TIDMMOGP
RNS Number : 0225P
Mountfield Group plc
15 February 2021
15 February 2021
Mountfield Group Plc ("Group" or "Company")
Proposed Disposal of Operating Businesses
Conditional Placing
Proposed Change of Name
Posting of Circular and Temporary Suspension
Appointment of Broker
Mountfield Group Plc, the AIM quoted commercial flooring and
specialist construction company, announces that it has today
conditionally agreed to sell the entire issued share capital of
Mountfield Building Group ("MBG") Limited and Connaught Access
Flooring Holdings Limited ("Connaught"). The Company also announces
a conditional placing of 1,569,620,253new ordinary shares of
GBP0.001 each ("Placing Shares") at a price of GBP0.001975 per
share to raise GBP3.1 million before expenses ("Placing").
The Proposed Sales will constitute a fundamental change of
business of the Company under Rule 15 of the AIM Rules and is
therefore conditional on the approval of Shareholders at a general
meeting of the Company.
The Company will today post a circular to all Shareholders to
convene a general meeting ("General Meeting") to be held at 11.00
a.m. on 2 March 2021. An extract of the circular appears below and
a copy of the circular is available from the Company's website
http://www.mountfieldgroupplc.com/ .
The purpose of the General Meeting is to consider and, if
thought fit, approve the conditional disposals of MBG and Connaught
and the Placing. The Placing is conditional, inter alia, on the
approval by the Company's Shareholders of resolutions granting
authority to its Directors to allot and issue the Placing Shares on
a non-pre-emptive basis.
The Placing, which was oversubscribed, is not being underwritten
and has been arranged by Peterhouse Capital Limited, which has also
been appointed as the Company's broker with immediate effect.
Full details of the proposals are set out in the extract from
the circular set out below.
Temporary Suspension
In view of the recent volatility in the market in respect of
conditional placings, the Company has requested a temporary
suspension in trading in its Ordinary Shares on AIM from the date
of this announcement until the completion of the General Meeting on
2 March 2021.
Notice of General Meeting
The General Meeting will be held at 11.00 a.m. on 2 March 2021.
In accordance with Government legislation and related restrictions
in response to COVID-19, and to minimise public health risks, the
General Meeting is to be held as a closed meeting, electronically,
and members and their proxies will not be able to attend or vote at
the meeting. Further details of the Government's regulations
relating to COVID-19 can be found at www.gov.uk/coronavirus .
Shareholders who wish to vote on the resolutions are strongly
encouraged to appoint the Chairman of the General Meeting to act as
a proxy as any other named person will not be permitted to attend
or vote at the meeting.
Appointment of Broker
The Company also announces that Peterhouse Capital Limited has
been appointed as broker to the Company with immediate effect.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (which forms part of
domestic UK law pursuant to the European Union (Withdrawal) Act
2018).
For further information, please contact:
Mountfield Group Plc 01268 561 516
Peter Jay, Chairman
Cairn Financial Advisers
LLP 020 7213 0880
Jo Turner / Sandy Jamieson
Peterhouse Capital Limited 020 7469 0930
Lucy Williams / Duncan Vasey
The following information has been extracted from the circular.
As such, references, including page numbers, may be incorrect and
Shareholders should read the circular in full.
To holders of Ordinary Shares
Dear Shareholder,
Proposed Sale of Mountfield Building Group Limited and Connaught
Access Flooring Holdings Limited, Proposed placing of 1,569,620,253
new Ordinary Shares at a price of GBP0.001975 per share, Proposed
Change of Name and Notice of General Meeting
1. Introduction
It was announced on 15 February 2021 that the Company has
conditionally agreed to sell the entire issued share capital of MBG
to Mountfield Holdings for consideration of GBP1,663,000 and the
entire issued share capital of Connaught to Connaught Group for
consideration of GBP2,300,000 on the terms set out in paragraph 3
of this letter. The Company also announced a conditional placing of
1,569,620,253 new Ordinary Shares at a price of GBP0.001975 per
share to raise GBP3.1 million before expenses.
The Proposed Sales will constitute a fundamental change of
business of the Company under Rule 15 of the AIM Rules and is
therefore conditional on, inter alia, the passing of the Ordinary
Resolution at the General Meeting.
The effect of the Proposed Sales will be that the Company will
no longer have any trading business or activities and will become
an AIM Rule 15 Cash Shell. As such, the Company must make an
acquisition or acquisitions which constitute a reverse takeover
under Rule 14 of the AIM Rules or be re-admitted to trading on AIM
as an investing company under the AIM Rules (which requires the
raising of at least GBP6 million) within six months of Completion
failing which the Ordinary Shares would then be suspended from
trading on AIM pursuant to Rule 40 of the AIM Rules. Admission to
trading on AIM would be cancelled six months from the date of
suspension, should the reason for the suspension not have been
rectified.
Accordingly, Shareholder approval of the Proposed Sales is being
sought at a General Meeting of the Company to be held at 11.00 a.m.
on 2 March 2021. The notice convening the General Meeting and
setting out the Resolutions to be considered at it is set out at
the end of this document. A summary of the action you should take
is set out in paragraph 17 of this letter and on the Form of Proxy,
which accompanies this document.
