Recommended Share Offer
(Thomson Reuters ONE) - NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, INOR INTO THE UNITED STATES, AUSTRALIA, CANADA, JERSEY, JAPAN OR ANYOTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION 22 September 2009 Recommended Share Offer by Chime Communications plc for Essentially Group LimitedSummaryThe Boards of Chime and Essentially are pleased to announce that theyhave reached agreement on the terms of a recommended share offer tobe made by Chime to acquire the whole of the issued and to be issuedshare capital of Essentially.Key terms of the Offer: * Chime will offer 0.04545 of a New Chime Share for each Essentially Share. Based on the Closing Price of 177.75 pence per Chime Share on 21 September 2009, being the last Business Day prior to this announcement, the Offer values each Essentially Share at 8.08 pence and values the entire issued share capital of Essentially at approximately £18.23 million. * In addition, Chime has agreed that Essentially Shareholders will be entitled to receive and retain the Essentially Interim Dividend of 0.36 pence per Essentially Share as announced today in Essentially's interim results. Payment of the Essentially Interim Dividend is conditional on approval by the Essentially Shareholders at a general meeting and on the Offer becoming Effective. * The Offer represents: * a premium of approximately 101.97 per cent. to the Closing Price of 4 pence per Essentially Share on 21 August 2009, being the last Business Day prior to Essentially announcing that it was in discussions regarding a potential offer; and * a premium of approximately 7.72 per cent. to the Closing Price of 7.5 pence per Essentially Share on 21 September 2009, being the last Business Day prior to this announcement.The Essentially Directors, who have been so advised by Cenkos,consider the terms of the Offer to be fair and reasonable. Inproviding their advice, Cenkos has taken into account the commercialassessments of the Essentially Directors. In addition, theEssentially Directors consider the terms of the Offer to be in thebest interests of the Essentially Shareholders as a whole.Accordingly, the Essentially Directors intend unanimously torecommend that Essentially Shareholders accept the Offer as theEssentially Directors have irrevocably undertaken to do in respect oftheir own (and certain family members') beneficial holdings inEssentially, amounting to, in aggregate, 45,741,666 EssentiallyShares, representing (as at the date of this announcement)approximately 20.27 per cent. of the existing issued ordinary sharecapital of Essentially.In addition to the irrevocable undertakings from the EssentiallyDirectors, Chime in aggregate has received irrevocable undertakingsfrom Essentially Shareholders to accept the Offer in respect of atotal of 44,214,482 Essentially Shares, representing approximately19.59 per cent. of the existing issued share capital of Essentiallyand non-binding letters of intent from Essentially Shareholders toaccept the Offer in respect of 20,868,336 Essentially Shares,representing approximately 9.25 per cent. of the existing issuedshare capital of Essentially. Further details in relation to theirrevocable undertakings and letters of intent (including in relationto the circumstances in which they cease to be binding) are given inthe main body of this announcement and Appendix III.* Commenting on the Offer, Lord Bell, the Chairman of Chime, said:"We are delighted that we have agreed terms for the recommendedacquisition of Essentially. Our Sports Marketing business has been aconsiderable success since we acquired Fast Track in 2007. Theintegration of Essentially will widen the spread of sports we cover,bring us some very talented people, allow for some synergies andrapidly develop more opportunities for growth in what is becoming amajor channel for marketing and communications."* Commenting on the Offer, John Byfield, the Chairman of Essentially, said:"The offer by Chime represents the next stage in the growth ofEssentially for its employees and shareholders. There is a goodstrategic and cultural fit and our staff, clients and shareholderswill all benefit from the association. This is an excellentopportunity to develop Essentially's business as part of Chime'sstrong sports marketing offering. The opportunities for growth areparticularly strong in the sports that the enlarged businessoperates."EPL Advisory is acting as exclusive financial adviser to Chime.Numis is acting as corporate broker and sponsor to Chime. Cenkos isacting as financial adviser under Rule 3 of the City Code andcorporate broker to Essentially.Further InformationThis summary should be read in conjunction with, and is subject to,the full text of the following announcement and the Appendices.Appendix I sets out the conditions and certain further terms of theOffer. Appendix II contains information on bases and sources used inthis announcement. Appendix III provides information in relation tothe irrevocable undertakings and letters of intent held or receivedby Chime and Appendix IV contains definitions of certain terms usedin this announcement. Please read the offer documentation in itsentirety before making a decision with respect to the Offer.Enquiries:Chime Communications plcLord Bell Tel: +44 (0) 7861 8515Christopher SatterthwaiteBell Pottinger Corporate & Financial(PR adviser to Chime)Charles Cook Tel: +44 (0)20 7861 3232Victoria GeogheganEmma KentEPL Advisory LLP(Financial adviser to Chime)David Anderson Tel: +44 (0)77 4877 6433Numis Securities Limited(Corporate broker and sponsor to Chime)Nick Westlake Tel: +44 (0)20 7260 1000Christopher WilkinsonEssentially Group LimitedBart Campbell Tel: +44 (0)20 7820 7000Dwight MightyCenkos Securities plc(Financial adviser to Essentially)Ivonne Cantu Tel: +44 (0) 20 7397 8900Beth McKiernanThis announcement is not intended to, and does not, constitute orform any part of an offer to sell or an invitation to purchase,otherwise acquire, subscribe for, sell or otherwise dispose of, anysecurities or the solicitation of an offer to purchase or subscribefor any securities pursuant to the Offer or otherwise. The Offerwill be made through the Offer Document and, in respect ofEssentially Shares held in certificated form, the Form of Acceptance,which will together contain the full terms and conditions of theOffer, including details of how to accept the Offer. Any acceptanceor other response to the Offer should be made only on the basis ofthe information contained in the Offer Document and, in respect ofEssentially Shares held in certificated form, the Form ofAcceptance. Chime also intends to publish a prospectus in connectionwith the Offer. The New Chime Shares are not being offered to thepublic by means of this announcement and this announcement does notconstitute a prospectus. Essentially Shareholders are advised toread carefully the formal documentation in relation to the Offer onceit has been dispatched.EPL Advisory, which is authorised and regulated in the United Kingdomby the Financial Services Authority, is acting exclusively for Chimeand no one else in connection with the Offer and will not beresponsible to anyone other than Chime for providing the protectionsafforded to its clients or for providing advice in relation to theOffer or in relation to the matters described in this announcement orany transaction or arrangement referred to herein.Numis, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Chime and noone else in connection with the Offer