TIDMMPAY
RNS Number : 3726X
Mi-Pay Group PLC
18 December 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT
JURISDICTION.
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
18 December 2019
Mi-Pay Group plc
("Mi-Pay", the "Company" or, together with its subsidiaries, the
"Group")
Proposed disposal of Mi-Pay Limited, cancellation from AIM and
MVL
Mi-Pay (AIM: MPAY) announces the proposed disposal of its wholly
owned trading subsidiary, Mi-Pay Limited, to Alphacomm B.V.
("Alphacomm") for cash consideration of approximately GBP792,000
(the "Disposal"). On completion of the Disposal, Alphacomm has
undertaken to ensure that Mi-Pay Limited is sufficiently
capitalised so as to repay inter-company payables which it owes to
the Company of approximately GBP308,000, meaning there will be a
total aggregate receipt by the Company of GBP1.1 million. The
Company also announces the proposal to cancel the admission of its
ordinary shares ("Ordinary Shares") to trading on AIM and intention
to return capital to shareholders of the Company ("Shareholders")
via a members' voluntary liquidation.
Background to and reasons for the Disposal
The Company's Ordinary Shares were admitted to trading on AIM on
29 April 2014. The Company's operations are focussed on the
provision of digital transformation, mobile payment and payment
fraud management services to Tier 1 Mobile Network Operators,
Mobile Virtual Network Operators and digital content providers.
On 22 November 2019, the Company announced that it was yet to
receive a research and development ("R&D") tax credit of
approximately GBP0.3 million from HMRC. The Company further
announced that it was in discussions with existing and new
investors regarding a potential equity fundraise, in order to
provide the Company with working capital should the receipt of the
R&D tax credit be materially delayed beyond Q1 2020, reduced or
not received at all. Following the completion of these discussions,
it has not been possible to conclude a fundraise with existing
shareholders or other parties on terms which are deemed to be
acceptable by the Board.
In recent years, the Company has demonstrated an ability to
deliver solutions efficiently and drive improved margins from its
revenues, seeing continual natural growth within its existing
clients. It successfully renewed and extended two major client
contracts in early 2019, representing 43 per cent. of the Company's
2018 revenue, and delivered growth and increasing profitability
from its direct managed fraud service. However, in September 2019,
one of the Company's larger clients, contributing 13 per cent. of
the Company's revenue in 2018, consolidated their payment
transactions to another existing provider as they downsized their
own operation. Whilst the Company has taken mitigating actions from
a cost perspective, when combined with the uncertainties in the
market due to the new and delayed implementation of Payment
Services Directive (PSD2) and economic uncertainties, growth has
been slower than anticipated, as announced by the Company in August
2019.
The risk associated with the R&D credit has compounded the
impact of the above factors, and the Board has taken further action
to align the Group's cost base appropriately. It is also
anticipated that the fraud screening services provided to
Alphacomm, which are expected to deliver approximately GBP0.4
million of revenue in 2019, may be at risk in the future should the
Company not proceed with the Disposal.
Over the recent years, the Board has actively considered M&A
opportunities for the Company, none of which have come to fruition.
These have included the potential sale of the business, as well as
seeking appropriate acquisition opportunities to accelerate growth.
This has included previous discussions with Alphacomm.
Taking the above into consideration, it is therefore the view of
Seamus Keating and Edward Lascelles who, for the reasons set out
below are deemed to be the independent directors of the Company in
respect of the Disposal (the "Independent Directors"), that, given
the M&A and fundraising options explored by the Board to date,
proceeding with the Disposal is the best option available to the
Company in order to maximise Shareholder value. Further, given the
synergies with Alphacomm, it will provide a stronger and wider
geographical growth platform for Mi-Pay Limited, provide a
materially increased scale, and secure the long-term continued
investment in its employees, clients and solutions.
For the year ended 31 December 2018, Mi-Pay Limited recorded
audited loss before tax of GBP538,486 on revenues of GBP3,337,025.
The audited total assets of Mi-Pay Limited as at 31 December 2018
were GBP5,022,336, with net assets being GBP375,653.
