TIDMGKO
RNS Number : 8805G
Greenko Group plc
25 November 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, WITHIN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
25 November 2015
Greenko Group plc
("Greenko" or the "Company")
Proposed Initial Cash Return
Adoption of New Articles of Association
Notice of Annual General Meeting
Notice of Extraordinary General Meeting
and
Proposed Delisting
As announced on 20 November 2015, the Disposal has now completed
and the consideration received from GEH amounted to approximately
GBP162.8 million. The Company is pleased to announce that it posted
a circular to Shareholders yesterday evening outlining details of
the Initial Cash Return to Shareholders, the adoption of New
Articles, Delisting and Notice of Annual General Meeting and Notice
of Extraordinary General Meeting (the "Circular").
Terms used and not defined in this announcement bear the meaning
given to them in the Circular.
The Company is now pleased to announce that the Company proposes
to make an Initial Cash Return to Shareholders of 98 pence per
Ordinary Share.
Completion of the Initial Cash Return will require, inter alia,
the approval of Shareholders. The level of Shareholder approval
required is not less than 75 per cent. of votes cast by
Shareholders voting in respect of the resolutions proposed at the
Extraordinary General Meeting.
Following the completion of the Disposal, the Company does not
have any assets other than its bank balances. Accordingly, the
Board is focused on minimising costs with a view to returning as
much cash to Shareholders as is possible within the timing
constraints imposed by its legal obligations.
As outlined in the Circular, the Board believes that once the
Initial Cash Return has been completed it will be in the best
interests of the Company and its Shareholders if the admission of
the Ordinary Shares to trading on AIM is cancelled.
The Circular includes details of the Notice of the Annual
General Meeting (which the Company is required to convene and hold
no later than 31 December 2015) and the Notice of the Extraordinary
General Meeting to be convened at 12:00 pm and 12:30 pm
respectively on 18 December 2015 at Merchants House, 24 North Quay,
Douglas, Isle of Man IM1 4LE, at which the proposed resolutions set
out in each notice will be put to Shareholders for approval.
The chairman's letter regarding the Initial Cash Return, the
Delisting, and the expected timetable of principal events,
contained in the Circular are set out below.
Enquiries:
Greenko Group plc +44 (0)20 7920 3150
Keith Henry/Mahesh Kolli/Anil Chalamalasetty
Arden Partners plc +44 (0)20 7614 5900
Jonathan Keeling/Steve Douglas/James
Felix
Investec Bank plc +44 (0)20 7597 4000
Jeremy Ellis/Nigel Robinson
Tavistock Communications +44 (0)20 7920 3150
Matt Ridsdale/Mike Bartlett/Niall Walsh
Introduction
On 19 October 2015, the Board of the Company announced that it
had entered into an agreement with GEH for the sale of all the
Company's shares in Greenko Mauritius. The Sale and Purchase
Agreement provided that GEH would acquire the Company's shares in
Greenko Mauritius, the Cash and the Share Application Monies,
subject to certain conditions, for an aggregate cash consideration
of approximately GBP162.8 million.
As announced on 20 November 2015, the Disposal has now completed
and the consideration received from GEH amounted to approximately
GBP162.8 million. This cash consideration is now the only asset of
the Company.
The Company is pleased to propose an Initial Cash Return to
Shareholders of 98 pence per Ordinary Share subject to Shareholder
approval at the Extraordinary General Meeting and satisfaction of
the conditions referred to in paragraph 1 of Part IV of the
Circular.
The Initial Cash Return will be made by way of the B Share
Scheme which will allow Shareholders (other than Restricted
Shareholders) to make an election as to whether to receive the
Initial Cash Return as dividend by way of the B Share Dividend or
as a capital return by way of the B Share Purchase Offer, or a
combination of both.
The Company also proposes to cancel the admission of the
Ordinary Shares to trading on AIM. The proposed Delisting requires
Shareholder approval pursuant to the AIM Rules and Shareholders are
accordingly being asked to vote in favour of the proposed Delisting
(which will be conditional on Shareholder approval at the
Extraordinary General Meeting for the Initial Cash Return).
