REG-London Finance & Investment Group Plc: Return of Capital Proposals

London Finance & InvestmentAnnouncement

26/02/2025 17:30

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

This announcement contains inside information for the purposes of UK Market
Abuse Regulation.

 

26 February 2025

 

London Finance & Investment Group PLC

("Lonfin" or the "Company")

 

 

Proposed return of cash to Shareholders by means of a Capital Reduction

Withdrawal of admission to trading on the London Stock Exchange

Termination of listing on JSE Limited

and

Distribution of Circular and Notice of General Meeting

 

The Board has, after considerable analysis and consideration decided that it
is in the best interests of Shareholders to cease LonFin's investment
activities and to return surplus capital in the Company to Shareholders by way
of a Return of Capital. It is proposed that the Return of Capital will result
in Shareholders receiving an estimated 71 pence in cash for each Ordinary
Share held at the Capital Reduction Record Date.

 

A circular is being sent to Shareholders shortly setting out the background
to, and the reasons for, the proposed Return of Capital, the withdrawal of
admission to trading on the London Stock Exchange and termination of the
listing on JSE Limited and a notice of a General Meeting at which Resolutions
will be proposed to approve the Proposals which will be held at Central Court,
25 Southampton Buildings, London WC2A 1AL at 11.00 a.m. on 28 March 2025 (the
"Circular").  The Circular will also contain details of how Shareholders can
vote at the General Meeting.   In addition, the Circular will be available on
the Company's website at
https://www.city-group.com/london-finance-investment-group-plc/ 

as well as submitted to the National Storage Mechanism
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

 

The Circular is being sent to Shareholders given that their approval is
required both for the Return of Capital and for the cancellation of trading in
the Company's Ordinary Shares in accordance with UK Listing Rule 21.  
Extracts from the Circular are set out at Appendix Two below, with the
Expected Timetable of Events set out at Appendix One.  

 

Capitalised terms in this announcement have the same meaning as defined in the
Company's Circular as described above.

 

The Independent Directors accept responsibility for the contents of this
announcement.

 

For further enquiries:

 

 London Finance & Investment Group PLC  Tel: +44 (0) 20 3709 8740  
 Beaumont Cornish Limited               Tel: +44 (0) 207 628 3396  
 Questco Corporate Advisory PTY Ltd     Tel: +27 (0) 82 786 3537   
  APPENDIX ONEEXPECTED TIMETABLE OF PRINCIPAL EVENTS:
 

Each of the date references set out below are to 2025.

 

Record date for the purpose of determining which SA Shareholders of Friday,
14 February the Company are entitled to receive the Circular

Publication and despatch of the Circular Wednesday, 26 February Publication
and dispatch of the Circular announced on SENS             
Wednesday, 26 February

Last day to trade for SA Shareholders to be able to participate and vote
at Thursday, 20 March the General Meeting

Last day to trade for UK Shareholders to be able to participate and
vote Monday, 24 March at the General Meeting

Latest date for receipt of Forms of Proxy for the General Meeting
at Wednesday, 26 March

11.00 a.m. (12.00 p.m. SA time) on:

 

Voting Record Date for the General Meeting at 6.00 p.m. (UK & SA
time) Wednesday, 26 March General Meeting at 11.00 a.m. (12.00 p.m. SA time)
on                            Friday, 28 March

Result of General Meeting announced via RIS and on SENS Friday, 28 March

 

Last day to file claim form and witness statements at High Court  Tuesday, 8
April Directions hearing at High Court              Wednesday, 16
April

Advertisement of Capital Reduction posted in newspaper, as directed
by Tuesday, 22 April the High Court

Open court hearing at High Court Tuesday, 29 April

 

Announce Finalisation information, Capital Reduction Payment amount Tuesday,
29 April and currency conversion rate on SENS

Last day to trade in the Company's Ordinary Shares on the London Wednesday,
30 April Stock Exchange

Suspension of trading of the Company's Ordinary Shares on the
London Thursday, 1 May Stock Exchange

