MCN Posted February 21, 2013 Share Posted February 21, 2013 This is my first attempt at a stock write up but I am here to learn so please feel free to pick this apart and point out my errors, constructive criticism is very much welcome! (And apologies for the formatting, just couldn't get the tables straight) Summary: PV Crystalox Solar Plc (PVCS) is a cash rich net-net based in the UK and traded on the London Stock Exchange. The company has recently announced that they will return cash to shareholders in Q2 2013. Considering that PVCS had net net current assets of €0.24, including ~€0.30 in cash per share at the date of their last financial statement in June 2012, against a current share price of £0.11, i believe the near term prospect exists for investors to receive a payout of between €0.08 & €0.23 per share. Additionally, at 11p per share, PVCS represents an opportunity to obtain a position in a well regarded company in the PV space with new, state of the art production facilities, managed by experienced and incentivised management, at low to, potentially, negative cost. Share Price: £0.11 Net Cash €122m Market Cap: £46.6m Current Assets €205.7m Enterprise Value: -£75m LT Assets €90m 5Yr Hi/Lo 193/4 Total Liabilities € 104.3m PV Crystalox Solar Plc (PVCS) is a UK based producer of solar-grade silicon products. Using polysilicon feedstock it produces multi-crystalline silicon ingots and wafers which it supplies to the global solar cell industry for use in solar electricity generation systems. PVCS has 3 production facilities: In 2009, at a cost of some €100m, PVCS completed the construction of its brand new polysilicon production facility in Bitterfield, Germany. The plant was completed just in time to run into the massive polysilicon over supply and subsequent collapse in demand. The company has halted production at the plant until such time as demand improves. PVCS also operates a Multicrystalline silicon ingot facility near Oxford in the UK and silicon Wafer production takes place at the company’s facility in Erfurt, Germany. Due to the downturn in the global solar industry and significant over supply in silicon products, PVCS’ shipment volumes and sales have been reduced dramatically with sales falling from €252m in 2010 to only €32m during the first six months of 2012. Consequently, the company has taken steps to conserve cash by implementing a cost reduction programme, halting production at its Polysilicon facility in Bitterfeld and substantially reducing production at its ingot and wafer plants in Oxford and Erfurt, with resultant significant redundancies. Management’s last trading statement in December 2012, stated that they expect to make an operating loss for the remainder of 2012 due to continuing severe pricing pressures but restructuring measures will result in the company being largely cash neutral during 2013. I take this to mean that they intend not to burn through too much of their substantial cash pile and considering that management owns around 30% of the company, it appears they are incentivised to preserve shareholder capital. The question remains as to what the cash burn will be prior to the cash payout in Q2 2013. 1. Management has indicated that they can vary production to match market requirements and operate on a cash neutral basis. 2. In H1 2012 operating costs were running at ~€30m annualised, which management are in the process of reducing. If we estimate that management obtain reductions of 20%, then operating costs to June 2013 would come in at around €24m 3. The June 2012 balance sheet shows current assets of €205.7m, which includes €127m cash. Applying a 30% write down to (an already written down) inventory in both current and longer term assets, produces estimated liquid assets of €193m. Estimate of realisable and liquid assets: Balance Sheet at 31.06.12 €’000 Adjustment €’000 Current Assets Cash (€0.30 Per Share) 126,924 126,924 Receivables 8,149 -10% 7,334 Inventories 46,563 -30% 32,594 Pre-Paid Exp (Half Inventory) Est- 6,700 -30% 4,690 Long Term Assets Other LT Assets (Polysilicon Inventory) 31,121 -30% 21,700 Total Liquid Assets Shares Outstanding- 416,725,335 193,245 Per Share €0.46 Current Liabilities -43,835 Long Term Liabilities -60,476 Net Liquid Assets Less Current Liabilities 149,410 Per Share €0.35 Net Liquid Assets Less Total Liabilities 88,934 Per Share €0.21 My best guess as to what the maximum cash payout could be is: 30.06.12 to 30.06.13 €’000 Total Liquid Assets at 30.06.12 193,245 Gross margin Loss for H2 2012 -8,000 Expenses -24,000 Current Liabilities -43,835 Net Cash Requirements -20,000 Excess Cash at 30.06.13 97,000 Per Share €0.23 I would imagine a minimum cash payout of €37m (€0.08 Per Share) PVCS will announce its year to Dec 31 2012 results on the 31.03.2013. I would expect a statement about the cash return somewhere between that date and the AGM on 23.05.2013 with an actual payout sometime in June 2013. Additional Comments: Assets: 1. The company is still negotiating a compensation settlement with two customers for payment on cancelled long term wafer supply contracts which may or may not result in a cash inflow to the company. In H1 2012, the company received a settlement of €90m from one customer. 2. The company owns the freehold of its 31,000m2 Polysilicon plant in Bitterfeld in addition to its plant and equipment at its leased facilities in Oxford and Erfurt. Long Term Liabilities: 1. An onerous contract provision in the amount of €39.2m, is an estimate of anticipated losses under existing Polysilicon supply contracts. Depending on ongoing negotiations and market pricing, this provision is subject to change. 2. Long term Lease payment commitments totalling €6m on the Ingot & Wafer facilities in Oxford and Erfurt. 3. Deferred grants and subsidies of €21m may become re-payable due to the company incurring redundancies at its plants in Germany. 4. The company’s pension plan is currently in surplus Risks: Long term liabilities such as the onerous contract provision and deferred grants become due sooner. Silicon prices continue to fall. Disclosure: I own PVCS shares. Disclaimer: The above should in no way be considered investment advice or a recommendation to buy or sell the stock mentioned. Please do your own due diligence! Link to comment Share on other sites More sharing options...
