DOR Doriemus

RNS Number:3392F
TEP Exchange Group PLC
19 December 2002


FOR IMMEDIATE RELEASE


19th December, 2002


TEP Exchange Group Plc("TEP" or "the Company")


Further re.Proposed placing and strategic alliance


Highlights


*         Outsourcing Agreement signed with Surrenda-Link Limited ("Surrenda-Link") for an initial term of two years;


*         All operational management of the TEP Exchange moved to Chester;


*         Development of additional products by the Company and Surrenda-Link to
market to registered IFA's via the TEP Exchange's web-based service and



*         Placing of 27.5 million new Ordinary Shares for cash at 1p per share,
raising #275,000 before expenses.

Enquiries;


Ami Weitz            TEP Exchange Group Plc     020 8365 4666


Paul Sands           Surrenda-Link Limited      01244 317999

David Roxburgh       Portfolio Design                          00 353 147 55411
                     Group International
                     Limited


John East            John East & Partners       020 7628 2200
Simon Clements       Limited
Nandita Sahgal



Introduction


In September this year, the Company announced its interim results for the
six-month period ended 30th June, 2002, which showed increased turnover and
reduced losses when compared to the corresponding period in the previous year.
The Board was encouraged by the steady increase in the number of Independent
Financial Advisers registered with the TEP Exchange ("the Exchange"), which then
exceeded 9,000 and anticipated that activity would increase in the last quarter
of the Company's financial year.



Over the last months however, in spite of a modest rally, share prices on the
London Stock Exchange remain depressed and insurance companies continue to
announce reduced annual and terminal bonus levels for endowment policies.  This
has created considerable uncertainty in the traded endowment policy market and,
although submissions of policies for sale to the Exchange continue at high
levels from the registered IFAs who now exceed 10,000, buying demand has reduced
very sharply indeed, with a consequential reduction in the turnover of the
Exchange.  The directors of TEP do not now anticipate any significant upturn in
activity until after the next bonus declaration period, traditionally due in the
first quarter of 2003.



As a result of these market conditions, the directors of TEP have been reviewing
their options, with a view to maintaining the viability of the Exchange and
allowing the Company to benefit from increased levels of activity in the future.
  Accordingly, the Company announced on 15th November, 2002 that it had signed
heads of agreement with Surrenda-Link Limited ("Surrenda-Link") to form a
strategic alliance intended to transform the Company's prospects.  Surrenda-Link
(Isle of Man) Limited ("Surrenda-Link (IOM)"), which is deemed to be acting in
concert with Surrenda-Link, currently holds 7.5 million existing ordinary
shares, equivalent to 6.49 per cent of the existing issued ordinary share
capital of the Company and Paul Sands, its chief executive, is a non-executive
director of the Company.



The strategic alliance takes the form of an agreement dated 16th December, 2002,
between the Company and Surrenda-Link ("the Outsourcing Agreement") and
Surrenda-Link's participation in the proposed Placing.



Details of the Outsourcing Agreement



Under the Outsourcing Agreement Surrenda-Link, which is a leading market maker
in traded endowment policies and manages other related investments, has taken
over the operational management of the Exchange from its offices in Chester.
Surrenda-Link will provide the necessary staff and also bear other fixed and
operational costs.  These arrangements will eliminate substantial fixed costs
currently being incurred by the Company.



If the resolutions to be proposed to shareholders at the Extraordinary General
Meeting ("EGM") convened for 10.00am on 13th January, 2003 ("the Resolutions"),
are not passed by 31st January 2003, the Outsourcing Agreement shall immediately
terminate, and neither party will have any obligation to the other in connection
with the Outsourcing Agreement, provided that Surrenda-Link shall be paid pro
rata up to the date of such termination.



The Outsourcing Agreement is for an initial term of two years, subject
thereafter to six months' notice, under which the Company will pay
Surrenda-Link, in the first year, a management fee of #400,000, to be satisfied
by the issue of 40 million new Ordinary Shares at 1p per share, plus 20 per
cent. of the total sales turnover of the Exchange, which will also be satisfied
by the issue of further new Ordinary Shares at 1p per share.  In the second year
and thereafter, the Company will pay Surrenda-Link #300,000 plus 20 per cent. of
the total sales turnover of the Exchange in cash, or, at the Company's option,
will be satisfied by the issue of further new Ordinary Shares at 1p per share.



The maximum number of new Ordinary Shares that can be issued under the terms of
the Outsourcing Agreement is 80 million.



The Company and Surrenda-Link intend to develop additional financial products
and market them to the Company's 10,000 registered IFAs and the wider IFA
community via the Company's web site.



