Publication of Circular & Notice of GM

RNS Number : 2080S

Let's Explore Group PLC

08 March 2023

 

8 March 2023

Let's Explore Group PLC 

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

Publication of Circular and Notice of General Meeting

The Company is pleased to announce that today it will be publishing a circular (the "Circular") containing details of a proposed off-market purchase of the Company's ordinary shares of 0.040108663 pence each in the capital of the Company ("Ordinary Shares"), and a proposed capital reduction (together the "Proposals"), and a notice of a general meeting of the Company (the "General Meeting"). The General Meeting will be held at 2:00 p.m. on 27 March 2023 at St. James Room 1, 116 Pall Mall, St. James's, London, SW1Y 5ED.

On 2 February 2023, the Company sent a circular to the Company's Shareholders ("Shareholders") detailing the disposal of the Location Based Entertainment business (the "LBE Sale") and outlining the proposals to return the majority of the proceeds of the LBE Sale to Shareholders. To allow the Company to return capital to Shareholders and provide flexibility to make future distributions and to complete the Off-Market Buy Backs, the Company requires distributable reserves. Accordingly, the Board is seeking approval, subject to the consent of the Court, for the Capital Reduction and for the amount of the reduction to be transferred to the Company's profit and loss account to create distributable reserves.

In addition, and as previously announced, the Company proposes to buy back and cancel 21,657,193 shares, plus 13,283,833 shares to be issued pursuant to exercise of options, from Rod Findley, Ken Musen and Alasdair Ritchie, (who are remaining with the Location Based Entertainment business) as outlined in the circular of 2 February 2023. These 34,941,026 shares are being purchased at a price of 3.65p per share with a net cost to the Company of £943,252. The Circular includes details of the purchase of these shares which is also subject to the necessary shareholder and UK Court approvals.

The expected timetable of principal events and the Chairman's statement from the Circular are set out below. Unless otherwise indicated, all defined terms in this announcement shall have the same meaning as described in the Circular.

Enquiries:

For further information please visit www. LetsExploreGroup.com , or contact:

Let's Explore Group plc	Martin Higginson David Marks	investors@l etsexploregroup.com
Cenkos Securities plc (Nomad and Sole Broker)	Adrian Hadden Camilla Hume Charlie Combe	Tel + 44 (0) 207 7397 8900

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

The dates and times set out below are based on the Company's current expectations and may be subject to change. Any change will be notified via a Regulatory Information Service. References to times are to London times, unless otherwise stated.

Publication of the Circular	8 March 2023
Latest time and date for receipt of Forms of Proxy for the General Meeting	2 p.m. on 23 March 2023
General Meeting	2 p.m. on 27 March 2023
Expected date of initial directions hearing of the Court	5 April 2023
Expected date of Court Hearing to confirm the Capital Reduction	25 April 2023
Expected effective date for the Capital Reduction	26 April 2023

LETTER FROM THE CHAIRMAN OF LET'S EXPLORE GROUP PLC

(Incorporated and registered in England and Wales under number 10964782)

8 March 2023

Dear Shareholder

PROPOSED CAPITAL REDUCTION

AND

PROPOSED OFF-MARKET BUY BACK AUTHORITIES

AND

NOTICE OF GENERAL MEETING

1.  Introduction

On 2 February 2023 the Company announced that it and its subsidiary Let's Explore VR Limited (previously named as Let's Explore Group Limited) had entered into a conditional sale and purchase agreement, for the sale of the entire issued share capital of Immotion Studios Limited and Immotion VR Limited and the entirety of the common stock C.2K Entertainment Inc. which together formed the Group's location-based entertainment business. On 1 March 2023, the Company announced that the LBE Sale had completed (the "Announcement").

On 2 February 2023, the Company sent a circular to Shareholders setting out details of the LBE Sale and outlining the proposals to return the majority of the proceeds of the LBE Sale to Shareholders.

Under the Companies Act, for the Company to be able to return capital to Shareholders as outlined in the Announcement and to complete the Off-Market Buy Backs, the Company requires distributable reserves sufficient to effect the Off-Market Buy Backs and the Return of Capital (having first offset any deficit on its profit and loss reserves). Accordingly, the Board is seeking approval from Shareholders, subject to the consent of the Court, for the Capital Reduction and for the amount of the capital reduction to be transferred from the Share Premium Account to the Company's profit and loss account in order, along with the gain on LBE Sale, to create positive distributable reserves necessary to effect the Off-Market Buy Backs and the Return of Capital as outlined in the Announcement.

The General Meeting that will be held at St. James Room 1, 116 Pall Mall, St. James's, London, SW1Y 5ED at 2 p.m. on 27 March 2023 to consider the Resolutions put to Shareholders.

