TIDMIPH
RNS Number : 4292E
Interactive Prospect TargetingHdgs
18 December 2009
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Interactive Prospect Targeting Holdings Plc
("IPTH", "the Company" or "the Group")
(AIM: "IPH")
Extraordinary General Meeting in connection with the proposed Sale of Directinet
and Netcollections
Further to the announcement made on 11 December 2009 that the Group had reached
agreement for the sale of Directinet SA (Directinet) and Netcollections SAS
(Netcollections), and the Company would be convening a meeting to seek the
approval of Shareholders to the disposal, the Company announces that it is today
posting the Circular with further details of the disposal and the Notice
convening the Extraordinary General Meeting to be held at the offices of Berwin
Leighton Paisner LLP at Adelaide House, London Bridge, London EC4R 9HA at 4pm on
Monday 4 January 2010.
The Circular has been reproduced below.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in
any doubt about the contents of this document and/or about what action you
should take, you should immediately seek your own financial advice from your
stockbroker, bank manager, solicitor, accountant or other independent financial
adviser authorised under the Financial Services and Markets Act 2000 (as
amended) if you are in the United Kingdom or, if not, another appropriately
authorised independent financial adviser.
If you have sold or otherwise transferred all of your registered holding of
Ordinary Shares, please forward this document, together with the accompanying
Form of Proxy, to the purchaser or transferee or to the stockbroker, bank or
other agent through whom the sale or transfer was effected, for delivery to the
purchaser or transferee. If you have sold or otherwise transferred part of your
holding of Ordinary Shares, you should immediately consult the stockbroker, bank
or other agent through whom the sale or transfer was effected as to what action
you should take.
Interactive Prospect Targeting Holdings plc
(incorporated in England and Wales
under the Companies Act 1985 with registered number 5173250)
Proposed disposal of French Subsidiaries
and
Notice of
Extraordinary General Meeting
Canaccord Adams Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for the Company (in
its capacity as the Company's nominated adviser and broker) in connection with
the arrangements described in this document. Its responsibilities as the
Company's nominated adviser under the AIM Rules are owed solely to the London
Stock Exchange and are not owed to the Company or to any Director or to any
other person. No representation or warranty, express or implied, is made by
Canaccord Adams Limited as to any of the contents of this document (without
limiting the statutory rights of any person to whom this document is issued).
Canaccord Adams Limited is not acting for, and will not be responsible to, any
person other than the Company for providing the protections afforded to
customers of Canaccord Adams Limited or for advising any other person on the
contents of this document or any transaction or arrangement referred to herein.
This document should be read in its entirety. However, your attention is drawn
to the letter from the Chairman of the Company which is set out in Part I of
this document and which includes a recommendation that you vote in favour of the
Resolution to be proposed at the Extraordinary General Meeting referred to
below. The Disposal will not take place unless the Resolution is passed.
Notice of an Extraordinary General Meeting of Interactive Prospect Targeting
Holdings plc, to be held at the offices of Berwin Leighton Paisner LLP at
Adelaide House, London Bridge, London EC4R 9HA at 4 p.m. on Monday, 4 January
2010 is set out at the end of this document. Shareholders will find enclosed a
Form of Proxy for use at the Extraordinary General Meeting. To be valid, the
Form of Proxy should be completed and signed in accordance with the instructions
printed thereon and returned by post or by hand to the Company's registrars,
Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as
possible and, in any event, so as to be received no later than 4 p.m. on
Saturday, 2 January 2010. Completion and return of the Form of Proxy will not
prevent a Shareholder from attending and voting in person at the Extraordinary
General Meeting.
Copies of this document will be available free of charge during normal business
hours on any week day (except Saturdays, Sundays and public holidays) at the
offices of Berwin Leighton Paisner LLP, Adelaide House, London Bridge, London
EC4R 9HA.
CONTENTS
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| | Page |
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| | |
+------------------------------------------------------------------+----------------+
| Expected timetable of principal events | 3 |
+------------------------------------------------------------------+----------------+
| Directors, secretary and advisers | 4 |
+------------------------------------------------------------------+----------------+
| Definitions | 5 |
+------------------------------------------------------------------+----------------+
| Part I | |
+------------------------------------------------------------------+----------------+
| Letter from the Chairman of Interactive Prospect Targeting | 7 |
| Holdings plc | |
+------------------------------------------------------------------+----------------+
| Part II | |
+------------------------------------------------------------------+----------------+
| Notice of Extraordinary General Meeting of Interactive Prospect | 16 |
| Targeting Holdings plc | |
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| | |
+------------------------------------------------------------------+----------------+
Expected timetable of principal events
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| | |
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| Date of this document | 18 December |
| | 2009 |
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| | |
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| Latest time and date for receipt of completed Forms of Proxy | 4 p.m. on |
| | Saturday, |
| | 2 January 2010 |
+------------------------------------------------------------------+----------------+
| Extraordinary General Meeting to approve the Disposal | 4 p.m. on |
| | Monday, |
| | 4 January 2010 |
+------------------------------------------------------------------+----------------+
| Expected date for completion of the Disposal* | Wednesday, |
| | 6 January 2010 |
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| Expected date for the 2009 Annual General Meeting | 4 p.m. on |
| | Thursday, |
| | 14 January |
| | 2010 |
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| | |
+------------------------------------------------------------------+----------------+
*This date is indicative only and will depend upon the date on which the
conditions to the Sale Agreement are satisfied and/or waived.
