RNS Number:9280T
MDY Healthcare PLC
29 March 2007
MDY Healthcare plc (the "Company")
Notice of AGM
The Company announces that it has today posted a circular to shareholders
setting out various resolutions to be passed at the Company's Annual General
Meeting to be held on 4 May 2007. These resolutions include, inter alia, a
proposed share capital reorganisation, the steps of which will lead to the
consolidation of the Company's shares equating to 1 New Ordinary Share for every
50 Existing Shares held.
This circular, along with the Company's Annual Report and Accounts for the year
ended 30 September 2006 also posted to shareholders today, are available for
download at the Company's website: www.mdyhealthcare.com
The full text of the Chairman's letter contained within the circular is set out
below. Definitions in this announcement shall bear the same meaning as those in
the circular to Shareholders.
To Shareholders and, for information only, to the holders of options under the
Share Option Schemes
Dear Shareholder,
ANNUAL GENERAL MEETING
PROPOSED SHARE CAPITAL REORGANISATION
APPROVAL OF INVESTING STRATEGY
INTRODUCTION
This year's Annual General Meeting is to be held at the offices of Financial
Dynamics on 4 May 2007 at 11.00 a.m and the notice of that meeting is set out at
the end of this document.
In May 2006, we completed the sale of all of our operating businesses to ARKRAY,
Inc. and the Company repositioned itself as a strategic investor in healthcare
companies. In September 2006, we moved our stock market listing from the
Official List to AIM. Therefore, in addition to the routine business of the
meeting, it is proposed to seek Shareholders' approval at the Annual General
Meeting for various other matters relating to the Company's Investing Strategy
and share capital structure. The purpose of this letter is to provide you with
information on all of the proposals, to explain why your Board considers them to
be in the best interests of the Company and the Shareholders as a whole, and to
recommend that you vote in favour of the Resolutions to be proposed at the
Annual General Meeting.
Your specific attention is drawn to Resolution 9, which relates to the
consolidation of the Existing Ordinary Shares and the subsequent sub-division
and conversion. The Board believes that the proposed Share Capital
Reorganisation is in the best interests of Shareholders as they believe that, if
approved and effected, it should:
* allow Shareholders with uneconomic shareholdings to exit the Company in a cost
efficient manner as they will be able to trade their New Ordinary Shares
through the Share Dealing Facility;
* streamline the Company's register, resulting in savings of administrative
costs and management time: and
* assist in reducing the bid/offer spread in respect of trading of the Company's
shares as the Board believes that the bid-offer spread on shares priced at low
absolute levels can be disproportionate to the share price, to the detriment
of Shareholders.
Details of all the Resolutions to be proposed at the Annual General Meeting are
set out below. Resolutions 1 to 7, 9, 10, 12 and 13 will be proposed as Ordinary
Resolutions and Resolutions 8 and 11 will be proposed as Special Resolutions.
RESOLUTION 1: APPROVAL OF ANNUAL REPORT AND ACCOUNTS
The 2006 Annual Report and Accounts are enclosed with this document. Copies will
be available at the Annual General Meeting.
RESOLUTIONS 2, 3 AND 4: APPOINTMENT AND RE-APPOINTMENT OF DIRECTORS
The Company's Articles of Association require directors to retire and submit
themselves for election at the first annual general meeting following their
appointment. Accordingly, as Charles Spicer and Alan MacKay were appointed since
the date of the last annual general meeting of the Company, each offers himself
for election. In addition, David Wong is standing for reappointment having
retired by rotation as required by the Company's Articles of Association. Being
eligible, Dr Wong offers himself for re-election.
Biographical details of the Directors standing for election or re-election and,
in respect of Alan MacKay, the reasons why the Board believes that he should be
elected, are set out below.
Mr Spicer is standing for election following his appointment to the Board as
Chief Executive on 12 July 2006. Mr Spicer was previously Head of Healthcare
Corporate Finance at Numis Securities Limited and prior to that, he held the
same position at Nomura International plc. In both roles, he advised a wide
range of companies in the healthcare sector on corporate finance, mergers,
acquisitions and corporate broking. Mr Spicer has a service contract with the
Company with a 12 month notice period.
