UPS Upstream

 

TIDMUPS TIDMNFC 
 
RNS Number : 1100A 
Upstream Marketing and Comms Inc. 
02 October 2009 
 

Upstream Marketing and Communications Inc. 
("UPS" or the "Company") 
 
 
Disposal of Business 
Adoption of Investment Strategy 
Change of Name 
 
 
The Board of Upstream Marketing and Communications Inc. is pleased to announce 
that it has entered into a conditional agreement for the proposed disposal of 
Upstream Asia Limited and Camber Communications Limited (together "UAL"), the 
Company's wholly-owned BVI subsidiaries, to Asset Pioneer Limited (the "Buyer"). 
The Disposal is subject to Shareholder approval which will be sought at an 
Extraordinary General Meeting which is being convened for 26 October 2009, as 
this disposal would result in a fundamental change of business by the Group 
pursuant to Rule 15 of the AIM Rules. In addition, at the General Meeting, 
Shareholders will be asked to approve the Company's proposed investing policy 
following Completion in accordance with AIM Rule 15. 
 
 
Commenting, Stephen Smith, Non-Executive Chairman of UPS, said: - 
"The proposed sale by UPS of its public relations businesses is a positive 
development for shareholders. The historic performance of those businesses has 
been disappointing and has had an adverse effect on UPS's share price. The Board 
did not foresee performance improving markedly and has been considering various 
options to realize the value of the public relations businesses and make better 
use of shareholders' funds. 
The businesses and the Upstream brand are being sold, and UPS's current CEO, 
David Ketchum, will continue in the business with a new strategic partner, Next 
Fifteen Communications Group plc ("Next Fifteen"). This sale was viewed as the 
best option to realize value for the businesses. We wish David and Next Fifteen 
well in this new chapter for Upstream. 
The Company will use the sale proceeds to seek out investment opportunities in 
the natural resources sector in order to maximize value for shareholders. To 
reflect this change in strategic direction, the Company proposes to change its 
name to Hameldon Resources Limited." 
 
 
Enquiries: 
Upstream Marketing and Communications 
David Ketchum 
+852 2973 0222 
Mr Nikul Sarin 
+44 207 399 4381 
 
 
 
 
Strand Partners Limited 
James Harris/Angela Peace 
+44 207 409 3494 
 
The Board of UPS is pleased to announce that it has entered into a conditional 
sale agreement to sell the entire issued share capital of Upstream Asia Limited 
and Camber Communications Limited, the Company's wholly-owned BVI subsidiaries, 
to Asset Pioneer Limited for US$1,100,000 comprising cash of US$900,000 and the 
assumption of US$200,000 worth of liabilities by the Buyer ("Disposal"). 
UAL comprises all the existing public relations businesses of UPS. On completion 
of the Disposal, UPS will have no remaining interest in the public relations 
business and its sole asset will be the proceeds of the Disposal net of costs. 
The Disposal constitutes a fundamental change of business of the Company under 
Rule 15 of the AIM Rules for Companies. Accordingly, completion of the Disposal 
is conditional, amongst other things, on the approval of Shareholders at an 
Extraordinary General Meeting of the Company, to be convened for 26 October 
2009. 
Your Board is also seeking Shareholder approval at the EGM to its proposed new 
investing strategy because, following the Disposal, the Company will be 
classified under the AIM Rules as an investing company. 
 
 
1.    Proposed Disposal 
Following the appointment of Stephen Smith and Ilyas Khan to the Board on 6 June 
2008, an independent committee of the Board was formed to consider the Company's 
current business and strategy. The committee considered, amongst other things, 
the Company's share price which has fallen since the reverse takeover of 
Upstream Asia Limited completed in October 2006 and the Company's poor financial 
performance generally together with its outlook for the future. The committee 
concluded that the Company's and the Shareholders' interests would be best 
served by disposing of UAL, the Company's public relations business, and 
adopting a new investing strategy to invest in businesses which would be 
expected to provide a greater enhancement in Shareholder value over the longer 
term. 
 
