Randall & Quilter shares slide on spat with suitor Brickell

Specialist non-life insurer Randall & Quilter updated the market on its proposed recommended acquisition by Brickell on Wednesday, after Brickell alleged that R&Q was in breach of some of its obligations.

As part of the proposed acquisition, Brickell had committed to provide $100m (£80.04m) of new equity funding.

The AIM-traded firm said that, after hours on Monday evening, it received a letter from Brickell alleging that it was in breach of certain obligations under the implementation agreement.

In addition, it said Brickell claimed that the breach amounted to a “material breach” by R&Q of the terms of the agreement, and that Brickell was thus exercising its right to terminate the agreement with immediate effect, and therefore its obligations in relation to the acquisition and new equity funding.

“R&Q does not agree that it is in breach of the implementation agreement as suggested, and therefore does not agree that Brickell has a right to terminate the implementation agreement,” the board said in its statement.

“R&Q has since written to Brickell in such terms.

“Accordingly, in R&Q's view the implementation agreement, together with Brickell's obligations in relation to the acquisition and new equity funding, remain in full force and effect.”

Randall & Quilter noted that the special general meeting referred to in a notice to shareholders on 27 April was adjourned to 1600 BST on Wednesday.

The company said it received indications that, if the meeting was adjourned again, the resolutions needed to enable the acquisition and new equity funding to proceed could receive further shareholder support, potentially sufficient for them to be approved.

As a result, the board said that unless it received contrary indications before 1600 BST, it intended to adjourn the meeting again to allow opportunity for the relevant resolutions to receive the required support at the further reconvened meeting.

“If, however, R&Q receives indications prior to 1600 BST that, even with a further adjournment, insufficient shareholder support is likely or some shareholders may change their existing vote in favour to be a vote against the resolutions, R&Q does not intend to adjourn the special general meeting again and will instead proceed to propose the resolutions at the meeting, and R&Q expects such resolutions to fail.”

Randall & Quilter warned shareholders that, if the resolutions were approved, given Brickell's purported termination of the implementation agreement, there was no certainty that it would provide the $100m new funding or in relation to the acquisition generally.

It added that, while it might be able to seek to enforce the terms of the implementation agreement through the courts, there could be no certainty that such a claim would succeed or of the timescales involved.

In addition, it said shareholders should note that, in the absence of an order for specific performance, Brickell's maximum liability to Randall & Quilter under the agreement in terms of damages could be $12.5m.

“R&Q notes that, under the terms of the implementation agreement, R&Q is not entitled to conduct an equity fundraising without Brickell's consent.

“Given the uncertainty relating to the acquisition and new equity funding explained above, R&Q will, today, seek Brickell's consent to progress a $100m equity fundraising so as to cater for R&Q's funding needs given the potential failure of either the resolutions to be proposed at the special general meeting, or of Brickell's obligation to provide the $100m new equity funding.

“R&Q is of the view that it would be unreasonable for Brickell to withhold such consent.”

The company’s board said shareholders would be updated further in due course.

At 1201 BST, shares in Randall & Quilter Investment Holdings were down 37.14% at 88p.

Reporting by Josh White at Sharecast.com.