Mr MacKay is standing for election following his appointment to the Board as a
Non-Executive Director on 14 September 2006. Mr MacKay is a Global Lead Partner
of Healthcare at 3i. He is also a member of the 3i leadership team and heads its
healthcare group throughout Europe, USA and Asia, actively investing in the
pharmaceuticals, medical device and care services sub-sectors. The Board
considers that Mr MacKay should be elected as the Board believes Mr MacKay has
considerable and wide-ranging experience in investing in healthcare companies,
which will be invaluable to the Company as it continues to implement its
Investing Strategy. Mr MacKay is a member of the Remuneration Committee.
Dr Wong became a director in 1998. In 1992, he founded Medical Consultants and
Management Limited, an investment holding company specialising in medical and
bioscience companies. He received a dental degree from Guy's Hospital Medical
School in 1976 and went on to found a group of dental surgery clinics, which
were subsequently sold in 1988. Dr Wong also built up and sold a food business
to Slater Foods PLC, where he became a director. He acted as Chief Executive of
the Company until 23 April 2003, when he was appointed Executive Chairman.
RESOLUTIONS 5 AND 6: RE-APPOINTMENT AND REMUNERATION OF AUDITORS
The Company is required to appoint auditors at each general meeting at which
accounts are laid, to hold office until the conclusion of the next such meeting.
The Company's Audit Committee has recommended the reappointment of KPMG.
Resolution 6 gives authority to the Board to determine the remuneration of the
auditors. The Audit Committee will approve the audit fees for recommendation to
the Board.
RESOLUTION 7: APPROVAL OF DIRECTORS' REMUNERATION REPORT
The Remuneration Report is included in the 2006 Annual Report and Accounts. It
sets out the Company's policy towards Directors' remuneration and other relevant
information.
RESOLUTION 8: AMENDMENTS TO THE COMPANY'S ARTICLES OF ASSOCIATION
The Share Capital Reorganisation and the creation of the Deferred Shares
requires that the Company amend its existing Articles of Association.
The amendments to the Articles of Association will provide for the rights
attaching to the Deferred Shares, the details of which are described below. The
amendments to the Articles of Association will also reflect a change to the
legislation governing indemnities given by a company to its directors. In
accordance with current standard practice, the amendments provide that the
Company may indemnify its directors to the fullest extent permitted by law.
In light of new legislation, including the Companies Act 2006, the Company will
consider further updating its Articles of Association in due course.
RESOLUTION 9: SHARE CAPITAL REORGANISATION
The Company currently has approximately 14,750 Shareholders. Of these, 9,583
Shareholders have registered holdings of less than 2,500 Existing Ordinary
Shares, representing approximately 65% of the total number of Shareholders, but
less than 1.26% of the issued Existing Ordinary Shares. On the basis of the
Company's closing mid-market share price on 22 March 2007, a shareholding of
2,500 Existing Ordinary Shares was worth #66.25.
The Board believes that for a company of its size, it is not in the Company's
best interests to continue to bear the significant costs of servicing such a
large shareholder base. The Board also believes that due to their small
holdings, many Shareholders may have considered selling their Existing Ordinary
Shares but have decided not to do so in the light of the disproportionate
dealing and administration costs relating to such a sale. The Board is therefore
proposing a restructuring of the Existing Ordinary Shares coupled with a free
Share Dealing Facility, the aim of which is to reduce the number of Shareholders
thereby achieving cost savings for the Company, whilst at the same time
returning some value to Shareholders with smaller interests.
In addition, the Board believes that the bid-offer spread on shares priced at
low absolute levels can be disproportionate to the share price, to the detriment
of Shareholders. The Board also believes that following the completion of the
Share Capital Reorganisation, the New Ordinary Shares will be more attractive to
investors in potential corporate or fundraising transactions.
Resolution 9 sets out the proposed steps in the Share Capital Reorganisation.
So as to facilitate the Share Capital Reorganisation, Charles Spicer has today
subscribed for 23 Existing Ordinary Shares at par in order to ensure that
(immediately preceding the Share Capital Reorganisation) the number of Existing
Ordinary Shares in issue would be exactly divisible by 50. Application has been
made for these 23 shares to be admitted to trading on AIM and, as a result of
the issue of these shares, the Company's share capital now comprises 699,211,150
Existing Ordinary Shares.
