REG - Adams PLC - Proposed Cancellation of Admission

AdamsAnnouncement

25/10/2024 07:00

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RNS Number : 5627J  Adams PLC  25 October 2024

25 October 2024

 

Adams Plc

("Adams" or the "Company")

 

 

Proposed cancellation of admission of Ordinary Shares to trading on AIM

Proposed realisation of investments and return of capital to Shareholders

Initiation by the Company to use its existing Share Buyback Authority

 

 

The Company announces proposals to:

·      cancel the admission of the Company's Ordinary Shares to trading
on AIM; and

·      pursue a realisation of investments strategy and a return of
capital to shareholders over the short to medium term; and

·      use the Company's existing authority to purchase Ordinary Shares
to help enable Shareholders who wish to sell their Ordinary Shares.

 

The Directors have, after a period of review and consulting with the Company's
Major Shareholder, concluded that it is in the best interests of the Company
and its Shareholders to seek Shareholder approval for the cancellation of the
Admission. In accordance with Rule 41 of the AIM Rules, the Company has
notified the London Stock Exchange of the date of the proposed Cancellation.

 

As part of the above review, the Directors also considered the Company's small
capital base and its strategy with a focus to invest in the small to middle
market capitalisation sectors of the UK or Europe. The Directors have
concluded that this strategy is no longer sufficiently attractive and that the
Company should not make any further investments and instead should pursue an
orderly realisation of existing investments and return of capital to
shareholders over the short to medium term, following which it is expected
that the Company will be voluntarily wound up or subject to an administrative
dissolution pursuant to the Companies Act.

 

In order to facilitate the return of capital to shareholders process,
Shareholders are being asked to approve the Amendment Resolution to amend the
Articles.

 

In addition, the Directors are aware that there is very little liquidity in
the Ordinary Shares and that Shareholders who wish to sell their Ordinary
Shares ahead of the Cancellation may have difficulty in finding buyers. The
Directors have, therefore, agreed that the Company will use its existing Share
Buyback Authority to make on-market purchases of Ordinary Shares at a price of
4.00 pence per Ordinary Share, being a premium of approximately 7.5 per cent.
to the estimated net asset value of 3.72 pence per Ordinary Share of the
Company at 30 September 2024.

 

The Company has obtained irrevocable undertakings from the Major Shareholder,
representing approximately 94 per cent. of the Company's issued share capital,
to vote in favour of the Cancellation Resolution and the Amendment Resolution.

 

The Company is seeking Shareholders' approval of the Cancellation Resolution
and the Amendment Resolution at the Extraordinary General Meeting, which has
been convened for 4.00 p.m. on 27 November 2024 at 55 Athol Street, Douglas,
Isle of Man, IM1 1LA. If the Cancellation Resolution is passed at the EGM, it
is anticipated that the Cancellation will become effective at 7.00 a.m. on 5
December 2024.

 

A circular "the Circular" will shortly be sent to Shareholders which sets out
the background and reasons for the proposed Cancellation, the proposed
realisation of investments and return of capital to shareholders, the
initiation by the Company to use its existing Share Buyback Authority and to
explain the consequences of the Cancellation and provide reasons why the
Directors unanimously consider the Cancellation to be in the best interests of
the Company and its Shareholders as a whole.

 

The Notice of the EGM is set out in Part II of the Circular.

 

Background to and reasons for the Cancellation

 

The Directors have undertaken a review to evaluate the benefits and drawbacks
to the Company and its Shareholders of retaining the Admission. This review
has included, amongst other matters, the public market share trading and
valuation volatility of the Company and the increasing costs of maintaining a
public listing. There has been limited liquidity in the Ordinary Shares for
some time and as a result the Company's Major Shareholder has been the only
significant buyer of its Ordinary Shares and has increased his shareholding in
the Company to a current approximately 94 per cent. of the Company's issued
share capital.

