7 December
2017
Clear Leisure
Plc
(“Clear Leisure”, “the Group” or “the
Company”)
Business
Update
Recent Events
The past two months have been especially challenging for the
Company’s management; as they must have been frustrating for
shareholders.
On 10 October 2017, through no
fault of the Company, the Company’s then nominated adviser, ZAI
Corporate Finance Limited had its status as a Nominated Advisor
removed. As the Company had not confirmed a replacement nominated
adviser by 19 October 2017, AIM
temporarily suspended trading in the Company’s shares.
On the same day, the Ivrea Court in Turin, announced on its website, that it had
found in favour of a petition by the Court Prosecutor to wind up
Clear Leisure’s Italian subsidiary, Mediapolis srl. Despite the
original claim against Mediapolis, which triggered the petition
having been settled by the Company, the Court, surprisingly,
elected not only to continue with the petition but also found in
favour of the prosecutor. Following this, on 21 November 2017, the Company announced that
having received and carefully studied the formal judgment, the
Company and Mediapolis jointly appealed the Court’s decision.
On 17 November 2017, the Company
was very pleased to announce that it had appointed SP Angel as
nominated adviser and joint broker, as a consequence of which,
trading in the Company’s ordinary shares recommenced on the same
day.
Investment Portfolio
GeoSim Systems Ltd (“GeoSim”)
Clear Leisure has a 4.53% shareholding in GeoSim, a company
which develops very sophisticated 3D modeling software. The
value of this investment was written-off in the 2014 annual
accounts. Clear Leisure has now been advised that the most recent
round of fundraising by GeoSim took place at a pre-money valuation
in excess of US$11 million,
corresponding to a valuation for Clear Leisure’s stake of
US$667,487(or approximately
£500,000).
Currently GeoSim has management and R&D teams based in
Tel Aviv, Israel, where it has 15
employees. In Vancouver, Canada it
has a team of three people. The production centers are in
India & Poland employing a further 15 people.
It is currently undergoing a round of funding as follows: an
internal fund raising with existing shareholders is being completed
at a valuation of US$15 million
pre-money and a roadshow to attract new investors is at a valuation
of over US$20 million pre-money.
Geosim’s new 3D model of city of Vancouver has been released and a short demo
can be found at: http://new.geosimmovies.com.
Mediapolis
On 24 November 2017, subsequent to
the winding up ruling by the Ivrea Court and the tabling of the
joint appeal by Clear Leisure and Mediapolis, a Court hearing took
place to determine the process for the auction of the land over
which Clear Leisure holds a first charge.
The receiver challenged some of the Company’s claims on the
technical nature of the first charge, however the receiver did not
dispute the first charge itself. The receiver therefore agreed to
proceed with an auction without restarting the auction procedure,
which could have delayed the disposal of the land by more than 12
months.
The Court ruled in favour of the receiver’s request, a decision
which the Company and its legal advisors support because,
notwithstanding a successful appeal against the winding up
decision, it makes more imminent the recovery of the asset or the
€3.86 million valuation of the Court appointed surveyor.
Ondaland
The Company continues to pursue a solution with the management
of T.L.T S.a.s, owner of the Ondaland waterpark in Northern Italy, which recognises the
substantial investment made by Clear Leisure’s subsidiary, Sipiem
SpA, in T.L.T.
The Company remains optimistic of reaching a mutually beneficial
solution which will result in Clear Leisure securing a substantial
stake in T.L.T.
The waterpark is a popular summer destination for Italians
living in north east Italy and
there are plans to create an all year family oriented theme park
facility, using the existing empty building comprising of 7,500
square meters of space erected in 2012.
For the fiscal year ended 31 October
2017, which includes the peak summer season, T.L.T recorded
revenues of €2.9 million (£2.5 million) generating an EBITDA of
nearly 30% (approximately £750,000). No dividend has been declared
as T.L.T’s debt position is such that the balance sheet will
require substantial restructuring.
Debt Reduction
During the past 18 months, the Company has reduced Group debt by
approx. €10 million (£8.8 million) at a cost to the Group of under
€2 million (approximately £1.75 million) including securing a prior
charge over Mediapolis. This has been achieved through
negotiating discounts with various Italian banks and creditors on
the face value of debt averaging 80%. It is the Company’s intention
to continue with this policy which has resulted in a considerable
improvement in the Group balance sheet and reduction in debt
servicing payments.
Most recently, the Company began discussions with two Clear
Leisure bondholders on discounted advance payment for cash and
shares on nearly €2 million of bonds outstanding, with maturity of
15 December 2018. While there is no
guarantee on a successful outcome of the negotiations, the climate
of the negotiations is positive.