The Directors are proposing first to consolidate the Existing Ordinary Shares on
the basis of 1 Consolidated Share for every 50 Existing Ordinary Shares held,
creating Consolidated Shares of 50 pence each. Each Consolidated Share then in
issue will be immediately sub-divided and converted into 1 New Ordinary Share of
1 pence each and 1 Deferred Share of 49 pence each. Each unissued Consolidated
Share will be immediately sub-divided into 50 New Ordinary Shares of 1 pence
each.
Following the completion of the Share Capital Reorganisation, the Company's
authorised share capital will comprise 314,773,073 New Ordinary Shares and
13,984,223 Deferred Shares and the Company's issued share capital will comprise
13,984,223 New Ordinary Shares and 13,984,223 Deferred Shares.
SHARE RIGHTS
The New Ordinary Shares arising on completion of the Share Capital
Reorganisation will have the same rights as the Existing Ordinary Shares,
including without limitation, the same voting, dividend and other rights.
Application will be made for the New Ordinary Shares to be admitted to trading
on AIM. It is anticipated that Admission will occur on 8 May 2007.
Following completion of the Share Capital Reorganisation, the Existing Ordinary
Shares will no longer exist. New share certificates in respect of New Ordinary
Shares are expected to be posted at the risk of Shareholders by no later than 11
May 2007 to those Shareholders who currently hold their Existing Ordinary Shares
in certificated form (and hold more than 50 Existing Ordinary Shares). These
will replace existing certificates which should be destroyed. Pending receipt of
new certificates, transfers of New Ordinary Shares held in certificated form
will be certified against the Register. The New Ordinary Shares have been
allocated new stock identification code as follows: SEDOL code (BIVJNC5) and
ISIN code (GB00BIVJNC59).
In the case of Shareholders who hold their shares through the CREST system, the
New Ordinary Shares will be credited to CREST accounts on 8 May 2007.
The rights attaching to the Deferred Shares, which will not be admitted to
trading on any market or exchange, will be minimal, thereby rendering them
effectively valueless. The Deferred Shares will not confer on their holders any
right to receive notice of any general meeting of the Company nor any right to
attend, speak or vote at any such meeting. The Deferred Shares will not entitle
their holders to receive any dividend or other distribution and shall on a
return of assets in a winding up of the Company entitle the holders only to the
repayment of the amounts paid up on such shares after the amount paid to holders
of the New Ordinary Shares exceeds #1,000,000 per New Ordinary Share. The
Deferred Shares will also be incapable of transfer and no share certificates
will be issued in respect of them.
FRACTIONAL ENTITLEMENTS
Shareholders should be aware that if they hold fewer than 50 Existing Ordinary
Shares they will not receive any Consolidated Shares and therefore will not be
entitled to New Ordinary Shares or Deferred Shares under the Share Capital
Reorganisation and, as a result, would lose their entire shareholding in the
Company.
Where any Shareholder is entitled to a fraction only of a Consolidated Share,
such fractions shall be aggregated with the fractions of Consolidated Shares to
which other Shareholders would have been entitled so as to form full
Consolidated Shares, which will then be subdivided (along with the other
Consolidated Shares) into New Ordinary Shares. The Directors will be authorised
to sell these New Ordinary Shares in the market as soon as reasonably
practicable following the passing of the Resolutions and, given that no
individual Shareholder will be entitled to more than #1.50 from the sale of
these New Ordinary Shares (on the basis of the Company's closing mid-market
share price on 22 March 2007), these shares will be sold for the benefit of the
Company.
SHARE DEALING FACILITY
Due to their small shareholdings, many Shareholders may have decided not to
trade their shares due to the disproportionate dealings costs involved.
