TIDMASTR
RNS Number : 0074B
Astaire Group Plc
10 February 2011
Astaire Group PLC
Recommended sale of Rowan Dartington
and
proposed investing policy
For immediate release
10 February 2011
The Board of Astaire Group PLC ("Astaire") announces that a
conditional contract has been signed for the sale of Rowan
Dartington & Co. Limited to a new company formed by a
consortium of private investors led by Graham Coxell.
1. Introduction
On 15 July 2010 the Astaire Group Board announced that
discussions were in progress which may lead to the sale of the
Group's main operating businesses. Since that time Astaire
Securities, a stockbroking and corporate finance advisory business
has been sold and a conditional contract for the sale of Dowgate
Capital Stockbrokers Limited has been signed.
Under the AIM Rules, the disposal of a business which represents
over 75% of an AIM quoted company's gross assets, pre tax profit,
turnover, capitalisation or gross capital is treated as a
fundamental change in that company's business and must be
conditional on its shareholders' approval. The proposed sale of
Rowan Dartington represents such a fundamental change in the
business of both the Astaire Group and of its 53% holding company,
Evolve Capital PLC. Accordingly general meetings of the Astaire
Group and Evolve will be convened to approve it.
The Board have concluded that it would be premature for the
Company to seek to delist its Shares from trading on AIM at this
stage but rather that Shareholders should have the opportunity to
see the completion of the sale of Dowgate Capital Stockbrokers and
the sale of Rowan Dartington and seek a liquidity event for
themselves at that stage if they so wish. The Board will keep any
future potential delisting of the Astaire Group under review going
forward.
Following completion of the proposed Sale, Astaire Group will
become an "investing company" as defined in the AIM Rules as a
result of the disposal of substantially all of its trading
businesses. A resolution will be proposed at the General Meeting to
approve the Astaire Group Investing Policy.
This announcement describes the recent sales of Astaire
Securities and Dowgate Capital Stockbrokers and sets out the
background to the Sale and the reasons why the Directors
unanimously recommend that Shareholders vote in favour of the Sale
and the Investing Policy at the General Meeting.
2. Background
The Astaire Group Board announced on 15 July 2010 that it had
completed a strategic review of its businesses and concluded the
following:
(i) that the operating businesses have good potential given the
right corporate environment; and
(ii) that there is a considerable momentum to make a clean break
from the current corporate structure.
The Sale follows a period of considerable activity exploring
alternative proposals for the Astaire Group as a whole and for its
constituent parts. Negotiations which were intended to result in
the Astaire Group as a whole having a new direction and a new
controlling shareholder failed to reach a mutually satisfactory
conclusion for several reasons, including difficulties in
ring-fencing Astaire Securities from a contingent litigation
liability to Izodia PLC at that time. As these difficulties
emerged, the Board resolved to follow up approaches from potential
purchasers of the constituent parts of the Group and established a
process for the submission of offers, the selection of preferred
bidders and, eventually, reaching agreement for the sale of both
Astaire Securities and Rowan Dartington, as well as agreeing a
transaction for DCS.
3. Sale of Astaire Securities
The strategy adopted by Evolve following its acquisition of
Astaire Group (then called Blue Oar PLC) during the winter of
2008-9 did not prove successful against the background of
continuing difficult market conditions. Litigation by Izodia PLC
against CS Holdings, an intermediate holding company within the
Group which held 99.9% of the issued share capital of Astaire
Securities created an atmosphere of uncertainty at Astaire
Securities, causing damage in terms of staff morale and client
relationships. As this business is dependent on its staff and
clients, a decision was made to sell it so that it could enjoy
better prospects as part of a purchaser's more stable group and to
enable the Astaire Group to realise some value for it. After
considering several proposals, contracts were exchanged for the
sale of Astaire Securities to Sandfire Capital Inc. on 15 October
2010 and the sale was completed on 22 October 2010.
