TIDMMUBL
RNS Number : 7957X
MBL Group PLC
14 August 2018
MBL Group plc / Epic: MUBL / Index: AIM
RNS ANNOUNCEMENT: The information communicated in this
announcement contains inside information for the purposes of
Article 7 of Regulation 596/2014.
For immediate release
14 August 2018
MBL Group PLC
("MBL" or the "Company" or the "Group")
CANCELLATION OF ADMISSION OF
ORDINARY SHARES TO TRADING ON AIM
and
NOTICE OF GENERAL MEETING
MBL Group plc (AIM: MUBL) announced that further to its
announcement yesterday, it is today convening a meeting of
Shareholders in order to consider the cancellation of the Company's
admission to trading on AIM. Under the AIM Rules, a proposal to
cancel the trading of the Company's securities on AIM is
conditional on the requisite notice being given to the London Stock
Exchange and on consent being granted in general meeting by
Shareholders holding not less than 75 per cent. of the votes cast
on the resolution proposed at such general meeting. The Company has
also today given notice to AIM of the proposed Cancellation.
In addition, the Circular sets out why the Directors recommend
that you vote in favour of the Resolution to be proposed at the
General Meeting. Terms in this announcement have the same meaning
as in the Circular.
Shareholders should note that conditional upon the Resolution
being passed at the General Meeting, it is anticipated that the
last day of trading of the Company's Ordinary Shares on AIM will be
Thursday 13 September 2018, with cancellation of admission to
trading on AIM becoming effective at 7.00 a.m. on Friday 14
September 2018.
Notice of the General Meeting to be held on 5 September 2018 at
12.00 p.m. at the offices of Thrings LLP, The Paragon, Counterslip,
Avon, Bristol, BS1 6BX is set out at the end of the Circular, which
will be posted to Shareholders today and made available on the
Company's website, www.mblgroup.co.uk.
Background to, and reasons for, the Cancellation
MBL's Ordinary Shares have been admitted to trading on AIM for
some time. Recent years have seen increased competition for the
Group's products, a number of changes to the Board and
disagreements with various shareholders over the direction of the
business.
The current Board has decided to set out below the recent
history of the Company. This is intended to assist the Company's
Shareholders to consider the appropriateness of the proposed
delisting from AIM with the prospect of pursuing a winding up and
capital distribution to Shareholders.
The Company has suffered several issues over the past decade,
which may have resulted in the unfortunate depletion of Company
assets. The Company makes no assertion that any action of any one
person, Shareholder or director has resulted in the depletion of
Company assets. The events outlined below reflect the potential
concerns of shareholders and directors and the actions undertaken
by any party may have been founded or justified for reasons in
their possession alone. This Board makes no judgement on the
actions of previous boards or Shareholders although wishes to set
out the history to highlight to the Shareholders the Board's belief
that the proposed course of action is now most suitable.
The Company and its then subsidiaries suffered allegations that
the conduct of directors was not satisfactory as far back as 2007.
The allegations in 2007 regarded transactions related to companies
associated with a shareholder. Those allegations considered whether
the transactions were at arm's length. The current Board believes
that nothing was proven at the time and it is not in possession of
any information that would support these allegations.
In 2010, a Shareholder, who subsequently sold their shares,
raised concerns over bonuses paid to directors. This Board is not
in possession of any information that would support those
concerns.
Allegations were made by a Shareholder and consultant to the
Company following the termination of their consultancy agreements
in 2011. Those allegations related to a number of different issues,
but were subsequently retracted.
Also, in 2011, a Shareholder wrote to the then non-executive
chairman stating their concern and disappointment over bonuses paid
to that director and the other directors, particularly in light of
the investment choices made by the Board.
In May 2014, David Anthony ("Tony") Johnson was appointed as a
non-executive director. In June 2014, Peter Cowgill resigned as
non-executive Chairman of the Company following a disagreement with
the rest of the Board on the future strategy of the Company, to be
replaced as Non-executive chairman by Tony Johnson. In 2015, Trevor
Allan resigned as a director of the Company. Meanwhile, Tim
Jackson-Smith was appointed as a non-executive director in 2016.
