RNS Number:8071H
Tandem Group PLC
21 February 2003
21 February 2003
For immediate release
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO CANADA, AUSTRALIA OR
JAPAN
Tandem Group plc
Circular posted to convene an EGM to facilitate the
Recommended Offer for the acquisition of MV Sports Group plc by Tandem Group plc
and other matters
Definitions used in this announcement are set out in the text below or in the
appendix at the end.
Further to an announcement made on 3 February 2003 in relation to the
recommended offer ("Offer") by Tandem to acquire the entire issued and to be
issued share capital of MV Sports by way of the Scheme, the board of Tandem has
called an extraordinary general meeting ("EGM") of the Company to be held at the
offices of Eversheds Solicitors, 115 Colmore Row, Birmingham B3 3AL at 11.30
a.m. on 18 March 2003. Details of the matters to be considered at the meeting
are contained within a circular to Tandem Shareholders which is being posted
today (the "Circular"). Copies of the Circular, and of the Scheme document, are
available free of charge from the Company Secretary, Tandem Group plc, 9a South
Street, Crowland, Peterborough, PE6 0AH.
At the meeting, resolutions will be put to shareholders to:
* Increase Tandem's authorised share capital, to grant the
Directors authority to allot relevant securities and to disapply pre-emption
rights to facilitate, inter alia, the acquisition of MV Sports;
* Approve the Share Capital Reorganisation involving a
reduction of share capital and a consolidation, sub-division and conversion of
Ordinary Shares; and
* Approve the purchase by the Company of its own "A"
Ordinary Shares.
Increase in authorised share capital and authority to allot relevant securities
and disapplication of pre-emption rights to facilitate the acquisition of MV
Sports
As already described in the announcement of 3 February 2003, the Scheme provides
for the allotment of up to 12,168,403 New Ordinary Shares (being equivalent to
121,684,058 Ordinary Shares before the Share Capital Reorganisation (see below)
has been effected) to MV Sports Scheme Shareholders. In order for the Company
to proceed with the Acquisition and the Scheme, it is therefore necessary to
increase its authorised share capital and for the Directors to be authorised to
allot sufficient relevant securities under section 80 of the Companies Act.
The Directors do not have the requisite power to allot relevant securities
without Shareholder authority pursuant to section 80 of the Companies Act. If
the power to allot is authorised, the Directors intend to exercise their
authority to allot shares for the purpose of the Acquisition and the Scheme. A
resolution is also being proposed at the EGM to disapply statutory pre-emption
rights in connection with, inter alia, the proposed issue of shares pursuant to
the Scheme.
Capital Reorganisation involving reduction of share capital and consolidation,
sub-division and conversion of Ordinary Shares
The middle market price of an Ordinary Share as at the close of business on 31
January 2003, being the latest practicable date prior to the Offer being
announced, was 3.5p. Typical bid/offer spreads, the price at which market
makers are willing to buy and sell shares tend to be +/- 0.25p above and below
the middle market price. Although it is sometimes possible to buy Ordinary
Shares within the bid/offer spread, taking into account typical dealing costs
and stamp duty most investors buying Ordinary Shares would typically have to see
the share price rise by 0.5p before they can realise a profit on their purchase.
The Directors are advised by the Company's Broker that having such a low share
price is not attractive to some institutional investors. The Directors consider
that raising the attractiveness of the Company to a larger group of potential
investors, while retaining the Company's attractiveness to the private investor,
is important to facilitate the growth of the Company and its profile.
Accordingly, the Directors have decided to recommend to Shareholders that the
Ordinary Shares are consolidated on a 1 for 10 basis and a resolution to effect
this is set out in the Notice of EGM contained in the Circular. Upon completion
of the consolidation, Shareholders will hold 1 New Ordinary Share for every 10
Ordinary Shares that they currently hold. This should mean that the Company's
New Ordinary Shares will trade at approximately 10 times the value at which they
currently trade, although market forces may mean that the price is greater than
or less than this anticipated value.