When the sale was announced on 15 October 2010, Astaire
Securities acted as Nominated Adviser and / or broker to over 40
companies, most of which were quoted on AIM. Its turnover, losses
and assets as at the dates shown were:-
Year ended Year ended 6 months ended
31 Dec 2008 31 Dec 2009 30 June 2010
(audited) (audited) (unaudited)
GBP'000 GBP'000 GBP'000
---------------------- ------------- ------------- ---------------
Turnover 6,318 5,259 2,897
---------------------- ------------- ------------- ---------------
Pre tax loss 2,914 1,934 635
---------------------- ------------- ------------- ---------------
Net assets at period
end 4,565 2,938 2,446
---------------------- ------------- ------------- ---------------
The pre-tax loss for the first half of 2010 is shown after
accounting for exceptional costs of GBP250,000 for restructuring
and redundancies.
The consideration due from the Sandfire Capital Inc. was GBP2.45
million comprising GBP2 million cash which was received on
completion and GBP450 000 to be placed in an escrow account in
relation to Astaire Securities' continuing eligibility for
Nominated Adviser status and against any warranty claims or
shortfall in the proceeds of the sale of certain assets below their
book value. In addition to containing warranties in favour of the
purchaser, as is normal for this type of contract, the sale and
purchase agreement, which was signed on 15 October 2010, contains a
tax indemnity. CS Holdings' exposure under the tax indemnity is
intended to be mitigated by the transfer of tax losses within the
Astaire Group. It was announced today that Astaire Securities,
which has changed its name to Northland Capital Partners Limited,
has been approved by London Stock Exchange as a continuing
Nominated Adviser following its change of ownership, thereby
satisfying conditions for the release of the GBP350,000 out of the
escrow escrow account to Astaire.
The effect of the sale of Astaire Securities was to reduce the
Astaire Group's trading losses. While the receipt of the cash
proceeds strengthened the Astaire Group consolidated balance sheet,
the net cash proceeds will be retained by CS Holdings as explained
below. Astaire will record a loss on disposal in the range GBP0.8
million to GBP1.4 million, the exact amount of which will depend on
the amounts released to Astaire from the escrow accounts.
The sale proceeds (net of transaction related costs) are held by
CS Holdings pending the outcome of the litigation, which is being
vigorously defended. Transaction related costs include a liability
in respect of a staff retention plan amounting to between
GBP182,172 and GBP269,987 (depending on the amounts eventually
released to CSH from escrow), legal and financial advisor fees.
Astaire Securities was named as a defendant in the claim by
Izodia PLC, but in order to effect the sale Astaire Securities
agreed, on a without prejudice basis, to a payment of GBP37,000 in
full and final settlement of any claim against Astaire Securities
and with no admission of fault or liability on the its part and
without discharging Izodia's claim against CS Holdings.
4. Sale of Dowgate Capital
Dowgate Capital Stockbrokers Limited was acquired as part of the
Dowgate Capital PLC group in July 2009. Its business activity is
the provision of private client stockbroking services.
The conditional sale of Dowgate Capital Stockbrokers Limited
("Dowgate") to 3B Capital Limited ("3B Capital") was agreed and
announced on 24 December 2010.
The contract provides for the sale of the whole of the issued
share capital of Dowgate to 3B Capital for GBP900,000 of which
GBP675,000 is payable in cash at completion and the balance of
GBP225,000 is due no later than 30 June 2012 subject to any claims
against the warranties and indemnities provided by Astaire. 3B
Capital is a new company formed by Beavis Morgan LLP and employees
of Dowgate, including two directors, Neil Badger and Clive Mattock,
who have together subscribed GBP82,502 (which will represent 25 per
cent. of 3B's issued share capital following completion). Neil
Badger and Clive Mattock will join the board of 3B Capital. In view
of these directors' participation in 3B Capital, the sale of
Dowgate is categorised as a transaction with a related party in
accordance with the AIM Rules. The Directors of Astaire, none of
whom has any interest in the sale of Dowgate, consulted Fairfax
I.S. PLC (Nominated Adviser to Astaire Group PLC) and announced
when the sale of Dowgate was announced that they consider the terms
of the transaction to be fair and reasonable insofar as Astaire
Shareholders are concerned.
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