OPSEC SECURITY GROUP PLC Summary
The board of Orca Bidco Limited ('Orca') and the Independent Directors of OpSec Security Group plc ('OpSec') are pleased to announce that they have reached agreement on the terms of a recommended cash offer for the entire issued share capital of OpSec not already owned or contracted to be acquired by Orca (the 'Transaction'). The Transaction is to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 (the 'Scheme').
Under the terms of the Scheme, Scheme Shareholders will receive 55 pence in cash (the 'Transaction Consideration') for each Scheme Share, valuing the entire issued share capital of OpSec at approximately £66.7 million.
Orca has entered into a conditional binding arrangement with the EBT Trustee in relation to its equity holding amounting to 2,514,429 OpSec Shares, representing approximately 2.1 per cent of the Voting Shares which upon completion of the Transaction will be rolled over into 2,826,115 B ordinary shares in Orca, representing approximately 2.4 per cent of the issued ordinary share capital of Orca as at such date. It is also proposed that Optionholders release their options over OpSec Shares for new options over B ordinary shares in Orca. The proposed arrangements between Orca and the EBT Trustee and the proposed treatment of the Optionholders (together, the 'Management Arrangements') are subject to approval, pursuant to Rule 16 of the Code, by the Independent Shareholders at the Independent Shareholders Meeting and to the Scheme becoming Effective.
The Transaction Consideration represents a premium of approximately:
69 per cent to the Closing Price of 32.5 pence per OpSec Share on 29 September 2015, being the last Business Day before Orca Holdings Limited ('Orca Holdings'), the parent company of Orca, acquired 30,512,078 OpSec Shares from Herald Investment Management Limited (the 'Herald Shares') and announced a possible offer for the ordinary shares of 5 pence each in the capital of OpSec not held by it;
62 per cent to the average Closing Price of 34.0 pence per OpSec Share for the 12 months prior to and including 29 September 2015, being the last Business Day before the date on which Orca Holdings acquired the Herald Shares and announced a possible offer for the OpSec Shares not already held by it; and
11 per cent to the Closing Price of 49.5 pence per OpSec Share on 27 October 2015,
being the last Business Day before the date of this announcement.
Orca has received irrevocable undertakings:
to vote in favour of the Transaction in respect of 7,834,845 OpSec Shares representing approximately:
39.8 per cent of the Scheme Shares, being those OpSec Shares which are eligible to vote at the Court Meeting convened by the Court for the purposes of approving the Scheme; and
90.2 per cent of the Voting Shares1, being those Voting Shares which are eligible to vote at the General Meeting convened to pass the Special Resolutions in relation to the Scheme, the Transaction and the Amended OpSec Articles,
to vote in favour of the Ordinary Resolutions to approve the Management Arrangements at the Independent Shareholders Meeting in respect of 4,583,309 OpSec Shares, representing approximately 29.1 per cent of the Independent Shares, being those OpSec Shares which are eligible to vote at the Independent Shareholders Meeting2.
Further details of the irrevocable undertakings, including the conditions to which they are subject, are set out in paragraph 6 of this announcement.
The Independent Directors, Richard Cremona and Michael Angus, who have been so advised by Shore Capital, consider the terms of the Transaction to be fair and reasonable and in the best interests of Scheme Shareholders. In providing its advice to the Independent Directors, Shore Capital has taken into account the Independent Directors' commercial assessment. Accordingly, the Independent Directors have unanimously agreed to recommend that Scheme Shareholders vote in favour of the Scheme at the Court Meeting and OpSec Shareholders vote in favour of the Special Resolutions to be proposed at the General Meeting, as Michael Angus has irrevocably undertaken to do in respect of his own beneficial holding, amounting in aggregate to 1,468,169 OpSec Shares, representing approximately 7.5 per cent of the Scheme Shares and approximately 1.2 per cent of the Voting Shares. Richard Cremona does not hold any OpSec Shares.
None of the OpSec Directors are considered independent for the purposes of the Independent Shareholders Meeting. Shore Capital considers the Management Arrangements to be fair and reasonable in so far as the Independent Shareholders are concerned and, accordingly, Shore Capital intends to recommend that Independent Shareholders vote in favour of the Ordinary Resolutions required to approve the Management Arrangements at the Independent Shareholders Meeting.
Orca was established on 12 October 2015 by Orca Holdings for the purposes of effecting the Scheme and implementing the Transaction and the Management Arrangements.
On 27 October 2015, Orca Holdings and Orca entered into a share for share exchange agreement (the 'Orca Share Exchange Agreement') pursuant to which Orca acquired 30,512,078 OpSec Shares held by Orca Holdings in exchange for the issue to Orca Holdings
1 Includes Voting Shares beneficially held by Orca and the EBT Trustee
2 The 15,753,254 OpSec Shares in aggregate held by Independent Shareholders is currently an estimate based on information provided by the Company and all Optionholders will be approached for confirmation of the number of OpSec Shares they each hold between the date of this announcement and the date of the Scheme Circular
by Orca of a corresponding number of ordinary shares in Orca.
On 27 October 2015, Orca Holdings and Orca entered into a declaration of trust pursuant to which Orca Holdings declared that it holds its entire beneficial interest in 48,512,914 OpSec Shares on trust for Orca, such declaration of trust being in consideration of the issue to Orca Holdings of 48,512,914 ordinary shares in Orca. On 27 October 2015, Orca Holdings subsequently executed a stock transfer form to transfer the bare legal title in 48,512,914 OpSec Shares to Orca, which has yet to be stamped and registered in the statutory books of OpSec.
