RNS Number:4837D
Comland Commercial PLC
07 September 2007
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION
7 September 2007
RECOMMENDED TERMS OF A PROPOSAL FOR THE ACQUISITION BY MCF COMMERCIAL LIMITED OF
THE ENTIRE ISSUED SHARE CAPITAL OF COMLAND COMMERCIAL PLC BY MEANS OF A SCHEME
OF ARRANGEMENT UNDER SECTION 425 OF THE COMPANIES ACT 1985
Summary
The boards of Comland Commercial Plc and MCF Commercial Limited announce that
they have reached agreement on the terms of a proposal for the issued share
capital of Comland to be acquired by MCF Commercial. MCF Commercial is owned by
Stuart Crossley, the Chief Executive of Comland.
Subject to approval by Comland Shareholders and sanction by the Court, Comland
Shareholders will receive either:
either:
for each Comland Share 9 pounds 50 pence in cash ("the Cash Alternative");
or:
for each Comland Share 95 pence in cash and 85.5 MCF Holdings Shares issued at
par ("the Cash Plus Shares Alternative").
The Cash Alternative values the fully diluted share capital of Comland at
approximately #43.3 million. The Cash Plus Shares Alternative values the fully
diluted share capital of Comland at approximately #41.3 million.
The Independent Comland Director, John Derek Collinson, having been so advised
by Grant Thornton, believes that the terms of the Cash Alternative are fair and
reasonable and recommends that Comland Shareholders vote in favour of the
resolutions to be put to the Court Meeting and the Extraordinary General Meeting
and to accept the Cash Alternative. The Independent Comland Director does not
express an opinion on the merits of the Cash Plus Shares Alternative.
A circular (the "Scheme Document") containing details of the Proposal will be
shortly posted to Comland Shareholders, convening a court meeting and an
extraordinary general meeting on 3 October 2007 at the offices of Grant Thornton
at Grant Thornton House, Melton Street, London NW1 2EP, in order that Comland
Shareholders can vote upon the proposed Scheme.
Copies of the Scheme Document will be available on the Company's website,
www.comland.co.uk
Contacts
Comland Commercial PLC
Chris Martin, Finance Director, 01628 535997
Grant Thornton Corporate Finance
Philip Secrett/Colin Aaronson, 020 7383 5100
This Announcement does not, and is not intended to, constitute or form part of
any offer to sell, or an invitation to purchase, any securities or the
solicitation of any vote or approval in any jurisdiction. The Acquisition will
be made solely by means of the Scheme Document, which will contain the full
terms and conditions of the Scheme. Comland Shareholders are advised to read
carefully the formal documentation in relation to the Proposal once it has been
despatched.
Distribution of the Scheme Document and the release, publication or distribution
of this Announcement to persons who are not resident in the United Kingdom may
be affected by the laws of the relevant jurisdictions in which they are located.
Persons who are not resident in the United Kingdom should inform themselves of,
and observe, any applicable requirements. Any failure to comply with such
applicable requirements may constitute a violation of the securities laws of any
such jurisdictions. This Announcement has been prepared for the purposes of
complying with English law and the City Code and the information disclosed may
not be the same as that which would have been disclosed if this Announcement had
been prepared in accordance with the laws of jurisdictions outside the United
Kingdom.
The Scheme Document will not be sent in or into any jurisdiction where to do so
would constitute a violation of the relevant laws of such jurisdiction.
Custodians, nominees and trustees should observe these restrictions and should
not send or distribute the Scheme Document in or into any jurisdiction where to
do so would constitute a violation of the relevant laws of such jurisdiction.
The statements contained herein are made as at the date of this Announcement,
unless some other time is specified in relation to them, and release of this
Announcement shall not give rise to any implication that there has been no
change in the facts set forth herein since such date. Nothing contained herein
shall be deemed to be a forecast, projection or estimate of the future
financial performance of Comland, MCF Commercial or MCF Holdings except where
otherwise stated.
Forward looking statements
This Announcement contains statements about Comland, MCF Commercial and MCF
Holdings that are or may be forward looking statements. All statements other
than statements of historical facts included in this Announcement may be forward
looking statements. Without limitation, any statements preceded or followed by
or that include the words ''targets'', ''plans'', ''believes'', ''expects'', ''
aims'', ''intends'', ''will'', ''may'', ''anticipates'', ''estimates'', ''
projects'' or words or terms of similar substance or the negative thereof are
forward looking statements. Forward looking statements include statements
relating to the following: (i) future capital expenditures, expenses, revenues,
earnings, synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects; (ii) business and management
strategies and the expansion and growth of Comland's, MCF Commercial's and MCF
Holdings operations and potential synergies resulting from the Proposal; and
(iii) the effects of government regulation on Comland's, MCF Commercial's or MCF
Holdings business.
Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key assumptions.
Many factors could cause actual results to differ materially from those
projected or implied in any forward looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof.
Comland, MCF Commercial and MCF Holdings disclaim any obligation to update any
forward looking or other statements contained herein, except as required by
applicable law.
Dealing disclosure requirements
Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any
person, whether or not an associate, is, or becomes, "interested" (directly or
indirectly) in 1% or more of any class of "relevant securities" of MCF
Commercial or Comland, or as a result of any transaction will be interested in
1% or more, all "dealings" in any "relevant securities" (including by means of
an option in respect of, or a derivative referenced to, any such "relevant
securities") of that company by such person (or any person through whom that
interest is derived) must be publicly disclosed by no later than 3.30 pm (London
time) on the London business day following the date of the relevant transaction.
This requirement will continue until the date on which the Scheme becomes
effective or lapses or is otherwise withdrawn. If two or more persons act
together pursuant to an agreement or understanding, whether formal or informal,
to acquire an "interest" in "relevant securities" of MCF Commercial or Comland,
will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant
securities" of Comland by Comland or MCF Group, or by any of their respective "
associates", must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at
www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a "dealing" under Rule 8, you should consult the Panel.
Advisers
Grant Thornton which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Comland and no-one else
in connection with the Proposal and this Announcement and will not be
responsible to anyone other than Comland for providing the protections afforded
to clients of Grant Thornton or for providing advice in relation to the Proposal
or the content of, or any matter or arrangement referred to in, this
Announcement.
Information required to be provided pursuant to Rule 2.10 of the City Code
Comland currently has 4,556,520 ordinary shares of 10 pence each in issue under
the International Securities Identification Number GB 0001859072.
Additional information is contained in the following Appendices
Appendix I sets out the sources of information from which the financial
calculations used in this Announcement have been derived
Appendix II contains definitions of terms used in this Announcement and the
Scheme Document
7 September 2007
RECOMMENDED PROPOSAL FOR THE ACQUISITION OF COMLAND COMMERCIAL PLC BY MCF
COMMERCIAL LIMITED BY MEANS OF A SCHEME OF ARRANGEMENT UNDER SECTION 425 OF THE
COMPANIES ACT 1985
1 Introduction
Comland Commercial Plc ("Comland") and MCF Commercial Limited ("MCF Comercial")
Directors announce in accordance with Rule 2.5 of the City Code that they have
reached agreement on the terms of a recommended proposal for the acquisition of
Comland for cash, with Comland Shareholders being offered the opportunity to
elect alternatively to receive a mixture of cash and shares, under which
proposal MCF Commercial will acquire the entire issued share capital of Comland.
The acquisition is to be effected by means of a court-approved Scheme of
Arrangement under section 425 of the Companies Act.
