RNS Number:5621D
Abingdon Capital PLC
08 November 2002
Abingdon Capital plc ("the Company")
8 November 2002
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA OR JAPAN.
Proposed demerger of the Company's interests in Bionex Investments plc,
Ark Therapeutics Group plc, Photo Therapeutics Group Limited and Redstone plc
1 Introduction
The Company has today announced the Demergers, pursuant to which the Company
intends to distribute a substantial proportion of the Group's remaining
investment portfolio to Shareholders. At the time of the Company's admission to
AIM in July 2002, following the acquisition of Corporate Synergy, the Directors
set out their revised strategy of establishing an integrated house providing a
range of financial services, specialising in small and medium sized companies.
At the same time the Directors said that they intend to dispose of any non-core
investments and consider the demerger of the Company's biotech investments. The
Demergers therefore represent the first step in the strategy. The Company is
therefore proposing the following:
* the Disposal;
* the Bionex Demerger; and
* the Redstone Demerger.
The Proposals are conditional upon the approval of Shareholders at an
Extraordinary General Meeting to be held on 2 December 2002, notice of which is
being sent to Shareholders today and on the approval of the Court.
2 Background to and reasons for the Proposals
In the Company's AIM admission document dated 1 July 2002 the Directors stated
that they would review the investment portfolio with a view to disposing of
non-core investments. In addition, the Directors stated their intention to
consider proposals whereby the existing unquoted biotech investments of the
Company could be demerged into a separate quoted vehicle.
The disposal of Abingdon's interest in Ark and Photo to Bionex and the Bionex
Demerger
Abingdon currently owns approximately 2.58 per cent of the issued share capital
of Ark (which develops gene-based products to treat vascular and circulatory
system related diseases and cancer) and approximately 0.46 per cent of the
issued share capital of Photo (which develops novel photodynamic therapies). In
addition, Abingdon owns approximately 29.04 per cent of the issued share capital
of Bionex (a biotechnology investment company).
Whilst your Board believes that there may be benefit in the future in continuing
to hold shares in Bionex, Ark and Photo, your Board does not believe that those
holdings fit the revised strategy of the Group in that they have no strategic
purpose for the Group (following the acquisition of Corporate Synergy) and that,
accordingly, there is no added value to the Group, with its new focus, in
retaining those holdings. The Company has therefore decided to sell its
remaining biotech interests to Bionex, before distributing the Company's
interest in Bionex by way of the Bionex Demerger. This will enable Qualifying
Shareholders to have an interest in a biotech focused investment company which
the Directors believe will better reflect the value of those investments.
Further information on Bionex following the Bionex Demerger is set out below.
Bionex is currently unquoted but intends to seek admission to AIM, to which end
it has appointed advisers.
The Redstone Demerger
Abingdon owns 3.77 per cent of the issued share capital of Redstone (a one stop
communications provider), which is quoted on the Official List of the UK Listing
Authority. Your Board does not believe that this holding fits the revised
strategy of the Group and that, accordingly, there is no added value in
retaining this holding. However, your Board does consider that Shareholders
should have the ability to make their own investment decisions about their
holdings in Redstone and so the Board is proposing the Redstone Demerger.
Subsequent position
Following the implementation of the Proposals, the Group will have disposed of
the majority (by value) of its investment portfolio. In addition, as at 29
October 2002 the Group had cash balances of approximately #5.9 million,
representing approximately 10.4p per share.
The Group intends to concentrate on its stated objective of establishing an
integrated house providing a range of financial services, specialising in small
and medium sized companies.
3 The Disposal and the Demergers
The Disposal
To facilitate the Demerger Abingdon has entered into the Disposal Agreement with
Bionex under which Bionex will acquire Abingdon's shares in Ark and Photo for
the allotment of 43,076,923 Bionex Shares credited as fully paid to Abingdon or
such persons as Abingdon may direct. Abingdon intends to direct that the Bionex
Shares to be issued by way of consideration will be issued to the Qualifying
Shareholders in proportion to their holdings in Abingdon on the Record Date. The
Disposal Agreement provides that the sale and purchase of shares in Ark and
Photo is conditional, amongst other things, upon the Court making an order
confirming the Share Capital Reduction and the Share Capital Reduction becoming
effective by being registered by the Registrar of Companies on or before 31
January 2003. The Disposal Agreement is not conditional upon the Bionex Shares
being admitted to trading on AIM, although Bionex intends to seek admission to
AIM, to which end it has appointed advisers.
