TIDMIPSA
RNS Number : 7127N
IPSA Group PLC
01 February 2016
IPSA Group PLC
("IPSA" or the "Company")
Proposal for Disposal of Assets
and
Notice of General Meeting
Further to the announcement dated 28 January 2016, IPSA
announces that it has today posted a circular to shareholders of
the company, outlining the rationale behind the Disposal and
calling a General Meeting of shareholders.
The General Meeting will be held at the offices of WH Ireland
Limited at 24 Martin Lane, London EC4R 0DR at 2.30 p.m. on 16
February 2016. The circular will shortly be made available for
review on the Company's website at
www.ipsagroup.co.uk/investors.
For further information contact:
Mark Otto, Acting CEO
IPSA Group PLC +27 (84) 219 2000
James Joyce / James Bavister +44 (0) 20 7220
W H Ireland Ltd 1666
Riaan van Heerden,
PSG Capital (Pty) Ltd. +27 (0) 21 887 9602
Proposed Disposal of Subsidiary and Related Matters
Shareholders will be aware that trading in our shares on AIM was
suspended on 24 September 2015 when the Company announced that it
was unable to publish its financial statements for the year ended
31 March 2015 by 30 September 2015 as required by AIM Rule 19
pending publication of its Annual Report and Accounts. The Board
has stated in recent announcements that the Company is dependent on
the forbearance of its creditors. Our efforts have continued to
seek ways to secure the survival of the Company for the benefit of
all shareholders and I am writing to you now to bring you up to
date and to explain to you our proposals for the near future for
IPSA.
On 28 January 2016 we announced that we had conditionally agreed
to sell our 100 per cent. interest in Blazeway, the company which
owns our sole operating asset in Newcastle, Kwa Zulu Natal, South
Africa through its wholly owned South African subsidiary, NewCogen,
to Sloane Corporation, a privately owned company. The sale
consideration is cash of GBP50,000 and non-cash of GBP1,816,000 in
the form of the assumption of certain indebtedness of the Company
equivalent in total to consideration of GBP1,866,000. The Disposal,
if consummated, represents a disposal of the Company's sole
operating asset and is therefore a fundamental disposal under AIM
Rule 15, which would result in the Company being classified as an
AIM Rule 15 cash shell, which would require the Company within six
months of the Disposal to make an acquisition or acquisitions which
will constitute a reverse takeover under AIM Rule 14.
The net proceeds of the Disposal after costs will be applied in
settlement of a proportion of the Company's current creditors.
Following the Disposal, the Company will retain some residual
assets in the form of the balance of plant associated with its
former TG50D5 gas turbines which were sold to Rurelec PLC in June
2013 and a receivable from Rurelec PLC.
The purpose of this letter is therefore to give you more
information regarding the Disposal and to seek your approval to
it.
Sale of Blazeway
The Company previously announced that its working capital was
extremely tight and it has been reliant on the forbearance of its
creditors and facing the possibility that the Company may be put
into administration. As a result of the failure of one of
NewCogen's gas turbines in November 2015, the working capital and
creditor position have deteriorated still further.
Following a marketing exercise conducted by IPSA to seek a buyer
of all of or a significant interest in NewCogen, which to date has
not resulted in any offer acceptable to the Company, an unsolicited
offer has been received from Sloane Corporation which has agreed to
assume responsibility for settling the majority of the Company's
creditors with a few exceptions including Ethos. The latter has
been notified that the Company intends to honour its payment
obligations through the sale of balance of plant held in storage in
Italy and from the balance of funds still owed to the Company by
Rurelec PLC.
The principal terms of the Disposal are as follows:
-- initial upfront cash consideration of GBP50,000 for the
Company's shares in Blazeway, payable on execution of the SPA,
which sum will be converted to a loan to the Company in the event
that the sale is not consummated as a result of any condition
precedent not being satisfied;
-- Sloane Corporation has already paid a further GBP50,000 in
satisfaction of certain of NewCogen's outstanding liabilities,
which sum will be converted to a loan to NewCogen in the event that
the sale is not consummated as aforesaid;
-- Sloane Corporation has agreed to deposit on execution of the
SPA the sum of GBP280,000 into escrow with the Company's nominated
adviser to be drawn down and used to settle creditors and
obligations of NewCogen up to this amount both prior to and
following completion of the Disposal; and
-- Sloane Corporation has formally undertaken through covenants
in the SPA and through agreements reached with third party
creditors of the Company to assume liability for up to GBP1,866,000
of existing creditors of the Company.
