TIDMMEA
RNS Number : 2098R
Medsea Estates Group PLC
27 April 2009
Medsea Estates Group plc
('Medsea' or 'the Company')
Issue of Addendum to Circular and Appointment of Independent Director
Background to the Addendum
A circular ("Circular") was sent to Shareholders on 7 April 2009. A summary is
set out in Appendix I.
However, the Company has now posted an Addendum to the Circular on 25 April
2009. A summary is set out in Appendix I1.
The purpose of the Addendum is to inform Shareholders of material changes to the
information contained in the Circular. All resolutions proposed in the Circular
remain unchanged and the Addendum seeks to remedy the unforeseen resignation of
the Independent Director and to provide further information where relevant.
The Extraordinary General Meeting will continue to take place at 32 Percy
Street, London W1T 2DE on 30 April at 10.30am.
Copies of the Circular and Addendum can be found at www.medseaestates-ir.com
Appointment of Director
The Company is pleased to announce the appointment of John Frankland as a
non-executive director with immediate effect.
John Frankland, aged 40, most recently was a certified financial planner
specializing in alternative and unregulated areas of the investment market,
including property-based investments. He spent 11 years (1989-2000) with
Prudential UK, in a variety of roles including advisory, business-to-business,
sales management and compliance management. Since 2000, he has been operating as
an Independent Financial Advisor ("IFA") and has built up an extensive private
and corporate client base. Since 2007, he has been working on creating an asset
allocation model focused on alternative investments for use by the IFA market,
and has set up an alternative investment research company and consulted on the
development of a new wealth management service to this end.
Mr. Frankland holds no shares in the Company.
Current Directorships
CPC Wealth Management Ltd
Professional Wealth Management Services Ltd
Corporate and Private Client Consulting Ltd
Sa Torre Development Ltd
Argos Sol Ltd
Past Directorships
PWMS (Carlisle) Ltd (resigned 28/02/09)
John Frankland was a director at the time, or within twelve months, of the
following companies going into receivership, compulsory liquidation, creditors'
voluntary liquidation, administration, company voluntary arrangement or
composition with creditors generally or any class of its creditors:
Pension Rescue Ltd (dissolved 16/12/2008)
No other information falls to be disclosed under schedule 2(g) of the AIM rules
with regard to John Frankland.
Summary of material changes made in the Addendum posted on 25 April 2009
1. Resignation of Independent Director and implications
The Circular detailed the intention of the Company to enter into a related party
transaction in order to complete the disposal ("Disposal") of Medsea UK Limited,
a material operating subsidiary, to the current executive directors of the
Company.
The Disposal will constitute a fundamental change of business as defined by the
AIM Rules. Furthermore, as the Disposal is to the current executive directors of
the Company, it would be recognised as a related party transaction under the AIM
Rules. Moreover, related party transactions require that an independent director
of the Company provide to all shareholders a "fair and reasonable" opinion with
regard to the terms of the transactions. The Circular posted on 7 April 2009
included a letter from Neil Craven, the independent director of the Company,
confirming that the terms of the Disposal were "fair and reasonable" insofar as
its Shareholders are concerned.
On 7 April 2009, the Executive Directors became aware that Neil Craven wished to
withdraw his "fair and reasonable" opinion provided in the Circular. However,
the Circular had been released for posting on the morning of 7 April 2009 which
led to a failure to withdraw the Circular in advance of its posting.
Furthermore, on 8 April 2009, Neil Craven tendered his resignation from the
Company with immediate effect.
In order for the Company to satisfy the AIM Rule with regard to the provision of
a "fair and reasonable" opinion from an independent director for the completion
of the Disposal to the related parties being the current Executive Directors,
the letter of recommendation from the Independent Director (Part 1) set out on
pages 3 to 4 of the Circular must be disregarded.
Instead, the Board of the Company has appointed a new independent director to
review the terms of the Disposal and where appropriate provide a "fair and
reasonable" opinion.
2. Board Appointment of John Frankland
The Company is pleased to announce the appointment of John Frankland as a
non-executive director with immediate effect. Further details are noted within
this announcement.
