Notice of General Meeting and Class Meetings

 

Caffyns Plc ("Caffyns" or the "Company")

Proposed adoption of New Articles of Association

Proposed Redemption Option for First Preference Shareholders

and New Preference Shareholders

Notices of General Meeting and Class Meetings

 

Introduction

 

Caffyns, the listed motor trader, today announces certain proposals (the "Proposals"), which are subject to approval by Shareholders at the General Meeting and the Class Meetings, to:

 

·      update the Company's articles of association to:

 

o  reflect various changes in relevant law, regulation and market practice;

 

o  amend the voting rights of the First Preference Shares, the New Preference Shares and the Second Preference Shares to ensure the Company can continue to comply with the Listing Rules;

 

o  increase the rate of dividend on the First Preference Shares and the New Preference Shares; and

 

·      allow the First Preference Shareholders and New Preference Shareholders to sell to the Company some or all of their First Preference Shares and New Preference Shares respectively pursuant to the Redemption Option.

 

A circular will shortly be posted to Shareholders, setting out the background to and reasons for the Proposals and requesting their approval at the General Meeting and at the Class Meetings all to be held on 14 January 2016 (the "Circular").

 

Capitalised terms in this announcement are defined in the definitions section at the end of this announcement.

 

Background to, and reasons for, the Proposals

 

Introduction

 

The Proposals have been formulated, following engagement with various Shareholders, primarily to ensure that the Company remains eligible to retain the Premium Listing of the Ordinary Shares. If the voting rights attaching to the First Preference Shares, the New Preference Shares and the Second Preference Shares are left in their current form, the Company will be unable to comply with Listing Rule 9.2.21 from 16 May 2016.

 

Information relating to the Company's current capital structure and on the Proposals is set out below.

 

The current capital structure and voting rights of Company

 

The Company currently has four classes of shares:

·              Ordinary Shares;

·              First Preference Shares;

·              New Preference Shares; and

·              Second Preference Shares.

The Ordinary Shares and the First Preference Shares were listed on the London Stock Exchange in 1961. The Second Preference Shares were issued in 1961 but were not listed. The New Preference Shares were a bonus issue to holders of Ordinary Shares in 1978 and were listed in that year. Today, the Ordinary Shares have a Premium Listing on the Official List and the First Preference Shares and the New Preference Shares have Standard Listings on the Official List. The Second Preference Shares are not listed.

Ordinary Shareholders have the right to participate in dividends to the extent that a dividend is declared and such dividends may be variable (as opposed to fixed). Ordinary Shareholders are also entitled to receive distributions which may exceed the nominal value of their Ordinary Shares on a winding up of the Company.

First Preference Shareholders, New Preference Shareholders and Second Preference Shareholders only have the right to participate in fixed levels of dividends and specified amounts in the event of a capital distribution.

The Articles currently provide that (subject to any special rights or restrictions attached to either class) the Ordinary Shares and the Second Preference Shares have equal voting rights, that is to say both Ordinary Shareholders and Second Preference Shareholders are entitled to vote on all matters proposed in general meetings of the Company on the basis of one vote per share.

 

The First Preference Shares and the New Preference Shares may currently only vote on the following matters:

 

·              a proposed winding up of the Company;

·              a sale of the whole or a major part of the assets and undertakings of the Company; and

·              a variation to their class rights,

unless their dividend payments are more than six months in arrears, in which case the First Preference Shares and the New Preference Shares are enfranchised such that they have full voting rights.

 

Neither the First Preference Shares nor the New Preference Shares have been enfranchised to vote in their history. 

 

Changes to the Listing Rules

 

In May 2014, as part of a package of measures, the FCA introduced new provisions in relation to the governance of companies with Premium Listed securities. In particular, the FCA introduced Listing Rule 9.2.21 which requires that in certain circumstances where a shareholder vote is required by the Listing Rules that vote must only be decided by a resolution of the holders of Shares which have a Premium Listing. As at the date of this announcement, only the Ordinary Shares have a Premium Listing.

