REG - STM Group PLC - Proposed transfer out of Workplace Master Trust

STMAnnouncement

14/06/2024 14:15

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RNS Number : 5561S  STM Group PLC  14 June 2024

14 June 2024

 

STM Group Plc

("STM" or "the Company" or "the Group")

Proposed transfer of all members out of Workplace Pensions Master Trust

 

STM Group Plc (AIM: STM), the cross-border provider of retirement solutions,
life assurance products and related administrative services, announces an
update on its planned strategy in relation to the UK master trust market.

 

As detailed previously within the announcement of Jambo SRC Limited's
("Jambo") firm intention to make an offer for STM in accordance with Rule 2.7
of the Takeover Code (the "Rule 2.7 Announcement") and Scheme of Arrangement
Document dated 9 October 2023 and 7 November 2023 respectively, ahead of
receiving an approach from Jambo, the STM Board was considering the sale of
the Master Trust as part of its strategy review in relation to the UK
workplace pension master trust market.   As also detailed in the Rule 2.7
announcement, STM agreed with Jambo to continue to explore its options for the
Master Trust.  STM currently carries on its UK workplace pensions business
through the Options Master Trust ("OMT"), which is administered by Options
Corporate Pensions UK limited ("OCPL").

 

The workplace pensions sector has undergone a significant amount of
consolidation in the past few years and the continued pressure on margins, as
well as additional regulatory costs and burdens, means that a smaller
innovative master trust is less commercially viable.

 

STM, after considering the various potential partners in the market, is
pleased to announce that it has signed a commercial agreement with Smart
Pension Limited ("SPL" or "Smart"). The agreement will invite the OMT trustees
(the "Trustees") to consider and, if they conclude it is appropriate,
approve Smart as the default provider, and, subject to regulatory approval
by The Pensions Regulator ("tPR"), will allow the Trustees to plan for an
orderly transfer of members over time from the OMT to Smart's own Master
Trust.

 

OCPL recorded revenues of £4.5 million and a profit before tax of £0.5
million for the financial year ending 31 December 2023. The Options Master
Trust has a membership (including deferred members) in excess of 300,000
individuals, across circa 3,700 participating employers.

 

Under the commercial agreement, OCPL will be paid by Smart for each member
that transfers to Smart, the exact consideration per member being dependent on
whether the member remains a contributing member; or whether they are a
preserved member. In addition, the consideration per member varies dependent
on the member's pension pot, with those members that have a pot below the
current Government threshold of £102, and are a preserved member, being
transferred at nil value.

Subject to approval by the trustees and tPR and completion of the proposed
transfer, it is anticipated under the commercial agreement that the existing
OMT membership book will attract an overall consideration of c£4.7 million,
with a maximum possible consideration of £4.8 million, which will be paid
over the course of the next twenty-four months. The consideration will
initially be retained by STM, with further use of proceeds to be decided by
the Board of the Company as they are received over the three years following
completion of the transaction.

 

The exact timing of the payments will be dependent on when new contributions
are received into Smart's Master Trust for active members and upon the bulk
transfer to Smart of historic contributions and assets for active and other
Options members. The final thirty per cent. of the expected consideration will
be payable twelve months after the date of the bulk transfer, so as to allow
for a truing-up for the final numbers of members transferring. Once the bulk
transfer has occurred, OCPL, in conjunction with the Trustees, will then
wind-down the OMT in an orderly fashion.

 

In addition to the above commercial agreement, STM has also entered into an
introducer agreement with Smart under which STM will receive an introductory
commission for new members to be introduced to SPL by existing and new
business relationships. The introducer agreement has the potential to deliver
significant additional benefit to STM, with advantageous terms available for
twelve months for introductions from existing STM business relationships, and
a period of three years on different terms for new business relationships
introduced.  The introductory commission is capped, and a reasonable
expectation would be that the introducer agreement might generate between £1
million and £5 million of revenue over the three year period.

 

The agreements with Smart will include companies affiliated with Jambo, once
Jambo becomes the shareholder controller of STM.

 

Alan Kentish, CEO of STM Group, commented: "We have got to know the Smart team
over the last 18 months, and have been impressed with their vision and
supporting technology. We believe that Smart would provide a good home for
our membership base, and that it will always act in the members' interests.
Whilst STM, has grown its master trust business since acquiring it in 2019,
and had created an innovative business model as an alternative to the one-size
fits all master trust, it is clear that continuing regulatory burdens and
consolidation activity mean that it is an opportune time for STM to proceed
with its strategy of transferring the UK master trust operation."

 

Jamie Fiveash, CEO of Smart UK, added: "I'm delighted that the agreement
announced today will enable us to further expand the benefits of Smart Pension
to be provided to more UK pension savers within the Options Master Trust,
bringing value, along with our best in class customer experience and
technology, to all its members. As a market-leading consolidator, we look
forward both to another successful partnership and implementation, and to
further opportunities with the wider STM and Jambo Group."

