RNS Number:6924O
TC Group
14 December 2001
PART 1
TGI plc
14 December 2001
Not for release, publication, or distribution in or into the United States,
Canada, Australia or Japan
Recommended cash offer by Hoare Govett Limited
on behalf of
TC Group A/S for TGI plc
Summary
* The TGI Directors and the TC Group Directors announce today that they
have reached agreement on the terms of a recommended cash offer, to be
made by Hoare Govett, on behalf of TC Group for the entire issued and to
be issued share capital of TGI.
* TC Group is a privately owned Danish company involved in the design,
manufacture and sale of digital signal processing equipment and of digital
audio software and hardware products.
* The Offer:
is 68.5 pence in cash per TGI Share, which values the existing issued
share capital of TGI at approximately #14.8 million;
represents a premium of approximately 34.3 per cent over the Closing
Price of 51.0 pence for a TGI Share on 13 December 2001, being the
last dealing day prior to the announcement of the Offer by TC Group;
includes a loan note alternative in respect of all, or part, of the
cash consideration due; and
is unanimously recommended by the TGI Directors.
* TC Group has irrevocable undertakings to accept the Offer in respect of
a total of 8,318,955 TGI Shares, representing approximately 38.41 per cent
of the current issued share capital of TGI.
* The TGI Directors, who have been so advised by Bridgewell, consider the
terms of the Offer to be fair and reasonable. In providing its advice,
Bridgewell has taken into account the commercial assessments of the TGI
Directors. Accordingly, the TGI Directors unanimously recommend TGI
Shareholders to accept the Offer, as they have undertaken to do so in
respect of their own shareholdings, which amount to 333,942 TGI Shares,
representing approximately 1.54 per cent of the existing issued share
capital of TGI.
* TGI is also announcing today its interim results for the six months
ended 30 September 2001. TGI Group's turnover and operating profit from
continuing operations amounted to approximately #22.3m million (2000:
#22.5 million) and #1.2 million (#1.4 million), respectively. Profit on
ordinary activities before taxation amounted to approximately #0.9 million
(#1.3 million), which resulted in, basic earnings per share of 3.0 pence
(4.6 pence). Net assets at 30 September 2001 amounted to approximately
#12.3 million (#11.8 million).
Commenting on the Offer, Michael Windsor, Chairman of TGI, said: "The Board of
TGI believes that the Offer from TC Group represents a fair price for the
business and enables shareholders to crystallise the value of their
investment."
This summary should be read in conjunction with the full text of the following
announcement.
Enquiries:
TC Group A/S 00 45 8742 7000
Anders Fauerskov Chief Executive
Hoare Govett Limited 020 7678 8000
Chris Fielding Director, Corporate Finance
Will Shaw Director, Corporate Broking
TGI plc 023 9249 2555
Nigel Hamilton Chief Executive
Peter Russell Finance Director
Bridgewell Corporate Finance Limited 020 7626 3322
Greg Aldridge
Paul Shackleton
The Offer is not being made, directly or indirectly, in or into, or by the use
of mails or any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facilities of a national securities exchange of, the United States, Canada,
Australia or Japan and the Offer is not capable of acceptance by any such use,
means, instrumentality, or facilities from or within, the United States,
Canada, Australia or Japan. Accordingly, copies of this announcement are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in, into or from the United States, Canada, Australia or
Japan and persons receiving this announcement and any related document
(including nominees, trustees or custodians) must not mail or otherwise
forward, distribute or send it in, into, or from the United States, Canada,
Australia or Japan. Doing so may render invalid any purported acceptance of
the Offer. The availability of the Offer to persons who are not resident in
the United Kingdom may be affected by the laws of the relevant jurisdictions.
Persons who are not resident in the United Kingdom should inform themselves
about and observe any applicable requirements.
The Loan Notes have not been, nor will they be, registered under the
Securities Act or under the securities laws of any state of the United States;
the relevant clearances have not been, nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus
has been lodged with, or registered by, the Australian Securities and
Investments Commission or the Japanese Ministry of Finance; and the Loan Notes
have not been, nor will they be, registered under or offered in compliance
with applicable securities laws of any state, province, territory or
jurisdiction of Canada, Australia or Japan. Accordingly, the Loan Notes may
not (unless an exemption under relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or into the
United States, Canada, Australia or Japan or any other jurisdiction if to do
so would constitute a violation of the relevant laws of, or require
registration thereof in, such jurisdiction or to, or for the account or
benefit of, any United States, Canadian, Australian or Japanese person.
