TIDMUEX
RNS Number : 3643Z
Urban Exposure PLC
21 May 2021
21 May 2021
Urban Exposure Plc ("the Company")
Proposed cancellation of admission of ordinary shares to trading
on AIM, solvent members' voluntary liquidation and Notice of
General Meeting
Further to the Company's announcement of 20 April 2021, the
Company announces details of the proposed cancellation of the
admission of its ordinary shares (the "Shares") to trading on AIM
and proposed liquidation.
In accordance with the AIM Rules for Companies (the "AIM
Rules"), the Company (together with its subsidiaries, the "Group")
hereby notifies the proposed cancellation of the admission of its
Shares to trading on AIM (the "Cancellation") and the proposed
implementation of a solvent members' voluntary liquidation of the
Company (the "Liquidation"), subject in each case to shareholder
approval at a general meeting to be held at 10.00 a.m. at the
offices of Hogan Lovells International LLP, Atlantic House, 50
Holborn Viaduct, London EC1A 2FG on 22 June 2021 (the "General
Meeting"). If the Cancellation Resolution is passed, the expected
date of the Cancellation will be 23 June 2021.
The Cancellation is being sought because the commencement of the
Liquidation will render the Company inappropriate for admission to
trading on AIM. The Liquidation Resolutions to be proposed at the
General Meeting are conditional upon the passing of the
Cancellation Resolution. However, the Cancellation Resolution is
not conditional upon the Liquidation Resolutions being
approved.
If the Cancellation Resolution is approved, there will be no
formal market mechanism enabling Shareholders to trade their Shares
on AIM or any other recognised market or trading facility. In
addition, Shareholders will no longer be afforded the protections
given by the AIM Rules. If Shareholders wish to buy or sell Shares
on AIM, they should do so prior to the Cancellation becoming
effective.
It is the Company's intention to cancel the CREST facility
following the passing of the Cancellation Resolution and
arrangements will be made to send share certificates to those
Shareholders (at their risk) currently using CREST. The Shares will
remain capable of being transferred in paper form until the
Liquidation is completed, however, such transfer will be permitted
only in the absolute discretion of the Liquidators. Shareholders
should not expect to be able to transfer their Shares following the
Canecllation.
General Meeting arrangements
If the measures set out in the UK Government's roadmap to
lifting COVID-19 restrictions in England are implemented as
currently expected, physical attendance at the General Meeting
should be possible as usual. However, given the uncertainty
surrounding the COVID-19 situation, the Company urges Shareholders
to vote by proxy and to appoint the chairman of the meeting as
their proxy for that purpose. The Company will continue to monitor
developments, including any regulatory changes in relation to
COVID-19. If it becomes necessary or appropriate to revise the
arrangements for the General Meeting, further announcements will be
made and information will be made available on our website at
www.urbanexposureplc.com.
Publication of Circular
An explanatory circular (the "Circular") containing a Notice of
General Meeting will shortly be posted to Shareholders providing
further details of the Cancellation and the Liquidation and setting
out the reasons for which the Cancellation and the Liquidation are
being proposed.
A copy of the Circular will shortly be available on the
Company's website www.urbanexposureplc.com.
Recommendation
The Board of Directors consider that the Liquidation and the
Cancellation are in the best interests of Shareholders as a whole,
and unanimously recommend that Shareholders vote in favour of the
Cancellation Resolution and each of the Liquidation Resolutions to
be proposed at at the General Meeting (together, the
Resolutions").
The Board intends to vote in favour of each of the Resolutions
in respect of their respective direct and indirect shareholdings in
the Company which, in aggregate, amount to 75,000 Shares,
representing 0.01 per cent. of the issued share capital of the
Company on a fully diluted basis.
Defined terms in this announcement have the meanings given to
them in the Circular, unless otherwise defined herein.
Background to, and reasons for, the Cancellation and the
Liquidation
Further to the Company's announcement on 20 April 2021, in light
of the continued progress made in realising the Group's loan
portfolio and the ongoing costs of remaining as an AIM listed
company, the Board believes it is now in the best interests of
Shareholders to appoint liquidators to implement the Liquidation
and to cancel the admission of the Company's Shares to AIM by way
of the Cancellation. Since 5 May 2020, the Company has been focused
solely on completing an orderly wind-down of its assets and
operations in order to maximise the return of capital to its
Shareholders. In December 2020, the Company returned approximately
GBP65 million to Shareholders via an own-share tender offer at a
price of 75 pence per Share. Since then, despite the continuation
of the COVID-19 pandemic, the Company has continued to make
significant progress in liquidating the Group's remaining loan
book.