 
Principal Terms of the Disposal 
The Company has agreed to sell to the Buyer the entire issued share capital of 
Upstream Asia Limited and Camber Communications Limited, representing the 
Company's entire public relations business. The Buyer will pay to the Company 
US$900,000 in cash on completion and the Buyer will assume responsibility for 
US$200,000 worth of liabilities associated with the operations of UPS. 
The Company has provided customary warranties as to its title to the shares in 
UAL (and its subsidiaries) and its authority to enter into the sale agreement. 
The Company has not given any warranties as to the trading of UAL. In addition 
the Company has agreed to indemnify the Buyer in respect of any liabilities of 
UAL, that have not been disclosed to the Buyer, and which were incurred by the 
Company's non-executive directors. Similarly, the Buyer has agreed to indemnify 
the Company against any liabilities that the Company may incur in respect of the 
UAL businesses. 
Completion of the Disposal is conditional upon, amongst other things: 
  *  the consent of Shareholders to the Disposal at the EGM; 
  *  the consent of Shareholders to the Company's proposed change of name; 
  *  UAL and its subsidiaries not suffering an insolvency event prior to completion; 
  *  there being no material adverse change in the business, operations, assets, 
  financial or trading position of UAL before completion; and 
  *  the Buyer and Upstream Asia Limited having agreed to the sale of UAL's public 
  relations business conditional only on completion of the Disposal (see paragraph 
  2 below). 
 
The conditions must be satisfied on or before 31 October 2009 failing which the 
agreement for the Disposal will lapse. 
 
 
Financial contribution of UAL 
Since UPS is an investment holding company, almost all of its profits and losses 
have been attributable to UAL. In the year ended 31 December 2008, UPS made a 
consolidated profit before tax of US$0.331 million (audited) (of which US$0.350 
million came from the sale of the news release business) and in the six months 
to 30 June 2009 a loss before tax of US$0.402 (unaudited), in both cases almost 
entirely attributable to UAL. The unaudited net asset value of UAL as at 30 June 
2009 was US$1.770 million, a decrease from US$3.451 million as at 31 December 
2008. 
 
 
2.    Related Parties and sale on 
The Buyer is wholly owned by Jane McGuire Ketchum who is both a director of UPS 
and a substantial shareholder, holding 14.61 per cent of the issued share 
capital of the Company. Jane McGuire Ketchum is married to David Ketchum, a 
director and substantial shareholder holding 14.87 per cent of the issued share 
capital of the Company. Under the AIM Rules the Buyer is, therefore, a related 
party. 
The Buyer has conditionally agreed that upon completion of its acquisition of 
Upstream Asia Limited, Upstream Asia Limited will sell its shares in Upstream 
Limited, Upstream Asia (Singapore) Pte Ltd and Upstream Australia Pty Ltd 
(together "Target Companies") to Bite Asia Holdings Limited ("Ultimate Buyer"), 
which is owned as to 55% by Next Fifteen Communications Group plc (AIM: NFC.L) 
("Next Fifteen") and as to 45% by the Buyer. The Buyer and Next Fifteen will 
enter into an option deed providing for Next Fifteen to acquire the Buyer's 
shares in the Ultimate Buyer over a five-year period, the pricing of which will 
depend upon the profitability of the Ultimate Buyer. 
The consideration for the sale by the Buyer to the Ultimate Buyer of the Target 
Companies will be US$900,000 in cash plus payment of the US$200,000 worth of 
liabilities that the Buyer has assumed from UPS. This is an identical price to 
the sale by the Company to the Buyer of UAL including their respective 
subsidiaries. The reason for this is that, as described above, all of the 
revenue and profits of UAL are attributable to the Target Companies. 
The Company is not selling UAL and its subsidiaries direct to the Ultimate Buyer 
because, amongst other reasons, of the Ultimate Buyer's requirements as follows: 
(i) for a comprehensive package of warranties and indemnities from the Company; 
instead those warranties and indemnities are being given by the Buyer. One of 
the Board's objectives for the Disposal was to ensure that the Company was clear 
of liabilities relating to the public relations business following completion; 
this would not have been possible had the Company given the warranties and 
indemnities requested; and 
(ii) that it does not want to acquire Upstream Asia Limited or any subsidiaries 
of Upstream Asia Limited other than the Target Companies nor does it wish to 
acquire Camber Communications Limited or its subsidiaries, as no revenues or 
profits are attributable to such companies. Upstream Asia Limited will be 
required by the Ultimate Buyer to wind up or dissolve the eight UAL companies 
not acquired by the Ultimate Buyer as soon as reasonably practicable after the 
sale to the Ultimate Buyer is completed. As a consequence these costs will be 
borne by the Buyer rather than the Company. 
As a further condition of the sale to the Ultimate Buyer, David Ketchum will be 
required to be released from his existing service agreement with the Company and 
will enter into a service agreement with the Ultimate Buyer as well as providing 
a limited guarantee as to the warranties provided by the Buyer and also 
restrictive covenants in favour of the Ultimate Buyer. Jane McGuire Ketchum will 
also provide a similar guarantee and restrictive covenants in favour of the 
Ultimate Buyer. 
In light of the above the Board (excluding David and Jane McGuire Ketchum) 
("Independent Directors") having consulted with Strand Partners Limited, the 
Company's nominated adviser, unanimously consider the terms of the Disposal to 
be fair and reasonable insofar as the Company's Shareholders are concerned. In 
providing its advice, Strand Partners Limited has taken into account the 
Independent Directors' commercial assessments. 
 
