TIDMRUBI
RNS Number : 2568F
Rubicon Diversified Investments PLC
13 June 2012
Rubicon Diversified Investments Plc
Proposed acquisition of Lonrho Aviation (BVI) Limited Proposed
acquisition of a further 49.98 per cent. economic interest in Five
Forty Aviation Limited Proposed approval of a waiver of the
obligations under Rule 9 of the City Code Notice of General Meeting
Admission to trading on AIM
Rubicon Diversified Investments Plc ("Rubicon" or the "Company";
AIM: RUBI) announces the publication of its Admission Document
relating to the proposed acquisitions of Lonrho Plc's ("Lonrho")
aviation division and an additional interest in Five Forty Aviation
Ltd., and the resumption of trading of its shares on the AIM Market
of the London Stock Exchange.
Transaction highlights:
-- Rubicon shares resume trading today
-- Acquisition of Lonrho's aviation division for $85.7million
-- Acquisition of an additional interest in Five Forty Aviation Ltd.
-- New ordinary shares issued by Rubicon as consideration at a price of 4.8p per share
-- Sir Stelios Haji-Ioannou's easyGroup to receive Rubicon
shares under brand licensing agreement as previously announced on 9
May 2012
-- Lonrho to retain a 73.7 per cent. interest in Rubicon
following issue of shares to easyGroup.
-- easyGroup has the right to nominate two directors to the Board of Rubicon
The Acquisition is a reverse takeover under the AIM Rules for
which shareholder approval is sought at a general meeting to be
held on 29 June 2012.
Commenting on the acquisition, Robert Burnham, Chairman of
Rubicon said:
"We are delighted to be announcing the acquisition of Lonrho
Aviation's Fly540 business with its unique platform of hubs, fly
rights and growing passenger revenue base. The combined talents of
Rubicon's management team and our partners from Lonrho and Sir
Stelios' easyGroup will transform Fly540, already a growing and
successful business, into Fastjet, a low cost, point-to-point, no
frills all jet airline for Africa."
Ed Winter, consultant to Rubicon and intended Chief Executive
Officer of Rubicon following Completion said:
"The African aviation market is significantly under-served and
there are major opportunities for growth in the aviation industry
across Africa where current offerings are, with a few exceptions,
sub-standard compared to international norms. With rising GDP and
consumer spending, and changing demographics, Africa is ripe for a
democratisation of air travel. We plan to achieve that through the
launch of Fastjet, the first true pan-African low cost airline
operating to European standards of safety security and
quality."
Key Points
-- Lonrho has built its Fly540 branded aviation division over
the past six years into a growing African airline with operations
in Kenya, Tanzania, Angola and Ghana, all of which are growing
economies with significant oil and gas and mineral wealth.
-- With the establishment of those four bases the Lonrho
aviation division represents a strong platform for developing a
pan-African low-cost airline. Rubicon will, through its association
with easyGroup as announced on 9 May 2012, look to bring on board a
highly-experienced aviation management team to take advantage of
that opportunity.
-- Following Completion it is intended that Ed Winter, former
CEO of low-cost airline Go and former COO of easyJet, will become
Chief Executive Officer of Rubicon and join the Board as one of
easyGroup's nominated directors.
-- The African air travel market is significantly
under-developed with limited competition in many markets. The
Directors believe this is an excellent time for developing an
airline business in Africa, a large continent with limited road and
rail infrastructure and often difficult topography but with
populations which are experiencing rising disposable income and
increasing demand for regional and intercontinental travel.
-- The combination of Lonrho Aviation's existing platform, Sir
Stelios Haji-Ioannou and easyGroup's aviation expertise and
Lonrho's knowledge of the African business environment offers a
strong base for the development of Fastjet, the planned low-cost
airline for Africa operating to European standards of safety and
quality.
-- Plans for the launch of "Fastjet" are underway but not yet
finalised and the introduction of an appropriate fleet of modern
jet aircraft may require the raising of additional funding.
