Notice of Shareholders' Meeting
January 22 2010 - 10:23AM
UK Regulatory
TIDMZRX
RNS Number : 0143G
Zirax PLC
22 January 2010
Zirax plc
("Zirax" or the "Company")
NOTICE OF SHAREHOLDERS' MEETING AND POSTING OF CIRCULAR
The Board of Zirax has today posted a circular ("Circular") to shareholders
convening a General Meeting of the Company to be held at the offices of Clyde &
Co LLP at 51 Eastcheap, London EC3M 1JP at 11.00 am (UK time) on 8 February
2010. On 12 January 2010 the Directors received notice from Erith Group Limited
("Erith") pursuant to section 303 of the Companies Act 2006 requesting a General
Meeting. Erith, the holder of 102,531,250 Ordinary Shares representing 59.5 per
cent. of the Company's issued share capital is the Company's largest
shareholder. At this meeting, shareholders will be asked to consider the
resolutions ("Resolutions") necessary for the cancellation of the admission of
the Company's Ordinary Shares to trading on AIM ("Cancellation"), the
re-registration of the Company as a private limited company with the name of
Zirax Limited ("Re-registration") and the adoption of the new articles of
association of the Company ("Adoption"). To be passed, the resolutions relating
to the Cancellation, the Re-registration and the Adoption require 75 per cent.
approval of votes cast at the General Meeting.
If shareholders approve the Cancellation at the Shareholders' Meeting, it
is anticipated that trading in the
Ordinary Shares of Zirax on AIM will cease
at the close of business on 22 February 2010. The proposed date for the
Cancellation taking effect is 23 February 2010.
The independent directors of the Company, being Sir Michael Oliver and David
Wood ("Independent Directors"),
have been advised that the directors of Erith
believe that it is necessary for them to take control of the running of the
Company, particularly of the Russian operations, and to manage the international
expansion from Russia. Erith further believe that without the implementation of
cost cutting measures, principally the cancellation of the admission of the
Company's Ordinary Shares to trading on AIM, the Company's financial position is
unlikely to improve materially.
The Independent Directors and Fenlon Dunphy, CEO, recognise the arguments put
forward by Erith but, given the loss of a market for the Ordinary Shares and the
protections offered by The City Code on Takeovers and Mergers that would result
from the Cancellation, they do not feel able to recommend the proposed
Resolutions. Accordingly, in respect of his holding of 50,000 Ordinary Shares,
Fenlon Dunphy intends to vote against the Resolutions. The Independent Directors
are not shareholders. Mikhail Petrushin, executive director, in respect of his
holding of 67,340 Ordinary Shares, intends to vote for the Resolutions.
Erith is beneficially owned as to 50 per cent. by each of Eldor Azizov and
Mikhail Baranov, one of the non-executive directors of the Company. Mikhail
Baranov also has an interest in OOO Yugo-Vostok Promkapital, which holds a
further 13,333,333 Ordinary Shares representing 7.7 per cent. of the Company's
issued share capital. Both of Erith and OOO Yugo-Vostok Promkapital have
indicated that they intend to vote in favour of the Resolutions.
An extract of the Circular is set out below, and the Circular to shareholders is
available in full, together with the proposed new articles, on the Company's
website: www.zirax.com. All definitions used below have the same meaning as
given to them in the Circular and the extract set out below should be read in
conjunction with the Circular.