Further details of the Proposed Sales and the Share Purchase
Agreements are set out below and in Part 2 of this document.
The purpose of this document is to give you further details of
the Proposed Sales and the Placing, including the background to and
reasons for them, to explain why the Independent Director considers
them to be in the best interests of the Company, its Shareholders
and stakeholders as a whole and recommend that you vote in favour
of the Resolutions to be proposed at the General Meeting.
On Completion, the Company proposes to change its name to U.K.
SPAC plc, subject to Shareholders' approval at the General
Meeting.
The Company has received from certain Shareholders irrevocable
undertakings to vote in favour of the Resolutions in respect of
holdings totalling in aggregate 139,320,000 Ordinary Shares,
representing approximately 54.79 per cent. of the Company's
existing issued share capital. Further details and the terms on
which the undertakings are given are set out in paragraph 14 of
Part 1 of this letter.
2. Background to and reasons for the Proposed Sales
Mountfield , a non-trading holding company, was incorporated in
September 2007 to become the holding company of Connaught and MBG,
which were companies that operated in separate sectors of the
construction industry. The Ordinary Shares of Mountfield were
admitted to trading on AIM on 30 October 2008.
The period from 2015 to 2018 saw the Group's business flourish
as annual operating profits increased by 454 per cent. from
GBP203,895 to GBP1,129,173. Even though operating profits fell by
GBP278,322 to GBP850,851 in 2019, the Directors regarded this as
having been caused by problems with a particular contract which
were unlikely to be repeated.
The period of growth came to an abrupt halt when the first
lockdown was announced on 23 March 2020. The impact of the pandemic
was immediate and far-reaching. Most construction sites were closed
and the few that remained open were subject to an extensive new set
of regulations that impacted on the Group's ability to operate
profitably. In the accounts for the financial year ended 31
December 2019 (which were announced on 15 September 2020) I wrote,
as Non-executive Chairman, that "The Board believes that as regards
future prospects, the changes resulting from the COVID-19
[pandemic] are of a fundamental nature and that these changes are
likely to have a long term and materially negative impact on the
markets in which the Group Companies operate."
In the half-yearly report to 30 June 2020, Mountfield reported
that net profits before tax for the period had dropped from
GBP719,056 in 2019 to GBP80,605 on turnover of GBP5,823,166 as
against that of GBP9,137,192 in 2019.
In our half-year report to 30 June 2020, the Group CEO and I
wrote that:
"We are disappointed to report that the Group's performance and
profitability that had improved substantially over the last few
years have deteriorated significantly in the current year. Turnover
and net profit for the Period [half year] are substantially lower
than those achieved in the corresponding periods of the previous
two years."
Unfortunately, the Company's trading position has not improved
since 30 June 2020 with turnover, operating profits and the levels
of secured turnover continuing to run at levels not seen since the
recession of 2008 and 2009. The Directors anticipate that the
Group's operating profits in 2020 are unlikely to be significantly
above break-even.
The Board is not confident that Connaught and MBG can return to
pre-pandemic levels of activity and profitability in the
foreseeable future. This is because work patterns have changed
substantially and demand for new and refurbished office space is
unlikely to return to pre-pandemic levels in the near future and,
as a result, demand for Connaught's services will continue to be
depressed. The absence of passporting or other support for the
financial services industry (from which Connaught obtained a large
part of its work) within the Brexit trade settlement is regarded by
the Directors as an additional area of concern, so far as Connaught
is concerned.
In a trading statement that was issued on 19 January 2021, I
wrote that "Management Accounts for the second half of 2020
demonstrate the impact of the pandemic on the Group in that it
achieved a level of profitability lower than that for the first
half" and I concluded that "As a result of the difficult trading
conditions and the uncertainty as to which areas of construction
will be in demand following the end of the pandemic, the Board is
considering making structural changes to the Group to improve
shareholder value."
The major decline in profitability has, as would be expected,
impacted on the Company's cash flow.
As a result of the Board's considerations, the Directors
concluded that the current level of business and marginal
profitability makes it increasingly difficult to support the costs
of maintaining the Company's AIM quotation. Further, the Directors
are no longer willing to continue providing personal guarantees for
the Group's bank overdraft facility in these circumstances.
To remove this personal risk, and to maintain the Company's AIM
quotation, the Directors would have sought to replace the
guarantees with funds obtained from a new equity raising which, in
the current economic climate, might not be achievable or which
otherwise would almost certainly have been a major dilution in the
percentages of the equity currently held by all Shareholders. Such
a fundraise would not offer a solution to the Directors' concerns
about the current and longer-term performance of Connaught and MBG
in the absence of sizeable contract wins in the near-term.
Another option considered to reduce operating costs was to
delist the Company's Ordinary Shares from trading on AIM, however
this would have removed Shareholders' ability to trade their
Ordinary Shares and restricted the Company's ability to raise
funds, if needed, again without addressing the Group's more
fundamental trading problems.