 

This announcement contains inside information in relation to STM for the
purposes of Article 7 of the Market Abuse Regulation.  The person responsible
for arranging the release of this announcement on behalf of STM is Alan
Kentish.

Capitalised terms used in this announcement (the "Announcement") shall, unless
otherwise defined, have the same meanings as set out in the Scheme Document.
All references to times in this Announcement are to London, United Kingdom
time unless stated otherwise.

 

 For further information:

 STM Group Plc
 Alan Kentish, Chief Executive Officer                                        Via Walbrook PR

 Cavendish Capital Markets Limited (Financial Adviser, Nominated Adviser and
 Broker to STM)
 Matt Goode / Emily Watts / Abigail Kelly - Corporate Finance                 Tel: +44 (0) 20 7220 0500

 Tim Redfern (ECM)

 Walbrook                                                                     www.walbrookpr.com (http://www.walbrookpr.com)
 Tom Cooper / Joseph Walker                                                   Tel: +44 (0) 20 7933 8780
                                                                              Mob: +44 (http://www.abchurch-group.com) (0) 797 122 1972
                                                                              STM@walbrookpr.com (mailto:STM@walbrookpr.com)

 

 

IMPORTANT NOTICES

Overseas Shareholders

The release, publication or distribution of this Announcement in jurisdictions
other than the United Kingdom or the Isle of Man may be restricted by law
and/or regulations. Persons who are not resident in the United Kingdom or the
Isle of Man or who are subject to the laws and regulations of other
jurisdictions should inform themselves of, and observe, any applicable
requirements. Unless otherwise determined by Bidco or required by the Takeover
Code, and permitted by applicable law and regulation, the Acquisition shall
not be made available, in whole or in part, directly or indirectly, in, into
or from a Restricted Jurisdiction where to do so would violate the laws or
regulations in that jurisdiction and no person may vote in favour of the
Acquisition by any such use, means, instrumentality or form within a
Restricted Jurisdiction or any other jurisdiction if to do so would constitute
a violation of the laws of that jurisdiction. Accordingly, copies of this
Announcement and all documents relating to the Acquisition are not being, and
must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in, into or from a Restricted Jurisdiction where to do so
would violate the laws in that jurisdiction, and persons receiving this
Announcement and all documents relating to the Acquisition (including
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send them in, into or from such jurisdictions where to do so
would violate the laws in those jurisdictions. If the Acquisition is
implemented by way of a Takeover Offer (unless otherwise permitted by
applicable law and regulation), such Takeover Offer may not be made available
directly or indirectly, into or from or by the use of mails or any means or
instrumentality (including, but not limited to, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or of any facility of a national, state or other securities exchange of
any Restricted Jurisdiction and the Takeover Offer may not be capable of
acceptance by any such use, means, instrumentality or facilities.

The availability of the Acquisition to STM Shareholders who are not resident
in the United Kingdom or the Isle of Man (and, in particular, their ability to
vote their Scheme Shares with respect to the Scheme at the Court Meeting, or
to appoint another person as proxy to vote at the Court Meeting on their
behalf) may be affected by the laws of the relevant jurisdictions in which
they are resident. Persons who are not resident in the United Kingdom or the
Isle of Man should inform themselves of, and observe, any applicable
requirements, as any failure to comply with such requirements may constitute a
violation of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. The Acquisition shall be subject to the applicable
requirements of the Companies Act, the Court, the Takeover Code, the Panel,
the London Stock Exchange, the Financial Conduct Authority and the AIM Rules.
Further details in relation to Overseas Shareholders will be contained in the
Scheme Document.

Additional Information for US Investors

The Acquisition is being made to acquire the securities of an Isle of Man
company by means of a scheme of arrangement provided for under Part X of the
Companies Act. A transaction effected by means of a scheme of arrangement is
not subject to the proxy solicitation or tender offer rules under the US
Exchange Act. Accordingly, the Scheme will be subject to disclosure
requirements and practices applicable to schemes of arrangement involving a
target company incorporated in the Isle of Man admitted to trading on AIM,
which are different from the disclosure requirements of the US under the US
proxy solicitation and tender offer rules. The financial information included
in this Announcement and the Scheme documentation has been or will have been
prepared in accordance with accounting standards applicable in the Isle of Man
and the UK and thus may not be comparable to financial information of US
companies or companies whose financial statements are prepared in accordance
with generally accepted accounting principles in the US.

Neither the US Securities and Exchange Commission nor any US state securities
commission has approved or disproved or passed judgment upon the fairness or
the merits of the Acquisition or determined if this Announcement is adequate,
accurate or complete.

If Bidco were to elect to implement the Acquisition by means of a Takeover
Offer, such Takeover Offer would be made in compliance with applicable US laws
and regulations, including to the extent applicable Section 14(e) of the US
Exchange Act and Regulation 14E thereunder, and in accordance with the
Takeover Code. Such a takeover would be made in the United States by Bidco and
no one else.

