Notice of GM
17 Février 2009 - 4:25PM
UK Regulatory
TIDMHHC
RNS Number : 4630N
Hexagon Human Capital PLC
17 February 2009
Hexagon Human Capital plc
("Hexagon" or "the Company")
Doc re: Notice of General Meeting
Further to the announcement released by the Company earlier today, the Board
confirms that the Circular convening a General Meeting of the Company to be held
at 11.00a.m. on 5 March 2009 at the offices of Hexagon Human Capital plc, First
Floor, 33 Cornhill, London EC3V 3ND has today been posted to Shareholders and
will shortly be available to download from the Company's website at
www.hexagongroup.com
The full text of the Chairman's Letter is set out below. Definitions in this
announcement shall bear the same meaning as those in the Circular to
Shareholders.
To the holders of Existing Ordinary Shares and, for information only, to
holders of options over Ordinary Shares
Dear Shareholder
REVISED BANKING FACILITIES
INTRODUCTION
The purpose of this document is to outline the background to and reasons for the
Revised Banking Facilities and, in accordance with The Takeover Code, to seek
Shareholder approval for the Proposals.
As announced today the Board of Hexagon has received an indicative conditional
proposal from a third party, interested in making an offer for the Company. The
Board wishes to inform Shareholders that discussions with the third party are at
a very preliminary stage and that there can be no guarantee that any offer will
be forthcoming.
Mindful of their overriding responsibility to maximise value for Shareholders,
the Board believes it to be in Shareholders' interests to progress with the
Proposals, details of which are set out below. Despite the current challenging
broader economic environment the Board remains confident of the short term
trading outlook for the Company. In the event that Hexagon's trading
deteriorates markedly from the levels currently being experienced, the Proposals
will provide the Group with significant flexibility against its current banking
covenants.
In light of the receipt of the Indicative Proposal, in accordance with Rule 21
of The Takeover Code, the Company requires the approval of Shareholders in
general meeting before entering into the Proposals.
Revised Banking Facilities
The Company proposes to enter in to an agreement with Barclays Bank to reduce
the level of its senior debt by GBP1,500,000 in return for the issue of the
Convertible Loan Notes on the terms set out below. A condition of the Revised
Banking Facilities proposed by Barclays is that Hexagon uses the Company's
existing authorities and allots new shares for cash on a non pre-emptive basis
to raise a minimum of GBP300,000 (net of expenses) for the Company within 60
days of the issue of the Convertible Loan Notes.
The net proceeds of the Revised Banking Facilities and the Placing will be used,
inter alia, towards improving the Group's working capital position thereby
increasing the level of headroom available under Hexagon's current banking
covenants. Further details of the Revised Banking Facilities are set out on page
6 of this Circular.
BACKGROUND TO AND REASONS FOR THE PROPOSALS
At the time of flotation Hexagon's strategy was to achieve growth through both
organic initiatives and a buy and build model. A number of successful
acquisitions have been completed since this time which have strengthened both
the Group's Senior Interim Management operations, where the Group is a market
leader, and its portfolio of executive search businesses, which have been
expanded and diversified in terms of sector and geography. The Directors believe
this strategy has created a differentiated business model relative to
the majority of its peers as Hexagon is able to meet client needs for short term
talent through its Senior Interim Management division as well as their needs for
full time business leaders through its specialist executive search portfolio.
