Home Meeting notice CLS: Public Offer and Notice of General Meeting – August 2022

CLS: Public Offer and Notice of General Meeting – August 2022

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PRESS RELEASE

Release date:

August 15, 2022

CLS Holdings plc

(“CLS” or the “Company”)

Proposal to buy 1 ordinary share in 40 at 2.5 pence each

in the Company (“Ordinary Shares”) at 250 pence per share

by way of a public offer (the “Public Offer”) and notice of the General Meeting

NOT TO DISSEMINATE, PUBLISH OR DISTRIBUTE, IN WHOLE OR IN PART, IN ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE APPLICABLE LAWS OF SUCH JURISDICTION

LEI: 213800A357TKB2TD9U78

On August 10, 2022, the CLS Board of Directors announced in its half year results for the period ended June 30, 2022 its intention to purchase 1 out of 40 ordinary shares through a tender offer at 250 pence per ordinary share.

CLS today published a circular to shareholders relating to the tender offer (the “Circular“) on the terms set out above. If the maximum number of 10,184,984 Ordinary Shares are acquired under the Tender Offer, this will result in the payment of approximately £25.5 million per the Company to participating shareholders Capitalized terms used but not defined in this press release shall have the meaning given to them in the Circular.

The Tender Offer is open to all Qualified Shareholders registered on the Company’s register at 6:00 p.m. on September 9, 2022, who may participate by tendering all or part of their ordinary shares at the above price. No Ordinary Shares will be purchased under the Tender Offer unless the relevant special resolution to be proposed to the general meeting of the Company to be held on September 9, 2022 at 11:00 a.m. is passed. The tender offer will be void if it is less than 0.1%. of the issued ordinary share capital of the Company (excluding treasury shares) in total is contributed. The Ordinary Shares purchased under the Tender Offer will be held as treasury shares.

Context and reasons for the takeover bid

In the first six months of the current financial year, the Council completed two property disposals, realizing a total of £10.1 million at prices in line with their valuations at 31 December 2021.

In addition, on August 3, 2022, CLS announced that it had completed the sale of two UK properties, Great West House, Brentford and 62 London Road, Staines and one French property, 96 Rue Nationale, Lille for a total of 39.8 million pounds. The three properties sold for an average of 3.7% above valuations on December 31, 2021.

The price of a common share continued to trade at a significant discount to net tangible assets (“NTA“) value of one Ordinary Share (last reported NTA per Ordinary Share of 352.8 pence per Ordinary Share,

Registered in England No. 2714781. Registered office as above.

PRESS RELEASE

as of June 30, 2022). The Board believes that the share price discount to its NTA is unjustified and that it is in the interests of all Shareholders to implement the Tender Offer to reduce this discount.

The Board determined that the Tender Offer should be made at an appropriate premium to the price per Ordinary Share and that this would be the most appropriate means of returning capital to Shareholders in a timely and efficient manner, taking into account the costs relative, complexity and timescales of possible methods, as well as the equal treatment of all Shareholders.

The Board of Directors of the Company considers that the Tender Offer is beneficial to the Shareholders as a whole, including, among other reasons, that:

  • the Tender Offer is open to all Qualified Shareholders, regardless of the size of their holding;
  • the Redemption Price represents a premium to the price of the Ordinary Shares, as follows:
  1. a 22.5% premium to the average closing price of the Company’s ordinary shares of 204.0 pence for the 30 business days to the last practicable date; and
  1. a premium of 18.8% to the closing price of the Company’s Ordinary Shares of 210.5 pence
    Last practicable date.
    1. a premium of 20.2% to the closing price of the Company’s ordinary shares of 208.0 pence on 9 August 2022 (the day before the publication of the Company’s notice half-year results).
  • the Tender Offer offers Qualified Shareholders who wish to reduce their holding of Ordinary Shares the opportunity to do so at a market-determined price with a premium;
  • the Tender Offer allows Shareholders who wish to retain their current investment in the Company and their Ordinary Shares to do so, with no Shareholder being required to participate in the Tender Offer, and thus providing Shareholders with flexibility; and
  • the Tender Offer will reduce the number of Ordinary Shares outstanding, and should therefore, assuming earnings and net asset values ​​of the Group’s properties remain the same, have a positive impact on earnings per share and net asset value per Group share.