and will not be responsible toanyone other than Chime for providing the protections afforded to itsclients or for providing advice in relation to the Offer or inrelation to the matters described in this announcement or anytransaction or arrangement referred to herein.Cenkos, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting exclusively forEssentially and no one else in connection with the Offer and will notbe responsible to anyone other than Essentially for providing theprotections afforded to its clients for providing advice in relationto the Offer or in relation to the contents of this announcement orany transaction or any other matters referred to herein.Overseas JurisdictionsThe release, publication or distribution of this announcement injurisdictions other than the United Kingdom may be restricted by lawand therefore any persons who are subject to the laws of anyjurisdiction other than the United Kingdom should inform themselvesabout, and observe, any applicable requirements. This announcementhas been prepared for the purposes of complying with English law andthe City Code and the information disclosed may not be the same asthat which would have been disclosed if this announcement had beenprepared in accordance with the laws and regulations of anyjurisdiction outside of the United Kingdom.The availability of the Offer to persons who are not resident in andcitizens of the United Kingdom may be affected by the laws of therelevant jurisdiction in which they are located.The Offer will not be made, directly or indirectly, in or into anyjurisdiction where to do so would constitute a breach of securitieslaws in that jurisdiction, and the Offer will not be capable ofacceptance from or within any such jurisdiction. Accordingly, copiesof this announcement are not being, and must not be, directly orindirectly, mailed or otherwise forwarded, distributed or sent in,into or from any jurisdiction where to do so would constitute abreach of securities laws in that jurisdiction, and persons receivingthis announcement (including custodians, nominees and trustees) mustnot mail or otherwise distribute or send it in, into or from suchjurisdictions as doing so may invalidate any purported acceptance ofthe Offer.This announcement is not an offer of securities for sale in theUnited States, Australia, Canada, Jersey or Japan or in any otherjurisdiction in which such an offer is unlawful. The New ChimeShares, which will be issued in connection with the Offer, have notbeen, and will not be, registered under the US Securities Act orunder the securities law of any state, district or other jurisdictionof the United States, or Australia, Canada, Jersey or Japan, and noregulatory clearance in respect of the New Chime Shares has been, orwill be, applied for in any jurisdiction other than the UK. The NewChime Shares may not be offered, sold, or delivered, directly orindirectly, in, into or from the United States except pursuant to anapplicable exemption from, or in a transaction not subject to, theregistration requirements of the US Securities Act or such othersecurities laws. The New Chime Shares may also not be offered, soldor delivered, directly or indirectly, in, into or from Australia,Canada, Jersey or Japan or to, or for the account or benefit of, anyresident of Australia, Canada, Jersey or Japan except pursuant to anapplicable exemption from, or in a transaction not subject to,applicable securities laws of those jurisdictions. In the UnitedStates, Australia, Canada, Jersey, Japan and any other overseasjurisdiction in which the offer or issuance of New Chime Shares wouldconstitute a breach of applicable securities laws, absent anapplicable exemption therefrom, Essentially Shareholders whootherwise validly accept the Offer will receive, in lieu of the NewChime Shares to which they would otherwise be entitled under theterms of the Offer, the net cash proceeds of the sale of such shares,as more fully set out in the Offer Document.Cautionary Note Regarding Forward Looking StatementsThis announcement contains forward looking statements that are basedon current expectations or beliefs, as well as assumptions aboutfuture events. These statements, which speak only as at the date ofthis document, are based on the current expectations of themanagement of Chime and are naturally subject to uncertainty andchanges in circumstances. Undue reliance should not be placed on anysuch statements because, by their very nature, they are subject toknown and unknown risks and uncertainties and can be affected byother factors that could cause actual results, and Chime's plans andobjectives, to differ materially from those expressed or implied inthe forward looking statements.There are several factors which could cause actual results to differmaterially from those expressed or implied in forward lookingstatements. Among the factors that could cause actual results todiffer materially from those described in the forward lookingstatements are Chime's ability to combine successfully the businessesof Essentially and Chime and to realise expected synergies from thatcombination, changes in the global, political, economic, business,competitive, market and regulatory forces, future exchange andinterest rates, changes in tax rates and future business combinationsor dispositions and lower than expected revenues.Neither Chime nor Essentially undertakes any obligation (except asrequired by the Listing Rules and the rules of the London StockExchange) to revise or update any forward looking statement containedin this announcement, regardless of whether that statement isaffected as a result of new information, future events or otherwise.Nothing in this announcement is intended to be a profit forecast andstatements in this announcement should not be interpreted to meanthat the earnings per Chime Share for the current or future financialperiods will necessarily be greater than those for the relevantpreceding financial period.Dealing Disclosure RequirementsUnder the provisions of Rule 8.3 of the City Code, if any person is,or becomes, "interested" (directly or indirectly) in one per cent. ormore of any class of "relevant securities" of Chime or Essentially,all "dealings" in any "relevant securities" of that company(including by means of an option in respect of, or a derivativereferenced to, any such "relevant securities") must be publiclydisclosed by no later than 3.30 p.m. on the London business dayfollowing the date of the relevant transaction. This requirement willcontinue until the date on which the Offer becomes, or is declared,unconditional as to acceptances, lapses or is otherwise withdrawn oron which the "offer period" otherwise ends. If two or more personsact together pursuant to an agreement or understanding, whetherformal or informal, to acquire an "interest" in "relevant securities"of Chime or Essentially, they will be deemed to be a single personfor the purpose of Rule 8.3.Under the provisions of Rule 8.1 of the City Code, all "dealings" in"relevant securities" of Chime or Essentially by Chime orEssentially, or by any of their respective "associates", must bedisclosed by no later than 12.00 noon on the London business dayfollowing the date of the relevant transaction.A disclosure table, giving details of the companies in whose"relevant securities" "dealings" should be disclosed, and the numberof such securities in issue, can be found on the Panel's website atwww.thetakeoverpanel.org.uk."Interests in securities" arise, in summary, when a person