 

Listing Rule 9.2.21 applies where the following circumstances require a Shareholder vote to be taken:

·              cancellation of the listing of equity shares as per Listing Rule 5.2;

·              a transfer of the listing of equity shares with a premium listing into or out of the category of premium listing as per Listing Rule 5.4A;

·              approval of an employees' share scheme if the scheme involves or may involve the issue of new shares or the transfer of treasury shares or a long-term incentive scheme in which one or more directors is eligible to participate in accordance with Listing Rule 9.4;

·              the transactions set out in Listing Rule 9.5 including an issue of equity shares in specified circumstances;

·              any significant transaction, which is a class 1 transaction as set out in Listing Rule 10;

·              any related party transaction as defined by Listing Rule 11; and

·              dealings in the Company's own securities and treasury shares in accordance with Listing Rule 12.

A two year transitional period was provided for companies with existing Premium Listings but with capital structures that were inconsistent with these measures, such as Caffyns, to make arrangements to comply with Listing Rule 9.2.21. This transitional period ends on 16 May 2016.

 

If the Company cannot comply with Listing Rule 9.2.21 from 16 May 2016, i.e. if the holders of Shares which are not admitted to Premium Listing purport to vote on matters which are prohibited under Listing Rule 9.2.21 after 16 May 2016, the Company has an obligation to inform the UKLA. The Company highlights that the UKLA has the power to suspend the listing of a company which fails to meet its continuing obligations, with the ultimate sanction being the cancellation of its listing.

 

The Proposals

 

The key elements of the Proposals and their impact on each class of Preference Shareholder are set out below.

 

First Preference Shares

 

Adoption of the New Articles of Association will remove the limited voting rights of the First Preference Shares, save in relation to a variation of class rights of the First Preference Shares.

 

In order to compensate First Preference Shareholders for the loss of their limited voting rights, the adoption of the New Articles of Association will also result in an increase in the rate of the annual dividend of the First Preference Shares from 6.5 per cent. to 7 per cent.

 

The First Preference Shares have no automatic redemption rights. However, conditional upon the approval of Resolutions 1 and 2 at the General Meeting and the passing of all the Resolutions at the Class Meetings, the Board has decided to allow First Preference Shareholders the option to sell some or all of their First Preference Shares back to the Company, pursuant to the Redemption Option at a price of 108 pence for each Preference Share.

 

New Preference Shares

 

Adoption of the New Articles of Association will remove the limited voting rights of the New Preference Shares save in relation to a variation of class rights of the New Preference Shares.

 

In order to compensate New Preference Shareholders for the loss of their limited voting rights, the adoption of the New Articles of Association will also result in an increase in the rate of the annual dividend of the New Preference Shares from 10 per cent. to 11 per cent.

 

The New Preference Shares have no automatic redemption rights. However, conditional upon the approval of Resolutions 1 and 3 at the General Meeting and the passing of all the Resolutions at the Class Meetings, the Board has decided to allow New Preference Shareholders the option to sell some or all of their New Preference Shares back to the Company, pursuant to the Redemption Option at a price of 167 pence for each New Preference Share.

 

Second Preference Shares

 

Adoption of the New Articles of Association will amend the voting rights of the Second Preference Shares such that they will no longer be able to vote on any matter which under the Listing Rules, as amended from time to time, are required to be voted on only by Premium Listed securities, i.e. the Ordinary Shares, or otherwise on any matter prohibited by law, statute or regulation from time to time.

 

For the avoidance of doubt, the Second Preference Shares will retain the right to vote on all other resolutions proposed at a general meeting of the Company.

 

The Second Preference Shareholders are receiving no compensation for the amendment to the voting rights of the Second Preference Shares.

 

The New Articles of Association

 

It is proposed that the New Articles of Association be approved and adopted as the new articles of association of the Company in substitution for and to the exclusion of the existing Articles.