Notes:
1.References to time in this document are to the time in London, England.
2.Other than the date of this document, each of the times and dates in the above
timetable is subject to change. If any of the above times and/or dates change,
the revised times and/or dates will be notified to Shareholders by announcement
on a Regulatory Information Service of the London Stock Exchange.
Directors, Secretary and Advisers
+-----------------------------------------+-----------------------------------------+
| | |
+-----------------------------------------+-----------------------------------------+
| Directors | Nicholas Ward (Executive Chairman) |
| | David Cicurel (Non-executive Director) |
| | Martin Kiersnowski (Director) |
| | |
+-----------------------------------------+-----------------------------------------+
| Company Secretary | Martin Purvis |
| | |
+-----------------------------------------+-----------------------------------------+
| Registered Office | 1 Vincent Square |
| | London |
| | SW1P 2PN |
| | |
+-----------------------------------------+-----------------------------------------+
| Nominated adviser and broker | Canaccord Adams Limited |
| | Cardinal Place |
| | 80 Victoria Street, 7th Floor |
| | London |
| | SW1E 5JL |
| | |
+-----------------------------------------+-----------------------------------------+
| Legal advisers to the Company | Berwin Leighton Paisner LLP |
| | Adelaide House |
| | London Bridge |
| | London |
| | EC4R 9HA |
| | |
+-----------------------------------------+-----------------------------------------+
| Registrars* | Capita Registrars Limited |
| | Northern House |
| | Woodsome Park |
| | Fenay Bridge |
| | Huddersfield |
| | West Yorkshire |
| | HD8 0GA |
+-----------------------------------------+-----------------------------------------+
| | |
+-----------------------------------------+-----------------------------------------+
Note:
* For the avoidance of doubt, Shareholders should return completed and signed
Forms of Proxy to the Company's registrars at Capital Registrars, PXS, 34
Beckenham Road, Beckenham, Kent BR3 4TU and not to the address referred to
above.
Definitions
The following definitions apply throughout this document unless the context
requires otherwise:
"2008 Accounts"the Company's report and accounts for the financial period ended
31 December 2008
"2009 Annual General Meeting"the annual general meeting of the Company currently
intended to be convened for 4 p.m.
on Thursday, 14 January 2010, or any adjournment thereof, notice of
which will be
circulated to Shareholders in due course
"AIM" AIM, a market operated by the London Stock Exchange
"AIM Rules" the rules for companies with a class of securities admitted to AIM
and their nominated
advisers published by the London Stock Exchange governing admission to and
the
operation of AIM, as
in force at the date of this document
"Bank"Barclays Bank PLC
"Bisnode"Bisnode AB, a company incorporated in Sweden with registered number
556341-5685
and whose
registered office is at Sveavägen 168, SE-105 99 Stockholm, a wholly-
owned subsidiary of the Guarantor
"Canaccord" Canaccord Adams Limited, nominated
adviser and broker of the Company
"Capita Registrars" Capita Registrars Limited, registrars to the Company
"Company" Interactive Prospect Targeting Holdings plc, a company incorporated
in England and Wales
with company registered number 5173250 and whose registered
office address is 1 Vincent Square,
London SW1P 2PN
"CREST"the Relevant System (as defined by the Crest Regulations) for the
paperless settlement of
share transfers and the holding of shares in uncertified form in respect of
which Euroclear
is the
Operator (as defined by the Crest Regulations)
"CREST Regulations"the Uncertified Securities Regulations 2001 (SI 2001/No.
3755)
"DEL"Direct Excellence Limited, a company incorporated in England and Wales with
company
registered number
3896907 (formerly called Interactive Prospect Targeting Limited), a
wholly-owned subsidiary of the
Company
"Directinet"Directinet SA, a company registered in France with registration
number 431 272 616
RCS
Paris and whose registered office address is 43 rue Beaubourg, 75003 Paris, a
wholly-owned subsidiary
of DEL
"Directors" or "Board" the directors of the Company, acting as the board of the
Company for the time being,
including any duly constituted committee of the Directors
"Disposal" the proposed sale by DEL to Bisnode of the entire issued share
capital of the French
Subsidiaries on the terms of the Sale Agreement
"EUR" or "EUR" euros, the lawful currency of the member states of the European
Union
"Euroclear"Euroclear UK & Ireland Limited, the operator of CREST
"Extraordinary
General Meeting" the extraordinary general meeting of the
Company to be held at the offices of Berwin
Leighton Paisner LLP, Adelaide House, London Bridge, London
EC4R 9HA and to be
convened for 4 p.m. on Monday, 4 January 2010, or any adjournment thereof,
notice of
which is set
out at Part II of this document
"Form of Proxy" the form of proxy for use in connection with the Extraordinary
General Meeting
accompanying this document
"French Subsidiaries"Directinet and Netcollections
"Group" the Company, its subsidiaries and its subsidiary undertakings as at the
date of this
document
"Guarantor" Bisnode Business Information Group AB, a company incorporated in
Sweden with
registered
number 556681-5725 whose registered office is Sveavägan 168, SE-105 99
Stockholm
"Interim Results"the Company's interim results for the six month period ended 30
June 2009
"London Stock Exchange" London Stock Exchange plc
"Netcollections"Netcollections SAS, a company registered in France with
registration number 493 456 016
RCS Paris and whose registered office address is 43 rue Beaubourg, 75003
Paris, a wholly-
owned
subsidiary of DEL
"Notice" the notice of the Extraordinary General Meeting, a copy of which is set
out at Part II of this
document
"NP6" NP6 SAS, a company registered in France with registration number 424 195
352
RCS Paris and whose
