TIDMCMIP
Capital Management and Investment Plc
(the "Company")
Proposed cancellation of admission to trading on AIM and amendments to
Investing Policy
Further to the Company's announcement of 30 October 2015, the Board of
the Company announces that it intends to seek shareholder approval for
the cancellation of the admission to trading of the Company's Ordinary
Shares on AIM, the adoption of new articles of association, the
re-registration of the Company as a private limited company and
amendments to its investing policy. A circular will today be posted to
Shareholders convening a general meeting of the Company to seek such
approvals (the "Circular"), extracts of which are set out at the end of
this announcement.
The General Meeting will be held at 3rd Floor, Watson House, 54 Baker
Street, London W1U 7BU on 12 January 2016 at 10.00 a.m.
The Cancellation is conditional upon the approval by not less than 75
per cent of the votes cast, whether in person or by proxy, by
Shareholders at the General Meeting.
Terms and expressions used in this announcement shall, unless defined
herein or the context otherwise requires, have the same meanings as
given to them in the Circular. Copies of the Circular will be made
available on the Company's website (www.cmi-plc.co.uk).
For further information please contact:
Capital Management and Investment plc
Tim Woodcock +44 20 7725 0800
N+1 Singer (Nominated Adviser and Broker)
Nic Hellyer
Alex Wright
James Maxwell +44 20 7496 3000
Background to and reasons for the Proposals
In 2004 the Company acquired a 28 per cent. shareholding in Algeco SA, a
modular construction company trading predominantly in France, Spain, and
Italy. A series of acquisitions by Algeco SA in the following years
culminated with the purchase of Williams Scotsman Inc., the then largest
modular construction and mobile storage business in the USA, in 2007 and
the formation of ASH. A number of additional acquisitions and
refinancing by ASH over subsequent years have resulted in the Company
now being interested in approximately 2.8 per cent. of ASH. ASH is
controlled by funds managed by TDR Capital LLP, a private equity
company.
In 2007 the Company also invested US$30 million into an investment
vehicle, Yola, which was used to indirectly acquire MIG, a US company
listed on the OTC Market in the US. MIG's principal asset was a 50.1 per
cent. shareholding in Magticom, the then largest provider of mobile
telephone services in the Republic of Georgia. As a result of the
investment into Yola, the Company indirectly acquired approximately 7
per cent. of Magticom. The Company continues to hold this interest but
its investment has been carried at zero value on the Company's balance
sheet since 31 January 2010. On 1 July 2014 MIG went into Chapter 11 as
a result of its inability to make payments of interest due on certain
loan notes. MIG currently remains in Chapter 11 and continues to explore
various restructuring options.
As at 16 December 2015, the Company had over 2,700 Shareholders,
overwhelmingly private investors, of whom over 2,500 Shareholders owned
100 Ordinary Shares or less and there is little liquidity in the
Company's Ordinary Shares. The total number of Ordinary Shares traded in
the year to 17 December 2015 was 172,267 representing 2.4 per cent of
the issued share capital of the Company. In addition, the Company's
share price as at 17 December 2015 was 90 pence per Ordinary Share,
which represents a discount to the Company's NAV as at 31 July 2015 of
32 per cent.
In addition, the costs of maintaining the Company's admission to trading
on AIM are estimated to be GBP0.25 million annually without taking into
account the significant amount of additional Board time taken up with
publicly quoted company matters including the production of interim and
annual reports. As at 31 July 2015, the Company's cash position was
GBP6.331 million, down from GBP6.808 million as at 31 July 2014.
Furthermore, the perceived benefits of an AIM quotation typically
include access to equity capital markets, an enhanced corporate profile,
a means to incentivise staff and a mechanism to provide a market in the
Company's Ordinary Shares. The Board has reached the view that the
Company does not enjoy any of these benefits.
