TIDMPROP

RNS Number : 0580B

Property Recycling Group PLC

11 February 2011

NOT FOR RELEASE PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

11 February 2011

Proposed cancellation of trading on AIM, availability of Facility and notice of General Meeting

1. Introduction

The Company announces today its intention to seek the cancellation of the admission of the Shares to AIM and is today posting a circular to Shareholders (the "Circular") convening a General Meeting for the purpose of proposing such a cancellation.

Except where the context otherwise requires, capitalised terms have the meaning set out in the definitions contained in the Circular. A copy of the Circular will shortly be available on the Company's website: www.propertyrecycling.co.uk.

Under the AIM Rules, a proposal to cancel the admission of the Shares to trading on AIM is conditional on the requisite notice being given to London Stock Exchange and on the approval by Shareholders holding not less than 75 per cent. of the votes cast on a resolution proposed at a general meeting. As the Rackham Family Interests (which hold approximately 80.83 per cent. of the Shares in issue) have confirmed to the Board their intention to vote in favour of the Resolution at the General Meeting, it is anticipated that the trading of the Shares on AIM will be cancelled with effect from 7.00 a.m. on 25 March 2011.

The Board recognises that the loss of the AIM trading facility will have an impact on Shareholders and that some may wish to sell their Shares in view of the consequent loss of liquidity and the long term nature of the Company's business. Accordingly, an arrangement has been put into place with Paul Rackham Limited in order to enable those Shareholders who wish to sell some or all of their Shares to do so cost effectively, at a fixed price, in the period leading up to De-listing.

2. Background to, and reasons for, the De-listing

The Shares were admitted to trading on AIM in 2005. Part of the Company's strategy was to use the quotation to expand the scale of business by acquiring brownfield properties and property companies using cash and shares. The Company was frustrated first by an overheated property market and then by the effects of the financial crisis. Since 2008 there has been a significant fall in development activity which fuels the property market. The absence of bank finance and the significant indebtedness of some other property owners have resulted in much reduced activity. To address this lower level of activity, the Company has reduced its cost base and sought to supplement short term rental income with option fees from potential long term purchasers. It has modest borrowings and has been positioned to survive a prolonged downturn as the Directors expect difficult conditions to prevail for some years.

On flotation the Rackham Family Interests held 51.4 per cent. of the Shares. Following two purchases of Shares in late 2008, the Rackham Family Interests acquired further Shares in 2009, mainly in circumstances where the sellers had approached Paul Rackham. In November 2010, the Rackham Family Interests acquired a further 5,308,799 Shares from an institutional investor taking their holding to 80.83 per cent., where it stands at the date of this document.

The Directors have been concerned for some time at the cost and administrative burden of maintaining the trading of the Shares on AIM. They have concluded that the Company should delist for the following reasons:

-- there is no realistic prospect of the price of the Shares trading at a level at which the quotation could provide capital or currency for the Company's business development;

-- the Company is facing a prolonged workout of its portfolio with future investment, if any, heavily dependent on disposal proceeds;

-- a disproportionate amount of senior management time is spent in meeting AIM Rules and related regulatory requirements, including reporting, disclosure and corporate governance requirements; and

-- at present the annual costs associated with the maintenance of the trading of the Shares on AIM are approximately GBP50,000, and the interests of the Company would best be served by removing these costs and allowing the Company's business to develop outside the regulatory constraints to which it is currently subject.

In view of the probable timescale of both market improvement and effective realisation of value from our portfolio, it is no longer appropriate for Paul Rackham, or his family interests, to maintain a commitment to a new cycle of investment, enhancement and disposal in a publicly quoted company.

3. Strategy of Peterborough following De-listing

The Directors intend to continue to seek to use short term rental income and option fees to provide cash flow to cover overheads and maximise value from the portfolio over medium to long term.

As the portfolio is realised the Directors intend to seek to provide opportunities for any remaining Shareholders to sell Shares by way of tender offers for Shares made on an equitable basis taking into account growth, if any, of net asset value and future portfolio risk. It is not possible to predict the timing of such realisations or tenders (if any), but completion of the process is expected to take several years.