As at 30 April 2021, being the latest practicable date prior to
the date of this Circular, the Group had a cash balance of GBP31.3
million, and a loan and investment receivables balance of GBP22.5
million. After considering a range of options, the Directors have
concluded that the most appropriate method of returning value to
Shareholders is through the Liquidation and the Cancellation.
The Board is seeking the approval of Shareholders to enter into
the Liquidation at the present time because it believes that the
costs of continuing to operate as an AIM listed company, including
the requirement to produce public audited accounts, now outweigh
the benefits of doing so and would reduce the cash available for
distribution to Shareholders. Shareholders should be aware that, if
the Resolutions are passed at the General Meeting, the Company will
not publish an annual report and audited financial statements for
the financial year ending 31 December 2020.
As announced on 20 April 2021, the Board estimates that returns
to Shareholders via the Liquidation should be within a range of 72
pence to 75 pence per Share.
The Initial Distribution
Taking into account the Company's current cash balances, and
following preliminary discussions with the Liquidators, the Board
currently expects that (based on certain assumptions set out in
more detail in the Circular and below) an Initial Distribution
equal to approximately 31.6 pence per Share should be made to those
Shareholders appearing on the share register as at the record date
for the Initial Distribution within 10 business days of the Company
entering into Liquidation. Shareholders should note that the
precise timing and amount of any such Initial Distribution is a
matter for the Liquidators and will depend upon the circumstances
of the Company at the time.
Subsequent distributions
It is anticipated that, subject to the continued review of the
Company's financial position by the Liquidators, and the
circumstances prevailing at the relevant time, there will be
further distributions to Shareholders subsequent to the Initial
Distribution, if, as and when the Group realises its remaining
portfolio of loans . It is currently expected that the Liquidation
of the Company will be completed, and t he final distribution to
Shareholders (if any) will be made, within twelve months of the
date on which the Liquidators are appointed. However, the final
distribution will not be made until the Liquidators have completed
their statutory duties to seek out, adjudicate and pay creditors'
claims and HMRC has confirmed its agreement to the Company's tax
returns and that it has no objection to the closure of the
Liquidation. There can be no guarantee that the Liquidation process
will not be delayed.
The Board currently estimates that the total value returned to
Shareholders via distributions made subsequent to the Initial
Distribution will be within a range of approximately 40 pence to 43
pence per Share, making total distributions of between 72 pence to
75 pence per Share. It should be noted, however, that these figures
represent the Company's best estimate on the basis of information
currently available to it, and there can be no guarantee of the
size of any subsequent distributions or that any such distributions
will be made. The precise timing and amount of any subsequent
distributions will be a matter for the Liquidators and will depend
on the financial condition of the Company at the relevant time.
Shareholders should note that the Board's estimate of the total
returns to Shareholders via the Liquidation and, in particular, the
estimated amounts and timing of any distributions to Shareholders
made subsequent to the Initial Distribution, are subject to the
outcome of a number of matters currently affecting the Company. The
outcome and speed of resolution of these matters, which are
summarised below, will determine the precise timing and amount of
capital that can be returned to Shareholders subsequent to the
Initial Distribution:
-- The Company anticipates that it will be required to utilise
all of its legal rights to recover the full amount due to it under
one of its remaining loans. The loan has an outstanding balance of
GBP10.7 million (as at 30 April 2021).
-- An early release is being sought by the Company from its
lease obligations in relation to its office space, with the current
contractual release date being November 2023.
-- The Company is continuing in its claim for damages against
Honeycomb Holdings Limited for breach of contract in relation to
the share purchase agreement dated 10 March 2020 (the "SPA"). In
addition, the Company intends to seek relief from other entities
within or connected to the Pollen Street Capital group, including
Honeycomb Investment Trust plc, Pollen Street Capital Limited and
Pollen Street Capital Holdings Limited, for procuring or inducing
the breach by Honeycomb Holdings Limited of the SPA.
-- Two subsidiaries of the Company have received a letter before
claim from a defaulting borrower regarding a purported breach of
loan documentation by the Company in relation to that borrower.
External legal counsel has advised that the claim is entirely
without merit and the Company intends to robustly defend its
position.
Prior to making the Initial Distribution, the Liquidators will
retain from the Company's cash balances an amount required to cover
these and the Company's other known and contingent liabilities, the
VAT inclusive costs of the Liquidation and an additional retention
for known contingencies (the "Liquidation Fund"). The Liquidators
will not make any subsequent distributions unless they are
satisfied that sufficient cash has been retained to provide for the
actual and contingent liabilities of the Company at the relevant
time, and the final distribution (if any) will not be paid until
the Liquidators are satisfied that all actual and contingent
liabilities of the Company have been discharged.
