TIDMCSC
RNS Number : 1565S
cScape Group PLC
15 November 2011
15 November 2011
cScape Group plc
("cScape" or the "Company")
Notice of Annual General Meeting,
Proposed Cancellation of AIM Admission
And
Proposed Re-registration as a Private Company
cScape Group plc announces that a notice convening its Annual
General Meeting (the "Notice") has been posted to shareholders,
today. The Annual General Meeting is to be held on Friday, 9
December 2011 at 10:00am at the offices of Taylor Wessing LLP, 5
New Street Square, London EC4A 3TW.
Included with the Notice is a circular (the "Circular") setting
out proposals for the cancellation of the admission to trading on
AIM of the ordinary shares in the Company ("Ordinary Shares")
("Delisting") and re-registration as a private company
("Re-registration"). The resolutions relating to the Delisting and
Re-registration will be dealt with as special business at the
Annual General Meeting.
The proposed timetable of events is set out below:
Dispatch of the Circular 15 November 2011
Latest time and date for receipt of Forms of Proxy for the Annual General Meeting 10.00 a.m. on 7 December 2011
Annual General Meeting 10.00 a.m. on 9 December 2011
Expected date of cancellation of Ordinary Shares from Admission 19 December 2011
Expected date of re-registration as a private company becoming effective Mid January 2012
Notes:
1. References to time in this document are to London time.
2. If any of the above times or dates should change, the revised
times and/or dates will be notified to Shareholders by an
announcement on a regulatory information service.
3. All events in the above timetable following the Annual
General Meeting are conditional upon approval by Shareholders of
the Resolutions to be proposed at the Annual General Meeting.
A copy of the Circular and the Form of Proxy will be available
on the Company's website at www.cscapegroup.com later today and
selected information extracted from the Circular is set out
below.
-Ends-
Enquiries:
Smith & Williamson Corporate Finance
Limited
Azhic Basirov
Siobhan Sergeant +44 (0)20 7131 4000
The following information has been extracted without material
adjustment from the Circular. Defined terms are as set out in the
Circular.
Reasons for the Cancellation of Admission
Following careful consideration, the Directors have concluded
that it is no longer in the best interests of the Company or its
Shareholders to maintain the admission to trading on AIM of the
Ordinary Shares. The current economic crisis has led to significant
falls in the values of the global stock markets, which have been
exaggerated in small cap, low liquidity stocks as well as a
dampened demand on the business of the Group.
With the limited liquidity in the trading of the Ordinary Shares
and substantial spreads in the price quoted for Ordinary Shares,
the Directors believe that the market currently substantially
undervalues the Company.
In December 2010, the Company undertook a placing for cash at a
price of 70p per new Ordinary Share issued raising net proceeds of
GBP235,000. Whilst the Group has continued to finance itself out of
cash flow, with the aid of a GBP50,000 overdraft from its bank and
the Group continues to reduce its liabilities and actively seeks
increased profitability, the Directors are very aware that the
ability to raise further capital in the equity markets at the
current time is very limited, particularly at a fair price.
Therefore, it is the opinion of the Directors that the Group's
continued Admission no longer provides any advantage to the Company
and, indeed, with the ongoing costs of maintaining its Admission,
it is having an adverse effect on the profitability of the Group to
the detriment of the Company and the holders of the Ordinary
Shares.
The Directors believe that the Company's continued
Admission:
-- may no longer serve a useful function in terms of access to
capital or the ability to use the shares of the Company to effect
acquisitions; and
-- results in significant direct costs to the Group, which
management estimate to be in excess of GBP75,000 per annum.
With this in mind, the Board has decided to propose cancelling
admission to trading on AIM of the Ordinary Shares to focus on
continuing to grow the inherent value of the Company across the
businesses of the Group.
Current Trading and Prospects
As announced in June 2011, the Group's subsidiary, Blue Sky
Hosting has continued to perform profitably whilst cScape Strategic
Internet Services has had a challenging year as clients have been
generally very cautious about spending, leading to a reduction in
the value of individual projects. This has had a material negative
impact on the Group's results for the year ended 30 June 2011 with
revenues down approximately 15 per cent. compared to the year ended
30 June 2010 and resultant net loss from continuing operations for
the period of approximately GBP500,000 (2010: GBP166,000).
As at 30 June 2011, the Group's current liabilities exceeded its
current assets by over GBP1 million (2010: GBP992,000),
principally, made up of a current tax liability of
GBP1,400,000.
Trading in the current financial year has continued to be
challenging and, as set out above, the Directors continue to seek
ways in which to reduce costs and improve profitability.
Re-registration
Following Cancellation, the Directors believe that the Company
will not benefit from being a public limited company. In
particular, the Directors believe that management time spent in
complying with the more significant public company disclosure
obligations would be disproportionate to the benefits of remaining
a public limited company.
