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 SUCH JURISDICTION
FOR IMMEDIATE RELEASE
1 May 2019
Provident Financial plc ("Provident")
Non-Standard Finance plc ("NSF") seeks to rectify its unlawful shareholder distributions and share buy-backs
The Provident Board notes that NSF has published notice of its 2019 annual general meeting (the "NSF AGM Notice") admitting:
the payment of 5 unlawful interim and final dividends between October 2016 and October 2018 aggregating approximately £12.5 million (the "Dividends"); and
85 unlawful and consequently void share buy-backs of a total of 5,070,234 shares aggregating £3,468,890 between 9 November 2017 and 29 March 2019 (the "Share Buy-backs").
The fact remains that since the NSF IPO, NSF has not generated post tax profits. The Dividends and Share Buy-backs have therefore effectively been returning to shareholders monies raised from them. This can be evidenced by the fact that the unlawful Dividends increased the NSF group's retained losses in each year they were paid. There is no explanation provided in the explanatory notes to the NSF AGM Notice as to how profits have been created to make good the deficits in profits available for distribution.
The NSF AGM Notice acknowledges that NSF may have claims against past and present shareholders who received any of the unlawful Dividends and against directors at the time the Dividends were paid and at the time the Share Buy-backs were entered into.
The resolutions proposed by NSF are intended to put all potentially affected parties in the position in which they always intended to be had the Dividends and Share Buy-backs been made in accordance with the Companies Act 2006 by releasing such claims and cancelling and extinguishing the shares that were purportedly purchased by NSF through the Share Buy-backs.
It is telling that the NSF Board cannot recommend that NSF Shareholders vote in favour of certain shareholder resolutions, given the interest of each of the NSF directors in being released from potential liability.
It is also notable that NSF is not seeking independent votes to approve the release of the potential liability of the substantial shareholders holding 10 per cent. or more of its issued share capital as would be required under the related party requirements of the premium listing NSF aspires to in conjunction with the Offer (but is not required under NSF current 'lite' standard listing).
The unlawful Dividends and void Share Buy-backs raise serious questions about the suitability and competence of NSF to acquire and manage Provident, a more complex and dual regulated business seven times its size, where capital maintenance is a fundamental regulatory requirement.
The Provident Board continues to believe the Offer is fraught with risks and that it is clearer than ever that the Offer should be rejected by Provident Shareholders.
Unless otherwise defined, all capitalised terms in this announcement shall have the meaning given to them in the response document published by Provident on 23 March 2019.
Provident, Tel: +44 12 7435 1135
Patrick Snowball, Chairman
Malcolm Le May, Chief Executive Officer
Gary Thompson / Vicki Turner, Investor Relations, Tel: +44 12 7435 1900
Richard King, Media, Tel: +44 20 3620 3073
Barclays (Joint Lead Financial Adviser and Corporate Broker to Provident)
Richard Taylor, Tel: +44 20 7623 2323
J.P. Morgan Cazenove (Joint Lead Financial Adviser and Corporate Broker to Provident)
Ed Byers, Tel: +44 20 7742 4000
Jefferies (Financial Adviser to Provident)
Graham Davidson, Tel: +44 20 7029 8000
Brunswick (PR Adviser to Provident)
Nick Cosgrove, Tel: +44 20 7404 5959
Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the Financial Conduct Authority (the "FCA") and the PRA, is acting exclusively as corporate broker and financial adviser for Provident and no one else and will not be responsible to anyone other than Provident for providing the protections afforded to clients of Barclays nor for providing advice in relation to any matter referred to in this announcement.
J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove, is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom. J.P. Morgan Cazenove is acting exclusively as corporate broker and financial adviser to Provident and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than Provident for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, or for providing advice in relation to the contents of this announcement or any other matter referred to herein.
Jefferies International Limited ("Jefferies"), which is authorised and regulated in the United Kingdom by the FCA, is acting for Provident and no one else in connection with the matters set out in this announcement. In connection with such matters, Jefferies will not regard any other person as their client, and will not be responsible to anyone other than Provident for providing the protections afforded to clients of Jefferies or for providing advice in relation to the contents of this announcement or any other matter referred to herein. Neither Jefferies nor any of its subsidiaries, affiliates or branches owes or accepts any duty, liability or responsibility whatsoever (whether direct, indirect, consequential, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Jefferies in connection with this announcement, any statement contained herein or otherwise.
Forward looking statements
This announcement may contain certain "forward looking statements" regarding the financial position, business strategy or plans for future operations of Provident. All statements other than statements of historical fact included in this document may be forward looking statements. Forward looking statements also often use words such as "believe", "expect", "estimate", "intend", "anticipate" and words of a similar meaning. By their nature, forward looking statements involve risk and uncertainty that could cause actual results to differ materially from those suggested by them. Much of the risk and uncertainty relates to factors that are beyond Provident's ability to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this document. Provident does not assume any obligation to, and does not intend to, revise or update these forward looking statements, except as required pursuant to applicable law or regulation.
A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on the Provident website at www.providentfinancial.com by no later than 12 noon (London time) on the business day following this announcement. For the avoidance of doubt, the content of this website is not incorporated by reference into, and does not form part of, this announcement.
This communication is not intended to and does not constitute an offer to buy or the solicitation of an offer to subscribe for or sell or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction. The release, publication or distribution of this communication in whole or in part, directly or indirectly, in, into or from certain jurisdictions may be restricted by law and therefore persons in such jurisdictions should inform themselves about and observe such restrictions.