The Demergers
It is proposed that Abingdon's interests in Bionex, Ark, Photo and Redstone will
be demerged by means of the Share Capital Reduction. The Demergers will be
effected by cancelling and returning to Qualifying Shareholders paid up share
capital. Specifically, the nominal amount of each of the issued Ordinary Shares
(all of which are fully paid) will be reduced and the capital set free on the
reduction will be cancelled and returned by (a) the Company transferring to
Qualifying Shareholders its shares in Bionex and Redstone and (b) the Company
causing Bionex to issue the Bionex Consideration Shares to Qualifying
Shareholders at the Company's direction in exchange for the transfer to Bionex
of all of the Company's shares in each of Ark and Photo.
The Share Capital Reduction requires the approval of Shareholders and also the
confirmation of the Court.
Following the Disposal and Demergers Qualifying Shareholders will have received
approximately 1.263 Bionex Shares and 1.865 Redstone Shares for each Ordinary
Share held. Further details as to how fractional entitlements to Bionex Shares
and Redstone Shares will be dealt with are set out in section 4 below.
As Bionex is a public company which will be issuing shares for non-cash
consideration (i.e. the transfer to it of shares in Ark and Photo), section 103
of the Act provides that before the Bionex Consideration Shares are actually
issued, a valuation of the shares in Ark and Photo being bought by Bionex must
be carried out by a person qualified to be, or continue to be, the auditor of
Bionex and that a copy of that valuation must be sent to the proposed allottees.
As Abingdon intends to direct that the Bionex Consideration Shares will be
issued to Qualifying Shareholders in proportion to their holdings in Abingdon on
the Record Date, the Qualifying Shareholders will be the proposed allottees of
the Bionex Consideration Shares on the date that the Share Capital Reduction
becomes effective. Chantrey Vellacott DFK, who are the auditors of Bionex, will
have prepared a valuation of the shares in Ark and Photo being purchased by
Bionex, and a copy of that valuation will be sent to Qualifying Shareholders as
soon as practicable after the Share Capital Reduction becomes effective in order
to comply with section 103 of the Act.
Therefore a total of 71,410,256 Bionex Shares (which will represent 45.39 per
cent of the enlarged issued share capital of Bionex following such allotment)
will be transferred or be allotted to Shareholders pursuant to the Share Capital
Reduction and the performance of the Disposal Agreement.
4 The Share Capital Reduction
Under the Act, a company's ability to reduce its share capital is very limited.
However, a share capital reduction is possible with shareholder approval and the
consent of the Court.
Abingdon's issued ordinary share capital amounts to #2,826,475.90 and comprises
56,529,518 Ordinary Shares, all of which are full paid. The Share Capital
Reduction has two elements. First, the 9,021,869 deferred shares of 30p each in
the capital of the Company, all of which are in issue, will be cancelled for no
consideration, and the Company will give an undertaking to the Court that the
amount set free on that cancellation will be transferred to a special reserve
for a period of time and treated as a capital redemption reserve. Secondly, the
issued ordinary share capital of the Company will be reduced by #2,768,395, that
being the value in Abingdon's books of Abingdon's interests in Bionex, Redstone,
Ark and Photo. The nominal amount of each of the issued Ordinary Shares will be
reduced pro rata; as consideration for the reduction in the nominal amount of
the Ordinary Shares the capital set free on the reduction will be returned in
the form of shares in Bionex (which will have an aggregate nominal value of
#1,951,175) and shares in Redstone (which will have an aggregate nominal value
of #817,220).
The Share Capital Reduction will only take effect if confirmed by the Court and
upon the appropriate documents being lodged with the Registrar of Companies. The
Court may require the Company to give an undertaking for the protection of the
Company's existing creditors and your Board anticipates that the Company will
give such an undertaking, if required. The application to the Court will be made
soon after the EGM and the procedure is expected to be completed by the end of
December 2002.
It is expected that Shareholders' certificates for their shares in Bionex and
Redstone will be despatched to them 14 days after the approval of the Share
Capital Reduction by the Court, although this is beyond the control of your
Board.