3. Independent Director review of the Disposal
Mr. Frankland, in his capacity as independent director of the Company, has
reviewed the terms of the Disposal and concluded that the transaction is "fair
and reasonable" insofar as Shareholders are concerned.
Mr. Frankland has been unable to consult with the Company's Nominated Adviser
("NOMAD") following the recent resignation of HB Corporate. In his position as
the Independent Director of Medsea, he recommends that Shareholders vote in
favour of the Resolutions contained in the Circular. His letter of
recommendation to the Company is set out below (SEE APPENDIX II: LETTER TO
SHAREHOLDERS FROM THE INDEPENDENT DIRECTOR) and is intended to replace the
letter from Mr Craven set out in Part l of the Circular (SEE APPENDIX I:
CIRCULAR DATED 7 APRIL 2009).
For avoidance of doubt, in the event that the Resolutions are not passed at the
General Meeting, the Company will seek advice regarding insolvency procedures.
4. Deferred Consideration mechanics and security provided
It is the intention that the benefit of the Deferred Consideration to which the
Company is entitled for the Disposal will be secured so far as practicable for
the benefit of the Minority Shareholders in the following way (or in such other
way as the Company may be advised in order to secure a similar result):
4.1 the Company will establish a new company ("newco") to take the benefit of
the Deferred Consideration and newco will issue 13,740,472 shares to the
Minority Medsea Shareholders.
4.2 Medsea UK Limited will grant a debenture over its assets and pledge over
the shares in Medsea Group SL to secure newco's interest in the Deferred
Consideration.
4.3 Other steps including security by Medsea Group SL will be sought.
5. Takeover Code
The Company has consulted the Panel regarding the Company's status for the
purposes of the City Code on Takeovers and Mergers. The Company understands that
the Transactions are not subject to the provisions of the Code but upon the
passing of the Resolutions and the appointment of the New Directors the Company
will become subject to the Code.
The Company will inform shareholders of the result of the EGM on 30 April 2009.
For further information:
Medsea Estates Group plc
www.medseaestates-ir.com
Tony Gatehouse, Chairman
Tel: +34 6 570 40 02
Juan Carlos Rodriguez Martinez, Chief Executive
Media enquiries:
Threadneedle Communications
Alex White/Josh Royston Tel: +44
(0) 20 7653 9850
APPENDIX I: CIRCULAR DATED 7 APRIL 2009
PART 1
Note: This letter has been superseded by new letter set out in the Addendum and
Appendix II of this announcement.
Dear Shareholder,
Medsea Estates Group Plc (the 'Company' or 'Medsea')
Disposal of Medsea UK Limited, Share Acquisition, Board Changes, New Business
Plan and Notice of Extraordinary General Meeting
Background to and Reasons for the Proposals
Following an earlier announcement on 10 November 2008, the Company announced on
19 March 2009 that it was continuing to discuss with various third parties
potential transactions which could increase shareholder value but noted that if
these discussions failed to bear fruit the Company would proceed with its
original plan to delist from AIM.
The Board of Medsea has now considered these approaches and been in contact with
the initiators. The Board has consulted with its former Nominated Adviser and
Broker, HB Corporate, a trading division of Hoodless Brennan PLC, on the
approaches. However, as announced on 6 April 2009, HB Corporate has resigned
with immediate effect and trading in the Company's shares has been suspended.
Although the decision has been a difficult one, the only one out of two
proposals which the Board feels able to put to shareholders is that explained in
this Circular. . Other than the two proposals, the Board was left with the
option either of proceeding with the previous intention to seek shareholders'
approval to the cancellation of the Company's AIM admission. The Board feels
that given the proposals received, such a course would not be fair and
reasonable in the interests of the Company's shareholders or creditors.
In view of the loss of the trading facility which would follow the cancellation
of the AIM admission, the Board has decided that the Proposals described in this
Circular offer a better prospect for Medsea shareholders. For the avoidance of
doubt, the former Nominated Adviser has not approved the terms of this Circular.
It must also be emphasised that there is no guarantee that the Company will be
successful in appointing a new Nominated Adviser or that trading in the shares
on AIM will be restored.