Cancellation of trading of the Company's Ordinary Shares on the
London Friday, 2 May Stock Exchange at 8.00 a.m. UK time

Last day to trade in the Company's Ordinary Shares on the JSE Limited Friday,
2 May Register the Capital Reduction at Companies House
UK                            Friday 2 May

Capital Reduction Record Date at 6.00 p.m. UK time  Friday, 2 May

 

Effective Date for the Capital Reduction Friday 2 May

 

Suspension of trading of the Company's Ordinary Shares on the JSE Monday, 5
May Limited at 9.00 a.m. SA time

Capital Reduction Record Date at 6.00 p.m. SA time Wednesday, 7 May

 

Distributions made to relevant Shareholders under the Return of
Capital Thursday, 8 May from the Effective Date with the last date for
payment being

Earliest date for termination of listing of the Company's Ordinary
Shares Friday, 9 May on the JSE Limited

Notes:

(1)     All of the above timings refer to London time unless otherwise
stated.

(2)     The dates and timing of the events in the above timetable and in
the rest of the Circular are indicative only and may be subject to change.

(3)     If any of the above times or dates should change, the revised
times and/or dates will be notified by an announcement through an RIS and an
announcement on SENS.

(4)     Ordinary Share certificates on the South African register may not
be Dematerialised or re-materialised between Monday, 5 May 2025 and Wednesday,
7 May 2025, both days inclusive and Ordinary Shares may not be transferred
between the registers in London and South Africa from Tuesday, 29 April 2025
to Friday, 2 May 2025.

 

APPENDIX TWO
 

INFORMATION EXTRACTED FROM PART 1 OF THE CIRCULAR

 
1.          Introduction
 

On 5 November 2024, the Company announced that its liquid investments had been
sold and, as at 4 November 2024, the Company had cash balances of
£23,226,000. Further information on the Company's remaining assets and
liabilities are set out below at Section 3.

On 18 December 2024, the Company's announced that it proposed to cease the
Company's investment activities early in the New Year and to effect a return
of cash (the total being net asset value, less closure costs) of approximately
70p per share to shareholders.

It is proposed that the Return of Capital be effected by means of a court
approved Capital Reduction. Accordingly, the proposed Return of Capital will
be implemented in two stages with the General Meeting to approve the
Resolutions followed by an application to the High Court to approve the
reduction in the Company's issued share capital.

 

The Company's major shareholder, Lynchwood Nominees Limited (which holds its
Ordinary Shares on behalf of Tennyson Sterling Investments Limited which is
controlled by the Marshall Family) ("Tennyson"), is fully supportive of the
Proposals but as it is not considered independent it has undertaken not to
vote its holding of 12,885,472 Ordinary Shares in the Company (41.2 per cent.
of the Company's issued ordinary share capital) in favour of the Resolutions
at the General Meeting. Both the Board and Tennyson consider it prudent to put
the Proposals to the independent shareholders of the Company, that is to say,
shareholders excluding Tennyson and Warwick Marshall, as it is intended that
Tennyson retain a vestigial interest in shares in the Company as explained
below. Warwick Marshall is a director of Tennyson and has similarly undertaken
not to vote his holding of 288,552 Ordinary Shares in the Company (0.9 per
cent. of the Company's issued Ordinary Share capital) in favour of the
Resolutions at the General Meeting.

 

The Company is in receipt of irrevocable undertakings from 5 other significant
shareholders holding in aggregate 6,232,500 Ordinary Shares in the Company
(19.9 per cent. of the Company's issued ordinary share capital) to vote their
holdings in favour of the Resolutions at the General Meeting.

LonFin requires that at least 1,000,000 Ordinary Shares of £0.05p each be
retained by Shareholders following the Return of Capital in order to meet the
requirement that public companies shall have issued share capital with a value
of at least £50,000 as required by Section 761 of the Companies Act 2006.
Accordingly, the Company has arranged that Tennyson, conditional on the
approval of the Proposals by shareholders at the General Meeting, has
committed by way of an irrevocable undertaking to retain 1,000,000 Ordinary
Shares (the "Retained Shares") in order to meet this requirement of the
Companies Act. Following completion of the Return of Capital, Tennyson will
own 100 per cent. of the issued Ordinary Share capital of the Company.

