TIDMSHLP
RNS Number : 3283O
Shellproof Limited
10 October 2012
Shellproof Limited
Merger with Shellproof PLC and Re-Admission to AIM
Highlights
-- Shellproof Limited announces proposals to merge with Shellproof PLC
-- Shellproof PLC intends to focus on the opportunity in the
English sparkling wine industry to develop vineyards, a winery and
a sales and marketing operation to take advantage of further
anticipated market growth in this sector of the wine industry
-- Shellproof PLC will acquire Halnaker Vineyard, comprising of
13 acres of land which currently has 10 acres of mature vines
planted
-- The transaction will provide Shellproof PLC with the
financial resources to start developing an English sparkling wine
business
For further information contact:
Shellproof Limited
Belize +501 223 5989
UK +44 (0)20 7248 6700
Cenkos Securities plc
Adrian Hargrave +44 (0)20 7973 8900
Introduction
The Directors today announce that they have identified a merger
with Shellproof PLC and the acquisition of the Freehold Property as
an attractive investment opportunity for Shellproof. Conditional
agreements have been entered into to acquire the Freehold Property
and to combine these with the financial resources of Shellproof
Limited under a merged company, Shellproof PLC, and to seek
admission of Shellproof PLC's shares to AIM. This will provide a
platform to focus on the opportunity in the English sparkling wine
industry to develop vineyards, a winery and a sales and marketing
operation to take advantage of further anticipated market growth in
this sector of the wine industry.
A circular to Shellproof Limited Shareholders and an admission
document prepared by Shellproof PLC in respect of Admission, which,
together, provide full details of the proposals, are being
despatched to Shellproof Shareholders shortly.
The Merger
Since the admission of Shellproof Limited to AIM, the Directors
have been actively seeking investment opportunities for Shellproof
Limited. The Directors have now identified an investment
opportunity and propose to effect the Merger and seek admission of
Shellproof PLC to trading on AIM.
It is proposed that the ultimate holding company of the Enlarged
Group should be incorporated in England and Wales. A new company,
Shellproof PLC, has therefore been incorporated. It is intended
that Shellproof PLC will merge with Shellproof Limited in
accordance with Belizean law and also complete the Acquisition
Agreement. Further details of the strategy of the Enlarged Group
and its plans for expansion are contained in the Admission
Document, which has been sent to you with this document.
Terms of the Merger
Prior to the Transactions, it is proposed that Shellproof
Limited will merge with Shellproof PLC, a newly incorporated public
limited company, so that the Enlarged Group has a holding company
incorporated in England and Wales. The Merger will be effected
under the IBCA on the terms and subject to the conditions of the
Merger Plan, which are set out in Appendix 1 to this document.
Shellproof Limited Shareholders will receive new Shellproof PLC
shares on the basis of:
One new Shellproof PLC share for each Shellproof Limited Share
held immediately prior to the Merger.
The Merger Plan was approved by written resolution of the
majority shareholder of Shellproof Limited on 9 October 2012. It is
intended that share certificates in respect of the Shellproof PLC
shares will be distributed as soon after Admission as is
practicable. Admission of Shellproof PLC is conditional on
completion of the Merger.
Under the provisions of Part VII of the IBCA, a holder of
Shellproof Limited Shares, on dissenting from the terms of the
Merger Plan, has the right to be paid the fair value of his
shares.
The Acquisition Agreement
The Acquisition Agreement involves the acquisition of a freehold
property comprising 13 acres of land in West Sussex which includes
10 acres of mature vines. Further details on the Acquisition
Agreement are set out in the Admission Document.
Reasons for the Merger
The Board considers that Shellproof Limited Shareholders will
benefit from the Merger through the opportunity to invest in the
establishment of an English sparkling wine business which is
expected to take advantage of further anticipated market growth in
this sector of the wine industry. The Board believes that the
business strategy provides shareholders with the potential for long
term capital growth in their investment.
Business Strategy
The business strategy is to create a prestigious English
sparkling wine production, sales and distribution business. Through
the acquisition and establishment of approximately 150 acres of
vineyards and the construction of a winery, the Enlarged Group aims
to produce leading examples of English sparkling wine.