SHARE CAPITAL STATISTICS
Number of Existing Ordinary Shares 300,269,919
Number of Consideration Shares 1,150,537,455
Number of 530 Vendor Consideration Shares 38,499,445
Number of Ordinary Shares in issue on Admission (1) 1,311,830,135
Lonrho's percentage interest in the Ordinary Shares 74.9 per cent.
in issue on Admission (2)
Number of easyGroup Licence Shares (3) 83,985,849
Lonrho's percentage interest in the Ordinary Shares 73.7 per cent.
in issue following the issue of the easyGroup Licence
Shares (4)
Number of outstanding warrants and options on Admission
(5) 106,358,671
Number of Ordinary Shares under option to easyGroup
under Brand Licence (6) 186,635,221
(1) On the assumption that no warrants or options are exercised
between the date of this announcement and Admission, this will be
the aggregate of the Existing Ordinary Shares, the Tranche A
Consideration Shares and the 530 Vendor Consideration Shares. The
Consideration Shares are to be issued in two tranches, Tranche A
Consideration Shares and Tranche B Consideration Shares, so that at
no time will Lonrho hold in excess of 75% of the issued share
capital of the Company in accordance with the Controlling
Shareholder Agreement. The Tranche B Consideration Shares will be
issued immediately following the issue of the easyGroup Licence
Shares. Tranche A Consideration Shares amount to 973,060,771
Ordinary Shares and the Tranche B Consideration Shares amount to
177,476,684 Ordinary Shares.
(2) On Admission, Lonrho will hold its existing interest of
9,500,000 Ordinary Shares and the Tranche A Consideration
Shares.
(3) This is calculated on the assumption that, except for the
Consideration Shares and the 530 Vendor Consideration Shares, no
Ordinary Shares are issued prior to the issue of the easyGroup
Licence Shares and no options or warrants are issued by the Company
prior to Admission other than those described in the Admission
Document.
(4) On issue of the easyGroup Licence Shares, Lonrho will hold
its existing interest of 9,500,000 Ordinary Shares and the
Consideration Shares and the Enlarged Issued Share Capital will
comprise 1,573,292,668 Ordinary Shares.
(5) This is calculated on the assumption that no options or
warrants are issued by the Company prior to Admission other than
those described in the Admission Document.
(6) This is calculated on the assumption that, except for the
Consideration Shares and the 530 Vendor Consideration Shares, no
Ordinary Shares are issued prior to the issue of the easyGroup
Licence Shares and no options or warrants are issued by the Company
prior to Admission other than those described in the Admission
Document.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Despatch and date of the Admission Document 13 June 2012
Latest time and date for receipt of the 2.00 p.m. on 27 June
completed Forms of Proxy to be valid at 2012
the General Meeting
General Meeting 2.00 p.m. on 29 June
2012
Completion of the Acquisitions, Admission 8.00 a.m. on 2 July
and commencement of dealings on AIM in 2012
the Enlarged Issued Share Capital on Admission
ISIN on Admission GB00B17BLJ81
All references to times in this announcement are to UK time
unless otherwise stated.
Each of the times and dates above is subject to change. Any such
change, including any consequential change in the Share Capital
Statistics, will be notified to Shareholders by an announcement on
a Regulatory Information Service.
13 June 2012
A copy of the Admission Document is being sent to shareholders
today together with the notice of general meeting.
Details of the proposed Acquisitions and other proposals are set
out below. Further details are set out in the Admission Document
which is available together with the notice of general meeting from
the Company's website: www.rubicondiv.co.uk
For further information please contact :
Rubicon Diversified Investments Plc Tel: 0207 887 1421
Rob Burnham
Citigate Dewe Rogerson Tel: 0207 638 9571
Sally Marshak / Angharad Couch
W.H. Ireland Ltd. Tel: 0207 220 1666
James Joyce/Nick Field
Introduction
On 18 November 2011, the Company announced its intention to
adopt a new investing policy. The Company aimed to seek an
acquisition or acquisitions in the global aviation services sector
with a particular focus on Africa.
The Board has now identified a potential acquisition which
fulfils its investment criteria.
On 23 February 2012, the Company announced that it was in
discussions to acquire 'Fly540', an aviation business operating in
Africa, from Lonrho which would constitute a reverse takeover under
the AIM Rules. Trading in the Existing Ordinary Shares was
suspended on 23 February 2012 until the Company could enter into a
binding agreement and publish an admission document for the
Enlarged Group.
