Notice of EGM

RNS Number : 9336G

Central Asia Metals PLC

13 June 2013

 



13 June 2013

Central Asia Metals plc

(the "Group", the "Company" or "CAML")

Proposed Share Premium Cancellation and Notice of Extraordinary General Meeting

Central Asia Metals plc (AIM:CAML), a copper producing company focused on base metals in Central Asia, today announces a proposed Share Premium Cancellation in order to restructure the Company's balance sheet so as to, subject to the protection of creditors, increase the amount of distributable reserves. The Share Premium Cancellation will permit the Company to continue to pay dividends and to repurchase its Ordinary Shares as and when the Directors decide this is appropriate. 

The Company is today posting to Shareholders a circular (the "Circular") containing details of a proposed Share Premium Cancellation, together with formal notice of the Extraordinary General Meeting, to be held at 10.00 a.m. on 2 July 2013 at the Company's offices at 4/5 Park Place, London SW1A 1LP to consider and vote on the Resolution. The Circular will also shortly be available for inspection at www.centralasiametals.com.

Enquiries:

Central Asia Metals plc                                     Nick Clarke                           [phone]

Nigel Robinson

Canaccord Genuity Limited                              Andrew Chubb                     [phone]

                                                                                Christopher Fincken

Mirabaud Securities LLP                                  Peter Krens                          [phone]

Pelham Bell Pottinger                                       Charles Vivian                      [phone]

                                                                                Lorna Spears   

Background to and reasons for the Share Premium Cancellation

The Group has developed and brought into production the Kounrad Project.  Construction of the plant at the Kounrad Project was completed in early 2012 and the production of copper commenced on 29 April 2012. The plant has produced over 10,000 tonnes of copper in just over twelve months since operations started.

The successful commencement of production has enabled the Board to return significant funds to Shareholders through the combination of a share buy-back programme and dividend payments.  A share buy-back authority was approved by Shareholders at the 31 May 2012 annual general meeting.  As at 31 December 2012, 1,318,929 Ordinary Shares had been purchased under this authority for a total of $1,982,677 at a value weighted average price of 93.059 pence per share. A further buy back authority was approved on 22 May 2013.

On 13 December 2012 the Board announced a dividend policy based on the Company's annual dividend being calculated as a percentage of the attributable revenues earned from the Kounrad Project at a minimum level of 20 per cent. of such revenues, subject to the Company's cash reserves providing a dividend cover of three times or greater.  Due to strong cash-flows generated by the Kounrad Project during 2012, the Board set a target for 2012 to distribute 30 per cent. of the attributable revenue.  On 27 March 2013, the Directors recommended a final dividend for the year ending 31 December 2012 of 3.7 pence per Ordinary Share bringing, with the previous payments of a special and an interim dividend, total dividends for 2012 to 10.7 pence per share.

As at 31 December 2012, the Group had $33.8 million of cash in the bank following the repayment to the parent company of $28.4 million from intercompany loans used to finance the Kounrad Project.

Share Premium Cancellation

The Act restricts the circumstances in which a company may pay dividends or return funds to its shareholders. In particular, it provides that a public company may only purchase its own shares out of distributable reserves or out of the proceeds of a fresh issue of shares. Furthermore, a public company may only pay a dividend on its shares out of its accumulated distributable reserves. It also imposes limitations on the use of a company's capital reserves including its share premium account.

As at 31 December 2012, the Company had an accumulated positive balance on its profit and loss account of $7,994,686 while the balance on the Company's share premium account at that date was $61,431,533.

In order to create further distributable reserves (subject to the protection of creditors), the Company is proposing to cancel the whole of its share premium account. If confirmed by the Court in the manner anticipated, this will create a reserve of $61,431,533, which, once all Relevant Creditor Amounts have been paid or the creditors owed such amounts have consented to the Share Premium Cancellation or they have otherwise been provided for (as more particularly described below), will be credited to the profit and loss account of the Company thereby increasing available distributable reserves by such amount. This will enable the Company to continue with its dividend policy and share buyback programme for as long as it is prudent to do so.