 

The primary changes to be made are:

 

·              to restrict the voting rights of the First Preference Shares, the New Preference Shares and the Second Preference Shares as described above;

·              to increase the rate of dividend of the First Preference Shares and the New Preference Shares as described above; and

·              to align certain provisions relating to directors' conflicts of interest with law and market practice.

A number of other non-material changes have been made to align the Articles with law and market practice. A version of the Articles marked to show the proposed changes will be included in the Circular.

 

Adoption of the New Articles of Association is conditional upon the passing of Resolution 1 to be proposed at the General Meeting and the Resolutions to be proposed at each of the Class Meetings.

 

If the relevant Resolutions for the adoption of the New Articles of Association are not passed, the Company will, from 16 May 2016, be unable to comply with Listing Rule 9.2.21.

 

The Redemption Option

 

Conditionally upon the passing of the Resolutions at the General Meeting and the Class Meetings, the Company is offering in this Circular to acquire some or all of the First Preference Shares and the New Preference Shares from the First Preference Shareholders and New Preference Shareholders respectively pursuant to the Redemption Option on the following basis:

 

for each First Preference Share               108 pence

for each New Preference Share               167 pence

 

in each case with dividends accrued as at the date of completion of the Redemption Option.

 

The Redemption Price in each case represents a yield of six per cent. and is higher than the amount to which First Preference Shareholders and New Preference Shareholders are strictly entitled to on a return of capital under the Articles to compensate them in part for the loss of future dividend income.

 

On the assumption that all of the First Preference Shareholders and the New Preference Shareholders elect to sell back all of their First Preference Share and their New Preference Shares, the maximum consideration payable by the Company pursuant to the Redemption Option (before taking into account any accrued dividends) would be £1.5 million. The Company will fund this amount from its existing bank facilities.

 

The Directors will make no recommendation in relation to each Preference Shareholder's individual participation in the Redemption Option. Whether or not Preference Shareholders decide to sell back some or all of their Preference Shares to the Company is a matter for each Preference Shareholder and will depend, among other things, on their individual circumstances, including their tax position.

 

General Meeting and Class Meetings

 

In order for the Proposals to become effective, the Resolutions must first be approved by a relevant majority of Shareholders at the General Meeting and the Class Meetings. Notices convening the General Meeting and the Class Meetings, all to be held on 14 January 2016 at 4 Meads Road, Eastbourne, East Sussex BN20 7DR, will be included in the Circular. 

 

Voting undertakings

 

The Company has received irrevocable undertakings to vote in favour of the relevant Resolutions from Shareholders who have a beneficial interest in respect of the following Shares:

 

·              808,345 Ordinary Shares representing approximately 29.3 per cent. of the issued Ordinary Shares (in respect of both the General Meeting and the Ordinary Share Class Meeting);

 

·              17,125 First Preference Shares representing approximately 4.4 per cent. of the issued First Preference Shares (in respect of the First Preference Share Class Meeting);

 

·              48,337 New Preference Shares representing approximately 7.5 per cent. of the issued New Preference Shares (in respect of the New Preference Share Class Meeting); and

 

·              2,000,000 Second Preference Shares representing 100 per cent. of the issued Second Preference Share (in respect of the General Meeting and the Second Preference Share Class Meeting).

 

This includes irrevocable undertakings to vote in favour of the Resolutions received from the Directors, who between them hold in aggregate 108,568 Ordinary Shares representing approximately 3.9 per cent. of the issued Ordinary Shares, 200 First Preference Shares representing approximately 0.05 per cent. of the First Preference Shares and 3,255 New Preference Shares representing approximately 0.5 per cent. of the issued New Preference Shares.

 

In addition, the Company has received an undertaking from James Sharpe & Co, Ltd, a provider of private client broking services, which advises beneficial holders of, in aggregate,

 

·              228,375 Ordinary Shares representing approximately 8.3 per cent. of the issued Ordinary Shares;

 

·              213,151 First Preference Shares representing approximately 54.8 per cent. of the issued First Preference Shares;

 

·              183,244 New Preference Shares representing approximately 28.3 per cent. of the issued New Preference Shares,

 

that it will advise its clients to vote in favour of the relevant Resolutions.

