Fulcrum shareholders advised not to accept tender offer
The board of directors of utility firm Fulcrum say an announcement by Harwood Capital that it will make a tender offer for Fulcrum’s shares “significantly undervalues” their business.
Sheffield-based Fulcrum has today issued a further response to Harwood’s intention to make a tender offer for up to 53,500,000 of the company’s ordinary shares at a price of 26.25 pence per share.
Fulcrum’s response states: “The Board continues to regard Harwood’s announcement as an opportunistic manoeuvre against the backdrop of stock market uncertainty and share price volatility resulting from the ongoing COVID-19 pandemic.
“The Board believes the tender price significantly undervalues the company and its prospects and does not reflect a fair value for independent shareholders.
“The Board reiterates its recommendation that shareholders should take no action and neither accept the tender offer, when made, nor sell any shares to Harwood at or below the tender price.”
As part of its detailed response, Fulcrum says it understands that if the tender offer is completed, Harwood will then propose a resolution to delist the company from AIM.
Fulcrum says this would “not be in the best interests of independent shareholders given the loss of liquidity currently provided as a company admitted to trading on AIM.”
It adds: “Discussions with independent shareholders since Harwood’s unsolicited proposal was announced have demonstrated significant support for the Board’s position.
“Independent shareholders have provided letters of intent confirming they intend (or, where applicable, will advise their underlying clients) not to tender any shares to Harwood and to oppose any resolution to cancel the admission of the company’s shares to trading on AIM.
“Under the AIM Rules, any delisting requires a majority of 75 per cent of votes cast at a shareholder meeting.”
Fulcrum says it is in a strong financial position, despite the uncertainties caused by the COVID-19 pandemic.
The business notes: “The disposal of our domestic customer gas connection assets and order book and associated meters to ES Pipelines has enabled the Group to repay all bank debt and leaves the Group with net cash of £5.6m as at 31 March 2020.
“Sales orders in the third quarter to December 2019 were the highest ever achieved by the Group at £17.4m and, until the impact of COVID-19 in March delayed the signing of two large contracts, the Board had expected the final quarter of the 19/20 financial year to be even stronger.
“It is expected that the sales orders that did not complete in March will do so in due course.
“Not including these deferrals, the Board expects the Group order book at 31 March 2020 to be approximately £71m, up 17% year-on-year.
“Looking further ahead, Fulcrum is a fundamentally robust business which gives the Board confidence that the Group is well positioned to prosper in the long term.”
