REG - Merit Group PLC - Recommended cancellation of listing & Notice of GM

MeritAnnouncement

30/01/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250130:nRSd1921Va&default-theme=true

RNS Number : 1921V  Merit Group PLC  30 January 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED.  ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

30 January 2025

Merit Group Plc

 

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

 

Recommended cancellation of trading on AIM

and

Notice of General Meeting

 

On 14 January 2025, Merit Group Plc (AIM: MRIT), the AIM-listed data and
intelligence business, announced that Lord Ashcroft, a substantial shareholder
of the Company, had requisitioned the holding of a general meeting of the
Company to consider a resolution to delist the Company from AIM. The Board
have undertaken a review of the benefits and drawbacks of retaining admission
on AIM and have concluded that delisting the Company from AIM is in the best
interests of the Company and its shareholders.

 

Accordingly, the Board are proposing the cancellation of trading of the
Company's ordinary shares of £0.28 each ("Ordinary Shares") on AIM (the
"Cancellation"), re-registration of Merit as a private company (the
"Re-Registration") and the adoption of new articles of association (the "New
Articles") (together with the Cancellation and Re-Registration and the New
Articles, the "Proposals").

 

The proposed Cancellation is conditional, pursuant to Rule 41 of the AIM
Rules, upon the approval of not less than 75 percent of the votes cast by
shareholders at a general meeting. The Company is therefore seeking
shareholders' approval for the Proposals at a general meeting which will be
convened for 9 a.m. on 25 February 2025 at the offices of Fieldfisher LLP at
Riverbank House, 2 Swan Lane, London EC4R 3TT (the "General Meeting").

 

The Company has today published a Circular to give notice of the General
Meeting. The Circular will shortly be published on the Company's website
www.meritgroupplc.com (http://www.meritgroupplc.com) and will be sent to
shareholders today.

 

 

Background and reasons for the proposed Cancellation

 

The Circular provides the background to and reasons for the Board's
recommendation of the Proposals. The Board has consulted certain shareholders
and has considered the following key factors amongst others in reaching their
recommendation:

 

(a)        Regulatory Costs:  The considerable cost of maintaining the
Company's admission to trading on AIM are, in the Board's opinion,
disproportionate to the benefits of the Company's continued admission to
trading on AIM.  Given the lower costs associated with unlisted company
status, it is estimated that the Cancellation will materially reduce the
Company's recurring administrative and adviser costs by around £300,000 per
annum, which, at more than 25% of the Central costs of the Company, the Board
believes would be a significant reduction in overhead cost burden. In addition
to this are savings that will come from the avoidance of such similar costs
associated with non-recurring transactions and from revising the Board
structure to better suit a private unlisted company.

(b)        Regulatory Burden: The considerable amount of management
time spent complying with the legal and regulatory burden associated with
maintaining the Company's admission to trading on AIM are, in the Board's
opinion, disproportionate to the benefits of the Company's continued admission
to trading on AIM. The Board believes that a delisting would allow the
executive management team to focus more time on operational management and
execution of the Company's strategy that would benefit all shareholders in the
longer term.

(c)        Lack of liquidity:  There continues to be limited liquidity
in the Ordinary Shares and, as a result, the Board believes that Shareholders
are not provided with opportunities to trade in meaningful volumes or with
frequency in an active market in Ordinary Shares.

(d)        Market volatility:  As a result of the limited liquidity of
Ordinary Shares described above, small trades in Ordinary Shares can have a
significant impact on price and, therefore, market valuation which, the Board
believes, in turn has a materially adverse impact on: (a) the Company's status
within its industry; (b) the perception of the Company among its customers,
suppliers and other partners; (c) staff morale; and (d) the Company's ability
to seek appropriate financing or realise an appropriate value for any material
future sales or disposals.