has longeconomic exposure, whether conditional or absolute, to changes in theprice of securities. In particular, a person will be treated ashaving an "interest" by virtue of the ownership or control ofsecurities, or by virtue of any option in respect of, or derivativereferenced to, securities.Terms in quotation marks are defined in the City Code, which can alsobe found on the Panel's website. If you are in any doubt as towhether or not you are required to disclose a "dealing" under Rule 8,you should consult the Panel.Publication on the Chime and Essentially websitesA copy of this announcement is and will be available for inspectionfree of charge, subject to certain restrictions relating to personsresident in restricted jurisdictions, on Chime's website atwww.chime.plc.uk and Essentially's website atwww.essentiallygroup.com.NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, INOR INTO THE UNITED STATES, AUSTRALIA, CANADA, JERSEY, JAPAN OR ANYOTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION 22 September 2009 Recommended Share Offer by Chime Communications plc for Essentially Group Limited1. IntroductionThe Boards of Chime and Essentially are pleased to announce that theyhave reached agreement on the terms of a recommended share offer tobe made by Chime to acquire the whole of the issued and to be issuedshare capital of Essentially.2. The OfferPursuant to the Offer, which will be on and subject to the terms andconditions set out below and in Appendix 1 and the full terms andconditions which will be set out in the Offer Document and, inrespect of Essentially Shares held in certificated form, the Form ofAcceptance, Essentially Shareholders will be entitled to receive: for each Essentially Share 0.04545 of a New Chime Shareand so in proportion for any number of Essentially Shares held.In addition, Chime has agreed that Essentially Shareholders will beentitled to receive and retain the Essentially Interim Dividend of0.36 pence per Essentially Share as announced today in Essentially'sinterim results. The Essentially Interim Dividend will be payable toEssentially Shareholders on the register on 2 October 2009 and the exdividend date is 30 September 2009. Payment of the EssentiallyInterim Dividend is conditional on approval by the EssentiallyShareholders of the Essentially Interim Dividend at a general meetingto be convened by the Essentially Directors and on the Offer becomingEffective.Based on the Closing Price of 177.75 pence per Chime Share on 21September 2009, being the last Business Day prior to thisannouncement, the Offer values each Essentially Share at 8.08 penceand values the entire issued share capital of Essentially atapproximately £18.23 million.The Offer represents: * a premium of approximately 101.97 per cent. to the Closing Price of 4 pence per Essentially Share on 21 August 2009, being the last Business Day prior to Essentially announcing that it was in discussions regarding a potential offer; and * a premium of approximately 7.72 per cent. to the Closing Price of 7.5 pence per Essentially Share on 21 September 2009, being the last Business Day prior to this announcement.Assuming that the maximum number of New Chime Shares is issued toEssentially Shareholders under the Offer, it is expected that currentChime Shareholders will own approximately 84.76 per cent., andcurrent Essentially Shareholders will own approximately 15.24 percent., of Chime's enlarged issued share capital once the Offerbecomes Effective.No fractions of New Chime Shares will be issued to holders ofEssentially Shares. Any fractional entitlements to New Chime Shareswill be rounded up or down to the nearest whole number (withfractional entitlements to 0.5 or more of a New Chime Share beingrounded up).Essentially Shares will be acquired by Chime, pursuant to the Offer,fully paid and free from all liens, equities, charges, encumbrances,rights of pre-emption and any other third party rights or interestwhatsoever and together with all rights now or hereafter attachingthereto, including voting rights and, without limitation, the rightto receive and retain in full all dividends and other distributions(if any) declared on or after the date of this announcement, otherthan the Essentially Interim Dividend.The New Chime Shares will, when issued, be fully paid and rank paripassu in all respects with the existing Chime Shares, including,where the record date for determining entitlements is on or after thedate of issue of the New Chime Shares, the right to all dividends andother distributions (if any) declared, made or paid by Chime. Forthe avoidance of doubt, the New Chime Shares will not qualify for theChime Interim Dividend announced on 25 August 2009.Application will be made to the UKLA for the New Chime Shares to beadmitted to the Official List and to the London Stock Exchange forthe New Chime Shares to be admitted to trading on the London StockExchange's market for listed securities. It is expected thatadmission will become effective and that dealings for normalsettlement in the New Chime Shares will commence shortly followingthe date on which the Offer becomes or is declared unconditional inall respects (save only for the admission of such shares becomingeffective).The Offer will be subject to the satisfaction or, where appropriate,waiver of the conditions of the Offer set out in Appendix I,including the admission to trading of the New Chime Shares.3. Unanimous recommendation and undertakings to accept the OfferThe Essentially Directors, who have been so advised by Cenkos,consider the terms of the Offer to be fair and reasonable. Inproviding their advice, Cenkos has taken into account the commercialassessments of the Essentially Directors. In addition, theEssentially Directors consider the terms of the Offer to be in thebest interests of the Essentially Shareholders as a whole.Accordingly, the Essentially Directors intend unanimously torecommend that Essentially Shareholders accept the Offer as theEssentially Directors have irrevocably undertaken to do in respect oftheir own beneficial holdings in Essentially, amounting in aggregateto 45,741,666 Essentially Shares, representing (as of the date ofthis announcement) approximately 20.27 per cent. of the existingissued ordinary share capital of Essentially.4. Background to and reasons for the OfferChime intends to integrate Essentially into its existing sportsmanagement business. The Essentially satellite offices in India,South Africa, Australia and New Zealand will enhance Chime's existingbusiness in the Commonwealth sports area. As one of the leadingmarketing agencies in rugby and cricket worldwide, the Chime Boardexpects that Chime's existing sports marketing business, whencombined with Essentially's, will be a major contributor to theEnlarged Group. It is Chime's intention to report sports marketingactivity as a separate division from January 2010. The Chime andEssentially teams have reviewed the prospects for the sportsmarketing business and are excited by the opportunities forsubstantial revenue growth based on existing long term contracts. Inaddition some immediate cost savings will result from the eliminationof Essentially's costs relating to its AIM admission and separatepublic company status.The Board of Chime expects the acquisition to be earnings enhancingin the first full year after acquisition and before taking account ofone-off costs relating to the acquisition and amortisation ofintangible assets. The foregoing statement is not intended to be aprofit