Proposed Cancellation and Not

RNS Number : 5018A

Infoserve Group PLC

02 February 2011

 



Infoserve Group plc

Proposed Cancellation of Admission, proposed change of name and

Notice of General Meeting

Infoserve Group plc (the "Company") (AIM: INFS), the online local business search and directory specialist, announces its intention to seek Shareholder approval for the cancellation of admission to trading on AIM of the Ordinary Shares.  The Company is also seeking Shareholder approval to change its name to CityVisitor Group plc.

An explanatory circular (the "Circular") will be posted to Shareholders today.  The Circular will set out the background to and reasons for the Proposals, why the Directors believe the Proposals are in the best interests of the Company and its Shareholders as a whole and why they recommend that Shareholders vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings of Ordinary Shares.

A General Meeting of the Company will be held at 9.30 am on Friday, 18 February 2011 at The Café Bar, Multiflight Training Centre, South Side Aviation, Leeds Bradford International Airport, Leeds LS19 7UG at which resolutions will be proposed to approve the Proposals.  A notice convening the General Meeting is set out in the Circular.

For further information, please contact:

Infoserve Group plc
Steve Barnes, Executive Chairman	Tel: [phone]
[e-mail]	www.infoservegroup.com
Jonathan Simpson, Finance Director
[e-mail]
WH Ireland Limited	Tel: [phone]
Robin Gwyn

Background to the Cancellation 

The Ordinary Shares were admitted to trading on AIM on 23 June 2006.  For some time the Board has been concerned that liquidity in the Ordinary Shares has become progressively more limited, especially now that more than 89% of the Ordinary Shares are in the hands of the Directors. In conjunction with its advisers therefore, the Board has conducted a review of the costs and benefits associated with having the Company's shares traded on AIM.

As a result of this review, the Board has concluded that it is no longer in the best interests of the Company or its Shareholders as a whole to maintain the admission to trading on AIM of the Ordinary Shares and intends to seek the authority of Shareholders for the cancellation of the Admission.

Rationale for the Cancellation

The Directors have concluded that a resolution should be put to Shareholders to approve a Cancellation for the following reasons:

·    there is a lack of liquidity in the Ordinary Shares which, in the Directors' view, has contributed to the decline in the market capitalisation of the Company; the Directors believe that this lack of liquidity makes it very difficult for anyone wishing to buy a substantial number of shares to do so at a reasonable price. In addition, the small market capitalisation of the Company has made  it difficult for the Company to attract broad analytical coverage or investor interest, which, the Directors believe, prevents anyone wishing to sell any substantial number of shares from doing so at a reasonable price; 

·    the ability to secure new equity participation at levels which fairly reflect the underlying equity value of the Company, in the opinion of the Directors, is significantly undermined by the low share price. The Directors believe that this inability to access additional equity capital at a reasonable valuation severely limits the Company's ability to grow the business and achieve its strategic aims and objectives; and

·    the Directors believe that the costs associated with maintaining Admission are now disproportionate to the value provided by Admission, and the Directors expect savings arising from the Cancellation to amount to approximately £60,000 per annum.

Against this background, the Board has spent significant time evaluating different strategic alternatives for the Company. These deliberations have taken into account the current financial position of the Company, the Company's growth strategy, the current financial climate and the relative benefits compared to the ongoing costs of maintaining Admission. The Board has also taken into account the views of the Company's large Shareholders, as well as assessing the position of the Shareholders as a whole.

Following careful consideration of these factors with its advisers, the Board has decided that the disadvantages and the ongoing costs of maintaining Admission outweigh the benefits that Admission provides to the Company.

Current Trading

On 28 January 2011, the Company issued the following trading update:

"The Company estimates that the severe weather in late November and December resulted in reduced revenues, and therefore cash, of around £60,000. It is unlikely that this trading shortfall will be recovered over the remaining three months of the financial year and the Directors therefore expect the Company's final results for the year ending 31 March 2011 to be below previous expectations."

A number of cost saving measures are being put into place in order to preserve cash, including the cessation of future funding to 2i Local Limited, the Company's joint venture with Iliffe News and Media Limited ("INML"). Despite this, the Directors expect that Infoserve will continue to have a strong trading relationship with INML.