The Directors do not anticipate there will be any change in the terms and conditions of employment of Peterborough's employees or management going forward. In addition, Paul Rackham has agreed with the Board that there will continue to be an independent director on the board.

4. Details about the Facility

The Directors recognise that cancelling the trading of the Company's Shares on AIM will make it significantly more difficult for Minority Shareholders to sell (or to buy) Shares should they so wish. Accordingly in consultation with the Panel and with the support of the Independent Director advised by Marshall Securities Limited ("Marshall"), Paul Rackham Limited (a company indirectly controlled by Paul Rackham's family) has made arrangements to purchase Shares from Minority Shareholders who wish to sell. The price at which Paul Rackham Limited is prepared to buy such Shares is the same for all the Minority Shareholders and is 14.5p per Share in cash, which is equivalent to the price paid to a major institutional shareholder by the Rackham Family Interests on 4 November 2010 and is also the highest price paid for a Share by the Rackham Family Interests in the twelve months preceding the date of the Circular.

Shareholders will be able to sell their Shares without incurring dealing costs by following the instructions set out in the Circular. Minority Shareholders should further note that: (i) this is the only price at which Paul Rackham Limited is prepared to acquire Shares; (ii) the same price is being made available to all Minority Shareholders; and (iii) this price will not be subject to any amendment during the Sale Period.

The Facility will be available until 24 March 2011 in order to provide Shareholders with sufficient opportunity to sell their holding to Paul Rackham Limited prior to De-listing should they so wish. Therefore, Minority Shareholders have from the date of the Circular until close of business on 24 March 2011, being the last anticipated day of dealings in Shares on AIM, to sell all or part of their shareholding to Paul Rackham Limited.

The Facility will not be available to any Shareholders in or from any jurisdictions (including the U.S.A., Japan, Australia or Canada) where the sale or purchase of Shares from that Shareholder, by Paul Rackham Limited, would or might infringe the laws of any jurisdiction or might require Paul Rackham Limited and/or the Company to obtain or observe any consent or formality.

The procedure for those Shareholders wishing to sell Shares under the Facility is set out in the Circular and summarised in paragraph 7 below.

5. Principal effects of De-listing

The principal effects of De-listing include, inter alia:

-- there will be no public stock market on which Shareholders can trade their Shares. Following De-listing there can be no guarantee that a Shareholder will be able to sell or purchase Shares;

-- no price will be publicly quoted for the Shares;

-- Shares will remain transferable but will cease to be transferable through CREST. Shareholders who hold Shares in uncertificated form prior to De-listing will receive share certificates; and

-- the Company will not be subject to the AIM Rules.

6. The City Code and transfers

Following the De-listing (and for at least ten years thereafter), the City Code will continue to apply to the Company. In addition, whilst the Shares will remain freely transferable, there will be no public market for any Shares not purchased by Paul Rackham Limited and they will cease to be transferable through CREST. Shareholders who currently hold shares in uncertificated form (that is, in CREST) and who do not sell their Shares to Paul Rackham Limited will receive share certificates in due course following the De-listing taking effect. Share transfers may still be effected after the date of De-listing by depositing a duly executed and stamped stock transfer form together with an appropriate share certificate with the Company Secretary at the registered office.

In accordance with Rules 35.1 and 35.3 of the City Code, the Rackham Family Interests (and any person(s) acting in concert with them) will not, except with the consent of the Panel:

(a) seek to acquire Shares in the 12 months after De-listing or, if earlier, the closure of the Facility; and

(b) acquire Shares at a higher price than 14.5p per Share in the six months after De-Listing.