forecast and statements in this announcement should not beinterpreted to mean that the earnings per Chime Share for the currentor future financial periods will necessarily be greater than thosefor the relevant preceding financial period.5. Background to and reasons for the recommendationEssentially was formed in 2001 as a motorsport business and, at itsadmission to AIM in May 2006, management's intention was to create aleading sports marketing and athlete management business through aseries of acquisitions. Essentially's acquisitions have been fundedby equity issues, internal cash generation and bank funding.Essentially has made eight acquisitions which have given it a leadingposition in the UK sports marketing business in cricket and rugby anda global reach in athlete management in these sports.Over the past year, the Essentially Directors have been evaluatingEssentially's next stage of growth and reassessing its strategyparticularly in the light of the economic conditions that haveprevailed. Such conditions make it difficult for Essentially tocontinue to pursue its acquisition strategy given a number of factorsincluding constraints in securing equity or debt financing,Essentially's depressed share price and the gap in valuationexpectations between sellers and buyers created by uncertainty in theeconomic outlook. While Essentially can pursue an organic growthstrategy in the short term, the Essentially Directors believe thatthe progress of the business would be materially enhanced throughincreased scale, a stronger corporate profile and access to greaterfinancial resources.The Offer represents an opportunity for Essentially to combine itsbusiness with Fast Track, Chime's sports marketing agency business,to create a larger, more diversified group with a stronger marketpresence. The businesses of Essentially and Fast Track are highlycomplementary. Essentially's strengths lie in the marketing ofrights and in athlete management in rugby and cricket while FastTrack enjoys strong positions in event management, communications andconsultancy in complementary sports.In accepting the Offer, following which Essentially Shareholderswould receive New Chime Shares, Essentially Shareholders will benefitfrom: * continued exposure to Essentially's business under a stronger platform for growth and profitability; * additional exposure to a larger, more diversified business in sports marketing and marketing services; * increased capital market scale; * increased share liquidity; and * improved prospects of both retaining and attracting new personnel.In considering whether to recommend the proposal, the EssentiallyDirectors have also taken into consideration the following: * Essentially Shareholders representing in aggregate approximately 52.27 per cent. of Essentially's issued share capital have already indicated their support for the Offer of which 12.41 per cent. represent institutional shareholders who are independent of the Essentially Directors and management; * the lack of liquidity in Essentially Shares and Essentially's current size mean that neither Essentially nor Essentially Shareholders are currently benefiting significantly from Essentially's admission to AIM; and * the consideration payable under the Offer represents a premium of approximately 101.97 per cent. to the Closing Price of 4 pence per Essentially Share on 21 August 2009, being the last Business Day prior to Essentially announcing that it was in discussions regarding a potential offer.On the basis of the above the Essentially Directors intendunanimously to recommend that Essentially Shareholders accept theOffer.6. Irrevocable UndertakingsChime has received irrevocable undertakings to accept, or procureacceptance of, the Offer from: * each of the Essentially Directors (or their nominees, family members or associated companies) in respect of their entire personal holdings of 45,741,666 Essentially Shares representing, in aggregate, approximately 20.27 per cent. of the existing issued share capital of Essentially; and * certain Essentially senior managers (or their nominees, family members or associated companies) in respect of their entire beneficial shareholdings of 44,214,482 Essentially Shares representing, in aggregate, approximately 19.59 per cent. of the existing issued share capital of Essentially.Accordingly, Chime has received irrevocable undertakings to accept,or procure acceptance of, the Offer in respect of, in aggregate,89,956,148 Essentially Shares representing approximately 39.86 percent. of the existing issued share capital of Essentially.These irrevocable undertakings continue to be binding in the event ofa higher offer being made for Essentially but cease to be binding ifthe Offer is withdrawn by Chime (with the consent of the Panel ifrequired) or lapses.Certain of the Essentially Directors and senior managers (or theirnominees, family members or associated companies, as applicable) havealso undertaken to Chime not to dispose of part of the New ChimeShares which they receive pursuant to the Offer for a period of up to12 months.As at 21 September 2009, being the last Business Day prior to thisannouncement, the following Essentially Shareholders have deliveredletters to Chime confirming their intention to accept the Offer: * AXA Framlington, the judgemental equity division of AXA Investment Managers UK Limited, in respect of 8,470,139 Essentially Shares over which it has discretionary management control; * Octopus Investments Limited in respect of 7,905,305 Essentially Shares over which it has discretionary management control; and * Bluehone Investors LLP in respect of 4,492,892 Essentially Shares held by two trusts which it manages, Active Capital Trust LLP and Bluehone AIM VCT2 plc.These letters of intent represent in aggregate 20,868,336 EssentiallyShares representing approximately 9.25 per cent. of Essentially'sexisting issued share capital. The letters of intent referred toabove are non-binding and do not prevent the relevant shareholdersfrom rejecting the Offer if they so choose.In addition, Rensburg AIM VCT plc, which holds 7,136,806 EssentiallyShares, has confirmed its intention to accept the Offer, provided ahigher offer is not forthcoming during the Offer Period.Further details of the irrevocable undertakings and letters of intentare set out in Appendix III to this announcement.7. Information on ChimeChime is the holding company for the Chime Group, one of the leadingindependent communications groups in the UK. The Chime Group helpsclients create, manage, monitor and market their businesses, brandsand reputations both in the UK and internationally. The principalbusiness of the Chime Group is to provide public relations,advertising, sports marketing, market research, direct marketing,design and event management consultancy.The Chime Group consists of one of the UK's leading public relationsgroups, Bell Pottinger, a research and consultation business, OpinionLeader, an advertising and marketing services group, VCCP Limited,and a leading UK sports marketing agency, Fast Track. In addition toits public relations division, Chime has both a research andengagement division and an advertising and marketing servicesdivision. The advertising and marketing services division has growninorganically through the acquisition of VCCP Limited and otherbusinesses.Chime is made up of three divisions, 50 agencies and over 1,000people with offices in London, Liverpool, Leeds, Macclesfield,Glasgow and Cardiff in the UK, Berlin, Munich, Hamburg