The purpose of the Circular is to provide you with information about the Proposals and to explain why the Board considers the Proposals to be in the best interests of the Company and its Shareholders as a whole and unanimously recommends that you vote in favour of the Resolutions to be proposed at the General Meeting. Shareholders should note that, unless the Resolutions are approved at the General Meeting (and the Court subsequently confirms the Capital Reduction), the Off-Market Buy Backs will not take place and the Return of Capital will not occur.

Part II of the Circular contains definitions of words and terms that have been used throughout it. Please refer to Part II as you review the Circular.

2.  Background to, and reasons for, the Capital Reduction

Under the Companies Act, a company may, with the sanction of a special resolution passed by its shareholders and confirmation of the Court, reduce or cancel its share capital, share premium account and other reserves. It may then apply the sums resulting from such reduction to its distributable reserves. These sums may then be treated as distributable for the purposes of making future returns to Shareholders.

The Companies Act requires that if a company issues shares at a premium to the nominal value of those shares for cash or otherwise, a sum equal to the aggregate amount of the premiums must be transferred to the company's share premium account. A share premium account can only be used in very limited circumstances.

The Company currently has a Share Premium Account of £20,570,000 which it plans to reduce in full.

The Capital Reduction, if approved, allows the Company to proceed with the Off-Market Buy Backs and the Return of Capital. Therefore, the Company is seeking approval for the Capital Reduction.

3.  Background to the Off-Market Buy Backs

As announced on 2 February 2023, it is the intention of the Board to return around £13.5m of the net proceeds of the LBE Sale to Shareholders. Approximately £1m will be used to satisfy the Off-Market Buy Backs and circa £12.5m will be allocated to the Return of Capital.

On 1 February 2023, the Company entered into the Off-Market Buy Back Agreements which are conditional, inter alia, on the Company having sufficient distributable profits to fund the acquisitions of the AR Shares, the KM Shares and the RF Shares. Rodney Findley, Kenneth Musen and Alasdair Ritchie are employed by C.2K Entertainment Inc. and it was agreed that their shares would be bought back as part of the arrangements for the LBE Sale. Further details of the Off-Market Buy Back Agreements are set out in Part V of the Circular and copies of each of the Off-Market Buy Back Agreements are available for inspection at the registered office of the Company for a period of 15 days ending on the date of the General Meeting.

Upon completion of the Off-Market Buy Back Agreements, the Company intends to cancel the Ordinary Shares bought back by the Company pursuant thereto.

Therefore, the Company is seeking approval for the Off-Market Buy Backs.

4.  The Capital Reduction

To allow the Company to undertake the Off-Market Buy Backs and the Return of Capital, the Company must undertake the Capital Reduction to provide it with the necessary distributable reserves.

In addition to the approval by Shareholders of the Capital Reduction Resolution, the Capital Reduction requires the approval of the Court. Accordingly, following the General Meeting, an application will be made to the Court in order to confirm and approve the Capital Reduction.

In providing its approval of the Capital Reduction, the Court may require measures to be put in place for the protection of creditors (including contingent creditors) of the Company whose debts remain outstanding on the relevant date, except in the case of creditors which have consented to the Capital Reduction. Such creditor protection measures may include seeking the consent of the Company's creditors to the Capital Reduction or the provision by the Company to the Court of an undertaking to deposit a sum of money into a blocked account created for the purpose of discharging the non-consenting creditors of the Company or an undertaking to treat as undistributable for the time being certain sums representing the realisation of "hidden value" in the balance sheet as at the Effective Date.

It is anticipated that the initial Court directions hearing in relation to the Capital Reduction will take place on 5 April 2023, with the final Court Hearing taking place on 25 April 2023 and the Capital Reduction becoming effective on the following day, following the necessary registration of the Court Order at Companies House.

There will be no change in the number of Ordinary Shares in issue (or their nominal value) following the implementation of the Capital Reduction and no new share certificates will be issued as a result of the Capital Reduction. The Capital Reduction itself will not involve any distribution or repayment of capital or share premium by the Company and will not reduce the underlying net assets of the Company. The distributable reserves arising on the Capital Reduction will, subject to the discharge of any undertakings required by the Court, allow the Company to undertake the Off-Market Buy Backs and undertake the Return of Capital as explained above.

Once the Return of Capital is implemented the number of Ordinary Shares in issue will reduce.

Once the Capital Reduction has become effective, the Company will complete the Off-Market Buy Backs and will announce the details of the proposed tender offer. To allow the proposed tender offer to proceed, the Company will need Shareholder approval to conduct on-market buy backs of its Ordinary Shares. This will necessitate a further general meeting of Shareholders.