registered office address is 32 rue de Canteranne, 33600 Pessac, a
former wholly-owned subsidiary of DEL which
was sold by DEL in April 2009
"Optionholders" holders of options under the Company's option schemes in force
at the date of this document
"Ordinary Shares" ordinary shares of GBP0.004 each in the capital of the
Company
"GBP" or "Pounds" pounds Sterling, the lawful currency of the United Kingdom
"Resolution"the ordinary resolution set out in the Notice
"Sale Agreement" the conditional agreement dated 11 December 2009 between DEL,
Bisnode and the
Guarantor and
pursuant to which, subject to obtaining the consent of Shareholders and the
fulfilment of other conditions
precedent, DEL has agreed to sell and Bisnode has agreed to
acquire the entire issued share capital of the French
Subsidiaries
"Shareholder"a holder of the existing Ordinary Shares in the Company
"UK" the United Kingdom of Great Britain and Northern Ireland
PART I
LETTER FROM THE CHAIRMAN
INTERACTIVE PROSPECT TARGETING HOLDINGS PLC
(incorporated in England and Wales
under the Companies Act 1985 with registered number 5173250)
+-----------------------------------------+-----------------------------------------+
| | |
+-----------------------------------------+-----------------------------------------+
| Directors: | Registered Office: |
+-----------------------------------------+-----------------------------------------+
| Nicholas Ward (Executive Chairman) | 1 Vincent Square |
| David Cicurel (Non-Executive Director) | London |
| Martin Kiersnowski (Director) | SW1P 2PN |
+-----------------------------------------+-----------------------------------------+
| | |
+-----------------------------------------+-----------------------------------------+
18 December 2009
To Shareholders and, for information purposes only, Optionholders
Dear Shareholder,
Proposed disposal of French Subsidiaries and Notice of Extraordinary General
Meeting
1.Introduction
On 11 December 2009 your Board announced that its wholly-owned subsidiary, DEL,
had on 11 December 2009 entered into a conditional agreement with Bisnode and
the Guarantor for the sale of the Group's French Subsidiaries to Bisnode for a
consideration of EUR7,350,000 (subject to adjustment) comprising an initial cash
consideration of EUR7,000,000 payable at completion and a balance of EUR350,000 (as
may be adjusted in accordance with the terms of the Sale Agreement).
The French Subsidiaries are the last significant operating subsidiaries of the
Group and the Disposal, together with other sales recently completed by the
Group, will constitute a fundamental change in business (as defined by the AIM
Rules). As a result, the consent of Shareholders to the Disposal is now being
sought at the Extraordinary General Meeting and, accordingly, a notice convening
an Extraordinary General Meeting of the Company to be held at 4 p.m. on Monday,
4 January 2010 at the offices of Berwin Leighton Paisner LLP, Adelaide House,
London Bridge, London EC4R 9HA is set out at Part II of this document. A summary
of what action you should take is set out in Paragraph 21 of this letter and on
the Form of Proxy that accompanies this document.
The Company also intends to submit to Shareholders the 2008 Accounts and to
conduct the other business that would be dealt with at its 2009 Annual General
Meeting which the Company plans to hold at 4 p.m. on Thursday, 14 January 2010.
This will include a proposal that the Company be de-listed from AIM. If the
resolution to de-list from AIM is approved by Shareholders, de-listing will take
place on or about Friday, 22 January 2010.
The purpose of this document is to explain the background and reasons for the
Disposal and why the Board believes the Disposal is in the best interests of the
Company, to recommend that you vote in favour of the Resolution at the
Extraordinary General Meeting and to explain what Shareholders should do next.
2.Background
I was appointed Executive Chairman on 19 June 2008, following the announcement
on 15 April 2008 of disappointing results for the year to 31 December 2007.
These results came after a number of profit warnings and the earlier withdrawal
of a preferred bidder for the acquisition of the Group as a whole following
extensive due diligence.
I think it is appropriate that my Chairman's Statement should give a full report
on the issues the Board has had to address from the date of my appointment as
Chairman to the present time, and what the immediate future holds.
3.Strategic and Operational Review
My first task was to take charge of a strategic and operational review of the
Group which had been initiated by the Group's former management.
The Board appointed PricewaterhouseCoopers LLP and Berwin Leighton Paisner LLP
to help in this review. Subsequently, a number of experienced turnaround
professionals were appointed to assist on an interim basis in the review and in
the on-going operational management of the Group.
An urgent assessment was made of the financial health of the Group's UK
operations and it became clear that the Group faced a number of serious
strategic and operational problems:
-There had been a considerable deterioration in the performance of the core UK
business (comprising MyOffers, CLG, WebBrands, List Rental and MyPropertySpy)
(the "Core UK Business"), which was trading significantly below the former
management's budgets and was loss-making. It also became clear that it was
necessary to make significant write-offs of the trade debtors of the Core UK
Business, some of these debts having arisen in 2008 and some in earlier periods.
The Board and its advisers reviewed a number of options for the Core UK Business
in the overall context of the Group, especially the shortage of cash in the UK.
The Board concluded that it was essential that the Core UK Business be disposed
of as quickly as possible.
-Taken together, the smaller UK businesses were not profitable and had no
strategic relevance to the Group. The Board concluded that they too should be
sold.
