RNS Number:8668G
Oasis Stores PLC
13 July 2001
PART 1
Not for release, publication or distribution in or into the United States or
Canada
RECOMMENDED #54m MANAGEMENT BUY-OUT OF OASIS STORES
* The Independent Directors of Oasis and the Sierra Directors announce
that they have agreed the terms of a recommended final* cash offer for Oasis
to be made by BDO Stoy Hayward Corporate Finance on behalf of Sierra.
* Sierra is a newly incorporated UK company backed by PPM Ventures,
the private equity arm of Prudential plc, and the Oasis management team led by
Derek Lovelock.
* The Offer will be made on the basis of 103p per Oasis Share, valuing
the issued ordinary share capital of Oasis at approximately #54.0 million.
* In addition, holders of Oasis Shares on the Register at the close of
business on 22 June 2001 will be entitled to receive the final dividend of
4.1p per Oasis share payable on 27 July 2001(representing additional value to
those Oasis Shareholders of approximately #2.2 million).
* The Offer represents a premium of approximately 64.8 per cent. over
the closing middle-market price of 62.5p for an Oasis Share on 16 January
2001, being the last dealing day prior to the announcement by the Oasis Board
on 17 January 2001 that it had authorised the management team to discuss with
a number of financial institutions the possibility of formulating an offer for
the Company.
* The Offer also includes a Loan Note Alternative guaranteed as to
principal by Bank of Scotland which is available to Oasis Shareholders (other
than certain overseas shareholders) as an alternative to all or part of the
cash consideration to which they would otherwise be entitled under the terms
of the Offer.
* Sierra has received irrevocable undertakings to accept the Offer and
undertakings to sell to it pursuant to the Management Exchange Agreement a
total of 22,178,131 Oasis Shares representing approximately 42.3 per cent. of
the issued share capital of Oasis.
* The Independent Directors of Oasis will unanimously recommend the
Offer.
* Commenting on the Offer, Michael Bennett, Non-Executive Chairman of
Oasis, said:
"I am pleased to announce a positive outcome from the sale process which
commenced in January this year. Since this process involved both trade buyers
and venture capital groups, the Independent Directors believe that the Offer
from PPM Ventures and the management team is the most attractive available and
should be recommended to shareholders."
* Commenting on the Offer, Derek Lovelock, Chief Executive of Sierra,
said:
"I am delighted that PPM Ventures has had the vision to recognise the
potential of Oasis and its management team. Our new status will enable us to
focus on the needs of the business in order to rebuild profitability. This is
clearly an exciting prospect for both the "Oasis" and "Coast" brands."
This summary should be read in conjunction with the full text of the following
announcement. Certain terms used in this summary are defined in Appendix II
of the following announcement.
* The Offer is final and will not be revised or increased. However, Sierra
reserves the right to amend, improve, revise, increase or change the terms of
the Offer in the event of an offer from a third party which has a value equal
to or higher than the Offer or any other competitive situation arising or
otherwise with the consent of the Panel.
For further information contact:
PPM Ventures Limited 020 7831 7747
Gareth Whiley, Investment Director
James Barton, Associate Director
Sierra Acquisitions PLC 020 7452 1024
Derek Lovelock
BDO Stoy Hayward Corporate Finance 020 7486 5888
Michael Cobb, Partner
Yvonne Beirne, Assistant Director
Hogarth Partnership 020 7357 9477
Rachel Hirst
Georgina Briscoe
Oasis Stores Plc 020 7452 1000
Michael Bennett, Chairman
Close Brothers Corporate Finance 020 7655 3100
Mark Napier, Managing Director
SG Securities 020 7638 5699
David Cohen, Corporate Broking
Financial Dynamics 020 7831 3113
Charlie Armitstead
BDO Stoy Hayward Corporate Finance, a division of BDO Stoy Hayward, Chartered
Accountants, who are authorised to carry on investment business by the
Institute of Chartered Accountants in England and Wales, is acting for Sierra
and no one else in connection with the Offer and will not be responsible to
anyone other than Sierra for providing the protections afforded to customers
of BDO Stoy Hayward Corporate Finance nor for providing advice in relation to
the Offer.
Close Brothers Corporate Finance Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting exclusively for Oasis,
acting through its Independent Directors, and no one else in connection with
the Offer and is not acting for any other person and will not be responsible
to anyone other than Oasis for providing the protections afforded to customers
of Close Brothers Corporate Finance Limited nor for providing advice in
relation to the Offer.
