Disposal/Name Change/EGM
July 24 2007 - 5:57AM
UK Regulatory
RNS Number:7427A
CityBlock PLC
24 July 2007
CITYBLOCK PLC
Proposed disposal of CityBlock Holdings Limited
Proposed change of name to Look Investments plc
and
Notice of Extraordinary General Meeting
On 23 July 2007, the Company entered into an agreement, conditional on approval
of the Resolutions, for the disposal by the Company of the Holdings Group to
City Portfolio and John Trevor Bargh, a former director of the Company. The
consideration for the Disposal is the Net Asset Value of the Holdings Group
calculated by reference to the Holdings Completion Accounts. The Share Sale
Agreement provides for the payment of the Deposit to the Company on signing of
the Share Sale Agreement.
The Company proposes to enter into an agreement whereby it is to acquire
5,688,723 Ordinary Shares from John Trevor Bargh for a consideration of
#742,000, subject to the passing of the Resolutions.
On 20 July 2007, the Company entered into the Hive-up Agreement transferring,
inter alia, the Company's properties at Carlisle, Huddersfield and Leicester to
CityBlock.
Under the AIM Rules, the Disposal is classified as a disposal resulting in a
fundamental change of business. The Disposal is, therefore, conditional on the
consent of Shareholders given in general meeting. The Disposal is also deemed a
related party transaction under the AIM Rules due to John Trevor Bargh's
interest, a person who was a director of the Company within the preceding twelve
months.
A circular convening an EGM has been dispatched to Shareholders today. The
purpose of the circular is to provide Shareholders with details of the
Proposals, to explain why the Board considers the Proposals to be in the best
interests of the Company and its Shareholders, to seek Shareholder approval for
the Proposals at the EGM and to recommend that Shareholders vote in favour of
the Resolutions which are necessary to approve and implement the Proposals.
An EGM has been convened for 11.00 a.m. on 30 August 2007 to be held at the
offices of Dickinson Dees LLP, Gate House, 1 Farringdon Street, London, EC4M 7LG
at which the Resolutions will be proposed for Shareholder approval.
Disposal
CityBlock Development
The main activity of CityBlock Development is the acquisition and development of
commercial and residential investment properties for letting by other companies
within the Group. Currently, CityBlock Development identifies suitable property
sites for development, obtains planning permission and develops, through
external architects and contractors, student accommodation and commercial space
for letting. Once the properties have been developed, a long lease is agreed
with CityBlock Lettings.
Following completion of the Hive-up Agreement, CityBlock Development holds the
freehold interest, together with other assets and liabilities appertaining to
CityBlock 1 and CityBlock 2 only.
CityBlock Lettings
The main activities of CityBlock Lettings are the letting of residential and
commercial properties. CityBlock Lettings manages the lettings and facilities
(through external providers) of the two developed sites, CityBlock 1 and
CityBlock 2.
CityBlock 1 comprises of 30 single en-suite rooms over 4 floors with a
commercial lease on the ground floor. CityBlock 2 comprises of 52 single
en-suite rooms and 25 self contained studio rooms over 5 floors with 2
commercial tenants on the ground floor.
Reasons for the Disposal and use of proceeds
The properties within the Holdings Group are often fully let and CityBlock
Lettings is currently unable to introduce material rent increases. Running costs
and interest rates have increased resulting in a reduced return to the Group
from these operations. The Directors believe that the offer to acquire CityBlock
Holdings maximizes the capital value of the assets held within this company and
is in excess of that likely to be received from a third party.
The consideration for the Disposal is the Net Asset Value of the Holdings Group
calculated by reference to the Holdings Completion Accounts. The estimated net
proceeds available to the Company from the Disposal calculated by reference to
the Estimated Net Asset Value will be approximately #2,023,854 (excluding the
Dividend). The proceeds from the Disposal will be used by the Company to reduce
borrowings of #1,877,000 and to provide additional working capital.
Principal Terms of the Share Sale Agreement
The Company has entered into the Share Sale Agreement, which is conditional upon
the passing of the Resolutions. Pursuant to the terms of the Share Sale
Agreement City Portfolio will acquire the entire issued share capital of
CityBlock Holdings for the Consideration.
In addition to the Net Asset Value, under the terms of the Share Sale Agreement
the Company will receive the Dividend.
Pursuant to the terms of the Share Sale Agreement, the Company is required to
change its name. Accordingly, a resolution will be proposed to approve the
change of Company name to Look Investments plc.
Financial effects of the Disposal
In the year ended 31 March 2007, the audited results of the Company recorded
turnover for the assets being disposed of #473,056 with profit before tax of
#55,237.
The fixed assets being disposed were recorded on the Company's audited balance
sheet at 31 March 2007 as #5,764,270.
Share Acquisition
The Company proposes to enter into the Share Acquisition Agreement subject to
the passing of the Resolutions. Pursuant to the terms of the Share Acquisition
Agreement, the Company will agree to acquire the Bargh Shares for #742,000. On
completion of the Share Acquisition Agreement, the Company will cancel the Bargh
Shares reducing the issued ordinary share capital of the Company to 19,353,374
Ordinary Shares.
Extraordinary General Meeting
The Proposals are subject to the passing of the Resolutions by Shareholders. An
extraordinary general meeting has been convened for 11.00 a.m. on 30 August 2007
to be held at the offices of Dickinson Dees LLP, Gate House, 1 Farringdon
Street, London, EC4M 7LG at which the Resolutions will be proposed.
