Share Capital Reorganisation and PDMR Notification

 

21 August 2020

 

For Immediate Release

 

Distribution Finance Capital Holdings plc
("DFC", "DF Capital" or the "Company" or together with its subsidiaries the "DFC Group")

 

SHARE CAPITAL REORGANISATION AND PDMR NOTIFICATION

Introduction

On 7 August 2020 the Company announced that as part of the ongoing bank licence application process and following feedback from the Prudential Regulation Authority (the "PRA"), the Company was required to take certain reorganisation steps in respect of parts of the existing share capital of the Company and its wholly-owned subsidiary, Distribution Finance Capital Limited ("DFC Limited"). The Company also announced that these steps would involve the buy-back and cancellation of certain existing shares and issuance of new shares held by managers and former managers totaling less than 5 per cent. of the Company's issued share capital.

The Company is pleased to provide an update on the proposed reorganisation steps, including the Buy-backs and the Subscription which are required to be completed before any final authorisation decision will be considered by the PRA. Following the completion of the reorganisation steps, the Directors expect to receive notification of the PRA's decision in respect of its application by the end of September.

The effect of the proposed steps is that all loans (other than loans that DFC Limited has made to Intertrust Employee Benefit Trustee Limited, in its capacity as trustee of the Distribution Finance Capital Employee Benefit Trust (the "EBT") that have directly or indirectly funded the acquisition of Ordinary Shares by employees will be repaid and subject to the Buy-back Agreements and Subscription Agreements being entered into, all Ordinary Shares that have been directly or indirectly funded will be cancelled and an equivalent number of new Ordinary Shares (the Subscription Shares) will be issued.

The Reorganisation Steps

As part of the ongoing bank licence application process and the application for the Company and DFC Limited's share capital to be classified as CET 1 and following feedback from the PRA, the following steps are being taken:

Step 1: the Company and DFC Limited have agreed with certain employees and Gavin Morris (being a Director of the Company) that they shall repay loans (together with accrued interest) of, in aggregate, £394,123.29 from the proceeds of the sale of 1,023,882 of their Ordinary Shares (of which Gavin Morris has agreed to sell 85,407 Ordinary Shares) to Watrium. These loans were entered into before the IPO of the Company and related to either the acquisition of shares in DFC Limited or funding of tax arising from such acquisitions.

Step 2: Watrium has agreed to acquire a further 919,611 Ordinary Shares from certain employees, former employees and Gavin Morris (of which Gavin Morris has agreed to sell 116,202 Ordinary Shares) and as consideration for the acquisition Watrium has agreed to transfer an equivalent number of Ordinary Shares to them.

Steps 1 and 2 are expected to complete on Wednesday 26 August 2020.

The Company also expects to very shortly conclude the Buy-back Agreements and the Subscription Agreements with Watrium and the EBT to implement the following steps:

Step 3: Subject to signing the Buy-back Agreements, Watrium and the EBT will, subject to approval of the Resolutions and conditional on Admission, sell the Watrium Buy-back Shares (being the 1,943,493 Ordinary Shares acquired by Watrium in steps 1 and 2) and the EBT Buy-back Shares (being 2,963,283 Ordinary Shares) to the Company in each case at a price of 1 pence per Ordinary Share and an aggregate consideration of £49,067.76.  If implemented, the Watrium Buy-back Shares and the EBT Buy-back Shares will be cancelled immediately following Admission.

Step 4: Subject to signing the Subscription Agreements, Watrium and the EBT will, conditional on Admission, subscribe for the Subscription Shares in each case at a price of 1 pence per Ordinary Share and an aggregate consideration of £49,067.76 so that they are issued with a number of new Ordinary Shares that is equal to the number of existing Ordinary Shares that they sell to the Company at Step 3.

If implemented, Steps 3 and 4 will be inter-conditional, and therefore there would be no circumstances where the Buy-back would complete without the Subscription Shares being issued. If any of the Resolutions are not passed by the requisite majority at a General Meeting to be convened, neither of Steps 3 and 4 will take place.

