TIDMWEST
RNS Number : 1835D
Western & Oriental plc
18 March 2011
18 March 2011
Western & Oriental plc
("Western & Oriental" or the "Company" or the "Group")
Update on the disposal of the brands and certain assets of the
travel division and Cancellation of the Company's Ordinary Shares
to trading on AIM
The Board of Western & Oriental, the luxury and specialist
travel group, today wishes to provide an update in relation to the
strategic objectives of the Company and proposed cancellation of
the Company's Ordinary Shares to trading on AIM (the
"Cancellation").
Update on the disposal of the brands and certain assets of the
travel division ("the Travel Business")
Following the previous announcements made on 26 January 2011 and
1 February 2011 in relation to the proposed disposal of the
Company's Travel Business and the strategic future of the group,
the Board is pleased to announce that the discussions in relation
to the sale of the Travel Business continue to progress well with
Furze International Limited which is owned by the Kumar Family
Trust of which Raj Kumar, a Director of the Company, is a
beneficiary ("the Purchaser"). Shareholder approval for this
disposal will be sought at a General Meeting.
Following the announcement on 1 February 2011, the terms of the
offer, which are acceptable to the Board, have now been amended to
reflect the following conditions:
1. Total consideration of GBP1.5m. The consideration will be
effected by the deemed repayment of the GBP800,000 loan, which Mr
Kumar has provided to the Company, as announced on 21 December
2010, and the balance of GBP700,000 to be satisfied by the
assumption by the Purchaser of Travel Business trade liabilities of
GBP700,000. If the proposed transaction does not gain sufficient
shareholder support, the Company will need to repay the GBP800,000
loan in cash or convert it into shares in the Company or a
combination of the two;
2. The Purchaser will acquire all the brands and certain assets
of the Travel Business, specifically the forward order book as at 1
March 2011. The net customer monies relating to those forward
orders currently stands at GBP4,600,000;
3. The Purchaser will take over the lease of all properties
operated by the Travel Business but not the existing lease of the
Group's head office, Welby House in Victoria. The Company intends
to put in place a service agreement in relation to the space and
services provided to the Travel Business in Welby House that will
take over approximately 50 per cent of the overhead cost. Total
savings from reduced lease obligations of approximately GBP200,000
per annum are expected.
Western & Oriental's Travel Business reported a loss from
continuing operations of GBP6.1m on revenues of GBP32.9m for the
year ended 30 September 2010 (GBP940,000 profits on revenues of
GBP32.1m for the year ended 30 September 2009).
As previously announced, the Board intends to seek shareholder
approval for the disposal of the Travel Business (the "Disposal").
The Disposal will require approval by shareholders representing at
least half the votes cast in general meeting and it is intended
that a resolution to approve the Disposal will be proposed at the
General Meeting.
In view of the delay in finalising the disposal of the Travel
Business, the Board has agreed with Mr Raj Kumar that the
shareholder loan of GBP800,000 provided by him to the group will be
extended to a date no later than 30 June 2011. Mr Kumar will be
granted a debenture over the shares of Western & Oriental
Travel Limited and Regent Holidays (U.K.) Limited for agreeing to
this extension and the terms of the Disposal.
Mr Kumar is deemed to be a related party for the purposes of AIM
rule 13 in relation to the changes to the agreement now being made
and the Disposal. The Company's directors, with the exception of Mr
Kumar, who is involved in the transactions as a related party,
consider, having consulted with the Company's nominated adviser,
that the terms of the transactions are fair and reasonable insofar
as its shareholders are concerned.
Current Trading
Following completion of the Disposal, the Company will continue
to own its events division which is currently trading in line with
management expectations. The division generated profit from
continuing operations, before central costs, of approximately
GBP700,000 on revenues of GBP13.8m for the year ended 30 September
2010 and GBP1.98m profits from continuing operations, before
central costs, on revenues of GBP21.37m for the year ended 30
September 2009.
Corporate costs incurred so far and the loss generated by the
travel division for the year to date will result in the Company
showing a loss for the current financial year but once the full
benefits of the Cancellation and the Disposal have borne fruit, the
Board believes that the Company can return to profitability.
Cancellation of the Company's Ordinary Shares to trading on
AIM
As a key part of the Board's attempts to reduce corporate costs,
the Board is also announcing today its intention to seek
shareholder approval for the cancellation the Company's Ordinary
Shares to trading on AIM. Cancellation of the Company's Ordinary
Shares to trading on AIM requires approval by shareholders
representing at least three-quarters of votes cast in general
meeting, and it is intended that a special resolution to approve
the Cancellation will be proposed at the General Meeting.
In reaching its decision to seek the cancellation, the Board has
considered the following matters:
- The ongoing costs of the AIM listing have a negative impact on
the Company's profits and can no longer be justified in relation to
the Company's size and market capitalisation. If the Company's
shares cease to be quoted on AIM, the Board expects to make savings
in excess of GBP200k annually. The Board believes that these funds
can be better deployed as additional working capital in the
business.
- A disproportionate amount of senior management time has
previously been devoted to meeting quoted company requirements.
Following the cancellation, management time will be focussed wholly
on making the business more profitable.
- There is very little liquidity in the Company's shares having
a considerable negative effect on the perceived market value of the
group.
- The current market capitalisation creates an artificially low
starting point for discussions with any potential buyer of the
business, and would not help to realise appropriate value in
relation to the future sale of any of the group's businesses.
- The AIM quotation of its shares offers the Company no benefit
in the trading of its individual businesses.
- The Company intends to pursue a strategy of profitability
rather than growth going forward.
For the reasons set out above and following conversations with
certain institutional shareholders, the Board has concluded that it
is in the best interests of the Company to proceed with the
Cancellation as soon as practicable.
The Board recognises that cancelling the Company's AIM quotation
could make it more difficult for shareholders to trade in the
Company's shares. Therefore the Company intends to put in place a
facility whereby the Company Secretary will seek to assist
shareholders to trade in the Company's shares with other
shareholders. The Company will continue to communicate with
shareholders through the Company's website.
An explanatory circular ("the Circular") setting out the details
of the Disposal and Cancellation is expected to be sent to
shareholders on 22 March 2011, giving Notice of the General Meeting
at which the Resolutions will be put before shareholders. The
General Meeting is expected to take place on 7 April 2011.
Indicative Timetable
2011
22 March: Circular and Notice of General Meeting to be sent to
all shareholders.
7 April: General Meeting.
15 April: Cancellation of the Company's Ordinary Shares to
trading on AIM effective (assuming the Resolution is passed by
shareholders).
A further announcement will be made on the day the Circular is
posted to shareholders confirming the exact dates.
Enquiries:
Western & Oriental plc
Pavlos Savvides, Chairman +44 (0)20 7821 4078
Collins Stewart
Adrian Hadden +44 (0)20 7523 8350
About Western & Oriental plc
Western & Oriental is a specialist luxury travel group with
a number of established high quality brands. The company was
admitted to trading on AIM under the ticker symbol WEST in March
2006. The Group acts as a tour operator, travel agent and
conference and incentive organisers, offering a premium service for
tailor-made and specialist packaged holiday programmes to
destinations worldwide.
For more information on Western & Oriental and its
individual luxury travel brand websites, go to
www.westernorientalplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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