Ten days after the appointment of Tim Jackson-Smith, Tony Johnson
used his casting vote to appoint Christopher William ("Chris")
Jones to the Board.
On 27 May 2016 a request was made by the Allan Family Trust, of
which the current Chairman is a trustee, to convene a general
meeting to vote on resolutions to remove Tony Johnson and Chris
Jones as directors. On 3 June 2016 notice was given of the request
to convene the general meeting. Following the request for the
general meeting, certain Shareholders made allegations that certain
persons and directors had wrongfully extracted funds from the
Company, that a director knew of and failed to act on the
extraction of funds and that the Allan Family Trust was not the
holder of shares. Allegations of insider trading were also made.
Whilst these allegations were made, previous Boards as well as this
Board in conjunction with legal advisers have been unable to
establish supporting evidence.
The Board during 2016 undertook investigations into the
allegations and as such contracted several professionals including
solicitors and accountants.
On 14 July 2016 the General Meeting proceeded and was adjourned
in order to consider the validity of the Allan Family Trust
ownership of shares. The General Meeting was postponed until 14
October 2016, which would be after the Company's 2016 Annual
General Meeting.
Following the General Meeting, the then Board continued to
undertake investigations into allegations. Those investigations led
to the procuring of witness statements that made allegations
against past directors.
An AGM was held on 21 September 2016. At that AGM a Shareholder
and the then Board challenged the ownership of shares by the Allan
Family Trust. The result of discussions on that day was the
postponement of the AGM. The Board and certain Shareholders agreed
to meet to discuss each other's concerns. That meeting took place
on 29 September 2016.
On 14 October 2016, the General Meeting proceeded. It was agreed
that the Company undergo a strategic review and Tony Johnson step
down as director.
On 4 November 2016, Lisa Clarke stepped down as a director.
On 5 December 2016 Chris Jones stepped down from the Board to be
replaced by Peter Palframan.
The Board consisting of Peter Palframan and Tim Jackson-Smith
continued with the strategic review and sales process, however
despite being in receipt of offers, were unable to secure a
disposal of either trading division.
Peter Palframan's appointment was not renewed at the AGM on 28
September 2017. As a result, the Company's AIM listing was
temporarily suspended on 5 October 2017.
On 24 October 2017, I was appointed as a Director. On the same
day, a Shareholder requested an investigation into the dilution of
Company assets. The investigation was undertaken following the
indication that the Shareholder would meet the cost of a forensic
exercise. It was announced on 22 December 2017 that there were no
findings of any wrongdoing and the Shareholder did not meet the
costs of the exercise. On the same day, the Board announced a
request from another Shareholder to investigate the dilution of the
Company's assets over the past 24 months. The Board subsequently
sought clarification from the Shareholder and the investigation has
been ongoing.
On 21 December 2017, James Reynolds was appointed as a director.
On 5 January 2018, Tim Jackson-Smith stood down as a director.
The Garden Homes Division was subsequently sold to Invalesco
Limited on 15 March 2018 for GBP800,000 in cash.
On 15 June 2018, the Company announced that, having taken both
legal and insolvency advice, administrators had been appointed to
Windsong International Limited, which made up the Home
Entertainment division.
With effect from the date of the appointment of administrators
to Windsong International Limited, MBL Group Plc became a "Rule 15
Cash Shell" under Rule 15 of the AIM Rules. At the same time the
Company confirmed its intention that, as it had now disposed of all
the Group's trading businesses, it would seek to return cash to
Shareholders and to provide for an orderly winding up of the
Company. The Board announced that it believed that this process
would be achieved in the most efficient and cost-effective manner
as a private company as it would, inter alia, be able to save the
additional running costs of being admitted to trading on AIM.
