| Mon 13 Aug 2007, 17:00 | | HAL - Halogen - Acquisition of Investment; Propose |
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HAL
HAL
HAL - Halogen - Acquisition of Investment; Proposed issue of Warrants; Creation
of an equity incentive scheme for employees; Cancellation of listing on the
Harare Stock Exchange
Halogen Holdings Societe Anonyme
(Incorporated in Luxembourg RC Luxembourg No. B 39773)
("Halogen" or "the Company")
ISIN: LU0216267913
Share code: HAL
Acquisition of Investment
Proposed issue of Warrants
Creation of an equity incentive scheme for employees
Cancellation of listing on the Harare Stock Exchange
We are pleased to announce that our subsidiary, Halogen Holdings plc ("Halogen
plc"), has invested GBP3 million of its cash resources in Heartstone Inns
Limited ("Heartstone"). Heartstone is the owner and manager of a growing chain
of UK country pubs and will use the funds to finance the acquisition of
additional pubs. Typical pubs will have a ratio of food sales to drink sales of
approximately 60% to 40%. They will employ their own chefs, preparing high
quality pub food on the premises from fresh local ingredients and will serve a
selection of real ales and other premium drinks.
Heartstone is managed by two executive directors: Stuart Hawthorn and James
Birch who between them have 32 years of experience in the UK brewing and pubs
industry. The first pub acquired by Heartstone was the Butchers Arms in
Sheepscombe, Gloucestershire and within six months it had won the award for
Cotswold Country Pub of the Year at the Cotswold Life magazine Cotswold Food and
Drink Awards.
Heartstone also acquired The Cricketers in Shroton near Blandford Forum, Dorset
in April this year. Heartstone has a strong pipeline of potential future
acquisitions and has agreed heads of terms on two further acquisitions, subject
to contract.
Heartstone has appointed Andrew Haining as a non-executive Chairman and Robin
Black as a non-executive director. Andrew and Robin are the directors of Bfm
Partners Limited, a privately owned specialist fund management and investment
company, and have previously been directors of other leisure companies including
Malmaison Hotels and Cineworld. They and others will invest approximately
GBP600,000 in Heartstone.
Depending on the size of subscriptions by other investors, Halogen will
initially acquire between 83% and 67% economic interest in Heartstone (reducing
to between 65% and 60% on a fully diluted basis). Halogen plc will hold 49.99%
of the voting rights and will appoint two directors to the Heartstone board, one
of whom will have a casting vote at Board level on certain matters, in the event
of the Board being tied.
Halogen has the option to invest a further GBP1 million in Heartstone by 9
August 2008. To provide the funds to permit it to take up this option the Board
is proposing to issue warrants to shareholders on the basis of one warrant for
every three shares held. The warrants will be exercisable on 31 May 2008 at a
price of GBP0.85 each, a discount of 55% to the current net asset value. To
raise additional funding to allow Halogen to invest further in Heartstone as it
grows, the Board proposes that for each warrant exercised, warrantholders will
be granted two new warrants exercisable on 31 May 2010 at a price of GBP0.85.
The proposed warrant issue is subject to shareholder approval at an
Extraordinary General Meeting, which is planned to be held in the week
commencing Monday, 17 September 2007 (the "EGM").
Following this investment and assuming the exercise of the option to subscribe
an additional GBP1 million in Heartstone, Halogen`s only significant asset will
be its investment in Heartstone. Halogen will work with the other shareholders
in Heartstone to grow Heartstone and will not have the resources to make any
further investments until the warrants are exercised in 2010.
At the EGM, shareholders will also be asked to approve the setting up of a
Halogen employee benefit trust to incentivise group management and the endowment
of that trust with 156,948 shares, representing approximately 4% of the fully
diluted share capital of the Company.
As Heartstone`s objective is to develop a significant chain of managed country
pubs, its policy will be to re-invest all earnings and so no dividend is
forecast for at least three years. In the absence of any dividend income from
Heartstone, Halogen will not be paying a dividend in the near future.
As Halogen has sold its last remaining investment in Zimbabwe, and due to the
continuing deterioration in economic circumstances in Zimbabwe, the Board has
decided to cancel the Company`s listing on the Zimbabwe Stock Exchange. The
Zimbabwe sub-register of shareholders will be closed forthwith and merged with
the European sub-register. The European registrar will accept share transfer
instructions in the appropriate form subject to the relevant exchange control
regulations.
By Order of the Board
City Group P.L.C.
Group Secretaries
13th August 2007
Date: 13/08/2007 17:00:01 Produced by the JSE SENS Department.
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