TIDMMSS
RNS Number : 9162C
Managed Support Services PLC
08 May 2012
Managed Support Services plc
("MSS" or the "Company")
Publication of Circular & Notice of General Meeting
Managed Support Services plc announces today that it proposes to
enter into a Company Voluntary Arrangement ("CVA"), undertake a
capital reorganisation, adopt new articles, implement placing of
new ordinary shares to raise GBP500,000 and adopt an investing
policy pursuant to Rule 15 of the AIM Rules. The Company is also
proposing to change its name to Kennedy Ventures Plc.
Consequently, a notice convening a General Meeting for 11:00
a.m. on 25 May 2012 at the offices of Morrison & Foerster (UK)
LLP, Citypoint, One Ropemaker Street, London EC2Y 9AW, was sent to
shareholders.
The company would also like to announce the appointment of
Rivington Street Corporate Finance Limited as Joint Broker to the
Company. Cenkos Securities plc will continue to act as Nominated
Adviser and Joint Broker.
Rivington Street Corporate Finance Limited has conditionally
raised GBP500,000 before expenses by way of a subscription for
2,500,000,000 New Ordinary Shares at a price of GBP0.0002 per
share. The Placing is conditional on admission of the Placing
Shares to trading on AIM.
The proceeds of the Placing will be used to fund approximately
GBP121,707 payment due to creditors pursuant to the CVA and to
provide the Company with working capital to allow it to fulfil its
investing policy, further details of which are set out below.
It is proposed that following the conclusion of the General
Meeting, Rodney Mann, Simon Beart and Piers Wilson will resign as
directors with immediate effect and new directors will join the
Board.
The following resolutions will be proposed at the Company's
General Meeting:
Ordinary Resolutions
Resolution 1, which will be proposed as an ordinary resolution,
seeks approval for the proposed Investing Policy.
Resolution 2, which will be proposed as an ordinary resolution,
seeks approval for the subdivision of each Existing Ordinary Share
into 1 New Ordinary Share and 1 New Deferred Share.
Resolution 3, which will be proposed as an ordinary resolution,
seeks to grant the directors of the Company authority to allot New
Ordinary Shares in the capital of the Company up to the nominal
amount of GBP1,000,000.
Resolution 4, which will be proposed as an ordinary resolution,
seeks approval for the Disposal.
Resolution 5, which will be proposed as an ordinary resolution,
seeks approval of the Warrant Instrument.
Special Resolutions
Resolution 6, which will be proposed as a special resolution,
seeks approval to change the name of the Company to Kennedy
Ventures Plc.
Resolution 7, which will be proposed as a special resolution,
seeks approval for the adoption of the New Articles and the
creation of the New Deferred Shares.
Resolution 8, which will be proposed as a special resolution,
seeks to dis-apply the statutory pre-emption rights over New
Ordinary Shares authorised for allotment pursuant to Resolution
3.
Resolution 9, which will be proposed as a special resolution,
seeks approval for the acquisition by the Company of all the New
Deferred Shares for an aggregate consideration of GBP0.01.
Each of the Resolutions is conditional on each of the other
Resolutions being passed.
A copy of the notice and form of proxy are available on the
Company's website:
http://www.managedsupportservicesplc.com/
The letter from Rodney Mann, Non Executive Chairman, which is
included in the notice of the General Meeting is set out below.
Save where capitalised terms are expressly defined in this
announcement, all words and phrases defined in the Circular shall
have the same meaning when used in this announcement, except where
the context otherwise requires.
The Directors of the issuer accept responsibility for this
announcement.