oddballstocks Posted February 21, 2013 Share Posted February 21, 2013 Off the ball investment ideas like this are what makes this board great. Writeups like this are under-appreciated. At the time of my response you've had 62 views, whereas two posts ahead of you where someone asks if KO is a good investment has had 10x the views. I would say that Crystalox Solar is a better investment than Coke.. First off great job on the write up, you hit a lot of things I was curious about. I actually only had to hit FT.com to answer a few questions. My first question was about the liability structure, I noted the high liabilities and figured they are mostly long term debt. To my surprise the company doesn't have much of any debt, and most liabilities are long term contracts that need to be fulfilled. This company has a lot of markings of a potentially good investment. The latest financials are messy and hard to understand. The company is losing a lot of money on core operations, but due to non-cash divestures actually generated £98m in cash flow of which they used £44m to pay back debt. If management is able to bring operations to even a slight loss and is looking to return capital to shareholders this is attractive. Beyond that they are in a bad industry, I wonder if they're thinking about a complete liquidation, if so there's a nice upside from here. Thanks for highlighting this, I'd glanced at it but didn't dig in enough, now that I see it's worth it I'm going to read up on it again. Link to comment Share on other sites More sharing options...
MCN Posted February 21, 2013 Author Share Posted February 21, 2013 Thanks, Nate. (btw, i enjoy your blog) I tend to stick to looking at small caps and ‘oddball’ stocks etc because i’m simply not smart enough to out think the type and number of people who are typically looking at the larger cap stocks. Typically i wouldn’t pay much attention to a company or industry that relies on government subsidies like the solar power industry does but as you can see i have approached this from the balance sheet, largely ignoring the general industry outlook or trading prospects for PVCS. The industry is currently going through a knock down drag out fight and i really have no idea who the last men standing will be. The Chinese producers, supported by government funding, have been producing huge volumes of silicon products at very low cost which has caused the recent low prices. Undoubtedly, low cost production is important but product quality is also a very important element for customers in this industry and it is my understanding that PVCS is considered a high quality producer. What attracted me to this, apart from the healthy cash position, is the fact that management are very experienced and have a large stake in the company and will hopefully try to preserve value, which i imagine is one reason for the cash payout. I’ve made an attempt to estimate what the cash payment might be in order to figure out the net cost of owning 3 state of the art silicon factories with capacity to produce 750MW of silicon wafers, run by very experienced solar industry professionals with an incentive to produce value for shareholders. This could be a cheap option on a rebound in the industry The industry shakeout is brutal and i’m guessing that management that has been in this industry since the 80’s and 90’s have learned a thing or two about reducing production costs and product innovation. The PVCS team has a lot of experience to draw on in this respect. The market in general is, apparently, still experiencing growth. Japan, the US and China are picking up the slack created by Europe. With regard to them liquidating the business, i did note that the leases on their factories in Oxford and Erfurt expire in Dec 2014 and the CEO and top management are around 60 to 70, so maybe the payout is a sign they might cash out?? Link to comment Share on other sites More sharing options...
jgb Posted March 1, 2013 Share Posted March 1, 2013 Very interesting idea. How do you get comfortable with the cash burn assumptions? Are you concerned at all that in the process of shutting down, they may be subject to some additional liabilities (employee severance as an example) that negatively impacts overhead? Is there something you can point to that gives you confidence management is right when it says the company will be breakeven for 2013? Several of the Solars have underestimated the industry headwinds over the last couple of quarters. Link to comment Share on other sites More sharing options...
