Proposed Cancellation of Admission to AIM
27 March 2010 - 2:11AM
UK Regulatory
TIDMSIN
26 March 2010
Proposed Cancellation of Admission to AIM,
Proposed Re-registration as a Private Limited Company,
General Meetings
Cancellation of Share Premium Account
and
Offer To Buy Back 13,208,072 Shares of GBP0.01
At 7 pence per Spectrum Interactive Share
The following announcement incorporates extracts from the Chairman's letter
contained in a Circular which will be posted to the Company's Shareholders
today, relating to Spectrum Interactive's proposed cancellation of its AIM
listing:
1. Introduction
The Company announces that it is proposing to seek Shareholder approval to:
* cancel the admission of the Company's Shares to trading on AIM;
* re-register the Company as a private limited company; and
* make an Offer to Shareholders other than the Majority Group, conditional on
the De-listing and Re-registration occurring and no Cancellation Application
having been made by the applicable Condition Date, to buy back Spectrum
Interactive Shares in accordance with the provisions of the Act.
In light of the proposed De-listing and Re-registration and in order to afford
Shareholders an opportunity to realise their investment in the Company, the
Company is making the Offer to Qualifying Shareholders (that is all shareholders
other than the Majority Group) which is conditional on the De-listing,
Re-registration and on no Cancellation Application having been made or
successfully disposed of or withdrawn by the Condition Date.
The price payable under the Offer is 7 pence per share, which is a premium of
approximately 14.3 per cent. to the closing price of a Share on 25 March 2010,
being the last practicable date prior to the date of this announcement.
The Company has also received irrevocable undertakings not to accept the Offer
from the Majority Group and certain Shareholders holding in aggregate
21,384,801 Spectrum Shares, representing in aggregate approximately 63.1 per
cent. of the Existing Issued Share Capital.
A circular will be sent later today to all Shareholders convening the General
Meetings and to explain the background to, and reasons for, the De-listing and
Re-registration and why the Directors unanimously consider the De-Listing and
the Re-registration to be in the best interests of the Company and its
Shareholders as a whole.
2. Background to and reasons for the De-listing
The Board wishes to effect the De-listing for the following reasons:
* Lack of Liquidity in Spectrum Shares
The Majority Group is interested in approximately 61.0 per cent. of the Existing
Issued Share Capital, and there has been very low trading volume in the
Company's shares since the Company's listing on AIM in April 2005.
* Administrative costs
The financial statements for the year ended 30 June 2009 note that
administrative costs in the period which they cover were approximately GBP5
million.
Administrative costs of between GBP100,000 and GBP150,000 will be saved by the
Company as a result of the De-listing and Re-registration. Such cost savings
include significant internal costs in ensuring ongoing compliance with the
Company's requirements as a publicly quoted company and professional fees
associated with the AIM quotation (including legal, accounting, broking and
Nominated Adviser costs). In addition, further administrative costs and
professional fees will be saved as a result of the Re-registration.
* Strategy
The Board believes that the Company can implement its current strategy with more
flexibility without the need to comply with the reporting and other requirements
imposed by the AIM Rules and free from short term concerns about share price
movements.
* Lighter regulatory burden
As a result of De-listing and Re-registration, the Company would be subject to a
less onerous regulatory and legislative regime than publicly quoted companies,
with attendant lower administrative costs. For instance, as a private company,
the Company would have more flexibility and be subject to less onerous company
administration procedures under the Act than apply to public companies.
As such, after careful consideration, your Board has therefore concluded that it
is in the best interests of the Company and Shareholders if the Company's
admission to trading on AIM is cancelled.
3. Background to and Reasons for the Offer
The De-listing will reduce significantly the liquidity and marketability of the
Company's Shares. After the De-listing there will be no guarantee that
Shareholders will be able to sell their Shares in the Company or, if they were
so able to do so, at an acceptable price.
In light of the De-listing and the Re-registration and in order to afford
Minority Shareholders with an opportunity to realise some or all of their
investment in the Company, the Company has determined to make the Offer.