and Madrid inEurope, New York, Boston and Washington DC in the United States andDubai, Abu Dhabi, Bahrain and Qatar in the Middle East. As set outin the audited financial information for Chime, for the financialyear ended 31 December 2008, Chime reported operating income of£112.1 million and profit after tax of £16.3 million. As at 31December 2008, Chime's net assets were £88.5 million.8. Current trading and prospects of ChimeAs announced in Chime's interim results for the six months ended 30June 2009, the Chime Group has delivered its highest first halfpre-tax profit in the history of Chime.The Chime Group's productivity has improved (income per head in thesix months ended 30 June 2009 increased to £58,000 from £55,000 inthe first half of the 2008 financial year). The Chime Groupconsolidated its business, with clients using more than one companyincreasing to 169 in the first half year from 159 in the first halfof 2008 and Chime's top 30 clients representing 57 per cent. of theChime Group's income (compared to 46 per cent. in the six monthsended 30 June 2008). Income per client rose to £64,000 in the firsthalf of 2009 from £51,000 in the first half of 2008. Nearly half ofthe Chime Group's operating income came from international workcompared to 34 per cent. in the first half of 2008.The consequence of this consolidation is that the Chime Group actedfor 908 clients in the first half of 2009 compared to 1,066 in thefirst half of 2008 and the number of clients paying the Chime Groupover £50,000 fell from 190 to 164.The Chime Group's new business pipeline is strong with a largeproportion of second half operating income committed (nearly 90 percent.). The Board of Chime believes that the Chime Group's costs areunder control, its cash management is strong and the Chime Group hasthe opportunity to make some strategic acquisitions to develop itsbusiness in preparation for a possible upturn at some point during2010.The Chime Group continues to operate a 4 times cover dividend policy(which is not necessarily paid in line with the proportion of onethird in the interim dividend and two thirds in the final dividend).The Directors of Chime remain cautiously optimistic for the fullfinancial year.9. Information on EssentiallyEssentially is a specialist sports marketing, media and servicescompany with business activities centered on rugby and cricket.Essentially was founded in 2001 and was admitted to AIM in May 2006. Essentially's headquarters are in London and it has additionaloffices in India, South Africa, Australia, New Zealand and Japan.Essentially has approximately 100 employees worldwide. Essentiallyoperates three complementary divisions: sports marketing, athletemanagement and professional services.In sports marketing, Essentially procures sponsorship rights to sellfor leading sports federations. Essentially is one of the UK'sleading agencies of cricket and rugby rights and also has anestablished position in Formula 1. Essentially currently hasexclusive rights to sell perimeter marketing at all test matchcricket grounds for all international cricket in the UK to 2010(including Twenty20, One Day International and Test matches), andexclusive rights to perimeter marketing at Twickenham and theMillennium Stadium. As part of its sports marketing business,Essentially also sources, negotiates and secures sponsorshipagreements and other marketing initiatives for a wide range oforganisations including global brands and sports federationsincluding events management. In athlete management, Essentially actsas manager for approximately 500 sports personalities in the UK, NewZealand, South Africa, Japan, Australia and India. Essentially'sprofessional services division offers clients specialist advisoryservices including accounting and tax advice. This includes taxplanning, accounting, image rights advice and secretarial servicesfor athletes, media personalities, professional sports clubs andgoverning bodies.10. Current trading of EssentiallyFor the year ended 31 December 2008, Essentially reported revenues of£16.3 million, gross profit of £9.4 million, earnings beforetaxation, interest, depreciation, amortisation and exceptional itemsof £2.6 million and net assets as at 31 December 2008 of £20.0million.Essentially today announced its interim results for the six monthsended 30 June 2009. Essentially reported revenues of £10.0 million,gross profit of £5.4 million and earnings before taxation, interest,depreciation, amortisation and exceptional items of £1.2 million forthe period. Essentially's net assets as at 30 June 2009 were £19.2million and its gross assets were £41.9 million. Cash on the balancesheet at 30 June 2009 was £4.3 million, with a net debt position of£4.0 million after taking account of funds collected on behalf ofclients. Conditional upon the Offer becoming Effective, Chimeintends to repay Essentially's debt using Chime's existingfacilities. The Essentially Board remains positive as toEssentially's outlook.The full text of Essentially's results for the year ended 31 December2008 and six months ended 30 June 2009 are available on Essentially'swebsite at www.essentiallygroup.com.11. Management and EmployeesChime attaches great importance to the skills and experience of theexisting management and employees of Essentially, and intends thatEssentially's current management team will continue to be involved inthe ongoing business of Essentially within the Enlarged Group.Chime confirms that, following the Offer becoming or being declaredunconditional in all respects, the existing employment rights ofemployees and management of Essentially, including pension rights,will be fully safeguarded.If the Offer becomes or is declared unconditional in all respects,John Byfield, the Executive Chairman of Essentially and JamesButterfield and Richard Battersby, each of whom are non-executiveDirectors of Essentially, have agreed to resign from the Board ofEssentially. Each will receive termination payments in accordancewith their contractual entitlements.Paladin Management Limited and John Byfield will enter into aconsultancy agreement with Essentially Sport Limited, a Guernseyregistered subsidiary of Essentially Group Limited, to run the motorsports division. The agreement will be subject to termination on 6months notice. On entering into the agreement, Paladin ManagementLimited will be paid £38,000 and an annual fee of £75,000. Cenkosconsiders these payments to be fair and reasonable so far as theEssentially Shareholders are concerned.12. Management Incentive SchemeConditional on the Offer becoming or being declared unconditional inall respects, Chime intends to put in place a management incentivescheme for certain members of Essentially's senior management,including Bart Campbell, Tim Berg, Dwight Mighty and MatthewVandrau. Under the scheme, 19 of Essentially's senior management maybecome entitled to payments of up to an aggregate of £2.5 millionover three years (a maximum of £833,000 per annum).The payment of benefits under the management incentive scheme isconditional on the performance of the combined businesses of FastTrack and Essentially, as part of the Enlarged Group, achievingcertain performance targets over the financial years 2010, 2011 and2012. Performance will be measured on the combined trading profitsbefore interest, amortisation of goodwill and intangible assets andcosts of the management incentive scheme for Fast Track andEssentially over this three year period. The performance targets forthe management