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

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF THE MARKET ABUSE REGULATION (EU 596/ 2014) AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED

FOR IMMEDIATE RELEASE

28 February 2023

Nexus Infrastructure plc

("Nexus" or the "Company" or the "Group")

Proposed Return of Capital of up to £63m by way of a Tender Offer at 163 pence per Ordinary Share 

and

Notice of General Meeting

On 3 February 2023 Nexus Infrastructure plc ("Nexus") announced the completion of the disposal of two of its divisions, TriConnex and eSmart Networks, to FitzWalter Capital for £77.7 million (the "Disposal"). Today, the Company announces its intention to return £63 million from the net proceeds of the Disposal to shareholders by way of a fixed price Tender Offer at 163 pence per Ordinary Share. A circular is expected to be posted and made available on the Company's website today detailing the terms of the Tender Offer for up to a maximum of 38,650,306 Ordinary Shares representing approximately 83.7 per cent. of the Company's Issued Share Capital at the Record Date[1].

The Circular sets out the terms of the Tender Offer and incorporates a notice of a General Meeting to be held at 10.00 a.m. on 17 March 2023 at the Company's registered office at Nexus Park Avenue East, Skyline 120, Great Notley, Braintree, Essex, England, CM77 7AL. A Tender Form for use by Shareholders who hold their Ordinary Shares in certificated form in connection with the Tender Offer will also be despatched. Shareholders that hold their Ordinary Shares electronically through CREST and wish to tender such Ordinary Shares, must make your tender electronically through CREST.

Terms of the Tender Offer:

·      The Tender Offer will be conducted at a price of 163p per Ordinary Share (the "Tender Price")

·      The Tender Offer will be open to all Qualifying Shareholders, being Shareholders on the Register on the Record Date (being 6pm 17 March 2023)

·      Qualifying Shareholders will be able to tender 5 Ordinary Shares for every 6 Ordinary Shares held ("Basic Entitlement"), representing 83.3 per cent. of the aggregate number of Ordinary Shares registered in each Qualifying Shareholder's name in the Register on the Record Date,

·      Qualifying Shareholders are able to submit tenders in excess of their Basic Entitlement ("Excess Tenders"). Excess Tenders will only be accepted to the extent that other Qualifying Shareholders tender less than their Basic Entitlement or do not tender any Ordinary Shares

·      The Tender Offer will open today and will close at 1:00 p.m. on 17 March 2023

·      Implementation of the Tender Offer is conditional upon, amongst other things, the approval of Shareholders

·      Assuming that the maximum number of Ordinary Shares under the Tender Offer are acquired by Numis and subsequently bought by the Company under the Option Agreement and cancelled, the Company's issued share capital will be reduced by 38,650,306 Ordinary Shares to 7,531,879 Ordinary Shares following completion of the Tender Offer

Directors' intentions:

·      Directors of Nexus have provided irrevocable commitments to tender their Basic Entitlement and have confirmed that they will not seek to submit any Excess Tenders

·      Therefore, it is expected that the Directors will together continue to hold approximately 23% of the issued Ordinary Share capital of Nexus post completion of the Tender Offer

·      The Directors and Nexus management team remain committed to continuing to deliver Tamdown's two-year turnaround plan which is well advanced

Current trading and outlook:

The Company draws Shareholders' attention to the results for the year ended 30 September 2022 published on 31 January 2023 and reconfirms that trading in the first quarter of FY23 was in line with the Board's expectations. The two-year turnaround plan for Tamdown is well progressed with operational benefits coming through. Tamdown continues to see positive demand for its services despite macroeconomic headwinds and new build housing market softness. Fundamental market growth drivers for Tamdown remain positive. The housing market continues to experience a long-term position of undersupply with the number of new houses being built falling short of national targets. Performance of the housebuilders during the upcoming spring selling season will be key to underpinning FY23 and FY24 performance for Tamdown.

The sale of TriConnex and eSmart Networks crystallised the inherent value of those businesses. Given the macroeconomic headwinds, the Board has decided to retain £12 million from the net proceeds of the Disposal to strengthen the Company's balance sheet (previously this was expected to be £10 million). This balance ensures the Company's remaining operating business, Tamdown, has adequate working capital and is well capitalised to continue to support its ongoing strategy, focusing on high quality contracts and improving operating margins. The Company's previous £5 million Revolving Credit Facility with Allied Irish Bank expired on completion of the Disposal and the Company is in the process of exploring new banking facilities. The retention of £12 million will provide additional protection and funding headroom whilst new banking facilities are being put in place. To the extent that surplus capital arises in the future, it is the Board's intention that such capital will be distributed to Shareholders.

