REG - K3 Bus Tech Grp PLC - Publication of Circular and Update

K3 Business TechnologyAnnouncement

03/04/2025 07:00

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RNS Number : 4377D  K3 Business Technology Group PLC  03 April 2025

AIM: KBT

K3 BUSINESS TECHNOLOGY GROUP PLC

("K3" or "the Group" or "the Company")

 

·      Publication of Circular relating to

Proposed Share Capital Reduction, Proposed Cancellation of the Share Premium
Account

and Notice of General Meeting

 

·      Update regarding possible return of value to Shareholders and
future plans, including possible de-listing

 

K3, which provides business-critical software solutions focused on fashion and
apparel brands, is pleased to announce that following the sale of NexSys
Solutions Limited ("NexSys"), completed in January 2025 for a gross cash
consideration of £36.0 million, the K3 Board believes that up to
approximately £29 million of the net proceeds, which amounted to £34.3
million, can be returned to Shareholders. This is after considering the
Group's current cash balances and the Board's expectations of the Group's
future cash requirements.

The mechanism of any return of net proceeds would be by way of a Tender Offer
and is, inter alia, subject to the completion of a share capital reduction (so
as to create the necessary distributable reserves) and approval by
Shareholders at a general meeting.

A circular explaining the details of and reasons for the proposed Share
Capital Reduction and why the Board considers the Share Capital Reduction to
be in the best interests of the Company and its Shareholders as a whole, has
been published today and will be sent to Shareholders. The proposed Share
Capital Reduction would result in, amongst other things, a reduction in the
nominal value of the Existing Ordinary Shares, from 25p to 5p, though the
number of shares in issue would not change.

The Circular contains a Notice of General Meeting, convened for 11.00 a.m. on
24 April 2025 at the offices of Cavendish Capital Markets at One Bartholomew
Close, London, WC1A 7BL. Part IV of the Circular sets out the Special
Resolution, which is being proposed to Shareholders in order to facilitate the
Share Capital Reduction. The Share Capital Reduction is also subject to an
appropriate Order of His Majesty's High Court of Justice in England. The
Directors unanimously recommend that Shareholders vote in favour of the
Special Resolution to be proposed at the General Meeting as they intend to do
so in respect of their beneficial holdings, which in aggregate amount to
61,701 Existing Ordinary Shares, representing approximately 0.14 per cent. of
the Company's existing issued Ordinary Share Capital. Kestrel Partners LLP has
given an irrevocable undertaking to vote in favour of the Special Resolution
in respect of an aggregate 12,990,869 Existing Ordinary Shares, representing
approximately 28.33 per cent. of the Company's existing ordinary share
capital.

The expected timetable of principal events is set out below. The Circular will
be made available on the Company's corporate website at
https://www.k3btg.com/investor-centre/
(https://www.k3btg.com/investor-centre/) .

Current Trading and Future Prospects

Following the NexSys Sale, the Group's continuing operations comprise:

 ●    the K3 Fashion portfolio, with annual recurring revenue ("ARR") of c.£6.0
      million at 30 November 2024 (2023: £5.8m);
 ●    the K3 Retail Solutions Business, with ARR of £5.8m at 30 November 2024
      (2023: £5.8m); and
 ●    the K3 Global Accounts services business, with revenue of £10.9m for the year
      ended 30 November 2024 (2023: £18.6m).

The Board is pleased to reconfirm its expectation set out in K3's Final
Results for 30 November 2024, announced on 27 February 2025, that the Group's
continuing operations will trade on a cash breakeven basis from March 2025
onwards.

Group pro forma cash balances at 28 February 2025, assuming £29 million of
capital is returned to shareholders, would be £6.1 million (including £3.3
million of restricted cash, which is restricted until July 2026).

The Board's focus remains on delivering value to Shareholders. It is expected
that this will be achieved by maintaining strong financial discipline,
continuing to simplify the Group as appropriate through the sale of non-core
businesses and to invest judiciously in profitable growth opportunities. As
further cash is realised in the Group, the Board intends to return it to
Shareholders in a timely manner.

Future Plans for the Group and Possible De-listing from AIM

Following the NexSys Sale and in line with the Board's ongoing strategy to
reduce costs and simplify the Group, the Board and certain Shareholders have
raised the question as to whether the Company's and Shareholders' best
interests are served by its continued admission to AIM following the planned
return of value to Shareholders. Accordingly, the Board will consult further
with Shareholders on this subject before recommending any course of action.
Where the Board concludes that a de-listing from AIM is the appropriate course
of action, a separate general meeting will be convened for a later date in
order that Shareholders can consider and vote on a special resolution
proposing a de-listing from AIM. Should such a de-listing be agreed, it would
be organised to become effective as soon as practicable after the planned
return of value to Shareholders.

Unless otherwise indicated all defined terms in this announcement shall have
the same meaning as described in the Circular.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 Publication of Circular document                                               3 April 2025
 Latest time for receipt of online proxy votes and Forms of Proxy for the       11.00 am on 22 April 2025
 General Meeting
 General Meeting                                                                11.00 am on 24 April 2025
 Expected date of initial directions hearing of the Court                       21 May 2025
 Expected date of Court Hearing to confirm the Share Capital Reduction          10 June 2025
 Registration of Court Order and Expected Effective Date for the Share Capital  by 13 June 2025
 Reduction

Notes

 

The expected dates for the confirmation of the Share Capital Reduction by the
Court and the Share Capital reduction becoming effective are based on
provisional dates that have been obtained for the required Court hearings of
the Company's application. These provisional hearing dates are subject to
change and dependent on the Court's timetable. If the expected dates of the
Court hearings are changed (and consequently the expected effective date for
the Share Capital Reduction), the Company will make further notifications via
a Regulatory Information Service.

The timetable assumes that there is no adjournment of the General Meeting. If
there is an adjournment, all subsequent dates are likely to be later than
those shown.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.

 

Enquiries:

 

 K3 Business Technology Group plc      Oliver Scott, Chairman              T: c/o 020 3178 6378
 www.k3btg.com (http://www.k3btg.com)  Eric Dodd, Chief Executive Officer

 Cavendish Capital Markets             Julian Blunt/ Dan Hodkinson         T: 020 7220 0500

 (NOMAD & Broker)                      (Corporate Finance)

                                       Sunila De Silva

                                       (Corporate Broking)

 KTZ Communications                    Katie Tzouliadis/ Robert Morton     T: 020 3178 6378

 

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