In the absence of either option above being pursued, if it is
found that the current trading pattern continues for longer than
expected, or deteriorates further, the Company may be unable to
continue as a viable business in its present form.
The Directors, therefore, concluded that the solution to the
Company's present problems that offered an opportunity for
Shareholders to see value accruing to their Ordinary Shares would
be for it to dispose of its two trading subsidiaries, Connaught and
MBG, with the purchasers agreeing between them to assume all of the
Company's liabilities, leave it free of any debt and for it to
become a cash shell. At the same time, the Company would effect a
fundraise to provide it with the funds required to retain its AIM
listing and enable it to seek to acquire an asset or business that
has potential for growth and profitability.
The two current executive directors of the Group, Andy Collins
and Graham Read, have agreed to buy the businesses that they have
each managed from the Company. The total, aggregate, consideration
being offered by Andy Collins and Graham Read is GBP3,963,000,
which will take the form of cash (to be utilised by the Company to
pay off the bank indebtedness and trade creditors) and the
assumption of other existing liabilities (being the MBG Inter-group
Loan, the Connaught Inter-group Loan and the Loan Notes), that the
Company would otherwise have to be settled if or when it had been
able to do so.
The Independent Director considers that the total consideration
payable by Andy Collins and Graham Read, and the corporate vehicles
that each has incorporated, greatly exceeds the value that the
businesses would achieve from third party purchasers who would not
assume all outstanding liabilities. Further, the Company will also
benefit from the sale of the businesses to Andy Collins and Graham
Read from a significantly faster and cheaper sale process than
otherwise would ordinarily have been incurred and mitigates the
risk of the sale process aborting.
On Completion of the Proposed Sales, Andy Collins and Graham
Read will resign as Directors of the Company, confirming that they
do not have claims against it, and additional appointments will be
made.
The Independent Director believes that if the Resolutions are
passed and the Proposed Sales and the Placing are completed, the
Company will be well placed to acquire another business or asset to
replace Connaught and MBG. However, were the Resolutions not to be
passed at the General Meeting and the Company was unable,
therefore, to complete the Proposed Sales, the Directors would have
to take steps necessary to ensure the viability of the Group to
continuing operating which would likely include seeking Shareholder
approve to delist the Company's Ordinary Shares from trading on AIM
and to seek alternative financing. There is no guarantee that any
alternative sources of financing will be available to the Company
on terms that are acceptable the Board.
If the Resolutions are passed at the General Meeting, the sale
of the subsidiaries would constitute a disposal resulting in a
fundamental change of business and the Company will become an AIM
Rule 15 cash shell.
Peter Jay (as the independent director in respect of the
Proposed Sales) has considered the current and prospective
financial position of the Company and the options available to it
that are mentioned above, and which include the Proposed Sales. He
has concluded that the best option for Shareholders would be for
the Proposed Sales to take place, for the Company to consider new
commercial opportunities and to raise additional funds to enable it
to pursue one or more of them. Although no acquisition targets have
yet been identified, a cash injection will enable the new board of
directors after Completion to begin the process of sourcing one
that offers the prospect of growth and an increase in the value of
the Company's Ordinary Shares.
The Company has two assets other than the shares in Connaught
and MBG. The first is shares in a subsidiary, Mountfield Land
Limited ("Mountfield Land"), a company that was set up in 2008 at
the time of the listing and was intended to source and consolidate
residential development sites and then to onward sell these sites
to house builders. At the end of 2009, the two employees who ran
the business of Mountfield Land were dismissed for lack of
performance and the company has been dormant since that date. It
does not own any assets and it is in the process of being
dissolved.
The other asset is a 20 per cent. shareholding in a company
known as Hub (UK) Limited ("Hub") with which the Company entered
into a joint venture in 2012. The venture was terminated in 2014
because Hub failed to introduce any contracts to MBG. Hub is now
insolvent and the shares (which are of nil value) will be
transferred by the Company to MBG (or as MBG may direct) on
completion of its sale for GBP1.
3. Principal terms of the Proposed Sales
Pursuant to the Connaught Share Purchase Agreement, the Company
is proposing to sell the entire issued share capital of Connaught.
The consideration payable by Connaught Group to the Company is
GBP2,300,000 to be satisfied by GBP842,188 in cash and the
assumption by Connaught Group of the Connaught Inter-group
Loan.
Pursuant to the MBG Share Purchase Agreement, the Company is
proposing to sell the entire issued share capital of MBG. The
consideration payable by Mountfield Holdings to the Company is
GBP1,663,000 to be satisfied by GBP113,334 in cash and the
assumption by Mountfield Holdings of (i) the MBG Inter-group Loan;
and (ii) the Loan Notes.
Completion of both sales is inter-conditional and also
conditional upon other closing conditions, including (amongst
others) the approval of the Ordinary Resolution at the General
Meeting and Admission.
Further details of the Share Purchase Agreements are set out in
Part 2 of this document.
4. Information on Mountfield Holdings and Connaught Group
Mountfield Holdings is a newly incorporated company majority
owned by Graham Read. Graham is also a director of Mountfield
Holdings. The company has been incorporated for the purpose of
acquiring MBG.
