RNS Number:9032F
Sigma Technology Group PLC
08 January 2003
Sigma Technology Group plc
8 January 2003
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA OR JAPAN
SIGMA TECHNOLOGY GROUP PLC ("Sigma" or "the Company")
Announcement of a Recommended cash and share offer by
Oriel Securities Limited
on behalf of
Sigma Technology Group plc
for Lionheart plc ("Lionheart")
Summary
* The boards of Sigma and Lionheart announce that they have agreed the
terms of a recommended cash and share offer to be made by Oriel Securities on
behalf of Sigma for the entire issued and to be issued share capital of
Lionheart.
* Under the terms of the Offer, Lionheart Shareholders will receive 107
pence in cash and 1.48 New Sigma Shares for each Lionheart Share. A Mix and
Match Election will also be available.
* The Offer values each Lionheart Share at 161 pence (1) and represents a
premium of 30 per cent. over the closing middle market price of 124 pence on 7
January 2003, the last business day prior to this announcement. It values
Lionheart at approximately #11.6 million.
* Sigma Technology Group plc is a UK-based company quoted on AIM. The
company was formed to take advantage of the significant opportunities to
support the development of young and growing companies, focussing on enabling
technologies in the TMT sector through the provision of advisory services, as
well as equity and debt investments in such companies. Sigma Group currently has
equity interests in 15 companies and its portfolio comprises companies at
varying stages of corporate and technology development. Sigma has recently
expanded its activities to include the management of third party funds, raising
#17 million for the Sigma Technology Venture Fund in April 2002.
* Sigma has received irrevocable undertakings to accept the Offer in
respect of 2,172,998 Lionheart Shares, representing 30.1 per cent. of the issued
ordinary share capital of Lionheart.
* The irrevocable undertakings received by Sigma include an undertaking
to accept (or procure acceptance of) the Offer from the Independent Director of
Lionheart in respect of 24,800 Lionheart Shares, being all of the Lionheart
Shares in which he is beneficially interested, representing approximately 0.3
per cent. of the issued ordinary share capital of Lionheart. The terms of this
undertaking requires acceptance of the Offer (unless the Offer is withdrawn or
lapses) even in the event of a higher competing offer from a third party.
* The balance, being an irrevocable undertaking to accept (or procure the
acceptance of) the Offer from a certain other Lionheart Shareholder in respect
of 2,148,198 Lionheart Shares representing 29.8 per cent. of the issued ordinary
share capital, will cease to be binding in the event of a competing offer being
made for the Lionheart Shares at a value in excess of 5% of the Offer.
* Lionheart's shares are quoted on AIM. Since the disposal in 1999 of
Lionheart's operating businesses and subsidiaries, Lionheart has had no trading
business and its sole material asset has been cash.
(1) Based on the closing middle market price of 36.5 pence per Sigma Share
on 7 January 2003, the last business date prior to this announcement.
This summary should be read in conjunction with the attached announcement. The
conditions and certain terms of the Offer are attached as Appendix I of the
attached announcement and definitions of certain expressions used in this
announcement are contained in Appendix III of the attached announcement.
Enquires:
Sigma Technology Group plc
Graham Barnet Tel: 0131 220 9444
Neil Crabb Tel: 020 7653 3200
Oriel Securities Limited Tel: 020 7710 7600
(Financial adviser to Sigma)
Andrew Edwards
Natalie Fortescue
Lionheart plc
Peter Pollock Tel: 07881 626123
Bridgewell Limited Tel: 020 7003 3000
(Financial adviser to Lionheart)
Ian Dighe
Martin Gibbs
College Hill Tel: 020 7457 2020
(Financial PR adviser to Sigma)
Matthew Smallwood
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails of, or by means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facilities of a securities exchange of, the United States, Australia, Canada or
Japan, and the Offer will not be capable of acceptance by any such use, means or
instrumentality or facilities or from or within the United States, Australia,
Canada, or Japan. Accordingly, copies of the announcement are not being, and
must not be, directly or indirectly, mailed or otherwise forwarded, distributed
or sent in or into the United States, Australia, Canada or Japan and persons
receiving this announcement (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send it in or into the United
States, Australia, Canada or Japan. Doing so may render invalid any purported
acceptance of the Offer.
The making of the Offer to persons not resident in the United Kingdom, or who
are citizens, residents or nationals of jurisdictions outside the United Kingdom
or who are nominees of, or custodians or trustees for, citizens, residents or
nationals of other countries ("overseas shareholders"), may be prohibited or
affected by the laws of the relevant overseas jurisdictions. Such overseas
shareholders should inform themselves about and observe any applicable legal
requirements.
Oriel Securities, which is regulated by the Financial Services Authority, is
acting exclusively for Sigma and no-one else in connection with the Offer and
will not be responsible to anyone other than Sigma for providing the protections
afforded to its customers, nor for providing advice in relation to the Offer,
the contents of this announcement or any other matters referred to herein.
Bridgewell, which is regulated by the Financial Services Authority, is acting
exclusively for Lionheart as financial adviser in relation to the Offer and is
not acting for any other person in relation to the Offer. Bridgewell will not be
responsible to anyone other than Lionheart for providing the protections
afforded to its customers, nor for providing advice in relation to the Offer,
the contents of this announcement or any other matters referred to herein.
This announcement, issued by Oriel Securities, does not constitute an offer or
an invitation to acquire securities. The Offer will only be made pursuant to the
Offer Document and Form of Acceptance, which is expected to be posted on or
around the 15 January 2003. Oriel Securities has issued this announcement as a
financial promotion solely for the purpose of section 21 of the Financial
Services and Markets Act 2000.
8 January 2003
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA OR JAPAN
Recommended cash and share offer by
Oriel Securities Limited
on behalf of Sigma Technology Group plc
for Lionheart plc ("Lionheart")
1. Introduction
The boards of Sigma and Lionheart announce that they have agreed the terms of a
recommended cash and share offer to be made by Oriel Securities on behalf of
Sigma for the entire issued and to be issued share capital of Lionheart.
