acquisition of windy city wire - diploma plc
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Acquisition of Windy City WireSeptember 2020
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Acquisition of Windy City Wire
Proposed acquisition of leading Controls business in US for up to £357m
Consistent with Diploma’s value-add business model and strategy
Strong management, customer proposition, and performance track record
Scalable platform with exciting organic growth potential
Year 1: Significantly earnings enhancing and covering cost of capital
Conservative funding: strong and flexible balance sheet retained
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Diploma strategy: Consistently delivering value
Value-add distribution model
Decentralised structure
Significant growth runway in attractive developed markets
Developing scalable businesses in key geographies and products
Evolving core competencies and capability to deliver at scale
Strong balance sheet
Emphasis on value-add, scalable, resilient businesses in core markets
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Highly attractive, scalable Controls business in the US
• A leading value-add distr ibutor of premium quality low voltage cable and wire
• Scalable platform in the US with exciting growth potential
• Strong and establ ished management team who wil l remain with the business
• Majority owned by founder Rich Galgano
Transaction overview
Excellent performance track
record and prospects
• Expected FY20 revenue c.$192m; proforma EBITDA c.$44.5m
• 10 year1 revenue and EBITDA CAGR of 12% and 13%, respectively
• Attractive margin profi le and strong cash generation
• Taking market share in structural ly attractive end segments
Compelling valuation for high quality US business
Conservative approach to
financing
• Consideration up to £357m ($465m), inc. deferred payment of up c. £12m ($15m)²
• Transaction multiple of c.10.5x FY20 EBITDA
• Year 1: acquisit ion is s ignif icantly earnings enhancing and covers cost of capital
• Post-transaction Group ROATCE to high-teens
• Funded though placing of up to 10%, balance funded through new debt faci l i t ies
• Conservative approach to leverage remains unchanged
• Leverage expected to be c.1x net debt/EBITDA by end FY21
• Maintains balance sheet strength and flexibi l i ty for dividends and future bolt -ons
___________________________
1. 10 years to December 2019
2. Payable to key members of Windy City Wire management team after 3 years, subject to certain conditions
Strategic rationale
Expands presence in the US, a key industrials market
Enhances our position in Controls, with a core product we understand
Value-add customer proposition with attractive margins
Significant organic growth potential
Strong financial returns , whilst maintaining a solid balance sheet
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Accelerates our strategy of focussing our growth in our key markets
Attractive
growth,
margin, and
cash flow
profile
Full suite of
trademarked
brands and
patented
products
Highly
experienced
management
team and
strong culture
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Leader in
premium
quality low-
voltage wire
and cable
market
Windy City Wire overview
Exceptional management team, customer proposition and performance
High value-
add customer
service
proposition
Highly
diverse and
sticky
customer
base with no
concen-
tration
Vertically
integrated
with national
warehouse
footprint
Track record
of consistent
and long term
profit growth
Essential product for customers
Convenience: glide technology to
facilitate user experience
Convenience: packaged for optimum
storage and usage
Significant customer labour cost
reductions
High service model based on rapid
speed to market – same day shipping
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Value-add customer proposition
Powerful customer proposition based on convenience, service, and low cost
Value added packaging innovation
SmartWire®
with Glide
Technology
Rackpack® Field
Systems Solutions
(“RPFSS”)
• Flagship family of low-voltage wire and cable products
• Clear length markings with differentiated colours for easy installation
• Glide® Technology, introduced in 2012, reduces friction for easy pulling
• Free spinning reel inside box allows for tangle-free pulling
• Provided on a lightweight, custom dolly for enhanced transportation
• Different transportation device sizes that can link into multiple RackPacks®
Diversity and stickiness of customer base
8___________________________Source: Windy City Wire
Diverse end marketsRevenue contribution by
total annual customer orderDeeply entrenched relationships
Top 100 Customers by footage purchased
Building
Automation
32%
AV/Voice/
Data
22%
Security
19%
Fire
17%
Other
10%
Ordered from
2017–2019
97%
Did Not Order from
2017–2019
3%
>$500k
15%
$200k–$500k
16%
$100k–$200k
16%
$50k–$100k
18%
$25k–$50k
14%
$10k–$25k
12%
<$10k
9%
9,000+
Unique
Customers
High
Recurring
Base
Diverse
Annual
Order
Profile
Resilience due to diversity of end customer and market
• High level of customer and end market diversity
• Large national account base: 9,300 active customers across all 50 states
• No account more than 2% of sales; majority of customer orders <$10,000
• Customer retention high based on convenient proposition
• Strong performance sustained through COVID-19
18%
19%
21%
17 18 19
Organic ROATCE (%)
