NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
15 May 2019
Provident Financial plc ("Provident")
92 per cent. of shares held by Independent Shareholders have not been assented to the Offer
· The Provident Board notes that Non-Standard Finance plc ("NSF") has today taken the technical step of declaring its Offer unconditional as to acceptances. However, the Offer remains subject to a number of material conditions. We also note that:
o in aggregate, 92 per cent. of shares held by Independent Shareholders have not been assented to the NSF Offer;
o valid acceptances have been received in respect of a total of only 135,657,017 Provident Shares as at 1.00pm (London time) on 15 May 2019, representing only 53.5 per cent of the voting rights of Provident, which represents a level of acceptances insufficient to delist Provident or to commence the compulsory acquisition procedure; and
o such acceptances represent an incremental increase of only 4 per cent. in the 12 weeks since NSF launched its unsolicited, nil-premium, Offer.
Important conditions including the FCA, PRA and CMA yet to be satisfied or waived
· Provident notes that regardless of today's announcement the Offer remains conditional on the satisfaction or waiver of important conditions, including receipt of approvals from the FCA, the PRA and the CMA.
o As of 14 May 2019, the CMA had not commenced its Phase 1 review and consequently it is extremely unlikely that the CMA will make a decision on or before 5 June 2019.
o Accordingly, if the FCA and PRA were to approve the change of control, NSF will have a choice on 5 June 2019 as to whether or not to waive the CMA condition and close its value destructive Offer. In the event that NSF were to declare the Offer wholly unconditional, Provident Shareholders should note that NSF has undertaken to keep its Offer open for acceptance for a period of at least seven days from the date that the Offer is declared wholly unconditional.
o The level of acceptances received (or lack thereof) at that point may be a critical consideration for NSF. The Provident Board therefore continues to urge Independent Shareholders to take no action and not to accept the Offer.
Unanswered questions and substantial concerns of this uncertain, conditional and bad deal
· In addition, NSF has still not provided satisfactory answers to the Provident Board's key questions and the Provident Board continues to have very substantial concerns about the Offer, including:
o the viability and sustainability of Loans at Home as a standalone business, the cost of demerging Loans at Home with sufficient capital to fund itself on a debt-free basis and the possibility of the Government's Good Work Plan, which sets out wide-ranging proposals for fundamentally changing the way businesses engage with flexible and semi-flexible workforces, making it more difficult for businesses like Loans at Home to engage self-employed workforces;
o the potential under-capitalisation of the enlarged group as a result of the combination with NSF and demerger, and particularly where a minority interest remains in place in the group;
o the impact of the FCA's review of high cost credit and additional focus on firms providing guarantor lending on the future profitability of NSF's guarantor loans businesses;
o the closure of Satsuma and curtailment of Provident's digital strategy to achieve better customer outcomes; and
o the funding; ratings, balance sheet and earnings impacts of the above points and specifically from NSF's proposed sale of Moneybarn.
· If the Offer were to become wholly unconditional but NSF were not to receive sufficient acceptances to compulsorily acquire Provident Shares held by non-assenting Provident Shareholders, the above factors relating to Loans at Home, under-capitalisation of the enlarged group and NSF's guarantor loans businesses may affect NSF's ability to fully pass through to NSF shareholders dividends received from Provident. Whereas, the dividends paid to continuing Provident Shareholders would be unaffected by these factors.
· The Provident Board believes that the strategic and financial flaws associated with the NSF Offer clearly demonstrate that Provident Shareholders would be better off not assenting their shares to the Offer.
· The Provident Board reiterates the continued progress in rebuilding the Group and in delivering a clear vision for the future, as laid out in Provident's Trading Statement and Vision for the Future, published on 3 May 2019.
The Provident Board therefore re-confirms that it continues not to recommend the Offer and strongly advises all Provident Shareholders to continue to take no action in relation to the NSF Offer.
"Shares held by Independent Shareholders" means the Provident Shares other than those held by Woodford Investment Management Limited, Invesco Asset Management Limited and Marathon Asset Management LLP for which they provided irrevocable undertakings and letters of intent to accept the Offer as at 15 May 2019 and Independent Shareholders shall be construed accordingly.
Unless otherwise defined, all capitalised terms in this announcement shall have the meaning given to them in the response document published on 23 March 2019.