The Liquidation
Shareholders will be able to realise their investment in the
Company through the Liquidation, which is conditional upon
Shareholder approval of the Liquidation Resolutions which, in turn,
are conditional upon Shareholder approval of the Cancellation
Resolution. If the Liquidation Resolutions are passed, the Company
intends that Geoffrey Paul Rowley and David Frederick Shambrook,
both of FRP Advisory Trading Limited, should be appointed as the
joint liquidators of the Company and the other remaining members of
the Group (the " Liquidators "). Upon the appointment of the
Liquidators, all powers of the Board will cease (except so far as
the Shareholders or the Liquidators sanction their continuance) and
the Liquidators will be responsible for the affairs of the Company
until it is wound up.
The Liquidators will retain the services of the Company's Chief
Executive Officer, Sam Dobbyn, its Chief Operating Officer, Robert
Pritchard and its Chief Risk Officer, Michael McMahon until the
wind-down and realisation of the Company's loan book is
substantially complete. The Company's Registrar, Equiniti, will be
retained by the Company during the liquidation period until the
final distribution has been paid.
The Board has agreed that the Liquidators will be remunerated by
reference to the time properly incurred by them and their staff in
attending to matters prior to and during the winding-up of the
Company. The Liquidators' fees in respect of the liquidation of the
Group will be fixed at GBP120,000 (exclusive of VAT and
disbursements), any increase to which would require further
approval from Shareholders. The Board estimates that the total
costs and expenses of the Liquidation will amount to approximately
GBP790,000. This figure includes the fees of the Liquidators and
those of the Company's advisers in connection with the Liquidation,
as well as the salaries to be paid to retained staff in respect of
the services to be provided by them.
Following their appointment at the General Meeting, the
Liquidators will take control of the Company, take custody of all
of the Company's assets, invite creditors to submit particulars of
debt and consider and settle each liability of the Company. Within
approximately 10 business days of being appointed, having
discharged or reserved for the liabilities and satisfied or
reserved for all the creditors of the Company, the Liquidators have
indicated that they intend to make an initial cash distribution to
Shareholders (the " Initial Distribution ") equal to approximately
31.6 pence per Share. The expected timing and amount of the Initial
Distribution are based on the following assumptions:
-- the Group has aggregate cash balances of GBP27.5 million
immediately following the appointment of the Liquidators;
-- the number of Shares in issue at the time of the Initial
Distribution (excluding Shares held in treasury) is 72,155,955;
and
-- the Liquidation Fund set aside by the Liquidators in respect
of, amongst other things, the Company's known and contingent
liabilities and the VAT inclusive costs of the Liquidation is equal
to GBP4.72 million.
Before the Initial Distribution and each subsequent distribution
(if any) can be made to Shareholders, the Liquidators must be
satisfied that either all liabilities of the Company have been
settled, or that sufficient cash has been retained to discharge or
provide for all of the Company's actual and contingent
liabilities.
Once the Liquidators are satisfied that all actual and
contingent liabilities of the Company have been settled, any
surplus will be distributed to the Shareholders at the Liquidators'
discretion as a final distribution. Any such final distribution is
expected to be made at the conclusion of the Liquidation and, once
this is completed, the Company will be dissolved. The precise
timing and amount of the final distribution is uncertain, and the
Liquidators' remuneration and any expenses will be deducted prior
to any final distribution to Shareholders.
A copy of the proposed final account must be sent to the
Shareholders, giving a minimum of eight weeks' notice of the date
upon which the Liquidators intend to deliver the final account to
the Registrar of Companies. Once finalised, the final account will
be sent to the Shareholders and to the Registrar of Companies
within 14 days of the date of the final account. The Company will
be dissolved on expiry of three months following the filing of the
final account with the Registrar of Companies.
The Cancellation
As the commencement of the Liquidation will render the Company
inappropriate for admission to trading on AIM, the Directors
propose to seek cancellation of the Shares from trading at the
General Meeting.
Rule 41 of the AIM Rules for Companies requires an AIM company
that wishes to cancel admission of its securities to trading on AIM
to notify such intended cancellation to the public and separately
to inform the London Stock Exchange of its preferred cancellation
date. AIM Rule 41 also requires that, unless the London Stock
Exchange otherwise agrees, such cancellation must be conditional
upon the consent of not less than 75 per cent. of votes cast by the
Shareholders, given in a general meeting.
The Shares will be suspended from trading at 7.30 a.m. on 22
June 2021 in advance of the General Meeting. Subject to Shareholder
approval at the General Meeting, it is expected that the admission
of the Shares to trading on AIM will be cancelled with effect from
7.00 a.m. on 23 June 2021, following the appointment of the
Liquidators at the General Meeting.