The nominal value of each Ordinary Share is currently 4p. The middle market
price of each Ordinary Share in recent weeks has been less than that amount and
was 2.75p as at 20 February 2003 being the latest practicable date prior to the
printing of the Circular. Upon completion of the consolidation referred to
above, the Directors would expect the margin between nominal value and market
price to remain small. A company limited by shares has no power to issue shares
as fully paid up for a consideration which is less than their nominal value and
is prohibited from doing so under section 100 of the Companies Act. For this
reason and in order to give the Company greater flexibility in pricing equity
fund raisings, it is proposed that the Share Capital Reorganisation be
structured so that the nominal value of the Company's resulting Ordinary Shares
shall have a par value of 4p each thereby increasing the margin between nominal
value and market price. In order to effect this, New "B" Ordinary Shares will be
created and then cancelled as follows:
(i) every 10 existing issued and unissued ordinary shares of
4p each will be consolidated into one ordinary share of 40p each;
(ii) every resulting ordinary share of 40p each will be
sub-divided and converted into 1 New Ordinary Share of 4p each and 1 non-voting
cancellable "B" ordinary share of 36p each; and
(iii) subject to Court and Shareholder approval, all of the
non-voting cancellable "B" ordinary shares of 36p each will be cancelled.
Despite the creation of New "B" Ordinary Shares and changes to the underlying
par value of the resulting New Ordinary Shares, Shareholders can rest assured
that their percentage ownership of the Company will not change as a result of
the Share Capital Reorganisation except as a result of fractional entitlements
and the issue of the Consideration Shares in respect of the Acquisition.
Therefore, a shareholder holding, say, 1 per cent of the voting Ordinary Shares
of the Company today, would hold materially the same percentage immediately
after the proposed Share Capital Reorganisation (were the Acquisition not to
take place).
The rights attached to the New Ordinary Shares will be the same as those
attached to the existing Ordinary Shares in the capital of the Company and an
application will be made for the New Ordinary Shares to be listed on AIM. Any
fractions of the New Ordinary Shares to which shareholders would otherwise be
entitled upon the Share Capital Reorganisation becoming effective will be
aggregated and sold and the proceeds shall be retained by the Company for its
benefit. The New "B" Ordinary Shares will be non-voting, will have very limited
rights to dividends or on a return of capital, will be subject to buyback by the
Company at a purchase price of 0.001p per share and will be cancellable. It is
anticipated that the "B" Ordinary Shares will have negligible value and will,
subject to Court and Shareholder approval, be cancelled. The New "B" Ordinary
Shares will not be listed on the Official List or AIM.
The proposed cancellation of New "B" Ordinary Shares would, if approved, result
in a reduction of share capital of #9,137,594.88. In the balance sheet of the
Company, an equivalent sum will be credited to a special undistributable
reserve. The Company will seek the approval of the Court to use part of this
special reserve (a) to eliminate the deficit on the Company's profit and loss
account, and (b) to create a surplus to enable the Company to proceed with the
proposed Buyback. The proposed Capital Reduction requires the approval of the
Shareholders and accordingly the Notice of EGM seeks this approval. The
proposed Capital Reduction will also require the Company to apply to the Court
to seek an order confirming the Capital Reduction.
The Company intends to apply to the Court to seek an order confirming the
Capital Reduction. The Court will require to be satisfied that the interests of
the Company's creditors will not be prejudiced as a result of the Capital
Reduction. It is for the Court, finally, to decide the precise nature of
protection required for the Company's creditors and the Board will give such
undertakings or other protection as the Court requires and the Board is advised
is appropriate.
It is anticipated that the Capital Reduction will take place on or around 8
April 2003.
Apart from the Buyback (described below), the proposed Capital Reduction will
not involve any distribution or repayment of capital by the Company. The Capital
Reduction will not materially reduce the underlying net assets of the Company
and the Directors do not anticipate that it will adversely affect the market
value of the Company's share capital. The principal effect of the Capital
Reduction will be to enable the Company to be put into a position where it can
purchase its own shares and/or pay dividends out of distributable profits sooner
than it would otherwise be able to do.
In respect of the New Ordinary Shares, new share certificates will be issued
following the Share Capital Reorganisation (if approved). Any share
certificates representing current holdings of Ordinary Shares will, following
completion of the Share Capital Reorganisation, be cancelled. As before, New
Ordinary Shares may be held through the uncertificated CREST system. If the
Court approves the cancellation of the New "B" Ordinary Shares, no share
certificates will be issued in respect of those shares.