In due course, the Company proposes to convene a further
extraordinary general meeting at which Shareholders will be
requested to authorise the Board to commence a members' voluntary
winding-up of the Company and to take such steps, including but not
limited to the payment of interim dividends and the appointment of
the liquidator, as the Board in their absolute discretion deem
necessary to effect the summary winding-up of the Company.
The purpose of the Circular is to provide further details of the
alternative options available to Shareholders and how Shareholders
may elect to choose one of them. In addition, as Shareholder
approval is being sought for the Initial Cash Return and for the
Delisting at the Extraordinary General Meeting, Shareholders will
find at the end of the Circular, a Notice of Extraordinary General
Meeting, which has been convened for 12.30 p.m. on 18 December 2015
at which the Requisite Resolutions will be put to Shareholders.
Shareholders will also find at the end of the Circular a Notice of
Annual General Meeting which has been convened for 12.00 noon on
the same date. Both the Annual General Meeting and the
Extraordinary General Meeting will be held at Merchants House, 24
North Quay, Douglas, Isle of Man, IM1 4LE. It is important that
Shareholders complete, sign and return the Forms of Proxy for use
at the Annual General Meeting and the Extraordinary General Meeting
enclosed with the Circular, whether or not they intend to attend
the Annual General Meeting or the Extraordinary General Meeting.
The completion and return of the Forms of Proxy will not preclude
Shareholders from attending the Annual General Meeting or the
Extraordinary General Meeting and voting in person, should they so
wish.
ACMK, a company in which Anil Kumar Chalamalasetty and Mahesh
Kolli have a controlling interest, holds approximately 18.77 per
cent. of the issued Ordinary Shares. Anil Kumar Chalamalasetty and
Mahesh Kolli are therefore not considered independent and,
accordingly, neither of them has participated in any Board vote
regarding the Initial Cash Return.
Summary of the B Share Scheme
The Board has proposed a flexible method by which the Initial
Cash Return is to be effected in light of the Company's diverse
shareholder base. Accordingly, the Initial Cash Return will be by
way of the B Share Scheme under which Shareholders will receive a
bonus issue of a newly created class of shares, B Shares, pro rata
to their holding of Ordinary Shares. Each Shareholder (other than a
Restricted Shareholder) will then be able to elect for the Initial
Cash Return to be through either the payment of a dividend in
respect of the B Shares (the B Share Dividend), acceptance of an
offer by the Company to purchase the B Shares (the B Share Purchase
Offer) or a combination of both. In the absence of an election
being made, Shareholders will be deemed to have elected to receive
their return by way of the B Share Dividend.
The Initial Cash Return will amount to approximately GBP155.8
million in aggregate. The Company has potential liabilities under
the Sale and Purchase Agreement in respect of: (i) claims for
breach of warranties provided by the Company (notified within 6
months of the date of Completion); and (ii) any CGT Liability
(notified within the earlier of two years of the date of Completion
and the date on which the shareholders of the Company resolve to
wind-up the Company). In light of this the Company is retaining a
provision of approximately GBP2.5 million from the consideration
received from GEH for the Disposal. The Board has also decided to
retain a further provision of approximately GBP4.5 million from the
consideration received from GEH for the Disposal: (i) in order to
settle the costs associated with the Disposal (including the
ongoing running expenses of the Company up to Completion); (ii) for
the estimated costs of running the Company up to the date on which
Shareholders resolve to wind-up the Company and; (iii) as a prudent
reserve for additional costs that may be incurred. To the extent
these provisions and reserves are not utilised they will be
returned to Shareholders at the time of a members' voluntary
winding-up or other restructuring of the Company.
Regardless of which election Shareholders make, each Shareholder
will receive the same amount per Ordinary Share of 98 pence.
The main features of the B Shares, and the alternative options
available to Shareholders, are summarised in the paragraph
below.
The B Share Scheme
Under the Initial Cash Return, Shareholders will receive one B
Share for every one Ordinary Share held on the Record Date.
Shareholders will have the following alternative options in
relation to their B Shares. Shareholders should read Part VII of
the Circular headed 'Taxation' before determining their elections
since each will have different tax consequences.