Not for release, publication or distribution in or into the United States or
Canada
RECOMMENDED FINAL*CASH OFFER
FOR OASIS STORES PLC
BY BDO STOY HAYWARD CORPORATE FINANCE ON BEHALF OF
SIERRA ACQUISITIONS PLC
1 INTRODUCTION
The Independent Directors of Oasis and the Sierra Directors are pleased to
announce that agreement has been reached on the terms of a recommended final*
cash offer, to be made by BDO Stoy Hayward Corporate Finance on behalf of
Sierra, to acquire the whole of the issued and to be issued ordinary share
capital of Oasis for 103p in cash for each Oasis Share. The Offer values the
whole of the issued share capital of Oasis at approximately #54.0 million. In
addition, Oasis Shareholders who were on the Register on 22 June 2001 will be
paid the final dividend of 4.1p per Oasis Share on 27 July 2001 in respect of
the 52 week period ended 27 January 2001. Accordingly, the total amount
receivable from the Offer plus the final dividend to Oasis Shareholders on the
Register on 22 June 2001 is 107.1p per Oasis Share.
Sierra is offering a guaranteed Loan Note Alternative in lieu of all or part
of the cash consideration to which Oasis Shareholders (other than certain
overseas Oasis Shareholders) would otherwise be entitled under the Offer.
In total, Sierra has received irrevocable undertakings to accept the Offer and
undertakings pursuant to the Management Exchange Agreement in respect of a
total of 22,178,131 Oasis Shares, representing approximately 42.3 per cent. of
the issued share capital of Oasis.
Sierra is a recently incorporated UK company which was formed for the purpose
of making the Offer and which has not traded since incorporation. Following
the Offer becoming or being declared unconditional in all respects, Sierra
will be owned by Sierra Holdings, which will be owned by clients of PPM
Ventures and the Management Investors.
The Offer Document and accompanying Form of Acceptance, which will be sent to
Oasis Shareholders as soon as practicable, includes the full terms and
conditions of the Offer.
2 TERMS OF THE OFFER
The Offer will be subject to the terms and conditions set out or referred to
in the Offer Document and in the Form of Acceptance and will extend to all of
the issued and to be issued Oasis Shares (other than those Oasis Shares issued
and to be issued which Sierra has already contracted to acquire pursuant to
the Management Exchange Agreement) on the following basis:
for each Oasis Share 103p in cash
In addition Oasis Shareholders on the Register on 22 June 2001 will retain the
right to receive the final dividend of 4.1p per Oasis Share in respect of the
52 week period ended 27 January 2001 which is payable on 27 July 2001.
Accordingly, the total value of the Offer plus the final dividend to Oasis
Shareholders on the Register at 22 June 2001 will be 107.1p per Oasis Share.
The Offer values the issued share capital of Oasis at approximately #54.0
million. The Offer price of 103p per Oasis Share represents a premium of
approximately 64.8 per cent. to the closing middle-market price of 62.5p per
Oasis Share on 16 January 2001 (the last dealing day before the announcement
on 17 January 2001 by the Oasis Board that it had authorised a management team
led by Derek Lovelock to discuss with a number of financial institutions the
possibility of formulating an offer for the Company).
* The Offer is final and will not be revised or increased. However, Sierra
reserves the right to amend, improve, revise, increase or change the terms of
the Offer in the event of an offer from a third party which has a value equal
to or higher than the Offer or any other competitive situation arising or
otherwise with the consent of the Panel.
The Oasis Shares are to be acquired fully paid and free from all liens,
charges, equitable interests, encumbrances, rights of pre-emption and other
third party rights or interests of any nature whatsoever and together with all
rights now or hereafter attaching to them, including the right to receive and
retain all dividends and other distributions declared, made or paid on or
after 13 July 2001 (other than the final dividend of 4.1p per Oasis Share
declared on 9 April 2001 and payable on 27 July 2001).
The Offer extends to any Oasis Shares (other than those Oasis Shares issued
and to be issued which Sierra has contracted to acquire pursuant to the
Management Exchange Agreement) which have been unconditionally allotted or
issued fully paid (or credited as fully paid) prior to the date on which the
Offer closes (or such other date(s) as Sierra may, subject to the City Code,
decide), including any such Oasis Shares unconditionally allotted or issued
pursuant to the exercise of options under the Oasis Share Option Schemes.
The Offer is final and will not be revised or increased. However, Sierra
reserves the right to amend, improve, revise, increase or change the terms of
the Offer in the event of an offer from a third party which has a value equal
to or higher than the Offer or any other competitive situation arising or
otherwise with the consent of the Panel.
