YSP Your Space

 

TIDMYSP 
 
RNS Number : 5477B 
Your Space PLC 
29 October 2009 
 

Your Space plc ("Your Space" or "the Company") 
 
 
Trading Update and Summary of the Terms of the Proposed Company Voluntary 
Arrangement ("CVA") 
 
 
Your Space announces an update in relation to trading and the measures proposed 
to address the Company's current financial position and to create a stable 
financial platform for the business. 
 
 
As a result of the downturn in activity and asset values in the property market, 
the Company has faced challenges in securing increased occupancy rates to target 
levels which has ultimately had an adverse effect on the strategy of the Company 
and its forecasts and cash flow. 
 
 
The directors of Your Space ("Directors") have taken steps to try and secure 
further funding for the Company, a strategy outlined in the Company's interim 
results to 30 September 2008 which were released on 23 December 2008: 
 
 
  *  In June 2009 the Directors sought to obtain additional funding by way of a new 
  convertible loan note from a private investor but the conditions attaching to 
  the funding prevented the Directors from agreeing a deal; 
 
 
 
  *  The Directors also held discussions with a third party which were at advanced 
  stages with respect to a sale of part of the business but the transaction did 
  not complete due to problems with the purchaser being able to satisfy the 
  company on its ability to transact this deal. This transaction would have seen 
  trade creditors in relation to that part of the business, repaid in full; and 
 
 
 
  *  The Directors requested an increase and extension of their banking facilities 
  from the Bank of Ireland ("Bank") but in the circumstances this was not 
  forthcoming. 
 
 
 
 
 
Despite the efforts of the Directors on 15th September 2009, they formed the 
opinion that the Company did not have sufficient working capital for their 
present requirements and the Directors therefore requested a temporary 
suspension of trading of the Company's shares. 
 
 
The directors of the Company and its wholly owned subsidiaries have finalised 
the terms of a company voluntary arrangement (the "CVA Proposal") to be put to 
unsecured creditors of Your Space plc, Workspace (Northwest) Limited and 
Yourspace UK Limited. The CVA Proposal is in full and final settlement of all 
claims of unsecured creditors against it. The CVA Proposal document, which 
contains full details of the CVA, was posted to shareholders and creditors of 
Your Space and its subsidiaries last night. 
 
 
The Bank of Ireland, the Group's secured lender, has confirmed its support for 
the CVA proposal. Her Majesty's Revenue and Customs, the largest unsecured 
creditor across the Group by value, has reviewed a draft of the CVA proposal and 
agreed to consider it favourably. The Group's main landlord has also announced 
its support for the CVA. 
 
 
A CVA is a formal procedure under Part I of the Insolvency Act 1986 that allows 
a company to agree a composition or arrangement with its creditors in 
satisfaction of some, or all, of its debts. 
 
 
The CVA Proposal requires the approval of the creditors of the Company and its 
subsidiaries and the shareholders of Your Space. Its main terms are summarised 
below. 
 
 
Unsecured creditors with estimated debts totalling GBP5.5 million will be asked 
to compromise their claims for payment. 
 
 
Commencing on 16 February 2010, it is proposed that GBP1.1 million will be paid 
into the CVA at a rate of GBP366,667 per annum for the first three years of the 
CVA. It is estimated that this will result in a payment of 20 per cent. of the 
above creditors' debt. In addition, further payments may be payable to unsecured 
creditors in accordance with the provisions contained in the CVA Proposal 
document which include a dividend based on surplus net cash flow generated by 
the Company during the CVA period of up to an estimated further 40 per cent. of 
the above creditors' debt; and/or if the Companies sell any property owned by 
them and there is a surplus after the secured creditors are paid in full then 
any surplus will be paid to unsecured creditors. The requirement to propose an 
additional trading dividend to unsecured creditors means they are given the 
opportunity to benefit further once the Company returns to profitability and 
trading exceeds what was envisaged at the date of the CVA Proposal. 
 
 
Throughout the CVA process, Your Space and its subsidiaries will continue 
trading under the control of their respective directors and operate as going 
concerns. The Company and its subsidiaries are not in, and will not be, in 
administration as a result of commencing the CVA process. 
 
