ADIL Adili

 
TIDMADIL 
 
AIM: ADIL                                                   25 February 2010 
 
                                   Adili plc 
 
                          ("Adili" or "the Company") 
 
 Proposed disposal of trading subsidiary, Proposed cancellation of trading on 
                             AIM and Notice of EGM 
 
The following announcement incorporates extracts from the Chairman's letter 
contained in a circular posted to the Company's shareholders to convene an 
Extraordinary General Meeting ("EGM") of the Company to be held at 10 a.m. on 
15th March 2010 at the offices of the Company, Blandford Hill, Milborne St. 
Andrew, Blandford Forum, Dorset DT11 0HZ. The purpose of the EGM is to seek 
Shareholders' approval to dispose of the trading subsidiary and subsequent 
cancellation of admission of its Ordinary Shares to trading on AIM. 
 
Enquiries: 
 
Adili plc                      Adam Smith, Chief Executive T: 01258 837 437 
                               Officer 
 
Seymour Pierce                 Nicola Marrin               T: 020 7107 8000 
 
                               Catherine Leftley 
 
 
Notice of an Extraordinary General Meeting - proposed disposal of trading 
subsidiary 
 
In the trading update issued in December 2009 and in the Half-yearly Report 
issued in January 2010 the need for further working capital funding for 
Adili.com's business was highlighted. A number of options for financing this 
additional requirement have been explored by the Board over the last few 
months. Whilst the Board was pleased with recent margin management, improved 
sell through rates and own label product performance it became clear to the 
Board in the latter part of 2009 that the key weakness that needed to be 
rectified was the lack of scale required to support the necessary overhead of 
the Group. The Board has actively worked on the following possible solutions: 
 
  * Collaboration with other ethical retailers to establish whether wider 
    product distribution, providing buying support or a potential merger of 
    operations might yield sufficient scale to accelerate break even; 
 
  * A further fund raising round from the existing shareholder base to fund the 
    Company until a significant increase in scale has been achieved 
 
  * A significant further restructuring of the Company's operations to reduce 
    operating costs whilst minimising any potential reduction in sales 
 
  * Bank funding for working capital combined with further restructuring 
 
  * An acquisition by the Company of another company in a different sector to 
    attract further funding 
 
  * A strategic alliance with a `mainstream' fashion retailer to offer 
    significantly increased product distribution opportunities, and at the same 
    time offering shared resources and funding 
 
After careful consideration, investigation and negotiation with various 
parties, the Board has concluded that there are no viable options available to 
the Group which are likely to enable the Company's shareholders to realise any 
value from the business hitherto carried on by Adili.com. The Company has 
therefore conditionally agreed to sell the entire issued share capital of 
Adili.com to a newly incorporated company, HICORP 73 Limited, which is owned by 
Luke Heron, an investor in ethical brands. Luke Heron has intimated his 
intention to trade Adili.com as a going concern through significant operating 
synergies with his existing online eco-enterprises. 
 
In the absence of this sale the Company has been advised that Adili.com would 
have no alternative but to cease trading. The sale of Adili.com requires the 
approval of a majority of shareholders at a general meeting of the Company 
under the AIM Rules. 
 
Principal terms of the Agreement 
 
The Agreement provides for the Purchaser to acquire the entire issued share 
capital of Adili.com for a cash consideration of GBP1. The Purchaser intends to 
provide short term working capital funding to Adili.com upon the execution by 
the holders of more than 50% of the total voting rights attaching to the 
Existing Ordinary Shares of irrevocable undertakings to vote to approve the 
Disposal. It is a requirement of the Purchaser that Adili plc release the 
intercompany loan of GBP4,229,386 made by it to Adili.com and that the Company 
change its name to a name not including the word "Adili". 
 
The Agreement, if completed, will result in the disposal of the Group's entire 
trading activities. As noted above, under AIM Rule 15, the Disposal must be 
conditional upon the consent of the Shareholders being given in general 
meeting. The Disposal will complete immediately following the EGM following 
which the Directors intend to take steps to make the Company a dormant company. 
 
Cancellation of Admission to AIM 
 
Following the EGM and completion of the Disposal, Seymour Pierce, the Company's 
nomad, will resign. The Board does not intend to appoint another nomad, as it 
is intended that the Company will become a dormant company, and as such the 
suspension of trading in the Company's shares will remain in place. The 
Directors therefore intend, following completion of the Disposal to seek the 
cancellation of trading of the Company's shares on AIM. In accordance with AIM 
Rule 41 such cancellation will be conditional upon the consent of not less than 
75% of the votes cast by the Company's shareholders in general meeting. In the 
event that the cancellation does not become effective, the suspension will 
remain in place for a period of one month following which, in accordance with 
the AIM Rules, the London Stock Exchange will cancel admission. 
 
During the suspension and/or following cancellation, transfers of Ordinary 
Shares may only be effected in accordance with the provisions of the articles 
of association of the Company concerning off-market transfers in certificated 
form. In summary, to effect a transfer of Ordinary Shares following 
Cancellation, once a proposed transferee has been found, a duly executed and 
stamped stock transfer form will need to be submitted (together with the 
relevant share certificate(s)) to the Company's secretary at the Company's 
registered office for registration. 
 