Shareholders who are in any doubt as to their tax position or
who are subject to tax in a jurisdiction other than the United
Kingdom should consult an appropriate professional adviser.
Restricted Shareholders should be aware that a choice for the
receipt of their Initial Cash Return cannot be offered.
Accordingly, Restricted Shareholders will only be entitled to
receive the B Share Dividend.
Option 1: B Share Dividend
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If you choose this option in respect of your B Shares, you will
receive a single dividend of an amount equal to the Initial Cash
Return per B Share in respect of those B Shares. Following receipt
of the B Share Dividend, your B Shares will automatically convert
into Deferred Shares with extremely limited rights and of
negligible value.
It is expected that the B Share Dividend will be treated as
income for United Kingdom tax purposes.
If you wish to choose Option 1: B Share Dividend in respect of
all of your B Shares you do not need to complete and return the
personalised Form of Election (if you are a Shareholder who holds a
share certificate or share certificates in respect of your Ordinary
Shares (a "certificated Shareholder")) or send a TTE Instruction in
CREST (if you are a Shareholder who holds their Ordinary Shares in
CREST (an "uncertificated Shareholder")).
Option 2: B Share Purchase Offer
If you choose this option in respect of your B Shares, the
Company will buy back those B Shares for an amount equal to the
Initial Cash Return per B Share. All B Shares bought back by the
Company will immediately be cancelled.
It is expected that the proceeds from the B Share Purchase Offer
will be treated as capital for United Kingdom tax purposes.
Restricted Shareholders will not be eligible for the B Share
Purchase Offer and so will be deemed to have elected for Option 1:
B Share Dividend in respect of their B Share Entitlement.
If you wish to choose Option 2: B Share Purchase Offer in
respect of some or all of your B Shares you need to complete and
return a valid Form of Election for certificated Shareholders
(Shareholders are not required to return their share certificates
with the Form of Election) or submit a valid TTE Instruction in
CREST for uncertificated Shareholders. Details of how to complete
and return your Form of Election are set out in Part II of the
Circular and details of how to send a valid TTE Instruction through
CREST are set out in Part III of the Circular.
If you do not properly complete and return your Form of Election
or if you are a CREST holder and you do not send a valid TTE
Instruction, you will be deemed to have elected for Option 1: B
Share Dividend in respect of all of your B Shares.
Further information on each of the B Share Alternatives is set
out in Part IV of the Circular.
Delisting
Following Completion, the Company does not have any assets other
than its bank balances. Accordingly, the Board is focused on
minimising costs with a view to returning as much cash to
Shareholders as is possible within the timing constraints imposed
by its legal obligations.
With this in mind the Board has also considered the benefit of
the Ordinary Shares continuing to be traded on AIM following
completion of the Initial Cash Return and consulted its advisers,
including the Company's nominated adviser and joint broker, Arden,
in this regard. The Board has taken into account the fact that,
after the Initial Cash Return has been completed, the Company will
have significantly reduced bank balances and no ongoing requirement
to access public markets for capital, and that the Company has
undertaken to GEH in the Sale and Purchase Agreement not to carry
on any business after Completion. The Board also expects that, as
the underlying cash value remaining for Shareholders after the
completion of the Initial Cash Return will be very low, there will
be limited liquidity in the Ordinary Shares.
The Board believes that, once the Initial Cash Return has been
completed, it will be in the best interests of the Company and its
Shareholders if the admission of the Ordinary Shares to trading on
AIM is cancelled. The Delisting is also expected to help the
Company to make cost savings whilst continuing to minimise the
Company's liabilities pending a winding-up of the Company.
Delisting Process
Rule 41 of the AIM Rules requires an AIM company that wishes to
cancel admission of its securities to trading on AIM to notify such
intended cancellation to the public and separately to inform the
London Stock Exchange of its preferred cancellation date. That rule
also requires that, unless the London Stock Exchange otherwise
agrees, the Delisting must be conditional upon the consent of not
less than 75 per cent. of votes cast by the Shareholders given in a
general meeting.
Subject to Shareholder approval at the Extraordinary General
Meeting and completion of the Initial Cash Return, it is expected
that the admission of the Ordinary Shares to trading on AIM will be
cancelled with effect from 7.00 a.m. on 19 January 2016.
