TIDMRHL
RNS Number : 4757O
Redhall Group PLC
21 August 2017
For immediate release 21 August 2017
Redhall Group plc
("Redhall" or the "Company")
Proposed Capital Reduction
Notice of General Meeting
Introduction
The Board of Redhall (the "Board") announces that the Company
will later today post a circular (the "Circular") to shareholders
of Redhall ("Shareholders") detailing a proposed reduction in the
capital of the Company (the "Capital Reduction") and convening a
general meeting of the Company (the "General Meeting"), the purpose
of which is to enable Shareholders to approve the Capital
Reduction.
The Company does not currently have distributable reserves and
is therefore prohibited from making distributions to Shareholders,
including the payment of dividends. The Board believes it is an
appropriate time to create distributable reserves, which would
allow the Company to pay dividends should it be considered
desirable to do so in the future, and is therefore proposing the
Capital Reduction to effect this.
A copy of the Circular will shortly be available on the
Company's website at www.redhallgroup.co.uk.
Below are extracts from the Circular which should be read in
conjunction with the full text. Defined terms used in this
announcement have the meaning ascribed to them in the Circular.
The Capital Reduction
At 30 September 2016, the Company had a profit and loss account
deficit of GBP32,973,000. At the same date, the balance standing to
the credit of the Company's share premium account and merger
reserve amounted to GBP28,326,000 and GBP12,679,000 respectively.
The Share Premium Account was further increased in July 2017 upon
the issue of new Ordinary Shares in connection with a previously
announced placing and debt conversion and as at 31 July 2017 stood
at GBP40,934,339. As at 31 July 2017, the profit and loss account
deficit had also increased. However, the Capital Reduction, if
approved and made effective, will be sufficient to eliminate this
deficit entirely and create distributable reserves.
The Capital Reduction is proposed to be effected by cancelling
the balances standing to the credit of the Share Premium Account
and (having first created and issued Capital Reduction Shares to
capitalise the merger reserve) the merger reserve. Cancelling the
balance of the Share Premium Account and the Capital Reduction
Shares will, subject to the discharge of any undertakings required
by the Court, be sufficient to eliminate the deficit on the profit
and loss account. As a result, any positive distributable reserves
generated by the Company after the date on which the Capital
Reduction takes effect would be available for the Board to use for
the purposes of paying dividends (should circumstances in the
future make it desirable to do so).
It is therefore proposed that:
a. the amount standing to the credit of the Company's merger
reserve in the sum of GBP12,678,593 is capitalised by way of a
bonus issue of newly created Capital Reduction Shares;
b. the newly created Capital Reduction Shares are cancelled; and
c. the amount standing to the credit of the Share Premium
Account (such amount being, as at 31 July 2017, GBP40,934,339) is
cancelled.
In addition to the approval by Shareholders, the Capital
Reduction requires the approval of the Court. Accordingly,
following the General Meeting, an application will be made to the
Court in order to confirm and approve the Capital Reduction.
There will be no change in the number of Ordinary Shares in
issue (or their nominal value) following the implementation of the
Capital Reduction. The Capital Reduction itself will not involve
any distribution or repayment of capital or share premium by the
Company and will not reduce the underlying net assets of the
Company. The distributable reserves arising on the Capital
Reduction will, subject to the discharge of any undertakings
required by the Court support the Company's ability to pay
dividends, should circumstances in the future make it desirable to
do so.
Background to, and reasons for, the Capital Reduction
Following the successful implementation of its strategic
turnaround programme, the Group has been transformed from a
site-based contractor and manufacturer into a high integrity
manufacturing business with significant growth prospects. As at
June 2017, the Group's order book had progressed to GBP32 million
with a pipeline of outstanding bids and other identified
opportunities. The Group is currently accelerating its growth into
key markets, in particular investing in its capability to serve
customers in three core (and growing) nuclear-related sectors:
defence, decommissioning and new build. Booth Industries and Jordan
Manufacturing are the Group's key businesses serving these
sectors.
