Stock exchange: More work needed for reverse takeover
Talks about a reverse takeover of NAHL Group – the owner of National Accident Helpline – by fellow listed company Frenkel Topping are to continue into the New Year, they announced today.
The potential offer was first revealed in September [1] but the date by which Frenkel Topping is required to declare either a firm intention to make an offer or that it will not make one has been extended for a third time to 13 January 2021.
In a stock exchange announcement, NAHL said the discussions were “at an advanced stage with respective management teams working constructively together with a view to delivering a transaction to the benefit of stakeholders”.
The proposed deal is structured as a takeover of NAHL by Frenkel Topping for the purposes of the Takeover Code but also represents a reverse takeover of Frenkel Topping for the purposes of the AIM rules.
“The due diligence, procedural and documentary requirements of a reverse takeover are more extensive than a typical takeover,” the statement said.
Frenkel Topping is best known for giving financial advice to seriously injured claimants with large awards. It has said its target is Bush & Co, NAHL Group’s case manager and rehabilitation subsidiary that supports serious and catastrophic injury victims.
This could lead to the claims management business, associated law firm and conveyancing leads arm – which account for three-quarters of the group – being sold off.
An accompanying trading update said NAHL’s performance had improved since the first six months of 2020, which it previously described as the “most challenging” period in its history [2] as revenue fell 22% compared to the same period in 2019.
“Pleasingly, volumes across each of the group’s businesses showed a steady recovery throughout Q3, ahead of management’s planning assumptions. On entering Q4, the impact of the second national lockdown and localised restrictions have impacted volumes, but to a lesser extent than compared to the first national lockdown.
“Revenues for the five months ended 30 November 2020 were approximately 15% lower than the same period last year (£17.9m, 2019: £21.1m).”
Efforts to manage the group’s balance sheet by reducing costs and maximising liquidity has seen net debt fall from £21m at the end of last year to £17m as at 30 November 2020.
NAHL reported that the volume of personal injury enquiries in the third quarter recovered to 67% of the same period last year, although the Welsh and then English lockdowns during October and November saw that figure fall to 56%.
“Management are pleased that volumes were more resilient during the second lockdown,” it said.
The number of instructions in NAHL’s conveyancing business were running 4% above last year over the past five months.
Bush & Co has demonstrated “a reasonable level of resilience throughout 2020”, but there was “evidence of a slow-down in case management and initial needs assessment instructions following the first national lockdown”.
The statement concluded: “Given the economic uncertainty caused by the ongoing Covid restrictions, the medium-term outlook for the group remains hard to predict.
“However, having taken appropriate actions to strengthen the business, the board believes the group remains well placed to benefit from a sustained recovery as and when the Covid restrictions ease, and to deliver on its near-term strategic focus of producing positive cash flows and reducing net debt.”