Re Agreement For Sale & Leaseback of UK On-Course Betting Pitches
27 Februar 2008 - 8:00AM
UK Regulatory
Stock Exchange Announcement
27 February 2008
Neville Porter plc (the "Company")
1 Introduction
The Company announced on 30 January 2008 that it and its subsidiaries
(together, the "Group") had entered into various agreements with two of its
directors, Mr Porter and Mr Morton, concerning a proposed refinancing and
restructuring of the Group's businesses.
The terms of the refinancing included a possible sale of certain racecourse
pitches to Mr Porter and it was announced that discussions were in progress
relating to a leaseback to the Company of these pitches. The Company is
please to announce that terms have been agreed for the leaseback
arrangements. Full details are set out below.
Under the AIM Rules the leaseback arrangements are regarded as related-
party transactions (under AIM Rule 13). In addition, they will require
shareholder approval as they amount to substantial property transactions
between the Company and a director pursuant to section 190 to 196 of the
Companies Act 2006 and may result in a fundamental change of business under
AIM Rule 15.
The requisite resolution, which will also approve the arrangements
announced on 30 January 2008, will be proposed at an Extraordinary General
Meeting ("EGM") which is expected to be convened within the next few days
and held by mid March 2008.
2 Background to Refinancing
The Group operates in a sector where results can vary from favourable to
unfavourable in a short space of time, and where bets on one sport can be
positive at the same time as losses are incurred on another sport. With
this in mind, the directors take steps to limit the Group's liabilities by
hedging bets with other bookmakers where appropriate, and by broadening the
spread of bets between different sports.
Furthermore, the Group's traditional operations, on-course betting at UK
(and now Irish) racecourses - which have been the successful core of the
predecessor business for nearly 30 years - have been supplemented since
flotation by off-course betting at the newly-formed Birtley telephone call
centre and via internet betting.
The significant stakes taken by phone and on the internet have generated
far poorer returns than had been projected, partly as a result of the
generous odds offered to attract a new clientele and build up client
loyalty while these operations were in their infancy, and partly in line
with the generally greater level of payouts, particularly in online
betting, which appears to have affected the industry generally.
With the continued run of poor results (announced on 27 December 2007) that
affected the 30 June 2007 accounts having continued into 2008, the Group
has taken steps to reduce its cost base, and has taken steps to limit its
potential exposure on certain races, and the board is hopeful of better
performance as 2008 progresses. These losses have seriously eroded the
Group's working capital base. To raise funds, the board has agreed to sell
its UK pitches and the independent directors accepted an offer from Mr
Neville Porter after obtaining an independent valuation from an industry
expert. Approximately �5,763,000 of bets were taken at the UK pitches in
the financial period ended 31 December 2007, resulting in a gross profit of
�173,000. After deducting on-course expenses, the Company made a net profit
of �25,000 in relation to the UK pitches.
3 Details of Leaseback
If the option granted to Mr Porter to acquire the UK Pitches announced on
30 January 2007 is exercised by either Mr Porter or Neville Porter Racing
Limited, a lease back to the company of the UK Pitches will automatically
take effect under a leaseback agreement dated 26 February 2008 (the
"Leaseback Agreement"). Details of the UK Pitches are set out below.
Pursuant to the Leaseback Agreement, the Company has agreed to lease the UK
Pitches from Mr Porter for a monthly rental of �2,500 (certain adjustments
to which may occur, as set out in Part A to Part II of this Circular) for a
period of 15 years from the date of the exercise of the Option. The lease
under the Leaseback Agreement is terminable, by the Company only, on 3
months notice. Payments are invoiced monthly in arrears and the Leaseback
Agreement may be terminated by Mr Porter where any payment is more than 60
days overdue for payment, a summary of the other termination provisions are
set out in Part A to Part II of this Circular. If the Company ceases to
lease the UK Pitches, Mr Porter's obligations under his Service Agreement
will be amended to reflect that he will be able to personally (directly or
indirectly) trade from the UK Pitches. In such event Mr Porter's salary
will be replaced by an hourly rate to reflect the actual time spent on the
Group's business and the Company shall waive its claims under the service
agreement in respect of Mr Porter's operation, either directly or
indirectly, of this business.
A summary of the principal terms of the Leaseback Agreement are set out
below.
4 Working Capital
Shareholders should be aware that the Company requires additional working
capital and the Directors believe that the proposals described in this
announcement and the announcement dated 30 January 2008 are the best way of
achieving this. All the funds received by the Company will be used for
general working capital purposes.
5 Extraordinary General Meeting
The leaseback agreement is conditional upon the passing of a resolution to
be proposed at the EGM expected to be held mid March and further
information will be set out in the circular which it is anticipated will be
sent to shareholders within the next week.
Mr Porter has undertaken to abstain from voting at the EGM and,
accordingly, the resolution will require a simple majority of votes cast in
favour by the independent shareholders at the EGM.
