TIDMMMP
RNS Number : 1375E
Marwyn Management Partners PLC
14 July 2016
EMBARGOED FOR RELEASE AT 7 A.M. ON 14 JULY 2016
14 July 2016
MARWYN MANAGEMENT PARTNERS PLC
("MMP" or the "Company")
Cancellation of admission of the Company's Ordinary Shares to
trading on AIM
The Board of Directors of MMP announces today that the Company
is seeking shareholder approval for the cancellation of admission
of its ordinary shares to trading on the AIM market of the London
Stock Exchange. MMP has today distributed a circular to all MMP
shareholders providing details of the Board's proposal and
convening a general meeting (the "General Meeting") to approve the
cancellation of its ordinary shares from trading on AIM.
Background to the delisting
The MMP group (the "Group") acquired Le Chameau SAS ("Le
Chameau") in October 2012 for EUR16.5 million from the French
conglomerate Lafuma. MMP has a 97.3 per cent. holding in Le
Chameau, with the remaining 2.7 per cent. held by third party
investors who currently have approximately EUR0.8 million
invested.
The new management team, led by Beverley Williams as
President/CEO, has repositioned the existing retail network in
France, rationalised underperforming and non-core product lines,
taken control of retail distribution in the UK, implemented a new
IT system and restructured the business's manufacturing operations.
It has taken longer than expected for the financial performance
hoped to result from such substantial organisational change to be
delivered. In addition, trading conditions in France and certain
other European territories remain challenging owing to a weak
economic backdrop. The result of this is that revenue for 2016 is
expected to be down on the prior year.
Le Chameau's core boot range however has continued to perform
well to underpin the Board's belief that Le Chameau offers a
genuine best-in-class product. This is consistent with the product
strategy going forward, which will remain focused on the quality
core boot product for which Le Chameau is renowned. New market
segments, beyond the traditional shooting market, continue to be
targeted both for existing products and new styles and ranges under
development. Whilst the Board continues to support the Le Chameau
business, the payoff from recent projects and growth in revenue is
taking longer than expected.
VAT Reclaims and Escrow Account
As noted previously, MMP retains an interest in approximately
GBP1.3 million which is held in an escrow account to cover any
claims made by the purchaser pursuant to an agreement dated 30
September 2012 between the Company, Marwyn Management Partners
Subsidiary Limited, Merkur Casino UK Ltd and Casino Merkur
Spielothek GmbH relating to the sale of Marwyn Gaming Limited
("MGL"). Whilst this contingent asset has been written down to nil
in the Company's accounts, sums may be released from the account to
cover certain of the Company's costs in relation to dealing with
claims relating to the sale of MGL (those claims relate to
litigation inherited in businesses that MGL acquired prior to its
sale). To the extent all such claims are ultimately settled or
withdrawn, further sums may be released to the Company with the
consent of the buyer. Progress on those claims remains slow and the
sum in the escrow account is currently GBP1.3 million.
In addition, there is currently a dispute between the gaming
industry and HMRC on the principle of fiscal neutrality. The basis
of the dispute is that some similar forms of gambling were treated
differently for VAT purposes and a test case was pursued by Rank
plc. Based on this test case, the Group submitted VAT repayment
claims in relation to the Group's ownership period of its former
subsidiary Praesepe plc pertaining, in the main, to VAT overpaid on
amusement machine income. While the HMRC won the case at The Court
of Appeal in 2015, further cases may be forthcoming. The Group
estimates that these claims total more than GBP12.5 million
including interest but repayment is currently being strongly
refused by HMRC and until the outcome of future cases is known, the
Group will not be in a position to seek the determination of these
claims.
It is not expected that there will be any resolution to the
Group's claims for several years, and it may be delayed further.
Should any repayment be made to the Company it will be subject to
professional fees and Corporation Tax. Whilst this amount is
material in relation to the Company, it is by no means certain that
anything will be recovered and no contingent asset has been
recognised.
Rationale for the Delisting
The recent organisational changes and the backdrop of economic
headwinds which have resulted in the delayed growth of Le Chameau
has led the Board to believe that the rationale for remaining as a
publicly quoted company has been significantly undermined, such
that it is no longer in the best interests of the Company or its
shareholders to maintain the Company's admission to trading on AIM.
