TIDMOPE
RNS Number : 7714L
Optare PLC
30 April 2015
30 April 2015
Optare plc
(AIM: OPE)
Proposed cancellation of trading on AIM
Optare plc ("Optare" or the "Company") announces that it will,
today, be sending a circular to Shareholders containing a notice
convening a General Meeting ("GM") of the Company to seek
Shareholders' approval to cancel the admission of the Company's
ordinary shares of 0.1p each ("Ordinary Shares") to trading on AIM
("Cancellation").
Introduction
The Directors have recently undertaken a review of the Ordinary
Shares currently being traded on AIM. Pursuant to this review,
which included consultation with the Company's advisers and its
major Shareholder, Ashok Leyland, your Directors have concluded
that it is in the overall interests of the Company and its
Shareholders if the admission of the Ordinary Shares to trading on
AIM is cancelled. Pursuant to Rule 41 of the AIM Rules, the
Directors have notified the London Stock Exchange of the date of
the proposed Cancellation.
As per the AIM Rules, Cancellation is conditional upon the
Resolution being passed by a majority of not less than 75 per cent.
of the votes cast, whether in person or by proxy, by Shareholders
at the GM to be held at 10.00 a.m. on 18 May 2015. Ashok Leyland,
which holds an interest in Ordinary Shares representing 75.1 per
cent. of the issued ordinary share capital of the Company at the
date of this announcement, has irrevocably undertaken to vote in
favour of the Resolution. Therefore, it is expected that the
Resolution to approve the Cancellation will be passed at the
GM.
Should Cancellation be approved by Shareholders at the GM, the
Company will put in place a matched bargain trading facility to be
administered by Capita IRG and which will operate shortly after
Cancellation and which should facilitate Shareholders in buying and
selling Ordinary Shares following Cancellation. Further information
is provided below.
Expected timetable of events
Dispatch of the Circular, Notice of General 30 April 2015
Meeting and Forms of Proxy
-------------------------------------------- ----------------------
Latest time and date for receipt of Forms 10.00 a.m. on 16 May
of Proxy 2015
-------------------------------------------- ----------------------
General Meeting to be held 10.00 a.m. on 18 May
2015
-------------------------------------------- ----------------------
Expected last day for dealings in Ordinary 1 June 2015
Shares on AIM
-------------------------------------------- ----------------------
Expected time and date that admission with effect from 7.00
of Ordinary Shares to trading on AIM will a.m. on 2 June 2015
be cancelled
-------------------------------------------- ----------------------
Each of the times and dates above is subject to change. Dates
set after the General Meeting assume that the General Meeting is
not adjourned and that the Resolution is passed. Any such change
will be notified by an announcement on a Regulatory Information
Service.
Unless otherwise stated, all references to time in this
announcement are to British Summer Time (BST).
Reasons for the proposed Cancellation
The Board believes that the perceived benefits of an admission
of securities to trading on AIM typically include access to equity
capital markets, an enhanced corporate profile, a market
capitalisation reasonably reflecting value residing in the Company,
a means to incentivise staff and a mechanism to provide a market in
the Company's Ordinary Shares. The Board has reached the view that
the Company is not receiving many of these benefits, nor is there
any reasonable prospect of this situation changing in the
foreseeable future, for the reasons set out below.
The total number of Ordinary Shares either owned or controlled
by the Board and Ashok Leyland amounts to 1,682,292,517
representing approximately 75.26 per cent. of the Ordinary Shares
at the date of this announcement. Accordingly, only 24.74 per cent.
of the Ordinary Shares are held by other Shareholders.
Over time, the Company has become increasingly reliant upon
Ashok Leyland, its 75.1 per cent. Shareholder. As at the date of
this announcement, Ashok Leyland continues to provide material
financial support to the Company, by way of a GBP5.1 million
short-term loan facility and a corporate guarantee of the Company's
GBP15 million term loan with Barclays Bank PLC. In addition, the
Company entered into a GBP1.5 million loan facility with Ashok
Leyland (UAE) LLC in December 2014 in order, inter alia, to fund
future product development. Ashok Leyland is also assisting the
Company to benefit from the deputation of key personnel, working on
export opportunities, joint buying and common sourcing strategies,
working with Ashok Leyland's supply chain to benefit from enhanced
purchasing power and the sourcing of components from lower cost
countries. The Directors expect this co-operation to deepen in the
future.