2. The Offer
The Offer, which will be subject, inter alia, to the conditions and further
terms summarised below and in Appendix I to this announcement and to be set out
in full in the Offer Document and the accompanying Form of Acceptance, will be
made on the following basis:
for each Lionheart Share: 107 pence in cash, and
1.48 New Sigma Shares
and so in proportion for any other number of Lionheart Shares held.
A Mix and Match Election will be made available under which Lionheart
Shareholders may elect, subject to availability, to vary the number of New Sigma
Shares and amount of cash they would receive in respect of their holdings in
Lionheart. Details of the Mix and Match Election are summarised in Section 3
below.
Based on the closing middle market price of 36.5 pence per Sigma Share as at 7
January 2003, the last business day prior to this announcement, the Offer values
each Lionheart Share at 161 pence and the existing issued share capital of
Lionheart at approximately #11.6 million. This represents a premium of 30 per
cent. over the closing middle market price of 124 pence per Lionheart Share on 7
January 2003. Further details of the financial effects of acceptance of the
Offer are set out in Appendix II.
Lionheart Shares will be acquired by Sigma fully paid and free from all liens,
charges, equities, equitable interests, encumbrances and other third party
rights and interests of any nature whatsoever, and together with all rights now
and hereafter attaching thereto.
The New Sigma Shares to be issued in connection with the Offer will be issued
credited as fully paid and will rank pari passu in all respects with existing
Sigma Shares, together with the right to receive and retain in full all
dividends and other distributions declared, made or paid after the date of this
announcement.
Application will be made to the London Stock Exchange for the New Sigma Shares
to be admitted to trading on AIM.
Fractions of New Sigma Shares will not be allotted to Lionheart Shareholders and
their entitlements will be rounded down to the nearest whole number of New Sigma
Shares.
3. The Mix and Match Election
Lionheart Shareholders may elect under the terms of the Offer, subject to
availability, to vary the number of New Sigma Shares and the amount of cash they
would receive as consideration in respect of their holdings of Lionheart Shares.
However, both the total number of New Sigma Shares to be issued under the
Offer and the total cash consideration payable under the Offer are fixed and
will not be varied as a result of the Mix and Match Elections. Accordingly, the
satisfaction of the Mix and Match Elections will be dependent upon the extent to
which other Lionheart Shareholders make offsetting elections. To the extent that
elections cannot be satisfied in full, they will be scaled down on a pro rata
basis.
As a result, Lionheart Shareholders who make Mix and Match Elections will not
necessarily know the exact number of New Sigma Shares or the amount of cash they
will receive until settlement of the consideration under the Offer.
The purpose of allowing Lionheart Shareholders to elect to receive an increased
amount of cash under the Mix and Match Election is to provide Lionheart
Shareholders with the opportunity, if there are sufficient offsetting elections,
to receive for their Lionheart Shares an increased cash element, without paying
commission, and to reduce the number of New Sigma Shares they would receive.
This may be of particular relevance to those Lionheart Shareholders having a
relatively small shareholding which in the event that dealing costs are incurred
on future sales, would render the size of their shareholdings in Sigma
uneconomic.
The Mix and Match Election will not affect the entitlements of those Lionheart
Shareholders who do not make Mix and Match Elections.
4. Background to and reasons for the recommended Offer
(a) Lionheart
Hamish Grossart, a non-executive director of Lionheart, is also a non-executive
director of Sigma. In view of this he has not participated in the consideration
of the Offer.
Since the disposal in November 1999 of the Croydex Company Limited and its
subsidiary companies (the "Croydex Disposal"), Lionheart has had no trading
businesses and its only material asset has been cash on deposit. The cash
resources of Lionheart as at 31 December 2002 stood at approximately #11.6
million, representing a cash value per share of approximately 161 pence before
deducting any expenses of returning cash to shareholders and before taking
account of contingent liabilities (if any). The Lionheart Board's strategy since
the Croydex Disposal has been to identify and acquire a business whose
performance would generate significant value for Lionheart Shareholders.
Despite the Lionheart Board and its advisers investigating a number of
opportunities during the period since the Croydex Disposal, it has not been
possible to conclude an acquisition at a value at which the Lionheart Board felt
it could recommend to Lionheart Shareholders. At Lionheart's last AGM, in June
2002, the Lionheart Board announced that in the absence of a suitable
transaction before the next AGM in June 2003, the Lionheart Board would examine
proposals for the return of cash to Lionheart Shareholders. Lionheart has no
material creditors and in these circumstances a company would often use a
members' voluntary winding up to return cash to its shareholders. A members'
voluntary winding up involves a process by which the Lionheart Directors would
be required to make a statutory declaration that the company is solvent, as well
as the appointment of the liquidator by the Lionheart Shareholders at a general
meeting. The liquidator would then be responsible for making provision for
paying any actual and contingent liabilities of Lionheart. The procedure to
conclude a members' voluntary winding up often takes in excess of six months. In
the event that the liquidator concluded that Lionheart had contingent
liabilities, he would delay making any distribution to Lionheart Shareholders
until the contingent liability crystallised or would alternatively retain an
amount based on his estimate of the contingent liability.
The Independent Director of Lionheart believes that the opportunity for
Lionheart Shareholders represented by the Offer from Sigma compares favourably
with the alternative of winding up the company as the Offer is capable of
completion much earlier than a full distribution via a winding up and it affords
Lionheart Shareholders a certain outcome.
The Independent Director of Lionheart also believes that the Offer presents
Lionheart Shareholders with a good opportunity to realise their investment in
Lionheart. The Offer which values each Lionheart share at 161 pence per ordinary
share (based on Sigma's closing middle market share price on 7 January 2003),
represents a premium of 30 per cent. to the closing middle market price on 7
January 2003. Furthermore, the Independent Director of Lionheart believes that
the cash element of the Offer of 107 pence per share represents a material
proportion of both the recent market price of Lionheart Shares and the
underlying cash value of Lionheart Shares. In addition, the existence of the Mix
and Match Election gives Lionheart Shareholders the possibility of receiving
more cash than 107 pence per share providing that there are corresponding
Lionheart Shareholders who elect to take more New Sigma Shares.