--ENDS--
FOR FURTHER INFORMATION, PLEASE CONTACT:
Managed Support Services plc:
Simon Beart, Chief Executive 07710 444 370
Piers Wilson, Finance Director 020 7280 0953
Cenkos Securities plc:
Nick Wells / Stephen Keys 020 7397 1949
Rivington Street Corporate Finance Limited:
Jon Levinson / Tom Stockton 020 7562 3365
To Shareholders and, for information only, holders of Existing
Warrants and the Existing Options
Proposals for:
Company Voluntary Arrangement
Disposal of Assets
Capital Reorganisation
Purchase of the Company's Deferred Shares for GBP0.01
Approval of Warrant Instrument
Adoption of New Articles of Association
Approval of Investing Policy
Change of Name
Placing of New Ordinary Shares by Rivington Street Corporate
Finance
Introduction
MSS announced earlier today that it proposes to enter into a
CVA, undertake the Capital Reorganisation and the Disposal, adopt
the New Articles, purchase the New Deferred Shares, approve the
Warrant Instrument, implement the placing of the Placing Shares and
adopt an investing policy pursuant to Rule 15 of the AIM Rules. The
Company is also proposing to change its name to Kennedy Ventures
Plc.
Consequently, the Company is issuing this Circular to
Shareholders setting out the background to and the reasons for the
Proposals and where appropriate seeking Shareholders' approval. A
notice convening a General Meeting for 11:00 a.m. on 25 May 2012 at
the offices of Morrison & Foerster (UK) LLP, Citypoint, One
Ropemaker Street, London EC2Y 9AW, to consider the Resolutions is
accordingly set out at the end of this Circular.
Rivington Street Corporate Finance Limited has been appointed as
Joint Broker to the Company while Cenkos Securities plc will
continue to act as Nominated Adviser and Joint Broker.
Rivington Street Corporate Finance Limited has conditionally
raised GBP500,000 before expenses by way of a subscription by
Placees for 2,500,000,000 New Ordinary Shares at a price of
GBP0.0002 per share. The Placing is conditional on admission of the
Placing Shares to trading on AIM.
The proceeds of the Placing will be used to fund approximately
GBP121,707 payment due to creditors pursuant to the CVA and to
provide the Company with working capital to allow it to fulfil its
investing policy, further details of which are set out below.
It is proposed that, should the Proposals be approved, Rodney
Mann, Simon Beart and Piers Wilson will resign as directors with
immediate effect following the conclusion of the General Meeting
and the Proposed Directors will join the Board.
For the purposes of section 656 of the Act, the Company has
suffered a serious loss of capital. This Circular contains the
proposals of the Directors to deal with the serious loss of capital
and the consequences for the Company.
Background to and Reasons for the CVA
Managed Support Services plc, formerly Worthington Nicholls
Group plc floated on AIM in June 2006 at a share price of 50p and
was primarily an installer of air conditioning systems in hotels
and commercial premises. Over the next 12 months the company issued
several positive press releases, the share price rose to a peak of
c.170p and additional funds were raised.
In the last quarter of 2007 the share price fell, following
adverse trading announcements which ultimately led to the
appointment of a new management team. Thereafter, the Group
undertook a significant restructuring and a reduction in
operations. The commercial activities remaining, following these
management actions, were in the building services markets. It was
therefore decided to expand these residual activities by
acquisition in order to create a nationwide supplier of building
services, ideally with sufficient market scale to appeal to larger
customers than the Group enjoyed at the time.
In pursuit of this policy, the Group undertook two principal
acquisitions to increase the Group's building services activities,
for a total net cost of GBP6.1m. The businesses acquired by the
Group and the small existing operations were consolidated into two
primary trading units, MSS Facilities Management, the building
services activities of the Group and the Compliance Division which
offered the consultancy based provision of health and safety advice
and the provision of water treatment monitoring and legislative
compliance with water related legislation.
In August 2011 the Board decided to dispose of the Compliance
Division because the Group was not of sufficient scale to fund the
development of two divisions by acquisition and therefore elected
to concentrate the Group's management and financial resources on
the growth of the MSS Facilities Management division. The disposal
of the Compliance Division to Capita Symonds, a trading division of
The Capita Group Plc, was completed and announced on 26 August 2011
for a total consideration of GBP3.85 million.