Enquiries:
+--------------------------+--------------------------+-------------------------+
| Zirax | Fenlon Dunphy, CEO | T: +44 (0)20 7930 0777 |
+--------------------------+--------------------------+-------------------------+
| | | |
+--------------------------+--------------------------+-------------------------+
| Westhouse Securities | Tim Metcalfe | T: +44 (0)20 7601 6100 |
+--------------------------+--------------------------+-------------------------+
| | Martin Davison | |
+--------------------------+--------------------------+-------------------------+
| | | |
+--------------------------+--------------------------+-------------------------+
| Cardew Group | Tim Robertson | T: +44 (0)20 7930 0777 |
+--------------------------+--------------------------+-------------------------+
| | David Roach | |
+--------------------------+--------------------------+-------------------------+
| | Daniela Cormano | |
+--------------------------+--------------------------+-------------------------+
LETTER FROM THE CHAIRMAN
PROPOSED CANCELLATION OF ADMISSION TO TRADING ON AIM AND
RE-REGISTRATION AS A PRIVATE LIMITED COMPANY
1. Introduction
At the time of the publication of the Company's trading statement in December
2009 the Directors announced that as a result of disappointing orders from a key
customer in Russia, a loss would result in the second half of the year and the
Company would report an overall loss for the full year. The Board's intention
at that time was to proceed with its International expansion plans and
explore commercial avenues in order to steer the Company towards a return to
profitability.
On 12 January 2010 (as it was disclosed in the announcement made on 13 January
2010) the Directors received notice from Erith, the Company's largest
shareholder, pursuant to section 303 of the Act requesting a general meeting to
approve the following resolutions:
1. the cancellation of the admission of the Ordinary Shares to trading on AIM;
2. upon cancellation of the admission to trading, the Company's re-registration as
a private limited company with the name of Zirax Limited; and
3. the adoption of new articles of association of the Company (which can be viewed
on the Company's website: www.zirax.com and are also available for inspection at
Clyde & Co, 51 Eastcheap, London EC3M 1JP during usual business hours on any
weekday until the date of the General Meeting).
Since the announcement made on 13 January 2010, the Independent Directors have
had the opportunity to meet with representatives of Erith to discuss the
background to, and reasons for, the requisition. The purpose of this document is
to explain the background to the proposed Cancellation and Re-registration.
For the purposes of the Resolutions, Sir Michael Oliver and David Wood are
considered to be independent. Mikhail Baranov is not considered to be
independent by virtue of his shareholding in Erith. Mikhail Petrushin is not
considered to be independent as he is expected to have a continuing role in the
Company if the Resolutions are passed. Fenlon Dunphy is not considered to be
independent for the purposes of the Resolutions as he has been invited by Erith
to fulfil a short term consultancy role for the Company if the Resolutions are
passed.
At the end of this document, there is a Notice of General Meeting which has been
convened at 11.00 a.m. (UK time) on 8 February 2010 at the offices of Clyde &
Co, 51 Eastcheap, London EC3M 1JP. Shareholders not intending to attend the
General Meeting should complete and return the Form of Proxy in accordance with
the instructions printed thereon.
2. Background to the Cancellation and Re-registration
The Independent Directors have been advised that Erith's directors believe that
it is necessary for them to take control of the running of the Company,
particularly of the Russian operations, and to manage the International
expansion from Russia. Erith further believe that without the implementation of
cost cutting measures, principally the cancellation of the admission on AIM, the
Company's financial position is unlikely to improve materially.
Erith is the holder of 102,531,250 Ordinary Shares representing 59.5 per cent.
of the Company's entire issued share capital. Erith is beneficially owned as to
50 per cent. by each of Eldor Azizov and Mikhail Baranov, one of the
non-executive Directors of the Company. Mikhail Baranov also has an interest
in OOO Yugo-Vostok Promkapital, which holds a further 13,333,333 Ordinary Shares
representing 7.7 per cent of the Company's issued share capital. Both of Erith
and OOO Yugo-Vostok Promkapital have indicated to the Board that they would vote
in favour of the Resolutions. The Cancellation Resolution requires 75 per cent.
approval of votes cast at the General Meeting.
In requisitioning the General Meeting, Erith consider that the ongoing expense
of maintaining the
Admission is no longer sustainable in the light of the Company's current size
and financial position.
Despite the best efforts of the Directors it has been extremely difficult to
grow revenues sufficiently to meet the costs of running the Company. As such the
Company was loss making for 2009 and there can be no certainty as to when the
Company will return to profitability.