The size of the tender offer has been determined to be appropriate to ensure that the Group’s loan to value ratio and liquidity remain at an acceptable level, below 40% for an appropriate period of time, and that cash and liquid resources and available facilities are over £100 million, giving the Group the flexibility to focus its portfolio on attractive growth prospects and continue to invest to improve the quality of its existing portfolio.

Interim Dividend 2022

As the record date of the Tender Offer is the same as the record date of the 2022 Interim Dividend, Shareholders who participate in the Tender Offer will continue to receive the 2022 Interim Dividend , or 2.60 pence per Ordinary Share, for all Ordinary Shares tendered.

Substantial shareholders

The Sten and Karin Mortstedt Family & Charity Trust which, through wholly owned subsidiaries of Creative Value Investment Group, owns 51.46% of the issued ordinary share capital of the company, and Bengt Mortstedt, which owns 6.52% of the issued ordinary share capital in the Company, have indicated to the Board that they intend to exercise their right on a pro rata basis in the context of the Tender Offer.

Registered in England No. 2714781. Registered office as above.

PRESS RELEASE

Expected calendar of events

Time and deadline for receipt of proxy nominations

11:00 a.m. on September 7, 2022

Ex-dividend date for the 2022 interim dividend

September 8, 2022

Record date of the 2022 interim dividend

September 9, 2022

General assembly

11:00 a.m. on September 9, 2022

Time and deadline for receipt of submission forms and TTE

3:00 p.m. on September 9, 2022

CREST shareholder instructions

Closing of the public offer

3:00 p.m. on September 9, 2022

Date of registration of the public offer

6:00 p.m. on September 9, 2022

Announcement of the result of the public tender offer

September 12, 2022

Checks sent for Common Shares with certificate

Before September 16, 2022

purchased under the Public Tender Offer and payment by

CREST for uncertificated Common Shares purchased

in the context of the Public Offer

CREST accounts credited with uncertificated Ordinary Shares

Before September 16, 2022

submission without success and sending of the part of balance

unsold Ordinary Share certificates with certificate and shares

certificates for unsuccessful offers of the Certified Ordinary

Shares

2022 Interim Dividend payment date

October 3, 2022

The terms of participation in the Public Offer and the terms of voting at the General Meeting are specified in the Circular. A summary of the tax consequences of the Tender Offer for UK resident Shareholders is also set out in the Circular. However, Shareholders are advised to consult their own professional advisers regarding their own tax position.

Copies of the Circular, Proxy Form and Submission Form have been submitted to the FCA National Storage Mechanism and are available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

The circular will also be available shortly on the CLS website at www.clsholdings.com, in the Investor Relations section under Shareholder Documents. Copies of the documents can also be obtained from the company secretary.

-ends-

Registered in England No. 2714781. Registered office as above.

PRESS RELEASE

For more information, please contact:

CLS Holdings plc

(LEI: 213800A357TKB2TD9U78) www.clsholdings.com

David Fuller, COO +44 (0)20 7582 7766

Liberum Capital Limited

Richard Crawley

Jamie Richards

+44 (0)20 3100 2222

Liberum Capital Limited, which is authorized and regulated in the United Kingdom by the FCA, is advising CLS in connection with the tender offer and no one else and will not be liable to anyone other than CLS for providing the protections given to clients of Liberum Capital Limited or for providing advice regarding the tender offer, the contents of this announcement or any transaction, arrangement or other matter referred to in this announcement.

Registered in England No. 2714781. Registered office as above.