REG - Circle Property PLC - Proposed Disposal and Proposed Delisting

Circle PropertyAnnouncement

24/02/2023 07:00

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RNS Number : 9204Q  Circle Property PLC  24 February 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 (AS AMENDED) (WHICH FORMS PART OF DOMESTIC UK LAW
PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED)). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

24 February 2023

Circle Property plc

("Circle", the "Company" or the "Group")

 

Proposed Disposal of Concorde Park

Proposed Cancellation of admission of Ordinary Shares to trading on AIM

and

Notice of Extraordinary General Meeting

 

Circle Property plc (AIM: CRC), is pleased to announce that it has
conditionally exchanged contracts to sell Concorde Business Park, Maidenhead
("Concorde Park"), the Group's largest remaining asset, to Skelton
Developments (Nottingham) Limited (the "Buyer") for a cash consideration of
approximately £12.3 million (the "Disposal"). Completion of the Disposal is
expected to take place on 29 March 2023, subject to Shareholder approval.

 

Following Completion, the net proceeds from the Disposal will be held as Group
cash and are expected to be returned to Shareholders through the proposed B
Shares Issues as announced by the Company on 20 January 2023, the first of
which is expected to occur in March 2023.

 

Upon completion of the Disposal, the Company will be regarded as an AIM Rule
15 cash shell, having ceased to own, control or conduct all or substantially
all, of its existing trading business, activities or assets. The Disposal is
therefore conditional on the consent of Shareholders at the Extraordinary
General Meeting. The Resolutions to be proposed at the Extraordinary General
Meeting also include a resolution approving the future disposal of the
Company's final remaining asset, 300 Pavilion Drive, Northampton, when
appropriate (the "Final Disposal").

 

In addition, the Company is seeking Shareholders' approval to cancel the
admission of the Company's Ordinary Shares to trading on AIM. In accordance
with Rule 41 of the AIM Rules, the Company has notified the London Stock
Exchange of the proposed Cancellation. Given that the Board wishes to complete
the Returns of Capital whilst the Company remains traded on AIM, the
definitive timetable in relation to Cancellation is dependent on timing of the
receipt of completion monies from the sale of Somerset House and 400 Pavilion
Drive (expected in late February and mid March 2023), and consequently, the
timing of the proposed Returns of Capital to Shareholders. Assuming the
passing of the Resolutions, completion of the Disposal and Returns of Capital
in March and April 2023, it is expected that Cancellation will occur in May
2023.

 

A copy of the Circular containing more information in relation to the
Disposal, Final Disposal, Cancellation and Notice of Extraordinary General
Meeting will be posted to Shareholders on 28 February 2023 and will be
available on the Company's website at
https://www.circleproperty.co.uk/investors/reports-and-presentations/2023
(https://www.circleproperty.co.uk/investors/reports-and-presentations/2023)
(http://www.circleproperty.co.uk) shortly.

 

The Extraordinary General Meeting will be held at the offices of Oak Group
(Jersey) Limited, 3rd Floor, IFC5 Castle Street, St. Helier, Jersey, JE2 3BY,
Channel Islands at 3.30 p.m. on 22 March 2023.

 

 

Enquiries:

 

 Circle Property Plc                     +44 (0)20 7930 8503
 John Arnold, CEO

 Edward Olins, COO

 Cenkos Securities plc                  +44 (0)20 7397 8900
 Katy Birkin

 George Lawson

 Radnor Capital                         +44 (0)20 3897 1830

 Joshua Cryer

 Iain Daly

 Camarco                                +44 (0)20 3757 4992
 Ginny Pulbrook

 Toby Strong

 

 

Details of the Proposed Disposal of Concorde Park, proposed Cancellation of
admission of Ordinary Shares to trading on AIM and Notice of Extraordinary
General Meeting

 

1.          Introduction

 

The Company announces that it has conditionally exchanged contracts to sell
Concorde Business Park, Maidenhead ("Concorde Park"), the Group's largest
remaining asset, to Skelton Developments (Nottingham) Limited (the "Buyer")
for a cash consideration of approximately £12.3 million (the "Disposal").
Completion of the Disposal is expected to take place on 29 March 2023, subject
to Shareholder approval.

 

Following Completion, the net proceeds from the Disposal will be held as Group
cash and are expected to be returned to Shareholders through the proposed B
Shares Issues as announced by the Company on 20 January 2023, the first of
which is expected to occur in March 2023.

