ABLON GROUP LIMITED 
By NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
For Immediate Release 25 March 2013
Ablon Group Limited
("Ablon" or the "Company")
Response by the Independent Directors
to the unconditional mandatory cash offer by
CPI Group, a.s.
for the entire issued and to be issued share capital of Ablon
not already owned by CPI
The Independent Directors of Ablon announce that the Company has today posted a response document (the "Response Circular") setting the views of the Independent Directors on the unconditional mandatory cash offer by CPI Group, a.s. ("CPI") to acquire all of the issued and to be issued Ordinary Shares not already owned by CPI (the "Offer") for the purposes of the City Code on Takeovers and Mergers (the "Code"). A document containing the full terms and conditions of the Offer was posted to Shareholders by CPI on 13 March 2013.
The Response Circular sets out the background to the Offer and the arguments for and against accepting the Offer and contains the recommendation of the Independent Directors to Shareholders to accept the Offer.
The procedure for acceptance of the Offer is set out on pages 11 to 14 of the Offer Document and, in respect of Ordinary Shares in certificated form, in the Form of Acceptance. To accept the Offer in respect of Ordinary Shares in certificated form, you must complete and return the Form of Acceptance as soon as possible and, in any event, so as to be received by the Receiving Agent, Neville Registrars Limited, by post, or by hand (during normal business hours only) at Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, B63 3DA by no later than 1.00 p.m. (London time) on 3 April 2013. Acceptances in respect of Ordinary Shares in uncertificated form (that is, in CREST) should be made electronically through CREST so that the TTE instruction settles no later than 1.00 p.m. (London time) on 3 April 2013. If you are a CREST sponsored member, you should refer to your CREST sponsor as only your CREST sponsor will be able to send the necessary TTE instruction to Euroclear.
The information contained in this announcement is derived from, and should be read in conjunction with, the Response Circular. Shareholders should read the whole of the Response Circular, in particular the letter from the Independent Directors of Ablon, and not rely solely upon the information set out below.
LETTER FROM THE INDEPENDENT DIRECTORS
OF
ABLON GROUP LIMITED
1. Introduction
Shareholders should have received a copy of the Offer Document dated 13 March 2013 containing, inter alia, the terms of the Offer being made by CPI for the entire issued and to be issued share capital of Ablon not already owned by it and a copy of the Form of Acceptance. The purpose of this letter is to explain the background to, and reasons for, the opinion of the Independent Directors in relation to the Offer and to set out the factors Shareholders should consider in assessing whether or not to accept the Offer.
2. Background to the Offer
On 22 February 2013, CPI acquired 39,237,704 Ordinary Shares from Uri Heller, former director and CEO of Ablon, at a price of 22.5 pence per Ordinary Share, increasing its shareholding from 30,443,938 Ordinary Shares, representing approximately 22.23 per cent. of the relevant securities of the Company to 69,681,642 Ordinary Shares, representing approximately 50.89 per cent. of the relevant securities of the Company. The acquisition of these Ordinary Shares triggered a requirement under Rule 9 of the Code to make a mandatory cash offer for the entire issued ordinary share capital of the Company (other than those Ordinary Shares that are already owned by CPI) at the highest price paid by CPI for an Ordinary Share over the last 12 months, being 22.5 pence. As at the date of the Offer CPI held Ordinary Shares carrying more than 50 per cent. of the voting rights of the Company so the Offer was wholly unconditional from the outset. In addition, following the purchase of these Ordinary Shares CPI has become the parent company of the Group. Subsequently on 21 March 2013, CPI announced that acceptances to the Offer had been received and accepted in respect of a total of 33,117,575 Ordinary Shares, increasing CPI's shareholding to 102,799, 217 Ordinary Shares, representing 75.07 per cent. of the Issued Share Capital.