Hielko Posted March 1, 2013 Share Posted March 1, 2013 Just started looking at this company, but this also seems interesting: We have been unable to reach a satisfactory agreement with two long-term contract customers who have been amongst the industry leaders in recent years and we are seeking resolution under the jurisdiction of the International Court of Arbitration. While successful judgements in the Group’s favour are anticipated there is increasing uncertainty as to whether one of these companies will have the financial resources to fully settle its claim. They settled a contract with another customer last year for 90M cash, so this adds some nice optionality. Link to comment Share on other sites More sharing options...
Hielko Posted March 3, 2013 Share Posted March 3, 2013 The Group intends to adjust its operations to align with anticipated sustainable short term market demand so that the ongoing business will be broadly cash neutral in 2013. What I'm wondering: does this include the above market price the company is paying on polysilicon? The company is losing >10M a year by overpaying for polysilicon due to the long term contract. If they are really capable of being cash neutral in 2013 that would actually imply a decent underlying profitability. MCN: I think you approach for figuring out how much excess cash there is, is pretty flawed. The company can't return inventory and receivables to share holders, and while they do need to pay the current liabilities those are also included in the net operating loss that is expected for the second half of 2012. Link to comment Share on other sites More sharing options...
MCN Posted March 5, 2013 Author Share Posted March 5, 2013 Very interesting idea. How do you get comfortable with the cash burn assumptions? Are you concerned at all that in the process of shutting down, they may be subject to some additional liabilities (employee severance as an example) that negatively impacts overhead? Is there something you can point to that gives you confidence management is right when it says the company will be breakeven for 2013? Several of the Solars have underestimated the industry headwinds over the last couple of quarters. @ jgb Nothing concrete, I’m largely going on faith that management has a large stake in the company and it is in their interest to limit the damage. However, they do seem to have made efforts to reduce costs and preserve cash- In the trading update of December 2012 PVCS wrote “The Group intends to adjust its operations to align with anticipated sustainable short term market demand so that the ongoing business will be broadly cash neutral in 2013” In the November 2012 trading update, management stated that “PVCS has maintained its average selling prices significantly above spot prices by focusing on sales to long term contract customers”. There are several long-term wafer supply contracts for unexpired periods of up to three years and PVCS is reducing loss making sales on the spot market and focusing on serving its long term contract customers who are in at higher than current spot prices. PVCS’ average selling price dropped to €454k/MW in H2 2011 (from €1,231k in H2 2008) and has since picked up a little to €535k/MW in H1 2012 which i think is an indication of reduced spot sales. In the Interim report of August 2012, management stated that they had been successful in negotiating reduced pricing for their purchase commitments of polysilicon and are also trading polysilicon to avoid excessive inventory build up. Additionally they have negotiated price reductions with other suppliers such as wafer sub contractors and, overall, expect wafer production costs to be reduced by more than 20% in 2012. PVCS had contracts with suppliers of Polysilicon for unexpired periods of between 1 and 3 years at average contract prices of €37/kg. I have not come across any information on volume commitments but as these contracts taper off, PVCS will be able to purchase Polysilicon at prevailing spot rates which today are in the area of €22/kg (according to PVInsights.com). PVCS has previously managed to reduce the cost of wafer production from €1,100k/MW in H1 2007 to €488k/MW in H1 2011, although i assume this is a function of volume increases. Costs have since spiked back up to €700k/MW in H1 2012 largely as a result of the Polysilicon contracts and labour costs but as previously mentioned PVCS is reducing employment levels at its plants to match output and Polysilicon supply should eventually come in at lower cost. PVCS has reduced its employee costs by 17% for H1 2012 from H1 2011 Production at the company’s Polysilicon plant at Bitterfeld had already been suspended in Dec 2011, so potential costs related to that, such as employee severance costs, should have already been reflected in 2012 overheads. Further staff reductions at their wafer and ingot plants would, i imagine, result in severance costs but i have no insight here. Spot wafer prices have fallen from $3.50 in Q1 2011 to $1.oo by Q1 2012 and prices seem to have stabilised at that level throughout 2012. Link to comment Share on other sites More sharing options...
MCN Posted March 5, 2013 Author Share Posted March 5, 2013 The Group intends to adjust its operations to align with anticipated sustainable short term market demand so that the ongoing business will be broadly cash neutral in 2013. What I'm wondering: does this include the above market price the company is paying on polysilicon? The company is losing >10M a year by overpaying for polysilicon due to the long term contract. If they are really capable of being cash neutral in 2013 that would actually imply a decent underlying profitability. MCN: I think you approach for figuring out how much excess cash there is, is pretty flawed. The company can't return inventory and receivables to share holders, and while they do need to pay the current liabilities those are also included in the net operating loss that is expected for the second half of 2012. @Hielko Thanks for pointing that out -i did write in my op that i’m pretty new at this! :-[ I didn’t intend to suggest that receivables and inventory would be paid out, just trying to show how much potential liquid working capital they might have. I would certainly appreciate any help on understanding this better. If you don’t mind, how would you go about calculating excess cash? Thanks Link to comment Share on other sites More sharing options...
