REG - Pelatro PLC - AIM Cancellation & Notice of General Meeting

PelatroAnnouncement

31/08/2023 07:00

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RNS Number : 8562K  Pelatro PLC  31 August 2023

31 August 2023

 

Pelatro Plc

 

("Pelatro" or the "Company")

 

Proposed cancellation of admission to trading on AIM and notice of General
Meeting

 

Further to the announcement of 29 August 2023, Pelatro announces that the
Board has concluded that it is in the best interests of the Company and its
shareholders to seek shareholder approval to cancel the admission of the
Company's Ordinary shares to trading on AIM (the "Cancellation"). In
accordance with Rule 41 of the AIM Rules for Companies ("Rule 41"), the
Company has notified the London Stock Exchange of the date of the proposed
cancellation.

 

The Directors consider that the Cancellation is in the best interests of the
Company and its Shareholders as a whole and intend unanimously to recommend
that shareholders vote in favour of the resolutions to effect the Cancellation
to be proposed at a General Meeting of the Company to be convened for this
purpose. Pursuant to Rule 41, the Cancellation requires the approval of not
less than 75% of the votes cast by Shareholders (whether present in person or
by proxy) at a General Meeting to be convened for the purpose and to be held
at the company's office at 49, Queen Victoria Street, London EC4N 4SA at 11.00
am on 21 September 2023. If the relevant resolutions are passed at the General
Meeting it is anticipated that the Cancellation will become effective,
following the issue of a Dealing Notice, at 7.00am on 29 September 2023. A
circular containing further information on the background to, reasons for, and
implications of the Cancellation will be posted to shareholders presently,
together with a notice convening the General Meeting.

 

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 to trading of
the Ordinary Shares on AIM. This review has included, amongst other matters,
the public market share trading and valuation of the Company, the increasing
costs of maintaining a public quotation and especially the inability to raise
funds in the London market (including most recently despite the likely working
capital shortfall experienced by the Group), which was one of the primary
reasons for the Company seeking admission to AIM in the first place. For these
reasons, the Directors have concluded that the Cancellation are 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.

 

The Directors believe that a number of factors have impaired investor
sentiment towards the Company, including, amongst others: (a) the Company's
exposure to events outside its control impacting its recent trading
performance; (b) current market conditions and the lack of investor appetite
for the Company; and (c) lack of UK market liquidity. Further, the Directors
believe that growing the Group's business within the parameters of a publicly
quoted company will be more challenging due to: (a) continuing adverse
sentiment towards the Company as referred to above; and (b) the legal and
regulatory burden associated in maintaining the Company's AIM admission. These
factors have all led the Directors to consider that the Company's business may
no longer be appropriate for that of a publicly quoted company.

 

Due to the setbacks suffered by the Company as a result of recent events, the
Directors believe that having access to capital in the near to medium-term may
be prudent to ensure that the Company can capitalise successfully on future
opportunities and growth and, as a result of the factors set out above, the
Directors consider it unlikely that an equity fundraise using the public
markets would successfully raise additional capital (or provide the optimal
platform to do so), should it be so required.

 

More generally, the UK small and micro-cap public markets have changed
significantly since the Company's IPO and the Directors believe that the
Company's current public market valuation does not reflect the underlying
potential of the business with the result that growth prospects are more
readily accessible and managed in a private market environment.

 

There has been limited liquidity in the Ordinary Shares for some time 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
access to capital in the medium to longer-term, nor provides liquidity to
investors. As a result, the Directors have concluded that the most likely
source of future funds would be through private capital and debt funding.

 

The considerable cost, management time and the legal and regulatory burden
associated with maintaining the Company's admission to trading on AIM is, in
the Directors' opinion, disproportionate to the benefits of the Company's
continued admission to trading on AIM. Given the lower costs associated with
private limited company status, it is estimated that the Cancellation will
materially reduce the Company's recurring administrative and adviser costs by
approximately $400,000 per annum, which the Directors believe can be better
spent supporting growth in the Group's business.

