RNS Number:8839O
Hartford Group PLC
18 December 2001
HARTFORD GROUP PLC
Placing and Open Offer to raise #1.6 million
Hartford Group PLC ("Hartford"), which operates a total of eight restaurants
and bars within London and the Home Counties, announces the terms of a
proposed Placing and Open Offer to raise #1.6 million gross to fund the next
phase of the Company's development.
KEY POINTS
* Proposed Placing and Open Offer of up to 130,959,140 shares to raise
#1.6 million gross fully underwritten by Prestbury Investment Holdings
Limited ("PIHL")
* The Group's strategic review is now complete and it is the management's
intention to move the focus of the existing business away from food-led
operations towards more drink-led venues with a quality food offering:
namely "bars with food"
* The Group's first "bar with food" operation, The Common Room (formerly
Utah fine-dining restaurant), opened in Wimbledon in late October
* The proceeds of the fundraising will be used to acquire and develop a
second pilot Common Room operation. A number of potential development
sites have already been identified within London and the South East
* The Common Room operations will typically be situated on or near local
high streets and will operate to a core 'back of house' template, whilst
the bars will be unbranded and individually styled, designed and staffed
* Dominic Johnson-Allen, formerly Director of Acquisitions for Marriott
and Travel Inn Hotels, has joined the Group as Property Development
Director
Commenting on the proposals, Stephen Thomas, Chairman of Hartford Group PLC,
said:
"Given the management team's past success with concept design and its recent
development of 'The Common Room' in Wimbledon village, we believe that
Hartford is ideally placed to exploit the opportunity to build a group of
well-designed, individually styled and staffed bars with a quality food
offering.
"Early indications are that The Common Room has the potential to be expanded
further. With a defined strategy in place, we look forward to the next phase
in this concept's development and building a substantial business going
forward."
18 December 2001
ENQUIRIES:
Hartford Group PLC Tel: 020 7654 3010
Sheila McKenzie, Chief Executive
Investec Henderson Crosthwaite Tel: 020 7597 5970
Simon Grafftey-Smith
College Hill
Justine Warren Tel: 020 7457 2020
Gareth David
HARTFORD GROUP PLC
("HARTFORD" OR THE "COMPANY")
Placing and Open Offer
The Company is pleased to announce a proposal to raise approximately #1.6
million gross (#1.3 million net of expenses) by means of a Placing and Open
Offer to fund the development of the Company's new strategy, as described
below. The Placing and Open Offer are conditional, inter alia, upon
Shareholders passing the Resolutions to be proposed at an Extraordinary
General Meeting of the Company to be held on 10 January 2002. The Placing and
Open Offer has been fully underwritten by PIHL.
Information on Hartford
Hartford's original strategy, implemented and developed following completion
of its merger with Montana plc ("Montana") in September 1999, was to operate
fine-dining restaurants. The intention at the time was to expand the Montana
concept of providing a fine-dining experience in affluent neighbourhoods but
it became apparent by December 2000 that this format was not as successful as
originally intended. Consequently, the Company undertook a board
reorganisation resulting in the appointment of Sheila McKenzie as Chief
Executive and Stephen Thomas as non-executive Chairman. At the same time,
Hartford raised #4.1 million by way of a placing and open offer.
A strategic review is now complete and the Board has instigated changes to
implement cost savings and broaden the appeal of the eight existing units. In
February and April 2001, the Company opened two pubs - The Wells, in Ascot and
The King's Head in Loughton. These properties had not been trading since their
acquisition, with the intention of converting both into fine-dining
restaurants, in 2000. Three of the Company's restaurants have been subject to
refurbishment to improve standards and increase their capacity for bar trade.
The Pharmacy in Notting Hill Gate re-opened in September with new
installations from the renowned artist Damien Hirst and an enlarged bar area.
By early November a new bar and informal seating area was installed at Montana
in Fulham. Utah in Wimbledon opened at the end of October with a new trading
format named The Common Room - the Company's trial of a "bar with food"
operation.
The purpose of these changes is to move the existing business towards a
greater emphasis on drink sales. Due to, what the Directors believe to be, an
opportunity in the market place and the management's experience, the Company
intends that there be a change in the Group's focus away from food-led
operations towards the development of a more liquor-led business. The
Directors believe that this change in strategy should enable the Company to
improve the utilisation of its assets by lowering operating costs and
ultimately to achieve a better return on its investments.