In light of the above, the Directors have recently undertaken a review
of the merits of the Ordinary Shares continuing to be traded on AIM and,
having completed this review, which included consultation with the
Company's advisers and its major shareholders, consider that the Company
should cancel the admission of the Ordinary Shares to trading on AIM
because the lack of liquidity, additional costs and substantial
management time involved in maintaining a quotation, coupled with the
proposed future strategy of the Company, as outlined below, far outweigh
the benefits to Shareholders of maintaining a quotation on AIM.
Intentions for the Company
Should the Proposals be approved by Shareholders, the Board, which is
expected to remain unchanged in the near term, proposes to implement a
reduction of capital in order to allow a return of capital, on a pro
rata basis, to Shareholders.
The Company cannot currently return cash to shareholders without a
reduction of capital as it does not have any distributable reserves. The
reduction of capital will involve all of the Directors signing a
solvency statement and the passing of a special resolution to approve
the reduction by Shareholders.
Should the reduction of capital become effective, the Directors propose
to return approximately GBP5.3 million (GBP0.75 per share) to
Shareholders, on a pro rata basis. The Company would then be left with
cash resources of approximately GBP1.0 million, which the Directors
believe will be adequate for the Company going forward when taking into
account planned operating and running cost reductions in addition to
those costs saved from no longer operating as a public company quoted on
AIM.
Following the proposed distribution, the Company's principal asset will
be its 2.8 per cent. shareholding in ASH.
Notwithstanding the above, the Board is currently in early discussions
to sell this shareholding in ASH for a consideration of approximately
GBP3.2m (in line with the value of the investment at the date of the
last interim accounts at 31 July 2015) (the "Proposed Disposal").
Subject to the passing of Resolution 4 and should the Proposed Disposal
complete, the Company intends to also distribute the net proceeds,
together with any other surplus cash, and commence winding up
proceedings.
Proposed Changes to the Investing Policy
The Board does not currently intend to make any further acquisitions and
in light of the Proposed Disposal, Shareholders are being asked to
approve, by ordinary resolution, a change in the Company's investing
policy to one which allows for the disposal of the Company's assets in
whole or in part and allows for cash to be returned to shareholders.
Accordingly and subject to Shareholder approval, the Company's new
investing policy will be as follows:
"The Company shall not make any new investments with a view to enabling
a future sale of the Company assets in whole or in part. The Company
will actively manage its existing investments and seek to realise its
assets in a managed way at an appropriate time, returning the net
proceeds and any surplus cash to Shareholders.
Shareholder returns are expected to be delivered by way of return of
capital on their Ordinary Shares, whether by dividend, repurchase or
otherwise."
Cancellation of admission of Ordinary Shares to trading on AIM
In accordance with the AIM Rules, the Cancellation is conditional upon
the consent of not less than 75 per cent. of votes cast by Shareholders
at the General Meeting and the expiration of a period of not less than
20 clear Business Days from the date on which notice of the intended
Cancellation is given to the London Stock Exchange.
The Company has notified the London Stock Exchange of the proposed
Cancellation. Subject to the passing of the resolution to cancel the
admission of the Ordinary Shares to trading on AIM by the requisite
majority, the Cancellation will occur no earlier than 5 clear Business
Days after the General Meeting and it is expected that trading in the
Ordinary Shares on AIM will cease at the close of business on 25 January
2016.
The principal effects that Cancellation will have on Shareholders are:
-- there will no longer be a formal market mechanism enabling Shareholders
to trade their Ordinary Shares in the Company through the market and the
CREST facility will be cancelled. Shareholders who currently hold
Ordinary Shares in uncertificated form will receive share certificates in
due course following the Cancellation taking effect. Share transfers may
still be effected after the date of cancellation by depositing a duly
executed and stamped stock transfer form together with an appropriate
share certificate with the company secretary at the registered office of
the Company. Shares in the Company will be capable of transfer, but will
be more difficult to sell compared to shares of companies quoted on AIM;
-- the Company will no longer be required to comply with any of the
corporate governance requirements applicable to UK-quoted companies;
-- the Company will no longer be subject to the Disclosure and Transparency
Rules and, among other things, will no longer be required to disclose
major shareholdings in the Company;
-- the Company will no longer be subject to the AIM Rules. Shareholders will
therefore no longer be afforded the protections given by the AIM Rules.
