AMCO Corporation PLC - Frthr re Proposed Demerger
August 06 1999 - 2:32AM
UK Regulatory
RNS Nol 6130r
AMCO CORPORATION PLC
6 August 1999
AMCO CORPORATION PLC ("THE Company")
PROPOSED DEMERGER OF TOLENT GROUP BUSINESSES
1. Introduction
On 3 June 1999, Amco announced that the Board had been considering various
ways to enhance shareholder value and that it believed that a demerger of
Tolent Corporation Limited, together with its subsidiaries and the
construction activities carried on by them, could be one method of achieving
this.
The Company reports that the necessary preparatory work for the Demerger is
now complete. Subject to shareholder approval at the extraordinary general
meeting to be held on 31 August 1999, the Demerger will become effective. The
Demerger Shares will be issued on completion of the Demerger and an application
will be made for the admission of the Demerger Shares to trading on AIM.
Subject to Admission, the Demerger Shares will commence trading on AIM on 1
September 1999.
2. Outline of the Demerger
The Demerger is to be effected by a dividend in specie to Qualifying
Amco Shareholders who will receive Demerger Shares on the following basis:
for every 1 Amco Share: 1 Demerger Share
The Board believes that it would have to incur significant costs in
obtaining appropriate approvals of the circular sent to Amco Shareholders today
and the Prospectus from the relevant regulatory authorities in the United
States and Canada if it were to arrange for the Demerger Shares to be
issued to Amco Shareholders whose addresses are in the United States or
Canada. The Board does not believe that it would be practical or cost effective
for the Demerger Shares to be issued to such Amco Shareholders who in aggregate
hold approximately 0.25 per cent of the issued share capital of Amco.
Accordingly, Amco Shareholders whose address, as stated in the Register of
Members of Amco, is in the United States or the provinces of Canada will not
participate in the Demerger and will not receive Demerger Shares. Such Amco
Shareholders will instead receive a cash dividend of a value equal to the
number of Amco Shares they hold multiplied by the Valuation Price. This cash
dividend will be paid in US or Canadian dollars (as appropriate) after having
been converted at the rate of exchange applicable on the date of the EGM. The
Board also considers it appropriate to treat the Amco Shares held in the
Reserve Accounts (which in aggregate hold approximately 0.5 per cent of the
issued share capital of Amco) and which have not been taken up by the persons
otherwise entitled thereto in the same way as the Amco Shares held by persons
with registered addresses in the United States or Canada. Accordingly, the
Reserve Accounts will qualify for the cash dividend mentioned above, but will
not be allotted Demerger Shares.
It is necessary to amend the Articles in order to effect the Demerger
as outlined above and also to obtain certain tax reliefs in connection with
the Demerger. In particular, the Resolutions, if passed at the EGM will amend
the Articles to grant the Board discretion to pay a cash dividend in the
manner described above and will redesignate and reclassify those shares held
by Amco Shareholders whose registered addresses are in the United States or
Canada and also those shares held in the Reserve Accounts as "A" ordinary
shares of 10p each. Such "A" ordinary shares will rank pari passu in all
respects with the other ordinary shares in the capital of Amco.
The opportunity is also being taken to update the provisions of the Articles
in relation to adjourned class meetings to prevent adjourned meetings
being dissolved if they would not otherwise be quorate. This proposed
amendment to the Articles will bring the Articles in this respect into line
with current accepted practice.
The Demerger, the amendments to the Articles and the payment of the
dividends described above all require the approval of Amco Shareholders
by special resolution at the EGM. If the Resolutions are passed it is
anticipated that the allotment of the Demerger Shares to Qualifying Amco
Shareholders and the cash dividend payments will be made on 2 September 1999.
If they are implemented, the Proposals will create an additional AIM
listed company. namely Tolent PLC. Broadly, Amco will continue to own and
carry on Amco's structural steel, power, rail and mining contracting
businesses whilst Tolent will own and carry on Tolent Group's construction,
property investment and development businesses.
3. Trading record of Tolent Group
The trading record of the Tolent Group for the three financial years and
six months ended 30 June 1999 is summarised below.
Year ended 31 6 months
December (Audited) ended 30 June
(Unaudited)
1996 1997 1998 1999
#000 #000 #000 #000
Turnover 39,466 52,955 77,537 39,116
Operating profit (68) 418 1,447 1,006
Profit before (277) 154 1,364 906
taxation
Trading in the three years and six months ended 30 June 1999, has seen a
return to increasing underlying profitability and continued growth in turnover.
Tender and contract management controls have improved over this period, as
has the proportion of negotiated tender, rather than competitive tender, work.
In the year ended 31 December 1997, there was an exceptional loss of
#424,000 relating to the disposal of an interest in land in Germany. The
Directors believe that there are no further liabilities in relation to the
Group's former German operations.
