The Thalassa Statement and Shareholder Update announcement released today at 15:29 under RNS No 6356T has been amended. Amendments are identified with an asterisk (*). The full amended text is shown below.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY (IN WHOLE OR IN PART), IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A TAKEOVER OFFER OR AN OFFER OF SECURITIES.
FOR IMMEDIATE RELEASE
The Local Shopping REIT plc (the "Company" or "LSR")
Thalassa Statement and Shareholder Update
21 March 2019
The board of The Local Shopping REIT plc (the "Board") notes the statement issued by Thalassa Holdings Ltd ("Thalassa") on 19 March 2019 in response to the circular to shareholders issued by the Board on 12 March 2019 (the "Circular").
In particular, the Board notes Thalassa's assertion that its offer to LSR shareholders (the "Offer") represents a "deliverable and certain exit" for LSR shareholders. The Board disputes this assertion, as the majority of the consideration offered by Thalassa is in Thalassa's ordinary shares. Accordingly, Thalassa's Offer does not provide the full cash exit which LSR shareholders desire and for which 99.98% of votes cast (other than Thalassa's) at the Company's general meeting in December 2018 were voted in favour. The Board remains committed to achieving this outcome, which is the mandated investment policy of the Company.
The Board further notes that, whilst making much of its share buy-back programme, Thalassa has given no guarantee that this will provide an exit for LSR shareholders - or that, should it acquire control of LSR, that it would have sufficient cash remaining to enable it to do so.
Furthermore, the Board continues to believe that Thalassa's ordinary shares, comprising the majority of the Offer, are unacceptably risky, for the reasons set out in the Circular.
The Board considers that the content of Thalassa's statement is, for the most part, wholly irrelevant to the simple decision before LSR shareholders, which is whether it is in their best interests to:
· seek a full cash exit from LSR, at liquidation value; or
· accept Thalassa's Offer, the majority of which is in Thalassa ordinary shares.
The Board continues strongly to advise LSR shareholders to seek a full cash exit by ignoring Thalassa's Offer and voting in favour of the resolution to be proposed at the general meeting of the Company to be held on 5 April 2019, which authorises the Board to take appropriate action to seek to liquidate LSR and make a full cash return to LSR shareholders to achieve the mandated outcome of the LSR investment policy, including petitioning the Court for the winding-up of the Company.
LSR shareholders should note that the earliest date that Thalassa could close its Offer as to acceptances (if it declared it wholly unconditional as to acceptances on its first closing date of 27 March 2019) is 1.00 p.m. on 10 April 2019, after the general meeting has taken place.
In considering their decision, the Board urges LSR shareholders to consider carefully the contents of the Circular, including the Board's reasons for considering Thalassa ordinary shares to be unacceptably risky. In summary, these include the following:
· Thalassa's past performance represents a less than compelling story due to:
o a poor record of investment returns;
o non-existent income returns;
o only one of its 7 investments has delivered a material profit;
o a share price trading at a deep discount to NAV;
o the increase in its NAV per share has been driven by fundraisings at significantly higher prices than Thalassa ordinary shares currently trade at; and
o trading illiquidity (outside Thalassa's share buy-back programme, about which there can be no guarantees)
· without making further investments, Thalassa's future relies on a pre-revenue technology subsidiary and an unfocused investment strategy;
· Thalassa's corporate governance falls short of UK guidelines;
· Thalassa's Standard Listing offers fewer protections than LSR's Premium Listing and its BVI incorporation offers fewer shareholder protections than those available to shareholders under English Law; and
· by Thalassa's own admission, there can be no guarantee that it will be able to maintain its Standard Listing if its Offer is successful, which could mean that the Thalassa ordinary shares are not capable of being traded on any exchange or market for quoted for listed securities.
The Board recognises the desire of LSR shareholders for further guidance in relation to the current value and the value they could reasonably expect to achieve from the Company's liquidation in order to inform their decision in relation to the Offer.
The most recent published net asset value of the Company was contained in the Company's audited accounts for 30 September 2018, published on 10 December 2018. Those accounts were prepared on a liquidation basis. An updated net asset value figure would require a revaluation of the Company's remaining property portfolio to RICS standards by an independent valuer in accordance with Rule 29 of the Takeover Code, which the Board considers is impracticable at the present time.