As noted in paragraph 12 of the Letter from CPI Group of the Offer Document, on 4 December 2012, the Company and CPI entered into a Standby Underwriting Agreement pursuant to which the Company and CPI agreed that they would negotiate in good faith with a view to finalising an underwriting agreement to be entered into in connection with a proposed rights issue by the Company (the "Rights Issue"). The Company and CPI committed to a price of 15 pence per new Ordinary Share in the Company for the Rights Issue. The Company agreed that it would take all of the actions necessary to implement the Rights Issue, including preparing and submitting a prospectus to the UKLA. CPI, subject to certain conditions, undertook to subscribe for a number of new Ordinary Shares at 15 pence so that its stake of the issued capital and voting rights in the Company, on a fully diluted basis post completion of the Rights Issue, was between 29.90 per cent. and 29.99 per cent. At the time, CPI held no Ordinary Shares in the Company but reserved the right, but not the obligation, subject to applicable laws and regulations to acquire additional Ordinary Shares (or interests in additional Ordinary Shares) prior to, during or following the Rights Issue (and whether pursuant to the Rights Issue or otherwise).
The Board subsequently felt it was appropriate to seek Shareholder approval for the implementation of the Rights Issue and proposed a resolution regarding this at a meeting held on 1 February 2013. The Board would like to draw the attention of Shareholders to the fact that, at the time of the general meeting to propose the Rights Issue, the Offeror, through Mr Vitek (who wholly owns CPI), had already acquired approximately 22.23 per cent. of the issued share capital of the Company and was instrumental in the Rights Issue not progressing by voting AGAINST the resolution at the relevant Shareholder meeting, having initially agreed with the Company to be an underwriter of the Rights Issue.
3. Summary of the Offer
The Offer by CPI is being made at a price of 22.5 pence in cash for each Ordinary Share, and thus values the entire issued ordinary share capital of Ablon at £30.81 million, representing a premium of approximately 21.62 per cent. to the closing mid-market price of the Ordinary Shares on 5 February 2013, the day prior to the commencement of the Offer Period and 4.65 per cent. to the closing mid-market price of the Ordinary Shares on 21 February 2013, the last trading day prior to the date of the Announcement.
The Offer has been made at the maximum price paid per Ordinary Share by CPI in the last 12 months and therefore represents the minimum priceat which the Offer can be made under the Code. Shareholders should therefore note that the Offer Price does not represent any premium over and above a price which is required as a mandatory minimum.
Shareholders should also note that the Offer is being made at a substantial discount to the Current Net Asset Value of the Company and, in the view of the Independent Directors, it significantly undervalues the Company. The Current Net Asset Value of the Company is £107,242,275, or approximately £0.783 per Ordinary Share. Therefore the Offer is at a discount of approximately 71.26 per cent. to the Current Net Asset Value of the Company. Shareholders are referred to paragraphs 11.2 and 11.3 of Part II of the Response Circular for further details on the Current Net Asset Value of the Company.
4. Factors for consideration by Shareholders in evaluating the Offer
The Independent Directors believe, having been so advised by Beaumont Cornish, that Shareholders should consider the matters set out below when considering whether to accept the Offer. In providing advice to the Independent Directors, Beaumont Cornish has relied upon the commercial assessments of the Independent Directors.
4.1 Arguments for accepting the Offer
Offer Price versus Ordinary Share price
The Offer Price of 22.5 pence per Ordinary Share represents a premium of approximately 21.62 per cent. to the closing mid-market price of the Ordinary Shares on 5 February 2013, the day prior to the commencement of the Offer Period and a small premium of 4.65 per cent. to the closing mid-market price of the Ordinary Shares on 21 February 2013, the last trading day prior to the date of the Announcement.
Since Ablon began trading on the Main Market under the standard segment of the Official List on 1 July 2011, the closing mid-market price of an Ordinary Share has decreased from a high of 47.5 pence on 1 July 2011 to 18.5 pence on 5 February 2013(the day prior to the commencement of the Offer Period), representing a decrease of 61 per cent.
The average closing mid-market price of an Ordinary Share for the 12 months preceding the commencement of the Offer Period is 19.3 pence. The Offer Price is at a 16.6 per cent. premium to this price and is the best price that Shareholders could have achieved for their Ordinary Shares since 29 May 2012 when the mid-market closing price was 23.5 pence.
