TIDMLZYE
RNS Number : 9460D
LZYE Group PLC
03 April 2014
This announcement replaces the announcement issued earlier today
with RNS reference 9451D. The full amended text is shown.
LZYE Group Plc
("LZYE" or the "Company")
DIRECTOR'S DEALING, RELATED PARTY LOAN, PROPOSED CANCELLATION OF
ADMISSION AND NOTICE OF GENERAL MEETING
The Board announces that it proposes to seek Shareholder
approval for the cancellation of admission to trading on AIM of the
Ordinary Shares.
Full details of the proposals, together with details of
Directors' dealing and a related party loan are sent out below and
will be contained in a circular to be despatched to Shareholders
latter today.
If Shareholders approve the resolution then cancellation will
become effective from 7.00 am on 16 May 2014. A full timetable of
events is contained at the end of this announcement.
LZYE Group plc +44(0)161 831 1512
Dominic Yeung, Chairman
Michelle Lai,
Chief Executive
Zeus Capital (Nominated Adviser and Broker)
Ross Andrews, Andrew Jones +44(0)161 831 1512
Introduction and Update
The Company announced on 20 December 2013, its interim results
for the period to 30 September 2013 and noted that trading had been
challenging; revenue decreased by approximately a half (HK$5.09
million) compared to the same period in 2012 (HK$10.01 million),
whist losses (as adjusted for costs relating to the preparation for
AIM and Admission) were HK$11.5 million (2012 HK$13.43
million).
Previously, on 18 December 2013, the Company announced it was in
discussions with a Chinese company regarding a strategic
partnership and the provision of access to finance to fund the
Company's growth. On 6 January 2014, the Company further announced
that these discussions, whilst continuing, were likely to take
longer and were expected to conclude during Q1 of 2014. At the same
time, the Company announced the disposal of its interest in the
Homantain Centre, Hong Kong, and the temporary cessation of all
education services in Hong Kong until discussions with the Chinese
company had concluded, in order to reduce short term costs.
The Board now announces that the discussions with the Chinese
company are unlikely to conclude in the near term and that there is
no prospect of educational services recommencing in Hong Kong or
elsewhere.
In light of these events the Board has decided to seek
Shareholder approval for the cancellation of admission to trading
on AIM of the Ordinary Shares.
On 2 April 2014, the Company was informed by ISF, a significant
shareholder in the Company and where Michelle Lai, a Director, is
the beneficial shareholder, that ISF had entered into three loan
agreements (dated 21 September 2012, 4 October 2012 and 2 April
2013). The security for these loans, which matured on 2 April 2014,
was 100,000,000 Ordinary Shares, held by ISF. Further details of
these arrangements are contained in paragraph 2 below.
The Board also now announces that in order to support the
continuing head office costs of the Company, it is also in receipt
of a further interest free loan from ISF, a related party, details
of which are contained below.
A circular will be posted later today (containing a notice of
meeting) setting out further details of the Director's Dealing, the
Related Party Loan and to explain the rationale behind the proposed
Cancellation and why the Directors unanimously consider the
proposal (in the absence of any other acceptable third party
proposal) to be in the best interests of the Company and its
shareholders as a whole and to seek your approval for the
Cancellation.
Director's Dealing
On 2 April 2014, the Company was informed that on 21 September
2012, ISF and Sunwah Kingsway entered into a facility agreement for
HK$2 million with a maturity date of 25 March 2013. On 4 October
2012, these parties entered into an amended facility agreement for
an additional amount of HK$4 million with a maturity date of 7
April 2013. On 2 April 2013, both parties entered into a
secondamended loan agreement for a further additional amount of
HK$2 million (an aggregate amount of HK$8 million) with a maturity
date of 2 October 2013. On 31 December 2013, the maturity date was
then amended to 2 April 2014. On 21 September 2012, as security for
these loans ISF gave Sunwah Kingsway a charge over 100 million
Ordinary Shares held by ISF, representing 40.53 per cent. of the
issued share capital of LZYE. The granting of such security
constitutes a Director's Dealing under the AIM Rules.
