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Knowledge Support (KSS)

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Friday 16 May, 2003

Knowledge Support

Disposal and Liquidation

Knowledge Support Systems Group Plc
16 May 2003



16 May 2003

Knowledge Support Systems Group Plc (the 'Company' or 'KSSG')


Proposed disposal of Knowledge Support Systems Limited and members' voluntary
liquidation of KSSG.

KSSG is pleased to announce that it has entered into a conditional contract with
Eurovestech PLC, an existing investor in KSSG, for its principal trading
subsidiary, KSSL.

Trevor Goul-Wheeker, Non-executive Chairman of KSSG, stated, 'We are pleased to
announce this transaction which marks the end of our strategic review to return
value to shareholders, whilst allowing the business in KSSL to continue to
develop under the ownership of a very supportive and high-calibre investment
manager.'

Richard Bernstein, Chief Executive of Eurovestech PLC, stated, 'We are pleased
to have the opportunity to acquire KSSL, whose business we have followed closely
since first investing in KSSG in July 2002. We believe that, under our
ownership, the management team will have greater flexibility to develop the
business.'

The transaction will involve the purchase by Eurovestech PLC of KSSL followed by
a members' voluntary liquidation of the KSSG shell that remains. The key points
are summarised below:

   •Proposed sale of the principal trading subsidiary, KSSL to Eurovestech
    PLC.

   •Proposed members' voluntary liquidation of the Company following the sale
    of KSSL.

   •Expected aggregate cash distribution to Shareholders of approximately £14
    million, representing approximately 18.5 pence per share (fully diluted).

   •The Company has received irrevocable undertakings to vote in favour of
    the Proposals from those Directors who hold Ordinary Shares and from
    substantial shareholders in respect of, in aggregate, 39,268,847 Ordinary
    Shares, representing approximately 53 per cent. of the issued share capital
    of the Company. Including Eurovestech PLC, Shareholders holding, in
    aggregate, approximately 62 per cent. of the issued share capital have
    expressed their support for the Proposals.

   •Eurovestech PLC is an investment company which operates a pan-European
    development capital fund, focussing on high-technology enterprises. Its
    shares are traded on the Alternative Investment Market of the London Stock
    Exchange.





Enquiries:

Knowledge Support Systems Group Plc                Tel: +44 (0)161 228 0040
Trevor Goul-Wheeker, Non-executive Chairman
Iain Cockburn, Chief Executive

Investec Investment Banking                        Tel: +44 (0)20 7597 5970
James Grace
Lee Aston








16 May 2003

Knowledge Support Services Group Plc (the 'Company' or 'KSSG')


Proposed disposal of Knowledge Support Systems Limited and members' voluntary
liquidation of KSSG

Introduction and background to the Proposals

On 25 June 2002, the Board announced that it was to undertake a review of the
retail division of the Company, as a result of continued slow progress in
generating a revenue pipeline in that part of the business. This review was
subsequently expanded in scope to include a review of all options for maximising
Shareholder value, including, inter alia, continuing to pursue the Group's
business plans as an independent entity, returning excess cash to Shareholders,
liquidation of the Group, a sale of the Group or parts thereof or a combination
of these options.

Shareholders holding a majority of the issued Ordinary Shares have clearly
expressed to the Board their desire to receive as much cash for their investment
in KSSG as possible, in the shortest timeframe. The Company has therefore, over
the past six months, explored all possible means of returning excess cash to
Shareholders, has actively sought a purchaser for the Group or parts thereof and
has pursued discussions with, and provided comprehensive due diligence
information to, a number of parties.

As a result of this process, the Company announces today the following
Proposals:

 i. to sell KSSL (the principal trading subsidiary of the Group) to Eurovestech.
    The effect of the arrangements for the sale of KSSL will be to transfer a
    number of ongoing and contingent liabilities from the Company to KSSL such
    that the Company will be left with cash and a limited number of creditors
    (mainly adviser costs and redundancy payments to Directors); and

ii. following, and conditional upon, completion of the Disposal, to place the
    Company into a members' voluntary liquidation. On liquidation, the
    Liquidators will, after paying or providing for all known actual and
    contingent liabilities of the Company, distribute the Company's then
    existing cash, which will include the proceeds from the Disposal, to
    Ordinary Shareholders. The Directors expect that, in aggregate, an amount of
    approximately £14 million, representing approximately 18.5 pence per Share
    will be available for distribution to Ordinary Shareholders. The Board
    expects that, following the Disposal, the liabilities of the Company will be
    limited and should therefore be settled rapidly, enabling the Liquidators to
    distribute approximately ninety per cent. of the expected Liquidation
    proceeds within fourteen days of commencement of the liquidation with the
    remainder being paid within approximately six months of the commencement of
    the liquidation.