There are significant costs associated with maintaining a
quotation on AIM, which are not considered commensurate with the
benefits of trading on AIM, and the Board believes that these funds
could be more prudently deployed in the Company's growth.
The Board also considers that:
-- the AIM listing of the Ordinary Shares is not in reality
offering investors the opportunity to trade in meaningful volumes
in the market. This has been demonstrated by the limited trading
volume in the Ordinary Shares, with just 0.3 per cent. of the
issued ordinary share capital of the Company having been traded
daily, on average, over the last three months;
-- the Company's size (having a market capitalisation of GBP3.58
million as at 29 April 2015 based on a share price of 0.16 pence
per Ordinary Share) and reliance on the Company's major
Shareholder, Ashok Leyland, increases the difficulty of raising any
further equity capital, other than from Ashok Leyland. Thus it is
increasingly challenging for the Company to take advantage of what
is usually a key benefit of a listing;
-- the management time and legal and regulatory burden
associated with maintaining admission of the Company's Ordinary
Shares to trading on AIM is disproportionate to the benefits
received; and
-- given its small market capitalisation and the relatively
small proportion of Ordinary Shares not owned by Ashok Leyland or
the Board (being approximately 24.74 per cent. as at 30 April
2015), Optare is unlikely to benefit from any new institutional or
other investor interest in the Company.
The Board has therefore concluded that the commercial
disadvantages and costs of maintaining a quotation on AIM at this
time in the Company's development outweigh the potential benefits
and that it is therefore no longer in the Company's or its
Shareholders' best interests for its Ordinary Shares to remain
quoted on AIM.
Effect of Cancellation
The Directors believe that the principal effects that
Cancellation would have on Shareholders are as follows:
-- there would no longer be a formal market mechanism enabling
Shareholders to trade their Ordinary Shares on AIM or any other
recognised market or trading exchange, and no price would be
publicly quoted for the Ordinary Shares. Accordingly, the Ordinary
Shares would be more difficult to value and it is likely that it
would be more difficult for a Shareholder to sell or purchase any
Ordinary Shares. However, as noted above, the underlying liquidity
in the Ordinary Shares is low and, in the opinion of the Directors,
would be likely to remain that way for the foreseeable future. The
proposal for the implementation of a matched bargain facility
following the Cancellation is described below;
-- the Company would cease to have a nominated adviser and
broker and would no longer be required to comply with the AIM
Rules, including the obligation to announce material events,
administrative changes and material and/or related party
transactions, for example Board changes and changes to its capital
structure; to announce interim and final results; and to obtain
Shareholder approval for reverse takeovers and/or fundamental
changes in the Company's business;
-- whilst the Company would no longer be required to comply with
many of the corporate governance requirements applicable to
companies with shares admitted to trading on AIM, the Company and
the Directors intend to comply with their obligations and
responsibilities under the Companies Act as appropriate for an
unlisted public company, as described in further detail below;
and
-- the Company would no longer be subject to the Disclosure and
Transparency Rules and would therefore no longer be required to
disclose major shareholdings in the Company.
However Shareholders should note inter alia that:
-- following Cancellation, as an unlisted public company, the
Company would remain subject to the provisions of the Takeover
Code. The Takeover Code operates principally to ensure that
shareholders are treated fairly and are not denied an opportunity
to decide on the merits of a takeover and that shareholders of the
same class are afforded equivalent treatment by any bidder. The
Takeover Code also provides an orderly framework within which
takeovers are conducted;
-- the Company would remain subject to English company law,
which mandates shareholder approval for certain matters, including
the issue of new shares on a non pre-emptive basis;
-- in accordance with English company law, the Directors would
continue to be subject to various duties in relation to the
Company, including to promote the success of the Company for the
benefit of the Shareholders as a whole;
-- the Company would continue to communicate information about
the Company to its Shareholders, as required by law, including by
continuing to publish annual reports and accounts and holding
annual general meetings and other general meetings in accordance
with applicable statutory requirements and the Company's articles
of association; and
-- the Company presently intends to maintain an "investors"
section on the Company's website at www.optare.com providing
information on any significant events or developments in which
Shareholders may be interested. Shareholders should be aware,
however, that there will be no obligation on the Company to update
that section of the website as presently required under the AIM
Rules.