In addition, as the Company will no longer be admitted to
trading on any public equity market following the Cancellation, it
will no longer be necessary for it to be a public company and
accordingly the Directors consider the re-registration as a private
company to be appropriate following the Cancellation.
In connection with the re-registration of the Company as a
private limited company and pursuant to section 97 of the Companies
Act 2006, the Company proposes to change its name from "cScape
Group plc" to "cScape Group Limited" and adopt the New Articles to
reflect the name change and to reflect the reduced corporate
governance burden upon the Company following the Cancellation. A
summary of the key changes between the Articles and the New
Articles is set out in Appendix I of this document.
Effect of the Proposals on Shareholders
The principal effects of the Cancellation will be that:
(a) although the Shares will remain transferable, they will no
longer be tradable on AIM or any other market or tracking exchange
and the CREST trading facility will be cancelled;
(b) the Company will not be bound to announce material events or
material transactions nor to announce interim or final results;
(c) the Company will no longer be required to comply with any of
the corporate governance requirements for companies admitted to
trading on AIM; and
(d) the Company will no longer be subject to the AIM Rules and
Shareholders will no longer be required to vote on certain matters
as provided in the AIM Rules.
Following the Re-registration, the Board will only hold general
meetings in accordance with the applicable statutory requirements
and the New Articles.
The provisions of the City Code on Takeovers and Mergers will
continue to apply to the Company following the Re-registration.
Approving the Proposals
Under the AIM Rules, it is a requirement that the cancellation
of the Company's AIM admission is approved by not less than 75 per
cent. of the Shareholders voting at the Annual General Meeting.
Accordingly, the notice of Annual General Meeting set out on page
10 of the Circular contains a special resolution to approve the
application to the London Stock Exchange for the Cancellation. If
the resolution is passed, it is expected that the Cancellation will
take effect on 19 December 2011, being 20 business days following
the date of the Circular and 5 clear business days following the
date of the Annual General Meeting.
Under the Companies Act 2006, the Re-registration must approved
by not less than 75 per cent. of the Shareholders voting at a
general meeting. Accordingly, the Notice also contains a special
resolution to approve the Re-registration.
Following the Cancellation
Whilst the Board believes that the Cancellation is in the
Shareholders' interests, it recognises that the Cancellation will
make it more difficult for the Shareholders to buy and sell
Ordinary Shares should they so wish.
Following the Cancellation, the Board intends to set up a
matched bargain arrangement to enable Shareholders to trade the
Ordinary Shares. Under this facility, it is intended that
Shareholders or persons wishing to acquire shares will be able to
leave an indication with a matched bargain facility provider that
they are prepared to buy or sell at an agreed price. In the event
that the matched bargain settlement facility provider is able to
match that order with an opposite sell or buy instruction, the
matched bargain settlement facility provider will contact both
parties and then effect the bargain. Shareholders who do not have
their own broker may need to register with the matched bargain
settlement facility provider as a new client. This can take some
time to process and therefore Shareholders who consider they are
likely to use this facility are encouraged to commence it at the
earliest opportunity. Once the facility has been arranged details
will be made available to Shareholders on the Company's website at
www.cscapegroup.com
Recommendation
For the reasons set out above, the Board considers that the
Proposals will promote the success of the Company and are in the
best interests of the Company and Shareholders as a whole.
Accordingly, the Board unanimously recommends Shareholders to vote
in favour of the Resolutions to be proposed at the Annual General
Meeting. The Directors who hold Ordinary Shares have irrevocably
undertaken to vote in favour of the Resolutions in respect of their
beneficial holdings amounting, in aggregate, to 995,398 Ordinary
Shares, representing approximately 66.88 per cent. of the issued
ordinary share capital of the Company.
Summary of the changes proposed to be made to the Articles
Conditional upon the passing of Resolutions 4 and 5 at the
Annual General Meeting, it is proposed that the Company adopt the
New Articles with effect from the Cancellation becoming
effective.
The main reasons for adopting the New Articles are to recognise
cancellation of trading on AIM and the re-registration of the
Company as a private limited company and to remove certain
provisions which will no longer be relevant in this context.
The principal changes being proposed by the New Articles are
summarised below. Other changes, which are of a minor, technical or
clarifying nature, and some other minor changes which reflect
changes made by the Companies Act 2006, have not been
summarised.
1. Change of the Company's name from "cScape Group plc" to "cScape Group Limited".
2. Removal of the restriction of financial assistance given by
the Company for the acquisition of its own
shares, such prohibition not being applicable to private
companies.
3. Disapplication of the statutory pre-emption right on the
allotment of new shares for cash.
4. Removal of the requirement to hold an annual general meeting.
5. Removal of the requirement for directors to retire by rotation.
6. Removal of the requirement to appoint auditors on an annual basis.
7. Removal of provisions that restrict the ability of, and the
administrative requirements for, a public
company to pay dividends.
8. Removal of the requirement to lay accounts before a general meeting of the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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