incentive scheme require Fast Track and Essentially toincrease their current levels of combined operating profit by 16 percent. in 2010, 12.5 per cent. in 2010 and 11 per cent. in 2012.Cenkos consider the terms of the management incentive scheme to befair and reasonable so far as the Essentially Shareholders areconcerned.Chime intends also to vary the existing deferred considerationarrangements put in place in March 2007 for certain members of FastTrack's management so that entitlements to payments under thesearrangements will in future also be calculated by reference to theperformance of the combined businesses of Fast Track and Essentially.13. Essentially Share SchemeAppropriate proposals will be made in due course to participants inthe Essentially Share Scheme. Details of these proposals will be setout in the Offer Document and in separate letters to be sent toparticipants in the Essentially Share Scheme.14. Non-solicitation and Break Fee AgreementChime and Essentially have entered into the Non-solicitation andBreak Fee Agreement in relation to the Offer. The Non-solicitationand Break Fee Agreement provides for an Exclusivity Period whichcommenced on 21 September 2009 and continues until the earlier of (i)the date when Chime's Offer lapses or is withdrawn; (ii) the date onwhich the Offer becomes or is declared unconditional as toacceptances.During the Exclusivity Period, Essentially has undertaken:(a) not to (i) solicit any Alternative Proposal; (ii) enter intoany discussions which relate to an Alternative Proposal; or (iii)enter into any agreement or arrangement with a view to implementingan Alternative Proposal; and(b) to notify Chime as soon as is reasonably practicable if (i) abona fide proposal or approach is made to Essentially in relation toany Alternative Proposal; (ii) a request for information is receivedby Essentially under Rule 20.2 of the City Code; or (iii) Essentiallyprovides any information to a Third Party with a view to that partyinvestigating or making an Alternative Proposal, in each case subjectto any restrictions under applicable law or regulations.Essentially has also agreed to pay Chime a break fee of £182,345,being an amount equal to 1 per cent. of the value of Essentiallycalculated by reference to the terms of the Offer if any of thefollowing occurs: (i) the Board of Essentially withdraws or adverselymodifies its recommendation of the Offer; (ii) an AlternativeProposal is made and subsequently becomes or is declaredunconditional in all respects or is completed; (iii) if Essentiallyis in material breach of any of its obligations under theNon-solicitation and Break Fee Agreement; (iv) the Offer is withdrawnby Chime with the consent of the Panel following a material breach ofa condition of the Offer as a result of any action or omission byEssentially; (v) the Board of Essentially fails unanimously torecommend that Essentially Shareholders vote in favour of anyresolutions necessary to implement the Offer or withdraw or adverselymodify such recommendation; or (vi) Essentially takes any actionwhich results in the Offer being frustrated or in EssentiallyShareholders being denied the opportunity to decide on its merits(including any action which falls within the scope of Rule 21.1 ofthe City Code).Further information on the Non-solicitation and Break Fee Agreementwill be set out in the Offer Document.15. Disclosure of Interests in EssentiallySave for the arrangements with Essentially Shareholders in relationto irrevocable undertakings summarised above, as at 21 September2009, being the latest Business Day prior to this announcement,neither Chime, nor, so far as Chime is aware, any person acting inconcert with Chime for the purposes of the Offer, has any interestin, or right to subscribe for, or has borrowed or lent (save for anyborrowed shares which have been either on-lent or sold) anyEssentially Shares, nor does any such person have any short positionor any arrangement in relation to Essentially Shares. An"arrangement" includes any indemnity or option arrangement and anyagreement or any understanding, formal or informal, of whatevernature, relating to Essentially Shares which may be an inducement todeal or refrain from dealing in such securities.It has not been possible, by the date of this announcement, toascertain the interests in Essentially Shares (if any) of all Chime'sconcert parties. Further enquiries will be completed prior topublication of the Offer Document. If such enquiries reveal any suchinterests, they will be included in the Offer Document or announcedearlier if required by the Panel."Interests in securities" is further explained in the paragraphheaded "Dealing Disclosure Requirements" below.16. Overseas ShareholdersThe distribution of this announcement to, and the availability of NewChime Shares under the terms of the Offer to, persons not resident inthe United Kingdom may be affected by the laws of the relevantjurisdiction. Such persons should inform themselves about and observeany applicable requirements.In any case where the delivery of New Chime Shares to an EssentiallyShareholder would or may infringe the laws of any jurisdiction orwould or may require Chime to obtain or observe any governmental orother consent or any registration, filing or other formality(including ongoing requirements) which Chime regards as undulyonerous, Chime reserves the right to have the New Chime Shares towhich such person would otherwise be entitled to under the Offer soldin the market with the proceeds of the sale being remitted to therelevant Essentially Shareholder.Further details in relation to Overseas Shareholders will becontained in the Offer Document.17. Cancellation of Admission, Re-registration and CompulsoryAcquisitionUpon the Offer becoming or being declared unconditional in allrespects and sufficient acceptances having been received, it is theintention of Chime to apply the provisions of Articles 116 to 118 andArticle 121 of the Companies (Jersey) Law 1991 (as amended) toacquire compulsorily any remaining Essentially Shares in respect ofwhich the Offer has not been accepted.Assuming the Offer becomes Effective, Chime also intends to procurethe making of an application by Essentially to the London StockExchange for the cancellation of the admission of the EssentiallyShares to AIM. If this cancellation occurs, it will significantlyreduce the liquidity and marketability of any Essentially Shares notassented to the Offer. It is anticipated that the cancellation ofadmission to AIM will take effect no earlier than 20 Business Daysafter the Offer becomes or is declared unconditional in all respectsprovided that Chime has, by virtue of its shareholdings andacceptances of the Offer, acquired or agreed to acquire issued sharecapital carrying at least 75 per cent. of the voting rights ofEssentially.It is also intended that, following the Offer becoming or beingdeclared unconditional and cancellation of the admission of theEssentially Shares to AIM, Essentially will be re-registered as aprivate company under the relevant provisions of the Companies(Jersey) Law 1991 (as amended).18. General and DocumentationChime reserves the right to elect to implement the acquisition ofEssentially, with the consent of the Panel, by way of scheme ofarrangement under Article 125 of the Companies (Jersey) Law 1991 (asamended). In such event, such scheme will be implemented on the sameterms (subject to appropriate amendment) as the Offer. References tothe Offer and the Offer Document in