9
___________________________Source: Windy City WireOperating cash flow = EBITDA – Capex.
$193m
09 10 11 12 13 14 15 16 17 18 19
$38m
09 10 11 12 13 14 15 16 17 18 19
Excellent track record of performance delivery
REVENUE ($m)
EBITDA ($m)
Consistent
double digit
revenue
growth
EBITDA margins
grown to c.20%
over 10 years
Strong cash
flow
generation
Significant
opportunities
to continue to
deliver
$29m
17 18 19
OPERATING CASH FLOW($m)
Strong platform for future growth
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Warehouse
Headquarters
National presence with 19 warehouse locations
Network of facilities
Unified systems and controls
Control of supply chain
• National scale and critical mass
• High service focus
• First class, well invested base in Bolingbrook, IL
• Truly scalable platform
• Integrated systems across WCW footprint
• 98%+ of customer orders ship within one day
• Predictive modelling and inventory management
• Working capital discipline
• Vertical integration ensures product consistency
• Light manufacturing operations can efficiently
handle short runs to meet demand
• Non-unionized manufacturing workforce
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Strong management and culture
High performance team and culture aligned with our values
Rich Galgano Dave DeNeve Dan Hughes Bobby Jose Michael MartinChief Executive Officer/Founder
Chief Financial Officer Chief Sales Officer Chief Information Officer Plant Manager
Co-founded Windy City Wire in 1994
Joined Windy City Wire in 2007
Joined Windy City Wire2001
Joined Windy City Wire in 2006
Joined Windy City Wire in 2008
Highly successful
management
team with
excellent track
record
Deep bench
with strong
industry
experience:
average tenure
15 years
Very strong
growth and
performance
orientated
culture
Management
team fully
committed to
next phase of
growth with
Diploma
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Significant future growth opportunities
Increasing market share in current
structural growth markets
Digital infrastructure driving wiring
demand and future opportunity
Building automation
Pro Audio/Visual
Fire security
$55B$78B
9% CAGR
2020 2024
MARKET SIZE & GROWTH
2020 2024
2020 2024
$171B$263B
$68B$95B
• Cloud-based services
• Networking infrastructure
• Energy-efficient and smart buildings
• Demand for video communication
• Pro AV for smart learning
• Increased security investment
• Advanced electronics in building systems
➢ Growing demand for cloud applications
➢ Land grab among states to build data centres
➢ North America c.38% of global data centre
construction market
➢ Pipeline of opportunities with major tech customers
➢ Increased usage of smartphones and wireless data
➢ Growing adoption of 5G cellular network
➢ Increased automation across industries
➢ Production innovation driving growth
Data centres
Distributed Antenna Systems (DAS)
Source: William Blair Proprietary Insights
11% CAGR
7% CAGR
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Current trading and outlook
Exceptional prospects for the combined Group
• Resilient trading performance
through COVID-19 pandemic
• Strong profit and margin
performance in crisis months
• Strong balance sheet and liquidity
• Trading in line with August trading
update and market expectations
• Intention to recommend a dividend
of 30p for year to Sept 2020, in line
with progressive dividend policy
• Resilient trading through COVID-19
• Expect to maintain revenues and
grow profitability in FY20
• Structural growth markets remain
robust and exciting
• Increased opportunities as part of
the Diploma Group
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Valuation and transaction structure
Equity
• 10% placing of issued share capital raising
approximately £200m
• New shares to be placed with existing and
new shareholders
Debt
• Balance of £150-175m ($195-228m) funded
through new debt facilities including USD
term loan and GBP multicurrency RCF with
initial blended interest cost of c. 2.2%
• In addition, existing Diploma debt of £36m
to be refinanced
Compelling valuation Transaction structure
• Consideration of up to £357m ($465m),
including deferred payment of up to
c.£12m ($15m)¹
• Transaction multiple of c.10.5x FY20
EBITDA
• Compelling valuation for high quality
US business
• Immediately value enhancing:
➢ Earnings accretive in Year 1
➢ ROATCE above cost of capital in Year 1
• Post-transaction Group ROATCE high-
teens
___________________________Note: New debt facilities comprise $170m term loan and £135m RCF
___________________________
1. Payable to key members of Windy City Wire management team after 3 years, subject to certain
conditions
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Strong balance sheet maintained
Maintain balance sheet strength
Net debt/EBITDA of combined group expected to be c.1x by end FY21
Rapid deleveraging profile
Liquidity for dividends and future bolt-ons
Conservative approach to leverage remains unchanged
Expands presence in the US, a key industrials market
Enhances our position in Controls, with a core product we understand
Value-add customer proposition with attractive margins
Significant organic growth potential
Strong financial returns , whilst maintaining a solid balance sheet
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Compelling strategic and value creating acquisition
Summary: exceptional business for Diploma’s future
TH IS PR ESENTAT I O N AND I TS CO NTENTS AR E S TR ICT L Y CO NF ID ENT IA L AND AR E NO T FO R R EL EASE , PUB L ICAT I O N O R D ISTR IB UT IO N , IN WHO L E O R IN PAR T , D IR ECTL Y O R IND IR ECTL Y , IN O R INTO THE UN I TED STATES O F AMER ICA ( INCL UD ING I TS TER R I TO R IES AND PO SSESS IO N S , ANY STATE O F THE UN I TED STATE S , AND THE D IS TR IC T O F CO L UMB IA) ( THE “UNI TED STATES” ) , CANAD A, AUSTR AL IA , JAPAN, THE R EPUB L IC O F SO UTH AFR ICA O R ANY O THER JUR ISD IC T IO N WHER E SUCH D ISTR IB UT IO N WO UL D B E UNL AWFUL . ANY FA I L UR E TO CO MPL Y WITH THESE R ESTR ICT I O NS MAY CO NSI T U TE A V IO L AT IO N O F APPL ICAB L E SECUR I T I ES L AWS.