 

Upon completion of the Disposal, the Company will be regarded as an AIM Rule 15 cash shell, having ceased to own, control or conduct all or substantially all, of its existing trading business, activities or assets. The Disposal is therefore conditional on the consent of Shareholders at the Extraordinary General Meeting. The Resolutions included in the Notice of Extraordinary General Meeting at the end of this document also include a resolution approving the future disposal of the Company's final remaining asset, 300 Pavilion Drive, Northampton, when appropriate (the "Final Disposal").
 
In addition, the Company is seeking Shareholders' approval to cancel the admission of the Company's Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the proposed Cancellation. Given that the Board wishes to complete the Returns of Capital whilst the Company remains traded on AIM, the definitive timetable in relation to Cancellation is dependent on timing of the receipt of completion monies from the sale of Somerset House and 400 Pavilion Drive (expected in late February and mid March 2023), and consequently, the timing of the proposed Returns of Capital to Shareholders. Assuming the passing of the Resolutions, completion of the Disposal and Returns of Capital expected in March and April 2023 it is expected that Cancellation will occur in May 2023.

 

2.          Background to, and reasons for, the Disposal

 

Introduction

 

On 14 February 2022, the Company announced its strategy to make targeted asset
sales in an orderly manner over a period of two to three years (if not
sooner). The Board stated that it was committed to maximising returns and
delivering value to Shareholders and expected that a minimum of two returns of
capital would be made to Shareholders.

 

The Company announced a Capital Reduction and proposed Return of Capital on 20
January 2023 which was approved by Shareholders at the extraordinary general
meeting held on 15 February 2023. Subject to successful application for
reporting fund status as detailed in the circular published by the Company on
20 January 2023, the Board expects that the first Return of Capital will take
place in March 2023.

 

Whilst it is currently expected that the Company will be accepted as a
reporting fund by HMRC, if for any reason following confirmation from HMRC
that is not the case, which would result in the proposed B Share Issues being
treated as income rather than capital, the Directors may look to pursue
alternative ways of returning cash to Shareholders.

 

Contracts were exchanged to sell the Company's remaining property in
Birmingham (Somerset House, Temple Street) as announced on 23 November 2022,
which is expected to complete in late February 2023, for a consideration of
£15.18 million.  In addition, on 24 January 2023, the Company announced that
it had exchanged contracts on the sale of Victory House, 400 Pavilion Drive,
Northampton ("400 Pavilion Drive") at a sale price of £2.75 million, with
completion expected by mid-March 2023. Subject to the timing of the completion
of the sale of Somerset House, the first Return of Capital in March 2023 is
expected to be for approximately £46 million (£1.57 per Ordinary Share).

 

Assuming completion of the sale of Somerset House and 400 Pavilion Drive as
set out above, as at the date of this announcement, the Company's remaining
assets are Concorde Park and Park House, 300 Pavilion Drive, Northampton
Business Park ("300 Pavilion Drive"). 300 Pavilion Drive is currently being
marketed for sale. It is currently the Board's intention to have sold 300
Pavilion Drive prior to Cancellation occurring, in order for the disposal
proceeds to be returned to Shareholders by way of a Return of Capital whilst
the Company is admitted to trading on AIM. However, this will depend on the
timing of any sale of 300 Pavilion Drive and the Board will keep this under
review noting the costs associated with maintaining a quotation on AIM.

 

Disposal of Concorde Park and AIM Rule 15

 

The Company today announced that it has entered into a binding conditional
sale and purchase agreement ("SPA") for the sale of Concorde Park, the Group's
largest asset, to Skelton Developments (Nottingham) Limited (the "Buyer") for
a cash consideration of approximately £12.3 million (the "Disposal") payable
on Completion. Completion of the Disposal is expected to take place five
working days following Shareholder approval at the Extraordinary General
Meeting to be held on 22 March 2023, or earlier if agreed between the Company
and the Buyer.

 

Concorde Park comprises approximately 68,919 sq ft of office space including
approximately 22,308 sq ft of currently vacant refurbished offices, available
to let. Concorde Park is 68% let, as follows: Socionext Europe GMBH (27.64%),
Regus Maidenhead Concorde Park Limited (23.8%), Avetta Limited (6.77%),
Stabilo International GMBH (5.56%) and Lambert Smith Hampton Group Limited
(3.85%). Concorde Park has total rent passing of approximately £1.11 million
per annum (£23.87 psf overall) and total estimated rental value once fully
let of approximately £1.63 million per annum. Concorde Park was acquired by
the Company in August 2019 for £14.6 million and had a valuation as at 30
September 2022 of £15.9 million. The profit before tax for the year ended 31
March 2022 attributable to Concorde Park was £0.63 million.