The market in Lionheart Shares is illiquid and this has represented a
significant impediment to Lionheart Shareholders wishing to realise the value of
their investment in Lionheart. The Independent Director believes that the Offer
affords them the ability to realise a significant proportion of that investment.
Lastly, the Offer represents an opportunity for Lionheart Shareholders to
receive New Sigma Shares at an implied discount of approximately 10 per cent. to
the closing middle market price of Sigma Shares of 36.5 pence as at 7 January
2003 (being the latest practicable date prior to this announcement).
Accordingly, the Independent Director has concluded that the Offer is in the
best interests of the Lionheart Shareholders.
(b) Sigma
Hamish Grossart, as a director of both Sigma and Lionheart, has not, in his
capacity as a Sigma Director, taken any part in the consideration or making of
the Offer. The Sigma Directors (other than Hamish Grossart) believe that the
additional cash resources (after expenses) which will accrue to Sigma as a
result of the Offer of approximately #3.4 million, will be of benefit by
supporting the growth of Sigma in its stated aim of increasing funds under
management. The Sigma Directors (other than Hamish Grossart) believe that this
growth will come through enabling:
(a) commitments in other private equity funds managed by companies within the
Sigma Group; and
(b) providing increased flexibility for strategic developments.
5. Information on Sigma
History
The business of Sigma was founded by Graham Barnet and Neil Crabb in December
1996 and commenced trading in January 1997 under the name "Sigma Technology
Management Limited". Based on their experience in the corporate finance and
technology sectors, they believed that there were significant opportunities
available to provide support to young and growing technology companies, to
assist in their development and to acquire equity interests in those companies.
In April 2000, Sigma was admitted to AIM following a placing of ordinary shares
and approximately #11.2 million was raised, net of expenses. On 2 April 2001,
Bank of Scotland subscribed for 5% of the then issued share capital of Sigma for
approximately #2.5 million. This investment was made as part of a number of
initiatives announced between Sigma and Bank of Scotland aimed at early and
development stage investments in companies in the TMT sectors.
Sigma has offices in London and Edinburgh and now employs a total of 17 staff.
Sigma's objective is to expand the areas from which it generates income.
Although current market conditions are difficult, the Sigma Directors believe
that they do provide significant opportunities for Sigma to broaden the scope of
its advisory services to other areas and Sigma is actively pursuing
opportunities in the quoted company arena to complement its work with unquoted
companies.
After Sigma's flotation on AIM, a portfolio of investee companies was
established, usually by direct investment for cash or by offering corporate
development services in return for equity positions. The Sigma Group currently
has equity interests in 15 companies and its portfolio comprises companies at
varying stages of corporate and technology development. Market conditions have
affected Sigma's portfolio clients both in terms of commercialising their
technology and raising funds. Valuations of such companies remain under
pressure and this was reflected in an additional write off of #1.3 million
against the cost of investments held in the balance sheet of Sigma as at 30 June
2002.
Current business aims
The management of third party funds is of increasing importance to Sigma. In
April 2002, Sigma announced it had raised #17 million for the Sigma Technology
Venture Fund, a private equity fund with the mandate to invest in early and
development stage companies in the TMT sectors. The fund remains open to receive
further commitments. Other significant initiatives include Strategic Investment
Management PLC ("SIM"), a specialist in property funds management, which Sigma
recently co-founded and in whom it retains a 38% interest in the ordinary share
capital. SIM has attracted third-party investment from Bank of Scotland and
others. A limited partnership vehicle managed by SIM recently acquired its first
property valued at #16 million.
In addition to the Sigma Technology Venture Fund, two other potential funds are
at advanced stages of negotiation. The first, a divestment fund, which could
enable institutional investors to divest their technology investment portfolios;
and the second, the Sigma Technology Scottish Innovation Fund ("STSIF"),
designed to coincide with the opening of the Sigma Technology Centre in Rosyth,
near Edinburgh. In addition, Sigma has announced that it has entered into an
arrangement with the University of Edinburgh to assist with the University's
technology commercialisation, in the area of spin out companies.
Summary financial information
Summary financial information extracted, without material adjustment, from
Sigma's results for the three years ended 31 December 2001 is set out in the
table below:
#'000 1999 2000 2001
Turnover 465 592 1,100
Operating profit/(loss) 19 (475) (5,004)
Profit/(loss) before tax 27 (58) (4,894)
Earnings/ (loss) per share 0.08p (0.19)p (13.72)p
Net Assets 254 11,532 9,080
Current trading position
Current trading conditions have continued to prove challenging. The general
environment remains subdued, without a clear sense of direction, and whilst
there are grounds for limited optimism, the outlook continues to remain
unpredictable.
The net assets of Sigma as at 31 December 2001 were #9.1 million. The net
assets reported in the unaudited interim statement of Sigma as at 30 June 2002
were #6.7 million, a fall of #2.4 million in the six month period. The fall was
due to further write-downs of investments and loans to client companies of #1.3
million as noted above, and a loss on ordinary activities before such
write-downs of #1.1 million.
The interim announcement for the period to 30 June 2002 made on 30 September
2002, included the following statement:
"Sigma's objective is to expand the areas from which it generates income. This
is beginning to bear fruit and will be reflected more clearly in the second half
results."
In the second half of the financial year Sigma has continued to sustain trading
losses albeit at reduced rates to that incurred in the first half. This is the
result of the implementation of the objectives set out by Sigma in its interim
statement. As a consequence the rate of adverse impact on Sigma's ongoing cash
balances and shareholders funds is reducing.