The Independent Comland Director is John Derek Collinson. Stuart Crossley, Chief
Executve of Comland is the sole shareholder in MCF Holdings (which is the parent
of MCF Commercial) and Stuart Crossley, together with fellow Comland Directors
Christopher Martin and Simon Funnell, are all directors of MCF Commercial and
MCF Holdings. It has been determined that it is not appropriate that they join
in recommending the Proposal. They therefore do not accept responsibility for
the views of Mr Collinson on the Proposal.
2 Summary of the Proposal
The acquisition will be effected by means of a court sanctioned Scheme of
Arrangement between the Company and the Scheme Shareholders under section 425
of the Companies Act. The Scheme is subject to the Conditions. Full details of
the Scheme are set out in Part VI of the Scheme Document.
2.1 Consideration
If the Scheme becomes effective, all the Scheme Shares will be transferred to
MCF Commercial, a wholly owned subsidiary of MCF Holdings, and, in exchange, all
Comland Shareholders (whether Independent Comland Shareholders or Family
Shareholders) will be entitled to receive:
either:
for each Comland Share 9 pounds 50 pence in cash (the "Cash Alternative");
or:
for each Comland share 95 pence in cash plus 85.5 MCF Holdings Shares issued at
par (the "Cash Plus Shares Alternative")
If the Scheme becomes effective Comland will become a wholly owned direct
subsidiary of MCF Commercial on the Effective Date and Comland Shareholders will
receive the relevant consideration referred to above.
It should be emphasised that the MCF Holdings Directors do not intend to apply
for the MCF Holdings Shares to be admitted to trading on AIM or any other stock
exchange. Accordingly Shareholders electing to take shares in MCF Holdings will
obtain shares in an unlisted company in which liquidity is likely to be
restricted.
The Cash Alternative represents a premium of approximately 138 per cent. to the
closing middle market price of 400 pence per Comland Share on 6 September 2007,
being the last dealing day prior to this Announcement.
The Cash Alternative values the fully diluted share capital of Comland at
approximately #43,286,940.
The Cash Plus Shares Alternative represents a premium of approximately 127 per
cent. to the closing middle market price of 400 pence per Comland Share on 6
September 2007, being the last practicable date prior to this Announcement.
The Cash Plus Shares Alternative values the fully diluted share capital of
Comland at approximately #41.3 million.
As required for Rule 24.10 of the City Code, Grant Thornton has provided to the
Independent Comland Director an estimate of the value of the MCF Holdings Shares
and, as at the date of the estimate and based on the matters set out in the
estimate so provided and the information reviewed, considers that the value of
each MCF Holdings Share is approximately 9.5p. The estimate by Grant Thornton is
set out in Part X of the Scheme Document.
The value of shares can go down as well as up and there will be no market for
the MCF Holdings Shares. The valuation set out in Part X of the Scheme Document
has been prepared solely for the use and benefit of the Independent Comland
Director for the purposes of Rule 24.10 of the City Code. It is not addressed to
and may not be used or relied upon by any other parties for any purpose
whatsoever and Grant Thornton expressly disclaims any liability with respect to
its contents. In particular, it does not constitute the provision of advice or a
recommendation by Grant Thornton to any Comland Shareholder or any other person
as to the fairness of the Cash Plus Shares Alternative. Comland Shareholders are
strongly recommended to take their own independent financial advice.
2.2 Risks of investing in unquoted securities
Scheme Shareholders should be aware of the risks associated with an investment
in MCF Holdings Shares. An investment in MCF Holdings Shares involves a high
degree of risk. Accordingly prospective investors should carefully consider the
specific risk factors set out below in addition to the other information
contained in the Scheme Document before electing to accept the Cash Plus Shares
Alternative. The risks listed do not necessarily comprise all those associated
with an investment in the Company and are not set out in any particular order of
priority.
An investment in MCF Holdings Shares described in the Scheme Document is
speculative and should only be undertaken by investors capable of evaluating the
risks and merits of such investment and who have sufficient resources to bear
any loss that might result from such an investment. Potential investors are
accordingly advised to consult an independent professional adviser authorised
for the purposes of FSMA who specialises in advising on investments of this kind
before making an investment decision.
A prospective investor should consider carefully whether an investment in the
Company is suitable in the light of his, her or its personal circumstances and
the financial resources available to him, her or it. If you are in any doubt
about the action you should take, you should consult your independent
professional adviser authorised under FSMA.
An investor in MCF Holdings could face the loss of his or her entire investment.
In addition to the business risks associated with Comland or any other business
owned and/or operated by MCF Holdings, an investment in MCF Holdings will carry
the following additional risks:
MCF Holdings shares will not be listed or traded on a regulated exchange or
market
MCF Holdings Shares are unlisted and it is not intended to apply for the listing
of MCF Holdings on any stock exchange. It will be considerably more difficult
for investors to sell their shares than it would be if MCF Holdings Shares were
publicly quoted.
The value of unlisted securities will be uncertain
Since the MCF Holdings Shares will not be listed or traded on a regulated
exchange or market, their value is and may remain uncertain. There is no
assurance that investors will be able to sell their shares at or above the value
at which they are being offered to Scheme Shareholders.
MCF Holdings shareholders will not be afforded the protections available to
shareholders in publicly quoted companies
MCF Holdings will not be subject to the Listing Rules of the UK Listing
Authority, the AIM Rules, the City Code, the Combined Code nor any other similar
rules or regulations applying to companies with securities admitted to or
traded on a regulated market or exchange. Accordingly, shareholders in MCF
Holdings will have neither the rights nor protections available to shareholders
in publicly quoted companies.
MCF Holdings will be controlled by one shareholder group.
Stuart Crossley and entities associated with him will control in excess of 90
per cent. of the issued share capital of MCF Holdings. Accordingly, the majority
shareholders will be able to determine the composition of the board of directors
of MCF Holdings, management and dividend policy and to pass special resolutions
at general meetings of the company. There can be no assurance that MCF Holdings
will be managed in a way which is in he best interests of independent
shareholders.
MCF Holdings shareholders may suffer dilutive effects of future share issues
MCF Holdings may choose to issue new shares which could have a dilutive effect
on shareholders. There can be no assurance that shareholders will have the right
to participate in future offerings of MCF Holdings Shares on a pre-emptive
basis.
The value of MCF Holdings is dependent on the value of its underlying business
The value of MCF Holdings will depend on the value of its principal underlying
business which is anticipated to be that of Comland for the foreseeable future.
Comland's business is subject to general economic conditions, the state of the
property market, interest rates and the availability of finance, the ability to
attract and retain suitably qualified and experienced management, the
availability and demand for commercial properties, competition and relevant
legislation and regulations. There can be no assurance that changes in respect
of any of the above will not impact deleteriously on the performance and
underlying value of Comland.
There can be no assurance that MCF Holdings will continue to have Comland as its
underlying business or that any other business acquired by MCF Holdings will be
in accordance with Scheme Shareholders' personal investment objectives.
Gearing
The acquisition of Comland will result in MCF Holdings and its subsidiaries
having a higher level of debt than Comland. Such additional gearing may not be
acceptable to Scheme Shareholders.
2.3 Scheme becoming effective
It is expected that (subject to the satisfaction of the Conditions) the Court
Hearing will be held on 12 October 2007 and that the Effective Date will be 16
October 2007. The Proposal is conditional upon the Scheme becoming effective by
not later than 31 January 2008, or such later date as Comland and MCF Commercial
may agree (with, where applicable, the consent of the Panel) and (if required)
the Court may approve, failing which it will lapse. If the Scheme becomes
effective, it will be binding on all Comland Shareholders, irrespective of
whether or not they attend or vote at the Court Meeting or the Extraordinary
General Meeting. Further details of the Scheme are set out in the Explanatory
Statement in Part II of the Scheme Document.