-The Group's EUR6.5 million loan from the Bank was in default and it was necessary
for the Board to enter into discussions with the Bank regarding the Group's
indebtedness position and funding requirements.
-The Group's three French businesses (Directinet, NP6 and Netcollections) (the
"French Businesses") were trading in line with their budgets and were profitable
and cash generative. However, due to French dividend regulations and the earnout
arrangements entered into in connection with the acquisition of Directinet and
NP6, the Group was precluded from remitting to the UK any of the surplus cash
resources within the French Businesses at the time of the review. These issues
were particularly serious in the case of Directinet, where relations with the
original founders of that company, five of whom constituted the top management
of Directinet, had deteriorated in the first half of 2008 to the point that the
President of Directinet had resigned from the Board and the Directinet founders
and related persons had initiated legal action against the Group.
In effect, what started as a strategic review turned into a fight for the
survival of the Group.
4.Initial Strategy
Against this serious background, the Board decided in August 2008 to pursue the
following strategy for preserving and restoring some value for Shareholders:
-To dispose of or close all of the UK activities as quickly as possible.
-To exercise control over the French Businesses as quickly as possible with a
view to accessing their cash resources and putting in place arrangements for
their long-term management.
-To negotiate with the Bank with a view to restructuring the EUR6.5 million loan
so that it could be paid off over a period as dividends were received from the
French Businesses.
-To run the three French Businesses as one integrated business which could
either be sold in due course or could be used as a platform for further
expansion.
5.UK Disposals
Having decided on this strategy, the Board took urgent action to dispose of most
of the Group's activities in the UK. The sale of the various businesses was
announced as follows:
-The Core UK Business on 29 September 2008. This sale did not include the
Group's offices at Vincent Square, London SW1P 2PT, to which I refer later.
-The Integra Insight business on 4 November 2008.
-Real World Customer Experience Limited, including its wholly-owned subsidiaries
TPoll Market Intelligence Limited and Stimulating World Research Company
Limited, on 4 November 2008.
-Newsletters On-Line Limited, Smart Quotes Limited and Everyinvestor Limited on
11 November 2008.
The effect of these sales was to protect the Group from further losses from
these businesses and to realise sufficient funds to enable the Group's remaining
UK companies to continue to operate on a solvent basis whilst the Board tackled
the issues relating to the French Businesses.
It was an important feature of these sales that most of the outstanding trade
creditors, commitments to customers, employment contracts and other similar
obligations in respect of these businesses were assumed by the new buyers or
retained by the companies that were sold.
The Group's only remaining UK business, EmailBureau, was transferred on 2
October 2008 to MailPerformance UK Limited, which was established as a UK
subsidiary of NP6.
6.Restructuring of the Bank Debt
In parallel with negotiations for the disposal of the Core UK Business, the
Board entered into discussions with the Bank and was able to agree new
arrangements which, on the basis of the projections then available to the Board
in respect of the French Businesses, would have enabled the Group to retain
these companies and repay the Bank debt out of dividends received from the
French Businesses.
Agreement in principle to the restructuring was announced at the time of the
sale of the Core UK Business on 29 September 2008, and the completion of the
restructuring was announced on 27 October 2008. As part of this arrangement, the
Group was required to agree to a restructuring fee of EUR650,000 which was added
to the principal amount of the Bank debt, bringing the total to EUR7,150,000.
It was a condition of the restructuring that certain conditions, including the
agreement of certain financial covenants, had to be fulfilled by 15 December
2008. As announced on 30 December 2008, the Group was not able to fulfil some of
these conditions and the Board received formal notification from the Bank on 29
December that the Group was in default under the terms of the restructuring. In
this notification, the Bank confirmed that it had no current intention of
enforcing its rights or taking any immediate action in respect of the breaches
under the terms of the restructuring, but it reserved its right to do so. This
has continued to be the case up to the present time.
7.Disputes Relating to the French Businesses
Having sold the Core UK Business and restructured the Bank facility, the Board
then opened discussions with the vendors of Directinet and NP6 with three main
objectives:
-To resolve issues arising from the earn out arrangements entered into at the
time each of these companies were acquired.
-To secure access to the surplus funds in these companies as quickly as
possible.
-To put in place arrangements for the long term management of the French
Businesses on an integrated basis.
These negotiations were especially difficult because of the composition of the
boards of Directinet and NP6. In the case of Directinet, the Group had only two
directors, with the remaining six directors being the representatives of the
original founders who had sold Directinet to the Group. In the case of NP6, the
Group did not have a single representative on the board. The President of a
French company has widespread powers under French company law, and the
Presidents of Directinet and NP6 were both representatives of the
founders/vendors of these companies.
The Board achieved its three objectives in relation to Directinet on 5 November
2008 and since then has had majority representation on the board of Directinet
together with access to its cash resources within the framework allowed by
French law. One of the five original founders of Directinet left the Group
immediately, and the other four left after a short transition period. A new
management team was installed, as announced on 13 February 2009.
This settlement in relation to Directinet was achieved on very satisfactory
terms and provided access to Directinet's surplus cash, which has proved crucial
to the survival of the Group since then.
Discussions with the original NP6 vendors were initiated at about the same time
as those with the vendors of Directinet, but took longer. The Group announced on
11 February 2009 that its negotiations with the original NP6 vendors had not
thus far been productive and that the President of NP6 had ceased to be a member
of the Board. The uncertainty as to the outcome of these negotiations led the
Board to request suspension of trading in the Company's shares on AIM and the
suspension took effect on 11 February 2009. All this followed the initiation of
legal proceedings against the Group by the original NP6 vendors.