On 27 October 2015, Orca Holdings and Orca entered into a declaration of trust pursuant to which Orca Holdings declared that it holds its entire beneficial interest in 20,000,000 Preferred Shares on trust for Orca, such declaration of trust being in consideration of the issue to Orca Holdings of 20,000,000 ordinary shares in Orca. On 27 October 2015, Orca Holdings subsequently executed a stock transfer form to transfer the bare legal title in the 20,000,000 Preferred Shares to Orca, which has yet to be stamped and registered in the statutory books of OpSec.
Orca currently holds 30,512,078 OpSec Shares and the beneficial interest in 48,512,914 OpSec Shares and 20,000,000 Preferred Shares, with the legal title in respect of the beneficially held 48,512,914 OpSec Shares and the Preferred Shares held by Orca Holdings pending stamping and registration of the respective stock transfer forms. Accordingly, Orca currently holds the beneficial interest in approximately 81.70 per cent of the Voting Shares of OpSec. Orca is not a Scheme Shareholder but is permitted to vote on the Special Resolutions to be proposed at the General Meeting and has confirmed its intention to vote in favour of such resolutions. Following completion of the Transaction and assuming that the Scheme and the Management Arrangements are approved, Orca will be majority owned by Orca Holdings with a minority holding held by the EBT Trustee.
Currently, Orca and Orca Holdings are, respectively, indirect and direct wholly owned subsidiaries of Investcorp Technology Fund III. The ultimate parent company of the Investcorp Group is Investcorp Bank B.S.C. Further details on Orca, Orca Holdings and the Investcorp Group are set out in paragraph 8 of this announcement.
The Transaction is subject to a number of conditions and further terms which are set out in Appendix I of this announcement. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent in value of the Scheme Shares voted. In addition, (i) Special Resolutions authorising, amongst other matters, the OpSec Directors to take all such action as they may consider necessary or appropriate for carrying the Scheme into full effect and adopting the Amended OpSec Articles must be passed by Voting Shareholders representing at least 75 per cent of votes cast at the General Meeting, and (ii) Ordinary Resolutions approving the Management Arrangements must be passed by Independent Shareholders representing in excess of 50 per cent of the votes cast at the Independent Shareholders Meeting.
Subject to the satisfaction of the Conditions, it is expected that the Scheme will become Effective by the end of 2015. The Scheme Document, containing further details of the Transaction and the Management Arrangements will be posted to OpSec Shareholders as soon as practicable and in any event within 28 days of this announcement.
On 3 July 2015, OpSec published its final results for the period ending 31 March 2015. Please see the OpSec Annual Report and Accounts 2015 on OpSec's website (http://www.opsecsecurity.com). OpSec's trading in the 6 month period to 30 September 2015 was satisfactory and in line with the expectations of the OpSec Board.
Commenting on the Transaction, Richard Cremona, OpSec's Chief Executive Officer and one of the Independent Directors, said: 'The Transaction gives OpSec's shareholders the opportunity to achieve a cash exit at a substantial premium to the recent market price. Once completed, OpSec will have access to significantly greater and more appropriately structured finance, increasing its ability to invest further in the OpSec Group's business. This should benefit all stakeholders including the interests and prospects of our staff'.
Commenting on the Transaction, Hazem Ben-Gacem, an Investcorp Group Managing Director responsible for Investcorp Technology Fund III's investment in OpSec, said: 'We have been investors in OpSec for over five years and have taken a long-term view to work with OpSec and management to build shareholder value. During that time, we have supported OpSec on its organic growth initiatives and through several meaningful acquisitions. While there is still much work ahead for OpSec and management, we are excited to commit additional resources and capital to OpSec with the expectation of enhancing its competitive positioning and becoming a leading global player in the provision of anti-counterfeiting solutions to brands and governments'.
The expected transaction timetable will be set out in the Scheme Document.
As at the date of this announcement, Orca holds 30,512,078 OpSec Shares and the beneficial interest in 48,512,914 OpSec Shares and 20,000,000 Preferred Shares, all with equal voting rights and therefore Orca holds a beneficial interest in approximately 81.70 per cent of the Voting Shares.
This summary should be read in conjunction with the full text of this announcement and the appendices. Appendix I to this announcement contains the conditions to, and certain further terms of, the Transaction. Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix III to this announcement contains definitions of certain expressions used in this summary and in this announcement.
The Transaction will be subject to the Conditions, the other terms set out in this announcement and to the full terms and conditions which will be set out in the Scheme Document.
Enquiries:
Hazem Ben-Gacem Tel: +44 (0)20 7629 6600
Colin Christie and Miles Cox Tel: +44 (0)20 7523 8000
Michael Angus Tel: +44 (0)191 417 5434
Stephane Auton / Edward Mansfield / Patrick Castle Tel: +44 (0)207 408 4090
Important Notices
This announcement is for information purposes only and is not intended to and does not constitute or form any part of an offer to sell or an invitation to subscribe for or purchase any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Transaction, the Management Arrangements or otherwise. The Transaction and the Management Arrangements are being made solely pursuant to the terms of the Scheme Document, which will contain the full terms and conditions of the Transaction and the Management Arrangements, including details of how to vote in respect of the Transaction and the Management Arrangements. Any response in relation to the Transaction and/or the
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