 

The purpose of this arrangement is solely to facilitate the orderly winding up
of the Company following the Return of Capital and Tennyson will not benefit
in any way from this arrangement.

 
2.          Return of Capital2.1      Background to and Reasons
for the Return of Capital
The Company has not been consistently fulfilling its objective to generate
value for Shareholders over the medium to long term. The Directors have
considered alternative means to achieve the Company's strategic objective but
have concluded after considerable analysis that in the current regulatory
environment the Company is:

·           too small to meet the strategic objective while bearing
the high, and ever increasing, overhead costs associated with being a listed
company,

·           unable to raise additional share capital without
significantly diluting the interests of Shareholders,

·           not an attractive acquisition target for other
companies because of its long trading history; and

·           not an attractive reverse takeover target because of
its long trading history and requests from major shareholders for an exit.

The Directors are therefore proposing to return surplus capital to
Shareholders by means of a Capital Reduction. Following approval by the High
Court, shareholders will be advised in RNS and SENS announcements of the
amount to be returned per share. However, based on information currently
available, the Directors estimate this at 71p per share, which represents an
increase of: 16 per cent. to the closing middle-market price of 61p per share
on 17 December 2024 being the Business Day prior to the Company's announcement
that it would be proposing a return of capital to shareholders

 
2.2      Structure and Conditions of the proposed Return of Capital
By undertaking the Capital Reduction, the Company will simultaneously return
capital to Shareholders and reduce the number of Ordinary Shares in issue.

A company must, as a matter of company law, treat all members of the same
class of shares in the same manner when undertaking a capital reduction. In
order to ensure that all Shareholders are treated the same, it is the view of
the Independent Directors that all Ordinary Shares, except for the Retained
Shares, are cancelled and a cash payment is made to Shareholders based on the
number of Ordinary Shares held with the Company's share capital being reduced
commensurately. The Retained Shares need to remain in existence so that the
Company can continue to meet the requirement of the Companies Act that public
companies have an issued share capital of at least £50,000.

 

The Capital Reduction is structured as a cancellation and repayment of all
Ordinary Shares other than the Retained Shares. It is the Company's intention
to undertake the Capital Reduction via the court approval procedure pursuant
to sections 645 to 649 of the Companies Act.

 
2.3      Shareholders resident in South Africa
2.3.1    The Return of Capital Payment

Should the Capital Reduction be approved and implemented, the Company will
fund Computershare SA within 7 days of the Effective Date of the Capital
Reduction with sufficient funds representing the Return of Capital Payment to
be paid to Shareholders who hold their Ordinary Shares on the JSE. On
completion of the Return of Capital, Computershare SA will credit the accounts
of the CSDPsvia Strate for the benefit of the Shareholders who hold their
Ordinary Shares on the JSE. The CSDPs will distribute the Return of Capital
Payment to such Shareholders in accordance with the terms of their respective
mandates, and net of applicable withholding taxes, if any.

 

Any funds made available by Computershare SA to a Certificated Shareholder
that have not been claimed on or prior to the third anniversary of the
Effective Date will be cancelled and will cease to represent any claim or
interest of any kind or nature against the Company or Computershare SA and all
funds then on deposit with Computershare SA in respect of the Return of
Capital will be returned to the Company.

 

2.3.2    South African Exchange Control Provisions

The Return of Capital Payment made by the Company to Shareholders holding
Ordinary Shares on the South African branch of the Register of Members of the
Company in terms of the Return of Capital may be subject to South African
Exchange Control Regulations. South African Exchange Control Regulations
regulate the flow of capital into and out of South Africa. Currency and shares
are not freely transferable from South Africa to any jurisdiction outside the
Common Monetary Area (encompassing Lesotho, Namibia, Eswatini and South
Africa). Such transfers must comply with the South African Exchange Control
Regulations. If you are in any doubt as to what action you should take, you
should consult with your broker, banker, legal advisor, accountant or other
professional advisor immediately.

