MBL Group PLC Strategy update (6796R)
25 September 2017 - 5:49PM
UK Regulatory
TIDMMUBL
RNS Number : 6796R
MBL Group PLC
25 September 2017
25 September 2017
MBL Group PLC
Strategy update
Further to the announcement made on 21 September 2017 the
content of the letter sent to shareholders is set out below:
"Dear Shareholder
MBL Group plc (the "Company")
I write to update you on progress and on the views of your board
of directors of the Company (the "Board") in connection with the
Company's strategy.
Background
As you are aware, following the completion of the strategic
review at the end of last year, Peter Palframan and I were given a
clear mandate to seek buyers for the Company's two trading
businesses (the "Trading Businesses") with the aim of maximising
value for shareholders.
The Board has therefore spent this year diligently conducting a
formal sales process and dealing with the issues relating to
shareholders and former management of the Company and the Trading
Businesses.
Sales process update
The Board, having run an extremely professional sale process,
attracting a number of high quality trade cash buyers for both
Trading Businesses, are saddened by recent events which have
frustrated the sales process. The preferred trade cash buyers for
each Trading Business were aiming to complete by the end of August
2017 with limited warranties requested from the Company in relation
to the sales and cash being payable on completion of each
transaction. Successful sales to such buyers would have resulted in
a significant increase in shareholder value, with cash being
returned to shareholders in a relatively short timescale.
However, the sale process has been frustrated by a combination
of a former director and shareholder being involved in the setting
up of a business which competes directly with The Garden and Home
Trading Company Limited ("GTHC") and that individual and certain
other shareholders refusing to commit to unconditional non-compete
covenants in favour of the preferred buyer of the Group's other
Trading Business, Windsong International Limited ("Windsong"). Such
refusal has led to the preferred cash buyer for Windsong
withdrawing from the sale process. Equally, with regard to the sale
of GHTC, when they became aware of the competing business the trade
cash buyers either withdrew from the sale process or significantly
reduced the price they are willing to pay, thereby diminishing the
value that can be delivered for the Company's shareholders.
This left the Board with an offer for GHTC from a group of
shareholders which, effectively, provided no cash on completion and
a lower price than certain trade buyers had previously offered.
When set against the backdrop of being unable to dispose of
Windsong this offer is not attractive and the Board does not
believe that it will deliver maximum value for shareholders and is
not a transaction that it can recommend.
In summary, the Board's efforts at achieving a sale to preferred
trade buyers have been frustrated, and the Board is not in a
position to accept any of the remaining bids.
New proposals
Considering the Board's mandate to achieve maximum shareholder
value, the Board now considers that new leadership is required to
reinvigorate the Trading Businesses and drive value through
operating them successfully for the foreseeable future. The Board
will therefore seek to appoint a new Chief Executive Officer (the
"New CEO") and new non-executive directors (together with the New
CEO the "New Board").
Accordingly, it is intended that Peter Palframan will resign
from the Board with effect from the appointment of the New CEO, and
that I will resign as soon as reasonably practicable once the New
Board is in place.
Trading update
The Trading Businesses remain profitable and cash generative and
the Board believes a dedicated Chief Executive Officer will inherit
an excellent opportunity to create future value for all
shareholders.
Requisitioned meetings
As shareholders are aware, resolutions will be considered at
shareholder meetings to be held on 28 September 2017 which will, if
passed, prevent the Board from increasing the remuneration of
future directors of the Company absent shareholder authority acting
by Ordinary Resolution (the "Requisitioned Resolutions"). If the
Requisitioned Resolutions are passed, the appointment of each
member of the New Board will therefore effectively be made subject
to shareholder approval at general meetings, which is likely to be
a deterrent in attracting potential New Board members.
The Board further considers such a process to be an unnecessary
waste of time and Company resources (particularly since under the
Company's Articles of Association all directors appointed by the
Board must offer themselves for re-election at the first Annual
General Meeting following their appointment). In light of the
foregoing, as well as other reasons previously given, the Board
unanimously recommends that shareholders VOTE AGAINST the
Requisitioned Resolutions.
Please be assured that the Board will continue to strive to
achieve maximum value for shareholders pending the appointment of
the New Board and is still open to meeting with any potential cash
buyers of each Trading Business.
Replacement pages for audited accounts
The Board thanks Lisa Clarke for bringing to its attention
certain drafting errors which appeared in the notes to the audited
annual report and financial statements of the Company for the year
ended 31 March 2017, circulated to shareholders on 5 September 2017
(the "2017 Accounts"). Whilst such errors have no consequences from
an audit perspective, please find enclosed two replacement pages
which should be used by shareholders in substitution for pages 26
and 37 of the 2017 Accounts. The 2017 Accounts which appear on the
Company's website have been updated accordingly.
Shareholder statement
Further to the announcement published on 5 September 2017 by the
Company, please find enclosed a shareholder statement made on
behalf of Keith Staton (the "KS Statement") in connection with the
resolution to be considered at the requisitioned general meeting of
the Company to be held on 28 September 2017. The Company is
required to circulate the KS Statement to shareholders under
section 315 of the Companies Act 2006.
Yours faithfully
Tim Jackson-Smith
Chairman"
ENDS
For further information, please contact:
MBL Group plc Tel: 01772 440440
Tim Jackson-Smith
SPARK Advisory Partners Limited Tel: 0113 370 8970
(NOMAD)
Sean Wyndham-Quin
Mark Brady
This information is provided by RNS
The company news service from the London Stock Exchange
END
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