 

Following this review, the Directors have concluded that the Cancellation is
in the best interests of the Company and its Shareholders as a whole.
Further details of the background to and reasons for the Cancellation are set
out below:

 

·      there is limited liquidity in the Ordinary Shares and, as a
result, the Directors believe that continued admission to trading on AIM no
longer sufficiently provides the Company with the advantage of providing wider
or more cost-effective access to capital in the medium to longer-term;

·      as a result of the limited liquidity in Ordinary Shares
highlighted above, the Admission does not necessarily offer investors the
opportunity to trade in meaningful volumes or with frequency within an active
market. With low trading volumes, the Company's share price can move up or
down significantly following trades of small volumes of Ordinary Shares; and

·      the considerable cost, management time and the legal and
regulatory burden associated with maintaining the Admission are
disproportionate to the benefits to the Company given that the continued
listing on AIM is unlikely to provide the Company with significantly wider or
more cost-effective access to capital.

 

Following careful consideration, the Directors believe that it is in the best
interests of the Company and Shareholders to seek the proposed Cancellation.

 

Proposed realisation of investments and return of capital to Shareholders

 

The Directors believe that UK small-cap public markets have changed
significantly over the last few years such that many of the small-cap listed
companies included in the Company's investment portfolio are also in the
situation where their current public market valuations do not reflect their
underlying potential and they no longer have access to cost-effective growth
capital.

 

As a result the Directors consider that the Company's strategy, with a focus
to invest in the small to middle market capitalisation sectors of the UK or
Europe, is no longer sufficiently attractive. In addition, the Company only
has a small capital base with total balance sheet net assets of approximately
£5.43 million at 30 September 2024 and which severely limits the alternative
investment strategy options available to it. The Directors have, therefore,
concluded that the Company should not make any further investments and instead
should pursue an orderly realisation of existing investments and return of
capital to Shareholders over the short to medium term, following which it is
expected that the Company will be voluntarily wound up or subject to an
administrative dissolution pursuant to the Companies Act.

 

The trading update provided in the "Current Trading" section 6 of this
announcement highlights that the Company had net assets of approximately
£5.43 million (equivalent to 3.72 pence per Ordinary Share) at 30 September
2024 and that this included equity investments with a carrying value of £5.39
million represented by seven quoted investment holdings valued at £3.16
million and four private unquoted investments valued at £2.23 million.

 

Whilst an orderly realisation of the seven quoted investment holdings should
be achievable in the short term, this is likely to take longer for the four
private unquoted investments.

 

The Directors intend to return capital to Shareholders by way of one or more
capital distributions as and when funds permit but there can be no certainty
on the timing or monetary amounts of such distributions.  The distributions
will constitute a reduction of the Company's share capital under section 58 of
the Companies Act and, in order to facilitate the process, Shareholders are
being asked to approve the Amendment Resolution to amend the Articles so that
the Directors can make the capital distributions without the prior sanction of
a special resolution.  If the articles are not amended, it may be necessary
to call one or more extraordinary general meetings to approve the capital
distributions before they can be made.

 

Furthermore, whilst the Directors hope that the total value of such
distributions will be not less than the Company's approximate 3.72 pence net
asset value per Ordinary Share at the 30 September 2024, there can be no
certainty that the total value of such distributions will not be materially
less than or be materially greater than 3.72 pence per Ordinary Share.

 

Process for, and principal effects of, the Cancellation

 

The Directors are aware that certain Shareholders may be unable or unwilling
to hold Ordinary Shares in the event that the Cancellation is approved and
becomes effective. Such Shareholders should consider selling their interests
in the market prior to the Cancellation becoming effective - see section 5
below for more details.

 

Under the AIM Rules, the Company is required to give at least 20 clear
Business Days' notice of Cancellation. Additionally, Cancellation will not
take effect until at least five clear Business Days have passed following the
passing of the Cancellation Resolution. If the Cancellation Resolution is
passed at the EGM, it is proposed that the last day of trading in Ordinary
Shares on AIM will be 4 December 2024 and that the Cancellation will take
effect at 7.00 a.m. on 5 December 2024.

