NFND Newfound

 

TIDMNFND 
 
RNS Number : 3978Q 
Newfound N.V. 
09 April 2009 
 

9 April 2009 
Newfound N.V. 
("Newfound" or the "Company") 
 
 
Proposed cancellation of admission of the Company's Ordinary Shares to trading 
on AIM, Notices of Extraordinary Class Meeting and Extraordinary General Meeting 
and update on current financial and trading position 
 
 
Newfound announces that it will today be posting a circular to shareholders (the 
"Circular") concerning the proposed cancellation of the admission of the 
Company's ordinary shares to trading on AIM (the "Delisting") and convening an 
Extraordinary Class Meeting of ordinary shareholders to approve the Delisting 
(the "ECM"). 
 
 
The Board has, following consultation with certain major shareholders, 
determined that the interests of all shareholders will be best served by the 
Delisting. 
 
 
The Delisting is subject to the passing of the resolution to be proposed at the 
ECM by not less than 75 per cent. of votes cast by ordinary shareholders. As at 
the time of this announcement, the Company has received irrevocable undertakings 
to vote in favour of the Resolution in respect of approximately 74 per cent. of 
the ordinary shares in issue. 
 
 
The Company's articles of association and Dutch law require the Company to 
convene an Extraordinary General Meeting of the Company ("EGM") as the Company's 
net asset value has fallen below 50 per cent of its paid up share capital. The 
Board believes that the net asset value of the Company was negative as at 31 
December 2008. The purpose of the EGM is to provide shareholders with an 
opportunity to discuss the reduction in the Company's net asset position. 
However, the Company is not required to propose any specific resolution for 
shareholders to approve at this meeting. All shareholders may attend the EGM. 
 
 
Current financial and trading position 
 
 
At the time of IPO, the Company's business model was focused on developing its 
three resorts, Humber Valley in Canada, Pinney's Estates in Nevis and Ocean's 
Edge in St. Kitts, together with seeking new resort opportunities. Since then, 
the Company has experienced a number of challenges in the implementation of its 
original business model which have led to its operational and financial 
performance being significantly below its expectations at the time of IPO. The 
credit crisis, the consequential reduction in demand for properties and 
significant withdrawal of debt from the market have exacerbated these 
challenges. 
 
 
During 2008, a number of changes were made to address these issues, including 
the appointment of a new Chief Executive Officer and management team and the 
implementation of an operational restructuring for the Company and its 
subsidiary undertakings (the "Group"). The financial circumstances of the Group 
also triggered an in-depth review of the costs of the business and efforts have 
focused upon the conservation of working capital. 
 
 
Following a review of the operations at Humber Valley, the Board concluded that 
the resort was not economically viable and following protracted efforts to find 
alternative solutions, the Company announced on 8 December 2008 that Humber 
Valley had filed for bankruptcy. This action has had no impact on the projects 
at St. Kitts and Nevis. 
 
 
The Company continues to develop the projects at Pinney's Estates in Nevis and 
Ocean's Edge in St. Kitts. Satisfactory progress is being made with the 
development and sale of properties at Ocean's Edge. The masterplanning work on 
Nevis is complete and a hotel operator for the site has entered a period of 
exclusivity with the Company. The project is now ready to move into its 
pre-development work stage with a view to starting on site in early 2010 subject 
to project finance being available. 
 
 
The decision to put Humber Valley Resort Corporation into liquidation stopped 
the drain on the Company's resources. The Board has taken the view to write down 
the assets of Humber Valley Resort Corporation which represents a non cash item 
of c. US$18 million for the year to 31 December 2008. As a result the Directors 
believe that the net asset value of the Company will be negative at 31 December 
2008. 
 
 
The closure of Humber Valley Resort Corporation means that the Company's 40 per 
cent. interest in the Ocean's Edge project is currently its only remaining 
income generating asset. However, the income from the development does not cover 
the Nevis pre-project costs and the administration costs being incurred 
elsewhere in the Group. 
 
 
In order to reduce the Company's cost base, in March 2009 Jayne McGivern 
resigned as Chief Executive Officer to become a non-executive director. 
Negotiations are well advanced to put in place arrangements for Jayne McGivern 
and other members of the Group's development team to provide management services 
to the Group by way of a third party management contract. 
 
 
In order to continue with the development of its project at Nevis and for future 
projects, the Company needs to raise further capital. It will also need to raise 
capital within the next 4 to 6 months to meet ongoing administration costs. 
Unless new finance can be found for the Group over the coming months, there is a 
risk that the Company will exhaust its cash resources, in which case it will 
need to cease operations. 
 
 
The Group is currently in compliance with its banking covenants following a net 
asset waiver which was agreed with Agilo Limited until September 2009. A new Net 
Asset Value to Aggregate Financial Indebtedness ratio has been agreed with Agilo 
Limited which will apply after September 2009. 
 
 
Background to and reasons for the proposed Delisting 
 
 
One of the primary reasons for the Company's admission to AIM in September 2006 
was the intention to use the equity market to fund the development of its three 
existing resorts and seek new resort opportunities. However, the Board believes 
that a public equity fundraising at the current time is not feasible due to the 
current equity market conditions and the weakened valuation of the ordinary 
shares. 
 