 

The Circular

 

Copies of the Circular, which contains details of the Proposals and Notices of the General Meeting and the Class Meetings, and relevant Forms of Proxy and Redemption Forms are expected to be posted to Shareholders on 21 December 2015.  

 

Copies of the Circular, the Forms of Proxy and the Redemption Forms will be submitted to the National Storage Mechanism on 21 December 2015 to be made available for inspection at http://www.hemscott.com/nsm.do. The Circular, the Forms of Proxy and the Redemption Forms will also be available on the Company's website at www.caffynsplc.co.uk from 21 December 2015

 

Shareholders are advised to read the contents of the Circular in full.

 

Expected timetable of principal events

 

Publication of the Circular	21 December 2015
Latest time and date for receipt of Forms of Proxy from Ordinary Shareholders and Second Preference Shareholders in respect of the General Meeting	2:30 p.m. on 12 January 2016
Latest time and date for receipt of Forms of Proxy from Ordinary Shareholders in respect of the Ordinary Shares Class Meeting	2:45 p.m. on 12 January 2016
Latest time and date for receipt of Forms of Proxy from Second Preference Shareholders in respect of the Second Preference Shares Class Meeting	3:00 p.m. on 12January 2016
Latest time and date for receipt of Forms of Proxy from First Preference Shareholders in respect of the First Preference Shares Class Meeting	3:15p.m. on 12 January 2016
Latest time and date for receipt of Forms of Proxy from New Preference Shareholders in respect of the New Preference Shares Class Meeting	3:30 p.m. on 12 January 2016
General Meeting	2:30 p.m. on 14 January 2016
Ordinary Shares Class Meeting	2:45 p.m. on 14 January 2016
Second Preference Shares Class Meeting	3:00 p.m. on 14 January 2016
First Preference Shares Class Meeting	3:15 p.m. on 14 January 2016
New Preference Shares Class Meeting	3:30 p.m. on 14 January 2016
Latest time and date for receipt of Redemption Forms or TTE Instructions from Preference Shareholders in respect of the Redemption Option	1:00 p.m. on 28 January 2016
Record Date for participation in the Redemption Option	5:30 p.m. on 28 January 2016
Results of the Redemption Option announced	1 February 2016
Settlement date - cheques despatched and CREST accounts credited with proceeds in respect of Preference Shares purchased by the Company	8 February 2016
Balance Share certificates despatched	by 8 February 2016

 

If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service provider.

 

 

For further information please contact:

 

Caffyns PLC                                                                           Telephone:  +44 (0) 1323 730201

Simon Caffyn (Chief Executive)   Mark Harrison (Finance Director

Definitions

The following definitions apply throughout this announcement unless the context requires otherwise:

