Worthington Group plc ("the Company" or "Worthington")
17th October 2016
FOR IMMEDIATE RELEASE
As announced on 10 October 2014, the Board of Directors was required by the FCA to request that trading in Worthington shares be suspended. This was to allow time for opinion to be sought from the regulators over whether a reverse takeover had been, or was likely to be triggered by the various acquisitions and investments that the Company had agreed to, or was in negotiations to complete. After protracted discussions with the UKLA, the Company was advised by them that it was likely that the Company had changed the nature of its business sufficiently that it had become an investment company which required a change of status from the Standard List to the Premium List. The Board of Directors took the view that the rules governing investment entity status on the Premium List were not compatible with the Company's stated aim and plans to become a conglomerate, and an alternative future was sought by the Company.
On 15 April 2015, the Company announced that it was in discussions with a group of investors (the "SPV Investors"), which sought to establish a special purpose vehicle ("SPV") to provide funding for an overseas listed company. The Company's discussions with the SPV Investors included the possibility that the overseas listed company would make an offer for Worthington, once the financing had been provided.
On 15 May 2015, the Company announced that the SPV was Greenland Mining Management Limited and the overseas listed company was NunaMinerals A/S ("Nuna"), a company quoted on the Copenhagen Stock Exchange.
On 3 July 2016, Nuna announced that the Court of Greenland had ruled in favour of a bankruptcy petition claim by Mr Ole Christiansen, former CEO of Nuna. On 4 July 2016, the Chairman of Nuna published a response to the bankruptcy petition claim.
On 21 September 2016, Nuna announced that it had lodged an appeal in the High Court of Greenland in relation to the bankruptcy order. On 13 October 2016, Nuna announced that the High Court of Greenland had annulled the earlier bankruptcy ruling and that Nuna was waiting for further information from the courts on the conditions associated with the High Court ruling.
Due to the uncertainties relating to Nuna, the Board of Worthington have continued to look at a viable alternative to provide a secure future for the Company and its stakeholders.
Pension fund issues
On 23 March 2015, the Company announced that Worthington's pension fund, the "Jerome Group plc Retirement Benefits Plan", had resolved the legal dispute over £3m of the scheme's cash assets, which were placed with solicitors pending an investment in the Rangers Football Club prior to it entering administration in 2012. The Company is pleased to be able to confirm that the £3m that was previously held in a client account with Collyer Bristow LLP on behalf of the pension fund, was recovered in full together with interest and costs.
However, despite this, in keeping with many other final salary schemes, the pension fund, which is sponsored by the Company as principal employer, is still in substantial deficit. As a consequence of Worthington currently being unable to complete the proposed acquisitions itself, due to having no tradable shares with which to do so, the Company is therefore not in a position to be able to service the Company's pension fund contributions on an ongoing basis. During the time that the Company was able to proceed with its acquisition plan, servicing the pension deficit into the future was manageable in relation to the size of the acquisitions.
In order to protect the pensioners' position, the Pension Fund will therefore need to enter the Pension Protection Fund so that existing pensioners will be paid in full, and deferred pensioners (i.e. those yet to retire) will receive 90% of their pension entitlements. In order for the Pension Fund to qualify to enter the Pension Protection Fund, it is necessary for Worthington to go through a qualifying event.
The Board of Directors have therefore decided to propose terms for a Company Voluntary Arrangement ("CVA") with all creditors; the principal terms of which are envisaged to be as follows:
· 50% of the proceeds, after legal costs, of any successful litigation that the Company, or its subsidiaries, has against various third parties will be distributed to the creditors of Worthington up to the amount of their full verified claim.
· 10% of any pre-tax profits that the Company makes, following the successful completion of its acquisitions (before or after any change of control of Worthington), will be distributed to creditors until such time as creditors receive full payment of their verified claim. Thus, 90% of the after-tax profits will be retained for the benefit of shareholders in the enlarged Company.
In order for the CVA to be implemented, 75% by value of the creditors voting in the proposed CVA must vote in favour of the CVA, together with shareholders representing 50.01% of the votes cast at the general meeting to approve the CVA.
At the same general meeting, the Company will seek the approval of shareholders for the implementation of the CVA for the purposes of Rule 21.1 of the Takeover Code.
Those creditors who are connected parties to the possible offer for Worthington by Nuna are:
Unsecured creditors: Mandolyn Limited (Doug Ware), Richard Spurway and Olympus Trading Group Limited (Aidan and Wulstan Earley); and
Secured creditors: European & Asian Limited (Doug Ware), Richard Spurway and Renatus Capital Limited (Aidan and Wulstan Earley)
Rangers Litigation and Craig Whyte
The Board of Directors reaffirm that Mr Craig Whyte has no interest in Worthington or its subsidiaries.
It remains the view of the Directors that the Company has, through its ownership of Law Financial Limited, claims relating to the administration of Rangers Football Club, the sale of its assets and the liquidation of RFC 2012 Plc.
The Board believes that the above CVA proposals, which are expected to be circulated to shareholders and creditors shortly, provide an opportunity for all stakeholders to benefit from the future success of the Company. Because of the delays in the possible takeover of Worthington, in order to secure the position for pensioners, the Pension Fund Trustees have had no alternative but to issue a Petition to wind up the Company, this Petition is due to be heard on the 24th October 2016. The Board is of the view that these CVA proposals will now provide the best possible outcome for creditors, including pensioners, whilst also ensuring that the Company's shareholders are able to participate in the Company's future success. It is therefore expected that the Petition hearing on the 24th October 2016 will be adjourned, in order to allow the proposal for the CVA to be put in place. The Board is very grateful to the Pension Fund Trustee for the support that it has shown to the Company over the last two years in these particularly trying and testing times.
About Worthington Group Plc ("Worthington")
Worthington (Stock Exchange LSE: WRN) is a British investment company that celebrates its 62nd anniversary as a London Stock Exchange main market listed company this year. The Company has four areas of investment focus: property, litigation claims, new economy and emerging markets. The Company believes that exceptional shareholder returns can be achieved by utilising its main market Sterling paper to acquire investments in these sectors worldwide.
Note: Forward-looking statements contained in this announcement, including Worthington's strategy and plans, as well as expectations for future revenue and earnings, reflect Worthington's current views and assumptions with respect to future events and are subject to certain risks, uncertainties and assumptions. There are many factors that may cause actual results achieved to differ materially from expectations for future results and expectations that may be expressed in or form an assumption of such forward-looking statements. Such factors include risks related to the day to day business of Worthington, client volatility, sales fluctuations, the general economic climate, political and environment and other risks, cancellations, software failures and interruption to service to customers due to technical problems, acquisition delays and failure as well as other uncertainties related to the results of Worthington including risks of delays or closure of projects, price falls, currency fluctuations and changes in contract terms, legislation and administrative practices, as well as competition risk and other unforeseen factors. If one or more of such risks or factors of uncertainty were to materialise, or should one or more of the statements provided prove to be incorrect, actual developments may differ materially from the forward-looking statements contained in this announcement.
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