As can be seen in the table below the Group's acquisition model has been
successful in delivering substantial growth in net fee income, profits and
earnings per share:
+----------------------+-----+----------+----------+--------+----------+---------+
| | | | | | | |
| | | Year | 15 | | Year | |
| | | ended | months | | ended | |
| | | 31 | to | % | 31 | % |
| | | December | 31 March | growth | March | growth |
| | | 2005* | 2007* | | 2008* | |
+----------------------+-----+----------+----------+--------+----------+---------+
| | | GBP'000s | GBP'000s | | GBP'000s | |
+----------------------+-----+----------+----------+--------+----------+---------+
| | | | | | | |
+----------------------+-----+----------+----------+--------+----------+---------+
| Net Fee Income | | 2,369 | 10,588 | 347% | 19,488 | 84% |
+----------------------+-----+----------+----------+--------+----------+---------+
| | | | | | | |
+----------------------+-----+----------+----------+--------+----------+---------+
| EBITA | | 300 | 1,620 | 440% | 5,672 | 250% |
+----------------------+-----+----------+----------+--------+----------+---------+
| | | | | | | |
+----------------------+-----+----------+----------+--------+----------+---------+
| Profit before tax | | 166 | 175 | | 2,872 | |
+----------------------+-----+----------+----------+--------+----------+---------+
| | | | | | | |
+----------------------+-----+----------+----------+--------+----------+---------+
| Earnings per share | | (0.08) | (2.60) | | 9.78 | |
| (p) | | | | | | |
+----------------------+-----+----------+----------+--------+----------+---------+
* Reported figures extracted without material adjustment from the Group's Annual
Report and Accounts for the 12 months to 31 December 2005, 15 months to March
2007 and 12 months to 31 March 2008.
The Group raised some GBP8.9 million net of expenses on Flotation and since then
has utilised its banking facilities to finance its acquisition activities.
The Directors consider that Hexagon has to date performed favourably relative to
other human capital services companies as a result of the diversification of its
portfolio of search business and defensive qualities of its interim management
business.
The Board is mindful that Hexagon's operations are unlikely to be immune from
the impacts of a prolonged economic recession. As a result the Board has been in
discussions with its bankers, Barclays Bank, for a number of months to
restructure the Group's facilities to ensure that in the event that Hexagon
begins to experience a significant trading slowdown it has sufficient working
capital to meet its obligations. A condition of the revised banking facilities
proposed by Barclays is that Hexagon uses the Company's existing authorities and
allots new Ordinary Shares for cash on a non pre-emptive basis to raise a
minimum of GBP300,000 (net of expenses) within 60 days of the issue of the
Convertible Loan Notes.
DETAILS OF THE REVISED BANKING FACILITIES
The Board is pleased to announce that it has secured an offer from Barclays Bank
to convert GBP1,500,000 of its senior term debt into the Convertible Loan Notes.
The cash proceeds of the CLNs will equate to a GBP1,500,000 reduction in the
Group's senior debt repayments between the Issue Date and 31 December 2011 (the
"Maturity Date"). The particulars of the terms and conditions of the CLNs are
set out below.
Status and term
The CLNs will have a nominal value of GBP100,000 per note and will be secured
against the assets of Hexagon, as is the Group's senior term debt. The maturity
date of the CLNs will be 31 December 2011 being the same date at which the Group
is currently obliged to complete the repayment of all its outstanding term debt.
Fees and interest
A one-off arrangement fee of GBP125,000, payable in two equal installments on 30
June 2009 and 30 December 2009, will be charged along with a monitoring fee of
GBP10,000 per annum payable quarterly in advance whilst the CLNs are
outstanding.
Interest on the CLNs will be charged at an annual rate of 3.5 per cent. above
LIBOR. Additionally, the interest charge on the Group's remaining senior debt
facilities will be adjusted to an annual rate of 3.5 per cent. (currently 2.0
per cent.) above LIBOR. Based on a rate of LIBOR of 2.5 per cent. this would
result in an estimated likely incremental interest cost to the Maturity Date of
approximately GBP194,500.
If the CLNs have not been issued on or before 16 March 2009 a fee of GBP75,000
will become immediately due and payable to Barclays Bank by Hexagon.
Redemption of the CLNs
Upon redemption (but not conversion) of the CLNs a redemption premium will be
charged. Such premium will accrue on the nominal value of the CLNs at a rate of
4.0 per cent. per annum (compounded quarterly) from the Issue Date to the
Maturity Date resulting in an estimated likely cost of c.GBP185,000.
Conversion of the CLNs
Barclays will hold the option to convert the loan notes into new Ordinary Shares
by giving notice not less than 15 days prior to 31 December 2011. The conversion
price per Ordinary Share is the volume-weighted average price of Ordinary Shares
over the 15 days prior to the Issue Date increased by a premium of 18 per cent.