The Proposals will require the approval of Shareholders, which is to be sought
at an Extraordinary General Meeting of the Company to be convened in due course.


The Proposals

Sale of KSSL

The Company announces today that it has entered into a conditional agreement for
the sale of the whole of the issued share capital of KSSL to Eurovestech.
Eurovestech is an investment company which operates a development capital fund,
focussing on high-technology enterprises. Its shares are traded on the
Alternative Investment Market of the London Stock Exchange.

The consideration for the Disposal is £1 million, payable in cash on Completion.

The disposal of KSSL is being effected by the sale of the whole of the issued
share capital of Internet Pricing Limited ('IPL'), a wholly-owned, dormant
subsidiary of the Company and all of the issued shares in KSSL not held by IPL.
In addition, simultaneously with the completion of the Disposal, certain trading
contracts and the lease of St James's Buildings (the Company's head office) are
required to be transferred to KSSL. Eurovestech has also given KSSG indemnities
in relation to specified employment-related liabilities of KSSG.

Completion of the Sale and Purchase Agreement is conditional upon Shareholder
approval of the Disposal, which will be sought at an Extraordinary General
Meeting of the Company to be convened in due course. The resolution to approve
the Disposal will be an Ordinary Resolution, which means that it will require
the approval of more than fifty per cent. of those persons who, being eligible
to do so, vote, in person or by proxy, at the EGM.

Information on KSSL

The Company is a supplier of price management and optimisation systems and
services for the petroleum, mass and convenience retail and telecommunications
industries. KSSL is the principal trading subsidiary of the Company. For the
year ended 31 December 2002, KSSG reported a loss before tax of £3.742 million
on turnover of £1.562 million. As at 31 December 2002, KSSG had consolidated net
assets of £22.588 million and net cash and cash equivalents of £21.539 million.
There is no material difference between the results and financial position of
KSSG and KSSL other than in relation to net cash and cash equivalents. As at 30
April 2003, KSSL had cash and cash equivalents (net of amounts owed to and now
paid to KSSG) of approximately £6 million.

Members' voluntary liquidation

The Directors believe that a members' voluntary liquidation will enable the net
cash in the Company, following Completion, to be returned to Shareholders in as
cost-effective and timely a manner as possible.

It is proposed that Phillip Sykes and Jeremy Willmont of Moore Stephens be
appointed as joint Liquidators of the Company to conduct the members' voluntary
liquidation. On the appointment of the Liquidators, all the powers of the
Directors in relation to the Company will cease.

As required by the Insolvency Act for a members' voluntary liquidation, the
Directors will swear a statutory declaration prior to the EGM that they have
made a full enquiry into the affairs of the Company and that, having done so,
they have formed the opinion that the Company will be able to pay its debts in
full, together with interest at the official rate, within a period of 12 months
from the commencement of the members' voluntary liquidation.

If Shareholders approve the Proposals, the Liquidators, after paying or
providing for all known actual and contingent liabilities of the Company,
including the fees and expenses associated with the Proposals, will distribute
the Company's then existing cash, which will include the net proceeds from the
sale of KSSL, to Ordinary Shareholders. The Directors, having discussed the
matter with the Liquidators, expect that, in aggregate, an amount of
approximately £14 million will be available for distribution to Ordinary
Shareholders. This represents approximately 18.5 pence per Share.

The Liquidators have indicated that an amount of approximately ninety per cent.
of funds available for distribution, representing approximately 16.7 pence per
Share, will be available for the First Distribution. This amount will be payable
by cheque to Ordinary Shareholders within fourteen days of Completion.

In the absence of any unforeseen circumstances, the proposed Liquidators have
indicated that they will be in a position to make the Second Distribution,
representing the remainder of the funds available for distribution, within a
period of approximately six months of commencement of the members' voluntary
liquidation. The precise timing of the Second Distribution will depend, in
particular, on the progress of the Liquidation and the receipt by the
Liquidators of appropriate confirmation from the tax authorities that the
Company has no outstanding tax liabilities.

The members' voluntary liquidation is conditional upon Shareholder approval,
which will be sought at the EGM, and completion of the Disposal. If approved by
Shareholders, the members' voluntary liquidation will commence immediately
following the Disposal.