The Company now expects that the cash shortfall from trading, together with the Company's planned investment in new products, the cost of the proposed cancellation of Admission, and the potential write off of loans to the joint venture may require the remaining £190,000 of the existing loan facility with David Hood to be drawn down before the end of the current financial year, slightly earlier than previously expected.

Strategy following the Cancellation

Following the Cancellation, the Directors intend to continue to seek to maximize the value of the Company's assets. The Company has seen many of its SME customers go through difficult trading times for the last twelve months and the Directors continue to look for ways to develop the Company's product offering and value proposition to maintain volumes and revenues. The Company has seen little improvement in confidence levels even from those business sectors that are experiencing growth, and the Directors believe that discretionary marketing spend by SMEs, even in the online sector, has been affected.

Although the Directors see little change in macro economic circumstances in the economy as a whole, they intend to continue to investigate ways to adapt the business to the current economic climate. In particular, the Directors believe that strategic alliances, investment in existing products and exploration of new products, and investment in the sales force remain the best ways to achieve Shareholder value.

The Company intends to continue to invest in growth and development, but will do so slowly and in a planned, steady and risk averse way in keeping with the current economic climate. In order to achieve this, the Directors believe that it is essential that the Company continues to drive down costs, especially those which do not add to its customer offering.

Cancellation Process

In accordance with Rule 41 of the AIM Rules, the Company has notified the LSE of the Cancellation.  Under the AIM Rules, it is a requirement that the Cancellation is approved by the requisite majority of Shareholders voting at the General Meeting (being not less than 75 per cent. of the votes cast in person or by proxy).  Accordingly, the Resolution numbered 1 set out in the Notice of General Meeting seeks Shareholders' approval for the Cancellation. The Resolution approving the Cancellation is not conditional on the passing of the other Resolution.  Subject to the Resolution approving the Cancellation being passed at the General Meeting, it is anticipated that trading in the Ordinary Shares on AIM will cease at close of business on 2 March 2011 with the Cancellation taking effect at 7.00 a.m. on 3 March 2011.  Upon the Cancellation becoming effective, WH Ireland Limited will cease to be nominated adviser and broker to the Company.  

Principal effects of the Cancellation

The principal effects of the Cancellation will include (inter alia) the following:

(a)        there will be no public stock market on which Shareholders can trade their Ordinary Shares and, further, no other trading facility (other than the Third Party Facility referred to in the paragraph entitled "Transactions in the Ordinary Shares following the Cancellation" below) will be available to enable trading of the Ordinary Shares. Consequently, following the Cancellation, there can be no guarantee that a Shareholder will be able to purchase or sell any Ordinary Shares;

(b)        no price will be publicly quoted for the Ordinary Shares;

(c)        it is expected that the Ordinary Shares will continue to be transferable through CREST;

(d)        the Company will not be subject to the AIM Rules and, accordingly, it will not (amongst other things) be required to retain a nominated adviser or to comply with the requirements of AIM in relation to annual accounts and half-yearly reports, the disclosure of price sensitive information or the disclosure of information on corporate transactions; and

(e)        the Company will no longer be subject to the Disclosure Rules and Transparency Rules of the UK Financial Services Authority and will therefore no longer be required specifically to disclose major shareholdings in the Company.

Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately.

Shareholders should note that, even if the Cancellation becomes effective, the Company will remain subject to the City Code on Takeovers and Mergers (the "Code").  Accordingly, Shareholders will continue to receive the minority and other protections afforded by the Code in the event that an offer is made to Shareholders to acquire their Ordinary Shares.

As the Ordinary Shares are currently admitted to trading on AIM, the Company is not required to comply with the provisions of the UK Corporate Governance Code.  Nevertheless, the Company seeks, within the practical confines of being a small company, to act in compliance with the principles of good governance and the code of best practice.  Shareholders should note that following the Cancellation, the Directors intend that the Company should continue to seek to comply with these principles of good governance on the same basis as currently. If the Cancellation becomes effective, this will not affect the Company's position as a public company for the purposes of the 2006 Act.

