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Paycorp PLC (PPSP)

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Wednesday 07 April, 2010

Paycorp PLC

Disposal of Subsidiaries and

RNS Number : 8317J
Paycorp PLC
07 April 2010
 



PAYCORP PLC ("Paycorp" or "the Company")

Sale of subsidiaries 

and proposed Withdrawal from plus markets

 

7 April 2010 

 

Introduction

 

The Board announces that, following completion of a strategic review of the businesses of Paycorp plc ("the Company"), it has decided to sell the Group's trading operations and has today entered into an agreement to sell the entire issued share capital of Paycorp Payment Solutions Pty Limited ("the Subsidiary") to PCI Corporation Pty Limited ("PCI Corporation") for AUS$450,000 (£272,700) payable in cash together with taking over the Company's overdrafts of AUS$1,224,467 with Westpac and AUS$400,000 with Calcom Enterprises Pty Ltd. Further details of the terms of the disposal, the effect of the sale on the Company and the proposed withdrawal from Plus Markets are set out later in this announcement.

 

 

Background to the Sale

 

Following shareholders voting against the re-appointment of Adrian Roche as a director of the Company at the Annual General Meeting on 7 August 2009, he was suspended as an employee of the Group and subsequently dismissed. Since then the main focus of the Board has been to ensure minimal disruption to the Group's business. On 30 November 2009, John Caliguri became managing director, Michael Edelson became non-executive chairman and Dean McClelland became a non-executive director.

 

The Company also commissioned an external strategic review of the Group's business. During this time the Company entered into discussions with it's Australian bank (to whom Adrian Roche had given a personal guarantee) leading to a renegotiation of the Group's banking arrangements. This, coupled with the ongoing financial restraints and the result of the strategic review, emphasised the additional cost burden of over viewing the underlying Australian trading businesses with non-executive directors based outside Australia. In recognition of this, the market was tested to determine whether a purchaser could be located and terms have today been agreed with PCI Corporation.

 

The Board recognises that the disposal of the Subsidiary is at a significant discount to the current market capitalisation of the Company, being £8.37 million at the close of business on the date prior to this announcement. The Disposal will result in a loss of £8.375 million to the book value of the Subsidiaries (as defined below) of £8.656 million at 30 June 2009, being the last date to which interim accounts were prepared. However, the Board believes, having considered the above and the liabilities within the Subsidiary, being approximately £1.355 million, the disposal of the trading operations is in the best interests of shareholders.  The Board also believes that the Disposal is in the best interests of employees and customers as PCI Corporation has indicated that it intends to invest in further development of products and growth of the business.Terms of the Sale

 

The Company has today entered into a share sale agreement between (1) the Company (2) PCI Corporation and (3) Paycorp Payment Solutions Pty Limited ("the Disposal Agreement").  Pursuant to terms of the Disposal Agreement, the Company has agreed to sell the entire issued share capital of Paycorp Payment Solutions Pty Limited to PCI Corporation for a cash payment of AUS$450,000, of which a non-refundable deposit of AUS$50,000 has been paid and the balance will be paid on completion, expected to be within 20 business days.

 

Paycorp Payment Solutions Pty Limited owns the entire issued share capital of Business Interface Services Pty Limited, which owns the entire issued share capital of Paycorp Holdings Pty Limited which in turn owns the entire issued share capital of Paycorp Australia Pty Limited.  Therefore, the Disposal Agreement is in effect a sale of all the Company's Australian subsidiaries ("the Subsidiaries") which operate the Group's business.  The entire Group's turnover and profits are generated through the Subsidiaries. For the 6 months ended 30 June 2009, the date to which the latest results were produced, turnover was £1.232 million and the loss before tax was £31,000 Following completion of the Disposal Agreement, the Company will have no subsidiaries and cease to operate a trade.  It also waives any debt owed to it by the Subsidiaries or by it to the Subsidiaries. 

 

PCI Corporation will take on all liabilities owed by the Subsidiaries which as at 30 June 2009 were approximately £1.355 million.

 

John Caliguri, a director of the Company, has given an undertaking to PCI Corporation in relation to a possible tax refund by the Subsidiaries to the Australian Tax Office and certain warranties in relation to the business of the Subsidiaries, any liability pursuant to such undertaking and warranties to be capped at AUS$210,000.

 

 

Effects of the Sale on the Company

 

The estimated net consideration receivable by the Company following completion of the Disposal Agreement is Aus$450,000. This represents a loss of £8.375 million to the book value of the Subsidiaries which as at 30 June 2009 was £8,565,000.  This loss, together with costs incurred in connection with the Sale, will be provided for in the Company's accounts for the year ended 31 December 2009 and all inter group debt will be written off.

 

In addition, the Company will be entitled to receive 100 per cent. of the sums recoverable by the Subsidiaries in respect of the AUS$134,000 plus interest owed to the Subsidiaries by Adrian Roche and/or any company controlled by him and furthermore the Company is entitled to receive 100 per cent. of sums recoverable from any claims which the Company or the Subsidiaries may have against him or any company controlled by him in respect of disputed amounts paid to any of these persons while Adrian Roche was a director or shareholder of the Company or any of the Subsidiaries.

 

Following the Disposal the Directors have agreed to waive all future remuneration.

 

Withdrawal from PLUS Markets

 

Following completion of the Disposal Agreement, the Company will be a non trading company with net cash of approximately £260,000. The Board believes that there is no benefit in remaining on PLUS and therefore the Company gives notice of its intention to withdraw the Company's shares from the PLUS quoted market in order to minimise costs and preserve the Company's cash resources prior to an orderly distribution of cash.

 

"Under the Plus rules, the Company is required to give shareholders' a period of 10 business days to object to the intended withdrawal of its securities from PLUS Market. Any shareholders wishing to raise an objection should contact PLUS in confidence by close of business on 22 April"

 

The PLUS Facility will be withdrawn on 22 April unless legitimate objections have been raised to the proposed withdrawal. In such circumstances the withdrawal must be conditional on the consent of 75 per cent. of votes cast by its shareholders at a general meeting.

 

Each of Michael Edelson and John Caliguri have confirmed that they would waive any entitlement to any distribution payable by the Company.  Together they hold (with connected persons) 336,870,590 ordinary shares in the capital of the Company representing approximately 30.19 per cent of the Company's entire issued share capital.

 

The Directors of the Company accept responsibility for this announcement.

 

For the purposes of this announcement an Exchange Rate £1 = AUS$1.65 has been used.

 

For further information, please contact:

 

Paycorp plc

Tel +44 (0) 161 975 0434

Michael Edelson

Ian Aspinall

Website: http://www.paycorpplc.com

 

Zeus Capital

Tel: +44 (0) 161 831 1512

Ross Andrews


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