 

The principal effects of the Cancellation will be that:

 

·     there would no longer be a formal market mechanism enabling
Shareholders to trade their shares through AIM;

·    the regulatory and financial reporting regime applicable to companies
whose shares are admitted to trading on AIM will no longer apply;

·    Shareholders will no longer be afforded the protections given by the
AIM Rules, such as the requirement to be notified of certain material
developments or events (including substantial transactions, financing
transactions, related party transactions and certain acquisitions and
disposals) and the separate requirement to seek shareholder approval for
certain other corporate events such as reverse takeovers or fundamental
changes in the Company's business;

·   Cairn Financial Advisers would cease to be the Company's nominated
adviser, and Peterhouse Capital Limited would cease to be the Company's
broker;

·    the Company will no longer be required to publicly disclose any change
in major shareholdings in the Company under the AIM Rules or the Disclosure
Guidance and Transparency Rules;

·     the Company will no longer be subject to UK MAR regulating inside
information and other matters;

·    whilst the Company's CREST facility will remain in place immediately
post the Cancellation, the Company's CREST facility may be cancelled in the
future and, although the Ordinary Shares will remain transferable, they may
cease to be transferable through CREST (in which case, Shareholders who hold
Ordinary Shares in CREST will receive share certificates);

·   stamp duty will be due on transfers of shares and agreements to
transfer shares unless a relevant exemption or relief applies to a particular
transfer;

·    the Ordinary Shares are likely to be more difficult to trade compared
to shares of companies trading on AIM;

·    in the absence of a formal market and quote, it may be more difficult
for Shareholders to determine the market value of their investment in the
Company at any given time; and

·    the Cancellation may have taxation or other commercial consequences
for Shareholders. Shareholders who are in any doubt about their tax position
should consult their own professional independent tax adviser.

 

The above considerations are not exhaustive, and Shareholders should seek
their own independent advice when assessing the likely impact of the
Cancellation on them.

 

For the avoidance of doubt, the Company will remain on the register of
companies in the Isle of Man in accordance with and, subject to the Companies
Act, notwithstanding the Cancellation.

 

Shareholders should also note that the City Code on Takeovers and Mergers will
continue to apply to the Company following the Cancellation and Shareholders
will remain entitled to the protections afforded to them by the Code until the
tenth anniversary of the date on which Admission is cancelled. However, the
City Code could cease to apply to the Company in the future if any changes to
the Board composition result in the majority of the Directors not being
resident in the Channel Islands, Isle of Man and United Kingdom.

 

The Company currently intends to continue to provide certain facilities and
services to Shareholders that they currently enjoy as shareholders of an AIM
company. The Company will:

 

·      continue to communicate information about the Company (including
annual accounts) to its Shareholders, as required by the Articles; and

·  continue, for at least 12 months following the Cancellation, to maintain
its website, https://www. adamsplc.co.uk (http://www.gygplc.com/) and to post
updates on the website from time to time, although Shareholders should be
aware that there will be no obligation on the Company to include all of the
information required under the Disclosure Guidance and Transparency Rules, AIM
Rule 26 or to update the website as required by the AIM Rules.

 

There will be no change to the composition of the Board immediately following
the Cancellation.

 

Transactions in the Ordinary Shares prior to and post the proposed
Cancellation

 

A. Prior to Cancellation and initiation by the Company to use its existing
Share Buyback Authority

Shareholders should note that they are able to trade in the Ordinary Shares on
AIM prior to Cancellation. Shareholders do not have to sell their Ordinary
Shares if they do not wish to do so. However, Shareholders who elect not to
sell their Ordinary Shares in the market prior to the Cancellation will,
subject to completion of the Cancellation, hold Ordinary Shares in an unlisted
company.