Hoare Govett, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for TC Group and no one else in
connection with the Offer and will not be responsible to anyone other than TC
Group for providing the protections afforded to clients of Hoare Govett or for
giving advice in relation to the Offer.
Bridgewell, which is regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for TGI and no one else in connection with
the Offer and will not be responsible to anyone other than TGI for providing
the protections afforded to clients of Bridgewell or for giving advice in
relation to the Offer.
This announcement does not constitute an offer or an invitation to purchase
any securities.
For immediate release.
14 December 2001
Not for release, publication, or distribution in or into the United States,
Canada, Australia or Japan
Recommended cash offer by Hoare Govett Limited
on behalf of
TC Group A/S for TGI plc
1. Introduction
The TGI Directors and the TC Group Directors announce today that they have
reached agreement on the terms of a recommended cash offer, to be made by
Hoare Govett, on behalf of TC Group for the entire issued and to be issued
share capital of TGI. TC Group is a privately owned Danish company whose
business is the design, manufacture and sale of digital signal processing
equipment and digital audio software and hardware products.
The purpose of this announcement is to explain the background to the
Offer, the reasons why the Directors of TGI consider the terms of the
Offer to be fair and reasonable and why they unanimously recommend TGI
Shareholders to accept the Offer.
Appendix II contains the definitions used in this announcement.
2. The Offer
The formal Offer, which is subject to the conditions and further terms of
the Offer set out in Appendix I and to be set out in the Offer Document,
will be made on the following basis:
for each TGI Share 68.5 pence in cash
In addition, there is a Loan Note Alternative available to TGI
Shareholders (other than certain overseas TGI Shareholders) who accept the
Offer, as described in paragraph 11 below.
The Offer values the existing issued share capital of TGI at approximately
#14.8 million. The Offer represents a premium of approximately 34.3 per
cent over the Closing Price of 51.0 pence for a TGI Share on 13 December
2001, being the last dealing day prior to the announcement of the Offer by
TC Group.
TGI Shares will be acquired by TC Group 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 attaching to them from the date of the
announcement of the Offer including, without limitation, the right to
receive and retain any dividends and other distributions, announced,
declared, made or payable after the date of this announcement.
3. Undertakings to accept the Offer
Each of the TGI Directors and certain of their connected persons have
irrevocably undertaken to accept the Offer in respect of their respective
holdings of TGI Shares as follows:
Name Number of TGI Shares Percentage of current issued share
capital
W M Windsor 50,000 0.23%
N P Hamilton 21,496 0.10%
P Russell 212,596 0.98%
P F Crawford 49,850 0.23%
I B Hamilton 73,775 0.34%
S Russell 295,000 1.36%
C A Windsor 50,000 0.23%
These undertakings, which continue to be binding even in the event of a
higher competing offer for TGI being announced and cannot be withdrawn
other than in the event of the Offer lapsing, or being withdrawn, are
given in respect of, in aggregate, 752,717 TGI Shares, representing
approximately 3.48 per cent of the current issued share capital of TGI.
TC Group has also received irrevocable undertakings to accept the Offer
from Mr and Mrs N Crocker in respect of, in aggregate, 854,450 TGI Shares,
representing approximately 3.95 per cent of the current issued share
capital of TGI. These undertakings will also continue to be binding even
in the event of a higher competing offer for TGI being announced and
cannot be withdrawn other than in the event of the Offer lapsing or being
withdrawn.
TC Group has also received irrevocable undertakings to accept the Offer
from the following institutional and other shareholders in respect of, in
aggregate, 6,711,788 TGI Shares, representing approximately 30.99 per cent
of the current issued share capital of TGI:
Name Number of TGI Percentage of current
Shares issued share capital
Schroder Investment 1,949,032 9.00%
Management Limited
Investec Fund Managers 666,471 3.08%
Limited
Britannic Investment Managers 1,039,795 4.80%
N E McDowell and Mrs J 611,298 2.82%
McDowell
R S McDowell 1,222,596 5.65%
P J McDowell 1,222,596 5.65%
These undertakings will cease to be binding, in certain circumstances, in
the event of the announcement of a competing offer for TGI, which
represents an improvement in excess of 5.0 per cent over the value of the
Offer.
TC Group therefore has irrevocable undertakings to accept the Offer in
respect of a total of 8,318,955 TGI Shares, representing approximately
38.41 per cent of the current issued share capital of TGI.
4. Background to, and reasons for recommending, the Offer
The principal activities of the TGI Group are the design, manufacture and
distribution of a wide range of high quality loudspeakers and professional
audio equipment under the Tannoy, Martin Audio and Lab Gruppen brands. The
TGI Group also manufactures original equipment speakers for the automotive
industry. Its principal operations are located in England, Scotland and
Sweden with distribution operations in North America and the Netherlands.