Related Party Transactions and Disposals resulting in a fundamental change of
business
The Transactions are proposed to take place between the Company and the
Executive Directors and fall within the definition of "substantial property
transactions" under section 190 of the Companies Act 2006 and under the
definitions of "substantial transactions and "related party transactions" under
rules 12 and 13 of the AIM Rules. The Transactions and the New Business Plan
also amount to a "disposal resulting in a fundamental change of business" under
rule 15 of the AIM Rules.
The combined effect of the above statutory and AIM Rule requirements is that the
Proposals be explained in the Circular and that the necessary resolutions for
their approval be submitted to the approval of Medsea Shareholders at a General
Meeting.
The Investing Strategy and New Business Plan
AIM Rule 15 states that where the effect of a proposed disposal is to divest
the AIM company of all, or substantially all, of its trading business
activities, the company will be treated as an investing company. The Company's
investing strategy to be implemented following the Disposal is set out in the
New Business Plan which is summarised in Part II and Appendix III. The New
Business Plan is subject to the approval of shareholders at the General Meeting.
The Company will then have to make an acquisition or acquisitions which may
constitute a reverse takeover under Rule 14 or otherwise implement the investing
strategy within twelve months of having received such consent from Shareholders,
failing which the Company's shares will be suspended from trading on AIM.
In order to provide adequate headroom for further share issues and facilitate
fund raising, it is proposed to include resolutions to empower the Directors to
allot additional ordinary shares at the General Meeting and providing for a
further reorganisation and subdivision of the share capital.
The Proposals
Part II of this document describes the Proposals. The New Directors believe that
their broad collective experience in corporate finance and corporate broking
together with their extensive network of contacts will assist them in the
identification, evaluation and funding of acquisition targets. When necessary,
other external professionals will be engaged to assist in the due diligence of
prospective targets. The New Directors would also consider bringing on board
additional directors with relevant experience.
Directors and Management
The current Board, including me as the Independent Director, will resign from
office upon the Transactions becoming or being declared unconditional in all
respects. The New Directors will join the Board at the same time. Further
information about the terms of appointment of the New Directors is set out in
Appendix IV.
Financial information and Pro Forma Balance Sheet
Unaudited financial information regarding Medsea and its subsidiaries is
contained in Appendix I. The Company announced its interim results for the six
month period to 30 June 2008. For the year ended 31 December 2008 unaudited
sales were in the region of GBP10.8 million and unaudited losses were in the
region of GBP147,000. Administrative overheads have been reduced. Trading
continues to be very depressed in the current adverse market conditions.
The financial effect of the proposed Disposal is shown below in Appendix II.
Further Information
Your attention is drawn to Part II of this document, the Appendices to this
document and the accompanying Form of Proxy.
Action to be taken
One of the conditions of the Proposals is the passing of the Resolutions by the
requisite majority at the General Meeting. In order to vote at the General
Meeting, you must return a Form of Proxy duly completed and signed by post or by
hand to Blue Harbour Financial Limited, 1 Aurora Avenue, Queens Quay, Clydebank
G81 1BF by no later than 10.30 am on 28 April 2009 (or 48 hours before any
adjournment of the General Meeting). A reply-paid envelope (for use in the UK
only) is enclosed for your convenience.
Recommendation
The Independent Director, who has consulted with the Company's nominated adviser
prior to to their resignation as nominated adviser, considers the terms of the
Transactions to be fair and reasonable so far as Medsea Shareholders are
concerned. The Independent Director recommends that shareholders vote in favour
of the Resolutions as he intends to do in respect of his holding of Medsea
Shares, representing approximately 2 per cent of the issued ordinary share
capital of Medsea.
Yours sincerely,
Neil Craven, Independent Director
PART II
Description of the Proposals
1. Proposed disposal of Medsea trading subsidiaries
The Executive Directors will purchase in their name, or through a Special
Purpose Vehicle (SPV), the whole of the issued share capital of Medsea UK
Limited. This company represents substantially the entire assets and undertaking
of Medsea including all trading subsidiaries and other residual assets, on the
following principal terms;
* the price of EUR1 (one euro) and the deferred consideration specified below ("the
Deferred Consideration")
* each of the Executive Directors will resign on terms acknowledging that they
have no claims against the Company for accrued remuneration, expenses or any
other matter
* each of the Executive Directors will so far as each is reasonably able to do so
provide information and answer queries raised by the Company without charge in
the period of 12 months following the Disposal
* completion of the disposal is conditional upon fulfillment of the Conditions and
completion of the Share Acquisition specified below
* Medsea will have audit access to the Medsea Group and in the event of any
dispute as to the calculation of the Deferred Consideration, the parties will be
bound by the decision of an Independent Accountant
* the interest of Medsea in the assets of the Medsea Group will be protected by a
legal charge, debenture or other form of security reasonably approved by Medsea.
