Proposed Company Voluntary Arrangement
April 26 2010 - 7:49AM
UK Regulatory
TIDMHIG
RNS Number : 7828K
Hertford International Group PLC
26 April 2010
26 April 2010
Hertford International Group PLC
("Hertford" or "the Company")
Proposed Company Voluntary Arrangement ("CVA"),
Change of Company Name and Adoption of Investing Policy
Hertford International Group Plc announces that it proposes to enter into a CVA,
change its name to Otium Ventures Plc and adopt an investing policy pursuant to
Rule 15 of the AIM Rules.
The Company has today issued a circular to Shareholders setting out the reasons
for the CVA and also the Company's proposed investing policy following
completion of the CVA, and to seek Shareholders' approval in accordance with
Rule 15 of the AIM Rules.
The Company's ordinary shares are expected to return from suspension on 13 May
2010 following the approval and acceptance of the CVA proposal.
Paul Seakens, Hertford Company Secretary, said: "These proposals will allow the
company to enter into new markets with confidence and take advantage of
opportunities which have been identified to deliver value to shareholders."
For further information please contact:
+------------------------------+----------------------------------+
| Alex Lubin/Paul Seakens | Tel: +44 20 3005 9924 |
| Hertford International Group | |
| Plc | |
| | |
+------------------------------+----------------------------------+
| Nick Tulloch | Tel: +44 20 7012 2000 |
| Arbuthnot Securities Limited | |
| | |
+------------------------------+----------------------------------+
Background to and reasons for the CVA
The Company's Ordinary Shares were admitted to trading on AIM on 24 December
2007 with the intention of capitalising on an anticipated strong growth in
demand for pre-paid debit cards.
In November 2008, Hertford announced the acquisition of Cheque Exchange Limited
("CEL") from Provident Financial Plc for a total consideration of approximately
GBP3,000,000, of which GBP1,250,000 was paid in cash on completion in January
2009. This acquisition was primarily funded by debt. The rationale for this
acquisition was to obtain CEL's distribution network which would allow the
Company to both distribute its pre-paid debit cards and profit from the expected
shift to the use of pre-paid cards from cash payments on cheque cashing and
sub-prime loans.
The second payment of GBP1,250,000 was due by July 2009, but due to the
difficulty of raising equity finance in the then prevailing market conditions,
this payment was not made and as a consequence CEL was transferred back from
Hertford to Provident on a mutually agreeable basis.
The use of pre-paid debit cards in the United Kingdom, except in areas such as
gaming, has been disappointing and has resulted in the insolvency of a large
number of quoted and unquoted participants in this market. Despite the Company
having developed a number of areas of expertise in the payment systems market,
the Board no longer considers the pre-paid cards business model viable as a sole
activity for the Company.
In light of the above developments, the Directors propose to reposition the
Company by seeking suitable investment opportunities in the leisure industry
where its expertise in payment systems and card technology are of value. For
such opportunities to be realised, however, a restructuring of the Company is
required.
Company Voluntary Agreement
In order to facilitate a re-focusing of the Company's activities and allow it to
raise the required capital, its primary lender, Palmdale Investments SA
("Palmdale"), has agreed to write-off approximately GBP800,000 of debt subject
to the approval of a CVA under which ordinary unsecured creditors will be paid
two pence in the pound. Since the Palmdale debt, after valuation of their
security over the assets of the Company for the purpose of voting on the CVA
proposal, is likely to represent more than 75 per cent. of the total unsecured
debt in the Company, it is expected that the CVA will be approved at a meeting
to be held at 10.00 a.m. on 12 May 2010. Palmdale is not connected to the
Company within the meaning of Sections 249 of the Insolvency Act 1986.
The Lender has also agreed, when a new business opportunity has been identified
and subject to certain conditions, to convert the remaining balance of its debt
into equity. The conversion terms will be finalised upon a suitable business
opportunity arising.
The Company has entered into a joint venture with Prepaid Financial Solutions to
market and operate its "Crewcard" pre-paid debit card product. The Directors
believe this option allows an interest in the product to be retained and for the
possibility of future revenue from pre-paid debit cards to be received whilst
not requiring resource or operating costs. As a consequence, Crewcard Network
Limited, a wholly owned subsidiary of the Company, has been placed into
liquidation.
Investing Policy
The Company will seek to identify ways to create value for Shareholders through
acquisitions or investments within the leisure industry and in particular in
areas where its expertise in payment systems and card technology can be
maximised. The principal features of the proposed investing policy are
summarised below:
· the Directors may choose to modify or amend the investing policy, either
generally or in relation to any particular investment, but may not do so in a
manner that would materially change the overall objective and risk profile of
the existing investing policy;
· the Directors will adopt a strategy of seeking suitable acquisition and
investment opportunities within the leisure industry by means of their
connections and their expertise in identifying and conducting such acquisitions
and may also engage advisers and intermediaries to source suitable
opportunities;
· investment and acquisitions carried out by the Company are likely to
involve the acquisition of substantial interests in the business and assets that
are to be acquired, combined with the introduction of new directors who will
have executive responsibility for the management of those businesses and assets.