The last day of dealing in, and for registration of transfers of, Comland Shares
will be 15 October 2007. Cancellation of the admission to AIM of Comland Shares
will take place on the Effective Date.
Prior to the Scheme becoming effective, an application will be made to the
London Stock Exchange for the cancellation of the Comland Shares from admission
to and trading on AIM.
3 Background to and reasons for recommending the Proposal
Comland is a property development and trading company holding mainly commercial
property assets. Comland demerged from the housebuilding business Banner Homes
Group PLC in 1997. Each Banner Homes Group PLC shareholder received 1 share in
Comland for each 4 shares in Banner Homes Group PLC. 3,890,696 shares were
issued and admitted to trading on AIM in December 1997. Comland currently has
4,556,520 Shares in issue, traded on under the International Securities
Identification Number GB 0001859072..
Since incorporation, Comland has followed the strategy of acquiring commercial
property opportunities for trading, development and resale. Having regard to the
growth of the business to its current value, the Independent Comland Director
believes the cash consideration under the Proposal represents an appropriate
price for the current business given the risk of exploiting future additional
value from the redevelopment and trading of assets within its portfolio.
For the year ended 31 March 2007, Comland reported a profit on ordinary
activities before taxation of #9.415 million and a profit on ordinary activities
after taxation of #6.599 million for that period. Comland benefited during the
period from a gross profit of #6.609 million on the sale of assets and #1.392
million from the sale of discontinued operations. Net assets at 31 March 2007
were #21.621 million. The properties owned by Comland were valued on 5 September
2007 by Savills at #72,590,000, representing a premium to book value of #25.01m.
This premium to book value would be subject to UK corporation tax (currently at
a rate of 30%) when realised. Adjusting the net assets at 31 March 2007 for this
premium would give a value of #39.13m. A copy of Savills report is set out in
part IV of the Scheme Document. The annual reports and accounts for Comland for
the financial years ended 31 March 2007 are enclosed with the Scheme Document.
The cash consideration under the Proposal represents a premium of #4.16 m to the
adjusted net asset value.
The Comland Independent Director believes that Comland is capable of continuing
to trade successfully and profitably. However, in considering the merits of the
Cash Alternative on behalf of all Independent Comland Shareholders, he has taken
into account the following important considerations:
* the immediate and certain benefits of the Cash
Alternative compared to the potential future return from remaining a Comland
Shareholder, having regard for the ongoing cost of being quoted on AIM;
* the fact that MCF Commercial has irrevocable undertakings
to vote in favour of the Proposal in respect of over 90 per cent. of the issued
Comland Shares
* the limited liquidity of Comland's shares generally, and
the opportunity afforded by the Cash Alternative for all Comland Shareholders to
realise their entire investment in Comland for cash;
* the Cash Alternative represents a certain cash value per
Comland Share at a premium of 138 per cent. to the closing middle market price
of 400 pence per Comland Share on 6 September 2007, being the last dealing day
prior to this Announcement;
* Comland Shareholders accepting the Cash Alternative would
be able to dispose of their Comland Shares free of dealing costs.
In light of the above, he believes that the terms of the Cash Alternative are in
the best interests of Independent Comland shareholders and have concluded that
the Proposal is fair and reasonable. He has not been able to form an opinion on
the Cash Plus Shares Alternative and accordingly does not make any
recommendations in relation thereto.
4 Effect of the Proposal on Directors, management, employees and locations
MCF Commercial attaches great importance to the skills and experience of the
existing management and employees of Comland. Accordingly, the MCF Commercial
Directors have confirmed that, they have no current plans to make any material
change in the conditions of employment of Comland's management and employees
following the Scheme becoming effective. It is the intention of MCF Commercial
that key members of the management team should remain with Comland.
MCF Commercial has no current plans to change the current strategy of Comland,
its fixed assets or the location of Comland's operational places of business.
The Independent Comland Director welcomes the assurances received from MCF
Commercial above as they are, in his view, in the best interests of Comland and
its employees.
5 Share option schemes
The Company does not have any share option schemes nor are there any Comland
Shares under option.
6 The Comland Directors and the effect of the Proposal on their interests
Details of the interests of the Comland Directors in the share capital of
Comland, are set out below and in paragraph 6 of Part V of the Scheme Document.
Comland Shares held by the Comland Directors will be subject to the Scheme.
Particulars of the service contracts and arrangements (including termination
provisions) and letters of appointment of the Comland Directors are set out in
paragraph 11 of Part V of the Scheme Document. John Derek Collinson shall resign
from the Board on Completion of the Proposal.
Save as set out above, the effect of the Scheme on the interests of the Comland
Directors does not differ from its effect on the interests of any other person.
7 Taxation
A summary of the tax consequences of the Scheme is set out in Part XI of the
Scheme Document. This summary is intended as a general guide only and if you are
in any doubt as to your tax position you should consult an appropriate
independent professional adviser.
8 Meetings and action to be taken
The Scheme and the Proposal is subject to the satisfaction or, where permitted,
waiver of the Conditions set out in Part III of the Scheme Document. In order to
become effective, the Scheme must be approved by a majority in number of those
Independent Comland Shareholders present and voting, either in person or by
proxy, at the Court Meeting, representing 75 per cent. or more in value of all
Comland Shares held by such Independent Comland Shareholders. In addition, the
Special Resolution to approve the application for Comland Shares to be removed
from trading on AIM must be passed by the Comland Shareholders at the
Extraordinary General Meeting.
Neither MCF Commercial nor MCF Holdings currently owns any Comland Shares either
as registered holder or through a nominee. Any Comland Shares which are
registered in the name of or beneficially owned by the MCF Group at the Voting
Record Time will be excluded from the definition of Scheme Shares and the MCF
Group will be precluded from voting at the Court Meeting. The MCF Group would
not be precluded from voting at the Extraordinary General Meeting. The MCF Group
has, however, undertaken to be bound by the Scheme. In addition, the MCF Group
has agreed to procure that any holder (other than the MCF Group) of Comland
Shares which may be beneficially owned by a member of the MCF Group at the
Voting Record Time will not vote at the Court Meeting, and that such holder will
undertake in respect of such Comland Shares to be bound by the Scheme. In
addition, the Family Shareholders will consent to the Scheme and to be bound
thereby.
Under the Companies Act, the Scheme is also subject to the sanction of the Court
at the Court Hearing which is expected to be held on 12 October 2007. If the
Scheme becomes effective, it will be binding on all Comland Shareholders,
(whether Independent Comland Shareholders or Family Shareholders), including
those who do not vote to approve the Scheme or who vote against it in the Court
Meeting.
9 Financing
MCF Holdings, the parent company of MCF Commercial, will initially be financed
principally via debt. An #11 million debt facility has been arranged by MCF
Holdings with HSBC Bank plc, which it has confirmed will be available in full to
MCF Commercial to satisfy the cash consideration payable under the Scheme.
Certain Comland shareholders, the S J Crossley Trusts, holding in aggregate
3,813,777 Comland shares, have signed irrevocable undertakings to elect to
receive the Cash Plus Shares Alternative, meaning that the maximum cash
consideration required to be paid to the S J Crossley Trusts if the Scheme
becomes effective totals #3,623,088.15. Should all other Comland Shareholders
elect to receive the Cash Alternative, a further maximum cash consideration of
#7,056,058.50 would be required to be paid to Comland Shareholders.
