TIDMTMW
RNS Number : 2539M
Timeweave plc
14 September 2012
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 OF SUCH
JURISDICTION
14 September 2012
Response by the independent directors of
Timeweave plc ("Timeweave" or the "Company")
to the offer by
Mayfair Capital Investments Limited ("Mayfair")
for the entire issued and to be issued share capital of
Timeweave
Offer rejection
On 6 September 2012, Mayfair announced its intention to make an
offer for the entire issued and to be issued share capital of
Timeweave at 22 pence per share in cash (the "Offer"). Mayfair
posted its offer document to Timeweave shareholders on 11 September
2012 (the "Offer Document").
Graham Parr and David Craven, being the independent directors of
Timeweave (the "Independent Directors") have considered the merits
of the Offer from Mayfair and have concluded that it is not in the
interests of shareholders to accept the Offer.
Richard McGuire is deemed not to be an independent director due
to his position on the board of Timeweave as the nominated
shareholder representative of Mayfair.
THE INDEPENDENT DIRECTORS RECOMMEND THAT SHAREHOLDERS DO NOT
ACCEPT THE OFFER AND SHOULD TAKE NO ACTION IN RESPECT OF THEIR
SHAREHOLDING.
Background
Timeweave is the holding company of a group which principally
comprises a 50 per cent. holding in Amalgamated Racing Limited
("AMRAC"), a 49.99 per cent. shareholding in DCD Media plc ("DCD
Media") and the wholly-owned sports corporate risk business,
SportingWins Limited ("SportingWins").
AMRAC is an equally-owned joint venture company between
Racecourse Media Services Limited (which is owned by a number of
the UK's foremost racecourses and Racecourse Investments Limited)
and Timeweave. AMRAC holds exclusive licences with 34 racecourses
to broadcast pictures, audio and data from these racecourses to
licensed betting offices in the United Kingdom and the Republic of
Ireland on its dedicated television channel, TurfTV.
DCD Media is an AIM-traded independent TV production, rights and
distribution group.
SportingWins covers corporate risk exposure to clients based on
sporting events.
In recent years, Timeweave has undergone a transformation
through the disposal of mature, lower-growth operating businesses
and the creation of a group focused on generating stable, long-term
shareholder value through the utilisation of existing cash
resources in investment opportunities (such as DCD Media), whilst
additionally strengthening its partnership in AMRAC.
The Offer
The Independent Directors have conducted a review of the merits
of the Offer from Mayfair and have concluded that it is not in the
interests of shareholders to accept the Offer for the following key
reasons:
-- THE OFFER FAILS TO REFLECT FULLY THE VALUE OF TIMEWEAVE
The Independent Directors believe that the Company's share price
has not reflected the full value inherent in Timeweave's
investments and instead reflects the early stages of implementing
its stated strategy, the perceived risks relating to AMRAC's
earnings, the short period of investment in DCD Media, the
Company's overall size, the concentrated nature of its shareholder
base and the low trading liquidity of its shares.
Whilst it is acknowledged that the 22 pence per Timeweave share
being offered by Mayfair represents a premium of approximately 12.8
per cent. to the closing price of 19.5 pence per Timeweave share on
5 September 2012 (being the last dealing day prior to the
announcement by Mayfair of its intention to make the Offer),
shareholders should note that the Offer represents:
(i) a nil premium to the 12 month volume weighted average price
of 22 pence per Timeweave share prior to 5 September 2012; and
(ii) a discount of approximately 5.2 per cent. to the 24 month
volume weighted average price of 23.2 pence per Timeweave share
prior to 5 September 2012.
The Independent Directors consider the Offer could represent a
loss of value for any shareholders that choose to accept it when
compared to the alternative of Timeweave continuing its current
activities and its strategic plan to take advantage of further
investment opportunities.
-- THE OFFER FAILS TO REFLECT FULLY THE STRENGTHS OF THE COMPANY
OR TAKE INTO ACCOUNT THE COMPANY'S FUTURE PROSPECTS
As a result of a combination of substantial cash flow generated
through its investment in AMRAC and the recent suspension of
dividend payments, Timeweave has the flexibility to continue to
invest both in its existing businesses and in new opportunities in
order to deliver attractive returns for shareholders.
The Independent Directors believe the AMRAC business is well
placed to consolidate on its market position. Whilst the
Independent Directors recognise that there is no certainty that key
contracts held by AMRAC will be extended, they believe the business
is in a favourable position to secure renewed long-term contracts
and to enhance further its joint venture relationship with
Racecourse Media Services Limited.