Therefore, the Company gave notice to AIM, under AIM Rule 41, that
it intended to seek cancellation of its admission to trading on AIM
at the earliest opportunity.
Most recently, as explained further below, the Company announced
that it has been fined GBP75,000 and been censured in relation to
breaches of the AIM Rules for Companies whilst under the
stewardship of a previous board.
The Company has little opportunity to make a return to
Shareholders should it continue to face the costs such as those
arising from further requests for investigations, litigious
behaviour and the associated additional costs involved in
investigating and defending these claims whilst maintaining its
public company status. Having completed the sale of the Garden
Homes division and put Windsong International Limited into
administration, your Board believes that it has actioned the
conclusions of the strategic review originally initiated by the
Board in late 2016, and endorsed by Shareholders, so leaving the
way open to return capital to Shareholders. As at 31 July 2018, the
Company had a cash balance of approximately GBP800,000. In
addition, it expects to receive the balance of the deferred
consideration for the sale of the Garden and Home division,
amounting to GBP375,000, on or before 31 August 2018, in accordance
with the terms of the sale agreement. Out of this combined cash
amount, the Company will have to pay the fine described below and
ongoing costs of the Company until dissolution, prior to any
distribution to Shareholders.
Your Board therefore strongly believes that the Company's recent
history supports its conclusion that Cancellation followed promptly
by a return of capital to Shareholders is in the best interests of
Shareholders as a whole.
AIM Notice
On 13 August, the Company made the following RNS
announcement:
"MBL Group plc (AIM: MUBL) notes that the London Stock Exchange
has today published details of a censure of the Company and a fine
of GBP125,000 for historic breaches of the AIM Rules in September
2017, discounted to GBP75,000 for early settlement of the
proceedings.
The Exchange states in its announcement that, since the events
that are the subject of this censure, the Company has a completely
new board.
The Exchange Notice is available to view at:
http://www.londonstockexchange.com/companies-and-advisors/aim/advisers/aim-notices/aim-notices.htm
"
Contingent Liability
Shortly before issuing this Circular, the Company received
notice of a claim in relation to a historic matter which is
potentially material. The Company is taking legal advice about the
merits of the claim and will update Shareholders, as appropriate,
in due course.
Cancellation
Effects of Cancellation
The principal effects of Cancellation will be that:
-- there will be no public market or trading facility on any
recognised investment exchange for the Ordinary Shares and,
consequently, there can be no guarantee that a Shareholder will be
able to purchase or sell any Ordinary Shares. The underlying
liquidity in the Ordinary Shares is currently low and, in the
opinion of the Directors, is likely to remain that way for the
foreseeable future whether or not the Cancellation proceeds. Hence,
the opportunity for Shareholders to realise their investment in the
Company will be more limited;
-- it is possible that following publication of this document,
the liquidity and marketability of the Ordinary Shares may be
significantly reduced and the value of such shares may be adversely
affected as a consequence;
-- the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM will no
longer apply. The Company will, therefore, achieve cost savings as
a result of no longer being subject to the provisions of this
regime;
-- Shareholders will no longer be afforded the protections given
by the AIM Rules, such as the requirement to be notified of certain
events, including substantial transactions, financing transactions,
related party transactions and fundamental changes in the Group's
business, including certain acquisitions and disposals;
-- the Company will cease to have an independent financial and nominated adviser and broker;
-- as an unlisted company, the Company will be subject to less
stringent accounting disclosure requirements;
-- the Cancellation may have either positive or negative
taxation consequences for Shareholders. Shareholders who are in any
doubt about their tax position should consult their own
professional independent adviser immediately; and
-- following the tenth anniversary of the Cancellation (and if
the Company is re-registered as a private company) the provisions
of the Takeover Code will cease to apply with respect to the
Company.