Reasons for the Placing and Open Offer and use of Proceeds
Having implemented its cost saving and re-focusing exercise, the Board feels
that the Company can now turn to the development of a liquor-led business with
a quality food offering as is now on trial at The Common Room.
Although the available trading area, at 1,800 sq ft, was thought to be too
small for the effective operation of a quality bar concept, the location in
Wimbledon Village was good enough to warrant a trial. In addition the fact
that there was a suitable property in the existing portfolio presented the
opportunity to develop and build the concept fairly quickly. In order to
confirm initial favourable indications of its trading potential the Directors
are proposing to undertake this fundraising in order to acquire and develop a
second bar operation. With two sites trading the Directors will be better able
to evaluate the potential of the concept and be in a position to return to
shareholders with proposals for the future.
The "bar with food" concept referred to above involves creating a safe,
welcoming place, on or near local high streets, which serves food all day. The
Directors expect approximately 85 per cent. of turnover to be derived from
drinks sales. The Board aims to generate an appropriate rate of return under
this concept.
It is the Directors' belief that there is a limited offering in the current
liquor-led market because of consumer "brand fatigue" plus the lack of
individuality, flair and people-focus that characterises units within branded
chains. Given the management team's significant experience with concept
development, the Board believes that the Company can exploit this opportunity
by the development of well-designed, individually styled and staffed
businesses. The Directors believe that the provision of good service and
standards, quality and style are vital. The core principle at the heart of the
Group's approach is the building of highly motivated teams, with staff able to
create a relaxed environment for customers. The Directors do not intend to
create a branded chain, but rather an individual and local look "front of
house" supported by unified systems and infrastructures "back of house".
Whilst it is the Directors' intention to continue to run its existing
portfolio of London restaurants, there are no plans for further expansion in
this division.
A number of potential site opportunities have been identified in London and
the South East. The acquisition and fitting-out cost of this second trial site
is expected to be up to #700,000. In order to finance the development and
ongoing working capital requirements, the Company is raising funds by way of
the Placing and Open Offer.
The Placing and Open Offer
The Company is proposing to raise approximately #1.3 million net of expenses
through the Placing and Open Offer, which have been fully underwritten by
PIHL.
The Open Offer Shares, in aggregate, will represent approximately 50 per cent.
of the Enlarged Share Capital of Hartford on Admission. The Open Offer Shares
will be issued credited as fully paid and will, on issue, rank pari passu with
the existing Ordinary Shares.
The Placing and Open Offer are conditional, inter alia, on:
(a) the passing of the Resolutions;
(b) the Placing Agreement becoming unconditional, save for Admission, by no
later than 18 January 2002 (or such later date, being no later than 10
February 2002 as the Company and Investec and PIHL may agree) and not having
been terminated in accordance with its terms; and
(c) Admission.
The Open Offer
PIHL has agreed to subscribe for all Open Offer Shares (less those the subject
of irrevocable undertakings referred to below) at the Issue Price pursuant to
the terms of the Placing and in accordance with the Placing Agreement, subject
to clawback to satisfy valid applications by Qualifying Shareholders pursuant
to the Open Offer.
Qualifying Shareholders are invited by Investec Henderson Crosthwaite, as
agent for the Company, to subscribe under the Open Offer for the Open Offer
Shares at the Issue Price free of expenses, pro rata to their existing
shareholdings, on the basis of
1 Open Offer Share for every 1 existing Ordinary Share
held on the Open Offer Record Date and so in proportion for any greater or
smaller number of existing Ordinary Shares then held. The amount due in
respect of each application form for Open Offer Shares is payable in full on
application. The maximum entitlement of a Qualifying Shareholder is indicated
on the Application Form to be sent to Shareholders and is personal to the
Qualifying Shareholder named on the form. Application Forms are personal to
Shareholders and may not be transferred except to satisfy bona fide market
claims.
Stephen Thomas (or any related trusts) and Sheila McKenzie have irrevocably
undertaken to take up, in aggregate, 10,200,000 Open Offer Shares to which
they are entitled under the Open Offer, representing approximately 7.78 per
cent. of the total number of Open Offer Shares.
Current Trading and Prospects
The Company announced its interim results on 28 September 2001. In the interim
period from 1 January 2001 to 15 July 2001, the Company reported a loss of #
0.61 million (2000: loss of #1.67 million) on turnover of #3.56 million (2000:
#3.94 million). Loss per share was reduced to 0.46p (2000: 3.58p). Since 15
July 2001, trading has been mixed and trade has been disrupted due to the
refurbishment programme in three sites and the impact of events since
September 11th. The Pharmacy reopened in September, Utah - now rebranded as
The Common Room - opened at the end of October and Montana in early November.