The receipt of cash pursuant to the Acquisition by a US holder as
consideration for the transfer of its Scheme Shares pursuant to the Scheme may
be a taxable transaction for United States federal income tax purposes and
under applicable United States state and local, as well as foreign and other,
tax laws. Each STM Shareholder is urged to consult his or her independent
professional adviser immediately regarding the tax consequences of the
Acquisition applicable to him.

It may be difficult for US holders to enforce their rights and any claims
arising out of the US federal securities laws, since STM is located in a
country other than the US, and all of its officers and directors are residents
of countries other than the US. US holders may not be able to sue a non-US
company or its officers or directors in a non-US court for violations of US
securities laws. Further, it may be difficult to compel a non-US company and
its affiliates to subject themselves to a US court's judgement.

In accordance with normal UK practice and consistent with Rule 14e-5 under the
US Exchange Act, Bidco, certain affiliated companies and the nominees or
brokers (acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, shares in STM outside of the US, other than pursuant
to the Acquisition, until the date on which the Acquisition and/or Scheme
becomes effective, lapses or is otherwise withdrawn. If such purchases or
arrangements to purchase were to be made they would occur either in the open
market at prevailing prices or in private transactions at negotiated prices
and will comply with applicable law, including to the extent applicable the US
Exchange Act. Any information about such purchases or arrangements to purchase
will be disclosed as required in the United Kingdom, will be reported to a
Regulatory Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com. This information will also be
publicly disclosed in the US to the extent that such information is made
public in the UK.

 

Disclosure Requirements of the Takeover Code

 

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per
cent. or more of any class of relevant securities of an offeree company or of
any securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An Opening Position
Disclosure must contain details of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of: (i) the
offeree company; and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 p.m. (London time) on the 10th Business Day following the
commencement of the offer period and, if appropriate, by no later than 3.30
p.m. (London time) on the 10th Business Day following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a Dealing
Disclosure if the person deals in any relevant securities of the offeree
company or of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of
each of: (i) the offeree company; and (ii) any securities exchange offeror(s),
save to the extent that these details have previously been disclosed under
Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be
made by no later than 3.30 p.m. (London time) on the Business Day following
the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.

 

Electronic Communications

 

Please be aware that addresses, electronic addresses and certain information
provided by STM Shareholders and other relevant persons for the receipt of
communications from STM may be provided to Bidco during the Offer Period as
requested under Section 4 of Appendix 4 of the Takeover Code to comply with
Rule 2.11(c) of the Takeover Code.

 

Publication on Website and Availability of Hard Copies

 

A copy of this Announcement and the documents required to be published by Rule
26 of the Takeover Code shall be made available subject to certain
restrictions relating to persons resident in Restricted Jurisdictions on STM'S
website at https://www.stmgroupplc.com/possible-offer-for-stm-group-plc by no
later than 12 noon (London time) on the Business Day following this
Announcement. For the avoidance of doubt, the contents of this website are not
incorporated into and do not form part of this Announcement.

 

STM Shareholders may request hard copies of this Announcement by contacting
Computershare Investor Services (Jersey) Limited at 13 Castle Street, St.
Helier, Jersey Channel Islands, JE1 1ES or on +44 (0370) 707 4040 between 9:00
a.m. and 5:00 p.m. (London time) Monday to Friday (public holidays excepted).
Calls to this number from persons who are not resident in Jersey are charged
at the applicable international rate. Calls from a mobile device may incur
network extras.

 

STM Shareholders may also request that all future documents, announcements and
information to be sent to them in relation to the Acquisition should be in
hard copy form. If an STM Shareholder has received this Announcement in
electronic form, copies of this Announcement and any document or information
incorporated by reference into this Announcement will not be provided unless
such a request is made.

 

Rounding

 

Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.

 

General

 

If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are a resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.

 

 

Notes to editors:

 

STM is a multi-jurisdictional financial services group traded on AIM, a market
operated by the London Stock Exchange. The Group specialises in the
administration of client assets in relation to retirement, estate and
succession planning and wealth structuring.

 

Today, the Group has operations in the UK, Gibraltar, Malta, Australia and
Spain. STM has developed a range of pension products for UK nationals and
internationally domiciled clients and has two Gibraltar life assurance
companies which provide life insurance bonds - wrappers in which a variety of
investments, including investment funds, can be held.

 

STM's growth strategy is focussed on both organic initiatives and strategic
acquisitions.

 

Further information on STM Group can be found at www.stmgroupplc.com
(https://urldefense.proofpoint.com/v2/url?u=http-3A__www.stmgroupplc.com&d=DwMGaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=05PHl3GHdShYuaCii2fBRpoqaNr9B1d97X09daeosu0&m=PU7KD9-tYowY3PC9sXem4PQSmJ-Zm8TJB2ox4M8NHwI&s=39Vvq5Ccz7txaqksRCl4B8zUxhpd6elnqEy0XmTed50&e=)

 

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