The Board subsequently announced on 17 April 2009 that the Group had entered
into settlement and sale agreements with the original NP6 vendors, under which
the Group sold NP6 (including MailPerformance UK Limited) to a private equity
backed vehicle of the original NP6 vendors and all of the disputes that existed
between the original NP6 vendors and the Group were fully and finally settled.
NP6 was sold at a price that was significantly less than that paid when NP6 was
acquired in 2007, but, nevertheless, the Board was satisfied that a good result
had been achieved, especially bearing in mind the changed economic conditions
and the commitment that had been made in respect of earnout payments at the time
of acquisition.
Following the settlement with the original NP6 vendors, trading in the Company's
shares on AIM was reinstated on 17 April 2009.
The cash consideration from the sale of NP6 was used to reduce Bank indebtedness
by EUR3.25 million to EUR3.9 million.
8.Revised Strategy
The decision to sell NP6 as part of the settlement with the original NP6
vendors, and the fact that the Bank debt was again in default, caused the Board
to review the initial strategy referred to above. Since April 2009, the Board's
key priorities have been as follows:
-The performance of Directinet and Netcollections, which are now increasingly
managed as one business. Both companies performed very well in 2008, which was
the last year of the earnout arrangements agreed at the time of the acquisition
of Directinet. However, whilst Netcollections has continued to perform well in
2009, Directinet's trading has reflected the adverse economic conditions that
the industry in France faced throughout 2009, with many advertisers having
reduced their marketing spend and/or taking marketing-related decisions at a
much higher level in their organisations, frequent rescheduling and deferment by
customers of campaigns that had already been booked, and reduced volumes in
customer acquisition activity. I would like to pay tribute to the new management
team who took over in February following the departure of the five original
founders at the end of their final earnout period. I believe that the new
management team has done well to keep Directinet and Netcollections intact and
profitable in very difficult circumstances.
-The repayment of the balance of the Bank loan which remains in default. Based
on the deteriorating performance of Directinet, the Board felt that it could not
rely on the two remaining French Subsidiaries to generate sufficient dividends
to enable the residual Bank loan to be repaid within an acceptable timeframe,
and that the only way the Board could repay the Bank loan would be from the
proceeds from the sale of the French Subsidiaries.
-The vacant Vincent Square offices. These comprise a total of approximately
12,000 square feet held through three separate leases which were entered into by
the previous Group management as recently as December 2007. These premises have
largely been vacant following the sale of the UK businesses last year and they
have been a heavy drain on the Group's resources, particularly the very scarce
resources in the UK. The Vincent Square outgoings have been at a level which
cannot be sustained out of the earnings of the French Subsidiaries at a time
when the Group also needs to repay its Bank debt. The next break point under the
leases is not until 2014. The Board considered that there was very little
prospect of assigning these leases to third parties on satisfactory terms within
the timescale available to the Board, and that the best way of eliminating these
obligations was that there be negotiations with the landlord with a view to
surrendering the leases as quickly as possible, with the surrender price being
paid from the proceeds of the sale of the French Subsidiaries.
-The level of the Group's overheads and the other costs that the Board has been
incurring as it has addressed the three items referred to above.
9.Sale of Directinet and Netcollections
In May 2009 the Board initiated a sale process with a view to finding a buyer
for Directinet and Netcollections and engaged Canaccord to advise the Company in
this process. An announcement was made on 9 July 2009 that the Group had
received indicative proposals that may or may not result in an offer being made
to acquire these companies.
Following discussions over an extensive period with a number of parties, the
Board announced on 11 December 2009 that it had reached agreement with Bisnode
for the sale of the French Subsidiaries. The Disposal is subject to a number of
conditions which include the following:
-The approval of Shareholders, which will be sought at the Extraordinary General
Meeting;
-The release of all relevant encumbrances in particular part of the Bank's
security which is expected to be obtained at completion; and
-Bisnode not exercising its right to terminate the Sale Agreement if a relevant
breach of warranty occurs prior to completion.
The amount receivable by the Group in respect of the Disposal comprises:
-An "initial consideration" of EUR7,000,000 (the "Initial Consideration"); and
-A "balance consideration" of EUR350,000 (the "Balance Consideration"),
subject to adjustments to take in account the "Actual Net Cash Amount" and the
"Adjusted Working Capital Amount" of the French Subsidiaries on 31 December 2009
as defined in the Sale Agreement ("Adjustments").
The Initial Consideration is payable on completion of the Disposal which is
expected on or about 6 January 2010. The Balance Consideration (subject to the
Adjustments) is payable following (i) the production of the accounts of the
French Subsidiaries for the year ended 31 December 2009 (by no later than 31
March 2010); and (ii) agreement on the extent of the Adjustments derived from
those accounts. The Adjustments will vary on a day to day basis depending upon
the cash flow and trading performance of the French Subsidiaries.
The Sale Agreement also provides for the possibility of an "Additional
Consideration", as defined in the Sale Agreement, of up to EUR1,000,000 linked to
the operating performance of the French Subsidiaries in 2009, but, based on the
latest forecast of the current profitability of these companies, this is not
expected to realise any further cash amounts.
In addition to the Disposal proceeds, the Group expects to receive settlement of
amounts due by the French Subsidiaries, amounting at the end of November 2009,
to approximately EUR480,000. It is currently expected that the majority of this
will be paid before completion with any balance paid by 31 March 2010.
