NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

28 November 2024

RECOMMENDED ACQUISITION
OF
Loungers PLC
by
CF EXEDRA BIDCO LIMITED

(a newly formed company indirectly owned by funds and accounts managed or advised by affiliates of FORTRESS INVESTMENT GROUP, LLC)

to be implemented by means of a scheme of arrangement under Part 26 of the Companies Act 2006

Summary

·      The boards of directors of CF Exedra Bidco Limited ("Bidco") and Loungers plc ("Loungers") are pleased to announce that they have reached agreement on the terms and conditions of a recommended acquisition by Bidco of the entire issued and to be issued share capital of Loungers (the "Acquisition").

 

·      Under the terms of the Acquisition, each Loungers Shareholder will be entitled to receive:

 

                  for each Loungers Share:        310 pence in cash (the "Cash Offer")

 

with an alternative option to participate in an unlisted share alternative in respect of some or all of their Loungers Shares (the "Alternative Offer").

 

·      The Cash Offer values the entire issued, and to be issued, ordinary share capital of Loungers at approximately £338.3 million, and at an enterprise value of approximately £350.5 million.

 

·      The Cash Offer represents a premium of approximately:

 

·      30.3 per cent. to the closing price of 238.0 pence per Loungers Share on 27 November 2024 (being the last Business Day prior to this announcement);

·      39.7 per cent. to the volume weighted average price of 221.9 pence per Loungers Share in the two weeks to 27 November 2024 (being the last Business Day prior to this announcement);

·      34.6 per cent. to the volume weighted average price of 230.4 pence per Loungers Share in the one month to 27 November 2024 (being the last Business Day prior to this announcement); and

·      29.6 per cent. to the volume weighted average price of 239.2 pence per Loungers Share in the twelve months to 27 November 2024 (being the last Business Day prior to this announcement).

·      As an alternative to the Cash Offer, eligible Loungers Shareholders may elect to participate in the Alternative Offer, pursuant to which they will receive unlisted securities, which will ultimately be issued pursuant to the mechanism described in paragraph 13 of this announcement, in the capital of CF Exedra Topco Limited (the ultimate owner of Bidco) ("Topco") ("Rollover Units"), on the terms and subject to the conditions of the Alternative Offer (as described in paragraphs 13 and 14 of this announcement and Appendix 4 to this announcement) and to be set out in the Scheme Document. An eligible Loungers Shareholder will be able to elect to take up the Alternative Offer in respect of all or part of their holding of Loungers Shares. The Rollover Units will be unlisted and non-transferable (except in very limited circumstances). Certain further details of the Rollover Units are set out in Appendix 4 to this announcement. Further information about the Rollover Units and the Alternative Offer will be included in the Scheme Document.

 

·      For the purposes of Rule 24.11 of the Takeover Code, HSBC, as financial adviser to Bidco, will provide an estimate of the value of a Rollover Unit, together with the assumptions, qualifications and caveats forming the basis of its estimate of value, in a letter to be included in the Scheme Document.

 

·      If, on or after the date of this announcement and before the Effective Date, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of Loungers Shares, Bidco reserves the right to reduce the consideration payable under the terms of the Cash Offer (and, as the case may be, the consideration due under the Alternative Offer) by an amount up to the amount of such dividend and/or distribution and/or return of capital, in which case any reference in this announcement to the consideration payable under the Cash Offer (or consideration due under the Alternative Offer) will be deemed to be a reference to the consideration as so reduced. Any exercise by Bidco of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme. In such circumstances, Loungers Shareholders would be entitled to retain any such dividend, distribution or other return of capital declared, made or paid or which becomes payable.

 

·      The Acquisition is intended to be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006. However, Bidco reserves the right to elect (with the consent of the Panel and subject to the terms of the Co-operation Agreement) to implement the Acquisition by way of an Offer.

 

Comments on the Acquisition

Commenting on the Acquisition, Alex Reilley, the Chairman of Loungers, said:

"We remain very confident about Loungers' future prospects and the half year results that we announced separately today clearly demonstrate the strong momentum that we have in the business.

Loungers has come a long way since we opened our first site in Bristol in 2002, and we are hugely proud of the jobs we've created, the positive impact we've made on the UK's high streets, and the outstanding hospitality our amazing teams have provided since then.

We are more ambitious than ever and we see Fortress as being an ideal partner to help us take Loungers into the next phase of its growth journey. We believe that the Acquisition represents a compelling proposition for all of our stakeholders and will allow us to execute our ambitious growth plans even more decisively and effectively."

Commenting on the Acquisition, Domnall Tait, Managing Director at Fortress said:

"Fortress is pleased to present this offer for Loungers, a company we believe holds a strong and differentiated position in its industry. Loungers' Directors have delivered impressive increases in the number of locations, same-store sales and revenues over the past several years - in spite of the recent challenges faced by the wider hospitality sector. This growth, and management's continued commitment to the business, give us confidence in the company's growth potential and in the opportunity to increase value.

Fortress brings to the table a successful track record of investing in consumer-focused businesses across the globe, particularly in the UK. For example, Fortress' investment in Majestic Wines and Punch Pubs & Co. has helped drive the growth of each of those companies. Today's announcement further strengthens Fortress' commitment to the UK market, and to being a responsible steward of and investor in UK businesses.

Fortress has a high conviction in the future of experience-led retail and hospitality, and believes this is highly complementary to Loungers' business model, strong operational performance, and impressive management team. Fortress looks forward to partnering with Loungers' management and to providing them with support to drive the business through its next stage of growth."

Acquisition highlights

·      The Cash Offer price is above the highest-ever closing price for Loungers Shares, and is a 30.3 per cent. premium to the Closing Price of a Loungers Share of 238 pence on 27 November 2024 (being the last Business Day prior to this announcement).

 

·      The Cash Offer was the result of a competitive private sale process. The Cash Offer price of 310 pence per Loungers Share was secured after extensive negotiations and is the highest offer level to be proposed during the sale process.

 

·      Bidco has procured irrevocable commitments to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of 41,774,202 Loungers Shares representing approximately 40.2 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to this announcement).

 

·      Fortress' private capital investment approach is to acquire companies with strong management teams, and to empower them to deliver their long-term strategy with the goal of increasing value. Fortress has industry knowledge; a strong belief in the future of experience-led retail; and a successful track record of growing businesses. In the pubs and hospitality space, Fortress has successfully invested in and supported the growth of Punch Pubs & Co., Majestic Wines and Vagabond in the UK, and Red Lobster, Krystal, J. Alexander and Logan's Roadhouse in the USA.

 

·      Fortress is excited to partner with Loungers management through Loungers' next stage of growth. Fortress holds Loungers' management team in high regard and admires its remarkable progress to date. Fortress recognises that Loungers' employees have played a critical role in its achievements to date and will remain a key part of its future success as a private business.

 

·      Fortress believes that the market value of a Loungers Share has failed to adequately reflect Loungers' positive business performance to date. With no indication this will change, Fortress believes the Acquisition presents a solution to the performance and liquidity challenges of Loungers Shares, giving Loungers Shareholders a record exit price, and certainty.

 

·    The Loungers Directors, who have been so advised by Houlihan Lokey as to the financial terms of the Cash Offer, consider the terms of the Cash Offer to be fair and reasonable. In providing its advice to the Loungers Directors, Houlihan Lokey has taken into account the commercial assessments of the Loungers Directors. Houlihan Lokey is providing independent financial advice to the Loungers Directors for the purposes of Rule 3 of the Takeover Code. Accordingly, the Loungers Directors intend unanimously to recommend that Loungers Shareholders vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting.

 

Background to and reasons for the Acquisition

·    Fortress believes it is a strong partner for Loungers, its management team, its employees and its other stakeholders in the next stage of Loungers' growth journey

 

Fortress is excited to partner with Loungers to continue developing the business by expanding its number of locations and investing in the customer offering - with the goal of increasing shareholder value. Through Fortress' deep industry knowledge and successful track record of investments in hospitality companies, Fortress is a highly credible, committed partner to support Loungers and its management team through the next phase of growth for the Lounge, Cosy Club and Brightside brands.

Fortress is supportive of Loungers' existing strategy, holds the management team in high regard and values their operational expertise and experience. Fortress believes that with the support of Fortress, management and employees will be able to focus on accelerating Loungers' growth plans for the business. Further, Fortress believes this will drive sustainable value in the longer-term.

 

Fortress believes that moving to private ownership will be in the interests of Loungers, its customers and its other stakeholders.

 

·    Fortress believes in Loungers' growth prospects, and the future of experience-led retail and hospitality offerings in the UK market

Fortress' high conviction in Loungers' growth prospects is based in part on its extensive experience in making direct investments in hospitality and consumer-focused companies, including Punch Pubs & Co., Majestic Wines and Vagabond in the UK, and in Red Lobster, Krystal, Logan's Roadhouse, J. Alexander, Rocket convenience stores in the USA. Fortress has experience in making public offers in the UK and globally.

 

In addition, Fortress has a strong belief in the future of experience-led retail and hospitality offerings in the UK market - underscored by its recent acquisition of Curzon, alongside the companies mentioned above.

 

Fortress recognises that Loungers' portfolio of complementary brands resonate strongly with the UK consumer, and that this experience-led approach has helped Loungers grow from one brand and one site in 2002 to three brands and 280 sites as at 27 November 2024. Alongside this expanded store count, Fortress is impressed by Loungers' track record in delivering strong like-for-like sales performance and return on capital, and admires the achievements of the current leadership team of Alex Reilley and Nick Collins and wider employee base. Fortress notes the strong financial performance of Loungers since IPO, with sales increasing from £153 million in FY19 to £346.6 million in FY24, in what has been a challenging environment for UK hospitality due to disruptions caused by COVID, rising inflation and the cost of living crisis, as well as the wider impact of geopolitical events on consumer sentiment.

 

Fortress notes Loungers' register concentration, as well as the current liquidity profile and price volatility of its shares on AIM. Fortress believes the Cash Offer gives Loungers Shareholders a price that reflects Loungers' strong historical performance, and certainty in the context of low trading liquidity - while allowing Fortress to make a long-term commitment to support the business in achieving its goals and maximising its full potential.

 

Recommendation

·    The Loungers Directors, who have been so advised by Houlihan Lokey as to the financial terms of the Cash Offer, consider the terms of the Cash Offer to be fair and reasonable. In providing its advice to the Loungers Directors, Houlihan Lokey has taken into account the commercial assessments of the Loungers Directors. Houlihan Lokey is providing independent financial advice to the Loungers Directors for the purposes of Rule 3 of the Takeover Code.

 

·    Accordingly, the Loungers Directors intend unanimously to recommend that Loungers Shareholders vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting as the Loungers Directors who are interested in Loungers Shares have irrevocably undertaken to do (or procure to be done) in respect of their own beneficial holdings of, in aggregate 7,759,526 Loungers Shares, representing approximately 7.5 per cent. of the issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement). Further details of these undertakings, including the circumstances in which they cease to be binding, are set out in Appendix 3 to this announcement.

 

·    In considering the terms of the Alternative Offer, which will allow Loungers Shareholders to maintain an ongoing economic interest in Loungers and to participate in future value creation which might, ultimately, deliver greater value than the Cash Offer (although this cannot be guaranteed), Houlihan Lokey and the Loungers Directors have considered, among other things, the risk factors and other investment considerations outlined in paragraph 15 of this announcement.

 

·    Houlihan Lokey is unable to advise the Loungers Directors as to whether or not the financial terms of the Alternative Offer are fair and reasonable. This is because of the significant and variable impact of the Alternative Offer for individual eligible Loungers Shareholders. In addition, it is not possible to predict with certainty the future value of the Rollover Units, which will depend upon the future performance of Loungers. Houlihan Lokey has not had any involvement in the development and validation of any financial projections for Topco or the Wider Bidco Group and, as a result, is unable to assess any plans Topco may have for the development of Loungers or the Wider Bidco Group to the degree necessary to form an assessment of the value of the Alternative Offer.

 

·    Accordingly, the Loungers Directors are unable to form an opinion as to whether or not the terms of the Alternative Offer are fair and reasonable and are not making any recommendation to Loungers Shareholders as to whether or not they should elect for the Alternative Offer. The Loungers Directors consider that, in deciding whether or not to elect for the Alternative Offer, Loungers Shareholders should consider carefully the disadvantages and advantages of electing for the Alternative Offer (including, but not limited to, the key factors set out in paragraph 15 of this announcement). Loungers Shareholders should also ascertain whether acquiring or holding Rollover Units is affected by the laws of the relevant jurisdiction in which they reside and whether Rollover Units are a suitable investment in light of their own personal circumstances. Accordingly, Loungers Shareholders are strongly encouraged to seek their own independent financial, tax and legal advice in light of their own particular circumstances and investment objectives before deciding whether or not to elect for the Alternative Offer. Any decision to elect for the Alternative Offer should be based on independent financial, tax and legal advice and full consideration of this announcement and the Scheme Document (when published).

 

·    Alex Reilley and Nick Collins, respectively Executive Chairman and Chief Executive of Loungers, both of whom: (i) are interested in Loungers Shares and options over Loungers Shares pursuant to the Loungers Share Plans; (ii) will continue to be involved with Loungers following the Effective Date; and (iii) wish to retain an ongoing economic interest in Loungers, have undertaken to Fortress to elect to participate in the Alternative Offer with respect to part of their interests in Loungers. Further details are set out in paragraph 8 of this announcement.

 

Summary of the background to and reasons for the Loungers Directors' recommendation of the Cash Offer

·    The Cash Offer values a Loungers Share at an all-time high

 

The Cash Offer values Loungers' entire issued and to-be-issued share capital at approximately £338.3 million on a fully diluted basis. This implies an enterprise value of £350.5 million and a multiple of approximately 8.1 times Loungers' FY24 Adjusted EBITDA (before site pre-opening costs) and of approximately 9.0 times Loungers' FY24 Adjusted EBITDA (after site pre-opening costs). The Cash Offer represents a premium of approximately:

 

·      30.3 per cent. to the closing price of 238.0 pence per Loungers Share on 27 November 2024 (being the last Business Day prior to this announcement);

·      39.7 per cent. to the volume weighted average price of 221.9 pence per Loungers Share in the two weeks to 27 November 2024 (being the last Business Day prior to this announcement);

·      34.6 per cent. to the volume weighted average price of 230.4 pence per Loungers Share in the one month to 27 November 2024 (being the last Business Day prior to this announcement); and

·      29.6 per cent. to the volume weighted average price of 239.2 pence per Loungers Share in the twelve months to 27 November 2024 (being the last Business Day prior to this announcement).

The Loungers Directors believe that the Cash Offer fairly recognises the medium-term risks and prospects of Loungers in its current form as a standalone, small cap AIM quoted entity.

 

·    The Cash Offer provides certainty for Loungers Shareholders

 

The Loungers Directors believe that the Cash Offer will provide Loungers Shareholders with the opportunity to receive an immediate and certain value per Loungers Share in cash at a valuation that might not otherwise become available and would, in any event, be subject to recognition by the stock market of the successful ongoing execution of Loungers' strategy and sufficient liquidity in the Loungers Shares.

 

·    The Cash Offer is the result of a competitive private sale process

 

The Loungers Directors began to consider ways to optimise value for Loungers Shareholders in early 2024. The Loungers Directors engaged financial advisers to assist in an assessment of whether a significant increase in value could be obtained for Loungers Shareholders. A competitive private sale process was undertaken, in accordance with the Takeover Code, during which Loungers entered into discussions with a number of potential strategic and private equity acquirers.

 

As part of this sale process, Fortress submitted an initial proposal which the Loungers Directors determined was not at a level they considered recommendable. During an extensive period of negotiations, Fortress made a further three proposals, culminating in the Cash Offer at 310 pence per Loungers Share.

 

For the avoidance of doubt, discussions with all other parties which were involved in the sale process have been discontinued.

 

·    Macro-economic factors have detracted from Loungers' operational success

 

The Loungers Directors believe that Loungers Shareholder value has for some time been negatively impacted by economic uncertainty and negative market sentiment towards the UK hospitality sector in general, as well as the significant challenges faced by the wider AIM market, and that these factors are likely to continue to exert a negative influence on Loungers Shareholder value.

 

·    Loungers' strong growth has not been reflected in its market valuation

 

The Loungers Directors' organic growth strategy has been driven by the rollout of new sites, and an ongoing focus on operational improvements to drive further sales and margin improvements across the existing estate. Loungers has consistently reported revenue growth, and sector-leading like-for-like sales growth in spite of challenging trading conditions for UK hospitality as a result of, amongst other things, COVID, inflation and the cost of living crisis. This gives the Loungers Directors confidence in the long-term growth prospects of Loungers as an independent company.

 

In the period since the Loungers Shares were admitted to trading on AIM in April 2019, Loungers has delivered approximately:

 

·     126.5 per cent. growth in reported revenues, from £153 million in the 52 weeks ended 21 April 2019 ("FY19") to £347 million in the 52 weeks ended 14 April 2024 ("FY24");

·     111.2 per cent. growth in reported adjusted EBITDA (before site pre-opening costs) on an IAS 17 basis, from £20.6 million in FY19 to £43.5 million in FY24; and

·     a 91.8 per cent. increase in the total number of sites across its three brands from 146 sites at IPO to 280 sites as at 27 November 2024 (the last Business Day prior to this announcement).

However, the Loungers Directors believe that Loungers' market capitalisation and implied enterprise valuation have trailed its operating performance in the period since IPO. The market capitalisation of Loungers as at 27 November 2024 (the last Business Day prior to this announcement) is only 33.7 per cent. higher than it was at Loungers' IPO. The implied enterprise value of Loungers on IPO equated to a multiple of 10.3 times FY19 adjusted EBITDA (before site pre-opening costs). Based on the closing price of a Loungers Share on 27 November 2024 (the last Business Day prior to this announcement), the implied enterprise value of Loungers equates to a multiple of just 6.0 times FY24 adjusted EBITDA (before site pre-opening costs).

 

·    Illiquidity in Loungers Shares impacts the ability of Loungers Shareholders to monetise their holdings

 

The Loungers Directors recognise that the market in Loungers Shares is illiquid. The Loungers Directors note that this illiquidity can make it challenging to attract new investors or for larger Loungers Shareholders to monetise their holdings. The Loungers Directors believe that this illiquidity is a structural issue inherent to many UK small-cap stocks.

 

Further details of the background to and reasons for the Loungers Directors' recommendation of the Cash Offer are set out in paragraph 4 of this announcement.

 

Irrevocable undertakings

Loungers Directors

·      The Loungers Directors who hold Loungers Shares and intend to participate in the Alternative Offer (being Alex Reilley and Nick Collins) have irrevocably undertaken:

 

·      to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their own beneficial holdings of, in aggregate, 7,707,708 Loungers Shares, representing approximately 7.4 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement); and

 

·      to participate in the Alternative Offer in respect of 75 per cent. and 30 per cent. of their Loungers Shares respectively, which together amounts to 5,350,457 Loungers Shares in aggregate, representing approximately 5.1 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

·      The Loungers Directors who hold Loungers Shares and do not intend to participate in the Alternative Offer (being Nick Backhouse, Adam Bellamy and Jill Little) have irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their own beneficial holdings of, in aggregate, 51,818 Loungers Shares, representing approximately 0.05 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

·      Stephen Marshall does not currently hold any Loungers Shares. To the extent that he acquires any Loungers Shares as a result of the vesting of awards or the exercise of options under the Loungers Share Plans following the date of this announcement, he has irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of his beneficial holdings of Loungers Shares and to participate in the Alternative Offer in respect of 100 per cent. of his Loungers Shares (which are expected to represent 0.02 per cent. of the fully diluted share capital of Loungers at completion of the Acquisition).

 

·      Robert Darwent is a Loungers Director. He holds no Loungers Shares in his own name. However, he is a representative of Lion on the board of Loungers. Lion is interested in 26,728,524 Loungers Shares and has given an irrevocable undertaking as described below.

Loungers Shareholders

 

·      Bidco has received an irrevocable undertaking from Lion pursuant to which Lion has irrevocably undertaken:

 

·      to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of 26,728,524 Loungers Shares representing approximately 25.7 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement); and

 

·      to participate in the Alternative Offer in respect of 100 per cent. of the Loungers Shares held by Lion, being a total of 26,728,524 Loungers Shares, representing approximately 25.7 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

·      Bidco has also received irrevocable undertakings from members of senior management of Loungers who hold Loungers Shares (being Jake Bishop and Justin Carter) pursuant to which they have irrevocably undertaken:

 

·      to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their respective beneficial holdings of, in aggregate, 7,106,004 Loungers Shares representing approximately 6.8 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement); and

 

·      to participate in the Alternative Offer in respect of part of the Loungers Shares held by them, being a total of 5,277,471 Loungers Shares, representing approximately 5.1 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

·      Kate Eastwood, Lucy Knowles, Jono Jenkins, Tom Trenchard and Guy Youll (also being members of senior management of Loungers) do not currently hold any Loungers Shares. To the extent that they acquire any Loungers Shares as a result of the vesting of awards or the exercise of options under the Loungers Share Plans following the date of this announcement, they have each irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their beneficial holdings of Loungers Shares and to participate in the Alternative Offer in respect of 30 per cent., 30 per cent., 15.9 per cent., 15.9 per cent. and 40 per cent. of their Loungers Shares respectively (which are expected to represent 0.01 per cent., 0.02 per cent., 0.01 per cent., 0.02 per cent., and 0.09 per cent. of the fully diluted share capital of Loungers at completion of the Acquisition).

 

·      Bidco has also received an irrevocable undertaking from Gregor Grant to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of his respective beneficial holdings of, in aggregate, 180,148 Loungers Shares representing approximately 0.2 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

·      In total therefore, Bidco has procured irrevocable commitments to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of 41,774,202 Loungers Shares representing approximately 40.2 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to this announcement). Further details of these irrevocable undertakings (including the circumstances in which they cease to be binding) are set out in Appendix 3 to this announcement.

Information relating to Bidco, Topco and Fortress

·      Bidco is a limited company registered in England and Wales and incorporated on 15 November 2024. Bidco was formed for the purposes of the Acquisition and is an entity indirectly owned by the Fortress Funds and a wholly-owned indirect subsidiary of Topco. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

 

·      Topco is a limited company registered in Jersey and incorporated on 14 November 2024. Topco was formed for the purposes of the Acquisition and is an entity indirectly owned by the Fortress Funds. Topco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

·      Fortress is a leading global investment manager with approximately US$48 billion in assets under management as of 30 June 2024. Fortress manages assets on behalf of institutional clients and private investors worldwide across a range of credit and real estate, private equity and permanent capital investment strategies. Fortress' investment approach is to acquire companies with strong management teams and empower them to deliver their long-term strategy. Fortress has experience investing in the United Kingdom, making direct investments in the pubs and hospitality sector including Majestic Wines, Punch Pubs & Co. and recently, Vagabond. Fortress also has experience investing in this sector in the US, including investments in Red Lobster, Krystal, J. Alexander and Logan's Roadhouse.

 

Information relating to Loungers

·      Loungers operates café bars, café restaurants, and roadside dining across the United Kingdom through three complementary brands: Lounge, Cosy Club and Brightside.

 

·      Loungers has a strong track record of growth and profitability, driven by an ambitious roll-out strategy and like-for-like sales growth. During FY24, Loungers opened a record 36 sites. The Loungers Directors expect to continue to open around 36 new sites per annum. As at 27 November 2024, (being the last Business Day prior to this announcement), Loungers had a total of 280 sites in its portfolio across its three brands.

 

·      The Loungers Group was established, and its head office is still, in Bristol, where its management and administration staff are based. The vast majority of Loungers' employees are site based. Consistent with prior years, the number of employees is expected to increase as Loungers continues to execute its roll out strategy.

 

·      Loungers was incorporated on 28 March 2019 and Loungers Shares were admitted to trading on AIM on 29 April 2019. In FY24, Loungers declared revenue of £346.6 million and an adjusted EBITDA (before site pre-opening costs of £4.7 million) on an IAS 17 basis of £43.5 million.

 

·      Loungers announced its unaudited results for the 24 weeks ended 6 October 2024 ("H125") on 28 November 2024, reporting revenue up 19.2 per cent. to £178.3 million (H124: £149.6 million) and adjusted EBITDA (IAS 17) up 27.8 per cent. to £22.1 million (H124: £17.3 million). During H125 Loungers opened 17 new sites (H124: 16 sites). Non property net debt at the end of H125 was £12.2 million (H124: £14.3 million).

 

·      Since the end of H125, Loungers has continued to trade well and has opened a further seven sites. Like-for-like sales growth across the 31 weeks to 25 November 2024 was 4.5 per cent.

 

Timetable and conditions

·      It is intended that the Acquisition will be implemented by way of the Scheme (although Bidco reserves the right to effect the Acquisition by way of an Offer, subject to the consent of the Panel and the terms of the Co-operation Agreement). The terms of the Acquisition will be put to Loungers Shareholders at the Court Meeting and the General Meeting (which is expected to take place immediately following the Court Meeting). The Meetings are required to enable Loungers Shareholders to consider and, if thought fit, vote in favour of resolutions to approve the Scheme and its implementation. In order to become Effective, the Scheme must be approved at the Court Meeting by a majority in number of Scheme Shareholders, present and voting (and entitled to vote), whether in person or by proxy, representing 75 per cent. or more in nominal value of the Scheme Shares held by those Scheme Shareholders. The Scheme also requires the passing at the General Meeting of the Resolutions. Following the Court Meeting and the General Meeting, the Scheme must also be sanctioned by the Court.

 

·      The Acquisition is subject to the satisfaction or, where applicable, the waiver of the Conditions as set out in Appendix 1 to this announcement (in particular, the satisfaction or waiver of the CMA Condition as further detailed at 3(a) and (b) of Appendix 1 to this announcement), along with certain other terms. Full details of the Acquisition will be provided in the Scheme Document. It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Meetings, together with the associated forms of proxy, will be posted to Loungers Shareholders within 28 days of this announcement (or such later time as Loungers, Bidco and the Panel may agree) and the Meetings are expected to be held shortly thereafter.

 

·      The Scheme is expected to become Effective in Q1 2025, subject to the satisfaction or (where applicable) waiver of the Conditions.

 

·      An expected timetable of key events relating to the Acquisition will be provided in the Scheme Document.

 

This summary should be read in conjunction with, and is subject to, the following full announcement and its Appendices. The Acquisition will be subject to the Conditions and other terms set out in the full announcement, including Appendix 1 to the full announcement, and to the full terms and conditions which will be set out in the Scheme Document. The sources and bases of calculation of certain information contained in this announcement are set out in Appendix 2 to the full announcement. Details of irrevocable undertakings received by Bidco are set out in Appendix 3 to the full announcement. Certain details of Topco and the Rollover Units are set out in Appendix 4 to the full announcement. Certain terms used in this announcement are defined in Appendix 5 to the full announcement.

