Raymarine plc "pre-packaged" administration sale

We advised Raymarine plc, the marine electronics company, on its "pre-packaged" administration sale to Flir Systems Inc. The agreed sale allowed for the full repayment of its total bank debt and a 19.5p per share return to shareholders.

Background

During the second half of 2008, Raymarine experienced very challenging trading conditions which resulted in a significant deterioration in its financial condition.

By mid-2009, the company was in breach of its banking covenants and had been operating under a series of short-term covenant waivers.

At the end of 2009, Raymarine announced that it had entered into exclusive discussions with a single party over the possible sale of its business and assets. At that time it was envisaged that Raymarine’s bank debt would (subject to certain limitations) be repaid in full on closing but it was anticipated that there would be no value remaining for shareholders.

Timeline of events

• 11 Mar 2010 - Raymarine announced that it had received a further approach from a third party which may lead to an offer for the company at approximately 3.6 pence per share
• 08 Apr 2010 - it was announced that Raymarine had received two further approaches from third parties which may lead to an offer being made for the company at 4 pence per share and 7.2 pence per share respectively
• 21 Apr 2010 - it was announced the party that had made the approach at 4 pence per share had withdrawn this offer, but made an equivalent proposal to acquire the business and assets of Raymarine
• 28 Apr 2010 - Garmin Ltd announced a pre-conditional offer for Raymarine of 15 pence per share Raymarine also announced on 28 April that its board was in advanced discussions with a third party regarding a sale of its subsidiary, Raymarine Holdings Limited (representing the entire business of Raymarine and its subsidiary undertakings)
• 29 Apr 2010 - it was announced that Raymarine remained in advanced discussions with a third party regarding a sale of Raymarine Holdings Limited and that, should the transaction be completed, approximately 17.5 pence per share would be available for return to Raymarine shareholders
• 14 May 2010 - Raymarine was finally put into administration by its banking syndicate and, on the same day, all of its business operations were sold to Flir Systems Inc. in a "pre-packaged" administration sale - with the result that the banks were repaid in full and shareholders could expect a return of approximately 19.5p per share. This allowed Raymarine’s business to continue trading and ensured that none of the company’s subsidiaries were placed into administration

Our role

Our multi-specialist approach enabled us to assemble a small, focused team from our Corporate and Commercial and Corporate Recovery and Insolvency groups that could advise Raymarine on the wide variety of issues which arose during the course of the transaction. This included giving advice on all aspects of the potential takeover and private acquisition proposals from the three potential buyers (including in light of the company’s financial position) and negotiating waivers from the company’s banking covenants.

Challenges for our team

The unpredictable nature of this transaction meant that our team had to respond quickly to the rapidly changing and varied events. The tight time constraints dictated by the short-term banking covenant waivers, for example, made it essential for them to react promptly to the numerous new and amended proposals received from the three potential buyers.

The end result

The transaction value included repayment of all of Raymarine’s debts. Despite the company being put into administration, the transaction also meant a return of 19.52p per share to Raymarine shareholders - a notable increase over the value of the proposals received earlier in the year.