Under the AIM Rules, cancellation requires the expiration of a
period of not less than 20 clear business days from the date on
which notice of the intended cancellation is given to the London
Stock Exchange. The Company has notified the London Stock Exchange
of the proposed cancellation and of the proposed Cancellation date
of 23 June 2021.
Upon cancellation of the Shares to trading on AIM, Liberum will
cease to be the Company's nominated adviser and broker and the
Company will no longer be required to comply with the AIM
Rules.
Inter-conditionality of the Resolutions
The Cancellation Resolution is not conditional upon the
Liquidation Resolutions being approved. If Shareholders approve the
Cancellation Resolution but do not approve the Liquidation
Resolutions, the admission of the Shares to trading on AIM would be
cancelled with effect from 23 June 2021, but the Company would not
enter into Liquidation. In such circumstances, the Company would
continue its operations until other proposals can be put forward
and approved, but, amongst other things:
-- the Initial Distribution would not be paid to Shareholders;
-- there would no longer be a formal market mechanism for
Shareholders to trade in the Shares, and no price would be publicly
quoted for the Shares. The liquidity and marketability of the
Shares would be very limited and the value of the Shares may be
consequently adversely affected; and
-- Shareholders would no longer be afforded the protections
given by the AIM Rules such as the requirement to be notified of
certain events, including substantial transactions, financing
transactions, related party transactions and fundamental changes in
the Company's business, including certain acquisitions and
disposals.
The Liquidation Resolutions are conditional upon the
Cancellation Resolution being passed . If the Cancellation
Resolution is not passed at the General Meeting the Liquidation
Resolutions cannot pass. In these circumstances:
-- the Shares would not be cancelled from trading on AIM and the
Company would not enter into Liquidation; and
-- the Company would continue in operation until alternative
proposals could be put forward and approved by Shareholders, but
the increased cost base of operating as an AIM listed company would
reduce the cash available for distribution to Shareholders. The
Company estimates that, if the Liquidation Resolutions are not
passed and the Company maintains its listing on AIM, its operating
expenses would be equal to approximately GBP200,000 per month.
EXPECTED TIMETABLE OF EVENTS
Latest time and date for receipt of Form of Proxy for the General Meeting 10.00 a.m. on 18 June 2021
Record date in respect of the General Meeting 6.30 p.m. on 18 June 2021
Expected last day for dealings in the Shares on AIM 21 June 2021
Record Date for participation in the Initial Distribution 6.30 p.m. on 21 June 2021
Suspension of the Shares from trading on AIM 7.30 a.m. on 22 June 2021
General Meeting and appointment of Liquidators 10.00 a.m. on 22 June 2021
Expected time and date of the Cancellation of admission of the Shares to trading on AIM 7.00 a.m. on 23 June 2021
Anticipated date for Initial Distribution to Shareholders* By 6 July 2021
Anticipated date for distribution of any remaining cash surplus to Shareholders* By July 2022
* actual date to be determined by Liquidators
The dates set out in the expected timetable may be adjusted by
the Company in which event details of the new dates will be
notified to Shareholders via an announcement made by the Company
through a regulatory information service.
General Meeting
The completion of the Cancellation and the Liquidation requires
the approval of Shareholders.
A notice convening a general meeting of the Company for 10.00
a.m. on 22 June 2021 at the offices of Hogan Lovells International
LLP, Atlantic House, 50 Holborn Viaduct, London EC1A 2FG, at which
the Cancellation Resolution and the Liquidation Resolutions will be
proposed, together with the Circular, will be despatched to
Shareholders shortly.
The Cancellation Resolution is a special resolution, which
require three-quarters of the votes cast in person or by proxy on a
show of hands or a poll to be in favour.
The Liquidation Resolutions include special resolutions to wind
up the Company voluntarily and to authorise the Liquidators (once
they have been appointed) to divide and distribute the Company's
assets amongst the Shareholders, and ordinary resolutions to
appoint and appropriately authorise the Liquidators as joint
liquidators of the Company and to approve their remuneration and
recovery of disbursements. The ordinary resolutions require a
simple majority of the votes cast in person or by proxy on a show
of hands or a poll to be in favour and the special resolutions
require three-quarters of the votes cast in person or by proxy on a
show of hands or a poll to be in favour.
The quorum for the General Meeting is two Shareholders present
in person or by proxy.
Enquiries:
Urban Exposure plc Tel: +44(0)207 408 0022
Graham Warner, Chairman
Sam Dobbyn, Chief Executive Officer
Liberum (NOMAD and Broker) Tel: +44(0)203 100 2000
Neil Patel
Gillian Martin
Richard Bootle
UrbanExposure@liberum.com
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