TIDMSYG
RNS Number : 9646H
Speymill PLC
27 June 2013
For Immediate Release 27 June 2013
Speymill plc
("Speymill" or the "Company")
Proposed disposal of German Property Portfolio
Proposed adoption of an Investing Policy
Notice of General Meeting
The Company announces that it has entered into a conditional
sale agreement with the Purchasers, dated 25 June 2013, for the
sale of its operating business being its two 94.9 per cent. owned
subsidiary companies Horsfield and Wyatt in consideration for the
cancellation of GBP4,213,352 of Existing Debt together with a cash
payment of GBP300,000 to provide further working capital to the
Company. In accordance with the AIM Rules, Completion is
conditional upon approval by Shareholders at the General
Meeting.
The Disposal will constitute a fundamental change of business of
the Company, under Rule 15 of the AIM Rules, which requires the
approval of Shareholders. The Disposal will, therefore, result in
the Company becoming an Investing Company, as a consequence of
which Rule 15 of the AIM Rules further requires the Company to
state its Investing Policy in this Document and to obtain approval
of the Shareholders of that Investing Policy. Further details of
the Investing Policy are set out below.
If the Investing Policy is approved by Shareholders at the
General Meeting, the Company will be required to make an
acquisition or acquisitions which will constitute a reverse
takeover under the AIM Rules or otherwise implement its Investing
Policy within 12 months of the General Meeting, failing which, the
Company's Ordinary Shares would then be suspended from trading on
AIM. If the Company's Investing Policy has not been implemented
within 18 months of the General Meeting, the admission to trading
on AIM of the Ordinary Shares would be cancelled and the Directors
will convene a general meeting of the Shareholders to consider
whether to continue seeking investment opportunities or to wind up
the Company and distribute any surplus cash back to
Shareholders.
The Directors and Burnbrae have undertaken to vote in favour of
the Resolutions in respect of their holdings of 26,165,290 Ordinary
Shares which represents 44.8 per cent. of the issued share capital
of the Company.
Background to and reasons for the Disposal
As part of an arrangement in 2010 to terminate the Company's
management agreement with Speymill Deutsche Immobilien Company Plc,
the Company acquired 94.9 per cent. of the issued share capital of
each of two investment companies, Horsfield and Wyatt, owning
primarily residential rental property in the South East region of
Germany (specifically Chemnitz, Leipzig, Dresden, Halle and the
surrounding areas). The directors of Horsfield and Wyatt are myself
and Denham Eke.
On 19 December 2012, the Company announced that its other
business, Speymill Contracts Limited, had entered into
administration, with the effective loss to the Company of any
remaining value from this operation.
As a result, the Company's sole remaining business has been that
of German residential rental property ownership and management. On
12 April 2013, the Company announced that a formal external
valuation of the German Properties had been undertaken by CBRE GmbH
as part of the year end audit process and as a result of this
valuation the impairment of the carrying value of these assets for
the year ended 31 December 2012 was GBP3.69 million (2011: GBPnil).
The resulting carrying value of the German Properties has fallen to
GBP17.89 million (2011: GBP22.1 million).
Thus the administration of Speymill Contracts coupled with the
German Properties' revaluation impairment, together with the normal
running costs of the Company, resulted in a total comprehensive
loss in the audited results for the Company at 31 December 2012 of
GBP6.1 million (2011: loss of GBP0.4 million).
The German Properties have associated debts held within
Horsfield and Wyatt, which are cross collateralised between these
two entities, of GBP14,527,649 ( EUR17,142,626 ) as at the Latest
Practicable Date and in addition, GBP6,283,319 has been drawn down
by the Company under the Existing Debt Facility as at that
date.
The Company is now faced with the on-going requirement to
refurbish and maintain the individual units held within Horsfield
and Wyatt to improve, or at least maintain, the current occupancy
levels which stand at a sub-economic average of 88.6 per cent. at
April 2013. Many of the German Properties now need considerable
work to meet current standards which may include electrical and
fire safety work. Whilst the underlying historic operational
trading of the German Properties has continued to allow the related
Property Loans to be serviced in accordance with the terms of each
loan, the Directors are aware that in order to maintain this
performance, a minimum estimated expenditure in the region of
EUR500,000 will be required within the next twelve months. In
addition, the Company carries the cost of management of the German
Properties, necessitating frequent visits to Germany by the
management team to liaise with the various professional advisers
and the bankers providing the Property Loans. The Company does not
have this funding and with the extent of the Property Loans and the
Existing Debt, the Directors believe that it is impractical to
raise further debt (or indeed equity) to cover this
requirement.