 
The Board believes that other funding options, including debt financing for 
ongoing resort development as well as equity funding to further proceed with the 
operational restructuring of the Group, are more likely to materialise if the 
Company ceases to be traded on any securities exchange. The Company is currently 
reviewing several opportunities which are only available to it if the Delisting 
occurs. Shareholders should note that there can be no certainty that any of 
these sources of funding will actually be realised. 
 
 
The Board also believes that the ongoing high costs and regulatory requirements 
of maintaining the admission of the Company's ordinary shares to trading on AIM 
can no longer be justified in relation to the Company. The Board anticipates 
that the Company will make meaningful annual savings as a result of the 
Delisting. The Board believes that these funds can be better deployed for 
shareholders by continued investment in the growth and development of the 
business. 
 
 
As a consequence of the above factors, the Board has concluded that, following 
consultation with certain major shareholders, the interests of the Company and 
the shareholders are not being best served by the continued admission of the 
Company's ordinary shares on AIM. 
 
 
Strategy following the Delisting 
 
 
The Company will continue to work to generate the best value for its existing 
assets. The management's current priority is the conservation of cash and the 
monitoring of the Company's cost base. It is critical that additional equity is 
raised and this will also be the priority of the management team. 
 
 
As referred to above, it is likely that following the Delisting a new third 
party management contract will be entered into with an entity headed by Jayne 
McGivern and involving other members of the Group's development team. The 
intention is that this new agreement has a cost remuneration structure suitable 
for the Company's ongoing activities. 
 
 
Delisting administration and treatment of depositary interests 
 
 
Subject to the ordinary shareholders approving and adopting the Resolution, it 
is anticipated that trading in the ordinary shares on AIM will cease at close of 
business on 12 May, with cancellation on AIM taking effect at 7 a.m. on 13 May 
2009. 
 
 
The arrangements concerning the depositary interests representing ordinary 
shares will remain unchanged and they will continue to be enabled in CREST 
following the Delisting. 
 
 
Upon the Delisting becoming effective, Collins Stewart Europe Limited will cease 
to be nominated adviser and broker to the Company and the Company will no longer 
be required to comply with the AIM Rules. 
 
 
How shareholders will be able to effect share transactions following Delisting 
 
 
While the Board has determined that the interests of all shareholders will be 
best served by the Delisting, it recognises that the Delisting may make it 
harder for shareholders to sell or buy ordinary shares should they so wish. 
 
 
Accordingly, the Board intends to investigate the possibility of introducing a 
share dealing facility under which shareholders will be able to buy or sell 
shares in the Company. 
 
 
ECM and EGM 
 
 
The ECM and EGM are to be held at Schiphol Airport Meeting Centre, 8th Floor, 
Havenmeesterweg 27, 1118 CB Schiphol Airport, The Netherlands at 12 noon and 
12.10 p.m. (Central European Time) respectively on 5 May 2009. 
 
 
Expected Timetable 
 
 
An expected timetable of key events for the Delisting is set out below: 
 
 
Circular (and form of proxy, form of direction or form of instruction if 
applicable) 
posted to shareholders 9 April 2009 
 
 
Latest time and date for receipt of forms of direction (1), (2) 12.00 noon on 1 
May 2009 
 
Latest time and date for receipt of forms of instruction (1), (2)12.00 noon on 2 
May 2009 
 
 
Latest time and date for receipt of forms of proxy (1), (2)12.00 noon on 3 May 
2009 
 
 
ECM (1), (2) 
                               12.00 noon on 5 May 2009 
 
 
EGM (1), (2)      12.10 p.m. on 5 May 2009, or 
                                as soon thereafter as the 
                                Extraordinary Class 
                                Meeting has concluded 
 
 
Last day of dealings in ordinary shares on AIM (3) 12 May 2009 
 
 
Cancellation of the admission of the ordinary shares to trading on AIM (3)8.00 
a.m. on 13 May 2009 
 
 
Notes: 
1.    Each of the times and dates above is subject to change. If any of the 
above times and/or dates change, the revised times and/or 
       dates will be notified to shareholders by announcement on a Regulatory 
Information Service. 
2.    Central European Time. 
3.British Summer Time. 
 
 
 
 
Further information may be found at the Company's website, www.newfoundnv.com, 
where a copy of the Circular will shortly be available. 
 
 
Enquiries: 
 
 
+------------------------------------------------------+-----------------+ 
| Newfound N.V.                                        | 020 7470 2438   | 
+------------------------------------------------------+-----------------+ 
| John Morgan                                          |                 | 
+------------------------------------------------------+-----------------+ 
| Stephen Bentley                                      |                 | 
+------------------------------------------------------+-----------------+ 
|                                                      |                 | 
+------------------------------------------------------+-----------------+ 
| Collins Stewart Europe Limited                       | 020 7523 8350   | 
+------------------------------------------------------+-----------------+ 
| Adrian Hadden                                        |                 | 
+------------------------------------------------------+-----------------+ 
|                                                      |                 | 
+------------------------------------------------------+-----------------+ 
| Citigate Dewe Rogerson                               | 020 7638 9571   | 
+------------------------------------------------------+-----------------+ 
| George Cazenove                                      |                 | 
+------------------------------------------------------+-----------------+ 
| Nicola Smith                                         |                 | 
+------------------------------------------------------+-----------------+ 
 
 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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