The Deferred Consideration
The terms of the Deferred Consideration are as follows:
* The Executive Directors will procure that an amount equal to 15% of capital and
income distributions derived by any of the Medsea Group attributable to the
Development Properties ("Property Distributions") which arise during the
Deferred Period will be paid to Medsea Estates Group plc. In addition during
each successive year following the Deferred Period, the Executive Directors will
procure that an amount equal to 15% of the Property Distributions less 3% in
each successive year will be paid to Medsea Estates Group plc (eg: 12% in year
6, 9% in year 7 etc.).
* The benefit of the Deferred Consideration will be secured so far as practicable
for the benefit of the Minority Shareholders, that is, the holders of 13,740,472
Existing Ordinary Shares (the amount of Existing Ordinary Shares not held by the
Executive Directors and Catherine Gatehouse).
* This value of the Deferred Consideration is estimated by the directors to be
EUR1.3million. On the assumption that this amount will be secured for the benefit
of the Minority Shareholders, this value would equate to 0.09 cents per share.
Further information regarding the valuations is set out in Appendix II. It
should be noted that there is no guarantee that this value will in fact be
achieved.
For the purposes of the Deferred Consideration, the following definitions apply:
"Medsea Group" Medsea Group SL and all subsidiary undertakings
"Development Properties" the following properties situated in Spain which are
partially owned
directly or indirectly by
Associate companies of Medsea Group SL:
Torre del Obispo (Owner: Promilorci SL)
Medsea Group has a 13% interest in Promilorci SL. Euromed Investments SL
(Medsea's 95% subsidiary) has a joint venture arrangement with Promilorci SL for
the 4.5 million sq ft Nuevo Torre Guil development in Murcia. The project,
known as the Torre del Obispo development, is within a large forested area six
miles from the city of Murcia, one of the most important Spanish destinations
for national and international tourism. The Murcia region has experienced
significant growth and ranks fifth for foreign investment in Spain with Madrid
and Barcelona taking the first two places.
Aguilas (Owner: Urbanilor SL)
Medsea Group has a 50% interest in Bishop Properties SL which itself has a
10% interest in Urbanilor SL. Urbanilor has bought development rights to a
693,159 sq m - approximately 7.5 million sq ft - plot of land in Aguilas,
Murcia, Spain . Urbanilor intends to develop up to 578 residential properties on
the site. Medsea will supervise everything related to the sales and marketing
of the properties on behalf Urbanilor, and Medsea's subsidiary, Euromed, acting
as principle agent, is marketing the development in the UK and Ireland through
its links with some 150 independent property agents.
Argos Sol (Owner: Residental Argos Sol SL)
Medsea Group has a 30% interest in Eurobond Investments SL which has a 80%
interest in Nuevas Inversiones del Mediterraneo which itself owns 100% of
Residental Argos Sol SL. Eurobond has a four year contract with Residencial
Argos Sol, S.I to market all the properties on a new Euro120million development
in Murcia, Spain. which also owns ten percent of the developer, has sole selling
rights for all units. The Residencial Argos Sol development, in the lakeside
area of Cehegin, covers 325.083 sq m and comprises 830 units - ranging from
apartments, town-houses,semi-detached villas and an aparthotel/spa. Cehegin is
approximately 62km from the City of Murcia and linked directly to it by a new
motorway. The international airports of Alicante and Murcia are just over an
hour's drive away, as are a choice of beaches. As well as its large lake (venue
for the National Fishing Championship), the area is renowned for
its health-giving hot springs.