 

2.3.3    South African Taxation Considerations

The Company is not providing tax advice. South African Shareholders should
consult their own tax and/or accounting advisors regarding the South African
taxation implications of the Return of Capital Payment to be received by such
Shareholders pursuant to successful implementation of the Return of Capital.

 
3.          Information on the Company
Prior to the announcement of the Proposals, the Company had, as at 31 December
2024, the following net assets:

31 December 2024

Current Assets £'000

Cash and cash equivalents 22,401

Trade, other receivables and accrued interest 201

------------

22,602

------------

Current Liabilities 251

------------

Net Assets 22,351

------------------------

Note: Figures above have been extracted from unaudited interim accounts to 31
December 2024

 

At Friday, 21 February 2025 (the latest practical date prior to the issue
ofthe Circular), the Company had, cash and cash equivalents of c. £22,682,000
and tax payable, sundry creditors and accruals of approximately £315,000.

The Company has 31,287,479 Ordinary Shares in issue (31,207,479 of which were
admitted to trading on the LSE and listed on the JSE and 80,000 of which are
not listed on either exchange), and has estimated net assets per share of
approximately 71p. The final amount of the Return of Capital will be announced
in due course.

 
Following completion of the Return of Capital
Following completion of the Proposals, the Board intends to undertake an
orderly winding up of the Company.

Following completion of the Return of Capital, the Company is expected to have
net assets consisting of: cash balances net of creditors and accruals of
approximately £750,000. Winding up costs (including accounts preparation and
submission of a final tax return) are expected to be approximately £40,000
and the remaining £710,000 is the value of the Retained Shares ie the amount
that Tennyson is entitled to under the Return of Capital. The purpose of this
arrangement is solely to facilitate the orderly winding up of the Company
following the Return of Capital and Tennyson will not benefit in any way from
this arrangement.

 

Furthermore, the Company's major Shareholder, Tennyson, has undertaken to
provide additional financing by way of an ex gratia payment if winding up
costs exceed the resources available to the Company.

If the Capital Reduction is approved, Chris Jousse, Frank Lucas and John
Maxwell will resign from the Board and the ongoing Board of LonFin will
comprise two Directors, namely Warwick Marshall and Edward Beale.

 
4.          Related Party Transaction
Under UK Listing Rule 8, Tennyson, a substantial shareholder, together with
Warwick Marshall, a director of both Tennyson and LonFin, are related parties
("Related Parties") and accordingly the arrangement in relation to the
Retained Shares is a related party transaction ("Related Party Transaction").
Under the class tests set out in the UK Listing Rules, the Related Party
Transaction relating to the Retained Shares, when aggregated with a
transaction with the same related parties in the last 12 months, has no test
resulting in over 5 per cent. and therefore there are no requirements under UK
Listing Rule 8.2 which need to be followed.

 

Tennyson is a private investment company and is 100 per cent. owned by a
family trust of which Warwick Marshall is a trustee.

The Related Parties intend to support fully the Company's strategy to seek to
cancel the admission of the Ordinary Shares to trading on the London Stock
Exchange and JSE Limited and on the Official List and return surplus cash to
its remaining Shareholders.

The Independent Directors and the Related Parties are of the view that the
Proposals will provide Shareholders with the opportunity to receive a full
cash return for their investment and which the Independent Directors believe
is in the best interests of the Company and Shareholders.

 
5.          Implementation of the Return of Capital
The proposed Return of Capital will be implemented in two stages:

 

First stage

The General Meeting will be held to approve the Withdrawal and the Capital
Reduction.