Th i s p r es en t a t i on has been p r epar ed and i s s ued by and i s the s o le r es pons ib i l i ty o f D ip lom a p lc ( the “Com pany ” ) and i s be ing s upp l ied to y ou s o le ly fo r i n fo r m at i on pu r pos es on ly i n connec t i o n w i th the p r opos e d p lac ing ( “P lac ing” ) o f new o r d inar y s har es o f f i ve pence each in th e capi ta l o f the Com pany ( “P lac ing Shar es ” ) . Fo r the pu r pos es o f th i s no t ice , “p r es en t a t i o n” m eans th i s docum en t , i t s con ten t s o r any par t o f i t , any o r a l p r es e n ta t i o n , any ques t ion and ans wer s es s ion , and any wr i t ten o r o r a l m ate r ia l d i s cus s ed o r d i s t r ibu te d by the Com pany du r ing the p r es en t a t io n .
Th i s p r es en t a t i on and i t s con ten t s a r e s t r ic t l y con f ide n t i a l and a r e be ing s ubm i t t ed to s e lec te d r ec ip ien ts on ly . I t m us t no t be r ecor de d , cop ied , d i s t r ibu te d , r epr oduc e d ( in who le o r i n par t ) , s to r ed in a r e t r ieva l s y s tem , pas s ed on , d i r ec t l y o r i nd i r ec t l y , o r t r ans m i t t e d to any o the r pe r s on (whether w i th in o r ou t s ide s uch per s on ’ s o r gan i s a t io n o r f i r m ) , fo r any pu r pos e o r under any c i r cum s ta n c es a t any t im e, w i thou t the p r io r wr i t ten cons en t o f the Com pany , B ar c lay s B ank PL C ( “B ar c lay s ” ) and Num is Secu r i t ies L im i ted ( “Num is ” and toget h er w i th B ar c lay s , the “B ank s ” ) as jo in t g loba l coor d ina t o r s and j o in t book r unner s fo r the Com pany .
Th i s p r es en t a t i on i s an adver t i s em e n t and no t a p r os pec tu s fo r the pu r pos es o f the P r os pect us R egu la t io n R u les o f the F inanc i a l Conduc t Au tho r i ty ( the “ FCA”) o r other wi s e and th i s p r es en t a t i o n has no t been appr ove d by the FCA o r any o the r r egu la to r y au tho r i ty . Th i s p r es en t a t i on does no t cons t i tu t e o r fo r m par t o f , and s hou ld no t be cons t r ue d as , any o f fe r o r i nv i ta t io n to s e l l o r i s s ue , o r any s o l ic i ta t io n o f any o f fe r to pu r chas e o r s ubs c r i be fo r , any s ecu r i t ies i n the Com pany ( inc lud ing , fo r the avo idan c e o f doubt , the P lac ing Shar es ) no r s ha l l i t o r any par t o f i t no r the fac t o f i t s d i s t r ibu t i on f o r m the bas i s o f , o r be r e l ied on in connec t i on w i th , any con t r a c t ua l com m i tm e n t o r i nves tm e n t dec i s ion in r e la t ion the r e to no r does i t cons t i tu t e a r ecom m en d a t i o n r egar d in g any s ecu r i t ies . R ec ip ien ts s hou ld no t pu r chas e , s ubs c r ibe fo r o r o the r w i s e acqu i r e any s ecu r i t ies o f the Com pany ( inc lud ing , fo r the avo idanc e o f doubt , the P lac ing Shar es ) on the bas i s o f th i s p r es en t a t io n .
Th i s p r es en t a t i on inc ludes in fo r m at io n wh ich m ay be m ate r ia l non -p u bl ic i n fo r m at i o n tha t i s p r ice s ens i t i ve in na tu r e ( “ In s ide I n fo r m a t i o n” ) . B y r ece iv ing th i s pr es en t a t io n , y ou agr ee tha t y ou w i l l no t u s e any o f the in fo r m at i o n con ta ine d in the p r es en t a t i o n (o r any r e la ted m ate r ia l s ) i n a way tha t m ay am oun t to i n s ide r deal ing under the Cr im ina l Jus t ice Act 1993 and m ar k e t abus e under the Mar k e t Abus e R egu la t io n (No . 596/ 2014) ( “MAR ”) o r wh ic h m ay cons t i tu t e a v io la t ion o f o the r app l icab le laws and/ or r egu la t io n s i n o the r ju r i s d ic t io ns .
