TIDMEVN
RNS Number : 2458V
Environ Group (Investments) PLC
09 January 2012
Environ Group (Investments) Plc
("The Company" or "The Group")
Proposed Disposals
9 January 2012
Further to the announcement by the Company on 23 December 2011,
it is proposed by the majority of the Board that the cancellation
of the admission to trading on AIM of the Company's Ordinary
Shares, together with the disposal of 51 per cent. of the Company's
interests in two of its wholly-owned subsidiaries, BGC Limited
("BCG") and Fenhams Limited ("Fenhams"), would be the most
appropriate way of deriving Shareholder value and be in the best
interests of the Company and of Shareholders as a whole ("the
Disposals"). Save as set out in this announcement, defined terms
are those set out in the circular ("the Circular") which has been
sent to shareholders today.
The Company has today entered into the BGC Sale and Purchase
Agreement in respect of the BGC Disposal, and has also entered into
the Fenhams Sale and Purchase Agreement in respect of the disposal
of 51 per cent. of the Company's interests in its wholly-owned
subsidiary, Fenhams.
The BGC Disposal to BGC Group (UK) and the Fenhams Disposal to
Fenhams Contracts Limited, companies in which Mark Sims and Paul
Richardson, directors of the Company, are respectively interested,
constitute substantial property transactions involving directors
under the Companies Act 2006 and, accordingly, the BGC Sale and
Purchase Agreement and the Fenhams Sale and Purchase Agreement are
conditional upon the approval by Shareholders at the General
Meeting. In addition, the Disposals will also constitute a
fundamental change of business for the purposes of Rule 15 of the
AIM Rules and are conditional upon the passing of resolutions 1 and
2 at the General Meeting.
1. Irrevocables Received Regarding Cancellation
As announced on 23 December 2011, the Cancellation is subject to
the approval of not less than 75 per cent. of the votes cast by
Shareholders (whether in person or by proxy) at the General
Meeting. The Directors, other than Neil Chapman and Christopher
Arnott, and Shareholders Stephen Hancock and Janet Domin, both
former directors, have irrevocably undertaken to vote in favour of
the Cancellation Resolution in respect of their own beneficial
holdings of Ordinary Shares, representing 66.41 per cent. of the
current issued ordinary share capital of the Company.
2. Background to and reasons for the Disposals
The Company has today entered into the BGC Sale and Purchase
Agreement relating to the sale of 51 per cent. of the issued share
capital of its wholly owned subsidiary BGC to BGC Group (UK)
Limited (formerly known as MSSH1 Limited). Further details of the
proposed BGC Disposal, which is subject to Shareholder approval,
are set out in paragraph 3 below.
The Company has today also entered into the Fenhams Sale and
Purchase Agreement relating to the sale of 51 per cent. of the
issued share capital of its wholly owned subsidiary Fenhams Limited
to Fenhams Contracts Limited. Further details of the proposed
Fenhams Disposal, which is subject to Shareholder approval, are set
out in paragraph 4 below.
The Group's credit terms are being contracted in the current
challenging economic environment. The majority of the Board feel
that by unwinding the Group structure, individual subsidiaries,
negotiating their own credit terms, will fare better than they
would have done so as part of the Group. By maintaining an
ownership structure whereby Environ retains a holding of 49 per
cent. in each of BGC and Fenhams but has an option to increase that
holding to 69 per cent. in the three years following completion of
the Disposals, the majority of the Board feel that entrepreneurial
drive will be restored to BGC and Fenhams, which could increase
value for Shareholders.
The Directors, other than Mark Sims (who is interested in the
BGC Disposal), Neil Chapman and Christopher Arnott, and
Shareholders Stephen Hancock and Janet Domin, both former
directors, have irrevocably undertaken to vote in favour of the BGC
Disposal in respect of their own beneficial holdings of Ordinary
Shares, representing 56.19 per cent. of the current issued ordinary
share capital of the Company.
The Directors other than Paul Richardson (who is interested in
the Fenhams Disposal), Neil Chapman and Christopher Arnott, and
Shareholders Stephen Hancock and Janet Domin, both former
directors, have irrevocably undertaken to vote in favour of the
Fenhams Disposal in respect of their own beneficial holdings of
Ordinary Shares, representing 62.78 per cent. of the current issued
ordinary share capital of the Company.
3. BGC Disposal
The Company today entered into the BGC Sale and Purchase
Agreement for the sale of 51 per cent. of the issued share capital
of BGC to BGC Group (UK) for a consideration of GBP1.00, subject to
shareholder approval and any necessary banking consents. The BGC
Sale and Purchase Agreement is also conditional upon entry into an
appropriate shareholders' agreement between the Company and BGC
Group (UK).