"Articles"	the articles of association of the Company (as amended from time to time)
"Board" or "Directors"	the board of directors of the Company or any duly authorised committee thereof
"Business Day"	any day other than a Saturday, Sunday or public holiday in England and Wales on which clearing banks in London are open for general banking business
"Circular"	this document to be published by the Company detailing the Proposals
"Class Meetings"	together, the Ordinary Share Class Meeting, the First Preference Share Class Meeting, the Second Preference Share Class Meeting and the New Preference Share Class Meeting
"Companies Act"	the Companies Act 2006 (as amended) of England and Wales
"Company" or "Caffyns"	Caffyns Plc, a public limited company, incorporated and registered in England (registered number 00105664)
"CREST"	the facilities and procedures for the time being of the relevant system (as defined in the CREST Regulations) of which Euroclear UK & Ireland Limited has been approved as operator pursuant to the CREST Regulations
"FCA"	the UK Financial Conduct Authority
"First Preference Shareholders"	holders of First Preference Shares
"First Preference Shares"	the 389,000 6.5 per cent. cumulative first preference shares of £1 each in the capital of the Company
"First Preference Shares Class Meeting"	the meeting of the First Preference Shareholders to be convened for 3:15 p.m. on 14 January 2016 to approve the adoption of the New Articles of Association
"Form of Proxy"	the: (a)  white form of proxy use by the Ordinary Shareholders and the Second Preference Shareholders at the General Meeting; (b)  pink form of proxy for use by the First Preference Shareholders at the First Preference Shares Class Meeting; (c)  blue form of proxy use by the New Preference Shareholders at the New Preference Shares Class Meeting; (d)  green form of proxy use by the Second Preference Shareholders at the Second Preference Shares Class Meeting; and (e)  yellow form of proxy use by the Ordinary Shareholders at the Ordinary Shares Class Meeting.
"FSMA"	the Financial Services and Markets Act 2000 (as amended)
"General Meeting"	the general meeting of the Company to be convened for 2:30 p.m. on 14 January 2016 to approve the adoption of the New Articles of Association and the Redemption Option
"Listing Rules"	the Listing Rules of the UKLA relating to admission to the Official List
"London Stock Exchange"	London Stock Exchange Group plc
"New Articles of Association"	the new articles of association which are subject to approval at the General Meeting and the Class Meetings
"New Preference Shareholders"	the holders of New Preference Shares
"New Preference Shares"	the 648,000 10 per cent. cumulative first preference shares of £1 each in the capital of the Company
"New Preference Shares Class Meeting"	the meeting of the holders of New Preference Shares to be convened for 3:30 p.m. on 14 January 2016 to approve the adoption of the New Articles of Association
"Official List"	the list maintained by the FCA in accordance with the FSMA
"Ordinary Shareholders"	holders of Ordinary Shares
"Ordinary Shares"	the ordinary shares of £0.50 each in the capital of the Company
"Ordinary Shares Class Meeting"	the meeting of the Ordinary Shareholders to be convened for 2:45 p.m. on 14 January 2016 to approve the adoption of the New Articles of Association
"Preference Shareholders"	holders of Preference Shares
"Preference Shares"	the First Preference Shares and the New Preference Shares
"Premium Listing"	a listing where the issuer is required to comply with those requirements in the Listing Rules that are expressed to apply to such securities with a premium listing
"Proposals"	together, the proposed adoption of the New Articles of Association and the Redemption Option
"Redemption Forms"	the: (a)  grey acceptance form for use by the First Preference Shareholders in connection with the Redemption Option; and (b)  orange acceptance form for use by the New Preference Shareholders in connection with the Redemption Option, (each a "Redemption Form")
"Redemption Option"	the offer by the Company to Preference Shareholders to sell to the Company up to, in aggregate, all of the 389,000 First Preference Shares and up to all of the 648,000 New Preference Shares, on the terms and subject to the conditions set out in the Circular and the Redemption Forms
"Redemption Price"	the price per Preference Share at which the Preference Shares will be purchased by the Company pursuant to the Redemption Option being: (a)  108 pence for each First Preference Share; and (b)  167 pence for each New Preference Share
"Resolutions"	the special resolution approving the adoption of the New Articles of Association and the ordinary resolutions relating to the Redemption Option to be proposed for Shareholder approval at the General Meeting and the special resolutions approving the adoption of the New Articles of Association at each of the Class Meetings
"Second Preference Shareholders	holders of Second Preference Shares
"Second Preference Shares"	the 6 per cent. cumulative second preference shares of £0.10 each in the capital of the Company
"Second Preference Shares Class Meeting"	the meeting of the Second Preference Shareholders to be convened for 3:00 p.m. on 14 January 2016 to approve the adoption of the New Articles of Association
"Shares"	together, the First Preference Shares, the New Preference Shares, the Second Preference Shares and the Ordinary Shares
"Shareholders"	holders of Shares
"Standard Listing"	a listing on the Official List which is not a Premium Listing
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"UKLA"	the FCA exercising its functions under Part VI of the FSMA