Enquiries:

HSBC Bank plc (Financial Adviser to Bidco) Anthony Parsons David Plowman Christopher Fincken Alex Thomas Alina Vaskina (Corporate Broking)	+44 (0)20 7991 8888
Cardew Group (Communications adviser to Bidco) Ed Orlebar ([email protected]) Olivia Rosser ([email protected])	+44 7738 724 630 +44 7552 864 250
Loungers Nick Collins Stephen Marshall	+44 7720 431 120
Houlihan Lokey UK Limited (Financial Adviser to Loungers) Sam Fuller Tim Richardson Tom Barnard	+44 (0)20 7389 3355
Panmure Liberum Limited (Joint Broker to Loungers) Andrew Godber Rupert Dearden William King	+44 (0)20 3100 2000
Peel Hunt (Joint Broker to Loungers) Dan Webster Sohail Akbar Andrew Clark Sodali & Co (PR Adviser to Loungers) Rob Greening Russ Lynch	+44 (0)20 7418 8900   +44 (0)20 7250 1446

Slaughter and May is acting as legal adviser to Bidco.

Jones Day is acting as legal adviser to Loungers.

Important notices relating to financial advisers

HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting as financial adviser exclusively for Bidco and no one else in connection with the Acquisition and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of HSBC, or for providing advice in relation to the Acquisition or any other matters referred to in this announcement. Neither HSBC nor any of its group undertakings or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of HSBC in connection with this announcement or any matter referred to herein.

Houlihan Lokey UK Limited ("Houlihan Lokey"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting as financial adviser exclusively for Loungers and no one else in connection with the Acquisition and will not be responsible to anyone other than Loungers for providing the protections afforded to clients of Houlihan Lokey or for providing advice in relation to the Acquisition or any other matters referred to in this announcement. Neither Houlihan Lokey nor any of its affiliates owes or accepts any duty, liability, or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Houlihan Lokey in connection with this announcement, any statement contained herein or otherwise.

Panmure Liberum Limited ("Panmure Liberum"), which is authorised and regulated in the United Kingdom by the FCA, is acting as corporate broker exclusively for Loungers and no one else in connection with the Acquisition and the matters set out in this announcement. Panmure Liberum will not regard any other person as its client in relation to the Acquisition or any other matter or arrangement set out in this announcement and will not be responsible to anyone other than Loungers for providing the protections afforded to clients of Panmure Liberum, nor for providing advice in relation to the Acquisition or any other matter or arrangement referred to in this announcement. Neither Panmure Liberum nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Panmure Liberum in connection with the Acquisition, this announcement, any statement contained herein or otherwise. No representation or warranty, express or implied, is made by Panmure Liberum as to the contents of this announcement.

Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United Kingdom by the FCA, is acting as corporate broker exclusively for Loungers and no one else in connection with the Acquisition and the matters set out in this announcement. Peel Hunt will not regard any other person as its client in relation to the Acquisition or any other matter or arrangement set out in this announcement and will not be responsible to anyone other than Loungers for providing the protections afforded to clients of Peel Hunt, nor for providing advice in relation to the Acquisition or any other matter or arrangement referred to in this announcement. Neither Peel Hunt nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Peel Hunt in connection with the Acquisition, this announcement, any statement contained herein or otherwise. No representation or warranty, express or implied, is made by Peel Hunt as to the contents of this announcement.

Further information

This announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or inducement to sell or an invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of an offer to buy any securities, any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise. The Acquisition will be made and implemented solely pursuant to the terms of the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document), which will contain the full terms and conditions of the Acquisition, including details of what action is required from Loungers Shareholders in respect of the Acquisition. Any decision in respect of, or other response to, the Acquisition should be made only on the basis of the information in the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document).

Loungers and Bidco shall prepare the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document) to be distributed to Loungers Shareholders. Loungers and Bidco urge Loungers Shareholders to read the Scheme Document in its entirety (or, if the Acquisition is implemented by way of an Offer, the Offer Document) when it becomes available because it will contain important information relating to the Acquisition.

This announcement does not constitute a prospectus or prospectus equivalent document.

Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme (subject to the Panel's consent and the terms of the Co-operation Agreement). In such event, the Acquisition would be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect, among other things, the change in method of effecting the Acquisition (including, without limitation: (i) the inclusion of an acceptance condition set at 90 per cent. of the Loungers Shares to which such Offer relates (or such other percentage as Bidco may, subject to the rules of the Takeover Code and the terms of the Co-operation Agreement and with the consent of the Panel, decide); and (ii) those required by, or deemed appropriate by, Bidco under applicable law, including US securities laws). Further, Bidco has agreed under the Co-operation Agreement that, if sufficient acceptances of such Offer are received and/or sufficient Loungers Shares are otherwise acquired, it will apply the provisions of the Companies Act 2006 to acquire compulsorily any outstanding Loungers Shares to which such offer relates.

Overseas Shareholders

This announcement has been prepared in accordance with, and for the purpose of complying with, the laws of England and Wales, the Takeover Code, the Market Abuse Regulation, the AIM Rules and the Disclosure Guidance and Transparency Rules and 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 England and Wales.

The release, publication or distribution of this announcement in or into certain jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves of, and observe, any applicable requirements of their jurisdictions.

The availability of the Acquisition to Loungers Shareholders who are not resident in and citizens of the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. In particular, the ability of persons who are not resident in the United Kingdom to vote their Loungers Shares with respect to the Scheme at the Court Meeting, or to execute and deliver forms of proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person.

Unless otherwise determined by Bidco or required by the Takeover Code, and permitted by applicable law and regulation, participation in the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Acquisition by any such use, means, instrumentality or from within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction and persons receiving this announcement and all such documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in, into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition. If the Acquisition is implemented by way of an Offer (unless otherwise permitted by applicable law and regulation), the Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Notice to US investors in Loungers

Loungers Shareholders in the United States should note that the Acquisition relates to the shares of an English company with a quotation on AIM and is proposed to be made by means of a scheme of arrangement provided for under, and which is governed by, the laws of England and Wales. If the Acquisition is carried out under the Scheme, it is expected that any Rollover Units issued pursuant to the Acquisition would be issued in reliance upon the exemption from the registration requirements under the US Securities Act provided by Section 3(a)(10) thereof and would not be registered under the US Securities Act. Securities issued pursuant to the Scheme will not be registered under any laws of any state, district or other jurisdiction of the United States, and may only be issued to persons resident in such state, district or other jurisdiction pursuant to an exemption from the registration requirements of such laws.

Neither proxy solicitation rules nor the tender offer rules under the US Exchange Act will apply to the Scheme. Moreover, the Scheme will be subject to the disclosure and procedural requirements and practices applicable in the United Kingdom to schemes of arrangement which differ from the disclosure requirements of US tender offer and proxy solicitation rules. If, in the future, Bidco exercises the right to implement the Acquisition by way of an Offer and determines to extend the offer into the United States, the Acquisition will be made in compliance with applicable United States laws and regulations, including any applicable exemptions under the US Exchange Act. Such an Offer would be made in the United States by Bidco and no one else. In accordance with normal United Kingdom practice and consistent with Rule 14e-5 under the US Exchange Act, Bidco, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in Loungers outside such Offer during the period in which such Offer would remain open for acceptance. If such purchases or arrangements to purchase were to be made they would be made outside the US either in the open market at prevailing prices or in private transactions at negotiated prices and would comply with applicable law, including, to the extent applicable, the US Exchange Act. Any information about such purchases will be disclosed as required in the United Kingdom, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

The financial information included in this announcement and the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document) has been or will have been prepared in accordance with generally accepted accounting principles of the United Kingdom and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with IFRS in the United States.

The receipt of consideration by a US holder for the transfer of its Loungers Shares pursuant to the Acquisition may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as non-US and other, tax laws. Each Loungers Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to them, including under applicable US federal, state and local, as well as non-US and other, tax laws.

It may be difficult for US holders of Loungers Shares to enforce their rights and any claim arising out of the US federal laws or to enforce against them a judgment of a US court predicated upon the securities laws of the United Kingdom, since Bidco and Loungers are incorporated in a non-US jurisdiction, and some or all of their officers and directors may be residents of countries other than the United States. US holders of Loungers Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement.

Cautionary Note Regarding Forward-Looking Statements

This announcement (including information incorporated by reference in this announcement), oral statements made regarding the Acquisition, and other information published by Bidco and Loungers contain certain statements which are, or may be deemed to be, "forward-looking statements". Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Bidco and/or Loungers (as the case may be) about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.

These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning or derivatives thereof. These statements are based on assumptions and assessments made by Loungers and/or Bidco in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements, include but are not limited to: the ability to complete the Acquisition, the ability to obtain requisite regulatory and shareholder approvals and changes in the global, political, economic, business, competitive, market and regulatory forces, financial regulatory matters, future exchange and interest rates, changes in tax rates and future business combinations or dispositions.

Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement. Neither Loungers nor Bidco assumes any obligation to update or correct the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law.

Dealing and Opening Position Disclosure Requirements

Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10^th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10^th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on a website

In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement will be made available and other documents required to be published under Rule 26 of the Takeover Code will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Loungers' website at https://loungers.co.uk and Fortress' website at https://www.fortress.com/loungers-offer by no later than 12 noon (London time) on the first Business Day following the date of this announcement. For the avoidance of doubt, neither the contents of these websites nor any website accessible from hyperlinks is incorporated into or forms part of this announcement.

No profit forecasts, estimates or quantified benefits statements

No statement in this announcement is intended to constitute a profit forecast, profit estimate or quantified benefits statement for any period and no statement in this announcement should be interpreted to mean that the earnings or future earnings per share of or dividends or future dividends per share of Loungers for the current or future financial years will necessarily match or exceed the historical published earnings or earnings per share or dividends per share of Loungers.

Requesting hard copy documents

In accordance with Rule 30.3 of the Takeover Code, Loungers Shareholders, persons with information rights and participants in Loungers Share Plans may request a hard copy of this announcement by contacting Loungers' registrars, Link Group 10^th Floor, Central square, 29 Wellington Street, Leeds, LS1 4DL, between 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday (except public holidays in England and Wales) by calling +44 345 922 0044 or by submitting a request in writing to Link Group. Calls are charged at the standard geographical rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Please note that Link Group cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. For persons who receive a copy of this announcement in electronic form or via a website notification, a hard copy of this announcement will not be sent unless so requested. Such persons may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be in hard copy form.

Electronic Communications

Please be aware that addresses, electronic addresses and certain other information provided by Loungers Shareholders, persons with information rights and other relevant persons for the receipt of communications from Loungers may be provided to Bidco during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

General

If the Acquisition is effected by way of an Offer, and such an Offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Bidco has agreed under the Co-operation Agreement to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act 2006 so as to acquire compulsorily the remaining Loungers Shares in respect of which the Offer has not been accepted.

Investors should be aware that Bidco may purchase Loungers Shares otherwise than under any Offer or the Scheme, including pursuant to privately negotiated purchases.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under FSMA if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.

Rule 2.9 of the Takeover Code

For the purposes of Rule 2.9 of the Takeover Code, Loungers confirms that, as at 27 November 2024 (being the last Business Day prior to this announcement), it had in issue 103,954,562 ordinary shares of 1 penny each (excluding shares held in treasury). The ISIN for the ordinary shares is GB00BH4JR002.

 

Not for release, publication or distribution, in whole or in part, DIRECTLY OR INDIRECTLY, in, INTO OR FROM any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction

FOR IMMEDIATE RELEASE

This announcement contains inside information

28 November 2024

RECOMMENDED ACQUISITION
OF
Loungers plc
by
CF EXEDRA BIDCO LIMITED

(a newly formed company indirectly owned by funds and accounts managed or advised by affiliates of FORTRESS INVESTMENT GROUP, LLC)

to be implemented by means of a scheme of arrangement under Part 26 of the Companies Act 2006

1.         Introduction

The boards of directors of CF Exedra Bidco Limited ("Bidco") and Loungers plc ("Loungers") are pleased to announce that they have reached agreement on the terms and conditions of a recommended acquisition by Bidco of the entire issued and to be issued share capital of Loungers (the "Acquisition").

2.         The Acquisition

Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and the full terms and conditions to be set out in the Scheme Document, each Loungers Shareholder who is on the register of members of Loungers at the Scheme Record Time will be entitled to receive:

                  for each Loungers Share:        310 pence in cash (the "Cash Offer"),

with an alternative option to participate in an unlisted share alternative in respect of some or all of their Loungers Shares (the "Alternative Offer").

 

The Cash Offer values the entire issued, and to be issued, ordinary share capital of Loungers at approximately £338.3 million, and at an enterprise value of approximately £350.5 million.

 

The Cash Offer represents a premium of approximately:

 

·      30.3 per cent. to the closing price of 238.0 pence per Loungers Share on 27 November 2024 (being the last Business Day prior to this announcement);

·      39.7 per cent. to the volume weighted average price of 221.9 pence per Loungers Share in the two weeks to 27 November 2024 (being the last Business Day prior to this announcement);

·      34.6 per cent. to the volume weighted average price of 230.4 pence per Loungers Share in the one month to 27 November 2024 (being the last Business Day prior to this announcement); and

·      29.6 per cent. to the volume weighted average price of 239.2 pence per Loungers Share in the twelve months to 27 November 2024 (being the last Business Day prior to this announcement).

As an alternative to the Cash Offer, eligible Loungers Shareholders may elect to exchange some or all of their Loungers Shares for Bidco Rollover Securities issued by Bidco which will, subject to the implementation of the Rollover Process (as described in paragraph 13 below), ultimately be exchanged for Rollover Units, on the terms and subject to the conditions of the Alternative Offer (detailed in paragraphs 13 and 14 below and in Appendix 4 to this announcement). Eligible Loungers Shareholders will be able to elect for the Alternative Offer in relation to some or all of their holding of Loungers Shares and will ultimately receive (subject to the implementation of the Rollover Process) for each Loungers Share:

 

1 Rollover Unit (each Rollover Unit comprising 3.47139622458205 Topco Ordinary Shares and 306.528603775418 Topco B Preference Shares (the "Exchange Ratio"))

 

The Topco Ordinary Shares and the Topco B Preference Shares will have the rights of the "Ordinary Shares" and "B Preference Shares" respectively set out in the Topco Shareholders' Agreement and the Topco Articles (as amended from time to time).

 

For the purposes of Rule 24.11 of the Takeover Code, the Rollover Units will be independently valued by HSBC (as financial adviser to Bidco) and an estimate of the value of the Rollover Units, together with the assumptions, qualifications and caveats forming the basis of that estimate of value, will be included in the Scheme Document. Further information about the Rollover Units and the Alternative Offer are set out in paragraphs 13 to 14 below and Appendix 4 to this announcement and will be included in the Scheme Document.

 

Holders of Rollover Units may be diluted over time, potentially significantly, for example, should the holders of Rollover Units not elect to participate in further issues of additional shares, loan notes or other securities of the Topco Group. In addition, where issuances are being made in accordance with an exception to the pre-emption rights detailed in the Topco Articles, the holders of Rollover Units may suffer significant dilution.

 

If, on or after the date of this announcement and before the Effective Date, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of Loungers Shares, Bidco reserves the right to reduce the consideration payable under the terms of the Cash Offer (and, as the case may be, the consideration due under the terms of the Alternative Offer), by an amount up to the amount of such dividend and/or distribution and/or return of capital, in which case any reference in this announcement to the consideration payable under the Cash Offer (or consideration due under the Alternative Offer) will be deemed to be a reference to the consideration as so reduced. Any exercise by Bidco of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme.

The Acquisition is intended to be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act 2006. However, Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme (with the consent of the Panel and subject to the terms of the Co-operation Agreement).

The Loungers Shares will be acquired pursuant to the Acquisition fully paid and free from all liens, charges, equities, encumbrances, rights of pre-emption and any other interest of any nature whatsoever and together with all rights attaching thereto, including without limitation voting rights and the rights to receive and retain in full all dividends and distributions (if any) announced, declared, made or paid with a record date on or after the Effective Date.

3.         Recommendation

The Loungers Directors, who have been so advised by Houlihan Lokey as to the financial terms of the Cash Offer, consider the terms of the Cash Offer to be fair and reasonable. In providing its advice to the Loungers Directors, Houlihan Lokey has taken into account the commercial assessments of the Loungers Directors. Houlihan Lokey is providing independent financial advice to the Loungers Directors for the purposes of Rule 3 of the Takeover Code.

 

Accordingly, the Loungers Directors intend unanimously to recommend that the Loungers Shareholders vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting as the Loungers Directors who are interested in Loungers Shares have irrevocably undertaken to do (or procure to be done) in respect of their own beneficial holdings of, in aggregate, 7,759,526 Loungers Shares, representing approximately 7.5 per cent. of the issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement). Further details of these undertakings, including the circumstances in which they cease to be binding, are set out in Appendix 3 to this announcement.

 

In considering the terms of the Alternative Offer, which will allow Loungers Shareholders to maintain an ongoing economic exposure to Loungers and to participate in future value creation which might, ultimately, deliver greater value than the Cash Offer (although this cannot be guaranteed), Houlihan Lokey and the Loungers Directors have considered, amongst other things, the risk factors and other investment considerations outlined in paragraph 15 below.

 

Houlihan Lokey is unable to advise the Loungers Directors as to whether or not the financial terms of the Alternative Offer are fair and reasonable. This is because of the significant and variable impact of the Alternative Offer for individual eligible Loungers Shareholders. In addition, it is not possible to predict with certainty the future value of the Rollover Units, which will depend upon the future performance of Loungers. Houlihan Lokey has not had any involvement in the development and validation of any financial projections for Topco or the Wider Bidco Group and, as a result, is unable to assess any plans Topco may have for the development of Loungers or the Wider Bidco Group to the degree necessary to form an assessment of the value of the Alternative Offer.

 

Accordingly, the Loungers Directors are unable to form an opinion as to whether or not the terms of the Alternative Offer are fair and reasonable and are not making any recommendation to Loungers Shareholders as to whether or not they should elect for the Alternative Offer.

 

The Loungers Directors consider that, in deciding whether or not to elect for the Alternative Offer, the Loungers Shareholders should consider carefully the disadvantages and advantages of electing for the Alternative Offer (including, but not limited to, those key factors set out in paragraph 15 below). Loungers Shareholders should also ascertain whether acquiring or holding Rollover Units is affected by the laws of the relevant jurisdiction in which they reside and whether Rollover Units are a suitable investment in light of their own personal circumstances. Accordingly, Loungers Shareholders are strongly encouraged to seek their own independent financial, tax and legal advice in light of their own particular circumstances and investment objectives before deciding whether or not to elect for the Alternative Offer. Any decision to elect for the Alternative Offer should be based on independent financial, tax and legal advice and full consideration of this announcement and the Scheme Document (when published).

 

Alex Reilley and Nick Collins, respectively Executive Chairman and Chief Executive of Loungers, both of whom: (i) are interested in Loungers Shares and Loungers Share Options; (ii) will continue to be involved with Loungers following the Effective Date; and (iii) wish to retain an ongoing economic interest in Loungers and have undertaken to Fortress to elect to participate in the Alternative Offer with respect to part only of their interests in Loungers. Further details are set out in paragraph 15 below.

 

Further details of the Alternative Offer are set out in paragraphs 13 to 14 below and Appendix 4 of this announcement.

 

4.         Background to and reasons for the Loungers Directors' recommendation of the Cash Offer

The Loungers Directors believe that Loungers has established itself as a leading participant in the quoted UK hospitality space, consistently delivering impressive financial and operational performance, outperforming the sector in like-for-like sales growth for 9 of the last 10 years. This has been achieved through the execution of an organic growth strategy, driven by the rollout of new sites and an ongoing focus on operational improvements to drive further sales and margin improvements across the existing estate.

The Loungers Directors note that in the period since the Loungers Shares were admitted to trading on AIM in April 2019, Loungers' reported revenues have grown by approximately 126.5 per cent. from £153 million in FY19 to £346.6 million in FY24, and Loungers' reported adjusted EBITDA (before site pre-opening costs) on an IAS 17 basis has grown by approximately 111.2 per cent. from £20.6 million in FY19 to £43.5 million in FY24. The number of Loungers' sites across its three brands - Lounge, Cosy Club and Brightside - has increased from 146 sites at IPO to 280 sites as at 27 November 2024 (the last Business Day prior to this announcement).

The Loungers Directors note that this impressive track record has been achieved despite challenging trading conditions for UK hospitality, which have been impacted by COVID, inflation, the cost of living crisis, and other challenges which have depressed consumer sentiment.

The Loungers Directors have for some time believed that these ongoing challenges have overshadowed the trading performance and prospects of Loungers and negatively influenced the market value of the Loungers Shares. The Loungers Directors note that the market capitalisation of Loungers as at 27 November 2024 (the last Business Day prior to this announcement) is only 33.7 per cent. higher than it was at Loungers' IPO. They also note that the implied enterprise value of Loungers on IPO equated to a multiple of 10.3 times FY19 adjusted EBITDA (before site pre opening costs). Based on the closing price of a Loungers Share on 27 November 2024 (the last Business Day prior to this announcement), the implied enterprise value of Loungers equates to a multiple of just 6.0 times FY24 adjusted EBITDA (before site pre-opening costs). The Loungers Directors have confidence in the long-term growth prospects of Loungers as an independent company but believe that economic uncertainty, negative market sentiment towards the UK hospitality sector in general, as well as the significant challenges faced by the wider AIM market, are likely to continue to exert a negative influence on Loungers Shareholder value.

With this in mind, in early 2024 the Loungers Directors began to consider alternative options to optimise value for Loungers Shareholders, including appointing financial advisers to determine whether an offer at a recommendable value for Loungers could be achieved by means of a competitive private sale process under the Takeover Code.

During this process, Loungers entered into detailed discussions with a number of potential strategic and private equity acquirers, including Fortress. Whilst Fortress' initial proposal was not at a level that the Loungers Directors considered recommendable, during an extensive period of negotiations Fortress made a further three proposals, resulting in the Cash Offer at 310 pence per Loungers Share. For the avoidance of doubt, discussions with all other parties which were involved in the sale process have been discontinued.

The Cash Offer values Loungers' entire issued and to be issued share capital at approximately £338.3 million on a fully diluted basis, and implies an enterprise value of £350.5 million and a multiple of approximately 8.1 times Loungers' FY24 Adjusted EBITDA (before site pre-opening costs) and of approximately 9.0 times Loungers' FY24 Adjusted EBITDA (after site pre-opening costs).

The Cash Offer represents a premium of approximately:

·      30.3 per cent. to the closing price of 238.0 pence per Loungers Share on 27 November 2024 (being the last Business Day prior to this announcement);

·      39.7 per cent. to the volume weighted average price of 221.9 pence per Loungers Share in the two weeks to 27 November 2024 (being the last Business Day prior to this announcement);

·      34.6 per cent. to the volume weighted average price of 230.4 pence per Loungers Share in the one month to 27 November 2024 (being the last Business Day prior to this announcement); and

·      29.6 per cent. to the volume weighted average price of 239.2 pence per Loungers Share in the twelve months to 27 November 2024 (being the last Business Day prior to this announcement).

In addition, the Loungers Directors recognise that the market in Loungers Shares is illiquid, with average daily volumes traded during the twelve-month period to 27 November 2024 of only 66,770 Loungers Shares. The Loungers Directors note that this low level of liquidity can make it challenging to either attract additional new investors, or for larger Loungers Shareholders to monetise their holdings in the market should they so wish. The Loungers Directors consider such illiquidity to be a structural issue inherent in many UK-quoted small-cap stocks.

The Loungers Directors believe that the Cash Offer fairly recognises the medium-term risks and prospects of Loungers in its current form as a standalone, small cap AIM quoted entity, and will provide Loungers Shareholders with the opportunity to receive an immediate and certain value per Loungers Share in cash at a valuation that might not otherwise become available and would, in any event, be subject to recognition by the stock market of the successful ongoing execution of Loungers' strategy and sufficient liquidity in the Loungers Shares.

 

In addition to the financial terms of the Acquisition, in its evaluation of Fortress as a suitable long-term partner for Loungers, the Loungers Directors have taken into account Fortress' stated intentions for Loungers in relation to its strategy, growth plans, management and employees as set out in paragraph 12 below. The Loungers Directors also welcome Fortress' confirmation that, following completion of the Acquisition, the existing employment rights, including pension rights, of the management and employees of Loungers will be fully safeguarded. The Loungers Directors believe that the Acquisition represents an opportunity which will result in a positive outcome for all Loungers stakeholders.

Following careful consideration of all relevant factors, including the outcome of Loungers' competitive private sale process, and the combination of value and certainty that the terms of the Cash Offer provide to Loungers Shareholders, the Loungers Directors intend unanimously to recommend that Loungers Shareholders vote in favour of the Scheme at the Court Meeting in favour of the Resolutions to be proposed at the General Meeting.

5.         Background to and reasons for the Acquisition

Fortress believes it is a strong partner for Loungers, its management team, its employees and its other stakeholders in the next stage of Loungers' growth journey.

 

Fortress is excited to partner with Loungers to continue developing the business by expanding its number of locations and investing in the customer offering - with the goal of increasing shareholder value. Through Fortress' deep industry knowledge and successful track record of investments in hospitality companies, Fortress is a highly credible, committed partner to support Loungers and its management team through the next phase of growth for the Lounge, Cosy Club and Brightside brands.

 

Fortress is supportive of Loungers' existing strategy, holds the management team in high regard and values their operational expertise and experience. Fortress believes that with the support of Fortress, management and employees will be able to focus on accelerating Loungers' growth plans for the business. Further, Fortress believes this will drive sustainable value in the longer-term.

 

Fortress believes that moving to private ownership will be in the interests of Loungers, its customers and its other stakeholders.

 

Fortress believes in Loungers' growth prospects, and the future of experience-led retail and hospitality offerings in the UK market.

 

Fortress' high conviction in Loungers' growth prospects is based in part on its extensive experience in making direct investments in hospitality and consumer-focused companies, including Punch Pubs & Co., Majestic Wines and Vagabond in the UK, and in Red Lobster, Krystal, Logan's Roadhouse, J. Alexander, Rocket convenience stores in the USA. Fortress has experience in making public offers in the UK and globally.

 

In addition, Fortress has a strong belief in the future of experience-led retail and hospitality offerings in the UK market - underscored by its recent acquisition of Curzon, alongside the companies mentioned above.

 

Fortress recognises that Loungers' portfolio of complementary brands resonate strongly with the UK consumer, and that this experience-led approach has helped Loungers grow from one brand and one site in 2002 to three brands and 280 sites as at 27 November 2024. Alongside this expanded store count, Fortress is impressed by what it considers to be Loungers' track record in delivering strong like-for-like sales performance and return on capital, and admires the achievements of the current leadership team of Alex Reilley and Nick Collins and wider employee base. Fortress notes the strong financial performance of Loungers since IPO, with sales increasing from £153 million in FY19 to £346.6 million in FY24, in what has been a challenging environment for UK hospitality due to disruptions caused by COVID, rising inflation and the cost of living crisis, as well as the wider impact of geopolitical events on consumer sentiment.

