Loungers plc scheme of arrangement sanctioned

Introduction

The High Court has sanctioned a scheme of arrangement proposed by Loungers plc, a prominent UK-based operator of café bars, restaurants, and roadside dining outlets. The scheme, under Part 26 of the Companies Act 2006, facilitates the acquisition of Loungers plc by CF Exedra Bidco Limited, a company formed for this purpose by investment funds managed by Fortress Investment Group, LLC.

The Scheme

The scheme of arrangement involved a straightforward transfer of shares between Loungers plc and its shareholders, enabling Bidco to acquire the entire issued share capital. Initially, shareholders were offered 310 pence per share in cash or the option to receive rollover units. However, following resistance from some shareholders, the offer was increased to 325 pence per share, valuing the company at £354.4 million, a 36.6% premium on the undisturbed share price.

Jurisdictional Requirements

Mr Justice Mellor reviewed the jurisdictional requirements under Part 26 and confirmed their satisfaction. The scheme involved an arrangement with the necessary give and take, and permission was granted to convene a meeting of shareholders, which was held at the company's headquarters in Bristol.

The Court Meeting

The court meeting saw a significant turnout, with 92 shareholders voting in favour of the scheme, representing 93.47% in value. The meeting was held in accordance with the directions, albeit with a waived technical defect regarding its location.

The Court's Discretion

In exercising discretion to sanction the scheme, the court considered the statutory compliance, fair representation of shareholders, and the absence of coercion. The scheme was deemed reasonable for an intelligent shareholder to approve, providing significant value over pre-announcement share prices.

Other Issues

Bidco's increased offer was supported by irrevocable undertakings from directors and other shareholders, covering approximately 38.5% of shares. The court noted the absence of objections and confirmed all conditions were met or waived, ensuring compliance with US securities regulations for the share alternative.

Conclusion

Mr Justice Mellor concluded by sanctioning the scheme, facilitating the acquisition of Loungers plc by CF Exedra Bidco Limited, marking a significant development in the company's corporate journey.

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For more information on shareholder law, see BeCivil's guide to Shareholder Law.