Hielko Posted March 5, 2013 Share Posted March 5, 2013 I would start with predicting how much cash has been used in the second half of 2012. If we base this on the performance of the first six months it would be: EBITDA before exceptional items minus payments for the onerous contract provision. DA is not a cash expense, and it's not paying a significant amount of I and T. EBIT: -14,165 - 850 (currency gain) + 7,104 (D&A) => -7,911 'cash loss' before utilizing 4,080 of the onerous contract provision. The provision has gone up and 12,681 is now a current liability on the balance sheet. So if the business creates the same -7,911 result I would expect that they need to spend -7,911 - (12,681 / 2) = -14,252 in the second half of 2012. Prices of polysilicon have been going down since June, so you would expect that they are going to lose more money on overpaying for polysilicon. They also are reducing production, so this should have a positive effect on the operating cash flow, but there are probably costs related to this process as well. So lets make it a round number and say that they will lose ~20 million in cash in 2H 2012. I think you should also assume that they will need to repay a large part of their subsidies because they are discontinuing the Bitterfeld facility (Big jump in these liabilities the year after this facility was build, so probably a lot of them are related to Bitterfeld). So my estimate for the amount of excess cash: + 126,924 (amount @ 1H 2012) - 4,498 (debt) - 20,000 (estimated cash burn 2H 2012) - 20,000 (estimated repayment subsidies) - 20,000 (wild guess for the amount of cash needed on the balance sheet to run the remaining 'core' business) = 62,426 With the market cap at ~52 million it looks to me that an investment at current prices would work out positive IF the management estimate is indeed correct that they will be roughly cash neutral in 2013 AND the company is indeed willing to return a large part of the remaining cash balance. The company could possibly return it's whole market cap in cash and be in a good shape to remain in survival mode until the industry becomes profitable again, and they could possible get a very significant sum if the two remaining customers settle their contracts. So you could have a lot of upside even when the operating business never recovers. PS. all numbers are in euro's. Link to comment Share on other sites More sharing options...
oddballstocks Posted March 21, 2013 Share Posted March 21, 2013 PVCS published their results today. Haven't had time to look closely yet but a first glance suggests i should probably stick to my day job..... ::) Maybe we're reading it differently but things aren't as bad as I expected, they're actually turning up. On an IFRS earnings basis they took a huge loss, they essentially wrote down everything, plant, inventory, contracts, anything and everything. On a cash basis they generated €60m+ which brought their cash hoard to €89m up from €22m a year earlier. Buried in the discussion on being a going concern are the best rays of hope. They have three contracts to deliver panels at reasonable prices. They reduced their purchase commitments with suppliers that were above market leaving them the ability to price at the market now. They can sell slightly above market to the three customers and buy at spot prices. They voluntarily reduced sales as well, they are no longer selling inventory at a loss, hence the writedown. The cash distribution plan is interesting. They're going to create two new classes of stock with different income preferences, shareholders can exchange into them depending on what they want. They will cancel the original shares after the exchange occurs to remain share neutral. They plan on operating out of cash reserves as well. So this is part waiting game, and part bet on a solar market turnaround. Link to comment Share on other sites More sharing options...
MCN Posted March 21, 2013 Author Share Posted March 21, 2013 Yes, I was referring more to the fact that i was significantly out on my projections of cash burn. Hielko did a good write up on his blog Link to comment Share on other sites More sharing options...
MCN Posted May 17, 2013 Author Share Posted May 17, 2013 PV Crystalox published an update today with clarification on the cash payout which will be 7.25p per share (~€8.5c) which was the lower end of my own estimate. Link to comment Share on other sites More sharing options...
udravi Posted May 17, 2013 Share Posted May 17, 2013 PV Crystalox published an update today with clarification on the cash payout which will be 7.25p per share (~€8.5c) which was the lower end of my own estimate. First, thanks for the idea. Still, 7.25p/share equals +-30mm which is 64% of the market cap. The remaining assets are probably worth more than the implied 17mm, especially with the anti-dumping duties to be introduced - hopefully. Link to comment Share on other sites More sharing options...
MCN Posted May 17, 2013 Author Share Posted May 17, 2013 Even at today's price of 11p you are effectively getting the business for 4p or £17m for the lot which, despite the fact that the €100m investment in the polysilicon plant has gone to money heaven, gets you a company with wafer production capacity of 750MW and an experienced team now concentrated on their core skills of wafer and ingot production It's a cheap option on a comeback but will require patience. Link to comment Share on other sites More sharing options...