Therefore, Smith & Williamson Corporate Finance Limited confirms that it is
satisfied that the resources available to MCF Commercial are sufficient to
satisfy the cash consideration due to Comland Shareholders under the Scheme.
10 Current trading and prospects of the Comland Group
In its preliminary results statement issued on 17 August 2007, Comland made the
following statements:
"In the year to 31 March 2007 the turnover of the group was #20.08 million
(2006: #6.35 million). This figure includes the revenue from property disposals.
Gross profit was #6.61million (2006: #0.68 million). Other operating income,
which is primarily rental income, has decreased to #6.05 million (2006: #6.33
million). Operating profit has increased to #10.84million (2006: #5.06 million).
Pre-tax profit was #9.41 million (2006: #1.95 million) after finance costs of
#2.93 million (2006: #3.11 million)."
"The above results included the following amounts relating to discontinued
operations: turnover of #366,000 (2006: #731,000), gross profit of #138,000
(2006: #302,000), operating profit of #47,000 (2006: #79,000) and pre-tax profit
of #1,367,000 (2006: loss #79,000)."
"Rising interest rates are starting to have an effect on the commercial property
market. Having significantly reduced our gearing in the last year we are
cautious about the future and have reduced our exposure to risk and will remain
cautious about opportunities until we are confident that interest rates have
peaked."
Since 31 March 2007 Comland has sold two properties (1) Red Lion House; and (2)
62 High Street, Marlow for a combined profit of #1,660,000 and has continued to
generate rental income on other properties.
11 Information on MCF Commercial
MCF Commercial was formed to effect the acquisition of Comland. MCF Commercial
is a limited liability company that was incorporated on 13 June 2007 and has not
traded since incorporation and is a wholly owned subsidiary of MCF Holdings
Limited.
The current directors of MCF Commercial are Stuart James Crossley, Christopher
Giles Martin and Simon Kennedy Funnell.
Further particulars as regards to the rights attaching to MCF Holdings Shares
are set out in paragraph 12 of Part V of the Scheme Document.
Stuart Crossley
Mr Crossley has over 25 years experience in the building industry. He acquired
Banner Homes Limited by way of management buy-out in 1981. Banner Homes Limited
was floated in 1987 and admitted to the Official List in 1993. Comland was
demerged from Banner Homes Group PLC in 1997 and admitted to the Alternative
Investment Market. In 1999, Mr Crossley sold his controlling interest in Banner
Homes Group PLC to concentrate on commercial property development through
Comland and the completion of a major residential development in Marbella.
Christopher Martin
Mr Martin is a chartered accountant. He spent six years with Deloitte & Touche
and three years working in corporate finance at Pricewaterhouse Coopers. He
joined Comland in April 1999 and was appointed to the Board in May 1999.
Simon Funnell
Mr Funnell is a chartered surveyor with 25 years of commercial property
experience in private practice. In 1990 he established his own commercial
practice based in High Wycombe and in 1994 merged this with another local
practice where he remained a partner responsible for property investment,
development and funding until he joined Comland in February 2002.
12 Information on MCF Holdings
MCF Holdings is a limited liability company that was incorporated on 13 June
2007 and has not traded since incorporation.
The current directors of MCF Holdings are Stuart James Crossley, Christopher
Giles Martin and Simon Kennedy Funnell. MCF Holdings is 100% owned by Stuart
Crossley.
Further particulars as regards the rights attaching to MCF Holdings Shares are
set out in paragraph 12 of Part V of the Scheme Document.
13 Current trading and prospects of MCF Commercial
MCF Commercial has informed Comland that it has no current plans to change the
current strategy of Comland.
14 Background to and reasons for making the Proposal
MCF Commercial was established for the purpose of making the acquisition of
Comland. The directors of MCF Commercial believe that while they remain cautious
about the future of the commercial property market in the short term, they
believe that in the longer term there will be opportunities to create value in
this sector. They believe, however, that this would be best achieved through an
unquoted company.
15 Financial information
MCF Commercial was incorporated on 13 June 2007 with an authorised share capital
of #1,000 divided into 1,000 ordinary shares of #1 each of which 1 is currently
in issue. It has not traded and its assets and liabilities have not changed
since incorporation.
MCF Holdings was incorporated on 13 June 2007 with an authorised share capital
of #1,000 divided into #1,000 ordinary shares of #1 each of which 10 were
issued. On 3 September 2007 the share capital of MCF Holdings was increased to
#100,000 and subdivided into 1,000,000 shares of #0.10 each (100 of which are
now in issue). On 5 September 2007 the authorised share capital of MCF Holdings
was further increased to #39,000,000 divided into 390,000,000 ordinary shares of
#0.10 each. It has not traded and its assets have not changed since
incorporation.
Financial information for Comland covering the three financial years ended 31
March 2007 are being enclosed with the Scheme Document in the form of the
audited accounts for Comland for the two financial years ended 31 March 2006 and
31 March 2007.
16 Pensions
Comland has a Standard Life stakeholder pension scheme which is open to all of
its employees. The only contributions made by Comland on behalf of the Directors
into this scheme are on behalf of Christopher Martin and Simon Funnell who are
both entitled to receive an amount equivalent to 10% of their salary into the
pension. Accordingly for financial year ended 31 March 2007 Comland made a total
payment into the pension scheme of #23,000. For the financial year ending 31
March 2008 the payment made by Comland will be #25,000.
17 Comland Share Option Schemes
Comland does not currently operate any share option schemes.
18 Structure of the Acquisition
(a) Introduction
The Acquisition is to be effected by means of a Scheme of Arrangement between
Comland and its Shareholders under section 425 of the Companies Act. The Scheme
is set out in full in Part VI of the Scheme Document. If the Scheme becomes
effective, it will result in Comland becoming a wholly-owned direct subsidiary
of MCF Commercial (which is a wholly owned subsidiary of MCF Holdings). This is
to be achieved by transferring the Scheme Shares held by Comland Shareholders to
MCF Commercial. MCF Holdings will pay the Cash Alternative sum or Cash Plus
Shares Alternative sum (as applicable) to the Comland Shareholders on the
register at the Scheme Record Time. MCF Holdings will also issue and allot the
relevant number of MCF Holdings shares to the Comland Shareholders who opted for
the Cash Plus Shares Alternative on the register at the Scheme Record Time.
To become effective, the Scheme requires, among other things, the approval by a
majority in number of the Scheme Shareholders who vote, representing at least 75
per cent. in value of the Scheme Shares voted, either in person or by proxy, at
the Court Meeting.
The Scheme also requires the sanction of the Court. Upon the Scheme becoming
effective, it will be binding on all Comland Shareholders, irrespective of
whether or not they attended or voted at the Court Meeting or the Extraordinary
General Meeting and whether they voted for or against, or abstained from voting
on, the resolutions. Upon the Scheme becoming effective it will be binding on
all Comland Shareholders, irrespective of whether or not they attended or voted
at the Court Meeting.
The last day of dealing in, and for registration of transfers of, Comland Shares
will be 15 October 2007. Cancellation of the admission to AIM of Comland shares
will take place on the Effective Date, which is expected to be 16 October 2007.
Subject to the passing of the special resolution to be proposed at the EGM prior
to the Scheme becoming effective, an application will be made to the London
Stock Exchange for the Comland shares to cease to be admitted to trading on AIM.
With effect from and including the Effective Date, each existing certificate
representing a holding of Scheme Shares shall cease to be valid in respect of
such holding and each holder of Scheme Shares shall be bound to destroy such
certificate.