The position of Volksbank in relation to the Offer
The Company has recently been informed by Volksbank, which, as at the date that the Offer Document was posted, was beneficially interested in 33,285,001 Ordinary Shares, representing approximately 24.31 per cent. of the Issued Share Capital, that it had accepted the Offer in relation to its entire beneficial holding. In addition the Independent Directors also intend to accept the Offer in respect of their combined holding of 4,451,383 Ordinary Shares, representing approximately 3.25 per cent. of the Issued Share Capital. Provided these acceptances are valid and not withdrawn, CPI's holding in Ablon would represent in excess of 75 per cent. of the Issued Share Capital.
As announced by CPI, as at 1.00 p.m. on 21 March 2013 it had received valid acceptances in respect of a total of 33,117,575 Ordinary Shares, representing approximately 24.18 per cent. of the Issued Share Capital. It can be deduced that, 33,117,001 of these Ordinary Shares represent the majority beneficial holding of Volksbank.
Financial position of the Company
Although the Offer Price is substantially below the Current Net Asset Value per Ordinary Share (refer to 'Arguments for not accepting the Offer'for further information), the share price of Ablon arguably reflects an element of market perception of the Company, its operations, history, management and sector and therefore investor demand for the Ordinary Shares. As referred to in the Offer Document, Ablon continues to face refinancing and operational challenges due tothe difficult state of the credit and real estate market in the countries in which it operates. This has had a continued negativeimpact on Ablon's ability to access capital and on its trading performance. As a consequence, Ablon has limited its development activity while continuing to focus on generating such positive cash flow as it can. Although Ablon has been able to extend andrestate its loan with Deutsche Pfandbrief bank, as at 31 December 2012 Ablon was still in breachof two of its debt covenants and some of its loans have expired.
On 22 February 2013, Mr. Vitek, through a subsidiary of Czech Property Investments, a.s., Beta, entered into a non-binding heads of terms with Volksbank to acquire the Company's portfolio of land bank loans ("Land Bank Portfolio") with a total capital amount of €29,421,222 plus interest and fees payable as at 31 December 2012, together with the related security (the "Land Bank Portfolio Acquisition Agreement") at a 50 per cent. discount to the nominal value. This Land Bank Portfolio consists of the loans between Volksbank and the Company which had expired and which if the Company had been requested to re-pay, and were it unable to raise sufficient sales proceeds from the disposal of the Group's interest in the properties secured against such loans, would have been in default. In addition, subject to completion of the acquisition of the Land Bank Portfolio and relevant requests being sent to Volksbank by the yielding loan counterparties, Volksbank agreed, inter alia, to adjust the terms of certain of the Company's yielding loan facilities (the "Yielding Loan Adjustments").
The Independent Directors, having been so advised by Beaumont Cornish, are of the opinion that the Land Bank Portfolio acquisition and the Yielding Loan Adjustments are in the best interests of the Company and of Shareholders as a whole and on that basis have provided, to Volksbank, the requested consent to the transfer of the Land Bank Portfolio, and accordingly have no objection to the Land Bank Portfolio acquisition and the Yielding Loan Adjustments proceeding. The Independent Directors, as so advised by Beaumont Cornish, are not in a position to opine on whether the terms of the Land Bank Portfolio acquisition and the Yielding Loan Adjustments are fair and reasonable in so far as Independent Shareholders are concerned. In coming to this decision the Independent Directors have taken into account, inter alia, the following factors:
1. the Offer Price has been set solely by reference to the requirements of Rule 9 of the Code following the acquisition by CPI of Mr Uri Heller's entire shareholding of 39,237,704 Ordinary Shares on 22 February 2013, which took CPI's interest in the Issued Share Capital from 22.23 per cent. to 50.89 per cent., and not by any commercial negotiations to arrive at a price which, in the view of Independent Directors, reflects a fair value of the Ordinary Shares or the benefits of entering into the Land Bank Acquisition Agreement and the Yielding Loan Adjustment agreement being received by Volksbank, CPI and the Company and not by the Independent Shareholders. Independent Shareholders should refer to the 'Recommendation' paragraph of this announcement where they will note that despite the fact that the Independent Directors believe that the Offer substantially undervalues the Company they are recommended to accept the Offer;
2. in so far as Independent Shareholders who accept the Offer are concerned, the Land Bank Portfolio acquisition and the Yielding Loan Adjustments are of no consequence given that they will no longer be Shareholders in the Company due to the cash exit which is effectively guaranteed by the wholly unconditional cash Offer;
3. the Land Bank Portfolio acquisition and the Yielding Loan Adjustments would help to stabilise the financial position of the Company for any remaining Shareholders (bearing in mind the recommendation of the Independent Directors and the Offeror's stated intention to acquire the Ordinary Shares of any minority should the circumstances permit, which means that Independent Shareholders cannot be guaranteed the option of remaining so) in the short term; and
4. although there is no active secondary market in the debt, it is being acquired by CPI from Volksbank at a 50 per cent. discount to nominal value, the benefit of which flows to CPI and not to Independent Shareholders.
