NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
6 December 2016
M.P. EVANS GROUP PLC ('MP EVANS' OR 'THE GROUP')
PROPOSED SALE OF ENTIRE 36.84% INTEREST IN PT AGRO MUKO AND PAYMENT OF SPECIAL 10 PENCE PER SHARE DIVIDEND, SUBJECT TO SHAREHOLDER APPROVAL
· Sale of 36.84% interest in PT Agro Muko agreed for US$100 million in cash;
· Special dividend to be paid following completion of 10p per share;
· Shareholder approval to be sought;
· Price in line with independent valuation of Group assets and provides further reason to reject KLK offer; and
· Planned reinvestment in substantial new oil-palm projects.
Transaction details
The MP Evans board (the 'Board') is pleased to announce that it has today entered into a conditional agreement to sell the Group's 36.84% share in PT Agro Muko to its long-standing partner, the Belgian Sipef group ('Sipef'), for the sum of US$100 million. PT Agro Muko is a joint venture in which Sipef currently holds 47.29 % of the issued share capital. PT Agro Muko's oil-palm and rubber project in Bengkulu Province, Sumatra, extends to 19,500 planted hectares. The Group has held its investment since the project was first developed in the late 1980's.
The total sale consideration amounts to US$13,860 per planted hectare, being the relevant share of PT Agro Muko's net current assets, plus a figure of US$13,000 per planted hectare. This compares with the US$13,100 per planted hectare included in the independent valuation which accompanied the Company's response document dated 25 November 2016 following the offer made by Kuala Lumpur Kepong Berhad ('KLK') on 18 November to all MP Evans shareholders to acquire their shares at 740 pence per share (the 'Offer'). The PT Agro Muko valuation was at the lower end of the independent valuer's range of values per hectare relative to other MP Evans estates (both majority- and minority-held), in view of the project's older average age of planting and because approximately 9% of its planted area comprises rubber which is typically less profitable than oil palm.
The fact that a sale has been achieved at this level supports the independent valuer's valuation not only of PT Agro Muko but also of the Group's other Indonesian assets. Based on the independent valuer's report, MP Evans commands a value of £10.82 per share, compared with the KLK offer of £7.40 per share, and the Board is therefore urging shareholders to reject the Offer.
Following the completion of the PT Agro Muko sale, the Board proposes to pay a special dividend of 10 pence per share. Both the share sale and dividend payment are conditional upon the approval of MP Evans' shareholders at a general meeting, details of which will shortly be circulated to shareholders. The transaction is also conditional on some statutory Indonesian approvals which may take several weeks to be received.
Transaction in line with MP Evans' strategy
The agreed sale of PT Agro Muko is in line with the Group's strategy. MP Evans embarked on its new strategy in 2005 of selling its small Malaysian estates and very substantially expanding its Indonesian oil-palm areas, and, from 2010 onwards, of managing all its estates. Since then, the Board has sought ultimately to divest its minority-held Indonesian estates, which are not managed by the Group, in favour of acquiring or developing its own, directly managed new projects.
The Board is now actively reviewing a prospective investment in a new, developed oil-palm project to replace at least the equivalent of the 7,200 hectares in PT Agro Muko (36.84% of 19,500 hectares). In addition, the Group is at an advanced stage in negotiations to acquire two projects in the immediate vicinity of the Group's existing East Kalimantan project, which will bring the size of that project from some 15,000 hectares (including smallholder co-operatives) to closer to the desired target, as referred to in the Group's 2015 annual report, of 20,000 hectares. This will result in the Group owning what the Board considers to be two optimally sized oil-palm areas of 10,000 hectares and two optimally sized crude-palm-oil mills.
In addition to these prospective acquisitions, the Board is seeking as quickly as possible to develop the remaining plantable areas on its new projects, amounting to at least 8,000 hectares, the majority of which are on Musi Rawas. In total, therefore, the Board is aiming in the short to medium term to acquire or develop a total of some 20,000 additional hectares of oil palm. The Group, with its excellent management team in place, has a proven track record of developing and managing new plantation projects in Indonesia.
Following the successful completion of the sale, the Group's sole remaining minority investment in the Indonesian palm-oil sector will be its 38% share of PT Kerasaan, comprising 2,300 planted hectares, which is majority-owned and managed by Sipef. It is planned in due course for the Group to sell this investment and similarly reinvest the proceeds in additional, directly owned and managed hectarage.
Commenting on the transaction, MP Evans Chairman, Peter Hadsley-Chaplin, said 'I believe that the Group's agreement to sell its shareholding in Agro Muko represents another important milestone in the pursuit of the board's strategy to control and manage all our Indonesian plantation assets. We feel confident of securing new projects to replace this investment. The agreed sale price strongly supports the independent valuer's recent valuation not only of PT Agro Muko but also of all the Group's other Indonesian assets, and provides another compelling reason to reject the KLK offer. We are also pleased, once again, as occurred following the sale earlier this year of the Group's share of The North Australian Pastoral Company Pty Ltd, to offer a special dividend following completion of the transaction, this time of 10 pence per share. We have been partners with our friends at Sipef in PT Agro Muko for almost 30 years and we wish them every success with the project in the future.'
Enquiries:
M.P. Evans Group PLC
Telephone: +44 1892 516333
Peter Hadsley-Chaplin, Chairman
Tristan Price, Chief Executive
Rothschild (Financial Adviser)
Telephone: +44 207 280 5000
Stuart Vincent
Sam Critchlow
Peel Hunt (NOMAD and Broker)
Telephone: +44 207 418 8900
Dan Webster
Adrian Trimmings
Hudson Sandler
Telephone: +44 207 796 4133
Charlie Jack
Bertie Berger
Responsibility
The Directors accept responsibility for the information contained in this document (including any expressions of opinion), except that the only responsibility accepted by them in respect of the information contained in this document relating to KLK, which has been compiled from published sources, is to ensure that such information has been correctly and fairly reproduced and presented. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.
Rule 21 of the Takeover Code (the "Code")
As the KLK offer remains outstanding and the proposed agreement to sell the Group's interest in PT Agro Muko is a contract outside the ordinary course of business, the Company is obliged under the Code to obtain the prior approval of shareholders at a general meeting for the implementation of the proposed sale of its interest in Agro Muko as well as this being a condition to the sale agreement.
Notice concerning financial adviser and nominated adviser
N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to for M.P. Evans and no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than M.P. Evans for providing the protections offered to its clients or for providing advice in connection with the subject matter of this announcement or any other matters referred to in this announcement.
Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as nominated adviser to for M.P. Evans and no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than M.P. Evans for providing the protections offered to its clients or for providing advice in connection with the subject matter of this announcement or any other matters referred to in this announcement.
Disclosure requirements of the Takeover Code (the "Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Overseas shareholders
The release, distribution or publication of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements.
Publication on website
A copy of this announcement will be made available at www.mpevans.co.uk in accordance with Rule 26 of the Code. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.