R&Q shareholders reject acquisition, capital increase continues

Randall & Quilter Investment Holdings Ltd (R&Q) shareholders again rejected an acquisition of the company by Brickell PC Insurance Holdings LLC, which is backed by 777 Partners, but instead approved plans to focus on a capital raise over $100 million.

R&Q failed to secure shareholder approval for the acquisition at a first special general meeting (SGM) last week, but had hoped to pass the necessary resolutions at a further meeting yesterday after securing a additional investor support.

However, his plans were scuttled when Brickell delivered a letter declaring termination of the agreement just a day before the vote, alleging that R&Q had breached certain obligations under the implementation agreement related to the proposed transaction.

The deal, which was announced in early April, valued R&Q’s existing issued share capital at around £482m, and Brickell also offered to invest $100m of new equity into R&Q as part of the deal. ‘arrangement.

As the transaction will not proceed, R&Q says it is instead focused on plans to raise approximately $100 million through a placement and up to $8 million through an open funding offering, which has garnered ” strong interest” from shareholders after a short market sounding process.

The capital increase will include a placement of shares to institutional shareholders and an open offering to existing eligible shareholders, of which $60 million of the proceeds will be used to fund collateral requirements and the balance to repay debt.

For its part, R&Q maintains that the vote against the resolutions necessary for its acquisition by Brickell “demonstrates the confidence of certain shareholders of the Company in the future value and prospects of the company and the support for a capital increase”.

But market prices suggest confidence in R&Q has been shaken, as its share price fell 42% yesterday after Brickell’s public announcement of its intention to terminate the deal, and only recovered by 6% at the time of writing, following the announcement of the capital increase strategy reversal.

Commenting on the last shareholders’ meeting, William Spiegel, Executive Chairman of R&Q, said: “Following the outcome of today’s vote, we will be focusing on fundraising. Having prepared this as an option when we initially engaged with shareholders, we are well positioned to launch this shortly. »

“Throughout this process, our priority has always been to deliver the best outcome to shareholders and the voting outcome demonstrated the long-term value that investors see in the business. We continue to have great confidence in R&Q’s future outlook and expect more than $90 million in pretax operating income in 2024. We look forward to engaging with our shareholders in the fundraising.

Alastair Campbell, Non-Executive Director and Independent Lead Director of R&Q, commenting on behalf of the Board, added:
“Following further engagement with our shareholders, our priority is now to obtain the financing necessary to deleverage our balance sheet and improve our financial profile. Since becoming Executive Chairman just over twelve months ago, William, alongside his new management team, has set out a compelling new strategy and driven significant positive change at R&Q, improving its culture, management risk and its governance. We look forward to engaging with our shareholders as we raise funds. »

The placement is expected to launch on June 13, 2022 following the release of R&Q’s 2021 annual results, and the company plans to offer up to 10% of its issued share capital on a firm basis, with additional common shares being conditionally offered. upon shareholder approval at a special general meeting on July 11, 2022.

Qualified shareholders will then have the opportunity to subscribe for common shares under the open offering at the same offering price as the placement up to a total value of $8 million, with the open offering to be launched on 15 June.

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