Proposed Special Dividend and Share Consolidation, Share Buyback Programme and Dividend Reinvestment Plan
Vectura Group plc (LSE:VEC) (“Vectura” or “the Company”) today announces a proposed Special Dividend and Share Consolidation, Share Buyback Programme and Dividend Reinvestment Plan.
On 17 July 2019, the Board announced its intention to undertake a capital return of approximately £50 million in 2019. The Board today announces that it intends to undertake an increased capital return of approximately £60 million as follows:
- Approximately £40 million is to be returned to shareholders by way of a proposed special dividend of 6 pence per existing ordinary share in the capital of the Company ("Special Dividend") which is expected to become payable to shareholders on 25 October 2019. The Special Dividend is to be accompanied by a consolidation of the Company's ordinary share capital ("Share Consolidation"). The Board also intends to launch a dividend reinvestment plan ("DRIP") in connection with the proposed Special Dividend. This will give shareholders the opportunity to invest the proposed Special Dividend to purchase additional ordinary shares in the Company.
- The Company is intending to buy back approximately £20 million of its ordinary shares pursuant to an on-market share buyback programme ("Share Buyback Programme"), with the first £10 million tranche of the Share Buyback Programme to be undertaken during the period commencing on or around 30 October 2019 and ending on or around 30 April 2020 and the expectation that a second tranche of approximately £10 million will be undertaken thereafter.
The Company has today published a circular ("Shareholder Circular") setting out the details of the proposed Special Dividend and Share Consolidation, the Share Buyback Programme and the Dividend Reinvestment Plan and convening a general meeting to be held at 10.30 a.m. on Thursday, 10 October 2019 at the offices of Clifford Chance LLP, 4 Coleman Street, London EC2R 5JJ ("General Meeting").
Paul Fry, Interim Chief Executive Officer of Vectura, commented:
"Today we’re announcing our intention to increase our capital return from £50 million to £60 million reflecting our belief in a strong outlook and the cash generative nature of our business. Following feedback from our major shareholders, we believe the proposal of a special dividend coupled with an on-market share buyback programme delivers the right balance of speed and efficiency, whilst providing liquidity for the stock during a period of potential uncertainty in financial market conditions."
The proposed Special Dividend will involve the Company returning 6 pence per existing ordinary share in the capital of the Company to shareholders on the register of members of the Company as at 6.00 p.m. on 11 October 2019.
It is expected that the Special Dividend will become payable to shareholders on 25 October 2019.
The Special Dividend is intended to result in an aggregate payment by the Company of approximately £40 million in cash to holders of existing ordinary shares.
It is anticipated that, without the proposed consolidation of the Company's existing ordinary share capital, there would be a decrease in the market price of the Company's shares as a consequence of the Special Dividend. The Share Consolidation has been proposed in order to maintain the market price for shares at approximately the same level as prevailed immediately prior to the approval of the Special Dividend (subject to normal market fluctuations and fractional entitlements).
As a result of the Share Consolidation, shareholders will hold 12 new ordinary shares in the Company ("New Ordinary Shares") for 13 existing ordinary shares in the Company held at 6.00 p.m. on 11 October 2019. The nominal value of the Company's existing ordinary shares will change from £0.00025 per share to £0.000271 per share.
The effect of the Share Consolidation will be to reduce the number of Vectura's existing ordinary shares to reflect the return of the Special Dividend. However, shareholders will own the same proportion of the Company as they did beforehand, subject to fractional entitlements.
Any fractional entitlements to New Ordinary Shares resulting from the Share Consolidation will be aggregated and sold in the market, with the net proceeds of sale in excess of £5 being distributed pro rata to relevant shareholders. Due to the cost of postage, proceeds less than £5 will be retained by the Company and will be donated to a charity of the Company’s election.
Share Buyback Programme
It is expected that the Share Buyback Programme will be conducted in two tranches. For the first tranche, the Company has entered into an irrevocable, non-discretionary arrangement with J.P. Morgan Securities plc ("JPMS") to enable JPMS to purchase the Company's New Ordinary Shares on-market during the period commencing on or around 30 October 2019 and ending on or around 30 April 2020. The aggregate maximum consideration for the purchase of New Ordinary Shares pursuant to the first tranche of the Share Buyback Programme is £10 million and will be undertaken in accordance with the terms of the general authority to make market purchases of up to 61,505,010 of the Company's New Ordinary Shares, of which approval is sought from shareholders at the General Meeting.
JPMS will make its trading decisions in relation to the Share Buyback Programme independently of, and uninfluenced by, Vectura.
Any New Ordinary Shares purchased in the market under the Share Buyback Programme will be cancelled or held as treasury shares, which may then be cancelled, sold for cash or used to meet the Company’s obligations under its share schemes.