Voodooking Posted August 28, 2020 Share Posted August 28, 2020 I was having a look at this one and thought I'd give a bit of an update for anyone interested. Currently trading at 0.50 GBP (61% of NCAV and 65% of Net Cash by my calculations). Management have announced a Tender Offer for shares at 0.55 GBP, which could hold potential for a small profit for some ...however, they are then planning to delist from the LSE almost immediately after. I have roughly calculated that there will still be some value left in the shares, even after the Tender Offer and retirement of shares. Revised figures taking into account the £2m cash spend, and reduction in share count will still leave a residual NCAV of 1.09 GBP and 0.98 Net Cash per share. Too hairy for me, but might be of interest to someone on here. PV CRYSTALOX SOLAR PLC (the "Company") Tender Offer to purchase up to 3,636,363 Ordinary Shares at 55 pence per Ordinary Share and Notice of General Meeting and Cancellation of admission of Ordinary Shares to the standard segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities 16 July 2020 Further to the announcement on 29 June 2020, in which the Company announced that following receipt of the payment relating to the settlement of a legacy wafer supply contract, it will proceed to return up to £2 million of surplus capital to Shareholders by way of a tender offer (the "Tender Offer"), the Company today announces further details of the Tender Offer, including the pricing at 55 pence (the "Tender Price") per Ordinary Share as well as the opening of the Tender Offer on 17 July 2020. Cancellation The Company also announces that it will request the cancellation of the listing of its Ordinary Shares on the standard segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities ("Cancellation of Listing"). The Cancellation of Listing is intended to take effect from 7.00 am on 29 September 2020. Highlights of the Tender Offer · The Tender Price represents: · a premium of 16.5% to the closing price of 47.2 pence per Ordinary Share on 13 July 2020 (being the Latest Practicable Date); and · a premium of 29.4% to the volume weighted average price of 42.5 pence per Ordinary Share over the one month to 13 July 2020. · The maximum number of Ordinary Shares that may be acquired under the Tender Offer is 3,636,363 representing approximately 49.9% of the Company's Issued Ordinary Share Capital on 13 July 2020 (being the Latest Practicable Date). · The Tender Offer opens tomorrow and will close at 1.00 pm on 9 September 2020. · To the extent that Shareholders choose not to participate in the Tender Offer, the surplus cash that is not returned to Shareholders will be held by the Company. The Board of the Company will consider how to utilise the surplus cash in due course, depending on the relevant amount and other conditions. · Completion of the Tender Offer will be conditional on shareholder approval of the Tender Offer at the General Meeting on 9 September 2020. The preceding summary should be read in conjunction with the full text below, as well as the shareholder circular (the "Circular"), which will be posted to Shareholders and also includes notice of a General Meeting. A copy of the Circular is also available from the Company's website at www.pvcrystalox.com. A summary expected timetable of principal events is set out in Appendix I to this announcement. General Meeting A General Meeting is being convened for 11.00 am on 9 September 2020 to consider and, if approved by shareholders, pass the Tender Offer Resolution, set out in full in the Circular. Enquiries: PV Crystalox Solar PLC +44 (0) 1235 437160 Peter Finnegan, Company Secretary Shore Capital +44 (0) 20 7408 4050 Antonio Bossi / Robert Finlay PV CRYSTALOX SOLAR PLC Tender Offer to purchase up to 3,636,363 Ordinary Shares at 55 pence per Ordinary Share and Notice of General Meeting and Cancellation of admission of Ordinary Shares to the standard segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities 1 BACKGROUND TO AND REASONS FOR THE TENDER OFFER AND CANCELLATION OF LISTING 1.1 Tender Offer During the last two years the Board has explored various options to maximise any value from the listing of the Group's shares on the Official List but has been unable to identify any viable opportunities. In March 2019, following an extensive review of the strategic options for the future of the Group, the Board concluded that returning a large proportion of the Group's surplus capital, as part of an orderly resolution of the Group's affairs, would be in the best interests of shareholders. A capital return of €43.4 million (£38.5 million) was duly completed in June 2019. On 19 March 2020, the Company announced that the Board had concluded that a further return of capital would be an appropriate course of action, followed by a cancellation of the Listing. The Board noted that this further return of capital was to be contingent upon receipt of the payment relating to the settlement of a legacy wafer supply contract. On 29 June 2020, the Company announced that following receipt of the payment relating to the settlement of a legacy wafer supply contract, it will proceed to return up to £2 million of surplus capital to Shareholders by way of a Tender Offer. The benefits of the Tender Offer are that it: (a) is available to all Qualifying Shareholders regardless of the size of their shareholdings (subject to rounding); (b) means tendering Shareholders will receive a premium of 16.5% to the closing price of 47.2 pence per Ordinary Share on 13 July 2020 (being the Latest Practicable Date) and represents a premium of 29.4% to the volume weighted average price of 42.5 pence per Ordinary Share over the one month