Connaught Group is a newly incorporated company majority owned
by Andy Collins. Andy is the sole director . The company has been
incorporated for the purpose of acquiring Connaught.
5. Financial effects of the Proposed Sales and use of the proceeds
On Completion, the Board intends to use the cash proceeds from
the Proposed Sales to pay all of the Company's outstanding
liabilities as at Completion including, but not limited to, trade
creditors and bank indebtedness so that Mountfield will be debt
free.
Following the discharge of such liabilities, it is expected that
the Company will retain no cash from the Proposed Sales. Following
Completion, the Company will have no significant assets or
liabilities, save for new funds to be introduced as a result of the
Placing.
As such a cash shell, the Company will have no operating cash
flow and would be dependent on the net proceeds of the Placing, and
any subsequent fundraisings, for its working capital requirements.
The Company would not expect to need further funding, following the
Placing, prior to commencing a reverse takeover transaction. In the
event that the Company does require additional funding in future,
there can be no guarantee that this funding will be forthcoming and
the Company's ability to raise further funds may depend on the
success of any existing and acquired investments at that time. The
Company may not be successful in procuring the requisite funds on
terms which are acceptable to it (or at all) and Shareholders'
holdings of Ordinary Shares may be materially diluted in due course
by subsequent equity issues.
6. Strategy following Completion
If the Proposed Sales complete, the Company will become an AIM
Rule 15 Cash Shell. Andy Collins and Graham Read will step down
from the Board and new directors will be appointed in their
place.
The Company intends to pursue a reverse takeover transaction,
subject to shareholder approval, with the aim of delivering
shareholder value. Pursuant to Rule 14 of the AIM Rules, a reverse
takeover transaction would require the publication of an admission
document in respect of the proposed enlarged entity and would be
conditional upon the consent of the Shareholders being given at a
general meeting. As per the guidance notes to Rule 14 of the AIM
Rules, trading in the Ordinary Shares would be suspended following
the announcement that a reverse takeover had been agreed or was in
contemplation until the publication of an AIM Admission Document or
an announcement that the transaction was not proceeding.
The Board has not yet identified any potential reverse takeover
targets which will be the primary responsibility of the new board.
In seeking and considering potential acquisitions, it is intended
that the new board will seek to identify opportunities offering the
potential to deliver value creation and returns to shareholders
over the medium to long-term. The Company will consider investment
opportunities in any sectors as they arise.
Any failure in completing an acquisition or acquisitions which
constitute(s) a reverse takeover under AIM Rule 14 (including
seeking re-admission as an investment company (as defined under the
AIM Rules)) will after 12 months result in cancellation of the
Company's Ordinary Shares from trading on AIM.
The Company will be dependent upon the ability of the new board
of directors following Completion to identify suitable acquisition
targets. There is no guarantee that the Company will be able to
acquire an identified opportunity at an appropriate price, or at
all, as a consequence of which resources might have been expended
fruitlessly on investigative work and due diligence.
Market conditions may have a negative impact on the Company's
ability to make an acquisition or acquisitions which constitute a
reverse takeover under AIM Rule 14. There is no guarantee that the
Company will be successful meeting the AIM Rule 14 deadline as
described above.
The Company expects to incur certain third-party costs
associated with the sourcing of a suitable acquisition or
acquisitions. The Company can give no assurance as to the level of
such costs, and given that there is no guarantee that negotiations
to acquire any given target business will be successful, the
greater the number of deals that do not reach completion, the
greater the likely impact of such costs on the Company's
performance, financial condition and business prospects.
7. Details of the Placing
To provide funding for the Company to enable it to continue as a
cash shell, Peterhouse has conditionally raised on behalf of the
Company GBP3.1 million before expenses through the Placing of the
Placing Shares at the Placing Price, together with one Investor
Warrant for every one Placing Share subscribed for. The Placing is
only conditional upon the passing of the Resolutions at the General
Meeting and completion of the Proposed Sales.
For every one Placing Share acquired by a participant in the
Placing, that participant shall be granted one Investor Warrant
providing a right to subscribe for a new Ordinary Share at a
subscription price of GBP0.003 per Ordinary Share. In total,
subject to completion of the Placing, there will be up to
1,569,620,253 Investor Warrants granted. The Investor Warrants
shall be exercisable for a period of 12 months following Admission,
after which any unexercised Investor Warrants shall lapse.
In addition to the issue of the Placing Shares, certain
creditors (being Peter Jay and Cairn), have agreed to settle their
outstanding liabilities by way of the issue of new Ordinary Shares
at the Placing Price. Accordingly, the Company will issue the
Advisor Shares to Cairn and the Fee Shares to Peter Jay in
satisfaction of liabilities totalling, in aggregate, GBP56,000. In
addition, Cairn will also receive the Cairn Warrants which are
being granted on the same terms as the Investor Warrants.
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM, subject to
approval of the Resolutions. It is expected that Admission will
become effective and that dealings in the New Ordinary Shares, will
commence on AIM at 8.00 a.m. on or around 3 March 2021.