this announcement shall include,where applicable, any such scheme of arrangement.The Offer will be subject to the conditions and further terms set outherein and in Appendix 1 and to the full terms and conditions whichwill be set out in the Offer Document (which will include a letter ofrecommendation from the Chairman of Essentially on behalf of theEssentially Board) and, in respect of Essentially Shares held incertificated form, the Form of Acceptance. In deciding whether ornot to accept the Offer in respect of their Essentially Shares,Essentially Shareholders should rely on the information contained in,and the procedures described in, the Offer Document and, in respectof Essentially Shares held in certificated form, the Form ofAcceptance.Chime also intends to publish a prospectus in connection with theOffer. The New Chime Shares are not being offered to the public bymeans of this announcement and this announcement does not constitutea prospectus. The Offer Document will be posted to EssentiallyShareholders and the Prospectus will be published as soon asreasonably practicable and in any event within 28 days of the date ofthis announcement. Essentially Shareholders are advised to readcarefully the formal documentation in relation to the Offer once ithas been dispatched.The Offer will be governed by English law and will be subject to thejurisdiction of the English courts. The Offer will be subject to theapplicable requirements of the City Code, the Panel, the London StockExchange and the UKLA.Further InformationAppendix I sets out the conditions and certain further terms of theOffer. Appendix II contains information on bases and sources used inthis announcement. Appendix III provides information in relation tocertain irrevocable undertakings and letters of intent and AppendixIV contains definitions of certain terms used in this announcement.Please read the Offer Document in its entirety before making adecision with respect to the Offer.Enquiries:Chime Communications plcLord Bell Tel: +44 (0)20 7861 8515Christopher SatterthwaiteBell Pottinger Corporate & Financial(PR adviser to Chime)Charles Cook Tel: +44 (0)20 7861 3232Victoria GeogheganEmma KentEPL Advisory LLP(Financial adviser to Chime)David Anderson Tel: +44 (0)77 4877 6433Numis Securities Limited(Corporate broker and sponsor to Chime)Nick Westlake Tel: +44 (0)20 7260 1000Christopher WilkinsonEssentially Group LimitedBart Campbell Tel: +44 (0)20 7820 7000Dwight MightyCenkos Securities plc(Financial adviser to Essentially)Ivonne Cantu Tel: +44 (0) 20 7397 8900Beth McKiernanThis announcement is not intended to, and does not constitute, orform any part of an offer to sell or an invitation to purchase,otherwise acquire, subscribe for, sell or otherwise dispose of, anysecurities or the solicitation of an offer to purchase or subscribefor any securities pursuant to the Offer or otherwise. The Offerwill be made through the Offer Document and, in respect ofEssentially Shares held in certificated form, the Form of Acceptance,which will together contain the full terms and conditions of theOffer, including details of how to accept the Offer. Any acceptanceor other response to the Offer should be made only on the basis ofthe information contained in the Offer Document and, in respect ofEssentially Shares held in certificated form, the Form ofAcceptance. Chime also intends to publish a prospectus in connectionwith the Offer. The New Chime Shares are not being offered to thepublic by means of this announcement and this announcement does notconstitute a prospectus. Essentially Shareholders are advised toread carefully the formal documentation in relation to the Offer onceit has been dispatched.EPL Advisory, which is authorised and regulated in the United Kingdomby the Financial Services Authority, is acting exclusively for Chimeand no one else in connection with the Offer and will not beresponsible to anyone other than Chime for providing the protectionsafforded to its clients or for providing advice in relation to theOffer or in relation to the matters described in this announcement orany transaction or arrangement referred to herein.Numis, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Chime and noone else in connection with the Offer and will not be responsible toanyone other than Chime for providing the protections afforded to itsclients or for providing advice in relation to the Offer or inrelation to the matters described in this announcement or anytransaction or arrangement referred to herein.Cenkos which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Essentiallyand no one else in connection with the Offer and will not beresponsible to anyone other than Essentially for providing theprotections afforded to its clients for providing advice in relationto the Offer or in relation to the contents of this announcement orany transaction or any other matters referred to herein.Overseas JurisdictionsThe release, publication or distribution of this announcement injurisdictions other than the United Kingdom may be restricted by lawand therefore any persons who are subject to the laws of anyjurisdiction other than the United Kingdom should inform themselvesabout, and observe, any applicable requirements. This announcementhas been prepared for the purposes of complying with English law andthe City Code and the information disclosed may not be the same asthat which would have been disclosed if this announcement had beenprepared in accordance with the laws and regulations of anyjurisdiction outside of the United Kingdom.The availability of the Offer to persons who are not resident in andcitizens of the United Kingdom may be affected by the laws of therelevant jurisdiction in which they are located.The Offer will not be made, directly or indirectly, in or into anyjurisdiction where to do so would constitute a breach of securitieslaws in that jurisdiction, and the Offer will not be capable ofacceptance from or within any such jurisdiction. Accordingly, copiesof this announcement are not being, and must not be, directly orindirectly, mailed or otherwise forwarded, distributed or sent in,into or from any jurisdiction where to do so would constitute abreach of securities laws in that jurisdiction, and persons receivingthis announcement (including custodians, nominees and trustees) mustnot mail or otherwise distribute or send it in, into or from suchjurisdictions as doing so may invalidate any purported acceptance ofthe Offer.This announcement is not an offer of securities for sale in theUnited States, Australia, Canada, Jersey or Japan or in any otherjurisdiction in which such an offer is unlawful. The New ChimeShares, which will be issued in connection with the Offer, have notbeen, and will not be, registered under the US Securities Act orunder the securities law of any state, district or other jurisdictionof the United States, or Australia, Canada, Jersey or Japan, and noregulatory clearance in respect of the New Chime Shares has been, orwill be, applied for in any jurisdiction other than the UK. The NewChime Shares may not be offered, sold, or delivered, directly orindirectly, in, into or from the United States except pursuant to anapplicable exemption from, or in a transaction not subject to, theregistration requirements of the US Securities Act or such othersecurities laws. The New Chime Shares may also not be offered, soldor delivered, directly or indirectly, in, into or from Australia,Canada, Jersey or Japan or to, or for the account or benefit of, anyresident