Against the background of difficult trading conditions, a number of Sigma
portfolio clients have made notable progress:
* Fluid Technologies Plc - working with a number of major companies in
the flavours, agrochemical and pharmaceutical industries in the application of
its microencapsulation technology. Subject to shareholder approval a listed
pharmaceutical development company has agreed to invest #2 million alongside a
further investment of #500,000 from the Sigma Technology Venture Fund;
* Securivox Limited - trials with potential strategic partners are agreed
and commencing with results expected by early 2003; and
* Camvista Limited - completed a merger with a trade party coupled with
subsequent third party investment.
As at 7 January 2003 Sigma Group had cash at bank of approximately #2.7 million
and in addition had provided certain short-term loans amounting to approximately
#645,000, all of which are expected to be repaid by 31 January 2003.
6. Information on Lionheart
Since the disposal in 1999 of Lionheart's operating business and its
subsidiaries, Lionheart has had no trading business and its sole material asset
has been cash. As at 31 December 2002, the cash balance was approximately #11.6
million.
7. Directors and employees
Lionheart has one employee who is employed as an assistant to the Company
Secretary. It has been agreed that one calendar month following the Offer being
declared wholly unconditional, she will be made redundant.
The Lionheart Directors have agreed to resign upon request after the Offer has
been declared wholly unconditional. In respect of his resignation, the
Independent Director will receive a payment in lieu of notice. The other
director of Lionheart, who is not independent and who is a director of Sigma,
has volunteered to waive any entitlement to compensation.
8. Financing of the Offer
The cash element of the Offer will be fully financed through a financing
facility made available by Bank of Scotland. The financing facility is
conditional, inter alia, upon the receipt by Sigma of acceptances in respect of
90 per cent. of the Lionheart Shares to which the Offer relates. Oriel
Securities is satisfied that sufficient resources are available for Sigma to
satisfy the cash consideration payable as a result of full acceptance of the
Offer.
9. Inducement Fee
Lionheart has agreed to pay to Sigma an inducement fee whereby #116,000 is
payable by Lionheart if:
(i) a higher offer is made by a third party and becomes or is declared wholly
unconditional in all respects; or
(ii) a resolution to wind up Lionheart is proposed or passed; or
(iii) Sigma gives notice to the Lionheart Directors that it or its advisers have
become aware of a material matter of which they were not aware at the time of
this announcement which would have constituted an adverse material change had it
occurred at the time of the announcement and that matter is, in the opinion of
the Panel, of material significance to Sigma in the context of the Offer.
10. Irrevocable Undertakings
Sigma has received irrevocable undertakings to accept (or procure the acceptance
of) the Offer in respect of a total of 2,172,998 Lionheart Shares representing
approximately 30.1 per cent. of the issued ordinary share capital of Lionheart.
These comprise:
a) an undertaking to accept (or procure the acceptance of) the Offer from
the Independent Director of Lionheart in respect of 24,800 Lionheart Shares,
being all of the Lionheart Shares in which he is beneficially interested,
representing approximately 0.3 per cent. of the issued ordinary share capital of
Lionheart. The terms of this undertaking require acceptance of the Offer
(unless the Offer is withdrawn or lapses) even in the event of a higher
competing offer from a third party; and
b) an undertaking to accept (or procure the acceptance of) the Offer from a
certain other Lionheart Shareholder, in respect of a total of 2,148,198
Lionheart Shares representing approximately 29.8 per cent. of the issued
ordinary share capital. This undertaking will cease to be binding in the event
of a competing offer being made for the Lionheart Shares at a value in excess of
5% of the Offer.
11. Disclosure of interests in Lionheart
Save as to set out in this announcement, neither Sigma nor any of the directors
of Sigma, nor so far as Sigma is aware, any persons acting in concert with
Sigma, owns or controls any Lionheart Shares or holds any option to acquire any
Lionheart Shares or holds derivatives referenced to Lionheart Shares.
12. Compulsory acquisition and cancellation of quotation of Lionheart
If Sigma receives acceptances under the Offer in respect of, and/or otherwise
acquires 90 per cent or more of the Lionheart Shares to which the offer relates
(within the meaning of sections 428 to 430F of the Act), and the Offer becomes
unconditional in all respects, Sigma intends to exercise its right to
compulsorily acquire any Lionheart Shares in respect of which acceptances have
not then been received.
As soon as it is appropriate and possible to do so and subject to the Offer
becoming or being declared unconditional in all respects, Sigma intends to
procure that Lionheart applies to the London Stock Exchange for the cancellation
of trading in Lionheart Shares on AIM.
13. Recommendation
Hamish Grossart, a non-executive director of Lionheart, is also a non-executive
director of Sigma and holds options to subscribe for Sigma Shares. In view of
Hamish Grossart's connection with both Sigma and Lionheart, Mr Peter Pollock is
the sole independent director of Lionheart. Accordingly, he has taken
responsibility for considering the Offer on behalf of Lionheart Shareholders and
for reaching conclusions as to the appropriate recommendation to be made to
them. In doing so the Independent Director has taken advice from Bridgewell.
The Independent Director of Lionheart, who has been so advised by Bridgewell,
considers the terms of the Offer to be fair and reasonable. In providing advice
to the Independent Director of Lionheart, Bridgewell has taken into account the
commercial assessments of the Independent Director of Lionheart.
Accordingly, the Independent Director of Lionheart recommends that Lionheart
Shareholders accept the Offer, as he has irrevocably undertaken to do in respect
of his own beneficial shareholding amounting to 24,800 Lionheart Shares,
representing 0.3 of the existing issued ordinary share capital of Lionheart.
14. General
The Offer Document will be posted to Lionheart Shareholders as soon as
practicable but not later than 5 February 2003. A summary of the conditions of
the Offer is set out in Appendix I of this announcement.
The Directors of Sigma accept responsibility for the information contained in
this announcement, other than that relating to Lionheart, the Lionheart
Directors, members of their immediate families, related trusts and persons
connected with them. To the best of the knowledge and belief of the Directors of
Sigma (who have taken all reasonable care to ensure that such is the case) the
information contained in this announcement for which they accept responsibility
is in accordance with the facts and does not omit anything likely to affect the
import of such information.