The Company has today announced that it has entered into the
Acquisition Agreement conditional, amongst other things, on
Shareholder approval, to acquire the entire issued share capital of
Lonrho Aviation, the holding company representing Lonrho's interest
in a pan-African airline business operating under the 'Fly540'
brand. The consideration will be satisfied by the issue to Lonrho,
or such entity as it directs, of the Consideration Shares at a
price of 4.8 pence per Ordinary Share. As part of the Acquisition
Agreement, any debt outstanding at Admission from the Lonrho
Aviation Group to the Retained Lonrho Group which has not been
capitalised as part of the Acquisition will be assigned by the
Retained Lonrho Group to Rubicon with the effect that after
Admission, no sums will be owed by the Lonrho Aviation Group to the
Retained Lonrho Group. The debt owed to the Retained Lonrho Group
that has been capitalised on 12 June 2012 amounts to US$45.0
million. Further details of the terms and conditions of the
Acquisition are set out below under the heading "Principal terms of
the Acquisitions". Rubicon will separately acquire for
consideration comprising US$2.25 million in cash and the 530 Vendor
Consideration Shares, a 49 per cent. legal and economic interest
and a further 49 per cent. economic interest in 530 Investments,
which owns 51 per cent. of Fly540 Kenya conditional on, inter alia,
Admission. When combined with Lonrho Aviation's 49 per cent.
interest in Fly540 Kenya, this will result in a 99 per cent.
economic interest in Fly540 Kenya owned by the Enlarged Group.
As a result of the Acquisitions, on Admission the Company will
have the following economic interests:
-- Fly 540 Kenya - 99 per cent.
-- Fly 540 Ghana - 92.5 per cent.
-- Fly 540 Tanzania - 90 per cent.
-- Fly 540 Angola - 60 per cent.
The Acquisitions will result in a fundamental change in the
Company's business and will constitute a reverse takeover under the
AIM Rules. As such, the Company is seeking Shareholder approval for
the Acquisitions at the General Meeting.
The purpose of this letter is to give you further information
regarding the matters described above and to seek your approval of
the Proposals, which include the Waiver, at the General Meeting.
The Notice is set out at the end of the Admission Document.
Following completion of the Acquisitions, on Admission the
Lonrho Concert Party will have an aggregate holding of
1,021,060,216 Ordinary Shares, representing 77.8 per cent. of the
issued ordinary share capital of the Company and, following the
issue of the easyGroup Licence Shares, the Lonrho Concert Party
will have an aggregate holding of 1,198,536,900 representing 76.2
per cent. of the issued ordinary share capital of the Company.
Following Admission and the implementation of the Proposals, the
Lonrho Concert Party will hold in excess of 30 per cent. of the
Enlarged Issued Share Capital and would normally incur an
obligation, under Rule 9 of the City Code, to make a general offer
to the other Shareholders to acquire their shares. However, subject
to the approval of the Independent Shareholders of the Acquisitions
on a poll at the General Meeting, the Panel has agreed to waive
this obligation. An explanation of the provisions and impact of the
City Code in relation to the Lonrho Concert Party is set out in the
paragraph entitled "the City Code" below.
The Proposals are conditional, inter alia, on the passing of the
Resolutions and Admission. If the Resolutions are approved by the
Shareholders, it is expected that Admission will become effective
and dealings in the Enlarged Issued Share Capital on Admission will
commence on AIM on or around 2 July 2012.
Reasons for the Acquisitions
The aviation sector in Africa is significantly under-served. Air
travel spending as a percentage of GDP is a fraction of that of
other emerging markets and the current offering is considered by
the Directors to be sub-standard relative to what they consider to
be international norms in relation to safety, pricing, punctuality,
service and route access. Rubicon identified that Lonrho Aviation
had developed a significant route network based around three main
hubs located in Kenya, Angola and Ghana. The Lonrho Aviation
operation is branded "Fly540". Lonrho Aviation's intention is to
offer an on-time, reliable and professional passenger air service
from its three regional hubs. Although not a low cost carrier, the
Directors believe that the Lonrho Aviation Group has brought
competitive pricing to its routes and has successfully built a
platform that a low cost carrier could use to enter the African
marketplace.
The Directors believe that the Acquisitions present an
attractive opportunity for the Company to achieve its investing
policy and that there is considerable potential for the further
development of the Lonrho Aviation Group and "Fly540" in the
African air travel market.
The Board believes that the Enlarged Group will have significant
growth opportunities as a result of combining the Company's public
listing, financial resources and experienced management team with
the Lonrho Aviation Group's existing aviation business. In
addition, the Board believes that the Company's growth prospects
could be further enhanced by its relationship with easyGroup.