Such protections include the requirement to be notified of certain events
(MORE TO FOLLOW) Dow Jones Newswires
December 23, 2015 02:00 ET (07:00 GMT)
including, amongst other things, substantial transactions (the size of
which results in a 10 per cent. threshold being reached under any one of
the class tests), related party transactions and the requirement to
obtain shareholder approval for reverse takeovers (the size of which
results in a 100 per cent. threshold being reached under any one of the
class tests) and fundamental changes in the Company's business; and
-- the Proposals might have either positive or negative taxation
consequences for Shareholders. Shareholders who are in any doubt about
their tax position should consult their own professional independent
adviser immediately.
However, Shareholders should note, inter alia, that, if the Cancellation
takes effect:
-- the Company will remain subject to UK company law, which mandates
shareholder approval for certain matters;
-- the Company will remain subject to the Takeover Code, further details on
which are set out below, however the Takeover Code will cease to apply to
the Company on the expiry of the 10 year period from the date of the
Cancellation or, if earlier, the date on which the Company is dissolved;
and
-- the Company will continue to communicate information about the Company
(including annual accounts) to its Shareholders, as required by law.
Shareholders should be aware that, if the Cancellation takes effect,
they will at that time cease to hold shares in a quoted company and the
matters set out in the paragraph above will automatically apply to the
Company from the date of Cancellation.
Re-registration as a private limited company
The Directors also propose that, conditional upon the Cancellation
becoming effective, the Company be re-registered as a private limited
company. This will reduce the costs and complexity of operating the
Company and, in particular, the Company would be permitted, subject to
shareholder approval, to effect returns of capital to Shareholders
without the need to apply to the court.
The Takeover Code is issued and administered by the Takeover Panel. The
Takeover Code currently applies to the Company and will continue to
apply to the Company notwithstanding the Cancellation. If the Company is
successfully re-registered as a private company, the Takeover Code will
cease to apply to the Company on the expiry of the 10 year period from
the date of the Cancellation or, if earlier, the date on which the
Company is dissolved.
The Takeover Code and the Takeover Panel operate principally to ensure
that shareholders are treated fairly and are not denied an opportunity
to decide on the merits of a takeover and that shareholders of the same
class are afforded equivalent treatment by an offeror. The Takeover Code
also provides an orderly framework within which takeovers are conducted.
In addition, it is designed to promote, in conjunction with other
regulatory regimes, the integrity of the financial markets.
The Code is based upon a number of General Principles which are
essentially statements of standards of commercial behaviour. For your
information, these General Principles are set out in Part III. The
General Principles apply to all transactions with which the Code is
concerned. They are expressed in broad general terms and the Code does
not define the precise extent of, or the limitations on, their
application. They are applied by the Panel in accordance with their
spirit to achieve their underlying purpose.
General Principle One states that all holders of securities of an
offeree company of the same class must be afforded equivalent treatment
and if a person acquires control of a company, the other holders of
securities must be protected. This is reinforced by Rule 9 of the
Takeover Code which requires a person, together with persons acting in
concert with him, who acquires shares carrying voting rights which
amount to 30 per cent. or more of the voting rights to make a general
offer. A general offer will also be required where a person who,
together with persons acting in concert with him, holds not less than 30
per cent. but not more than 50 per cent. of the voting rights, acquires
additional shares which increase his percentage of the voting rights.
Unless the Takeover Panel consents, the offer must be made to all other
shareholders, be in cash (or have a cash alternative) and cannot be
conditional on anything other than the securing of acceptances which
will result in the offeror and persons acting in concert with him
holding shares carrying more than 50 per cent. of the voting rights.
In addition to the General Principles, the Code contains a series of
Rules (such as Rule 9 which is summarised above), of which some are
effectively expansions of the General Principles and examples of their
application and others are provisions governing specific aspects of
takeover procedure. Although most of the Rules are expressed in more
detailed language than the General Principles, they are not framed in
technical language and, like the General Principles, are to be
interpreted to achieve their underlying purpose. Therefore, their spirit
must be observed as well as their letter. The Panel may derogate or
grant a waiver to a person from the application of a Rule in certain
circumstances.
