TIDMCSLT
RNS Number : 1464X
Cosalt PLC
09 February 2012
Proposed cancellation of listing of the Cosalt Shares to the
Official List and of trading on the London Stock Exchange's main
market for listed securities
Re-registration as a private limited company
and
Notice of General Meeting
The Board of Cosalt plc ("Company" or "Cosalt") announces today
that the Company is seeking shareholder approval for the
cancellation of the listing of Cosalt shares on the Official List
and trading on the London Stock Exchange ("Cancellation"). A
circular is today being posted to the Company's shareholders
convening a general meeting to take place at the offices of the
Company, Origin 4, Genesis Park, Origin Way, Grimsby DN37 9TZ, at 9
am on 27 February 2012 to seek such approval ("General Meeting")
and explaining the background to the proposed Cancellation and the
reasons why the Board of Directors unanimously consider the
proposed Cancellation to be in the best interests of the Company
and its shareholders as a whole, and further why it recommends that
shareholders should vote in favour of the proposed Cancellation at
the General Meeting ("Circular").
The Circular will also be available on the investors' section of
Cosalt's website accessible at www.cosalt.com and is also available
for inspection at Osborne Clarke One London Wall, London EC2Y 5EB
upon request and will also be stored at the National Storage
Mechanism.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of Circular, the Notice of the General Meeting and the Form of 9 February 2012
Proxy
Latest time and date for receipt of Forms of Proxy for the General Meeting of 9.00 am on 25 February 2012
Shareholders
General Meeting of Shareholders 9.00 am on 27 February 2012
Last day of dealings in Ordinary Shares on Main Market and in CREST 26 March 2012
Expected date of cancellation of listing and trading on the main market 27 March 2012
Notes:
1. References to times in the Circular are to London time unless otherwise
stated.
2. If any of the above times and/or dates change, the revised times and/or dates will be notified
to Shareholders by an announcement through a regulatory information service recognised by
the London Stock Exchange.
The following text is extracted from a Circular expected to be
posted today. Definitions used in the Circular apply in this
announcement unless the context otherwise requires.
Proposed cancellation of listing of the Cosalt Shares to the
Official List and of trading on the London Stock Exchange's main
market for listed securities
Re-registration as a private limited company
and
Notice of General Meeting
Proposed cancellation of listing of the Cosalt Shares to the
Official List and of trading on the London Stock Exchange's main
market for listed securities and re-registration as a private
limited company and Notice of General Meeting
1. Introduction
Cosalt today announced that it is proposing to cancel the
admission of the Cosalt Shares from the Official List and to
trading on the London Stock Exchange's Main Market (the
"Cancellation") and, conditional upon the Cancellation becoming
effective, to re-register Cosalt as a private limited company (the
"Re-registration"). Under the Listing Rules, the Cancellation can
be effected by Cosalt only after approval by a resolution of
Shareholders in the General Meeting, passed by 75% of those
Shareholders who attend and vote at the meeting, and the expiration
of a period of not less than 20 Business Days from the date of the
Shareholder approval.
The purpose of this letter is to outline the reasons for the
Cancellation and the Re-registration and explain why the Directors
consider the Cancellation and Re-registration to be in the best
interests of Cosalt and the Shareholders as a whole and why the
Directors recommend that you vote in favour of the Resolutions as
they intend to do in respect of the Cosalt Shares held by them.
You will find set out at the end of this document the Notice of
General Meeting to be held at the offices of the Company, Origin 4,
Genesis Park, Origin Way, Grimsby DN37 9TZ at 9 am on 27 February
2012, at which the Resolutions to authorise Cosalt to approve the
Cancellation and the Re-registration will be proposed as special
resolutions.
2. Background to and reasons for the Cancellation and Re-registration
On 19 October 2011, Cosalt announced that the Group's trading
for the year to 31 December 2011was expected to be significantly
lower than the Board's previous expectations and that the delayed
sale of the Marine division earlier in the year and the resulting
pressure on cashflow has had an adverse effect on the margins of
its Offshore Division (both in the UK and in Norway) and has also
delayed the rollout of the South East contract in the Group's
Workwear division. It was stated that the Board has instigated a
full review of the Group's operations and future funding
requirements.
On 23 November 2011 the Company announced the Company's cash
flow position had continued to deteriorate such that the Company
only had GBP900,000 of bank facilities available, representing
sufficient working capital only until 30 November 2011 and that the
Company was in urgent discussions with its major shareholders and
banking partners.
