TIDMCTT
RNS Number : 9860W
Cattles PLC
29 November 2010
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
29 November 2010 FOR IMMEDIATE RELEASE
Cattles plc
Launch of restructuring
The Board of Cattles plc ("Cattles") announces that it has
received sufficient support from its key financial creditors to
enable it to launch a restructuring of the Cattles group (the
"Group").
The highlights of the restructuring proposal are as follows:
-- Cattles and Welcome Financial Services Limited ("WFSL") each
intend to propose a scheme of arrangement to certain of their
respective creditors;
-- Cattles, WFSL and certain other members of the Group intend
to enter into bilateral agreements with the pension trustee of the
Cattles Staff Pension Fund which will compromise the claims of the
fund;
-- a payment is proposed to be made by WFSL to the Financial
Services Compensation Scheme (the "FSCS") in connection with the
liabilities of WFSL in respect of certain regulated products sold
by WFSL; and
-- Cattles intends to propose a scheme of arrangement to its
shareholders, pursuant to which Cattles shareholders will receive
1p in cash for each Cattles share held by them.
Commenting on the proposed restructuring, the Executive Chairman
of Cattles, Margaret Young said:
"Today's announcement is the culmination of long and complex
discussions and, given the Group's very serious financial
difficulties, we believe that the proposed restructuring represents
the best possible outcome for the Group's creditors and
shareholders. It will also provide a stable platform to collect out
the Welcome Finance loan book and to continue to develop the
businesses of Shopacheck and The Lewis Group. Since the beginning
of 2009, we have collected over GBP1.1 billion from the Welcome
Finance loan book and returned Shopacheck and The Lewis Group to
profitability.
Cattles and WFSL have received sufficient support from their
respective key financial creditors to enable us to launch this
restructuring. The proposed schemes of arrangement will be put
before separate creditor and shareholder meetings for their
approval, early in the New Year. If those approvals are for any
reason not forthcoming, the Board of Cattles expects that it would
be necessary to place Cattles into administration."
Introduction
The Board of Cattles announces that it has received sufficient
support from its key financial creditors to enable it to launch a
restructuring of the Group.
On 25 November 2009, Cattles announced that it had agreed a
Standstill and Equalisation Agreement ("SEA") with its key
financial creditors, and that this should improve the likelihood of
achieving its restructuring objectives. Since that date, Cattles
has continued to engage in discussions with representatives of its
key financial creditors in order to progress proposals for a
solvent restructuring.
Cattles, WFSL and certain other members of the Group have today
entered into an agreement with certain of their respective key
financial creditors to support a solvent restructuring (the
"Restructuring and Lock-Up Agreement"). Cattles and WFSL have now
notified the other parties to the Restructuring and Lock-Up
Agreement that they have resolved to launch a solvent restructuring
of the Group as described below.
Key features of the restructuring
- Cattles intends to propose a scheme of arrangement under Part
26 of the Companies Act 2006 to its shareholders, pursuant to which
the shares in Cattles will be acquired by Bovess Limited
("Bovess"). Bovess is a newly incorporated company, established at
the request of Cattles by an independent corporate services
provider for the purposes of implementing the restructuring. Bovess
will be managed by the independent corporate services provider and
ultimately owned by a charitable trust. Under the terms of the
Cattles shareholder scheme, Cattles shareholders will receive 1p in
cash for each Cattles share held by them. The formal Rule 2.5
announcement, as required by the City Code on Takeovers and
Mergers, will be issued shortly.
- Cattles and WFSL also each intend to propose a scheme of
arrangement to certain of their respective creditors. Pursuant to
those schemes, the claims of those creditors will be compromised in
order to facilitate a solvent restructuring of Cattles and WFSL and
maximise recoveries for their respective creditors.
- Another member of the Group, Ewbanks Mail Order Limited,
intends to propose a scheme of arrangement to certain of its
creditors, pursuant to which its guarantee obligations (and those
of certain other members of the Group) will be compromised in order
to facilitate a solvent restructuring of those entities.