Cash exit
The Offer provides Shareholders with the opportunity to exit their investment at a premium to the share price prior to the commencement of the Offer Period, with the certainty of cash. It will also enable Shareholders to exit their investment free of dealing costs. Accepting the Offer would eliminate the investment risks and uncertainties associated with holding Ordinary Shares.
Lack of viable alternative options
Given that the Company is now controlled by CPI, the current Board is no longer in a position independently to consider alternative courses of action in order to create value for Shareholders. Accordingly, it is not possible for the Board to consider any sale of assets and use the proceeds to repay debt with any surplus being returned to Shareholders, and it is also effectively a bar to any other competing offeror from providing an alternative and potentially more attractive offer for the Company.
The Directors believe that the ability to realise Ablon's assets and the value at which they could be realised is uncertain and dependent upon various factors, including (i) the marketability of such assets, (ii) the availability and pricing of similar assets in the market, and (iii) the economic environment in Central Eastern Europe.
Controlling shareholder
As announced by CPI on 21 March 2013, CPI is already interested in 102,799,217 Ordinary Shares, representing approximately 75.07 per cent. of the relevant securities of the Company. As a result, CPI has the ability to exercise effective control over Ablon and exert significant influence over its strategic direction. Given that CPI is already interested in over 75 per cent. of the issued share capital of Ablon, they currently hold sufficient voting rights to ensure the approval or rejection of ordinary resolutions of Ablon, including resolutions relating to the appointment and removal of its executive and non-executive directors. CPI could therefore remove the existing Directors and appoint a board comprised solely of their own representatives. In addition, as CPI controls in excess of 75 per cent, of the votes attaching to the Ordinary Shares. CPI will therefore be able to amend the Ablon articles of incorporation to affect the rights attaching to Ordinary Shares and pass special resolutions.
Shareholders should be aware that there are no provisions of Guernsey law which confer rights of pre-emption in respect of the issue or allotment of any class of shares to protect Shareholders from dilution of their shareholdings.
There can be no certainty as to how the Group will be managed in the future under CPI's ownership and how and at what stage any value will be realised for the benefit of any Shareholders who do not accept the Offer and are able to remain as Shareholders. Shareholders should note that there has been little or no interaction with the Directors or the Company's advisers in regard to what an appropriate level of offer would be for the minority Shareholders.
CPI has renegotiated the arrangements with Volksbank substantially without reference to the Independent Directors and therefore any minority Shareholders who wish to remain as such do so very much at their own risk as they will be without any protections afforded by a listing or an independent board and there will be no guarantee that the Company will retain any systems of corporate governance.
Potential loss of Official Listing
CPI has stated that it will seek to procure that the Board applies to the UKLA for the removal and de-listing of its Ordinary Shares from the standard segment of the Official List of the UKLA and to the London Stock Exchange for cancellation of trading in its Ordinary Shares on the Main Market as soon as practicable.