Trading at the test site - The Common Room - has been at or above the
Company's expectations since opening.
As at 17 December 2001, Hartford had a cash balance of approximately #67,000.
The Concert Party and the City Code
Each of Nick Leslau, Nigel Wray and PIHL (a company controlled by Nigel Wray
and Nick Leslau), are or may be deemed for the purposes of the City Code, to
be acting in concert in relation to the Company.
Under Rule 9 of the City Code, where a person or a group of persons acting in
concert acquires shares in a company which is subject to the City Code, and
such shares when taken together with any shares already held, would result in
that concert party's shares carrying 30 per cent. or more of the voting rights
of that company, or any person, together with persons acting in concert, who
holds not less than 30 per cent. but not more than 50 per cent. of the voting
rights of the company acquires additional shares which increase the percentage
of the voting rights, such concert party is normally required by the City Code
to make a general offer to all the shareholders of the company for the
remaining shares that the concert party does not already own at the highest
price paid by any member of the concert party in the preceding 12 months.
Set out below is the maximum number of Ordinary Shares which will be held by
members of the Concert Party following the implementation of the Proposals
with the percentage of the Company's voting rights which will then be
represented by that holding:
Name Number of Existing Open Offer Total Percentage of
existing Ordinary percentage Shares Enlarged Share
Shares Capital
Nigel 3,243,784 2.48 - 3,243,784 1.24
Wray
Nick 3,243,784 2.48 - 3,243,784 1.24
Leslau
PIHL 53,623,710 40.95 120,759,140 174,382,850 66.58
60,111,278 45.91 120,759,140 180,870,418 69.06
Note: Based upon the 1 for 1 Open Offer, and the assumption that pursuant to
its underwriting commitment, PIHL is required to subscribe for all Open Offer
Shares except the full entitlement of Stephen Thomas and Sheila McKenzie.
The Panel on Takeovers and Mergers has agreed, subject to the approval of the
independent shareholders voting on a poll in general meeting, to waive the
obligation for the Concert Party or any member of it (including PIHL
specifically), to make a general offer for the Ordinary Shares not owned by
them under Rule 9 of the City Code as a result of the implementation of the
Proposals, including the underwriting by PIHL.
Shareholders should note that following the implementation of the Proposals
the Concert Party may control over 50 per cent. of the voting rights of the
Company, and PIHL may alone also control over 50 per cent. of the voting
rights of the Company. Therefore for so long as PIHL maintains a shareholding
in respect of over 50 per cent. of the voting rights of the Company, it will
be able to increase its aggregate shareholding in the Company without
incurring any further obligation under Rule 9 to make a general offer. Other
members of the Concert Party would similarly be free to acquire further
Ordinary Shares except that no individual may acquire 30 per cent. or more of
the voting rights of the Company without triggering an obligation for that
individual to make a general offer for the Ordinary Shares not owned by him
under Rule 9 of the City Code.
Also, as the Concert Party together may control over 50 per cent. of the
voting rights of the Company following implementation of the Proposals, the
members of the Concert Party may be able to exert a very significant degree of
control over the future conduct of the Company.
Prospectus
It is expected that an AIM admission document, also comprising a prospectus
accompanied by a form of proxy for use at the EGM and an Application Form for
use in connection with the Open Offer setting out the details of the Proposals
and including a notice of the EGM will be sent to Shareholders today.
