Return of Capital/De-listing from AIM, etc.
June 06 2008 - 1:00AM
UK Regulatory
RNS Number : 1216W
Finsaga PLC
06 June 2008
Date: Embargoed until 07.00hrs, Friday 6 June 2008
Contact: Charles Fairbairn (Chairman)
Finsaga plc
Tel: 020 7796 4133 (contact via Hudson Sandler)
Corporate Website: www.finsaga.com
Alistair Mackinnon-Musson
Nicola Savage
Hudson Sandler
Tel: 020 7796 4133
Email: finsaga@hspr.com
Mark Williams/Henry Fitzgerald-O'Connor
Canaccord Adams Limited
Nominated Adviser
Tel: 020 7050 6500
Finsaga plc ("Finsaga")
Return of Capital, Scheme of Arrangement, Resignation of Director, cancellation of admission to AIM and notice of Extraordinary General
Meeting and Court Meeting
In July 2007, Finsaga successfully completed the disposal of its trading subsidiary, Brightview Group Limited to British
Telecommunications plc ("BT"). It was the Board's stated intention that, following the disposal, the Board would seek an opportunistic
investment for the proceeds of the disposal or Finsaga would return proceeds to Shareholders. The Board has actively pursued a number of
acquisition and consolidation opportunities since the disposal but has determined that none of these are of sufficient merit. Finsaga is now
proposing to return up to approximately �13.7 million of those proceeds to Shareholders, equivalent to up to approximately 29.25 pence cash
per Existing Ordinary Share. The Return will be made in two stages: approximately �12.1 million, equivalent to 25.8 pence cash per Existing
Ordinary Share, will be returned following implementation of the Proposals and it is intended that up to a further �1,620,500 will be
returned after 31 January 2009.
The Scheme Document containing, inter alia, the full terms and conditions of the Scheme, an explanatory statement pursuant to section
897 of the Companies Act 2006, notices of the Court Meeting and the Extraordinary General Meeting, a timetable of principal events and
details of the action to be taken by Shareholders is today, 6 June 2008, being posted to Shareholders.
Shareholders will be also be asked to approve the de-listing of Finsaga from admission to trading on AIM at the Extraordinary General
Meeting. De-listing is expected to become effective at 7 a.m. on the 18 July 2007.
David Laurie, with effect from 5 June 2008, resigned as a director of Finsaga. He holds outstanding share options over Existing Ordinary
Shares, and under the terms of the Scheme, which requires shareholder approval, Finsaga will be authorised to make a loan to him of the
exercise price of his options plus any tax and employee national insurance contributions payable.
Charles Fairbairn, Chairman of Finsaga, said:
"The proposed return of capital, equivalent to approximately 29.25 pence per share, of which 25.8 pence will be paid by 5 August, will
bring to an end the public existence of our company. On my arrival as Chairman in December 2006 we completed a placing at 7.5 pence per
share and in July 2007 disposed of our internet services division and the residual shareholding from the disposal of our home gaming
division. We have subsequently repaid our bank borrowings and spent a further �1.1m on the buyback of shares. I would like to thank my
fellow directors and staff in this period, all of whom have contributed to this result.
"As our efforts to find an investment opportunity for the remaining cash have not identified a suitable candidate, the Board is recommending
that Shareholders approve the proposals outlined above to return this capital and de-list the company from AIM."
Further details on the Proposals
Principal features of the Scheme
The reorganisation will be carried out by a formal procedure, known as a scheme of arrangement, under the Companies Act 2006. The Scheme
will involve a reduction of capital under the Companies Act 1985. (The procedures fall under the two different Companies Acts as the
provisions of the Companies Act 2006 are gradually being brought into force to replace the provisions of the Companies Act 1985, and new
provisions are in force for schemes of arrangement but not yet for reductions of capital.) The key features of the Scheme are as follows:
Shares
Under the Scheme:
(a) the Existing Ordinary Shares in Finsaga will be cancelled by way of a reduction of capital and the share premium account and
capital redemption reserve will also be extinguished;
(b) the reserve arising on the reduction of capital will be:
(i) treated as a realised profit in the hands of Finsaga; and
(ii) you will receive 1 New Ordinary Share, 1 B Share and 1 Redeemable Share for every 1 Existing Ordinary Share you hold at the
Scheme
Record Time.