As noted above, CPI is currently interested in Ordinary Shares representing in excess of 75 per cent. of the relevant securities of the Company and has the ability to appoint and remove Board directors. Although the Company stated in its Standard Listing Prospectus, dated 28 June 2011, that it would adopt Listing Rule 5.2.5 and seek Shareholder approval for any Cancellation there is no guarantee that CPI will seek such approval and in addition, given that CPI is now interested in over 75 per cent. of the Issued Share Capital the result would be a foregone conclusion. If no Shareholder approval is sought, through the appointment of a new board, CPI would have the ability to enforce the Cancellation in any event.
Even if it was not the intention of CPI to initiate the Cancellation, given the lack of Ordinary Shares held in public hands the Company may no longer meet the minimum specifications required of a company on the standard segment of the Official List and it is likely that the Company would be de-listed in any event.
The Independent Directors believe that without a listing, the liquidity, marketability and value of the Ordinary Shares is likely to be reduced to the detriment of minority Shareholders. Furthermore, Shareholders who do not accept the Offer would no longer benefit from the Shareholder protections provided by the Listing Rules and the DTRs and other related regulations applicable to a Company with a Standard Listing.
Compulsory acquisition of Ordinary Shares
If the Offeror receives acceptances under the Offer in respect of, and/or otherwise acquires or contracts to acquire, 90 per cent. or more in nominal value of the Ordinary Shares to which the Offer relates (excluding any Ordinary Shares held as treasury shares) and of the voting rights attaching to those Ordinary Shares, the Offeror intends to exercise its rights in accordance with section 337 of the Companies (Guernsey) Law, 2008, as amended, to acquire compulsorily the remaining Ordinary Shares on the same terms as the Offer.
In these circumstances a Shareholder would be forced to sell their Ordinary Shares to CPI whether or not they wish to accept the Offer. By accepting, they will receive their consideration sooner.
Shareholders should note that, given the acceptances to the Offer to date and the intention of the Independent Directors to accept the Offer, in excess of 55 per cent. of those Ordinary Shares to which the Offer relates (excluding any Ordinary Shares held as treasury shares) and of the voting rights attaching to those Ordinary Shares have effectively accepted and therefore the likelihood of such a compulsory acquisition is high.
Liquidity and marketability
As a result of the concentration of the majority of Ordinary Shares with CPI at present and following the Offer, and other blocks currently held by other significant Shareholders, the Ordinary Shares may become increasingly illiquid. If Shareholders do not accept the Offer, it is possible that Shareholders may be unable to sell their Ordinary Shares at a price equivalent to that available under the Offer for some time, if ever.
CPI holds a significant stake in Ablon. In the unlikely event that Ablon remains admitted to trading on the standard segment of the Main Market, and CPI seeks to sell its Ordinary Shares, this may have a significant negative effect on Ablon's share price.
4.2 Arguments for not accepting the Offer
Offer Price versus Current Net Asset Value
The Offer Price represents a discount of approximately 71.26 per cent. to Ablon's Current Net Asset Value per Ordinary Share of £0.783. If Shareholders accept the Offer, they will be prevented from benefitting from any future cash realisations of Ablon's assets and any consequent capital returns to Shareholders, which may be higher than the value of the Offer.
The Offer has been made at the maximum price paid per Ordinary Share by CPI in the last 12 months and therefore represents the minimum priceat which the Offer can be made under the Code. Shareholders should therefore note that the Offer Price does not represent any premium over and above a price which is required as a mandatory minimum.
Additional value within the Company
The Directors believe that there may be further significant value in Ablon that is not reflected in the Offer Price taking into account a number of factors, including:
(a) completion of the Land Bank Acquisition Agreement and the Yielding Loan Adjustments whereby CPI has purchased the Land Bank Portfolio at a 50 per cent discount to the nominal value. Completion of this transaction will enableCPI to reduce the gearing of the Group while ensuring loan prolongations and thus freeing the Company for potential loan restructuring and the raising of further debt in order to take advantage of further value creation opportunities within Ablon's real estate;
(b) the quality of the personnel and management team; and
(c) the current value of the Ablon brand that can be further exploited.