Provided the Company's place of central management and control
continues to be in the United Kingdom, the Company will, however,
remain subject to the Takeover Code until such tenth anniversary
and Shareholders will benefit from those provisions including in
the case of an offer for all of the Shares of the Company whereby
all Shareholders will need to be treated equally. Shareholders will
also continue to benefit from the relevant provisions of the
Act.
Process for Cancellation
Under the AIM Rules, the Cancellation can only be effected by
the Company after the passing of a resolution approved by at least
75 per cent. of the votes cast by Shareholders (present in person
or by proxy) in a general meeting, and the expiration of a period
of 20 Business Days from the date on which notice of the
Cancellation is given, which is deemed to have been given in the
announcement made by the Company on 14 August 2018. In addition, a
period of at least five Business Days following approval of the
Cancellation is required before the cancellation of admission of
the Ordinary Shares to trading on AIM will be effective. The
Company, through its nominated adviser, SPARK Advisory Partners,
has notified the London Stock Exchange of the proposed
Cancellation.
Should Shareholders approve the Cancellation, the Board will
look to return capital to Shareholders, in the most cost-effective
manner, further details of which are given below.
Ordinary Share dealing following Cancellation
The Board recognises that the Cancellation will make it more
difficult for Shareholders to buy and sell Ordinary Shares should
they wish to do so. Following the Cancellation, although the
Ordinary Shares will remain transferable they will no longer be
tradable on AIM.
Return of capital to Shareholders
Having reviewed the possible routes to return capital to the
Company's Shareholders, it is your Board's intention to propose a
resolution to its Shareholders that the Company should enter into a
Member's Voluntary Liquidation, which it is anticipated will result
in a first payment to Shareholders by November 2018, and winding up
and dissolution (including a final payment to Shareholders) in the
first half of 2019. These timings are not exact and may not be
within the Board's control, the Company will keep Shareholders
appraised of progress as appropriate.
Taxation
The Proposal may have tax consequences for Shareholders, who are
advised to consult their own professional tax advisers if in any
doubt about their tax position.
General Meeting and action to be taken
As set out in the Circular, the Resolution will be proposed at
the General Meeting. The Cancellation is conditional upon the
approval of Shareholders holding not less than 75 per cent. of the
votes cast (whether in person or by proxy) at the General Meeting.
The meeting will be held at held on 5 September 2018 at 12.00 p.m.
at the offices of Thrings LLP, The Paragon, Counterslip, Avon,
Bristol, BS1 6BX.
Importance of the vote and recommendation by the Directors
The Directors believe that Cancellation is the next logical step
in the Company's strategic plan, set out in December 2016, and will
help to preserve the remaining shareholder value following the
disposal of the Group's trading businesses. The Board also believes
that the proposed return of capital to Shareholders would best be
achieved following the Cancellation, as the Company will no longer
be further depleting its cash reserves by retaining the costs of
admission to trading on AIM. Shareholders should be aware that, if
the Resolution is not approved at the General Meeting, the
Cancellation will not occur and the Company's Shares will remain
admitted to trading on AIM and the Company would need to continue
to incur all the costs and the associated regulatory burden of
being an AIM company which will significantly reduce the Company's
cash reserves.
Shareholders should also be aware that, since the appointment of
administrators to Windsong on 15 June 2018, the Company is regarded
as a Rule 15 Cash shell under the AIM Rules; therefore should the
Company not find an acquisition which would constitute a reverse
takeover, under AIM Rule 14, within six months of 15 June 2018,
then trading in the Company's Ordinary Shares would be suspended
and would be cancelled after a further six months if a reverse
takeover was not found and approved by Shareholders.
The Board therefore unanimously recommends Shareholders to vote
in favour of the Resolution at the forthcoming General Meeting.
For further information visit www.mblgroup.co.uk
Contact:
Anton Lane
James Reynolds MBL Group plc 01454 777831
SPARK Advisory Partners
Limited (Nominated
Mark Brady Adviser) 0113 370 8970
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCSFSFLLFASEIA
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August 14, 2018 10:54 ET (14:54 GMT)
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