 

Second stage

After the Capital Reduction has been approved by Shareholders at the General
Meeting, the Company will apply to the High Court for its approval. Prior to
approving the capital repayment, the court will need to be satisfied that the
interests of the Company's creditors will not be adversely impacted by the
proposal. The Company anticipates being able to do so. The Capital Reduction
will only take effect once the court has made an order and that order has been
registered with the Registrar of Companies. Once this approval has been
received notice will be given to Shareholders of the intended date for
delisting from the London Stock Exchange and JSE Limited and from the Official
List and the date of the Return of Capital. The final amount of the Return of
Capital will be announced at that time.

 

Following the Return of Capital and application for Withdrawal from the LSE,
the JSE will take steps to remove all the Ordinary Shares from the official
list of the JSE, to which the Company has already confirmed it will not
object, on the basis that, following completion of the Return of Capital, the
Company will no longer comply with the public spread requirements pursuant to
paragraph 4.28(e) of the JSE Listing Requirements as detailed in paragraph 6
below.

 
6.          Withdrawal of Admission to the London Stock Exchange and
from the Official List and Termination of JSE Listing
 Withdrawal of Admission to the London Stock Exchange and from the Official
List

In order for the Company to implement the Return of Capital, the Company will
need to cancel the admission of its Ordinary Shares to trading on the London
Stock Exchange and to the Official List. The Company's withdrawal from the
Official List is conditional, pursuant to Chapter 21 of the UK Listing Rules,
upon the approval of not less than 75 per cent. of the votes cast by all
Shareholders and 50 per cent. of the votes cast by Independent Shareholders
(whether present in person or by proxy) at a General Meeting

 

The Company intends to apply for cancellation and the resolution to approve
the Withdrawal will be put to Shareholders at the General Meeting.

In accordance with the UK Listing Rules, the Company has announced its
proposed withdrawal from admission to trading on the London Stock Exchange and
from the Official List and has provided not less than 20 Business Days' notice
of its intended withdrawal of securities from admission to trading on the
London Stock Exchange and from the Official List. If the resolution to approve
the Withdrawal from admission to trading on the London Stock Exchange and the
Official List is passed at the General Meeting, it is proposed that the last
day of trading in Ordinary Shares on the London Stock Exchange will occur no
earlier than Wednesday, 30 April 2025 and that the Withdrawal from the London
Stock Exchange and from the Official List will take effect at 8.00 a.m. UK
time no earlier than Friday, 2 May 2025. The actual date, when confirmed, will
be announced.

 

If Shareholders wish to buy or sell Ordinary Shares on the London Stock
Exchange or the JSE Limited they must do so prior to the Withdrawal becoming
effective.

 
Termination of JSE Listing
Following the Return of Capital and the Company's Withdrawal from the London
Stock Exchange, the Company will have only one Shareholder. As a result,

the Company will no longer be in compliance with the JSE's spread requirements
as set out in paragraph  4.28(e) of the JSE Listings Requirements and will no
longer be eligible for listing on the JSE.

The Company has no intention to take any other steps towards re-establishing
its public spread requirement and its eligibility for a listing on the JSE.

Accordingly, the JSE will take steps to suspend trade in the Company's
Ordinary Shares with effect from Monday, 5 May 2025 and to remove the Company
from the JSE's list in accordance with sections 1.12 and 1.13 of the JSE
Listing Requirements with effect from Friday 9 May 2025, on the basis that the
Company will no longer comply with the public spread requirements pursuant to
section 4.28(e) of the JSE Listings Requirements and on the basis that the
Company has already confirmed to the JSE that it does not intend to object to
the JSE taking such steps.

 

 
7.          General Meeting
A General Meeting will need to be held to approve the Withdrawal and the
Capital Reduction.

 

The General Meeting will be held at the offices of City Group at Central
Court, 25 Southampton Buildings, London WC2A 1AL on Friday, 28 March 2025. At
that meeting Shareholders will be asked to approve the following actions:
1. subject to the passing of Resolution 2, the Withdrawal of the admission of
the Ordinary Shares to trading on the London Stock Exchange and from the
Official List; and
2. subject to the passing of Resolution 1, the Capital Reduction subject to
High Court approval.
 