 

In accordance with AIM Rule 15, the Disposal constitutes a fundamental change
of business of the Company. The Disposal is therefore conditional on the
consent of Shareholders at the Extraordinary General Meeting. The Resolutions
at the end of the Circular also include a resolution approving the future sale
of 300 Pavilion Drive, when appropriate.

 

On completion of the Disposal, the Company will cease to own, control or
conduct all or substantially all, of its existing trading business, activities
or assets. The Company will therefore become an AIM Rule 15 cash shell. As
there is no intention by the Directors to make an acquisition or acquisitions
which constitute a reverse takeover under AIM Rule 14 (including seeking
re-admission as an investing company (as defined under the AIM Rules)) on or
before the date falling six months from completion of the Disposal or be
re-admitted to trading on AIM as an investing company under the AIM Rules
(which requires the raising of at least £6 million), the Directors are
seeking Shareholder approval for Cancellation, as detailed below.

 

3.          Background to, and reasons for, the proposed Cancellation

 

The Board has concluded that, in light of the Company becoming an AIM Rule 15
cash shell in the near future with no trading business, it is in the best
interests of the Company and its Shareholders to seek Shareholders' approval
to cancel the admission of the Company's Ordinary Shares to trading on AIM. In
accordance with Rule 41 of the AIM Rules, the Company has notified the London
Stock Exchange of the proposed Cancellation. . Assuming the passing of the
Resolutions, completion of the Disposal and Returns of Capital expected in
March and April 2023, it is expected that Cancellation will occur in May 2023.

 

Pursuant  to  Rule  41  of  the  AIM  Rules,  Resolution 3 (relating
to the Cancellation)  requires  the  approval  of  not  less than 75 per
cent. of the votes cast by Shareholders (whether present in person or by
proxy) at the Extraordinary General Meeting. Resolution 3 is conditional upon
(i) Resolution 1 being approved; and (ii) the completion of the Disposal on
the terms of the Share Purchase Agreement.

 

Since admission to AIM, the Company has suffered from limited liquidity in the
Ordinary Shares and the share price has remained at a significant discount to
the Company's net asset value ("NAV"). The closing mid-market price of the
Ordinary Shares on 23 February 2023 (being the latest practicable date prior
to this announcement) was £2.09, a 9 per cent. discount to an unaudited
estimated NAV per share as at 31 January 2023 of £2.30.

 

The Directors have conducted a review of the benefits and disadvantages to
the Company and its Shareholders in retaining its admission to trading on AIM.
The Directors believe that the Cancellation is in the best interests of the
Company and its Shareholders as a whole. Following the Disposal, the Returns
of Capital and the Final Disposal in line with the Company's stated strategy,
the Company will have no trading business and limited cash resources.
Maintaining the Company's admission to trading on AIM requires significant
management time, legal and regulatory obligations, and comes with material
financial costs (such as professional fees, London Stock Exchange fees and
other costs associated with being an AIM-traded company) that the Directors
believe are disproportionate to the benefits to the Company.

 

4.          Process for, and principal effects of, the Cancellation

 

Under the AIM Rules, the Company is required to give at least 20 clear
Business Days' notice of the Cancellation. Pursuant to Rule 41 of the AIM
Rules, the Cancellation is also conditional upon the approval of not less than
75 per cent. of the votes cast by Shareholders (whether present in person or
by proxy) at an Extraordinary General Meeting. The Notice at the end of the
Circular contains Resolution 3 which proposes that the Company's admission to
trading on AIM be cancelled. Additionally, Cancellation will not take effect
until at least five clear Business Days have passed following the passing of
Resolution 3.

 

Given that the Board wishes to complete the Returns of Capital whilst the
Ordinary Shares remain admitted to trading on AIM, the definitive timetable in
relation to Cancellation is dependent on timing of the receipt of completion
monies from disposals and the timing of the proposed Returns of Capital to
Shareholders. Assuming the passing of the Resolutions, completion of the
Disposal and Returns of Capital expected in March and April 2023, it is
expected that Cancellation will occur in May 2023. The Cancellation timetable
will be announced to Shareholders via a Regulatory Information Service in due
course. Shareholders should note that Cancellation will not take place if
Resolution 3 is not passed at the Extraordinary General Meeting. Resolution 3
is conditional upon (i) Resolution 1 being approved; and (ii) the completion
of the Disposal on the terms of the Share Purchase Agreement.

 

As soon as possible following the Cancellation, it is the Board's intention to
liquidate solvently the Group and therefore no matched bargain facility will
be implemented and there will be no formal market for Shareholders to effect
transactions in the Ordinary Shares following Cancellation.