Purchase of own "A" Ordinary Shares and Notice to "A" Ordinary Shareholders
There are currently 125,000,000 "A" Ordinary Shares in the authorised share
capital of the Company, 102,125,309 of which are issued and fully paid. In
order to simplify the share capital structure of the Company and in order to
save administrative expense currently incurred in relation to the "A" Ordinary
Shares, it is proposed that the Company will buy back all of the "A" Ordinary
Shares at 0.001p per share (the "Purchase Price").
The "A" Ordinary Shares currently have no right to receive notice of, nor any
right to attend and vote at, any general meeting of the Company but do have the
right to receive a proportional share of dividends (if declared) and a
proportional share of surplus assets on any winding up in each case based on the
amount paid up in respect of each "A" Ordinary Share as a proportion of the
entire issued share capital.
It is proposed that the Company will purchase all of the "A" Ordinary Shares at
the Purchase Price. The "A" Ordinary Shares are not listed on AIM and therefore
the proposed Buyback is therefore an "off-market" purchase pursuant to section
164 of the Companies Act.
Pursuant to section 168 of the Companies Act, the Company will only be able to
proceed with the Buyback if, inter alia, it is able to purchase the "A" Ordinary
Shares from distributable profits. It is anticipated that if the Capital
Reduction is approved, the Company will have sufficient distributable profits.
Application for Admission of New Ordinary Shares to trading on AIM
If the Share Capital Reorganisation is approved, an application will be made for
up to 25,382,208 New Ordinary Shares to be admitted to trading on AIM. Admission
of the New Ordinary Shares is expected to be effective on 19 March 2003.
If the Scheme is effected an application will be made in respect of the
Consideration Shares to be admitted to trading on AIM. If the Share Capital
Reorganisation is approved then application will be made for up to 12,168,405
New Ordinary Shares to be issued in consideration of the Acquisition. If the
Share Capital Reorganisation is not approved then application will be made for
up to 121,684,058 Ordinary Shares to be issued in consideration of the
Acquisition. Admission of the Consideration Shares is expected to be effective
on 9 April 2003.
Update regarding compost claim
As announced on 3 February 2003, Tandem is currently defending a claim by a
former customer in relation to compost supplied between 1994 and 1995 by a
Tandem subsidiary during its ownership of a horticultural business. Tandem was
unsuccessful on liability at trial and has, on 19 February 2003, been refused
leave to appeal the original trial decision. Nevertheless the matter continues
to be vigorously defended and quantum is still to be determined.
Currently there is evidence to suggest that quantum could be between #80,000 and
#215,000 (plus interest and costs but less any allowance for mitigation), but
this is by no means fixed since arguments on quantum have yet to be presented
and determined. Tandem has a long-standing provision, of which #72,000 remains,
in respect of this litigation.
Expected Timetable of Principal Events
Extraordinary General Meeting 11.30 a.m. 18 March 2003
Record date of the Share Capital Reorganisation 18 March 2003
Admission of New Ordinary Shares to trading on AIM 19 March 2003
Crest accounts credited with New Ordinary Shares 19 March 2003
Share certificates issued in respect of New Ordinary Shares 21 March 2003
Court hearing of petition to confirm Capital Reduction 7 April 2003
Court hearing of petition to sanction the Scheme 7 April 2003
Effective date of the Capital Reduction 8 April 2003
Completion of the Acquisition 8 April 2003
Admission of Consideration Shares to trading on AIM 9 April 2003
Crest accounts credited with Consideration Shares 9 April 2003
Share certificates issued in respect of Consideration Shares 11 April 2003
Enquiries:
Mervyn Keene, Director, Tandem Group plc 01733 211399
Adam Hart, KBC Peel Hunt 020 7418 8900
KBC Peel Hunt, which is regulated in the United Kingdom for the conduct of
investment business by the Financial Services Authority, is acting for Tandem
and no one else in connection with the Proposals and will not be responsible to
anyone other than Tandem for providing the protections afforded to customers of
KBC Peel Hunt nor for providing advice in relation to the Proposals, this
announcement or any other matters referred to herein.
This announcement does not constitute an offer to sell or invitation to purchase
any securities or the solicitation of any vote or approval in any jurisdiction.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or distributed
should inform themselves about and observe such restrictions.