The Offer price of 7 pence per Spectrum Interactive Share is a premium of
approximately 14.3 per cent. to the closing price of a Share on 25 March 2010,
being the last practicable date prior to the date of this announcement.
4. The Offer
Spectrum Interactive hereby offers to acquire, on the terms and subject to the
conditions set out in the Shareholder circular, 13,208,072 Shares being all
Spectrum Interactive Shares other than those owned by the Majority Group. The
Offer values each Spectrum Interactive Share at 7 pence. Acceptance in full
would result in an aggregate payment of GBP924,565.04 by the Company to
participating Shareholders. Shareholders may accept the Offer in respect of all
or any number of their Shares.
Minority Shareholders should note that the percentage of Spectrum Interactive
Shares held by the Majority Group will increase and the percentage of Spectrum
Interactive Shares held by the remaining Minority Shareholders will decrease if
the Offer is accepted by any Minority Shareholders.
Please note that there will be no requirement for Minority Shareholders to
accept the Offer if they wish to remain as Shareholders in the Company. A number
of employees wish to maintain their equity stake in the Company's business and,
accordingly, have given irrevocable undertakings not to accept the Offer in
respect of any of their holdings of Shares.
5. Financing of the Offer
Full acceptance of the Offer, save in respect of those who have undertaken not
to accept as described above, would result in a maximum cash consideration of
GBP924,595.42 being payable by Spectrum Interactive to Minority Shareholders. The
Company will fund the cash consideration and fees payable under the Offer from
its own cash resources, from an additional senior loan of GBP560,000 from the Bank
of Scotland plc pursuant to a facility letter dated 25 March 2010 and from the
subscription for up to GBP240,000 convertible secured loan notes by Simon Alberga
and Yoav Kurtzbard pursuant to a loan agreement dated 25 March 2010.
The principal terms of the BoS Loan are:
* Security: existing fixed and floating charge
* Interest:4% over LIBOR
* Arrangement fee2% of principal loan
* Repaymentby equal monthly installments over three years
The principal terms of the Directors' Loan are as follows:-
* Security:fixed and floating charge subordinated to debt owed to Bank of
Scotland
* Interest:5% over LIBOR
* Term:three-years, extendable by a further two years at the option of the
noteholders
* Conversion:convertible into ordinary shares at any time at the option of the
noteholders at a price per share equivalent to a 15 per cent. premium to the
Offer price
6. Share dealing after De-listing
Shares will remain freely transferable after De-listing. To the extent that
Shareholders are unable or unwilling to hold Shares in the Company following the
De-listing becoming effective, or wish to realise their investment in the
Company beyond their allocated participation in the Offer, such Shareholders
should consider selling their interests prior to the Delisting becoming
effective.
In accordance with Rule 41 of the AIM Rules, cancellation of the Company's
listing on AIM will not take effect until at least twenty Business Days have
passed following the announcement of the proposed De-Listing. If the De-Listing
Resolution is passed at the First General Meeting, it is proposed that
De-listing will take effect at 7.00 a.m. on 28 April 2010.
In the event that the De-listing proceeds, there will be no market facility for
dealing in the Shares and no price will be publicly quoted for Shares as from
close of business on 27 April 2010. As such, interests in Shares are unlikely to
be readily capable of sale and where a buyer is identified, it may be difficult
to place a fair value on any such sale.
7. Risks associated with retaining an interest in the Company following the
De-listing
The Directors draw to the attention of Shareholders the following factors which
should be taken into account in assessing whether or not to retain their
interests in Shares in the event that the De-listing is approved and becomes
effective:
* as indicated above, there will be no market facility for dealing in the
Shares and no price will be publicly quoted for Shares. As such, interests
in Shares are unlikely to be readily capable of sale and where a buyer is
identified, it will be difficult to place a fair value on any such sale;
* as shareholders in an unquoted company, Shareholders will no longer have the
protections afforded by the AIM Rules and will only be able to rely on the
protections afforded to minority shareholders under general English law;
* the Company will no longer be subject to the rules relating to disclosure of
interests in Shares set out in the DTR, such that it may be difficult to
ascertain the ownership of Shares from time to time; and
* the levels of transparency and corporate governance within the Company are
unlikely to be as stringent as for a company quoted on AIM.