The Directors are aware that there is very little liquidity in the Ordinary
Shares and that Shareholders who wish to sell their Ordinary Shares may have
difficulty in finding buyers. The Directors have, therefore, agreed that the
Company will use its existing Share Buyback Authority to make on-market
purchases of Ordinary Shares at a price of 4.00 pence per Ordinary Share,
being at a premium of approximately 7.5 per cent. to the estimated net asset
value of 3.72 pence per Ordinary Share at 30 September 2024. The on-market
purchases of Ordinary Shares is subject to the Share Buyback Authority
condition that the purchase price, exclusive of expenses, is not greater than
105 per cent. of the average price at which the Ordinary Shares traded in the
five Business Days preceding the purchase. The average quoted bid price of the
Ordinary Shares in the five business days preceding the date of this
announcement was 4.0 pence per Ordinary Share. The funds required for the
Company to purchase Ordinary Shares will be financed by the Company from its
existing cash and liquid resources.

The Share Buyback Authority gives the Company authority to purchase up to a
maximum number of Ordinary Shares equal to 15 per cent. of its issued share
capital as at 26 June 2024.

The Company will use its corporate share dealing broker, Canaccord Genuity
Wealth Management, S
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Peter Port, Guernsey, Channel Islands
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, to purchase Ordinary Shares on-market at a price of 4.00 pence per Ordinary
Share under the Share Buyback Authority. Shareholders that would like to sell
their Ordinary Shares at 4.0 pence per Ordinary Share should request their
brokers to contact Canaccord Genuity Wealth Management in Guernsey directly on
+44 (0)1481 726511.

The Board is not making any recommendation as to whether or not shareholders
should buy or sell their Ordinary Shares.  The Existing Share Buyback
authority will expire in the event that the Cancellation is approved and
becomes effective, and the Directors do not intend from that point onwards to
make off-market purchases of Ordinary Shares.

 

B. Dealing and settlement arrangements post Cancellation

 

In the event that the Cancellation proceeds, there will be no market facility
for dealing in the Ordinary Shares and no price will be publicly quoted for
Ordinary Shares as from close of business on 4 December 2024, assuming the
Cancellation Resolution is approved on 27 November 2024. As such, interests in
Ordinary Shares are unlikely thereafter to be readily capable of sale and
where a buyer is identified, it may be difficult to place a fair value on any
such sale. While there can be no guarantee that Shareholders will be able to
sell any Shares, any Shareholder seeking to do so following the Cancellation
should contact the Company in writing at the registered office of the Company,
55 Athol Street, Douglas, Isle of Man, IM1 1LA (email: office@adamsplc.co.uk).
The Company will then be able to advise as to whether the Directors are aware
of any prospective buyers for any Ordinary Shares which the holder thereof
wishes to sell at that time.

Current Trading

 

On 27 June 2024, the Company released its annual report and audited financial
results for the year ended 31 March 2024 which included the following key
performance indicators as set out below:

 

                                                  31 March 2024  31 March 2023
 Net assets (£'000)                               4,983          5,110
 Net asset value per Ordinary Share (pence)       3.42           3.50
 Loss after tax (£'000)                           (127)          (2,370)
 Cash and short-term deposit with banks (£'000)   87             47

 

Current trading in the six months to 30 September 2024 is estimated to have
generated a net profit of approximately £0.45 million comprising a net
investment return of £0.55 million on mainly unrealised investment gains,
less administrative costs of £(0.10) million.

 

The carrying value of the Company's equity investments at 30 September 2024
was £5.39 million represented by seven quoted investment holdings valued at
£3.16 million and four private investments valued at £2.23 million.

 

The Company held cash balances of £0.07 million as at 30 September 2024.

 

Net assets increased to approximately £5.43 million (equivalent to 3.72 pence
per Ordinary Share) at the 30 September 2024 half year balance sheet date.

 

Process for Cancellation

 

Under the AIM Rules, it is a requirement that the Cancellation must be
approved by Shareholders holding not less than 75 per cent. of votes cast by
Shareholders (whether present in person or by proxy) at the Extraordinary
General Meeting. Accordingly, the Notice of Extraordinary General Meeting set
out in Part II of the Circular contains a special resolution to approve the
Cancellation.

