Notice of AGM

RNS Number : 3777U

Artisan (UK) PLC

21 December 2011

 



ARTISAN (UK) PLC

ANNUAL GENERAL MEETING, PROPOSED CANCELLATION OF TRADING ON AIM, PROPOSED SHARE REORGANISATION AND

CONDITIONAL AGREEMENT FOR A £1MILLION LOAN NOTE

London, 21 December 2011:

Artisan (UK) plc ("Artisan" or "the Company"), the AIM listed house builder, commercial property developer and property investor, has today published its preliminary results for the year ended 30 June 2011.

The Annual General Meeting of the Company ("the AGM") will be held on Wednesday, 25 January 2012 at the offices of Altium Capital Limited at 30 St James's Square, London SW1Y 4AL at 11.30 am. Notice of the AGM will be distributed to shareholders shortly.

At the AGM, the Directors will seek shareholder approval for two items of special business:

·     cancellation of the admission of the Company's ordinary shares to trading on the AIM Market of the London Stock Exchange ("the Cancellation"); and

·     a proposed reorganisation of the Company's share capital ("the Capital Reorganisation").

Cancellation of trading

After very careful consideration, the Board has reached the view that the Company is not receiving the perceived benefits of an AIM listing to any extent which would justify the costs and management time associated with maintaining its status as an AIM-traded company.  In addition, the Board has concluded that the Company is not likely to achieve any of the perceived benefits of an AIM listing in the foreseeable future.  In particular, all the indications seen by the Directors suggest that the equity markets are unlikely to provide a source of capital for the Company at any time in the foreseeable future.

On the other hand, the requirement to provide trading updates under the AIM Rules is potentially commercially disadvantageous in a difficult operating climate, which can adversely affect negotiations with potential customers and suppliers.

The Directors have, therefore, come to the opinion that the Company's interests would be better served if the Company were to operate as an unquoted entity. In addition, cancellation of the Company's admission to AIM will result in savings in management time and costs associated with meeting the Company's obligations under the AIM Rules and related regulatory requirements, including reporting, disclosure, and some corporate governance requirements.

Accordingly, the Directors have decided to seek shareholder approval for the cancellation of the admission of the Company's ordinary shares ("Ordinary Shares") to trading on AIM.

Under the AIM Rules, it is a requirement that the Cancellation be approved by shareholders by not less than 75 per cent of the votes cast on the proposal at a general meeting - in this case the AGM.

Trading volumes in the Ordinary Shares is generally at very low levels, and demand for the Ordinary Shares from investors is low.  The Board acknowledges that Cancellation will make it more difficult to trade in the Ordinary Shares, but believes that the commercial benefits to be gained in de-listing from AIM outweigh these considerations. 

Nevertheless, the Board believes that it is important that Shareholders are able to trade in their Ordinary Shares and intends, therefore, to make arrangements for a matched bargain trading facility to be made available through a suitable broker for an initial period of 12 months.  At the end of that period, the Directors will review the use made of the facility and, if it is well used, consider renewal of the facility, but at this stage the Board is unwilling to make any further commitment as to the provision of such a facility. 

The Directors' intention is that the Company should remain a public but unquoted company.

Effect of the Cancellation on shareholders

The principal effects of the Cancellation would be that:

(a)  there would no longer be a formal market mechanism enabling shareholders to trade their ordinary shares on AIM or any other recognised market or trading exchange;

(b)  the Company would not be bound to announce material events, administrative changes or material transactions, nor to announce interim or final results;

(c)  the Company would no longer be required to comply with any of the additional specific corporate governance requirements for companies admitted to trading on AIM;

(d)  the Company would no longer be subject to the AIM Rules for companies, and shareholders would no longer be required to vote on certain matters as provided in the AIM Rules; and

(e)  the Company would no longer be subject to the provisions of the Disclosure and Transparency Rules relating to the disclosure of changes in significant shareholdings in the Company.

The Cancellation may have taxation consequences for shareholders.  Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

Protections for shareholders

Notwithstanding the proposed Cancellation, the Board intends to maintain high standards of corporate governance and appropriate shareholder protections.

The Company's non-executive directors, Norman Saunders and John Hemingway will retire at the AGM, and the Directors do not intend in the immediate future to replace them with a non-executive director, but the Board:

(a)  will hold an annual general meeting and, when required, other general meetings, in accordance with the applicable statutory requirements and the Articles;

(b)  will make available to all shareholders an annual report and the Company's annual financial statement;

(c)  intends to maintain an "Investors" section on its website at www.artisan-plc.co.uk, and to post on its website a summary of its half year financial performance and details of any significant events or developments in which shareholders may be interested and which are not commercially sensitive;

(d)  intends to retain the services of Altium Capital Limited to advise on corporate issues, with particular reference to corporate governance, even though, on ceasing to be listed on AIM, the Company would no longer be obliged to maintain a nominated adviser;

(e)  intends to retain the services of Philip Speer, as the Company's professional company secretary; and

(f)   intends, as soon as the Company's performance and financial situation permit, to resume a progressive dividend policy, paying dividends commensurate with the profitability, cash availability and underlining performance of the Group's businesses.

Shareholders should note that even if the Company's shares cease to be traded on AIM, the Company will remain subject to the provisions of the City Code on Takeovers and Mergers ("the City Code") on the basis set out in the City Code.

Share dealings following Cancellation

Although the Board believes that Cancellation is in the interests of shareholders as a whole, the Directors recognise that Cancellation will make it more difficult for shareholders to buy and sell their Ordinary Shares in the Company, if they wish to do so. 