Th i s p r es en t a t i on m ay inc lude cer ta in “ fo r war d - l o ok in g s ta tem en t s ” w i th r es pect to the f i nanc ia l cond i t io n , r es u l t s o f oper a t io n s and bus ines s es and p lans o f the Com pany and i t s s ubs id ia r ie s ( the “G r oup” ) and Windy C i ty W i r e L L C ( the “ Ta r ge t” ) . Wor ds s uch as “be l ieves ” , “an t ic ipa t e s ” , “ es t im at es ” , “expect s ” , “ in tends ” , “p lans ” , “a im s ” , “po ten t i a l ” , “w i l l ” , “wou ld” , “cou ld” , “cons ide r e d ” , “ l i k e ly ” , “es t im at e ” and var ia t ions o f thes e wor ds and s im i la r fu tu r e o r cond i t ion a l expr es s ion s , a r e in tended to iden t i fy fo r war d - lo ok in g s ta tem e n ts bu t a r e no t the exc lus i ve m eans o f iden t i fy ing s uch s ta tem e n ts . Thes e s ta tem e n ts and fo r ecas t s i nvo lve r i s k and uncer ta i n ty becaus e they r e la te to even ts and depen d upon fu tu r e c i r cum s ta n c es tha t have no t occu r r ed . The r e ar e a num ber o f fac to r s tha t cou ld caus e ac tua l r es u l t s o r deve lop m e n t s to d i f fe r m ate r ia l l y f r om thos e expr es s e d o r im p l ied by thes e fo r war d - l o ok in g s ta tem e n ts and fo r ecas t s . As a r es u l t , the Gr oup and/or the Ta r get ’ s ac tua l f i nanc ia l condi t io n , r es u l t s o f oper at io n s and bus ines s and p lans m ay d i f fe r m ate r ia l l y f r om the p lans , goa l s and expect a t i on s expr es s ed o r im p l ied by thes e fo r war d - l ook i n g s ta tem e n ts . No r epr es en t a t io n o r war r an ty i s m ade as to the ach ievem e n t o r r eas onabl e ne s s o f , and no r e l iance s hou ld be p laced on , s uch fo r war d - l o ok in g s ta tem en t s . No s ta tem e n t i n th i s p r es en ta t i o n i s i n tende d to be , no r m ay i t be cons t r ue d as , a p r o f i t fo r ecas t o r be r e l ied upon as a gu ide to fu tu r e per fo r m a nc e . The fo r war d - lo ok in g s ta tem e n ts con ta in e d in th i s Announc em e n t s peak on ly as o f the date o f th i s Announc em e n t . The Com pany , the B ank s and any o f the i r r es pect i v e a f f i l i a tes , d i r ec to r s , o f f ice r s , par tne r s , em ploy ees , agen ts , adv i s e r s o r any per s on ac t ing on the i r beha l f (co l lec t i ve ly , “R epr es en t a t i v es ” ) and any per s on ac t ing on i t s o r the i r beha l f each expr es s ly d i s c la im any ob l ig at i on o r under t ak in g to update o r r ev i s e pub l ic ly any fo r war d - l ook i n g s ta tem e n ts , wheth er as a r es u l t o f new in fo r m at i o n , fu tu r e even ts o r o the r w i s e , un les s r equ i r ed to do s o by app l icab l e law o r r egu la t io n , the L i s t i ng R u les , MAR , the D i s c los u r e G u idance and T r ans par e n cy R u les , the r u les o f the L ondon S tock Exchan ge o r th e FCA.
To the ex ten t ava i lab le , the indus t r y and m ar k e t data con ta in ed in th i s p r es en t a t i on has com e f r om o f f ic ia l o r th i r d par ty s o u r ces . Th i r d par ty i ndus t r y pub l ica t i on s , s tud ies and s u r vey s gener a l l y s ta te the data con ta in e d the r e in have been obta ined f r om s ou r ces be l ieved to be r e l i ab le , bu t tha t the r e i s no guar an t e e o f the accu r acy o r com ple t en e s s o f s uch data . Wh i le the Com pany be l ieves tha t each o f thes e pub l ica t i o ns , s tud ies a nd s u r vey s has been p r epar ed by a r epu tab l e s ou r ce , the Com pany has no t i ndepend e n t ly ve r i f i ed the data con ta in ed the r e in . In add i t ion , ce r ta in o f the indus t r y and m ar k e t data con ta ine d in th i s pr es en t a t io n com e f r om the Com pany ’ s i n te r na l r es ear ch and es t im ates bas ed on the k nowledg e and exper ienc e o f the Com pany ’ s m anagem e n t i n the m ar k e t i n which the Com pany oper ate s . Wh i le the Com pany be l ieves that s uch r es ear ch and es t im at es a r e r eas onabl e and r e l iab le , the i r un der ly ing m ethodo l o gy and as s um pt i on s , have no t been ve r i f i ed by any independ e n t s ou r ce fo r accu r a cy o r com ple t e ne s s and a r e s ub jec t to change wi thou t no t ice . Accor d ing ly , undue r e l iance s hou ld no t be p laced on any o f the indus t r y o r m ar k e t data con ta in e d in th i s p r es en ta t i o n . Cer ta in f igu r es i n th i s p r es en t a t io n a r e s ub jec t to r ound ing . Accor d ing ly , f igu r es s hown fo r the s am e categ or y p r es en t e d in d i f fe r en t char t s o r tab les m ay var y s l igh t l y and f igu r es s hown as to ta l s i n ce r ta in char t s o r tab les m ay no t be an a r i thm et i c aggr ega t i o n o f the f igu r es tha t p r ecede them .
