RNS Number:1514X
Jourdan PLC
31 March 2004
Wednesday, 31 March 2004
Jourdan plc
Proposed cancellation of Share Premium Account
and Capital Redemption Reserve
Proposed Share Buy Back Authority
Proposed approval of waivers under Rule 9 of the City Code on
Takeovers and Mergers
Jourdan plc ("Jourdan" or the "Company") has today announced that it is seeking
authority from its Shareholders to enable the Company to purchase up to 10 per
cent. of the issued ordinary capital. While, in the opinion of the Directors,
the Company has sufficient working capital to finance a purchase of its own
shares, such purchases may only be made from distributable reserves held on the
Company's balance sheet. As at 30 June 2003 Jourdan had a deficit on its profit
and loss account of approximately #3.0 million while the share premium account
stood at approximately #6.18 million and the capital redemption reserve at
#240,000. The Company is, subject to Shareholder approval, proposing a
cancellation of the share premium account and capital redemption reserve to
bring forward the time at which it will be in a position to purchase its own
shares or pay dividends.
Mr David Abell, Chairman, together with other members of the Abell Family
currently holds 29.99 per cent. of the issued Ordinary Shares. Any purchase of
Ordinary Shares by the Abell family will increase their of their shareholding to
above 30 per cent. issued Ordinary Shares which would, in the absence, inter
alia, of a waiver by Shareholders, result in a requirement under Rule 9 of the
City Code for the Abell Family to makean offer to acquire the entire issued
share capital of the Company not already owned by them. The same obligation
would be triggered if the Abell Family were to come to hold 30 per cent. or more
of the issued Ordinary Shares as a result of the Company exercising the
authority now being sought from Shareholders to purchase its own shares unless,
inter alia, Shareholders confirm a waiver of the obligation under Rule 9 of the
City Code on the Abell family, which the Panel has agreed to give (subject to
such approval). Therefore the Board is seeking the approval of the Independent
Shareholders to waivers of certain obligations which may arise under the Code as
a result of the exercise by the Company of the authority to purchase its own
shares. At the same time approval of the Independent Shareholders is being
sought to the waiver of equivalent obligations that would arise if any member of
the Abell Family were to exercise any of the Options or Warrants held by them.
In summary, these proposals are:
* to cancel the Company's share premium account and capital redemption
reserve;
* to authorise the Company to buy back up to 10 per cent. of the issued
Ordinary Shares; and
* to obtain the approval of the Independent Shareholders to waivers of
the obligations which would otherwise arise under Rule 9 of the Code for a
general offer to be made by the Abell Family for the issued Ordinary Shares
not held by them if their combined shareholdings riseto 30 per cent. or more
as a result of the exercise of the share buy-back authority or as a result of
the exercise by any member of the Abell Family of any Options or Warrants
held by them.
2. Background and reasons for the Share Buy Back
The Company currently has approximately #2.5 million of undrawn bank facilities.
The Directors believe that it may be advantageous to use certain of these funds
to make market purchases of Ordinary Shares.
The Directors will only use the authority to purchase Ordinary Shares if, in the
light of market conditions prevailing at the time, they believe that:
* the effect of any purchase will be to enhance earnings per Ordinary
Share; or
* the effect of any purchase would be to enhance net asset value per
Ordinary Share; or
* the effect of any purchase will be in the best interests of
Shareholders as a whole. In this regard, alternative investment opportunities
and the overall financial position of the Group will be taken into account in
reaching any decisions.
Accordingly, the Board is seeking authority from Shareholders at the
Extraordinary General Meeting to purchase Ordinary Shares in the market. The
authority will be limited to a maximum of 3,294,525 Ordinary Shares,
representing 10 per cent. of the issued Ordinary Shares as at the date of this
announcement.