As announced in the FY22 results, there will be no final dividend for the year ended 30 September 2022 given the £63 million return of capital. The Board confirms that it is committed to a dividend policy in line with previous years, and this is expected to be 3x cover based on adjusted profits. The Board expects that the Company will pay an interim and final dividend for the current financial year FY23.

Posting of Circular and Notice of General Meeting:

Full details of the Tender Offer will be included in a circular which is expected to be published and available on the Group's website later today (www.nexus-infrastructure.com).

Implementation of the Tender Offer is conditional upon the approval of the Shareholders of the Tender Offer Resolution. That approval will be sought at a general meeting of the Company to be held at 10.00 a.m. on 17 March 2023 at the Company's registered office at Nexus Park Avenue East, Skyline 120, Great Notley, Braintree, Essex, England, CM77 7AL.

Enquiries:

NOTICE IN RELATION TO OVERSEAS PERSONS

The release, publication or distribution of this announcement in or into jurisdictions other than the UK may be restricted by law and therefore any person who is subject to the laws of any jurisdiction other than the UK should inform themselves about and observe any of those restrictions. Any failure to comply with any of those restrictions might constitute a violation of the relevant laws or regulations of such jurisdiction.

FORWARD-LOOKING STATEMENTS

This announcement includes "forward-looking statements" which include all statements other than statements of historical fact, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would, "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. Whilst the Directors consider these statements to be reasonable based upon information currently available, they may prove to be incorrect. However, the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless required to do so by applicable law or the AIM Rules.

NO PROFIT FORECAST OR ESTIMATES

Unless otherwise stated, no statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings, earnings per share or income, cash flow from operations or free cash flow for the Group, for the current or future financial years would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations or free cash flow from the Group.

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for Nexus and no one else in connection with the proposed Tender Offer and will not be responsible to anyone other than Nexus for providing the protections afforded to clients of Numis nor for providing advice in relation to the proposed Tender Offer or any other matter referred to herein. Neither Numis 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 Numis in connection with the proposed Tender Offer or any matter referred to herein.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Proposed Tender Offer to purchase Ordinary Shares for up to £63 million at a fixed price of 163 pence per Ordinary Share

1.       Introduction

The Company proposes to make a capital return of up to £63 million by way of a tender offer (the "Tender Offer"). The Tender Offer will be conducted at a fixed price of 163 pence per Ordinary Share (the ''Tender Price''). If the maximum number of shares under the Tender Offer are tendered this would result in the purchase of approximately 84.9% of the Company's Issued Share Capital at the Record Date.   

This announcement sets out the background to and reasons for the Tender Offer and why the Directors believe the Tender Offer to be in the best interests of the Company and its Shareholders as a whole. This announcement also contains details of the procedure that should be followed by those Qualifying Shareholders who wish to participate in the Tender Offer. To enable the Tender Offer to take place, the Company is seeking Shareholders' approval of the Tender Offer Resolution, which grants permission to the Company to buy back up to 38,650,306 Ordinary Shares in connection with the Tender Offer, at a General Meeting to be held at 10.00 a.m. on 17 March 2023.

2.      Background to and Reasons for the Tender Offer

On 3 February 2023, Nexus completed the disposal of TriConnex and eSmart Networks to an indirect wholly-owned subsidiary of funds managed or advised by FitzWalter and its affiliates, for cash consideration of £77.7 million (the "Disposal"). The Independent Directors were of the view that the Disposal would allow Nexus and its Shareholders to realise a higher value for the two divisions than could be generated from Nexus' continued ownership, taking into account macro-economic uncertainty and resulting demand risk in the near term, execution risk in the business plans and the investment required to achieve their growth potential.

As articulated by the Board at the time of the Disposal, the Company intended to undertake a significant return to Shareholders as a result of the Disposal, and today, the Company confirms it is returning up to £63 million to Shareholders by way of a tender offer subject to passing of the Tender Offer Resolution by Shareholders.

Current trading and prospects of the Group

The Company draws Shareholders' attention to the results for the year ended 30 September 2022 published on 31 January 2023 and reconfirms that trading in the first quarter of FY23 was in line with the Board's expectations. The two-year turnaround plan for Tamdown is well progressed with operational benefits coming through. Tamdown continues to see positive demand for its services despite macroeconomic headwinds and new build housing market softness. Fundamental market growth drivers for Tamdown remain positive. The housing market continues to experience a long-term position of undersupply with the number of new houses being built falling short of national targets. Performance of the housebuilders during the upcoming spring selling season will be key to underpinning FY23 and FY24 performance for Tamdown.

