SerVision plc Update re Suspension (4865H)
March 13 2018 - 3:00AM
UK Regulatory
TIDMSEV
RNS Number : 4865H
SerVision plc
13 March 2018
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR").
13 March 2018
SerVision plc
("SerVision" or the "Company")
Update re Suspension
Proposed re-financing and potential administration of SerVision
Limited
Introduction and update re. suspension
On 20 February 2018, SerVision plc (AIM: SEV), the AIM quoted
developer and manufacturer of digital video security systems,
requested that trading be suspended in its ordinary shares on AIM,
pending clarification of the Company's financial position. This
request followed the Company entering into default on at least one
of its loans and the directors concluding that there was no
immediate prospect of the Company raising any new capital.
Prior to 20 February 2018, SerVision had been in discussions
with a potential investor about providing funding to the Company.
Although these discussions have continued, the focus of these has
shifted to a re-financing of SerVision Limited, the Company's
principal trading operation in Israel. The Company is the largest
creditor of SerVision Limited which also owns 100% of the issued
share capital of SerVision Inc., the Company's US operating
subsidiary.
Proposed re-financing and potential administration of SerVision
Limited
In order to allow the discussions regarding the re-financing of
SerVision Limited to continue, Gidon Tahan, the sole director of
SerVision Limited, with the support of the employees of SerVision
Limited, appointed a lawyer on 12 March 2018 to seek from the
Israeli Court (the "Court") protection for SerVision Limited from
its creditors. Part of the petition is expected to include a
commitment from Cascade VP, LLC, a substantial shareholder in the
Company owning 10.0% of the issued share capital of the Company,
and Ronnie Cohen (together the "Investors") to provide around
US$0.5m of interim funding in the form of debt and/or equity to
enable SerVision Limited to continue to operate during the period
of creditor protection. It is further expected that the necessary
documentation will be lodged with the Court within the next few
days at which point the Board of the Company expects to be in a
position to update shareholders further.
The period of creditor protection can last up to 60 days, during
which the Court will determine the best outcome for SerVision
Limited and its creditors, which could include the sale of the
business to a third party. Although the Company is the largest
creditor of SerVision Limited, it is an unsecured creditor and
ranks behind other secured creditors, including the employees. At
this stage, the Directors of the Company have not received any
written proposal from the Investors and do not anticipate that much
value, if any, will be returned from its debts and shareholding in
SerVision Limited.
Under the Court process in Israel the Court would take effective
control of SerVision Limited and the expected outcome is likely to
be the transfer of SerVision Limited to a third party, which would
be equivalent to a fundamental disposal under Rule 15 of the AIM
Rules for Companies. The Company's sole remaining asset would be
its 100% ownership of SerVision UK Limited, the Company's UK
operating subsidiary, to which the Board ascribes little value
without ownership of the main operating subsidiary.
If the petition were not to be successful there would be no
interim financing for SerVision Limited and it is deemed highly
likely by the Board that SerVision Limited would be placed into
liquidation.
Thus, whatever the outcome, it is likely that ultimately the
Company's operating subsidiaries, being SerVision Limited and
SerVision UK Limited, will be divested from the Company which
would, as a result, become an "AIM Rule 15 Cash Shell" under Rule
15 of the AIM Rules for Companies. As an AIM Rule 15 Cash Shell,
the Company would need to raise sufficient funds to continue
operating and to complete an acquisition or acquisitions which
constitute a reverse takeover under AIM Rule 14 within 6 months of
becoming an AIM Rule 15 Cash Shell. In the event that the Company
does not complete a reverse takeover under AIM Rule 14 within six
months of becoming an AIM Rule 15 Cash Shell, the Exchange would
suspend trading in the Company's shares pursuant to AIM Rule
40.
Possible re-financing of the Company
The Directors are also currently in discussions with potential
investors to invest new equity funds into the Company by way of a
placing. Such an equity fundraising would require the approval of
shareholders in a general meeting and would be conditional, inter
alia, on: (i) SerVision Limited being divested; and; (ii) an
acceptable arrangement with the Company's creditors (which
currently total circa US$2.2 million). If no such discussions can
be successfully concluded, then it is likely that the Company will
need to be placed into the appropriate insolvency process.
At this stage the Board continues to seek to clarify the
Company's financial position and seek a solution for the benefit of
creditors and shareholders and the Company is working closely with
its advisers (including an insolvency practitioner) in this
regard.
The Company's ordinary shares remain suspended from trading on
AIM.
Further updates will be provided by the Company at the
appropriate time.
-ends-
For further information:
SerVision plc
Eitan Yanuv (Finance Director) +44 (0)20 3328
Antony Legge (Non-Executive Director) 5656
Allenby Capital Limited (Nominated +44 (0)20 3328
Adviser and Broker) 5656
Nick Athanas / John Depasquale
Leander PR (Financial PR)
+44 (0)7795 168
Christian Taylor-Wilkinson 157
This information is provided by RNS
The company news service from the London Stock Exchange
END
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