The in fo r m at i on in th i s p r es en t a t io n has no t been indepen d en t ly ve r i f i ed and s peak s as o f the date he r eo f on ly and i s s ub jec t to updat ing , r ev i s ion , and am endm e n t w i thou t no t ice . Ne i the r the Com pany , the B ank s no r any o f the i r R epr es en t a t i ve s i s under any ob l iga t ion to update o r k eep cu r r en t the in fo r m at io n con ta in e d in th i s p r es en t a t i o n , to co r r ec t any inaccu r a c i es wh ich m ay becom e appar en t o r p r ov ide the r ec ip ien t w i th acces s to an y add i t ion a l i n fo r m at i on . Th i s p r es en t a t io n does no t pu r por t to con ta in a l l o f the in fo r m at i o n tha t m ay be r equ i r ed to eva luat e any inves tm e n t i n the Com pan y o r any o f i t s s ecu r i t ies . The m er i t and s u i tab i l i ty o f an inves tm e n t i n the Com pany s hou ld be indepen de n t ly eva luate d and any per s on cons ide r in g s uch an inves tm e n t i n the Com pany i s adv i s ed to obta in i ndepen d en t adv ice as to the lega l tax , accoun t i n g , f i nanc ia l , c r ed i t and o the r r e la ted adv ice p r io r to m ak ing an inve s tm e n t .
17
N o l i a b i l i t y w ha t s o e v e r ( w he t he r i n ne g l i g e nc e o r o t he r w i s e ) a r i s i ng d i r e c t l y o r i nd i r e c t l y f r o m t he us e o f t h i s p r e s e n t a t i o n o r i t s c o n t e n t s i s a c c e p t e d , a nd no r e p r e s e n t a t i o n , w a r r a n t y o r und e r t a k i ng , e x p r e s s o r i m p l i e d , i s o r w i l l b e m a d e o r g i v e n b y o r o n b e ha l f o f t he C o m p a ny , t he B a n k s o r t he i r r e s p e c t i v e R e p r e s e n t a t i v e s , a s t o , a nd no r e l i a nc e s ho u l d b e p l a c e d f o r a ny p u r p o s e s o n , t he a c c u r a c y , c o m p l e t e ne s s o r f a i r ne s s o f t he i n f o r m a t i o n o r o p i n i o ns c o n t a i ne d i n t h i s p r e s e n t a t i o n o r f o r a ny e r r o r s , o m i s s i o ns o r m i s s t a t e m e nt s o r a s t o t he s u i t a b i l i t y o f a ny p a r t i c u l a r i nv e s t m e n t f o r a ny p a r t i c u l a r i nv e s t o r o r f o r a n y l o s s ho w s o e v e r a r i s i ng , d i r e c t l y o r i nd i r e c t l y , f r o m a ny us e o f s uc h i n f o r m a t i o n o r o p i n i o ns o r o t he r w i s e a r i s i ng i n c o nne c t i o n t he r e w i t h . T o t he f u l l e s t e x t e n t p e r m i s s i b l e b y l a w , e a c h o f t he C o m p a ny , t he B a nk s a nd t he i r r e s p e c t i v e R e p r e s e n t a t i v e s d i s c l a i m a l l a nd a ny r e s p o ns i b i l i t y o r l i a b i l i t y , w he t he r a r i s i ng i n t o r t , c o n t r a c t o r o t he r w i s e , w h i c h t he y m i g h t o t he r w i s e ha v e i n r e s p e c t o f t h i s p r e s e n t a t i o n . R e c i p i e n t s s ho u l d no t c o ns t r ue t he c o n t e n t s o f t h i s p r e s e n t a t i o n a s l e g a l , t a x , r e g u l a t o r y , f i na nc i a l o r a c c o un t i n g a d v i c e a nd a r e u r g e d t o c o ns u l t w i t h t he i r o w n a d v i s e r s i n r e l a t i o n t o s uc h m a t t e r s .
T he d i s t r i b u t i o n o f t h i s p r e s e n t a t i o n a nd t he o f f e r i ng o r s a l e o f s e c u r i t i e s i n c e r t a i n j u r i s d i c t i o ns m a y b e r e s t r i c t e d b y l a w . P e r s o ns i n t o w ho s e p o s s e s s i o n t h i s p r e s e n t a t i o n c o m e s a r e r e q u i r e d t o i n f o r m t he m s e l v e s a b o u t a nd o b s e r v e a ny a p p l i c a b l e l e g a l o r r e g u l a t o r y r e q u i r e m e nt s i n r e l a t i o n t o , t he d i s t r i b u t i o n o r p o s s e s s i o n o f t h i s p r e s e n t a t i o n .