Under the terms of the BGC Sale and Purchase Agreement, the
Company has an option to buy back such number of shares from BGC
Group (UK) as is equal 20 per cent. of the total number of BGC
Shares at the date of the BGC Sale and Purchase Agreement, for a
consideration of GBP500,000 in cash. The Company shall give 28
days' notice of exercise of the buy back option, which shall be
exercisable during the period of three years from completion of the
BGC Disposal.
Mark Sims is a director and shareholder of both BGC Group (UK)
and the Company and is also a director of BGC. The BGC Disposal is
therefore classified as a "Related Party Transaction" under the AIM
Rules. The BGC Disposal also constitutes a substantial property
transaction under section 190 of the Companies Act 2006 and is
therefore subject to the approval of Shareholders in a general
meeting.
Where a company, whose shares are traded on AIM, enters into a
related party transaction, rule 13 of the AIM Rules requires the
independent directors of such company to consider, having consulted
with the company's nominated adviser, whether the terms of the
transaction are fair and reasonable insofar as its shareholders are
concerned.
The Directors, other than Mark Sims (who is interested in the
BGC Disposal), consider, having consulted with Grant Thornton UK
LLP in its capacity as the Company's nominated adviser, that the
terms of the related party transaction with BGC Group (UK) (in
which Mark Sims is interested) are fair and reasonable insofar as
Shareholders are concerned.
The Disposals are together deemed to be a disposal resulting in
a fundamental change of business for the purposes of Rule 15 of the
AIM Rules and therefore are conditional on approval from
Shareholders by the passing of resolutions 1 and 2 at the General
Meeting.
The principal activity of BGC is that of the installation and
maintenance of gas central heating systems and building
adaptations. During the seven months ended 31 October 2011 BGC
generated sales of GBP4.0 million (unaudited) and pre-tax losses of
GBP30,000 (unaudited). During the year ended 31 March 2011 BGC
generated sales of GBP9.1 million (audited) and pre-tax profits of
GBP363,000 (audited). The net assets of BGC were GBP1.5 million at
31 October 2011 (unaudited) and GBP1.4 million at 31 March 2011
(audited). Net assets as at 31 December 2011 includes amounts of
GBP1.36 million owed by the Group which are to be written off prior
to the completion of the BGC Disposal.
If the BGC Disposal is completed, the Company would still hold
49 per cent. of the BGC Shares. BGC's assets, liabilities and
operations, however, would no longer be consolidated into the
Group's financial statements.
4. Fenhams Disposal
The Company today also entered into the Fenhams Sale and
Purchase Agreement for the sale of 51 per cent. of the issued share
capital of Fenhams to Fenhams Contracts Limitedfor a consideration
of GBP1.00, subject to Cancellation, shareholder approval and any
necessary banking consents. The Fenhams Sale and Purchase Agreement
is also conditional upon entry into an appropriate shareholders'
agreement between the Company and Fenhams Contracts Limited.
Under the terms of the Fenhams Sale and Purchase Agreement, the
Company has an option to buy back such number of shares from
Fenhams Contracts Limitedas is equal 20 per cent. of the total
number of Fenhams Shares at the date of the Fenhams Sale and
Purchase Agreement, for a consideration of GBP500,000 in cash. The
Company shall give 28 days' notice of exercise of the buy back
option, which shall be exercisable during the period of three years
from completion of the Fenhams Disposal.
Paul Richardson is a director and shareholder of both the
Company and Fenhams Contracts Limited and is also a director of
Fenhams. The Fenhams Disposal is therefore classified as a "Related
Party Transaction" under the AIM Rules. The Fenhams Disposal also
constitutes a substantial property transaction under section 190 of
the Companies Act 2006 and is therefore subject to the approval of
Shareholders in a general meeting.
Where a company, whose shares are traded on AIM, enters into a
related party transaction, rule 13 of the AIM Rules requires the
independent directors of such company to consider, having consulted
with the company's nominated adviser, whether the terms of the
transaction are fair and reasonable insofar as its shareholders are
concerned.
The Directors, other than Paul Richardson (who is interested in
the Fenhams Disposal), consider, having consulted with Grant
Thornton UK LLP in its capacity as the Company's nominated adviser,
that the terms of the related party transaction with Paul
Richardson are fair and reasonable insofar as Shareholders are
concerned.