 

As a result of the limited liquidity in Ordinary Shares highlighted above, the
admission of the Ordinary Shares to trading on AIM 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. In the opinion of the Directors, the adverse share price
performance is detrimental to the perception of the Group amongst customers
and other partners, which, in turn, has negatively impacted its staff morale
and industry reputation as highlighted above.

 

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

 

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.

 

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 General Meeting, it is proposed that the last day of trading in
Ordinary Shares on AIM will be 28 September 2023 and that the Cancellation
will take effect at 7.00 a.m. on 29 September 2023.

 

The principal effects of the Cancellation will include the following:

 

•              there will be no formal market mechanism
enabling the Shareholders to trade Ordinary Shares;

 

•              it is possible that, following the publication
of this Document, the liquidity and marketability of the Ordinary Shares is
reduced and their value adversely affected (however, as set out above, the
Directors believe that the existing liquidity in the Ordinary Shares is in any
event limited);

 

•              the Ordinary Shares may be more difficult to
sell compared to shares of companies traded on AIM (or any other recognised
market or trading exchange);

 

•              in the absence of a formal market and quote, it
may be 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;

 

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

 

•              the levels of disclosure and corporate
governance within the Company may not be as stringent as for a company quoted
on AIM;

 

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

 

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

 

•              the Takeover Code will cease to apply to the
Company following the Cancellation;

 

•              finnCap will cease to be nominated adviser to
the Company;

 

•              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; and

 

•              the Cancellation and Re-registration may have
personal taxation 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 registered with the
Registrar of Companies in England & Wales in accordance with and, subject
to the Companies Act, notwithstanding the Cancellation.

 

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
Companies Act; and

 

•              continue, for at least 12 months following the
Cancellation, to maintain its website, www.pelatro.com
(http://www.pelatro.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.

 

Matched Bargain Facility

 

In the event that the Cancellation becomes effective, the Company intends to
put in place a Matched Bargain Facility to assist Shareholders to trade in the
Ordinary Shares to be put in place from the date of Cancellation. The Matched
Bargain Facility will be provided by J P Jenkins. J P Jenkins is an appointed
representative of Prosper Capital LLP, which is authorised and regulated by
the Financial Conduct Authority.

 

Under the Matched Bargain Facility, Shareholders or persons wishing to acquire
or dispose of Ordinary Shares will be able to leave an indication with J P
Jenkins, through their stockbroker (J P Jenkins is unable to deal directly
with members of the public), of the number of Ordinary Shares that they are
prepared to buy or sell at an agreed price. In the event that J P Jenkins is
able to match that order with an opposite sell or buy instruction, it would
contact both parties and then effect the bargain (trade). Should the
Cancellation become effective and the Company puts in place the Matched
Bargain Facility, details will be made available to Shareholders on the
Company's website at www.pelatro.com

 

The Matched Bargain Facility will operate for a minimum of six months after
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 details
will be communicated to the Shareholders at the relevant time.

 

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so
prior to the Cancellation becoming effective. As noted above, in the event
that Shareholders approve the Cancellation, it is anticipated that the last
day of dealings in the Ordinary Shares on AIM will be 28 September 2023 and
that the effective date of the Cancellation will be 29 September 2023.

 

Board Composition

 

There will be no change to the composition of the Board immediately following
the Cancellation. Harry Berry and Pieter Verkade (being the two Non-Executive
Directors of the Company) have, however, notified the Company that they are
considering stepping down from their roles as directors in the period shortly
following the Cancellation. A key purpose of their current positions is to
bring independence to the Board, and help ensure that the Company meets its
obligations under the AIM Rules, and such a role is unlikely to exist or be
economically or operationally justified should the Cancellation take place.

 

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 Resolutions at the General Meeting, as they
intend to do in respect of their own beneficial holdings amounting to
12,933,553 Ordinary shares representing approximately 13.8 per cent. of the
issued share capital.

 

For further information contact:

 

 Pelatro Plc
 Subash Menon, Managing Director                  c/o finnCap

 finnCap Limited (Nominated Adviser and Broker)   +44 (0)20 7220 0500
 Carl Holmes/Milesh Hindocha (Corporate Finance)

 

 

 

 

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