(the "Conversion Price"). As at the date of this Circular, the Conversion Price
would be approximately 44p equating to the issue of 3,393,497 new Ordinary
Shares, representing 14.83 per cent. of the Company's issued share capital as
enlarged by the issue of the New Ordinary Shares. Hexagon will hold an option,
exercisable up to three days after the conversion notice is issued, to pay a
cash sum to Barclays (within 30 days of the exercise of such option) equal to
the amount of the Loan Note Conversion Shares multiplied by the closing price
of Ordinary Shares on the date of the conversion notice served by Barclays.
Hexagon will also have the ability after 14 months from the Issue Date to redeem
the CLNs early, if, during such 14 month period, Hexagon's share price trades at
a level of 150 per cent. of the Conversion Price for 20 out of 30 days.
Conditions subsequent
A condition of the CLNs is that at least GBP300,000 of new equity is raised by
Hexagon within 60 days of the Issue Date.
A copy of the instrument constituting the Convertible Loan Notes will be
available for inspection at the Company's registered office, First Floor, 33
Cornhill, London EC3V 3ND, from the date of this Circular to the time and date
of the GM.
GENERAL MEETING
As a result of the Indicative Proposal the Company is currently within a
technical "offer period" for the purposes of The Takeover Code. Pursuant to Rule
21.1 of The Takeover Code the Company is required to obtain Shareholder approval
(by way of an ordinary resolution) for the issue of the CLNs and the Placing. A
notice convening the GM to be held at 11.00 a.m. on 5 March 2009 at the offices
of Hexagon Human Capital plc, First Floor, 33 Cornhill, London EC3V 3ND is set
out at the end of this document. The purposes of the Resolution will be to
approve the Proposals pursuant to Rule 21.1 of The Takeover Code.
SHAREHOLDER SUPPORT
The Company has received letters of intent from certain existing Shareholders
and irrevocable undertakings from the Directors as set out below, to vote in
favour of the Resolution, amounting to, in aggregate, 6,178,338 Ordinary Shares
representing 31.70 per cent. of the Existing Ordinary Shares.
ACTION TO BE TAKEN
You will find enclosed with this document a Form of Proxy for use at the GM.
Whether or not you propose to attend the GM in person, you are asked to complete
the form of proxy and return it to the Company's Registrars, Capita Registrars,
at Proxies, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to
arrive as soon as possible, but in any event not less than 48 hours before the
time of the meeting or of any adjournment of the meeting. Completion and return
of a form of proxy will not preclude you from attending and voting at the GM in
person if you wish.
RECOMMENDATION
The Directors believe that the Proposals as described in this Circular are in
the best interests of the Company and its Shareholders. Accordingly, the
Directors unanimously recommend that you vote in favour of the Resolution to be
proposed at the General Meeting. The Directors intend to vote in favour of the
Resolution in respect of their own beneficial holdings amounting to 2,801,148
Ordinary Shares, representing approximately 14.4 per cent. of the Existing
Ordinary Shares.
Yours sincerely
Robert Walker
Non-executive Chairman
Enquiries:
+-----------------------------------------------+----------------+
| Jonathan Wright, Chief Executive | 020 7337 1133 |
| Carl Thompson, Finance Director | |
+-----------------------------------------------+----------------+
| Hexagon Human Capital plc | |
+-----------------------------------------------+----------------+
+-----------------------------------------------+----------------+
| Matt Davis | |
+-----------------------------------------------+----------------+
| Alison Barrow | |
+-----------------------------------------------+----------------+
| Brewin Dolphin Investment Banking | 0845 213 3219 |
| Financial Adviser | |
+-----------------------------------------------+----------------+
| | |
+-----------------------------------------------+----------------+
| Sanna Sumner/Anna Dunkin | |
+-----------------------------------------------+----------------+
| Redleaf Communications | 020 7566 6700 |
| | |
+-----------------------------------------------+----------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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