Options

There are employee options outstanding over a total of 3,008,461 Ordinary Shares
with exercise prices of between 8.0 pence and 478.5 pence per share.

Options under the Approved Scheme will (if not already exercisable) be capable
of exercise immediately and any unexercised options will lapse as soon as the
Liquidation process starts. Options under the Unapproved Scheme will (if not
already exercisable) become exercisable upon these option holders receiving
notice of the passing of the resolution for Liquidation immediately and any
unexercised options will lapse one month thereafter.

The Board will be writing shortly to holders of options over Ordinary Shares to
explain the action to be taken.

Undertakings to vote in favour of the Proposals

The Company has received irrevocable undertakings to vote in favour of the
Proposals from those Directors who hold Ordinary Shares and from substantial
shareholders in respect of, in aggregate, 39,268,847 Ordinary Shares,
representing approximately 53 per cent. of the issued share capital of the
Company. Including Eurovestech, Shareholders holding, in aggregate,
approximately 62 per cent. of the issued share capital have expressed their
support for the Proposals.

Recommendation

The Directors believe that the Proposals are in the best interests of
Shareholders and unanimously recommend that Shareholders vote in favour of the
Proposals at the EGM, as those Directors who hold Ordinary Shares intend to do
in respect of their own beneficial holdings which amount, in aggregate, to
6,479,074 Ordinary Shares, representing approximately 8.7 per cent. of the
issued share capital of the Company.

EGM

A circular will be sent to Shareholders as soon as practicable setting out
details of the Proposals, including notice of an EGM at which resolutions to
approve the Proposals will be proposed, as required by the Listing Rules and (if
relevant) Rule 21 of the City Code, in view of an approach that has been
received by the Company to acquire the entire issued share capital of the
Company. The resolution under Rule 21 of the City Code will be proposed if the
potential offeror has not withdrawn its interest in acquiring the entire issued
share capital of the Company, or otherwise consented to the Disposal prior to
posting of the circular. If proposed, such resolution will require the approval
of a majority of fifty per cent. of the issued share capital. Shareholders
should note that holders of approximately 53 per cent. of the issued share
capital have irrevocably undertaken to vote in favour of the Proposals
(including any resolution proposed for the purposes of satisfying Rule 21 of the
City Code).



                                  Definitions

In this announcement, the following expressions have the following meanings,
unless the context requires otherwise:

'Act'               the Companies Act 1985 (as amended)

'Board' or          the directors of the Company from time to time
'Directors'

'Company' or        Knowledge Support Systems Group Plc
'KSSG'

'Completion'        completion of the Disposal

'Disposal'          the disposal of KSSL on the terms set out in the
                    Sale and Purchase Agreement

'EGM' or            the extraordinary general meeting of the Company, to
'Extraordinary      be convened for the purposes of considering and, if
General Meeting'    thought fit, approving the Proposals

'Eurovestech'       Eurovestech PLC

'First              the proposed cash distribution by the Liquidators to
Distribution'       Ordinary Shareholders

'Group'             the Company and its subsidiaries (as defined in the
                    Act)

'Insolvency Act'    the Insolvency Act 1986

'KSSL'              Knowledge Support Systems Limited

'Liquidation'       the members' voluntary liquidation of Knowledge
                    Support Systems Group Plc proposed in this
                    document

'Liquidators'       Phillip Sykes and Jeremy Willmont of Moore Stephens
                    Chartered Accountants and/or such other person(s) as
                    may, from time to time be appointed as liquidator(s)
                    of the Company

'Proposals'         the proposals described in this announcement, and to
                    be set out in a circular to Shareholders, for the
                    Disposal, the appointment of the Liquidators and the
                    subsequent members voluntary liquidation of the
                    Company

'Shareholders' or   holders of Ordinary Shares
'Ordinary
Shareholders'

'Sale and Purchase  sale and purchase agreement between Eurovestech and
Agreement' or       the Company setting out the terms of the Disposal
'SPA'

'Second             the proposed further cash distribution by the
Distribution'       Liquidators to Shareholders of any surplus funds on
                    completion of the liquidation of the Company

'Shareholder(s)'    (a) holder(s) of Shares

'Share(s)' or       ordinary shares of 0.2 pence each in the capital of
'Ordinary           the Company
Shares'

'UK' or 'United     the United Kingdom of Great Britain and Northern
Kingdom'            Ireland



                      This information is provided by RNS
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