As previously announced, trading conditions have been difficult for the Company
and in particular orders from significant customers have been down on previous
years. This has hindered the Company's ability to carry out its expansion
plans.
The Company has limited cash resources and it is the view of Erith that the
Admission is an area that the Company should look to conserve these resources.
The Independent Directors have been advised by Erith, that they believe it is no
longer sustainable for Zirax to maintain the Admission or to remain a public
limited company. In reaching this conclusion, Erith have considered the
following factors:
* the necessity to increase the Company's costs savings;
* the significant professional fees associated with the Admission (such as legal,
accounting, broking and nominated advisory costs and the fees of the London
Stock Exchange);
* the costs of financial reporting obligations on a six-monthly basis;
* the disproportionate length of time spent by senior management to ensure
compliance with the AIM Rules and other related regulatory requirements
(including corporate governance, reporting and disclosure obligations);
* the difference between the implementation plan for the Group's future between
the Directors and Erith, coupled with the reliance on the trading relationship
between the Group and OAO Kaustik (an entity connected with Erith through common
ownership);
* that one of the key benefits of the Admission has been to provide access for the
Company to capital and enable the Company to use the Ordinary Shares as
consideration in transactions which in the present economic climate is no longer
the case for a company with significant Russian ownership; and
* there is limited trading volume in the Ordinary Shares.
3. Strategy following the Cancellation
The initial strategy will be to implement the cost cutting exercise lead by the
savings obtained through cancellation of the Admission. Erith intend to carry
out a full review of existing customer and supplier arrangements, looking at all
contractual commitments and application to future plans. Following this, they
will consider any further appropriate changes to the strategy of the Company.
If the Resolutions are passed, Erith will be the controlling shareholder in a
private company. Erith have told the Independent Directors that Erith intends to
keep the Shareholders informed of the Company's financial and trading
performance through periodic updates on the company's website: www.zirax.com and
that the Board will continue to include at least one non-executive Director (to
be identified and appointed).
4. Cancellation
Pursuant to Rule 41 of the AIM Rules, the Directors have notified the London
Stock Exchange of the date of the proposed Cancellation. The Cancellation is
conditional upon the approval of not less than 75 per cent. of the votes cast by
Shareholders (whether present in person or by Form of Proxy) at the General
Meeting. Accordingly, the Resolution numbered 1 set out in the Notice of General
Meeting seeks Shareholders' approval to the Cancellation. The Cancellation
Resolution is not conditional on the passing of any of the other Resolutions.
Subject to the Cancellation Resolution having been passed at the General
Meeting, it is anticipated that trading in the Ordinary Shares on AIM will cease
at close of business on 22 February 2010. The proposed date for the Cancellation
taking effect is 23 February 2010.
5. Consequences of the Cancellation
If the Cancellation becomes effective, Westhouse Securities Limited will cease
to be nominated adviser and broker to the Company and the Company will no longer
be required to comply with the AIM Rules.
Immediately following the Cancellation, there will be no market facility for
dealing in the Ordinary
Shares and no price will be publicly quoted and the Ordinary Shares will cease
to be registered with CREST.
As the Company does not anticipate moving to an alternative trading platform for
its Ordinary Shares the loss of the AIM trading platform means that Shareholders
will not readily be able to buy or sell Ordinary Shares. They will be able to
buy or sell Ordinary Shares "off market" although this will be more difficult
than trading "on market". The Directors do not consider it likely that third
parties will buy or sell Ordinary Shares.
There is no obligation on Erith or the Company to make an offer to Shareholders
to purchase their
Ordinary Shares. Neither the Company nor Erith is currently in a position to
purchase Ordinary Shares held by minority shareholders. However, Erith is aware
of the position of minority shareholders and is exploring options to accommodate
those shareholders who wish to sell their Ordinary Shares to it. Erith intends
to communicate with Shareholders within three months from the Cancellation, if
approved.