The Scheme Record Time is expected to be 6.00 p.m. (UK time) on 16 July 2008 (subject to the date on which the Court sanctions the
Scheme). Finsaga will immediately after the Scheme becomes effective pay a dividend to New Finsaga of the whole amount standing to the
credit of its distributable profits less �1,620,500.
The B Share and the Redeemable Share are the instruments by which you will receive your Return. The majority of the Return will be made
by way of the New Finsaga Reduction of Capital, expected to become effective on 23 July 2008. The remainder of the Return will take place
(to the extent possible) after 31 January 2009 by way of redemption of the Redeemable Shares. The cancellation of the B Shares and the
redemption of the Redeemable Shares is expected to be treated as capital for UK tax purposes but you are referred to Part 5 of the Scheme
Document for a more detailed description of the expected tax consequences.
The Return will be made in two stages because, upon the sale of its trading subsidiary, Brightview Group Limited, to BT on 31 July 2007,
Finsaga gave certain warranties and indemnities (under a tax covenant and in relation to two specific issues) to BT in respect of Brightview
Group Limited. BT has until 31 January 2009 (the "Warranty Period") to claim under these warranties and indemnities, after which any
warranty or indemnity claims by BT will be time-barred. Finsaga's financial liability to BT under the warranties and tax covenant is capped
at �1,620,500. Finsaga's financial liability under one of two specific indemnities given will decrease to �500,000 from 31 July 2008 for the
remainder of the Warranty Period, while liability under the other specific indemnity will remain unlimited for the remainder of the Warranty
Period. In order to make adequate provision for potential warranty and indemnity claims by BT, the Directors propose to retain �1,620,500 in
an account where it will be held on trust for Finsaga until 1 February 2009 (or such later date when any claims made by BT prior to 1 February 2009 have been finally settled). As at 5
June 2008 (being the latest practicable date prior to the publication of this document), Finsaga has not received notification of any
warranty or indemnity claims from BT so such claims remain contingent liabilities of Finsaga.
The structure we have chosen allows us to effect the Return to the maximum amount possible while the Warranty Period is running and to
return the remaining capital to Shareholders when the Warranty Period has expired (subject to deductions of up to �1,620,500 in respect of
any successful claims by BT). The Redeemable Shares are redeemable at the option of New Finsaga. It is New Finsaga's intention to redeem all
of the Redeemable Shares as soon as possible after 31 January 2009, provided that BT has not made any warranty or indemnity claims against
Finsaga. If BT has made any warranty or indemnity claims by 31 January 2009, the amount claimed will be retained in the trust account
pending settlement of the claim and the balance of the �1,620,500 will be paid to Finsaga which will distribute it to New Finsaga by way of
dividend. New Finsaga will then redeem Redeemable Shares of an aggregate amount equal to the amount of the payment received by Finsaga from
the trust account, pro rata between the holders of Redeemable Shares at the time of redemption. If Finsaga is required to pay some or all of the �1,620,500 held in the trust account to BT in
settlement of a claim for which Finsaga accepts liability or for which it is held liable by a court, the amount payable to Shareholders in
respect of the redemption of their Redeemable Shares will be reduced accordingly.
If any amount is retained in the trust account beyond 31 January 2009 because BT has made a claim, to the extent that claim is
subsequently unsuccessful so that the amount in question is released from the trust account to Finsaga, it will be dividended up to New
Finsaga and New Finsaga will use such sums to redeem further Redeemable Shares then in issue. The payment received by New Finsaga will be
allocated pro rata amongst the holders of the Redeemable Shares then in issue, by way of redemption of the Redeemable Shares. Once there are
no further amounts in the trust account, any Redeemable Shares then in issue will remain in issue as New Finsaga will not be in a position
to redeem them.