Cancellation may have either positive or negative taxation
consequences for Shareholders. Shareholders who are in any doubt
about their tax position should consult with their own independent
professional adviser as soon as possible.
Governance following Cancellation
The Directors' current intention is that the Company should
remain a public limited company but without having its shares
admitted to trading on a public market or multilateral trading
facility.
The Directors intend to continue to include at least one
independent non-executive director on the Board for the foreseeable
future to ensure appropriate independent judgement on issues of
strategy, performance, resources and corporate governance that they
consider vital to the continued success of the Group. The Company
will continue to ensure that standards of corporate governance are
maintained that are proportionate and appropriate to the size and
nature of the Group post-Cancellation.
Cancellation Process
Under the AIM Rules, Cancellation requires the approval of
Shareholders by a majority of not less than 75 per cent. of the
votes cast in person or by proxy in general meeting, and the
expiration of a period of not less than 20 clear Business Days from
the date on which notice of the intended Cancellation is given to
the London Stock Exchange.
The Company has notified the London Stock Exchange of the
proposed Cancellation. Subject to the passing of the Resolution,
Cancellation will occur no earlier than five clear Business Days
after the GM and it is expected that trading in the Ordinary Shares
on AIM will cease at the close of business on 1 June 2015, with
Cancellation expected to take effect at 7.00 a.m. on 2 June
2015.
Trading in the Ordinary Shares after Cancellation
Following Cancellation, the Directors do not anticipate applying
to admit the Ordinary Shares to trading and/or listing on an
alternative stock exchange in the foreseeable future and, absent
any further action from the Company, any transaction in Ordinary
Shares undertaken after Cancellation will only be capable of being
undertaken by private sale. The Directors are accordingly aware
that Cancellation, should it be approved by Shareholders, will make
it difficult for Shareholders to buy and sell Ordinary Shares
should they wish to do so. Optare therefore intends to make
available to Shareholders an off-market trading facility for the
Ordinary Shares, which will be administered by Capita IRG, based on
matching bargains, where buyers' and sellers' price expectations
match. Under this third party facility, Shareholders or persons
wishing to acquire or dispose of Ordinary Shares will be able to
leave an indication with Capita IRG that they are prepared to buy
or sell at an agreed price. In the event that Capita IRG is able to
match that order with an opposite sell or buy instruction, it would
contact both parties and then effect the bargain.
It is currently anticipated that this matched bargain facility
will be in place shortly after the date of Cancellation. More
details of the facility will be made available on the Company's
website at that time at www.optare.com.
The Board intends to monitor the popularity of this arrangement
amongst Shareholders following Cancellation and will review it at
regular intervals to consider whether it remains cost-effective and
in the best interests of Shareholders as a whole. The Company's
CREST trading facility will remain in place for so long as it
remains economic to do so.
Current trading
In the past financial year, the double deck market grew by over
20 per cent. and the single deck market grew by approximately 5 per
cent. The Company maintained its market share in the single deck
segment, but the Company's overall market share fell by 1 per cent.
to 11 per cent. due to the lack of a product on sale in the double
deck segment. The official launch of the Company's new Euro 6
double deck, the MetroDecker, took place in May 2014 and the
Company expects to open the sales book later this year. The markets
in which the Company operates continue to be characterised by
intensified competition, higher level of requirements from
operators and continued pressure on margins. The Directors also
anticipate that increased government austerity and uncertainty due
to the forthcoming UK general election in May might impact market
growth. Overall, trading since the interim period end on 30
September 2014 has been in line with management's expectations, in
that it has remained difficult, but with a full product range to
offer to the UK market later this year, higher base volumes from
the major groups expected as a result, and conversion of more
export tenders, together with the continued support of Ashok
Leyland, the future remains generally positive for the Company.