The above considerations are non-exhaustive and Shareholders should seek their
own independent advice when assessing the likely impact of the De-listing on
them.
8. Information on the Majority Group
The Majority Group consists of Lord Young of Graffham, the David Young
Charitable Trust, Simon Alberga (and his family trust), Yoav Kurtzbard (and his
family trust), Mark Lewarne and Philip Congdon. Lord Young, Simon Alberga and
Yoav Kurtzbard are all directors of Young Associates Limited, a private equity
firm, and Mark Lewarne and Philip Congdon are, respectively, Chief Executive and
Finance Director of the Company. Together, the five members of the Majority
Group, including interests held by a charitable trust and family interests, are
interested in aggregate in 20,695,434 Shares representing approximately 61.0 per
cent. of the Existing Issued Share Capital.
Shareholders should be aware that Lord Young of Graffham, his family interests
and the David Young Charitable Trust, Simon Alberga, and Yoav Kurtzbard and
their family interests are deemed by the Panel on Takeovers and Mergers to be
acting in concert.
Depending on the level of acceptances under the Offer (and taking account of the
undertakings received not to accept the Offer) the Majority Group will be
interested in between approximately 61.0 and 97.2 per cent. of the issued share
capital of the Company.
9. Irrevocable Undertakings
The Company has received irrevocable undertakings to vote in favour of the
Resolutions from each member of the Majority Group in respect of all of their
respective holdings of Shares being 20,695,434 Shares in aggregate, representing
approximately 61.0 per cent. of the Existing Issued Share Capital.
The Company has received irrevocable undertakings not to accept the Offer from
Minority Shareholders who are key employees of the Company, in respect of a
total of 689,367 Shares representing approximately 2.0 per cent. of the Existing
Issued Share Capital. These undertakings have been secured because the Directors
consider it to be in the interests of the Company that its key personnel are
committed to the Company and have the ability to participate in any future
success to which they contribute by retaining an equity stake.
For further information please contact:
Spectrum Interactive plcTel: 01442 205 511
Mark Lewarne, Chief Executive Officer
Philip Congdon, Chief Financial Officer
Arbuthnot SecuritiesTel: 020 7012 2000
Alasdair Younie/Ben Wells
Expected Timetable of Principal Events
Latest time and date for receipt of Forms 10.00 a.m. on 10 April 2010
of Proxy
for the first General Meeting
First General Meeting 10.00 a.m. on 12 April 2010
Latest time and date for receipt of 1.00 p.m. on 16 April 2010
completed Acceptance Form and TTE
Instruction
Offer closes 1.00 p.m. on 16 April 2010
Offer Record Date Close of business on 16 April 2010
Announcement as to acceptances 8.00 a.m. on 19 April 2010
Trading on AIM cancelled 7.00 a.m. on 28 April 2010
Latest time for application to court to 10 May 2010
cancel Re-registration Resolution
Latest time and date for receipt of Forms 10.00 a.m. on 10 May 2010
of Proxy
for the Second General Meeting
Expected date for Re-registration 11 May 2010
Second General Meeting 10.00 a.m. on 12 May 2010
Expected date for Share Premium Account 13 May 2010
Resolution to take effect
CREST accounts credited with Offer proceeds 24 May 2010
Cheques dispatched for certified shares 24 May 2010
purchased pursuant to the Offer
Balance share certificates dispatched where 24 May 2010
relevant by
Note: If any of the above times or dates should change, the revised times and/or
dates will, prior to cancellation of trading on AIM, be notified to Shareholders
by an announcement on a Regulatory Information Service (whilst the Company
remains listed on AIM) and thereafter by post.