The Directors have therefore concluded that the German
Properties no longer form the basis of a sustainable publicly
listed company and that it is in the best interests of Shareholders
as a whole to dispose of this business and leave the Company as a
"shell" with a new investing policy which could then acquire or
participate in another business. This action will provide all
Shareholders with the opportunity to participate in a new venture
as set out below.
Burnbrae has indicated to the Board that it would be prepared to
take on the German Properties together with the related Property
Loans in cancellation of an amount of the Existing Debt totalling
GBP4,213,352 and the provision of sufficient working capital to
allow the Company to meet its anticipated working capital
obligations for 12 months or until a new investment is made in
accordance with its Investing Policy, this amount being the cash
payment element of GBP300,000 within the consideration. In
addition, the proposed provision of a new funding facility (as
detailed below) to replace the current shareholder loan facility
will provide an additional potential source of funding over and
above the GBP300,000 received under the proposed transaction.
Thus, the Independent Director, in consultation with both the
Company's Nominated Adviser and the Company's legal advisers, has
considered this proposal and has concluded that this is the best
way to provide the possibility of creating future value for
Shareholders.
Following the Disposal, the Board intends to pursue new
investment opportunities in accordance with the proposed Investing
Policy. Set out in Appendix A is an unaudited pro forma statement
of net assets of the Company immediately on Completion, showing
movements from the audited consolidated balance sheet as if the
Disposal had taken place on 31 December 2012.
The Existing Debt Facility was repayable on 30 June 2013. To
allow sufficient time for this proposal to be considered and voted
on at a General Meeting, Burnbrae and Mr James Mellon have agreed
to extend this date to 31 August 2013. If the current proposals are
accepted by Shareholders, it is proposed that upon the expiry of
the current facility a new facility will be provided by Galloway (a
related party to Burnbrae and a company which is indirectly wholly
owned by the trustee of a settlement under which Mr James Mellon,
Chairman of Speymill, has a life tenancy). Following completion of
the proposed transaction, this new facility will repay the
outstanding balance due under the Existing Debt Facility and will
be on the following terms;
- The facility will have a limit of GBP4,000,000
- The interest rate under the facility will be 8% per annum
- A facility fee of 3% on drawdowns made under the facility
- The facility will be convertible to Ordinary Shares at a
conversion price based on the average closing price of the Ordinary
Shares as traded on the AIM exchange for the five (5) working days
prior to the date of conversion, subject to a maximum price of
GBP0.01 (1 pence) per Ordinary Share
- Repayment date of 31 July 2014.
Since Burnbrae and Galloway are companies which are indirectly
wholly owned by the trustee of a settlement under which Mr Jim
Mellon, Chairman of Speymill, has a life tenancy, the Disposal, the
extension of the Existing Debt Facility and the Galloway Debt
Facility (together the "Transaction") are a Related Party
Transaction under the AIM Rules. In addition, as Mr Denham Eke is
Managing Director of Burnbrae and Galloway, he is not considered to
be independent for the purposes of recommending the Transaction.
Accordingly, the Independent Director, having consulted with the
Company's Nominated Adviser, considers that the Transaction is fair
and reasonable in so far as the Company's Shareholders are
concerned.
James Mellon and Burnbrae hold respectively 2,727,273 and
23,421,217 Ordinary Shares, in aggregate 26,148,490 Ordinary Shares
representing 44.8 per cent. of the issued share capital.
Summary of the Sale Agreement
Pursuant to the Sale Agreement the Company has agreed to sell in
each case 94.9 per cent. of the issued share capital of Horsfield
and Wyatt, conditionally upon Shareholder approval of the Disposal,
to the Purchaser.