It is intended that the vineyards and winery will be located in
West Sussex within, or in close proximity to the South Downs
National Park. The business plan is based on approximately 150
acres of vineyards. In full production these vineyards are expected
to produce grapes sufficient for approximately 400,000 bottles of
sparkling wine which would make the Enlarged Group one of the
leading producers of English sparkling wine.
Market overview
In 2011 total wine sales in the UK amounted to 1,685 million
bottles. Sparkling wine accounts for 108 million bottles of this
representing 6.4 per cent of all wine consumed in the UK. English
wine (including sparkling) accounted for 2.4 million bottles (only
0.1 per cent of total wine sales in the UK).
Of the 2.4 million bottles of English wine sold in the UK in
2011, the Directors believe that English sparkling wine accounts
for approximately 60 per cent of this at 1.4 million bottles. This
represents approximately 1.3 per cent of the UK sparkling wine
market. However, the UK sparkling wine market of 108 million
bottles includes a number of categories such as Cava and Prosecco,
as well as Champagne and other sparkling wines, which the Directors
believe are sold in retail price brackets from under GBP10 to over
GBP40. Champagne accounts for approximately 35 million bottles
overall but even within this sub sector it is estimated that only
around two-thirds will be at price levels comparable with English
sparkling wine. Thus English sparkling wine could already represent
around 6 per cent of the equivalent Champagne market with
production trends which Directors believe could potentially double
this percentage in the coming years.
English sparkling wines have won a number of prestigious awards
recently against competition from Champagne and other sparkling
wines. Ridgeview has won the best international sparkling wine
trophy on three separate occasions and in 2012 took both a trophy
and gold medal at the International Wine Competition (IWC. The
English sparkling wine sector has also enjoyed significant and
positive media coverage in recent years). It is understood that
English sparkling wines also featured at the Royal Wedding and
Jubilee celebrations and it was reported that Waitrose sales of
English sparkling wine increased five-fold over the Jubilee
period.
Production of English wines has increased significantly in the
last 9 years and from 2002 to 2011 total domestic production
increased by 57 per cent (source: HMRC Alcohol bulletin May 2012).
This growth in sales has also been reflected in UK vineyard growth
with planting in the UK up by around 75 per cent in the last 3
years to approximately 1,400 hectares (equivalent to 3,460 acres)
from the previous level of around 800 hectares (equivalent to 1,980
acres). The Directors believe that sparkling wine grape varieties
form the bulk of new plantings.
In terms of competition, there are currently relatively few
large producers of English sparkling wine and the Directors believe
that there are only a few companies estimated to be producing more
than 400,000 bottles of English sparkling wine per year.
Availability nationwide is currently restricted to a few national
retailers such as Waitrose and more recently Tesco, with retail
price points in the range of GBP15 - GBP30 with some examples in
excess of that. The Directors believe that direct retail sales via
farm shops, online and mail order represent a significant
proportion of distribution in the English sparkling wine market and
for smaller producers this is likely to be their only outlet.
Business description
There are three principal components involved in developing the
business to be operated by the Enlarged Group:
i. The Vineyards
These will contain or be planted with grape varieties suitable
for English sparkling wine such as Pinot Noir, Pinot Meunier and
Chardonnay. The 150 acre target is expected to come from:
-- The Freehold Property - 13 acres, of which 10 acres are
planted with mature vines, to be acquired in accordance with the
terms of the Acquisition Agreement as a freehold purchase.
-- The FBT Site - 27 acres.
-- Other sites locally, up to a further 110 acres, which are
expected to be on similar long term farm business tenancies similar
to the FBT will be identified and planted over the course of the
next few years.
During the early years, in order to meet its production plans,
the Enlarged Group will continue to buy in grapes and process these
in other local wineries on a contract basis. The Enlarged Group
currently has stocks of approximately 25,000 bottles.
The Enlarged Group may also consider the acquisition of freehold
land and mature vineyards if suitable opportunities arise.
ii. The Winery
The Enlarged Group intends to build a winery on one of its
target sites, subject to obtaining the relevant planning consents.
