Osprey Communications PLC
6 September 2000
OSPREY COMMUNICATIONS PLC ('Osprey' or the 'Company')
Disposal of Osprey London Limited and Osprey Future Image
Limited ('the Disposals')
This announcement relates to the Disposals and the re-
listing of the Company's shares. The shares of the
Company to be re-listed on 6 September 2000 and the
Directors expect to release the financial results for the
18 months ended 29 March 2000 by 29 September 2000.
The Company announces that it has today completed the
disposal of the business and assets of Osprey London
Limited ('Osprey London').
Osprey London, an advertising agency, has been sold to
Sevco 1156 Limited ('Interfocus'), a new company formed
to acquire Interfocus Group Limited (a London based
communications group) by its management. Interfocus has
been established for over ten years and has no previous
relationship with Osprey London.
In the nine months to 30 June 2000 Osprey London made a
profit of £36,786 and as at 30 June 2000 had net
liabilities of £522,977.
The cash consideration for the acquisition of Osprey
London is based on 80p for every £1 of gross profit
earned from the revenue generated from Osprey clients
transferred to Interfocus in the 12 months following
completion. The consideration will be paid in four
tranches:
- £750,000 payable on completion;
- £210,000 payable when gross profit reaches £1.2
million, provided this is within the 12 months following
completion;
- £240,000 payable when gross profit reaches £1.5
million, provided this is within the 12 months following
completion;
- a balance payable should the gross profit for the 12
months following completion exceed £1.5 million based on
an auditor's certificate on gross profit for the 12
months subject to a maximum amount of £2.0 million.
Following completion of the sale of Osprey London, Chris
Still, Chief Executive, and Lester Corney, Operations
Director have resigned from the Board of the Company and
all Group subsidiaries. Both of them have taken up
positions with Interfocus and following completion of the
sale, Chris Still will join its board.
Jack Rubins, formerly non-Executive Chairman, has resumed
executive responsibility for the management of the
continuing business.
Ralph Davies resigned as Group Company Secretary on 31
August 2000 to take up another appointment and Cargil
Management Services Limited have been appointed in his
place.
The business, assets and liabilities of Osprey Future
Image Limited ('Future Image') has been sold to its
management, comprising the two executive directors Sally
Gardiner and Rosemary Hamilton, which is the only
available option in the current circumstances. This
company is engaged in the provision of public relations
services. In the nine months to 30 June 2000 Future
Image made a profit of £6,891 and as at 30 June 2000 had
net liabilities of £213,865.
The cash consideration for the acquisition of Future
Image is £115,000 payable in two tranches:
- £50,000 payable on completion;
- £65,000 payable within 5 days following 12 months
after completion.
The Company is also currently in negotiations for the
sale of Osprey Advertising Scotland Limited, a subsidiary
engaged in the provision of advertising and marketing
services, to an unconnected third party. However the
terms of such a disposal have yet to be agreed. A
further announcement will be made in due course.
In the year to 30 September 1999 Osprey made a loss of
£958,000 on a turnover of £18.7 million and at that date
had a net assets deficit of £2.1 million.
In normal circumstances a disposal of the size of Osprey
London would be classified as Class 1 under the FSA
Listing Rules and consequently a circular would need to
be sent to shareholders to seek their approval prior to
completion of the transaction.
As Future Image is being sold to its management, this
disposal is classified as a related party transaction
under the Listing Rules and it also would normally
require a circular and prior shareholder approval.
However, due to the severe financial difficulty of the
Company, the UK Listing Authority ('UKLA') on this
occasion has agreed that these requirements will not need
to be met for the following reasons.
The Company confirms that Osprey is currently trading at
the limit of its overdraft facility and with the support
of its bankers, National Westminster Bank ('NatWest').
NatWest have requested Osprey to reduce its overdraft by
£800,000 by 5 September 2000 and have declined to provide
the Company with an increase in its overdraft facility.
Consequently the Company confirms that it does not have
the funds for the production of the circular nor the time
to seek shareholder approval prior to completion of the
Disposals. The Company confirms that all alternative
methods of financing the debt have been exhausted and the
only option remaining is to dispose of a substantial part
of the Company's business. The negotiations for the
Disposals could not have been entered into earlier since
the directors were in negotiations for a reverse takeover
of the Company, however due to the volatility in the
stock market, it was not possible to complete the reverse
takeover. The directors have confirmed that the disposal
of Future Image to its management is fair and reasonable
so far as shareholders of the Company are concerned and
have been so advised by Grant Thornton. The disposal
proceeds will be used to reduce bank debt.
Beeson Gregory, the Company's sponsor, has confirmed to
the UKLA that the Company is in severe financial
difficulty and will not be in a position to meet its
obligations as they fall due unless the Disposals take
place. In addition, NatWest have also confirmed to the
UKLA that further facilities will not be made available
to the Company. Unless the Disposals are effected by 5
September 2000 and in absence of satisfactory alternative
proposals, NatWest will withdraw the banking facilities
and appoint Administrative Receivers. Consequently, if
the Disposals are not effected immediately and the bank
demand immediate repayment of the Company overdraft, the
directors will have no option but to place the Company
into administrative receivership.
The directors confirm that they believe that the
Disposals are in the best interest of the Company and its
shareholders as a whole.
Following the Disposals, the Group will comprise of the
Company and one trading subsidiary, Osprey RMA Limited.
In the nine months to 30 June 2000 Osprey RMA Limited
made a profit of £208,739 and as at 30 June 2000 had net
assets of £647,580.
However the current trading and financial prospects for
the Group remain uncertain and in the directors' opinion,
following the Disposals, the working capital available to
the continuing Group is not sufficient for its present
requirements, that is for at least 12 months from the
date of this announcement. The directors are therefore,
considering a number of options available to them at the
current time including the sale of the remaining
businesses in the Group and/or a potential reverse
takeover of Osprey. The directors believe that either of
these options would lead to a resolution of the working
capital position of the Group, and an application for the
re-listing of the shares. If the remaining businesses in
the Group are sold, then the Group will effectively be a
shell company with no trading business.
However currently the Group will continue to trade
through Osprey RMA Limited and Osprey Scotland Limited.
Following the reduction of the bank overdraft from the
proceeds of the Disposals, NatWest have indicated that
they will remain supportive of Osprey pending
satisfactory proposals for dealing with the residual debt
exposure.
The Directors have requested that the Company's shares
are re-listed on 6 September 2000. In addition the
Company expects to release its financial results for the
18 months ended 29 March 2000 by 29 September 2000.
6 September 2000
