GLI Finance Limited Proposes Acquisition Of Sancus Limited and Sancus (Guernsey) Limited
GLI Finance Limited ("GLI Finance" and the "Company") announces on 14 November 2014, it entered into a conditional sale and purchase agreement with Sancus Holdings Limited ("SHL") (the "SPA"), under which the Company has conditionally agreed to acquire the respective entire issued share capitals of Sancus Limited ("SL") and Sancus (Guernsey) Limited ("SGL") from SHL and the intragroup loans (the "Intragroup Loans") made by SHL to SL (the "Acquisition") for a total consideration of £37.75 million.
The payment of the consideration relating to the Acquisition would involve the Company issuing to SHL new Ordinary Shares (the "New Ordinary Shares") and new redeemable zero dividend preference shares in the Company (the "ZDP Shares"). Therefore, in connection with the Acquisition, the Board is seeking the approval of Shareholders for the New Articles to be adopted in order to reflect the creation of such a new class of ZDP Shares and to provide for the rights attached to the ZDP Shares (altogether, the "Proposals"). The Board believes that the ZDP Shares will diversify the funding of the Company's capital structure and better align the structure with the Board's expectation of the future returns from the Company's business. The issue of ZDP Shares is also expected to reduce the Company's overall cost of capital.
The total consideration for £37.75 million will be satisfied by the issue to SHL of:
- 31,415,930 New Ordinary Shares at a fixed price of 56.5 pence per New Ordinary Share, representing a 3.4 per cent discount to the closing mid-market price of 58.5 pence per Ordinary Share on 14 November 2014 (being the last trading day prior to announcement of the Acquisition); and
- 20,000,000 ZDP Shares at a fixed price of £1 each.
Application will be made to admit the New Ordinary Shares to trading on AIM as soon as practicable following their issue. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on 18 December 2014. At Admission, SHL will be interested in 31,415,930 Ordinary Shares, representing 18.2 per cent of the Company's enlarged issued share capital.
Completion of the Acquisition is conditional upon, amongst other things approval by Shareholders of the proposed adoption of the New Articles by way of a special resolution (the "Resolution").
An Extraordinary General Meeting of the Company will therefore be held at 11.00 a.m. on 12 December 2014 for Shareholders to approve the Resolution. The notice of the EGM will be posted today to Shareholders along with a circular (the "Circular"). The Circular will shortly be made available on the Company's website, www.glifinance.com.
The Board of GLI Finance considers that the Proposals are in the best interests of the Company and Shareholders as a whole. The Board also believes that the Acquisition will represent a key event in the Company's development and that it will provide the Company with the opportunity to achieve an immediate step-change in the scale and breadth of its activities in the alternative finance arena for the following reasons:
- The Acquisition will provide the GLI Finance with an existing loan book and an income stream from SL's current loan book. SL also has a pipeline of future loan origination opportunities in the Channel Islands, supported by its established network of contacts, expanding presence in the market and growing market recognition. The Board also intends to research the potential for SL to expand its operations into other offshore jurisdictions, such as the Isle of Man and Malta, as the Board believes this represents another area of opportunity in the medium-term.
- The SL network of contacts and market presence also provides the enlarged Group with potential access to a wide pool of capital from Channel Islands-based high net worth individuals and family offices. These sources could provide future lenders and co-lenders, not only to SL, but to other platforms within the group of alternative finance platforms in which the Company holds equity interests.
- The Acquisition also brings additional experienced management with loan origination and underwriting capabilities to develop and drive growth in the Company's proprietary loan book. It is the Board's intention to expand the Enlarged Group's loan origination business following the Acquisition, and in light of this, to reorganise the Company's investment activities into two divisions, Lending and Platforms. Mr Andrew Whelan, SL's Chief Executive Officer will be appointed to a newly created post, Director of Lending, with responsibility for loan origination and management. Mr Whelan's appointment will become effective immediately following the Acquisition and it is intended that he will join the Board as an executive director.
In summary, the Board believes that there is a good strategic fit between SL and the Company and that the Acquisition will not only bring the entirety of SL's current and future lending business within the Enlarged Group but will provide the management skills and potential access to the capital required to facilitate a broader expansion of the Enlarged Group's loan origination activities.
GLI Finance Chief Executive Officer, Geoff Miller, said:
"This acquisition represents a key event in the Company's development; not only immediately delivering an existing loan book and income stream but also an exciting platform from which to expand into other offshore jurisdictions. Alongside this, we will benefit from the experience of a hugely talented management team with loan origination capabilities that will drive the growth of our proprietary loan book."
Sancus Holdings Limited Chief Executive Officer, Andrew Whelan, said:
"Having GLI Finance as an investor for nearly a year has made clear the synergies that are possible between Sancus and GLI Finance's other investments, to the benefit of all involved. I look forward to being a part of this exciting stage of growth for GLI Finance, which has already built an impressive and diverse portfolio of alternative finance platforms."
Related Party Transaction
Mr Geoffrey Miller, the Company's Chief Executive Officer and a Director of the Company, is a non-executive director of SHL. The aggregate interests of Mr Miller and his fellow SHL directors in SHL's issued and to be issued voting share capital exceed 30 per cent. As such, SHL is classified as a related party of the Company under Rule 13 of the AIM Rules and the Acquisition is therefore treated as a related party transaction. It is also subject to the requirements of Rule 3.01 of the Authorised Closed-Ended Scheme Rules, 2008.
The Independent Directors consider, having consulted with the Company's nominated adviser, Panmure Gordon, that the terms of the Acquisition are fair and reasonable insofar as Shareholders are concerned.