TIDMADS
RNS Number : 2549F
Alexander David Securities Grp PLC
21 May 2013
Alexander David Securities Group plc
('ADS' or the 'Company')
Disposals and Issue of Equity
Following a number of internal discussions and expressions of
interest, the Board of ADS proposes that it is in the best
interests of shareholders to undertake a number of steps that will
lead to a fundamental change in the nature of the Company's
business pursuant to AIM Rule 15 (the "Proposals"). The Proposals
will all be subject to shareholder approval to be sought at a
general meeting of the Company in due course.
The year to 31 December 2012 continued to be a challenging one
for the Company which has been exacerbated by the difficulties in
the global economy and the stock market in the UK. The Directors
believe that in the current climate the public market is not
supportive of small brokerage companies and the costs of being
quoted on AIM far outweigh the benefits for securities firms such
as ADS.
The Directors have therefore agreed to sell the business of
Alexander David Securities Group, being its securities operations
and substantially all of its business, to certain members of its
management, and to turn ADS into an investing company with an
investing policy with the intention of maximising shareholder
returns, all of which is subject to shareholder approval.
The business of ADS comprises two divisions, being its Private
Client Broking business ("PCB") and the Corporate Finance and
Institutional Broking business ("CF"). The sale of PCB has been
agreed, subject to shareholder and FCA approval, as further
described below, and the sale of CF is currently being
negotiated.
Further, ADS has entered into a heads of terms, which is subject
to contract, for a new investor to make a strategic investment in
the Company and then implement a new investing policy.
Further details on each of these stages are set out below.
Private Client Broking
The Board of ADS announces that it has today entered into an
agreement with Highstone Investment Management Limited
("Highstone") for the disposal of PCB for a total cash
consideration of GBP100,000 plus assumption by Highstone of
liabilities of GBP230,000 and contingent liabilities of GBP100,000.
Highstone is owned by Trevor Coote, who is a director of ADS. As a
result, the disposal of PCB is deemed to be a related party
transaction pursuant to AIM Rule 13.
The sale principally comprises such business and assets of
Alexander David Securities Limited, a wholly owned subsidiary of
ADS, as relate to PCB, together with the goodwill attaching
thereto, the records and all property and assets relating to PCB,
but excludes the use of the Alexander David name.
Following the disposal of PCB to Highstone, it is proposed that
Alexander David Securities Limited, a wholly owned subsidiary of
ADS which is authorised and regulated by the FCA, will continue to
offer a regulatory umbrella to Highstone, by means of an Authorised
Representative arrangement.
Completion of the disposal of PCB is subject, inter alia, to FCA
approval and to shareholder approval under section 190 of the
Companies Act as it is deemed to be a substantial property
transaction involving a director of the Company.
The directors independent of Highstone, being David Scott,
Michael Hicks, Angus Rose and Alon Bull consider, having consulted
with ADS' nominated adviser, Cairn Financial Advisers LLP, that the
terms of the disposal of PCB are fair and reasonable insofar as its
shareholders are concerned.
The Company has today entered into a loan agreement with
Highstone whereby Highstone is lending GBP100,000 to ADS (the
"Loan"). The terms of the Loan are that the Company is required to
submit the Appointed Representative documents to the FCA by 30 June
2013. In the event that such documents are not submitted within
that timeframe, the Loan is immediately repayable with a penalty
payment of an additional 25% of the principal sum. Interest on the
Loan is 1% per month.
In the event that the disposal to Highstone of PCB completes,
the Loan will be treated as the cash consideration element of the
purchase price and will therefore not be repayable.
In the event that the Loan becomes payable and the Company is
unable to pay, it will convert into 50 million new ordinary shares
in the Company.
Disposal of CF and new equity investment
The Board separately announces that it is in discussions with
certain members of the CF team regarding the disposal of CF to a
buyout vehicle which it is proposed will be owned by David Scott
and Angus Rose.
The CF business was recently approached by an independent third
party for a trade sale and, as a result, consideration for the
disposal of CF is likely to be set on a similar basis to that
indicative approach. Initial consideration is likely to be by way
of a nominal purchase price of GBP1 with an earn-out based on
certain conditions, over three years, of up to GBP300,000.
The disposal of CF would be subject, inter alia, to FCA approval
and to shareholder approval under section 190 of the Companies Act
as it would, as envisaged, be deemed to be a substantial property
transaction involving a director of the Company.
The disposal of CF would also be conditional on shareholder
approval pursuant to AIM Rule 15 as it would, when aggregated with
the disposal of PCB, be deemed to be a disposal resulting in a
fundamental change of business.
Shareholder approval will also be sought to approve the adoption
of a new investing policy which the Board would seek to implement
pending completion of the disposals of PCB and CF.
It is also proposed that a group of new investors will invest a
minimum of GBP200,000 for approximately 36 per cent. of the
enlarged issued share capital of the Company, conditional on the
completion of the disposals of both PCB and CF.
Conversion of preference shares, warrants, and outstanding
Directors' salaries
At the same time as shareholders vote on the sale of PCB and CF,
the Directors propose that all preference shares, warrants and
outstanding Directors' salaries, which are currently valued in
aggregate at GBP3.8m, are converted into ordinary shares on a GBP
for GBP basis, then each will be written down by approximately 90%.
This will allow the balance sheet to be reorganised for the new
investment company proposals. Further details will be notified in
due course.
Circular
A circular convening a general meeting of the Company seeking
shareholder approval for the Proposals detailed above will be sent
to shareholders in due course. In the meantime, the Board will
announce any further updates regarding the Proposals without
delay.
For further information please see www.ad-securities.com or
contact:
Michael Hicks, Chairman
David Scott, Chief Executive Alexander David Securities Group plc 020 7448 9800
James Caithie/Avi Robinson
Nominated Adviser Cairn Financial Advisers LLP 020 7148 7900
This information is provided by RNS
The company news service from the London Stock Exchange
END
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