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Hirco plc (HRCO)

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Thursday 15 August, 2013

Hirco plc


RNS Number : 8266L
Hirco plc
15 August 2013


15 August 2013



(the "Company")


Suspension to trading on AIM


The Company has requested the suspension of trading of its shares on AIM pending clarity on its financial position due to the potential enforcement matters outlined below which may have a material impact on the financial position of the Company.


The Company has received copies of statutory notifications dated 30 and 31 July 2013 from lenders to Sunny Vista Realtors Private Limited (the Indian project company which owns the Panvel property) alleging that certain repayments under their respective loan agreements have not been met, that the loans are in default (in one case, wilful default), and that if the loans are not repaid in full together with interest within 60 days, enforcement action will be taken against Sunny Vista.  The total sums stated to be now due are approximately 360 Crores (circa £37.66m) plus interest.  The notices state that Sunny Vista is not permitted to transfer any of its assets without the relevant lenders' consents. However, the extent of the security over the assets which are to be the subject of enforcement is as yet unclear, as are the circumstances surrounding such enforcement.


The Company has also received copies of a petition from Tata Capital Financial Services Limited against Hiranandani Palace Gardens Pvt Ltd, the Indian project company which owns the Chennai Township residential development.  The petition requests the High Court of Bombay to appoint a provisional liquidator over Hiranandani Palace Gardens pending a hearing to appoint a liquidator and demands that Hiranandani Palace Gardens be ordered to deposit 82 Crores (circa £8.58m) plus interest at the Court.  The evidence in support of the petition alleges irregularities in connection with obtaining the loan from Tata, that the company is commercially insolvent and unable to pay its debts in the ordinary course of business as and when they fall due, and that the management should not be allowed to carry on its business any further as that will inevitably result in incurring further debts with no reasonable expectation and/or capacity to repay the same.


These loans are obligations of the Indian project companies and are not of Hirco Plc.  The common equity in the Indian project companies is held by "the Burke Companies," Mauritius domiciled companies owned by interests associated with the Hiranandani family. Because the Company is not a party to these loan agreements, it is not a party to these proceedings.  Nonetheless, it is endeavouring to establish further information regarding the enforcement action and the potential consequences in relation to the value of the preference shares the Company holds. The Board is seeking information on these points so that the financial position of the Company can be clarified.


Separately, the Board wishes to disclose information which has come to light in respect of a potential offer for the projects held through the Burke Companies. The Board understands that the Burke companies received an indication of a potential offer some months ago which, if made, would be to purchase the entire issued share capital of the Indian project companies they own.  Since becoming aware of a potential offer, the Board has been seeking to establish further information which may verify and confirm the validity of such potential offer. The Board's current understanding is that if that potential offer were made, accepted and implemented, the Burke Companies would be able to redeem the Company's preference shares in return for £100 million (payable over a number of years) in full and final settlement of the Company's rights in those shares. The Board has now received information that an indicative timetable has been received by the Burke Companies outlining the process to a potential offer and also that due diligence work has commenced. In light of this, the Board feels that the indication of an offer may have substance and is seeking further clarification.


The Company cannot be certain that an offer in an appropriate amount with appropriate legal protections guaranteeing payment would be made for the shares of the Indian project companies, that the various boards of directors would accept such an offer, that any third party consents or approvals would be obtained, that the Company would receive proceeds from any transaction, or that any proceeds would ultimately be distributed to Company shareholders. 


Notwithstanding these developments, the Company continues to pursue redress through the litigation and arbitration proceedings which are ongoing.


The Company requested a suspension of trading in its shares on AIM pending clarity on the financial position of the Company pursuant to any of the enforcement actions and will seek reinstatement of trading in the Company shares once the Company is in a position to make a full announcement on this issue in accordance with AIM Rule 10.




For further information please contact:


IOMA Fund & Investment Management Limited                        Tel: +44 (0)1624 681250

Philip Scales


N+1 Singer                                                                               Tel: +44 (0) 20 7 496 3000

James Maxwell/Nick Donovan 

This information is provided by RNS
The company news service from the London Stock Exchange

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