Over the past two years the Board of TGI has taken a number of strategic
steps to maximise shareholder value. This process has seen TGI
concentrating on the professional audio and consumer hi-fi markets. In
July 2000, TGI acquired Lab Gruppen AB, a specialist designer and
manufacturer of digital audio amplifiers, and in March 2001 TGI disposed
of Tannoy Audix Systems Limited, which manufactured and distributed public
address announcement systems.
In the year ended 31 March 2001, the TGI Group's turnover and operating
profit from continuing operations amounted to approximately #44.5 million
(2000: #46.8 million) and #2.1 million (#2.5 million), respectively.
Profit on ordinary activities before taxation fell to approximately #0.1
million (#2.4 million), largely as a result of the loss on disposal of a
former activity. Net assets at 31 March 2001 amounted to approximately
#11.6 million.
In the six months ended 30 September 2001, TGI Group's turnover and
operating profit from continuing operations amounted to approximately
#22.3 million (2000: #22.5 million) and #1.2 million (#1.4 million),
respectively. Profit on ordinary activities before taxation amounted to
approximately #0.9 million (#1.3 million), which resulted in basic
earnings per share of 3.0 pence (4.6 pence). Net assets at 30 September
2001 amounted to approximately #12.3 million (#11.8 million). The
announcement of these results, which was also released today, states that
TGI's sales from continuing operations were level with the previous period
but below anticipated levels reflecting more difficult trading conditions,
particularly in international markets, and disruption caused by a change
of distribution partner in Europe. It concludes, however, that while the
world market environment has become more challenging in recent months,
opportunities for further growth from new products and new distribution
arrangements continue to exist in each of TGI's businesses. The Directors
of TGI believe that a satisfactory performance will be achieved for the
year as a whole.
The TGI Directors believe that, while TGI could continue to remain
independent given its strong brands and consistent underlying trading, it
does face a number of strategic issues, not least of which is its relative
size in both absolute and in stock market terms.
Over recent years, there has been a marked lack of interest by investors
in small companies such as TGI. The Board of TGI believes that the market
price of a TGI Share over recent months has not reflected the true worth
of TGI and that this situation is unlikely to change in the foreseeable
future. Recent world events have compounded this issue for all small
listed companies such as TGI.
The Board of TGI therefore believes that the Offer by TC Group is fair and
reasonable given current market uncertainties. It offers TGI Shareholders
an opportunity to crystallise their investment in TGI for cash at a
premium of 34.3 per cent to the Closing Price of a TGI Share on 13
December 2001. As a result, the Board of TGI is recommending TGI
Shareholders to accept the Offer.
5. Information on TC Group
TC Group, a private Danish company, was incorporated in 1998 as the
holding company of TC Electronic A/S which itself had been incorporated in
1989. TC Group is owned as to approximately 32 per cent each by Gert
Frederiksen, who was the initial chairman of TC Electronic A/S and is now
a non-executive director of TC Group, Kim Rishoj Pedersen, a non-executive
director of TC Group who is responsible for research and development, and
Anders Fauerskov, the chief executive of TC Group. The balance of its
equity is owned by its employees, either directly or as beneficiaries
under a stock ownership programme.
TC Group is involved in the design, manufacture and sale of digital signal
processing equipment and of digital audio software and hardware products.
As a result of its continuously expanding library of algorithms, the
mathematics underlying digital signal processing, TC Group is a leading
provider of digital signal processing equipment to professional production
and audio businesses around the world.
TC Group has recently completed the development of a number of significant
new digital sound technologies, which it is now seeking to introduce into
the marketplace. This includes, the TC Group Directors believe, the first
high quality solution integrating digital sound processing and Class D
(digital) amplification into speakers, generating a wide range of
advantages including improved sound quality, proprietary speaker linking
and remote controllability.
In the year ended 30 June 2001, TC Group made profit before taxation of
approximately DKr 17.6 million (#1.5 million) (2000: DKr 21.5 million
(#1.8 million)) on turnover of approximately DKr 209.3 million (#17.4
million) (2000: DKr 171.2 million (#14.2 million)). Net assets at 30 June
2001 amounted to approximately DKr 91.0 million (#7.6 million).