Under the Act, a public company may reduce or cancel its share premium account if so authorised by its articles of association, providing that it obtains the approval of its shareholders by special resolution in general meeting and that the Court confirms the reduction or cancellation.  The Company is therefore seeking the approval of Shareholders at the EGM to cancel the Company's share premium account. 

If approved by Shareholders the Company will, as soon as practicable, apply to the Court for an appropriate Court Order. It is expected the Court Order confirming the Share Premium Cancellation will be made on or around 31 July 2013.  The Share Premium Cancellation will become effective on the Effective Date soon thereafter. 

The Court will be concerned to ensure that the interests of the Company's creditors (if any) as at the Effective Date are not prejudiced.  The Court may require the Company to give an undertaking to, amongst other matters, transfer the Cancellation Amount to a non-distributable reserve until such time as all creditors of the Company on the Effective Date have either consented to the Share Premium Cancellation, have been satisfied or have otherwise been provided for.  The Company will give such an undertaking as it may be advised is appropriate in the circumstances.  For so long as the reserve remains undistributable pursuant to the above undertaking, it will be unavailable for the purposes of paying dividends and financing repurchases of Ordinary Shares. On the basis that the Company does not trade of its own account and has relatively few creditors who are of a short-term nature, it is anticipated that the reserve arising on the Share Premium Cancellation should be treated as distributable within a month of the Effective Date.

Following the Share Premium Cancellation, and subject to any undertaking given to the Court, the distributable reserves of the Company will be increased as a result of the distributable reserve resulting from the Share Premium Cancellation. This, together with future distributable profits generated after the Effective Date, will ensure that the Directors are able to continue the Company's dividend policy.  It should be noted that the Share Premium Cancellation will not, in itself, involve any distribution or repayment of capital by the Company to any Shareholder or other person, and will not reduce the Company's underlying assets

Circular and Notice of Extraordinary General Meeting

A circular setting out the background to Share Premium Cancellation and a notice convening the EGM for at 10.00 a.m. on 2 July 2013, is being sent to Shareholders today and will also be made available shortly for inspection at www.centralasiametals.com.

APPENDIX 1

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Date circular posted	13 June 2013
Latest time and date for receipt of Form of Proxy to be valid at the Extraordinary General Meeting	10.00 a.m. on  28 June 2013
Extraordinary General Meeting	10.00 a.m. on 2 July 2013
Court hearing to confirm the Share Premium Cancellation	31 July 2013
Effective Date	the date on which the Court Order confirms the Share Premium Cancellation (and certain accompanying documents are registered by Companies House) which is expected to be on or around 1 August 2013

APPENDIX 2

DEFINITIONS

"Act"	the Companies Act 2006, as amended
"AIM"	the market of that name operated by London Stock Exchange plc
"Extraordinary General Meeting" or "EGM"	the extraordinary general meeting of the Company convened for 10.00 a.m. on 2 July 2013
"Board" or "Directors"	the directors of the Company
"Cancellation Amount"	the balance standing to the credit of the share premium account of the Company as at the Effective Date
"Company" or "CAML"	Central Asia Metals plc
"Court"	the High Court of Justice of England and Wales
"Court Order"	the order to be sought by the Company from the Court confirming the Share Premium Cancellation
"Effective Date"	the date that the Court Order confirming the Share Premium Cancellation is registered with the Registrar of Companies
"Form of Proxy"	the form of proxy for use by Shareholders at the Extraordinary General Meeting
"Group"	the Company and its subsidiaries
"Kounrad Project"	the solvent extraction-electrowinning (SX-EW) copper plant at the Kounrad mine site in central Kazakhstan, of which the Group is the operator and 60 per cent. owner
"Ordinary Shares"	ordinary shares of $0.01 each in the capital of the Company
"Relevant Creditor Amounts"	all amounts that would be owing to persons entitled to prove as creditors of the Company in a notional winding up of the Company as at the Effective Date
"Resolution"	the resolution set out in the notice of the EGM
"Shareholders"	the holders of Ordinary Shares
"Share Premium Cancellation"	the proposed cancellation of the Company's share premium account as set out in the Resolution
"$"	US dollars, the lawful currency of the United States of America

 

END

 

 

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