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Cpl Resources Plc - Tender Offer

Cpl Resources Plc  - Tender Offer

On 14 September 2011, the Board of Cpl announced, in the Company's preliminary statement of annual results, its intention to return up to &euro20 million of surplus capital by way of a tender offer (the "Tender Offer").

The Tender Offer is being made to Qualifying Shareholders at a price per share of &euro3.00 (the "Tender Price") and tenders may be made at the Tender Price only. The Tender Price represents a premium of 20 per cent. to the closing price of &euro2.50 per Ordinary Share on 13 September 2011 (being the last date prior to the announcement of the Board's intention to make the Tender Offer) and represents a premium of 12.8 per cent. to the volume weighted average price over the three month period to 13 September 2011.

Qualifying Shareholders are not obliged to tender any or all of their Ordinary Shares if they do not wish to do so.

A circular (the "EGM Circular"), containing the formal terms and conditions of the Tender Offer and instructions to Shareholders on how to tender their Ordinary Shares should they choose to do so, together with a Tender Form, has been today posted to Shareholders. The EGM Circular also contains a notice of Extraordinary General Meeting to be held at Fitzwilton House, Wilton Place, Dublin 2, Ireland at 3.15 p.m. (or, if later, as soon as practicable after the Annual General Meeting of the Company convened for 3 p.m. on the same date and at the same place, shall have been concluded or adjourned) on 27 October 2011 to consider the resolutions necessary to implement the Tender Offer. The EGM Circular includes a recommendation from the Board of Cpl to vote in favour of the resolutions to be considered at the Extraordinary General Meeting.

Capitalised terms in this announcement have, unless otherwise stated, the same meaning as set out in the EGM Circular.

BACKGROUND TO AND REASONS FOR THE TENDER OFFER

In the year to 30 June 2011, the Group reported progress against all financial and operating measures. A strong operating cash flow performance within the period increased the Group's net cash balance from &euro43.4 million to &euro46.3 million.

Throughout 2011, the Board considered a range of strategic and financial options to enhance Shareholder value. The Board, in consultation with its advisers, reviewed a number of factors including:

&middot the Group's current and expected capital requirements relative to the strength of its balance sheet together with its ongoing cash flow generation

&middot the interest income generated by the Group's current cash balance and

&middot acquisition and investment opportunities.

Following this review, and having regard to the views of certain institutional Shareholders that had made unsolicited approaches relating to a potential return of capital to Shareholders, the Board (with the exception of Anne Heraty and Paul Carroll, who absented themselves from deliberations relating to the proposed Tender Offer) unanimously determined that a return of surplus capital is in the best interests of Shareholders as a whole. The Board believes that a return of capital in the amount proposed represents the most effective use of those Shareholder funds and that the continued strength of the Group's balance sheet, and its cashflow generation after the return of those funds, will be sufficient to pursue the Group's stated growth objectives.

The Board concluded, following consultation with the Company's advisers, that a return of up to &euro20 million of capital by way of the Tender Offer is in the best interests of the Group and Shareholders as a whole as it provides Shareholders with both choice (that is, the discretion to participate) and certainty of value. Those Shareholders who do not wish to participate in the Tender Offer can retain their full existing investment in the Company. As all Ordinary Shares purchased by the Company under the Tender Offer will subsequently be cancelled, the Tender Offer is expected to have a positive effect on both the Group's earnings per share and dividend per share measures.

An independent committee of the Board, comprised of independent non-executive directors Breffni Byrne and Oliver Tattan, was formed to consider and settle the terms and conditions of the Tender Offer, including the Tender Price.

Benefits of the Tender Offer

The benefits of the Tender Offer, compared to other available options for a return of capital to Shareholders, are that the Tender Offer:

a) provides those Qualifying Shareholders who wish to sell Ordinary Shares with the opportunity to do so

b) enables those Shareholders who do not wish to receive capital at this time to maintain their full investment in the Company

c) is available to all Shareholders (other than Shareholders who may be resident in a Prohibited Territory) regardless of the size of their shareholdings

d) ensures equal opportunity to all Qualifying Shareholders to participate in the return of capital by offering the
entitlement to sell up to approximately 17.915 per cent. of the Ordinary Shares registered in his name on the Record Date under the Tender Offer, rounded down to the nearest whole number of Ordinary Shares (the "Guaranteed Entitlement") and

e) will have a sustainable positive impact on both the Group's earnings per share and dividend per share as all shares acquired under the Tender Offer will be cancelled.