Accordingly, the Directors intend to establish a matched bargain trading facility, which will be provided by a suitable broker, to enable shareholders to trade their ordinary shares.  Under such a facility, shareholders or investors wishing to trade ordinary shares would be able to leave an indication with the selected broker that they are prepared to buy or sell at an agreed price.  If the matched bargain settlement facility is able to match that indication with an opposite sell or buy instruction, the broker would contact both parties to effect the bargain.  Once such a facility has been established and is open for registration, details will be made available to shareholders on the Company's website at www.artisan-plc.co.uk.

The Directors intend, following Cancellation, to cancel the Company's CREST trading facility after which all trades in the Company's ordinary shares after Cancellation will be paper-based.

Approval of the Cancellation

If the Cancellation is approved by not less than 75% of the votes cast on the proposal at the AGM, it is expected that Cancellation will take effect at 7.00 am on 2 February 2012. In that case the last day for dealings in the Ordinary Shares on AIM will be 1 February 2012.

The Directors intend to vote in favour of the Cancellation in respect of the shares in which they are beneficially interested, totalling 9,294,671 Ordinary Shares, representing approximately 69.74 % of the total voting rights in respect of the Ordinary Share capital of the Company.

Proposed Loan Note and capital reorganisation

On 30 November 2011, the Company announced a further extension of its current banking facilities until 31 January 2012, to allow for completion of ongoing negotiations for the grant of new facilities for the medium term.  Whilst the Company's lender remains supportive, and the Directors are confident that negotiations will come to a satisfactory conclusion, it has become apparent to the Board that completion of new banking facilities will require an injection of additional funds, by way of new equity or quasi-equity.

Accordingly, the Company announces that Christopher Musselle, Michael Eyres, John Jones, Norman Saunders and John Hemingway (together "the Independent Directors") have conditionally agreed commercial terms with Aspen Finance Limited, which holds 69.5 per cent of the Company's issued ordinary shares, for a subscription for a £1,000,000 convertible loan note ("the Loan Note") to be issued by the Company.  The Chairman of the Board, Michael Stevens, took no part in the Board approval of the Loan Note, because of his beneficial interest in Aspen Finance Limited's shareholding in the Company.

The subscription for the proposed Loan Note is conditional on the renewal of the banking facilities available to the Company and its subsidiaries (together "the Group") on terms satisfactory to the Directors and to Aspen Finance Limited, but the issue of the Loan Note (which will be subordinated to the Group's bank liabilities) will also support the renewal of those banking facilities.  The proposed Loan Note will be repayable 3 years after its issue date, carry interest at the rate of 5% per annum in the meantime, and be convertible into Ordinary Shares in the Company at a conversion price of 14.5p per Ordinary Share - which was the closing mid-market price of the Company's Ordinary Shares on 20 December 2011.

The Loan Note will only be issued by the Company and taken up by Aspen Finance Limited if and when the Group's banking facilities are renewed on acceptable terms. The Independent Directors believe that the terms of the proposed Loan Note are fair and reasonable insofar as Shareholders are concerned. However, the issue of the Loan Note would constitute a related party transaction for the purposes of the AIM Rules and so, if the Loan Note is issued before the Cancellation takes effect, the Independent Directors will also consult the Company's nominated adviser in that respect.

Although the issue of the proposed Loan Note to Aspen Finance Limited is expected to be required in order to secure the renewal of the Group's medium term banking facilities, it is, at the same time, apparent to the Directors that, to move the business of the Group forwards in the current difficult market conditions, there is the potential that the Company may still require further equity or similar funding.

The nominal value of an Ordinary Share is 20p.  Since April this year, the Company's Ordinary Shares have consistently been trading on AIM below their nominal value. 

For any company, a share trading price below its nominal value creates a problem in raising further equity funds, when needed for the company's development, because company law does not permit a company to issue shares at a discount to their nominal value. 

For this reason, the Board will propose at the AGM that the Company's current ordinary shares of 20p each ("Existing Ordinary Shares") should be sub-divided into one ordinary share of 1p ("New Ordinary Shares") and 19 deferred shares ("Deferred Shares") of 1p.  All the rights with regard to voting at general meetings of the Company and in relation to dividends which currently attach to the Existing Ordinary Shares would continue to attach to the 1p New Ordinary Shares created by this subdivision.

If the proposed Capital Reorganisation is approved by shareholders at the AGM, each shareholder would then hold, in place of every one 20p Existing Ordinary Share currently held, one New Ordinary Share of 1p and 19 Deferred Shares of 1p. 

The Board's proposal is that the Deferred Shares would -

·     not carry any voting rights;

·     not carry any right to receive dividends; and

·     only have the right to participate in any return of capital by the Company, such as on liquidation, after £1 million had been repaid to the holder of each New Ordinary Share - a situation which is extremely unlikely to arise.

The Directors believe that the Deferred Shares will, therefore, effectively have no value.  No application will be made for the Deferred Shares to be listed or admitted to trading on AIM or any other investment exchange.  Nor will share certificates be issued in respect of the Deferred Shares.

The objective of the share subdivision is to attach the current trading value of the Company's Existing Ordinary Shares to a New Ordinary Share with a lower nominal value, so as to facilitate equity fundraising by the Company. The Board has, accordingly, decided to propose the Capital Reorganisation at the AGM.

If the Cancellation is approved by Shareholders, the Company's Existing Ordinary Shares will cease to be traded on AIM on 2 February 2012. The Directors propose, therefore, that the Capital Reorganisation should take effect at close of business on the same date, and this would, accordingly, be the record date for the Capital Reorganisation.

Enquiries:

Artisan (UK) plc                                                                                                      [phone]

Chris Musselle, Chief Executive                                                                                                        

Altium Capital Limited - Nominated Adviser                                                         [phone]

Adrian Reed

Adam Sivner

Bankside Consultants - Financial PR Advisers                                                       [phone]

Simon Rothschild                                                                                                Mobile: [phone]

 

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