The Board further considers that greater shareholder value will be
derived by operating the Group's business off-market for the
immediate future.
In reaching this conclusion, the Board has focused on the
following key factors:
-- trading volumes in the Ordinary Shares are very low. In the
twelve months to 12 July 2016 (the last practicable date before
publication of this document) there were 198 trading days when no
Ordinary Shares were traded on AIM (77.6 per cent. of trading
days);
-- MMP, like many other AIM quoted companies of its size, has a
tightly held register of shareholders and suffers from a lack of
liquidity for its ordinary shares. 90.1 per cent. of the existing
ordinary shares are held by MVI LP. In practical terms, this
results in a small free float and low trading volumes, which
further reduces the demand for the ordinary shares;
-- the Board believes that it is unlikely in the context of
current market conditions that the Company will be able to raise
money through a new share issue from shareholders other than MVI
LP, and therefore the lack of ordinary shares in free float and low
volumes can be expected to continue;
-- the Board believes that there is limited institutional
investor appetite in the Company, particularly in the current
economic environment;
-- in light of the limited trading in the ordinary shares, the
tangible costs associated with maintaining the AIM quotation (such
as legal, accounting, broking, London Stock Exchange and nominated
adviser costs) are disproportionately high when compared to the
benefits, and the Directors consider that these funds could be
better utilised in running the business;
-- the management time and the legal and regulatory burden
associated with maintaining the Company's admission to trading on
AIM, and meeting the AIM Rules and related regulatory requirements
(including reporting, disclosure and corporate governance
requirements is disproportionate to the benefits to the Company;
and
-- if the Company is delisted as proposed and has 150 or fewer
shareholders, it will be able to issue shares on a fully
pre-emptive basis without publishing a prospectus and incurring the
associated costs.
Accordingly, the Board strongly believe that it is no longer in
the best interests of MMP or its shareholders as a whole for MMP to
retain its AIM quotation.
Acquisition of MMP's Ordinary Shares by MVI LP
The Board has had discussions with MVI LP around the Delisting.
MVI LP (which, as indicated above, holds approximately 90.1 per
cent. of the ordinary shares) has indicated that it is supportive
of the process and has instructed its brokers to acquire MMP
ordinary shares on the market at a price of 2p per share
(representing the closing price of the ordinary shares on the day
prior to publication of this announcement) to allow for
shareholders who wish to exit their investment in the Company
rather than remain as a shareholder in an unlisted company where
there is no market in its shares.
The Board has recommended that all shareholders consult their
duly authorised independent advisers before making a decision as to
whether to sell their ordinary shares, in order to obtain advice
relevant to their particular circumstances. The Board are making no
recommendations in relation to MVI LP's position.
Process for Delisting
Subject to Rule 41 of the AIM Rules for companies and the
necessary resolution approving the AIM delisting being passed by
the requisite majority at the General Meeting of the Company, it is
anticipated that trading in MMP's ordinary shares on AIM will cease
at close of business on 17 August 2016, with delisting taking
effect at 7.00 a.m. on 18 August 2016.
Upon delisting becoming effective, WH Ireland will cease to be
the nominated adviser and broker to the Company and the Company
will no longer be required to comply with the AIM Rules. In
addition, ordinary shares will only be capable of being held and
transferred in certificated form.
Recommendation and action to be taken
MMP's independent directors consider that approval of the
delisting resolution is in the best interests of the Company and
its members as a whole. The Board has therefore unanimously
recommended that shareholders vote in favour of all resolutions at
the General Meeting on 10 August 2016 and note that, where
relevant, they intend to do so in respect of their own
shareholdings.
Shareholders therefore are encouraged, if unable to be present
at the General Meeting, to complete their respective forms of proxy
and return them to the Company per the instructions contained in
the General Meeting notice.
Enquiries:
Marwyn Management Partners plc
+ 44 (0) 207 004 2700
Mark Kirkland
WH Ireland Limited
020 7220 1666
Paul Shackleton / Mark Leonard
This information is provided by RNS
The company news service from the London Stock Exchange
END
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