The proposed tender offer documentation will be sent to Shareholders at the same time as the notice convening the additional general meeting requesting authority to conduct on-market buy backs of Ordinary Shares and it is expected that the proposed tender offer will close immediately prior to the general meeting and that the results of the tender offer will be announced shortly thereafter.

Assuming Shareholders approve the terms of the proposed tender offer the proceeds of the Return of Capital would be remitted to participating Shareholders shortly thereafter. The Company is targeting overall completion of the Return of Capital (including payment of monies) by the end of May 2023.

Shareholders should note that if, for any reason, the Court declines to approve the Capital Reduction, the Capital Reduction will not take place. The Board reserves the right to abandon or to discontinue (in whole or in part) the application to the Court in the event that the Board considers that the terms on which the Capital Reduction would be (or would be likely to be) confirmed by the Court would not be in the best interests of the Company and/or its Shareholders as a whole. The Board has undertaken a thorough and extensive review of the Company's liabilities (including contingent liabilities) and considers that the Company will be able to satisfy the Court that there is no real likelihood that any creditor of the Company would be prejudiced by the Capital Reduction.

5.  General Meeting and Resolutions

The Notice of General Meeting is set out in Part V of the Circular.

The General Meeting will take place at St. James Room 1, 116 Pall Mall, St. James's, London, SW1Y 5ED at 2 p.m. on 27 March 2023. At the General Meeting, the Resolutions set out in Part V of the Circular will be proposed to Shareholders.

Resolutions 1-3 (inclusive) are ordinary resolutions and will be passed if more than 50% of the votes cast (in person or by proxy) at the General Meeting are in favour of each resolution. Resolution 4 is a special resolution and will be passed if 75% or more of the votes cast (in person or by proxy) at the General Meeting are in favour of it.

The Resolutions are summarised below:

Resolution 1 - this is an ordinary resolution to approve, subject to the passing of Resolution 4 and the capital reduction approved by Resolution 4 taking effect, the Rodney Findley Buy Back Agreement.

Resolutions 2 - this is an ordinary resolution to approve, subject to the passing of Resolution 4 and the capital reduction approved by Resolution 4 taking effect, the Kenneth Musen Buy Back Agreement.

Resolution 3 - this is an ordinary resolution to approve, subject to the passing of Resolution 4 and the capital reduction approved by Resolution 4 taking effect, the Alasdair Ritchie Buy Back Agreement.

Resolution 4 - this is a special resolution to approve, subject to confirmation of the Court, the cancellation of the Share Premium Account.

6.  United Kingdom Taxation

The following comments are intended as a general guide only and relate only to certain UK tax consequences of the Reduction of Capital. The comments are based on current legislation and HM Revenue & Customs published practice, both of which are subject to change, possibly with retrospective effect. These comments deal only with Shareholders who are resident for taxation purposes in the UK, who are the absolute beneficial owners of the Ordinary Shares and who hold them as an investment and not in a trading account ("UK Shareholders"). They do not deal with the position of certain classes of Shareholders, such as dealers in securities, insurance companies, collective investment schemes or persons regarded as having obtained

their Ordinary Shares by reason of employment. Any Shareholder who has any doubt about their own taxation position, or who is subject to taxation in any jurisdiction other than the UK should consult their own professional taxation advisor immediately.

The Share Premium Reduction should not have any consequences for UK Shareholders for the purposes of UK taxation of chargeable gains (CGT), UK income tax, UK corporation tax, or UK stamp taxes.

7.  Action to be taken in respect of the General Meeting

Shareholders will be sent a Form of Proxy for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by the Company's Registrars, Neville Registrars Limited, by not later than 2 p.m. on 23 March 2023, or 48 hours (excluding any part of a day that is not a Business Day) before any adjourned General Meeting. Completion of the Form of Proxy will not preclude you from attending the meeting and voting in person if you so wish.

8.  Recommendation

The Directors consider that the Capital Reduction and the Off-Market Buy Backs to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting, as they intend to do in respect of their aggregate shareholdings, of 35,444,946 Ordinary Shares representing approximately 8.52% of the Ordinary Shares in issue at the date of this announcement.