Since 1 July 2001, TC Group has traded in line with management's
expectations and the TC Group Directors are confident that the year ending
30 June 2002 will represent a further year of progress.
6. Recommendation
The TGI Directors, who have been so advised by Bridgewell, consider the
terms of the Offer to be fair and reasonable. In providing its advice,
Bridgewell has taken into account the commercial assessments of the TGI
Directors. Accordingly, the TGI Directors unanimously recommend TGI
Shareholders to accept the Offer, as they have undertaken to do so in
respect of their own shareholdings, which amount to 333,942 TGI Shares,
representing approximately 1.54 per cent of the existing issued share
capital of TGI.
7. Financing of the Offer
Full acceptance of the Offer by TGI Shareholders (assuming the exercise in
full of all outstanding options under the TGI Share Option Schemes which
are, or as a result of the Offer become, exercisable, and in respect of
which the exercise price is less than 68.5 pence per TGI Share) would
result in a maximum cash consideration payable by TC Group of
approximately #15.0 million.
The Offer will be financed entirely through banking facilities, which have
been provided by Jyske Bank A/S, a leading Danish commercial bank.
8. Inducement fee arrangement
TGI has entered into an agreement to pay TC Group an inducement fee of
#125,000 (exclusive of VAT) in the event that:
(a) before the lapsing or withdrawal of the Offer, a third party
unconnected with TC Group announces a competing offer for TGI; or
(b) the TGI Directors withdraw or alter their recommendation of the
Offer or approve or consent to the announcement of, or recommend, an
offer made by a third party unconnected with TC Group.
9. Directors and employees
The Board of TC Group has confirmed to the Board of TGI that, following
the Offer becoming or being declared unconditional in all respects, the
existing rights, including pension rights, of all employees of the TGI
Group will be fully safeguarded.
The TGI Directors have agreed to resign from the Board of TGI upon the
Offer becoming or being declared unconditional in all respects. Details of
certain arrangements between TGI and the TGI Directors regarding the
termination of their engagements and in connection with the Offer
(including payments to be made to the TGI Directors) are set out in the
Offer Document.
10. TGI Share Option Schemes
The Offer extends to any TGI Shares which are unconditionally allotted or
issued fully paid (or credited as fully paid) as a result of the exercise
of options under the TGI Share Option Schemes prior to the date on which
the Offer closes (or such earlier date as TC Group, subject to the City
Code, may determine). Following the Offer becoming or being declared
unconditional in all respects, appropriate proposals will be made to
participants in the TGI Share Option Schemes who hold options exercisable
at exercise prices of below 68.5 pence per TGI Share.
11. The Loan Note Alternative
As an alternative to receiving any or all of the cash consideration which
would otherwise be receivable under the Offer, accepting TGI Shareholders
(other than certain overseas shareholders) who validly accept the Offer
may elect to receive Loan Notes to be issued by TC Group on the following
basis:
for every #1 of cash consideration #1 nominal of Loan Notes
under the Offer
The Loan Notes will be unsecured, but will be guaranteed as to principal
by Barclays Bank PLC, and will be issued, credited as fully paid, in
amounts and integral multiples of #1 in nominal value; all fractional
entitlements will be disregarded and not paid in cash or any other form.
The Loan Notes will bear interest (from the date of issue to the relevant
holder of Loan Notes) in arrears at a rate of 1.5 per cent per annum below
six month LIBOR. Interest on the Loan Notes will be payable on 30 June and
31 December in each year (or if not a business day in any year on the
first business day thereafter), commencing 30 June 2002. The whole, or any
part (in integral amounts of #100) of a holder's holding of Loan Notes
will be redeemable at par (together with accrued interest) at the option
of the holder on any Interest Payment Date after the date falling six
months after the date of issue of the Loan Notes to such holder upon such
holder giving at least 30 days' written notice of redemption. Unless
previously redeemed or purchased, the Loan Notes will be redeemed on 30
April 2005 (or, if not a business day, on the first business day
thereafter). The Loan Notes will, subject to certain conditions, be
transferable but no application is intended to be made for the Loan Notes
to be admitted to the Official List or dealt in on any stock exchange. The
Loan Notes have not been, and will not be, registered under the Securities
Act and should not be offered, sold, resold, delivered or distributed,
directly or indirectly, in or into the United States, or to or for the
account or benefit of any US person except pursuant to an exemption from,
or in a transaction not subject to, the requirements of the Securities Act
or the relevant securities laws of any state of the United States. The
Loan Notes may not be offered, sold or delivered, directly or indirectly,
in or into Canada, Australia or Japan.
Hoare Govett has advised that, based on market conditions on 13 December
2001 (the latest practicable date prior to the publication of this
document), in its opinion, if the Loan Notes had then been in issue, the
value of the Loan Notes would have been approximately 95.0 pence per #1 in
nominal value of Loan Notes.
