FOR IMMEDIATE RELEASE.
28 September 2020
The Local Shopping REIT plc ("LSR" or the "Company")
Proposed transfer of the Company's listing category
on the Official List from Premium to Standard
Proposed Change of Name
Notice of General Meeting
The directors of the Company (the "Board" or the "Directors") are pleased to announce that LSR is today posting a circular to its shareholders (the "Circular") containing full details of the Board's proposals for the transfer of the Company's listing category on the Official List of the Financial Conduct Authority from Premium to Standard (the "Proposed Transfer"), the adoption of a new strategy for the Company and the change of the Company's name to Alina Holdings Plc (together, the "Proposals").
The Circular will be accompanied by a notice of a General Meeting of the Company to be convened for 10:00 a.m. on 21 October 2020 inter alia for the purpose of passing the special resolution necessary to give effect to the Proposed Transfer as required by the Listing Rules. A Proxy Form for use by LSR Shareholders who hold their LSR Shares in certificated form is also being despatched with the Circular.
Background to the Proposals
Trading in the Company's ordinary shares ("LSR Shares") on the London Stock Exchange was suspended on 18 September 2019 following the tender offer carried out by the Company which resulted in the Company's largest shareholder, Thalassa Holdings Ltd ("Thalassa"), owning approximately 92.62 per cent. of the Company's issued share capital (excluding shares held in treasury). This meant that the Company no longer complied with the 'free float' requirement of the Listing Rules for a minimum of 25 per cent. of a listed company's issued share capital to be in public hands.
The Board has considered a range of potential options with a view to removing the suspension of trading in the Company's shares. Following discussions with the Board of Thalassa, it has been agreed that Thalassa will transfer to its shareholders approximately 21,019,500 of the 21,021,277 Ordinary Shares in LSR it currently holds, by way of a mandatory redemption of shares and return of capital by Thalassa to its shareholders (the "Thalassa Return of Capital"). Based on information provided by Thalassa, the Board anticipates that following the Thalassa Return of Capital, approximately 37.10% of LSR Shares will be in public hands.
The Board is therefore satisfied that the Company will be able to comply with the free float requirement of the Listing Rules as a result of the Thalassa Return of Capital, which together with the Proposed Transfer will enable the resumption of trading in the Company's shares.
Implementation of the Proposals is subject to Thalassa carrying out the Thalassa Return of Capital prior to the Transfer taking effect and, therefore, in support of the Proposals, the Company and Thalassa have entered into an Irrevocable Undertaking, pursuant to the terms of which Thalassa has undertaken to vote in favour of all the resolutions at the General Meeting and the Thalassa Board has undertaken to take all necessary steps to enable the Thalassa Return of Capital to be undertaken, subject to: (a) the passing of the resolutions at the General Meeting; and (b) the Proposed Transfer becoming effective.
The Company will make an application for the Proposed Transfer to take place as soon as reasonably practicable following the General Meeting and allowing for the Thalassa Return of Capital to be completed by Thalassa. It is expected that the Proposed Transfer will take effect on 19 November 2020.
The Company will also make an application to the FCA for the lifting of the suspension from trading of its shares, which the Company anticipates will take place immediately following the Proposed Transfer becoming effective and on 19 November 2020.
As a result of the significant reduction in the Company's investment property holdings and the share buy-back that took place in 2019, the Company has already been restructured substantially away from being an investment fund into an entity which is in all material respects an operating business. In continuance of the restructuring of the Company, the Board proposes in the Circular a new strategy, as summarised below, (the "New Strategy"), to complete the Company's transformation into a commercial company, which it intends to pursue following the Proposed Transfer.
Subject to the Proposed Transfer taking effect, the Company intends to identify and acquire interests in potential target businesses which are, in the opinion of the Directors, capable of delivering long term value for the Company's shareholders. This may include the acquisition of controlling stakes or all of the equity in target companies, businesses or assets, enabling it to take operational control to integrate and develop the target business. However, the Company may equally consider making investments or acquiring interests in businesses or assets that do not confer voting control where the Directors consider that the investment opportunity is sufficiently attractive and are satisfied that the Company can exert sufficient influence over the management of the target business or investment to implement its strategy (for example, via board appointment rights or veto rights or other forms of protection). There will be no limit on the number of such potential investments or acquisitions the Company may make and the Company may invest in a number of propositions or in just one investment. Acquisitions or investments may take the form of equity, equity-linked securities, debt or other structured finance in potential target businesses.
The Board has identified European leisure and entertainment as the Company's initial target sector (including but not limited to ISIC codes 50 (water transport), 55 (accommodation), 56 (food and beverage) and 90 (creative arts and entertainment)), and will predominantly focus on transactions within those activities. Whilst the Board will consider a range of potential business and assets for acquisition or investment, the initial focus will likely be on leisure hospitality. The Company has no specific preferred country or countries in Europe which it intends to concentrate on, however, acquisition or investment targets will most likely be located in less developed destinations, which the Board considers to offer the best potential for capital appreciation. The Board sees the impact of COVID-19 on the leisure and entertainment sector as an opportunity as businesses struggle to generate positive free cash flow and may have had to postpone or cancel development and expansion initiatives.
It is the Directors' intention to continue to actively manage the current property portfolio alongside the New Strategy at least until the current uncertainty overhanging the UK property market has ended. The current portfolio of six properties (one of which is considered held for sale) comprises a mixture of freehold and leasehold interests, in both commercial and residential units and situated in the South, West and North of the United Kingdom. The Directors will continue to monitor conditions in the UK property market and will sell properties only when they consider that it is in the best interests of the Company's shareholders to do so.
The changes to the Company's business away from investment fund activities and towards a traditional operating company mean that the Company will no longer qualify as a Real Estate Investment Trust ("REIT") for the relevant rules of UK REIT tax regime. Details of the effect of the Company leaving the REIT regime are set out in the Circular.
Proposed Change of Name
In conjunction with the New Strategy, the Directors believe it appropriate for the Company to change its name and accordingly, conditional upon the Proposed Transfer taking effect, pursuant to Article 4 of the Articles of Association, the Board has resolved to change the name of the Company to Alina Holdings Plc. Following the change of name becoming effective, the LSR Shares will be traded under the Company's new ticker "ALNA".
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 at the General Meeting;
· 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.
In addition, Thalassa has undertaken to take all necessary steps to effect the Thalassa Return of Capital.
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 the resolutions 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).
The Local Shopping REIT plc
William A Heaney
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Following the publication of this announcement, this inside information is now considered to be in the public domain.