With effect from and including the Effective Date, each Scheme Share credited to
any stock account in CREST shall be disabled and all Scheme Shares will be
removed from CREST in due course.
(b) The Meetings
Before the Court's sanction can be sought for the Scheme, the Scheme will
require approval by Independent Comland Shareholders at the Court Meeting.
Notices of the Court Meeting and the Extraordinary General Meeting are set out
in Part VIII and Part IX of the Scheme Document respectively. Save as set out
below, all Independent Comland Shareholders whose names appear on the register
of members of Comland at the Voting Record Time, including any adjournment
thereto, will be entitled to attend and vote at the Court Meeting in respect of
the number of Comland Shares registered in their name at the relevant time. All
Comland Shareholders (including Family Shareholders) will be entitled to vote at
the Extraordinary General Meeting.
The Court Meeting
The Court Meeting, which has been convened for 10.00 a.m. on 3 October 2007, is
being held at the direction of the Court to seek the approval of Independent
Comland Shareholders for the Scheme.
At the Court Meeting, voting will be by way of poll and each Independent Comland
Shareholder present in person or by proxy will be entitled to one vote for each
Scheme Share held. The approval required at the Court Meeting is a majority in
number of those who vote, representing at least 75 per cent. in value of the
Scheme Shares voted, either in person or by proxy, at the Court Meeting.
Neither MCF Commercial nor MCF Holdings currently own any Comland Shares either
as registered holder or through a nominee. Any Comland Shares which are
registered in the name of or beneficially owned by the MCF Group would be
excluded from the definition of ''Scheme Shares'' and therefore neither MCF
Commercial nor MCF Holdings would be entitled to attend or vote at the Court
Meeting in respect of those Comland Shares. In addition, it is important that,
for the Court Meeting in particular, as many votes as possible are cast so
that the Court may be satisfied that there is a fair and reasonable
representation of opinion of the Independent Comland Shareholders. Family
Shareholders will not be entitled to participate in the Court Meeting but will
consent separately to the Scheme.
The Extraordinary General Meeting
In addition, the Extraordinary General Meeting has been convened for 10.15 a.m.
on 3 October 2007, or as soon thereafter as the Court Meeting has been
concluded or adjourned, to consider and, if thought fit, pass, the Special
Resolution (which requires votes in favour representing at least 75 per cent. of
the votes cast) to approve the Comland Directors being authorised to cease the
trading of Comland Shares on AIM.
(c) Conditions to the Proposal
The Conditions to the Proposal are set out in full in Part III of the Scheme
Document. In summary, the implementation of the Scheme is conditional upon:
* the Scheme becoming effective by not later than 31 January 2007 or such later
date as Comland and MCF Commercial may agree (with, where applicable, the
consent of the Panel) and (if required) the Court may approve, failing which the
Scheme will lapse;
* the approval by a majority in number of the Independent Comland Shareholders
who vote, representing at least 75 per cent. in value of the Scheme Shares
voted, either in person or by proxy, at the Court Meeting; and
* the sanction of the Scheme, (with or without modification on terms agreed by
Comland and MCF Commercial) by the Court and the delivery of office copies of
the Court Order to the Registrar of Companies and the registration of such Court
Order.
(d) Sanction of the Scheme by the Court
Under the Companies Act, the Scheme requires the sanction of the Court. The
hearing by the Court to sanction the Scheme is expected to be held on 12
October 2007, subject to the prior satisfaction or waiver of the other
Conditions set out in Part III of the Scheme Document. MCF Commercial has
confirmed that it will be represented by counsel at such hearing so as to
consent to the Scheme and to undertake to the Court to be bound thereby.
The Scheme will become effective in accordance with its terms upon delivery of
office copies of the Court Order to the Registrar of Companies, and upon
registration of such Court Order.
If the Scheme becomes effective, it will be binding on all Comland Shareholders
irrespective of whether or not they attended or voted in favour of the Scheme at
the Court Meeting or in favour of the Special Resolution at the Extraordinary
General Meeting. If the Scheme does not become effective by 31
January 2008 (or such later date (if any) as Comland and MCF Commercial may
agree and (if required) the Court may allow) the Scheme will not become
effective and the Proposal will not proceed.
(e) Alternative means of implementing the Proposal
MCF Commercial has reserved the right to implement the Proposal by way of a
Takeover Offer, in which case additional documents will be despatched to Comland
Shareholders. In such event, such a Takeover Offer will (unless otherwise
agreed) be implemented on the same terms so far as applicable as those which
would apply to the Scheme (subject to appropriate amendments including (without
limitation) an acceptance condition set at 75 per cent. (or such lesser
percentage, being more than 50 per cent., as MCF Commercial may decide) of the
shares to which such offer relates),
19 Cancellation of admission to AIM of Comland Shares
Prior to the Scheme becoming effective, the London Stock Exchange will be
requested to cancel admission of Comland to AIM with effect from 8.00am on the
Effective Date and it is for this purpose that the Special Resolution will be
proposed at the EGM.
The last day of dealings in, and for registration of transfers of, Comland
Shares will be the business day after the Court Hearing which is expected to be
on 12 October 2007. Accordingly, the last day of dealing in Comland Shares is
expected to be 15 October 2007 and no transfers of Comland Shares will be
registered after 4:30pm on this date.
20 Settlement
Subject to the Scheme becoming effective, settlement of the cash consideration
to which any holder of Scheme Shares is entitled thereunder will be effected
within 14 days of the Effective Date in the manner set out below.
Except with the consent of the Panel, settlement of the cash
consideration to which any Comland Shareholder is entitled under the Scheme
will be implemented in full in accordance with the terms of the Scheme free of
any lien, right of set-off, counterclaim or other analogous right to which MCF
Commercial may otherwise be, or claim to be, entitled against such shareholder.
If the Scheme becomes effective Comland will become a wholly owned direct
subsidiary of MCF Commercial on the Effective Date and Comland Shareholders will
receive the relevant consideration referred to above.
Shareholders electing to receive the consideration due by way of the Cash Plus
Shares Alternative and whose entitlement includes a half of one MCF Holdings
share, will have their entitlement rounded down to the nearest whole number of
MCF Holdings Shares and will receive their entitlement to the half of one MCF
Holdings Share as cash. An additional #0.05 will be added to their cash payment,
21 Overseas Shareholders
The implications of the Scheme and the Proposal for Overseas Shareholders may be
affected by the laws of the relevant jurisdictions. Overseas Shareholders should
inform themselves about and observe any applicable legal requirements. It is the
responsibility of each Overseas Shareholder to satisfy himself/ herself as to
the full observance of the laws of the relevant jurisdiction, including the
obtaining of any governmental, exchange control or other consents which may be
required, or the compliance with other necessary formalities which are required
to be observed and the payment of any issue, transfer or other taxes due in such
jurisdiction.
22 Conditions to the implementation of the Scheme and further terms of the
Proposal
The Proposal and the Scheme will be governed by English law and will be subject
to the jurisdiction of the courts of England.
Part A: Conditions of the Proposal
The Proposal will be conditional upon the Scheme becoming unconditional and
becoming effective, subject to the City Code, by not later than 31 January 2008
or such later date (if any) as Comland and MCF Commercial may agree (with, where
applicable, the consent of the Panel) and (if required) as the Court may allow.
The Scheme will comply with the applicable rules and regulations of the
Financial Services Authority and the City Code.
