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.
FOR IMMEDIATE RELEASE.
2 April 2019
The Local Shopping REIT plc (the "Company" or "LSR")
Response to Announcement by Thalassa Holdings Ltd ("Thalassa")
The board of The Local Shopping REIT plc (the "LSR Board") notes the announcement released by Thalassa on 2 April 2019 stating that it has submitted its form of proxy to vote against the ordinary resolution (the "Resolution") to be proposed at the general meeting of the Company to be held on Friday 5 April 2019. The Resolution seeks to authorise LSR's directors to take all actions as they consider necessary or desirable to liquidate the Company and thus achieve the mandated outcome of the Company's investment policy, including, if necessary, petitioning the Court for the winding-up of the Company.
The LSR Board notes Thalassa's statements regarding its opinion of the prospects for the success of an application to the Court to wind-up the Company and that it would challenge any such application. Thalassa's statements come as no surprise to the LSR Board, given that it has consistently opposed attempts by the LSR Board to return to LSR Shareholders the cash to which they are entitled.
The LSR Board considers that, whilst Thalassa is entitled to form its own opinion on the merits of such an application, it has not made clear the reasons supporting its view.
The LSR Board, on the other hand, has clearly explained on pages 29-31 of the response circular to shareholders published by the LSR Board on 12 March 2019 (available on the LSR website www.localshoppingreit.co.uk) (the "Response Circular") the rationale for its belief as to why a petition to the Court should succeed, being, in summary, that:
· the LSR Investment Policy, which has been pursued by the LSR Board since its adoption in 2013 (three years before Thalassa's investment in the Company), requires the LSR Board, in summary, to realise the assets of the Company, repay its debts and distribute the surplus to LSR Shareholders;
· there is clear support among the Company's members not to change course in relation to the full distribution of the Company's surplus cash to shareholders, as evidenced by the fact that 99.98% of votes cast on the resolution to enter a Members' Voluntary Liquidation in December 2018 (excluding those of Thalassa) were cast in favour of that resolution; and
· LSR can no longer achieve the commercial objectives provided for in its listing prospectus and by the LSR Investment Policy as Thalassa's clear desire to frustrate any action that would achieve the mandated outcome of the LSR Investment Policy has left the Company in a state of deadlock.
As stated in the Response Circular, your Board has sought advice from leading Queen's Counsel on the options open to it and, in particular, the merits of an application to the Court to wind-up the Company in circumstances where:
· the LSR Investment Policy requires the LSR Board to realise the assets of the Company, repay its debts and distribute the surplus to LSR Shareholders;
· after considering a number of options by which to return capital to LSR Shareholders, the LSR Board has determined that the most appropriate way for the distribution to be made is through the liquidation of the Company;
· a members' voluntary liquidation has been blocked;
· Thalassa's Offer has been rejected by LSR Shareholders; and
· the LSR Board does not consider that there is an alternative investment policy that could be adopted which would be consistent with members' expectations and be likely to command the support of a majority of members.
Whilst granting an order to wind-up the Company is at the Court's discretion, on the basis of the advice which it has received from a leading Queen's Counsel (and in respect of which privilege is not waived), the LSR Board continues to consider that, in the circumstances described above, the prospects of the Court making a winding-up order are good.
The LSR Board notes Thalassa's statements regarding engagement between Thalassa and the LSR Board. The LSR Board engaged with Thalassa on a number of occasions since May 2018. The LSR Board does not wish to comment on Thalassa's statements in relation to those meetings, other than to confirm that at no time has Thalassa indicated that it would support the achievement of the LSR Investment Policy by way of a full cash exit for LSR Shareholders, and to note again that the LSR Investment Policy was in force prior to Thalassa's investment in the Company.
The LSR Board continues to believe that Thalassa's intention is to gain control of the cash to which LSR Shareholders are entitled and therefore firmly recommends that LSR Shareholders ignore Thalassa's Offer. LSR Shareholders are recommended to vote in favour of the Resolution at the general meeting to be held at 10.00 a.m. on 5 April 2019 at the offices of BDO LLP at 150 Aldersgate Street, London EC1A 4AB (contained in the Response Circular) (the "General Meeting"). The Board urges any LSR Shareholders who have not yet submitted their forms of proxy for the General Meeting to do so by no later than 10.00 a.m. on 3 April 2019, which is the closing date for proxy submissions. The form of proxy may also be found on LSR's website.
The attention of LSR Shareholders is drawn to the disclosure requirements of Rule 8 of the Takeover Code, which continue to apply to the Company, and which are summarised below.
Please be aware that addresses, electronic addresses and certain other information provided by LSR Shareholders and persons with information rights and other relevant persons for the receipt of communications from LSR may be provided to Thalassa during the Offer Period as required by the City Code.
Save where otherwise defined herein, capitalised words and expressions used in this announcement have the meanings given to them in the Response Circular.
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 and the documents (including the Response Circular) required to be published by Rule 26.1 of the Code 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 and the Response Circular 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 or the Response Circular, 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 and the Response Circular are made as at the date of this announcement or the Response Circular (as the case may be), unless some other time is specified in relation to them, and publication of this announcement and the Response Circular shall not give rise to any implication that there has been no change in the facts set out in this announcement or the Response Circular (as the case may be) since such date. Unless expressly stated to the contrary in this announcement or the Response Circular, no statement in this announcement or the Response Circular 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.