The Lionheart Directors accept responsibility for the information contained in
this announcement which relates to Lionheart, the Lionheart Directors, members
of their immediate families, related trusts and persons connected with them. To
the best of the knowledge and belief of the Lionheart Directors (who have taken
all reasonable care to ensure that such is the case) such information contained
in this announcement is in accordance with the facts and does not omit anything
likely to affect the import of such information.
This announcement is issued by Oriel Securities on behalf of Sigma. This
announcement does not constitute an offer or invitation to purchase any
securities.
The definitions of certain expressions used in this announcement are contained
in Appendix III.
Oriel Securities , which is regulated by the Financial Services Authority, is
acting exclusively for Sigma and no-one else in connection with the Offer and
will not be responsible to anyone other than Sigma for providing the protections
afforded to its customers, nor for providing advice in relation to the Offer,
the contents of this announcement or any other matters referred to herein.
Bridgewell, which is regulated by the Financial Services Authority, is acting
exclusively for Lionheart as financial adviser in relation to the Offer and is
not acting for any other person in relation to the Offer. Bridgewell will not be
responsible to anyone other than Lionheart for providing the protections
afforded to its customers, nor for providing advice in relation to the Offer,
the contents of this announcement or any other matters referred to herein.
APPENDIX I
CONDITIONS OF THE OFFER
(a) The Offer will be subject to the following conditions:
1 valid acceptances being received (and not, where permitted,
withdrawn) by not later than 3.00 pm London time on the First Closing Date of
the Offer (or such later time(s) and/or date(s) as Sigma may, subject to the
rules of the City Code, decide) in respect of not less than 90 per cent. (or
such lesser percentage as Sigma may decide) in nominal value of the Lionheart
Shares to which the Offer relates, provided that this condition shall not be
satisfied unless Sigma and/or any of its wholly-owned subsidiaries shall have
acquired or agreed to acquire (pursuant to the Offer or otherwise) Lionheart
Shares carrying in aggregate more than 50 per cent. of the voting rights then
exercisable at a general meeting of Lionheart including for this purpose (to the
extent, if any, required by the Panel) any such voting rights attaching to any
Lionheart Shares that are unconditionally allotted or issued before the Offer
becomes or is declared unconditional as to acceptances whether pursuant to the
exercise of any outstanding subscription or conversion rights or otherwise. For
the purposes of this condition:
1.1 the expression "Lionheart Shares to which the Offer relates"
shall be construed in accordance with sections 428 to 430F (inclusive) of the
Act;
1.2 shares that have been unconditionally allotted shall to the
extent (if any) required by the Panel be deemed to carry the voting rights that
they will carry upon issue; and
1.3 valid acceptances shall be treated as having been received in
respect of any Lionheart Shares that Sigma and its subsidiaries shall, pursuant
to section 429(8) of the Act, be treated as having acquired or contracted to
acquire by virtue of acceptances of the Offer;
2. the London Stock Exchange agreeing to admit to trading on
AIM the New Sigma Shares and (unless or to the extent the Panel agrees
otherwise) such admission becoming effective in accordance with paragraph 27 of
the AIM Rules or (if determined by Sigma and subject to the consent of the
Panel) the London Stock Exchange agreeing to admit such shares to AIM subject
only to (i) the allotment of such shares and/or (ii) the Offer becoming or being
declared unconditional in all respects;
3. all authorisations and determinations necessary in any
jurisdiction for or in respect of the Offer or the acquisition or proposed
acquisition of any shares or other securities in, or control of, Lionheart by
Sigma having been obtained in terms and in a form reasonably satisfactory to
Sigma from all relevant authorities or (without prejudice to the generality of
the foregoing) from any persons or bodies with whom any member of the wider
Lionheart Group has entered into contractual arrangements and such
authorisations and determinations together with all authorisations and
determinations necessary for any member of the wider Lionheart Group to carry on
its business remaining in full force and effect at the time at which the Offer
becomes or is otherwise declared unconditional in all respects and all filings
necessary for such purpose having been made and there being no notice of any
intention to revoke, suspend, restrict, modify or not renew any of the same
having been received;
4. no relevant authority having intervened in a way that would
or might reasonably be expected to:
4.1 make the Offer or its implementation or the acquisition or
proposed acquisition by Sigma of any Lionheart Shares, or the acquisition of
control of Lionheart by Sigma, void, unenforceable and/or illegal or, to an
extent that is material in the context of the Offer, directly or indirectly
restrain, restrict, prohibit, delay or otherwise interfere with the
implementation thereof, or impose additional conditions or obligations with
respect thereto, or otherwise challenge or require amendment of the Offer or the
acquisition or proposed acquisition of any Lionheart Shares, or the acquisition
of control of Lionheart by Sigma to an extent which is material in the context
of the Offer;
4.2 as a result of the Offer, require, prevent or delay the
divestiture or alter the terms of any proposed divestiture by Sigma or Lionheart
or any member of the wider Sigma Group or the wider Lionheart Group of all or
any material part of their respective businesses, assets or properties or impose
a material limitation on the ability of any of them to conduct any of their
respective businesses or to own any of their respective assets or properties or
any part thereof in any such case in a manner or to an extent which is material
in the context of the wider Sigma Group or the wider Lionheart Group (as the
case may be) taken as a whole;
4.3 impose any material limitation on the ability of Sigma or of
any member of the wider Lionheart Group to exercise effectively, directly or
indirectly, any rights of ownership in respect of shares or other securities (or
the equivalent) in, or to manage or control, Lionheart or, to an extent material
in the context of the wider Lionheart Group taken as a whole, any member of the
wider Lionheart Group;
4.4 as a result of the Offer, require Sigma or any member of the
wider Lionheart Group to offer to acquire any shares or other securities (or the
equivalent) in any member of the wider Lionheart Group owned by any third party
or to sell or offer to sell any shares or other securities (or the equivalent),
such acquisition or sale being material in the context of the wider Lionheart
Group taken as a whole;
4.5 result in a material delay in the ability of Sigma, or render