 

Fortress notes Loungers' register concentration, as well as the current liquidity profile and price volatility of its shares on AIM. Fortress believes the Cash Offer gives Loungers Shareholders a price that reflects Loungers' strong historical performance, and certainty in the context of low trading liquidity - while allowing Fortress to make a long-term commitment to support the business in achieving its goals and maximising its full potential.

6.         Information relating to Bidco, Topco and Fortress

Bidco

 

Bidco is a limited company registered in England and Wales and incorporated on 15 November 2024. Bidco was formed for the purposes of the Offer and is an entity indirectly owned by the Fortress Funds and a wholly-owned indirect subsidiary of Topco. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Offer.

Topco

Topco is a limited company registered in Jersey and incorporated on 14 November 2024. Topco was formed for the purposes of the Offer and is an entity indirectly owned by the Fortress Funds. Topco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Offer.

Fortress

Fortress is a leading global investment manager with approximately US$48 billion in assets under management as of 30 June 2024. Fortress manages assets on behalf of institutional clients and private investors worldwide across a range of credit and real estate, private equity and permanent capital investment strategies. Fortress' investment approach is to acquire companies with strong management teams and empower them to deliver their long-term strategy. Fortress has experience investing in the United Kingdom, making direct investments in the pubs and hospitality sector including Majestic Wines, Punch Pubs & Co. and recently, Vagabond. Fortress also has experience investing in this sector in the US, including investments in Red Lobster, Krystal, J. Alexander and Logan's Roadhouse.

7.         Information relating to Loungers

Loungers operates café bars, café restaurants, and roadside dining across the United Kingdom through three complementary brands: Lounge, Cosy Club and Brightside.

 

Loungers has a strong track record of growth and profitability, driven by an ambitious roll-out strategy and like-for-like sales growth. During FY24, Loungers opened a record 36 sites. The Loungers Directors expect to continue to open around 36 new sites per annum. As at 27 November 2024, (being the last Business Day prior to this announcement), Loungers had a total of 280 sites in its portfolio across its three brands.

 

The Loungers Group was established, and its head office is still, in Bristol, where its management and administration staff are based. The vast majority of Loungers' employees are site based. Consistent with prior years, the number of employees is expected to increase as Loungers continues to execute on its roll out strategy.

 

Loungers was incorporated on 28 March 2019 and Loungers Shares were admitted to trading on AIM on 29 April 2019. In FY24, Loungers declared revenue of £346.6 million and an adjusted EBITDA (before site pre-opening costs) on an IAS 17 basis of £43.5 million.

 

Loungers announced its unaudited results for the 24 weeks ended 6 October 2024 ("H125") on 28 November 2024, reporting revenue up 19.2 per cent. to £178.3 million (H124: £149.6 million) and adjusted EBITDA (IAS 17) up 27.8 per cent. to £22.1 million (H124: £17.3 million). During H125 Loungers opened 17 new sites (H124: 16 sites). Non property net debt at the end of H125 was £12.2 million (H124: £14.3 million).

 

Since the end of H125, Loungers has continued to trade well and has opened a further seven sites. Like-for-like sales growth across the 31 weeks to 25 November 2024 was 4.5 per cent.

 

8.         Irrevocable Undertakings

In total, Bidco has procured irrevocable undertakings to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of, in aggregate, 41,774,202 Loungers Shares, representing approximately 40.2 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

Loungers Directors

The Loungers Directors who Loungers Shares and intend to participate in the Alternative Offer (being Alex Reilley and Nick Collins) have irrevocably undertaken:

·       to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their own beneficial holdings of, in aggregate, 7,707,708 Loungers Shares, representing approximately 7.4 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement); and

 

·       to participate in the Alternative Offer in respect of, 75 per cent. and 30 per cent. respectively of their Loungers Shares, which together amounts to, 5,350,457 Loungers Shares in aggregate, representing approximately 5.1 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

The Loungers Directors who hold Loungers Shares and do not intend to participate in the Alternative Offer (being Nick Backhouse, Adam Bellamy and Jill Little) have irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their own beneficial holdings of, in aggregate, 51,818 Loungers Shares, representing approximately 0.05 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

Stephen Marshall does not currently hold any Loungers Shares. To the extent that he acquires any Loungers Shares as a result of the vesting of awards or the exercise of options under the Loungers Share Plans following the date of this announcement, he has irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of his beneficial holdings of Loungers Shares and to participate in the Alternative Offer in respect of 100 per cent. of his Loungers Shares (which are expected to represent 0.02 of the fully diluted share capital of Loungers on completion of the Acquisition).

 

Robert Darwent is a Loungers Director. He holds no Loungers Shares in his own name. However, he is a representative of Lion on the board of Loungers. Lion is interested in 26,728,524 Loungers Shares and has given an irrevocable undertaking as described below.

 

Lion

Bidco has received an irrevocable undertaking from Lion pursuant to which Lion has irrevocably undertaken:

 

·      to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of 26,728,524 Loungers Shares representing approximately 25.7 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement); and

 

·      to participate in the Alternative Offer in respect of 100 per cent. of the Loungers Shares held by Lion, being a total of 26,728,524 Loungers Shares, representing approximately 25.7 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

Bidco has also received irrevocable undertakings from members of senior management of Loungers who hold Loungers Shares (being Jake Bishop and Justin Carter) pursuant to which they have irrevocably undertaken:

 

·       to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their respective beneficial holdings of, in aggregate, 7,106,004 Loungers Shares representing approximately 6.8 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement); and

 

·       to participate in the Alternative Offer in respect of part of the Loungers Shares held by them, being a total of 5,277,471 Loungers Shares, representing approximately 5.1 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

Kate Eastwood, Lucy Knowles, Jono Jenkins, Tom Trenchard and Guy Youll (also being members of senior management of Loungers) do not currently hold any Loungers Shares. To the extent that they acquire any Loungers Shares as a result of the vesting of awards or the exercise of options under the Loungers Share Plans following the date of this Announcement, they have each irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their beneficial holdings of Loungers Shares and to participate in the Alternative Offer in respect of 30 per cent., 30 per cent., 15.9 per cent., 15.9 per cent. and 40 per cent. of their Loungers Shares respectively (which are expected to represent 0.01 per cent., 0.02 per cent., 0.01 per cent., 0.02 per cent., and 0.09 per cent. of the fully diluted share capital of Loungers on completion of the Acquisition).

 

Bidco has also received an irrevocable undertaking from Gregor Grant to vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of his respective beneficial holdings of, in aggregate, 180,148 Loungers Shares representing approximately 0.2 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

 

Further details of these irrevocable undertakings (including the circumstances in which they cease to be binding) are set out in Appendix 3 to this announcement.

9.         Financing of the Acquisition

The cash consideration payable to Loungers Shareholders by Bidco under the terms of the Acquisition will be financed by a combination of: (i) equity to be invested by the Fortress Funds pursuant to the Equity Commitment Letter and Omnibus Subscription Agreement; and (ii) debt to be provided under the Interim Facilities Agreement by HSBC, comprising a £155 million senior term loan facility.

HSBC, in its capacity as sole financial adviser to Bidco, is satisfied that sufficient resources are available to Bidco to satisfy in full the cash consideration payable to Loungers Shareholders pursuant to the terms of the Acquisition.

Further information on the financing of the Acquisition will be set out in the Scheme Document.

10.       Offer-related Arrangements

10.1      Confidentiality Agreement

Fortress, in its capacity as investment manager for and on behalf of certain of its funds or accounts managed or advised by it or its affiliates, and Loungers have entered into a confidentiality agreement dated 15 April 2024 (the "Confidentiality Agreement"), pursuant to which each party has undertaken, among other things, to: (i) keep confidential certain information relating to the proposed Acquisition and not to disclose it to third parties (other than certain permitted parties) unless required by law, regulation, or the rules of any relevant stock exchange (including AIM) or at the request of any applicable governmental, judicial, supervisory or regulatory organisation (including the Takeover Code and the Panel); and (ii) use the confidential information only for the purpose of appraisal of the Loungers Group and for negotiations in connection with the Acquisition. These confidentiality obligations will remain in force until 15 April 2026. In addition, the Confidentiality Agreement includes certain standstill undertakings on Fortress, its affiliates and its concert parties, which cease to apply upon the release of this announcement. The Confidentiality Agreement further includes customary non-solicitation and non-contact undertakings.

10.2      Co-operation Agreement

Bidco and Loungers have entered into a co-operation agreement dated 28 November 2024 (the "Co-operation Agreement"), pursuant to which Bidco and Loungers have, among other things, agreed to cooperate in relation to obtaining any approvals, consents, clearances, permissions, confirmations, comfort letters and waivers as may be necessary, and the making of all filings as may be necessary, from or under the law, regulations or practices applied by any applicable regulatory authority in connection with the Acquisition. In addition, Bidco has agreed to provide Loungers with certain information for the purposes of the Scheme Document and otherwise to provide assistance which may reasonably be required with the preparation of the Scheme Document. The Co-operation Agreement also includes provisions relating to the right of Bidco to implement the Acquisition by way of an Offer and provisions that will apply in respect of the Loungers Share Plans (including, in particular: (i) Bidco's agreement that the performance conditions applicable to outstanding awards under the Loungers Share Plans will be met in full; and (ii) the parties' agreement or expectations (as applicable) regarding the application of time pro-rating)). Bidco has also agreed, pursuant to the Co-operation Agreement, that it shall not waive paragraph 3(a) of the CMA Condition without the prior written consent of Loungers unless, at the time of such waiver, it also waives paragraph 3(b)(i) of the CMA Condition.             If, subject to the terms of the Co-operation Agreement, Bidco exercises its right to implement the Acquisition by way of an Offer, the acceptance condition for such Offer will be set at no less than 90 per cent. of the Loungers Shares to which the Offer relates (or such lesser percentage, being more than 50 per cent. of the Loungers Shares to which the Offer relates as Bidco may agree with Loungers after, to the extent necessary, receiving the consent of the Panel).

Bidco and Loungers have the right to terminate the Co-operation Agreement including, among others, (i) upon written notice served by Bidco where (a) the Loungers Directors recommend a competing proposal; (b) a competing offer completes, becomes effective or is declared unconditional; (c) the Loungers Directors withdraw, adversely qualify or modify the recommendation; or (d) certain milestones in connection with the Scheme are not achieved; (ii) upon written notice served by Loungers where (a) a competing proposal completes, becomes effective or is declared unconditional; or (b) the Scheme and/or the Resolutions are not approved at the Meetings and/or the Court refuses to sanction the Scheme or grant the Scheme Court Order at the Court Sanction Hearing; (iii) upon written notice by either party on the other, if a Condition which has not been waived or which is incapable of waiver is incapable of satisfaction by the Long Stop Date, in each case where the invocation of the relevant Condition is permitted by the Panel and the Panel has consented; (iv) if the Acquisition is withdrawn, terminates or lapses in accordance with its terms and (where required) with the permission of the Panel except in certain situations relating to the announcement of a revised offer on substantially the same or improved terms or where Bidco has elected to exercise its right to implement the Acquisition by way of Offer; and/or (v) where the parties so agree in writing.

10.3      External Clean Team and Joint Defence Agreement

On 23 October 2024, Fortress, Loungers, Fortress' external legal counsel and Loungers' external legal counsel entered into a clean team and joint defence agreement (the "External Clean Team and Joint Defence Agreement"), the purpose of which is to ensure that the exchange or disclosure of certain materials relating to the parties only takes place between their respective external legal counsel, and does not diminish the confidentiality of such materials and does not result in the waiver of privilege, right or immunity that might otherwise be available. The External Clean Team and Joint Defence Agreement also set out the terms governing the disclosure of commercially and competitively sensitive information whereby such information would only be disclosed to certain external lawyers or consultants advising the other party on regulatory approvals.

10.4      Clean Team Agreement

On 30 October 2024, Fortress and Loungers entered into a clean team agreement (the "Clean Team Agreement") which sets out certain procedures for the exchange and use of competitively sensitive information in order to ensure that the exchange of such information does not give rise to any infringement of antitrust law.

11.        Disclosure of Interests in Loungers

By virtue of its expected shareholding in Topco following completion of the Acquisition, the Panel has determined that, from the point of entry into the irrevocable commitment as described in paragraph 8 above, Lion is acting in concert (within the meaning of the Takeover Code) with Bidco. As at 27 November 2024 (being the last Business Day prior to the date of this announcement), funds managed by Lion held or controlled 26,728,524 Loungers Shares representing approximately 25.7 per cent. of the existing issued ordinary share capital of Loungers (the "Lion Interest"). Lion has no other interests in any relevant securities of Loungers.

Other than the irrevocable commitments referred to in paragraph 8 above and the Lion Interest, as at close of business on 27 November 2024 (being the last Business Day prior to the date of this announcement) neither Bidco, nor any of its directors, nor, so far as Bidco is aware, any person acting in concert (within the meaning of the Takeover Code) with Bidco has:

a)   any interest in, or right to subscribe for, any relevant securities of Loungers;

b)   any short positions in respect of relevant securities of Loungers (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery;

c)   any dealing arrangement of the kind referred to in Note 11 on the definition of acting in concert in the Takeover Code in relation to Loungers Shares or in relation to any securities convertible or exchangeable into Loungers Shares; nor

d)   borrowed or lent any relevant securities of Loungers or entered into any financial collateral arrangements.

'Interests in securities' for these purposes arise, in summary, when a person has long economic exposure, whether absolute or conditional, to changes in the price of securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person will be treated as having an 'interest' by virtue of the ownership, voting rights or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to securities.

It has not been possible for Bidco to make enquiries of all of its concert parties in advance of release of this announcement. Therefore, if Bidco becomes aware, following the making of such enquiries, that any of its concert parties have any such interests in relevant securities of Loungers, relevant details will be included in Bidco's Opening Position Disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) to Rule 8 of the Takeover Code.

12.       Strategic plans with regard to the business, management, employees, pensions and locations of the Loungers Group

12.1      Strategic plans for Loungers

As outlined in paragraph 5 above, Bidco is impressed by the position that Loungers has built in the casual hospitality sector, with a distinctive portfolio of properties and brands, a track record in delivering strong like-for-like sales growth and return on capital, and an experienced and committed senior management team.

Bidco holds the Loungers management team in high regard and values their expertise and experience. Bidco intends to work with them closely to support the business with its continued growth, as well as development opportunities for Loungers' employees and stakeholders and ongoing improvements to the offering for Loungers' customers.

Loungers has a portfolio of well recognised brands which Bidco regards as resonating strongly with the UK consumer. As such, Bidco believes in its further growth and so intends to offer strategic support to Loungers to enable it to continue its successful rollout as a privately-owned group and accelerate management's growth plans away from the distractions of maintaining a listed business.

Prior to this announcement, and consistent with market practice, Bidco has been granted access to Loungers' senior management for the purposes of confirmatory due diligence. However, Bidco has not formulated specific plans or intentions regarding the operational impact of the Acquisition on Loungers. Following completion of the Acquisition, Bidco intends to work with the senior management team to undertake an evaluation of Loungers and its brands, and its future growth opportunities (the "Evaluation"). Bidco expects that the Evaluation will be completed within a period of approximately six months from the Effective Date.

The scope of the Evaluation is expected to include a review of: (i) strategic opportunities for Loungers' brands and its competitive position in the UK market; (ii) growth opportunities for the business going forward; and (iii) Loungers' management incentivisation arrangements.

Bidco recognises that long term, sustainable value creation will be maximised by maintaining an unwavering focus on Loungers' customers and intends to ensure that Loungers provides the necessary operational support and resources to employees, suppliers and broader stakeholders to allow them to best serve Loungers' customers.

12.2      Employees and management

Bidco attaches great importance to the skill and experience of Loungers' management and employees and recognises that the employees and management of Loungers have been and will continue to be key to the continued success of Loungers.

On completion of the Acquisition, each of the independent non-executive directors of Loungers will resign from their office as a director of Loungers (as is customary). It is intended that the initial Chair, CEO and CFO, with effect from the Effective Date, will be the current chair, CEO and CFO of Loungers.

Other than as described above, and consistent with Loungers management's current plans, Bidco does not intend to initiate any reductions to Loungers' headcount or changes to the conditions of employment or the balance of skills and functions of the employees and management of Loungers.

12.3      Existing employee rights and pensions

Bidco intends to fully safeguard the existing contractual and statutory employment rights and pensions rights of all of Loungers' management and employees, in accordance with applicable law.

Bidco does not intend to make any changes to the benefits provided by the Loungers defined contribution pension scheme. No member of the Loungers group participates in any defined benefit pension scheme.

12.4      Management incentivisation arrangements

Following completion of the Acquisition, Bidco intends to review the management, governance and incentive structure of Loungers. Bidco has not entered into, and has not discussed the terms of, any new form of incentive arrangement with any member of Loungers' management, but expects to put in place new incentive arrangements for certain members of Loungers' management following the Effective Date (as is customary for sponsor-backed private businesses).

12.5      Locations of business, headquarters, fixed assets and research and development

Bidco does not intend to make any changes in location of Loungers' headquarters, the function of the headquarters, or other existing operations and places of business. In line with Loungers' stated strategy, Bidco intends to support the continued rollout of new sites.

Bidco does not envisage any material changes with regard to the redeployment of Loungers' existing fixed asset base. Owing to the nature of its business, Loungers has no research and development function.

12.6      Trading facilities

Loungers Shares are currently admitted to trading on AIM. As set out in paragraph 19 below, before the Effective Date, an application will be made to the London Stock Exchange for the cancellation of the admission to trading of Loungers Shares on AIM to take effect on the Business Day following the Effective Date. Trading in Loungers Shares is expected to end at the close of business on the Business Day before the Effective Date, assuming that the Scheme has been approved at Court and by Loungers Shareholders.

As soon as practicable after the Effective Date, it is intended that Loungers will be re-registered as a private limited company under the relevant provisions of the Companies Act 2006.

12.7      Post-offer undertakings

None of the statements in this paragraph 12 are "post-offer undertakings" for the purposes of Rule 19.5 of the Takeover Code.

13.       The Alternative Offer

As an alternative to the Cash Offer, eligible Loungers Shareholders may, on the terms and subject to the conditions of the Alternative Offer (detailed in paragraph 14 below), elect for the Alternative Offer in relation to all or part of their holding of Loungers Shares.

 

Eligible Loungers Shareholders electing for the Alternative Offer will, subject to the implementation of the Rollover Process, ultimately receive, for each Loungers Share, Rollover Units (each Rollover Unit comprising 3.47139622458205 Topco Ordinary Shares and 306.528603775418 Topco B Preference Shares). The Topco Ordinary Shares and the Topco B Preference Shares will have the rights respectively set out in the Topco Shareholders' Agreement and the Topco Articles.

 

Any fractional entitlements of a Loungers Shareholder to Topco Ordinary Shares and Topco B Preference Shares under the Alternative Offer will be rounded down to the nearest whole number of Topco Ordinary Shares and Topco B Preference Shares per Loungers Shareholder. Fractional entitlements to Topco Ordinary Shares and Topco B Preference Shares will not be allotted or issued to such Loungers Shareholder but will be disregarded.

 

Accordingly, if a Loungers Shareholder with 1,000 Loungers Shares validly accepts the Alternative Offer, they would be entitled to receive 3,471 Topco Ordinary Shares and 306,528 Topco B Preference Shares.

 

Subject to, and following implementation of, the Rollover Process, the maximum number of Rollover Units ultimately available to eligible Loungers Shareholders under the Alternative Offer will be limited to such amount which, based on an exchange ratio of one Rollover Unit for each Loungers Share, ultimately represents 37.17 per cent. of the fully diluted share capital of Loungers at completion of the Acquisition (the "Alternative Offer Maximum").

If valid elections are received from eligible Loungers Shareholders in respect of a number of Loungers Shares that would, subject to the implementation of the Rollover Process, ultimately require the issue of Rollover Units exceeding the Alternative Offer Maximum, such elections will not be capable of being satisfied in full. In these circumstances the amount of Bidco Rollover Securities and Rollover Units ultimately to be issued to each eligible Loungers Shareholder who has validly elected for the Alternative Offer will be reduced on a pro rata basis (being pro rata to the number of Loungers Shares in respect of which valid elections have been received), and the balance of the consideration due to each such Loungers Shareholder will be paid in cash in accordance with the terms of the Cash Offer. For the avoidance of doubt, the Exchange Ratio would continue to apply on the same basis.

The availability of the Alternative Offer is conditional upon valid elections being made that would, subject to the implementation of the Rollover Process, ultimately require the issue of such number of Rollover Units as, based on an exchange ratio of one Rollover Unit for each Loungers Share, represent at least 25 per cent. of the fully diluted share capital of Loungers at completion of the Acquisition (the "Minimum Alternative Offer Threshold"), failing which it will lapse. In these circumstances, no Bidco Rollover Securities (and therefore, no Rollover Units) will be issued and the consideration payable in respect of each Loungers Share will be settled entirely in cash in accordance with the terms of the Cash Offer. However, given the irrevocable undertakings received from certain Loungers Directors, Lion and certain other Loungers Shareholders include undertakings to elect for the Alternative Offer in respect of, in aggregate, a total 41,774,202 Loungers Shares owned by them, representing approximately 40.2 per cent. of Loungers' existing issued ordinary share capital on 27 November 2024 (being the last Business Day prior to the date of this announcement), the Alternative Offer is not anticipated to lapse for this reason.

Unless otherwise determined by Bidco and permitted by applicable law and regulation, the Alternative Offer will not be made, and neither the Bidco Rollover Securities nor the Rollover Units will be offered, sold or delivered, directly or indirectly, in or into any Restricted Jurisdiction and individual acceptances of the Alternative Offer will be valid only if all regulatory approvals (if any) required by a Loungers Shareholder to acquire the Bidco Rollover Securities and, subject to the implementation of the Rollover Process, the Rollover Units, have been obtained.

Eligible Loungers Shareholders who wish to make an election for the Alternative Offer will be required, as a condition to their election being treated as valid and to Bidco Rollover Securities and, subject to the implementation of the Rollover Process, ultimately Rollover Units being issued to them, to provide certain preliminary "Know Your Customer" information (being such information required in order to comply with applicable anti-money laundering, sanctions or "know your customer" laws, or as otherwise reasonably required by Bidco). Details regarding the information to be provided, and the manner in which it must be provided, will be set out in the Scheme Document. Furthermore, if and to the extent required by applicable anti-money laundering, sanctions or "know your customer" laws, eligible Loungers Shareholders who receive Bidco Rollover Securities and, subject to the implementation of the Rollover Process, ultimately Rollover Units, may be required to provide further "know your customer" information following the issue of Rollover Units to them, and information regarding this will be set out in the Scheme Document.

For the purposes of Rule 24.11 of the Takeover Code, HSBC, as sole financial adviser to Bidco, will provide an independent estimate of the value of a Rollover Unit, together with the assumptions, qualifications and caveats forming the basis of its estimate of value, in a letter to be included in the Scheme Document.

If the Scheme becomes Effective, Loungers Shareholders who do not validly elect to receive their consideration by means of the Alternative Offer will automatically receive the cash consideration payable under the Cash Offer for their entire holding of Loungers Shares.

If the Scheme becomes Effective, eligible Loungers Shareholders who validly elect to receive consideration by means of the Alternative Offer will receive: (i) their Rollover Units pursuant to a rollover mechanism in the Scheme whereby on or shortly following the Effective Date such number of Loungers Shares in respect of which eligible Loungers Shareholders have validly elected for the Alternative Offer (subject to the terms of thereof) will be exchanged for Bidco Rollover Securities pursuant to the Scheme which will then in turn be exchanged, directly or indirectly and subject to the exercise of associated put or call options, for the relevant number of Rollover Units to which eligible Loungers Shareholders are entitled to in accordance with the Alternative Offer (the "Rollover Process"); and (ii) if applicable, as a result of a partial election for the Alternative Offer and/or any scaling back as described above, the cash consideration under the Cash Offer on the basis set out in paragraph 2 above. Further details will be set out in the Scheme Document.

Information on Topco share capital

The total number of Topco Ordinary Shares issued to Loungers Shareholders pursuant to the Alternative Offer will, on the date on which the Topco Ordinary Shares are issued (and regardless of how many elections are made under the Alternative Offer), be equal to 60 per cent. of the Topco Ordinary Shares.

On or shortly after the Effective Date, Fortress will subscribe for such number of Topco Ordinary Shares as would result in Fortress holding, in aggregate, 40 per cent. of the total number of Topco Ordinary Shares in issue at that date (following the issuance of the Rollover Units (subject to implementation of the Rollover Process) to Loungers Shareholders who validly elect for the Alternative Offer) at a subscription price of one penny per Topco Ordinary Share (the "Fortress Ordinary Investment"). The remainder of Fortress' investment in Topco will be made by way of a subscription for Topco A Preference Shares at a subscription price of one penny per Topco A Preference Share (the "Fortress Preference Investment" and together with the Fortress Ordinary Investment, the "Fortress Equity Investment").

The total amount of the Fortress Equity Investment on the Effective Date in connection with the Acquisition will depend on the number of elections validly made by eligible Loungers Shareholders under the Alternative Offer. If no valid elections are received from Loungers Shareholders other than those who have irrevocably undertaken to participate in the Alternative Offer (as described at paragraph 8 above), the amount of the Fortress Equity Investment would be £103.5 million (with the amount of the Fortress Preference Investment being an amount equal to £103.5 million minus the amount of the Fortress Ordinary Investment) and the share capital of Topco would comprise, following, and subject to, the implementation of the Rollover Process:

·      133,788,920 Topco Ordinary Shares issued to Loungers Shareholders;

·      89,192,613 Topco Ordinary Shares issued to Fortress;

·      11,813,728,025 Topco B Preference Shares issued to Loungers Shareholders; and

·      10,260,807,387 Topco A Preference Shares issued to Fortress.

For every additional Loungers Share which is subject to the Alternative Offer, the Fortress Equity Investment will be reduced (on a pound for pound basis) by an amount equal to the value of the Cash Offer in respect of each such additional Loungers Share participating in the Alternative Offer (subject always to the Alternative Offer Maximum). Accordingly, if the Alternative Offer were taken up in full by eligible Loungers Shareholders, the maximum amount of the Fortress Equity Investment would be £97.2 million (with the amount of the Fortress Preference Investment being an amount equal to £97.2 million minus the amount of the Fortress Ordinary Investment) and the share capital of Topco would comprise, following, and subject to, the implementation of the Rollover Process:

·      140,828,623 Topco Ordinary Shares issued to Loungers Shareholders;

·      93,885,748 Topco Ordinary Shares issued to Fortress;

·      12,435,342,567 Topco B Preference Shares issued to Loungers Shareholders; and

·      9,627,460,006 Topco A Preference Shares issued to Fortress.