 

The principal effects of the Cancellation will be that:

 

·     there will be no public market on any recognised investment
exchange or multilateral trading facility for the Ordinary Shares and,
consequently, there can be no guarantee that a Shareholder will be able to
purchase or sell any Ordinary Shares;

 

·     while the Ordinary Shares will remain freely transferable, it is
likely that the liquidity and marketability of the Ordinary Shares will, in
the future, be more constrained than at present and the secondary market value
of such Ordinary Shares may be adversely affected as a consequence;

 

·     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;

 

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

 

·     the levels of disclosure and corporate governance within the Group
may not be as stringent as those for a Company quoted on AIM;  however the
Company will continue to be subject to the City Code for a period of at least
ten years from the date of Cancellation;

 

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

 

·     in order to increase the cost saving by becoming a private company,
following the Cancellation, the Company will no longer be obligated to produce
and publish half-yearly reports and related financial statements;

 

·     the Company will cease to have a nominated adviser and broker;

 

·     whilst the Company's CREST facility will remain in place following
the Cancellation, the Company's CREST facility may be cancelled in the future
and, in that event, although the Ordinary Shares will remain transferable,
they will cease to be transferable through CREST.  In this instance,
Shareholders who hold Ordinary Shares in CREST will receive share
certificates; and

 

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

 

Shareholders should be aware that if the Cancellation takes effect, they will
at that time cease to hold shares in a quoted company and will become
Shareholders in an unquoted company which will be likely significantly to
reduce the marketability and liquidity of the Ordinary Shares and the
principal effects referred to above will automatically apply to the Company
from the date of the Cancellation.

 

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

 

5.          Extraordinary General Meeting

 

             Set out at the end of the Circular is a Notice of
Extraordinary General Meeting to be held at the offices of Oak Group (Jersey)
Limited at 3rd Floor, IFC5 Castle Street, St. Helier, Jersey, JE2 3BY, Channel
Islands at 3.30 p.m. on 22 March 2023 at which the following Resolutions will
be proposed:

 

·        Resolution 1 (to approve the Disposal)

·        Resolution 2 (to approve the Final Disposal)

·        Resolution 3 (to approve the proposed Cancellation)

 

All Resolutions are being proposed as special resolutions and will require
approval by 75 per cent. of those votes cast (by persons present in person or
by proxy) at the Extraordinary General Meeting to be passed.

 

Completion of the Disposal, the Final Disposal and Cancellation are
conditional, inter alia, on Shareholders passing the respective Resolutions
being proposed at the Extraordinary General Meeting. If Shareholders do not
pass the Resolutions, completion of the Disposal, the Final Disposal and
Cancellation will not proceed.

 

6.          Recommendation

 

The Board believes that the Resolutions and Disposal, Final Disposal and
Cancellation are in the best interests of the Company and the Shareholders as
a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour
of the Resolutions to be proposed at the Extraordinary General Meeting, as all
of the Directors holding Ordinary Shares intend to do in respect of their own
beneficial holdings of 5,334,069 Ordinary Shares representing approximately
18.26 per cent. of the Company's existing Ordinary Shares.

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

 Announcement of the Disposal and the proposed Cancellation pursuant to AIM  24 February 2023
 Rule 41

 Publication of the Circular                                                 24 February 2023

 Posting of the Circular                                                     28 February 2023

 Latest time and date for receipt of Forms of Proxy for the Extraordinary    3.30 p.m. on 20 March 2023

 General Meeting

 Extraordinary General Meeting                                               3.30 p.m. on 22 March 2023

 Completion of the Disposal                                                  29 March 2023

 Cancellation of the Ordinary Shares from trading on AIM*                    May 2023

* In accordance with Rule 41 of the AIM Rules, the Company has notified the
London Stock Exchange of the proposed Cancellation. Given that the Board
wishes to complete the Returns of Capital whilst the Ordinary Shares remain
traded on AIM, the definitive timetable in relation to Cancellation is
dependent on timing of the receipt of completion monies from disposals and the
timing of the proposed Returns of Capital to Shareholders. Assuming the
passing of the Resolutions, completion of the Disposal and Returns of Capital
expected in March and April 2023, it is expected that Cancellation will occur
in May 2023. Further announcements will be made by the Company through a
Regulatory Information Service, as appropriate.