"Deferred Period"the period of five years starting on the date of Completion of
the
Transactions
The Board of Medsea intends that the benefit of the Deferred Consideration will
be secured so far as practicable for the benefit of the Minority Shareholders.
The present proposed means of giving effect to this intention is that
arrangements will be made to dispose of the benefit of the Deferred
Consideration at current market value to a special purpose vehicle or trust
which will hold the benefit of the deferred Consideration for the Minority
Shareholders. The Company will make a further announcement on this matter as
soon as practicable.
2. Share Acquisition
Andrew Meikle or a vehicle introduced by Mr Meikle will purchase all the
Existing Ordinary Shares held by the Executive Directors and by Catherine
Gatehouse amounting to 64,238,940 ordinary shares (the "Sale Shares)
representing 82.38% of the current issued share capital of the Company on the
following principal terms:
* the Sale Shares will be sold with good title and free of any encumbrances
* the price of the Sale Shares will be 0.18p per share payable by issue of a
deferred loan note redeemable after 1 year without interest
* completion of the sale of the Sale Shares is conditional upon the fulfillment of
the Conditions specified below.
3. Maji advance
Maji will advance to Medsea GBP120,000 to settle liabilities to creditors
conditionally upon their acceptance of settlement at 60p in GBP. Further details
of the advance are set out in Appendix IV.
4. Board Changes
It is the intention that, conditional on the approval of the Proposals, all the
current Directors will resign from the Board of the Company.
Andrew Meikle, Alexandra Eavis and Alberto Gil have agreed to join the Board,
subject to the approval of the Proposals. Brief summaries of their experience
are set out below. Further information regarding their proposed remuneration,
and current and past directorships is set out in Appendix IV.
Andrew Meikle - Chairman and Executive Director
Andrew has 15 years' experience in the private equity market. He jointly founded
Catalyst Investment Group Limited and more recently ARC Fund Management Limited,
which have between them invested in over 35 small companies over the last 8
years. ARC is now listed on the AIM market in London. Whilst with these
organisations, he set up the first retail EIS Enterprise Investment Scheme fund
and the first FSA-authorised European residential property fund. Andrew set up a
new financial services group structure in 2006, Maji Capital Partners Group plc,
which includes a corporate finance arm (Infinity Corporate Finance Limited) and
a stockbroking arm (M Squared Equities Limited). This public limited company and
its subsidiaries specialise in delivering bespoke financial products to retail
investors. Andrew is also a director of the Infinity Asia to AIM Fund.
Alexandra Eavis - Executive Director
Alexandra Eavis has been acting as the Director of Corporate Finance at Infinity
Corporate Finance Ltd since May 2006. In addition, she has recently completed
the project management of a GBP3.5million residential conversion of a Grade 1
listed building in Central London for Topshore Ltd. Since graduating from Oxford
University with a degree in experimental psychology, she has been responsible
for setting up award winning public sector projects and establishing her own
consultancy firm (Leone Services Ltd) within the small company sector. Her
analytical and insightful thinking are key to the Infinity small company
investment model, and her presence on the Group's management committee has been
instrumental in diversifying the Group's business model. She also sits on the
board of Maji Capital Partners Group Plc.
Alberto Gil - Non - Executive Director
Alberto has 15 years' experience in the private equity market. He jointly
founded The Investment Trading Company aimed at raising funds for the SME market
both here and abroad, especially in China. Prior to this he worked at Catalyst
investment group as head of Corporate Finance and the companys Financial
Controller helping to raise funds for the SME market .He has a good knowledge of
the retail sector and the residential property services.Alberto is a qualified
Chartered Management Accountant
4. New Business Plan
Medsea will adopt a new business plan (the Business Plan) describing the intent
for the new Medsea Group to develop and/or acquire a new fund management
business whereby the new Medsea Group will seek to raise funds in order to offer
profitable companies(and their shareholders) based in Brazil, Russia, India,
China and other developing economies the opportunity to have the expenses of
obtaining admission to the AIM market met by the new Medsea Group in exchange
for the grant of an agreed proportion of shares in the company seeking
admission.