The Placing Shares will represent approximately 84.74 per cent.
of the Enlarged Issued Share Capital of the Company in issue
immediately following Admission. Following Admission, the Enlarged
Issued Share Capital of the Company will be 1,852,219,137.
Subject to Admission, Peterhouse will receive warrants over 4
per cent. of the Enlarged Issued Share Capital for the period of
three years from Admission, as part-payment for the introduction of
incoming investors. In practice this means that at Admission, the
Broker Warrants provide the rights to subscribe for 62,784,810
Ordinary Shares at the Placing Price.
8. Consequences of the Placing for Existing Shareholders
Following completion of the Placing, the proportion of the
Ordinary Shares held by the existing Shareholders will be
approximately 13.73 per cent. of the Enlarged Issued Share
Capital.
The New Ordinary Shares will be issued credited as fully paid
and will rank pari passu in all respects with the Existing Ordinary
Shares including the right to receive all dividends and other
distributions declared on or after the date on which they are
issued.
For details as to the expected date and times by which certain
events (e.g. Admission, the crediting of CREST accounts and the
despatch of share certificate) are expected to happen in relation
to the Placing Shares, please refer to the information on page 6
(Expected Timetable of Principal Events) of this document.
9. Proposed Change of Name
Following the Company becoming an AIM Rule 15 cash shell and in
order to avoid any confusion with MBG following Completion, the
Company is proposing to change its name to U.K. SPAC plc.
The Special Resolution will therefore be proposed at the General
Meeting to approve the change of name of the Company to U.K. SPAC
plc conditional on Completion. The name will be changed as soon as
possible after Completion once the relevant paperwork has been
processed by Companies House.
The Directors therefore believe that the Change of Name would be
in the best interests of the Company and the Shareholders as a
whole.
If the Special Resolution is passed at the General Meeting, the
Company's website and AIM ticker will be updated accordingly. The
Company will update the market in due course of the new
details.
10. Proposed board changes
Subject to Completion occurring, Andy Collins will resign from
his position as Chief Executive Officer of the Company and Graham
Read will resign from his position as Executive Director of the
Company.
Peter Jay will remain as Chairman of the Company and two new
directors will be appointed to the Board on Completion.
11. Related Party Transactions
Both Andy Collins and Graham Read are Directors of Mountfield,
Connaught and MBG. They are also both the beneficial owners of a
substantial number of Ordinary Shares in Mountfield totalling, in
aggregate, 45.55 per cent. of the Existing Ordinary Shares. Andy
Collins is also a director of, and shareholder in, Connaught Group
and Graham Read is a director of, and shareholder in, Mountfield
Holdings, their respective entities established for the purposes of
the Proposed Sales.
As a result, Andy Collins would be regarded as a related party
of Mountfield with regard to his proposed purchase of Connaught and
Graham Read would be regarded a related party of Mountfield with
regard to his proposed purchase of MBG. The Proposed Sales
therefore constitute related party transactions for the purposes of
AIM Rule 13 (the "Related Party Transactions").
Peter Jay is considered to be an independent director for the
purposes of the Proposals. Peter does not hold an executive
position with the Company, has no interest or prospective interest
in either of the Proposed Sales, in Connaught or MBG or in either
of the corporate vehicles that will be used to acquire them.
The Directors, with the exception of Graham Read and Andy
Collins, consider, having consulted with the Company's nominated
adviser, Cairn, that the terms of the Related Party Transactions
are fair and reasonable insofar as Shareholders are concerned.
12. Use of Proceeds
The Company is raising funds to enable the Board to search for
acquisition opportunities which, if successful, would constitute a
reverse takeover under the AIM Rules and fund the Company's general
working capital.
13. Advisor Shares and Fee Shares
The Advisor Shares are to be allotted and issued to Cairn on
Admission at the Placing Price in lieu of, and in full and final
settlement of outstanding fees. In addition, Cairn will also
receive the Cairn Warrants which are being granted on the same
terms as the Investor Warrants.
The Fee Shares are to be allotted and issued to Peter Jay on
Admission at the Placing Price in lieu of, and in full and final
settlement of outstanding fees and in line with his ordinary
remuneration.
14. Irrevocable undertakings
Graham Read and Andy Collins have given irrevocable undertakings
to the Company to vote in favour of the Resolutions to be proposed
at the General Meeting (and, where relevant, to procure that such
action is taken by the relevant registered holders if that is not
one of them) in respect of their beneficial holdings totalling, in
aggregate, 115,820,000 Ordinary Shares, representing approximately
45.55 per cent. of the Existing Ordinary Shares.
Subject to the Ordinary Shares which he beneficially holds being
registered in his name personally at least 48 hours prior to the
General Meeting, Peter Jay has given an irrevocable undertaking to
the Company to vote in favour of the Resolutions to be proposed at
the General Meeting in respect of his beneficial holding totalling
23,500,000 Ordinary Shares, representing approximately 9.24 per
cent. of the Existing Ordinary Shares.
15. Taxation
Any person who is in any doubt as to his tax position or who is
subject to tax in a jurisdiction other than the United Kingdom is
strongly recommended to consult his professional tax adviser
immediately.
