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Fulcrum Utility Services - Tender Offer Update

This content has been sourced from: https://www.investegate.co.uk/fulcrum-utility-srvc...

FULCRUM UTILITY SERVICES LIMITED

("Fulcrum", the "Company" or the "Group")

Proposed Board Changes

Implementation of Relationship Agreement

Proposed Amendments to the Articles of Association

Fulcrum Utility Services Limited, the UK's market leading independent multi-utility infrastructure and services provider, announces that it has reached an agreement with Harwood Capital LLP ("Harwood") and Bayford Group ("Bayford") on certain matters regarding composition of the Board. The Company also announces that Harwood has agreed to withdraw the proposed Tender Offer announced on 9 April 2020.

The Company intends to appoint Jeremy Brade and Jonathan Turner to the Board as Non-Executive Directors in short order following final due diligence.  As a condition of their appointment to the Board on behalf of Harwood and Bayford respectively, the Company has today entered into relationship agreements ("Relationship Agreements") with each of Harwood and Bayford in order to provide the Company with customary protections along with these Shareholders' rights of Board representation.

Furthermore, the Company is proposing to amend the Articles of Association in order to incorporate additional protections typically available to UK public companies under The City Code on Takeovers and Mergers (the "Code"), which are not currently available to Fulcrum or its Shareholders as a company incorporated in the Cayman Islands.

Proposed Board Changes

The Company announces that pursuant to signing the Relationship Agreements with each of Harwood and Bayford, it intends to appoint Jeremy Brade and Jonathan Turner, as representative directors of Harwood and Bayford respectively, to the Board as Non-Executive Directors in short order following final due diligence. 

Jeremy is a partner at Harwood and has been investing in UK smaller companies for 19 years. He has deep experience of serving on the boards of private and listed companies and developing their strategies to enhance shareholder value for all shareholders.  His career has spanned both public and private sectors.

Jonathan is Chief Executive Officer and sole shareholder of Bayford Group, a diverse entrepreneurial business established over one hundred years ago, with interests in gas and electricity supply, electric vehicle charging, fuel cards, property investment, development and letting and hospitality.

In addition to these intended appointments, the Company announces that a transition plan of the Board has been agreed, whereby two new independent non-executive directors will be appointed to the Board prior to the conclusion of the Company's Annual General Meeting in 2021, one of whom will assume the role of Chairman.

It has also been agreed that Philip Holder (Chairman) and Stephen Gutteridge (Non-executive Director) will remain on the Board until the earlier of the conclusion of the Company's Annual General Meeting in 2021 and three months following the appointment of both new independent directors.

Summary of the Relationship Agreements

The Company has entered into Relationship Agreements with each of Harwood and Bayford setting out certain conditions on which the representative directorship appointments of Harwood and Bayford to the Board may be made. The purpose of the Relationship Agreements is to ensure that the Company is capable of carrying on its business independently of Harwood and Bayford. 

As at the date of this agreement Harwood is interested in 24,515,000 Ordinary Shares representing approximately 11.04 per cent of the Company's total voting rights and Bayford and its connected persons are interested in aggregate in 29,570,398 Ordinary Shares representing approximately 13.31 per cent of the Company's total voting rights.

Right of board representation

Pursuant to the terms of each of the Relationship Agreements, each of Harwood and Bayford have the right to nominate one representative director to the Board. The Relationship Agreements contain acknowledgements of the rights, duties and responsibilities of each representative director, who will also need to enter into a customary letter of appointment with the Company. Each of Harwood and Bayford will need to consult with the independent directors of Fulcrum as to the suitability of their representative director (or any replacement).

Undertakings

Each of Harwood and Bayford has given undertakings in their respective Relationship Agreements in relation to the following matters:

  • All transactions between either shareholder and the Group being on arm's length terms;
  • No action being taken which may compromise the ability of the Group to operate as an independent business;
  • No action being taken which may compromise the ability of the Group to comply with applicable law and regulation including the AIM Rules and MAR or which may, save in the case of a completed takeover, result in the cancellation of the Company's AIM listing;
  • No requisitioning general meetings of the Company and no distribution of shareholder circulars by either Harwood or Bayford; and
  • Neither Harwood nor Bayford will be permitted to make a general offer for the Company's shares unless the offer is recommended by the independent directors and neither must take any action which would trigger an obligation to make a mandatory offer (whether under the Company's Articles of Association or under the Code and whether or not the Code applies).

Harwood's Relationship Agreement will apply only for as long as it is interested in shares in the Company carrying not less than 10 per cent of the Company's total voting rights, applying the definition of interests in securities in the Code.  Bayford's Relationship Agreement will also apply for as long as it is interested in shares in the Company carrying not less than 10 per cent of the Company's total voting rights, again applying the definition of interests in securities in the Code, although this threshold will increase to 20 per cent should the Harwood Relationship Agreement cease to apply.

Each representative director will not initially be a member of any committee of the Board. In addition, both representative directors will be subject to future re-election by shareholders in the first annual general meeting following their appointment.

Proposed Amendments to the Articles of Association

The Company intends to seek approval by Shareholders to amend its Articles of Association in order to incorporate additional protections typically available to UK public companies under the Takeover Code, which are not currently available to Fulcrum as a company incorporated in the Cayman Islands. A circular will shortly be posted to Shareholders, together with a notice of the General Meeting in connection with the proposed amendments to the Company's Articles of Association and a further announcement will be made in due course. Each of Harwood and Bayford have undertaken to vote in favour of these proposed amendments in accordance with the Relationship Agreements.