The maximum price to be paid on any purchase of an Ordinary Share will not be
greater than 5 per cent. above the average middle market quotation of an
Ordinary Share at the close of business on the five business days immediately
preceding the date of purchase. The minimum price to be paid on any purchase of
an Ordinary Share will be 10 pence (being the nominal value of an Ordinary
Share).
If the Resolution proposing the authority for the purchase of Ordinary Shares is
passed then it will become capable of exercise on and from the date of the EGM,
and will last until the earlier of the expiry of 18 months from that date or
until the conclusion of the Annual General Meeting of the Company to be held in
2005.
The total number of Options that are outstanding as at the date of this
announcement, is in respect of 1,664,187 Ordinary Shares, which would, if
exercised, represent approximately 4.81 per cent. of the issued Ordinary Shares
as at that date and approximately 5.31 per cent. of the issued Ordinary Shares
if the authority for the Company to purchase its own shares is granted and
exercised in full.
The total number of Warrants that are outstanding as at the date of this
document, is in respect of 3,291,651 Ordinary Shares, which would, if exercised,
represent approximately 9.1 per cent. of the issued Ordinary Shares as at that
date and approximately 9.99 per cent. of the issued Ordinary Shares if the
authority for the Company to purchase its own shares is granted and exercised in
full.
3. Cancellation of Share Premium Account and Capital Redemption Reserve
The Cancellation will enable the Company both to eliminate the deficit on its
profit and loss account and to create distributable profits. The deficit has
arisen as a result of the Company writing down the value of its investments in
previous accounting periods. The Cancellation is conditional upon the approval
of Shareholders by special resolution at the EGM and subsequent confirmation by
the Court.
As at 30 June 2003 the Company had a deficit on profit and loss account of
#3,006,351. The Companies Act prohibits the payment of dividends or any
purchase of Ordinary Shares by the Company while there is a deficit on profit
and loss account. However, subject to confirmation by the Court, the sum
arising on a reduction or cancellation of share premium account and/or capital
redemption reserve can be applied to reduce or eliminate such a deficit.
The share premium account of the Company has a current balance of #6,180,428. A
credit is made to the share premium account when shares are issued at a price
greater than their nominal value. The capital redemption reserve amounts to
#240,000. A share premium account is a capital account of the Company and a
capital redemption reserve is a capital reserve of the Company and the uses to
which each may be put are restricted by statute.
The Company's share premium account arose from the issue of shares either for
cash raised for the purpose of expanding the Group by acquisition, or directly
to the vendors of acquired businesses. The capital redemption reserve arose
from a purchase by the Company of its own shares in 1988. Any losses sustained
upon the subsequent disposal of these businesses, or provisions against the
carrying value of investments in continuing businesses, are required by the
Companies Act to be charged against the profit and loss account and cannot be
set off against the share premium account or capital redemption reserve.
However, both the share premium account and the capital redemption reserve can,
with the approval of Shareholders and confirmation by the Court, be reduced or
cancelled and the profit arising upon the reduction or cancellation applied in
eliminating the deficit on the profit and loss account. The first step in the
process is to obtain the approval of Shareholders, by special resolution, to the
Cancellation and this is the purpose of Resolution 1.
If Resolution 1 is passed at the Extraordinary General Meeting it is proposed
that an application will be made immediately to the Court to confirm the
Cancellation. It is expected that the hearing of the application will be made
on 19 May 2004. If the Court makes the appropriate order, the Cancellation will
become effective when the order has been registered by the Registrar of
Companies.
Subject to confirmation by the Court, the effect of the Cancellation will be to
create a realised profit equal to the amount cancelled. #3,006,351 of that
amount will be transferred to the profit and loss account in order toeliminate
the deficit, with the balance being transferred to the profit and loss account
once the Company has complied with the arrangements which it is expected that
the Court will require for the protection of creditors. It is currently
anticipated that the creditor protection required by the Court will take the
form of an undertaking from the Company to treat certain sums (including a sum
equal to the amount by which the cancellation of the share premium account and
capital redemption reserve exceeds the deficit on the profit and loss account)
as undistributable until all creditors of the Company who are creditors on the
Effective Date have either been discharged or have consented. Once the Company
has been released from the undertaking, the sums standing to the undertaking
reserve will be transferred to its profit and loss account and accordingly
become available for all the purposes for which distributable profits can be
used, including the payment of dividends and financing of purchases of the
Company's own shares.