Timeweave also recently converted a significant proportion of
its holding of loan notes in DCD Media, so that Timeweave now holds
a 49.99 per cent. shareholding in DCD Media. Following such
conversion, the Independent Directors believe that DCD Media will
benefit from being able to focus all of its resources on
implementation of its strategy of securing production commissions
and driving post-production value from current and future
intellectual property rights through its distribution and rights
arms. The Independent Directors therefore believe further value can
be generated for shareholders as its strategy is implemented.
Whilst the Independent Directors acknowledge the defence of the
legal claim from Matchbet Limited, they remain confident of the
Company's position and continue to defend the claim robustly.
The Independent Directors therefore consider the Offer fails to
reflect fully the strengths of the Company and does not take into
account the Company's future prospects.
-- THE POSITION OF SHAREHOLDERS MAY BE COMPROMISED IF MAYFAIR GAINS CONTROL OF TIMEWEAVE
The current concentration of the Company's share register will
be further compounded by any shareholders that choose to accept the
Offer, thereby reducing the trading liquidity in the shares.
As detailed in Mayfair's Offer Document, Mayfair holds
67,600,569 Timeweave shares (being 29.99 per cent. of the issued
share capital of Timeweave) and has received an irrevocable
undertaking to accept the Offer from Henderson Global Investors
Limited in relation to 35,625,379 Timeweave shares (being 15.80 per
cent. of the issued share capital of Timeweave).
Consequently, Mayfair only requires Offer acceptances from
shareholders representing a further 9,481,584 Timeweave shares
(being 4.21 per cent. of the issued share capital of Timeweave) for
it to control in excess of 50 per cent. of the voting rights of the
Company. Mayfair will then have effective control over the
operations of the Company and be able to change the board of
directors and the operations of the Company regardless of the views
of minority shareholders.
The Independent Directors further note the statement made by
Mayfair in its Offer Document that it may, in the event that it
acquires greater than 50 per cent. of the issued share capital of
Timeweave, convene a general meeting of shareholders seeking
approval for the cancellation of trading of Timeweave shares on AIM
(which would require the approval of 75 per cent. of the votes cast
at a general meeting) and make an application for such cancellation
in accordance with the AIM Rules.
In the event that Mayfair acquires 75 per cent. of the issued
share capital of Timeweave, it has stated that it will seek to
cancel the trading of Timeweave shares on AIM.
Following such cancellation, Mayfair intends to procure that
Timeweave re-registers as a private limited company. Such
cancellation and re-registration will significantly reduce the
liquidity and marketability of any Timeweave shares not assented to
the Offer.
The Independent Directors therefore consider that the interests
of shareholders would not be best served in the event that control
of Timeweave was ceded to Mayfair as a result of this Offer.
IN ORDER FOR THE OFFER TO LAPSE, SHAREHOLDERS MUST NOT ACCEPT
THE OFFER AND INSTEAD TAKE NO ACTION IN RESPECT OF THEIR
SHAREHOLDING.
Recommendation
The Independent Directors, who have been so advised by Investec,
their independent financial adviser for the purposes of Rule 3 of
the Takeover Code, unanimously recommend that SHAREHOLDERS REJECT
THE OFFER BY TAKING NO ACTION IN RESPECT OF THEIR SHAREHOLDING. In
providing its advice, Investec has taken into account the
commercial assessments of the Independent Directors.
The Company will shortly be posting to shareholders a circular
in response to the Offer.
Enquiries:
Timeweave Tel: +44 (0)7713 069
651
Graham Parr, Non-Executive Director
David Craven, Chief Executive Officer
Investec (financial adviser, NOMAD and Tel: +44 (0)20 7597
broker to Timeweave) 4000
Andrew Pinder
Junya Iwamoto
Forward-Looking Statements
This document contains statements that are or may be
forward-looking with respect to the financial condition, results of
operations and businesses and achievements of Timeweave. These
statements can be identified by the use of forward-looking
terminology such as "believe", "anticipate", "expects", "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. Should one or more of these risks or uncertainties
materialise, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this
document. The Company assumes no obligation to update or correct
the information contained in this document, whether as a result of
new information, future events or otherwise, except to the extent
legally required.
Dealing disclosure requirements of the Takeover Code (the
"Code")
Under Rule 8.3(a) of the Code, any person who is interested in
one per cent. or more of any class of relevant securities of an
offeree company or of any paper 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 paper
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 paper 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 paper offeror
is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a paper 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 one per cent. or more of any class of relevant
securities of the offeree company or of any paper offeror must make
a Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any paper 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 paper offeror, 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 paper
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).
In accordance with Rule 30.4 of the Code, a copy of this
announcement will be published on the Company's website at
www.timeweave.com by no later than 12 noon on 17 September
2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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