Any fractional entitlements of a Loungers Shareholder to Bidco Rollover Securities, Topco Ordinary Shares and Topco B Preference Shares under the Alternative Offer will be rounded down to the nearest whole number of Bidco Rollover Securities, Topco Ordinary Shares and Topco B Preference Shares per Loungers Shareholder. Fractional entitlements to Bidco Rollover Securities, Topco Ordinary Shares and Topco B Preference Shares will not be allotted or issued to such Loungers Shareholder but will be disregarded. Any fractional entitlements of Fortress to Topco Ordinary Shares or Topco A Preference Shares will be rounded down to the nearest whole number and any such fractional entitlements will be disregarded.

 

14.       Certain details of the Rollover Units

As an alternative to the Cash Offer, eligible Loungers Shareholders may elect to exchange their Loungers Shares for Bidco Rollover Securities which will, subject to the implementation of the Rollover Process, ultimately be exchanged for Rollover Units, on the terms and subject to the conditions of the Alternative Offer (detailed in paragraph 13 above).

 

Certain details of the Rollover Units are set out in Appendix 4 to this announcement. Further information about the Rollover Units and the full terms and conditions of the Alternative Offer, including the eligibility of Loungers Shareholders to elect for the Alternative Offer, will be included in the Scheme Document. Loungers Shareholders are encouraged to read in full Appendix 4 to this announcement, together with the Topco Shareholders' Agreement and the Topco Articles and, in due course, the Scheme Document.

As an overview, the Rollover Units will be subject to the following terms and conditions:

·      the Rollover Units will be issued credited as fully paid;

·      the equity share capital of Topco shall comprise Topco A Preference Shares, Topco B Preference Shares and Topco Ordinary Shares (as detailed in paragraph 13 above):

·      the Topco A Preference Shares and the Topco B Preference Shares will not entitle the holders thereof to receive notice of, attend or vote at any general meeting of Topco, nor to receive or vote on any proposed written resolution of Topco;

·      the Topco Ordinary Shares will entitle the holders thereof to receive notice of, attend, speak and vote at any general meeting of Topco, and to receive and vote on any proposed written resolution of Topco, on the basis of one vote for each Topco Ordinary Share (subject to certain reserved matters);

·      on an Exit Event or any other return of value, the proceeds available shall be distributable as detailed in Appendix 4 to this announcement; and

·      Topco may elect to redeem some or all of the Topco Preference Shares at any time at their then-current Redemption Price, provided that the Topco A Preference Shares are redeemed in priority to any redemption of the Topco B Preference Shares;

·      the Rollover Units will be unquoted;

·      eligible Loungers Shareholders who validly elect for the Alternative Offer will, pursuant to a power of attorney to be included in the Form of Election and/or the Scheme Document (the "Scheme PoA"), deliver a fully executed deed of adherence pursuant to which they will be bound by the Topco Shareholders' Agreement;

·      on a proposed issuance of any new securities, Topco Shareholders shall have customary pro rata pre-emption rights, subject to customary exceptions;

·      the Rollover Units will be non-transferrable during the Lock-up Period (subject to very limited customary exceptions, including a waiver of the lock-up requirement by the holders of a majority of the Topco Ordinary Shares) and thereafter any transfer will be subject to a right of first refusal in favour of the other holders of the Topco Ordinary Shares (subject to such right being waived by the holders of a majority of the Topco Ordinary Shares);

·      following the expiry of the Lock-up Period, Topco Shareholders proposing to transfer more than 50 per cent. of the Topco Ordinary Shares (in aggregate) to a bona fide third-party purchaser will have a right to "drag-along" (i.e. force the sale of) all other Topco Shares on no less favourable terms, provided that the consideration payable for each Topco Preference Shares is the then current Redemption Price of such Topco Preference Share and proceeds are applied in the order of priority set out in paragraph 6 of this Appendix 4;

·      the Fortress Funds shall have further rights to "drag-along" all Topco Shares in certain circumstances where no Exit Event has been achieved by the fifth anniversary of the Effective Date;

·      following the expiry of the Lock-up Period, Topco Shareholders will, on any proposed transfer of Topco Ordinary Shares by other Topco Shareholder(s) to a third-party purchaser that would result in such third-party purchaser holding more than 50 per cent. of the Topco Ordinary Shares, have a full "tag-along" right to sell all their Topco Shares to the third-party purchaser on the same terms as the selling Topco Shareholder(s) and, for any other third-party transfer, a pro rata "tag-along" right will apply (as described in more detail in paragraph 10 of Appendix 4);

·      any transfer of any Rollover Units will be subject to customary restrictions, including in relation to the identity of any proposed transferee and the delivery by the proposed transferee of a fully executed deed of adherence pursuant to which they will be bound by the Topco Shareholders' Agreement. Customary stapling provisions will apply in respect of any transfers of Topco Shares such that Topco Ordinary Shares and Topco Preference Shares must be transferred together in fixed ratios;

·      a holder of at least 15 per cent. of the Topco Ordinary Shares shall have the right to appoint two directors and one observer to the board of Topco;

·      the two largest holders of the Topco Ordinary Shares shall jointly have the right to appoint the chair of the board of Topco;

·      the holders of a majority of the Topco Ordinary Shares shall have the right to remove the chair of the board of Topco, the CEO, the CFO and other senior executives of the Topco Group from time to time;

·      a holder of at least 15 per cent. of the Topco Ordinary Shares shall have customary information rights; holders of at least 5 per cent. of the Topco Ordinary Shares shall have a more limited set of information rights; and all other holders of any Topco Ordinary Shares will have the right to request a copy of the audited consolidated accounts for the Topco Group only;

·      certain customary matters shall be subject to the prior approval of: (i) holders of a majority of the Topco A Preference Shares; (ii) holders of a majority of the Topco B Preference Shares (save that changes which would be materially and disproportionately adverse to the rights or obligations of any other holder of Topco B Preference Shares ("Other B Preference Shareholders") when compared to those holders of Topco B Preference Shares forming part of the relevant approving majority will also require the prior consent from holders of more than 50 per cent. of the Topco B Preference Shares then held by the Other B Preference Shareholders); (iii) holders of at least 20 per cent. of the Topco Ordinary Shares; and (iv) holders of a majority of the Topco Ordinary Shares held by the Topco Minority Shareholders, respectively;

·      if no Exit Event has been achieved by the fifth anniversary of the Effective Date the holders of a majority of the Topco Ordinary Shares shall be entitled to require the board of Topco to constitute an exit committee and pursue an Exit Event as soon as practicable. Holders of at least 15 per cent. of the Topco Ordinary Shares shall each be entitled to appoint one representative to such exit committee and the Chair and CEO at the relevant time shall be invited to attend meetings of such exit committee as observers; and

·      Topco Shareholders shall be subject to customary undertakings to support the execution of an Exit Event.

15.       Risk factors and other investment considerations regarding the Alternative Offer

The attention of eligible Loungers Shareholders who may be considering electing to receive all or part of their consideration by means of the Alternative Offer is drawn to certain risk factors and other investment considerations relevant to such an election, including, among other things, the following:

·      The Topco B Preference Shares and Topco Ordinary Shares will be highly levered and economically subordinated share capital ranking behind the Topco A Preference Shares (which shall be held by the Fortress Funds) and the secured and unsecured liabilities of the Topco Group.

·      Holders of Rollover Units will only have board appointment rights if they hold at least 15 per cent. of the Topco Ordinary Shares and will only have certain matters reserved to them if they hold: (i) a majority of the Topco A Preference Shares; (ii) a majority of the Topco B Preference Shares (save that changes which would be materially and disproportionately adverse to the rights or obligations of Other B Preference Shareholders when compared to those holders of Topco B Preference Shares forming part of the approving majority will also require the prior consent from holders of more than 50 per cent. of the Topco B Preference Shares then held by the Other B Preference Shareholders); (iii) at least 20 per cent. of the Topco Ordinary Shares; or (iv) (in respect of a limited set of matters only) holders of a majority of the Topco Ordinary Shares held by Topco Minority Shareholders, respectively, and therefore certain holders (in particular smaller minority holders) will have limited or no influence over decisions made by Topco in relation to its investment in, or the strategy of, Loungers, the Topco Group or any of its or their current or prospective businesses.

·      These and certain other rights and protections attaching to the Rollover Units will depend on the number of Rollover Units held by each Loungers Shareholder. Given the scale back mechanism described at paragraph 13 above, Loungers Shareholders will have no certainty as to the number of Rollover Units they would receive.

·      The Rollover Units are unquoted and there is no current expectation that they will be listed or admitted to trading on any exchange or market for the trading of securities, and will therefore be illiquid.

·      The Loungers Shares are currently admitted to trading on AIM and Loungers Shareholders are therefore afforded certain standards and protections, including in respect of disclosure. The Rollover Units will be unlisted securities in a private company and so Loungers Shareholders who, subject to the implementation of the Rollover Process and the other terms contained in this announcement, receive Rollover Units will not be afforded protections commensurate with those from which they currently benefit as a Loungers Shareholder. Except for the right to request a copy of the audited consolidated accounts for the Topco Group or information to be provided to persons who hold at least 5 per cent. of the Topco Ordinary Shares, neither the Topco Articles nor the Topco Shareholders' Agreement will provide holders of Rollover Units with information rights, and the default information rights available to such holders of Rollover Units under Jersey law are very limited.

·      The Rollover Units will have very limited transfer rights. They will not be transferable during the Lock-up Period except pursuant to limited exemptions, including where holders of a majority of the Topco Ordinary Shares waive the lock-up requirement. Following the expiry of the Lock-up Period, any transfer will be subject to a right of first refusal in favour of all other holders of Topco Ordinary Shares, unless such right of first refusal has been waived by holders of a majority of the Topco Ordinary Shares.

·      Holders of Rollover Units may be required to sell their Rollover Units pursuant to the exercise of "drag-along" provisions in the Topco Shareholders' Agreement by other Topco Shareholders. Although holders of Rollover Units will be entitled to no less favourable terms than those applicable to other Topco Shareholders (subject always to the priority entitlement of Topco Preference Shares to the then current Redemption Price of such Topco Preference Shares), any transfer involving the application of "drag-along" rights may be at a value that is less than the value of the Cash Offer.

·      Where other Topco Shareholders elect to sell Topco Ordinary Shares, "tag-along" rights may apply entitling Topco Shareholders to participate in the relevant transfer. However, such "tag-along" rights are subject to a number of exclusions, including in relation to customary permitted transfers to affiliates or to transfers in connection with an IPO, a reorganisation or a refinancing. Further, holders of Rollover Units who exercise the "tag-along" rights will be required to agree to pay a proportionate share of related costs and bear related liabilities and may be required to agree to the same terms of transfer as the transferring Topco Shareholders, including in respect of covenants, indemnities and commitments in connection with such process.

·      The value and performance of the Rollover Units will be uncertain and there can be no assurance that any such securities will be capable of being sold in the future or that they will be capable of being sold at the value to be estimated by HSBC in the Scheme Document.

·      The value of the Rollover Units will depend on the future performance of the Loungers business. This remains uncertain and could result in the amount received on any Exit Event or future transfer of Rollover Units being less than the cash consideration payable to Loungers Shareholders under the Cash Offer. There can be no certainty or guarantee as to the performance of the Topco Group following the Effective Date. Past performance cannot be relied upon as an indication of future performance.

·      Payments in respect of Rollover Units will not be guaranteed or secured and, for so long as the Topco Group has any secured debt or Topco Preference Shares outstanding, it is not anticipated that Topco will declare or pay any dividends or make any distributions on any of the Topco Ordinary Shares.

·      Further issues of securities by Topco may occur. Such further issues will generally be made subject to pre-emption rights, however the right of holders of Rollover Units to exercise such pre-emption rights will be subject to exceptions.

·      Where securities are issued pursuant to an exception to the pre-emption rights, the percentage interest of holders of Rollover Units in Topco will be diluted and such events may result in the economic entitlement of the holders of Rollover Units suffering significant dilution.

·      In relation to any such further issues of securities being made on a pre-emptive basis, if holders of Rollover Units wish to avoid their percentage interest and/or economic entitlement in Topco being reduced by any such issue, they will need to invest further cash sums in Topco. In particular, holders of Rollover Units who do not elect to exercise their pre-emption rights by investing the necessary cash sums in respect of any further issues of securities by Topco may suffer significant dilution in their percentage interest and/or economic entitlement in Topco.

·      The board of Topco or holders of at least 20 per cent. of the Topco Ordinary Shares may at any time following the Effective Date consider it necessary to raise equity funding on an expedited basis, and therefore require Topco to allot and issue securities in Topco to holders of at least 20 per cent. of the Topco Ordinary Shares. Whilst other Topco Shareholders (including holders of Rollover Units) will have a customary "catch-up right" to subscribe for or acquire their pro rata portion of the same securities, as if such issuance were made on a pre-emptive basis, Topco Shareholders who do not elect to exercise their catch-up rights may suffer significant dilution in their percentage interest and/or economic entitlement in Topco.

·      If after the Effective Date any member of the Topco Group introduces one or more management incentivisation plans within the Topco Group for actual or potential employees, directors, officers and consultants of the Topco Group, which provide participants with an interest in securities in the Topco Group (a "MIP"), the creation of such a MIP and the issuance of securities pursuant to it could significantly dilute the percentage interests and/or economic entitlement in Topco of all Topco Shareholders. In addition, Topco may not receive material cash sums on the issue of any such securities and the returns on any such securities may potentially be structured to increase their proportionate interest in the value of the Topco Group as it increases in value (whether pursuant to a ratchet mechanism or otherwise).

·      Holders of Rollover Units will not be entitled to participate in issues of securities by the Topco Group in certain other cases, including the allotment and issue of securities to a bona fide third party: (i) in connection with a bona fide merger, acquisition or other business combination; or (ii) with the approval of holders of a majority of Topco Ordinary Shares.

·      The precise number of securities that may be issued by the Topco Group from time to time cannot be ascertained at the date of this announcement and will depend on a variety of factors including those described above.

·      An Exit Event will occur at the sole discretion of either the board of Topco, an exit committee of the board of Topco constituted by the holders of a majority of Topco Ordinary Shares that includes representatives appointed by holders of at least 15 per cent. of the Topco Ordinary Shares or, in certain circumstances, Fortress and its affiliates. Holders of Rollover Units may, therefore, not have control over the date(s), terms or value(s) on or at which they may be able to realise their investment in the Topco Group.

·      Topco intends that reasonable, properly incurred costs in connection with any Exit Event, reorganisation, refinancing or return of value will be borne by the Topco Group and/or the holders of Topco Shares. Such costs would therefore result, directly or indirectly, in a pro rata reduction in the value of the investment made by holders of Rollover Units in the Topco Group. The quantum of such costs is not known.

·      Certain consent rights under the Topco Shareholders' Agreement are exercisable by the holders of: (i) a majority of the Topco A Preference Shares; (ii) a majority of the Topco B Preference Shares (and in certain circumstances, a majority of the holders of the Other B Preference Shares); (iii) at least 20 per cent. of the Topco Ordinary Shares; and (iv) (in respect of a limited set of matters only) a majority of the Topco Ordinary Shares held by the Topco Minority Shareholders, respectively. Depending on the number of persons who elect for the Alternative Offer and in what proportions, it is possible that such consents may in practice be capable of being given by one or a small number of holder(s) of Topco Shares without any requirement to consult with or refer to the other holder(s).

·      Holders of two thirds of the Topco Ordinary Shares may make any amendment to, or variation of, the Topco Shareholders' Agreement and/or related documents without the consent of, or notification to, other holders of Topco Ordinary Shares (including holders of Rollover Units) (the "Other Shareholders"), provided that: (i) amendments or variations that would be materially and disproportionately adverse to the rights or obligations of any Other Shareholder when compared to those Topco Ordinary Shareholders approving such amendment or variation will also require the prior consent of the holders of a majority of the Ordinary Shares then held by the Other Shareholders (and, if the variation would impose material new obligations or liabilities on a party or materially increase any existing obligation or liability of a party, the consent of the affected party will also be required); (ii) any changes affecting the Topco A Preference Shares and/or Topco B Preference Shares may be made only with the consent of the holders of a majority of the Topco A Preference Shares and the holders of a majority of the Topco B Preference Shares, respectively (save that changes which would be materially and disproportionately adverse to the rights or obligations of any Other B Preference Shareholders when compared to those holders of Topco B Preference Shares forming part of the approving majority will also require prior consent from the holders of more than 50 per cent. of the Topco B Preference Shares then held by the Other B Preference Shareholders); (iii) any alteration or variation to the rights attaching to any security in the Topco Group other than the Topco A Preference Shares and/or Topco B Preference Shares may only be made with the consent of holders of at least 20 per cent. of the Topco Ordinary Shares; and (iv) any alteration or variation to the rights attaching to the Topco Ordinary Shares which would be materially and disproportionately adverse to the rights of the Ordinary Shares held by the Topco Minority Shareholders when compared to holders of at least 20 per cent. of the Topco Ordinary Shares must be approved by the holders of a majority of the Topco Ordinary Shares held by Topco Minority Shareholders.

·      The Topco Shareholders' Agreement contains a number of continuing obligations, including: (i) broad restrictions on Topco Minority Shareholders knowingly saying or doing anything they are aware is or is reasonably likely to be harmful or prejudicial to the goodwill or reputation or disparaging in relation to, a member of the Topco Group (including the Loungers Group) or any holder of at least 20 per cent. of the Topco Ordinary Shares (including the Fortress Funds) and any of their affiliates; and (ii) a compliance covenant, which requires the parties to the Topco Shareholders' Agreement to observe and fully comply with its terms. The Topco Shareholders' Agreement includes an undertaking by the parties to exercise their rights and give full effect to it, including passing certain resolutions and/or class consents, including in connection with an Exit Event or the issue of securities. This means that circumstances may arise in which the holders of Rollover Units are obliged to vote in a particular way to comply with such covenant, failing which their right to object to a variation of class rights may be otherwise restricted. The Topco Shareholders' Agreement also contains powers of attorney in connection with certain actions, including reorganisations, refinancings and Exit Events, pursuant to which the Topco Shareholders appoint each directors of Topco as their attorney to provide the consents and approvals referred to above (the "SHA PoAs"). The combination of such compliance covenants, the SHA PoAs, the variation provisions described above and certain other requirements in the Topco Shareholders' Agreement and Topco Articles, therefore narrows the scope of class rights protections which would otherwise be available to holders of Rollover Units under Jersey law.

·      Loungers Shareholders who hold a small proportion of the total number of Loungers Shares at the Scheme Record Time and who validly elect for the Alternative Offer and/or validly elect for the Alternative Offer in respect of part only of their total holding of Loungers Shares may, as a result of the implementation of the Alternative Offer in accordance with its terms, hold only a small percentage interest and/or economic entitlement in Topco, and therefore have limited or no influence over decisions made by Topco and/or receive limited or no returns of value from Topco to the extent made (including in accordance with the Topco Shareholders' Agreement and/or the Topco Articles).

·      Within 3 months of the Effective Date, the board of Topco (acting with the consent of holders of at least 20 per cent. of the Topco Ordinary Shares) may require some or all of the holders of less than 1 per cent. of the total number of Topco Ordinary Shares (including any Loungers Shareholders who receive such shares, subject to implementation of the Rollover Process, as a result of validly electing for the Alternative Offer) to transfer the legal title to some or all of the securities which they hold in Topco (including Rollover Units) to a nominee in accordance with the provisions of a nominee agreement, and therefore holders of Rollover Units may not hold the legal title to some or all of their Rollover Units and certain rights otherwise exercisable by the legal title holder in relation to such Rollover Units may be exercisable by the nominee pursuant to the terms of the nominee agreement. The Topco Shareholders' Agreement will contain a power of attorney authorising each director of Topco to execute any documents and do any acts necessary to implement such transfer and/or arrangements. This is intended to be a purely administrative arrangement and will not adversely affect the rights of any holder of Rollover Units required to hold such Rollover Units through the nominee.

Further details on Topco and the principal rights of the Rollover Units are set out in Appendix 4 to this announcement and will be summarised in the Scheme Document.

16.       Loungers Share Plans

Participants in the Loungers Share Plans will be contacted regarding the effect of the Acquisition on their rights under the Loungers Share Plans and, where required, an appropriate proposal will be made to such participants pursuant to Rule 15 of the Takeover Code in due course. Details of these proposals will be set out in the Scheme Document and/or in separate letters to be sent to participants in the Loungers Share Plans.

The Acquisition will apply to any Loungers Shares which are unconditionally allotted, issued or transferred to satisfy the exercise of options or the vesting of awards under the Loungers Share Plans prior to the Scheme Record Time.

Amendments to Loungers' articles of association will be put forward for approval at the General Meeting by Loungers Shareholders to provide that any Loungers Shares allotted, issued or transferred after the Scheme Record Time in satisfaction of the exercise of options or the vesting of awards under the Loungers Share Plans will be automatically transferred to Bidco and for cash consideration to be paid to the original recipient of the Loungers Shares so issued in the same amount as under the Cash Offer.

17.       Opening Position Disclosure

In connection with the Acquisition, Bidco will make a public Opening Position Disclosure setting out details of its interests or short positions in, or rights to subscribe for, any relevant securities of Loungers by no later than 12 noon on 12 December 2024.

18.       The Scheme

It is intended that the Acquisition will be implemented by means of a scheme of arrangement between Loungers and the Scheme Shareholders, although Bidco reserves the right to implement the Acquisition by way of an Offer, with the consent of the Panel and subject to the terms of the Co-operation Agreement.

The purpose of the Scheme is to provide for Bidco to become owner of the whole of the issued and to be issued share capital of Loungers. This is to be achieved:

·      under the Cash Offer, by the transfer of the Scheme Shares to Bidco, in consideration for which the relevant Scheme Shareholders will receive the cash consideration on the basis set out in paragraph 2 above; and

·      in respect of those Scheme Shareholders who validly elect for the Alternative Offer, through the receipt of Bidco Rollover Securities in exchange for the transfer to Bidco of the relevant number of Scheme Shares of the relevant eligible Scheme Shareholder (ultimately to be exchanged into Rollover Units pursuant to the mechanism set out paragraph 13 above),

in either case pursuant to the Scheme.

To become Effective, the Scheme must be approved at the Court Meeting by a majority in number of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) who are on the register of members of Loungers at the Scheme Voting Record Time present and voting (and entitled to vote), whether in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares held by those Scheme Shareholders (or the relevant class or classes thereof, if applicable). The Scheme also requires the passing at the General Meeting of the Resolutions. The General Meeting is expected to be held immediately after the Court Meeting. Following the Meetings, the Scheme must be sanctioned by the Court. Finally, a copy of the Scheme Court Order must be delivered to the Registrar of Companies for registration, upon which the Scheme will become Effective.

The Scheme will also be subject to the Conditions and further terms set out in Appendix 1 to this announcement (in particular, the satisfaction or waiver of the CMA Condition set out at 3(a) and (b) of Appendix 1 to this announcement) and to the full terms and conditions to be set out in the Scheme Document. Bidco has also agreed, pursuant to the Co-operation Agreement, that it shall not waive paragraph 3(a) of the CMA Condition without the prior written consent of Loungers unless, at the time of such waiver, it also waives paragraph 3(b)(i) of the CMA Condition.

The Scheme Document will include full details of the Scheme, together with the notices convening the Court Meeting and the General Meeting. The Scheme Document will also contain the expected timetable for the Acquisition, and will specify the necessary actions to be taken by Loungers Shareholders. Subject to restrictions in respect of Restricted Jurisdictions, the Scheme Document will be sent to Loungers Shareholders and, for information only, to persons with information rights and holders of options and/or awards granted under the Loungers Share Plans, as soon as reasonably practicable, and in any event (save with the consent of the Panel), within 28 days of the Announcement Date.

The Scheme is expected to become Effective during the first calendar quarter of 2025, subject to the satisfaction or (where applicable) waiver of the Conditions. If the Scheme does not become Effective on or before the Long Stop Date, it will lapse and the Acquisition will not proceed (unless Bidco and Loungers otherwise agree and the Panel consents (if required)).

As set out in further detail in the Condition in paragraph 2 of Appendix 1 to this announcement, the Scheme will also lapse if, among other things, any of the Court Meeting, the General Meeting and/or the Court Sanction Hearing is not held on or before the 22nd day after the expected date of such meetings to be set out in the Scheme Document (or such later date as may be: (A) agreed between Bidco and Loungers; or (B) (in a competitive situation) specified by Bidco with the consent of the Panel, and in either case (if required) as the Court may allow).

Upon the Scheme becoming Effective: (i) it will be binding on all Loungers Shareholders, irrespective of whether or not they attended or voted at the Meetings (and if they attended and voted, whether or not they voted in favour); and (ii) share certificates in respect of Loungers Shares will cease to be valid and entitlements to Loungers Shares held within the CREST system will be cancelled. The consideration for the Acquisition (pursuant to the Cash Offer or the Alternative Offer, as applicable) will be dispatched to Loungers Shareholders no later than 14 days after the Effective Date.

Any Loungers Shares issued before the Scheme Record Time which remain in issue at the Scheme Record Time will be subject to the terms of the Scheme. The Resolutions to be proposed at the General Meeting will, among other matters, provide that Loungers' articles of association will be amended to incorporate provisions requiring, subject to the Scheme becoming effective, any Loungers Shares allotted, issued or transferred after the Scheme Record Time (other than to Bidco and/or their nominees) to be automatically transferred to Bidco and for cash consideration to be paid to the original recipient of the Loungers Shares so issued in the same amount as under the Cash Offer. The provisions of Loungers' articles of association (as amended) will avoid any person (other than Bidco and their nominees) holding shares in the capital of Loungers after the Effective Date.

Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme (subject to the Panel's consent and the terms of the Co-operation Agreement). In such event, the Acquisition will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect, among other things, the change in method of effecting the Acquisition (including, without limitation: (i) the inclusion of an acceptance condition set at 90 per cent. of the Loungers Shares to which such Offer relates (or such other percentage as Bidco may, subject to the rules of the Takeover Code and the terms of the Co-operation Agreement and with the consent of the Panel, decide); and (ii) those required by, or reasonably deemed appropriate by, Bidco under applicable law, including US securities law). Further, Bidco has agreed under the Co-operation Agreement that, if sufficient acceptances of such Offer are received and/or sufficient Loungers Shares are otherwise acquired, it will apply the provisions of Chapter 3 of Part 28 the Companies Act 2006 to acquire compulsorily any outstanding Loungers Shares to which such offer relates.