If the Cancellation becomes effective, Sir Michael Oliver, Fenlon Dunphy and
David Wood will resign as directors. Erith have invited Fenlon Dunphy to
continue to work for the Company for a limited time as a consultant on terms to
be agreed. Mikhail Petrushin will resign as a director of the Company but will
continue to work for the Company as an employee. Mikhail Baranov will assume an
executive role in the Company. Erith will be the controlling shareholder. If the
Cancellation becomes effective, the Company's place of central management and
control will be Russia.
6. Re-registering as a private company
In order for the Company to effect the Re-registration and to make certain
consequential changes to the Articles, Shareholders will be asked to pass the
Resolutions numbered 2 and 3 set out in the Notice of General Meeting. The
Resolution approving the Re-registration is conditional upon the Cancellation
Resolution being passed and the Cancellation taking effect.
If the Resolution approving the Re-registration is passed and the
Re-registration becomes effective, the Articles will need to be updated to
reflect the fact that the Company is no longer a public company and to remove
certain provisions which will no longer be relevant. The main provisions which
will be removed are those relating to shares which are currently held in
uncertificated form through CREST. Certain consequential amendments will also
need to be made to remove definitions which will no longer be used and to update
the numbering of the Articles. Accordingly, Resolution numbered 3 in the Notice
of General Meeting also seeks the Shareholders' approval to amend the Articles.
Copies of the proposed new Articles showing the proposed amendments can be
viewed on the Company's website: www.zirax.com and are also available for
inspection at Clyde & Co, 51 Eastcheap, London EC3M 1JP during usual business
hours on any weekday until the date of the General Meeting.
If the Resolution approving the Re-registration is passed then, following the
satisfaction of the
conditions, the Company will file the requisite documents with the Registrar of
Companies together with the relevant fee for re-registration. The
Re-registration will become effective upon the Registrar of Companies issuing a
certificate of incorporation on re-registration once he is satisfied that no
valid application can be made to cancel the Resolution approving the
Re-registration.
Upon Re-registration of the Company certain provisions of the Act will cease to
apply. These include amongst others:
* The Company will no longer have to hold annual general meetings and there is no
obligation to lay the accounts before its members.
* The Company will have nine months to file its annual accounts following the end
of the financial year.
* The Company may pass written resolutions.
* The restrictions on financial assistance will no longer apply.
* The Company will have no prescribed minimum share capital.
* The Company may reduce its share capital by special resolution without the
consent of the court.
* The Company may issue shares for non-cash consideration and such consideration
will not have to be independently valued.
* The Disclosure Rules and Transparency Rules will no longer apply, therefore
there will be no requirement to notify the Company of a change in voting rights
held by members.
* The auditors of the Company will be deemed to be re-appointed without annual
shareholders' approval.
7. The City Code on Takeovers and Mergers (the "Code")
The Code currently applies to Zirax. The Code does not apply to private
companies (other than in
certain limited circumstances) and would not apply to any offer made to Zirax
shareholders to acquire their Zirax shares made subsequent to the re-registering
of the Company as a private company.
Zirax shareholders should note that, if the resolution to re-register the
Company as a private company becomes effective, they will not receive the
protections afforded by the Code in the event that there is a subsequent offer
to acquire their Zirax shares.
Brief details of the Takeover Panel (the "Panel"), the Code and the protections
given by the Code are described below. Before giving your consent to the
re-registration of the Company as a private company, you may want to take
independent professional advice from an appropriate independent financial
adviser.
The Code is issued and administered by the Panel. Zirax is a company to which
the Code applies and its shareholders are accordingly entitled to the
protections afforded by the Code.
The Code and the Panel operate principally to ensure that shareholders are
treated fairly and are not denied an opportunity to decide on the merits of a
takeover and that shareholders of the same class are afforded equivalent
treatment by an offeror. The Code also provides an orderly framework within
which takeovers are conducted. In addition, it is designed to promote, in
conjunction with other regulatory regimes, the integrity of the financial
markets.
