RB 10/2018: Delayed disclosure of inside information and conclusion of agreement concerning division of Calypso Fitness S.A. and future acquisition of shares in companies taking over a portion of assets spun off from Calypso Fitness S.A.


RB 10/2018 
Date: February 2018
Subject: Delayed disclosure of inside information and conclusion of agreement concerning division of Calypso Fitness S.A. and future acquisition of shares in companies taking over a portion of assets spun off from Calypso Fitness S.A.
Legal basis: Art. 17 item 4 MAR – delayed disclosure of inside information

The Management Board of Benefit Systems S.A., with its registered seat in Warsaw (hereinafter, the ‘Issuer’), acting on the basis of art. 17 item 1 and 4 of Regulation (EU) No 596/2014 of the European Parliament and of the Council of  16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (hereinafter, ‘MAR Regulation’), in connection with the termination of reasons for delaying disclosure of inside information, discloses the following inside information on the commencement of preliminary negotiations with Glastonbury Ventures Limited (Ltd), represented by Mr. Mikołaj Nawacki, on the transformation of Calypso Fitness S.A. (hereinafter, ‘Inside Information’).

The disclosure to the public of the Inside Information was delayed on 21 December 2017 on the basis of art. 17 item 4 of MAR Regulation.

The content of the inside information the announcement of which was delayed:

‘The Management Board of Benefit Systems S.A., with its registered seat in Warsaw (hereinafter ‘the Issuer’), hereby informs that on 21 December 2017, the Issuer acting on behalf of Fit Invest sp. z o.o., with its registered seat in Warsaw, a wholly owned subsidiary of the Issuer (hereinafter ‘Fit Invest’), commenced preliminary negotiations with Mr. Mikolaj Nawacki (hereinafter ‘MN’), on behalf of Glastonbury Ventures Limited (Ltd), with its registered seat in Limassol (hereinafter ‘GVL’), and Fitness Investments sp. z o.o., with its registered seat in Warsaw (hereinafter ‘Fitness Investment’), regarding the initial conditions of the transformation of Calypso Fitness S.A., with its registered seat in Warsaw (hereinafter ‘Calypso Fitness’), consisting of separation of part of Calypso Fitness assets to other entities controlled by the Issuer (hereinafter ‘Transaction’). The detailed terms and conditions of the Transaction have not yet been agreed.’

For the sake of protection of the legitimate interests of the Issuer, the disclosure of Inside Information about the commencement of negotiations by Fit Invest aimed at establishing the terms of the Transaction was delayed starting from 21 December 2017.

Immediate disclosure of Inside Information could have triggered specific market circumstances or of third-party behavior, which, in the Issuer's opinion, could have potentially jeopardized the negotiations conducted by the Issuer with other shareholders of Calypso Fitness.

Promptly upon publication of this Report, the Issuer, acting pursuant to Article 17 item 4, third paragraph, of the MAR Regulation, will inform the Polish Financial Supervisory Authority about delay in disclosure of the said Inside Information, by filing a written explanation concerning fulfilment of the terms and conditions set forth in Article 17 item 4 letter points a) – c) of the MAR Regulation.

Conclusion of agreement concerning transformation of the Calypso Fitness

At the same time, the Issuer's Management Board informs that on 19 February 2018 the Issuer concluded agreement with Fit Invest, GVL, Fitness Investment and MN. The subject matter of the agreement consisted in particular in determination of the terms and conditions of multi-phase procedure that would ultimately lead to transformation of Calypso Fitness, and, subsequently, to conclusion of agreements for sale of shares in the companies controlled by shareholders of Calypso Fitness other than Fit Invest, to whom portions of assets separated from Calypso Fitness would be transferred (hereinafter, ‘Agreement’).

In accordance with the Agreement, transformation of Calypso Fitness S.A. will involve division of Calypso Fitness by way of spinning off a portion of assets of the company and transferring it to three separate entities (hereinafter, the ‘Spin-off’), which on the date of spin-off, are 100% controlled directly by the existing shareholders of Calypso Fitness, i.e. to subsidiary of GVL (hereinafter, the ‘NewCo1’), subsidiary of Fit Invest (hereinafter, the ‘NewCo2’) and subsidiary of Fitness Investment (hereinafter, the ‘NewCo3’). The assets spun off from Calypso Fitness S.A. will include the assets and liabilities that currently make up 10 fitness clubs.

Furthermore, before initiating the division procedure of Calypso Fitness, according to the intention of the parties to the Agreement, NewCo1 will take over the Calypso Fitness contractual rights and obligations under the lease agreements of no less than 5 (five) and no more than 9 (nine) premises for the future fitness clubs.

The process of transformation of Calypso Fitness assumes undertaking many preparatory activities and carries a risk of withdrawal from the Agreement by any shareholder of Calypso Fitness, the Issuer or MN, even before the commencement of the transformation procedure. One of the reasons for the Issuer to withdrawal from the Agreement is if the sales of assets being the subject of the transaction exceeded EUR 10 million in any of the two financial years preceding the transaction i.e. a threshold necessitating notification of the intention of concentration to the President of the Office of Competition and Consumer Protection.

According to the parties to the Agreement, the procedure leading to initiation of the Spin-Off process, as well as the Spin-off itself, will have been completed by 31 January 2019, however, an exceeding of the deadline will not constitute a violation of the Agreement.

The Agreement comprises a covenant of GVL and of Fit Invest to conclude, after the transformation of Calypso Fitness S.A. is completed, agreement for sale of all the shares in NewCo1 and in NewCo3 (which will have already been acquired by GVL from Fitness Investment) (hereinafter, the ‘Shares’ and the ‘Sale Agreement’, respectively) at the total price due to GVL (as the seller) from Fit Invest (as the buyer) of PLN 69 million (hereinafter, the “Price”). The Price will be payable once-off within three (3) business days following conclusion of the Sale Agreement to the bank account of GVL. The ownership title to the Shares will be transferred to Fit Invest on the date when the bank account is credited with the Price. Notwithstanding the amount of the Price, on the basis of the Sale Agreement, Fit Invest will be obliged to pay additional sums to GVL in the total amount not exceeding PLN 37 million which depend on the Issuer’s market cap increase.

As a result of the Spin-Off and implementation of the provisions of the Sale Agreement, Fit Invest will become the sole shareholder in NewCo1, NewCo2 and NewCo3. Pursuant to the Agreement, the Issuer will also be jointly and severally liable for all the obligations of Fit Invest under the Agreement and under the Sale Agreement, and MN will be jointly and severally liable for all the obligations of GVL under the Agreement and under the Sale Agreement. The Agreement also provides for bilateral contractual penalties amounting to PLN 10 million, if GVL or Fit Invest does not enter into the Sale Agreement even though division of Calypso Fitness S.A. has been completed and the terms and conditions specified in the Agreement have been met.

The Agreement was concluded on condition subsequent taking the form of a failure to obtain consent from the Supervisory Board of the Issuer (in the form of relevant resolution) for conclusion of the Agreement by 28 February 2018 at the latest.

DateFirst name and surnamePosition/function
19 February 2018Adam RadzkiMember of the Management Board
19 February 2018Grzegorz HaftarczykMember of the Management Board

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