The Scheme will be governed by English law and will be subject to the jurisdiction of the Court. The Scheme will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange, the FCA, the AIM Rules and the Registrar of Companies.

19.       Cancellation of trading and re-registration

Loungers Shares are currently admitted to trading on AIM. It is intended that dealings in Loungers Shares will be suspended shortly before the Effective Date and that a request will be made to the London Stock Exchange to cancel the admission to trading of Loungers Shares on AIM with effect from or shortly after the Effective Date.

It is expected that the last day of dealings in Loungers Shares on AIM will be the date of the Court Sanction Hearing and that no transfers will be registered after 6.00 p.m. (London time) on that date.

It is also intended that, following the Effective Date, Loungers will be re-registered as a private limited company.

20.       Consents

Each of HSBC, Houlihan Lokey, Panmure Liberum and Peel Hunt has given and not withdrawn its written consent to the inclusion herein of the references to its name in the form and context in which such references appear.

21.       Documents available for inspection

Copies of the following documents will by no later than 12 noon on 29 November 2024 be published on Fortress' website at https://www.fortress.com/loungers-offer and Loungers' website at https://loungers.co.uk until the end of the offer:

·      this announcement;

·      the Confidentiality Agreement;

·      the Co-operation Agreement;

·      the Equity Commitment Letter;

·      the Omnibus Subscription Agreement;

·      the Interim Facilities Agreement;

·      the Topco Shareholders' Agreement;

·      the Topco Articles;

·      the Bidco Articles;

·      the External Clean Team and Joint Defence Agreement;

·      the Clean Team Agreement;

·      the irrevocable undertakings listed in Appendix 3 to this announcement; and

·      the consent letters from each of the financial advisers referred to in paragraph 20 above.

The contents of the websites referred to in this announcement are not incorporated into and do not form part of this announcement.

22.       General

The Acquisition will be made on the terms and subject to the Conditions set out in Appendix 1 to this announcement, and to the full terms and conditions to be set out in the Scheme Document. The formal Scheme Document comprising the Cash Offer and Alternative Offer to Loungers Shareholders will be sent to Loungers Shareholders within 28 days of this announcement (or on such later date as may be agreed between Bidco and Loungers with the consent of the Panel). The sources and bases of calculation of certain information contained in this announcement are set out in Appendix 2 to this announcement. Details of irrevocable undertakings received by Bidco are set out in Appendix 3 to this announcement. Certain details of the Rollover Units are set out in Appendix 4 to this announcement. Certain terms used in this announcement are defined in Appendix 5 to this announcement.

Enquiries:

HSBC Bank plc (Financial Adviser to Bidco) Anthony Parsons David Plowman Christopher Fincken Alex Thomas Alina Vaskina (Corporate Broking)	+44 (0)20 7991 8888
Cardew Group (Communications adviser to Bidco) Ed Orlebar ([email protected]) Olivia Rosser ([email protected])	+44 7738 724 630 +44 7552 864 250
Loungers Nick Collins Stephen Marshall	+44 7720 431 120
Houlihan Lokey UK Limited (Financial Adviser to Loungers) Sam Fuller Tim Richardson Tom Barnard	+44 (0)20 7389 3355
Panmure Liberum Limited (Joint Broker to Loungers) Andrew Godber Rupert Dearden William King	+44 (0)20 3100 2000
Peel Hunt (Joint Broker to Loungers) Dan Webster Sohail Akbar Andrew Clark Sodali & Co (PR Adviser to Loungers) Rob Greening Russ Lynch	+44 (0)20 7418 8900   +44 (0)20 7250 1446

Slaughter and May is acting as legal adviser to Bidco.

Jones Day is acting as legal adviser to Loungers.

Important notices relating to financial advisers

HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting as financial adviser exclusively for Bidco and no one else in connection with the Acquisition and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of HSBC, or for providing advice in relation to the Acquisition or any other matters referred to in this announcement. Neither HSBC nor any of its group undertakings or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of HSBC in connection with this announcement or any matter referred to herein.

Houlihan Lokey UK Limited ("Houlihan Lokey"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting as financial adviser exclusively for Loungers and no one else in connection with the Acquisition and will not be responsible to anyone other than Loungers for providing the protections afforded to clients of Houlihan Lokey or for providing advice in relation to the Acquisition or any other matters referred to in this announcement. Neither Houlihan Lokey nor any of its affiliates owes or accepts any duty, liability, or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Houlihan Lokey in connection with this announcement, any statement contained herein or otherwise.

Panmure Liberum Limited ("Panmure Liberum"), which is authorised and regulated in the United Kingdom by the FCA, is acting as corporate broker exclusively for Loungers and no one else in connection with the Acquisition and the matters set out in this announcement. Panmure Liberum will not regard any other person as its client in relation to the Acquisition or any other matter or arrangement set out in this announcement and will not be responsible to anyone other than Loungers for providing the protections afforded to clients of Panmure Liberum, nor for providing advice in relation to the Acquisition or any other matter or arrangement referred to in this announcement. Neither Panmure Liberum nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Panmure Liberum in connection with the Acquisition, this announcement, any statement contained herein or otherwise. No representation or warranty, express or implied, is made by Panmure Liberum as to the contents of this announcement.

Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United Kingdom by the FCA, is acting as corporate broker exclusively for Loungers and no one else in connection with the Acquisition and the matters set out in this announcement. Peel Hunt will not regard any other person as its client in relation to the Acquisition or any other matter or arrangement set out in this announcement and will not be responsible to anyone other than Loungers for providing the protections afforded to clients of Peel Hunt, nor for providing advice in relation to the Acquisition or any other matter or arrangement referred to in this announcement. Neither Peel Hunt nor any of its affiliates (nor their respective directors, officers, employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Peel Hunt in connection with the Acquisition, this announcement, any statement contained herein or otherwise. No representation or warranty, express or implied, is made by Peel Hunt as to the contents of this announcement.

Further information

This announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or inducement to sell or an invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of an offer to buy any securities, any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise. The Acquisition will be made and implemented solely pursuant to the terms of the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document), which will contain the full terms and conditions of the Acquisition, including details of what action is required from Loungers Shareholders in respect of the Acquisition. Any decision in respect of, or other response to, the Acquisition should be made only on the basis of the information in the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document).

Loungers and Bidco shall prepare the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document) to be distributed to Loungers Shareholders. Loungers and Bidco urge Loungers Shareholders to read the Scheme Document in its entirety (or, if the Acquisition is implemented by way of an Offer, the Offer Document) when it becomes available because it will contain important information relating to the Acquisition.

This announcement does not constitute a prospectus or prospectus equivalent document.

Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme (subject to the Panel's consent and the terms of the Co-operation Agreement). In such event, the Acquisition would be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect, among other things, the change in method of effecting the Acquisition (including, without limitation: (i) the inclusion of an acceptance condition set at 90 per cent. of the Loungers Shares to which such Offer relates (or such other percentage as Bidco may, subject to the rules of the Takeover Code and the terms of the Co-operation Agreement and with the consent of the Panel, decide); and (ii) those required by, or deemed appropriate by, Bidco under applicable law, including US securities laws). Further, Bidco has agreed under the Co-operation Agreement that, if sufficient acceptances of such Offer are received and/or sufficient Loungers Shares are otherwise acquired, it will apply the provisions of the Companies Act 2006 to acquire compulsorily any outstanding Loungers Shares to which such offer relates.

Overseas Shareholders

This announcement has been prepared in accordance with, and for the purpose of complying with, the laws of England and Wales, the Takeover Code, the Market Abuse Regulation, the AIM Rules and the Disclosure Guidance and Transparency Rules and 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 England and Wales.

The release, publication or distribution of this announcement in or into certain jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves of, and observe, any applicable requirements of their jurisdictions.

The availability of the Acquisition to Loungers Shareholders who are not resident in and citizens of the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. In particular, the ability of persons who are not resident in the United Kingdom to vote their Loungers Shares with respect to the Scheme at the Court Meeting, or to execute and deliver forms of proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person.

Unless otherwise determined by Bidco or required by the Takeover Code, and permitted by applicable law and regulation, participation in the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Acquisition by any such use, means, instrumentality or from within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction and persons receiving this announcement and all such documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in, into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition. If the Acquisition is implemented by way of an Offer (unless otherwise permitted by applicable law and regulation), the Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Notice to US investors in Loungers

Loungers Shareholders in the United States should note that the Acquisition relates to the shares of an English company with a quotation on AIM and is proposed to be made by means of a scheme of arrangement provided for under, and which is governed by, the laws of England and Wales. If the Acquisition is carried out under the Scheme, it is expected that any Rollover Units issued pursuant to the Acquisition would be issued in reliance upon the exemption from the registration requirements under the US Securities Act provided by Section 3(a)(10) thereof and would not be registered under the US Securities Act. Securities issued pursuant to the Scheme will not be registered under any laws of any state, district or other jurisdiction of the United States, and may only be issued to persons resident in such state, district or other jurisdiction pursuant to an exemption from the registration requirements of such laws.

Neither proxy solicitation rules nor the tender offer rules under the US Exchange Act will apply to the Scheme. Moreover, the Scheme will be subject to the disclosure and procedural requirements and practices applicable in the United Kingdom to schemes of arrangement which differ from the disclosure requirements of US tender offer and proxy solicitation rules. If, in the future, Bidco exercises the right to implement the Acquisition by way of an Offer and determines to extend the offer into the United States, the Acquisition will be made in compliance with applicable United States laws and regulations, including any applicable exemptions under the US Exchange Act. Such an Offer would be made in the United States by Bidco and no one else. In accordance with normal United Kingdom practice and consistent with Rule 14e-5 under the US Exchange Act, Bidco, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in Loungers outside such Offer during the period in which such Offer would remain open for acceptance. If such purchases or arrangements to purchase were to be made they would be made outside the US either in the open market at prevailing prices or in private transactions at negotiated prices and would comply with applicable law, including, to the extent applicable, the US Exchange Act. Any information about such purchases will be disclosed as required in the United Kingdom, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

The financial information included in this announcement and the Scheme Document (or, if the Acquisition is implemented by way of an Offer, the Offer Document) has been or will have been prepared in accordance with generally accepted accounting principles of the United Kingdom and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with IFRS in the United States.

The receipt of consideration by a US holder for the transfer of its Loungers Shares pursuant to the Acquisition may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as non-US and other, tax laws. Each Loungers Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to them, including under applicable US federal, state and local, as well as non-US and other, tax laws.

It may be difficult for US holders of Loungers Shares to enforce their rights and any claim arising out of the US federal laws or to enforce against them a judgment of a US court predicated upon the securities laws of the United Kingdom, since Bidco and Loungers are incorporated in a non-US jurisdiction, and some or all of their officers and directors may be residents of countries other than the United States. US holders of Loungers Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement.

Cautionary Note Regarding Forward-Looking Statements

This announcement (including information incorporated by reference in this announcement), oral statements made regarding the Acquisition, and other information published by Bidco and Loungers contain certain statements which are, or may be deemed to be, "forward-looking statements". Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Bidco and/or Loungers (as the case may be) about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.

These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning or derivatives thereof. These statements are based on assumptions and assessments made by Loungers and/or Bidco in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements, include but are not limited to: the ability to complete the Acquisition, the ability to obtain requisite regulatory and shareholder approvals and changes in the global, political, economic, business, competitive, market and regulatory forces, financial regulatory matters, future exchange and interest rates, changes in tax rates and future business combinations or dispositions.

Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement. Neither Loungers nor Bidco assumes any obligation to update or correct the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law.

Dealing and Opening Position Disclosure Requirements

Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10^th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10^th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on a website

In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement will be made available and other documents required to be published under Rule 26 of the Takeover Code will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Loungers' website at https://loungers.co.uk and Fortress' website at https://www.fortress.com/loungers-offer by no later than 12 noon (London time) on the first Business Day following the date of this announcement. For the avoidance of doubt, neither the contents of these websites nor any website accessible from hyperlinks is incorporated into or forms part of this announcement.

No profit forecasts, estimates or quantified benefits statements

No statement in this announcement is intended to constitute a profit forecast, profit estimate or quantified benefits statement for any period and no statement in this announcement should be interpreted to mean that the earnings or future earnings per share of or dividends or future dividends per share of Loungers for the current or future financial years will necessarily match or exceed the historical published earnings or earnings per share or dividends per share of Loungers.

Requesting hard copy documents

In accordance with Rule 30.3 of the Takeover Code, Loungers Shareholders, persons with information rights and participants in Loungers Share Plans may request a hard copy of this announcement by contacting Loungers' registrars, Link Group 10^th Floor, Central square, 29 Wellington Street, Leeds, LS1 4DL, between 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday (except public holidays in England and Wales) by calling +44 345 922 0044 or by submitting a request in writing to Link Group. Calls are charged at the standard geographical rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Please note that Link Group cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. For persons who receive a copy of this announcement in electronic form or via a website notification, a hard copy of this announcement will not be sent unless so requested. Such persons may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be in hard copy form.

Electronic Communications

Please be aware that addresses, electronic addresses and certain other information provided by Loungers Shareholders, persons with information rights and other relevant persons for the receipt of communications from Loungers may be provided to Bidco during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

General

If the Acquisition is effected by way of an Offer, and such an Offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Bidco has agreed under the Co-operation Agreement to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act 2006 so as to acquire compulsorily the remaining Loungers Shares in respect of which the Offer has not been accepted.

Investors should be aware that Bidco may purchase Loungers Shares otherwise than under any Offer or the Scheme, including pursuant to privately negotiated purchases.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under FSMA if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.

Rule 2.9 of the Takeover Code

For the purposes of Rule 2.9 of the Takeover Code, Loungers confirms that, as at 27 November 2024 (being the last Business Day prior to this announcement), it had in issue 103,954,562 ordinary shares of 1 penny each (excluding shares held in treasury). The ISIN for the ordinary shares is GB00BH4JR002.

 

APPENDIX 1
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE ACQUISITION

Part A: Conditions to the Scheme and Acquisition

Long Stop Date

1.   The Acquisition will be conditional upon the Scheme becoming unconditional and becoming Effective, subject to the provisions of the Takeover Code, by no later than 11.59 p.m. on the Long Stop Date or such later date (if any) as Bidco and Loungers may, with the consent of the Panel, agree and (if required) the Court may allow.

Scheme approval

2.   The Scheme will be conditional upon:

(a)        (i) its approval by a majority in number of the Scheme Shareholders who are on the register of members of Loungers (or the relevant class or classes thereof, if applicable) at the Scheme Voting Record Time, present and voting (and entitled to vote), either in person or by proxy, representing 75% or more in value of the Scheme Shares held by those Scheme Shareholders, at the Court Meeting, and at any separate class meeting(s) which may be required by the Court or at any adjournment of any such meeting; and (ii) such Court Meeting and any separate class meeting(s) which may be required by the Court, being held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document, or such later date as may be: (A) agreed between Bidco and Loungers; or (B) (in a competitive situation) specified by Bidco with the consent of the Panel, and in either case (if required) as the Court may allow;

(b)        (i) the Resolutions being duly passed by the requisite majority or majorities of Loungers Shareholders at the General Meeting (or any adjournment thereof); and (ii) such General Meeting being held on or before the 22nd day after the expected date of the General Meeting to be set out in the Scheme Document, or such later date as may be: (A) agreed between Bidco and Loungers; or (B) (in a competitive situation) specified by Bidco with the consent of the Panel, and in either case (if required) as the Court may allow; and

(c)        (i) the sanction of the Scheme by the Court with or without modification (but subject to any such modification being acceptable to Bidco and Loungers); and (ii) the Court Sanction Hearing being held on or before the 22nd day after the expected date of the Court Sanction Hearing to be set out in the Scheme Document, or such later date as may be: (A) agreed between Bidco and Loungers; or (B) (in a competitive situation) specified by Bidco with the consent of the Panel, and in either case (if required) as the Court may allow; and (iii) the delivery of a copy of the Scheme Court Order to the Registrar of Companies for registration.

General Conditions

3.   In addition, subject as stated in Part B of this Appendix 1, Bidco and Loungers have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless such Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

UK CMA

(a)        one of the following having occurred:

(i)       confirmation that the CMA has no further questions in relation to the Acquisition following the submission of a briefing paper to it; and

(a)        as at the date on which all other Conditions are satisfied or waived in relation to the Acquisition, the CMA not having:

(1)        requested submission of a merger notice;

(2)        indicated in writing to either party that it intends, or is considering whether, to commence a Phase I investigation;

(3)        indicated in writing that the statutory review period in which the CMA has to decide whether to make a reference under section 34ZA Enterprise Act 2002 has begun; nor

(4)        requested documents, information or attendance by witnesses (including under section 109 of the Enterprise Act 2002) which indicates that it is considering whether to request submission of a merger notice or whether to commence the aforementioned statutory review period in respect of the Acquisition; or

(ii)      on terms reasonably satisfactory to Bidco, the CMA confirming that the Acquisition or any matter arising therefrom or related thereto or any part of it will not be subject to a reference under Part 3 of the Enterprise Act 2002 (a "Phase 2 CMA Reference"), such decision being either unconditional or conditional on the CMA's acceptance of undertakings in lieu under Section 73 of the United Kingdom Enterprise Act 2002, or the applicable time period for the CMA to make a Phase 2 CMA Reference having expired without the CMA having made such a reference.

(b)

(i)       if and to the extent that Condition 3(a) is waived or not invoked by Bidco, all authorisations, orders, grants, recognitions, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals (each a "Clearance") from the authority referred to in Condition 3(a) having been obtained; and

(ii)      any other Clearance deemed necessary by Bidco for or in respect of the Acquisition (including, without limitation, its implementation and financing or the proposed direct or indirect acquisition of any shares or other securities in, or control of, Loungers or any member of the Wider Loungers Group by Bidco) having been obtained from the relevant authorities,

in each case in terms and in a form and subject to conditions that are reasonably satisfactory to Bidco and all such Clearances remaining in full force and effect and all filings necessary for such purpose having been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time of the Scheme becoming Effective (or, if the Acquisition is implemented by way of an Offer, at the time of the Offer becoming unconditional as to acceptances),

(together, the "CMA Condition").

Certain matters arising as a result of any arrangement, agreement, etc.

(c)        save as Disclosed, there being no provision of any agreement, arrangement, licence, lease, franchise, permit or other instrument to which any member of the Wider Loungers Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, or any event or circumstance which in consequence of the Scheme, the Acquisition or the proposed acquisition by any member of the Wider Bidco Group of any shares or other securities in Loungers or because of a change in the control or management of any member of the Wider Loungers Group or otherwise, could or might result in, to an extent which is material in the context of the Wider Loungers Group as a whole or in the context of the Acquisition:

(i)         any monies borrowed by or any other indebtedness (actual or contingent, including without limitation, guarantees, letters of credit and hedging contracts) of, or grant available to, any such member of the Wider Loungers Group, being or becoming repayable or capable of being declared repayable immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii)        any such agreement, arrangement, licence, lease, franchise, permit or other instrument or the rights, liabilities, obligations or interests of any such member of the Wider Loungers Group thereunder being terminated or adversely modified or adversely affected or any obligation or liability arising or any adverse action being taken or arising thereunder;

(iii)        any assets or interests of, or any asset the use of which is enjoyed by, any member of the Wider Loungers Group being or failing to be disposed of or charged, or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any member of the Wider Loungers Group;

(iv)       the creation or enforcement of any mortgage, charge, encumbrance or other security interest over the whole or any part of the business, property or assets of any member of the Wider Loungers Group or any such mortgage, charge, encumbrance or other security interest (whenever created, arising or having arisen) becoming enforceable;

(v)        the rights, liabilities, obligations or interests of any member of the Wider Loungers Group under any arrangement, agreement, licence, permit, lease or instrument, or the interests or business of any such member with any other person or body or firm or company (or any arrangement or agreement relating to any such interests or business), being or becoming capable of being terminated, adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

(vi)       the business, assets, value of, or the financial or trading position, profits or prospects of, any member of the Wider Loungers Group being prejudiced or adversely affected;

(vii)       any member of the Wider Loungers Group ceasing to be able to carry on business under any name under which it presently does so; or

(viii)      the creation or acceleration of any liability, actual or contingent, by any member of the Wider Loungers Group (including any tax liability or any obligation to obtain or acquire any authorisation, notice, waiver, concession, agreement or exemption from any Third Party or any other person), excluding trade creditors and other liabilities incurred in the ordinary course of business,

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit, lease, franchise or other instrument to which any member of the Wider Loungers Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would result in any of the events or circumstances as are referred to in Conditions 3(c)(i) to (viii);

General regulatory

(d)        except as Disclosed, other than in connection with the Conditions set out in paragraphs 3(a) and 3(b) above, no Third Party having (1) given notice of a decision or having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, (2) required any action to be taken or otherwise having done anything, (3) enacted, made or proposed any statute, regulation, decision, order or change to published practice, or (4) having taken any other steps which would reasonably be expected to (and in each case, not having withdrawn the same) and there not continuing to be any outstanding statute, regulation, decision or order or might reasonably be expected to:

(i)         require, prevent or materially delay the divestiture, or materially alter the terms envisaged for any proposed divestiture, by any member of the Wider Bidco Group or any member of the Wider Loungers Group of all or any portion of their respective businesses, assets or property or impose any limitation on the ability of any of them to conduct their respective businesses (or any part thereof) or to own, control or manage any of their respective assets or properties (or any part thereof) which, in any such case, is material in the context of the Wider Loungers Group or the Wider Bidco Group in either case taken as a whole;

(ii)        require, prevent or delay the divestiture by any member of the Wider Bidco Group of any shares or other securities (or the equivalent) in any member of the Wider Loungers Group or the Wider Bidco Group;

(iii)        impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Bidco Group directly or indirectly to acquire or to hold or to exercise effectively all or any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider Loungers Group or the Wider Bidco Group or to exercise voting or management control over any such member;

(iv)       otherwise adversely affect the business, assets, profits or prospects of any member of the Wider Bidco Group or of any member of the Wider Loungers Group in a manner which is adverse to and material in the context of the Wider Bidco Group or the Wider Loungers Group, in either case taken as a whole;

(v)        make the Scheme, the Acquisition, its implementation or the acquisition or proposed acquisition by Bidco or any member of the Wider Bidco Group of any shares or other securities in, or control or management of Loungers, void, illegal, and/or unenforceable under the laws of any relevant jurisdiction, or directly or indirectly, restrain, restrict, prohibit, delay or otherwise interfere with the same, or impose material additional conditions or obligations with respect thereto, or otherwise challenge, impede, interfere or require amendment of the Scheme, the Acquisition, its implementation or the acquisition or proposed acquisition by Bidco or any member of the Wider Bidco Group of any shares or other securities in, or control or management of Loungers;

(vi)       other than pursuant to the Acquisition, require any member of the Wider Bidco Group or the Wider Loungers Group to offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider Loungers Group or the Wider Bidco Group owned by any third party;

(vii)       impose any limitation on the ability of any member of the Wider Loungers Group to conduct, integrate or co-ordinate all or any part of its business with all or any part of the businesses of any other members of the Wider Loungers Group or the Wider Bidco Group which is adverse to and material in the context of the Wider Loungers Group or the Wider Bidco Group, in either case taken as a whole; or

(viii)      result in any member of the Wider Loungers Group ceasing to be able to carry on business under any name under which it presently does so,

and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any relevant jurisdiction in respect of the Scheme, the Acquisition or the acquisition or proposed acquisition of any Loungers Shares having expired, lapsed or been terminated;

(e)        other than in connection with the Conditions set out in paragraphs 3(a) and 3(b) above, all necessary notifications, filings or applications having been made in connection with the Acquisition and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Scheme, the Acquisition, its implementation or the acquisition by any member of the Wider Bidco Group of any shares or other securities in, or control or management of, Loungers and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals reasonably deemed necessary by Bidco for or in respect of the Scheme, the Acquisition, its implementation or the proposed acquisition of any shares or other securities in, or control or management of, Loungers by any member of the Wider Bidco Group having been obtained in terms and in a form satisfactory to Bidco (acting reasonably) from all appropriate Third Parties or persons with whom any member of the Wider Loungers Group has entered into contractual arrangements and all such authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals together with all authorisations, orders, recognitions, grants, licences, confirmations, clearances, permissions and approvals necessary or appropriate to carry on the business of any member of the Wider Loungers Group remaining in full force and effect and all filings necessary for such purpose having been made and there being no notice or intimation of any intention to revoke or not to renew any of the same (x) where the Acquisition is implemented by way of a Scheme, immediately prior to 12 noon on the Business Day before the Court Sanction Hearing, and (y) where the Acquisition is implemented by way of an Offer, at the time at which the Offer becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;

Certain events occurring since 21 April 2024

(f)         except as Disclosed, no member of the Wider Loungers Group having, since 21 April 2024:

(i)         issued or agreed to issue or authorised or proposed the issue of, additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or securities or convertible securities or transferred, sold or agreed to transfer or sell or authorise or propose the transfer or sale of shares out of treasury (except, where relevant, as between members of the Loungers Group or for Loungers Shares issued pursuant to the exercise of options or vesting of awards in the ordinary course under the Loungers Share Plans);

(ii)        recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise), other than dividends (or other distributions whether payable in cash or otherwise) lawfully paid as between members of the Loungers Group;

(iii)        save for transactions between members of the Loungers Group, implemented, effected, authorised, proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, sub-division, scheme, commitment or acquisitions or disposal of assets or shares or loan capital (or the equivalent thereof) in any undertaking or undertakings in any such case to an extent which is or could be material in the context of the Wider Loungers' Group taken as a whole or material in the context of the Acquisition;

(iv)       save for transactions between members of the Loungers Group, disposed of, or transferred, mortgaged or charged or created any security interest over any asset or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to do so in a manner which is or could be material in the context of the Wider Loungers Group taken as a whole or material in the context of the Acquisition;

(v)        save for transactions between members of the Loungers Group entered into in the ordinary course of business, entered into, implemented or authorised the entry into, any joint venture, asset or profit sharing arrangement, partnership or merger of business or corporate entities, in each case, to an extent which is material in the context of the Wider Loungers Group taken as whole or in the context of the Acquisition;

(vi)       made any alteration to its memorandum or articles of association or other incorporation documents (other than in connection with the Scheme);

(vii)       save for transactions between members of the Loungers Group, made, authorised, proposed or announced an intention to propose any material change in its loan capital;

(viii)      save for transactions between members of the Loungers Group, issued, authorised or proposed or announced an intention to authorise or propose the issue of any debentures, or any change in or to the terms of any debentures or become subject to any contingent liability or incurred or, save as between members of the Loungers Group increased any indebtedness which is or might reasonably be expected to be material in the context of the Wider Loungers Group taken as a whole or material in the context of the Acquisition;