- Further, Cattles, WFSL and certain other members of the Group
intend to enter into bilateral agreements with certain other
creditors including the pension trustee of the Cattles Staff
Pension Fund which will compromise the claims of the fund in order
to facilitate the solvent restructuring. In addition, a payment of
GBP90 million (subject to certain adjustments) is proposed to be
made by WFSL to the FSCS in connection with the liabilities of WFSL
in respect of certain regulated products sold by WFSL.
- Each scheme and bilateral agreement, including the
shareholders' scheme, will be subject to the satisfaction of
certain conditions.
- Subject to the satisfaction of those conditions, under the
terms of the WFSL scheme of arrangement, Cattles will compromise
its subordinated intercompany claims against WFSL and other
subsidiaries in the Group in return for a payment by WFSL of GBP49
million to Cattles.
As a condition of that payment of GBP49 million, WFSL and
Cattles will enter into a protocol for the sharing of information
relating to any claims either may have against third parties. For
joint claims against third parties by both WFSL and Cattles, in the
event of a proposed settlement or appeal, WFSL would be able to
decide whether or not to proceed subject to it indemnifying Cattles
for any losses it might suffer as a result.
Having stabilised the Group and launched the restructuring,
Margaret Young, David Haxby, Frank Dee and Alan McWalter have
advised the Board of their intention to resign as directors of
Cattles, at an appropriate time, shortly after the restructuring
has been completed. Robert East and Paul Felton-Smith will remain
as Managing Director and Finance Director, respectively.
Position of Cattles
If the Cattles creditor scheme and/or the Cattles shareholder
scheme do not become effective, the Board of Cattles expects that
it will be necessary to place Cattles into administration and that
all of its subsidiaries (other than Cattles Staff Pension Fund
Limited) will be sold to Bovess for a nominal payment to Cattles
(with no offer to Cattles' shareholders). Pursuant to the
Restructuring and Lock-Up Agreement, certain of the key financial
creditors of Cattles and WFSL have confirmed their support for the
Cattles Board to place Cattles into administration in such
circumstances.
In that scenario, under the terms of the WFSL creditor scheme,
Cattles will agree to compromise its subordinated intercompany
claims against WFSL and other subsidiaries in the Group for an
amount which is not less than GBP30 million and which may increase,
at the option of Cattles, either to: (i) GBP33 million; or (ii)
subject to a ratchet mechanism, an amount which may not exceed
GBP39 million. This reflects the lower amount WFSL is prepared to
pay to compromise its intercompany debt in circumstances where
Cattles is in administration.
Therefore, the assets available for distribution to the
creditors of Cattles under the restructuring will comprise:
(a) either: (i) up to GBP39 million; or (ii) GBP49 million paid
by WFSL, as summarised above;
(b) approximately GBP5 million projected to be received from the
intended future disposal of a property owned by Cattles Properties
(Ruddington) Limited, which is currently occupied by WFSL;
(c) approximately GBP2 million in cash held by Cattles; and
(d) the proceeds of any successful claims that Cattles may have
against third parties,
in each case subject to related costs incurred.
Expected timetable
Documentation relating to the Cattles shareholder scheme and the
creditor schemes described above is expected to be made available
in December 2010 to the shareholders of Cattles and the relevant
creditors of Cattles and WFSL, respectively. This documentation
will include details of the timetable for the schemes, including
the proposed dates for meetings in 2011 at which those shareholders
or creditors (as applicable) will be able to attend and vote in
respect of the schemes.
Subject to the satisfaction of the conditions to be set out in
the creditor schemes, the Cattles shareholder scheme and the
bilateral agreements, it is presently expected that this
restructuring process will be concluded by late February 2011.
Cattles will make further announcements in connection with the
matters set out above, as appropriate.
A copy of this announcement will also be made available on
Cattles' website (www.cattles.co.uk) by no later than 12.00 noon
(London time) on 30 November 2010.
For further information:
Margaret Young, Executive Chairman, Cattles plc 020 7269
7252
Paul Marriott, Financial Dynamics
This information is provided by RNS
The company news service from the London Stock Exchange
END
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