Notice of General Meeting and Trading update

RNS Number : 7910R

Coms PLC

09 November 2011

 



COMS PLC

09 November 2011

 COMS PLC

("Coms", or "the Company")

Notice of General Meeting and Trading update

The Company announces that is has today posted to shareholder notice convening a general meeting of shareholders for the purpose of, inter alia, reorganising the capital of the Company.

The Board has reviewed all areas of the Company and, despite some slow progress within part of the business, it believes Coms has the ability to achieve success subject to raising further funds.  The proposed reorganisation is necessary to provide sufficient flexibility to raise those funds which, the Board believes, will enable ComsÕ to realise its potential and reach sustainable profitability in the short term by adding new customers to its internet telephony service. 

The meeting is to be held at 46 Cannon Street, London, EC4N 6JJ at 11am on 25 November 2011. The notice of meeting with all the resolutions is available on the CompanyÕs website: www.coms.com.

Background and trading update

In January this year the Company carried out a successful share placing to raise what was anticipated to be sufficient working capital to see the Company through to reaching profitability. As reported in the recent interim statement, whilst the core element of the Group has grown strongly, Vcomm has been impacted by delayed orders and eroding margins. This trading difficulty has left the Company in need of additional short term working capital which the directors believe to be approximately £300,000. Failure to raise sufficient funds in the next four to six weeks could see the Company having to sell parts of the business and the future of the Group could be compromised..

Whilst reviewing all areas of the business and seeking to control costs wherever possible, the Board believes that the group can achieve sustainable profitability in the short term and has the opportunity to become a successful company subject to this level of further funding. The directors believe this can be achieved by adding approximately 2,500 new accounts to the Coms internet telephony service over a period of 9 Ð 12 months, based upon our current customer acquisition rates. Once this is achieved, and as Coms is nearly a fixed cost business, the monthly recurring billings are expected to cover the operating costs and gross profits from new customers should go straight to the bottom line creating a profitable company.

The directors believe that a capital reorganisation is necessary in order to provide sufficient flexibility when issuing new shares to raise the funds required by the Company. Under the Companies Act, it is not permissible for the Company to issue shares at a discount to their nominal value. In order to provide maximum flexibility to enable further equity capital to be raised, it is likely that the Company will need to place Ordinary Shares at a discount to the current mid market price which would be below the current par value of the Ordinary Shares.  To enable this it will be necessary to subdivide the CompanyÕs Existing Share Capital and create new shares with a lower nominal value to ensure that shares can be subscribed for above nominal value.

Accordingly, it is proposed that there will be a subdivision of each of the Existing Ordinary Shares into 1 Ordinary Share of 0.1 pence each and 9 Deferred Shares of 0.1 pence each. The 2011 Deferred Shares will have rights such that in practical terms they will have no value and will not be quoted. The Board intends to cancel the Deferred Shares in due course. The New Ordinary Shares will reflect the same proportion of the Company's value as the Existing Ordinary Shares and therefore their intrinsic value is the same.

The Capital Reorganisation requires Shareholder approval and Shareholders will be asked to vote on this at the General Meeting. The Board considers that the ordinary resolution sub-dividing the Existing Ordinary Shares into 1 New Ordinary Share of 0.1 pence each and 9 2011 Deferred Share of 0.1 pence each, to be put to Shareholders at the General Meeting, is in the best interests of the Company and its shareholders as a whole.

If the Resolutions are not passed, the Capital Reorganisation will not proceed meaning it will make it materially harder to raise the required funds to meet the CompanyÕs working capital requirements pursuant to the proposed Placing and certain parts of the Group will be unlikely to be in a position to meet their liabilities as they fall due, forcing the Directors to either place Coms into administration or sell it or parts of the business on less favourable terms. In such circumstances, it is not expected that the Shareholders would receive more than nominal value for their current shareholdings.

Contact:

Coms plc

Richard Bennett                           [phone] 

Northland Capital Partners

(Nominated Adviser)

Luke Cairns / Rod Venables            [phone]

(Broker)

Katie Shelton                              [phone] 

XCAP Securities Plc

(Broker)

John Grant                                  [phone]

Threadneedle Communications (PR)

Graham Herring                            [phone]

 

END

 

 

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