On 25 November 2011, the Independent Directors of Cosalt plc
('Cosalt') and the Board of Oval (2245) Limited ('Oval') announced
that they have reached an agreement on the terms of a recommended
cash offer to be made by Oval, a company wholly owned by myself,
for the entire issued and to be issued ordinary share capital of
Cosalt, other than an aggregate of 60,998,069 Cosalt Shares
(representing approximately 15.08 per cent. of the entire existing
ordinary share capital of Cosalt) beneficially owned by me.
The deterioration in Cosalt's trading as outlined in part 1 of
the offer documents dated 29 November 2011 and 22 December 2011 in
respect of the Offer, together with the current level of net
indebtedness in the Cosalt Group and the pension deficit has
resulted in a high degree of uncertainty over the ability of Cosalt
to be able to continue as a going concern. I have, in recent years,
provided significant levels of funding to the Cosalt Group. Cosalt
requires a significant injection of capital to provide the
necessary funding for the business to ensure it can meet its
obligations and provide time to seek a turnaround in the
performance of the business. A number of Cosalt's largest
shareholders indicated that they did not wish to invest further
cash into the business, and subsequently sold their Cosalt Shares
to Oval or myself.
Further to Oval's offer for the issued share capital of Cosalt
being declared wholly unconditional on 9 January 2012, the board of
Cosalt agreed revised arrangements for the provision of borrowing
facilities to the Company by Oval. The Company's previous
short-term GBP5 million borrowing facility with Oval, which expired
on 9 January, was replaced with a new GBP5 million unsecured
facility. The Company will use this facility to fund working
capital and capital expenditure. Under the terms of the new
facility, any amounts outstanding will fall due for repayment on
the earliest to occur of (i) 30 June 2012; (ii) the date of any
refinancing of any nature of the Company's bank facilities (being a
refinancing, redemption or cancellation in full of all such
facilities) with HSBC and RBS, the Company's senior lenders; or
(iii) the date the facilities must be repaid on certain events of
default. To date GBP4,645,000 has been drawn down under this
facility.
The Directors believe that it is no longer appropriate to
maintain its listing as it is disproportionately restrictive and
costly for a business of its size and that it would be easier to
address Cosalt's issues as a private company. It is therefore
intended that Cosalt will be delisted to address the issues that
have affected the Cosalt Group's trading, away from the public
markets.
For these reasons, the Directors consider that it is in the
Company's interests to seek approval to effect the Cancellation and
Re-registration. However, Shareholders should note that following
the Cancellation becoming effective:
-- The regulatory regime which applies solely to companies with
shares admitted to the Official List and to trading on the London
Stock Exchange's main market for listed securities will no longer
apply, including obtaining shareholder approval under the Listing
Rules for transactions out of the ordinary course of business or
with related parties.
-- The Company would no longer be required to comply with the UK Corporate Governance Code.
-- The Cancellation may have taxation consequences for
Shareholders, for example, once the Cancellation has become
effective, the Cosalt Shares would no longer be a qualifying
investment for an individual savings account (ISA).
-- The Cancellation may have implications for Shareholders
holding shares in a Self-Invested Personal Pension ("SIPP"). For
example, shares in unlisted companies may not qualify for certain
SIPPs and, if in any doubt, Shareholders should consult with their
SIPP provider immediately.
The Cancellation will significantly reduce the liquidity and
marketability of any Cosalt Shares not assented to the Offer and
their value may be affected in consequence as there will be no
market facility for dealing in Cosalt Shares.
Subject to the passing of Resolution 1 set out in the Notice of
General Meeting at the end of this document, it is intended that
Cosalt will be re-registered as a private limited company under
section 97 of the Companies Act 2006 and pursuant to the passing of
Resolution 2(a).
Resolution 2(b), which is conditional on the passing of
Resolution 1 and which is being proposed as a special resolution,
changes the Company's name to "Cosalt 2012 Limited". Usually, upon
re-registration as a private limited company, the company would
keep the same name and only the suffix would change. However,
"Cosalt Limited" is already in use by a group company of the
Company and, accordingly, a new name must be adopted for the
Company upon Re-registration.
Resolution 2(c), which is conditional on the passing of
Resolution 1 and which is being proposed as a special resolution,
adopts the New Articles. These amend the existing articles of
association of the Company by deleting certain provisions which
will no longer be relevant to the Company following Cancellation.