7. Procedure for selling Shares

Paul Rackham Limited is willing to purchase Shares from Minority Shareholders at a fixed price of 14.5p per Share at any time between the date of the Circular and close of business on 24 March 2011. Marshall has received written confirmation from Paul Rackham Limited that it has instructed its bank to deposit funds with Marshall's settlement agent sufficient to purchase all of the 6,938,500 Shares held by Minority Shareholders and that it has irrevocably instructed Marshall to purchase on Paul Rackham Limited's behalf, up to 6,938,500 Shares at a price of 14.5p per Share until close of business on 24 March 2011. Further details of the procedure for selling shares are set out in the Circular.

8. General Meeting

A resolution to cancel the admission to trading of the Shares on AIM will be proposed at the General Meeting. The De-listing is conditional upon the approval of Shareholders holding not less than 75 per cent. of the votes cast (whether in person or by proxy) at the General Meeting. The meeting will be held at 11.00 a.m. on 9 March 2011 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF. The Rackham Family Interests, which hold approximately 80.83 per cent. of the Shares, have confirmed to the Board their intention to vote in favour of the Resolution at the General Meeting.

9. Recommendations

The Directors consider that the De-listing is in the best interests of the Company and its Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolution. As noted above the Rackham Family Interests intend to vote in favour of the Resolution in respect of Shares owned or controlled by them representing in aggregate 29,261,500 Shares (approximately 80.83 per cent. the Shares in issue). These interests include Paul Rackham's shareholdings and those of his son, Paul Rackham Jnr. In addition, the remaining directors intend to vote in favour of the Resolution in respect of Shares beneficially owned or controlled by them, representing in aggregate 177,099 Shares (approximately 0.5 per cent. of the Shares in issue).

David Weir, the Independent Director, who has been so advised by Marshall, considers that the provision of the Facility is in the best interests of the Company and its Shareholders as a whole and that the price of 14.5p per Share at which Paul Rackham Limited is willing to buy Shares from Minority Shareholders to be fair and reasonable for the purposes of the Facility. In providing advice to the Independent Director, Marshall has taken into account the Independent Director's commercial assessments. The Independent Director recommends that Minority Shareholders consider carefully their own personal circumstances, particularly in respect of loss of market based liquidity and the uncertain value and timescale of future tenders by the Company, when deciding whether to sell their Shares to Paul Rackham Limited at this time.

David Weir does not intend to participate in the Facility in respect of his holding of 62,000 Shares representing approximately 0.2 per cent. of the Shares in issue. In addition, Stephen Stuteley and George Atterbury do not intend to participate in the Facility in respect of their holdings amounting to an aggregate of 115,099 Shares representing approximately 0.3 per cent. of the Shares in issue.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
 
 Circular and Form of Proxy posted to                  11 February 
  Shareholders                                                2011 
 Latest time and date for receipt of    11.00 a.m.    7 March 2011 
  Form of Proxy                          on 
 General Meeting                        11.00 a.m.    9 March 2011 
                                         on 
 Last day for dealings in Shares on                  24 March 2011 
  AIM 
 Cancellation of trading of Shares on   7.00 a.m.    25 March 2011 
  AIM                                    on 
 

If any of the details contained in the timetable above should change, the revised times and dates will be notified to Shareholders by means of an announcement through a Regulatory Information Service (as defined in the AIM Rules). All events listed in the above timetable following the General Meeting are conditional on the passing of the Resolution at the General Meeting and assume that the General Meeting is not adjourned.

All of the times referred to in this announcement refer to London time.

For further information please contact:

 
 Paul Rackham, Chairman, 
 Property Recycling Group plc               01953 717176 
 John Webb/Robert Luetchford 
 Marshall Securities Limited (Financial 
  adviser)                                 020 7490 3788 
 Geoff Nash 
  FinnCap (Nominated adviser)              020 7600 1658 
 

This announcement has been issued by and is the sole responsibility of the Company.

The distribution of this announcement into jurisdictions other than the UK may be restricted by law. Persons into whose possession this announcement comes should inform themselves of and observe any such restrictions.

This announcement is for information purposes only and is not intended to and does not constitute or form any part of any offer or invitation to subscribe for, purchase or otherwise acquire any securities.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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