The Scheme will be conditional upon:
1 the approval of the Scheme by a majority in number representing 75 per
cent. or more in value of the Comland Shareholders present and voting, either
in person or by proxy, at the Court Meeting, or at any adjournment thereof; and
2 the sanction (with or without modification, on terms agreed by Comland
and MCF Commercial) of the Scheme by the Court and office copies of the Court
Order being delivered for registration to the Registrar of Companies.
Comland and MCF Commercial have agreed that, subject as stated in Part B below,
application to the Court to sanction the Scheme will not be made unless
conditions 1 above has been fulfilled.
Part B: Further terms of the Proposal
MCF Commercial reserves the right to elect to implement the Proposal by way of a
Takeover Offer. In such event, such an offer will be implemented on the same
terms so far as applicable, as those which would apply to the Scheme (subject to
appropriate amendments, including (without limitation) an acceptance condition
set at 75 per cent. (or such less percentage (being more than 50 per cent.) as
MCF Commercial may decide)) of the shares to which such offer relates).
The Proposal will lapse and the Scheme will not proceed (unless otherwise agreed
with the Panel) if before the date of the Court Meeting the Office of
Fair Trading has referred the Proposal to the Competition Commission
provided that if the merger is allowed then, with the consent of the Panel, the
Proposal will be reinstated on the same terms and at not less than the same
price as soon as practicable.
23 Directors and registered office
(a) The Comland Directors and their respective functions are as follows:
Stuart James Crossley Chief Executive
Simon Kennedy Funnell Investment and Development
Director
Christopher Giles Martin Financial Director
John Derek Collinson Non-executive Director
Comland's registered office is at Lunar House, Mercury Park, Wooburn Green, High
Wycombe, Buckinghamshire HP10 0HH and the telephone number is 01628 535 777.
(b) The MCF Commercial Directors and their respective functions are as
follows:
Stuart James Crossley Chief Executive
Christopher Giles Martin Financial Director
Simon Kennedy Funnell Investment and Development
Director
MCF Commercial's registered office is at c/o Shoosmiths, 1st Floor, Witan Gate
House, 500-600 Witan Gate, Milton Keynes, Buckinghamshire MK9 1SH.
(c) The MCF Holdings Directors and their respective functions are as follows:
Stuart James Crossley Chief Executive
Christopher Giles Martin Financial Director
Simon Kennedy Funnell Investment and Development
Director
MCF Holdings' registered office is at c/o Shoosmiths, 1st Floor, Witan Gate
House, 500-600 Witan Gate, Milton Keynes, Buckinghamshire MK9 1SH.
24 Holdings and dealings
As at 6 September 2007 (the latest practicable date prior to the release of this
Announcement) the interests of the Comland Directors in the share capital of
Comland within the meaning of section 820 of the 2006 Act (including family and
corporate interests as defined, respectively, in sections 822 and 823 of the
2006 Act) are as follows:
Director Number of Comland Shares
Stuart James Crossley 4,125,903
Christopher Giles Martin 251
Simon Kennedy Funnell 251
No dealings for value in Comland Shares by Directors have taken place during the
Disclosure Period. None of MCF Holdings nor MCF Commercial, any of the MCF
Holdings Directors or MCF Commercial Directors, any member of their immediate
families or any related trusts or companies, any other person acting in concert
with MCF Commercial, owns, controls or is interested (directly or indirectly)
in, or has any rights to subscribe or has any short positions in respect of any
relevant securities nor has any such person dealt in any relevant securities
during the Disclosure Period.
Save as disclosed above, neither Comland nor any of its subsidiaries nor any of
the Comland Directors nor any member of their immediate families or any related
trusts or companies, owns, controls or is interested (directly or indirectly)
in, or has any rights to subscribe or has any short positions in respect of any
relevant securities nor has any such person dealt in any relevant securities
during the Disclosure Period and no bank, stockbroker, financial or other
professional adviser of Comland (other than one which is independently managed)
of Comland or any of its subsidiaries nor any person whose investments are
managed on a discretionary basis by fund managers (other than exempt fund
managers) connected with Comland owns, controls or is interested (directly or
indirectly) in, or has any rights to subscribe or has any short positions in
respect of, any relevant securities nor has any such person dealt therein during
the Disclosure Period.
As at 6 September 2007 (the latest practicable date prior to the posting of the
Scheme Document) no person falling within the categories specified in paragraphs
(a) and (d) of the definition of "associate" below in relation to Comland (but
excluding exempt principal traders and pension funds which are independently
managed) owned, controlled, or was interested (directly or indirectly) in, or
had any right to subscribe or had any short positions in respect of, any
relevant securities nor has any such person dealt therein during the Disclosure
Period.
There is no agreement, arrangement or understanding whereby the beneficial
ownership of any Comland Shares to be acquired by MCF Commercial pursuant to the
Scheme will be transferred to any other person.
None of (i) MCF Commercial or any person acting in concert with MCF Commercial;
or (ii) Comland or any associate (as defined in the City Code) of Comland has
any arrangement of the kind referred to in Note 6(b) on Rule 8 of the City Code
in relation to relevant securities. For the purposes of this part of the
document, "arrangement" includes an indemnity or option arrangement and any
agreement or understanding, formal or informal, of whatever nature which may be
an inducement to deal or refrain from dealing.
Neither Comland nor MCF Commercial nor any person acting in concert with them
have borrowed nor lent any relevant securities of Comland during the Disclosure
Period, save for any borrowed shares which have been on-lent or sold.
Neither Comland nor MCF Commercial nor any person acting in concert with them
has borrowed or lent any relevant securities of MCF Commercial during the
Disclosure Period, save for any borrowed shares which have been on-lent or sold.
No relevant securities of Comland have been redeemed or purchased by Comland
during the period commencing on 7 September 2006 (being the date 12 months prior
to the commencement date of the Offer Period) and ending on 6 September 2007
(being the latest practicable date prior to the release of this Announcement).
No relevant securities of MCF Holdings or MCF Commercial have been redeemed or
purchased by MCF Holdings or MCF Commercial during the Disclosure Period.
References in this paragraph to:
an "associate" are to:
a) subsidiaries and associated companies of Comland and companies of
which any such subsidiaries or associated companies are associated companies;
b) banks, financial and other professional advisers (including
stockbrokers) to Comland or a company covered in (a) above, including persons
controlling, controlled by or under the same control as such banks or financial
or other professional advisers;
c) the Comland Directors and the directors of any company covered in
(a) above (together in each case with their close relatives and related trusts);
d) the pension funds and employee benefit trusts of Comland or any
company covered in (a) above;
a "bank",
do not apply to a bank whose sole relationship with Comland, or a company
covered in 8.11.1(a) above, is the provision of normal commercial banking
services or such activities in connection with the proposed acquisition of
Comland to be effected by the Scheme;
ownership or control of 20 per cent. or more of the equity share capital of a
company is regarded as the test of associated company status and "control" means
a holding or aggregate holdings of shares carrying 30 per cent. or more of the
voting rights attributable to the share capital of the company which are
currently exercisable at a general meeting, irrespective of whether the holding
gives de facto control; and
"relevant securities" means
MCF Holdings Shares and Comland Shares and securities convertible into or
exchangeable for rights to subscribe for and options in respect of any of the
foregoing
25 Irrevocable undertakings
The following Comland Shareholders have given undertakings to vote in favour of
the resolutions to be put to the Comland Shareholders at the EGM:
Name Number of Comland Shares % of current issued share capital
Stuart James Crossley 25,700 0.56%
Christopher Giles Martin 251 0.01%
Simon Kennedy Funnell 251 0.01%
Neville Bailey Esq 641,381 14.08%
GPM (Nominees) Limited 988,712 21.7%
IPM Personal Pension Trustees 276,187 6.06%
Limited
Christopher Giles Martin 2,180,184 47.85%
Recallgrade Limited 8,105 0.18%
Thomas Grant and Company Nominees 2,134 0.05%
Thomas William George Clarke 167,500 3.68%
Elaine Barbour 26,833 0.59%
William Barbour 1,144 0.03%
Michael Gatenby 3,500 0.08%
Total. 4,321,882 94.88%
The first nine listed, with the exception of the 251 shares held each by
Christopher Martin and Simon Funnell, are held by Comland's Chief Executive,
Stuart Crossley or trusts established by him
These undertakings will cease to be binding if: (i) the requisite majorities
fail to approve the resolution(s) at the Court Meeting or the Extraordinary
General Meeting; (ii) the Scheme otherwise lapses or is withdrawn in accordance
with its terms and MCF Commercial does not publicly confirm that it intends to
implement the Proposal by way of a Takeover Offer or otherwise within 10
business days of such lapse or withdrawal; (iii) the Scheme otherwise lapses or
fails to complete before 31 January 2008; or (iv) in respect of Thomas William
George Clarke, Elaine Barbour and William Barbour upon the announcement of a
competing proposal at a price at least 20% above the value of the Proposal.