In particular, the following provisions are proposed to be
removed:
-- Provisions relating to uncertificated shares;
-- The requirement for the Directors to retire by rotation at
every third annual general meeting;
-- Provisions relating to the restriction on the authority of
the Directors to borrow funds on behalf of the Company;
In addition to these changes, as a private limited company, the
Company will no longer be required to produce its accounts within
six months following the end of its financial year and then to
circulate copies of the accounts to Shareholders. Following
Re-registration, the period for the preparation of annual reports
and accounts is extended to nine months following the end of the
financial year. The Company will still be required to circulate
annual reports and accounts to Shareholders but the period for
doing so is extended for private companies. In addition, the
Company will no longer prepare or publish interim accounts.
Furthermore, after Cancellation, Shareholder resolutions of the
Company may be obtained as written resolutions by obtaining the
approval in writing of a majority of Shareholders in the case of
ordinary resolutions, and 75 per cent. of Shareholders in the case
of special resolutions. After Cancellation, and as a private
limited company, the appointment of a company secretary is at the
Company's discretion.
The New Articles will be available for inspection during normal
business hours at the registered office of the Company from the
date of this document until the time of the General Meeting and at
the place of the General Meeting from at least 15 minutes before
the General Meeting until it ends.
3. Details of the Cancellation
Under the London Stock Exchange's admission and disclosure
standards, Cosalt must advise the London Stock Exchange of the
Cancellation not less than 20 Business Days before the date it
intends trading in the Cosalt Shares to be discontinued.
Under the Listing Rules, the Cancellation can be effected by
Cosalt only after securing approval by a special resolution of
Shareholders at the General Meeting, and the expiration of a period
of not less than 20 Business Days from the date of the Shareholder
approval. Such approval will be sought through Resolution 1 set out
in the Notice of General Meeting. Subject to Resolution 1 being
duly passed, Cosalt will apply to the FSA and to the London Stock
Exchange for cancellation of admission of the Cosalt Shares to the
Official List and to trading on the London Stock Exchange. It is
anticipated that the Cancellation will take effect 20 Business Days
following the passing of Resolution 1 on or around 27 March
2012.
4. Bank consent
The Offer was declared wholly unconditional in all respects on
10 January 2012 and bank consent in respect of the change of
control of the Company was provided by RBS as agent under the Bank
Facilities Agreement.
On 10 January 2012 Oval and the Company entered into a Medium
Term Facilities Agreement ("MTFA") under which Oval is to provide
the Company with a range of financing facilities (including a
revolving loan facility) of up to GBP5 million in aggregate, for
general working capital purposes and to finance agreed capital
expenditure. Monies under the MTFA can be drawn down by the Company
when required, subject to the satisfaction of certain customary
conditions precedent. Until the date (the "Discharge Date") that
all payments have been made or discharged to the Company's senior
lenders under the Bank Facilities Agreement, no repayment amounts
shall be made without the prior written consent of RBS, acting as
agent for the senior lenders under the Bank Facilities Agreement.
Any amount outstanding under the MTFA shall be immediately
repayable upon the earliest to occur of (i) 30 June 2012; (ii) the
date of any refinancing of any nature of the bank facilities
available to the Company pursuant to the Bank Facilities Agreement;
(iii) the date there has been an insolvency event against the
Company provided that (in the case of either (i) or (ii)) the
Discharge Date has occurred before then. An arrangement fee of
GBP100,000 is payable in respect of the provision of the MTFA
subject to certain restrictions. To date, the Company has requested
drawdown, and Oval has satisfied, payments of GBP4,645,000 in
aggregate.
Following entry into the MTFA, all amounts due under (including
the arrangement fee of GBP100,000) the Short Term Facilities
Agreement were repaid by the Company to Oval in full on 11 January
2012. Consent to such repayment was provided by RBS as agent, as
required under the Bank Facilities Agreement.
5. Taxation
Shareholders and prospective investors should consult their own
professional advisers on whether continuing to hold Shares
following the Cancellation is suitable for them or whether the
Cancellation has any tax consequences for them.
Any comments on the tax implications described in this document
are based on the Directors' current understanding of tax law and
practice, are not tailored to any individual circumstances and are
directed at individuals who are UK resident and domiciled. Tax
rules can change and the precise tax implications for Shareholders
will depend on their particular circumstances. If you are in any
doubt as to your tax position, you should consult your own
independent professional adviser.
6. Transactions in the Cosalt Shares following the Cancellation
The Directors are aware that Shareholders may still wish to
acquire further or dispose of Cosalt Shares and, accordingly,
intend to use reasonable endeavors to create and maintain a matched
bargain settlement facility.