On 18 November 2011, the Company announced the intention to
dispose of MSS Facilities Management. Whilst MSS Facilities
Management had been profitable on a stand-alone basis, before Group
costs, the Board believed that MSS Facilities Management had made
insufficient progress particularly given the impact of the
recession on its current markets, in creating a building services
division of scale. The Board therefore decided that the prospects
for MSS Facilities Management would be realised more rapidly if the
division became part of a larger trading group.
Accordingly, the Board agreed terms for the sale of MSS
Facilities Management with Rentokil Initial plc for a consideration
of up to GBP6.5 million. However, the final, adjusted consideration
was agreed at GBP4.1 million, an amount materially below the
Board's expectations.
As a result, the Board decided that the Group would not be able
to meet its long term liabilities, principally a long term lease
entered into by the previous management. The Directors therefore
reluctantly concluded that the best course of action was to call a
meeting of the creditors and a meeting of the Shareholders for the
purpose of considering and voting on a proposal for a CVA.
A CVA, if agreed, will allow the Company to avoid liquidation
and to remain in existence. This will provide the Proposed
Directors an opportunity to reposition the Company into an
investing company, pursuant to the AIM Rules with an investing
policy focused on the natural resources and energy sectors.
The Directors estimate that 3(rd) party creditors shortfall is
GBP1,352,297, the majority of which is made up of a long term lease
and a disputed legal claim, these two creditors amount to
GBP1,033,334.
If the CVA is not approved, the Directors believe that the only
alternative would be for the Company to be placed into
liquidation.
Company Voluntary Arrangement
In order to facilitate the proposed future activity of the
Company and allow it to raise the required capital, approximately
75 per cent of unsecured creditors have agreed to take 9 pence in
the pound in cash. It is expected that the CVA will be approved at
meetings to be held at 10:00 a.m. and 10:15 a.m. on 25 May
2012.
For the avoidance of doubt, the CVA would not result in any
distribution being made to the Shareholders of the Company.
The Directors have requested that Paul Howard Finn of Finn
Associates, Central Administration, Tong Hall, Tong, West
Yorkshire, BD4 0RR act as Nominee in respect of the proposal of the
directors for a Company Voluntary Arrangement. Mr Finn has provided
his consent to Act and his Nominee's Report will be filed at Court
as required.
A copy of the Directors' proposal incorporating the Nominee's
Report will be available for download from the following website as
of 8 May 2012:
www.thecreditorgateway.co.uk, password: ms78jd76fw
Should any Shareholder wish to receive a paper copy of the
proposal please contact Finn Associates on 0870 330 1900, or email
solutions@finnassociates.com, or in writing to the above noted
address.
Notices of the Creditors' Meeting and Shareholder CVA Meeting,
to be held on 25 May 2012, and a Form of Proxy enabling you to vote
at the meetings may be found in the proposal document. Following
completion these should be detached and returned to Rivington
Street Corporate Finance, 3rd Floor, 3 London Wall Buildings,
London Wall, London, EC2M 5SY.
The Disposal
Under the terms of the CVA, it is proposed that forthwith upon
approval of the CVA steps will be taken to dispose of any remaining
assets of the Subsidiaries which will be placed into Creditors'
Voluntary Liquidation. The proceeds of the Disposal will be
applied, at independent valuations, towards satisfying the
indebtedness secured on the Disposable Assets. Those Subsidiaries
which can be dissolved will be the subject of applications under
section 1003 of the Act to the extent applications have not already
been so made. It is expected that MSS Building Services Limited,
MSS Health & Safety Limited and MSS Interiors Limited will need
to enter a formal liquidation process given that they have third
party liabilities which may prevent an application for voluntary
dissolution.
The Disposal is considered a fundamental change in the business
and therefore, pursuant to the AIM Rules, requires the consent of
Shareholders. Resolution 7 seeks such an authority.
The Placing and Appointment of Broker and Issue of Warrants
RCSF has been appointed Joint Broker to the Company.
