Issue of Equity
December 27 2002 - 2:00AM
UK Regulatory
RNS Number:5840F
Inveresk PLC
27 December 2002
INVERESK PLC
ISSUE OF EQUITY, SECURING OF AN UNSECURED LOAN
AND CAPITAL REORGANISATION
Introduction
In order to recapitalise Inveresk Plc ("Inveresk" or the "Company"), the Board
today announced that it intends to raise #2,000,000 by way of an issue of
20,000,000 New Ordinary Shares at a price of 10 pence per share. The Company
also intends to enter into an unsecured loan of between #2,000,000 and
#2,500,000 with Klippan AB and certain persons connected with it for the
purposes of this transaction, being Jan Bernander, Bengt Ostensen, Stefan Lersen
and Alan Walker (the "Klippan Parties").
It was announced on 20 December 2002 that the Company intends to move from the
Official List of the UKLA to the Alternative Investment Market of the London
Stock Exchange ("AIM") subject to the passing of a resolution at the
Extraordinary General Meeting of the Company to be held at 10.00 a.m. on 20
January 2003 (the "EGM") and being able to satisfy the admission requirements of
AIM. Provided these conditions are satisfied, Inveresk will apply to the UK
Listing Authority to have its listing cancelled with effect from 8.00 a.m. on 23
January 2003. The Company will also apply to have its issued share capital
admitted to trading on AIM with effect from the same date.
The Board remains of the opinion that the working capital currently available to
Inveresk is not sufficient for the Company's present requirements, that is, for
at least 12 months following the date of this announcement. In order to try to
ensure the continued survival of the Group, the Board believes that it is
essential that Shareholders vote in favour of the Resolutions at the EGM. If
Shareholders do not vote in favour of the Resolutions, in view of the shortfall
of working capital, the Company may be left in a position where it is not likely
to meet its commitments as they fall due. In such circumstances, the Board
believes that it would either have to sell the Carrongrove Mill and/or the St
Cuthberts Mill or place the Company into administration or receivership. The
raising of the funds through the Placing and the Loan is therefore important to
the future survival of the Group.
The Placing and the Loan
The Company has conditionally placed 20,000,000 Placing Shares (representing
approximately 37.2 per cent. of the Company's current issued share capital) with
certain investors at a price of 10 pence per share.
In addition, the Klippan Parties have conditionally agreed to lend between
#2,000,000 and #2,500,000 to the Company on an unsecured basis. The terms of the
Loan provides that it is repayable after six months or earlier at the option of
the Company or, after three months of making the Loan, in the event of certain
events of default, including insolvency. No interest will accrue on the Loan.
The aggregate proceeds from the Placing and the Loan are expected to amount to
between #4,000,000 to #4,500,000 and will be used to reduce the Company's
indebtedness. It is expected that the proceeds of the Placing and Loan will be
received on or before 23 January 2003. The Loan will be capable of being drawn
down on admission to AIM (expected to be on 23 January 2003).
The Placing is not underwritten and is conditional, inter alia, on Admission to
AIM and the passing of a resolution at the EGM.
The New Ordinary Shares will, when issued and fully paid, rank pari passu in all
respects with the existing Ordinary Shares, including the right to receive all
dividends and other distributions hereafter declared, made or paid.
Background to and reasons for the Placing and the Loan
Inveresk announced on 16 August 2002 that the Group had breached the covenants
set out in the loan agreements with the Royal Bank of Scotland plc. On 30
October 2002, Inveresk announced that it was in severe financial difficulty and
that in the opinion of the directors, the working capital available to Inveresk
was not sufficient for the Company's present requirements, that being, for at
least 12 months following the date of that announcement. In order to alleviate
this situation, the Company disposed of the business and certain assets relating
to the Caldwells Mill to Klippan AB without obtaining prior Shareholder
approval.
On the 30 October 2002, the Company also announced that it was in discussions
with Klippan AB with a view to raising additional finance.
The Board remains of the opinion that the working capital currently available to
Inveresk is not sufficient for the Company's present requirements, that is, for
at least 12 months following the date of this announcement.
In order to resolve this situation, the Board has considered various options to
recapitalise and refinance the Company. These have included a sale of the
remaining businesses and an issue of equity. In addition the Directors are in
discussions with various banks in order to replace the Company's existing
bankers, the Royal Bank of Scotland plc. Due to the Company's publicised
financial difficulties, the Board believes that it would not obtain a fair price
for either of its businesses if it tried to sell them now and therefore does not
believe that raising funds by means of an asset sale would be in the best
interests of the Company or its Shareholders.
Accordingly, the Board believes that the proposed Placing and the Loan are the
best options currently available to recapitalise the Company.
Intention to announce a pre-emptive share issue
The Board recognises that the Placing will dilute existing Shareholders. In
order that Shareholders be given an opportunity to clawback partially their
interests in the Company, the Board intends that subsequent to the completion of
the Placing, further New Ordinary Shares will be offered to holders of New
Ordinary Shares on a pre-emptive basis. The Board also intends that under the
terms of the proposed pre-emptive share issue, Shareholders will be given the
opportunity to apply for New Ordinary Shares in excess of their entitlements.
The Directors expect to publish further details and documentation in relation to
such offer in 2003.
