Shares will be entitled to receive, before any return or consideration is paid to holders of ordinary shares, an amount equal to the nominal value of the Preference Shares and any accrued preference dividend.
The Preference Shares will give the Bank veto rights in respect of certain specified material decisions, including acquisitions, disposals and new equity raisings (although there will be no veto over the terms on which an initial £2.5 million of new equity is raised to pay down the first £2.5 million in nominal value of the Preference Shares provided the Bank's equity position is, as a result of that equity raising, not diluted to a number of ordinary shares representing less than 17.5% of the ordinary shares in issue upon completion of the Restructuring but taking into account the new shares issued in that equity raising). The Preference Shares will also give the Bank access and information rights and the right to appoint a non-executive Director to the board of the Company and, subject to obtaining any applicable regulatory consents, any subsidiary of the Company.
In order to retain and attract key employees following the Restructuring, Midas also intends to put in place a management incentive scheme comprising nil cost shares, options and/or warrants over ordinary shares representing (after including existing unvested LTIP options) up to 15.0%, in aggregate, of the Company's ordinary shares in issue upon completion of the Restructuring (which will dilute all shareholders, including the Bank in respect of its combined position under its ordinary shareholdings and warrant holdings, pro rata upon exercise). These nil cost shares, options and/or warrants will vest over the next three years subject to certain performance targets. Further details of the management incentive scheme will be provided in due course.
The Restructuring is conditional, inter alia, upon execution of full legally binding documentation satisfactory to Midas and the Bank, on the approval of Midas' shareholders and on certain regulatory approvals. Midas expects to post the relevant documents to shareholders setting out full details of the Restructuring in the next few weeks and to complete the Restructuring within the next 3 to 4 weeks thereafter.
The Midas group's 2008 financial statements will be published following completion of the Restructuring.
Board Changes
Simon Edwards stepped into the Group CEO role in September 2008 on the departure of the previous Group CEO. Following the successful restructuring of the Group's capital and debt structure, referred to above, he has now decided to focus solely on managing the Midas fund management activities based in Liverpool. Accordingly, he is today leaving the board of the Company and reverting to his previous role of Chief Executive of Midas Capital Partners Limited.
Colin Rutherford continues in the role of Executive Chairman.
As part of an ongoing process of widening the executive roles on the Board, Anthony John Moore (46) is today appointed a Director of the Company as Chief Financial Officer. He has been Group Director of Finance since March 2004 and previously worked for Channel Four Television Corporation and Associated Advertising and Marketing Group after qualifying as a Chartered Accountant with Spicer and Pegler. He currently holds 7,000 ordinary shares in Midas together with options over a further 84,000 ordinary shares. No other items fall to be reported under the provisions of Schedule 2, paragraph (g) of the AIM Rules.
Trading Update
The difficult economic environment continues to make trading conditions challenging; however, the Midas business is trading in line with expectations. The Group held approximately £5.5 million in cash as at 20 March 2009 and Group funds under management as at 28 February 2009 were £1.9 billion. Net redemptions are in line with expectations.
Enquiries
For further information, please contact:
Colin Rutherford, Executive Chairman, Midas Capital plc 07768 053 054
Roland Cross, Director, Broadgate 020 7726 6111
Richard Vaughan/Matt Stoate, Kinmont 020 7087 9100
(Financial Advisor to Midas)
James Steel, Arbuthnot Securities Limited 020 7012 2000
(Nominated Advisor and Broker to Midas)
Web: www.midascapitalplc.com
Kinmont, which is authorised and regulated by the Financial Services Authority, is acting for Midas Capital plc and for no-one else in connection with the Restructuring and will not regard any other person as its customer nor be responsible to anyone other than Midas Capital plc for providing the protections afforded to customers of Kinmont nor for providing advice in relation to the Restructuring or any matter referred to in this announcement.
Deloitte Corporate Finance is acting for Bank of Scotland plc and for no-one else in connection with the Restructuring and will not regard any other person as its client nor be responsible to anyone other than Bank of Scotland plc for providing the protections afforded to clients of Deloitte Corporate Finance nor for providing advice in relation to the Restructuring or any matter referred to in this announcement. Deloitte Corporate Finance is a division of Deloitte LLP, which is authorised and regulated by the Financial Services Authority in respect of regulated activities.