Fractional entitlements
Entitlements to fractions of Bionex Shares or Redstone Shares will not be
transferred to Qualifying Shareholders: the entitlements of Qualifying
Shareholders will be rounded down to the nearest whole number of Bionex Shares
and the nearest whole number of Redstone Shares. The fractional entitlements of
Qualifying Shareholders to Redstone Shares will be aggregated and retained by
the Company which may choose to sell them in the market. The aggregated
fractional entitlements would normally be sold for the benefit of Qualifying
Shareholders who would receive a cheque for the net proceeds of sale provided
such net proceeds exceed #3. The Company has decided that it should retain the
aggregated fractional entitlements because it is unlikely that the net proceeds
of sale of the fractional entitlement of any Qualifying Shareholder will exceed
#3.
Overseas Shareholders
Where it is not practicable, by reason of any relevant laws or regulatory
requirements, to transfer Redstone Shares to any Overseas Shareholders then the
Company intends that the Redstone Shares that Overseas Shareholders would have
received if they were Qualifying Shareholders will be sold in the market for the
best price reasonably obtainable for the benefit of the Overseas Shareholders.
Where it is not practicable, by reason of any relevant laws or regulatory
requirements, to transfer, issue or allot Bionex Shares to any Overseas
Shareholders and the Bionex Shares are admitted to trading on AIM on before 31
March 2003 then the Company intends that the Bionex Shares that the Overseas
Shareholders would have received as Qualifying Shareholders will be transferred
to, and held on trust for those Overseas Shareholders by, a person nominated by
the Board and, in due course will be sold in the market at the discretion of the
Board for the best price then reasonably obtainable for the benefit of Overseas
Shareholders. However, if Bionex Shares are not admitted to trading on AIM on
or before 31 March 2003 then the Company intends that the Bionex Shares that the
Overseas Shareholders would have received as Qualifying Shareholders will be
purchased by the Company at 3.25p per Bionex Share.
Every Overseas Shareholder will be sent a cheque for the proceeds of sale, if
any, of Redstone Shares and/or Bionex Shares (after the costs associated with
such sale have been deducted), but no cheque for less than #3 shall be sent to
any Overseas Shareholder and, if the net proceeds of sale of any Overseas
Shareholder's entitlement to Bionex Shares or Redstone Shares is less than #3,
such proceeds shall be retained for the benefit of Abingdon.
Timing of payment to Overseas Shareholders
The date that a cheque will be sent to any Overseas Shareholder who is entitled
to receive a cheque under the arrangements described above will be dependent on
the date that the Bionex Shares are admitted to trading on AIM. The Company
intends to send a single cheque to any Overseas Shareholder so entitled in
relation to sums due to them in respect of their interests in Bionex Shares and
Redstone Shares. It is therefore difficult to be precise about the date that any
such cheque will be sent as the Company will need to see whether the admission
of Bionex Shares to AIM takes place on or before 31 March 2003.
5 The Reorganisation
The Share Capital Reduction will mean that the par value of the Ordinary Shares
in issue will have been reduced to approximately 0.1027p (because the value in
the Company's balance sheet of the holdings that are to be demerged represents
approximately 97.94 per cent of the amount paid up on the issued shares in
Abingdon's capital). The Directors believe that it would be confusing for the
Company's ordinary shares to have a par value of 0.1027p. It is therefore
proposed that the nominal value of each of the ordinary shares in the Company in
issue following the Share Capital Reduction be reduced to 0.1p. No new share
certificates will be issued in respect of the ordinary shares of 0.1p each
created by the Reorganisation: the existing certificates for Ordinary Shares
held by Shareholders will continue to be valid. The effect of rounding down the
par value of the Ordinary Shares will be to produce an amount of #1,551.382 in
excess of the value to be returned to shareholders, and it is therefore proposed
that the sum of #1,551.382 be transferred to the special reserve of the Company
to be created on the cancellation of the deferred shares in the Company and be
subject to the undertaking given by the Company to the Court in respect of that
reserve.
6 Release of the special reserve
In accordance with an undertaking given by the Company to the Court on a
previous application to reduce the Company's share capital the sum of #2,743,400
was transferred from profit and loss account and other reserves to a "special"
reserve. This reserve is non-distributable until the terms of the undertaking
have been complied with. The conditions for the release of the undertaking
require that all creditors, potential or actual, at 10 December 1996 have been
fully satisfied. All such creditors are expected to have been satisfied shortly
and so the sum of #2,743,400 will then be transferred and credited to the
Company's profit and loss account.