Under the terms of the Sale Agreement, the Purchaser will obtain
ownership of the Company's 94.9 per cent. shareholding in each of
Horsfield and Wyatt. The Consideration will be in the form of
cancelling an amount of debt under the Existing Debt Facility and
the payment of a cash amount of GBP300,000 to allow the Company to
meet its anticipated working capital obligations for 12 months or
until a new investment is made. Completion is intended to take
place at the earliest practicable date following Shareholder
approval.
Further Information on Horsfield and Wyatt
As disclosed in the Speymill audited Annual Report for the year
ending 31 December 2012, the trading performance of Horsfield and
Wyatt has been as follows for 2011 and 2012;
31 December 31 December
2012 2011
(unaudited) (unaudited)
GBP 000s GBP 000s
============= =============
Turnover 1,519 1,544
Reportable Segment profit/(loss)
from operations (2,589) 693
Finance income 50 -
Finance costs (1,166) (1,443)
Reportable Segment (loss)
before tax (3,705) (750)
The composition of the properties within the portfolios is as
follows;
Residential units 473
Commercial units 23
As at 31 December 2012 a formal external valuation was
undertaken by CBRE GmbH as part of the year end audit process which
provided a carrying value of the properties held within Horsfield
and Wyatt of GBP17.89 million and this has been incorporated into
the audited Speymill plc annual report for the year ended 31
December 2012.
Proposed Investing Policy
The Company's proposed Investing Policy, which is subject to
Shareholder approval at the General Meeting, is set out below:
Investing Policy
On Completion, the Company will have disposed of all of its
trading businesses and therefore (under Rule 15 of the AIM Rules)
it will be re-classified as an Investing Company and will be
required to adopt an Investing Policy, which must also be approved
by Shareholders.
The Company will have a "generalist" investing policy with the
Company investing in all sectors but with a concentration on
property and property related businesses. The Directors intend
primarily to seek to invest in companies whose businesses represent
a long term investment. The Directors intend initially to focus
primarily in the European Union area where the Directors believe
that there are opportunities to acquire interests in suitable
projects, although other countries may also be considered.
The Directors may consider it appropriate to take an equity
interest in any proposed investment which may range from a minority
position to 100 per cent. ownership. Proposed investments may be
made in either quoted or unquoted companies and structured as a
direct acquisition, joint venture or as a direct interest in a
project.
The Company intends to be an involved and active investor.
Accordingly, where necessary, the Company may seek participation in
the management or board of directors of an entity in which the
Company invests or in the event that it is acquired then in the
on-going enlarged entity.
New investments will be held for the medium to longer term,
although shorter term disposal of any investments cannot be ruled
out.
There will be no limit on the number of projects into which the
Company may invest, and the Company's financial resources may be
invested in a number of propositions or in just one investment,
which may be deemed to be a reverse takeover pursuant to Rule 14 of
the AIM Rules. Where the Company builds a portfolio of related
assets it is possible that there may be cross-holdings between such
assets. The Company does not currently intend to fund any
investments with debt or other borrowings but may do so if
appropriate.
Investments may be made in all types of assets and there will be
no investment restrictions.
The Company's primary objective is that of securing for the
Shareholders the best possible value consistent with achieving,
over time, both capital growth and income for Shareholders through
developing profitability coupled with dividend payments on a
sustainable basis.
Following on from adopting an Investing Policy, the Company will
be required to make an acquisition or acquisitions which constitute
a reverse takeover under the AIM Rules or otherwise implement its
Investing Policy within 12 months of the General Meeting, failing
which the Company's Ordinary Shares would then be suspended from
trading on AIM. If the Investing Policy has not been implemented
within 18 months of the General Meeting the admission to trading on
AIM of the Company's Ordinary Shares would be cancelled and the
Directors will convene a general meeting of the Shareholders to
consider whether to continue seeking investment opportunities or to
wind up the Company and distribute any surplus cash back to
Shareholders.
The Directors believe that their broad collective business
experience in the areas of acquisitions, accounting, corporate and
financial management will assist them in the identification and
evaluation of suitable opportunities and will enable the Company to
achieve its investing objectives. The Directors may undertake the
initial project assessments themselves with additional independent
technical advice as they judge may be required. The Company will
not have a separate investment manager.
Dividends
The initial focus of the Company will be to achieve capital
growth for Shareholders and, therefore, the Company will only
consider the payment of dividends as and when it is appropriate to
do so. As such, it is not possible at this stage to give an
indication of the likely level or timing of any future dividends.