 

DEFINITIONS

 

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

 

 "AIM"                                      the market of that name, operated by the London Stock Exchange

 "AIM Rules"                                together, the AIM Rules for Companies and the AIM Rules for Nominated Advisers

 "AIM Rules for Companies"                  the AIM Rules for Companies published by the London Stock Exchange, as amended
                                            from time to time

 "AIM Rules for Nominated Advisers"         the AIM Rules for Nominated Advisers published by the London Stock Exchange,
                                            as amended from time to time

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

 "B Share Issues"                           the proposed distributions of the proceeds of the Company's disposals to
                                            Shareholders through issues of B Shares as announced on 20 January 2023

 "Business Day"                             any day on which banks are generally open in England and Wales for the
                                            transaction of business, other than a Saturday, Sunday or public holiday

 "Cancellation"                             the proposed cancellation of the admission to trading on   AIM of the
                                            Ordinary Shares, subject to passing of Resolutions 1 and 3 and in accordance
                                            with Rule 41 of the AIM Rules

 "Capital Reduction"                        the reduction of the Company's stated capital by cancelling and extinguishing
                                            capital, with the resulting reduction moneys being credited to a special
                                            reserve of the Company, the 'capital redemption reserve', as detailed in the
                                            circular dated 20 January 2023

 "Cenkos"                                   Cenkos Securities plc, the Company's nominated adviser and broker,
                                            incorporated in England & Wales with company registration number 05210733

 "Company" or "Circle"                      Circle Property plc, a company incorporated in Jersey on 4 December 2015 with
                                            company number 120165

 "Completion"                               completion of the Disposal

 "Consideration"                            the total cash consideration to be paid in accordance with the terms of the
                                            Disposal comprising approximately £12.3 million at Completion

 "CREST Manual"                             the rules governing the operation of CREST as published by Euroclear

 "CREST Regulations"                        the Uncertificated Securities Regulations 2001 (SI 2001/3755) and the
                                            Companies Uncertificated Securities (Jersey) Order 1999 as amended from time
                                            to time, and any applicable rules made under those regulations

 "Disposal"                                 the proposed disposal of Concorde Park, Maidenhead

 "Euroclear"                                Euroclear UK & Ireland Limited, the operator of CREST

 "Extraordinary General Meeting" or "EGM"   the Extraordinary General Meeting of the Company to be held at the offices of
                                            Oak Group (Jersey) Limited at 3(rd) Floor, IFC5 Castle Street, St. Helier,
                                            Jersey, JE2 3BY, Channel Islands at 3.30 p.m. on 22 March 2023, notice of
                                            which is set out at the end of the Circular

 "Financial Conduct Authority" or "FCA"     the UK Financial Conduct Authority

 "Final Disposal"                           the proposed future disposal of the Company's final remaining asset, 300
                                            Pavilion Drive, Northampton

 "Form of Proxy"                            the form of proxy relating to the Extraordinary General Meeting being sent to
                                            Shareholders (where applicable) with this document

 "FSMA"                                     the UK Financial Services and Markets Act 2000 (as amended)

 "Group"                                    the Company and its subsidiary undertakings

 "Jersey Companies Law"                     the Companies (Jersey) Law 1991 (as amended)

 "London Stock Exchange"                    London Stock Exchange plc

 "MAR" or "Market Abuse Regulation"         the UK Market Abuse Regulation (Regulation 596/2014)

 "Notice of Extraordinary General Meeting"  the notice convening the Extraordinary General Meeting set out at the end of
                                            the Circular

 "Official List"                            the official list of the UK Listing Authority

 "Ordinary Shares"                          ordinary shares of no par value in the capital of the Company

 "Prospectus Regulation Rules"              the prospectus regulation rules of the Financial Conduct Authority made under
                                            Part VI of FSMA

 "Registrars"                               Computershare Investor Services (Jersey) Limited

 "Regulatory Information Service" or "RIS"  one of the regulatory information services authorised by the London Stock
                                            Exchange to receive, process and disseminate information in respect of AIM
                                            quoted companies

 "Resolutions"                              the resolutions proposed to be passed by Shareholders at the Extraordinary
                                            General Meeting, as set out in the Notice of Extraordinary General Meeting at
                                            the end of the Circular and a reference to a Resolution shall be construed
                                            accordingly

 "Returns of Capital"                       the consecutive returns of capital pursuant to the allotment and redemption of
                                            B Shares as contemplated by the circular to Shareholders published on 20
                                            January 2023

 "Shareholders"                             holders of the Ordinary Shares

 "Share Purchase Agreement" or "SPA"        the conditional agreement dated 23 February 2023 between (1) the Company and
                                            (2) Skelton Developments (Nottingham) Limited relating to the Disposal

 "UK" or "United Kingdom"                   the United Kingdom of Great Britain and Northern Ireland

 "£" or "Sterling"                          pounds sterling, the lawful currency of the United Kingdom

 

 

 

 

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