Any buyback of New Ordinary Shares pursuant to the agreement with JPMS will be carried out on the London Stock Exchange and executed in accordance with Article 5 of Regulation (EU) No 596/2014, the Commission Delegated Regulation (EU) 2016/1052 and Chapter 12 of the Financial Conduct Authority's Listing Rules. The Company will announce any buyback of New Ordinary Shares no later than 7.30 a.m. on the business day following the calendar day on which the buyback occurred.
The second tranche of the Share Buyback Programme is expected to be announced in due course to follow the first tranche.
The Special Dividend and the Share Consolidation are conditional upon shareholder approval, which will be sought at the General Meeting, and also upon admission of the New Ordinary Shares (after the Share Consolidation) to the Official List of the United Kingdom Listing Authority and to trading on the London Stock Exchange plc's main market for listed securities becoming effective by or as soon as practicable after 8.00 a.m. on 14 October 2019 (or such later time and/or date as the directors may in their absolute discretion determine) ("Admission").
At the General Meeting, the Company is also seeking to refresh its general authority to make market purchases of its ordinary shares granted by shareholders at the Company's 2019 Annual General Meeting so that the authority continues to be available in respect of the New Ordinary Shares. The Share Buyback Programme will be undertaken in accordance with, and pursuant to, the general authority to be refreshed at the General Meeting.
The Board considers that the resolutions to be proposed at the General Meeting (as set out in the Notice of Meeting in the Shareholder Circular) are in the best interests of the shareholders of the Company as a whole. Accordingly, the Board unanimously recommends shareholders to vote in favour of all of the resolutions.
Dividend Reinvestment Plan
The Board intends to launch the DRIP in connection with the Special Dividend. The DRIP shall be administered by Computershare Investor Services PLC ("Computershare") and provides shareholders with the opportunity to reinvest the cash Special Dividend and subsequent dividend payments to purchase additional ordinary shares in the Company.
Further details, including the associated fees and charges, are set out in the Shareholder Circular and the DRIP terms and conditions which are available to view and download on the Company's website at www.vectura.com/investors/general-meetings and also on Computershare's website at https://www.investorcentre.co.uk. Alternatively, you may request a hard copy of the DRIP terms and conditions by contacting Computershare via the shareholder helpline on 0370 707 1387.
If you do not wish to participate in the DRIP, you do not need take any further action.
If you wish to participate in the DRIP in respect of the Special Dividend, a form of election accompanies the Shareholder Circular or you can apply online at https://www.investorcentre.co.uk, but you must first register if you are not already a member of Investorcentre. If you are a CREST member or sponsored by a CREST member and you wish to participate in the DRIP you must submit your election using the CREST system. You may also request a hard copy DRIP election form by contacting Computershare via the shareholder helpline on 0370 707 1387. Further details are contained in the DRIP terms and conditions.
To participate in the DRIP in respect of the Special Dividend, Computershare must receive your completed election form, online application, or election using the CREST system by 6.00 p.m. on 11 October 2019. Any valid applications or elections received after this time will not apply to the Special Dividend.
A guide to certain taxation consequences of the Special Dividend and Share Consolidation and the DRIP for certain categories of UK tax resident shareholders under current English law and HM Revenue & Customs' practice and a summary of certain United States federal income tax consequences for certain US shareholders under current United States federal income tax law are set out in the Shareholder Circular. This is intended as a general guide only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular shareholder, nor should it be relied on.
Shareholders who are subject to tax in a jurisdiction other than the United Kingdom or the United States, or who are in any doubt as to the potential tax consequences of the Special Dividend and Share Consolidation or the DRIP, should consult an appropriate professional adviser.
Expected timetable of principal events
|Latest time and date for receipt of Forms of Proxy and CREST proxy instructions for the General Meeting||10.30 a.m. on Tuesday, 8 Oct|
|General Meeting||10.30 a.m. on Thursday, 10 Oct|
|Latest time of dealings in Existing Ordinary Shares||4.30 p.m. on Friday, 11 Oct|
|Record Date for the Special Dividend and for the Share Consolidation||6.00 p.m. Friday, 11 Oct|
|Latest time and date for election to participate in the DRIP for the Special Dividend||6.00 p.m. Friday, 11 Oct|
|Ordinary Shares marked ex-Special Dividend||Monday, 14 Oct|
|Commencement of dealings in New Ordinary Shares (after Share Consolidation)||By or as soon as practicable after 8.00 a.m. on Monday, 14 Oct|
|CREST accounts credited with New Ordinary Shares (after Share Consolidation)||Monday, 14 October|
|Despatch of certificates for New Ordinary Shares (after Share Consolidation)||No later than Friday, 25 Oct|
- Vectura Group plc
- Vectura Group plc