To the extent that any dividends are paid they will be paid in
accordance with any applicable laws and the regulations to which
the Company is subject. The amount of the dividends paid to
Shareholders will fluctuate according to the levels of profits
earned by the Company and will be dependent on sufficient
distributable reserves being available to the Company.
Board
The Board consists of the Independent Director, James Mellon, as
Executive Chairman, and Denham Eke, as Chief Executive Officer.
While there is no present intention to alter the composition of the
Board, its composition is kept under constant review to ensure that
it has the correct balance of experience and knowledge to support
its objectives.
General Meeting
Completion of the Disposal and approval of the Investing Policy
is conditional upon the passing of the Resolutions at the General
Meeting, to be held at The Claremont Hotel 18/19 Loch Promenade,
Douglas, Isle of Man at 10.30am on 30 July 2013, at which the
Resolutions will be proposed.
For further information:
Speymill PLC
Denham Eke
Tel +44 (0)1624 640860
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish
Tel +44 (0)207 628 3396
Appendix A
Unaudited Pro Forma Statement of Net Assets
Per Audited
Financial Pro Forma
Statements Adjustments Statement
(Notes
(Note 3 and
2) 4)
GBP 000s GBP 000s GBP 000s
Non-current Assets
Property, plant
and equipment 4 - 4
Financial assets
at fair value 1 - 1
------------ ------------ ----------
Total non-current
assets 5 - 5
------------ ------------ ----------
Current assets
Trade and other
receivables 966 (75) 891
Investment property 17,885 (17,885) -
Prepayments 18 - 18
Cash and cash
equivalents 1,152 (844) 308
------------ ------------ ----------
Total current
assets 20,021 (18,804) 1,217
------------ ------------ ----------
Non-current liabilities
Shareholders'
loan (5,722) 4,213 (1,509)
Interest bearing
loans (13,887) 13,887 -
Derivative financial
instruments (971) 971 -
------------ ------------ ----------
Total non-current
liabilities (20,580) 19,071 (1,509)
------------ ------------ ----------
Current liabilities
Trade and other
payables (2,342) 339 (2,003)
Interest bearing
loans (187) 187 -
Current tax liabilities (4) - (4)
------------ ------------ ----------
Total current
liabilities (2,533) 527 (2,007)
------------ ------------ ----------
Net (Liabilities)
/ Assets (3,087) 794 (2,293)
============ ============ ==========
Notes
1. The pro forma statement of net assets of
the Company set out above has been prepared
to illustrate the effect on the net assets
of the Company that the Disposal would have
had if it had occurred on 31 December 2012.
The pro forma statement is for illustrative
purposes only and, because of its nature,
may not give a true picture of the net assets
of the Company after the Disposal.
2. The net liabilities of GBP3,087,000 as
at 31 December 2012 have been extracted from
the consolidated balance sheet in the published
audited accounts for the year ended 31 December
2012.
3. The adjustments shown represent the amounts
included in the audited consolidated financial
statements as at 31 December 2012 in respect
of Horsfield and Wyatt together with any relevant
consolidation adjustments that would cease
to be required on the removal of these entities.
The adjustments reflect the disposal of the
Investment properties at their current valuation
of GBP17.9m, together with the associated
debt of GBP13.9m and other associated assets
and liabilities.
4. The adjustments represent the consideration
of GBP4.5m in the form of GBP4.2m of shareholder
loan forgiveness and GBP0.3m of cash.
5. The adjustments shown include the removal
of the 'minority interests' reflected in the
audited consolidated financial statements
in respect of the element of Horsfield and
Wyatt that is not attributable to the holders
of the shares owned by Speymill.