(ix)       purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(x)        entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, arrangement, agreement, transaction or commitment (whether in respect of capital expenditure or otherwise) which is (a) of a long-term, onerous or unusual nature or magnitude or (b) which is or could reasonably be expected to be restrictive (other than of a nature and to extent which is normal in the context of the business concerned) on the businesses of any member of the Wider Bidco Group or the Wider Loungers Group or which involves or could involve an obligation of such a nature or magnitude or which in any such case is other than in the ordinary course of business and which is material in the context of the Wider Loungers Group taken as a whole;

(xi)       entered into or materially varied (or having offered to materially vary) the terms of employment of any director or senior manager, except for salary increases or bonuses in the ordinary course for any senior executive of Loungers, other than as agreed by the Panel and Bidco;

(xii)       (other than in respect of a member of the Wider Loungers Group which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings started or threatened against it in relation to the suspension of payments, a moratorium of indebtedness, its winding-up (voluntary or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous or equivalent steps or proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;

(xiii)      been unable, or admitted in writing that it is unable, to pay its debts when they fall due or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(xiv)      terminated or varied the terms of any agreement or arrangement between any member of the Wider Loungers Group and any other person in a manner which would or might reasonably be expected to be materially adverse to the Wider Loungers Group taken as a whole or to be material in the context of the Acquisition;

(xv)      waived, compromised or settled any material claim or material regulatory proceeding (whether actual or threatened) by or against any member of the Wider Loungers Group otherwise than in the ordinary course of business;

(xvi)      made, proposed or agreed or consented to or procured any change to, or the custodian or trustee of any scheme having made a material change to:

(1)        the terms of the trust deeds constituting the pension scheme(s) established by any member of the Wider Loungers Group for its directors, employees, former employees or their dependents;

(2)        the contributions payable to any such scheme(s) or to the benefits which accrue or to the pensions which are payable thereunder;

(3)        the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

(4)        the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made,

(xvii)     carried out any act:

(1)        which would or could reasonably be expected to lead to the commencement of the winding up of any pension scheme(s) established by any member of the Wider Loungers Group for its directors, former directors, employees, former employees or their dependants;

(2)        which would or might reasonably be expected to create a material debt owed by an employer to any such plan; or

(3)        which would or could reasonably be expected to accelerate any obligation on any employer to fund or pay additional contributions to any such plan;

(xviii)    save as agreed by the Panel (if required) and Bidco, proposed or agreed to modify the terms of any of the Loungers Share Plans;

(xix)      proposed, agreed to provide or modified the terms of any other share option scheme, incentive scheme, retention scheme or other benefit (including compensation) relating to the employment or termination of employment of any person employed by the Wider Loungers Group other than in accordance with the terms of the Co-operation Agreement or Acquisition or, if required by the Takeover Code, as agreed by the Panel and/or Bidco;

(xx)      entered into any agreement, commitment or arrangement or passed any resolution or made any offer (which remains open for acceptance) or proposed or announced any intention with respect to any of the transactions, matters or events referred to in this Condition; or

(xxi)      other than with the consent of Bidco, having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of Loungers Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code,

and, for the purposes of paragraphs (i) to (v) (inclusive) and (vii) and (viii) of this condition, the term "Loungers Group" shall mean Loungers and its wholly-owned subsidiaries;

No material adverse change, litigation, regulatory enquiry or similar

(g)        except as Disclosed, since 21 April 2024:

(i)         no adverse change or deterioration having occurred, and no circumstance having arisen which would or might reasonably be expected to result in any adverse change or deterioration, in the business, assets, financial or trading position or operational performance or profits or prospects of any member of the Wider Loungers Group which is material in the context of the Wider Loungers Group taken as a whole;

(ii)        no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider Loungers Group is or may become a party (whether as a plaintiff, defendant or otherwise) and no enquiry, review, investigation or other regulatory proceedings by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Loungers Group having been instituted, announced, implemented or threatened by or against or remaining outstanding in respect of any member of the Wider Loungers Group, which in any such case is material or could reasonably be expected to be material in the context of the Wider Loungers Group taken as a whole or in the context of the Acquisition;

(iii)        no contingent or other liability having arisen or become apparent or increased which affects, or which could reasonably be expected to affect adversely the business, assets, financial or trading position or profits or prospects of any member of the Wider Loungers Group (and where such effect is or could reasonably be expected to be material in the context of the Wider Loungers Group taken as a whole or in the context of the Acquisition);

(iv)       no steps having been taken, and no omissions having been made, which would or might be reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Loungers Group which is necessary for the proper carrying on of its business, in circumstances where the withdrawal, cancellation, termination or modification of such licence has had, is having, or could reasonably be expected to have an effect which is material in the context of the Wider Loungers Group taken as a whole or in the context of the Acquisition; and

(v)        no member of the Wider Loungers Group having conducted its business in material breach of any applicable laws and regulations where such breach is or might reasonably be expected to be material in the context of the Wider Loungers Group taken as a whole or in the context of the Acquisition;

No discovery of certain matters regarding information, liabilities and environmental issues

(h)        save as Disclosed, Bidco not having discovered that:

(i)         any financial, business or other information concerning the Wider Loungers Group as contained in the information publicly disclosed at any time by or on behalf of any member of the Wider Loungers Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading where the relevant information has not subsequently been corrected prior to the date of this announcement by public disclosure, and which is, or was, or could reasonably be expected to be, material in the context of the Wider Loungers Group taken as a whole or in the context of the Acquisition;

(ii)        any member of the Wider Loungers Group is subject to any liability (contingent or otherwise) which is not disclosed in the 2024 Annual Report and which is material in the context of the Wider Loungers Group taken as a whole;

(iii)        any past or present member of the Wider Loungers Group has failed to comply in any material respect with any applicable legislation, regulations or other requirements of any jurisdiction or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any liability including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Wider Loungers Group and which is material in the context of the Wider Loungers Group taken as a whole;

(iv)       there is or is reasonably likely to be any obligation or liability (whether actual or contingent) or requirement to make good, remediate, repair, reinstate or clean up any property, asset or any controlled waters currently or previously owned, occupied, operated or made use of or controlled by any past or present member of the Wider Loungers Group (or on its behalf), or in which any such member may have or previously have had or be deemed to have had an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation or order of any Third Party or any other person or body in any jurisdiction or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto and which in any such case is material in the context of the Wider Loungers Group taken as a whole;

(v)        circumstances exist (whether as a result of the Acquisition or otherwise) which would be reasonably likely to lead to any Third Party instituting, or whereby any past or present member of the Wider Loungers Group would be likely to be required to institute, an environmental audit or take any other steps which would in any such case be reasonably likely to result in any liability (whether actual or contingent) to improve, modify existing or install new plant, machinery or equipment or carry out changes in the processes currently carried out or make good, remediate, repair, re-instate or clean up any land or other asset currently or previously owned, occupied or made use of by any past or present member of the Wider Loungers Group (or on its behalf) or by any person for which a member of the Wider Loungers Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest and which in any such case is material in the context of the Wider Loungers Group taken as a whole; and

(vi)        any information concerning the Wider Loungers Group disclosed at any time before the Announcement Date by or on behalf of any member of the Wider Loungers Group is misleading or contains a misrepresentation of any fact and which was not subsequently corrected by disclosure via a Regulatory Information Service published before the Announcement Date and which is material in the context of the Wider Loungers Group as a whole.

Anti-corruption, sanctions, criminal property

(i)         save as Disclosed, Bidco not having discovered that:

(i)         any past or present member, director, officer, employee or agent of the Wider Loungers Group or any person that performs or has performed services (or otherwise acts or has acted) for or on behalf of any such company being or at any time having been engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other anti-corruption or anti-bribery law, rule or regulation or legislation applicable to the Wider Loungers Group concerning improper payments or kick-backs;

(ii)        (i) any asset of any member of the Wider Loungers Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition) or proceeds of crime under any other applicable law, rule or regulation concerning money laundering or proceeds of crime; or (ii) any member of the Wider Loungers Group has engaged in any activity constituting money laundering under any law, rule or regulation concerning money laundering applicable to that member of the Wider Loungers Group;

(iii)        any past or present member, director, officer, employee or agent of the Wider Loungers Group or any person that performs or has performed services for or on behalf of any such member, director, officer or employee is or has at any time been engaged in any activity or business with, made any investments in, made any funds or assets available to or received any funds or assets from:

(a)        any government, entity or individual in respect of which the US, United Kingdom or European Union persons, or persons operating in those territories, are prohibited from engaging in activities or doing business, or from receiving or making available funds or economic resources, by US, United Kingdom or European Union laws or regulations, including the economic sanctions administered by the United States Office of Foreign Assets Control, or HM Treasury & Customs; or

(b)        any government, entity or individual targeted or covered by any of the economic sanctions administered or imposed by the United Nations, the US (including, without limitation, the United States Office of Foreign Assets Control), the United Kingdom, the European Union (or any of its respective member states) or any other governments or supranational body or authority in any jurisdiction, save that this shall not apply if and to the extent that it is or would be unenforceable by reason of breach of any applicable Blocking Law;

(iv)       any member of the Wider Loungers Group is or at any time has been engaged in a transaction which would cause any member of the Wider Bidco Group to be in breach of any applicable law or regulation on completion of the Acquisition, including the economic sanctions administered by the United States Office of Foreign Assets Control or HM Treasury & Customs or any government, entity or individual targeted by any of the economic sanctions of the United Nations, the US, the United Kingdom or the European Union or any of its member states or any other governments or supranational body or authority in any jurisdiction, save that this shall not apply if and to the extent that it is or would be unenforceable by reason of breach of any applicable Blocking Law; and

(v)        any past or present member, director, officer or employee of the Wider Loungers Group, or any other person for whom any such person may be liable or responsible has: (i) engaged in conduct which would violate any relevant anti-terrorism laws, rules, or regulations, including but not limited to the US Anti-Terrorism Act; (ii) engaged in conduct which would violate any relevant anti-boycott law, rule, or regulation or any applicable export controls, including but not limited to the Export Administration Regulations administered and enforced by the US Department of Commerce or the International Traffic in Arms Regulations administered and enforced by the US Department of State; (iii) engaged in conduct which would violate any relevant laws, rules, or regulations concerning human rights, including but not limited to any law, rule, or regulation concerning false imprisonment, torture or other cruel and unusual punishment, or child labour; (iv) been debarred or otherwise rendered ineligible to bid for or to perform contracts for or with any government, governmental instrumentality, or international organization or found to have violated any applicable law, rule, or regulation concerning government contracting or public procurement.

Part B: Certain further terms                                       

1.   Subject to the requirements of the Panel, Bidco reserves the right to waive:

a)   the deadline set out in Condition 1 in Part A of this Appendix 1, and any of the deadlines set out in Condition 2 in Part A of this Appendix 1 for the timing of the Court Meeting and the General Meeting and the Court Sanction Hearing. If any such deadline is not met, Bidco will make an announcement by 8.00 a.m. on the Business Day following such deadline confirming whether it has invoked or waived the relevant Condition or extended the deadline in relation to the relevant Condition in accordance with the terms on which such deadline may be extended. In all other respects, Conditions 1 and 2 in Part A of this Appendix 1 cannot be waived; and

b)   in whole or in part, all or any of Conditions 3(a) to (i) (inclusive) in Part A of this Appendix 1.

2.   The Scheme will be subject to the fulfilment (or waiver, if permitted) of the Conditions set out in Part A of this Appendix 1, to the further terms set out in this Part B of Appendix 1, and to the full terms and conditions which will be set out in the Scheme Document, and such further terms as may be required to comply with the provisions of the Takeover Code.

3.   Bidco shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as satisfied or fulfilled any of the Conditions that it is entitled (with the consent of the Panel and subject to the requirements of the Takeover Code) to invoke by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that the other Conditions of the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of satisfaction or fulfilment.

4.   If Bidco is required by the Panel to make an offer for Loungers Shares under the provisions of Rule 9 of the Takeover Code, Bidco may make such alterations to any of the above Conditions and terms of the Acquisition as are necessary to comply with the provisions of that Rule.

5.   Under Rule 13.5(a) of the Takeover Code and subject to the remaining provisions of this paragraph 5, Bidco may only invoke a Condition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn with the consent of the Panel. The Panel will normally only give its consent if the circumstances which give rise to the right to invoke the Condition are of material significance to Bidco in the context of the Acquisition. This will be judged by reference to the facts of each case at the time that the relevant circumstances arise. Conditions 1 and 2 and, if applicable, any acceptance condition if the Acquisition is implemented by means of an Offer, are not subject to this provision of the Takeover Code.

6.   Any Condition that is subject to Rule 13.5(a) of the Takeover Code may be waived by Bidco.

7.   Loungers Shares acquired under the Acquisition will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights attaching or accruing to them on or after the acquisition becomes Effective, including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any) announced, declared, made or paid, or any other return of capital (whether by reduction of share capital or share premium account or otherwise) made, on or after the Acquisition becoming Effective.

8.   If, on or after the Announcement Date and before the Effective Date, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of Loungers Shares, Bidco reserves the right to reduce the consideration payable under the terms of the Cash Offer (and, as the case may be, the consideration due under the terms of the Alternative Offer) by an amount up to the amount of such dividend and/or distribution and/or return of capital, in which case any reference in this announcement to the consideration payable under the Cash Offer (or consideration due under the Alternative Offer) will be deemed to be a reference to the consideration as so reduced. Any exercise by Bidco of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme. In such circumstances, Loungers Shareholders would be entitled to retain any such dividend, distribution or other return of capital declared, made or paid which becomes payable. If and to the extent that any such dividend, distribution or other return of capital is declared, made or paid or becomes payable and is either: (i) transferred pursuant to the Acquisition on a basis which entitled Bidco to receive the dividend, distribution or other return of capital and to retain it; or (ii) cancelled before payment, the consideration payable under the terms of the Cash Offer (and, as the case may be, the consideration due under the terms of the Alternative Offer) shall not be subject to change in accordance with this paragraph 8. Any exercise by Bidco of its rights referred to in this paragraph shall not be regarded as constituting any revision or variation of the terms of the Scheme.

9.   Bidco reserves the right to elect to implement the Acquisition by way of an Offer as an alternative to the Scheme (subject to the Panel's consent and the terms of the Co-operation Agreement). In such event, the Acquisition will be implemented on the same terms, so far as applicable, and subject to the terms of the Co-operation Agreement, as those which would apply to the Scheme, subject to appropriate amendments to reflect, among other things, the change in the method of effecting the Acquisition (including, without limitation: (i) the inclusion of an acceptance condition set at 90 per cent. of the Loungers Shares to which such Offer relates (or such other percentage as Bidco may, subject to the rules of the Takeover Code and the terms of the Co-operation Agreement and with the consent of the Panel, decide); and (ii) those required by, or reasonably deemed appropriate by, Bidco under applicable law, including US securities laws. Further, Bidco has agreed under the Co-operation Agreement that, if sufficient acceptances of such Offer are received and/or sufficient Loungers Shares are otherwise acquired, it will apply the provisions of Chapter 3 of Part 28 of the Companies Act 2006 to acquire compulsorily any outstanding Loungers Shares to which such offer relates.

10.  The availability of the Acquisition (including for the avoidance of doubt the Alternative Offer) to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

11.  The Acquisition (including for the avoidance of doubt the Alternative Offer) is not being made, directly or indirectly, in, into or from, or by use of the mails of, or by any means of instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of, any Restricted Jurisdiction.

12.  This announcement and any rights or liabilities arising hereunder, the Acquisition and the Scheme, and any proxies will be governed by English law and be subject to the jurisdiction of the Court and to the Conditions and further terms set out in this Appendix 1 to be set out in the Scheme Document. The Co-operation Agreement and any dispute or claim arising out of, or in connection with it (whether contractual or noncontractual in nature). is governed by English law (save to the extent expressly set out therein) and is subject to the jurisdiction of the courts of England. The Acquisition will be subject to the applicable requirements of English law, the Takeover Code, the Panel, the AIM Rules, the London Stock Exchange and the FCA.

13.  Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

 

 

APPENDIX 2
SOURCES AND BASES OF INFORMATION

In this announcement:

1.         Unless otherwise stated, historical financial information relating to the Loungers Group has been extracted or derived (without any adjustment) from the audited 2024 Annual Report.

2.         As at the close of business on 27 November 2024 (being the last Business Day prior to the date of this announcement), Loungers had in issue 103,954,562 Loungers Shares. The ISIN for the Loungers Shares is GB00BH4JR002.

3.         The fully diluted share capital of Loungers (being 109,142,572 Loungers Shares) is calculated on the basis of:

(a)        the number of issued Loungers Shares referred to in paragraph 2 of this Appendix 2; and

(b)        5,188,010 Loungers Shares, being the number of Loungers Shares that is expected to be issued on or after the date of this announcement to satisfy the exercise of options or vesting of awards under the Loungers Share Plans, as at 27 November 2024 (being the last Business Day prior to the date of this announcement), assuming the Scheme becomes Effective in February 2025 and taking into account any options granted following the date of this Announcement.

4.         The value attributable to the entire issued and to be issued ordinary share capital of Loungers is calculated on the basis of:

(a)        the cash consideration of 310 pence per Loungers Share; and

(b)        the fully diluted number of Loungers Shares as referred to in paragraph 3 of this Appendix 2.

5.         The enterprise value of Loungers of £350.5 million is derived from the entire issued and to be issued ordinary share capital of Loungers valued at £338.3 million plus the non-property net debt of Loungers of £12.2 million as at the end of H125.

6.         The adjusted EBITDA multiples of 8.1x and 9.0x implied by the Acquisition are calculated based on a fully diluted enterprise value of £350.5 million per paragraph 5 of this Appendix 2 and, respectively, the FY24 adjusted EBITDA (before site pre-opening costs) of £43.5 million and the FY24 adjusted EBITDA (after site pre-opening costs) of £38.8 million.

7.         Unless otherwise stated, all prices and closing prices for Loungers Shares are closing middle market quotations derived from the London Stock Exchange Daily Official List (SEDOL).

8.         The premium calculations to the price per Loungers Share have been calculated by reference to a price of 238.0 per Loungers Share, being the closing price on 27 November 2024, the last Business Day prior to this announcement.

9.         Volume-weighted average prices per Loungers Shares have been derived from Bloomberg and have been rounded to the nearest single decimal place.

 

 

 

(d)       

APPENDIX 3
DETAILS OF IRREVOCABLE UNDERTAKINGS

1.         Loungers Directors

The following Loungers Directors have given irrevocable undertakings to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their own beneficial holdings of Loungers Shares (or those Loungers Shares over which they have control):

Name	Total Number of Loungers Shares	Percentage of existing issued share capital
Nick Backhouse	13,903	0.01
Adam Bellamy	24,012	0.02
Jill Little	13,903	0.01

 

The following Loungers Directors have given irrevocable undertakings to: (i) to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their own beneficial holdings of Loungers Shares (or those Loungers Shares over which they have control); and (ii) participate in the Alternative Offer in respect of 7,707,708 Loungers Shares, representing, in aggregate, approximately 7.4 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the Announcement Date).

Name	Total Number of Loungers Shares	Percentage of existing issued share capital	Percentage of existing issued share capital committed to the Alternative Offer
Alex Reilley	6,751,432	6.5	4.9
Nick Collins	956,276	0.9	0.3

 

 

Stephen Marshall does not currently hold any Loungers Shares. To the extent that he acquires any Loungers Shares as a result of the vesting of awards or the exercise of options under the Loungers Share Plans following the date of this announcement, he has irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of his beneficial holdings of Loungers Shares and to participate in the Alternative Offer in respect of 100 per cent. of his Loungers Shares (which are expected to represent 0.02 per cent. of the fully diluted share capital of Loungers at completion of the Acquisition).

These irrevocables will lapse and shall cease to have effect on the earlier of: (i) if Bidco announces, with the consent of the Panel, that it does not intend to proceed with the Acquisition by way of the Scheme and at the same time, Bidco does not announce a firm intention to implement the Acquisition by way of an Offer; or (ii) on the earlier of: (a) the Long Stop Date; or (b) the date on which the Scheme is withdrawn or lapses in accordance with its terms, unless either: (I) it is withdrawn or lapses in connection with an Agreed Switch (as defined in the Co-operation Agreement); or (II) such lapse or withdrawal is to be followed promptly by a firm intention announcement made by Bidco (or a person acting in concert with Bidco) to implement the Acquisition by an Offer on substantially the same or improved terms (and in any event on terms no less favourable to the holders of Loungers Shares in any material respect and which represent no diminution in the value of the Acquisition), and such announcement is made within five Business Days of such lapse or withdrawal (or such other period as Loungers and Bidco may agree).

2.         Loungers Shareholders

Lion Capital LLP has given irrevocable undertakings to: (i) vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of 100 per cent of the Loungers Shares held by Lion, representing approximately 25.7 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement); and (ii) to participate in the Alternative Offer in respect of 26,728,524 Loungers Shares, representing, in aggregate, approximately 25.7 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the date of this announcement).

The obligations contained in this irrevocable undertaking will lapse and shall cease to have effect on the earlier of: (i) if Bidco announces, with the consent of the Panel, that it does not intend to proceed with the Acquisition by way of the Scheme and at the same time, Bidco does not announce a firm intention to implement the Acquisition by way of an Offer; or (ii) on the earlier of: (a) the Long Stop Date; or (b) the date on which the Scheme is withdrawn or lapses in accordance with its terms, unless either: (I) it is withdrawn or lapses in connection with an Agreed Switch (as defined in the Co-operation Agreement); or (II) such lapse or withdrawal is to be followed promptly by a firm intention announcement made by Bidco (or a person acting in concert with Bidco) to implement the Acquisition by an Offer on substantially the same or improved terms (and in any event on terms no less favourable to the holders of Loungers Shares in any material respect) and such announcement is made within five Business Days of such lapse or withdrawal (or such other period as Loungers and Bidco may agree); or (c) the date on which any competing scheme of arrangements becomes effective.

Kate Eastwood, Lucy Knowles, Jono Jenkins, Tom Trenchard and Guy Youll (also being members of senior management of Loungers) do not currently hold any Loungers Shares. To the extent that they acquire any Loungers Shares as a result of the vesting of awards or the exercise of options under the Loungers Share Plans following the date of this announcement, they have each irrevocably undertaken to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect of their beneficial holdings of Loungers Shares and to participate in the Alternative Offer in respect of 30 per cent., 30 percent., 15.9 per cent., 15.9 per cent. and 40 per cent. of their Loungers Shares respectively (which are expected to represent 0.01 per cent., 0.02 per cent., 0.01 per cent, 0.02 per cent. and 0.09 per cent. respectively of the fully diluted share capital of Loungers at completion of the Acquisition).

Gregor Grant has given an irrevocable undertaking to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect Loungers Shares beneficially owned by him:

Name	Total Number of Loungers Shares	Percentage of existing issued share capital
Gregor Grant	180,148	0.2

 

 

The senior managers listed below have given an irrevocable undertaking to: (i) vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or if the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer) in respect Loungers Shares beneficially owned by it (or those Loungers Shares over which it has control); and (ii) to participate in the Alternative Offer in respect of 7,106,004 Loungers Shares, representing, in aggregate, approximately 6.8 per cent. of the existing issued ordinary share capital of Loungers as at 27 November 2024 (being the last Business Day prior to the Announcement Date.

Name	Total Number of Loungers Shares	Percentage of existing issued share capital	Percentage of existing issued share capital committed to the Alternative Offer
Jake Bishop	6,507,432	6.3	4.8
Justin Carter	598,572	0.6	0.3

 

The obligations contained in these irrevocable undertakings will lapse and shall cease to have effect on the earlier of: (i) if Bidco announces, with the consent of the Panel, that it does not intend to proceed with the Acquisition by way of the Scheme and at the same time, Bidco does not announce a firm intention to implement the Acquisition by way of an Offer; or (ii) on the earlier of: (a) the Long Stop Date; or (b) the date on which the Scheme is withdrawn or lapses in accordance with its terms, unless either: (I) it is withdrawn or lapses in connection with an Agreed Switch (as defined in the Co-operation Agreement); or (II) such lapse or withdrawal is to be followed promptly by a firm intention announcement made by Bidco (or a person acting in concert with Bidco) to implement the Acquisition by an Offer or scheme on substantially the same or improved terms (and in any event on terms no less favourable to the holders of Loungers Shares in any material respect and which represent no diminution in the value of the Acquisition), and such announcement is made within five Business Days of such lapse or withdrawal (or such other period as the Target and Bidco may agree).

All of the irrevocable undertakings (and commitments to participate in the Alternative Offer) detailed in this Appendix 3 also extend (as regards their commitment to participate in the Alternative Offer, in the same respective proportions as apply to their commitment to participate in the Alternative Offer in respect of their existing holdings of Loungers Shares) to any Loungers Shares acquired by the persons who have given such undertakings following the date of this Announcement (whether as a result of the vesting of awards or the exercise of options under the Loungers Share Plans or otherwise).

 

APPENDIX 4
DETAILS OF THE ROLLOVER UNITS

1.   INFORMATION ON TOPCO AND THE INTERMEDIATE HOLDING COMPANIES

Topco is indirectly wholly owned by the Fortress Funds. Topco is a limited company registered in Jersey and incorporated on 14 November 2024. The share capital of Topco currently comprises 1 ordinary share of £1.00 but will be reorganised on or prior to the Effective Date so that it comprises Topco A Preference Shares, Topco B Preference Shares and Topco Ordinary Shares. Topco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

Midco is a limited company registered in England and Wales and incorporated on 15 November 2024. Midco was formed for the purposes of the Acquisition and is a wholly-owned direct subsidiary of Topco. Midco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

Bidco is a limited company registered in England and Wales and incorporated on 15 November 2024. Bidco was formed for the purposes of the Acquisition and is a wholly-owned direct subsidiary of Midco. Bidco has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

Between the date of this announcement and the Effective Date, no member of the Topco Group is expected to conduct any business or activities other than in connection with the Acquisition.

Set out below is a summary of the proposed structure of the Topco share capital and the provisions of the Topco Shareholders' Agreement and the Topco Articles governing the terms on which eligible Loungers Shareholders who elect for the Alternative Offer will hold securities in Topco, pursuant to the mechanism described in paragraphs 13 and 14 of this announcement. Further details are included in the Topco Shareholders' Agreement, the Topco Articles, and will be included in the Scheme Document.

Eligible Loungers Shareholders who validly elect for the Alternative Offer will, pursuant to the Scheme PoA, deliver a fully executed deed of adherence pursuant to which they will be bound by the Topco Shareholders' Agreement.