The Group has given a number of warranties pursuant to the Sale Agreement, but
the Group's liability under them is capped at EUR100,000.
The total Disposal proceeds are below the aggregate of the price paid for
Directinet when it was purchased in 2006 plus the amount that has been invested
in Netcollections since it was formed in 2007. However, the Board believes that
the price that has been obtained is the best price available at the present time
and in the current economic climate, and that it is very much in the interests
of the Group as a whole, and of Shareholders in particular, that the French
Subsidiaries should be sold on the basis negotiated.
The net earnings before interest and tax attributable to the French Subsidiaries
were EUR3,203,000 in the year ended 31 December 2008 and EUR139,000 in the six month
period ended 30 June 2009. The French Subsidiaries had net tangible assets of
EUR2,134,000 as at 31 December 2008 and EUR2,214,000 as at 30 June 2009. In
September 2009 Directinet declared a dividend of EUR2,000,000 part of which was
applied to reduce intergroup indebtedness and the balance remitted to the UK and
used for UK working capital purposes.
10.Repayment of the Bank Loan
The current outstanding Bank loan of EUR3,900,000 plus accrued interest and
certain bank fees will be repaid in full on completion of the Disposal. The Bank
retains its warrants to subscribe in cash for up to 3,000,000 Ordinary Shares in
the Company at GBP0.004 per Ordinary Share.
The Board is grateful for the support it has received from the Bank over the
last eighteen months or so since the original defaults first came to light.
11.Vincent Square
Since March 2009, the Board has been in discussion with the landlord of the
Group's head offices at Vincent Square with a view to agreeing terms for the
surrender of the Company's leasehold interests.
The Board announced on 11 December 2009 that an agreement had been signed with
the Vincent Square landlord under which the Group has acquired an option to
assign the Vincent Square leases to the landlord's ultimate parent company
shortly after the completion of the Disposal, thereby extinguishing all the
Group's obligations under those leases.
The net cost of these assignments will be approximately GBP1,000,000 which will
be satisfied out of the proceeds of the sale of the French Subsidiaries. The
Board has been advised that this is a good outcome for the Group and that the
potential liability could have been significantly higher.
12.Maximising Shareholder Value
Once the Disposal has completed and the Bank and the Vincent Square landlord
have been repaid, the Board intends to continue to manage the Group's interests
with a view to maximising Shareholder value. Having previously disposed of its
wholly-owned online direct marketing businesses in the UK and having sold NP6,
with the sale of the French Subsidiaries, the Group will have disposed of its
remaining subsidiaries and the former principal activity of the Group of
providing online direct marketing will cease. Following the Disposal, the Group
will comprise the Company and its principal wholly-owned subsidiary, DEL, and
these companies will continue to trade as going concern investment holding
companies whilst the Board seeks to maximise Shareholder value. This will
involve the following:
-Dealing with post-completion issues in relation to the Disposal, including the
collection of any further amounts of consideration and the resolution of any
warranty claims.
-Optimising the value of the Group's 12.2% interest in the ordinary share
capital of Web-Clubs Limited, an online marketing business which is a closely
held private company and in which the Group has had an investment for some
years.
-Realising any remaining tax recoveries in France.
-Settling any remaining liabilities.
-Maximising the return from surplus funds held by the Group.
-Keeping the Group overhead as low as possible.
-Considering how best to return funds to Shareholders.
To mark this new phase in the Group's life, the Board proposes that the name of
the Company be changed to Directex Realisations Plc and a resolution to this
effect will be put to Shareholders at the forthcoming 2009 Annual General
Meeting.
13.Restructuring Costs
During the past eighteen months or so, the Board has carefully considered the
interests of Shareholders and other stakeholders, particularly the Group's
creditors and employees. The various actions described above (the UK disposals,
the restructuring of the Bank debt and subsequent discussions with the Bank, the
negotiations and litigation relating to the vendors of Directinet and NP6, the
process of selling the French Businesses, and the negotiations with the Vincent
Square landlord) have all been taken with these interests in mind, but they have
been expensive in terms of professional fees, interim management and other
restructuring costs. These costs have been very large in the context of the size
of the Group, but they reflect the complexity of the issues the Board has had to
address and the fact that the Company is an AIM-listed company.
However, these costs have been partly offset by savings on earnout payments that
the Group might otherwise have had to make.
14.Accounts and Going Concern
Having decided to follow the various courses of action referred to above, the
Directors are in the process of preparing the 2008 Accounts on a going concern
basis.
However, the ability of the Group to continue as a going concern depends upon
three key issues:
-The approval by Shareholders of the Disposal, and the subsequent completion of
the Sale Agreement following satisfaction of the other conditions precedent.
-The continued support of the Bank until completion and the repayment of their
debt at completion.
-The surrender of the Vincent Square leases on the basis negotiated with the
landlord, settlement of which will be made from the proceeds of sale of the
French Subsidiaries.
15.Annual Accounts and Interim Results
The 2008 Accounts and the Interim Results are expected to be published by no
later than 23 December 2009 and will therefore be available to Shareholders
before the Extraordinary General Meeting.
16.Section 656 Companies Act 2006
Section 656 of the Companies Act 2006 provides that, where the net assets of a
public company are half or less of its called-up share capital, in such
circumstances, the directors must call a general meeting of the company to
consider whether any, and if so what, steps should be taken to deal with the
situation. The directors must do this not later than 28 days from the earliest
day on which the fact is known to a director of the company.