Provident Financial plc, Tel: +44 12 7435 1135
Patrick Snowball, Chairman
Malcolm Le May, Chief Executive Officer
Gary Thompson / Vicki Turner, Investor Relations, Tel: +44 12 7435 1900
Richard King, Media, Tel: +44 20 3620 3073
Barclays (Joint Lead Financial Adviser and Corporate Broker to Provident)
Richard Taylor, Tel: +44 20 7623 2323
J.P. Morgan Cazenove (Joint Lead Financial Adviser and Corporate Broker to Provident)
Ed Byers, Tel: +44 20 7742 4000
Jefferies (Financial Adviser to Provident)
Graham Davidson, Tel: +44 20 7029 8000
Brunswick (PR Adviser to Provident)
Nick Cosgrove, Tel: +44 20 7404 5959
Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the Financial Conduct Authority (the "FCA") and the PRA, is acting exclusively as corporate broker and financial adviser for Provident and no one else and will not be responsible to anyone other than Provident for providing the protections afforded to clients of Barclays nor for providing advice in relation to any matter referred to in this announcement.
J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove, is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom. J.P. Morgan Cazenove is acting exclusively as corporate broker and financial adviser to Provident and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than Provident for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, or for providing advice in relation to the contents of this announcement or any other matter referred to herein.
Jefferies International Limited ("Jefferies"), which is authorised and regulated in the United Kingdom by the FCA, is acting for Provident and no one else in connection with the matters set out in this announcement. In connection with such matters, Jefferies will not regard any other person as their client, and will not be responsible to anyone other than Provident for providing the protections afforded to clients of Jefferies or for providing advice in relation to the contents of this announcement or any other matter referred to herein. Neither Jefferies nor any of its subsidiaries, affiliates or branches owes or accepts any duty, liability or responsibility whatsoever (whether direct, indirect, consequential, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Jefferies in connection with this announcement, any statement contained herein or otherwise.
Forward looking statements
This announcement may contain certain "forward looking statements" regarding the financial position, business strategy or plans for future operations of Provident. All statements other than statements of historical fact included in this document may be forward looking statements. Forward looking statements also often use words such as "believe", "expect", "estimate", "intend", "anticipate" and words of a similar meaning. By their nature, forward looking statements involve risk and uncertainty that could cause actual results to differ materially from those suggested by them. Much of the risk and uncertainty relates to factors that are beyond Provident's ability to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this document. Provident does not assume any obligation to, and does not intend to, revise or update these forward looking statements, except as required pursuant to applicable law or regulation.
A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on the Provident website at www.providentfinancial.com by no later than 12 noon (London time) on the business day following this announcement. For the avoidance of doubt, the content of this website is not incorporated by reference into, and does not form part of, this announcement.
This communication is not intended to and does not constitute an offer to buy or the solicitation of an offer to subscribe for or sell or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction. The release, publication or distribution of this communication in whole or in part, directly or indirectly, in, into or from certain jurisdictions may be restricted by law and therefore persons in such jurisdictions should inform themselves about and observe such restrictions.
Bases and Sources
Unless otherwise stated, as at 15 May 2019:
· The total issued share capital of Provident is 253,378,601
· The total shares provided under irrevocables and letters of intent in aggregate by Woodford Investment Management Limited, Invesco Asset Management Limited and Marathon Asset Management LLP is 125,097,841
· The total aggregated shares held by Independent Shareholders is 128,280,760, such figure being calculated by deducting the aggregate shares provided under irrevocables and letters of intent by Woodford Investment Management Limited, Invesco Asset Management Limited and Marathon Asset Management LLP as at 15 May 2019 from the total issued share capital of Provident
· As per NSF's announcement on 15 May 2019, NSF had received valid acceptances for the Offer in respect of 135,657,017 Provident Shares representing 53.5 per cent. of the total issued share capital of Provident as at 1.00pm (London time) on 15 May 2019
· The number of shares therefore assented to the Offer by Independent Shareholders is 10,559,176, such figure being calculated by deducting the shares provided under irrevocables and letters of intent by Woodford Investment Management Limited, Invesco Asset Management Limited and Marathon Asset Management LLP as at 15 May 2019 from the valid acceptances received
· The assertion that 92 per cent. of shares held by Independent Shareholders have not been assented to the Offer is by reference to (i) the total aggregated shares held by Independent Shareholders of 128,280,760 and (ii) the number of shares assented to the Offer by Independent Shareholders of 10,559,176
· The assertion that NSF has only been able to secure approximately 4 per cent. incremental acceptances from Provident Shareholders beyond those committed at time of launch is by reference to (i) the total irrevocables and letters of intent committed by Woodford Investment Management Limited, Invesco Asset Management Limited and Marathon Asset Management LLP as at 15 May 2019 of 125,097,841, and (ii) the total share capital of Provident at 15 May 2019 of 253,378,601