2.         ROLLOVER MECHANICS

If the Scheme becomes Effective, eligible Loungers Shareholders that validly elect to receive consideration by means of the Alternative Offer will receive their Rollover Units in Topco pursuant to the Rollover Process whereby on or shortly following the Effective Date:

·      First Exchange - first, the relevant Loungers Shares of each electing Loungers Shareholder will be exchanged for loan notes of a commensurate value to be issued by Bidco pursuant to the Scheme (the "Bidco Rollover Securities");

·      Second Exchange - second, the Bidco Rollover Securities will be exchanged for loan notes of a commensurate value to be issued by Midco (the "Midco Rollover Securities"); and

·      Third Exchange - finally, the Midco Rollover Securities will be exchanged for the relevant number of Rollover Units in Topco (comprising Topco Ordinary Shares and Topco B Preference Shares in the Exchange Ratio) to which the eligible Loungers Shareholder is entitled in accordance with the Alternative Offer.

The second exchange and the third exchange will occur immediately following the preceding exchange, subject to and conditional upon the exercise of a put option by the relevant transferor, or a call option by the relevant transferee, in relation to the securities to be exchanged. As noted above, Loungers Shareholders who elect for the Alternative Offer will be required, pursuant to the Scheme PoA, to adhere to the Topco Shareholders' Agreement as a condition of such election. The Scheme PoA will also provide for the signing on behalf of such Loungers Shareholder (in such form as Bidco may require) of the put and call option deed and/or any exercise notice, exchange agreement, transfer, instrument, or other document deemed by Bidco (in its absolute discretion) to be necessary or desirable to effect the Rollover Process as a condition of such Loungers Shareholder electing for the Alternative Offer, including any appropriate employment tax elections.

Within 3 months of the Effective Date, the board of Topco (acting with the consent of holders of at least 20 per cent. of the Topco Ordinary Shares) may require some or all of the holders of less than 1 per cent. of the total number of Topco Ordinary Shares (including any Loungers Shareholders who receive such shares, subject to implementation of the Rollover Process, as a result of validly electing for the Alternative Offer) to transfer the legal title to some or all of the securities which they hold in Topco (including Rollover Units) to a nominee in accordance with the provisions of a nominee agreement, and therefore holders of Rollover Units may not hold the legal title to some or all of their Rollover Units and certain rights otherwise exercisable by the legal title holder in relation to such Rollover Units may be exercisable by the nominee pursuant to the terms of the nominee agreement. The Topco Shareholders' Agreement will contain a power of attorney authorising each director of Topco to execute any documents and do any acts necessary to implement such transfer and/or arrangements.

3.         INFORMATION ON TOPCO SHARE CAPITAL

The total number of Topco Ordinary Shares issued to Loungers Shareholders pursuant to the Alternative Offer will, on the date on which the Topco Ordinary Shares are issued (and regardless of how many elections are made under the Alternative Offer), be equal to 60 per cent. of the Topco Ordinary Shares.

On or shortly after the Effective Date, Fortress will subscribe for such number of Topco Ordinary Shares as would result in Fortress holding, in aggregate, 40 per cent. of the total number of Topco Ordinary Shares in issue at that date (following the issuance of the Rollover Units (subject to implementation of the Rollover Process) to Loungers Shareholders who validly elect for the Alternative Offer) at a subscription price of one penny per Topco Ordinary Share (the "Fortress Ordinary Investment"). The remainder of Fortress' investment in Topco will be made by way of a subscription for Topco A Preference Shares at a subscription price of one penny per Topco A Preference Share (the "Fortress Preference Investment" and together with the Fortress Ordinary Investment, the "Fortress Equity Investment").

The total amount of the Fortress Equity Investment in connection with the Acquisition will depend on the number of elections validly made by eligible Loungers Shareholders under the Alternative Offer. If no valid elections are received from Loungers Shareholders other than those who have irrevocably undertaken to participate in the Alternative Offer (as described at paragraph 8 of this announcement), the amount of the Fortress Equity Investment would be £103.5 million (with the amount of the Fortress Preference Investment being an amount equal to £103.5 million minus the amount of the Fortress Ordinary Investment) and the share capital of Topco would comprise, following, and subject to, the implementation of the Rollover Process:

·      133,788,920 Topco Ordinary Shares issued to Loungers Shareholders;

·      89,192,613 Topco Ordinary Shares issued to Fortress;

·      11,813,728,025 Topco B Preference Shares issued to Loungers Shareholders; and

·      10,260,807,387 Topco A Preference Shares issued to Fortress.

For every additional Loungers Share which participates in the Alternative Offer, the Fortress Equity Investment will be reduced (on a pound for pound basis) by an amount equal to the value of the Cash Offer in respect of each such additional Loungers Share participating in the Alternative Offer (subject always to the Alternative Offer Maximum). Accordingly, if the Alternative Offer were taken up in full by eligible Loungers Shareholders, the maximum amount of the Fortress Equity Investment would be £97.2 million (with the amount of the Fortress Preference Investment being an amount equal to £97.2 million minus the amount of the Fortress Ordinary Investment) and the share capital of Topco would comprise, following, and subject to, the implementation of the Rollover Process:

·      140,828,623 Topco Ordinary Shares issued to Loungers Shareholders;

·      93,885,748 Topco Ordinary Shares issued to Fortress;

·      12,435,342,567 Topco B Preference Shares issued to Loungers Shareholders; and

·      9,627,460,006 Topco A Preference Shares issued to Fortress.

Any fractional entitlements of a Loungers Shareholder to Bidco Rollover Securities, Topco Ordinary Shares and Topco B Preference Shares under the Alternative Offer will be rounded down to the nearest whole number of Bidco Rollover Securities, Topco Ordinary Shares and Topco B Preference Shares per Loungers Shareholder. Fractional entitlements to Bidco Rollover Securities, Topco Ordinary Shares and Topco B Preference Shares will not be allotted or issued to such Loungers Shareholder but will be disregarded. Any fractional entitlements of Fortress to Topco Ordinary Shares or Topco A Preference Shares will be rounded down to the nearest whole number and any such fractional entitlements will be disregarded.

 

4.         TERMS OF ALTERNATIVE OFFER IN THE EVENT OF A SWITCH

If Bidco elects, with the consent of the Panel and subject to the Co-operation Agreement, to switch to an Offer, and less than 100 per cent. of the Loungers Shares are acquired by Bidco on or around the date of such Offer becoming wholly unconditional, the total number of Topco Ordinary Shares and Topco B Preference Shares issued to Loungers Shareholders pursuant to the Alternative Offer (subject to implementation of the Rollover Process) will be calculated on the same basis as described in paragraph 3 of this Appendix 4 (and on the basis of the Exchange Ratio). Fortress will also subscribe for such number of Topco Ordinary Shares as described in paragraph 3 of this Appendix 4, in such number as would result in Fortress holding, in aggregate, 40 per cent. of the Topco Ordinary Shares at a subscription price of one penny per Topco Ordinary Share.

The remainder of Fortress' investment in Topco at that date will be reduced (on a pound for pound basis) to the extent less than 100 per cent. of Loungers Shares are acquired through the Offer and, to the extent that Bidco (as directed by Fortress) exercises its rights under section 979 of the Companies Act 2006 in order to acquire 100 per cent. of the Loungers Shares, such acquisitions will be funded through the subscription of further Topco A Preference Shares (at the same price per share as the Topco A Preference Shares issued on the Effective Date).

5.         TERMS OF ISSUE OF ROLLOVER UNITS

The Rollover Units to be issued to eligible Loungers Shareholders who elect for the Alternative Offer will be issued credited as fully paid.

The Topco Ordinary Shares to be issued to eligible Loungers Shareholders comprising the Rollover Units will rank economically pari passu with the Topco Ordinary Shares held by and issued to the Fortress Funds in connection with the Acquisition, including in respect of the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling on or after the date of this announcement.

The Topco B Preference Shares comprising the Rollover Units will rank economically as described below.

6.         ECONOMIC RIGHTS

The economic rights described below are subject to the risks also described in paragraph 15 of this announcement (for example, that: (i) the Topco B Preference Shares and Topco Ordinary Shares will be highly levered and economically subordinated share capital ranking behind the Topco A Preference Shares and the secured and unsecured liabilities of the Topco Group; (ii) the value of the Rollover Units will depend on the future performance of the Loungers business; and (iii) payments in respect of Rollover Units will not be guaranteed or secured).

Subject to the above, any returns of value to security holders of Topco, whether on or following an Exit Event or otherwise, including dividends and other distributions and returns of capital made or paid, shall, after payment of all costs and taxes in relation to such Exit Event or return of value, be allocated among the Topco Shareholders in the following order of priority (in each case, only to the extent that any amount remains following the preceding distributions):

·      first, in paying to each holder of Topco A Preference Shares an amount equal to the Redemption Price in respect of each Topco A Preference Share of which it is the holder (pari passu as between the holders of Topco A Preference Shares and pro rata to the amounts of Redemption Price payable on their Topco A Preference Shares respectively);

·      second, in paying to each holder of Topco B Preference Shares an amount equal to the Redemption Price in respect of each Topco B Preference Share of which it is the holder (pari passu as between the holders of Topco B Preference Shares and pro rata to the amounts of Redemption Price payable on their Topco B Preference Shares respectively); and

·      third, by distributing the balance of such assets pro rata and pari passu among the holders of the Topco Ordinary Shares.

The Topco A Preference Shares will carry a fixed cumulative preferential dividend at an annual rate of 10 per cent. of their issue price, which will accrue from day to day and be capitalised annually (the "A Preference Preferred Return").

The Topco B Preference Shares will carry a fixed cumulative preferential dividend at an annual rate of 14 per cent. of their issue price, which will accrue from day to day and be capitalised annually (the "B Preference Preferred Return").

On a redemption, Exit Event or other return of value, the Topco A Preference Shares and Topco B Preference Shares will each benefit from a minimum return equal to the higher of: (a) a 1.35x money-on-money multiple; and (b) their issue price plus any accrued and unpaid amounts of A Preference Preferred Return or B Preference Preferred Return (as applicable) thereon (the "Redemption Price").

The Topco Preference Shares shall be redeemable: (i) on an Exit Event at the election of the holder; or (ii) at the election of Topco, at any time and in such amount as determined by Topco, provided that where Topco is at any time redeeming fewer than all of the Topco Preference Shares then in issue, the number of Topco Preference Shares to be redeemed shall be apportioned first between the holders of Topco A Preference Shares pro rata to the Redemption Price in respect of the Topco A Preference Shares held by them at the date fixed for redemption until all Topco A Preference Shares have been redeemed in full at the Redemption Price, following which the number of Topco Preference Shares to be redeemed shall be apportioned between the holders of Topco B Preference Shares pro rata to the Redemption Price in respect of the Topco B Preference Shares held by them at the date fixed for redemption until all Topco B Preference Shares have been redeemed in full at the Redemption Price.

7.         VOTING RIGHTS

None of the Topco A Preference Shares or Topco B Preference Shares shall entitle the holders thereof to receive notice of or to attend or vote at any general meeting of Topco, or to vote on any resolution proposed to members as a written resolution, and none of the Topco A Preference Shares or Topco B Preference Shares shall be counted in determining the total number of votes which may be cast at or in respect of any such meeting or resolution.

Each Topco Ordinary Share shall entitle the holder thereof to receive notice of and to attend, speak and vote at any general meeting of Topco, and to vote on any resolution proposed to members as a written resolution, on the basis of one vote per Topco Ordinary Share.

Reserved matters - Topco Ordinary Shares

Certain matters (the "Voting Share Reserved Matters") will require the consent of any person holding 20 per cent. or more of the Topco Ordinary Shares, including:

·      the creation, allotment and/or issuance of securities of any member of the Topco Group, save as expressly permitted by the Topco Shareholders' Agreement;

·      effecting any corporate reconstruction, reorganisation or refinancing of the Topco Group, save as permitted by the Topco Shareholders' Agreement;

·      the variation of any coupon, fixed cumulative preferential dividend or imposition of any redemption premium or fee, attaching to shareholder debt, loan notes, preference shares or other debt securities;

·      altering or varying the rights attaching to any securities of any member of the Topco Group other than the Topco A Preference Shares and/or the Topco B Preference Shares;

·      the recommendation, payment or declaration of any dividend or other distribution or the redemption or repurchase of securities from, or the return of capital or value:

o  other than on a pari passu basis for all Topco Shareholders consistent with their economic entitlement as set out in the Topco Shareholders' Agreement; or

o  any other member of the Topco Group;

·      the establishment of or material variation to any MIP or other employee incentive arrangement;

·      any alteration to or waiver of any constitutional documents of any member of the Topco Group;

·      creating or causing or permitting to be created or to exist any mortgage, charge, lien (other than a lien arising in the ordinary course of business), security interest or other encumbrance over the whole or any part of a member of the Topco Group's undertaking or assets, save in connection with the Topco Group's senior facility agreement in place as at the Effective Date;

·      the making of any loan to, or entry into of any guarantee or surety for the obligations of, any third party (other than: (i) trade credit in the ordinary course of business; or (ii) by one wholly-owned member of the Topco Group to another wholly-owned member of the Topco Group);

·      any disposal (by any means) of the whole or a substantial part of a member of the Topco Group's business, undertaking or assets, whether pursuant to a single transaction or a series of related transactions, save in connection with an Exit Event in accordance with the Topco Shareholders' Agreement;

·      any acquisition (by any means) of any interest in any securities or indebtedness of any person, or the whole or part of a person's business, undertaking or assets either: (i) with a value in excess of £3,000,000; or (ii) relating to or constituting a business of a general nature which is materially different to that of the business carried on by a member of the Topco Group, whether pursuant to a single transaction or a series of related transactions;

·      the entry into any partnership, joint venture or consortium agreement;

·      any substantial alteration to the general nature of the business carried on or proposed to be carried on by any member of the Topco Group or any cessation of such business (in whole or in part), including any change to the jurisdiction where the business is domiciled, undertaken, managed and controlled and the closure of any branch, agency, trading establishment or business of the Topco Group;

·      initiation of any litigation, arbitration or mediation, or the settlement of any such litigation, arbitration or mediation, by any member of the Topco Group, where the value (estimated or otherwise) is in excess of £300,000, which is or could potentially be material to the interests of the Topco Group or could reasonably foreseeably result in adverse reputational consequences to any member of the Topco Group, any holder of more than 20 per cent. of the Topco Ordinary Shares or any of their affiliates;

·      the entry into, termination or variation, or the waiver of any breach of any contract or arrangement, between any member of the Topco Group and either: (i) any director or senior manager of the Topco Group (or any of their connected persons), except where approved pursuant to (ii); or (ii) any Topco Shareholder (or any connected person or affiliate of such holder, excluding any member of the Topco Group and, in the case of financial sponsors, any portfolio companies), in each case excluding where such transaction is pursuant to or in accordance with the Topco Shareholders' Agreement;

·      the appointment or removal of auditors other than the re-appointment of the existing auditors or where the replacement is one of Deloitte, Ernst & Young, KPMG, PwC or Alvarez & Marsal;

·      any variation or waiver of any right or claim under the finance arrangements of the Topco Group (or any documents entered into pursuant to them) which directly relates to a right or obligation of, or which relates to the holdings in the Company of, the Fortress Funds or any other holder of at least 20 per cent. of the Topco Ordinary Shares (or in each case their affiliates); and

·      taking any step that would result in an insolvency event in relation to any member of the Topco Group.

Holders of two thirds of the Topco Ordinary Shares may make any amendment to, or variation of, the Topco Shareholders' Agreement and/or related documents without the consent of, or notification to, the Other Shareholders (including holders of Rollover Units), provided that: (i) amendments or variations that would be materially and disproportionately adverse to the rights or obligations of any Other Shareholder when compared to those Topco Ordinary Shareholders approving such amendment or variation will also require the prior consent of the holders of a majority of the Ordinary Shares then held by the Other Shareholders (and, if the variation would impose material new obligations or liabilities on a party or materially increase any existing obligation or liability of a party, the consent of the affected party will also be required); (ii) any changes affecting the Topco A Preference Shares and/or Topco B Preference Shares may be made only with the consent of the holders of a majority of the Topco A Preference Shares and the holders of a majority of the Topco B Preference Shares, respectively (save that changes which would be materially and disproportionately adverse to the rights or obligations of any Other B Preference Shareholders when compared to those holders of Topco B Preference Shares forming part of the approving majority, will also require prior consent from the holders of more than 50 per cent. of the Topco B Preference Shares then held by the Other B Preference Shareholders); (iii) any alteration or variation to the rights attaching to any security in the Topco Group other than the Topco A Preference Shares and/or Topco B Preference Shares may only be made with the consent of holders of at least 20 per cent. of the Topco Ordinary Shares; and (iv) any alteration or variation to the rights attaching to the Topco Ordinary Shares which would be materially and disproportionately adverse to the rights of the Ordinary Shares held by the Topco Minority Shareholders when compared to holders of at least 20 per cent. of the Topco Ordinary Shares must be approved by holders of a majority of the Topco Minority Shareholders.

Reserved Matters - Topco A Preference Shares

In addition to the Voting Share Reserved Matters, certain matters shall be reserved to the holders of a majority of the Topco A Preference Shares until all of the Topco A Preference Shares have been redeemed in full at the then current Redemption Price, including:

·      the incurrence or issuance of any debt or indebtedness if such incurrence or issuance would cause the Topco Group's consolidated leverage to exceed, or if the Topco Group's consolidated leverage exceeds at the time of such proposed incurrence or issuance:

o  until such time as the Fortress Funds have achieved at least a 1.35x money-on-money multiple on their investment in respect of the Topco A Preference Shares issued to them on or around the Effective Date, 3.5x; and

o  thereafter, 4x;

·      creation, allotment and/or issuance of any security ranking senior or having a preference or priority to the Topco A Preference Shares;

·      the declaration or payment of any dividend or other distribution, or the redemption or purchase of securities, or other return of capital or value by Topco, save in accordance with the Topco Shareholders' Agreement and the Topco Articles (including in accordance with the priority among the classes of Topco Shares as described in paragraph 6 of this Appendix 4); and

·      any change affecting the class rights of the Topco A Preference Shares.

Reserved Matters - Topco B Preference Shares

In addition to the Voting Share Reserved Matters, certain matters shall be reserved to the holders of a majority of the Topco B Preference Shares (save that changes which would be materially and disproportionately adverse to the rights or obligations of any Other B Preference Shareholders when compared to those holders of Topco B Preference Shares forming part of the approving majority, will also require prior consent from the holders of more than 50 per cent. of the Topco B Preference Shares then held by the Other B Preference Shareholders), until all of the Topco B Preference Shares have been redeemed in full at the then current Redemption Price, including:

·      the creation, allotment and/or issuance of any security ranking senior or having a preference or priority to the Topco B Preference Shares if such issuance would cause the Topco Group's consolidated leverage to exceed 3.5x, or if the Topco Group's consolidated leverage exceeds at the time of such proposed allotment or issuance; and

·      any change affecting the class rights of the Topco B Preference Shares.

Reserved Matters -Topco Minority Shareholders

Certain matters will require the consent of the holders of a majority of the Topco Minority Shareholders, including:

·      save for any alteration or waiver consistent with an equivalent variation of the Topco Shareholders' Agreement in accordance with the relevant variation provisions, any alteration or variation of, or the waiver of any provisions under the Topco Articles which would be materially and disproportionately adverse to the rights of Topco Minority Shareholders when compared to the holders of at least 20 per cent. of the Topco Ordinary Shares;

·      any alteration or variation to the rights attaching to the Topco Ordinary Shares which would be materially and disproportionately adverse to the rights of the Topco Ordinary Shares held by Topco Minority Shareholders when compared to the holders of at least 20 per cent. of the Topco Ordinary Shares;

·      the recommendation, payment or declaration of any dividend or other distribution or the redemption or purchase of securities from, or other return of capital or value in relation to Topco, save as in accordance with the Topco Shareholders' Agreement and Topco Articles; and

·      the entry into, termination or material variation or the waiver of any material breach of any contract or arrangement between any member of the Topco Group and a holder of at least 20 per cent. of the Topco Ordinary Shares (or an affiliate thereof), but excluding, in the case of financial sponsors, any portfolio companies), but excluding the entry into, termination or material variation of, or waiver of any material breach under, any such contract or arrangement on arms' length terms or carried out in accordance with the terms of the Topco Shareholders' Agreement).

Reserved Matters - the Fortress Funds

Topco shall undertake, and Topco and each Topco Shareholder (during the period from the Effective Date to the first anniversary of the Effective Date) shall undertake to use its rights to procure, that no member of the Topco Group shall take any action which would be inconsistent with any of the statements of intention set out in paragraph 12 of this announcement without the prior consent of the Fortress Funds.

If the Acquisition takes place by way of a Takeover Offer, the Fortress Funds may direct Bidco to exercise its rights under section 979 of the Companies Act 2006 in order to acquire 100 per cent. of the Loungers Shares, and Topco and each Topco Shareholder shall undertake to take such actions as the Fortress Funds may direct (acting reasonably) which are necessary or desirable to facilitate the exercise of such rights and the acquisition of 100 per cent. of the Loungers Shares.

8.         GOVERNANCE AND TOPCO BOARD REPRESENTATION

Any Topco Shareholder (together with its affiliates) holding at least 15 per cent. of the Topco Ordinary Shares at any time shall have the right to appoint:

·      two directors (subject to the identity of the proposed director being acceptable to the board of Topco (acting reasonably and in good faith), it being acknowledged that consent being withheld in respect of the appointment of any person holding a position of significant influence and/or managerial responsibility at an actual or potential competitor of the Topco Group shall not be unreasonable, provided that financial sponsors shall not be considered to be competitors for this purpose) to attend, speak and vote at meetings of the board of Topco; and

·      one observer to attend only meetings of the board of Topco.

The two largest holders of Topco Ordinary Shares from time to time shall, acting jointly, be entitled to appoint the chair of the board of Topco (the "Chair"). A majority of the holders of the Topco Ordinary Shares shall be entitled to remove the Chair. It is intended that the initial Chair, with effect from the Effective Date, will be the current chair of Loungers. The Chair shall not have a casting vote.

The board of Topco shall further comprise:

·      the CEO of the Loungers Group (as appointed from time to time); and

·      the CFO of the Loungers Group (as appointed from time to time).

The Group MD of Loungers (as appointed from time to time) shall be invited to attend meetings of the board of Topco as an observer.

The holders of a majority of the Topco Ordinary Shares shall have the power to remove the CEO, the CFO or other senior executives from time to time. It is intended that the initial CEO and CFO, with effect from the Effective Date, will be the current CEO and CFO of Loungers respectively.

The board of Topco shall approve the business plan for the Loungers Group.

9.         TRANSFERS OF SHARES

No Topco Shares will be transferable during an initial five-year lock-up period from the Effective Date (the "Lock-up Period") without the prior written consent of a majority of the Topco Ordinary Shareholders, except:

·      in respect of customary permitted transfers to affiliates (which shall be subject to customary transfer back requirements and the general transfer obligations described below), including:

·      where the Topco Shareholder is an institutional investor, to: (i) any fund which has a direct or indirect interest in that investor, or which is managed by or advised by or has for its general partner (x) the manager or adviser of such investor or any entity that directly or indirectly own or control such investor and/or any other entity whose primary purpose is to manage or advise formed by any of the founding partners of the same, or (y) the same or any affiliate of any of the managers, advisers or general partners of the investor or the funds which have a direct or indirect interest in that investor; (ii) any person under the control of any person described in (i) and whose assets are held for the purpose of fulfilling such fund's investment mandates; (iii) any member of that investor's group; (iv) any general partner, trustee, nominee or manager or adviser to any of the persons in (i), (ii) or (iii); or (v) any co-investment scheme of the investor or any of the persons in (i), (ii) (iii) or (iv), or any person holding or entitled to the benefit of shares or interests under such scheme, in each case excluding any member of the Topco Group and any portfolio companies of that investor or its affiliates; and

·      where the shareholder is a natural person: (i) their spouse or civil partner, lineal descendants by blood or adoption, or their step children and their lineal descendants; (ii) a trust in respect of which the only beneficiaries are that person or the persons described in (i); or (iii) a body corporate, partnership or foundation controlled by that person and owned solely by that person or their family members, or any trust described in (ii); and

·      where required or permitted pursuant to an Exit Event or reorganisation or refinancing permitted or required by the Topco Shareholders' Agreement.

Following the Lock-up Period, a Topco Shareholder shall be entitled to transfer its Topco Shares, subject to a right of first refusal on the part of all other Topco Ordinary Shareholders, such right being waivable by holders of a majority of the Topco Ordinary Shares.

No Topco Shares shall be allotted, issued or transferred to any person unless such person has: (i) executed and delivered a deed of adherence to the Topco Shareholders' Agreement; (ii) satisfied the requirements of Topco and the Fortress Funds in respect of customary "know your customer", anti-money laundering and compliance checks and/or completed any anti-trust or regulatory change in control approvals required by any regulator. The board of Topco shall not enter any person into the register of members of the Company if it, acting reasonably and without delay, considers such person to be a competitor of the Loungers Group (save that financial sponsors shall not be considered to be competitors for this purpose), or a person whose investment is likely to result in reputational harm to the Fortress Funds, the Topco Group or their affiliates.

Customary stapling provisions shall apply in respect of any transfers of Topco Shares such that Topco Ordinary Shares and Topco Preference Shares must be transferred together in fixed ratios.

No changes in direct or indirect interests or economic entitlements in any security in Topco shall be permitted which circumvent the restrictions on transfer and, without prejudice to damages claims, economic rights shall be suspended during any such breach.

10.       DRAG-ALONG AND TAG-ALONG

Drag-along

Following expiry of the Lock-Up Period, Topco Shareholders proposing to directly or indirectly transfer more than 50 per cent. of the Topco Ordinary Shares on arm's length terms to a bona fide third-party purchaser as part of a single transaction or series of connected transactions (a "Dragging Shareholder") shall have a right to "drag-along" (i.e. force the sale of) all of the other Topco Shares to such third-party purchaser on no less favourable terms, provided that the consideration payable for each Topco Preference Shares is the then current Redemption Price of such Topco Preference Share.

Tag-along

Following expiry or waiver of the Lock-up Period:

·      on a proposed direct or indirect transfer of Topco Ordinary Shares (a "Transferring Shareholder") to a third-party purchaser as part of a single transaction or series of connected transactions which would result in such third-party purchaser (together with any persons connected with it or with whom it is acting in concert) holding (directly or indirectly) more than 50 per cent. of the Topco Ordinary Shares, the remaining Topco Shareholders shall have a "tag-along" right to require the third-party purchaser to make an offer for all of the Topco Shares on the same terms (the "Full Tag Right"); and

·      save where the Full Tag Right applies, a pro rata "tag-along" right will apply in respect of any proposed share transfers and in such event the Transferring Shareholder shall also require the third-party purchaser to make an offer on the same terms for any Topco Preference Shares for at least their then current Redemption Price (the "Pro Rata Tag Right") (provided that on a pro rata "tag-along" the proposed buyer group shall be entitled to elect that the number of securities which the Topco Shareholders propose to transfer (including pursuant to the exercise of the Pro Rata Tag Right) be proportionately scaled back so that the proposed buyer group acquires the same aggregate number of each class of securities as it would have acquired had the Pro Rata Tag Right not been exercised).