Under this facility Shareholders or persons wishing to acquire
shares will be able to leave an indication with the matched bargain
settlement facility provider that they are prepared to buy or sell
at an agreed price. In the event that the matched bargain
settlement facility provider is able to match that order with an
opposite sell or buy instruction, the matched bargain settlement
facility provider will contact both parties and then effect the
order. Shareholders who do not have their own broker may need to
register with the matched bargain settlement facility provider as a
new client. This can take some time to process and therefore
Shareholders who consider they are likely to avail themselves of
this facility are encouraged to commence it at the earliest
opportunity.
The contact details of the matched bargain settlement facility
provider once arranged will be made available to Shareholders on
Cosalt's website.
Shareholders should note that following the Cancellation, Cosalt
will remain subject to the provisions of the Code.
7. Option Holders
The Cancellation will not affect the terms of the Cosalt
Options. However, following the Cancellation, since there will be
no ready market in Cosalt's shares, Cosalt Optionholders will need
to take this into account when deciding to exercise or not to
exercise their Cosalt Options in the future to the extent that such
Cosalt Options have not previously lapsed.
8. General Meeting
A notice convening the General Meeting, to be held at the
offices of the Company, Origin 4, Genesis Park, Origin Way, Grimsby
DN37 9TZ, at 9am on 27 February 2012, is set out at the end of this
document, at which the Resolutions will be proposed to approve the
Cancellation.
9. Action to be taken
Shareholders will find a Form of Proxy enclosed with this
document for use at the General Meeting or at any adjournment
thereof. You are requested to complete and sign the Form of Proxy,
whether or not you propose to attend the General Meeting in person,
in accordance with the instructions printed on it and return it as
soon as possible, but in any event so as to be received no later
than 9.00am on 25 February 2012, by the Company's Registrars,
Capita Registrars at PXS, 34 Beckenham Road, Beckenham, Kent BR3
4TU. Alternatively you may vote online at www.capitashareportal.com
in accordance with the procedures set out in the notice convening
the General Meeting at the end of this document.
CREST members may also choose to utilize the CREST electronic
proxy appointment service in accordance with the procedures set out
in the notice convening the General Meeting at the end of this
document. The lodging of the Form of Proxy (or the electronic
appointment of a proxy) will not preclude you from attending and
voting at the General Meeting in person if you so wish.
10. Recommendation
The Board considers the terms of the Cancellation and
Re-registration outlined above to be in the best interests of
Cosalt and its Shareholders as a whole. Accordingly, the Board
recommends that you vote in favour of the Resolutions to be
proposed at the General Meeting, as I intend to do in respect of my
own holdings of Cosalt Shares.
In addition Oval has provided an indication of its current
intention to vote in favour of the Cancellation and Re-registration
and I will vote in favour of the Cancellation and
Re-registration.
In total therefore, there is an intention to vote in favour of
the Cancellation in respect of an aggregate number of 226,496,173
Cosalt Shares, equivalent to 56.01 per cent. of the issued share
capital of Cosalt.
Yours faithfully,
David Ross
Chairman
COSALT PLC (the 'Company')
(incorporated and registered in England and Wales with
registered no: 00019628)
Notice of General Meeting
Notice is hereby given that a General Meeting of the Company
will be held at 9am on 27 February 2012 at the offices of the
Company, Origin 4, Genesis Park, Origin Way, Grimsby DN37 9TZ.
You will be asked to consider and vote on the Resolutions below.
The Resolutions will be proposed as special resolutions.
SPECIAL RESOLUTIONS
1. THAT, the listing of the Cosalt Shares on the premium segment
of an Official List of the UK Listing Authority and admission to
trading on London Stock Exchange plc's main market for the
securities be cancelled, and that the Directors be and are hereby
authorised to take all such steps which are necessary or desirable
in order to effect such cancellation and application accordingly
(the "Cancellation") ; and
2. THAT, conditional on the Cancellation becoming effective:
a. The Company be re-registered as a private limited company
pursuant to section 97 of the Companies Act 2006
b. The Company's name be and it is changed to "Cosalt 2012 Limited"; and
c. The existing articles of association of the Company be
replaced with the articles of association initialled by the
Chairman for the purposes of identification.
Denise Robinson
Company Secretary
Registered Office: By order of the board
Origin 4
Genesis Park
Origin Way
Europarc
Grimsby
N.E. Lincolnshire
DN37 9TZ
United Kingdom
Registered in England No: 00019628 9 February 2012
Enquiries:
Cosalt plc Tel: +44 (0) 1472 725 560
David Ross, non-Executive Chairman
Cardew group Tel: +44 (0) 20 7930 0777
Tim Robertson
This information is provided by RNS
The company news service from the London Stock Exchange
END
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