Details of the Placing



As part of these arrangements, the Company intends to issue 27.5 million new
Ordinary Shares for cash at 1p per share ("the Placing Shares"), raising
#275,000 before expenses.  Surrenda-Link has, conditionally on the passing of
the Resolutions, agreed to subscribe 20 million of these.  Moses Kraus, Stephen
Kay, and others have agreed to subscribe the remaining 7.5 million new Ordinary
Shares on the same terms and conditions.  In view of the need for these
arrangements to be effected with minimum delay and cost, the Placing is not
being carried out on a pre-emptive basis and, since the amount involved exceeds
the cash allotment authority granted to the Company at the last Annual General
Meeting, the consent of shareholders is required.



Notice of an Extraordinary General Meeting, to approve, inter alia, the issue of
the Placing Shares, will be sent to shareholders today.



Following the Placing, Mr Moses Kraus and Mr Stephen Kay will hold 23,034,698
and 2,900,000 Ordinary Shares, equivalent to 16.09 and 2.03 per cent. of the
issued share capital of the Company at Admission, respectively.



The maximum number of Ordinary Shares, which could be issued to Surrenda-Link
under the Outsourcing Agreement and its participation in the Placing, is 100
million. On that basis, the total shareholding in the Company held by the
Concert Party (being Surrenda-Link, Surrenda-Link (IOM), Paul Sands and
Portfolio Design Group International Limited, the parent company of
Surrenda-Link), would total 107.7 million Ordinary Shares, equivalent to 48.22
per cent. of the enlarged issued share capital of the Company.



Application will be made for the Placing Shares to be admitted to AIM and it is
anticipated that dealings will commence on 15th January, 2003.



Board Changes and employees



Following implementation of the Outsourcing Agreement and the Placing ("the
Proposals") and the consequential operational reorganisation, Stephen Kay, the
current chief executive of the Company, will resign as a director and employee
to pursue other interests. Also following implementation of the Proposals, David
Roxburgh will be appointed to the Board, as a representative of Surrenda-Link.



With effect from 12th December, 2002, all employees of the Company were made
redundant apart from Mr Ami Weitz, whose employment rights will be fully
safeguarded.



Current Trading



As set out above, the Directors were encouraged by progress at the time of the
announcement of the interim results of the Company in September this year.
However, the reduction in bonuses, referred to above and the uncertainty this
has caused, has had a marked impact on the turnover of the Exchange, with buyers
holding back until future bonus levels are easier to predict.  The Directors do
not feel that this is likely to take place until the next bonus declaration
season in the first quarter of 2003 period, but the Proposals, if implemented,
are designed to allow the Company to benefit from any upturn in activity with a
reduced cost base.





City Code on Takeovers and Mergers



At Admission, the Concert Party will hold 27.5 million Ordinary Shares,
representing 19.21 per cent. of the then enlarged issued share capital.  Upon
the issue of 40 million Ordinary Shares to satisfy the fixed element of the
first year's management fee, the Concert Party will hold 67.5 million Ordinary
Shares, representing 36.86 per cent. of the thus enlarged issued share capital
of the Company.   Under the terms of the Outsourcing Agreement, a maximum of a
further 40 million new Ordinary Shares may be allotted to Surrenda-Link in
satisfaction of amounts due.  In addition, Paul Sands a member of the Concert
Party has options over 200,000 Ordinary Shares.  Accordingly, the maximum
shareholding of the Concert Party is 107.7 million Ordinary Shares, which would
represent 48.22 per cent. of the then enlarged issued share capital of the
Company.



Rule 9 of the City Code ("Rule 9") provides that when any person acquires shares
which, when taken together with shares already held by him or shares held or
acquired by persons acting in concert with him, carry 30 per cent. or more of
the voting rights of a company subject to the City Code, that person is normally
obliged to make a general offer to all shareholders at the highest price paid by
him, or any person acting in concert with him, for shares in that company within
the preceding 12 months.



The Panel on Takeovers and Mergers has been consulted and, in this instance, has
agreed, subject to a resolution being passed at the EGM on a poll by independent
shareholders of the Company, to waive the requirement on the Concert Party (both
individually and collectively) to make a general offer in cash to shareholders
under Rule 9 which would otherwise arise as a result of the issue of new
Ordinary Shares pursuant to the Outsourcing Agreement and the Placing.

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

FURIIFVAFRLALIF

Doriemus (LSE:DOR)
Historical Stock Chart
Von Jun 2024 bis Jul 2024

Doriemus (LSE:DOR)
Historical Stock Chart
Von Jul 2023 bis Jul 2024