Sigma unable, to acquire some or all of the Lionheart Shares or require or
prevent or materially delay divestiture by Sigma of any such shares or other
securities of Lionheart;
4.6 result in any member of the wider Lionheart Group ceasing to be
able to carry on its business under any name which it at present uses where such
use is material to the business of the wider Lionheart Group taken as a whole;
4.7 impose any material limitation on, or result in any material
delay in, the ability of any member of the wider Sigma Group or wider Lionheart
Group to integrate or co-ordinate its business, or any part thereof, with the
business(es) of any part of the wider Sigma Group or the wider Lionheart Group
in any such case being material in the context of the wider group concerned
taken as a whole; or
4.8 otherwise materially and adversely affect the business, assets,
or profits of the wider Lionheart Group, taken as a whole, to an extent that is
material in the context of the wider Lionheart Group taken as a whole,
and all necessary filings having been made, all regulatory and statutory
obligations having been complied with, in each case in any relevant
jurisdiction, all applicable waiting and other time periods during which any
relevant authority could have intervened, in respect of the Offer or the
acquisition or proposed acquisition of any shares or other securities in, or
control of, Lionheart by Sigma, having expired, lapsed or terminated;
5. save as publicly announced or disclosed in writing to Sigma
or its advisers in connection with the Offer prior to the date of this
announcement there being no provision of any agreement, arrangement, licence or
other instrument which is material to the Lionheart Group taken as a whole to
which any member of the wider Lionheart Group is a party or by or to which any
member of the wider Lionheart Group or any part of its assets may be bound,
entitled or subject or any circumstance that, as a result of the Offer, the
proposed acquisition by Sigma of the Lionheart Shares or any of them, or change
in the control or management of any member of the wider Lionheart Group or
otherwise, would or might reasonably be expected to result in (to an extent that
is material in the context of the wider Lionheart Group taken as a whole):
5.1 any moneys borrowed by, or any other indebtedness, actual or
contingent of, or grant available to, any member of the wider Lionheart Group
being or becoming repayable or capable of being declared repayable immediately
or earlier than the repayment date provided for in such agreement, arrangement,
licence or other instrument, or the ability of any such member to borrow moneys
or incur any indebtedness being withdrawn or inhibited;
5.2 any such agreement, arrangement, licence or other instrument
being terminated or adversely modified or any onerous obligation or liability
arising or any material and adverse action being taken or arising thereunder;
5.3 the assets, rights, liabilities, obligations, interests or
business of any member of the wider Lionheart Group under any such agreement,
arrangement, licence or instrument or the interests or business of any such
member in or with any other person, firm, company or body (or any arrangements
relating to any such interests or business) being terminated or adversely
modified or affected;
5.4 any member of the wider Lionheart Group ceasing to be able to
carry on its business under any name which it at present uses;
5.5 any assets or interests of or the use of which is enjoyed by
any member of the wider Lionheart Group being or falling to be disposed of or
charged or any right arising under which any such asset or interest could be
required to be disposed of or charged or could cease to be available to any
member of the wider Lionheart Group, in each case otherwise than in the ordinary
course of business;
5.6 the creation or enforcement of any mortgage, charge or other
security interest over the whole or any material part of the business, property
or assets of any such member of the wider Lionheart Group or any such security
interest (whenever and wherever arising or having arisen) becoming enforceable;
or
5.7 the value of any member of the wider Lionheart Group or their
respective financial or trading position being prejudiced or adversely affected
or materially and adversely modified; or
5.8 the creation of any material liability (actual or contingent)
of any member of the wider Lionheart Group;
6. no member of the wider Lionheart Group having, save as
announced on or before the date of this announcement by Lionheart on the London
Stock Exchange (such information being "publicly announced") or save as fairly
disclosed in writing to Sigma or its advisers in connection with the Offer prior
to the date of this announcement:
6.1 (save as between Lionheart and, on a pre-emptive basis, any
member of the wider Lionheart Group which is a wholly owned subsidiary of
Lionheart) issued or agreed to issue or authorised or proposed the issue of
additional shares of any class, or of securities convertible into or
exchangeable for, or rights, warrants or options to subscribe for or acquire,
any such shares or convertible securities or redeemed, purchased or reduced any
part of its share capital;
6.2 recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus, dividend or other distribution other than to
Lionheart or to a member of the wider Lionheart Group which is a wholly-owned
subsidiary of Lionheart;
6.3 acquired or disposed of or transferred, mortgaged or charged or
created any security interest over any assets or any rights, title or interest
in any asset (including shares and trade investments) which in any such case is
material in the context of the wider Lionheart Group taken as a whole or merged
with any body corporate or authorised or proposed or announced any intention to
propose any merger, demerger, acquisition, disposal, transfer, mortgage, charge
or security interest (in each case other than in the ordinary course of
business);
6.4 made or authorised or proposed or announced an intention to
propose any change in the share or loan capital of Lionheart;
6.5 issued, authorised or proposed the issue of any debentures or
incurred or increased any indebtedness or contingent liability which is material
in the context of the wider Lionheart Group taken as a whole;
6.6 purchased, redeemed or repaid or proposed the purchase,
redemption or repayment of any of its own shares or other securities or reduced
or made any other change to any part of its share capital to an extent which
(other than in the case of Lionheart) is material in the context of the
Lionheart Group taken as a whole;
6.7 entered into any contract, reconstruction, amalgamation,
commitment or other transaction or arrangement otherwise than in the ordinary
course of business which is material in the context of the wider Lionheart Group
taken as a whole;
6.8 entered into or varied any contract, transaction or commitment
(whether in respect of capital expenditure or otherwise) which is of a loss
making, long-term, onerous or unusual nature or magnitude or which involves or