Terms of the Disposal
The Company and Alphacomm have today entered into a conditional
sale and purchase agreement for the sale of Mi-Pay Limited to
Alphacomm for cash consideration of approximately GBP792,000
together with an undertaking from Alphacomm to fund Mi-Pay Limited
to enable it to repay inter-company payables owing to the Company
of approximately GBP308,000, such total amount of GBP1.1 million
being payable in cash on completion of the Disposal.
Alphacomm has indicated that it may seek the continued services
of John Beale and Michael Dickerson to continue to run the business
of Mi-Pay Limited following completion of the Disposal, however no
discussions have taken place. In light of this indication, John
Beale and Michael Dickerson are not considered as Independent
Directors for the purposes of the Disposal.
AIM Rule 15 and cancellation from trading on AIM
In accordance with Rule 15 of the AIM Rules for Companies, the
Disposal will constitute a fundamental change of business for the
Company and will therefore require the approval of Shareholders at
a duly convened general meeting. Accordingly, the Company will in
due course publish a circular to Shareholders (the "Circular") to
convene a general meeting to approve the Disposal and the
cancellation from trading on AIM (the "Cancellation"). The Circular
will include the timetable for the general meeting, Disposal,
Cancellation and proposed liquidation (as detailed further below).
It will set out the reasons why the Independent Directors consider
the Disposal to be in the best interests of Shareholders and why
all Directors intend to vote in favour of the resolutions at the
general meeting. A further announcement will be made on publication
of the Circular. The completion of the Disposal is conditional on
the passing of the resolution regarding the Disposal, at the
general meeting. The resolution regarding the Disposal will be
proposed as an ordinary resolution. The level of Shareholder
approval that is required is for more than 50 per cent. of the
votes cast at the general meeting to be cast in favour of the
Disposal. The Company will also be seeking that its Ordinary Shares
be cancelled from trading on AIM. Under the AIM Rules for
Companies, the Cancellation must be approved by not less than 75
per cent. of the votes cast at the general meeting.
Members' voluntary liquidation
Following the completion of the Disposal, the Company will no
longer have any trading operations and the Board will seek to
determine the best method to return the net cash resources of the
Company resulting from the Disposal to Shareholders. To facilitate
any such distribution of cash to Shareholders, conditional on
completion of the Disposal, the Directors of the Company propose to
seek approval to wind up the Company voluntarily by way of members'
voluntary liquidation ("MVL") and to appoint a liquidator. Under
the Insolvency Act, winding up the Company voluntarily by way of
MVL must be approved by not less than 75 per cent. of the votes
cast at a general meeting and appointing a liquidator must be
approved by more than 50 per cent. of the votes cast at a general
meeting. The Company will commence the MVL process following
completion of the Cancellation.
On the basis of the assumption that: (i) the total cash receipt
from the Disposal is GBP1.1 million; (ii) the liabilities of the
Company remain at approximately GBP260,000; and (iii) the
transaction costs of the Disposal and running costs of the Company
in the period prior to completion of the return of capital amount
to approximately GBP140,000, the Company is expected to have
sufficient cash resources to make total distributions to
Shareholders of approximately GBP700,000 in aggregate, equivalent
to approximately 1.5 pence per Ordinary Share. The estimated level
of total distributions is provided for guidance purposes only. It
is emphasised that the ability of the Company to make the estimated
level of distributions and the timing of such return is not
currently known with certainty, and will be subject to factors
outside of the Board's control.
Further details on the proposed MVL process will be provided on
posting of the Circular.
Related party transaction
As Alphacomm is controlled by Huub Sparnaay, a Non-Executive
Director of the Company, the Disposal constitutes a related party
transaction pursuant to the AIM Rules. The Independent Directors of
the Company, having consulted with the Company's nominated adviser,
Allenby Capital Limited, consider the terms of the Disposal to be
fair and reasonable insofar as the Company's Shareholders are
concerned.
For further information, please contact:
Mi-Pay Group plc Allenby Capital Limited
Tel: +44 207 112 2129 Tel: +44 203 328 5656
Michael Dickerson, Chairman James Reeve
John Beale, CEO Asha Chotai
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCTPBITMBABBJL
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December 18, 2019 10:00 ET (15:00 GMT)
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