Accordingly, trading in Ordinary Shares on AIM will cease at the
close of business on 18 January 2016.
The Delisting may have taxation consequences for Shareholders.
Shareholders who are in any doubt about their tax position should
consult an appropriate professional adviser.
Upon cancellation of the Ordinary Shares to trading on AIM,
Arden will cease to be the Company's nominated adviser and joint
broker and the Company will no longer be required to comply with
the AIM Rules.
Risks associated with the Delisting
There are certain risks associated with the Delisting. The Board
considers the principal risks that Shareholders should consider to
be as follows:
(a) Lack of an ongoing trading platform
Once the Delisting has taken place, there will no longer be a
formal market mechanism for Shareholders to trade in the Ordinary
Shares and no price will be publicly quoted for the Ordinary
Shares. Shareholders will be able to buy and sell their Ordinary
Shares "off market" although this will be more difficult than
trading "on market". It will therefore be more difficult for
Shareholders to realise their Ordinary Shares than when the Company
had an AIM quotation and, where a buyer is identified, it will be
difficult to place a fair value on any such sale.
(b) Corporate governance and regulation
After the Delisting, the AIM Rules will no longer apply to the
Company and levels of corporate governance and transparency,
including those that require the Company to announce material
events or transactions, will no longer be dictated by those rules.
The Company will continue as a company limited by shares under the
Act.
Notwithstanding the cancellation of the Ordinary Shares to
trading on AIM, the Company will continue to publish annual reports
and accounts and hold annual general meetings and other general
meetings in accordance with the applicable statutory requirements
and the Company's articles of association. Where the Board
considers it to be in the interests of the Company to do so, it
will continue to post certain additional information relating to
the Company on its website. Shareholders will also be able to
contact the Company to request information.
Although the Company is incorporated, and has its registered
office, in the Isle of Man, the Directors consider that the
Company's place of central management and control is outside the
United Kingdom, the Channel Islands and the Isle of Man, and
accordingly after the Delisting the Company will no longer be
subject to the provisions of the Takeover Code. Shareholders will
therefore not have the protections afforded by the Takeover Code,
which regulate the way in which takeovers are conducted in the UK,
in the event of a takeover offer for the Company or in
circumstances where the Company would be an offeree company for the
purposes of the Takeover Code.
If circumstances change, the Company will consult with the
Takeover Panel to ascertain whether this will affect the place of
central management and control of the Company. If the Takeover
Panel determines that, as a result of such changes, the place of
central management and control of the Company is located in the
United Kingdom, the Channel Islands or the Isle of Man, then the
Takeover Code will become applicable to the Company and
Shareholders will be informed at that time.
Adoption of New Articles
As the Current Articles need to be updated in order to implement
the B Share Scheme, it is proposed that the New Articles are
adopted in substitution for the Current Articles. The New Articles
reflect the following key changes to the Current Articles:
(a) the following new definitions have been added to article 2.1 (Definitions):
"B Shares" the non-cumulative, non-redeemable,
limited voting preference shares
of 0.000001 pence each in the
capital of the Company with the
rights and restrictions described
in Article 5A;
"Deferred Shares" the non-voting redeemable deferred
shares of 0.000001 pence each
in the capital of the Company
with the rights and restrictions
described in Article 5B;
(b) in article 4 (Authorised Share Capital), the amount of share
capital of the Company available for issue has been increased by
GBP159.011606, divided into 159,011,606 B Shares, to enable the
Company to issue the B Shares in connection with the B Share
Scheme;
(c) the power of the Board to allot and issue the B Shares, by
way of a bonus issue, and the rights and restrictions attaching to
the B Shares (as more particularly summarised in Part V of the
Circular) are set out in a new article 5A (B Shares);
(d) the rights and restrictions attaching to the Deferred Shares
(as more particularly summarised in Part VI of the Circular) are
set out in a new article 5B (Deferred Shares); and
(e) the requirement to obtain prior Shareholder authority in
relation to a capitalisation of reserves (under article 141) and a
reduction of capital (under article 12) has been qualified to the
extent that the new articles 5A and 5B respectively contain
appropriate authorisations in connection with the same in order to
help implement the B Share Scheme.