Related Party Loan
On 2 April 2014, ISF made a further interest free loan of
HK$1,325,840 to LZYE. ISF is a related party under the AIM Rules
and as such the independent directors are required to make a
statement as to whether they consider the terms of the loan to be
fair and reasonable insofar as shareholders are concerned. Dominic
Yeung, the independent director, considers, having consulted with
Zeus Capital the Company's Nominated Adviser, that the loan of
HK$1,325,840 is fair and reasonable insofar as shareholders are
concerned. The aggregate amount of interest fee loans provided by
ISF is HK$8,658,770.
Background to and Reasons for Cancellation of Admission
At the time of admission of the Company's shares to trading on
AIM, which was obtained in August 2012, the Directors' believed it
would be an attractive way to provide additional funds needed for
expansion of the business as well as raise its profile
internationally. Further, they also thought it would enable the
Company to attract, motivate and retain key employees through the
introduction of a share incentive scheme. The proceeds of the
placing (GBP1.5m before costs) were to be used not only to further
develop the existing operations in Hong Kong but also to obtain a
foothold into China, a market which the Directors' believed would
be strategically key for the development of the Group.
Since its admission to AIM, the Board has found it difficult to
develop the business in the way that it set out in its Admission
Document and the Company has continued to trade at a loss. Against
this background it has proved difficult to raise additional equity
(both in the UK and overseas) and the Company has relied on the
support of its principal shareholder, ISF. ISF has provided a
further interest fee loan to the Company, details of which are
included in paragraph 3 of this document.
With a further delay in the discussions with a possible
strategic partner, against a background of continuing losses, the
Directors have concluded (in the absence of any alternative
proposals) that it is no longer in the best interests of the
Company or its Shareholders to maintain the admission to trading on
AIM of the Ordinary Shares and recommend to Shareholders the
cancellation of the trading facility on AIM. Set out below are
details of the effect of such a cancellation.
Effect of the Cancellation
The principal effects of the Cancellation would be that:
(a) there would no longer be a formal market mechanism enabling
the Shareholders to trade their shares on AIM or any other market
or tracking exchange and the CREST trading facility will be
cancelled;
(b) the Company would not be bound to announce material events
or material transactions nor to announce interim or final
results;
(c) the Company would no longer be required to comply with any
of the additional specific corporate governance requirements for
companies admitted to trading on AIM; and
(d) the Company will no longer be subject to the AIM Rules and
Shareholders will no longer be required to vote on certain matters
as provided in the AIM Rules.
The Board will, however, continue to:
(i) post information relating to the Company on its website at www.lzye.com;
(ii) hold general meetings in accordance with the applicable
statutory requirements and the Company's articles of association;
and
(iii) send Shareholders copies of the Company's audited accounts
in accordance with the applicable statutory requirements.
The provisions of the City Code on Takeovers and Mergers will
continue to apply to the Company following the Cancellation for a
period of 10 years from the date of Cancellation.
Proposed Change to the Board of Directors
If the Cancellation is approved, Dominic Yeung will tender his
immediate resignation as Non-executive Director of the Company and
terminate his letter of engagement with the Company from the date
of Cancellation.
Approving the Cancellation and Conversion
Under the AIM Rules, it is a requirement that the Cancellation
must be approved by not less than 75 per cent. of the Shareholders
voting in the General Meeting. Accordingly a General Meeting is
being convened to approve the application to the London Stock
Exchange for the Cancellation. If the resolution is approved, it is
expected that the Cancellation will take effect on 16 May 2014.
Irrevocable undertakings and voting in relation to LZYE
The Company has received an irrevocable undertaking to vote in
favour of the Resolution to be proposed at the General Meeting from
a Shareholder holding 22,585,863 Ordinary Shares representing
approximately 9.15 per cent of the entire issued share capital of
the Company at the time of the proposed General Meeting.