6 Board Approval
The Directors, excluding Mr Porter and Mr Morton who did not take part in
your Board's deliberations because of their respective interests in the
arrangements outlined above, concluded that the arrangements, having
consulted with its nominated adviser, Blomfield Corporate Finance Limited,
were fair and reasonable insofar as its shareholders were concerned.
Further information:
David Soley Tel: 08000 223388
Chairman
Neville Porter plc
Nick Harriss Tel: +44 20 7512 0191
Nominated Adviser
Blomfield Corporate Finance Limited
Appendix
Details of the Leaseback Agreement
The Leaseback Agreement between Mr Porter and the Company was entered into on 26
February 2008. The agreement grants a lease of the UK Pitches to the Company,
with a right to assign the benefit of such lease to any wholly owned subsidiary
from time to time.
This agreement is for a term of 15 years, at an initial monthly rent of �2,500
for the first five years, rising by �1,000 per year thereafter. The rent shall
be reduced pro-rata in the event that a Pitch is permanently unavailable (being
unavailability for six or more consecutive race days).
The Leaseback Agreement is terminable on 3 months notice in writing by the
Company and is also terminable upon the occurrence of the following events:-
the termination of Mr Porter's service contract;
an insolvency event of the Company;
Mr Porter not being permitted to attend on racedays to operate the pitches
on behalf of the Company in his capacity as an employee (other than where the
legitimate business interests of the Company otherwise require);
it being unlawful for the Company to perform its obligations under the
agreement (which are incapable of remedy within 14 days of such event);
a reverse takeover of the Company being approved by the shareholders or a
mandatory takeover bid for the Company taking effect under Rule 9 of the City
Code on Takeovers and Mergers (in the case of a reverse takeover without the
consent of Mr Porter or in the case of a mandatory offer, where Mr Porter is not
acting as a bidder or in concert with a bidder);
the Company not paying any amount, other than rent, payable under the
Agreement within 60 days of the due date;
a general offer being made to shareholders of the Company which results in
the acquisition of 50 per cent. or more of the voting rights or shares of the
Company; and
the rent remaining unpaid 60 days after the end of the calendar month to
which it relates.
In the event of termination as a result of the termination of Mr Porter's
service contract or as a result of a mandatory take over bid taking effect, the
Company shall be entitled to re-acquire UK Pitches at the �350,000 sale price.
Mr Porter is only permitted to sell the UK Pitches or to acquire new pitches
which will be subject to the lease arrangements with the prior written consent
of the Company.
Upon a termination of the Leaseback Agreement, the Company has agreed that Mr
Porter can carry on either directly or indirectly a course betting business on
his own account and the Company waives claims under his service contract in
respect of this, whether for breaching restrictive covenants or otherwise. In
addition, Mr Porter will be released from his service agreement hours and be
available on reasonable notice on days where there is no race meeting at any UK
Pitch and his existing salary arrangements will be replaced with an hourly rate
of �50 per hour up to a maximum of �50,000 per annum.
UK Pitches
Racecourse Ring List Position
Ascot Royal Rails 12
Ascot Royal Tattersalls 13
Ayr Flat Tattersalls 1
Ayr Flat Tattersalls 5
Beverley Course 18
Carlisle Flat Tattersalls 2
Catterick Flat Rails 16
Catterick NH Rails 6
Cheltenham Festival Rails 31
Cheltenham Festival Lower Tattersalls 3
Cheltenham Off Lower Tattersalls 1
Cheltenham Off Lower Tattersalls 2
Chepstow NW Tatterstalls 78
Chepstow Flat Tatterstalls 67
Doncaster Flat Tatterstalls 18
Epsom Derby Lower Tattersalls 55
Exeter Tatterstalls 57
Fontwell Lower Tattersalls 28
Hamilton Rails 15
Hamilton Rails 4
Haydock Flat Rails 9
Haydock NH Rails 8
Haydock NH Rails 13
Kelso Rails 3
Kempton NH Tattersalls 48
Kempton AW Tattersalls 67
Kempton AW Tattersalls 109
Kempton AW Silver 43
Kempton AW Silver 17
Leicester Flat Rails 5
Leicester NH Rails 5
Leicester NG Rails 18
Leicester NH Rails 3
Ludlow Tattersalls 42
MusselburghFlat Tattersalls 1
Newcastle NH Rails 18
Newcastle NH Tattersalls 5
Newcastle Flat Rails 6
Newcastle Flat Tattersalls 5
Newcastle Flat Tattersalls 11
Newmarket Rowley Rails 10
Newmarket Rowley Rails 22
Ripon Rails 6
York Rails 15
York Tattersalls 120
END
Neville Porter (LSE:NEV)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Neville Porter (LSE:NEV)
Historical Stock Chart
Von Jun 2023 bis Jun 2024