The sale of TriConnex and eSmart Networks crystallised the inherent value of those businesses. Given the macroeconomic headwinds, the Board has decided to retain £12 million from the net proceeds of the Disposal to strengthen the Company's balance sheet (previously this was expected to be £10 million). This balance ensures the Company's remaining operating business, Tamdown, has adequate working capital and is well capitalised to continue to support its ongoing strategy, focusing on high quality contracts and improving operating margins. The Company's previous £5 million Revolving Credit Facility with Allied Irish Bank expired on completion of the Disposal and the Company is in the process of exploring new banking facilities. The retention of £12 million will provide additional protection and funding headroom whilst new banking facilities are being put in place. To the extent that surplus capital arises in the future, it is the Board's intention that such capital will be distributed to Shareholders.

As announced in the FY22 results, there will be no final dividend for the year ended 30 September 2022 given the £63 million return of capital. The Board confirms that it is committed to a dividend policy in line with previous years, and this is expected to be 3x cover based on adjusted profits. The Board expects that the Company will pay an interim and final dividend for the current financial year FY23.

3.      The Tender Offer

Subject to certain conditions (including the Tender Offer Resolution being passed at the General Meeting), the Tender Offer will be implemented by Numis (acting as principal and not as agent, nominee or trustee) at the Tender Price.

Conditional upon the Tender Offer becoming unconditional and subject to the terms thereof, Numis has the right to require the Company to purchase from it (and the Company has the right to require Numis to sell to it) any Ordinary Shares acquired by Numis under the Tender Offer pursuant to an option agreement dated 28 February 2023 (the "Option Agreement") at the Tender Price. If either the put option or call option under the Option Agreement is exercised, the Company intends to cancel any Ordinary Shares purchased by Numis pursuant to the Tender Offer and subsequently purchased by the Company from Numis pursuant to the Option Agreement. It is expected that Qualifying Shareholders who successfully tender their shares will receive payment for such shares by no later than 3 April 2023.

Depending on the level of participation in the Tender Offer, it is possible that Numis will purchase, as principal, Ordinary Shares pursuant to the Tender Offer such that Numis' interest in Ordinary Shares would carry 30 per cent or more of the Company's voting rights. Such an acquisition would ordinarily trigger an obligation pursuant to Rule 9 of the Takeover Code. The Takeover Panel have, following consultation, granted a waiver from this obligation as a result of Numis' acquisition of Ordinary Shares from Qualifying Shareholders pursuant to the Tender Offer. Further details are set out in paragraph 6 below.

The Tender Offer will be open to all Qualifying Shareholders, being Shareholders on the Register on the Record Date, who are not subject to the securities laws of a Restricted Jurisdiction.

Qualifying Shareholders may participate in the Tender Offer by tendering a proportion of their registered holdings of Ordinary Shares. Each Qualifying Shareholder will be entitled to sell their Basic Entitlement under the Tender Offer, with potential for further tenders, depending on the number of Ordinary Shares tendered by other Qualifying Shareholders.

The Tender Offer is subject to, amongst other things, the passing of the Tender Offer Resolution.

The Tender Offer will close at 1.00 p.m. on 17 March 2023 and tenders received after that time will not be accepted unless otherwise approved by Numis (in consultation with the Company).

The principal terms of the Tender Offer are as follows:

·    The Tender Offer is being made to Qualifying Shareholders by Numis for the purchase of up to 38,650,306 Ordinary Shares at the Tender Price of 163 pence per Ordinary Share.

·     Numis will purchase existing issued Ordinary Shares for a total purchase price of up to £63 million.

·     Under the Tender Offer, each Qualifying Shareholder is entitled to have its shareholding purchased by Numis at the Tender Price of 163 pence per Ordinary Share up to that Qualifying Shareholder's Basic Entitlement together with potential further purchases depending on the number of Ordinary Shares tendered by other Qualifying Shareholders (subject to the overall maximum number indicated below).

·     Qualifying Shareholders have the right to tender 5 Ordinary Shares for every 6 Ordinary Shares (their "Basic Entitlement"). This number represents 83.3 per cent of the aggregate number of Ordinary Shares expected to be registered in each Qualifying Shareholder's name in the Register on the Record Date (being 17 March 2023), rounded down to the nearest whole number of Ordinary Shares.