 
3.    The Company's operations following the Disposal 
Following the Disposal the Company will have no material liabilities other than 
its general overheads and expenses (including expenses incurred in relation to 
the Disposal). 
The Company intends to use the funds available to it following the Disposal to 
provide working capital for the day-to-day administration of the Company and to 
make investments in accordance with its proposed investing strategy, further 
details of which are set out in paragraph 4 below. 
 
 
4.    Proposed investing strategy 
The Company's proposed investing strategy is to acquire holdings in natural 
resources, minerals, metals and/or oil & gas companies which the Directors 
believe are undervalued and where one or more such transactions have the 
potential to create value for Shareholders. The Company expects to be an active 
investor but it will depend on the terms of each transaction. 
If approved, the Company would seek to acquire interests in natural resources, 
minerals, metals, and/or oil & gas projects such as (without limit) exploration 
permits and licences, mining and production licences or processing and 
development projects, which may be achieved through acquisitions, partnerships 
or joint venture arrangements. Such investments may result in the Company 
acquiring the whole or part of a company or project. The Company's investments 
may take the form of equity, joint venture debt, convertible instruments, 
licence rights, or other financial instruments as the Directors deem 
appropriate. 
The Directors believe that their broad collective experience in the areas of 
natural resources, acquisitions, accounting, corporate and financial management 
together with the opinion of consultant experts in the evaluation and 
exploitation of natural resources, minerals or metals projects, which will 
assist them in the identification and evaluation of suitable opportunities, will 
enable the Company to achieve its objectives. Where the Directors consider it 
necessary, internationally recognised competent persons will be commissioned to 
prepare reports on the projects being considered by the Company. The Directors 
may undertake the initial project assessments themselves with additional 
independent technical advice as required. 
If the investing strategy is approved, there is no limit on the number of 
projects into which the Company may invest, and the Company will consider 
possible opportunities anywhere in the world, with a particular focus on Africa, 
South America, Australasia and central and eastern Europe. The Company intends 
to be an active investor. 
Returns to shareholders are expected to be by way of dividends and growth in the 
value of the Company's shares. It is the Board's current intention to hold 
Investments for the long term. 
The Company will have to make an acquisition or acquisitions which constitute a 
reverse takeover under the AIM Rules or otherwise implement its investing 
strategy within 12 months of the EGM, failing which the Company's Ordinary 
Shares would then be suspended from trading on AIM. If the Company's investing 
strategy has not been implemented within 18 months of the EGM then 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. 
 
 
5.    Change of Name 
At the EGM the Board will propose to change the name of the Company to better 
reflect the Company's new strategic direction. It is proposed that the name of 
the Company be changed to Hameldon Resources Limited. 
 
 
6.    EGM 
The Disposal constitutes a transaction by the Company resulting in a fundamental 
change of business for the purpose of Rule 15 of the AIM Rules, and accordingly 
completion of the Disposal and the adoption of the investing policy following 
completion requires the consent of the Shareholders at an extraordinary general 
meeting. 
A circular convening the EGM will be despatched later today. It is intended that 
the EGM will be convened for 10.00 a.m. (Dubai time) on 26 October 2009 to be 
held at Suite 1701, City Tower 2, Sheikh Zayed Road, Dubai, UAE. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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