Appendix B
DEFINITIONS
The following definitions apply throughout this Document unless
the context requires otherwise:
"Act" the Isle of Man Companies Act 1931-
2004 (as amended) and includes
the regulations made under the
Act;
"AIM" AIM, a market operated by the London
Stock Exchange;
"AIM Rules" the AIM Rules for Companies, incorporating
guidance notes, published by the
London Stock Exchange governing,
inter alia, admission to AIM and
the continuing obligations of companies
admitted to AIM, as amended or
reissued from time to time;
"Beaumont Cornish" Beaumont Cornish Limited, the Company's
Nominated Adviser authorised and
regulated by the Financial Conduct
Authority;
"Burnbrae" Burnbrae Limited, a company incorporated
and registered in the Isle of Man
with registered number 071444C
whose registered office is 4(th)
Floor, Viking House, Nelson Street,
Douglas, Isle of Man;
"Company" or "Speymill" Speymill plc, a company incorporated
and registered in the Isle of Man
with registered number 120231C
whose registered office is at 1st
Floor, Regent House, 16-18 Ridgeway
Street, Douglas, Isle of Man;
"Completion" completion of the Disposal;
"Consideration" means the aggregate amount of the
cancellation of GBP4,213,352 of
the Existing Debt together with
a cash payment of GBP300,000, being
the aggregate consideration for
the Disposal. The cancellation
of the Existing Debt to be allocated
on the following basis GBP513,352
to be in respect of the amount
due to Burnbrae and GBP3,700,000
to be in respect of the amount
due to Mr James Mellon;
"Directors" or the the directors of the Company whose
"Board" names are set out in the Document;
"Disposal" the conditional sale of 94.9 per
cent. in each case of the issued
share capital of Horsfield and
Wyatt to the Purchasers pursuant
to the Sale Agreement;
"Existing Debt" the aggregate amount owed by the
Company to Burnbrae and to Mr James
Mellon pursuant to the Existing
Debt Facility;
"Existing Debt Facility" a loan facility provided to the
Company by Burnbrae and Mr James
Mellon on 24 June 2011 and as amended
on 16 April 2012 and also on 27
September 2012;
"Document" the document, being a circular
to Shareholders and accompanying
Notice of General Meeting;
"Form of Proxy" the form of proxy accompanying
this Document for use by the Shareholders
in relation to the General Meeting;
"Galloway" Galloway Limited, a company incorporated
and registered in the British Virgin
Islands with registered number
39025 whose registered office is
PO Box 659, Road Town, Tortola,
British Virgin Islands;
"Galloway Debt Facility" the proposed debt facility to be
provided by Galloway to the Company
as described in the Document;
"General Meeting" the general meeting of the Company,
convened by the Notice of General
Meeting, to be held at The Claremont
Hotel, 18/19 Loch Promenade, Douglas,
Isle of Man at 10.30am on 30 July
2013, or any adjournment of that
meeting, which is being held to
consider the Resolutions;
"German Properties" the portfolio of German investment
properties owned by Horsfield and
Wyatt;
"Horsfield" Horsfield Limited, a company incorporated
and registered in the Isle of Man
with registered number 001703V
whose registered office is 33-37
Athol Street, Douglas, Isle of
Man;
"Independent Director" Mr Lincoln Forrest
"Latest Practicable 25 June 2013, being the last practicable
Date" date prior to the publication of
this Document;
"London Stock Exchange" London Stock Exchange plc;
"Investing Company" has the meaning given in the glossary
to the AIM Rules;
"Investing Policy" the proposed investing policy of
the Company, to be pursued by the
Company following Completion, further
details of which are set out in
the Document;
"Notice of General the notice convening the General
Meeting" Meeting appearing at the end of
this Document;
"Ordinary Shares" the existing ordinary shares of
1 penny each in the capital of
the Company;
"Property Loans" the loans relating to the German
Properties, with Deutsche Genossenschafts-Hypothekenbank
AG, these loans being held directly
with Horsfield and Wyatt in relation
to their respective properties;
"Purchasers" Burnbrae and Mr James Mellon;
"Resolutions" the ordinary resolutions set out
in the Notice of General Meeting;
"Shareholders" holders of the entire issued ordinary
share capital in the Company;
"Sale Agreement" the conditional sale agreement
between the Company and the Purchasers,
relating to the Disposal, dated
25 June 2013, which is more particularly
described in the Document;
"Sterling" or "GBP" the lawful currency of the Isle
of Man and the UK;
"UK" or United Kingdom" the United Kingdom of Great Britain
and Northern Ireland; and
"Wyatt" Wyatt Limited, a company incorporated
and registered in the Isle of Man
with registered number 001711V
whose registered office is 33-37
Athol Street, Douglas, Isle of
Man.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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