Legal Claims being made by the
Company
Since its appointment just over two years’ ago, the Board has
undertaken a major and ongoing investigation into the status of the
Company’s investments. While priorities had to be assigned on
investments which required immediate action, in depth analyses on
recovered documents for other investments continued and now the
Company is in a position to file two legal claims for an
approximate combined value of £2.5 million. The Company, as advised
by its lawyers, is currently unable to disclose the names of the
defendants at this stage. For the sake of clarity, no former
director of Clear Leisure is involved in these two claims.
The first claim relates to an investment into an Italian
subsidiary regarding serious misrepresentations about the company’s
accounts, which were used as the primary basis for the investment,
and on the day-by-day management of the investment itself by the
former owner, then a manager of the subsidiary. A complaint for
criminal offences has been filed with the prosecutor of the
relevant Italian jurisdiction and a claim for damages will be
approved by Clear Leisure, the controlling shareholder, at the
subsidiary shareholders meeting, in the next few weeks. The amount
of the claim is estimated in the region of €1.7million (£1.5
million).
The second claim relates to rights owned by Clear Leisure on the
sharing of the final upside on exit by the buyer of a formerly
disposed UK based portfolio investment. A Letter before Action has
been served to the defendant, for a settlement of £700,000 against
a total claim in the region of £1.2 million. No settlement has been
reached to date, hence the Company’s intention to start legal
procedures as soon as practical.
The outcome of the two aforementioned claims is not guaranteed
and, even if the legal action is successful, there is no guarantee
that the defendants will have funds to meet the financial demands
which will follow.
The Company advises that there are further potential claims
relating to other Italian investments, in particular ORH S.p.A.
(trading as Ora Hotel Group), which remains under
investigation.
Eufingest SA
Clear Leisure’s largest shareholder, Eufingest SA (“Eufingest”),
which has been the dominant provider of financial support to the
Company during the challenging last few years, has confirmed to the
Company its continued support for the Board and its intention to
maintain its shareholding in the Company at just below 30%, by
converting into shares part of its €2.4 million convertible loan
each time a new share issue takes place.
Eufingest, as the largest shareholder, remains fully supportive
of the Board’s efforts to realise value from its investments.
Loan Facility
The Board is pleased to announce that the Company has entered
into an unsecured convertible loan facility agreement (the
Facility") with Eufingest.
Under the Facility, Eufingest provides €50,000 at an interest
rate of 2.5 per cent per annum. The Facility is repayable on
31 December 2017 and the proceeds
will be used for working capital purposes.
The Company may repay the Facility early at any time without
penalty. At any time before 31 December
2017, Eufingest may convert the outstanding balance of the
Facility into Shares at the rate of 1
pence per Share.
Eufingest is the beneficial holder of more than 10 per cent of
the ordinary share capital of the Company. Eufingest is
therefore a "related party" for the purposes of the AIM Rules.
The Directors of the Company (each of whom is independent from
Eufingest), having consulted with the Company's Nomad, consider the
terms of the transaction to be fair and reasonable insofar as
shareholders are concerned.
Future Funding
Notwithstanding the possibility of generating funds from asset
disposals or successful debt recovery, the Company remains reliant
on debt and equity placements in order to sustain its day to day
activities, including acquisition of subsidiary debt at discount,
funding of litigations and development of existing investments.
Francesco Gardin, CEO and
Executive Chairman of Clear Leisure, commented,
“Since mid-May, following the winding up demand on Mediapolis by
the Ivrea Court Prosecutor and more recently the loss of the
licence by our former Nomad, with the urgent need to select and
appoint a new Nomad, the Company’s Board has been forced to focus
on a number of unexpected events. While this has inevitably
consumed substantial time allocation and prioritisation on these
matters, all other business has been carried out in parallel.
“We wish to thank our shareholders for their continuing patience
and look forward to reporting further, positive results in
2018.”
-ends-
For further information please
contact:
Clear Leisure Plc
+39
335 296573
Francesco Gardin, CEO and Executive
Chairman
SP Angel Corporate Finance (Nominated Adviser & Joint
Broker) +44 (0)20
3407 0470
Jeff Keating / John Mackay/ Charlie
Bouverat
Peterhouse Corporate Finance (Joint Broker)
+44 (0) 20 7469
0935
Lucy Williams / Heena Karani
Leander (Financial PR)
+44 (0) 7795 168 157
Christian Taylor-Wilkinson
About Clear Leisure Plc
Clear Leisure plc (AIM: CLP) is an AIM listed investment company
with a portfolio of companies primarily encompassing the leisure
and real estate sectors mainly in Italy. The focus of management is to pursue
the monetisation of all of the Company’s existing assets, through
selected realisations, court-led recoveries of misappropriated
assets and substantial debt-recovery processes. For further
information, please visit, www.clearleisure.co.uk