8 September 2016
K&C REIT plc
('K&C' or the 'Company')
Put Options Arrangements with Vendor of Silcott Properties Limited
The Company acquired Silcott Properties Limited ('Silcott') on the date of the Company's admission to AIM on 3 July 2015 as part of its IPO arrangements. As part of the terms of the acquisition, it was agreed with the vendor of Silcott that £300,000 of the consideration due to the vendor would be payable in the form of ordinary shares in the Company issued at 10p per ordinary share (the 'Consideration Shares'). It was also agreed that, of the 3,000,000 Consideration Shares to be issued to the vendor, 2,700,000 would be subject to the terms of a put option agreement to be entered into between the vendor and three of the Company's directors, Tim James, Christopher James and Oliver Vaughan (the 'Put Option Arrangements').
Pursuant to the Put Option Agreements, in the event that any of the Consideration Shares were not sold within a year from the date of completion of the acquisition of Silcott, the vendor has the right (exercisable within a six-month period following the first anniversary of completion) to require Tim James, Christopher James and Oliver Vaughan to purchase 40.74 per cent. (1,100,000 shares), 40.74 per cent (1,100,000 shares) and 18.52 per cent (500,000 shares) respectively of the Consideration Shares (the 'Put Option Shares') at 10p per ordinary share (in total 2,700,000 shares).
The Admission Document published by the Company on 30 June 2015 stated that Tim James, Christopher James and Oliver Vaughan would purchase 38.64 per cent. (1,043,172 shares), 38.64 per cent. (1,043,172 shares) and 22.73 per cent. (613,656 shares) respectively of the Put Option Shares. These numbers were marginally incorrect and the numbers set out in the above paragraph are the correct numbers applicable to the Put Option Arrangements.
The acquisition of Silcott was completed by the Company on admission on 3 July 2015. The vendor has informed the directors that it wishes to exercise its rights under the Put Option Arrangements and accordingly the directors have today effected the following arrangements with the vendor.
In respect of the obligation of Christopher James to purchase 1,100,000 Put Option Shares from the vendor at 10p per ordinary share, Christopher has satisfied this obligation by the purchase of the relevant number of Put Option Shares from the vendor, with the legal interest remaining with Christopher whilst the beneficial interest is transferred to an adult family member of his.
Financing for this purchase of Put Option Shares was provided by a current shareholder in the Company, Edward Vandyk. The loan is for a period of one year from 8 September 2016, being the date on which the financing was provided for the purchase of the Put Option Shares.
Security for the loan has been provided by way of a first legal mortgage over the Put Option Shares and by the deposit by the purchaser of the Put Option Shares in Mr Vandyk's CREST nominee account. As additional security, Christopher has also deposited his entire respective shareholdings in the Company, of 2,250,001 ordinary shares (the 'Additional Security Shares'), in Mr Vandyk's CREST nominee account.
In respect of the obligation of Tim James to purchase 1,100,000 Put Option Shares, Tim has today entered into an agreement that Mr Vandyk will purchase the 1,100,000 Put Option Shares from the vendor in his place.
Tim and Mr Vandyk have also entered into a separate Put Option Agreement (the 'New Put Option') granting Mr Vandyk the right to require Tim to purchase 1,100,000 ordinary shares at 10p per ordinary share from him at any time before 31 December 2016.
Security for the performance of the New Put Option has been provided by way of a first legal mortgage over 1,087,500 ordinary shares (the 'Additional Security Shares') belonging to Tim James.
In summary, Mr Vandyk together with members of his family have taken security over 1,100,000 of Christopher James' Put Option Shares, 2,250,001 of Christopher James' current holding of ordinary shares and 1,087,500 of Tim James' current holding of ordinary shares (together the 'Secured Shares').
The security arrangements make clear that unless and until the security becomes enforceable, no beneficial interest in the Secured Shares has been transferred to Mr Vandyk or his family members. In addition, Tim and Christopher retain the right to exercise all voting and other rights attaching to the Secured Shares. However, in the event that the security becomes enforceable, Mr Vandyk, or one of the family members of his who are party to the security arrangements, will become both the legal and beneficial owner of the Secured Shares. In such circumstances and based on his current shareholding of 400,000 shares, his interest in the 1,100,000 shares acquired from Tim James and the 500,000 shares acquired from Oliver Vaughan (see below), the total interest of Mr Vandyk and his family members would be 13.8 per cent. of the ordinary share capital of the Company.
In respect of the obligation of Oliver Vaughan to purchase 500,000 Put Option Shares, Oliver has today entered into an agreement that Mr Vandyk will purchase the 500,000 Put Option Shares from the vendor in his place.
As a consequence of these transactions, the directors no longer have any interest in the Put Option Shares.
This announcement contains inside information.
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Notes to Editors:
K&C's objective is to build a substantial residential property portfolio that generates secure income flow for shareholders through the acquisition of SPVs (Special Purpose Vehicles) with inherent historical capital gains. The Directors intend that the group will acquire, develop and manage residential property assets in Central London and other key residential areas in the UK.
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