It is envisaged that the company may fall below this threshold when the 2008
Accounts are completed. Further information will be included in the 2008
Accounts and the Circular convening the 2009 Annual General Meeting.
17.AIM Listing
As a consequence of the necessary delay in publishing the 2008 Accounts, trading
in the Ordinary Shares on AIM was suspended from 24 June 2009 and they currently
remain suspended pending the publication of the 2008 Accounts and the Interim
Results.
Once the 2008 Accounts are sent to Shareholders, and the Interim Results are
published, application will be made to the Stock Exchange for resumption of
trading in the Ordinary Shares on AIM, and it is hoped that this will happen
shortly thereafter.
The Board has concluded that the remaining activities are too small to warrant
the continuation of the AIM listing and will be recommending to Shareholders at
the 2009 Annual General Meeting that the Company be de-listed from AIM. If the
resolution is approved, de-listing will take place on or about Friday, 22
January 2010.
18.Directors' Interests
I will receive a cash payment of GBP100,000 (less tax and employee's National
Insurance) following completion of the Disposal; the timing of this payment is
at the discretion of the Remuneration Committee. In addition, I am entitled to
receive an amount equal to 5% (less tax and employee's National Insurance) of
anything that is actually distributed to Shareholders.
I also have the right to options in respect of up to 1 million Ordinary Shares
depending on the price of those Ordinary Shares from time to time. The options
become available in tranches of 200,000 options if the share price per Ordinary
Share increases to specified levels ranging from 40p to 80p. These options would
be exercisable at a price of 30p per Ordinary Share (and are "under water" and
of no value).
On completion of the Disposal, Martin Kiersnowski will be entitled to
consideration for the payment of a bonus to be determined by the Remuneration
Committee.
David Cicurel and Martin Kiersnowski are both Shareholders and also hold options
over the Ordinary Shares (which are also "under water" and of no value). Shares
and options are held as follows:
+-----------------------------------------------------+-----------+----------+----------+
| | | | |
+-----------------------------------------------------+-----------+----------+----------+
| Director | Shares | Options | Exercise |
| | | | price |
+-----------------------------------------------------+-----------+----------+----------+
| | | | |
+-----------------------------------------------------+-----------+----------+----------+
| Martin Kiersnowski | 2,287,500 | 50,000 | GBP1.91 |
+-----------------------------------------------------+-----------+----------+----------+
| | - | 50,000 | GBP0.24 |
+-----------------------------------------------------+-----------+----------+----------+
| David Cicurel | 140,500 | 30,000 | GBP1.91 |
+-----------------------------------------------------+-----------+----------+----------+
| | | | |
+-----------------------------------------------------+-----------+----------+----------+
19.Proceeds of Disposal
The net proceeds to the Group from the Disposal (excluding any Adjustments),
after discharging the outstanding Bank indebtedness, exercising the Vincent
Square options and settling any unpaid professional and other charges relating
to these issues, are expected to be GBP1,100,000.
The Board's intentions for maximising Shareholder value are set out in Paragraph
12 above.
Assuming that the Disposal is approved by Shareholders, and on the basis of
other assumptions which the Board currently considers to be reasonable but which
are potentially subject to significant variation, the Board believes that the
Group may, in mid-2010, have up to the equivalent of 1.5p per Ordinary Share
available in surplus cash which may be available for distribution to
Shareholders. However, because of the position on the distributable reserves in
the Company and DEL, and on the intra-group balances between these two
companies, the Board is not currently able to say how and when it will actually
be possible to distribute to Shareholders any surplus cash that the Group may
have in mid-2010. This will not be known for certain until the report and
accounts for the financial period ending 31 December 2009 for the Company and
DEL have been prepared and the legal issues involved have been discussed with
the Board's advisers.
Looking further ahead, the Board believes it will be a number of years before it
is able to complete the process of maximising Shareholder value along the lines
envisaged in Paragraph 12, particularly the realisation of the full amount of
any tax recoveries that may be available to the Group in France. On the basis of
the projections currently available to the Board, which at this stage must be
regarded as highly speculative, it may be that at the end of this process the
Board may be able to return a further amount of cash to Shareholders, possibly
in the range of 0p to 4.6p, but completion of this process is likely to take at
least five years.
20.General Meetings
As explained above, the Disposal is conditional, amongst other things, on the
approval of Shareholders at the Extraordinary General Meeting to be held at the
offices of Berwin Leighton Paisner LLP at 4 p.m. on Monday, 4 January 2010. A
notice of Extraordinary General Meeting is set out at Part II of this document.
At the Extraordinary General Meeting an ordinary resolution will be proposed to
approve, for the purposes of Rule 15 of the AIM Rules, the Disposal.
Together with the issue of the 2008 Accounts and the Interim Results, the Group
will issue a circular convening the 2009 Annual General Meeting which will
contain further particulars of the de-listing proposal and other Company
business.
21.Action to be taken
Shareholders will find enclosed with the Notice in this document a Form of Proxy
for use in connection with the Extraordinary General Meeting. Whether or not you
intend to be present at the Extraordinary General Meeting you are requested to
complete, sign and return the Form of Proxy in accordance with the instructions
printed on it so as to be received by the Company's Registrar, Capita
Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible
and, in any event, so as to arrive no later than 4 p.m. on Saturday, 2 January
2010, being 48 hours before the time appointed for the holding of the
Extraordinary General Meeting. Completion and return of the Form of Proxy will
not prevent a Shareholder from attending and voting in person at the
Extraordinary General Meeting.