(e)        Challenges related to the Company's position as a micro-cap
stock:  Growing the company, a UK micro-cap stock, comes with a range of
challenges, which, in the Board's view, stem from the Company's small market
valuation, limited resources, and the dynamic nature of the market.  These
challenges include, but are not limited to: (a) access to capital; (b) a lack
of visibility amongst analysts, media and potential investors; (c) increased
volatility in Company valuation unrelated to Company performance leading to
higher risk perception; and (d) an aversion from potential new investors
seeking stability and a valuation that aligns with Company performance.  For
these reasons, the Board believes that the Company is unlikely to attract the
material investment it requires from third party equity investors whilst
current market conditions continue to prevail, and does not see such
conditions changing in the medium term.    Furthermore, the UK small and
micro-cap markets have changed significantly over recent years and the
Directors believe that the Company's current public market valuation reflects
neither the current status of the business nor its underlying potential.

(f)         Strategic flexibility:  The Board believes that an
unlisted company can take and implement decisions more quickly than a company
which is publicly traded as a result of the more flexible regime that is
applicable to a private company. Nonetheless, the Board do not believe the
Proposals reflect any change in, or have a material impact upon, the Company's
strategy.

(g)        Governance: Even after the Cancellation, the Board is
committed to continued rigorous corporate governance procedures for the
protection of all Shareholders and investors; and

(h)        Future Trading of Shares: The Board believes that it can
make satisfactory arrangements for Shareholders to freely transfer their
shares periodically via an auction-based secondary market trading facility.

 

Therefore, following careful consideration, the Board believes that it is in
the best interests of the Company and Shareholders to seek the proposed
Cancellation at the earliest opportunity in line with AIM Rule 41, along with
re-registration and associated adoption of the New Articles.

 

 

 

 

Expected Timetable

 Notice provided to the London Stock Exchange to notify it of the proposed     30 January 2025
 Cancellation
 Publication and posting of this document                                      30 January 2025
 Latest time and date for receipt of online proxy votes or completed Forms of  9 a.m. on 21 February 2025
 Proxy in respect of the General Meeting
 General Meeting                                                               9 a.m. on 25 February 2025
 Expected final date and time for trading in Ordinary Shares                   6 p.m. on 4 March 2025
 Expected date of Cancellation                                                 7.00 a.m. on 5 March 2025
 Expected date of Re-registration                                              By 5 March 2025
 Secondary market trading facility for Ordinary Shares expected to commence    By 24 March 2025

 

 

 

Secondary Market Trading Facility

 

The secondary market trading facility will be provided by Asset Match and will
be reviewed on an annual basis. This facility will allow existing shareholders
of the Company, and new investors, to trade Ordinary Shares by matching buyers
and sellers through periodic auctions. Asset Match operates an open auction
system where volumes of bids and offers at different prices are displayed on
its website together with the closing date of the auction. At the end of each
auction period Asset Match passes this information through a non-discretionary
algorithm that determines a "fair" share price based on supply and demand and
allocates transactions accordingly. Bids and offers may be made and withdrawn
at any time before the closing date of each auction.

 

Shareholders will continue to be able to hold their shares in uncertificated
form (i.e. in CREST) and should check with their existing stockbroker whether
they are willing or able to trade in unquoted shares. Shareholders wishing to
trade shares through Asset Match must do so through a stockbroker and a
comprehensive list of stockbrokers who have signed up to access the Asset
Match platform is available on request.

 

Should the Cancellation become effective and the Company puts in place the
secondary market trading facility, details will be made available to
Shareholders on the Company's website and directly by letter or e-mail (where
appropriate). The Secondary Market Trading Facility is expected (but is not
certain) to operate for a minimum of 12 months after the Cancellation. The
Directors' current intention is that it will continue beyond that time, but
Shareholders should note that it could be withdrawn and therefore inhibit the
ability to trade the Ordinary Shares.

 

Further information about the secondary market trading facility, including
indicative prices and a history of transactions, will be available on the
Asset Match website which is located at www.assetmatch.com
(//www.assetmatch.com) .

 

 

 

 For further information, please contact:
 Merit Group plc

                                               020 7593 5500
 Mark Smith - Chairman                         www.meritgroupplc.com (http://www.meritgroupplc.com/)

 Phil Machray - CEO & CFO

 Canaccord Genuity Limited (Nomad and Broker)  020 7523 8150

 Bobbie Hilliam

 Harry Pardoe

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCVKLFLEFLZBBV