MAP MG Capital

 

TIDMMAP 
 
RNS Number : 0552S 
MG Capital PLC 
12 May 2009 
 

 
 
 
 
MG Capital plc 
("MG Capital" or "the Company") 
 
Cancellation of Trading on AIM 
 
 
The Company will today post to shareholders a circular which contains a proposal 
to cancel the Company's admission to AIM and a notice to convene a general 
meeting ('GM') to discuss this proposal. The text of the circular is appended 
below. 
 
 
The GM is scheduled to take place at 10.00 a.m. on 5 June 2009 at the offices of 
MG Capital plc, 53 Monument Street, London, EC3R 8BU. If shareholders vote in 
favour of the resolution, cancellation of the Company's AIM admission will take 
effect on 15 June 2009.  A copy of the circular will be available on the 
Company's website www.mgcapital.co.uk, and at the above address during normal 
weekday working hours until 12 June 2009. 
 
 
- Ends - 
 
 
For further information, please contact: 
+-------------------------------------------+----------------------------+ 
| MG Capital plc                            |                            | 
+-------------------------------------------+----------------------------+ 
| Charles Fowler                            |  Tel: +44 (0) 20 7332 2040 | 
+-------------------------------------------+----------------------------+ 
 
 
+-------------------------------------------+----------------------------+ 
| Nominated Adviser:                        |                            | 
| Grant Thornton UK LLP                     |                            | 
+-------------------------------------------+----------------------------+ 
| Gerry Beaney/Fiona Kindness               |  Tel: +44 (0) 20 7383 5100 | 
+-------------------------------------------+----------------------------+ 
 
 
Text of the circular to shareholders (Capitalised terms used in this text not 
defined have the meanings given to them in the circular): 
 
 
Proposed cancellation of admission of the Company's AIM Securities; General 
Meeting 
 
 
1. Introduction 
 
 
On 12 May 2009 the Company formally announced its intention to apply for the 
admission to trading of its Ordinary Shares on AIM to be cancelled. The Proposal 
is subject to Shareholders' approval being obtained and the purpose of this 
document is to provide Shareholders with information on the Cancellation and to 
seek the requisite Shareholder approval at a General Meeting of the Company, 
notice of which is set out at the end of this document. 
 
 
2. Background to the Proposals 
 
 
MG Capital has been trading on AIM since 2001. The Directors had previously 
believed that a listing on AIM would provide acquisition opportunities and 
opportunities for the Company to continue to develop within the parameters of 
its core strategy. However, falls in the Company's share price and the current 
challenging market conditions affecting the investment landscape in which the 
Company operates have forced the Directors to reconsider the benefits of this 
listing. 
 
 
The Company also notes the recent trend of companies of similar size leaving AIM 
as stock market conditions have resulted in the costs associated with 
maintaining an AIM listing outweighing the perceived benefits. 
 
 
3. Reasons for the Proposals 
 
 
The Company's financial performance has been significantly hindered by the 
difficult period in the global credit markets. As announced on 5 March 2009, the 
Company was expecting to receive a 5% fee as a result of the Company's role in a 
US$20 million capital raising for an Australian company involved in 
telecommunications in China. This transaction had received the relevant 
approvals from the client company's shareholders, however, the investor 
defaulted on its investment and this fee has therefore not been received by the 
Company. Although the capital raising process is still underway, the quantum of 
fees due to the Company will be dependent on the level of funding which can be 
raised for the client company, with this amount not yet being determined due to 
current market conditions. 
 
 
The Company has also been working on other projects that were expected to have 
already generated revenues but which have been since put on hold due the current 
state of the financial markets. The Company is still hoping to realise these 
revenues, but accepts that it may not happen in the near future. 
 
 
As a result of this, the Company has undertaken a cost cutting exercise 
including relocating into smaller offices, reducing staff levels and closing the 
Beijing office. 
The Directors believe that the financial burden, and management time, associated 
with maintaining the public quotation on AIM now outweigh the benefits to the 
Company. Not only would the proposed Cancellation reduce the overheads of the 
business, it would also reduce the costs associated with the completion of any 
acquisition that the Company may contemplate. 
 
 
In addition, I have funded the Company's recent losses, lent the Company a total 
of GBP476,789.50 and purchased convertible loan notes to the value of 
GBP185,000. In the event that Shareholders approve the Proposal, the cost 
savings from the Cancellation would mean that the Company would no longer be so 
reliant upon funding from me. 
 
 
4. Effect of the Proposal on Shareholders 
 
 
The principal effects of the Cancellation would be: 
 
 
  *  There would no longer be a formal market mechanism enabling the Shareholders to 
  dispose of their shares through the market and the CREST facility would be 
  cancelled; 
  *  The Company would not be bound to announce material events, nor to announce 
  interim results; and 
  *  The Company would no longer be required to comply with any of the corporate 
  governance requirements for quoted companies. 
 
 
 
5. Communications with Shareholders 
 
 
The Board will: 
 
 
  *  Consider how best to implement a matched bargain settlement facility provider 
  service for Shareholders and further notification will be made if appropriate; 
  *  Continue to hold Annual General and other general meetings in accordance with 
  the applicable statutory requirements and the Company's articles; and 
  *  Continue to send Shareholders copies of the Company's audited accounts. 
 
 
 
Even if the Proposal is approved, the Company will remain subject to the City 
Code on Takeovers and Mergers for at least ten years following the date of 
Cancellation. 
 
 
6. The Board's intentions for the future 
 
 
The Board intends to continue with the existing strategy, and hopes that the 
cost cutting exercise that has been implemented will provide the Company with a 
platform from which it will be able to progress the transactions that are still 
live, and also to react quickly to any new opportunities that arise. In 
particular, the Company will continue to advise its client, Family Investments 
Limited, on the liquidation of its portfolio, pursue private equity advisory 
mandates in areas where it has experience, such as telecommunications and 
farming, and will continue to look for investors for a new specialist farming 
investment vehicle. 
 
 
If Shareholders approve the Proposal, application will be made for Cancellation 
with effect from 15 June 2009. 
 
 
7. General Meeting 
 
 
You will find set out at the end of this document a notice convening the General 
Meeting of the Company to be held at the offices of MG Capital plc at 53 
Monument Street, London, EC3R 8BU. 
 
 
At the GM a special resolution will be proposed to approve the proposal to 
cancel admission of the Company's AIM Securities. The AIM Rules require the 
approval of 75 per cent. of Shareholders voting at the GM in person or by proxy. 
 
 
8. Action to be taken 
 
 
Shareholders will find enclosed with this document a Form of Proxy for use at 
the General Meeting. Forms of Proxy should be completed and returned in 
accordance with the instructions printed thereon so as to arrive with the 
Company's Registrars, Capita Registrars, The Registry, 34 Beckenham Road, 
Beckenham, Kent BR3 4TU not later than 10.00 a.m. on 3 June 2009. 
 
 
Completion and return of a Form of Proxy will not prevent Shareholders from 
attending and voting at the General Meeting should they so wish. 
 
 
9. Recommendation 
 
 
The Directors consider the Proposal described in this document to be in the best 
interests of the Company and its Shareholders. Accordingly, the Directors 
unanimously recommend that Shareholders vote in favour of the Resolution to be 
proposed at the General Meeting, as they intend to do in respect of their own 
holding of 2,020,697 Ordinary Shares representing 42.1 per cent of the Company's 
issued share capital. 
 
 
Yours faithfully 
 
 
 
 
Peter Hannen 
Chairman 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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