 

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the
London Stock Exchange to cancel the admission of its shares to trading on AIM
to notify shareholders and to separately inform the London Stock Exchange of
its preferred cancellation date at least 20 Business Days prior to such date.
In accordance with AIM Rule 41, the Directors have notified the London Stock
Exchange of the Company's intention, subject to the Cancellation Resolution
being passed at the Extraordinary General Meeting, to cancel the Admission on
5 December 2024.

 

Accordingly, if the Cancellation Resolution is passed, the Cancellation will
become effective at 7.00 a.m. on 5 December 2024. If the Cancellation becomes
effective, Cairn Financial Advisers will cease to be nominated adviser of the
Company and the Company will no longer be required to comply with the AIM
Rules.

 

Extraordinary General Meeting

 

The Extraordinary General Meeting will be held at the Company's registered
office at 55 Athol Street, Douglas, Isle of Man, IM1 1LA at 4.00 p.m. on 27
November 2024.

 

The Cancellation Resolution to be proposed at the Extraordinary General
Meeting is a special resolution to approve the Cancellation as set out the
Notice of Extraordinary General Meeting in Part II of the Circular.  The
Amendment Resolution to be proposed at the Extraordinary General Meeting is a
special resolution to amend the Articles as set out the Notice of
Extraordinary General Meeting in Part II of the Circular.

 

Action to be taken in relation to the Extraordinary General Meeting

 

Enclosed with the Circular is a Form of Proxy for use at the Extraordinary
General Meeting. Whether or not you intend to attend the Extraordinary General
Meeting in person you are requested to complete the Form of Proxy in
accordance with the instructions printed on it and to return it to the
Company's registrars by post or scanned and e-mailed to
Corporate.Governance@fim.co.im (mailto:Corporate.Governance@fim.co.im) ,
together with the power of attorney or other authority (if any) under which it
is signed (or a certified copy of such authority) to FIM Capital Limited, 55
Athol Street, Douglas, so as to arrive not later than 4.00 p.m. on 25 November
2024 (or in the case of an adjournment of the Extraordinary General Meeting,
not later than 48 hours before the time fixed for the holding of the adjourned
meeting). The completion and depositing of the Form of Proxy will not preclude
you from attending and voting in person at the Extraordinary General Meeting
should you wish to do so.

 

Recommendation

 

The Directors consider that the Cancellation is in the best interests of the
Company and its Shareholders as a whole and, therefore, unanimously recommend
that you vote in favour of the Cancellation Resolution and the Amendment
Resolution at the Extraordinary General Meeting.

 

 

 

 

Enquiries:

 

Adams Plc        Michael Bretherton
 
                        Tel: +44 1534 719 761

 

Nomad             Cairn Financial Advisers LLP. Sandy Jamieson, James
Caithie                Tel: +44 207 213 0880

 

Broker              Peterhouse Capital Limited. Heena Karani,
Martin Lampshire                    Tel: +44 207 469 0930
(tel:0207%20469%200930)

 

 

 

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

 

Notice provided to the London Stock Exchange
to
25 October 2024 notify it of the proposed Cancellation

 

Publication and posting of the Circular and the Form of Proxy
                                          25
October
2024

 

Latest time for receipt of proxy appointments
in
4.00 p.m. on 25 November 2024 respect of the Extraordinary General Meeting

 

Extraordinary General
Meeting
4.00 p.m. on 27 November 2024

 

Last day of dealings in Ordinary Shares on AIM
 
                      4 December 2024
Cancellation         7.00 a.m. on 5 December 2024

 

 

If any of the details contained in the timetable above should change, the
revised time and dates will be notified to Shareholders by means of a
Regulatory Information Service (as defined in the AIM Rules) announcement.