to 13 July 2020; © provides Qualifying Shareholders with an opportunity to partially realise their investment in the Company on an equivalent basis to all Qualifying Shareholders prior to the Cancellation of Listing; and (d) enables those Qualifying Shareholders who do not wish to realise their investment in Ordinary Shares at this time to maintain their current investment in the Company. Qualifying Shareholders may choose not to tender their existing holding of Ordinary Shares, but following the Cancellation of Listing, Qualifying Shareholders should take into consideration, amongst other things, that: (e) they will no longer be able to trade their Ordinary Shares on the London Stock Exchange and the opportunity to realise their investment in the Company by selling their Ordinary Shares will be reduced; and (f) the corporate governance, regulatory and financial reporting regime which applies to companies whose shares are admitted to the Official List and to trading on the London Stock Exchange's Main Market will no longer apply (save that the Takeover Code will continue to apply to the Company to afford protection to its shareholders for a period of 10 years following the Cancellation of Listing). 1.2 Cancellation of Listing The Board has for some time been reviewing the benefits to, and burdens on, the Company and Shareholders of continuing the Listing. The Board has concluded that it is in the interests of Shareholders to proceed with the Cancellation of Listing for the following reasons: (a) the Company has no intention of completing a public markets transaction such as a secondary fundraise or an acquisition using its Ordinary Shares as currency; and (b) given the reduced size of the Company and its limited business activity, the cost of maintaining the systems, procedures, staff and advisers to comply with listed company requirements is not an optimal use of the Company's financial resources. For the reasons set out above, the Board has concluded that it would be in the interests of the Company and Shareholders as a whole if the Listing were to be cancelled following the Tender Offer. The Cancellation of Listing is expected to take effect from 7.00 am on 29 September 2020. In accordance with UK Listing Rule 5.2.8, the Company is required to give at least 20 business days' notice to the London Stock Exchange of the intended Cancellation of Listing. Shareholder approval is not required in order to effect the Cancellation of Listing. 2 TENDER OFFER 2.1 How to Participate in the Tender Offer Each Qualifying Shareholder is entitled to tender a percentage of that Qualifying Shareholder's holding equal to (or less than, if they so choose) the Individual Basic Entitlement. Qualifying Shareholders will also be entitled to apply to tender Ordinary Shares in excess of their Individual Basic Entitlement and, to the extent that other Shareholders do not tender their Individual Basic Entitlement all such Ordinary Shares will be scaled down pro rata to the total number of such Ordinary Shares tendered in excess of the aggregate Individual Basic Entitlement, such that the total number of Ordinary Shares purchased pursuant to the Tender Offer does not exceed 3,636,363 and the maximum total cost of the Ordinary Shares purchased pursuant to the Tender Offer does not exceed £2 million, in accordance with the terms and conditions of the Tender Offer which shall be set out in the Circular expected to be published later today. 2.2 Full terms and conditions of the Tender Offer Full details of the Tender Offer, including the terms and conditions on which it is made, as well as the procedure for tendering and settlement, will be set out in the Circular, expected to be published later today. 3 CURRENT TRADING AND OUTLOOK As part of the continuing resolution of the Company's affairs the Board has implemented various measures to reduce costs. The UK office has now been closed and the CFO/Company Secretary's role has become part-time with effect from 1 July 2020. Non-executive director fees were reduced by 50% from January 2020 and a similar adjustment will be effected for the Chief Executive. The Cancellation of Listing will deliver a further reduction in overheads and Michael Parker will also step down at that time from his position as a non-executive director. The Board will continue its endeavours to complete the transformation of the manufacturing operation in Germany although the Covid-19 pandemic has disrupted progress. Additionally, work will continue to resolve any potential challenge from tax authorities regarding the distribution of payments received under the arbitration settlement in 2018. A sale of the German business to a third party or a transfer to the existing management team remains the ultimate objective and together with a resolution of the tax issues may enable a further cash return to shareholders in due course. As the Company's ability to accelerate the liquidation process is limited and economic considerations make such action unfavourable, the Board's focus is on minimising the cash burn during the next 12-18 months while the outstanding issues are resolved. 4 GENERAL MEETING 4.1 Whilst the Company has existing authority to purchase its own shares, pursuant to the Annual General Meeting held on 23 June 2020, the Company wishes to obtain fresh authority from Shareholders in connection with the proposed Tender Offer and acquisition of Ordinary Shares. The Tender Offer Resolution is subject to different parameters than the authority previously granted by Shareholders, including with respect to the aggregate number of Ordinary Shares that may be purchased and the price at which such Ordinary Shares may be acquired. The Tender Offer Resolution proposes to authorise the Company to purchase up to 3,636,363 Ordinary Shares at a price of 55 pence per Ordinary Share in connection with the Tender Offer. 