The Directors believe that the poor share price performance of the Company over the six months prior to the commencement of the Offer Period has primarily been a result of instability in the composition of the Board and therefore the management of the Company, directly resulting from the various requisitioned general meetings by substantial Shareholders. The fact that Volksbank has not been in a position to extend the Land Bank Portfolio, containing a number of loans which the Company was servicing, has also placed the Company into an unstable financial position, the reasons for which have been beyond the Company's control. The Independent Directors are therefore of the view that the share price at the commencement of the Offer Period, and therefore the price being used to illustrate an Offer premium of 21.62 per cent., does not reflect a fair representation of any potential premium as the base price does not reflect the inherent value within the Company.
Shareholders who accept the Offer or who are forced to accept under section 337 of the Companies (Guernsey) Law 2008, as amended, will be prevented from benefitting from any future recovery in Ablon's share price which may occur, if in the unlikely event Ablon maintains its listing.
Ablon may benefit under the control of CPI
Ablon may benefit under the control of its new parent company, particularly if CPI are supportive of Ablon. Shareholders who reject the Offer and remain Shareholders may be in a position to benefit from any increase in the value of Ablon and therefore any value that CPI may realise in relation to its assets in the future. However, if CPI receives acceptances under the Offer in respect of, and/or otherwise acquires or contracts to acquire 90 per cent. or more in nominal value of the Ordinary Shares to which the Offer relates and of the voting rights attaching to those Ordinary Shares, CPI intends to exercise its rights in accordance with section 337 of the Companies (Guernsey) Law 2008, as amended, to acquire compulsorily the remaining Ordinary Shares on the same terms as the Offer.
However, as noted above, there are substantial risks associated with remaining as a minority Shareholder and there can be no guarantee that any value will be realised for such remaining Shareholders. If Shareholders do remain as such then they must realise that they do so very much at their own risk.
5. The effects of implementation of the Offer
The Independent Directors believe the Offer will result in a more stable financial position for the Company as part of a substantial and better capitalised group within CPI, with a revised loan provider position, which should result in greater opportunities for potential real estate developments and completion of existing projects, and there should be ongoing employment opportunities for the retained management team.
CPI has stated in the Offer Document that it intends to grow Ablon's business over the coming years and that following completion of the Offer, CPI intends to work with the Company's management and employees to ensure that the business is optimally structured. CPI has further indicated that no material changes to the employee base are currently anticipated, however, a review is expected to be carried out within 12 months of the date of the Offer Document which may result in a reduction in the headcount in those 12 months where CPI consider it to be appropriate. Following completion of the Offer, CPI has indicated in the Offer Document that the existing employment rights of the management and employees of Ablon will continue to be fully safeguarded.
CPI has further stated that there are no agreements or arrangements between CPI and management or employees of Ablon in relation to their on-going involvement in the business and the Offer is not conditional on reaching agreement with such persons.
Further, CPI has not entered into any discussions regarding incentivisation arrangements with Ms. Lovro, who holds 3.21 per cent. of the Issued Share Capital, but it may be that following a due diligence exercise, as referred to in paragraph 5 of Part 1 of the Offer Document, CPI may wish to enter into incentivisation discussions with Ms. Lovro.
The Independent Directors consider that as there has been little interaction between the Offeror and the Independent Directors, it is difficult to provide a view as to the effects of the implementation of the Offer on employment and the location of the Company's places of business as set out in the Offer Document. The Independent Directors would welcome the opportunity to enter into discussions with CPI over the repercussions on employment generally.
6. CPI's strategic plan for Ablon
In the Offer Document CPI states that it has no strategic plans for Ablon that would change, in the short term, its existing focus or operations, nor does CPI have any intention to change the location of Ablon's places of business or to redeploy Ablon's fixed assets. However, in order to crystalise potential financial and operational benefits, Mr. Vitek and CPI will perform a detailed due diligence exercise on Ablon, as a result of which Mr Vitek may undertake a reorganisation of his real estate investment and management platforms within 12 months of the Offer closing. Such reorganisation could include a merger of Ablon's operations and entities with one or more of Mr. Vitek's other investments, such as Czech Property Investments, a.s., and/or a restructuring of Mr. Vitek's investments. At present, however, there is no formal plan in place to implement such reorganisation.
