11 September 2018

Recommended Cash Offer with Unlisted Partial Share and Loan Note Alternative
for
Produce Investments PLC
by
April 1983 Bidco Limited

Summary

The Independent Committee of the Board of Produce Investments and the Board of April 1983 Bidco Limited, a Jersey company ultimately owned and controlled by funds managed by Promethean Investments LLP, are pleased to announce that they have reached agreement on the terms of a recommended cash offer under Chapter 3 of Part 28 of the Companies Act 2006, with an unlisted partial share and loan note alternative to be made by April 1983 Bidco Limited for the entire issued and to be issued share capital of Produce Investments.

Highlights

• Under the terms of the Offer, Produce Investments Shareholders will be entitled to receive:

• The Offer will also include the Unlisted Partial Share and Loan Note Alternative under which Produce Investments Shareholders will be able to elect to receive:

in lieu of the full Cash Consideration to which they would otherwise be entitled under the Offer. The availability of the Units under the Unlisted Partial Share and Loan Note Alternative is limited to such number as would constitute no more than 24.9 per cent. of the entire issued share capital of April 1983. To the extent that elections for Units under the Unlisted Partial Share and Loan Note Alternative cannot be satisfied in full, they will be scaled down as nearly as reasonably practicable pro rata to the size of such elections. An estimate of value of the Units and the Unlisted Partial Share and Loan Note Alternative will be included in the Offer Document.

• The Cash Consideration values the entire issued share capital of Produce Investments at approximately £52.95 million and the fully diluted share capital of Produce Investments at £55.29 million and represents a premium of 35.44  per cent. to the Closing Price of 142.50 pence  per Produce Investments Share on 10 September 2018 (being the last Business Day before the date of this announcement).
• The Offer will impact on options held by participants in the Produce Investments Share Option Schemes. Participants will be contacted regarding the effect of the Offer on their rights under the Produce Investments Share Option Schemes and appropriate proposals will be made to such participants in due course.
• April 1983 is a newly-formed Jersey entity ultimately owned and controlled by funds managed by Promethean Investments, a specialist MBO investor providing capital solutions in the lower mid-market.
• The Board of Produce Investments, which has been independently advised as to the financial terms of the Offer for the purposes of Rule 3 of the Code by Shore Capital, consider the terms of the Offer to be fair and reasonable. In providing its advice, Shore Capital has taken into account the commercial assessments of the Produce Investments Directors. Accordingly, the Independent Committee of the Board of Produce Investments intends to recommend acceptance of the Offer.
• April 1983 has, conditional upon release of this Announcement, agreed to purchase, or has received Irrevocable Undertakings in respect of, a total of 6,316,555 Produce Investments Shares at the Offer Price, representing approximately 23.03 per cent. of the Produce Investments’ issued share capital, or, when also accounting for Irrevocable Undertakings received in respect of options over Produce Investments Shares, a total of 6,419,002 Produce Investments Shares at the Offer Price, representing approximately 22.41 per cent. of the Produce Investments’ fully diluted share capital.
  • Ronald Barrie Clapham, Chairman of Produce Investments, intends to sell, pursuant to the terms of the Share Purchase Agreement, 2,972,316  of the Produce Investments Shares beneficially held by him, representing approximately 10.83 per cent. of Produce Investments’ issued share capital.
  • Ronald Barrie Clapham, Chairman of Produce Investments, has additionally entered into an Irrevocable Undertaking to accept the Offer in respect of the balance of his beneficial holdings totalling to 2,960,449 Produce Investments Shares in aggregate and representing approximately 10.79 per cent. of Produce Investments’ issued share capital. 
  • Furthermore, April 1983 has received an Irrevocable Undertaking from each of Angus Armstrong, Chief Executive Officer of Produce Investments, and his wife, Bronwyn Armstrong, in respect of holdings totalling to 383,790 Produce Investments Shares in aggregate and representing approximately 1.40 per cent. of the Produce Investments’ issued share capital. In addition, April 1983 has received an Irrevocable Undertaking from Angus Armstrong in respect of options held by him over 102,447 Produce Investments Shares, representing approximately 0.36 per cent. of Produce Investments’ fully diluted share capital.
• Further details of the Share Purchase Agreement and the Irrevocable Undertakings are set out in Appendix 3 to this Announcement.
• The Offer is conditional, amongst other things, on valid acceptances being received in respect of, and/or April 1983 having otherwise acquired or agreed to acquire, more than 50 per cent. of the Produce Investments Shares to which the Offer relates.
• Commenting on the Offer, Michael Burt, managing partner of Promethean Investments said:

“We are delighted to have been able to reach agreement with the Independent Committee of the Board of Produce Investments in relation to the proposed Offer, which represents an opportunity for Produce Investments Shareholders to exit at a significant premium to the current market value of Produce Investments and which will allow Produce Investments to grow outside the constraints of the public market.”

• Commenting on the Offer, Angus Armstrong, Chief Executive Officer of Produce Investments said:

“This transaction will allow Produce Investments to move to a more suitable private market environment for a company of its size, thereby eliminating the regulatory burden, constraints and costs of maintaining a public listing. Existing management will continue to run the business, and, along with them, I look forward to continuing to grow the business and serve our customers.”

• N+1 Singer is acting as financial adviser to April 1983 in respect of the Offer. King & Spalding International LLP is acting as legal adviser to April 1983.
• Shore Capital is acting as financial adviser and broker to Produce Investments in respect of the Offer. Addleshaw Goddard LLP is acting as legal adviser to Produce Investments.

Enquiries:

Stephane Auton/ Patrick Castle/ Anita Ghanekar/  James Thomas

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