Yours faithfully

Sir Robin Miller

Non-executive Chairman

 

DEFINITIONS

The following definitions apply throughout this announcement unless the context otherwise requires:

"Act"		Companies Act 2006;
"AR Shares"		the 3,480,593 Ordinary Shares issued and registered in the name of Alasdair Ritchie;
"Alasdair Ritchie Buy Back Agreement"		the off-market buy back agreement entered into on 1 February 2023 between Alasdair Ritchie and the Company in relation to the buy back by the Company of the AR Shares;
"Board" or "Directors"		the directors of the Company or any duly appointed committee thereof;
"Capital Reduction"		the proposed cancellation of the Company's Share Premium Account pursuant to the resolution 4 as set out in the Notice of General Meeting;
"Capital Reduction Record Time"		6.00p.m. on the date immediately preceding the date of the Court Hearing;
"Capital Reduction Resolution"		the resolutions to be proposed at the General Meeting in relation to the proposed Share Premium Account Reduction which is set out in full in the Notice of General Meeting at resolution 4;
"Cenkos"		Cenkos Securities plc;
"Company" or "LEG"		Let's Explore Group plc, a company incorporated in England and Wales with registered number 10964782;
"Court"		the High Court of Justice in England and Wales;
"Court Hearing"		the hearing by the Court to confirm the Capital Reduction;
"Court Order"		the order of the Court confirming the Capital Reduction;
"CREST"		the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as   defined   in   the   CREST Regulations);
"CREST Regulations"		the Uncertificated Securities Regulations 2001 (as amended);
"Effective Date"		the date of the Court Order;
"Form of Proxy"		the form of proxy accompanying the Circular relating to the General Meeting;
"FSMA"		the Financial Services and Markets Act 2000, as amended;
"General Meeting"		the general meeting of the Company, notice of which is set in the Circular and including any adjournment(s) thereof;
"Group"	the Company and its subsidiaries and subsidiary undertakings (in each case as defined in the Act);
"KM Issued Shares"	the 7,592,251 Ordinary Shares issued and registered in the name of Kenneth Musen;
"KM Option Shares"	the options for 2,846,536 Ordinary Shares held pursuant to the Company's Share Option Scheme held by Kenneth Musen;
"KM Shares"	the KM Issued Shares and the KM Option Shares;
"Kenneth Musen Buy Back Agreement"	the off-market buy back agreement entered into on 1 February 2023 between Kenneth Musen and the Company in relation to the buy back by the Company of the KM Shares;
"LBE Sale"	the sale of the entire issued share capital of Immotion Studios Limited and Immotion VR Limited and the entirety of the common stock C.2K Entertainment Inc. pursuant to a share purchase agreement dated 1 February 2023 entered into between (1) the Company, (2) Let's Explore Group Limited (previously known as Immotion Limited) and (3) LBE Bidco, Inc.;
"Market Abuse Regulation"	the Market Abuse Regulation (2014/596/EU) (incorporating the technical standards, delegated regulations and guidance notes, published by the European Commission, London Stock Exchange, the FCA and the European Securities and Markets Authority) as retained in the UK pursuant to section 3 of the European Union (Withdrawal) Act 2018;
"Notice of General Meeting"	the notice of General Meeting, set out in Part V of the Circular;
"Off-Market Buy Back Agreements"	the Alasdair Ritchie Buy Back Agreement, the Kenneth Musen Buy Back Agreement and the Rodney Findley Buy Back Agreement.
"Off-Market Buy Backs"	the proposals contemplated in the Alasdair Ritchie Buy Back Agreement, Kenneth Musen Buy Back Agreement and the Rodney Findley Buy Back Agreement;
"Off-Market Buy Back Resolutions"	the resolutions to be proposed at the General Meeting in relation to the proposed Off-Market Buy Backs which are set out in full in the Notice of General Meeting at resolutions 1-3 (inclusive);
"Ordinary Shares"	ordinary shares of 0.040108663 pence each in the capital of the Company;
"Proposals	(i)  the Capital Reduction; and (ii)  the Off-Market Buy Backs; all as set out in the Resolutions;
"Registrars"	Neville Registrars Limited, registrars to the Company;
"RF Issued Shares"	the 10,584,349 Ordinary Shares issued and registered in the name of Rodney Findley;
"RF Option Shares"	the options for 10,437,297 Ordinary Shares held pursuant to the Company's Share Option Scheme held by Rodney Findley;
"RF Shares"	the RF Issued Shares and the RF Option Shares;
"Resolutions"	the Capital Reduction Resolution and the Off-Buy Back Resolutions set out in full in the Notice of General Meeting;
"Return of Capital"	proposed return of capital outlined in the Announcement;
"Rodney Findley Buy Back Agreement"	the off-market buy back agreement entered into on 1 February 2023 between Rodney Findley and the Company in relation to the buy back by the Company of the RF Shares;
"Share Option Scheme"	the Company's share option scheme adopted by Shareholders on 9 July 2018;
"Shareholders"	holders of Ordinary Shares;
"Share Premium Account"	the share premium account of the Company;
"Share Premium Account Reduction"	the cancellation of the full amount outstanding to the credit of the Share Premium Account;
"UK"	the United Kingdom of Great Britain and Northern Ireland.

 

END

 

 

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