·     All Ordinary Shares validly tendered by any Qualifying Shareholder up to their Basic Entitlement will be accepted in full.

·    Qualifying Shareholders are permitted to submit tenders in respect of Ordinary Shares that are in excess of their Basic Entitlement ("Excess Tenders"). Excess Tenders will only be accepted to the extent that other Qualifying Shareholders tender less than their Basic Entitlement or do not tender any Ordinary Shares.

·      To the extent that other Qualifying Shareholders have not taken up their Basic Entitlement (thereby creating "Excess Capacity"), Qualifying Shareholders will have their Excess Tenders satisfied in full to the extent that the Excess Capacity exceeds the aggregate Excess Tenders. To the extent that the aggregate Excess Tenders exceed Excess Capacity, Excess Tenders shall be allocated at the discretion of Nexus, with priority given to smaller shareholders, ex-employees of Nexus and ensuring that no obligation is triggered pursuant to Rule 9 of the Takeover Code, but with a general view to scaling down pro-rata to the total number of Ordinary Shares so tendered by that Qualifying Shareholder, such that the total cost of Ordinary Shares purchased pursuant to the Tender Offer does not exceed £63 million and if any fractions arise from scaling back, the number of Ordinary Shares accepted will be rounded down to the nearest whole number.

·    The maximum number of Ordinary Shares that will be purchased by Numis under the Tender Offer is 38,650,306, representing approximately 83.7 per cent of the Company's issued share capital as at the Record Date (assuming full take-up of the Tender Offer at the Tender Price and the maximum number of new Ordinary Shares issued pursuant to the share options and share awards referred to in paragraph 8 below are issued).

·      Conditional upon the Tender Offer becoming unconditional and subject to the terms thereof, Numis has the right to require the Company to purchase from it (and the Company has the right to require Numis to sell to it) any Ordinary Shares acquired by Numis under the Tender Offer pursuant to and subject to the terms and conditions of the Option Agreement. If either the put option or call option under the Option Agreement is exercised, any Ordinary Shares acquired by Numis pursuant to the Tender Offer and subsequently purchased by the Company from Numis pursuant to the Option Agreement will be immediately cancelled and will not rank for any future dividends.

·    Assuming full take up of the Tender Offer and that either the put or call option under the Option Agreement is exercised, following completion of the Tender Offer and cancellation of any Ordinary Shares purchased by the Company from Numis pursuant to the Option Agreement, the Company expects that it will have 7,531,879 Ordinary Shares in issue.

·   Qualifying Shareholders who hold their Ordinary Shares in certificated form who wish to participate in the Tender Offer must return a completed Tender Form, together with any shares certificate(s) and/or other document(s) of title so as to be received by the Receiving Agent by no later than 1.00 p.m. on 17 March 2023. Qualifying Shareholders who hold their Ordinary Shares in uncertificated form (that is, in CREST) who wish to participate in the Tender Offer should not complete a Tender Form but should submit TTE instructions electronically through CREST as described in the Circular.

·      Once submitted, a Tender Form and/or a TTE instruction (as appropriate) is irrevocable and cannot be withdrawn. Qualifying Shareholders should note that, once tendered, Ordinary Shares may not be sold, transferred, charged or otherwise disposed of.

·   Full details of the Tender Offer, including the terms and conditions on which it is made, are set out in the Circular and, for Shareholders who hold their Ordinary Shares in certificated form, on the Tender Form.

·    This is not a recommendation to Shareholders to sell or tender their Ordinary Shares. Shareholders are not obliged to tender any Ordinary Shares and Shareholders who wish to retain all of their investment in the Company should not return a Tender Form or submit a TTE Instruction. Whether or not Qualifying Shareholders tender any Ordinary Shares will depend on, among other things, their view of the Company's prospects and their own individual circumstances, including their tax position, on which they should seek their own independent advice.

4.      Overseas Shareholders

The attention of Shareholders who are not resident in the United Kingdom is drawn to paragraph 6 of Part III of the Circular to be sent to Shareholders headed "Overseas Shareholders" and, for Shareholders who hold their Ordinary Shares in certificated form, to the relevant provisions of the Tender Form.

5.       Taxation

A summary of the taxation consequences of the Tender Offer for UK resident Shareholders is set out in Part IV of the Circular to be sent to Shareholders.

Shareholders are strongly advised to obtain independent tax advice regarding their own tax position.