5 EXPECTED TIMETABLE OF PRINCIPAL EVENTS A summary expected timetable of principal events is set out in Appendix I to this announcement. IMPORTANT NOTICES This announcement is not intended to, and does not constitute, or form part of, any offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction. Shareholders are advised to read carefully the Circular. Any response to the Tender Offer should be made only on the basis of the information in the Circular. Shore Capital (which is authorised and regulated in the UK by the FCA), is acting exclusively for the Company and no one else in connection with this announcement and the Tender Offer and will not regard any other person as its client in relation to the Tender Offer and accordingly will not be responsible to anyone other than the Company for providing the protections afforded to its clients, or for providing advice in connection with the Tender Offer or any other transaction, arrangement or other matter referred to in this announcement as relevant. Apart from the responsibilities and liabilities, if any, which may be imposed on Shore Capital under FSMA or the regulatory regime established thereunder: (i) none of Shore Capital or any persons associated or affiliated with them accepts any responsibility whatsoever or makes any warranty or representation, express or implied, in relation to the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by, or on behalf of it, the Company or the Directors, in connection with the Company and/or the Tender Offer; and (ii) Shore Capital accordingly disclaims, to the fullest extent permitted by law, all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise be found to have in respect of this announcement or any such statement. Forward‑Looking Statements The Circular contains indications of likely future developments and other forward‑looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These factors include, but are not limited to, those discussed in Part III (Risk Factors) of the Circular. These and other factors could adversely affect the Group's results, strategy and prospects. Forward‑looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently anticipated. No obligation or duty is assumed (except as required by the Listing Rules, the Disclosure Guidance and Transparency Rules, the rules of the London Stock Exchange and by law) to update any forward‑looking statements, whether as a result of new information, future events or otherwise. Overseas shareholders The availability of the Tender Offer to Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Persons who are not resident in the United Kingdom should read paragraph 11 (Overseas Shareholders) set out in Part IV (Terms and Conditions of the Tender Offer) of the Circular and should inform themselves about, and observe, any applicable legal or regulatory requirements. Shareholders who are resident in the United States should read the Notice for US Shareholders on page 2 of the Circular and paragraph 12 (US Shareholders) set out in Part IV (Terms and Conditions of the Tender Offer) of the Circular. Unless otherwise determined by the Company and Shore Capital and permitted by applicable law and regulation, neither the Circular nor the Tender Form or any related document is being, or may be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed, or sent in, into or from any Restricted Jurisdiction, and persons receiving the Circular, the Tender Form and/or any related document (including, without limitation, trustees, nominees or custodians) must not mail or otherwise forward, distribute or send it in, into or from such Restricted Jurisdiction, as to do so may invalidate any purported participation in the Tender Offer. Any person (including, without limitation, trustees, nominees or custodians) who would or otherwise intends to, or who may have a contractual or legal obligation to, forward the Circular together with the Tender Form and/or any related document to any jurisdiction outside the United Kingdom, should seek appropriate advice before taking any action. This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for any Ordinary Shares nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. The Tender Offer is made only pursuant to the Circular and the related Tender Form with respect to the Ordinary Shares. The Tender Offer is not being made to holders of Ordinary Shares residing in any jurisdiction in which the making of the Tender Offer would not be in compliance with the laws of that jurisdiction. US Shareholders The Tender Offer relates to securities in a non‑US company and is subject to the disclosure requirements, rules and practices applicable to companies listed in the UK, which differ from those of the United States in certain material respects. The Circular has been prepared in accordance with the UK style and practice for the purpose of complying with English law. The financial information relating to the Company, which is available for review on the Company's website (www.pvcrystalox.com), has not been prepared in accordance with generally accepted accounting principles in the United States and thus may not be comparable to financial information relating to US companies. The Tender Offer is not subject to the disclosure and other procedural requirements of Regulation 14D under the US Exchange Act. The Tender Offer will be made in the United States in accordance with the requirements of Regulation 14E under the US Exchange Act to the extent applicable. Certain provisions of Regulation 14E under the US