The New Directors intend to arrange an entitlement offer to Medsea shareholders
with a view to raising sufficient funds to meet any additional working capital
needs for the forthcoming 12 months. In order to assist in this, they intend to
use the resources of Maji Capital Partners Group plc in which they are directors
and Andrew Meikle has a controlling interest. There is no guarantee that
sufficient funds will be raised but the New Directors are confident that this
objective can be met.
More information about the New Business Plan is set out in Appendix III.
5. Conditions of the Proposals
The Proposals are subject to the following conditions:
* The confirmation of the Takeover Panel in terms reasonably satisfactory to the
Board that Medsea is not governed by the terms of the Code on the grounds that
it is not resident in the United Kingdom.
* The passing of the Resolutions by the requisite majority.
* The acceptance by Medsea's creditors of settlement of the amounts owed to them
on terms satisfactory to Maji.
* The receipt of funds advanced by Maji to satisfy Medsea's creditors.
The conditions must be fulfilled by 30 April 2009 otherwise the Proposals will
lapse unless extended by agreement between the Company, the Executive Directors
and Maji.
6. General Meeting
The Company has convened a General Meeting to be held on 30 April 2009 for the
purpose of considering and if thought fit passing the following resolutions:
* To approve the Disposal on the basis of the terms described in the Circular
* To approve the Share Acquisition on the basis of the terms described in the
Circular
* To approve the adoption of the New Business Plan as described in the Circular
* To change the name of the Company to "AIM Investments plc"
* To subdivide the Ordinary shares of 1p each into shares of 0.1p each
* To cancel the Deferred shares and the Share Premium Account
* To empower the Directors to allot ordinary shares to a nominal value of
GBP2,202,058
The Notice convening the General Meeting is to be found on page 32 and a Form of
Proxy accompanies this document.
7. Irrevocable undertakings to vote in favour of the Transactions
The Executive Directors and Catherine Gatehouse have irrevocably undertaken to
vote in favour of the Resolutions in respect of their shares in the Company
amounting in aggregate to 64,238,940 Medsea Shares, representing 82.38% of the
issued ordinary share capital of Medsea.
While the effect of such irrevocable undertakings is to ensure that the
Resolutions will be carried, nevertheless the Directors wish to ascertain the
level of support for the Proposals by the Minority shareholders and to give the
Minority Shareholders a voice.
APPENDIX II: LETTER FROM THE INDEPENDENT DIRECTOR IN THE ADDENDUM POSTED ON 24
APRIL 2009
Dear Shareholders,
Before my appointment to the Board of Medsea ("the Board"), the incumbent Board
considered two separate third party transactions that may have created
shareholder value. On 18 March 2009 the Company accepted the letter proposing
certain transactions from Maji Capital Partners Group Plc ("Maji") which it
considered to be the most favourable for its shareholders and creditors. The
Maji proposals have been agreed between the Company and Maji to be legally
binding.
As announced on 6 April 2009, the Company's Nominated Advisor, HB Corporate,
resigned with immediate effect and trading in the Company's shares was
suspended. In addition, as announced on 22 April 2009, the executive directors
became aware on 7 April that Neil Craven wished to withdraw his "fair and
reasonable" opinion provided in the Circular and on 8 April 2009 Mr Craven
resigned as a director with immediate effect. This left the Company in a
position where it was unable to satisfy the AIM Rule with regard to the
provision of a "fair and reasonable" opinion from an independent director for
the completion of the Disposal to the related parties being the current
Executive Directors.
For the avoidance of doubt, the former Nominated Adviser has not approved the
terms of the Circular or this Addendum. It must also be emphasised that there is
no guarantee that the Company will be successful in appointing a new Nominated
Adviser or that trading in the Shares on AIM will be restored.
Related Party Transactions and Disposals resulting in a fundamental change of
business
The Transactions are proposed to take place between the Company and the
Executive Directors and fall within the definition of "substantial property
transactions" under section 190 of the Companies Act 2006 and under the
definitions of "substantial transactions and "related party transactions" under
Rules 12 and 13 of the AIM Rules. The Transactions and the New Business Plan
also amount to a "disposal resulting in a fundamental change of business" under
Rule 15 of the AIM Rules.