The "tag-along" rights shall not apply in respect of certain excluded instances, including customary permitted transfers to affiliates or in relation to transfers in connection with an IPO, a reorganisation or a refinancing.

Topco Shareholders who exercise "tag-along" rights will be required to pay a proportionate share of related costs incurred by or attributable to the Topco Group or Topco Shareholders and bear related liabilities and may be required to agree to the same terms and conditions of transfer as the transferring Topco Shareholders (including as to price, save in respect of any Topco Preference Shares acquired pursuant to the Pro Rata Tag Right).

General

Topco Shareholders transferring Topco Shares pursuant to the exercise of a "drag- along" or "tag-along" right shall receive consideration in the same form as the Dragging Shareholder or Transferring Shareholder (as applicable), provided that where a transfer is made pursuant to a "drag-along" right and is to be made for non-cash consideration, all dragged Topco Shareholders must be offered a cash alternative of an equal value.

The aggregate sale proceeds payable in respect of any proposed transfer pursuant to "drag-along" rights be applied in the order of priority set out in paragraph 6 of this Appendix 4.

11.        EXIT ARRANGEMENTS

As soon as reasonably practicable following the third anniversary of the Effective Date, the board of Topco will evaluate strategic options for an Exit Event and pursue the preferred option (or, as applicable, a dual-track process).

Each of the Topco Shareholders are required to co-operate and take such actions in respect of any proposed Exit Event as are reasonably requested by the board of Topco, the Exit Committee (if applicable) or the holders of a majority of the Topco Ordinary Shares to achieve, and to actively co-operate with the Topco Group to maximise the value for holders of securities in the Topco Group achieved as a result of, any such process. This shall include without limitation: (i) any reorganisation, restructuring or other corporate (or similar) action required to facilitate such Exit Event; (ii) providing customary warranties as to the title to Topco Shares held by such holder and its capacity to transfer such Topco Shares (and, other than in a drag-along scenario, in relation to the Shareholders who are directors or senior managers, subject to disclosure and customary limitations, as they may be reasonably required by the board of Topco, the Exit Committee or a majority of the holders of Topco Ordinary Shares); (iii) giving a customary locked box covenant or customary covenant in relation to any completion accounts adjustment in connection with such Exit Event in the same form that the holders of a majority of the Topco Ordinary Shares have agreed to give, on a pro rata and several basis; (iv) bearing their pro rata share of costs in relation to such Exit Event; (v) in the case of an IPO, entering into any "lock-up", sell-down or other related arrangements as may be reasonably recommended by the underwriter(s) advising on such IPO and to the same extent and on the same terms as the holders of a majority of Topco Ordinary Shares; and (vi) taking a number of related actions, including voting in favour of or consenting to the relevant process.

Equivalent obligations also apply in relation to any bona fide refinancing or reorganisation of the Topco Group in each case approved or required by holders of a majority of the Topco Ordinary Shares, provided that such refinancing or reorganisation would not be materially and disproportionately adverse to the rights or obligations of the holders of Topco Ordinary Shares as a whole or any holders of Topco Ordinary Shares who do not form part of the approving majority compared to those forming part of the approving majority.

If no Exit Event has occurred by the fifth anniversary of the Effective Date, Topco Shareholders holding more than 50 per cent. of the Topco Ordinary Shares shall be entitled to require the board of Topco to constitute an exit committee and to appoint advisers to evaluate, pursue and approve an Exit Event as soon as practicable (the "Exit Committee"). Any Topco Shareholder holding at least 15 per cent. of the Topco Ordinary Shares shall be entitled to appoint one representative to the Exit Committee. The Chair and the Chief Executive Officer, for as long as they remain in office, shall be invited to attend meetings of the Exit Committee as observers.

The Fortress Funds will have the right to "drag-along" all other Topco Shares into a full sale on terms equivalent to those described in paragraph 10 of this Appendix 4:

·      if the Topco A Preference Shares have not been redeemed in full at the Redemption Price and no Exit Event has occurred by the fifth anniversary of the Effective Date, provided that the Original Shareholders (as defined below) would achieve at least a 2x money-on-money multiple on their Original Invested Capital (as defined below);

·      regardless of whether the Topco A Preference Shares have been redeemed in full at the Redemption Price, on the seventh anniversary of the Effective Date, provided that the Original Shareholders would achieve at least a 1x money-on-money multiple on their Original Invested Capital; or

·      regardless of whether the Topco A Preference Shares have been redeemed in full at the Redemption Price, on the tenth anniversary of the Effective Date (regardless of the money-on-money multiple that the Original Shareholders would achieve on their Original Invested Capital),

(each being, a "Fortress Exit").

For these purposes:

"Original Shareholders" means the Loungers Shareholders subject to the Fortress Exit who were issued with Topco Shares at the Effective Date, or their permitted transferees or assigns; and

"Original Invested Capital" means the amount deemed to be paid up on the Topco B Preference Shares and Topco Ordinary Shares by the Original Shareholders (as applicable),

and in determining whether the money-on-money multiples above have been met, it shall be assumed that the Original Shareholders continued to hold Topco B Preference Shares and Topco Ordinary Shares in the same proportion as at or on or around the Effective Date.

In circumstances where the Fortress Funds seek to exercise these rights, Topco and other Topco Shareholders will provide customary co-operation and assistance undertakings (including in relation to the appointment of advisors) to facilitate the Fortress Exit.

12.       ADDITIONAL TOPCO SHARE ISSUES

If Topco proposes to issue new Topco Shares (including any issue or transfer of Topco Shares from treasury) or other securities, each holder of Topco Shares shall be entitled to participate pro rata in such issuance, exercisable on at least 15 Business Days' written notice, excluding any issuance:

·      in connection with the Acquisition, including to the Fortress Funds and/or their affiliates to finance the Acquisition, to effect the Rollover Process and/or to eligible Loungers Shareholders pursuant to the terms of the Alternative Offer;

·      by a member of the Topco Group to another member of the Topco Group that is wholly-owned, directly or indirectly, by Topco or to a new holding company;

·      to any actual or potential employees, directors or consultants of the Topco Group, including pursuant to a MIP or other employee incentive arrangement approved in accordance with the Topco Shareholders' Agreement, which shall dilute the Topco Ordinary Shares pro rata;

·      to a bona fide third-party finance provider in connection with any member of the Group's third-party debt financing arrangements, which shall dilute the Topco Ordinary Shares pro rata;

·      in connection with a bona fide merger, acquisition or other business combination of any person's business or assets, or in connection with a joint venture, partnership or strategic transaction entered into with such third-party on arm's length terms (in each case where such transaction has been approved in accordance with the Topco Shareholders' Agreement);

·      pursuant to: (i) a pro rata share split or any other reorganisation where, following such share split or reorganisation, each member of the Topco Group will have the same ultimate owners (holding shares in the same proportions) as the affected members prior to the share split or reorganisation; (ii) any reorganisation immediately prior to, and conditional upon a listing, pursuant to which the share capital of Topco (or a new holding company, as applicable) is reorganised to give effect to the intended distribution of proceeds or value among the Topco Shareholders immediately prior to such listing; or (iii) any other refinancing or reorganisation of the Topco Group in accordance with the terms of the Topco Shareholders' Agreement, in each case which shall dilute the Topco Ordinary Shares pro rata;

·      where either (i) the board of Topco or (ii) a holder or holders of at least 20 per cent. of the Topco Ordinary Shares (acting reasonably and in good faith) consider(s) it to be necessary to raise equity funding on an expedited basis, to holder(s) of at least 20 per cent. of the Topco Ordinary Shares, provided that in each case the remaining holders of Topco Ordinary Shares shall have customary catch-up rights;

·      pursuant to any catch-up right;

·      pursuant to the terms of, or upon the conversion of, any security previously issued in accordance with the Topco Shareholders' Agreement and the Topco Articles; or

·      in respect of which the holders of a majority of the Topco Ordinary Shares give their prior written consent to pre-emption rights not applying provided the relevant issuance is to a bona fide third-party not connected to such holders.

13.       INFORMATION RIGHTS

Any holder of at least 5 per cent. of the Topco Ordinary Shares shall be entitled to request and Topco shall undertake to provide to such holder:

·      the audited consolidated accounts for the Topco Group for that financial year (together with the notes to, and the reports of, the directors and auditors on such accounts), no later than three months after the end of each financial year;

·      the business plan and the annual budget for the Topco Group, no later than one month after their respective finalisation;

·      the monthly management accounts for the Topco Group, which shall include a consolidated profit and loss account, balance sheet and cash flow statement, within the later of: (i) 15 Business Days; and (ii) 20 calendar days, of each month end; and

·      on request (and provided and to the extent that such request does not unduly interfere with the business of the Topco Group or its management), such information as is reasonably required to comply with that holder's or its affiliates respective bona fide accounting, tax, regulatory, anti-trust and/or legal reporting requirements in respect of the Topco Group.

In addition to the foregoing, any holder of at least 15 per cent. of the Topco Ordinary Shares shall be entitled to receive the following further information from Topco:

·      each monthly management information pack prepared for and provided to the board of Topco and any other board of a member of the Topco Group as may be specified from time to time;

·      written details of any actual, pending or threatened litigation, arbitration or administrative proceeding or claim which might be likely, by itself, or together with any other proceedings or claim, to have a material adverse effect on the financial condition of the Topco Group or the business or reputation of the Topco Group (or, in each case, of any member of it), as soon as practicable after such information becomes available;

·      any material written correspondence from a regulatory body, including any Tax authority, or relating to the loss by any Topco Group company of any material licence, consent, permit or authorisation required by such company to carry out its business, as soon as practicable after such information becomes available to the Topco Group or a senior manager of it;

·      written details of any violation by any Topco Group company of any law or regulation, or any material licence, consent, permit or authorisation required by such company to carry out its business, which would, or could reasonably be expected to, by itself, or together with any other such violations, have a material adverse effect on the financial condition, business or reputation of the Topco Group or any member of it, as soon as practicable after such information becomes available;

·      all financial or other information to be provided to the Topco Group's debt finance providers or any third party holder of debt securities in any member of the Topco Group, at the same time as it is so provided;

·      details of matters which might lead to an Exit Event or other liquidity event or which in the opinion of the board of Topco acting reasonably have a realistic prospect of leading to M&A activity which would otherwise require the consent of holders of at least 20 per cent. of the Topco Ordinary Shares pursuant to the Topco Shareholders' Agreement;

·      such other information as may be reasonably required by the relevant holder, including information in order to comply with its or its affiliates' internal reporting requirements (including reasonable access to the auditor of the Topco Group); and

·      on request, a breakdown of the Topco Group's revenues in each financial year, within 90 days after the end of each financial year, to the extent such information is required for any regulatory filings that may be required to be made by the requesting party or its affiliates.

Notwithstanding the foregoing, any holder of Topco Ordinary Shares shall be entitled to request the audited consolidated accounts for the Topco Group in respect of each previous financial year.

Any information provided to a Topco Shareholder pursuant to the above shall be subject to customary confidentiality obligations and in any case any such right shall cease automatically at such time as the board of Topco acting reasonably either considers the relevant Topco Shareholder or its affiliates to be a competitor of the Topco Group (save that financial sponsors shall not be considered to be competitors for this purpose) or that the provision of the relevant information to the relevant Topco Shareholder would not be in the best interests of Topco for its members as a whole.

Each director of Topco appointed by a Topco Shareholder may pass any information received from the Topco Group or which relates to the Topco Group or which otherwise comes into their possession as a result of their appointment to such Topco Shareholder and/or its affiliates.

14.       Governing Law and Jurisdiction

The Topco Shareholders' Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by English law. The courts of England shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Topco Shareholders' Agreement and accordingly any proceedings arising out of or in connection with the Topco Shareholders' Agreement shall be brought in such courts.

APPENDIX 5
DEFINITIONS

"2024 Annual Report"	means the audited annual report and accounts of Loungers for the 53 weeks ended 21 April 2024;
"A Preference Preferred Return"	has the meaning given in paragraph 6 of Appendix 4 to this announcement;
"Acquisition"	the proposed acquisition of the entire issued and to be issued share capital of Loungers by Bidco, to be implemented by the Scheme as described in this announcement (or by the Offer under certain circumstances described in this announcement);
"AIM"	the market of that name operated by the London Stock Exchange;
"AIM Rules"	the AIM Rules for Companies published by the London Stock Exchange from time to time;
"Alternative Offer"	has the meaning set out in paragraph 2 of this announcement;
"Alternative Offer Maximum"	has the meaning set out in paragraph 13 of this announcement;
"Announcement Date"	the date of this announcement;
"Authorisations"	regulatory authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions or approvals;
"B Preference Preferred Return"	has the meaning given in paragraph 6 of Appendix 4 to this announcement;
"Bidco"	CF Exedra Bidco Limited, incorporated in England and Wales with registered number 16082113;
"Bidco Articles"	the articles of association of Bidco;
"Bidco Rollover Securities"	has the meaning set out in paragraph 2 of Appendix 4 to this announcement;
"Blocking Law"	(i) any provision of Council Regulation (EC) No 2271/1996 of 22 November 1996 (or any law or regulation implementing such Regulation in any member state of the European Union or the United Kingdom); or (ii) any similar blocking or anti-boycott law;
"Business Day"	a day, (other than a Saturday, Sunday, public or bank holiday) on which banks are generally open for non-automated business in London;
"Cash Offer"	310 pence in cash for each Loungers Share;
"Clearance"	has the meaning given to it in paragraph 3(b) of Appendix 1;
"CMA"	the Competition and Markets Authority of the United Kingdom (or any successor body or bodies carrying out the same functions in the United Kingdom from time to time);
"Companies Act 2006"	the UK Companies Act 2006 (as amended from time to time);
"Conditions"	the conditions to the implementation of the Acquisition, as set out in Appendix 1 to this announcement and to be set out in the Scheme Document;
"Confidentiality Agreement"	has the meaning given to it in paragraph 10.1 of this announcement;
"Co-operation Agreement"	has the meaning given to it in paragraph 10.2 of this announcement;
"Court"	the High Court of Justice in England and Wales;
"Court Meeting"	the meeting or meetings of the Loungers Shareholders (or any class or classes thereof) convened by order of the Court pursuant to Part 26 of the Companies Act 2006 (notice of which will be set out in the Scheme Document) for the purpose of considering and, if thought fit, approving the Scheme (with or without amendment) and any adjournment, postponement or reconvention thereof;
"Court Sanction Hearing"	the hearing of the Court to sanction the Scheme under section 899 of the Companies Act 2006;
"CREST"	the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the Regulations);
"Dealing Disclosure"	an announcement pursuant to Rule 8 of the Takeover Code containing details of dealings in relevant securities of a party to an offer;
"Disclosed"	the information fairly disclosed by or on behalf of Loungers: (i) in the 2024 Annual Report; (ii) the announcement of Loungers' results for the 24 weeks ended 6 October 2024 made on the Announcement Date; (iii) in this announcement; (iv) in any other announcement through a Regulatory Information Service prior to the publication of this announcement; (v) in filings made with the Registrar of Companies and appearing in Loungers' file of those of any member of the Wider Loungers Group at Companies House before the Announcement Date; or (vi) otherwise fairly disclosed in writing via the virtual data room operated by or on behalf of Loungers prior to the date of this announcement;
"Disclosure Guidance and Transparency Rules"	the disclosure and transparency rules made by the FCA pursuant to section 73A of the Financial Services and Markets Act 2000;
"Disclosure Table"	the Disclosure Table provided on the website of the Panel;
"EBITDA"	earnings before interest, taxes, depreciation, and amortization;
"Effective"	in the context of the Acquisition: (i) if the Acquisition is implemented by way of the Scheme, the Scheme having become effective in accordance with its terms; or (ii) if the Acquisition is implemented by way of the Offer, the Offer having been declared or having become unconditional in all respects in accordance with the requirements of the Takeover Code;
"Effective Date"	the date on which the Scheme becomes effective in accordance with its terms;
"Equity Commitment Letter"	the equity commitment letter entered into between the Fortress Funds, on the one hand, and Bidco, on the other hand, dated as of the date of this announcement;
"Exchange Ratio"	means one Rollover Unit comprising 3.47139622458205 Topco Ordinary Shares and 306.528603775418 Topco B Preference Shares
"Exit Event"	any of the following occurring after the Effective Date: 1.   a sale (whether through pursuant to a single transaction or series of related transactions), of the entire issued share capital of, or of all or substantially all of the business, assets or undertaking; 2.   an IPO; or 3.   a liquidation, winding-up or other dissolution, of any of Topco, Midco, Bidco or Loungers, or any new holding company of the same from time to time;
"FCA"	the Financial Conduct Authority, or any successor body;
"Fortress"	Fortress Investment Group, LLC;
"Fortress Equity Investment"	has the meaning given to it in paragraph 13 of this announcement;
"Fortress Funds"	means funds and accounts managed or advised by affiliates of Fortress Investment Group, LLC;
"Fortress Ordinary Investment"	has the meaning given to it in paragraph 13 of this announcement;
"Fortress Preference Investment"	has the meaning given to it in paragraph 13 of this announcement;
"FSMA"	the Financial Services and Markets Act 2000 (as amended from time to time);
"General Meeting"	the general meeting of Loungers Shareholders to be convened in connection with the Scheme for the purposes of considering and if thought fit pass, inter alia, the Resolutions (including any adjournment, postponement or reconvention thereof);
"Houlihan Lokey"	Houlihan Lokey UK Limited;
"HSBC"	HSBC Bank plc;
"IFRS"	International Financial Reporting Standards;
"Interim Facilities Agreement"	the interim facilities agreement between (among others) Bidco the Original Interim Lenders, the Interim Facility Agent and the Interim Security Agent;
"IPO"	an admission to trading on any recognised investment exchange of securities;
"ISIN"	international securities identification number;
"Lion"	Lion Capital LLP;
"Lock-Up Period"	has the meaning set out in paragraph 9 of Appendix 4 to this announcement;
"London Stock Exchange"	London Stock Exchange plc;
"Long Stop Date"	28 August 2025 or such later date as may be agreed between Bidco and Loungers and, if required, the Panel and the Court may allow;
"Loungers"	Loungers plc, incorporated in England and Wales with registered number 11910770;
"Loungers Directors"	the directors of Loungers as at the date of this announcement or, where the context so requires, the directors of Loungers from time to time;
"Loungers Employee Share Plan"	the Loungers employee share plan adopted in 2019, as amended from time to time;
"Loungers Group"	Loungers and its Subsidiaries and associated undertakings;
"Loungers Restricted Share Plan"	the Loungers senior management restricted share plan adopted in 2019, as amended from time to time;
"Loungers Share Plans	means the Loungers Employee Share Plan, the Loungers Restricted Share Plan and the Loungers Value Creation Plan;
"Loungers Shareholders"	the holders of Loungers Shares;
"Loungers Shares"	the ordinary shares of 1 penny each in the capital of Loungers;
"Loungers Value Creation Plan"	the Loungers value creation plan adopted in 2019, as amended from time to time;
"Market Abuse Regulation"	the UK version of the Market Abuse Regulation (EU) No 596/2014, which came into effect on 1 January 2021 when the EU Market Abuse Regulation (EU) No 596/2014 was incorporated into UK domestic law by the European Union (Withdrawal) Act 2018 and related legislation, with certain modifications;
"Market Surveillance Unit"	the Market Surveillance Unit established by the Panel;
"Meetings"	the Court Meeting and the General Meeting and, where the contexts permits, each of them;
"Midco"	CF Exedra Holdings Limited, incorporated in England and Wales with registered number 16081989;
"Midco Rollover Securities"	has the meaning given in paragraph 2 of Appendix 4;
"Minimum Alternative Offer Threshold"	has the meaning given to that term in paragraph 13 of this announcement;
"MIP"	has the meaning given in paragraph 15 of this announcement;
"Offer"	if, subject to the consent of the Panel and the terms of the Co-operation Agreement, the Acquisition is implemented by way of a takeover offer as defined in Chapter 3 of Part 28 of the Companies Act 2006, the offer to be made by or on behalf of Bidco to acquire the entire issued and to be issued ordinary share capital of Loungers and, where the context admits, any subsequent revision, variation, extension or renewal of such offer;
"Offer Document"	should the Acquisition be implemented by means of the Offer, the document to be published by or on behalf of Bidco in connection with the Offer, containing, inter alia, the terms and conditions of the Offer;
"Offer Period"	the Offer Period (as defined by the Takeover Code) relating to Loungers commencing on the date of this announcement and ending on the earlier of the date on which the Acquisition becomes Effective and/or the date on which the Acquisition lapses or is withdrawn (or such other date as the Panel may decide);
"Opening Position Disclosure"	has the same meaning as in Rule 8 of the Takeover Code;
"Other B Preference Shareholders"	has the meaning given to it in paragraph 14 of this announcement;
"Other Shareholders"	has the meaning given to it in paragraph 15 of this announcement;
"Overseas Shareholders"	Loungers Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom;
"Panel"	the Panel on Takeovers and Mergers;
"Phase 2 CMA Reference"	has the meaning in paragraph 3(a)(ii) of Appendix 1 to this announcement;
"Redemption Price"	has the meaning in paragraph 6 of Appendix 4 to this announcement;
"Registrar of Companies"	the Registrar of Companies in England and Wales;
"Regulatory Information Service"	an information service authorised from time to time by the FCA for the purpose of disseminating regulatory announcements;
"Resolutions"	such shareholder resolutions of Loungers as are necessary to approve, implement and effect the Scheme and the Acquisition, including (without limitation) a resolution to amend the articles of association of Loungers by the adoption and inclusion of a new article under which any Loungers Shares issued or transferred after the General Meeting shall either be subject to the Scheme or (after the Scheme Record Time) be immediately transferred to Bidco (or as it may direct) in exchange for the same cash consideration as is due under the Scheme;
"Restricted Jurisdiction"	any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Acquisition is sent or made available to Loungers Shareholders in that jurisdiction;
"Rollover Process"	has the meaning given to it in paragraph 13 of this announcement;
"Rollover Units"	the Topco Ordinary Shares and the Topco B Preference Shares available under the Alternative Offer;
"Scheme"	the proposed scheme of arrangement under Part 26 of the Companies Act 2006 between Loungers and Loungers Shareholders to implement the Acquisition, with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by Loungers and Bidco;
"Scheme Court Order"	the order of the Court sanctioning the Scheme under section 899 of the Companies Act 2006;
"Scheme Document"	the circular relating to the Scheme to be despatched to Loungers Shareholders and persons with information rights, setting out, among other things, the details of the Acquisition, the full terms and conditions of the Scheme and containing the notices convening the Court Meeting and the General Meeting (including, as the context requires, any supplementary scheme document);
"Scheme PoA"	has the meaning given in paragraph 14 of this announcement;
"Scheme Record Time"	the time and date specified as such in the Scheme Document, expected to be 6.00p.m. on the Business Day immediately after the Court Sanction Hearing, or such other time as Loungers and Bidco agree;
"Scheme Shareholder"	a holder of Scheme Shares;
"Scheme Shares"	1.   the Loungers Shares in issue at the date of the Scheme Document; 2.   any Loungers Shares issued after the date of the Scheme Document and prior to the Scheme Voting Record Time; and 3.   any Loungers Shares issued at or after the Scheme Voting Record Time and prior to the Scheme Record Time in respect of which the original or any subsequent holder thereof is bound by the Scheme, or shall by such time have agreed in writing to be bound by the Scheme;
"Scheme Voting Record Time"	the date and time specified in the Scheme Document by reference to which entitlement to vote at the Court Meeting will be determined, expected to be 6.00p.m. (London time) on the day which is two days before the Court Meeting or, if the Court Meeting is adjourned 6.00p.m. (London time) on the day which is two days before the date of such adjourned Court Meeting
"SHA PoAs"	has the meaning given in paragraph 15 of this announcement;
"Significant Interest"	a direct or indirect interest in 30 per cent. or more of the voting equity share capital of an undertaking;
"Subsidiary"	has the meaning given in section 1159 of the Companies Act 2006;
"Takeover Code"	the City Code on Takeovers and Mergers of the UK issued by the Panel, as amended from time to time;
"Third Party"	any government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, association, institution, self-regulatory authority, or any other body or person whatsoever in any jurisdiction;
"Topco A Preference Shares"	the A preference shares in the capital of Topco;
"Topco Articles"	the articles of association of Topco;
"Topco B Preference Shares"	the B preference shares in the capital of Topco;
"Topco Group"	Topco and its subsidiary undertakings and where the context permits, each of them (including, following the Effective Date, the Loungers Group);
"Topco Minority Shareholders"	together the holders of Topco Ordinary Shares from time to time other than any holder of at least 20 per cent. of the Topco Ordinary Shares (or their affiliates);
"Topco Ordinary Shareholders"	the holders of Topco Ordinary Shares;
"Topco Ordinary Shares"	the ordinary shares in the capital of Topco;
"Topco Preference Shares"	the Topco A Preference Shares and Topco B Preference Shares;
"Topco Shareholders"	the holders of Topco Shares;
"Topco Shareholders' Agreement"	an agreement between the Topco Shareholders to be entered into on the Effective Date;
"Topco Shares"	the Topco A Preference Shares, the Topco B Preference Shares and the Topco Ordinary Shares;
"Topco"	CF Exedra Topco Limited, incorporated in Jersey with registered number 157120;
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland;
"US" or "United States"	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia;
"US Exchange Act"	US Securities Exchange Act of 1934 (as amended) and the rules and regulations promulgated thereunder;
"US Securities Act"	US Securities Act of 1933 (as amended), and the rules and regulations promulgated thereunder;
"Voting Share Reserved Matters"	has the meaning given to it in paragraph 7 of Appendix 4 to this announcement;
"Wider Bidco Group"	Bidco and its subsidiary undertakings, associated undertakings and any other undertaking in which Bidco and/or such undertakings (aggregating their interests) have a Significant Interest; and
"Wider Loungers Group"	Loungers and its subsidiaries, subsidiary undertakings, associated undertakings and any other undertakings in which Loungers and/or such undertakings (aggregating their interests) have a Significant Interest.

 

For the purposes of this announcement:

·      "subsidiary", "subsidiary undertaking" and "undertaking" have the respective meanings given by the Companies Act 2006 and "associated undertaking" has the meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (other than paragraph 19(1)(b) of Schedule 6 to those Regulations which shall be excluded for this purpose);

·      all references to a statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as extended, modified, replaced or re-enacted from time to time and all statutory instruments, regulations and orders from time to time made thereunder or validly deriving therefrom;

·      all references to time are to London time unless otherwise stated;

·      all references to "£" and "pence" are to the lawful currency of the United Kingdom; and

·      references to the singular include the plural and vice versa.