Therefore, the Company has arranged for its brokers, Brewin Dolphin, through
their execution-only Stocktrade division, to administer a free Share Dealing
Facility for all Shareholders subject to a limit of 50 New Ordinary Shares
(equivalent to a holding of 2,500 Existing Ordinary Shares prior to the
completion of the Share Capital Reorganisation) for each Shareholder. The free
Share Dealing Facility gives Shareholders the opportunity, subject to the
passing of Resolution 9, to dispose of up to 50 New Ordinary Shares, at no cost
to them. The Share Dealing Facility will be open for a period of approximately
five weeks from 15 May 2007 (assuming the Share Capital Reorganisation is
approved by Shareholders at the AGM), with the transactions taking place on 15
June 2007.
It is entirely up to you whether you take advantage of the Share Dealing
Facility and neither the Company nor Brewin Dolphin are making any
recommendation to you as to the course of action you should take. If you are in
any doubt, you should consult your independent financial adviser.
You will find a Share Dealing Application Form enclosed with this document
detailing the steps that you need to follow if you wish to sell your New
Ordinary Shares. To ensure that instructions are acted on, please ensure that
completed Share Dealing Application Forms (together with the share certificate
(s) representing the New Ordinary Shares you wish to sell) are returned to
Stocktrade to arrive no later than 8 June 2007.
RESOLUTION 10: AUTHORITY TO ALLOT SHARES
Under section 80 of the Act, the Directors of the Company may only allot
relevant securities if authorised to do so. The Company's Articles of
Association give a general authority to the Directors to allot relevant
securities, but that authority is subject to renewal by Shareholders. This
Resolution proposes that the Directors' authority be renewed, giving the power
to allot relevant securities up to an aggregate nominal value of #42,000. This
authority, if renewed, will terminate on 3 May 2012 unless and to the extent
that such authority is revoked, varied, renewed or extended prior to such date.
Resolution 10 is conditional on the passing of Resolution 9 (approval of the
Share Capital Reorganisation). If Resolution 10 is not passed, the Company's
existing authority granted to Directors at the Extraordinary General Meeting of
the Company held on 15 August 2006 will remain in place until 14 August 2011,
unless and to the extent that such authority is revoked, varied, renewed or
extended prior to such date.
The Directors have no present intention of issuing any relevant securities other
than pursuant to share subscriptions by appointees to the Company's Senior
Advisory Panel and to participants in the Company's share incentive plans. The
Company announced on 14 February 2007 that it had established a Senior Advisory
Panel to provide guidance on specific investment and transaction opportunities.
The Company anticipates that part of the consulting fees paid to members of the
Senior Advisory Panel will be immediately invested by the relevant member in New
Ordinary Shares in the Company.
RESOLUTION 11: AUTHORITY TO DISAPPLY PRE-EMPTION RIGHTS
Section 89 (1) of the Act requires that on an allotment of new shares for cash,
such shares are offered first to existing Shareholders in proportion to the
number of shares that they each hold at that time. There may be circumstances
when it is in the interests of the Company to disapply pre-emption rights on
certain allotments of shares. Therefore, this Resolution requests Shareholders
to waive their pre-emption rights by approving a new power to allot equity
securities on a non-pre-emptive basis in connection with a "rights issue" and
otherwise up to an aggregate nominal value of #42,000. This power, if approved,
will terminate on 3 May 2012 unless and to the extent that such power is
revoked, varied, renewed or extended prior to such date. Resolution 11 is
conditional on the passing of Resolution 10 (Directors authority to allot
relevant securities). If Resolution 11 is not passed, the existing power granted
to Directors at the Extraordinary General Meeting of the Company held on
15 August 2006 will remain in place until 14 August 2011, unless and to the
extent that such power is revoked, varied, renewed or extended prior to such
date.
Whilst the Directors have no present intention of exercising this new power
other than pursuant to share subscriptions by appointees to the Company's Senior
Advisory Panel and to participants in the Company's share incentive plans, it
will enable the Company to take advantage of strategic opportunities as and when
they arise in a timely way.