RSCF has conditionally raised GBP500,000 before expenses through
the subscription of 2,500,000,000 New Ordinary Shares at a price of
GBP0.0002 per share. The Placing is conditional on approval of the
Resolutions and the approval of the CVA at meetings of the
unsecured creditors and Shareholders. The net proceeds of the
Placing are estimated at GBP307,000.
Conditional on the Proposals being approved by Shareholders at
the General Meeting, the Company has agreed to issue Peterhouse
Capital Limited a warrant which is exercisable over 3% of the
Company's issued share capital from time to time. This warrant will
be exercisable at the Placing Price until 20 March 2015.A summary
of the principal terms of the Warrant Instrument is set out in
Appendix II.
The proceeds of the Placing will be used to fund approximately
GBP121,700 payment due to creditors pursuant to the CVA and provide
the Company with working capital to allow it to fulfil its
Investing Policy, further details of which are set out below.
Following completion of the CVA, Placing and the Capital
Reorganisation, the Placees will, in aggregate, hold approximately
92.26% of the Enlarged Share Capital.
Shareholders should be aware that the Placing is conditional
upon the passing of all of the Resolutions and the approval of the
CVA. If the CVA is not approved or any of the Resolutions are not
passed then the Placing will not proceed and the Company will have
to consider commencing liquidation proceedings.
Change of Name
Subject to Shareholders' approval, it is proposed that the name
of the Company be changed to Kennedy Ventures Plc, to reflect the
new Investing Policy. Resolution 2 is proposed for the purposes of
obtaining Shareholders' approval for the proposed name change.
Proposed Directors
Immediately following completion and subject to all the
Resolutions being passed, the Directors intend to resign from the
Board and waive all claims against the Company under their
employment contracts.
It is proposed that immediately following the General Meeting,
Mr Peter Redmond will join the Board as Executive Director. The
Company expects to announce, prior to the General Meeting, a
proposed Non-Executive Director who will join the Board following
completion and subject to all the Resolutions being passed. The
Company will make an announcement to the market accordingly.
Peter Redmond - Executive Director
Peter is an experienced corporate financier and has some 30
years' experience in corporate finance and venture capital. He has
gained particular experience in the field of reverse takeovers and
mergers. He became director of corporate finance at Durlacher
Limited in 2003, then joined Merchant House Group PLC where he
later became Chief Executive. He has been active in reconstructing
a number of AIM companies which have subsequently acquired or
established operating businesses.
Reverse transactions on which he has acted include Weatherly
International PLC and IGas Resources PLC, in both cases acting as a
director both before and after the reverse. Currently, Peter is
Chairman of Leed Resources PLC, which is an investment company on
AIM and a director of Black Eagle Capital PLC, which is an
investment company on PLUS.
Capital Reorganisation
The Act prohibits the Company from issuing ordinary shares at a
price below their nominal value. The price at which the Company has
been able to raise additional capital in the Placing is less than
the current nominal value of its Existing Ordinary Shares.
Accordingly, it will be necessary to undertake a Capital
Reorganisation to enable the Placing to proceed.
The existing ordinary share capital comprises 209,802,191
ordinary shares of GBP0.01 in issue. Resolution 3 to be proposed at
the General Meeting proposes that each of the Existing Ordinary
Shares of the Company be split into one New Ordinary Share and one
New Deferred Share.
The New Ordinary Shares will continue to carry the same rights
as attached to the Existing Ordinary Shares (save for the reduction
in nominal value).
The New Deferred Shares will not entitle the holder thereof to
receive notice of or attend and vote at any general meeting of the
Company or to receive a dividend or other distribution or to
participate in any return on capital on a winding up other than the
nominal amount paid on such shares following a substantial
distribution to holders of ordinary shares in the Company. Subject
to the passing of the Resolutions, the Company will have the right
to purchase all the issued New Deferred Shares from all
Shareholders for an aggregate consideration of one penny. As such,
the New Deferred Shares effectively have no value. Share
certificates will not be issued in respect of the New Deferred
Shares.