could involve an obligation of a nature or magnitude which is material in the
context of the wider Lionheart Group taken as a whole save in the ordinary
course of business;
6.9 entered into any contract, transaction or arrangement which
would be materially restrictive on the business of any member of the wider
Lionheart Group;
6.10 waived or compromised any claim otherwise than in the ordinary
course of business which is material in the context of the wider Lionheart Group
taken as a whole;
6.11 entered into or varied the terms of or terminated any service
agreement with any of the directors of Lionheart in any material respect;
6.12 taken any corporate action or had any legal proceedings started
or, so far as the Lionheart Directors are aware, threatened against Lionheart
for its winding-up, dissolution or reorganisation or for the appointment of a
receiver, administrator, administrative receiver, trustee or similar officer of
all or any of its assets or revenues or any analogous proceedings in any
jurisdiction or for the appointment of any analogous person in any jurisdiction;
6.13 other than in the ordinary course of business, taken any action to
commence or institute any legal proceedings or to settle, compromise or
discontinue any legal proceedings which have already been commenced or suffered
any claims or, so far as the Lionheart Directors are aware, had any legal
proceedings instituted against it or admitted any liability in any such claim or
proceedings, failed to take action to refute or defend any such claim or
proceedings or taken any action to settle or compromise any such claim or
proceedings;
6.14 made any amendment to the memorandum or articles of association of
Lionheart;
6.15 been unable or admitted that it is unable to pay its debts or
having stopped or suspended (or threatened to stop or suspend) payment of its
debts generally or ceased or threatened to cease carrying on all or a
substantial part of its business;
6.16 entered into any contract, commitment, agreement or arrangement or
passed any resolution with respect to, or to effect, any of the transactions,
matters or events referred to in this condition, or announced an intention to do
so;
7. save as publicly announced or as fairly disclosed in writing
to Sigma or its advisers in connection with the Offer prior to the date of this
announcement:
7.1 no adverse change having occurred in the business, assets,
financial or trading position or prospects of Lionheart or any other member of
the wider Lionheart Group that is material in the context of the wider Lionheart
Group taken as a whole;
7.2 no litigation or arbitration proceedings, prosecution or other
legal proceedings having been announced, instituted or so far as Lionheart
Directors are aware threatened in writing by or against or remaining outstanding
against any member of the wider Lionheart Group or to which any member of the
wider Lionheart Group is or is likely to become a party (whether as plaintiff,
defendant or otherwise) and no enquiry or investigation by or complaint or
reference to any relevant authority against or in respect of any member of the
wider Lionheart Group having been threatened in writing, announced or instituted
or remaining outstanding by, against or in respect of any member of the wider
Lionheart Group and which in any such case might be likely to adversely affect
any member of the wider Lionheart Group to an extent that is material in the
context of the wider Lionheart Group taken as a whole; and
7.3 no contingent or other liability of any member of the wider
Lionheart Group having arisen or become apparent that might be likely adversely
to affect any member of the wider Lionheart Group that is material in the
context of the wider Lionheart Group taken as a whole;
8. save as fairly disclosed in writing to Sigma or its advisers
in connection with the Offer prior to the date of this announcement, Sigma not
having discovered that:
8.1 any financial, business or other information concerning
Lionheart or the wider Lionheart Group that has been publicly disclosed at any
time by or on behalf of any member of the wider Lionheart Group is misleading in
any material respect, contains a misrepresentation of fact or omits to state a
fact necessary to make the information contained therein not misleading and
which was not corrected by subsequent public announcement made on the London
Stock Exchange on or before the date of this announcement and which in any such
case is material in the context of the wider Lionheart Group taken as a whole;
8.2 any information which affects the import of any such
information to an extent that is material in the context of the wider Lionheart
Group taken as a whole; or
8.3 any member of the wider Lionheart Group or any entity in which
any such member has a significant economic interest is subject to any liability
(actual or contingent) that has not been publicly announced, such liability
being material in the context of the wider Lionheart Group taken as a whole;
9. in relation to any release, emission, discharge, disposal or
other fact or circumstance which has caused or might impair the environment or
harm human health, no past or present member of the wider Lionheart Group having
in a manner or extent which is material in the context of the Offer:
(a) so far as the Lionheart Directors are aware committed any violation
of any laws, statutes, regulations, notices or other requirements of any third
party; and/or
(b) so far as the Lionheart Directors are aware incurred any liability
(whether actual or contingent) to any third party.
(b) General
Sigma reserves the right to waive all or any of the above conditions, in whole
or in part except conditions 1, 2, 3 and 7.
The Offer will lapse unless all the above conditions have been fulfilled or (if
capable of waiver) waived, or, where appropriate, have been determined by Sigma
in its reasonable opinion to be or remain satisfied, by midnight on the day
which is 21 days after the later of the First Closing Date of the Offer and the
date on which the Offer becomes or is declared unconditional as to acceptances,
or such later date as Sigma may, with the consent of the Panel, decide, provided
that Sigma shall be under no obligation to waive or treat as fulfilled any
condition by a date earlier than the latest date specified or referred to above
for the fulfilment thereof notwithstanding that the other conditions of the
Offer may at such earlier date have been waived or fulfilled and that there are
at such earlier date no circumstances indicating that any of such conditions may
not be capable of fulfilment.
If the Offer lapses it shall thereupon cease to be capable of further acceptance
and Lionheart Shareholders and Sigma shall cease to be bound by acceptances
delivered on or before the date on which the Offer so lapses.
If Sigma is required by the Panel to make an offer for Lionheart Shares under
the provision of Rule 9 of the City Code, Sigma may make such alterations to the
conditions of the Offer as are necessary to comply with the provisions of that
Rule and any other requirements of the City Code.
The Offer will comply with English Law and the City Code.