Intention to move to AIM
In order to facilitate the Placing, the Company announced on 20 December 2002
that it intended to move from the Official List of the UK Listing Authority to
trading on AIM subject to the passing of a resolution at the EGM and being able
to satisfy the admission requirements of AIM. Provided these conditions are
satisfied, Inveresk will apply to the UK Listing Authority to have its listing
cancelled with effect from 8.00 a.m. on 23 January 2003, being 20 business days
after the announcement of the intention to transfer to AIM was first made. The
Company will also apply to have its issued share capital admitted to trading on
AIM with effect from the same date. The Board believes that AIM, with its lower
cost of complying with continuing obligations, is a more appropriate market for
the Company given its size and shareholder base.
In connection with Inveresk's move to AIM, KBC Peel Hunt will be appointed as
the Company's nominated adviser and broker.
Application will be made for the New Ordinary Shares and the Placing Shares to
be admitted to AIM. No application will be made for the Placing Shares to be
admitted to the Official List of the UKLA. It is expected that admission of the
New Ordinary Shares and the Placing Shares will become effective and that
dealings will commence on 23 January 2003.
Reorganisation
The current nominal value of the Company's shares is 10p. Given the price at
which the Placing Shares are being placed, the Board does not believe that it is
appropriate to maintain the nominal value of the Company's Ordinary Shares at
this level. In order to reduce the nominal value of its Ordinary Shares, it is
proposed that:
(i) each issued ordinary share of 10p each in the Company will be
sub-divided into ten New Ordinary Shares of 1p each in the Company and that
nine of such ordinary shares of 1p each in the Company will be redesignated
as deferred shares of 1p each;
(ii) each authorised but unissued ordinary share of 10p each in the
Company will be sub-divided and converted into ten New Ordinary Shares of
1p each in the Company; and
(iii) each Deferred Share will be purchased by the Company or its nominee
for cancellation in due course.
The rights of the Deferred Shares, which will not be admitted to the Official
List or AIM, will be minimal, thereby rendering them effectively valueless. As
such, no share certificates will be issued in respect of the Deferred Shares.
The proportionate interests of Shareholders prior to the issue of the Placing
Shares will not be affected by the proposed creation of the Deferred Shares.
Their creation is simply a mechanism to reduce the nominal value of the Ordinary
Shares in the Company from 10p to 1p. Accordingly, immediately following
completion of the Reorganisation, Shareholders will hold the same number of
Ordinary Shares in the capital of the Company, but of a different nominal value.
Similarly, the Reorganisation will not affect Shareholders' voting or dividend
or rights on a return on capital in respect of the New Ordinary Shares. The
Directors have been advised that as a consequence of the Reorganisation, the
existing base cost of Ordinary Shares held will become the base cost of the New
Ordinary Shares and that there should be no liability to tax by reason of the
creation and cancellation of the Deferred Shares. Accordingly the reduction
should have no adverse impact on the UK tax position of shareholders resident in
the UK.
Breach of borrowing powers and amendment to the Company Articles of Association
At the EGM, a resolution will be proposed to ratify a breach of the Company's
borrowing powers contained in Article 115 of the Company's Articles of
Association. This breach has arisen because Article 115 currently restricts the
Company's borrowings to two times the Company's "Adjusted Total of Capital and
Reserves" (as defined in the Articles). To rectify the situation, an amendment
will be proposed to Article 115 to provide that the Group's borrowings shall be
limited to the higher of (i) three times the Adjusted Total of Capital and
Reserves and (ii) #25,000,000.
In order to create the Deferred Shares, an amendment to the Company's Articles
of Association will be proposed at the EGM pursuant to which a new provision
will be included which sets out the rights of the Deferred Shares. As stated
above, these provisions will render the Deferred Shares effectively valueless
(but all Shareholders' existing rights will be preserved in the New Ordinary
Shares which Shareholders will retain).
EGM
The EGM of the Company will be held at the offices of Jones, Day, solicitors to
the Company, Bucklersbury House, 3 Queen Victoria Street, London, EC4N 8NA at
10.00 a.m. on 20 January 2003.
Recommendation
The Board remains of the opinion that the working capital currently available to
Inveresk is not sufficient for the Company's present requirements, that is, for
at least 12 months following the date of this announcement. In order to try to
ensure the continued survival of the Group, the Board believes that it is
essential that Shareholders vote in favour of the Resolutions at the EGM. If
Shareholders do not vote in favour of the Resolutions, in view of the shortfall
of working capital, the Company may be left in a position where it is not likely
to meet its commitments as they fall due. In such circumstances, the Board
believes that it would either have to sell the Carrongrove Mill and/or the St
Cuthberts Mill or place the Company into administration or receivership. The
raising of the funds through the Placing and the Loan is therefore important to
the future survival of the Group.
The Board believes that the resolutions to be proposed at the EGM are in the
best interests of the Company and its Shareholders as a whole and recommends you
to vote in favour of them as they intend to do in respect of their own
registered shareholdings of 4,711,707 Ordinary Shares representing approximately
8.75 per cent. of the current issued share capital of the Company.
Enquiries
Alan Walker (Chief Executive) 020 7240 1234
Jan Bernander (Chairman) 00 65 9661 7974
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEZGMZZFDKGZZM
Inveresk (LSE:IVS)
Historical Stock Chart
From Sep 2024 to Oct 2024
Inveresk (LSE:IVS)
Historical Stock Chart
From Oct 2023 to Oct 2024