 
The CVA Proposal document contains notices of meetings of the unsecured 
creditors and shareholders of Your Space and its subsidiaries to consider and, 
if thought fit, approve the CVA proposal. To become effective, the CVA requires 
the approval of 75 per cent. in value of the creditors present in person or by 
proxy and voting on the resolution to approve the CVA Proposal; and 50 per cent. 
in value of the shareholders present in person or by proxy and voting on the 
resolution. 
 
 
The Directors, and the Company's nominees, are firmly of the opinion that the 
CVA proposal and the CVA process in general will result in a better outcome for 
creditors than would occur if the Company and its subsidiaries were placed into 
administration or liquidation. However, in the event the CVA is not agreed, 
there is a likelihood that the Company and its subsidiaries will be placed into 
administration. 
 
 
The CVA meetings for creditors and shareholders of the Company and its 
subsidiaries will be held at 12.30 p.m. on Monday, 16 November 2009 at Deloitte 
LLP, 1 City Square, Leeds, LS1 2AL. 
 
 
The detailed terms of the CVA Proposal, including details for the meetings, are 
contained in the document that was posted to unsecured creditors and 
shareholders of the Company and its subsidiaries last night by the joint 
nominees of the CVA Proposal being Daniel Francis Butters and William Kenneth 
Dawson of Deloitte LLP. Copies of the CVA Proposal document are available for 
inspection at Deloitte LLP, 1 City Square, Leeds, LS1 2AL during normal business 
hours on any business day with effect from today and up to and including the day 
of the CVA meetings. Copies will also be available for download from the 
Company's website - www.yourspaceplc.com. 
 
 
Your Space owns 4 freehold properties. The Governor and Company of the Bank of 
Ireland has a legal charge over each of these properties. The Directors are in 
discussions to sell these properties and ultimately reduce the Company's 
indebtedness to the Bank. 
 
 
Due to the challenges the Companies have faced in securing increased occupancy 
rates to target levels, the Company has made the decision to surrender certain 
of its leases in return for a nominal surrender fee.  The lease of the 
Clerkenwell property is to be assigned to an unconnected third party. In place 
of the leases the Company will enter into owner manager contracts with the 
respective landlords of each leasehold property. Each of the landlords has 
agreed to this amended arrangement. The Company will therefore be able to 
continue with the serviced office business. As far as the contracting business 
is concerned, the Directors expect to be able to increase their gross margins as 
a result of their sector expertise and by following an in house approach which 
means only a small amount of work has to be sub-contracted. 
 
 
The Directors believe that provided trading levels remain as currently forecast, 
the Company will return to profitability and will have sufficient working 
capital to make the payments envisaged under the CVA Proposal. The Directors 
also believe that the Companies will be able to pay a further dividend to 
creditors dependent on performance of the Company and the overall commercial 
property market. 
 
 
Commenting on the CVA Proposal, Chris Phillips, Non Executive Chairman, said: 
 
 
"This announcement details the continuing steps we are taking to implement the 
strategy necessary to secure Your Space's long term future. With the support of 
the Bank of Ireland and the Company's other secured creditors, the board is 
strongly of the view that the CVA proposal is in the best interests of the group 
and its stakeholders as a whole." 
 
 
Daniel Butters, who is based in Deloitte's Leeds office said: "This CVA allows 
the business to remain as a going concern and to maintain its trade. It offers 
job security to employees and certainty to its trading partners." 
 
 
"The use of a CVA will result in a greater return to creditors compared to 
alternative insolvency procedures such as an administration or liquidation." 
 
 
The Company expects to be able to announce its preliminary results to 31 March 
2009 and its interim results to 30 September 2009 by 31 December 2009, depending 
upon the outcome of the CVA. 
 
 
The Company will release a further announcement once the outcome of the CVA has 
been determined. 
 
 
 
 
For further information please contact: 
 
 
Steve Turton, Director, Your Space plc    0151 229 1700 
 
 
Richard Hughes / Bobby Fletcher, Zeus Capital    0161 831 1512 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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