AKI Arthro Kinetics

    RNS Number : 9053I
  Arthro Kinetics plc
  25 November 2008
   



    


    TUESDAY, 25th November 2008 - Arthro Kinetics plc (AIM: AKI) ("Arthro Kinetics" or the "Company")

    Notice of a General Meeting; Cancellation of AIM quotation; Re-registration as a private limited company; Adoption of new articles of
association; amendments to the memorandum of association. Resignation of a director.
    Arthro Kinetics plc is an orthopedics company dedicated to regenerating joint mobility. 

    Having taken professional advice, the Directors have reached the decision to recommend to Shareholders that the Company cancels its AIM
listing and a circular has today been sent to Shareholders calling a General Meeting on 19 December 2008 to approve, amongst other things,
the delisting of the Company from AIM.  If the resolution is passed, the last day of trading will be 30 December 2008 and the listing will
be cancelled on 31 December 2008. The principal reasons of the Directors for recommending the Company de-list are set out below.
    As detailed in the announcement of 5 November 2008, the Company has been having ongoing discussions which may or may not lead to an
offer for the issued share capital of the Company. Although these discussions are progressing positively, it is unlikely that a conclusion
will be reached before the end of 2008 and as such the Directors believe it is in the best interest of Shareholders to do all they can to
maximise the time available for a positive outcome. The potential sale of the Cell and Tissue Bank Austria (CTBA) was also detailed in the
announcement of 5 November 2008. At this stage it is unclear as to the certainty and timing of completion although it is now not expected to
complete within the targeted timeframe of the end of November. In parallel to both sets of discussions the Directors are pursuing other
routes to secure additional funding for the business.
    Since the Company's flotation on AIM, the share price of the Ordinary Shares has fallen substantially. Despite significant improvements
in the strategic direction of the business, its strengthened management and financial performance in the last 18 months, the long term trend
in the share price on AIM has been one of steady decline. The loss of shareholder value has been considerable, to the extent that the
Company has a current market capitalisation of approximately �1.5m, below what it currently holds in cash. In addition, as there is almost
no liquidity, Shareholders cannot easily sell their Ordinary Shares.
    It is the opinion of the Directors that the Company is worth substantially more than the current market capitalisation. Additional value
for Shareholders is most likely to be achieved through either the positive conclusion of the discussions for the sale of the Company or by
the Company continuing to trade through 2009 and achieving value-creating milestones on its CFI and spinal nucleus replacement development
programmes. In this respect, the Company is targeting the achievement of a CE Mark for CFI in early 2009 and the successful initiation of
clinical studies for its spinal nucleus replacement implant and annulus closure device.
    To be able to achieve either of these outcomes, it is important that the Company maximises its available cash balance and reduces costs
where possible. The ongoing costs of the Company's AIM quotation, together with maintaining its status as a public limited company, are
relatively high. On cancellation of the Company's AIM quotation, together with changing the status of the Company from a public limited
company to a private limited company, the Directors anticipate that the Company will make an annual saving in excess of �300,000. In
addition, it would allow senior management to focus on the critical aspects of the business, given that a disproportionate amount of time is
spent on meeting AIM obligations such as investor relations and compliance requirements.  
    The principal effects the cancellation would have on Shareholders are: 

(a)           there would no longer be a formal market mechanism enabling Shareholders to trade their shares through the market and the
CREST facility will be cancelled. Shareholders who currently hold Ordinary Shares in uncertificated form will receive share certificates in
due course following the cancellation taking effect. Share transfers may still be effected after the date of cancellation by depositing a
duly executed and stamped stock transfer form together with an appropriate share certificate with the company secretary at the registered
office of the Company. While the Ordinary Shares will remain freely transferable, they may be more difficult to sell compared to shares of
companies listed on AIM. It may also be more difficult for Shareholders to determine the market value of their stockholdings in the Company
at any given time;
 
(b)           the Company would not be bound to announce material events, nor to announce interim or final results;
 
(c)           the Company would no longer be required to comply with any of the corporate governance requirements applicable to UK-listed
companies;
 
(d)           the Company will no longer be subject to the Disclosure Rules and Transparency Rules and inter alia will no longer be required
to disclose major shareholdings in the Company;
 
(e)           the Company will no longer be subject to the AIM Rules and Shareholders will no longer be required to vote on certain matters
as provided in the AIM Rules including, inter alia, substantial transactions/reverse takeovers (the size of which results in a 10% or 100%
threshold respectively being reached under any one of the class tests), related party transactions and the approval of certain documents
(for example employee equity incentive plans), however the Company will remain subject to English company law, which mandates shareholder
approval for certain transactions; and
 
(f)             the cancellation may have either positive or negative taxation consequences for Shareholders. Shareholders who are in any
doubt about their tax position should consult their own professional independent adviser immediately.

    A General Meeting will take place on 19 December 2008 to seek shareholder approval, inter alia, for the cancellation of the AIM
quotation, re-registration as a private limited company, adoption of new articles of association and amendments to the memorandum of
association. 

    The Company is complying with The City Code on Takeovers and Mergers ("Takeover Code") with regard to the discussions which may or may
not lead to an offer for the issued share capital of the Company and the Company will remain subject to the Takeover Code following the
cancellation of the Company's AIM quotation and its change in status to a private limited company.

    Whilst there is no certainty with regard to the funding position of the Company, the Directors are recommending to Shareholders the
cancellation of the AIM quotation and the change in status to a private limited company to minimise ongoing compliance costs in 2009. In the
absence of sufficient certainty with regard to transactions for the funding of the Company the Directors will take steps to close the
business in a timeframe where the group's cash position will match the forecast costs of a solvent liquidation of the group. The Directors
anticipate making a decision in this regard within the next few weeks.  
    The Company also announces the resignation of Mr. James Hobbs as a director of the Company with effect from 30 November 2008. On behalf
of the Board, Chairman Michel Lendvai thanked Mr. Hobbs for his contribution to the business.   


    CONTACTS 

 Arthro Kinetics Plc                       Tel:  +49 (0)711 305 110 70
 Jason Loveridge, Chief Executive Officer
 Doug Quinn, Chief Financial Officer

 Nomura Code Securities Limited             Tel:  +44 (0)207  776 1200
 Richard Potts/Giles Balleny


This information is provided by RNS
The company news service from the London Stock Exchange
 
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