Wed 12th Jun 2019 - Exclusive: Azzurri Group set to buy Pod for £2.7m in deal that values shares at 5p each Exclusive: Azzurri Group set to buy Pod for £2.7m in deal that values shares at 5p each: Pod, the 22-strong, London-based healthy eating operator, is set to be sold to Azzurri Group for £2.7m, subject to shareholder approval, Propel has learned. The offer, which will see shareholders receive 5p per share, was one of three received for Pod, which put itself up for sale in May. The company warned if shareholders did not accept the deal it was likely it would go into administration. A total of 75% of shareholders are required to approve the deal by 5pm on Monday (17 June) for it to go through. One shareholder told Propel: “Shareholders get 5p having paid up to £6 per share for their shares and they don’t get it until June 2020 yet advisors get £321,000!” A circular accompanying a letter sent to shareholders, which has been seen by Propel, stated: "As you may be aware, the company has been in financial difficulty for a while – it was loss making in 2017 and although in 2018 it was Ebitda positive, it was not able to cover maintenance capex and debt repayments. The introduction of a new management team saw an upturn in the trends during the latter half of 2017 and the first three quarters of 2018, but the company has not been able to raise funds for new investment, and has suffered difficult trading conditions. Against this background, the board sought buyers for the company and appointed RSM earlier in the year for this purpose. RSM marketed the company and business widely and attracted a significant level of interest; in total about 60 interested parties contacted RSM, and three credible offers were received. The board strongly believes the offer is the best of the offers received from both a value and deliverability perspective. The board would like to emphasise to shareholders that, in the absence of new investment funds, the likely alternative to accepting the offer is an administration or other form of insolvency process and, as such, the board believes that the offer is the best available for all of the company’s stakeholders. Azzurri Group is a market leader in the Italian casual dining sector, operating ASK Italian, Zizzi and Coco di Mama. The group employs nearly 6,000 people, serving more than 15 million meals a year in its growing estate of more than 250 restaurants and shops. The buyer has made an offer to purchase the entire issued share capital of the company, enabling all shareholders to sell their entire shareholdings in the company. The overall value of the investment being made by the buyer in acquiring the company is £2.7m. That investment will be allocated as follows – £1,250,000 to repay the company’s trade creditors and for working capital purposes; £379,780.52 to procure the repayment by the company of its secured bank debt facilities with National Westminster Bank in full; £595,687.53 to procure the repayment of approximately 60% of the loan notes and shareholder loans and other non-trading loans outstanding from the company or its wholly owned subsidiary, Pod Food Group; and £321,000 in respect of the company’s professional fees relating to the proposed transaction, payable to RSM and the company’s solicitors Charles Russell Speechlys. The balance of the buyer's investment of £153,531.95 will be applied as consideration for the acquisition of the 3,020,839 ordinary shares in issue and the 83,000 G Shares in issue. RSM has calculated that, on that basis, the aggregate share consideration will be £0.05 per ordinary share." In the letter to shareholders accompanying the circular chairman David Haimes said: "As you are aware we have been running a sale process to find a new owner for the company which can fund the business to the required level. After a comprehensive process run by RSM we have received three offers. The strongest offer was from Azzurri Group, which the board has accepted subject to shareholder and certain debt-holder approval. In order for this this deal to proceed, shareholders holding no less than 75% of the ordinary shares need to complete, sign (before an independent witness) and return the attached Form of direction by 5pm on Monday (17 June). The board unanimously supports this transaction as representing the best solution for all stakeholders of Pod. While this is not the outcome you hoped for when you invested it is, without question, the best option available and I would ask you to support it for the benefit of not only yourself but all the other shareholders, debt-holders, creditors and staff of the company."