The General Principles and Rules of the Code
The Code is based upon a number of General Principles which are essentially
statements of standards of commercial behaviour. For your information these
General Principles are set out in Part 1 of Appendix A. The General Principles
apply to all transactions with which the Code is concerned. They are expressed
in broad general terms and the Code does not define the precise extent of, or
the limitations on, their application. They are applied by the Panel in
accordance with their spirit to achieve their underlying purpose.
In addition to the General principles, the Code contains a series of Rules, of
which some are effectively expansions of the General Principles and examples of
their application and others are provisions governing specific aspects of
takeover procedure. Although most of the Rules are expressed in more detailed
language than the General Principles, they are not framed in technical language
and, like the General Principles, are to be interpreted to achieve their
underlying purpose. Therefore, their spirit must be observed as well as their
letter. The Panel may derogate or grant a waiver to a person from the
application of a Rule in certain circumstances.
Giving up the protection of the Code
A summary of key points regarding the application of the Code to takeovers
generally is set out in Part 2 of Appendix A. You are encouraged to read this
information carefully as it outlines certain important protections which you
will be giving up if you agree to the re-registration of the Company as
a private company. Your attention is drawn in particular to the fact that any
future offer made by Erith, or another party, will, following Cancellation, not
be subject to the Code. However, at this time, the Directors can confirm that
they are not aware of any such offer and there is no guarantee that Shareholders
will receive such an offer in the future.
General Meeting
At the end of this document, there is a notice convening a General Meeting of
the Company to be held at Clyde & Co, 51 Eastcheap, London EC3M 1JP at 11.00
a.m. (UK time) on Monday 8 February 2010. At this meeting, the Resolutions will
be proposed as special resolutions.
To be effective, the Resolutions require the approval of not less than 75 per
cent. of the votes cast by Shareholders (whether present in person or by proxy)
at the General Meeting.
If the Cancellation Resolution is passed at the General Meeting, it is
anticipated that the Cancellation will become effective from 23 February 2010.
Action to be taken
Shareholders listed on the Company's register on 6.00 p.m. (UK time) on 4
February 2010 shall be entitled to participate at the General Meeting and vote
there in person or by a proxy.
Enclosed with this document is a Form of Proxy. Whether or not you propose to
attend the General Meeting personally, you are urged to complete and return the
Form of Proxy in accordance with the instructions printed thereon as soon as
possible. To be valid, completed Forms of Proxy must be received by the
Company's registrars Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY. Completion of a Form of Proxy will not
preclude you from attending and voting at the General Meeting in person should
you wish to do so.
Recommendation
The Independent Directors and Fenlon Dunphy recognise the arguments put forward
by Erith but given the loss of a market for the Ordinary Shares and the
protections offered by the Code that would result from the Cancellation, they do
not feel able to recommend the proposed Resolutions.
Accordingly, in respect of his 50,000 Ordinary Shares, Fenlon Dunphy intends to
vote against the Resolutions. The Independent Directors are not Shareholders.
Mikhail Petrushin in respect of his 67,340 Ordinary Shares, intends to vote for
the Resolutions. Erith is the holder of 102,531,250 Ordinary Shares representing
59.5 per cent. of the Company's entire issued share capital. Erith is
beneficially owned as to 50 per cent. by each of Eldor Azizov and Mikhail
Baranov, one of the non-executive Directors of the Company. Mikhail Baranov also
has an interest in OOO Yugo-Vostok Promkapital, which holds a further 13,333,333
Ordinary Shares representing 7.7 per cent of the Company's issued share capital.
Both of Erith and OOO Yugo-Vostok Promkapital have indicated that they intend to
vote in favour of the Resolutions.
The Cancellation Resolution requires 75 per cent. approval of votes cast at the
General Meeting.
Yours faithfully
Sir Michael Oliver
Non-executive Chairman
This information is provided by RNS
The company news service from the London Stock Exchange
END
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