Information on the Lonrho Aviation Group
The Lonrho Aviation Group operates, through local subsidiaries,
scheduled airline services under the 'Fly540' brand serving
destinations across Africa from three regional hubs in Kenya in
East Africa, Angola in South-West Africa and Ghana in West Africa.
Lonrho Aviation operates as a subsidiary of Lonrho, a diversified
trading group with interests throughout Africa.
Turnover in the 15 months ended 31 December 2011 was US$57.0
million and passenger numbers totalled 525,375, compared with
US$33.6 million and 239,235 passengers for the year ended 30
September 2010.
Lonrho first became interested in regional air travel in Africa
when, in October 2006 it subscribed for 49 per cent. of the issued
share capital of Fly540 Kenya for a cash consideration of US$1.5
million. Fly540 Kenya commenced operations in Kenya in November
2006 on its inaugural route, Nairobi to Kisumu. Operations in
Angola began from Cabinda, the second hub airport, in January 2011.
Ghanaian services began from Accra, the third regional hub, in
December 2011, with one aircraft servicing routes between Accra,
Tamale, Takoradi and Kumasi.
Lonrho Aviation's Ugandan operation was discontinued in December
2011, and the local Ugandan company does not form part of the
Acquisition, having been disposed of by Lonrho Aviation on 1 June
2012.
Principal terms of the Acquisitions
On the date of this announcement, Rubicon entered into the
Acquisition Agreement pursuant to which it has conditionally agreed
to acquire the entire issued share capital of Lonrho Aviation. The
consideration will be satisfied by the issue of the Consideration
Shares. The Tranche A Consideration Shares will be issued on
Admission and the Tranche B Consideration Shares will be issued
when the easyGroup Licence Shares are issued.
Rubicon has further entered into an agreement, the 530
Acquisition Agreement, under which it will conditionally acquire a
49 per cent. legal and economic interest and a 49 per cent.
economic interest in 530 Investments, which owns 51 per cent. of
Fly540 Kenya, for the issue of the 530 Vendor Consideration Shares
and US$2.25 million cash. When combined with Lonrho Aviation's 49
per cent. interest in Fly540 Kenya, this will result in the
Enlarged Group owning a 99 per cent. economic interest in Fly 540
Kenya.
The Acquisition Agreement contains warranties from the Vendor in
relation to the business, assets and affairs of Lonrho Aviation and
certain indemnities from the Vendor. The 530 Acquisition Agreement
contains warranties from the 530 Vendor in relation to the
business, assets and affairs of 530 Investments. Further details of
both agreements are set out in paragraphs 9.1.1 and 9.1.2 of Part
VII of the Admission Document.
The Acquisition is conditional upon, inter alia:
i. the approval by the Shareholders of the Resolutions proposed
at the General Meeting convened for 29 June 2012; and
ii. Admission having occurred not later than 6.00 p.m. on 31
July 2012 (or such later time and/or date as the Company and Vendor
may determine.
The 530 Acquisition is conditional upon, inter alia:
i. the completion of the Acquisition;
ii. the approval by the Shareholders of the Resolutions proposed
at the General Meeting convened for 29 June 2012; and
iii. Admission.
Management share options
In connection with Admission, each of Robert Burnham, Richard
Blakesley, David Lenigas and Geoffrey White are to be issued with
options over 20,000,000 Ordinary Shares at 5 pence per Ordinary
Share. The Director Options are subject to approval at the General
Meeting and are conditional on Admission and are subject to
performance conditions. Further details of these are set out in
Part VII of the Admission Document.
Reverse Takeover
The acquisition of Lonrho Aviation will constitute a reverse
takeover under the AIM Rules. Accordingly, completion of the
Acquisition is conditional upon, inter alia, the publication of an
admission document for the Enlarged Group and approval of these and
other matters by Shareholders, which is being sought at the General
Meeting, notice of which is set out in the Admission Document.
General Meeting
As the Proposals constitute a reverse takeover for the purposes
of the AIM Rules, they require the consent of the Shareholders in a
General Meeting. A General Meeting, notice of which is set out at
the end of the Admission Document, has been convened for 2.00 p.m.
on 29 June 2012 at the offices of Thomas Eggar LLP, 76 Shoe Lane,
London EC4A 3JB for the purpose of considering and, if thought fit,
passing the following resolutions:
Ordinary resolutions to:
1. approve, for the purposes of Rule 14 of the AIM Rules, the
Acquisitions by the Independent Shareholders;
2. approve the Waiver by the Independent Shareholders;
3. authorise the Directors to allot relevant securities under Section 551 of the Act;
4. approve the grant of the Director Options by the Independent Shareholders; and
Special resolution to:
5. disapply statutory pre-emption rights.