The principal activity of Fenhams is that of installation and
maintenance of gas central heating systems. During the seven months
ended 31 October 2011 Fenhams generated sales of GBP4 million
(unaudited) and pre-tax losses before goodwill amortisation of
GBP200,000 (unaudited). During the year ended 31 March 2011 Fenhams
generated sales of GBP8 million (audited) and pre-tax profits of
GBP52,000 (audited). The net assets of Fenhams were GBP1.3 million
at 31 October 2011 (unaudited) (which includes goodwill of GBP3.9
million) and GBP1.5 million at 31 March 2011 (audited) (which
includes goodwill of GBP3.9 million). Net assets as at 31 December
2011 also includes amounts of GBP1.87 million owed to the Group
which are to be written off prior to the completion of the Fenhams
Dispoosal.
If the Fenhams Disposal is completed, the Company would still
hold 49 per cent. of the Fenhams Shares. Fenhams' assets,
liabilities and operations would no longer be consolidated into the
Group's financial statements.
5. Irrevocable Undertakings
The Company has received irrevocable undertakings to vote in
favour of the Cancellation from Stephen Hancock and Janet Domin,
both former directors and current Shareholders, and Nigel Wray,
Mark Sims, Paul Richardson and Michael Clough who together are
interested in 91,438,212 Ordinary Shares, representing 66.41 per
cent. of the current issued ordinary share capital of the
Company.
The Company has received irrevocable undertakings to vote in
favour of the BGC Disposal from Stephen Hancock and Janet Domin,
both former directors and current Shareholders, and Nigel Wray,
Paul Richardson and Michael Clough who together are interested in
77,358,134 Ordinary Shares, representing 56.19 per cent. of the
current issued ordinary share capital of the Company.
The Company has received irrevocable undertakings to vote in
favour of the Fenhams Disposal from Stephen Hancock and Janet
Domin, both former directors and current Shareholders, and Nigel
Wray, Mark Sims and Michael Clough who together are interested in
86,438,212 Ordinary Shares, representing 62.78 per cent. of the
current issued ordinary share capital of the Company.
6. General Meeting
The General Meeting of the Company, the notice of which is set
out in the Circular, will be held at Memery Crystal LLP, 44
Southampton Buildings, London WC2A 1AP on 25 January 2012 at 12.00
noon.
7. Recommendation
The Directors, with the exception of Neil Chapman and
Christopher Arnott, consider the Cancellation to be in the best
interests of the Group and its Shareholders as a whole, and most
likely to promote the success of the Group for the benefit all of
its Shareholders and accordingly recommend that Shareholders vote
in favour of the Cancellation Resolution to be proposed at the
General Meeting as they have irrevocably undertaken to do in
respect of their own beneficial holdings of Ordinary Shares,
amounting, in aggregate, to 72,599,159 Ordinary Shares,
representing 52.73 per cent. of the current issued ordinary share
capital of the Company.
Having consulted with Grant Thornton UK LLP (the Company's
nominated adviser) the Directors (with the exception of Mark Sims,
who is interested in the BGC Disposal) consider that the terms of
the BGC Disposal are fair and reasonable insofar as Shareholders
are concerned. The Directors, with the exception of Mark Sims (who
is interested in the BGC Disposal), Neil Chapman and Christopher
Arnott, consider the BGC Disposal to be in the best interests of
the Group and its Shareholders as a whole, and most likely to
promote the success of the Group for the benefit all of its
Shareholders and accordingly recommend that Shareholders vote in
favour of the Cancellation Resolution to be proposed at the General
Meeting as they have irrevocably undertaken to do in respect of
their own beneficial holdings of Ordinary Shares, amounting, in
aggregate, to 58,519,081 Ordinary Shares, representing 42.5 per
cent. of the current issued ordinary share capital of the
Company.
Having consulted with Grant Thornton UK LLP the Directors (with
the exception of Paul Richardson, who is interested in the Fenhams
Disposal) consider that the terms of the Fenhams Disposal are fair
and reasonable insofar as Shareholders are concerned. The
Directors, with the exception of Paul Richardson (who is interested
in the Fenhams Disposal), Neil Chapman and Christopher Arnott
consider the Fenhams Disposal to be in the best interests of the
Group and its Shareholders as a whole, and most likely to promote
the success of the Group for the benefit all of its Shareholders
and accordingly recommend that Shareholders vote in favour of the
Fenhams Disposal as they have irrevocably undertaken to do in
respect of their own beneficial holdings of Ordinary Shares,
amounting, in aggregate, to 67,599,159 Ordinary Shares,
representing 49.1 per cent. of the current issued ordinary share
capital of the Company.
For further information, please contact:
Environ Group (Investments) plc
Mark Sims - Chief Executive Officer
Tel: +44 (0) 01782 826939
Nominated Adviser:
Grant Thornton Corporate Finance
Gerry Beaney
Tel: +44 (0) 20 7383 5100
Broker:
Seymour Pierce Limited Jacqui Briscoe Tel: +44 (0) 20 7107
8000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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