A summary of key points regarding the application of the Code to
takeovers generally is set out in Part III. Shareholders are encouraged
to read this information carefully and should note that, if the
Cancellation and the Re-registration become effective, they will not
receive the benefit of the protections afforded by the Takeover Code
after the expiry of 10 years from the date of the Cancellation (assuming
the Company is still in existence).
Share trading facility following Cancellation
Your Directors are aware that, following the proposed Cancellation,
Shareholders may still wish to acquire further Ordinary Shares or
dispose of their Ordinary Shares and, accordingly, intend to use
reasonable endeavours to create and maintain a matched bargain
settlement facility. The Company has held initial discussions with
providers of such facilities. Under such a facility Shareholders or
persons wishing to acquire shares will be able to leave an indication
with the matched bargain settlement facility provider that they are
prepared to buy or sell at an agreed price. In the event that the
matched bargain settlement facility provider is able to match that order
with an opposite sell or buy instruction, the matched bargain settlement
facility provider will contact both parties and then affect the order.
Shareholders who do not have their own broker may need to register with
a broker as a new client. This can take some time to process and,
therefore, Shareholders who consider they are likely to avail themselves
of this facility are encouraged to commence it at the earliest
opportunity. The contact details of the matched bargain settlement
facility provider, once arranged, will be made available to Shareholders
on the Company's website.
New Articles of Association
Conditional on the passing of the resolutions to approve the
Cancellation and the Re-registration, it will be necessary to adopt new
Articles of Association more in keeping with the Company's new unquoted
status. A summary of the New Articles is set out in Part II of the
Circular.
Trading update
The Company announced its Interim Results for the six months ended 31
July 2015 on 30 October 2015.
In that announcement, the Company announced a NAV as at 31 July 2015 of
GBP1.32 per Ordinary Share and cash resources of GBP6.331 million.
Taxation
The Board has been advised that the Cancellation and the Re-registration
should not have any direct effect on Shareholders' current liabilities
to income, capital gains and inheritance tax under UK law. Nevertheless,
Shareholders who are in any doubt as to their tax position or who are
subject to tax in a jurisdiction other than the United Kingdom should
consult their professional adviser.
General Meeting
Set out at the end of the Circular is a notice convening the General
Meeting to be held at 3rd Floor, Watson House, 54 Baker Street, London
W1U 7BU at 10.00 a.m. on 12 January 2016 for the purposes of considering
and if thought fit, passing the Resolutions.
Irrevocable Undertakings
The Company has received irrevocable undertakings from Shareholders who
hold, in aggregate, 5,100,443 Ordinary Shares at the date of the
Circular, representing 71.21 per cent. of the current issued ordinary
share capital of the Company, that they will vote in favour of the
Resolutions.
The Company has also received irrevocable undertakings from certain
Directors that they will vote in favour of the Resolutions as follows:
Director Number of Ordinary Shares % of total voting rights
Timothy Woodcock 52,867 0.74%
Charles Nasser 50,731 0.71%
Stephen Farrugia 210 0.00%
Total 103,808 1.45%
As a result the Company has received irrevocable undertakings to vote in
favour of the Resolutions over a total 5,204,251 Ordinary Shares,
representing 72.66 per cent. of the current issued ordinary share
capital of the Company.
The undertakings will lapse if the Meeting is not held or the
Resolutions are not put to Shareholders. In the event that the
resolution to approve the Cancellation is not approved, the undertakings
to vote in favour of the resolutions to approve the Re-registration and
adoption of the New Articles would also lapse.
Recommendation
The Board believes that the Resolutions as set out in the notice of the
General Meeting are in the best interests of the Company and its
(MORE TO FOLLOW) Dow Jones Newswires
December 23, 2015 02:00 ET (07:00 GMT)
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