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Copies of the New Articles together with a comparison of the New
Articles against the Current Articles are available for review from
the Company's registered office at any time before the
Extraordinary General Meeting; in addition, copies of the New
Articles will be available on the Company's website at
www.greenkogroup.com and at the Extraordinary General Meeting.
Additional Returns of Capital and Future of the Company
As set out in the circular dated 19 October 2015, the Company
intends to make cash returns to Shareholders in the period from
Completion up to the time at which the Company enters a members'
voluntary winding-up or other restructuring. The aggregate cash
returns were estimated at that time to be up to approximately 100
pence per Ordinary Share, based on a number of assumptions, and
such amount would be reduced to the extent of, inter alia:
(a) Any claims by the Purchaser under the warranties or the
Company's undertakings in the Sale and Purchase Agreement
In the event that there are any such claims by the Purchaser,
these will need to be notified within a period of not more than 6
months from Completion. The Company is therefore retaining an
amount of approximately GBP2 million in relation to contingent
liabilities under the warranties or the Company's undertakings
under the Sale and Purchase Agreement, being the maximum amount of
the Company's liability in respect of such matters under the Sale
and Purchase Agreement and a provision for associated costs.
(b) Any taxation liability resulting from the Disposal
There has been no change to the taxation advice received by the
Board prior to the announcement of the Disposal, namely that the
sale of the Company's shares in Greenko Mauritius is not expected
to result in a tax liability for the Company in either India or
Mauritius. The Withholding Tax Amount for the purposes of the Sale
and Purchase Agreement is therefore nil.
The Company is, however, required to file a tax return in India
after the end of the current tax year on 31 March 2016 and the
Board has decided, conservatively, to retain an amount of
approximately GBP500,000 until such time as the Shareholders
resolve to wind up the Company (being the quantum and term of the
potential CGT Liability pursuant to the Sale and Purchase
Agreement). In light of the advice that no tax liability is
expected to result from the Disposal, it is therefore anticipated
that this sum, less associated filing and adviser costs, should
ultimately be capable of being returned to Shareholders.
(c) Any differences between actual costs and the estimated
running expenses of the Company until the final return of capital
to Shareholders
The Company currently estimates that the costs associated with
the Disposal (including the running expenses of the Company to
Completion) and running expenses of the Company in the period from
November 2015 up to the Company entering a members' voluntary
winding-up or other restructuring, after making a prudent provision
for additional costs that may be incurred, will amount to
approximately GBP4.5 million.
To the extent the amount retained by the Company to meet its
estimated running expenses as outlined above exceeds the actual
costs of the Company, it will be returned to Shareholders at the
time of the members' voluntary winding-up or other restructuring of
the Company.
Following Completion, the Company's cash balances net of the
provision for the Disposal transaction costs and future running
costs of the Company in the period up to the Company entering a
members' voluntary winding-up or other restructuring and the
retentions referred to above, amounted to approximately GBP155.8
million (approximately 98 pence per Ordinary Share).
The Company's Investing Policy, as approved by Shareholders on 9
November 2015, is to return capital to Shareholders. It is expected
that at the end of this process the Company will enter a members'
voluntary winding-up or other restructuring and this is likely to
take place before the end of 2016.
Taxation
A guide to certain UK tax consequences of the B Share Scheme
under current UK law and HM Revenue & Customs' practice is set
out in Part VII of the Circular.
Overseas Shareholders
Overseas Shareholders' attention is drawn to paragraph 8 of Part
IV of the Circular. In particular, Overseas Shareholders (other
than Restricted Shareholders) should note that, by making a valid
election for the B Share Purchase Offer, such Shareholders will be
deemed to represent, warrant, undertake and/or agree (as
applicable) in the terms set out in paragraph 8 of Part IV of the
Circular. Restricted Shareholders will be deemed to have elected
for the B Share Dividend in respect of all of their B Share
Entitlement. The tax consequences of the B Share Scheme may vary
for Overseas Shareholders and, accordingly, Overseas Shareholders
should consult their own independent professional adviser without
delay.
