RNS Number:0347S
IMS Maxims PLC
13 November 2003



Preference Shares to Redeem BES liability



IMS Maxims plc ("the Company") has posted a circular to shareholders convening
an extraordinary general meeting ("EGM") to consider passing resolutions to
resolve certain BES funding arrangements in a subsidiary by the issue of new
Convertible Cumulative Redeemable Preference Shares. It is not proposed to list
the new shares on AIM or any other market.



Commenting on the proposal, CEO Brian Ennis said; "As indicated in our Annual
Report and Accounts we have concluded an agreement to convert this liability
into an equity instrument. This act will strengthen our balance sheet and
capability to execute our business strategy. I am confident that the resolutions
will be passed at the EGM."





Background



Irish Medical Systems (Computers) Limited ("IMSCL"), an Irish based subsidiary
of the Company, has received two tranches of BES funding through the Second and
Third Expanding Companies Funds ("the Funds") under agreements managed by CF
Investment Managers Limited ("CF"). By virtue of the Investment Agreements a
total of IR#1 million was subscribed by the Funds and Anglo Irish Bank
(Nominees) Limited ("Anglo") and Ulster Bank Dublin Trust Company ("Ulster")
were allotted, as nominee for the investors, a total of one million "A" Ordinary
Shares of Euro1.269738 each (formerly one million "A" Ordinary Shares of IR#1 each)
in IMSCL ("the IMSCL Shares").



The Investment Agreements and certain related put and call option deeds ("the
Deeds") provide that if the IMSCL Shares are not purchased at market value by 5
years and 6 months from the date of the later of the Investment Agreements, then
the IMSCL Shares will acquire voting rights equivalent to 85% of the total
voting rights attaching to all shares then in issue in IMSCL. A premium of 10%
of their subscribed value is due to Anglo and Ulster on the IMSCL Shares. The
Investment Agreements contain a number of covenants and restrictions in relation
to the actions of directors of IMSCL, its solvency, net asset value and business
and conduct of its board meetings.



Under the Deeds both IMSCL on the one hand and Anglo and Ulster on the other
have the right to require the other party to purchase or sell their IMSCL Shares
at a market value to be agreed between the two parties. CF, acting on behalf of
Anglo and Ulster, served notice of exercise of their put option in February
2003. At that time IMSCL was not in a position to purchase the IMSCL Shares. In
order to utilise its available cash resources in developing the Group's business
further, IMSCL and Anglo and Ulster have agreed to exchange the IMSCL Shares for
newly created Convertible Cumulative Redeemable Preference Shares of #1 each in
the capital of the Company ("the CCRP Shares"). The approval of Shareholders at
an EGM is consequently needed to create a new class of share capital, and to
approve various related matters.





New Redeemable Preference Shares in IMS



The amount owing to Anglo and Ulster by IMSCL at the date of the EGM including
interest will be #993,141 ("the Indebtedness").



The Company is proposing to enter into an agreement ("the Subscription Agreement
") which, if approved by the shareholders at the EGM, will lead to the Company
issuing 993,141 CCRP Shares to Anglo, as nominee for the former BES investors,
having the rights and being subject to the restrictions set out below in
consideration for the cancellation of the Indebtedness. The Company will pay a
management fee to CF similar to that currently payable under the BES
arrangement.



The Company will have a right at any time to purchase or redeem the CCRP Shares
upon payment of the par value thereof together with a premium of 7% per annum
for each of the first two years and 11% per annum thereafter. The holders of
CCRP Shares can convert the CCRP Shares into Ordinary Shares (ordinary shares of
1 pence each in the capital of the Company) on any date that is 24 months after
their date of issue ("Conversion Date"). The number of Ordinary Shares to which
Anglo will be entitled will be equal to the par value of the CCRP Shares at the
date of issue plus the amount of any unpaid premium multiplied by 14. There is
no final repayment date on the CCRP Shares.



Should the Company issue the CCRP Shares under the terms proposed, the effect
upon the Group balance sheet at the date of issue would be to increase the net
assets of the Group by #993,141 by the reduction of group current liabilities
and the increase in CCRP Shares under Capital and Reserves. Should the holders
of the CCRP Shares convert those shares into Ordinary Shares at the earliest
opportunity, then they would hold 15,918,660 Ordinary Shares, being some 9.9% of
the issued Ordinary Share capital of the Company as enlarged by conversion,
assuming no other issues had taken place in the interim period. Should the
holders of the CCRP Shares convert those shares into Ordinary Shares at any time
after the earliest opportunity or the Company redeem the CCRP Shares after 24
months then they will hold more Ordinary Shares due to the increased premium in
accordance with the provisions laid before the meeting for consideration.



In addition to the right of conversion, CF, acting as manager for the BES
investors, has the right to call for the Company to purchase or redeem all or
any of the CCRP Shares once the Conversion Date has passed. If CF serve a notice
to do this, the Company is obliged to purchase or redeem the Shares unless the
directors are of the opinion that either (i) the Company does not have
sufficient distributable reserves under the Act to purchase or redeem all or any
of the CCRP Shares, or (ii) the purchase or redemption would cause the Company
to lose its going concern status, or (iii) that following the purchase or
redemption the current assets of the Company and its subsidiaries would not
exceed its current liabilities, or (iv) that following the purchase or
redemption the Company and its subsidiaries would not have sufficient working
capital for their present requirements. Any dispute relating to this may be
referred to the Company's auditors whose decision shall be final and binding
unless there is manifest error.



The Directors believe that the interests of the Ordinary Shareholders would be
better served by the redemption of the CCRP Shares rather than leaving them
outstanding earning the preferred dividend and capable of conversion.  Therefore
the Directors will, over the next two years, take reasonable endeavours to place
the Company in such a position so that it can, whilst maintaining sufficient
working capital for the operation of the business and subject to market
conditions, redeem the CCRP Shares.



Copies of the circular to shareholders are available for the next month from the
offices of the Company at Sandymount, Station Road, Woburn Sands, Bucks. MK17
8BR and on www.imsmaxims.com.




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