The Company has notified the London Stock Exchange of the proposed 
cancellation. In the event that Shareholders approve the cancellation, it is 
anticipated that the effective date of the Cancellation will be 24th March 
2010. 
 
Change of Name 
 
In order to comply with the Purchaser's requirements the Directors propose 
that, subject to the resolution to approve the Disposal being duly passed, the 
name of the Company should be changed to Directional Fashion plc. 
 
Irrevocable Undertakings 
 
Irrevocable undertakings to vote in favour of the Resolutions have been 
received from Hawk Investment Holdings Limited and Quentin Griffiths who 
between them hold 51.57% of the Existing Ordinary Shares. 
 
Extraordinary General Meeting 
 
The EGM has been convened to seek approval for the Resolutions and will be held 
at the offices of the Company, Blandford Hill, Milborne St. Andrew, Blandford 
Forum, Dorset DT11 0HZ on Monday 15th March 2010, at 10am. Set out below is a 
summary of the Resolutions: 
 
Approval of disposal resulting in a fundamental change of business 
 
As required by AIM Rule 15, Resolution 1 seeks Shareholder approval for the 
Disposal. 
 
Cancellation of Admission to AIM 
 
As required by AIM Rule 41, Resolution 2 seeks Shareholder consent to the 
cancellation of the admission of the Company's Ordinary Shares to trading on 
AIM. 
 
Change of Name 
 
Resolution 3 seeks Shareholder approval for the change of the Company's name to 
Directional Fashion plc. 
 
Action to be taken by Shareholders 
 
Shareholders will find enclosed with the document a Form of Proxy for use at 
the EGM. The Form of Proxy should be completed and returned in accordance with 
the instructions printed thereon so as to arrive at the Company's registrars, 
Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as 
possible and in any event not later than 10am on 13th March 2010. 
Alternatively, CREST members who wish to appoint a proxy or proxies via CREST 
may do so in accordance with the procedures set out in the Notice of an 
Extraordinary General Meeting and Form of Proxy. Completion and return of the 
Form of Proxy or appointment of a proxy via CREST will not prevent Shareholders 
from attending and voting at the EGM should they so wish. 
 
Recommendation 
 
The Directors believe that the terms of the Disposal are fair and reasonable 
insofar as Shareholders are concerned and that the Disposal and the approval of 
the Resolutions set out in the notice of EGM are in the best interests of the 
Company and its Shareholders as a whole. Accordingly, the Directors recommend 
that Shareholders vote in favour of the Resolutions as they have undertaken to 
do in respect of their aggregate shareholdings of 682,545 Existing Ordinary 
Shares, equivalent to 0.58 per cent of the Existing Ordinary Shares. 
 
Expected timetable of events 
 
Despatch of the document                                     25th February 2010 
 
Latest time and date for receipt of Proxy Forms         10am on 13th March 2010 
 
Extraordinary General Meeting                                   15th March 2010 
 
Cancellation of admission to trading on AIM                     24th March 2010 
 
Expected dispatch of share certificates                         30th March 2010 
 
Definitions 
 
"Adili.com"                Adili.com Limited (company number 5707632), a 
                           wholly-owned subsidiary of the Company 
 
"Agreement"                the conditional sale agreement entered into by the 
                           Company and the Purchaser for the sale and purchase 
                           of the entire issued share capital of Adili.com; 
 
"AIM"                      the AIM Market of the London Stock Exchange 
 
"AIM Rules"                the rules published by the London Stock Exchange 
                           relating to AIM, as amended from time to time 
 
"Company" or "Adili"       Adili plc 
 
"CREST"                    the system for paperless settlement of trades and 
                           the holding of uncertificated shares administered 
                           through Euroclear UK & Ireland Limited 
 
"Directors" or "Board"     the directors of the Company, as set out on page 5 
                           of the document 
 
"Disposal"                 the sale by the Company, pursuant to the Agreement, 
                           of the entire issued share capital of Adili.com; 
 
"EGM"                      the extraordinary general meeting of the Company 
                           convened for 10am on 15th March 2010, notice of 
                           which is set out on pages 8 to 10 of the document 
 
"Existing Ordinary Shares" the 118,181,870 Ordinary Shares in issue at the date 
                           of the document 
 
"Form of Proxy"            the form of proxy accompanying the document for use 
                           in connection with the EGM 
 
"Group"                    the Company and its subsidiary undertaking 
 
"London Stock Exchange"    London Stock Exchange plc 
 
"Ordinary Shares"          ordinary shares of GBP0.01 each in the capital of the 
                           Company 
 
"Purchaser"                Hicorp 73 Limited (company number 7111367) 
 
"Resolutions"              the resolutions set out in the notice of the EGM on 
                           page 8 of the document 
 
"Seymour Pierce"           Seymour Pierce Limited 
 
"Shareholders"             holders of Existing Ordinary Shares 
 
 
 
END 
 

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