RESOLUTION 12: APPROVAL OF INVESTING STRATEGY
The Company is an investing company quoted on AIM, with its objective to achieve
superior returns for Shareholders by investing globally in companies, both
public and private, across the healthcare sector. The Directors and executives
have significant operational and investment experience in the sector and
therefore, we believe, the ability to identify and review a wide range of
potential investments. Due diligence on any potential investment will always be
undertaken by the Directors and executive team in the first instance to assess
the proposed investee company management, financials, products/technology,
intellectual property and markets. In addition, prior to making any investment,
the Company will also seek specialist advice where the Directors believe it
appropriate, from external advisers including members of the Senior Advisory
Panel. Given the Directors' and executives' experience and contact base within
the sector, MDY Healthcare is also able to provide investee companies with
strategic business support and advice, in addition to finance.
The Company's Investing Strategy is to identify investment opportunities, both
individually and as a co-investor in companies in the following sub-sectors:
medical technology, diagnostics, biopharmaceuticals and providers of other
healthcare products and services. MDY Healthcare will continue to consider
investments in both private and publicly traded companies located in the UK,
Continental Europe, Scandinavia, North America, the Far East and Asia. The
Company may make investments on both an active and passive basis.
Since becoming an investing company, the Company has made the following
strategic investments:
COZART PLC
In July 2006, the Company subscribed #336,000 for ordinary shares in Cozart plc
as part of a vendor placing to finance the acquisition of HL Scandinavia AB.
Cozart is an AIM-quoted medical diagnostics company which develops, manufactures
and sells immunodiagnostic tests, predominantly those used for the detection of
drugs of abuse. HL, based in Stockholm, supplies drugs of abuse point of care
urine testing products and services to customers in the criminal justice,
workplace and medical markets in Sweden. Since the initial investment, the
Company has acquired further shares in Cozart and now holds a total of 2,232,575
shares, which represents 2.1 per cent of the issued share capital of Cozart.
AOI MEDICAL, INC.
In September 2006, the Company subscribed $1.5 million for ordinary shares in
AOI Medical, Inc. as part of a private placing arranged and underwritten by
Numis Securities, with MDY Healthcare acting as lead investor. Based in Florida,
USA, AOI Medical is developing, and intends to manufacture, innovative
orthopaedic medical devices for the spine and trauma markets. The private
placing raised a total of $3.0 million to fund the continued product development
as well as clinical and product marketing. Following this placing, MDY
Healthcare has an interest of approximately 7.5% of the issued share capital of
AOI Medical. MDY Healthcare also provides paid strategic consulting services to
AOI Medical.
MEDIVANCE, INC
On 21 December 2006, the Company subscribed $2,500,000 for convertible loan
notes in Medivance, Inc in a private placing arranged by Piper Jaffray with MDY
Healthcare acting as lead investor. Based in Boulder, Colorado, Medivance is a
leading company in the emerging field of therapeutic temperature management.
Medivance's non-invasive technology, Arctic Sun(R) is patented and FDA approved
to rapidly cool patients ("therapeutic hypothermia") and precisely control their
temperatures as a therapeutic tool. Therapeutic cooling has been shown to reduce
brain damage after traumatic events such as cardiac arrest and brain injury. It
also has potential applications in the treatment of stroke and fever. Introduced
in 2004, Arctic Sun(R) has been adopted by hospitals throughout the US, Europe
and Asia. The private placing raised a total of $4,540,000 to fund the continued
marketing of the Arctic Sun(R) system around the world.
MINSTER PHARMACEUTICALS PLC
On 2 March 2007, MDY Healthcare subscribed #471,749.85 for new shares and
warrants in Minster Pharmaceuticals plc in their fundraising which raised a
total of #17 million before expenses. The fundraising was arranged by Nomura
Code Securities Limited with cornerstone investments from Care Capital and Rho
Capital.
Minster is a drug development company (AIM: MPM) that acquired from
GlaxoSmithKline the worldwide development rights of two compounds, tonabersat
and sabcomeline, which have already benefited from substantial investment by
GSK. Minster's lead product, tonabersat, belongs to an exciting new class of
drugs called gap junction blockers, and is being developed as a prophylactic
treatment for migraine. Minster has recently reported positive data for
tonabersat from its Phase IIa study.