3 THE LOAN NOTE ALTERNATIVE
Oasis Shareholders (other than certain overseas Oasis Shareholders) who
validly accept the Offer may, under the terms of the Offer, elect to receive
Loan Notes as an alternative to all or part of the cash consideration to which
they would otherwise be entitled under the Offer on the following basis:
for every #1 of cash consideration #1 nominal of Loan Notes
in each case subject to the terms and conditions of the Loan Note Alternative.
The Loan Notes will be issued by Sierra in multiples of #1 and will be issued
credited as fully paid. The Loan Notes will be unsecured, but will be
guaranteed as to principal by Bank of Scotland. The Loan Notes will bear
interest, payable in arrears in yearly instalments on 31 July each year at an
annual rate of one per cent. below LIBOR. The first payment of interest will
be on 31 July 2002 for the period from the first date of issue of any of the
Loan Notes. The Loan Notes will be freely transferable, save to certain
overseas persons, in amounts or integral multiples of #1,000 or, if less, the
entire holding of the transferor's Loan Notes. No application will be made
for the Loan Notes to be listed or dealt in on any stock exchange.
The holders of the Loan Notes will have the option to redeem all or part
(being #1,000 nominal or integral multiples thereof or, if less, the entire
amount of the holder's Loan Notes) of the Loan Notes at par together with
interest on any interest payment date on or after 31 July 2002. Loan Notes
which have not been redeemed by 31 July 2005 will be redeemed on that date.
The Loan Notes will also be redeemable in whole at the option of Sierra by
giving no less than 30 days' notice to remaining Noteholders where less than
25 per cent. of the total nominal amount of Loan Notes issued remain
outstanding, such notice not to take effect before 31 July 2002.
The Loan Note Alternative is conditional on the Offer becoming or being
declared unconditional in all respects and shall (unless Sierra, in accordance
with the Code, notifies otherwise) remain open for so long as the Offer
remains open for acceptance.
BDO Stoy Hayward has advised the Sierra Directors that, based on current
market conditions on 12 July 2001 (the latest practicable date prior to this
announcement) in their opinion, the value of the Loan Notes if they had been
in issue on that date, would have been approximately 98p per #1 nominal value.
Further details on the Loan Note Alternative will be provided in the Offer
Document.
4 BACKGROUND TO AND REASONS FOR THE OFFER
Background to the Offer
The Independent Directors believe that Oasis has been subject to adverse
investor sentiment due to its focus on fashion retail and its relatively small
market capitalisation, both of which have impacted negatively on its share
price during the last few years. Furthermore, although the Company has
demonstrated year-on-year growth in sales as it has expanded, profits in each
of the 52 week periods ended 29 January 2000 and 27 January 2001 declined
compared to the previous financial year and fell short of the Oasis Board's
expectations. This was primarily due to disappointing trading in the final
quarter of the last two financial years around Christmas.
An additional consideration is that the founders of Oasis (namely Michael
Bennett, Maurice Bennett and Vivian Scott) have sought to step back from
day-to-day involvement in Oasis since the appointment of Derek Lovelock as
Chief Executive in November 1999. This process was formally completed when
the founders assumed non-executive positions on the Oasis Board on 12 June
2001. As they are no longer involved in the day-to-day running of Oasis, the
founders will in due course wish to realise some or all of their holdings.
The Independent Directors consider that if Oasis were to remain publicly
quoted, its share price would be adversely affected by the prospect of future
share sales by the founders in relatively large volumes.
Consequently, the Oasis Board concluded that shareholders' interests would be
best served through a cash offer for the Company. Following press speculation
and movement in the Company's share price, the Oasis Board announced on 17
January 2001 that a management team led by Derek Lovelock had been authorised
to discuss with a number of financial institutions the possibility of
formulating an offer for the Company. Following this announcement, a
competitive sale process involving both trade buyers and venture capitalists
was commenced to elicit the most attractive offers for Oasis Shareholders. In
order that there would be no actual or perceived conflicts of interest in the
consideration of all proposals received, an independent committee of the Board
(comprising Michael Bennett, Rowley Ager, Maurice Bennett, Colin Glass and
Vivian Scott) was constituted to assume responsibility for consideration of
the proposals arising from this process. The Independent Directors have no
financial interest in Sierra or Sierra Holdings and are not connected with the
Offer.
A number of parties expressed an interest in acquiring the Company and, on the
basis of their indicative offer proposals, some of these were supplied with
further information and access to the Oasis Board to enable them to put
forward their best proposals. The Independent Directors, advised by Close
Brothers Corporate Finance, reviewed these proposals and concluded that the
proposal from the Investors was the most attractive in terms of value and
deliverability. On 12 June 2001, the Independent Directors announced that
they had entered into a period of exclusivity with the Investors.