4. The City Code on Takeovers and Mergers
Under Rule 9 of the City Code when (i) a person acquires shares which, when
taken together with shares already held by him or persons acting in concert with
him, carry 30 per cent. or more of the voting rights of a company subject to the
Code or (ii) any person who, together with persons acting in concert with him,
holds not less than 30 per cent. but not more than 50 per cent. of the voting
rights of the company subject to the Code, and such person, or any person acting
in concert with him, acquires additional shares which increases his percentage
of the voting rights, then in either case that person together with the persons
acting in concert with him is normally required to make a general offer in cash,
at the highest price paid by him or any person acting in concert with him, for
shares in the relevant company within the preceding 12 months, for all the
remaining equity share capital ofthe company.
Under Rule 37 of the City Code any increase in the percentage voting rights held
by a shareholder or persons acting in concert with that shareholder resulting
from the purchase by a company of its own shares will be treated as an
acquisition for the purpose of Rule 9 of the City Code. As the Abell Family
beneficially owns 29.99 per cent. of the Company's issued Ordinary Shares, and
the Abell Family are regarded by the Panel to be acting in concert, any exercise
of the Company's authority to buy back Ordinary Shares would result in the Abell
Family being obliged under Rule 9 of the City Code to make an offer for the
Company.
If the maximum number of Ordinary Shares were to be repurchased by the Company
and the Abell Family exercised their 250,000 Options and 638,000 Warrants, the
Abell Family's aggregate holding would increase from 29.99 per cent. to
approximately 35.26 per cent. of the issued Ordinary Shares, assuming they do
not dispose of any of their current holdings in the intervening period as set
out below:
Number of % of % of share Number of Number of Shareholding % of
Ordinary current capital Options Warrants enlarged by Ordinary
Shares issed following exercise of Shares
share Buyback ** Options and following
capital * Warrants the
Buyback
and
exercise
of
options
and
warrants
***
David Abell 8,315,000 25.24% 28.04% 250,000 577,500 9,142,500 29.94%
Mrs Juliana Abell 700,000 2.12% 2.36% 0 0 700,000 2.29%
The Family 865,000 2.63% 2.92% 0 60,500 925,500 3.03%
Members
Total 9,880,000 29.99% 33.32% 250,000 638,000 10,768,000 35.26%
* number of current issued Ordinary Shares 32,945,258
** number of issued Ordinary Shares in issue 29,650,733
following the buy back
*** number of issued Ordinary Shares in issue 30,538,733
following the buy back and if only the Abell Family
were to exercise their options and warrants
However, the Panel has agreed, subject to approval by Independent Shareholders
voting on a poll at the Extraordinary General Meeting, to waive the obligation
which would otherwise arise under Rule 9 of the Code for a general offer to be
made by the Abell Family for Jourdan as a resultof the purchase by the Company
of any Ordinary Shares. The Panel has also agreed, subject again to approval by
Independent Shareholders voting on a poll at the EGM, to waive the obligation
which would otherwise arise under Rule 9 of the Code for a general offer to be
made by the Abell Family for Jourdan as a result of the exercise by any members
of the Abell Family of any Options or Warrants held by them.
The waivers, which have been agreed by the Panel (subject to Shareholder
approval)of the obligations which may arise under Rule 9 of the City Code will
be invalidated if any purchases of Ordinary Shares are made by any member of the
Abell Family or any persons acting in concert with any of them in the period
between the date of this document and the EGM.