T he P l a c i ng S ha r e s ha v e no t b e e n a nd w i l l no t b e r e g i s t e r e d und e r t he U S S e c u r i t i e s A c t o f 1 9 3 3 , a s a m e nd e d ( t he “ S e c u r i t i e s A c t ” ) o r w i t h a ny s e c u r i t i e s r e g u l a t o r y a u t ho r i t y o f a ny s t a t e o r j u r i s d i c t i o n o f t he U n i t e d S t a t e s o f A m e r i c a ( i nc l ud i ng i t s t e r r i t o r i e s a nd p o s s e s s i o ns , a ny s t a t e o f t he U n i t e d S t a t e s a nd t he D i s t r i c t o f C o l um b i a ) , a nd m a y no t b e o f f e r e d , s o l d o r t r a ns f e r r e d , d i r e c t l y o r i nd i r e c t l y , i n t he U n i t e d S t a t e s e x c e p t p u r s ua n t t o a n e x e m p t i o n f r o m , o r i n a t r a ns a c t i o n no t s ub j e c t t o , t he r e g i s t r a t i o n r e q u i r e m e nt s o f t he S e c u r i t i e s A c t a nd i n c o m p l i a nc e w i t h a ny a p p l i c a b l e s e c u r i t i e s l a w s o f a ny s t a t e o r o t he r j u r i s d i c t i o n o f t he U n i t e d S t a t e s . A c c o r d i ng l y , t he P l a c i ng S ha r e s a r e b e i ng o f f e r e d a nd s o l d o n l y ( i ) o u t s i d e o f t he U n i t e d S t a t e s i n o f f s ho r e t r a ns a c t i o ns i n r e l i a nc e i n R e g u l a t i o n S und e r t he S e c u r i t i e s A c t a nd o t he r w i s e i n a c c o r d a nc e w i t h a p p l i c a b l e l a w s a nd ( i i ) i n t he U n i t e d S t a t e s t o a l i m i t e d num b e r o f “ q ua l i f i e d i n s t i t u t i o na l b uy e r s ” ( a s d e f i ne d i n R u l e 1 4 4 A und e r t he S e c u r i t i e s A c t ) i n t r a ns a c t i o ns e x e m p t f r o m r e g i s t r a t i o n und e r t he S e c u r i t i e s A c t . T he r e w i l l b e no p ub l i c o f f e r i ng o f t he P l a c i ng S ha r e s i n t he U n i t e d S t a t e s .
T he P l a c i ng ha s no t b e e n a p p r o v e d o r d i s a p p r o v e d b y t he U . S . S e c u r i t i e s a nd E x c ha ng e C o m m i s s i o n , a ny s t a t e s e c u r i t i e s c o m m i s s i o n i n t he U n i t e d S t a t e s o r a ny U . S . r e g u l a t o r y a u t ho r i t y , no r ha v e a ny o f t he f o r e g o i ng a u t ho r i t i e s p a s s e d up o n o r e nd o r s e d t he m e r i t s o f t he P l a c i ng , o r t he a c c u r a c y o r a d e q ua c y o f t h i s p r e s e n t a t i o n . A ny r e p r e s e n t a t i o n t o t he c o n t r a r y i s a c r i m i na l o f f e nc e i n t he U n i t e d S t a t e s .
T h i s p r e s e n t a t i o n i s b e i ng d i s t r i b u t e d o n l y t o a nd d i r e c t e d o n l y a t p e r s o ns w ho s e o r d i na r y a c t i v i t i e s i nv o l v e t he m i n a c q u i r i ng , ho l d i ng , m a na g i ng a nd d i s p o s i ng o f i nv e s t m e n t s ( a s p r i nc i p a l o r a g e n t ) f o r t he p u r p o s e s o f t he i r b us i ne s s a nd w ho ha v e p r o f e s s i o na l e x p e r i e nc e i n m a t t e r s r e l a t i ng t o i nv e s t m e n t s a nd a r e : ( 1 ) ( a ) i f i n a m e m b e r s t a t e o f t he E u r o p e a n E c o no m i c A r e a , p e r s o ns w ho a r e q ua l i f i e d i nv e s t o r s ( “ Qua l i f i e d I nv e s t o r s ” ) , b e i ng p e r s o ns f a l l i n g w i t h i n t he m e a n i ng o f A r t i c l e 2 ( e ) o f t he P r o s p e c t us R e g u l a t i o n ; o r ( b ) i f i n t he U n i t e d K i ng d o m , t o Qua l i f i e d I nv e s t o r s w ho a r e ( i ) p e r s o ns w ho f a l l w i t h i n t he d e f i n i t i o n o f “ i nv e s t m e n t p r o f e s s i o na l s ” i n A r t i c l e 1 9 ( 5 ) o f t he F i na nc i a l S e r v i c e s a nd M a r k e t s A c t 2 0 0 0 ( F i na nc i a l P r o m o t i o n ) O r d e r 2 0 0 5 , a s a m e nd e d ( t he “ Or d e r ” ) , o r ( i i ) p e r s o ns w h o f a l l w i t h i n A r t i c l e 4 9 ( 2 ) ( a ) t o ( d ) ( “ H i g h N e t W o r t h C o m p a n i e s , U n i nc o r p o r a t e d A s s o c i a t i o ns , e t c ” ) o f t he Or d e r ; o r ( c ) p e r s o ns t o w ho m i t m a y o t he r w i s e b e l a w f u l l y c o m m un i c a t e d ( a l l s uc h p e r s o ns r e f e r r e d t o i n ( a ) , ( b ) a nd ( c ) a b o v e t o g e t he r b e i ng r e f e r r e d t o a s “ R e l e v a n t P e r s o ns ” ) ; o r ( 2 ) p e r s o ns i n t he U n i t e d S t a t e s w ho a r e a Q I B . A ny i nv e s t m e n t o r i nv e s t m e n t a c t i v i t y t o w h i c h t h i s p r e s e n t a t i o n r e l a t e s i s a v a i l a b l e o n l y t o R e l e v a n t P e r s o ns o r , i n t he U n i t e d S t a t e s , p e r s o ns w ho a r e a Q I B a nd w i l l b e e ng a g e d i n o n l y w i t h s uc h p e r s o ns . T h i s p r e s e n t a t i o n m us t no t b e a c t e d o n o r r e l i e d o n b y p e r s o ns w ho a r e no t R e l e v a n t P e r s o ns o r , i n t he U n i t e d S t a t e s , p e r s o ns w ho a r e no t a Q I B . I f y o u a r e no t s uc h a p e r s o n y o u s ho u l d no t a t t e nd t he p r e s e n t a t i o n a nd s ho u l d i m m e d i a t e l y r e t u r n a ny m a t e r i a l s r e l a t i ng t o i t c u r r e n t l y i n y o u r p o s s e s s i o n .