4. Valuation of Tolent Corporation
As part of the procedural requirements in preparing for and effecting
the Demerger it has been necessary to obtain an independent valuation of
Tolent Corporation and its subsidiaries. A valuation report has been prepared
by Grant Thornton, the current auditors of Amco and Tolent, addressed to the
directors of Tolent which states that, in the opinion of Grant Thornton, the
consideration for the allotment to the Qualifying Amco Shareholders (which is
the transfer of the whole of the issued share capital of Tolent Corporation
Limited) is not less than #3.5 million. 5. Reasons for the Demerger
The Board has continually been seeking ways to generate additional
shareholder value. It now considers that this will best be achieved through
two separate and focused investments with the value of the individual
businesses being much more transparent to investors. The purpose of the
Demerger is to create additional opportunities for long-term growth, and
for the delivery of increasing value for shareholders, from two businesses,
each of which will have its shares traded on AIM
The Directors also believe that the key strengths of the Residual Amco
Group are:
* its presence in niche areas of the civil engineering and
mining industries
* its efficient and highly regarded structural steel businesses
* its ability to work to high levels of safety
* its risk averse approach to environmental matters
* its established fleet of specialised plant and equipment
6. Relationship between Amco and Tolent following the Demerger Management
Following the completion of the Proposals, Amco and Tolent will operate
as separate companies, each with its ordinary shares admitted to trading on
AIM,and neither Tolent nor Amco will hold any shares in the capital of the
other.
Certain directors of Amco will,serve on the Tolent board as described below:
Name Position within Amco Position within
Tolent
S N Gordon Chairman Chairman
O H Schmill Managing director Executive director
I Swire Financial director Financial director
M R Speakman Non-executive Non-executive
director director
The services of Messrs O H Schmill, S N Gordon and I Swire as
part-time executive directors of Tolent will be provided by Amco pursuant to the
terms of the Services Agreement. It is intended that in due course the New
Tolent Group will appoint a full-time financial director. The services of Mr
D M Jackson will also be provided by Amco pursuant to the Services Agreement
as a part-time director of Tolent Construction Limited,, Under the terms of
the Services Agreement each of these executive directors will devote up to 25
per cent of his time to Tolent's affairs.
Mr J G Wood, currently a director of Amco, will be appointed managing
director of Tolent and will resign as a director of Amco upon the Demerger
becoming effective. It is the intention of the directors of Tolent to
appoint two additional non-executive directors to the Tolent Board by 31
October 1999 at which point W M R Speakman will resign from the board of
Tolent.
Trading
There is, and will continue to be, trading between the New Tolent Group and
the Residual Amco Group. There are also currently leases in place pursuant to
which the Group leases its head office at Ravensworth House, Gateshead and its
vehicle fleet from members of the Residual Amco Group. Any transactions
undertaken will be on normal commercial terms.
Administration
The Services Agreement also provides for Amco to provide administrative
support to the New Tolent Group in areas such as personnel services, company
secretarial and registrar functions, insurance and pensions administration.
DEFINITIONS
The following definitions apply throughout this announcement unless
otherwise stated or the context otherwise requires:
"Admission" admission of the Demerger Shares to AIM
"AIM" the Alternative Investment Market of the
London
Stock Exchange
"Amco" Amco Corporation Plc
"Amco Group" Amco and its subsidiary and associate undertakings
(or any of them as the context requires)
"Amco Shares" ordinary shares of 10p each in the capital of Amco
and, following the passing of the Resolutions, "A"
ordinary shares of 10p each in the capital of Amco
"Amco Shareholders" holders of Amco Shares
"Articles" the articles of association of Amco
"Bell Lawrie Wise Speke" Bell Lawrie Wise Speke, a division of Brewin
Dolphin Securities Ltd
"Board" or "Directors" the directors of Amco, or a duly authorised
committee thereof
"Demerger" the proposed Demerger of Tolent
Corporation from Amco
"Demerger Effective Date"31 August 1999
"Demerger Shares" Ordinary shares of 10p each in the capital
of Tolent
"New Tolent Group" Tolent and each member of the Tolent Group (or
any of them, as the context requires) following
the completion of the Demerger
"Proposals" the Demerger and Admission
"Prospectus" the prospectus relating to the Admission and sent
to Qualifying Amco Shareholders
"Qualifying Amco holders of Amco Shares as shown in the
Shareholders" Register of Members of Amco on the Record
Date other than (i) those whose address, as shown in
the Register of Members of Amco, is in the United
States of America or any of the provinces of Canada
and (ii) the Reserve Accounts
"Record Date" 5 August 1999
"Reserve Accounts" Big Nama Reserve Account, Nama Creek Reserve
Account, Amco Industrial Holdings Reserve
Account and International Amco Corporation Reserve
Account (each being a nominee account holding shares in
Amco which have not been taken up by persons otherwise
entitled to such shares)
"Residual Amco Group" the Amco Group following completion of the Demerger
"Resolutions" the special resolutions which are to be
proposed at the EGM
"Services Agreement" the agreement made between Amco and Tolent as at
the date of this document providing for the
provision of certain services by the Residual Amco
Group to the New Tolent Group
"Tolent" Tolent PLC
"Tolent Corporation" Tolent Corporation Limited
"Tolent Group" or Tolent Corporation and each of its
"Group" subsidiary and associated undertakings or any
of them, as the context requires)
"Valuation Price" 28p per share
END
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