Annual General Meeting
The Company is required to convene and hold an annual general
meeting for a date not later than 31 December 2015. Shareholders
will find at pages 33 to 36 of the Circular the notice convening an
Annual General Meeting, to be held at Merchants House, 24 North
Quay, Douglas, Isle of Man IM1 4LE at 12.00 noon on 18 December
2015.
At the Annual General Meeting:
a) Ordinary Resolutions (as defined in the Current Articles)
will be proposed (i) to receive, consider and adopt the Company's
Annual Report and Accounts and attached documentation for the
financial year ended 31 December 2014; (ii) to re-elect those
Directors who are retiring by rotation but, being eligible, have
offered themselves for re-election (being Anil Kumar Chalamalasetty
and Vasudeva Rao Kaipa);and (iii) to re-appoint Grant Thornton as
the independent auditor of the Company and to authorise the
Directors to determine their remuneration;
b) Special Resolutions (as defined in the Current Articles) will
be proposed (i) to authorise the Company to make open-market
purchases of up to 5 per cent. of the Ordinary Shares on the terms
set out in the resolution concerned, including the price and number
of shares to be purchased; and (ii) to authorise the Directors to
allot Ordinary Shares up to the limits specified in the resolution
concerned as if the pre-emption rights contained in the Current
Articles did not apply.
Notwithstanding the proposed Initial Cash Return, Delisting and
eventual members' voluntary winding-up of the Company, the
Directors consider the authorities above are necessary to preserve
maximum flexibility for the period between the date of the Annual
General Meeting and Delisting or winding-up, as appropriate.
Shareholders are referred to the notes and explanatory notes to
the notice convening the Annual General Meeting at pages 35 and 36
of the Circular.
Extraordinary General Meeting
Shareholders will find at pages 37 and 38 of the Circular a
notice convening an extraordinary general meeting of the Company,
to be held at Merchants House, 24 North Quay, Douglas, Isle of Man,
IM1 4LE at 12.30 p.m. on 18 December 2015.
At the Extraordinary General Meeting, the Requisite Resolutions
will be proposed to approve, amongst other things, the adoption of
the New Articles, the B Share Scheme and the Delisting.
Shareholders are referred to the notes to the notice convening
the Extraordinary General Meeting at page 38 of the Circular.
Action to be Taken
Action Shareholders should take in relation to the Annual
General Meeting and the Extraordinary General Meeting
Shareholders will find enclosed with the Circular Forms of Proxy
for use at the Annual General Meeting and the Extraordinary General
Meeting. Whether or not you intend to be present at the Annual
General Meeting or the Extraordinary General Meeting, you are
requested to complete and return the Forms of Proxy so as to reach
the Company's registered office at Merchants House, 24 North Quay,
Douglas, Isle of Man, IM1 4LE, either by personal delivery, post,
facsimile transmission (+44 (0)1624 619 989) or email
(mail@iqe.im), as soon as possible and, in any event, not later
than 12.00 noon on 16 December 2015 in respect of the Annual
General Meeting and not later than 12.30 p.m. on 16 December 2015
in respect of the Extraordinary General Meeting, in both cases,
being not less than 48 hours before the time appointed for the
Annual General Meeting and the Extraordinary General Meeting
respectively.
Completion and return of the Forms of Proxy will not, however,
prevent you from attending at the Annual General Meeting and the
Extraordinary General Meeting and voting in person if you should
wish to do so.
Action Shareholders should take in relation to the B Share
Scheme
The procedure for making elections under the B Share Scheme
depends on whether your existing Ordinary Shares are held in
certificated or uncertificated form and is summarised below.
Shareholders (other than Restricted Shareholders) may elect for
any combination of the B Share Alternatives provided that the total
number of Ordinary Shares in respect of which an election is made
does not exceed a Shareholder's total holding of Ordinary Shares as
at the Record Date.
Shareholders need to make their own decision regarding any
election(s) they make under the B Share Scheme between the B Share
Alternatives and are recommended to consult their own independent
professional adviser.
(a) Ordinary Shares held in certificated form
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