The combined effect of the above statutory and AIM Rule requirements is that the
Proposals be explained in the Circular and that the necessary resolutions for
their approval be submitted to the approval of Medsea Shareholders at an
Extraordinary General Meeting. All the details contained in the Circular are
accurate except those in Part I and Part II (4). Part I should be disregarded in
its entirety and Shareholders should instead refer to this replacement Part I
section. Part II (4) refers to Board Changes and should read:
"It is the intention that, conditional on the approval of the Proposals, all the
current Executive Directors will resign from the Board of the Company.
I intend to retain my Non-Executive role and remain on the Board. In addition,
Andrew Meikle, Alexandra Eavis and Alberto Gil have agreed to join the Board,
subject to the approval of the Proposals. Brief summaries of their experience
are set out in the Circular. A brief summary of my experience is contained in
this Addendum. Further information regarding their proposed remuneration, and
current and past directorships is set out in Appendix IV of the Circular."
The Investing Strategy and New Business Plan
AIM Rule 15 states that where the effect of a proposed disposal is to divest the
AIM company of all, or substantially all, of its trading business activities,
the company will be treated as an investing company. The Company's investing
strategy to be implemented following the Disposal is set out in the New Business
Plan which is summarised in Part II and Appendix III of the Circular. The New
Business Plan is subject to the approval of Shareholders at the General Meeting.
The Company will then have to make an acquisition or acquisitions which may
constitute a reverse takeover under Rule 14 or otherwise implement the investing
strategy within twelve months of having received such consent from Shareholders,
failing which the Company's shares will be suspended from trading on AIM.
In order to provide adequate headroom for further share issues and facilitate
fund raising, it is proposed to include resolutions to empower the Directors to
allot additional ordinary shares at the General Meeting and providing for a
further reorganisation and subdivision of the share capital.
The Proposals
Part II of the Circular describes the Proposals. The New Directors believe that
their broad collective experience in corporate finance and corporate broking
together with their extensive network of contacts will assist them in the
identification, evaluation and funding of acquisition targets. When necessary,
other external professionals will be engaged to assist in the due diligence of
prospective targets. The New Directors would also consider bringing on board
additional directors with relevant experience.
Directors and Management
The current Executive Directors will resign from office upon the Transactions
becoming or being declared unconditional in all respects. The New Executive
Directors will join the Board at the same time. I will remain on the Board
assuming the Proposals are approved. Further information about the terms of
appointment of the New Directors is set out in Appendix IV of the Circular.
Further information about the terms of my appointment is contained in this
Addendum.
Financial information and Pro Forma Balance Sheet
Unaudited financial information regarding Medsea and its subsidiaries is
contained in Appendix I of the Circular. The Company announced its interim
results for the six-month period to 30 June 2008. For the year ended 31 December
2008 unaudited sales were in the region of GBP10.8 million and unaudited losses
were in the region of GBP147,000. Administrative overheads have been reduced.
Trading continues to be very depressed in the current adverse market conditions.
The financial effect of the proposed Disposal is shown in Appendix II of the
Circular.
Further Information
Your attention is drawn to Part II of the Circular, the Appendices to the
Circular and the accompanying Form of Proxy.
Action to be taken
One of the conditions of the Proposals is the passing of the Resolutions by the
requisite majority at the General Meeting. In order to vote at the General
Meeting, you must return the Form of Proxy included with the Circular duly
completed and signed by post or by hand to Blue Harbour Financial Limited, 1
Aurora Avenue, Queens Quay, Clydebank G81 1BF by no later than 10.30 am on 28
April 2009 (or 48 hours before any adjournment of the General Meeting). A
reply-paid envelope (for use in the UK only) was previously enclosed for your
convenience.
Recommendation
I have reviewed the Circular and supporting material provided to me by Medsea
and Maji. I have been unable to consult with the Company's Nominated Adviser
("NOMAD") because the Company is not currently retaining one but I conclude,
based on the information provided to me, that the terms of the Transactions
outlined in the Circular are fair and reasonable so far as Shareholders are
concerned. In my position as the Independent Director of Medsea, I recommend
that Shareholders vote in favour of the Resolutions contained therein.
Yours Sincerely,
John Frankland
This information is provided by RNS
The company news service from the London Stock Exchange
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