Irrevocable undertakings
The Company has received irrevocable undertakings from the holders of, in
aggregate, 14,842,357 Ordinary Shares (representing approximately 59.27 per
cent. of the Existing Ordinary Shares) to vote in favour of the Resolutions and
that under English law and pursuant to the AIM Rules a majority vote is required
to approve the ordinary resolution numbered 1 and a 75 per cent. majority vote
is required to approve the special resolutions numbered 2 and 3 in the notice of
EGM.
Recommendation
The Directors, having consulted with WH Ireland, the Company's nominated
adviser, consider that the terms of the Proposals are fair and reasonable and in
the best interests of the Company and its shareholders. Accordingly, the
Directors unanimously recommend Shareholders to vote in favour of the
Resolutions as they intend to do in respect of their own beneficial holdings of
7,421,179 Ordinary Shares representing approximately 29.63 per cent. of the
issued share capital of the Company.
For more information please contact:
Lee Dudack, CityBlock plc Tel: 07799 775 141
David Youngman, WH Ireland Ltd Tel: 0161 832 2174
A copy of the circular dispatched to Shareholders is available from the
Company's registered office: Fleet House, New Road, Lancaster, Lancashire, LA1
1EZ.
DEFINITIONS
"AIM" a market operated by London Stock Exchange plc
"AIM Rules" the AIM Rules for Companies governing the admission to and
the operation of AIM published by London Stock Exchange plc
as amended from time to time
"Bargh Shares" 5,688,723 Ordinary Shares beneficially owned by John Trevor
Bargh
"the Board" or "the Directors" the directors of the Company as at the date of this document
"CityBlock 1" the property located at 77-81 Penny Street, Lancaster, LA1
1XN
"CityBlock 2" the property located at 99 and 101 Penny Street, Lancaster,
LA1 1XN
"CityBlock Development" CityBlock Development Limited (company number 4438858), a
wholly owned subsidiary of CityBlock Holdings
" CityBlock Holdings" CityBlock Holdings Limited (company number 4450448), a
wholly owned subsidiary of CityBlock
"CityBlock Lettings" CityBlock Lettings Limited (company number 4449707), a
wholly owned subsidiary of CityBlock Holdings
"City Portfolio" City Portfolio Limited (company number 5704241), a
non-trading company in which John Trevor Bargh, a former
director of the Company, is interested in 100 per cent. of
the equity share capital
"Company" or "CityBlock" CityBlock plc
"Completion" completion of the Share Sale Agreement and the purchase of
the Shares
"Completion Date" the date of Completion
"Consideration" Net Asset Value
" Deposit" the payment of 10 per cent. of the Estimated Net Asset Value
in cash
"Disposal" the disposal of the Holdings Group pursuant to the terms of
the Share Sale Agreement
"Dividend" the dividend of #639,524 declared (but not paid) by
CityBlock Holdings, payable to the Company on Completion,
further details of which are set out in paragraph 1.1 of
Part II
"EGM" the extraordinary general meeting of the Company, convened
for 11.00 a.m. on 30 August 2007, and any adjournment
thereof
"Estimated Net Asset Value" the estimated net asset value of the Holdings Group on
Completion of #2,123,854
"Existing Ordinary Shares" 25,042,097 Ordinary Shares in issue as at the date of this
document
"Form of Proxy" the form of proxy enclosed with the circular
"Group" CityBlock and its subsidiaries
"Hive-up Agreement" the agreement between CityBlock, CityBlock Holdings,
CityBlock Development and CityBlock Lettings entered into on
20 July 2007 transferring the properties at Carlisle,
Huddersfield and Leicester and certain other assets from
CityBlock Holdings, CityBlock Development and CityBlock
Lettings to CityBlock including the assumption of certain
liabilities of CityBlock Holdings, CityBlock Development and
CityBlock Lettings by CityBlock
"Holdings Completion Accounts" the unaudited consolidated balance sheet as at the
Completion Date and the unaudited consolidated profit and
loss account for the Holdings Group for the period from 1
April 2007 and ending on the Completion Date
"Holdings Group" CityBlock Holdings, CityBlock Development and CityBlock
Lettings
"Net Asset Value" the aggregate value of the assets of the Holdings Group as
at the Completion Date minus the aggregate liabilities of
the Holdings Group as at the Completion Date as shown in the
Holdings Completion Accounts
"Ordinary Shares" ordinary shares of 0.5p each in the capital of the Company
"Proposals" the Disposal, the Share Acquisition and the proposed change
of Company name
"Reduced Share Capital" 19,353,374 Ordinary Shares in issue following approval of
the Resolutions and the completion of the Share Acquisition
Agreement
"Resolutions" the resolutions to be proposed at the EGM
"Share Acquisition Agreement" the agreement to be entered into between the Company and
John Trevor Bargh pursuant to which the Company will agree
to acquire the Bargh Shares, subject to the passing of the
Resolutions
"Share Sale Agreement" the conditional share sale agreement entered into between
the Company, City Portfolio, John Trevor Bargh and Martin
James Higginson pursuant to which the Company will agree to
dispose of the entire issued share capital of CityBlock
Holdings to City Portfolio
"Shareholder" or "Shareholders" the holder or holders of Ordinary Shares
"Shares" 270,000 ordinary shares of #1 each in the capital of
CityBlock Holdings
"WH Ireland" WH Ireland Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
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