Following the Cancellation
Whilst the Board believes that the Cancellation is in the
Shareholders' interests, it recognises that the Cancellation will
make it more difficult for the Shareholders to buy and sell
Ordinary Shares should they so wish.
There remains some trading in the Company's existing free float
and although this is not significant (less than 100 individual
trades in 2014) the Directors do believe that it is important,
following the Cancellation, to enable Shareholders the ability to
be able to trade the Ordinary Shares. It is therefore their
intention to establish a matched bargain facility to enable
Shareholders to trade Ordinary Shares. Under this facility, it is
intended that Shareholders or persons wishing to acquire shares
will be able to leave an indication with a matched bargain facility
provider that they are prepared to buy or sell at an agreed price.
In the event that the matched bargain facility provider is able to
match that order with an opposite sell or buy instruction, the
matched bargain facility provider will contact both parties and
effect the bargain. Shareholders who do not have their own broker
may need to register with the matched bargain facility provider as
a new client. Once the facility has been arranged details will be
made available to Shareholders on the Company's website at
www.lzye.com.
General Meeting
A General Meeting is to held at 9.00 a.m. on 8 May 2014 at 23
Berkeley Square, London, W1J 6HE at which the Resolution will be
proposed.
Recommendation
For the reasons set out above the Directors consider that the
Cancellation is in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Directors unanimously
recommend Shareholders to vote in favour of the Resolution as they
intend to do in respect of their shareholding of 200,000 Ordinary
Shares, representing approximately 0.08 per cent. of the entire
issued share capital of the Company.
The Company has received an irrevocable undertaking from ISF to
vote in favour of the Resolution in respect of its beneficial
holding of 22,585,863 Ordinary Shares, representing approximately
9.1 per cent. of the entire issued share capital of the
Company.
TIMETABLE
2014
Publication date of the Circular 2 April
Latest date and time for receipt 9.00 a.m. 6 May
of Forms of Proxy
General Meeting 9.00 a.m. 8 May
Expected date of cancellation of 7.00 am 16 May
Ordinary Shares from Admission
DEFINITIONS
"Act" the Companies Act 2006
"Admission" the admission of the Ordinary Shares
to trading on AIM
"AIM" a market operated by London Stock Exchange
plc
"AIM Rules" the AIM Rules for Companies published
by the London Stock Exchange from time
to time (including, without limitation,
any guidance notes or statements of
practice) which govern the rules and
responsibilities of companies whose
shares are admitted to trading on AIM
"Board" the board of directors of the Company
"Cancellation" the proposed cancellation of the Company's
Ordinary Shares from admission to trading
on AIM, subject to the passing of the
Resolutions
"Company" or "LZYE" LZYE Group plc
"CREST" the computer based system established
under the Uncertificated Securities
Regulations 2001 (SI 2001 No. 3755)
which enables title to units of relevant
securities to be evidenced and transferred
without a written instrument and in
respect of which Euroclear UK & Ireland
is the operator
"Directors" the directors of the Company whose names
are set out on page 5 of this document
"General Meeting" or " GM" the extraordinary general meeting of
the Company, convened for 9.00 a.m.
on 8 May 2014, and any adjournment thereof,
notice of which is set out at the end
of this document, which will consider
the Resolutions
"Group" LZYE and it subsidiaries
"Form of Proxy" the Form of Proxy to be enclosed with
the ciorcular to shareholders for use
by Shareholders in connection with the
GM
"ISF" ISF Asset Manager Limited
"Ordinary Shares" ordinary shares of 1p each in the capital
of the Company
"Resolution" the special resolution to be proposed
at the General Meeting, details of which
will be set out in the notice of General
Meeting
"RIS" Regulatory Information Service
"Shareholders" holders of Ordinary Shares and "Shareholder"
means any one of them
"Sunwah Kingsway" Kingsway SW Finance Limited
"UK" the United Kingdom of Great Britain
and Northern Ireland
Exchange rate as at 2 April GBP1 = HK$12.90
2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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