ALLERGY THERAPEUTICS PLC
On 23 March 2007, the Company announced that it had acquired 500,000 ordinary
shares in Allergy Therapeutics PLC. Allergy Therapeutics is a Europe-based
specialty pharmaceutical company focused upon the treatment and prevention of
allergy. It has an existing sales base, an MHRA-approved manufacturing
capability and an established sales and marketing infrastructure in several
major European markets. In addition, Allergy Therapeutics has a number of novel
compounds, which have already undergone initial clinical evaluation and once
registered, could potentially revolutionise the treatment of allergy.
Whilst just the start of the process, these investments illustrate the types of
companies that MDY Healthcare is targeting. We are continuing to review a wide
range of potential strategic investments as well as, on a selective basis,
continuing to invest in listed equities on a shorter-term basis.
In accordance with the AIM Rules, the Company is required to seek the approval
of Shareholders for its Investing Strategy on an annual basis. Accordingly, the
purpose of Resolution 12 is to seek Shareholder approval to the Company's
Investing Strategy.
RESOLUTION 13: ELECTRONIC COMMUNICATIONS
New provisions contained in the Companies Act 2006 came into force on 20 January
2007 relating to electronic communications in relation to the sending of
accounts, reports and financial statements, the appointment of proxies and
notices of meetings and other company information. Resolution 13 is designed to
enable the Company to take advantage of these new provisions. The Company
expects that being able to communicate with Shareholders electronically will
result in cost savings, a reduction in the environmental impact of wasted paper,
printing and distribution and hopefully, by way of a new electronic
communication strategy, an overall enhancement in the level and quality of
communication with Shareholders.
Under the provisions of the Companies Act 2006, the Company is required to ask
Shareholders individually to confirm their agreement to the Company sending or
supplying the documents and information to them electronically or via the
Company's website (www.mdyhealthcare.com). Assuming Resolution 13 is approved by
Shareholders at the AGM, if we do not receive a response from you within 28 days
of 4 May 2007 (that is by 1 June 2007), then you will be taken to have agreed
(under paragraph 10 of Schedule 5 to the Companies Act 2006) to the Company
sending or supplying documents and information to you via the Company's website.
Therefore, if you agree to the Company sending or supplying documents or
information to you via the Company's website, you need take no further action.
However, if you also wish to receive documents and information in electronic
form, for example, by email, please follow the instructions on the letter
relating to electronic communications and the Shareholder Election Card enclosed
with this document which set out the steps that need to be taken to facilitate
this.
If you would prefer to receive documents and information in paper form rather
than via the Company's website, you will need to let us know. The letter
enclosed with this document relating to electronic communications and the
Shareholder Election Card explain the steps you need to take to notify us that
you wish to continue to receive Company documents and information in paper form.
Each time a document is published on the Company's website, you will be informed
(either by letter or by email, if you have elected to receive documents in
electronic form).
ANNUAL GENERAL MEETING
As explained above, the Resolutions are subject to the approval of Shareholders
in general meeting. Set out at the end of this document is a notice convening an
annual general meeting of the Company to be held at 11.00 a.m. on 4 May 2007 at
Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB.
ACTION TO BE TAKEN
You will find enclosed with this document a form of proxy for use at the Annual
General Meeting. Whether or not you propose to attend the Annual General Meeting
in person, you are requested to complete and return the form of proxy to the
Registrars in accordance with the instructions printed thereon as soon as
possible and, in any event, so as to be received no later than 11.00 a.m. on 2
May 2007. Completion and return of a form of proxy will not preclude you from
attending the Annual General Meeting and voting in person if you so wish.
RECOMMENDATION
The Board is of the opinion that the Resolutions are in the best interests of
Shareholders as a whole and, accordingly, recommends you vote in favour of the
Resolutions. David Wong, Charles Spicer and Derek Ablett (being the Directors
who are interested in issued Existing Ordinary Shares) intend to vote in favour
of the Resolutions (save that they will not vote in respect of Resolutions in
which they are interested parties (their own election or re-election and the
Directors' Remuneration Report)) in respect of their own aggregate beneficial
holdings of 45,505,105 Existing Ordinary Shares representing approximately 6.5
per cent of the current issued ordinary share capital of the Company.
Yours sincerely,
David Wong
Executive Chairman
This information is provided by RNS
The company news service from the London Stock Exchange
END
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