Court Meeting and Extraordinary General Meeting
The Scheme requires the approval of Shareholders at the Court Meeting. If the Scheme is approved by the requisite majority at the Court
Meeting, an application will be made to the Court to sanction the Scheme at the Court Hearing.
Shareholders will also be asked to approve a resolution implementing matters in connection with the Scheme at the Extraordinary General
Meeting, including: (i) providing the Directors with authority to give effect to the Scheme by approving the cancellation of the Existing
Ordinary Shares; (ii) approving amendments to the Finsaga Articles; (iii) the cancellation of admission to trading on AIM of the Existing
Ordinary Shares; and (iv) the re-registration of Finsaga as a private limited company.
Completion
We expect that the new holding company structure will become effective on 18 July 2008.
New Finsaga Reduction of Capital
The share capital of New Finsaga will be reduced by cancelling the B Shares in consideration of the payment to Shareholders of 25.8 pence
per B Share, being the nominal capital of each B Share. In addition, the share premium account, created by the issue of the Redeemable
Shares at a premium, will be reduced by �1,620,500 in order to establish distributable reserves of �1,620,500 out of which to redeem the
Redeemable Shares after 31 January 2009.
The initial shareholders of New Finsaga have resolved to reduce its capital as described above, conditional on the Scheme becoming
effective. The New Finsaga Reduction of Capital will also require the confirmation of the Court. Prior to confirming the reduction of
capital of New Finsaga, the Court will need to be satisfied that the creditors (if any) of New Finsaga are not thereby prejudiced. New
Finsaga will put in place such form of creditor protection (if any) as it may be advised is appropriate to satisfy the Court in this regard.
However, at present it is not envisaged that New Finsaga will have any creditors at the time the New Finsaga Reduction of Capital is
confirmed.
The New Finsaga Reduction of Capital is expected to become effective on 23 July 2008.
De-listing of Finsaga and re-registration of Finsaga as a private limited company
No application for admission to trading on AIM, or to any other stock exchange, will be made in respect of the New Ordinary Shares, B
Shares or Redeemable Shares in New Finsaga as the Directors believe that the ongoing costs and regulatory requirements of a listing on AIM
will no longer be justified following the Return. Shareholders will be also be asked to approve the De-listing of Finsaga at the
Extraordinary General Meeting. De-listing is expected to become effective at 7 a.m. on the Scheme Effective Date.
Under the AIM Rules for Companies, the De-listing can only be effected by Finsaga after approval of a special resolution of Shareholders
in a general meeting, and the expiration of a period of at least twenty business days from the date on which notice of the De-listing is
given to London Stock Exchange. In addition, a period of at least five business days following the Shareholders' approval of the De-listing
is required before London Stock Exchange may put the De-listing into effect. Canaccord, Finsaga's nominated adviser, has been consulted with
respect to the De-listing.
Upon the Scheme becoming effective, the Directors intend that Finsaga will be re-registered as a private limited company. When the Court
sanctions the cancellation of the Existing Ordinary Shares as part of the Scheme, Finsaga will also request that the Court order that
Finsaga be re-registered as a private limited company because Finsaga's authorised share capital will fall below the minimum share capital
that a public limited company is required to have under the Companies Act 1985 as a result of the Scheme. Shareholders are also being asked
to approve re-registration of Finsaga as a private limited company at the Extraordinary General Meeting.
Following the Scheme becoming effective, New Ordinary Shares will remain freely transferable but will not be transferable through CREST.
Instead, Shareholders who currently hold Existing Ordinary Shares in uncertificated form will receive share certificates for New Ordinary
Shares and Redeemable Shares after the De-listing. As all of the B Shares will be cancelled soon after issue pursuant to the New Finsaga
Reduction of Capital, no share certificates will be issued in respect of the B Shares. Share transfers may still be effected after the
De-listing by depositing a duly executed and stamped stock transfer form together with an appropriate share certificate with the
Registrars.