Completion of the Buy-Backs and Subscription will be conditional on Shareholder approval and Admission. The Company will update the market when the Buy-back Agreements and the Subscription Agreements are concluded.

DFC Limited has also agreed to reorganise its share capital by cancelling its existing share capital and using the reserve arising, to pay up new shares. 

Share Incentive Arrangements

In recognition of the employees and Gavin Morris agreeing to repay loans early, the Company has granted the Options.

The Options will be granted under the Company's existing PSP and a new tax-advantaged CSOP to be adopted by the Board. The number of Ordinary Shares subject to each Option will be determined by reference to the number of Ordinary Shares required to be sold by the employees and Gavin Morris to repay their respective loans, and to reflect the fact that income tax and National Insurance contributions will arise when the PSP Options are exercised, as compared to the tax position that would have applied in respect of the sale of the corresponding Ordinary Shares. The CSOP Options have an exercise price per share equal to the market value of Ordinary Shares as at the time of grant and the PSP Options are nil cost options. The Options will become exercisable on the same timeline, and in the same proportions, that the corresponding Ordinary Shares would have become freely transferable on the terms on which they were held. The Options are not otherwise subject to the satisfaction of performance conditions. It is expected that the Options shall (subject to vesting) be satisfied using Ordinary Shares held by the EBT and should not therefore result in any new shares being issued.

Further details of the Options granted to Gavin Morris (being a person discharging managerial responsibility) are set out in the Appendix to this announcement.

 

Enquiries:

 

Distribution Finance Capital Holdings plc
Carl D'Ammassa - Chief Executive Officer	+44 (0) 161 413 3391
Kam Bansil - Head of Investor Relations	+44 (0) 7779 229508
http://www.dfcapital-investors.com
Macquarie Capital (Europe) Limited (NOMAD and broker)
Alex Reynolds	+44 (0) 20 3037 2000
Jonny Allison
Blue Pool Communications (Financial PR)
Nick Lord	+44 (0) 7501 271 083

 

DEFINITIONS

Defined terms used in this announcement shall have the meanings set out below:

Admission	admission of the Subscription Shares to trading on AIM becoming effective in accordance with the AIM Rules
AIM	the AIM market operated by the London Stock Exchange
AIM Rules	the AIM Rules for Companies, as published by the London Stock Exchange from time to time
Board or Directors	the directors of the Company as at the date of this announcement
Buy-backs	the EBT Buy-back and the Watrium Buy-back
Buy-back Agreements	the EBT Buy-back Agreement and the Watrium Buy-back Agreement
Circular	subject to the Buy-back Agreements and the Subscription Agreements being entered into, the circular to be posted to Shareholders which will include the notice convening the General Meeting at which the Resolutions will be proposed
Company	Distribution Finance Capital Holdings plc, a company incorporated and registered in England and Wales under number 11911574
CSOP	the Company's new tax-advantaged Company Share Option Plan
DFC Limited	Distribution Finance Capital Limited, a company incorporated and registered in England and Wales under number 10198535
EBT	Intertrust Employee Benefit Trustee Limited, in its capacity as trustee of the Distribution Finance Capital Employee Benefit Trust
EBT Buy-back	subject to the EBT Buy-back Agreement being entered into, the purchase by the Company of 2,963,283 Ordinary Shares held by the EBT pursuant to the terms of the EBT Buy-back Agreement
EBT Buy-back Agreement	the conditional agreement between the Company and the EBT pursuant to which the Company will purchase 2,963,283 Ordinary Shares from the EBT
EBT Subscription Agreement	the conditional agreement between the Company and the EBT pursuant to which the EBT will subscribe for 2,963,283 Ordinary Shares
General Meeting	subject to the Buy-back Agreements and the Subscription Agreements being entered into, the general meeting of the Company to be convened to approve the Buy-back Agreements and the Subscription, notice of which will be included in the Circular
Options	the options over a total of 1,237,632 Ordinary Shares granted by the Company
Ordinary Shares	ordinary shares of £0.01 each in the capital of the Company
PRA	the Prudential Regulation Authority, the financial services regulator in the United Kingdom
PSP	the Company's performance share plan
Resolutions	subject to the Buy-back Agreements and the Subscription Agreements being entered into, the ordinary and special resolutions to be proposed at the General Meeting to approve the Buy-backs and the Subscription
Shareholders	holders of Ordinary Shares
Subscription	subject to the Subscription Agreements being entered into, the conditional subscription by the EBT and Watrium for the Subscription Shares
Subscription Agreements	the EBT Subscription Agreement and the Watrium Subscription Agreement
Subscription Shares	subject to the Subscription Agreements being entered into, the 2,963,283 new Ordinary Shares to be allotted to the EBT and the 1,943,493 new Ordinary Shares to be allotted to Watrium conditional on Admission
Watrium	Watrium AS, a significant shareholder of the Company
Watrium Buy-back	subject to the Watrium Buy-back Agreement being entered into, the purchase by the Company of 1,943,493 Ordinary Shares held by Watrium pursuant to the terms of the Watrium Buy-back Agreement
Watrium Buy-back Agreement	the conditional agreement between the Company and Watrium pursuant to which the Company purchase 1,943,493 Ordinary Shares from Watrium
Watrium Subscription Agreement	the conditional agreement between the Company and Watrium pursuant to which Watrium will subscribe for 1,943,493 Ordinary Shares