(c) Definitions
For the purposes of these conditions:
(i) "relevant authority" means any government, government department or
governmental, quasi-governmental, supranational, statutory, regulatory or
investigatory body, court, trade agency, professional association or institution
or environmental body or any other body or person in any jurisdiction;
(ii) a relevant authority shall be regarded as having "intervened" if it
has instituted, implemented or threatened or communicated its intention to take
or make any action, proceedings, suit, investigation or inquiry or reference, or
made, enacted or proposed any statute, regulation, decision or order, or taken
any measures or other steps and "intervene" shall be construed accordingly;
(iii) "authorisations" means authorisations, orders, grants, recognitions,
confirmations, consents, licences, clearances, permissions, exemptions and
approvals; and
(iv) "the wider Lionheart Group" means Lionheart and its subsidiary
undertakings, associated undertakings and any other undertakings in which
Lionheart and such undertakings (aggregating their interests) have a substantial
interest and "the wider Sigma Group" means Sigma and its subsidiary
undertakings, associated undertakings and any other undertaking in which Sigma
and such undertakings (aggregating their interests) have a substantial interest
and, for these purposes, "subsidiary undertaking", "associated undertaking" and
"undertaking" have the meanings given by the Act (but for this purpose ignoring
paragraph 20(1) (b) of Schedule 4A to the Act) and "substantial interest" means
a direct or indirect interest in 20 per cent. or more of the equity capital of
an undertaking.
APPENDIX II
FINANCIAL EFFECTS OF ACCEPTANCE OF THE OFFER
The following table shows, for illustrative purposes only and on the bases of
assumptions set out below, the financial effects on capital and income value for
a holder of one Lionheart Share of acceptance of the Offer (ignoring the
treatment of fractional entitlements and taxation and assuming no election under
the Mix and Match Election), on the Offer becoming or being declared
unconditional in all respects:
Capital Impact
Cash per Lionheart Share 107p
Number of New Sigma Shares 1.48
Value of New Sigma Shares received(1) 54p
Total value received 161p
Market value of a Lionheart Share(2) 124p
Increase in capital value 37p
This represents an increase of 30%
Notes:
(1) Based on the closing middle market price of 36.5 pence per Sigma
Share on 7 January 2003, being the last dealing date prior to this announcement.
(2) Based on the closing middle market price of 124 pence per
Lionheart Share on 7 January 2003, being the last dealing date prior to this
announcement.
Income impact
The income available to shareholders of Lionheart who accept the Offer is
dependent on individual circumstances. Lionheart Shareholders who accept the
Offer will receive interest income depending upon the manner in which the cash
proceeds are reinvested. Lionheart has not paid a dividend since that declared
in respect of its financial year to 31 December 1998. Furthermore, in line with
the Lionheart Directors' policy since then, there is no intention to pay further
dividends for the foreseeable future. Lionheart Shareholders who accept New
Sigma Shares will rank pari passu in all respects with existing Sigma
shareholders but should be aware that to date Sigma has never declared a
dividend, nor is expected to do so for the foreseeable future.
APPENDIX III
DEFINITIONS
The following definitions apply throughout this announcement unless the context
otherwise requires:
"AIM Rules" the rules of the London Stock Exchange relating to AIM
"AIM" the Alternative Investment Market of the London Stock Exchange
"Australia" Australia, its possessions and, territories and all areas subject to its
jurisdiction and any political subdivision thereof
"Bridgewell" Bridgewell Limited
"Canada" Canada, its provinces and territories and all areas subject to its jurisdiction or
any political subdivision thereof
"Code" or "City Code" The City Code on Takeovers and Mergers as from time to time interpreted and
implemented by the Panel
"Companies Act'" or " the Companies Act 1985 (as amended)
Act"
"First Closing Date" 21 days following the posting of the Offer Document
"Form of Acceptance" the form of acceptance, election and authority relating to the Offer to be
despatched to Lionheart Shareholders with the Offer Document
"FSA" the Financial Services Authority in its capacity as the competent authority for the
purposes of Part VI of the Financial Services and Markets Act 2000.
"Independent Director Peter Pollock, being the remaining director on the board of Lionheart (excluding
of Lionheart " Hamish Grossart)
"Lionheart" Lionheart plc
"Lionheart Directors" the directors of Lionheart being Peter Pollock and Hamish Grossart
or "Lionheart Board"
"Lionheart Shares" the existing unconditionally allotted or issued and fully paid ordinary shares of
10p each in the capital of Lionheart and any further such shares which may be
issued or unconditionally allotted and fully paid prior to the time and date on
which the Offer closes or by such earlier date and time as Sigma may, subject to
the City Code, decide
"Lionheart holders of any Lionheart Shares
Shareholders"
"London Stock
Exchange" London Stock Exchange plc
"Mix and Match the right of Lionheart Shareholders to elect, subject to availability, to vary the
Election" number of New Sigma Shares and the amount of cash they would receive under the
Offer
"New Sigma Shares" the new Sigma Shares to be issued, credited as fully paid, pursuant to the Offer
"Offer" the recommended offer by Sigma for Lionheart
"Offer Document" the formal offer document by which the Offer will be made, which will contain and
set out the terms and conditions of the Offer
"Oriel Securities" Oriel Securities Limited
"Panel" The Panel on Takeovers and Mergers
"Sigma" Sigma Technology Group plc
"Sigma Board" or " the directors of Sigma being Neil Crabb, Graham Barnet, Marilyn Cole, Simon Miller,
Sigma Directors" Keith Monserrat, Brian Hadfield and Hamish Grossart
"Sigma Group" Sigma Technology Group plc, Sigma Technology Management Limited, Sigma Technology
Investments Limited and any subsidiaries or associates thereof
"Sigma Shares" the existing issued and fully paid ordinary shares of 1 pence each in the capital
of Sigma
"Sigma Shareholders" holders of Sigma Shares
"TMT" Technology, Media and Telecommunications
"UK" or "United the United Kingdom of Great Britain and Northern Ireland
Kingdom"
"United States" or the United States of America, its territories and possessions, any states of the
"US" United States and the District of Columbia
For the purposes of this announcement "associated company", "subsidiary" and "
subsidiary undertaking" have the respective meanings under the Companies Act.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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