Expected Timetable of Principal Events
Record Date for the Open Offer Tuesday 11
December 2001
Latest time and date for receipt of Forms of Proxy for the EGM Tuesday 8
January 2002
Extraordinary General Meeting Thursday 10
January 2002
Latest time and date for splitting Application Forms (to Sunday 13
satisfy bona fide market claims only) January 2002
Latest time and date for receipt of Application Forms and Tuesday 15
payment in full under the Open Offer January 2002
Admission and commencement of dealings in the new Ordinary Friday 18
Shares January 2002
CREST accounts credited for the new Ordinary Shares Friday 18
January 2002
Despatch of definitive share certificates for the new Ordinary Friday 25
Shares, held in certificated form January 2002
Issue statistics
Issue price 1.25p
Number of existing Ordinary Shares in issue 130,959,140
Number of new Ordinary Shares placed pursuant to the Placing and 130,959,140
Open Offer
Number of Ordinary Shares in issue following the Placing and Open 261,918,280
Offer
Estimated net proceeds of the Placing and Open Offer #1.3
million
Market capitalisation at the Issue Price following the Placing and #6.2
Open Offer million
Definitions
The following definitions apply throughout this announcement, unless the
context otherwise requires:
"Admission" admission of the new Ordinary Shares to trading on AIM pursuant
to the AIM Rules
"AIM" the Alternative Investment Market of the London Stock Exchange
"AIM Rules" the rules of the London Stock Exchange governing the admission
to, and the operation of, companies on AIM
"Application the application form for use by Qualifying Shareholders in
Form" relation to the Open Offer
"Board" or the directors of the Company as at the date of this
"Directors" announcement
"City Code" the City Code on Takeovers and Mergers as published by the
Panel
"Concert Party" Nigel Wray, Nick Leslau and PIHL
"CREST" the computerised settlement system to facilitate the transfer
of title to shares in uncertificated form operated by CRESTCo
Limited
"Enlarged Share the entire issued share capital of Hartford as enlarged by the
Capital" issue of the new Ordinary Shares
"existing the 130,959,140 ordinary shares of 1p each in issue at the date
Ordinary of this announcement
Shares"
"Extraordinary the extraordinary general meeting of the Company to be held at
General the offices of CMS Cameron McKenna, at 10.00am on 10 January
Meeting" or 2002
"EGM"
"Hartford" or Hartford Group PLC
"the Company"
"Hartford Hartford and its wholly owned subsidiaries
Group" or "the
Group"
"Investec" Investec Bank (UK) Limited
"Investec Investec Henderson Crosthwaite, a division of Investec
Henderson
Crosthwaite"
or "IHC"
"Issue Price" 1.25p per new Ordinary Share
"London Stock London Stock Exchange plc
Exchange"
"new Ordinary the 130,959,140 new ordinary shares of 1p each to be issued by
Shares" the Company pursuant to the Placing and Open Offer
"Open Offer" the conditional open offer being made by Investec Henderson
Crosthwaite, as agent for the Company to Qualifying
Shareholders to subscribe for the Open Offer Shares at the
Issue Price
"Open Offer the close of business on 11 December 2001 for the Open Offer
Record Date"
"Open Offer 130,959,140 new Ordinary Shares which are to be made available
Shares" to Qualifying Shareholders pursuant to the Open Offer and which
have been conditionally placed (subject to clawback to satisfy
valid applications by Qualifying Shareholders under the Open
Offer) pursuant to the Placing Agreement
"Ordinary ordinary shares of 1p each in the capital of the Company
Shares"
"Panel" the Panel on Takeovers and Mergers
"PIHL" Prestbury Investment Holdings Limited
"Placing" the conditional subscription by PIHL of new Ordinary Shares
pursuant to the Placing Agreement subject to a right of recall
in respect of such number of new Ordinary Shares as is required
to satisfy valid applications from Qualifying Shareholders
under the Open Offer
"Placing the agreement dated 18 December 2001 between (1) the Company
Agreement" (2) Investec and (3) PIHL relating to the Placing
"Proposals" the Placing and Open Offer, and other matters in respect of
which the Resolutions, including the waiver of the requirement
for the Concert Party (or any individual member thereof) to
make a general offer under Rule 9 of the City Code, are to be
proposed at the EGM
"Qualifying Shareholders on the register of members of Hartford on the Open
Shareholder" Offer Record Date (except for certain overseas shareholders)
"Resolutions" the resolutions to be proposed at the EGM relating to, the
Placing and Open Offer and the approval of the waiver by the
Panel of the obligation of the Concert Party to make a general
offer under Rule 9 of the City Code
"Shareholder(s) holder(s) of Ordinary Shares in the Company
"
"UK Listing the Financial Services Authority Limited acting in its capacity
Authority" as the competent authority for the purposes of Part VI of the
Financial Services and Markets Act 2000
"United the United Kingdom of Great Britain and Northern Ireland
Kingdom" or
"UK"
Investec Henderson Crosthwaite, a division of Investec Bank (UK) Limited which
is regulated by the Financial Services Authority, is acting for Hartford Group
PLC in connection with the Placing and Open Offer and is not acting for any
person other than Hartford Group PLC and will not be responsible to any other
person than Hartford Group PLC for providing the protections afforded to its
customers or for providing advice to any other person in connection with the
Placing and Open Offer.
This announcement is not intended to be an exhaustive summary of the Placing
and Open Offer. The contents of this announcement have been extracted from
the Prospectus which contains full details of the Placing and Open Offer.
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