of Australia, Canada, Jersey or Japan except pursuant to anapplicable exemption from, or in a transaction not subject to,applicable securities laws of those jurisdictions. In the UnitedStates, Australia, Canada, Jersey, Japan and any other overseasjurisdiction in which the offer or issuance of New Chime Shares wouldconstitute a breach of applicable securities laws, absent anapplicable exemption therefrom, Essentially Shareholders whootherwise validly accept the Offer will receive, in lieu of the NewChime Shares to which they would otherwise be entitled under theterms of the Offer, the net cash proceeds of the sale of such shares,as more fully set out in the Offer Document.Cautionary Note Regarding Forward Looking StatementsThis announcement contains forward looking statements that are basedon current expectations or beliefs, as well as assumptions aboutfuture events. These statements, which speak only as at the date ofthis document, are based on the current expectations of themanagement of Chime and are naturally subject to uncertainty andchanges in circumstances. Undue reliance should not be placed on anysuch statements because, by their very nature, they are subject toknown and unknown risks and uncertainties and can be affected byother factors that could cause actual results, and Chime's plans andobjectives, to differ materially from those expressed or implied inthe forward looking statements.There are several factors which could cause actual results to differmaterially from those expressed or implied in forward lookingstatements. Among the factors that could cause actual results todiffer materially from those described in the forward lookingstatements are Chime's ability to combine successfully the businessesof Essentially and Chime and to realise expected synergies from thatcombination, changes in the global, political, economic, business,competitive, market and regulatory forces, future exchange andinterest rates, changes in tax rates and future business combinationsor dispositions and lower than expected revenues.Neither Chime nor Essentially undertakes any obligation (except asrequired by the Listing Rules and the rules of the London StockExchange) to revise or update any forward looking statement containedin this announcement, regardless of whether that statement isaffected as a result of new information, future events or otherwise.Nothing in this announcement is intended to be a profit forecast andstatements in this announcement should not be interpreted to meanthat the earnings per Chime Share for the current or future financialperiods will necessarily be greater than those for the relevantpreceding financial period.Dealing Disclosure RequirementsUnder the provisions of Rule 8.3 of the City Code, if any person is,or becomes, "interested" (directly or indirectly) in one per cent. ormore of any class of "relevant securities" of Chime or Essentially,all "dealings" in any "relevant securities" of that company(including by means of an option in respect of, or a derivativereferenced to, any such "relevant securities") must be publiclydisclosed by no later than 3.30 p.m. on the London business dayfollowing the date of the relevant transaction. This requirement willcontinue until the date on which the Offer becomes, or is declared,unconditional as to acceptances, lapses or is otherwise withdrawn oron which the "offer period" otherwise ends. If two or more personsact together pursuant to an agreement or understanding, whetherformal or informal, to acquire an "interest" in "relevant securities"of Chime or Essentially, they will be deemed to be a single personfor the purpose of Rule 8.3.Under the provisions of Rule 8.1 of the City Code, all "dealings" in"relevant securities" of Chime or Essentially by Chime orEssentially, or by any of their respective "associates", must bedisclosed by no later than 12.00 noon on the London business dayfollowing the date of the relevant transaction.A disclosure table, giving details of the companies in whose"relevant securities" "dealings" should be disclosed, and the numberof such securities in issue, can be found on the Panel's website atwww.thetakeoverpanel.org.uk."Interests in securities" arise, in summary, when a person has longeconomic exposure, whether conditional or absolute, to changes in theprice of securities. In particular, a person will be treated ashaving an "interest" by virtue of the ownership or control ofsecurities, or by virtue of any option in respect of, or derivativereferenced to, securities.Terms in quotation marks are defined in the City Code, which can alsobe found on the Panel's website. If you are in any doubt as towhether or not you are required to disclose a "dealing" under Rule 8,you should consult the Panel.Publication on the Chime and Essentially websitesA copy of this announcement is and will be available for inspectionfree of charge, subject to certain restrictions relating to personsresident in restricted jurisdictions, on Chime's website atwww.chime.plc.uk and Essentially's website atwww.essentiallygroup.com. APPENDIX I CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFERPart A: Conditions of the OfferThe Offer will be subject to the following conditions (as amended ifappropriate):(a) valid acceptances being received (and not, wherepermitted, withdrawn) by not later than 3.00 p.m. on the firstclosing date of the Offer (or such later time(s) and/or date(s) asChime may, with the consent of the Panel or in accordance with theCity Code, decide) in respect of not less than 90 per cent. (or suchlower percentage as Chime may decide) (1) in nominal value of theEssentially Shares to which the Offer relates and (2) of the votingrights attached to those shares, provided that this condition shallnot be satisfied unless Chime or other members of the Wider ChimeGroup shall have acquired or agreed to acquire, whether pursuant tothe Offer or otherwise, shares in Essentially carrying in aggregatemore than 50 per cent. of the voting rights then normally exercisableat general meetings of Essentially. For the purposes of thiscondition:(i) shares which have been unconditionally allotted but notissued before the Offer becomes or is declared unconditional as toacceptances, whether pursuant to the exercise of any outstandingsubscription or conversion rights or otherwise, shall be deemed tocarry the voting rights they will carry on being entered into theregister of members of Essentially; and(ii) the expression "Essentially Shares to which the Offerrelates" shall be construed with regard to the provisions of Articles116, 117(8) and 123(1) and (2) of the Companies (Jersey) Law 1991 (asamended);(b) the admission to the Official List of the New Chime Sharesto be issued in connection with the Offer becoming effective inaccordance with the Listing Rules and the admission of such shares totrading becoming effective in accordance with the Admission andDisclosure Standards of the London Stock Exchange or if Chime andEssentially so determine (and subject to the consent of the Panel)the UKLA agreeing to admit such shares to the Official List and theLondon Stock Exchange agreeing to admit such shares to tradingsubject only to (i) the allotment of such shares and/or (ii) theOffer becoming or being declared unconditional in all respects;(c) there being no provision of any agreement, arrangement,licence, permit or other instrument to which any member of the WiderEssential
Datum: 22.09.2009 - 08:05 Uhr
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