DEFINITIONS

 

The following definitions apply throughout this announcement, unless the
context requires otherwise:

"Admission"
the admission of the Ordinary Shares to trading on AIM;

"AIM"
AIM, the market operated by the London Stock Exchange;

"AIM
Rules"
the rules and guidance for companies whose shares are admitted to trading on
AIM entitled "AIM Rules for Companies" published by the London Stock Exchange,
as amended from time to time;

 

  "Amendment Resolution"                The resolution to
amend the Articles to be proposed at the Extraordinary General Meeting in the
form set out in Part II of the Circular;

 

 
"Articles"
the Company's current articles of association;

 

"Business Day"
a day (excluding Saturdays, Sundays and public holidays in England and Wales)
on which banks are generally open for the transaction of normal banking
business in London;

 

"Cairn Financial Advisers"                Cairn Financial
Advisers LLP, the Company's nominated adviser;

 

 

"Cancellation"
the cancellation of Admission in accordance with Rule 41 of the AIM Rules,
subject to passing of the Cancellation Resolution;

 

"Cancellation Resolution"                 the resolution to
approve the Cancellation to be proposed at the Extraordinary General Meeting
in the notice set out in Part II of the Circular;

 

"Circular"
the document containing information about the Cancellation and the
Extraordinary General Meeting, being sent to shareholders today;

 

"Company" or "Adams"                 Adams Plc, a
company incorporated in the Isle of Man with registered number 004145V and
having its registered office at 55 Athol Street, Douglas, Isle of Man, IM1
1LA;

 

"Companies Act"                              the
Isle of Man Companies Act 2006 (as amended from time to time);

 

"CREST"                                         the
relevant system (as defined in the CREST Regulations) in respect of which
Euroclear is the operator (as also defined in the CREST Regulations);

 

"CREST Regulations"                       the
Uncertificated Securities Regulations 2001 (SI2001/3755), (as amended from
time to time);

 

"Directors" or "Board"                        the
directors of the Company;

 

"Disclosure Guidance and Transparency Rules"

the disclosure rules and transparency rules made by the UK Financial Conduct
Authority pursuant to section 73A of FSMA;

 

 "Extraordinary General Meeting"

 or "EGM"
the general meeting of the Company convened for 4.00 p.m. on 27 November 2024
and any adjournment thereof, notice of which is set out in Part II of the
Circular;

 

"Form of Proxy"                            the form of proxy
enclosed with the Circular for use by Shareholders in connection with the
Extraordinary General Meeting;

 

"FSMA"                                             the
Financial Services and Markets Act 2000 (as amended from time to time);

 

 

"London Stock Exchange"                London Stock Exchange
plc;

 

"Major Shareholder"                          Richard
Griffiths and his controlled company undertakings;

 

"Notice of Extraordinary General

 Meeting" or "Notice"
the notice of the Extraordinary General Meeting which is set out in Part II of
the

 
        Circular;

 

"Ordinary Shares"                             the
ordinary shares in the capital of the Company of £0.01 each

and "Ordinary Share" means any one of them;

 

"Panel"
the Panel on Takeovers and Mergers;

 

  "Registrars"
            FIM Capital Limited of 55 Athol Street, Douglas, Isle
of Man

 
IM1 1LA;

 

 

"Shareholders"
holders of Ordinary Shares from time to time and "Shareholder" means any one
of them;

 

  "Share Buyback Authority"               the general authority
for the Company to make on-market purchases of up to 15 per cent. of the
issued share capital of the Company as at 26 June 2024;

 

 "Takeover Code"
the City Code on Takeovers and Mergers;

 

 "UK MAR"                                       Regulation
(EU) (No 596/2014) of the European Parliament and of the Council of 16 April
2014 on market abuse to the extent that it forms part of the domestic law of
the United Kingdom including by virtue of the European Union (Withdrawal) Act
2018 (as amended by virtue of the European Union (Withdrawal Agreement) Act
2020).

This announcement contains inside information as defined in Article 7 of the
Market Abuse Regulation No. 596/2014 ("MAR") as retained as part of UK law by
virtue of the European Union (Withdrawal) Act 2018 as amended

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.

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