It is proposed that new Articles of Association of the Company
be adopted to reflect the rights attaching to the New Deferred
Shares. A copy of the new Articles of Association will be available
for inspection at the General Meeting and will be made available on
the Company's website at, www.managedsupportservicesplc.com. A
summary of the New Articles is set out in Appendix I. The practical
effect of this change, if implemented, will be that each
Shareholder will receive the same number of New Ordinary Shares as
they hold Existing Ordinary Shares, without diminution in rights
pertaining to each share held. It is intended that GBP0.01 of the
proceeds raised from the Placing will be applied to redeeming all
of the New Deferred Shares.
Application for admission to trading on AIM of the Placing
Shares to be issued in connection with the Proposals will be made
to AIM. Admission is expected to occur on or around 28 May 2012. On
Admission, trading of the Company's New Ordinary Shares as
reorganised pursuant to the Capital Reorganisation will be restored
on AIM.
Share capital
The Company is seeking authorisation to allot additional equity
securities on a non pre-emptive basis up to the nominal amount of
GBP1,000,000 (representing 10,000,000,000 New Ordinary Shares) to
enable the Proposals to be implemented (including to allow the
Proposed Directors the ability to issue further New Ordinary Shares
pursuant to the Warrant Instrument).
Existing Options and Existing Warrants
At the date of this document there are 8,500,000 Existing
Warrants of which Simon Beart, Chief Executive Officer and Piers
Wilson, Group Finance Director hold 6,800,000 warrants. The
Existing Warrants are exercisable until 2018 with an exercise price
of 7.5p - 10p. As part of this transaction, Simon Beart and Piers
Wilson have agreed to cancel their 6,800,000 warrants.
The Company also operated a share option scheme and Long Term
Incentive Plan ("LTIP") that granted options over its ordinary
shares on a discretionary basis to its Directors and employees. At
the date of this document there are 18,687,500 Existing Options
exercisable until 2016 with an exercise price of 12p - 30p. Simon
Beart and Piers Wilson hold 14,831,250 options which they have
agreed to cancel as part of this transaction.
Investing Policy
Resolution 1 to be proposed at the General Meeting proposes the
adoption of the new Investing Policy.
It is proposed by the New Directors that the Company's Investing
Policy will be to invest principally, but not exclusively in the
resources and energy sectors. The Company will initially focus on
projects located in Asia but will also consider investments in
other geographical regions. The Company may be either an active
investor and acquire control of a single company or it may acquire
non-controlling shareholdings. Once a target has been identified,
additional funds may need to be raised by the Company to complete a
transaction.
The proposed investments to be made by the Company may be in
either quoted or unquoted securities; made by direct acquisition;
may be in companies, partnerships, joint ventures; or direct
interests in projects and can be at any stage of development. The
Company's equity interest in a proposed investment may range from a
minority position to 100 per cent. ownership.
The Company will identify and assess potential investment
targets and where it believes further investigation is required,
intends to appoint appropriately qualified advisers to assist.
The Company proposes to carry out a comprehensive and thorough
project review process in which all material aspects of any
potential investment will be subject to rigorous due diligence, as
appropriate. It is likely that the Company's financial resources
will be invested in a small number of projects or investments or
potentially in just one investment which may be deemed to be a
reverse takeover under the AIM Rules.
Where this is the case, it is intended to mitigate risk by
undertaking an appropriate due diligence process. Any transaction
constituting a reverse takeover under the AIM Rules will require
shareholder approval. The possibility of building a broader
portfolio of investment assets has not, however, been excluded.
The Company intends to deliver shareholder returns principally
through capital growth rather than capital distribution via
dividends. Given the nature of the Company's Investing Policy, the
Company does not intend to make regular periodic disclosures or
calculations of net asset value.
The proceeds of the Placing will enable the Company to take
initial steps to implement this new strategy and it is likely that
the Company will undertake a further fundraising in the future to
provide additional capital for the Company.
