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enterpriseAsia (EPA)

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Wednesday 20 October, 2004

enterpriseAsia

Capital Reorganisation

enterpriseAsia PLC
20 October 2004


Capital Reorganisation And Reduction Of Capital


enterpriseAsia plc ('enterpriseAsia' or 'the Company') announces that it is
today, 20 October 2004, putting forward proposals for a capital Reorganisation
to, inter alia, eliminate the deficit on the Company's profit and loss account
and enable the Company to issue new shares.


At 31 December 2003, the audited consolidated balance sheet of the Company
revealed an accumulated deficit on the profit and loss account of £10,590,883.
This deficit arose during 2001, 2002 and 2003 as a result of the writing down of
investments made by the Company.  The unaudited consolidated balance sheet of
the Company shows that this deficit has increased by approximately £165,000 in
the period ended 30 June 2004 to £10,756,272.


Whilst the balance on the Company's profit and loss account remains in deficit,
the Company cannot declare a dividend on its Ordinary Shares due to prohibitions
under the Companies Act 1985 ('the Act').  The proposed Reduction of Capital
will, if adopted and confirmed by the Court, enable the Company to substantially
reduce the deficit and, subject to appropriate funds being available for the
purpose, bring closer the prospective date when a dividend payment can be made.


In addition, at present the Company's Existing Ordinary Shares trade on AIM at
below their par value.  The Company is therefore unable to issue further
Ordinary Shares as, under the Act, shares cannot be issued at a discount to
their par value.  The Directors believe that having the Company's Existing
Ordinary Shares trading at fractions of a penny does not promote the Company
with investors and prospective commercial partners.  The Proposals will, if
implemented and all things being equal, result in the Ordinary Shares having a
nominal value lower than the expected market price following the Reorganisation.


This procedure requires the approval by shareholders of the Company at an
Extraordinary General Meeting and, in respect of the Reduction of Capital, the
subsequent confirmation of the reduction by the Companies Court of the High
Court of Justice of England and Wales.  A circular containing information
regarding the proposed Reorganisation to be effected by the consolidation of the
Existing Ordinary Shares, a subsequent sub-division of the consolidated
Intermediate Shares and, subject to Court approval, the cancellation of a
substantial part of the Company's paid up share capital is being posted to
shareholders today.


Cancellation of Share Premium Account, Reorganisation and cancellation of part
of the paid up share capital


There is presently standing to the credit of the Company's Share Premium Account
the sum of £9,175,770.  As at today the authorised share capital of the Company
is £5,000,000 divided into 500,000,000 Existing Ordinary Shares of £0.01 each of
which 239,598,496 Existing Ordinary Shares have been allotted and fully paid.


The Directors now propose that the share premium account should be cancelled and
that the reserve thereby arising amounting to £9,175,770 should be applied to
eliminate in part the deficit on the profit and loss account of the Company.


The Directors have also decided to propose a consolidation of the Existing
Ordinary Shares on the basis of one Intermediate Share of £10 for every 1,000
Existing Ordinary Shares. Fractions of an Intermediate Share will not be issued
but will be consolidated and sold in the market.  The amount realized, net of
costs, will be sent to the relevant shareholders to the extent that such amount
exceeds £5 or otherwise will be retained for the benefit of the Company.  Each
Intermediate Share will then be divided into 5 New Ordinary Shares and one
Deferred Share.  Such Deferred Shares will have no rights as to dividends, nor
to any return of capital except in exceptional circumstances and no rights to
vote at or attend general meetings of the Company.


Upon the shareholders approving the Resolutions the Company will apply to the
Court for the Deferred Shares to be cancelled which will result in an additional
amount to offset against the deficit on the profit and loss account of the
Company of a further £2,384,005.


Disapplication of Statutory Pre-emption Rights


The Board has considered the best methods of increasing interest in the
Company's operations and shares.  Interest from the investment community has
been small due to the market capitalisation of the Company being so low. Whilst
the Board is working to build shareholder value this is unlikely to increase the
size of the Company in the medium term to a size where institutional investors
would be interested in its shares.  The Board has therefore decided to
accelerate the growth of the Company by looking for investment opportunities of
a size larger than that which can be funded using internal resources.  This will
therefore require the issue of Ordinary Shares, whether as consideration for the
investment or to raise cash resources to acquire or invest in these
opportunities.  Whilst the Board would like to involve shareholders directly in
any issue of securities, the cost of issuing a prospectus would not be
economically feasible unless the sum raised was some £2 million since any lesser
amount would result in costs exceeding 10% of the funds raised.  Therefore the
Board is seeking an authority to allot relevant securities pursuant to section
80 of the Act in an amount of up to £20,000, which represents 167% of the issued
ordinary share capital following the capital Reconstruction.  Further the Board
is seeking approval by the shareholders of the disapplication of preemption
rights in respect of issues of equity securities of an amount representing up to
100% of the Company's issued ordinary share capital, which at 0.32p per Existing
Ordinary Share (being the closing mid-market price per Existing Ordinary Share
on 18 October 2004) represents an issue of £768,000 worth of equity securities.


In the event that the Proposals are duly passed by the shareholders the Company
will be able to issue Ordinary Shares for cash as part of the consideration for
future acquisitions.  It is the Board's wish to be able to issue Ordinary Shares
in the Company as full or partial consideration for identified target companies,
within reasonable limits, without convening further extraordinary general
meetings.  In accordance with the Company's investment policy, the Directors are
presently considering possible acquisitions. The Directors may utilise the
Ordinary Shares to raise funds to pay for an acquisition and/or otherwise settle
the consideration via the issue of shares to the vendors of such businesses.


It should be emphasised that the Proposals will not result in any reduction in
the net assets of the Company or the Group and the Proposals should not of
themselves affect the market value of the Ordinary Shares on AIM.


Court Approval


At the Extraordinary General Meeting to be convened on 12 November 2004, the
relevant resolutions will be considered by the shareholders. Following the
passing of the relevant resolutions an application will be made to obtain the
Court's approval for the Reduction of Capital.  In considering the Company's
application for confirmation of the Reduction of Capital, the Court will,
amongst other things, be concerned to ensure that the interests of the Company's
creditors will not be adversely affected.  It is for this reason the Directors
will seek to obtain the written consent of the Company's creditors to proceed
with the matters described in the circular.


The total aggregate amount of the Company's Share Premium Account and the
Deferred Shares, which it is proposed will be cancelled, will exceed the deficit
on profit and loss account by £803,503.  It is expected that, for so long as
there are creditors who may have a claim against or be owed a debt by the
Company at the date upon which the Reduction of Capital becomes effective, the
Court will require the Company to undertake to transfer such excess to a special
reserve that will be distributable only in limited circumstances.


Although it cannot be said for certain that the Court's confirmation will be
obtained, it is the Directors' hope that this will be achieved towards the end
of December 2004, so that the effect of the proposed Reduction of Capital can be
shown in the Consolidated Accounts for the year ending 31 December 2004.


Future Dividends


No dividend will be proposed for the year ending 31 December 2004.  The
Directors do not know when a dividend will be paid in the future.


Code on Takeovers and Mergers


The Company has sought and obtained confirmation from the Panel on Takeovers and
Mergers that the Company does not fall under paragraph 4a of the Introduction to
the Code on Takeovers and Mergers as it does not have its place of central
management in one of the relevant jurisdictions (being the United Kingdom, the
Channel Islands or Isle of Man). In particular, any person, together with any
parties acting in concert with him or her, who as a result of any acquisition of
Ordinary Shares in the market or otherwise, holds over 30% of the issued share
capital of the Company, will not be required to make a general offer for the
Company.





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