The initial distribution which the Board believes shareholders could by now have received if the Members' Voluntary Liquidation, blocked by Thalassa, had gone ahead was £22 million, equating to 26.7p per share, with further distributions to follow.
The Company now has approximately £22.8 million in cash reserves, equating to 27.6p per share.
We are awaiting completion of the sale of two properties on which we have exchanged contracts, for gross proceeds of £0.4 million. Excluding these, the remaining portfolio comprises twelve assets. Of these, terms have been agreed with prospective purchasers for the sale of six properties. Of the remaining six properties, we plan to hold back three properties in order to maintain the Company's REIT tax status until the Company enters into the liquidation process. The net rental income from these three properties will assist in defraying the Company's operational costs, including those associated with maintaining its listed status, until its liquidation.
The costs incurred by the Company in connection with the Thalassa Offer are estimated at between £435,000 and £520,000.
The Board has received advice on the likely costs of a Court application to wind up the Company and believes these to be reasonable. The costs associated with the Company's liquidation are already incorporated in the 30 September 2018 net asset value figure, referred to above. Whilst ordering the winding-up of the Company will be at the Court's discretion, the Board continues to believe, on the basis of the advice it has received from a leading QC, that the prospects for this are good.
The Circular can be found on the Company's website at:
The Circular contains the notice of the general meeting to be held on 5 April 2019 and a form of proxy can be found at the same location.
*If LSR shareholders have any questions in relation to the resolution to be proposed at the general meeting, or on the form of proxy they should contact the LSR Shareholder Helpline on 0800 014 8163 from within the UK or +44 (0)207 920 9700 from outside the UK.* The LSR Shareholder Helpline is available between 9.00 a.m. and 5.30 p.m. (London time) Monday to Friday (except English and Welsh public holidays). Calls to the LSR Shareholder Helpline from outside the UK will be charged at applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The LSR Shareholder helpline cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.
The Local Shopping REIT plc
William A Heaney
020 7355 8800
BDO LLP (Independent Rule 3 Adviser to the Company)
020 7486 5888
Tavistock (Financial PR)
020 7920 3150
BDO LLP ("BDO"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to the Company and no one else in connection with the Offer and will not be responsible to anyone other than the Company for providing the protections afforded to clients of BDO or for providing advice in connection with the Offer or any other matter referred to in this announcement.
This announcement is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities or the solicitation of any vote or approval in any jurisdiction. Any offer (if made) will be made solely by certain offer documentation which will contain the full terms and conditions of any offer (if made), including details of how such offer may be accepted. This announcement has been prepared in accordance with English law and the Code and information disclosed may not be the same as that which would have been prepared in accordance with laws outside the United Kingdom. The release, distribution or publication of this announcement in jurisdictions outside the United Kingdom may be restricted by the laws of the relevant jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.
Disclosure requirements of the Takeover Code (the "Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Publication on website
A copy of this announcement will, subject to certain restrictions relating to persons resident in restricted jurisdictions, be available on the Company's website at www.localshoppingreit.co.uk by no later than 12 noon on the Business Day following the date of this announcement. For the avoidance of doubt, the content of the website referred to above is not incorporated into and does not form part of this announcement.
This announcement contains statements that are or may be forward-looking with respect to the financial condition, results of operations and businesses and achievements of the Company. These statements can be identified by the use of forward-looking terminology such as "believe", "anticipate", "expect", "prospect", "estimated", "should", "may" or the negative thereof, or other variations thereof, or comparable terminology indicating expectations or beliefs concerning future events. These forward-looking statements include risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors which could or may cause actual results, achievements or developments to differ materially from those expressed or implied by such forward-looking statements. The Company assumes no obligation to update or correct the information contained in this announcement, whether as a result of new information, future events or otherwise, except to the extent required by law or regulation. The statements contained in this announcement are made as at the date of this announcement, unless some other time is specified in relation to them, and publication of this announcement shall not give rise to any implication that there has been no change in the facts set out in this announcement since such date. Unless expressly stated to the contrary in this announcement, no statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this document should be interpreted to mean that earnings for the Company or earnings per LSR share, as appropriate, for the current or further financial years would necessarily match or exceed the historical published earnings for the Company or earnings per LSR share.