Exchange Act are not applicable to the Tender Offer by virtue of Rule 14d‑1(d) under the US Exchange Act. US Shareholders should note that the Ordinary Shares are not listed on a US securities exchange and the Company is not subject to the periodic reporting requirements of the US Exchange Act and is not required to, and does not, file any reports with the US Securities and Exchange Commission thereunder. It may be difficult for US Shareholders to enforce certain rights and claims arising in connection with the Tender Offer under US federal securities laws since the Company is located outside the United States and most of its officers and directors reside outside the United States. It may not be possible to sue a non‑US company or its officers or directors in a non‑US court for violations of US securities laws. It also may not be possible to compel a non‑US company or its affiliates to subject themselves to a US court's judgment. The receipt of cash pursuant to the Tender Offer by a Shareholder who is a US citizen or otherwise a US taxpayer will likely be a taxable transaction for federal income tax purposes. This document does not address any United States federal or state income tax consequences of the Tender Offer and each such Shareholder should consult and seek individual US tax advice from an appropriate professional adviser. To the extent permitted by applicable law and in accordance with normal UK practice, the Company, Shore Capital or any of their respective affiliates, may make certain purchases of, or arrangements to purchase, Ordinary Shares outside the United States during the period in which the Tender Offer remains open for participation, including sales and purchases of Ordinary Shares effected by Shore Capital acting as market maker in the Ordinary Shares. These purchases, or other arrangements, may occur either in the open market at prevailing prices or in private transactions at negotiated prices. In order to be excepted from the requirements of Rule 14e‑5 under the US Exchange Act by virtue of Rule 14e‑5(b)(12) thereunder, such purchases, or arrangements to purchase, must comply with applicable English law and regulation, including the Listing Rules, and the relevant provisions of the US Exchange Act. Any information about such purchases will be disclosed as required in the UK and the US and, if required, will be reported via a Regulatory Information Service and will be available on the London Stock Exchange website at http://www.londonstockexchange.com. While the Tender Offer is being made available to Shareholders in the United States, the right to tender Ordinary Shares is not being made available in any jurisdiction in the United States in which the making of the Tender Offer or the right to tender such Ordinary Shares would not be in compliance with the laws of such jurisdiction. This document has not been approved, disapproved or otherwise recommended by the US Securities and Exchange Commission or any US state securities commission and such authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offence in the United States. The Tender Offer is being made in the United States solely by the Company and no one else. Shareholders tendering from the United States or nominees acting on their behalf should carefully follow the instructions for tenders by US Shareholders set out in paragraph 12 of Part IV (Terms and Conditions of the Tender Offer) of the Circular. APPENDIX I EXPECTED TIMETABLE OF PRINCIPAL EVENTS Time and Date Announcement of the Tender Offer and Cancellation of Listing 16 July 2020 Tender Offer opens 17 July 2020 Latest time and date for receipt of Forms of Proxy for the General Meeting 11.00 am on 7 September 2020 General Meeting 11.00 am on 9 September 2020 Latest time and date for receipt of Tender Forms and share certificates in relation to the Tender Offer 1.00 pm on 9 September 2020 Latest time and date for receipt of TTE Instructions in relation to the Tender Offer 1.00 pm on 9 September 2020 Announcement of results of the General Meeting by 3.00 pm on 9 September 2020 Tender Offer Record Date 6.00 pm on 9 September 2020 Announcement of results of the Tender Offer By 7.00 am on 11 September 2020 Purchase of Ordinary Shares under the Tender Offer 11 September 2020 CREST accounts credited in respect of Tender Offer proceeds for uncertificated Ordinary Shares no later than 15 September 2020 CREST accounts credited for revised uncertificated holdings of Ordinary Shares (or, in the case of unsuccessful tenders, for entire holdings of Ordinary Shares) no later than 15 September 2020 Cheques dispatched in respect of Tender Offer proceeds for certificated Ordinary Shares no later than 18 September 2020 Return of share certificates in respect of unsuccessful tenders of certificated Ordinary Shares no later than 18 September 2020 Despatch of balancing share certificates (in respect of certificated Ordinary Shares) for revised, certificated holdings in the case of partially successful tenders no later than 18 September 2020 Last day of dealing in Ordinary Shares 28 September 2020 Cancellation of Listing with effect from 7.00 am on 29 September 2020 Notes: 1. References to time in the Circular are to London time. 2. If any of the above times or dates should change, this revised time and/or date will be announced to Shareholders through a Regulatory Information Service. 3. All events relating to the Tender Offer in the above timetable following the General Meeting are conditional upon approval by the shareholders of the Tender Offer Resolution to be proposed at the General Meeting. Link to comment Share on other sites More sharing options...
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