16. The General Meeting
You will find set out at the end of this document a notice
convening the General Meeting to be held on 2 March 2021 at 11.00
a.m., at which the Resolutions will be proposed.
Resolution 1 (being the Ordinary Resolution), which will be
proposed at the General Meeting as an ordinary resolution, is to
approve the Proposed Sales and to authorise the Directors to take
all steps necessary or desirable to complete the Proposed Sales. In
order for the Ordinary Resolution to be passed, a simple majority
is required.
Resolution 2, which will be proposed at the General Meeting as
an ordinary resolution, is to approve the Proposed Sales as
substantial property transactions for the purposes of section 190
of the Companies Act. In order for Resolution 2 to be passed, a
simple majority is required.
In addition, resolutions are being proposed at the General
Meeting in connection with the Placing, the Broker Warrants, the
Cairn Warrants and the Investor Warrants. Resolutions 3 and 4 seek
authority for the Directors to (i) allot the New Ordinary Shares
and (ii) grant the Broker Warrants, the Cairn Warrants and the
Investor Warrants, and to do so on a non-pre-emptive basis.
Resolution 3 is an ordinary resolution and requires a simple
majority to be passed. Resolution 4 is a special resolution and
requires the approval of Shareholders representing at least 75 per
cent. of votes cast to be passed. Resolutions 3 and 4 also seek
further authority for the Directors to allot new Ordinary Shares on
a non-pre-emptive basis subject to certain limitations.
Resolution 5 (being the Special Resolution), which will be
proposed at the General Meeting as a special resolution and which
is conditional upon Resolutions 1 and 2 having been passed and
Completion, is to approve the Change of Name.
Resolution 6 which is being proposed at the General Meeting as a
special resolution and which is conditional on Completion, is to
amend the articles of association of the Company to remove the
rights attaching to the Founder Shares currently held by Graham
Read. Resolution 6 is a special resolution and requires the
approval of Shareholders representing at least 75 per cent. of
votes cast to be passed
Shareholders should read the Notice of General Meeting at the
end of this document for the full text of the Resolutions and for
further details about the General Meeting.
Effect of COVID-19 regulations on the General Meeting
In accordance with Government legislation and related
restrictions in response to COVID-19, and to minimise public health
risks, the General Meeting is to be held as a closed meeting,
electronically, and members and their proxies will not be able to
attend or vote at the meeting. Further details of the Government's
regulations relating to COVID-19 can be found at
www.gov.uk/coronavirus.
As a result, the minimum number of Directors or employees of the
Company will attend to ensure that the meeting is quorate. Updates
in relation to the General Meeting will be provided on our website
and, where appropriate, announced via a Regulatory Information
Service.
Voting on the Resolutions will be by way of a poll rather than a
show of hands. A poll ensures that the votes of Shareholders who
are unable to attend the General Meeting, but who have provided
votes by proxy, are taken into account in the final voting
results.
If you would like to vote on the Resolutions, you can appoint a
proxy to exercise your right to vote at the General Meeting. As
such, you are strongly encouraged to appoint the Chairman of the
General Meeting to act as your proxy as any other named person will
not be permitted to attend or vote at the meeting.
Shareholders will find accompanying this document a Form of
Proxy for use in connection with the General Meeting. The Form of
Proxy should be completed and returned in accordance with the
instructions thereon so as to be received by SLC Registrars, as
soon as possible and in any event not later than 48 hours
(excluding non-Business Days) before the time of the General
Meeting.
The number of Ordinary Shares a Shareholder holds as at the
Voting Record Time will determine how many votes a Shareholder or
his proxy will have on the poll.
17. Action to be taken
A Form of Proxy for use at the General Meeting accompanies this
document. The Form of Proxy should be completed and signed in
accordance with the instructions thereon and returned to the
Company's registrars, SLC Registrars at Elder House, St Georges
Business Park, Brooklands Road, Weybridge, Surrey KT13 0TS (or by
scanning a signed copy and emailing this to
proxy@slcregistrars.com), as soon as possible, but in any event so
as to be received by no later than 11.00 a.m. on 26 February 2021
(or, if the General Meeting is adjourned, 48 hours (excluding any
part of a day that is not a Business Day) before the time fixed for
the adjourned meeting).
Your attention is drawn to the fact that the Proposed Sales are
conditional and dependent on the Ordinary Resolution being passed
by Shareholders at the General Meeting. Shareholders are asked to
vote in favour of the Ordinary Resolution in order for the Proposed
Sales to proceed. If Shareholders do not approve the Proposed Sales
at the General Meeting, the Board will begin the process of seeking
consent to delist the Ordinary Shares of the Company from trading
on AIM.
If you are in any doubt as to what action you should take, you
are recommended to seek your own personal financial advice from
your broker, bank manager, solicitor, accountant or other
independent financial adviser authorised under FSMA if you are
resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser,
immediately.