The Loan Note Alternative is conditional on the Offer becoming or being
declared unconditional in all respects. No Loan Notes will be issued
unless, by the time the Offer becomes or is declared wholly unconditional,
valid elections have been received for at least #0.5 million in nominal
value of Loan Notes. If insufficient elections are received, TGI
Shareholders who validly elect for the Loan Note Alternative will instead
receive cash in accordance with the terms of the Offer.
Further details of the Loan Notes will be set out in the Offer Document.
12. Compulsory acquisition and application for de-listing
Subject to the Offer becoming or being declared unconditional in all
respects, if sufficient acceptances are received under the Offer, TC Group
intends to use the procedures set out in sections 428 to 430F of the
Companies Act to compulsorily acquire any outstanding TGI Shares to which
the Offer relates and to procure that TGI applies to the UK Listing
Authority for cancellation of the listing of the TGI Shares on the Official
List and to the London Stock Exchange for admission to trading of TGI Shares
to be cancelled. It is anticipated that the cancellation of TGI's listing
and admission will take effect no earlier than the later of (i) the expiry
of any period during which TGI Optionholders may elect to accept proposals
made by TC Group in respect of subsisting options granted under the TGI
Share Option Schemes or (ii) the expiry of 20 business days after the Offer
becomes or is declared unconditional in all respects. An announcement will
be made following (i) the Offer becoming or being declared unconditional in
all respects; or (ii) the commencement of the compulsory acquisition
procedures under sections 428 to 430F of the Companies Act in respect of the
TGI Shares, stating the anticipated time and date, not earlier than 20
business days after such announcement, when the listing of the TGI Shares on
the Official List and their admission to trading on the London Stock
Exchange market for listed securities will be cancelled.
Enquiries:
TC Group A/S 00 45 8742 7000
Anders Fauerskov Chief Executive
Hoare Govett Limited 020 7678 8000
Chris Fielding Director, Corporate
Finance
Will Shaw Director, Corporate Broking
TGI plc 023 9249 2555
Nigel Hamilton Chief Executive
Peter Russell Finance Director
Bridgewell Corporate Finance Limited 020 7626 3322
Greg Aldridge
Paul Shackleton
The Offer is not being made, directly or indirectly, in or into, or by the
use of mails or any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or
any facilities of a national securities exchange of, the United States,
Canada, Australia or Japan and the Offer is not capable of acceptance by any
such use, means, instrumentality, or facilities from or within, the United
States, Canada, Australia or Japan. Accordingly, copies of this announcement
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in, into or from the United States, Canada,
Australia or Japan and persons receiving this announcement and any related
document (including nominees, trustees or custodians) must not mail or
otherwise forward, distribute or send it in, into, or from the United
States, Canada, Australia or Japan. Doing so may render invalid any
purported acceptance of the Offer. The availability of the Offer to persons
who are not resident in the United Kingdom may be affected by the laws of
the relevant jurisdictions. Persons who are not resident in the United
Kingdom should inform themselves about and observe any applicable
requirements.
The Loan Notes have not been, nor will they be, registered under the
Securities Act or under the securities laws of any state of the United
States; the relevant clearances have not been, nor will they be, obtained
from the securities commission of any province or territory of Canada; no
prospectus has been lodged with, or registered by, the Australian Securities
and Investments Commission or the Japanese Ministry of Finance; and the Loan
Notes have not been, nor will they be, registered under or offered in
compliance with applicable securities laws of any state, province, territory
or jurisdiction of Canada, Australia or Japan. Accordingly, the Loan Notes
may not (unless an exemption under relevant securities laws is applicable)
be offered, sold, resold or delivered, directly or indirectly, in or into
the United States, Canada, Australia or Japan or any other jurisdiction if
to do so would constitute a violation of the relevant laws of, or require
registration thereof in, such jurisdiction or to, or for the account or
benefit of, any United States, Canadian, Australian or Japanese person.
Hoare Govett, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for TC Group and no one else in
connection with the Offer and will not be responsible to anyone other than
TC Group for providing the protections afforded to clients of Hoare Govett
or for giving advice in relation to the Offer.
Bridgewell, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for TGI and no one else in
connection with the Offer and will not be responsible to anyone other than
TGI for providing the protections afforded to clients of Bridgewell or for
giving advice in relation to the Offer.
This announcement alone does not constitute an offer or an invitation to
purchase any securities. Any acceptance or other response to the Offer
should be made only on the basis of the information to be contained in the
Offer Document that will be despatched to TGI Shareholders today.
MORE TO FOLLOW
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