22.Conclusion and recommendation
The last eighteen months or so have been extremely difficult for all
stakeholders in the Group and the Board is grateful for the support and
encouragement it has received from many of them.
The out-turn has been especially disappointing for our Shareholders. There have
been a number of occasions over the last year when there was a real possibility
that the Group might have to enter into an insolvency procedure in the UK, with
no return for Shareholders. Every action taken by the Board during this period
has had due regard to both Shareholder and wider stakeholder interests.
The Directors unanimously recommend that Shareholders vote in favour of the
Resolution in respect of the approval of the Sale Agreement as they intend to do
in respect of, in aggregate, 2,428,000 Ordinary Shares in which they are
interested, representing approximately 4.8 per cent. of the existing issued
Ordinary Shares.
Yours faithfully
Nicholas Ward
Executive Chairman
PART II
NOTICE OF EXTRAORDINARY GENERAL MEETING
INTERACTIVE PROSPECT TARGETING HOLDINGS PLC (the "Company")
NOTICE IS HEREBY GIVEN that an extraordinary general meeting of the Company will
be held at 4 p.m. on Monday, 4 January 2010 at the offices of Berwin Leighton
Paisner LLP, Adelaide House, London Bridge, London EC4R 9HA to consider and, if
thought fit, pass the following resolution as an ordinary resolution:
That the proposed disposal by the Company's wholly-owned subsidiary, Direct
Excellence Limited, of the entire issued share capital of Directinet SA and
Netcollections SAS (the "Disposal") on the terms and subject to the conditions
contemplated by the sale and purchase agreement dated 11 December 2009 (the
"Sale Agreement") (being the agreement described in Part 1 of the circular to
the shareholders of the Company dated 18 December 2009 (the "Circular") a copy
of which has been produced to the meeting and, for the purposes of
identification, initialed by the Chairman of the meeting) be and is hereby
approved for the purposes of Rule 15 of the AIM Rules for Companies of the
London Stock Exchange plc and that the directors of the Company (or a duly
authorised committee thereof) be and are hereby authorised to complete the Sale
Agreement and all other agreements or deeds for which the Sale Agreement
provides and to make such variations and amendments to the terms and conditions
thereof as the directors of the Company (or a duly authorised committee thereof)
may approve and consider not to be material in the context of the Disposal and
to do, approve and execute all other acts, things and documents necessary or
desirable, in order to effect or facilitate the Disposal.
By order of the Board
Martin T A Purvis
Company Secretary
Registered Office
1 Vincent Square
London SW1P 2PN
Registered Number:
5173250
Dated: 18 December 2009
EXPLANATORY NOTES TO THE NOTICE OF EXTRAORDINARY GENERAL MEETING
1.Members entitled to attend, speak and vote at the extraordinary general
meeting may appoint a proxy or proxies (who need not be a member of the Company)
to exercise these rights in their place at the extraordinary general meeting. A
member may appoint more than one proxy, provided that each proxy is appointed to
exercise the rights attached to different shares. You may not appoint more than
one proxy to exercise rights attached to any one share. To appoint more than one
proxy please use separate forms.
2.A form of proxy is enclosed with this Notice. To be valid, the form of proxy
must reach the Company's registrars, Capita Registrars, at PXS, 34 Beckenham
Road, Beckenham, Kent BR3 4TU not less than 48 hours before the time fixed for
the extraordinary general meeting or any adjournment thereof. Details of the
procedure for appointing a proxy or proxies are contained on the proxy form.
Appointment of a proxy will not prevent a member from attending the
extraordinary general meeting and voting in person. If you have appointed a
proxy and attend the extraordinary general meeting in person, your proxy
appointment will automatically be terminated.
3.The Company, pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, specifies that only those members on the register of members
of the Company as at 6 p.m. on Saturday, 2 January 2010 (or, if the
extraordinary general meeting is adjourned, members on the register of members
not later than 48 hours before the time fixed for the adjourned meeting) are
entitled to attend and vote at the extraordinary general meeting in respect of
the shares registered in their names at that time. Subsequent changes to the
register shall be disregarded in determining the rights of any person to attend
and vote at the extraordinary general meeting.
4.In the case of joint holders, the signature of only one of the joint holders
is required on the proxy form but the first named on the register of members of
the Company will be accepted to the exclusion of the other joint holders.
18 December 2009
For further information:
+-------------------------------------------+----------------------------+
| IPH | |
+-------------------------------------------+----------------------------+
| Nicholas Ward, Executive Chairman | Tel: +44 (0) 20 7932 4410 |
+-------------------------------------------+----------------------------+
| Martin Purvis | |
+-------------------------------------------+----------------------------+
| | |
+-------------------------------------------+----------------------------+
| Canaccord Adams | Tel: +44 (0) 20 7050 6500 |
+-------------------------------------------+----------------------------+
| Mark Williams, Corporate Finance | |
+-------------------------------------------+----------------------------+
| Bhavesh Patel | |
+-------------------------------------------+----------------------------+
| | |
+-------------------------------------------+----------------------------+
| College Hill | Tel: +44 (0) 20 7457 2020 |
+-------------------------------------------+----------------------------+
| Mark Garraway, Media Enquiries | |
+-------------------------------------------+----------------------------+
| Adam Aljewicz | |
+-------------------------------------------+----------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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