Resolution to be proposed at the General Meeting
In order to approve Cancellation, the Resolution will be
proposed at the GM in the following terms: "That the admission of
the ordinary shares of 0.1p each in the capital of the Company to
trading on AIM, a market operated by London Stock Exchange plc, be
cancelled and that the directors of the Company be authorised to
take all steps which they consider to be necessary or desirable in
order to effect such cancellation". The Resolution will be proposed
as a special resolution requiring approval of not less than 75 per
cent. of the votes cast, in person or by proxy, by Shareholders at
the GM.
Irrevocable undertaking
An irrevocable undertaking to vote in favour of the Cancellation
at the General Meeting has been received from Ashok Leyland in
respect of its beneficial holding of 1,678,704,162 Ordinary Shares,
representing approximately 75.1 per cent. of the total issued
ordinary share capital of the Company at the date of this
announcement.
Recommendation
The Directors consider Cancellation to be in the overall
interests of the Company and the Shareholders as a whole.
Accordingly, the Directors recommend Shareholders to vote in favour
of the Resolution to be proposed at the GM as they intend to do in
respect of their own beneficial holdings, amounting, in aggregate,
to 3,588,355 Ordinary Shares representing approximately 0.16 per
cent. of the issued ordinary share capital of the Company at the
date of this announcement.
General Meeting and Cancellation from Trading on AIM
A notice of GM will be sent to Shareholders today convening a
meeting at 10.00 a.m. at the offices of the Company at Hurricane
Way South, Sherburn in Elmet, Leeds, North Yorkshire LS25 6PT, on
18 May 2015. Subject to the passing of the Resolution, the
delisting of the Ordinary Shares from trading on AIM is expected to
take effect from 2 June 2015 and the final day upon which they will
be able to be traded on AIM is expected to be 1 June 2015.
A copy of the Circular, which will include the notice of GM,
will be made available on the Company's website at
www.optare.com.
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context otherwise requires:
"AIM" AIM, the market of that name operated
by the London Stock Exchange
"AIM Rules" the "AIM Rules for Companies" published
by the London Stock Exchange from
time to time
"Ashok Leyland" Ashok Leyland Limited, a company
incorporated in India, whose registered
office is at No. 1, Sardar Patel
Road, Guindy, Chennai 600 032, India
and/or, where the context requires,
any of its subsidiaries
"Board" the board of directors of the Company
"Business Day" a day, other than a Saturday or Sunday
or public holiday in England and
Wales, on which banks are open in
London for general commercial business
"Cancellation" the cancellation of admission of
the Ordinary Shares to trading on
AIM
"Capita IRG" Capita IRG Trustees Limited
"Circular" the circular to Shareholders relating
to, and giving details of, the Cancellation,
and which will contain the notice
of GM
"Companies Act" the Companies Act 2006
"Company" or "Optare" Optare plc
"CREST" the relevant system (as defined in
the CREST Regulations) in respect
of which Euroclear UK & Ireland Limited
is the Operator (as defined in the
CREST Regulations)
"CREST Regulations" the Uncertificated Securities Regulations
2001 (SI 2001/3755)
"Directors" the directors of the Company
"Form of Proxy" the form of proxy to be used in connection
with the GM, which will accompany
the Circular
"General Meeting" or "GM" the general meeting of Optare to
be held at the offices of the Company,
Hurricane Way South, Sherburn in
Elmet, Leeds, North Yorkshire LS25
6PT, at 10.00 a.m. on 18 May 2015,
notice of which will be set out at
the end of the Circular
"Group" Optare and its subsidiaries
"London Stock Exchange" London Stock Exchange plc
"Ordinary Shares" ordinary shares of 0.1 pence each
in the capital of the Company
"Resolution" the resolution to be proposed at
the GM to obtain the approval of
Shareholders to Cancellation
"Shareholders" holders of Ordinary Shares from time
to time
"Takeover Code" the City Code on Takeovers and Mergers
This information is provided by RNS
The company news service from the London Stock Exchange
END
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