Subject to Mr. Vitek deciding to implement a reorganisation of his real estate investment and management platforms as described above, CPI will act as a holding company for the Ordinary Shares acquired prior to and in connection with the Offer and CPI's business, employees, management, conditions of employment and strategic plans will not be affected by the Offer.
Following the proposed de-listing of the Ordinary Shares, CPI has no intention of maintaining a trading facility for the Ordinary Shares.
The Independent Directors consider that as there has been little interaction between the Offeror and the Independent Directors, it is difficult to provide a view as to how successful or otherwise such plans might be. The Independent Directors would welcome the opportunity to enter into discussions with CPI over the strategic direction of Ablon and to assist in the due diligence exercise as they have detailed knowledge of the assets, operations, potential development opportunities of the Land Bank Portfolio, loan agreements and realisations as well as over the strengths of the management team of the Group.
7. Independence
Mr Wolfhard Fromwald is not deemed to be an Independent Director for the purposes of considering the Land Bank Portfolio Acquisition, the Yielding Loan Adjustments or for recommending the Offer as he was appointed to the Board of Ablon through a requisitioned general meeting requested by VB Real Estate Holding eins GmbH, a company within the same group as Volksbank, which was held on 5 December 2012.
8. Employee consultation
In accordance with the requirements of Rule 2.12 of the Code, Ablon has informed employees of the right of employee representatives under Rule 25.9 of the Code to require that a separate opinion of the employee representatives on the effects of the Offer on employment be appended to the Response Circular.
9. Recommendation of the Independent Directors
Taking into account the fact that the Offer substantially undervalues the underlying business of the Company and the fact that the terms of the Offer have been set merely at the lowest allowable price under Rule 9 of the Code, the Independent Directors, as so advised by Beaumont Cornish, do NOT consider the terms of the Offer to be fair and reasonable. In advising the Independent Directors, Beaumont Cornish have taken into account the commercial assessments of the Independent Directors.
However, whilst the Independent Directors consider that the Offer undervalues the Company as evidenced by the discount of approximately 71.26 per cent. to Ablon's Current Net Asset Value per Ordinary Share of £0.783, the Offer nevertheless represents a premium to the share price as at the date prior to the commencement of the Offer Period, (which also reflects investor demand and market perception of both the Company and the European property sector). The Independent Directors also recognise that Shareholders may well not wish to remain a Shareholder in Ablon given the likelihood that it will be de-listed and the risks associated with being a minority shareholder in a company with a controlling shareholder and that the Offer provides such Shareholders an opportunity to realise their investment in Ablon for cash.
Accordingly the Independent Directors recommend that Shareholders ACCEPT the Offeras the Independent Directors intend to do so in respect of the 4,451,383 Ordinary Shares owned by them, representing approximately 3.25 per cent. of the Issued Share Capital.
10. Action to be taken to accept the Offer or not to accept the Offer
Your attention is drawn to the procedure for accepting the Offer, which is set out in paragraph 15 (Procedure for acceptance) of Part I of the Offer Document.
Shareholders are not obliged to accept the Offer. If you wish to remain a Shareholder, you should not(i) return the Form of Acceptance accompanying the Offer Document, (ii) make an Electronic Acceptance or, (iii) take any other action.
If you are in doubt about the action you should take regarding the Offer, you are recommended to consult immediately your stockbroker, bank manager, solicitor, accountant or other independent financial adviser who specialises in advising on shares or other securities and, in the case of the UK Shareholders, who is authorised under the Financial Services and Markets Act 2000.
Enquiries:
Alex Borrelli / Adrienn Lovro
Ablon Group Limited
+44 7747 020 600/+36 1 225 6600
Roland Cornish/Emily Staples
Beaumont Cornish Limited
+44 207 628 3396
The Directors, accept responsibility for the information contained in this document (other than the opinions of the Independent Directors relating to the Offer and to the Land Bank Portfolio acquisition and the Yielding Loan Adjustments for which only the Independent Directors accept responsibility, as set out below) save that the only responsibility they accept in respect of the information contained in this announcement relating to the Offeror and the Former Directors, which have been compiled from published sources, is to ensure that it has been correctly and fairly reproduced and presented. Subject as aforesaid, to the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and there is no omission likely to affect the import of such information.
