Part-disposal of investment in MarineTrack Limited ("MarineTrack")
Related party transaction
In February 2006, the Company announced that it had increased its holding in
MarineTrack to 69.94%. In building its stake, the Company was taking advantage
of opportunities to acquire shares at what the directors believed were
favourable prices.
MarineTrack is a security alert system manufacturer and service provider for
commercial shipping, providing remote monitoring, remote control and tracking
products for marine customers.
It is the Company's strategy to hold minority stakes in businesses and to exit
successfully from those investments. Recent changes in the interpretation of
accounting rules which would have required a majority investment in a company to
be consolidated in the Company's accounts have prompted a decision to dispose of
approximately 20.1% of MarineTrack earlier than anticipated. The shares in
MarineTrack have been sold to Billam AG, a substantial shareholder and so this
constitutes a related party transaction.
The shares in MarineTrack have been sold at a price of approximately #500,000,
being the fair valuation used in the accounts of the Company as at 30 June 2006
that have today been announced. In addition, Zyzygy is entitled to 90 per cent.
of any net profit made by Billam AG on the sale of these shares during the next
three years but is not liable for any losses on disposal. Payment of the amount
due has been deferred for a period of up to two years, with earlier payment if
MarineTrack is floated or sold. In this connection, it is the Company's
intention to bring MarineTrack to market next year. Interest is chargeable on
any amounts outstanding at commercial rates and Zyzygy retains a charge over the
MarineTrack shares.
The Zygygy directors, having consulted with the Company's nominated adviser,
consider that the terms of the transaction are fair and reasonable insofar as
Zyzygy's shareholders are concerned.
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