IPSA Group PLC Sale of Blazeway Engineering Limited (3454N)
29 January 2016 - 2:00AM
UK Regulatory
TIDMIPSA
RNS Number : 3454N
IPSA Group PLC
28 January 2016
28 January 2016
IPSA Group PLC
("IPSA" or the "Company")
Sale of Blazeway Engineering Limited and Settlement of Certain
Major Creditors
IPSA Group PLC (AIM:IPSA), the developer, owner and operator of
power generation capacity in South Africa, announces that it has
agreed to sell Blazeway Engineering Limited ("Blazeway") to Sloane
Corporation Limited ("SCL") subject to the satisfaction of
conditions precedent including the approval of the transaction by
the Company's shareholders. Blazeway is the UK holding company,
which owns Newcastle Cogeneration Proprietary Limited ("NewCogen"),
the Company's operating subsidiary in South Africa.
Under the terms of the conditional sale and purchase agreement,
SCL will provide total consideration of GBP1,866,000 in the form of
cash of GBP50,000 and non-cash consideration which includes the
assumption by SCL of the liability to discharge certain of the
Company's creditors subject to the consent of those creditors. The
GBP50,000 is payable on execution of the sale and purchase
agreement.
In addition to this GBP50,000 cash payment, SCL has paid
GBP50,000 in satisfaction of certain of NewCogen's outstanding
liabilities and has agreed to set aside the sum of GBP280,000 to be
drawn down and used to settle creditors and obligations of NewCogen
up to this amount both prior to and following completion of the
Disposal. Drawn down amounts will be converted to a loan to
NewCogen in the event that the sale is not completed.
SCL is wholly owned and operated by Peter Earl, a former
director of the Company. As Peter Earl left the IPSA board in July
2015, the transaction will be treated as a related party
transaction under the AIM Rules.
The directors consider, having consulted with WH Ireland, IPSA's
nominated adviser, that the terms of the transaction are fair and
reasonable insofar as the shareholders are concerned.
The transaction will also constitute a fundamental disposal
under the AIM Rules and consequently the transaction will be
subject to shareholder approval at a general meeting and a circular
to shareholders will be issued shortly. Following the disposal of
NewCogen, IPSA would be regarded as an AIM Rule 15 cash shell, and
would be required to make an acquisition or acquisitions
constituting a reverse takeover under the AIM Rules within 6
months.
A circular convening the general meeting of shareholders in the
Company and with further details of the disposal will be sent to
shareholders and notified by RNS in due course.
In the year ended 31 March 2014 the audited loss before tax of
Blazeway was GBP2,011,155 and net assets were negative
GBP2,411.115. In the year ended 31 March 2015, the unaudited loss
before tax of Blazeway was GBP227,529 and net assets were negative
GBP2,638,644.
The GBP50,000 cash proceeds paid to IPSA from the transaction
will be used for working capital whilst IPSA seeks to realise its
remaining assets that consist primarily of the balance of plant
associated with the previously sold 701DU turbines and a receivable
from Rurelec PLC.
The Company previously announced that its working capital was
extremely tight and it has been reliant on the forbearance of its
creditors with the possibility that the Company may be put into
administration. As a result of the mechanical failure of one of
NewCogen's gas turbines in November 2015, the working capital and
creditor pressure has deteriorated further. In the absence of other
funding solutions in the available timeframe, the Company has
concluded that the sale of Blazeway is the only way to avoid having
to place NewCogen into business rescue, which in turn would have
resulted in a likely administration for IPSA. Whilst the financial
position of IPSA will remain critical following the proposed sale
as a result of the amount owed to Ethos Energy of approx. GBP3.2
million the Company will focus its attention in the near term of
seeking to satisfying its remaining creditors from the sale of the
balance of plant and collection of the receivable from Rurelec
PLC
The Company's shares are currently suspended pending the release
of its financial accounts for the year ended 31 March 2015 and for
the interim period to 30 September 2015.
Chairman Richard Linnell commented: "The transaction, if
completed, will release IPSA from a significant portion of its
outstanding liabilities. This will in turn place the Company in a
stronger position to meet all of its remaining obligations to
creditors - most notably Ethos Energy Italia - out of other asset
disposals with any residual balance for shareholders as IPSA turns
itself into a cash shell that will seek a reverse takeover."
For further information contact:
Mark Otto, Acting CEO
IPSA Group PLC +27 (84) 219 2000
James Joyce / James Bavister +44 (0) 20 7220
W H Ireland Ltd 1666
Riaan van Heerden,
PSG Capital (Pty) Ltd. +27 (0) 21 887 9602
This information is provided by RNS
The company news service from the London Stock Exchange
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