18. Recommendation
The Directors believe the Proposals to be the most appropriate
way to provide a strategy to provide value to Shareholders. Should
the Proposed Sales not proceed for any reason, the Company would
seek to delist from AIM in order to be able to secure future
trading. Graham Read and Andy Collins intend to vote in favour of
the Resolutions with their holdings totalling, in aggregate,
115,820,000 Ordinary Shares, representing approximately 45.55 per
cent. of the Existing Ordinary Shares. Subject to the Ordinary
Shares which he beneficially holds being registered in his name
personally at least 48 hours prior to the General Meeting, Peter
Jay also intends to vote in favour of the Resolutions with his
holding totalling 23,500,000 Ordinary Shares, representing
approximately 9.24 per cent. of the Existing Ordinary Shares.
The Independent Director considers the Proposals to be in the
best interests of the Company, its Shareholders and stakeholders as
a whole and accordingly recommends Shareholders to vote, or procure
the vote, in favour of the Resolutions to be proposed at the
General Meeting.
Yours faithfully,
Peter Jay
Non-executive Chairman
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Event 2021
Announcement of the Proposals 15 February
Publication and posting of this document 15 February
and Form of Proxy
Latest time and date for receipt of 11.00 a.m. on 26 February
Forms of Proxy
General Meeting 11.00 a.m. on 2 March
Announcement of the result of the General 2 March
Meeting
Expected completion date of the Proposed 3 March
Sales
Admission of the Placing Shares, the 3 March
Advisor Shares and the Fee Shares to
trading on AIM
CREST accounts credited (where applicable) 8.00 a.m. on 3 March
Despatch of definitive share certificates within 10 days of Admission
(where applicable)
Notes:
References to times in this document are to London time (unless
otherwise stated).
Each of the above times and/or dates is subject to change at the
absolute discretion of the Company, Peterhouse and Cairn. If any of
the above times and/or dates should change, the revised times
and/or dates will be announced through a Regulatory Information
Service.
STATISTICS
Placing Price (per share) GBP0.001975
Number of Existing Ordinary Shares at the Last
Practicable Date 254,244,454
Number of Placing Shares 1,569,620,253
Number of Adviser Shares 15,189,873
Number of Fee Shares 13,164,557
Enlarged Issued Share Capital 1,852,219,137
Number of Broker Warrants 62,784,810
Number of Investor Warrants 1,569,620,253
Number of Cairn Warrants 15,189,873
Placing Shares as a percentage of the Enlarged 84.74 per cent.
Issued Share Capital
Gross proceeds of the Placing GBP3.1 million
Estimated net proceeds of the Placing GBP2,867,500
Market capitalisation of the Company at the GBP3,658,132
Placing Price
DEFINITIONS
The following definitions have been extracted from the circular
and shareholders should read the circular in full, rather than rely
on this summary, to ensure the context applies correctly.
"Act" the Companies Act 2006 (as amended);
"Admission" admission of the New Ordinary Shares to trading
on AIM, which is expected to occur on or
around 3 March 2021;
"Advisor Shares" 15,189,873 Ordinary Shares to be issued in
settlement of contractual liabilities to
Cairn, further details of which are set out
in paragraph 13 of Part 1 of this document;
"AIM" the AIM market operated by the London Stock
Exchange;
"AIM Rule 15 Cash has the meaning given to 'AIM Rule 15 cash
Shell" shell' in the AIM Rules;
"AIM Rules" the rules and guidance notes for AIM companies
and their nominated advisers issued by the
London Stock Exchange from time to time relating
to AIM traded securities and the operation
of AIM;
"Broker Warrants" the warrants over 62,784,810 Ordinary Shares
to be granted to Peterhouse, further details
of which are set out in paragraph 7 of Part
1 of this document;
"Business Day" a day on which dealings in domestic securities
may take place on the London Stock Exchange;
"Cairn" Cairn Financial Advisers LLP, a limited liability
partnership incorporated and registered in
England and Wales with registered number
OC351689, and the Company's nominated adviser,
authorised and regulated by the FCA;
"Cairn Warrants" the warrants over 15,189,873 Ordinary Shares
to be granted to Cairn, such warrants to
be granted on the same terms as the Investor
Warrants;
"Certificated form" an ordinary share recorded on a company's
or "in Certificated share register as being held in certificated
form" form (namely, not in CREST);
"Change of Name" the proposal to change the name of the Company
to U.K. SPAC plc;
"Company" or "Mountfield Mountfield Group plc, a company incorporated
" and registered in England and Wales with
registered number 06374598;
"Completion" completion of the Proposed Sales in accordance
with the Share Purchase Agreements;
" Connaught Group" Connaught Access Flooring Group Limited,
a company incorporated and registered in
England and Wales with registered number
13166826;
"Connaught" Connaught Access Flooring Holdings Limited,
a company incorporated and registered in
England and Wales with registered number
06577291;
"Connaught Inter-group GBP1,457,812 being the amount outstanding
Loan" on the inter-group loan account between the
Company and Connaught's subsidiary, Connaught
Access Flooring Limited;
"Connaught Share Purchase a conditional share sale agreement dated