The Tender Offer will provide all Qualifying Shareholders with an opportunity to sell part of their respective shareholdings and to receive their respective share of the capital which the Company is seeking to return. Qualifying Shareholders may also be able to participate in excess of their Guaranteed Entitlement, potentially up to their maximum shareholding in the Company, to the extent that other Qualifying Shareholders do not wish to participate in the Tender Offer in respect of their respective Guaranteed Entitlements.

DETAILS OF THE TENDER OFFER

Full details of the Tender Offer, including the terms and conditions on which it is being made, are set out in Part III of the EGM Circular and in the Tender Form. Shareholders do not have to tender any Ordinary Shares if they do not wish to do so.

The Tender Offer is conditional on:

(i) the passing of Resolutions 1, 2, 3(a), 3(b) and 3(c) set out in the Notice of Extraordinary General Meeting at the end of the EGM Circular

(ii) the receipt of valid tenders in respect of at least 5,000,000 Ordinary Shares representing approximately 13.44 per cent. of the Company's Existing Issued Ordinary Share Capital and

(iii) the Tender Offer not having been terminated in accordance with paragraph 10 of Part III (Terms and Conditions of the Tender Offer) of the EGM Circular prior to 11.00 a.m. on 1 November 2011.

The Tender Offer is being made to Qualifying Shareholders on the register of members of the Company at 5.00 p.m. on 1 November 2011 and in respect of their Ordinary Shares held at that time.

Under the Tender Offer:

&middot The Company will purchase up to 6,666,666 Ordinary Shares from Qualifying Shareholders at the Tender Price. These Ordinary Shares will subsequently be cancelled by the Company.

&middot There is no obligation on Qualifying Shareholders to participate in the Tender Offer.

&middot Each Qualifying Shareholder will be entitled to sell up to approximately 17.915 per cent. of the Ordinary Shares registered in his name on the Record Date under the Tender Offer, rounded down to the nearest whole number of Ordinary Shares. Qualifying Shareholders may sell more than their Guaranteed Entitlement to the extent that other Qualifying Shareholders tender less than their Guaranteed Entitlement.

&middot If the aggregate purchase price of all Ordinary Shares tendered is &euro20 million or less, all Ordinary Shares validly tendered will be accepted and purchased at the Tender Price, subject to the receipt of valid tenders in respect of at least 5,000,000 Ordinary Shares.

&middot However, if the aggregate value of all validly tendered Ordinary Shares exceeds &euro20 million, not all of the Ordinary Shares validly tendered will be accepted and purchased. In these circumstances, the number of Ordinary Shares which will be accepted and purchased will be calculated as follows:

(i) all Ordinary Shares validly tendered by Qualifying Shareholders up to their respective Guaranteed
Entitlements will be accepted and purchased in full and

(ii) all Ordinary Shares tendered by Qualifying Shareholders in excess of their Guaranteed
Entitlements, will be scaled down pro rata to the total number of such Ordinary Shares tendered in excess of the aggregate Guaranteed Entitlement, such that the total cost of Ordinary Shares purchased pursuant to the Tender Offer does not exceed &euro20 million

&middot All of the Directors who hold Ordinary Shares will be tendering Ordinary Shares on a pro rata basis as set out in the EGM Circular.

Ordinary Shares not validly tendered will not be purchased. Ordinary Shares purchased pursuant to the Tender Offer will be purchased free of commissions and dealing charges.

Ordinary Shares successfully tendered under the Tender Offer will be purchased by the Company and subsequently cancelled and will not rank for any future dividends. However, the final dividend of 2.5 cent per Ordinary Share will, subject to its approval at the Annual General Meeting, be paid on 14 November 2011 in respect of any Ordinary Shares successfully tendered under the Tender Offer.

The issued share capital of the Company as at 29 September 2011, being the latest practicable date prior to the publication of the EGM Circular, was 37,211,825 Ordinary Shares. If the Tender Offer is implemented in full, this will result in the purchase of up to 6,666,666 Ordinary Shares (approximately 17.915 per cent. of the Existing Issued Ordinary Share Capital). The issued Ordinary Share capital of the Company following cancellation of these shares will be 30,545,159.

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