-- the Disposal is conditional upon:
- requisite approval from Shareholders of the Disposal;
- the approval of IDC under the terms of the loan agreement
between NewCogen and IDC;
- the formal assumption by Sloane Corporation of GBP1,866,000 of
indebtedness of the Company, which assumption is subject to those
creditors' consent.
If Shareholders do not approve the Disposal, the Company and
NewCogen will enter into loan agreements with Sloane Corporation to
repay all sums provided under the arrangements described above.
As noted above, the conditional agreement to dispose of the
Company's interest in Blazeway is subject, inter alia, to the
approval by Shareholders of the resolution to that effect which
will be tabled at the forthcoming General Meeting.
Sloane Corporation is managed by Peter Earl, an experienced
company director with over twenty years' experience in the power
industry. The Directors believe that the sale of Blazeway will
preserve jobs at the operating power plant in Newcastle, which is
an area of high unemployment in South Africa.
Peter Earl, a former director of the Company, wholly owns Sloane
Corporation. As Peter Earl left the IPSA board in July 2015, the
transaction will be treated as a related party transaction under
the AIM Rules. The Directors consider, having consulted with WH
Ireland Limited, the Company's nominated adviser, that the terms of
the transaction are fair and reasonable insofar as Shareholders are
concerned.
In the year ended 31 March 2014, the audited loss before tax of
Blazeway was GBP2,011,155 and net assets were negative
GBP2,411,115. In the year ended 31 March 2015, the unaudited loss
of Blazeway was GBP227,529 and the net assets were negative
GBP2,638,644.
In the absence of other funding solutions in the available
timeframe, the Company has concluded that the sale of Blazeway is
the only way to avoid having to place NewCogen into business
rescue, which in turn would result in a likely administration for
IPSA. Whilst the financial position of IPSA will remain critical
following the proposed sale as a result of the amount owed to Ethos
of approximately GBP3.2 million, the Company will focus its
attention in the near term on seeking to satisfy its remaining
creditors from the sale of the balance of plant and the collection
of the funds owing by Rurelec PLC.
AIM Rule 15 Cash Shell
On completion of the proposed Disposal, the Company will be
deemed to be an AIM Rule 15 cash shell for the purposes of the AIM
Rules and will have six months in which to make an acquisition or
acquisitions which will constitute a 'reverse takeover' under AIM
Rule 14.
Recommendation
The Directors consider that the Disposal is in the best
interests of the Company and Shareholders as a whole. Accordingly,
the Directors recommend that you vote in favour of the Resolution
at the General Meeting as they intend to do so in respect of their
own beneficial holdings amounting in aggregate to 50,000 Ordinary
Shares representing 0.05 per cent. of issued Ordinary Shares. In
addition, the Company has received voting undertakings in support
of the Resolution from Shareholders representing a further 29.57
per cent. of the issued Ordinary Shares.
DEFINITIONS
In this announcement, the following expressions shall have the
following meanings, unless the context otherwise requires:
"AIM Rules" the AIM Rules for Companies published from time to
time by London Stock Exchange PLC;
"AIM" the market of that name operated by London Stock Exchange
PLC;
"Blazeway" Blazeway Engineering Limited, a wholly owned
subsidiary of the Company registered in England and Wales with
registration number 05356014;
the "Board" or the "Directors" the directors of the Company;
"Company" or "IPSA" IPSA Group PLC, a company registered in
England and Wales with number 05496202;
"Disposal" the proposed disposal of the Company's interest in
Blazeway to Sloane Corporation as described in this announcement
document;
"Ethos" Ethos Energy Italia S.P.A., the major creditor of the
Company;
"General Meeting" the general meeting of Shareholders convened
for 16 February 2016, notice of which is set out in the Circular,
which was posted to shareholders on 1 February 2016;
"Group" the Company and its subsidiaries;
"IDC" The Industrial Development Corporation of South Africa
Limited, a provider of loan finance to NewCogen;
February 01, 2016 13:24 ET (18:24 GMT)
"NewCogen" Newcastle Co-generation (Pty) Limited, the Company's
South African operating subsidiary owned through Blazeway;
"Ordinary Shares" the Company's ordinary shares of 2 pence each;
"Resolution" the resolution to be proposed at the General Meeting;
"Shareholders" holders of the Ordinary Shares;
"Sloane Corporation" Sloane Corporation Limited, a company
registered in England and Wales with registration number 07518886;
and
"SPA" the sale and purchase agreement dated 27 January 2016
between IPSA and Sloane Corporation.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2016
Posting of the Notice of General Meeting and Forms of Proxy on 1
February
Latest time and date for receipt of Forms of Proxy 2.30 p.m. on
12 February
General Meeting of the Company 2.30 p.m. on 16 February
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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