6.       Takeover Code

Under Rule 9 of the Takeover Code, any person who acquires an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining Shareholders to acquire their shares at the highest price paid by that person (or any persons acting in concert with them) for shares in the company within the preceding 12 months.

Rule 9 of the Takeover Code also provides that any person, together with persons acting in concert with that person, who is interested in shares which in the aggregate carry not less than 30 per cent of the voting rights of a company to which the Takeover Code applies but does not hold more than 50 per cent of such voting rights will be unable, without the Panel's consent, to acquire, either individually or together, any interest in any further voting rights in the company without being required to make a general offer to shareholders of that company to acquire their shares at the highest price paid by that person (or any persons acting in concert with them) for shares in the company within the preceding 12 months. Persons holding more than 50 per cent. of the voting rights of a company which is subject to the Takeover Code will normally have freedom to acquire further shares without being required to make a general offer to shareholders of that company.

Depending on the level of participation in the Tender Offer, it is possible that Numis will purchase, as principal, Ordinary Shares pursuant to the Tender Offer such that Numis' interest in Ordinary Shares would carry 30 per cent or more of the Company's voting rights. Such an acquisition would ordinarily trigger an obligation pursuant to Rule 9 of the Takeover Code. The Takeover Panel have, following consultation, granted a waiver from this obligation on the basis that, subject to the terms and conditions of the Option Agreement, Numis shall have a right to require the Company to purchase, and the Company shall have a right to require Numis to sell, in each case any Shares acquired by Numis pursuant to the Tender Offer.

The Company has obtained irrevocable undertakings from Mike Morris, Michelle Morris and Keith Breen that they will each participate in the Tender Offer with respect to their Basic Entitlement. The Company has also obtained irrevocable undertakings from other large shareholders to confirm that they will participate in the Tender Offer to a sufficient extent such that they will continue to hold less than 30 per cent. of the Company's issued share capital following completion of the Tender Offer and any potential subsequent purchase by the Company (pursuant to the Option Agreement) of Ordinary Shares acquired by Numis under the Tender Offer.

7.    Intentions of the Directors in relation to the Tender Offer 

As at the Latest Practicable Date, the Directors and their connected persons were interested, in aggregate, in 10,398,382 Ordinary Shares, representing approximately 22.8 per cent of Current Issued Ordinary Shares of the Company. The Directors will be tendering shares up to their Basic Entitlement, and therefore there is no expectation that their percentage holding will change materially following the Tender Offer. The Directors have irrevocably undertaken that they will not be submitting any applications in excess of their Basic Entitlement.

(1) Dawn Hillman's holding includes Ordinary Shares held by her spouse

(2) Mike Morris' holding includes Ordinary Shares held by his spouse

(3) Alex Wiseman's holding includes Ordinary Shares held by his spouse

8.  Employee options

As previously announced in connection with the Disposal, certain share options and share awards vested upon completion of the Disposal. It is expected that 625,281 Ordinary Shares will be issued to employees (pursuant to the exercise of these share options and the vesting of these awards) shortly after publication of this document. These new Ordinary Shares will be included in the number of Ordinary Shares in issue as at the Record Date, and therefore capable of participating in the Tender Offer.

9. Issued Ordinary Shares following the Tender Offer

Assuming that the maximum number of Ordinary Shares under the Tender Offer are acquired by Numis and (subject to exercise of the put option by Numis or the call option by the Company in each case pursuant to the Option Agreement), subsequently bought back by the Company and cancelled, and the maximum number of new Ordinary Shares issued pursuant to the share options and share awards referred to in paragraph 8 above are issued, the Company's issued Ordinary Share capital will be  7,531,879 Ordinary Shares. An announcement setting out the Company's new issued share capital will be made following completion of the Tender Offer.

10.    Recommendation

The Directors consider that the Tender Offer and the Tender Offer Resolution are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Tender Offer Resolution to be proposed at the General Meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings of Ordinary Shares (in respect of which they have the power to exercise or direct the exercise of voting rights) which, in aggregate, amount to 10,398,382 Ordinary Shares representing 22.8 per cent of the Current Issued Ordinary Shares.

The Directors are making no recommendation to Shareholders in relation to participation in the Tender Offer itself.

Whether or not Shareholders decide to tender their Ordinary Shares will depend, amongst other things, on their own individual circumstances, including their own tax position. Shareholders are recommended to consult their duly authorised independent advisers in making their own decisions. Attention is drawn in particular to the risk factors set out in the Circular to be sent to Shareholders later today.

DEFINITIONS

In this announcement, the following definitions apply unless the context requires otherwise: