Industrial Multi Property Trust : 2017-02-17 Irene - 2.7 announcement

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17 February 2017

RECOMMENDED CASH OFFER BY HANSTEEN HOLDINGS PLC FOR INDUSTRIAL MULTI PROPERTY TRUST PLC

• The Directors of Hansteen and the Independent Directors of IMPT are pleased to announce that they have reached agreement on the terms of a recommended all cash offer for the entire issued ordinary share capital of IMPT by Hansteen.

• Under the terms of the Offer, IMPT Shareholders will receive 300p in cash for each IMPT Share held which values the entire issued ordinary share capital of IMPT at £25,228,560.

• The Offer provides an attractive opportunity for IMPT Shareholders to realise in cash, at a premium, their investment in IMPT and represents:

  • a premium of 22.4 per cent. over the Closing Price of 245p per IMPT Share on 16 February 2017 (being the latest practicable date prior to this Announcement);

  • a premium of 35.1 per cent. to the volume weighted average price of 222.1p per IMPT Share for the three months to 16 February 2017 (being the latest practicable date prior to this Announcement); and

  • a premium of 5.6 per cent. over IMPT's last reported NAV at 30 June 2016 of 284p per IMPT Share.

• The IMPT Independent Directors have given notice to IMPT's current investment adviser and manager, Alpha, to terminate the Existing Investment Management Agreement between IMPT and Alpha in accordance with its terms. Hansteen has granted an option to IMPT to appoint Hansteen (or one of its affiliates) as IMPT's new investment adviser and manager, regardless of the outcome of the Offer. The option is conditional upon the Offer becoming unconditional or lapsing.

• Commenting on the Offer, Jonathan Clague, Chairman of IMPT, said:

  "The Offer provides all IMPT shareholders with the opportunity of a cash exit at a significant premium to IMPT's recent share price. Furthermore, the 300p per share Offer Price represents considerable progress from IMPT's refinancing in 2013 and over five times the share price of 54p in August 2015 just before IMPT announced initiatives aimed at improving shareholder value."

• The IMPT Independent Directors, who have been so advised by Stockdale, consider the financial terms of the Offer to be fair and reasonable. In providing advice to the IMPT Independent Directors, Stockdale has taken into account the commercial assessments of the IMPT Independent Directors.

• Accordingly, all of the IMPT Independent Directors intend to recommend that the IMPT Shareholders accept the Offer. Those IMPT Independent Directors who hold IMPT Shares have irrevocably undertaken to accept the Offer in respect of their own beneficial holdings and the beneficial holdings of their close relatives totalling 70,400 IMPT Shares, in aggregate, representing approximately 0.84 per cent. in aggregate of the issued ordinary share capital of IMPT in issue as at close of business on 16 February 2017 (being the last Business Day prior to the date of this Announcement).

• It is intended that the Offer will be implemented by way of a takeover offer under Chapter 1 of Part 28 of the Companies Act 2006. However, Hansteen reserves the right, subject to the prior consent of the Panel, to effect the Proposed Transaction by way of a Scheme of Arrangement.

• The Offer Document will include full details of the Offer and specify the actions to be taken by the IMPT Shareholders. It is expected that the Offer Document will be posted to IMPT Shareholders as soon as practicable and in any event within 28 days after the date of this Announcement (unless otherwise agreed with the Panel).

• Commenting on the Offer, Ian Watson and Morgan Jones, Joint Chief Executives of Hansteen said:

"The IMPT portfolio, being very similar in nature to Hansteen's own UK portfolio, can be easily absorbed on to our asset management platform with limited additional cost. With experienced management teams in seven offices around the UK, which build close relationships with tenants and local stakeholders, we are well positioned be able to achieve sustainable growth in the portfolio's rental income and occupancy through our intense asset management initiatives. We have a long standing track record of achieving above average returns for our stakeholders."

* * *

1. The Offer

   It is intended that the Offer will be implemented by way of a takeover offer under Chapter 1 of Part 28 of the Companies Act 2006. However, Hansteen reserves the right, subject to the prior consent of the Panel, to effect the Proposed Transaction by way of a Scheme of Arrangement.

   Under the Offer, which will be subject to the Conditions and further terms set out below and in Appendix I to this Announcement (and to be set out in the Offer Document), IMPT Shareholders will receive:

   For each IMPT Share 300p in cash

   • The Offer provides an attractive opportunity for IMPT Shareholders to realise in cash, at a premium, their investment in IMPT and represents:

     • a premium of 22.4 per cent. over the Closing Price of 245p per IMPT Share on 16 February 2017 (being the latest practicable date prior to this Announcement);

     • a premium of 35.1 per cent. to the volume weighted average price of 222.1p per IMPT Share for the three months to 16 February 2017 (being the latest practicable date prior to this Announcement); and

     • a premium of 5.6 per cent. over IMPT's last reported NAV at 30 June 2016 of 284p per IMPT Share.

2. Recommendation

   The IMPT Independent Directors, who have been so advised by Stockdale, consider the financial terms of the Offer to be fair and reasonable. In providing advice to the IMPT Independent Directors, Stockdale has taken into account the commercial assessments of the IMPT Independent Directors. Stockdale is providing independent financial advice to the IMPT Independent Directors for the purposes of Rule 3 of the Code.

   Accordingly, all of the IMPT Independent Directors intend to recommend that the IMPT Shareholders accept the Offer. Those IMPT Independent Directors who hold IMPT Shares have irrevocably undertaken to accept the Offer in respect of their own beneficial holdings and the beneficial holdings of their close relatives totalling 70,400 IMPT Shares, in aggregate, representing approximately 0.84 per cent. in aggregate of the issued ordinary share capital of IMPT in issue as at close of business on 16 February 2017 (being the last Business Day prior to the date of this Announcement).

   The Independent Directors are those of the IMPT Directors who are independent of Alpha, being all of the IMPT Directors other than Mark Rattigan. Mark Rattigan, a Director of IMPT, is not considered to be independent for the purposes of the Offer in light of his position as Chief Operating Officer of Alpha, the investment adviser and manager to IMPT. Mark Rattigan has therefore not taken part in any deliberations regarding the Offer, and has neither reviewed nor considered the terms of the Offer.

3. Irrevocable undertakings

   Hansteen has received irrevocable undertakings to accept the Offer from the IMPT Independent Directors who hold IMPT Shares and who, together with their close relatives, beneficially own or control 70,400 IMPT Shares, in aggregate, representing approximately 0.84 per cent. in aggregate of the issued ordinary share capital of IMPT in issue as at close of business on 16 February 2017 (being the last Business Day prior to the date of this Announcement).

   These irrevocable undertakings remain binding in the event of a competing offer.

   Further details of these irrevocable undertakings are set out in Appendix III to this Announcement.

4. Background to and reasons for the recommendation of the Offer

The IMPT Independent Directors intend to recommend that the IMPT Shareholders accept the Offer for the reasons set out below.

In August 2015 IMPT announced initiatives with the objective of improving shareholder value. At that time, IMPT's share price stood at 54p which the Board believed reflected the IMPT Group's high gearing and lack of dividend rather than the quality of the property portfolio. Since the IMPT Group's borrowings provided for the payment of certain fees in the event of prepayment in the first three years following drawdown, plans for a refinancing could only be targeted for the fourth quarter of 2016 when such prepayment penalties fell away. IMPT also announced that, in the event a refinancing was not possible, it would consider alternative ways to improve shareholder value at that time.

A refinancing before the end of 2016 did not prove possible. The Independent Directors all favoured a refinancing structure which reduced the overall level of debt through an issue of new shares, providing existing shareholders with an opportunity to participate, and thereby enabling IMPT to pay a material and sustainable dividend. However, during such discussions it became clear that Alpha Real Trust Limited (IMPT's largest shareholder) and Alpha (investment manager to both IMPT and Alpha Real Trust Limited) were only prepared to consider a relatively highly leveraged debt refinancing of the Group which, if implemented, would have led to increased borrowings and new banking covenants at higher levels than at present, putting any potential dividend at greater risk.

Rather than discuss alternative ways to improve shareholder value, Alpha Real Trust Limited then requisitioned an extraordinary general meeting (the "Requisitioned EGM") to try to remove two of IMPT's Independent Directors. At the Requisitioned EGM, those shareholders independent of Alpha Real Trust Limited (and Antler Investment Holdings Limited, a company associated with Alpha) voted overwhelmingly to support the continued appointment of the two Independent Directors in a ratio of over 6 to 1.

As a result of the publicity arising from the Requisitioned EGM, IMPT received a number of unsolicited proposals regarding ways to improve shareholder value including the proposal from Hansteen regarding the Offer. The Independent Directors evaluated such proposals against a refinancing, which would have required a material equity raising to reduce the high level of debt significantly and took into account representations from a number of shareholders who, following the Requisitioned EGM, indicated that they favoured a realisation of the value in the IMPT Group rather than subscribing for more equity or remaining invested in a heavily leveraged company. Furthermore, the Independent Directors recognised the advantages of an offer for the shares of IMPT rather than a sale of its portfolio, since a portfolio sale would inevitably have been more complex with shareholders having to bear, inter alia, the costs of the sale process and subsequent winding up and return of capital.

In arriving at their decision to recommend the Offer, the Independent Directors have also taken into account:

• the premium of the Offer to both the recent share price and the last reported NAV of IMPT; and

• the relative lack of liquidity in the trading of IMPT's shares and the fact that the Offer provides IMPT Shareholders with a certain opportunity to realise their investment in IMPT wholly for cash.

Accordingly the Independent Directors believe that the Offer is in the best interests of both IMPT and its shareholders and therefore unanimously recommend that shareholders accept the Offer.