Reasons for recommendation of the Offer
The Independent Directors continue to hold the view that the Company is a
solid business with an excellent market position, a strong brand image and an
able executive management team. However, weighing this generally positive
outlook for Oasis against the terms of the Offer and prospects for enhancement
in shareholder value over the medium term as a quoted company, the Independent
Directors have concluded that the Offer is fair and reasonable and that they
should recommend it to Oasis Shareholders for the following reasons:
* the Company continues to suffer from poor investor sentiment towards
the smaller company sector, and in particular companies operating in fashion
retail. Accordingly, the Independent Directors have concluded that, in the
absence of the Offer, Oasis Shareholders may not be in a position to realise
equivalent value to that represented by the Offer within a reasonable
timescale;
* the Offer represents a premium of approximately 64.8 per cent. to
the closing middle market price of 62.5p per Oasis Share on 16 January 2001,
being the last dealing day prior to the announcement by the Company on 17
January 2001 that it had authorised a management team led by Derek Lovelock to
discuss with a number of financial institutions the possibility of formulating
an offer for the Company; and
* the Offer represents a multiple of 13.6 times the Company's
post-exceptional earnings per share of 7.6p per share for the 52 week period
ended 27 January 2001. Furthermore, the share price of Oasis Shares has not
closed above 107.1p (being the total value of the Offer plus the final
dividend of 4.1p) since 19 January 2000.
5 IRREVOCABLE UNDERTAKINGS
Sierra has received irrevocable undertakings to accept the Offer and
undertakings to sell pursuant to the Management Exchange Agreement a total of
22,178,131 Oasis Shares representing approximately 42.3 per cent. of the
issued share capital of Oasis as detailed below.
Sierra has received irrevocable undertakings to accept the Offer from:
(a) the Independent Directors in respect of their holdings of Oasis Shares
and from certain family members and trusts. These irrevocable undertakings
amount, in aggregate to 18,816,970 Oasis Shares, representing approximately
35.9 per cent. of the issued share capital of Oasis and will remain binding
even in the event of a higher offer being made for Oasis, but cease to be
binding in the event that the Offer lapses or is withdrawn.
(b) certain institutional shareholders in respect of 2,872,500 Oasis
Shares, representing approximately 5.3 per cent. of the issued share capital
of Oasis. These irrevocable undertakings are given on the following basis:
(i) an irrevocable undertaking in respect of 1,275,000 Oasis
Shares, representing approximately 2.4 per cent. of the issued share capital
of Oasis, which will cease to be binding in the event that a competing cash
offer is made which exceeds the value of the Offer;
(ii) an irrevocable undertaking in respect of 1,507,500 Oasis
Shares, representing approximately 2.9 per cent. of the issued share capital
of Oasis, which will cease to be binding in the event that an offer exceeding
the value of the Offer by 10 per cent. or more in cash is made not later than
12 noon on 20 July 2001 and Sierra does not announce a revised offer, which is
on terms no less favourable than such higher offer, within 14 days upon which
the offer document containing the higher competing offer is posted to Oasis
Shareholders. In the event that Sierra announces a revised offer, the
undertaking will continue to be binding even if such offer is also revised or
a further higher offer is received from any source.
(c) certain Management Investors who are also on the Oasis Board (namely
Lynne Burstall and John Bennett) in respect of their beneficial holdings of
Oasis Shares and from certain family members and trusts. These irrevocable
undertakings amount in aggregate to 481,049 Oasis Shares (being the balance of
Lynne Burstall's and John Bennett's beneficial holdings of Oasis Shares which
have not been contracted to be acquired by Sierra under the Management
Exchange Agreement), representing approximately 0.9 per cent. of the issued
share capital of Oasis and will remain binding even in the event of a higher
offer being made for Oasis, but cease to be binding in the event that the
Offer lapses or is withdrawn.
Under and pursuant to the Management Exchange Agreement, Sierra has agreed to
acquire the following at a value equivalent to the Offer:
* from the Management Investors who are on the Oasis Board (namely
Derek Lovelock, Richard Glanville, Lynne Burstall, Jane Woolf and John
Bennett) a total of 87,612 issued Oasis Shares; and
* from Meg Lustman (a Management Investor who is not on the Oasis
Board), 10,000 Oasis Shares.
In aggregate, these undertakings represent 0.2 per cent. of the issued share
capital of Oasis.
6 RECOMM
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