The proposed resolutions to achieve this are as follows:

 

Resolution 1 - Withdrawal of the admission of the Ordinary Shares to trading
on the London Stock Exchange and the Official List - Special Resolution

The resolution is to approve the Withdrawal of the Ordinary Shares from
admission to trading on the London Stock Exchange and to cancel the Company's
listing. This is a special resolution and will require approval from not less
than 75 per cent. of the votes cast by all Shareholders and 50 per cent. of
the votes cast by Independent Shareholders at the General Meeting in person or
by proxy in accordance with UK Listing Rule 21. Holders of 19.9 per cent. of
the Ordinary Shares in issue have undertaken to vote in favour of this
resolution. If this resolution is not passed, the Proposals will not proceed.
Shareholders will not be asked to vote on the remaining resolution. The
Directors will then consult with Shareholders on the future of the Company.

 

Resolution 2 - Capital Reduction - Special Resolution

The resolution will be to approve the Capital Reduction, subject to the
approval of the High Court, and will be a Special Resolution which will
require approval from more than 75 per cent. of those voting at the General
Meeting in person or by proxy.

If either of the resolutions are not passed, the Proposals will not proceed.
The Directors will then consult with Shareholders on the future of the
Company.

 
8.          Irrevocable Voting Undertakings
Tennyson has given an irrevocable undertaking not to vote its holding of
12,885,472 Ordinary Shares in the Company (representing 41.2 per cent. of the
Company's issued ordinary share capital) in favour of Resolutions 1 and 2 at
the General Meeting. In addition, Warwick Marshall has given an irrevocable
undertaking not to vote his holding of 288,552 Ordinary Shares in the Company
(0.9 per cent.) in favour of Resolutions 1 and 2 at the General Meeting.

 

The Company is also in receipt of irrevocable undertakings from 5 other
significant Shareholders holding in aggregate 6,232,500 Ordinary Shares
(representing 19.9 per cent. of the Company's issued ordinary share capital)
to vote their holdings in favour of the Resolutions at the General Meeting.

 
9.          Action to be takenVoting at the General Meeting
The Notice of the General Meeting is set out in Part III of the Circular and
this letter explains the items to be transacted at the General Meeting.

A Form of Proxy for use at the General Meeting is enclosed with the Circular.

 

If you, as a Shareholder on the UK branch of the Register of Members of the
Company, wish to validly appoint a proxy, the Form of Proxy should be
completed and signed in accordance with the instructions printed thereon, and
returned by post so as to be received by Neville Registrars Limited not later
than 11.00 a.m. on Wednesday, 26 March 2025 for the General Meeting.

 

If you, as a Shareholder on the South African branch of the Register of
Members of the Company, wish to validly appoint a proxy, the Form of Proxy for
South African Shareholders, attached to the Circular, should be completed and
signed in accordance with the instructions printed thereon, and returned by
e-mail, hand or post so as to be received by Computershare SA not later than
12.00 p.m. on Wednesday, 26 March 2025 for the General Meeting.

 

The Company has made provision for Shareholders (or their proxies) to
participate in the General Meeting by joining a Microsoft Teams virtual
meeting room. Shareholders or their duly appointed proxies who wish to
participate in the General Meeting via electronic communication, must apply to
Computershare SA at proxy@computershare.co.za by not later than 12.00 p.m. on
Wednesday, 26 March 2025.

 
10.      Consent
Beaumont Cornish has given and not withdrawn its consent to the issue of the
Circular with the inclusion of the recommendation in it and of references to
its name in the form and context in which they appear.

 
11.      RecommendationThe Board, having been advised by Beaumont Cornish
on the Proposals, recommend that Shareholders vote in favour of the
Resolutions at the General Meeting given that the Proposals are, in the
opinion of the Board, in the best interests of Shareholders as a whole and as
the Independent Directors intend to do or procure to be done in respect of
their own beneficial shareholdings.
 

Warwick Marshall, who is a director of Tennyson and therefore considered not
to be independent, has taken no part in the Board's consideration of the
Proposals or the recommendation.

 

 

 

 

 

 



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