The operating costs of New Finsaga are expected to be substantially lower than those of Finsaga. Finsaga will no longer pay the costs
associated with being a public company listed on AIM. The Board will be further reduced from three to two and the rates of pay for New
Finsaga will be lower than that of Finsaga to reflect the smaller scale of New Finsaga.
Action to be taken
On 30 June 2008, the Court Meeting and the Extraordinary General Meeting will be held to seek approval for the Proposals. Notices of the
Court Meeting and the Extraordinary General Meeting will be sent to Shareholders along with the Scheme Document. In order that the Court can
be satisfied that the votes cast fairly represent the views of the Shareholders, it is important that as many votes as possible are cast at
the Court Meeting. Shareholders are therefore encouraged to attend the Court Meeting in person or by proxy.
Recommendation
The Board, which has received financial advice from Canaccord, considers the terms of the Proposals to be fair and reasonable. In providing
advice to the Board, Canaccord has relied upon the Board's commercial assessment of the Proposals.
The Board considers the Proposals to be in the best interests of Shareholders as a whole and accordingly, your Board unanimously
recommends that holders of Existing Ordinary Shares vote in favour of the Proposals at the Court Meeting and at the Extraordinary General
Meeting. The members of the Board intend to vote their own shareholdings totalling 13,050,000 Existing Ordinary Shares (representing in
aggregate approximately 29.99 per cent. of the issued ordinary share capital of Finsaga) in favour of the Proposals.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
28 June 2008 11.30 a.m.: Latest time for receipt of green Form of Proxy
for the Court Meeting
28 June 2008 11.45 a.m.: Latest time for receipt of blue Form of Proxy
for the Extraordinary General Meeting
28 June 2008 6.00 p.m.: Scheme Voting Record Time (in respect of the
Extraordinary General Meeting and the Court Meeting)
30 June 2008 11.30 a.m.: Court Meeting
30 June 2008 11.45 a.m.: Extraordinary General Meeting
15 July 2008 Court Hearing of the claim form to sanction the Scheme
16 July 2008 6.00 p.m.: Scheme Record Time
16 July 2008 Last day of dealings in Existing Ordinary Shares
17 July 2008 7.00 a.m. Suspension of dealings in Existing Ordinary
Shares on AIM
17 July 2008 Court hearing to confirm reduction of capital of Finsaga in
connection with the Scheme
18 July 2008 7.00 a.m.: De-listing of Existing Ordinary Shares
18 July 2008 Scheme Effective Date
22 July 2008 Court Hearing of the claim form to confirm the New Finsaga
Reduction of Capital
23 July 2008 New Finsaga Reduction of Capital becomes effective
By 5 August 2008 Despatch of certificates in respect of New Ordinary Shares
and Redeemable Shares
By 5 August 2008 Despatch of cheques to Shareholders in respect of the
cancellation of B Shares
The dates given are indicative only and may be subject to change. The dates are based on Finsaga's current expectations and will depend
on, among other things, the dates upon which the Court sanctions the Scheme, the Scheme becomes effective and the Court confirms the New
Finsaga Reduction of Capital. In particular, certain Court dates are subject to confirmation by the Court. If the scheduled date of the
Court Hearing of the claim form to sanction the Scheme is changed, Finsaga will give notice of the change by issuing an announcement through
a Regulatory Information Service.
Definitions
The following definitions apply throughout this announcement unless the context requires otherwise.