B a r c l a y s B a nk P L C i s a u t ho r i s e d b y t he P r ud e n t i a l R e g u l a t i o n A u t ho r i t y ( “ P R A ” ) a nd r e g u l a t e d i n t he U n i t e d K i ng d o m b y t he P R A a n d t he F C A . N um i s S e c u r i t i e s L i m i t e d i s a u t ho r i s e d a nd r e g u l a t e d i n t he U n i t e d K i ng d o m b y t he F C A . E a c h o f B a r c l a y s a nd N um i s a r e a c t i ng e x c l us i v e l y f o r t he C o m p a ny a nd f o r no o ne e l s e i n c o nne c t i o n w i t h t he P l a c i ng a nd w i l l no t r e g a r d a ny o t he r p e r s o n ( w he t he r o r no t a r e c i p i e n t o f t h i s p r e s e n t a t i o n ) a s a c l i e n t i n r e l a t i o n t o t he P l a c i ng o r a ny o t he r m a t t e r r e f e r r e d t o i n t h i s p r e s e n t a t i o n o r a ny o t he r m a t t e r c o n t e m p l a t e d he r e i n , a nd w i l l no t b e r e s p o ns i b l e t o a ny o ne o t he r t ha n t he C o m p a ny f o r p r o v i d i ng t he p r o t e c t i o ns a f f o r d e d t o i t s c l i e n t s o r f o r g i v i ng a d v i c e i n r e l a t i o n t o t he P l a c i ng o r a ny o t he r m a t t e r r e f e r r e d t o i n t h i s p r e s e n t a t i o n o r a ny o t he r m a t t e r c o n t e m p l a t e d he r e i n .
B y a t t e nd i ng o r o t he r w i s e a c c e s s i ng t h i s p r e s e n t a t i o n , y o u w a r r a n t , r e p r e s e n t , und e r t a k e a nd a c k no w l e d g e t o e a c h o f t he C o m p a n y a nd t he B a nk s t ha t : ( a ) y o u ha v e r e a d a nd a g r e e t o c o m p l y w i t h t he f o r e g o i ng l i m i t a t i o ns a nd r e s t r i c t i o ns i nc l ud i ng , w i t ho u t l i m i t a t i o n , t he o b l i g a t i o n t o k e e p p e r m a n e n t l y c o n f i d e n t i a l t he i n f o r m a t i o n c o n t a i ne d i n t h i s p r e s e n t a t i o n o r m a d e a v a i l a b l e i n c o nne c t i o n w i t h f u r t he r e nq u i r i e s t o t he e x t e n t s uc h i n f o r m a t i o n i s no t m a d e p ub l i c l y a v a i l a b l e ( o t he r w i s e t ha n t h r o ug h a b r e a c h b y y o u o f t h i s p r o v i s i o n ) ; ( b ) y o u a r e a b l e t o r e c e i v e t h i s p r e s e n t a t i o n w i t ho u t c o n t r a v e n t i o n o f a ny a p p l i c a b l e l e g a l o r r e g u l a t o r y r e s t r i c t i o ns ; ( c ) i f y o u a r e i n t he E u r o p e a n E c o no m i c A r e a , y o u a r e a Qua l i f i e d I nv e s t o r ; ( d ) i f y o u a r e i n t he U n i t e d K i ng d o m , y o u a r e a R e l e v a n t P e r s o n ; ( e ) i f y o u a r e i n t he U n i t e d S t a t e s o r a U S p e r s o n ( w i t h i n t he m e a n i ng o f R e g u l a t i o n S und e r t he S e c u r i t i e s A c t ) , y o u a r e a Q I B ; ( f ) y o u w i l l no t a t a ny t i m e ha v e a ny d i s c us s i o n , c o r r e s p o n d e n c e o r c o n t a c t c o nc e r n i ng t he i n f o r m a t i o n i n t h i s p r e s e n t a t i o n w i t h a ny o f t he R e p r e s e n t a t i v e s o f t he C o m p a ny no r w i t h a ny o f i t s s up p l i e r s , no r a ny g o v e r nm e nt a l o r r e g u l a t o r y b o d y , w i t ho u t t he p r i o r w r i t t e n c o ns e n t o f t he C o m p a ny ; a nd ( g ) y o u w i l l no t d e a l i n ( o r e nc o u r a g e a ny o t he r p e r s o n t o d e a l i n ) t he s ha r e s o r f i na nc i a l i n s t r um e nt s o f t he C o m p a ny o r b a s e a ny b e ha v i o u r o n a ny I n s i d e I n f o r m a t i o n y o u r e c e i v e a s p a r t o f t he p r e s e n t a t i o n un t i l y o u ha v e c e a s e d t o ha v e s uc h i n f o r m a t i o n f o r t he p u r p o s e s o f M A R .