The Proposed Directors believe that their broad collective
experience together with their extensive network of contacts will
assist them in the identification, evaluation and funding of
suitable investment opportunities. When necessary, other external
professionals will be engaged to assist in the due diligence of
prospective opportunities. The Proposed Directors will also
consider appointing additional directors with relevant experience
if the need arises.
The objective of the Proposed Directors is to generate capital
appreciation and any income generated by the Company will be
applied to cover costs or will be added to the funds available to
further implement the Investment Policy. In view of this, it is
unlikely that the Proposed Directors will recommend a dividend in
the early years. However, they may recommend or declare dividends
at some future date depending on the financial position of the
Company.
The Proposed Directors confirm that, as required by the AIM
Rules, they will at each annual general meeting of the Company seek
shareholder approval of its Investing Policy.
Certificates
No new share or warrant certificates will be issued as a result
of the Company's name change or the change in nominal value.
General Meeting
If any of the Resolutions are not passed, the General Meeting
will be adjourned and the Board will consider the Company's future
position in respect of its current trading and working capital
position. The Board will seek immediate advice regarding insolvency
proceedings in relation to its assets including its
Subsidiaries.
The Notice convening the General Meeting at which the
Resolutions will be proposed is set out at the back of this
Circular. A summary of the Resolutions is set out below. Please
note that unless all of the Resolutions are passed the proposals
outlined in this circular will not proceed and the Directors will
be forced to implement proposals to put the Company into
liquidation.
Ordinary Resolutions
Resolution 1, which will be proposed as an ordinary resolution,
seeks approval for the proposed Investing Policy.
Resolution 2, which will be proposed as an ordinary resolution,
seeks approval for the subdivision of each Existing Ordinary Share
into 1 New Ordinary Share and 1 New Deferred Share.
Resolution 3, which will be proposed as an ordinary resolution,
seeks to grant the directors of the Company authority to allot New
Ordinary Shares in the capital of the Company up to the nominal
amount of GBP1,000,000.
Resolution 4, which will be proposed as an ordinary resolution,
seeks approval for the Disposal.
Resolution 5, which will be proposed as an ordinary resolution,
seeks approval of the Warrant Instrument.
Special Resolutions
Resolution 6, which will be proposed as a special resolution,
seeks approval to change the name of the Company to Kennedy
Ventures Plc.
Resolution 7, which will be proposed as a special resolution,
seeks approval for the adoption of the New Articles and the
creation of the New Deferred Shares.
Resolution 8, which will be proposed as a special resolution,
seeks to dis-apply the statutory pre-emption rights over New
Ordinary Shares authorised for allotment pursuant to Resolution
3.
Resolution 9, which will be proposed as a special resolution,
seeks approval for the acquisition by the Company of all the New
Deferred Shares for an aggregate consideration of GBP0.01.
Each of the Resolutions is conditional on each of the other
Resolutions being passed.
Action to be taken
Shareholders will find a Form of Proxy enclosed for use at the
General Meeting. Whether or not you intend to be present at the
General Meeting, you are requested to complete and return the Form
of Proxy in accordance with the instructions printed thereon as
soon as possible. To be valid, completed Forms of Proxy must be
received at the Company's registrars, Capita Registrars at PXS, 34
Beckenham Road, Beckenham, Kent BR3 4TU not later than 11:00 a.m.
on 23 May 2012, being 48 hours before the time appointed for
holding the General Meeting. Completion of the Form of Proxy will
not preclude you from attending and voting at the General Meeting
in person if you so wish.
Recommendation
The Directors consider the Proposals to be in the best interests
of the Company, its creditors and the Shareholders as a whole as
the only alternative may be liquidation which the Directors believe
would deliver very little or no value to its creditors or
Shareholders. The Directors therefore recommend that you vote in
favour of the Resolutions as they intend to do themselves in
respect of their shareholdings totalling 3,618,218 shares
representing approximately 1.72 per cent of the existing share
capital.
Yours faithfully,
Rodney Mann
Non Executive Chairman
for and on behalf of the Board
This information is provided by RNS
The company news service from the London Stock Exchange
END
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