FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
18 June 2019
The Local Shopping REIT plc ("LSR" or the "Company")
Announcement of irrevocable undertaking from Thalassa Holdings Ltd ("Thalassa")
to support proposals to return capital to LSR shareholders
by way of a capital reduction and share buy-back tender offer
This announcement does not represent a firm intention to make an offer under Rule 2.7 of the City Code on Takeovers and Mergers (the "Code").
The directors of the Company (the "Board") are pleased to announce that LSR and Thalassa have today entered into an irrevocable undertaking (the "Irrevocable Undertaking") pursuant to which, amongst other things, Thalassa has agreed to support proposals to return capital to LSR shareholders by way of a capital reduction and share buy-back tender offer to be effected at a price per LSR share equal to the net asset value per LSR share (to be set out in LSR's unaudited consolidated interim results for the six months ended 31 March 2019 to be published on or around 20 June 2019), subject to a cap of 31.5 pence per share ("NAV") (the "Proposals").
Pursuant to the Irrevocable Undertaking, Thalassa has undertaken not to participate in the buy-back tender offer to be effected in connection with the Proposals, but has undertaken to vote, or procure the vote, in favour of all resolutions required to be passed by LSR shareholders in order to implement the Proposals on which it is entitled to vote.
Background to the Proposals
Since the lapse of Thalassa's offer to acquire the entire issued, and to be issued, ordinary share capital of LSR on 3 May 2019 (the "Thalassa Offer"), the Board has continued to explore ways of returning capital to LSR shareholders as quickly and efficiently as possible. Accordingly, following the lapse of the Thalassa Offer, LSR and Thalassa entered into a dialogue regarding the Proposals as a means of achieving this.
The Proposals will entail seeking the confirmation of the High Court of Justice in England and Wales (the "Court") of a capital reduction to be undertaken by LSR in connection with the Proposals in order to create the distributable reserves necessary to implement them and to return the necessary capital to LSR shareholders.
Accordingly, in due course following the publication of LSR's unaudited consolidated interim results for the six months ended 31 March 2019, which is expected to occur on 20 June 2019, the Board expects to publish a circular to LSR shareholders, which will contain, amongst other things, further details in respect of the Proposals, a notice of general meeting to approve the resolutions required to implement the Proposals (the "General Meeting") as well as the formal terms and conditions applicable to the Proposals (including the buy-back tender offer). As was the case with LSR's financial statements for the twelve months ended 30 September 2018, the Company's interim results will be prepared on a liquidation basis.
Benefits of the Proposals
With Thalassa's willingness to support the Proposals, the Board considers that they are likely to be the best route for achieving LSR's investment policy and enabling a full cash return to LSR shareholders in the near term. The Proposals will:
· provide all LSR shareholders who wish to sell their shares with the opportunity to achieve a full cash exit at the NAV per share to be published in June 2019; and
· enable those LSR shareholders who do not wish to receive capital at this time to maintain their investment in the Company.
Details of the Irrevocable Undertaking
Pursuant to the Irrevocable Undertaking, Thalassa has undertaken, amongst other things:
· to vote, or procure the vote, in favour of the resolutions required to be passed at the General Meeting to give effect to the Proposals;
· not to tender any of its LSR shares in the tender offer in connection with the Proposals; and
· not to take any action which is or may be prejudicial to the successful outcome of the Proposals or which would or might have the effect of preventing any of the terms or conditions of the Proposals from being fulfilled.
The buy-back tender offer will be subject to a minimum acceptance condition such that following the buy-back and cancellation of tendered LSR shares, Thalassa would hold more than fifty per cent of the voting rights in LSR. Thalassa has also agreed that should the Proposals not become effective by reason of the threshold for the acceptance condition not being satisfied or, if capable of waiver, waived, then Thalassa will support any further proposal brought forward by the Board for the liquidation of the Company.
In addition, Thalassa has given certain additional warranties and undertakings in respect of its shareholding and ability to enter into the Irrevocable Undertaking as well as a waiver of claims in favour of the Board. In the event that the Proposals are implemented, the directors of LSR have undertaken to tender their resignations.
The Irrevocable Undertaking will lapse in the event that:
· the Board withdraws its recommendation to vote in favour of the resolutions to implement the Proposals before the General Meeting is held; or
· the Proposals or any resolution to be proposed at the General Meeting (or any adjourned meeting) are/is not approved by the requisite majority of LSR shareholders at the General Meeting (or any adjourned meeting); or
· the Court fails to confirm the capital reduction required to be effected in order to implement the Proposals.
The Board reiterates its belief that, in view of the Irrevocable Undertaking entered into by Thalassa and the support it has expressed for them, the Proposals now represent the best route for achieving LSR's mandated investment policy and providing a full cash return to LSR shareholders in the near term and, accordingly, the Board shall continue to work with Thalassa to consummate them. LSR will make further announcements relating to the Proposals in due course.
The Local Shopping REIT plc
William A Heaney
020 7355 8800
BDO LLP (Independent Rule 3 Adviser to the Company)
020 7486 5888
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 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.
In accordance with Rule 2.9 of the Code, the Company confirms that, as at the close of business on 14 June 2019 (being the latest practicable date prior to the date of this announcement), it had in issue 82,505,853 ordinary shares of 20 pence each (excluding 9,164,017 ordinary shares held in treasury). The International Securities Identification Number (ISIN) for the ordinary shares is GB00B1VS7G47.
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.