It is likely that the winery would be acquired via a leasehold
arrangement with commencement contingent on planning. The winery
would be expected to be commissioned towards the end of 2014. The
winery and related storage facility would carry out grape crushing,
juice extraction, fermentation, secondary fermentation and other
processes involved in the production of sparkling wine. The
buildings would also accommodate bottling and storage facilities as
well as a small visitor centre.
iii. Sales & Marketing
At a mature production level of approximately 400,000 bottles,
the business is expected to be positioned as one of the leading
producers of English sparkling wine. Sales and marketing will
include:
-- Branding and related support:
A brand name or names will be chosen to reflect the perceived
brand values of the product. The Directors believe that branding
will be assisted by the perceived quality of the region's
"terroir". This region on which Shellproof Wines is based already
has established vineyards for some of the leading English sparkling
wine producers. The region benefits from an attractive setting with
particular soil and climatic conditions which have already produced
a number of award winning sparkling wines.
-- Distribution:
Distribution will include direct sales via a visitor centre,
other local direct sales, online and mail-order purchases, export
sales and selected national distribution.
Admission, Settlement and CREST
It is expected that on or about 25 October 2012, Shellproof PLC
Shares will be admitted to trading on AIM and that dealings will
commence on that date. It is intended that, where applicable,
definitive share certificates in respect of Shellproof PLC Shares
will be distributed as soon thereafter as is practicable.
Shellproof PLC Shares are issued in registered form and may be
held either in certificated or uncertificated form.
The Company has applied for the Shellproof PLC Shares to be
admitted to CREST with effect from Admission. CREST is a paperless
settlement procedure enabling securities to be evidenced otherwise
than by a certificate and transferred otherwise than by a written
instrument. The articles of association of the Company permit the
holding of Shellproof PLC Shares under the CREST system.
Accordingly, settlement of transactions in Shellproof PLC Shares
following Admission may take place within the CREST system if any
shareholder so wishes.
CREST is a voluntary system and holders of Shellproof PLC Shares
who wish to receive and retain share certificates will be able to
do so.
Circular and admission document
A copy of the circular and admission document have been sent to
Shellproof Limited Shareholders today and will be available to view
on the Company's website shortly at www.shellprooflimited.com.
Definitions
Acquisition the acquisition by Shellproof
Wines of the Freehold Property
pursuant to the Acquisition Agreement;
Acquisition Agreement the contract for sale of the
Freehold Property;
-----------------------------------------
Admission admission of all of the Shellproof
PLC Shares to trading on AIM;
-----------------------------------------
AIM a market operated by the London
Stock Exchange plc;
-----------------------------------------
CREST the relevant system (as defined
in the Uncertificated Securities
Regulations) for the paperless
settlement of share transfers
and the holding of shares in
uncertificated form in respect
of which CRESTCo Limited is the
operator (as defined in those
Regulations);
-----------------------------------------
Directors or Board the directors of Shellproof PLC;
-----------------------------------------
Enlarged Group Shellproof PLC and its subsidiaries
following completion of the Merger
and any subsidiaries or businesses
it may acquire following Admission;
-----------------------------------------
Freehold Property Halnaker Vineyard, Thicket Lane,
Halnaker, Chichester also known
as land to the north of Warehead
Stud Farm, Eartham, Chichester;
-----------------------------------------
FBT a long term farm business tenancy
agreement expected to be entered
into by Shellproof Wines in respect
of the FBT Site;
-----------------------------------------
FBT Site a field in West Sussex suitable
for establishing a vineyard and
comprising approximately 27 acres;
-----------------------------------------
IBCA the International Business Companies
Act, 1990 of Belize;
-----------------------------------------
Merger the merger of Shellproof Limited
and Shellproof PLC pursuant to
Part VII of the IBCA;
-----------------------------------------
Shellproof Limited Shellproof Limited, an international
business company incorporated
in Belize under the IBCA with
registered number 70,859;
-----------------------------------------
Shellproof Limited Shareholders holders of Shellproof Limited
Shares;
-----------------------------------------
Shellproof Limited Shares ordinary shares of 50 pence each
in the capital of Shellproof
Limited;
-----------------------------------------
Shellproof PLC Shellproof PLC, a company incorporated
in England and Wales with the
Company registered number 08225727;
-----------------------------------------
Shellproof PLC Shares ordinary shares of 50 pence each
in the capital of Shellproof
PLC issued or to be issued pursuant
to the Merger;
-----------------------------------------
Shellproof Wines Shellproof Wines Limited, a wholly-owned
subsidiary of Shellproof Limited,
being a company incorporated
in England and Wales with registered
number 07665948;
-----------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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