7 Bionex
Following the Bionex Demerger and the issue of the Bionex Consideration Shares
pursuant to the terms of the Disposal Agreement and prior to the admission of
Bionex Shares to trading on AIM it is anticipated that there will be 157,310,250
Bionex Shares in issue. The Bionex Shares to be issued pursuant to the Disposal
Agreement will be issued credited as fully paid at 3.25p per share and, on that
basis, the entire issued share capital of Bionex following the implementation of
the Proposals would have a market capitalisation of approximately #5.1 million.
In addition, Bionex has issued 40,375,000 warrants ("Bionex Warrants"), each of
which entitle the holder to subscribe for one Bionex Share at 2.5p at any time
before 31 December 2010 and 26,000,000 rights ("Bionex Further Subscription
Rights"), each of which entitles the holder to subscribe for one Bionex Share at
2.5p at any time before 31 December 2010 and to be issued two further Bionex
Warrants on such subscription.
In addition to Abingdon's holding of 28,333,333 Bionex Shares (which are to be
demerged pursuant to the Bionex Demerger), Abingdon also holds 8,000,000 Bionex
Warrants and 4,000,000 Bionex Further Subscription Rights. Abingdon's holding of
Bionex Warrants and Bionex Further Subscription Rights will not be demerged as
part of the Bionex Demerger, but will be retained by Abingdon at nil carried
value. The Group intends, wherever possible, to seek to acquire or retain
interests in companies by way of warrants or options carried at nil cost whether
or not such companies have any strategic relationship with any Group company.
Oliver Vaughan, the chairman of the Company, holds (together with his wife) a
total of 2,566,666 Bionex Shares, 1,200,000 Bionex Warrants and 800,000 Bionex
Further Subscription Rights. Chris Roberts, the Group Managing Director, holds
166,666 Bionex Shares and is a director of Bionex. Accordingly, Oliver Vaughan
and Chris Roberts have not participated in the recommendation of set out in
section 14 that Shareholders vote in favour of Resolution 1 to be proposed at
the EGM (which approves the Share Capital Reduction) and will not vote on that
resolution.
Bionex has informed your Board that some of its principal investments (in
addition to the shares in Ark and Photo that it will be acquiring from Abingdon
pursuant to the Disposal Agreement) are currently:
* Drug Abuse Sciences Inc, which is a company based in Los Altos, California and
Paris, France is a pharmaceutical company, founded in 1994, and which is
developing a new generation of therapeutics for alcohol abuse and drug
addiction.
* Morphochem AG, which was founded in Munich, Germany in 1996 and launched in
1998. Morphochem's business model has evolved from a technology platform to an
integrated drug discovery company and its drug discovery projects are intended
to serve as starting points for clinical development.
* Biovex Limited which was founded in 1998 by academics working at University
College London and is based in Oxford and London. BioVex Limited has developed
proprietary vectors, based on modified herpes simplex virus (HSV-1 the common
cold sore virus), for the delivery of genes to a number of important target
tissues where its vectors have particular utility - including cells of the
immune system and nervous system and for oncolytic tumour therapy.
Bionex is already a shareholder in Ark and Photo.
Bionex intends to seek admission to AIM, to which end it has appointed advisers.
8 Adjustment of options and warrants
The Company has granted options to subscribe for Ordinary Shares both under the
Abingdon Capital Plc Share Option Plan 2002 and pursuant to option agreements
entered into with Chris Roberts, the Group Managing Director, and Adrian Graham,
a former director of the Company. The rules of the Plan and the option
agreements all provide that following a share capital reduction the terms of the
options shall be adjusted in such manner as the auditors of the company certify
as being fair and reasonable. Moore Stephens, the auditors of the Company, have
indicated that following the implementation of the Proposals they will certify
that the exercise price of all the options granted by the Company should be
reduced by 4.897p (being the value in Abingdon's books of Abingdon's interests
in Bionex, Redstone, Ark and Photo .divided by the number of Ordinary Shares in
issue).
Similarly, the exercise price of the Corporate Synergy Warrants will also be
reduced (from 10p per share) by 2.176p per share and Moore Stephens have also
indicated that they will certify such a reduction as being fair and reasonable
as required by the terms of the Corporate Synergy Warrants. This will require a
reorganisation of Corporate Synergy's share capital. The Company has undertaken
to acquire (if so requested) any new shares in Corporate Synergy arising on the
exercise of Corporate Synergy Warrants.