The Group's growth plans anticipate increased volumes and
margins driven by improved trading terms with the Group's supply
chain, improved competitiveness and by investment in the people,
plant and equipment, processes and technology required to meet
customer requirements in complex and hazardous environments.
In July 2017, the Company raised GBP9.53 million through a
placing of new Ordinary Shares and converted GBP3.75 million of
debt into equity. The Company has also refinanced its borrowings
with HSBC Bank plc and LOIM for a further four years. These actions
have significantly improved the Company's balance sheet and, in the
Board's opinion, provided the flexibility to implement the Group's
growth plans.
In light of the Group's growth prospects, the Board believes
that it might be considered desirable in the future to commence
paying dividends to Shareholders. However, the Company currently
has negative distributable reserves and is, therefore, prohibited
under the Act from making distributions to its Shareholders,
including the payment of dividends.
The Board, therefore, believes it is an appropriate time to
undertake the Capital Reduction and create distributable reserves
which would enable the payment of dividends in the future. In
addition, the Board believes the Capital Reduction will have the
effect of further strengthening the balance sheet and improving the
Group's access to capital.
The General Meeting
The General Meeting will take place at 10.00 a.m. on 5 September
2017 at the offices of Squire Patton Boggs (UK) LLP at 7 Devonshire
Square, London, EC2M 4YH. At the General Meeting, a resolution (the
"Resolution") will be proposed to Shareholders to seek their
approval of the Capital Reduction.
The Resolution will be passed if 75 per cent. or more of the
votes cast (in person or by proxy) at the General meeting are in
favour of it.
Shareholders should note that unless the Resolution is approved
at the General Meeting (and the Court subsequently confirms the
Capital Reduction) the Capital Reduction will not take place.
Directors' recommendation
The Directors consider that the Capital Reduction will be
beneficial for the Company and its Shareholders as a whole.
Accordingly, the Directors unanimously recommend that Shareholders
vote in favour of the Resolution to be proposed at the General
Meeting, as they intend to do in respect of their aggregate
shareholdings, of 3,027,455 Ordinary Shares representing
approximately 0.9% of the Ordinary Shares in issue.
Expected timetable 2017
Posting of the Circular and Form 21 August 2017
of Proxy
Latest time and date for receipt 10.00 a.m. on
of Forms of Proxy for the General 3 September 2017
Meeting
Time and date of the General Meeting 10.00 a.m. on
5 September 2017
Initial directions hearing of 12 September
Court 2017
Court Hearing to conform the Capital 20 September
Reduction 2017
Effective date of Capital Reduction 21 September
2017
Each of the times and dates above refer to London time. The
expected dates for the confirmation of the Capital Reduction by the
Court and the Capital Reduction becoming effective are based on
provisional dates that have been obtained for the required Court
hearings of the Company's application. These provisional hearing
dates are subject to change and dependent on the Court's timetable.
Any such change will be notified to Shareholders by an announcement
on a Regulatory Information Service.
Redhall's Chief Executive Officer, Phil Brierley, commented:
"At the time of our interim results in June we highlighted the
momentum in Redhall's recovery and our confidence in being able to
deliver profitable growth. At the appropriate time, once this
profitability is established, we would like to return Redhall to
the dividend list, both to reward existing shareholders and to
increase the marketability of Redhall shares. This proposed capital
reduction is an essential procedural step to enable dividend
payments to be made."
For further information please contact:
Redhall Group plc Tel: +44 (0)
Phil Brierley, Chief Executive 1924 385 386
Chris Kelly, Group Finance Director
Buchanan, PR
Mark Court, Sophie Cowles Tel: +44 (0)
20 7466 5000
GCA Altium, NOMAD
Tim Richardson, Simon Lord
Tel: +44 (0)
845 505 4343
This information is provided by RNS
The company news service from the London Stock Exchange
END
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