To be passed, Resolutions 1 to 4 require a majority of more than
50 per cent., and Resolution 5 will require a majority of not less
than 75 per cent., of the Shareholders voting in person or by proxy
in favour of each Resolution.
All the Resolutions will be conducted on a poll and, in
addition, in accordance with the requirements of the Code,
Resolution 2 shall be taken on a poll of the Independent
Shareholders.
City Code on Takeovers and Mergers & Rule 9 Waiver
The issue of the Consideration Shares and the 530 Vendor
Consideration Shares to the Lonrho Concert Party gives rise to
certain considerations under the Code. Brief details of these as
well as of the Panel, the Code and the protections they afford to
Shareholders are described in the Chairman's letter contained in
the Admission Document.
The Panel has agreed, however, subject to Resolution 2 being
passed on a poll by the Independent Shareholders at the General
Meeting, to waive the obligations on the Lonrho Concert Party under
Rule 9 to make a general offer for the entire share capital of the
Company, which would otherwise arise as a result of the Proposals.
Accordingly, approval of the Independent Shareholders (on a poll)
to the Waiver is sought in Resolution 2.
Related Party Transactions, Section 190 of the 2006 Act
The acquisition of Lonrho Aviation from Lonrho represents a
related party transaction for Rubicon under the AIM Rules by virtue
of Lonrho's past substantial shareholding in the Company. The
Independent Directors consider, having consulted with the Company's
nominated adviser, WH Ireland, that the terms of the Acquisition
are fair and reasonable insofar as the Company's shareholders are
concerned.
The grant of the Director Options represents a related party
transaction for Rubicon under the AIM Rules. As all of the
Directors will receive the Director Options there are no
independent directors to make the fair and reasonable statement
required under the AIM Rules. WH Ireland considers the proposed
grant of the Director Options to be fair and reasonable so far as
the Company's shareholders are concerned. The Independent
Shareholders will be asked to vote on the grant of the Director
Options.
Admission and dealings
Application will be made to the London Stock Exchange for the
Enlarged Issued Share Capital on Admission to be admitted to
trading on AIM. It is expected that Admission will become effective
and that dealings in the Enlarged Issued Share Capital on Admission
will commence on 2 July 2012.
Action to be taken
A Form of Proxy is enclosed with the Admission Document for the
use by Shareholders in connection with the General Meeting. Whether
or not they intend to be present at the General Meeting,
Shareholders are asked to complete, sign and return the Form of
Proxy in accordance with the instructions printed thereon. To be
valid, completed Forms of Proxy must be received by the Company's
Registrars, Neville Registrars Limited, as soon as possible and in
any event so as to arrive not later than 2.00 p.m. on 27 June 2012,
being 48 hours before the time appointed for the holding of the
General Meeting. The completion and return of the Form of Proxy
will not preclude Shareholders from attending the General Meeting,
and voting in person should they wish to do so. Accordingly,
whether or not Shareholders intend to attend the General Meeting
they are urged to complete and return the Form of Proxy to the
Company's Registrars as soon as possible.
Recommendation and Directors Intentions
David Lenigas and Geoffrey White are directors of Lonrho and
Lonrho Aviation and, as a result, have a conflict of interest for
the purpose of Rule 25.2 (Note 4) of the City Code and therefore
have taken no part in the deliberations of the Board and have been
excluded from the recommendation of the Board.
The Independent Directors consider, having been so advised by WH
Ireland, the terms of the Acquisitions to be fair and reasonable so
far as the Company and its Shareholders as a whole are concerned,
and therefore unanimously recommend that the Shareholders vote in
favour of the Resolutions (save for Resolutions 1, 2 and 4, upon
which only the Independent Shareholders are permitted to vote). The
Independent Directors have irrevocably undertaken to vote in favour
of the Resolutions in respect of their holdings of 13,023,097
Existing Ordinary Shares in aggregate, representing approximately
4.3 per cent. of the Existing Ordinary Shares.
Definitions
Defined terms used in this announcement have the meanings
defined in the Admission Document. The Admission Document is
available at www.rubicondiv.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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