The Offer will not be made directly or indirectly in or into or by the use of
the mails of, or any other means or instrumentality of interstate or foreign
commerce of, or any facility of a national securities exchange of Canada,
Australia or Japan. Accordingly, this document is not being, and must not be
issued, mailed or otherwise distributed or sent in, into or from Canada,
Australia or Japan and persons receiving this document (including custodians,
nominees and trustees) must not distribute or send it in, into or from Canada,
Australia or Japan.
The Tandem Consideration Shares, if approved, will not be registered under the
Securities Act or under any relevant securities laws of the United States, nor
have the relevant clearances been, nor will they be, obtained from the
securities commission or similar authority of any province or territory of
Canada, and no prospectus has been or will be filed, or registration made, under
any securities law of any province or territory of Canada, nor has a prospectus
in relation to the Tandem Consideration Shares, been, nor will one be, lodged
with or registered by the Australian Securities and Investments Commission nor
have any steps been taken, nor will any steps be taken, to enable the Tandem
Consideration Shares to be offered in compliance with applicable securities laws
of Japan, nor will the offer of Tandem Consideration Shares be registered with
the Securities and Futures Commission of the Republic of China pursuant to
relevant securities laws and regulations. Accordingly, unless an exception
under the Securities Act or such securities laws is available, none of the
Tandem Consideration Shares may be offered, sold, resold or delivered, directly
or indirectly, in, into or from the United States, Canada, Australia or Japan or
any other jurisdiction in which an offer of Tandem Consideration Shares would
constitute a violation of relevant laws or require registration thereof, or to
or for the account or benefit of any US Person or resident of Canada, Australia
or Japan.
Appendix
Definitions used in this announcement are as follows:
"Acquisition" the acquisition of the entire issued share capital of MV
Sports to be effected by way of the Scheme;
"AIM" the Alternative Investment Market of London Stock Exchange
plc;
" "A" Ordinary Shares" the "A" ordinary shares of 1p each in the capital of the
Company;
"Buyback" the purchase by the Company of the 102,125,309 "A" Ordinary
Shares in the capital of the Company which are in issue as
at the date of this announcement;
"Buyback Contract" the contract setting out the terms on which the Buyback
will take place;
"Capital Reduction" the proposed reduction of share capital of the Company
as described in the Circular;
"Company" or "Tandem" Tandem Group plc;
"Companies Act" the Companies Act 1985 (as amended);
"Consideration Shares" the New Ordinary Shares (or, if the Share Capital
Reorganisation does not proceed, Ordinary Shares) which it
is proposed will be allotted to MV Sports Shareholders
pursuant to the Scheme;
"Directors" the directors of Tandem;
"Extraordinary General Meeting" or "EGM" the extraordinary general meeting of the Company convened
for 18 March 2003 pursuant to the Notice of EGM;
"MV Sports" MV Sports Group Plc;
"MV Sports Scheme Shareholders" the MV Sports Shares:
(a) in issue at the date the Scheme document is
posted excluding 1 MV Sports Share registered in the name of
Tandem;
(b) issued after the date the Scheme document is
posted and prior to 6.00 p.m. on the day prior to the day
immediately before the meeting convened at the direction of
the Court pursuant to the Scheme; and
(c) issued thereafter and prior to midnight on the
business day immediately preceding the day of the hearing of
the petition to sanction the Scheme either on terms that the
original or any subsequent holders thereof shall be bound by
the Scheme or in respect of which the holders thereof shall
have agreed to be bound by the Scheme;
"MV Sports Shares" the ordinary shares of 0.1p each in the capital of MV
Sports;
"New "B" Ordinary Shares" the "B" ordinary shares of 36p each in the capital of the
Company which will be created upon completion of the Share
Capital Reorganisation;
"New Ordinary Shares" the ordinary shares of 4p each in the share capital of the
Company which will be created upon completion of the Share
Capital Reorganisation;
"Notice of EGM" the notice convening the EGM;
"Ordinary Shares" the ordinary shares of 4p each in the capital of the Company
(but, for clarity, not the New Ordinary Shares);
"Proposals" the Capital Reduction, the Share Capital Reorganisation and
the Buyback;
"Scheme" the proposed scheme of arrangement under section 425 of the
Companies Act between MV Sports and its shareholders
"Share Capital Reorganisation" the increase in authorised share capital and the
consolidation, sub-division and conversion of the Ordinary
Shares
"Tandem Shareholders" holders of Ordinary Shares;
This information is provided by RNS
The company news service from the London Stock Exchange
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