26 Implementation Agreement
On 7 September 2007, MCF Commercial and Comland entered into an Implementation
Agreement, which sets out the terms on which they will implement the Scheme.
Conduct of business
Under the Implementation Agreement Comland has undertaken that, unless required
by law, pursuant to an ongoing contractual commitment, or with MCF Holding
Limited 's prior written approval, it will not (and will procure that Comland
Group members do not), prior to the effective date of the Scheme or (if earlier)
the date on which the Implementation Agreement is terminated:
(i) carry on business other than in the ordinary and usual course;
(ii) make (or agree to make) any payment outside the ordinary course of
trading,
without in each case first consulting with, and having regard to, MCF
Commercial's recommendations.
Under the Implementation Agreement, other than contemplated by the
terms of the Proposal or Implementation Agreement, Comland has also
undertaken that it will not (and will procure that Comland Group members do
not), prior to the effective date of the Scheme or (if earlier) the date on
which the Implementation Agreement is terminated:
(i) amend the memorandum or articles of association of any Comland Group
member;
(ii) propose, recommend or pay any bonus issue, dividend or other distribution
(cash or otherwise) other than dividends paid by a wholly-owned subsidiary of
Comland to Comland or any of its other wholly-owned subsidiaries;
(iv) subject to the Comland Directors' fiduciary duties, take any step which is
reasonably likely to prevent or delay satisfaction of the Scheme conditions;
(v) alter the share capital of any Comland Group member or grant any options
or rights over any Comland share capital, except for existing share options and
share awards obligations;
(vi) subject to the Comland Directors' fiduciary duties, do anything requiring
shareholder approval in general meeting or Panel consent under Rule 21 of the
City Code (other than in respect of the Scheme);
(vii) amend or (except for serious misconduct) terminate the employment
arrangements with any non-executive director of Comland or any of Stuart James
Crossley, Christopher Giles Martin or Simon Funnell, or any of their successors
in their respective roles.
Termination
The obligations of MCF Commercial and Comland to implement the Scheme and
complete the Proposal may be terminated at any time prior to 11.59 p.m. on the
date on which the Court holds a hearing to approve the Scheme:
(i) by mutual written consent of MCF Commercial and Comland;
(ii) by either MCF Commercial or Comland if the requisite Comland Shareholder
approvals are not obtained at the Court Meeting and at the Extraordinary General
Meeting;
(iii) by MCF Commercial:
(A) in the event of failure of any of the Conditions to the Scheme or if the
Court does not sanction the Scheme;
(B) if Comland enters into any agreement with respect to, or makes any public
statement approving or endorsing, any Alternative Acquisition Proposal (as
defined in the Implementation Agreement); or
(C) if Comland is in material breach of the Implementation Agreement;
(iv) by Comland:
(A) if MCF Commercial is in material breach of the Implementation Agreement;
or
(B) if it is announced by, or on behalf of, Comland that the board of directors
of Comland has determined not to give, or withdraw or modify, its recommendation
of the Proposal and the Scheme,
provided that neither MCF Commercial nor Comland may terminate if they are
required by the Panel to proceed with the Proposal.
The obligations of the parties to implement the Scheme and complete the Proposal
will also terminate if the Scheme does not become effective prior to 31 January
2008 (or such later date as MCF Commercial and Comland, with the consent of the
Panel, agree in writing).
Waivers and indemnities
MCF Commercial has agreed that it will waive any claim that it has or may have
against any Comland Director in connection with:
(i) any negligence, default, breach of duty or breach of trust by the
director in relation to Comland; or
(ii) the exercise or purported exercise of the director's duties or powers or
otherwise in connection with the director's duties, powers or office with the
Comland Group in any period prior to the earlier of the Effective Date or the
date on which the Implementation Agreement is terminated.
in each case, provided that the existence of each such indemnity or undertaking
has been disclosed to MCF Commercial prior to the date of the Implementation
Agreement. The waivers and indemnities set out above do not apply:
(i) to the extent that they are not permitted by, or are inconsistent with,
any law or statute, or the rules and regulations of any regulatory body;
(ii) where there has been gross negligence, fraud or wilful default by the
relevant Comland Director;
or
(iii) where the relevant Comland Director has improperly derived a personal
benefit or profit.
APPENDIX I
SOURCES OF INFORMATION AND BASES OF CALCULATION
((a) The value of approximately #43.3 million attributed to the fully diluted
share capital of Comland, is based upon the fully diluted number of
Comland Shares being 4,556,520 shares.
(b) The financial information relating to Comland is extracted from the
audited consolidated financial statements of Comland for the year ended 31 March
2007, prepared in accordance with UK GAAP.
(c) No financial information relating to MCF Commercial or MCF Holdings has
been extracted.
(d) All prices quoted for Comland Shares and premia implied by the Offer price
per Comland Share are calculated based on closing middle market prices and are
derived the daily official list of closing prices for companies listed on the
London Stock Exchange.
