Taylor Wessing uses pioneering ‘Take Private Lite’ structure on EBT Mobile China deal
European law firm Taylor Wessing has acted for EBT Mobile China (EBT) on its proposed de-listing from AIM. EBT has a market capitalisation of £15.5m.
The deal, which uses Taylor Wessing’s innovative ‘take private lite’ approach, will see EBT’s AIM listing being cancelled following a share buy-back offer to shareholders. Following shareholder and Companies Court approval, Panmure Gordon will undertake a tender offer on behalf of EBT to allow shareholders who do not wish to hold unquoted shares to sell for cash, whilst permitting others to remain following the de-listing.
According to Taylor Wessing, for reasons of cost, the traditional take private route is typically not feasible in the case of many smaller quoted companies.
Tim Stocks, Head of Taylor Wessing’s Financial Institutions and Markets Group says:
“We are delighted to have acted for EBT on this transaction. EBT, like many smaller listed companies, has concluded that continued growth can best be achieved away from the glare of public markets. Take private lite is a useful and flexible tool which can help companies achieve this at significantly lower costs than a traditional take private route.”
Tim Oldridge, partner in Taylor Wessing’s Financial Institutions and Markets Group adds:
“Whilst a take private lite approach is not for all companies, we have already seen significant interest. The current liquidity squeeze is hitting smaller UK quoted companies hardest. Some 1,600 companies on the Official List and AIM have a market caps lower than £50m, so the appeal to many smaller companies is very great. We expect to see a wave of further take private lites announced and already have a number of similar deals in the pipeline.”
How it works: ‘Take Private lite’
The de-listing process works as follows:
- Companies must issue a circular to shareholders convening a general meeting to propose a de-listing resolution
- Companies on the Official List only need the circular signed-off by the UKLA
- 75% shareholder vote in favour of the resolution required
- irrevocable undertakings to vote in favour of the resolution can be procured
- The de-listing is then effected by dealing notice issued by the London Stock Exchange (in the case of AIM) and by the UKLA (in the case of the Official List).
- The board and investors must agree how the buy-back is to be funded; internal cash resources; bank debt or a subscription for new shares
- They must then consider whether the Company has adequate distributable reserves from which to fund the buy-back. If not, they must consider creating these, e.g. reduction of share capital or share premium account, or fund from the proceeds of a new share issue
- The next step is the production of an investment agreement between the Company and the investor(s) including, reps and warranties from the Company (and possibly management) if the buy-back is funded from the proceeds of a new share issue involving an investor. The investment arrangements can include a due diligence exercise typical for a private equity transaction
- Lastly, a circular must then be sent to shareholders proposing resolutions, if required, to:
- authorise the de-listing;
- amend the articles of association to create the new shares;
- authorise the share buy-back;
- approve a reduction in share capital;
- permit the issue of the convertible preference shares; and
- dis-apply statutory pre-emption rights
ENDS
Notes to Editors
Taylor Wessing’s Financial Institutions and Markets Team
Taylor Wessing’s Financial Institutions and Markets Team consists of over 150 lawyers in offices across Europe, as well as in China and Dubai. The team’s work extends to corporate finance transactions (including IPOs and other stock-exchange related work), mergers & acquisitions, private capital, corporate tax, financial services and funds, EC law and general company law issues.
Taylor Wessing
Taylor Wessing is a leading law firm providing legal support for commercial organisations doing business in Europe. Based in Belgium, France, Germany and the UK, Taylor Wessing provides the full range of legal services to major corporations and growing enterprises.
Taylor Wessing boasts a strong reputation in the corporate, finance and real estate sectors alongside in-depth experience across the full range of legal services including intellectual property and technology, tax, litigation and dispute resolution, employment and pensions and private client.