Investments of this kind are likely to be held for the long term with a view to
development and capital growth;
· it is likely that the Company will make a single substantial acquisition
or a series of acquisitions of businesses and assets that are to be combined
within a single grouping;
· in making acquisitions and investments, the Directors anticipate issuing
new ordinary shares in exchange for the acquisition of shares, businesses and
assets; and
· the Company would not contemplate investments or acquisitions that carry a
high degree of contingent risk or liability that is capable of imposing
financial obligations upon the Company that it could not reasonably expect to
meet. The Company would also not entertain investments or acquisitions that
would cause the Company to cease to be admitted to AIM or listed on any
comparable securities exchange.
The Directors hope to be able to announce a number of new corporate developments
in the near future. These will have the effect of re-positioning the Company
firmly in the leisure industry where the Directors believe the Company is able
to take advantage of significant identified opportunities.
As a result of the CVA and in accordance with Rule 15 of the AIM Rules, the
investing policy must now be approved by Shareholders in general meeting and the
Company must implement the investing policy by 12 November 2010, otherwise
trading in the Company's Ordinary Shares on AIM will be suspended in accordance
with Rule 40 of the AIM Rules. If following suspension of the Ordinary Shares
in accordance with Rule 40 of the AIM Rules, the Ordinary Shares have not been
re-admitted to trading on AIM within six months, the admission of the Ordinary
Shares to trading on AIM will be cancelled.
The Board
As has previously been announced, Lewis Findlay and Adam Dougall resigned as
directors in December 2009. In addition Paul Marks, non-executive Chairman, left
the board with effect from 7 April 2010. The Company is in advanced discussions
with a number of experienced executive and non-executive directors who are
expected to join the board on completion of the restructuring.
Change of Company name
In view of the change in nature of the business, it is proposed that, with
effect from 13 May 2010, the name of the Company be changed to Otium Ventures
Plc. The Company's new AIM symbol will be OTV.L.
AIM suspension
The Company's Ordinary Shares are expected to return from suspension at 8.00
a.m. on 13 May 2010 following the approval and acceptance of the CVA proposal.
General Meeting
Upon completion of the CVA, the Company will be treated as an investing company
in accordance with Rule 15 of the AIM Rules and accordingly the adoption of the
investing policy and change of name requires the consent of the Shareholders in
a general meeting.
A notice convening the General Meeting is set out at the end of the Shareholder
circular. The General Meeting has been convened for 11.00 a.m. on 12 May 2010 to
be held at the offices of Atlantic Law LLP, One Great Cumberland Place, London
W1H 7AL. A copy of the Directors' proposal in relation to the CVA and a summary
of the statement of affairs and the nominee's comments thereon, which have been
filed at the High Court have been sent to Shareholders.
DEFINITIONS
+----------------+----------------------------------------------+
| "Act" | the Companies Act 2006 |
+----------------+----------------------------------------------+
| "AIM" | a market operated by London Stock Exchange |
| | plc |
+----------------+----------------------------------------------+
| "AIM Rules" | the AIM Rules for Companies published by the |
| | London Stock Exchange from time to time |
| | (including, without limitation, any guidance |
| | notes or statements of practice) which |
| | govern the rules and responsibilities of |
| | companies whose shares are admitted to |
| | trading on AIM |
+----------------+----------------------------------------------+
| "Articles" | the articles of association of the Company |
+----------------+----------------------------------------------+
| "Board" or | the board of directors of the Company |
| "Directors" | |
+----------------+----------------------------------------------+
| "Company" or | Hertford International Group Plc |
| "Hertford" | |
+----------------+----------------------------------------------+
| "Form of | the form of proxy enclosed with the |
| Proxy" | Shareholder circular for use by Shareholders |
| | in connection with the General Meeting |
+----------------+----------------------------------------------+
| "General | the general meeting of the Company, notice |
| Meeting" or | of which is set out at the end of the |
| "GM" | Shareholder Circular, convened for 11.00 |
| | a.m. on 12 May 2010, and any adjournment |
| | thereof |
+----------------+----------------------------------------------+
| "Group" | the Company and its subsidiaries as at the |
| | date of this announcement |
+----------------+----------------------------------------------+
| "High Court" | the High Court of Justice in England and |
| | Wales |
+----------------+----------------------------------------------+
| "Notice of GM" | the notice convening the GM |
+----------------+----------------------------------------------+
| "Ordinary | ordinary shares of 1p each in the capital of |
| Shares" or | the Company |
| "Shares" | |
+----------------+----------------------------------------------+
| "Resolutions" | the resolutions before Shareholders at the |
| | General Meeting |
+----------------+----------------------------------------------+
| "Shareholders" | holders of Ordinary Shares |
+----------------+----------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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