Agreement" 15 February 2021 between the Company and
Connaught Group;
"CREST" the relevant system (as defined in the CREST
Regulations) in respect of which Euroclear
is the operator (as defined in those regulations);
"CREST Regulations" the Uncertificated Securities Regulations
2001 (S.I. 2001 No. 3755) (as amended);
"Directors" or "Board" the directors of the Company whose names
are set out on page 5 of this document, or
any duly authorised committee thereof;
"Enlarged Issued Share the entire issued ordinary share capital
Capital" of the Company following completion of the
Placing;
"Euroclear" Euroclear UK & Ireland Limited, the operator
of CREST;
"Existing Group" the Company and its subsidiary undertakings
as at the date of this document (including,
without limitation, the Connaught and its
subsidiary and MBG and its subsidiary);
"Existing Ordinary the 254,244,454 Ordinary Shares in issue
Shares" at the date of this document, all of which
are admitted to trading on AIM;
"FCA" the Financial Conduct Authority;
"Fee Shares" 13,164,557 Ordinary Shares to be issued in
settlement of contractual liabilities to
Peter Jay, further details of which are set
out in paragraph 13 of Part 1 of this document;
"Form of Proxy" the form of proxy for use in connection with
the General Meeting which accompanies this
document;
"Founder Shares" the 2,270,182 founder shares of GBP1 each
in issue in the Company;
"FSMA" the Financial Services and Markets Act 2000
(as amended);
"General Meeting" a duly convened general meeting (or any adjournment
thereof) of the Shareholders at which the
Resolutions will be proposed to be held at
11.00 a.m. on 2 March 2021, notice of which
is set out in the Notice of General Meeting;
"Group" the Company and its subsidiaries;
"Independent Director" Peter Jay;
"Investor Warrants" the warrants over, in aggregate, 1,569,620,253
Ordinary Shares to be granted to parties
participating in the Placing, further details
of which are set out in paragraph 7 of Part
1 of this document;
"Last Practicable 12 February 2021;
Date"
"Loan Notes" GBP245,000 of outstanding loan notes owed
by the Company to Graham Read under a loan
note instrument dated 16 October 2008;
"London Stock Exchange" London Stock Exchange plc;
"MBG" Mountfield Building Group Limited, a company
incorporated and registered in England and
Wales with registered number 02101063);
"MBG Inter-group Loan" in aggregate GBP1,304,666, being the amount
outstanding on the inter-group loan account
between the Company and MBG and the amount
outstanding on the inter-group loan account
between the Company and MBG's subsidiary,
MBG Construction Limited;
"MBG Share Purchase a conditional share sale agreement dated
Agreement" 15 February 2021 between the Company and
Mountfield Holdings;
" Mountfield Holdings" Mountfield Holdings Limited, a company incorporated
and registered in England and Wales with
registered number 13144822;
"New Ordinary Shares" the Placing Shares, the Advisor Shares and
the Fee Shares;
"Notice of General the notice convening the General Meeting
Meeting" which is set out at the end of this document;
"Ordinary Resolution" resolution number 1 proposed at the General
Meeting seeking shareholder approval to the
Proposed Sales for the purposes of Rule 15
of the AIM Rules;
"Ordinary Shares" the ordinary shares of 0.1 pence each in
the capital of the Company;
"Peterhouse" Peterhouse Capital Limited, a company incorporated
and registered in England and Wales with
registered number 02075091, and the Company's
broker, authorised and regulated by the FCA;
"Placing" the placing of new Ordinary Shares;
"Placing Price" GBP0.001975;
"Placing Shares" 1,569,620,253 new Ordinary Shares to be issued
pursuant to the Placing;
"Proposals" the Proposed Sales and the Placing;
"Proposed Sales" the proposed sale of the entire issued share
capital of each of the Sale Companies pursuant
to the Share Purchase Agreement;
"Prospectus Regulation the Prospectus Regulation Rules made in accordance
Rules" with the EU Prospectus Regulation 2017/1129
in relation to offers of securities to the
public and the admission of securities to
trading on a regulated market, as amended
by The Prospectus (Amendment etc.) (EU Exit)
Regulations 2019;
"Register" the register of members of the Company maintained
by SLC Registrars Limited, a company incorporated
and registered in England and Wales with
registered number 01661542;
"Resolutions" the ordinary resolutions and the special
resolutions set out in the Notice of General
Meeting;
"Restricted Jurisdiction" Australia, Canada, Japan, New Zealand, the
Republic of South Africa or the United States;
"Sale Companies" Connaught and MBG;
"Share Purchase Agreements" the Connaught Share Purchase Agreement and
the MBG Share Purchase Agreement;
"Shareholders" holders of Ordinary Shares;
"Special Resolution" resolution number 5 to be proposed at the
General Meeting seeking shareholder approval
to the Change of Name;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern
Ireland;
"uncertificated" or an Ordinary Share recorded on a company's
"in uncertificated share register as being held in uncertificated
form" form in CREST and title to which, by virtue
of the CREST Regulations, may be transferred
by means of CREST;
"US Person(s)" has the meaning given in the United States
Securities Act 1933 (as amended); and
"Voting Record Time" 6.30 p.m. on 26 February 2021.
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