APPENDIX

Grant of Options to Directors and Persons Discharging Managerial Responsibilities (together "PDMRs")

 In accordance with the terms of the Distribution Finance Capital Holdings plc Performance Share Plan (the "PSP"), and the Distribution Finance Capital Holdings plc Company Share Option Plan ("CSOP"), the Company's Chief Financial Officer, Gavin Morris, has been granted options over ordinary shares in the capital of the Company ("Shares") as follows:

 

-      a nil-cost option over 19,733 Shares under the PSP; and

 

-      an option with an exercise price of £0.405 per Share over 74,074 Shares under the CSOP.

 

All options referred to above (subject to vesting) are expected to be satisfied using Shares held by the trustee of the Company's employee benefit trust and should not therefore result in any new shares being issued.

 

Further to the above, the Company makes the following notification and public disclosure of transactions by persons discharging managerial responsibilities:

 

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Gavin Morris
2	Reason for the notification
a)	Position/status	Chief Financial Officer and Director of Distribution Finance Capital Holdings plc

 

b)	Initial notification /Amendment	Initial Notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	DISTRIBUTION FINANCE CAPITAL HOLDINGS PLC
b)	LEI	2138004TJJJSFYYCWP10
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary Shares of Distribution Finance Capital Holdings plc
	Identification code	ISIN: GB00BJ7HMR72
b)	Nature of the transaction	Grant of nil cost option to acquire Shares under the Distribution Finance Capital Holdings plc Performance Share Plan

 

 

c)	Price(s) and volume(s)
			Price(s) - GBP	Volume(s)
			N/A	19,733
d)	Aggregated information
	- Aggregated volume	19,733
	- Price (GBP)	N/A
	- Total
e)	Date of the transaction	20 August 2020
f)	Place of the transaction	AIM / London Stock Exchange

 

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Gavin Morris
2	Reason for the notification
a)	Position/status	Chief Financial Officer and Director of Distribution Finance Capital Holdings plc

 

b)	Initial notification /Amendment	Initial Notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	DISTRIBUTION FINANCE CAPITAL HOLDINGS PLC
b)	LEI	2138004TJJJSFYYCWP10
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary Shares of Distribution Finance Capital Holdings plc
	Identification code	ISIN: GB00BJ7HMR72
b)	Nature of the transaction	Grant of option to acquire Shares for £0.405 per share under the Distribution Finance Capital Holdings plc Company Share Option Plan

 

 

c)	Price(s) and volume(s)
			Price(s) - GBP	Volume(s)
			N/A	74,074
d)	Aggregated information
	- Aggregated volume	74,074
	- Price (GBP)	N/A
	- Total
e)	Date of the transaction	20 August 2020
f)	Place of the transaction	AIM / London Stock Exchange