AIM the AIM Market operated by London Stock Exchange
B Shares the B Shares of nominal value 25.8 pence each in the capital of New
Finsaga to be allotted and issued pursuant to the Scheme and
carrying the rights described in Part 4 of this document
Board the Board of Directors of Finsaga
Canaccord Canaccord Adams Limited
Court the High Court of Justice of England and Wales
Court Hearing the hearing of the claim form to sanction the Scheme by the Court
Court Meeting the meeting, notice of which is set out in Part 8 of the Scheme
Document, of the holders of Existing Ordinary Shares convened for
11.30 a.m. on 30 June 2008 by order of the Court pursuant to section
896 of the Companies Act 2006 to consider and, if thought fit,
approve the Scheme, and any adjournment thereof
De-listing the cancellation of admission of the Existing Ordinary Shares to
trading on AIM
Directors the directors of Finsaga
Existing Ordinary Shares ordinary shares of 1 penny each in the capital of Finsaga:
(a) in issue as at the date of the Scheme Document;
(b) (if any) issued after the date of the Scheme Document and prior
to the Scheme Voting Record Time; and
(c) (if any) issued at or after the Scheme Voting Record Time and
at or prior to the Scheme Record Time either
on terms that the original or any subsequent holders thereof shall
be bound by the Scheme or in respect of which the holders thereof
shall have agreed in writing to be bound by the Scheme
but in each case save for any share(s) registered in the name of or
beneficially held for New Finsaga
Explanatory Statement Part 2 of the Scheme Document which has been prepared in accordance
with section 897 of the Companies Act 2006
Extraordinary General Meeting the extraordinary general meeting of Finsaga convened for 11.45 a.m.
on 30 June 2008, notice of which is set out in Part 9 of the Scheme
Document, to consider and, if thought fit, approve, a special
resolution required inter alia to give effect to the Scheme, and any
adjournment thereof
Finsaga Finsaga plc, a public limited company incorporated in England and
Wales with registered number 3917504
Finsaga Articles the Articles of Association of Finsaga as adopted or amended from
time to time
Forms of Proxy the forms of proxy accompanying the Scheme Document relating to the
resolutions to be proposed at the Court Meeting and the
Extraordinary General Meeting
FSMA 2000 Financial Services and Markets Act 2000
Group before the Scheme Effective Date, Finsaga and its subsidiary
undertakings (which does not include New Finsaga) and, from the
Scheme Effective Date, New Finsaga and its subsidiary undertakings
(which will include New Finsaga)
London Stock Exchange London Stock Exchange plc
New Finsaga New Finsaga Limited, a private limited company incorporated in
England and Wales with registered number 6531126
New Finsaga Reduction of the proposed reduction of capital of New Finsaga under section 135
Capital of the Companies Act 1985 described in paragraph 4 of Part 1 of the
Scheme Document
New Ordinary Shares the ordinary shares of nominal value of 1/300 pence in the capital
of New Finsaga to be allotted and issued pursuant to the Scheme
penny, pence, p, � or pounds the lawful currency of the United Kingdom
sterling
Proposals the proposed reorganisation of the Group involving the Scheme and
the subsequent New Finsaga Reduction of Capital
Redeemable Shares the redeemable shares of nominal value 1/300 pence each in the
capital of New Finsaga to be allotted and issued pursuant to the
Scheme
Registrars Neville Registrars Limited, Neville House, 18 Laurel Lane,
Halesowen, West Midlands B63 3DA
Return the payment to Shareholders proposed to be effected pursuant to the
Scheme as described in the Scheme Document by cancelling the B
Shares then redeeming the Redeemable Shares
Scheme the scheme of arrangement in its present form as set out in Part 3
of the Scheme Document or with or subject to any modification,
addition or condition approved or imposed by the Court
Scheme Document the document dated 6 June 2008 and posted to Shareholders containing
details of the Proposals, the Scheme, the Explanatory Statement and
notices of the Court Meeting and the Extraordinary General Meeting
Scheme Effective Date the first date on which both the Scheme and the reduction of capital
of Finsaga in connection with the Scheme become effective in
accordance with Clause 7 of the Scheme, expected to be 18 July 2008
Scheme Record Time 6.00 p.m. on the day after the Court Hearing, expected to be 16 July
2008
Scheme Shareholder a holder of Existing Ordinary Shares as appearing in the register of
members of Finsaga at the Scheme Record Time, save for New Finsaga
Scheme Voting Record Time 6.00 p.m. on 28 June 2008 or, if the Court Meeting is adjourned,
6.00 p.m. two days before the time appointed for any adjourned Court
Meeting
Shareholder a registered holder of Existing Ordinary Shares, or of New Ordinary
Shares, as the context may require
UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland
UK time local time in the United Kingdom
- ENDS -
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