TIDMMET
RNS Number : 1927I
Metro Baltic Horizons PLC
20 July 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS IN THAT JURISDICTION
Metro Baltic Horizons plc
Response to the announcement of a
Cash Offer by Eagleheads Investments OU
For immediate release
20 July 2012
The board of Metro Baltic Horizons plc ("MBH" or the "Company")
notes cash offer for the entire issued share capital of MBH (the
"unsolicited Offer") by Eagleheads Investments OU
("Eagleheads").
Preliminary observations on the unsolicited Offer
Eagleheads has been formed by Metro Capital Management AS
("MCM"), affiliates of MCM and Ms Margarita Novikova.
MBH is close to filing claims in excess of EUR20 million against
MCM and others.
The Board's preliminary view is that the unsolicited Offer is an
effort to win control of the Company at an offer price value of
EUR2.36 million for the purpose of stopping MBH pursuing legal
claims against MCM (and others) and to acquire its principal asset
at a significant undervalue.
MBH is at an advanced stage of preparation of legal proceedings
against the Company's former directors and professional advisers,
including MCM and its principal, Mart Habakuk, and TAS (formerly
Metro Frontier Limited, a wholly owned subsidiary of MCM) and its
former principal, James Kenny. The Board anticipates that such
claims will be for an amount in excess of EUR20 million and will
include serious allegations of mismanagement of the Company.
The Board believes that shareholders suffered a loss in the
value of their shares due to the mis-management of the Company's
assets by MCM when it was the Company's investment adviser between
December 2006 and its dismissal in August 2011. The Board fears
that similar mismanagement might cause further losses if Eagleheads
gains control of the Company.
The Board has set out its preliminary observations on the
unsolicited Offer below:
1. Valuation
- The Company's NAV has fallen dramatically since the initial
admission of the Company's shares to AIM as a result of the
mismanagement of the Company (as stated in the trading updated
dated 3 August 2011 and Chairman's statements to the Annual Reports
for the years ended 31 December 2010 and 31 December 2011). The
mismanagement included, inter alia, excessive leverage, misleading
announcements, the purchase of properties from related parties,
including MCM/or and parties related to it, and unauthorised
profits to the manager.
- The Company's NAV stated in the 2011 annual report of 12.50
Euro cents was arrived at on a conservative basis, after deducting
various costs including (i) investment management fees claimed by
MCM, which the Board does not intend to pay given MCM's breaches of
duty as investment manager, and (ii) purported liabilities and
costs that are contested by the Company and which are associated
with the loan note transaction pursuant to security granted over
the St Petersburg site in favour of a former wholly-owned
subsidiary of MCM.
- Valuations can be prepared on various bases. The valuation of
the St Petersburg site referred to in Eagleheads' announcement was
prepared in connection with Russian court proceedings on a forced
sale basis and is not directly comparable with the open market
value that MBH will seek in the event of a sale of the property.
The Board is currently reviewing its options in the market at the
same time as disputing the validity of the loan facility allegedly
secured on the property. This is anticipated to lead to a decision
to place the property on the market, which was independently valued
at 31 December 2011 at EUR6.2m.
- The Board has prepared litigation based on a reasonable
expectation of material recoveries. The value of such litigation
cannot be reflected in the accounts.
- Accordingly, while the Board believes that the NAV is fully
and accurately calculated in accordance with MBH's accounting
policies, it does not reflect the full potential value of the
Company.
2. Delisting
In addition, the unsolicited Offer clearly states Eagleheads'
intention to seek the cancellation of the Company's admission to
AIM. The Board believes that the AIM quotation and related
corporate governance and disclosure requirements provide a valuable
set of protections for Shareholders which could be lost should MCM
acquire control of the Company.
3. Additional concerns
In addition, the Board has the following concerns with the
content of the unsolicited Offer:
- The Board believes that the unsolicited Offer is misleading in
that it refers to a purported right on the part of MCM to convert
outstanding investment management fees into ordinary shares in MBH.
While an amended investment management agreement was entered into
by TAS and the the previous board, the Board believes it was
subject to shareholder consent and that such specific consent was
not sought and therefore no such right exists. Furthermore this
specific issue was the catalyst for the actions taken leading to
the appointment of Messrs Reid and Murphy to the Board, in relation
to what they believed to be an attempt in part by TAS and MCM to
take control of the Company. The Board also notes that the Company
does not intend to discharge these fees owing to breaches of the
Investment Management and Investment Advisory agreements.
- The unsolicited Offer contains insufficient information on the
property investment background of Ms Novikova. MCM's property
investment track record in relation to the Company's assets is
self-evident to MBH's shareholders.
- Certain of the entities disclosed in announcement of the
unsolicited Offer as related parties to MCM are the same parties
who subscribed for the disputed loan notes allegedly secured on the
St Petersburg property.
As stated above, the Board is considering its full response to
the unsolicited Offer with Fairfax and will make a further
announcement in due course. Shareholders are recommended to not
take any immediate action in relation to the unsolicited Offer.
MBH Shares in issue
MBH confirms that it has 26,200,270 ordinary shares of EUR0.01
each in issue and admitted to trading on the AIM market of the
London Stock Exchange with the ISIN: IM00B14GZ.
Enquiries
MBH Holdings PLC
Ronan Reid Tel: +353 1 6333843
Fairfax I.S. PLC Nominated Adviser
James King, David Floyd Tel: 020 7598 5368
Further Information
This announcement will be available on MBH's website
http://www.metrobaltichorizons.com/ as soon as practicable in
accordance with AIM Rule 26.
The persons responsible for this announcement are the directors
of MBH.
MBH is being advised by Fairfax I.S. PLC ("Fairfax") which is
acting for MBH and no-one else in relation to the possible offer.
Fairfax will not regard any other person as its customer or be
responsible to any other person for providing the protections
afforded to customers of Fairfax nor for providing advice to any
other person relating to the possible offer.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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