DEFINITIONS
"Acceptance Form"the acceptance form, election and authority relating to the
Offer, for use in respect of Spectrum Interactive Shares
"Act" or "Companies Act"the Companies Act 2006
"acting in concert"has the meaning attributed to it in the City Code
"AIM" the AIM market of the London Stock Exchange
"AIM Rules"the AIM Rules for Companies published by the London Stock Exchange
"Arbuthnot Securities"Arbuthnot Securities Limited
"Board" or "Directors"the Spectrum Interactive directors
"BoS Loan"an additional senior loan of GBP560,000 from the Bank of Scotland plc
pursuant to a facility letter dated 25 March 2010 to be made as part of the
financing of the Offer
"Business Days"Monday to Friday other than bank or public holidays in the United
Kingdom
"Cancellation Application" an application to the court to cancel the
Re-registration Resolution pursuant to section 98 of the Act
"Cancellation Period" the period from the date of passing of the Re-registration
Resolution to the Condition Date
"Closing Date" the closing date of the Offer, being 1.00 p.m. on 16 April 2010
"Code" or "City Code" the City Code on Takeovers and Mergers
"Company", "Spectrum" or "Spectrum Interactive" Spectrum Interactive plc,
company number 4440500
"Condition Date" 28 days after the Re-registration Resolution is passed
"CREST" the relevant system in respect of which Euroclear is the operator and in
accordance with which securities may be held and transferred in uncertificated
form
"De-listing" the cancellation of the admission of the Company's Shares to
trading on AIM
"De-listing Resolution" the special resolution approving the De-listing to be
proposed at the First General Meeting
"Directors' Loan" the convertible loans of GBP240,000 made to the Company by Simon
Alberga and Yoav Kurtzbard
"DTR" Disclosure and Transparency Rules published by the FSA
"Euroclear" Euroclear UK & Ireland Limited, the operator of CREST
"Excluded Territories" the United States of America, Canada, Japan, the Republic
of Ireland, Australia, the Republic of South Africa or any jurisdiction where
such actions may violate the laws in that jurisdiction
"Existing Issued Share Capital" the issued ordinary share capital of the
Company as at the date of this announcement
"First General Meeting" the general meeting of the Company
"Form of Proxy" the form of proxy for use by Shareholders at the relevant
General Meeting
"General Meetings" the First General Meeting and the Second General Meeting of
the Company
"Group" the Company and its subsidiaries (as defined in the Act)
"London Stock Exchange" London Stock Exchange plc
"Minority Shareholder" means any Shareholder on the share register of Spectrum
Interactive on the Record Date other than the Majority Group
"Majority Group" the Directors (other than Peter Benson), the Rt. Hon. Lord
Young of Graffham, The David Young Charitable Settlement and their family trusts
and nominees
"Notice" the notice of the First General Meeting or the Second General Meeting
(as appropriate)
"Offer" the cash offer made by Spectrum Interactive to Qualifying Shareholders
to acquire from them the Offer Shares
"Offer Shares"13,208,072 Shares not already owned by the Majority Group
"Offer Price" 7 pence per Share
"Qualifying Shareholders" Shareholders who are entitled to participate in the
Offer, being shareholders other than a member of the Majority Group on the
register of members of the Company at the Record Date who are not persons
resident in any of the Excluded Territories
"Receiving Agent" Capita Registrars
"Record Date" 16 April 2010
"Registrar" Capita Registrars Limited
"Re-registration" the re-registration of the Company as a private limited
company
"Re-registration Resolution" the special resolution approving the
Re-registration to be proposed at the First General Meeting
"Regulatory Information Service" any channel recognised as a channel for the
dissemination of regulatory information by listed companies as defined in the
AIM Rules
"Resolutions" all the resolutions to be proposed at the General Meetings
"Second General Meeting" the general meeting of the Company convened by the
notice
"Shareholders" holders of Spectrum Interactive Shares on the Record Date
"Share Premium Account Resolution" the special resolution approving the
cancellation of the Company's share premium account to be proposed at the Second
General Meeting
"Spectrum Interactive Shares"
or "Shares" the issued ordinary shares of GBP0.01 each in the capital of the
Company and any such further shares which are unconditionally allotted or issued
after the date hereof and before the date on which the Offer ceases to be open
for acceptance (or such earlier date or dates as the Company may decide)
"Takeover Panel" or "Panel" the Panel on Takeovers and Mergers
END
[HUG#1398342]
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