The Directors of BBGI SICAV S.A. (LON: BBGI) have today announced a proposed placing of up to £75 million through an issue of Ordinary Shares of no par value in the Company.
The Placing will be non pre-emptive and will be launched immediately following this announcement, when Jefferies International Limited and Stifel Nicolaus Europe Limited will commence a book-building process to determine the level of demand from potential investors for participation in the Placing. The Placing Shares are not being offered at a fixed price. To bid in the book-build, investors should communicate their bid by telephone to their usual sales contact at Jefferies and Stifel. Each bid should state the number of Placing Shares for which the prospective investor wishes to subscribe and the price or price range that the prospective investor is offering to pay. Any bid price must be for a full pence or half pence amount.
On 28 March 2019 the Company announced its final audited results for the year ended 31 December 2018, whereby the investment basis net asset value per Ordinary Share as at 31 December 2018 was 133.5 pence. The Company’s share price as at close of business on Monday 17 June 2019 was 160.5 pence.
Background to the Placing and Use of Proceeds
The Company’s existing portfolio consists of direct or indirect interests in PPP/PFI infrastructure assets in the transport, healthcare, education, justice and other services sectors which are geographically located in Australia, Canada, Continental Europe, the UK and the US. The Company seeks to limit and reduce investment risk where possible, with the current portfolio benefitting from 100 per cent availability-based assets which are currently operational, with a bias towards lower risk road and bridge assets. The Company also maintains a diversified supply chain in regards to facilities management and operational and maintenance (“O&M”) contractors.
Despite a competitive acquisition environment, the Company has demonstrated that it can continue to grow its PPP portfolio on accretive terms whilst being selective with its approach to acquisition opportunities. In recent weeks it has acquired additional interests in two high quality projects, being Ohio River Bridges East End Crossing and the A1/A6 PPP road project for a total consideration of approximately £58 million, whilst over the longer term it has successfully grown its portfolio from 19 assets at IPO to the current number of 48 assets.
The Company’s strategy is to remain puristic in its approach to investing in availability-based assets only and not in higher risk infrastructure asset classes. The Company will continue to track both primary development opportunities and secondary acquisition opportunities in a variety of PPP transactions in the transportation, health, judicial, accommodation and other availability sectors that are suitable for the investment strategy. The Company’s investment pipeline includes five opportunities, with a value in excess of £150 million, arising from its strategic partnership with SNC-Lavalin, which may be available to purchase over the short to medium term. In addition the Company continues to explore, and be short listed for, new opportunities in its targeted sub-sectors, which may over the short to medium term present it with a number of interesting and accretive investment options.
In order to fund recent acquisitions, the Company has been utilising its existing revolving credit facility (“RCF”) and has in total drawn down an amount of £77 million. The Company’s current net debt position is approximately £57 million. It remains the Board’s intention that the RCF shall not be used as long-term structured debt and noting this, as well as the Company’s medium term investment pipeline, the Directors believe it is now an appropriate time to raise new equity. This equity will be used to pay down debt and thereby provide the Company with additional financial flexibility to pursue suitable new primary and secondary investment opportunities as and when they become available.
Benefits of the Placing
The Board believes the Placing will confer the following benefits for shareholders and the Company:
· the net proceeds will enable the Company to pay down its RCF and thereby provide it with additional financial flexibility to pursue primary and secondary investment opportunities in the market in accordance with the Company’s strategy;
· certain existing shareholders will be able to subscribe for further Ordinary Shares and new investors will be able to invest in the Company;
· existing shareholders who do not participate in the placing will not suffer any dilution to their NAV per ordinary shares since the Placing Shares will be issued at a premium;
· the market capitalisation of the Company will increase following the Placing and it is expected that the secondary market liquidity of the Ordinary Shares will be enhanced accordingly; and
· the Placing will provide a larger asset base for the Company over which its operating costs may be spread, thereby allowing the Company to take advantage of its internalised management structure and, over time, provide a reduction to the Company’s ongoing charges percentage.
Terms of the Placing
Jefferies and Stifel are acting as joint bookrunners in connection with the Placing.
The number of Placing Shares to be issued and the price per Ordinary Share will be determined by the Company, in consultation with the Joint Bookrunners, following the close of the book-build at 1.00 p.m. on 20 June 2019, and announced along with the results of the Placing at 7.00 a.m. on 21 June 2019. The Company (in consultation with the Joint Bookrunners) reserves the right to set a maximum percentage of Placing Shares that may be allocated to any one investor.
The Placing is available to qualifying new and existing investors and will be launched immediately following the release of this announcement, in accordance with the terms and conditions set out in the appendix to this Announcement (the “Appendix”). The Placing is expected to close at 1.00 p.m. on 20 June 2019. Stifel and Jefferies may, in agreement with the Company, accept bids that are received after the book-build has closed.
The Placing is being effected pursuant to the authority granted at the Company’s Annual General Meeting held on 30 April 2019. The price per Placing Share will be in excess of the Company’s 31 December 2018 NAV per Ordinary Share.
Stifel and Jefferies will choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with the Company, and may scale down any bids for this purpose on such basis as the Company and the Joint Bookrunners may determine. It may be necessary to scale back applications under the Placing if the number of applications exceeds the number of Placing Shares available under the Placing. In such event, Placing Shares will be allocated at the discretion of the Company (in consultation with the Joint Bookrunners). The Company will consider various factors when making this scaleback decision, including the price per share being offered by a potential investor and whether existing shareholders wish to maintain their current percentage holding in the Company. The Company reserves the right to reduce the amount to be raised pursuant to the Placing.
The Company will apply for admission of the Placing Shares to listing on the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc. It is expected that settlement of subscriptions in respect of the Placing Shares and Admission will take place and that trading in the Placing Shares will commence at 8.00 a.m. on 25 June 2019.
The Placing Shares will, when issued, be fully paid and will rank pari passu in all respects with the existing Ordinary Shares in issue, including in respect of the right to receive all future dividends and distributions declared, made or paid. Based on the current expected timetable, Placing Shares issued under the Placing will qualify for the interim dividend relating to the period to 30 June 2019, which is expected to be declared in August 2019.
The Placing is conditional upon, inter alia, Admission becoming effective not later than 8.00 a.m. (London time) on 25 June 2019 (or such later time and/or date, being not later than 8.00 a.m. (London time) on 5 July 2019, as Jefferies and Stifel may agree with the Company) and the Placing Agreement dated 18 June 2019 between the Company, Jefferies and Stifel not being terminated in accordance with its terms.
By choosing to participate in the Placing and by making an oral and legally binding offer to subscribe for Placing Shares, investors will be deemed to have read and understood this Announcement, in its entirety and to be making such offer on the terms and subject to the conditions in this Announcement, and to be providing the representations, warranties and acknowledgements contained in the Appendix.