APPENDIX II
DEFINITIONS
2006 Act the Companies Act 2006
Acquisition The proposed acquisition of all of the issued ordinary share capital of Comland by MCF
Commercial by means of the Scheme
Act or Companies Act the Companies Act 1985 (as amended from time to time)
AIM the market of that name operated by the London Stock Exchange
Announcement the press release announcing the Proposal by MCF Commercial for Comland dated 7 September
2007 made pursuant to Rule 2.5 of the City Code
Annual Report the annual report and accounts of Comland for the year ended 31 March 2007
associated undertaking to be construed in accordance with the Companies Act 1985 (but for this purpose ignoring
paragraph 20(1)(b) of Schedule 4A thereto
Authorisations authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances,
certificates, permissions and approvals
Board the board of directors of Comland
Business Day a day on which the London Stock Exchange is open for normal business
Cash Alternative the proposal by MCF Commercial for MCF Holdings to pay #9.50 in cash to Comland Shareholders
for each Comland Share
Cash Plus Shares the proposal by MCF Commercial for MCF Holdings to pay #0.95 in cash to Comland Shareholders
Alternative and 85.5 MCF Holdings Shares issued at par for each Comland Share
certificated or in a share or other security which is not in uncertificated form (that is, not in CREST)
certificated form
City Code the City Code on Takeovers and Mergers (as amended from time to time)
Comland or Company Comland Commercial Plc, a company registered in England and Wales with company number
03463248 and whose registered office is at Lunar House, Mercury Park, Wooburn Green, High
Wycombe, Buckinghamshire HP10 0HH
Comland Directors the directors of Comland, being Stuart James Crossley, Christopher Giles Martin, Simon
Kennedy Funnell and John Derek Collinson as at the date of this document
Comland Group Comland and any and all of its subsidiaries and associated companies
Comland Shareholder or the holders of Comland Shares
Shareholder
Comland Shares ordinary shares of #0.10 each in the capital of Comland (company number 03463248)
Company's Registrars Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Conditions the conditions to the implementation of the Scheme and further terms of the Proposal set out
in Part III of this document
connected person has the meaning given to it in section 346 of the Companies Act 1985
Court the High Court of Justice in England and Wales
Court Hearing the hearing by the Court of the petition to sanction the Scheme
Court Meeting the meeting of Scheme Shareholders (and any adjournment thereof) to be convened pursuant to
an order of the Court under section 425 of the Companies Act for the purposes of considering
and, if thought fit, approving the Scheme (with or without amendment)
Court Order the order of the Court sanctioning the Scheme under section 425 of the Companies Act
CREST the relevant system (as defined in the Regulations) to facilitate the transfer of title to
shares in uncertificated form (as defined in the Regulations)
Daily Official List The daily official list of closing prices of companies listed on the London Stock Exchange
Disclosure Period the period commencing on 7 September 2006 (the date 12 months prior to the commencement of
the Offer Period) and ending on 6 September 2007 (being the last practicable date prior to
publication of this document)
Effective Date the date on which the Court Order is registered by the Registrar of Companies
EGM or Extraordinary the extraordinary general meeting of Comland Shareholders (and an adjournment thereof) to be
General Meeting convened in connection with the Proposal by the notice set out in Part IX of this document
Family Shares Scheme Shares registered in the names of Stuart Crossely, Chris Martin, Simon Funnell,
Neville Bailey, GPM (Nominees) Limited; IPM Personal Pension Trustees Limited; and
Recallgrade Limited at the Scheme Record Time or Voting Record Time (where appropriate)
Family Shareholders holders of Family Shares
Form of Acceptance a form for use by Comland Shareholders to elect whether they were to accept the Cash
Alternative or the Cash Plus Shares Alternative
Forms of Proxy the forms of proxy for use at the Court Meeting and the Extraordinary General Meeting
FSA or Financial the Financial Services Authority in its capacity as the competent authority for the
Services Authority purposes of Part VI of the Financial Services and Markets Act 2000
FSMA Financial Services and Markets Act 200 (as amended)
Grant Thornton Grant Thornton Corporate Finance, the corporate finance division of Grant Thornton UK LLP of
Grant Thornton House, Melton Street, London NW1 2EP
Implementation the implementation agreement entered into between Comland and MCF Commercial on 7 September
Agreement 2007
Independent Comland John Derek Collinson
Director
Independent Scheme Scheme Shares other than Family Shares at the Scheme Record Time or the Voting Record Time
Shares (where appropriate)
Independent Comland holders of Independent Scheme Shares
Shareholders
London Stock Exchange London Stock Exchange Plc
MCF Commercial MCF Commercial Limited a company incorporated in England and Wales with registered number
6278487
the members of the management board of MCF Commercial whose names are set
out in paragraph 2(b) of Part VI of this document
MCF Commercial
Directors the ordinary shares of #1 each in capital of MCF Commercial
MCF Holdings Limited, a company incorporated in England and Wales with registered number
6278449
MCF Commercial Shares
MCF Holdings
MCF Holdings Directors the members of the management board of MCF Holdings whose names are set out in paragraph
2(c) of Part V of this document
MCF Holdings and MCF Commercial
the #0.10 ordinary shares in the capital of MCF Holdings
MCF Group
MCF Holdings Shares
Meeting(s) the Court Meeting and/or the Extraordinary General Meeting, as the case may be
New Debt Facility the #11,000,000 (eleven million pound) loan facility in favour of MCF Holdings which has been
arranged and underwritten by HSBC Bank plc
Offer Period the period from 7 September 2007 until the court hearing
Overseas Shareholders Comland Shareholders who are resident in or nationals or citizens of jurisdictions outside
the United Kingdom or who are nominees of, or custodians or trustees for, citizens or
nationals of countries other than the United Kingdom
Panel the Panel on Takeovers and Mergers
Preliminary Results the announcement of Comland's audited preliminary results for the year ended 31 March
2007
Proposal the proposed acquisition of all of the issued ordinary share capital of Comland by MCF
Commercial by means of the Scheme
Registrar of Companies the Registrar of Companies in England and Wales
Regulations the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)
Scheme or Scheme of the scheme of arrangement proposed to be made under section 425 of the Companies Act 1985
Arrangement between Comland and the Scheme Shareholders, as set out in Part VI of this document, to
effect the acquisition of Comland by MCF Commercial
Scheme Document the document expected to be sent to Comland Shareholders in due course
Scheme Record Time 6.00 p.m. on the Business Day following the First Court Hearing
Scheme Shareholders holders of Scheme Shares
Scheme Shares (i) the Comland Shares in issue at the date of this document;
(ii) any Comland Shares issued after the date of this document and before the Voting
Record Time; and
(iii) any Comland Shares issued at or after the Voting Record Time and before the Scheme
Record Time in respect of which the original or any subsequent holders thereof are, or shall
have agreed in writing to be, bound by the Scheme, in each case other than any Comland Shares
beneficially owned/registered in the name of MCF Commercial
Shares the existing unconditionally allotted or issued and fully paid ordinary shares of 10 pence
each in the capital of Comland and any further such ordinary shares which are unconditionally
allotted or issued
S J Crossley Trusts together the SJC Guernsey Discretionary Settlement, beneficial owner of 988,712 shares, (held
by GPM Nominees Limited on behalf of Draic Limited, wholly owned by Spread Trustee Company
Limited as trustees for SJC Guernsey Discretionary Settlement), the SJC Crossley Children
Settlement 2002, beneficial owner of 2,183,684 shares (2,180,184 shares held by Christopher
Giles Martin and 3,500 shares held by Michael Gatenby, both on trust) and the S J Crossley
number one settlement, beneficial owner of 641,381 shares, (held on trust by Neville Bailey)
Smith & Williamson Smith and Williamson Corporate Finance Limited of 25 Moorgate, London EC2R 6AY
Corporate Finance
Limited
Special Resolution the special resolution to be proposed at the Extraordinary General Meeting in connection
with, inter alia, the Scheme
subsidiary undertaking have the meaning given by the Companies Act 1985 (but for these associated undertaking and
and associated purposes ignoring paragraph 20(1)(b) of schedule 4A to the Companies Act)
undertaking
substantial interest in relation to an undertaking, an interest, direct or indirect, in 20 per cent. or more of
the voting rights exercisable in relation to the undertaking or in the capital
or any class of the capital of such undertaking
Takeover Offer a takeover offer as such term is defined in section 974 of the Companies Act 2006
recorded on the relevant register as being held in uncertificated form in CREST and title to
which may be transferred by means of CREST
Uncertificated or in
uncertificated form
UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland
Voting Record Time 6.00 p.m. on the day which is two days before the date of the Court Meeting or, if such Court
Meeting is adjourned, 6.00 p.m. on the day which is two days before the date of such
adjourned meeting
Unless otherwise indicated, all references to times are to London times.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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