The Independent Directors accept responsibility for the opinion of the Independent Directors relating to the Offer and to the Land Bank Portfolio acquisition and the Yielding Loan Adjustments contained in this announcement. To the best of the knowledge and belief of the Independent Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything to affect the import of such information.
Beaumont Cornish Limited ("Beaumont Cornish") which is authorised and regulated in the United Kingdom by The Financial Services Authority is acting for the Company in relation to the matters described in this announcement and is not advising any other person, and accordingly will not be responsible to anyone other than the Company for providing the protections afforded to customers of Beaumont Cornish or for providing advice in relation to the matters described in this announcement.
A copy of this announcement will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions) at http://www.ablon-group.com by no later than 12 noon (London time) on 26 March 2013, being the business date following the date of this announcement.
Copies of the Response Circular will be available, free of charge, at the offices of Beaumont Cornish Limited, Bowman House, 29 Wilson Street, London EC2M 2SJ and on the Company's website (www.ablon-group.com).
DEFINITIONS
The following definitions apply throughout this announcement unless the context requires otherwise:
"Announcement" | the announcement released on 22 February 2013 announcing the Offeror's firm intention to make the Offer; |
"Beaumont Cornish" | Beaumont Cornish Limited, the Company's financial adviser for the purposes of Rule 3.1 of the Code; |
"Beta" | CPI Beta a.s., a subsidiary of Czech Property Investments, a.s.; |
"Cancellation" | the proposedremoval and delisting of the Ordinary Shares from the standard segment of the Official List of the UKLA and the cancellation of trading in the Ordinary Shares on the Main Market; |
"certificated" or "in certificated form" | in relation to a share or other security, a share or other security title to which is recorded in the relevant register as being held in certificated form; |
"Code" | the City Code on Takeovers and Mergers; |
"Company" or "Ablon" | Ablon Group Limited (a company incorporated in Guernsey and registered with number 45674) whose registered office is at Frances House, Sir William Place, St. Peter Port, Guernsey GY1 4HQ; |
"CPI" or "Offeror" | CPI Group, a.s., a company incorporated in the Czech Republic with registered number 281 92 095; |
"CREST" | the relevant system (as defined in the Regulations) in respect of which Euroclear is the operator (as defined in the Regulations); |
"CREST member" | a person who is, in relation to CREST, a system member (as defined in the Regulations); |
"CREST sponsor" | a person who is, in relation to CREST, a sponsoring system participant (as defined in the Regulations); |
"CREST sponsored member" | a CREST member admitted to CREST as a sponsored member under the sponsorship of a CREST sponsor; |
"Current Net Asset Value" | the total equity attributable to the equity holder of Ablon as per the audited financial statements of the Company as at 31 December 2012, being €131,087,000 (or approximately £107,242,275 when calculated at an exchange rate of €1:£0.8181), further details of which are set out in paragraphs 11.2 and 11.3 of Part II of the Response Circular; |
"Directors" or the "Board" | the directors of the Company whose names are set out on page 8 of the Response Circular; |
"DTRs" | the Disclosure and Transparency Rules made by the FSA pursuant to FSMA governing the disclosure of information by listed companies; |
"Electronic Acceptance" | the inputting and settling of a TTE instruction which constitutes or is deemed to constitute an acceptance of the Offer on the terms setout in the Offer Document; |
"Euro", "EUR" or "€" | the Euro, being the official currency of the European Union's member states; |
"Euroclear" | Euroclear UK & Ireland Limited; |
"First Closing Date" | the date which is 21 days after the date of publication of the Offer Document, being 3 April 2013; |
"Form of Acceptance" | the form of acceptance and authority relating to the Offer sent along with the Offer Document for use by the Shareholders holding Ordinary Shares in certificated form; |
"Former Directors" | Mr Radovan Vitek and Martin N Share
© Publicnow - 2013
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