9 Dealing facility
The Directors are aware that Shareholders may consider that their holding in
Abingdon is too small to be able to sell their holding without incurring
disproportionately high dealing costs. Accordingly, the Company intends to make
arrangements for those Shareholders who hold 5,000 Ordinary Shares or fewer to
do so at nil cost. Further details will be sent to the relevant Shareholders if
and when such arrangements have been concluded.
Similarly, the Directors are aware that Qualifying Shareholders may consider
that the holding of Bionex Shares or Redstone Shares which they will receive
pursuant to the Proposals will be too small for them to be able to sell their
holding without incurring disproportionately high dealing costs. Accordingly,
the Company also intends to make arrangements for all Qualifying Shareholders to
be able to sell their Bionex Shares and/or their Redstone Shares at nil cost.
Further details will be sent to the Qualifying Shareholders if and when such
arrangements have been concluded.
Enquiries:
Abingdon Capital:-
Edward Vandyk 020 7626 2244
Chris Roberts 020 7937 4445
APPENDIX I
Definitions:
The following definitions apply throughout this document, unless the context
requires otherwise:
"Act" the Companies Act 1985, as amended
"AIM" the Alternative Investment Market of the London Stock Exchange
"Ark" Ark Therapeutics Group Plc
"Bionex" Bionex Investments Plc
"Bionex Demerger" the transfer by Abingdon of its shares in Bionex to Qualifying Shareholders by
way of the Share Capital Reduction on the terms set out in this document
"Bionex Shares" ordinary shares of 1p each in the capital of Bionex
"Bionex Consideration Shares" the 43,076,923 Bionex Shares to be issued credited as fully paid pursuant to
the Disposal Agreement
"Board" or "Directors" the board of directors of the Company
"Company" or "Abingdon" Abingdon Capital Plc
"Corporate Synergy" Corporate Synergy Holdings Plc, the company acquired by Abingdon in 2002
"Corporate Synergy Warrants" warrants to subscribe for ordinary shares of 10p each in the capital of
Corporate Synergy at 10p per share at any time before 7 September 2007
"Court" The High Court of Justice of England & Wales
"Demergers" the Bionex Demerger and the Redstone Demerger
"Disposal" the disposal by Abingdon of shares in Ark and Photo pursuant to the Disposal
Agreement
"Disposal Agreement" the conditional agreement dated 7 November 2002 entered into between Abingdon
(1) and Bionex (2) pursuant to which Bionex will acquire Abingdon's shares in
Ark and Photo, further details of which are set out in this document
"EGM" the extraordinary general meeting of the Company to be held on 2 December 2002
convened by the Notice, or any adjournment of that meeting
"Group" Abingdon and its subsidiaries
"Independent Directors" all the directors of Abingdon other than Oliver Vaughan and Chris Roberts
"London Stock Exchange" London Stock Exchange Plc
"New Ordinary Shares" new ordinary shares of 0.1p each created by the Reorganisation
"Ordinary Shares" ordinary shares of 5p each in the capital of the Company
"Overseas Shareholders" the Qualifying Shareholders who on the Record Date are not resident in or who
are outside the United Kingdom and in whose case it is impracticable because of
the laws or regulatory requirements of any jurisdiction in which they may be
located to make any transfer, allotment or issue of shares in Bionex or
Redstone to which they would otherwise become entitled as Qualifying
Shareholders
"Photo" Photo Therapeutics Group Limited
"Proposals" the Share Capital Reduction, the Demergers, the Reorganisation and the other
proposals set out in this document
"Proxy" the form of proxy for use in connection with the EGM, sent to Shareholders
together with this document
"Qualifying Shareholders" the Shareholders on the Company's register of members as at the Record Date
"Record Date" the close of business on the date that the Share Capital Reduction becomes
effective, which is expected to be on 19 December 2002
"Redstone" Redstone Plc
"Redstone Demerger" the transfer by Abingdon of its shares in Redstone to Qualifying Shareholders
by way of the Share Capital Reduction on the terms set out in this document
"Redstone Shares" ordinary shares of 0.1p each in Redstone
"Reorganisation" the reduction of the par value of each ordinary share in the capital of the
Company arising from the Share Capital Reduction into one New Ordinary share
and the associated undertaking proposed to be given to the Court in relation to
the special reserve of #1,551.382
"Resolutions" the resolutions to be proposed at the EGM, as set out in the EGM Notice
"Shareholders" holders of Ordinary Shares
"Share Capital Reduction" the cancellation of part of the Company's share account on the terms set out in
this document
This information is provided by RNS
The company news service from the London Stock Exchange
END
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