Transactions in the Ordinary Shares following the Cancellation

In order to assist Shareholders who wish to trade in Ordinary Shares following the Cancellation, the Board currently intends to employ the services of a third-party matched bargain trading facility (the "Third-Party Facility") for at least one year.  Under this Third-Party Facility, Shareholders or persons wishing to acquire Ordinary Shares will be able to leave an indication with the Third-Party Facility provider that they are prepared to buy or sell at an agreed price.  In the event that the Third-Party Facility provider is able to match that order with an opposite sell or buy instruction, the Third-Party Facility provider will contact both parties and then effect the bargain.  In these circumstances, Shareholders who do not have their own broker may need to register with any such Third-Party Facility provider as a new client. This can take some time to process and, therefore, Shareholders who consider they are likely to use this facility would be encouraged to commence registration at the earliest opportunity.

Once such arrangements have been set up by the Company, details will be made available to Shareholders on the Company's website (www.infoservegroup.com).

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Cancellation becoming effective.  As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 2 March 2011 and that the effective date of the Cancellation will be 3 March 2011.

Communications with Shareholders

Following the Cancellation, there is no intention to change the constitution of the Board and the Directors' current intention is to continue to:

(a)        hold general meetings in accordance with applicable statutory requirements and the        Articles; and

(b)        post certain information relating to the Company, including notices of general meetings, copies of the Company's audited accounts and details of any arrangements made to assist Shareholders to trade in Ordinary Shares, on its website (www.infoservegroup.com) and to notify shareholders by post when such communications are made available.

Proposed change of name

In order to align the name of the Company more closely with its major product, the Company proposes, subject to the approval of Resolution 2 set out in the Notice of General Meeting, to change its name to CityVisitor Group plc following the Cancellation.

General Meeting

Set out at the end of the Circular is a notice convening a General Meeting to be held at The Café Bar, Multiflight Training Centre, South Side Aviation, Leeds Bradford International Airport, Leeds LS19 7UG at 9.30 a.m. on 18 February 2011. The purpose of the General Meeting is to seek Shareholders' approval for the Proposals.

Recommendation

The Directors consider that the Resolutions are fair and reasonable and in the best interests of the Company and its Shareholders as a whole and the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings, amounting to, in aggregate, 52,617,549 Ordinary Shares representing approximately 89.07 per cent. of the Company's current issued voting share capital.

Expected timetable of principal events
Last time and date for receipt of Forms of Proxy	9.30 a.m. on 16 February 2011
General Meeting	9.30 a.m. on 18 February 2011
Last day of dealings of Ordinary Shares on AIM	2 March 2011
Cancellation of Admission	3 March 2011

Definitions

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

"2006 Act"	the Companies Act 2006;
"Admission"	admission to trading on AIM of the Ordinary Shares;
"AIM"	a market operated by the London Stock Exchange;
"AIM Rules"	the AIM Rules for Companies governing the admission to and operation of AIM published by the LSE from time to time;
"Board" or "Directors"	the directors of the Company as at the date of this announcement or any duly authorised committee thereof;
"Cancellation"	the proposed cancellation of admission of the Ordinary Shares to trading on AIM;
"Company" or "Infoserve"	Infoserve Group plc;
"CREST"	the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended) operated by Euroclear UK & Ireland Limited in accordance with which securities may be held or transferred in uncertificated form;
"EMI Options"	the enterprise management incentive options to subscribe for Ordinary Shares granted or to be granted by the Company to certain directors and employees and former directors and employees of the Company and its group;
"Form of Proxy"	the form of proxy for use by Shareholders in connection with the GM, which is enclosed with the Circular;
"General Meeting" or "GM"	the general meeting of the Company to be held at The Café Bar, Multiflight Training Centre, South Side Aviation, Leeds Bradford International Airport, Leeds, LS19 7UG at 9.30 a.m. on 18 February 2011 (or any adjournment thereof), notice of which is set out in the Circular;
"LSE"	London Stock Exchange plc;
"Ordinary Shares"	ordinary shares of 5 pence each in the capital of the Company;
"Proposals"	the proposals set out in the Circular, comprising the Cancellation and the proposed change of name of the Company to CityVisitor Group plc;
"Resolutions"	the resolutions to be put to Shareholders at the General Meeting as set out in the notice of General Meeting which is set out in the Circular;
"Share Options"	the EMI Options and the Unapproved Share Options;
"Shareholders"	holders of Ordinary Shares;
"SME"	small and medium-sized enterprises; and
"Unapproved Share Options"	the unapproved options to subscribe for Ordinary Shares granted by the Company to certain directors and employees and former directors and employees of the Company and its group.

 

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