Notwithstanding the waivers sought by the relevant Resolutions at the EGM, none
of the members of the Abell Family will be able to acquire any further Ordinary
Shares except by exercising their Options and Warrants without triggering a Rule
9 obligation on the part of the Abell Family, unless the Panel otherwise
consents.
Each member of the Abell Family may also incur an individual obligation to make
a general offer should he or she acquire additional Ordinary Shares which have
the effect of increasing his/her shareholding to 30 per cent. or more of the
issued Ordinary Shares at that time.
The Independent Directors, who have been so advised by Charles Stanley, believe
the waivers of the obligations on the members of the Abell Family (both
individually and collectively) to make a general offer to Shareholders under
Rule 9 of the Code as set out in the Resolutions, to be fair and reasonable so
far as the Independent Shareholders are concernedand to be in the best
interests of Shareholders as a whole. In providing advice to the Independent
Directors, Charles Stanley has taken into account the Independent Directors'
commercial assessments.
Accordingly, the Independent Directors unanimously recommend Shareholders to
vote in favour of the Resolutions as the Independent Directors intend to do in
respect of their beneficial shareholdings amounting to 1,265,000 Ordinary Shares
representing 3.84 per cent. of the issued Ordinary Shares.
Mr Abell (and the other members of the Abell Family) will not vote in respect of
the Resolutions relating to the waiver of their obligations to make an offer for
the Company under Rule 9 of the Code. However, Mr Abell and his wife have given
irrevocable undertakings to vote in favour of the Resolutions relating to the
cancellation of the share premium account and capital redemption reserve, and
granting the authority to make market purchases of the Ordinary Shares, in
respect of their beneficial shareholdings of 9,015,000 Ordinary Shares
representing 27.36 per cent. of the issued Ordinary Shares.
An irrevocable commitment to vote in favour of each of the Resolutions has also
been received from Strand Associates Limited, which holds 6,986,508 Ordinary
Shares representing 21.21 per cent. of the issued Ordinary Shares.
Enquiries:
Jourdan plc 01476 403 456
David Abell
Chairman
Charles Stanley & Co. Limited 020 7739 8200
Russell Cook
Definitions
The following definitions apply throughout this announcement unless the context
requires or unless it is otherwise specifically provided:
"Abell Family" David Abell and other members of his immediate
family who between them hold 9,880,000 Ordinary
Shares representing 29.99 per cent. of the issued
Ordinary Shares
"AIM" the Alternative Investment Market of the London
Stock Exchange
"the Cancellation" the proposed cancellation of share premium account
and capital
redemption reserve to be effected by Resolution 1
to be proposed at the
Extraordinary General Meeting
"Charles Stanley" Charles Stanley & Co. Limited
"City Code" the City Code on Takeovers and Mergers
"Companies Act" or "Act" Companies Act 1985, as amended
"the Company" or "Jourdan" Jourdan plc
"Court" High Court of Justice of England and Wales
"Directors" directors of the Company
"the Effective Date" the date on which the Cancellation takes effect
"the Extraordinary General Meeting" or "the EGM" the extraordinary general meeting of the Company to
be held at 10.00 a.m. on 23 April 2004
"the Group" Jourdan and its subsidiaries
"the Independent Directors" together Mr Morris, Mr Pither and Mr Arnold
"the Independent Shareholders" "Shareholders other than members of the Abell
Family
"the London Stock Exchange" London Stock Exchange plc
"Ordinary Shares" ordinary sharesof 10p each in the capital of the
Company
"Options" options to subscribe for Ordinary Shares under
either of the Share Schemes
"the Panel" the Panel on Takeover and Mergers
"Resolutions" resolutions to be proposed at the Extraordinary
General Meeting
"Shareholders" holders of Ordinary Shares
"Warrants" warrants to subscribe for Ordinary Shares at 70p
per share issued in November 1999
This information is provided by RNS
The company news service from the London Stock Exchange
END
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