I n C a na d a , no p r o s p e c t us ha s b e e n f i l e d w i t h a ny s e c u r i t i e s c o m m i s s i o n o r s i m i l a r r e g u l a t o r y a u t ho r i t y i n r e s p e c t o f t he P l a c i ng S ha r e s . N o s uc h s e c u r i t i e s c o m m i s s i o n o r s i m i l a r r e g u l a t o r y a u t ho r i t y i n C a na d a ha s r e v i e w e d o r i n a ny w a y p a s s e d up o n t he m e r i t s o f a ny p r o p o s e d o f f e r i ng o f t he P l a c i ng S ha r e s a nd a ny r e p r e s e n t a t i o n t o t he c o n t r a r y i s a n o f f e nc e . I n C a na d a , t he p r e s e n t a t i o n m a y b e d e l i v e r e d , a nd P l a c i ng S ha r e s m a y b e o f f e r e d a nd s o l d , o n l y t o a p e r s o n ( " E l i g i b l e C a na d i a n I nv e s t o r " ) i n t he p r o v i nc e s o f A l b e r t a , B r i t i s h C o l um b i a , On t a r i o a nd Que b e c t ha t i s ( a ) a n "a c c r e d i t e d i nv e s t o r " a s d e f i ne d i n s e c t i o n 1 . 1 o f N a t i o na l I n s t r um e n t 4 5 - 1 0 6 P r o s p e c t us E x e m p t i o ns o r S e c t i o n 7 3 . 3 ( 1 ) o f t he S e c u r i t i e s A c t ( On t a r i o ) , a s a p p l i c a b l e ; a nd ( b ) a "p e r m i t t e d c l i e n t " a s d e f i ne d i n s e c t i o n 1 . 1 o f N a t i o na l I n s t r um e n t 3 1 - 1 0 3 R e g i s t r a t i o n R e q u i r e m e nt s , E x e m p t i o ns a nd Ong o i ng R e g i s t r a n t Ob l i g a t i o ns . A ny o t he r p e r s o n w ho r e c e i v e s t he p r e s e n t a t i o n s ho u l d no t r e l y o r a c t up o n i t . I n c o nne c t i o n w i t h a ny o f f e r o r s a l e m a d e t o i nv e s t o r s i n t he P l a c i ng t ha t a r e l o c a t e d i n C a na d a , t he P l a c e e w i l l b e r e q u i r e d t o p r o v i d e a s i g ne d i nv e s t o r l e t t e r , c o n f i r m i ng i t s e l i g i b i l i t y t o p a r t i c i p a t e i n t he P l a c i ng a nd c o n t a i n i ng a d d i t i o na l p r e s c r i b e d d i s c l o s u r e f o r t he p u r p o s e s o f c o m p l i a nc e w i t h C a na d i a n s e c u r i t i e s l a w r e q u i r e m e nt s .
T he p r e s e n t a t i o n i s no t , a nd und e r no c i r c um s t a nc e s i s t o b e c o ns t r ue d a s , a p r o s p e c t us , a n a d v e r t i s e m e nt o r a p ub l i c o f f e r i n g o f t he s e c u r i t i e s d e s c r i b e d he r e i n i n a ny p r o v i nc e o r t e r r i t o r y o f C a na d a .
S e c u r i t i e s l e g i s l a t i o n i n c e r t a i n p r o v i nc e s o r t e r r i t o r i e s o f C a na d a m a y p r o v i d e a p u r c ha s e r w i t h r e m e d i e s f o r r e s c i s s i o n o r d a m a g e s i f a ny o f f e r i ng m e m o r a nd um ( i nc l ud i ng a ny a m e nd m e nt t he r e t o ) c o n t a i ns a m i s r e p r e s e n t a t i o n , p r o v i d e d t ha t t he r e m e d i e s f o r r e s c i s s i o n o r d a m a g e s a r e e x e r c i s e d b y t h e p u r c ha s e r w i t h i n t he t i m e l i m i t p r e s c r i b e d b y t he s e c u r i t i e s l e g i s l a t i o n o f t he p u r c ha s e r ’ s p r o v i nc e o r t e r r i t o r y . C a na d i a n p u r c ha s e r s s ho u l d r e f e r t o a ny a p p l i c a b l e p r o v i s i o ns o f t he s e c u r i t i e s l e g i s l a t i o n o f t he p ur c ha s e r ’ s p r o v i nc e o r t e r r i t o r y f o r p a r t i c u l a r s o f t he s e r i g h t s o r c o ns u l t w i t h a l e g a l a d v i s o r .
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