Langley Park IT Plc - EGM Statement
RNS Number:2662X
Langley Park Investment Trust PLC
25 May 2007
HEADLINE - PROPOSALS REGARDING VOLUNTARY WINDING-UP
LANGLEY PARK INVESTMENT TRUST PLC ('Langley' or the 'Company')
Proposals for the winding up of the Company
Introduction
Further to the Company's announcement on 28 March 2007, the Board has taken the
decision today to put to Shareholders proposals for the Voluntary Liquidation of
the Company.
This announcement (and the circular to be sent to Shareholders) sets out the
terms and conditions of the proposed Voluntary Liquidation of the Company and
the subsequent appointment of the Liquidators.
This announcement sets out the background to and the reasons for each of the
Proposals and why your Board believes convening the EGM to consider the
Proposals is required at this time.
In its announcement on 28 March 2007 the Company stated that it had received
notice from Weiss Capital LLC suggesting that the Board should put forward
Proposals for the liquidation of the Company, including negotiating a management
termination fee with the Investment Manager.
Following receipt of this notice, another Shareholder indicated that they would
support the suggestions made by Weiss. The percentage holdings of the
Shareholders that have indicated to the Board, or their advisers, their support
for these proposals is approximately 44% of the total Shareholders.
On the basis that shareholders representing a substantial percentage of the
Company's share capital would like the Board to convene an EGM to consider the
Proposals made by Weiss, the Board has resolved that it would be only right and
proper to convene an EGM to allow Shareholders to consider, and if thought fit
pass resolutions, to put into effect the proposals suggested by, inter alia,
Weiss Capital LLC as set out in the Notice at the end of this Document.
Background to and summary of the Proposals
The 2006 Report and Accounts of the Company, approved by the Board on 23 March
2007, outlined the substantial gain realised in the year with over £7 million
received from the sale of the investment in NutraCea, Inc. Following the
completion of this sale the Company took the decision to re-invest the proceeds
of this sale into appropriate smaller-cap companies. At the same time a new
Investment Manager was appointed and, as outlined in the Company's Accounts for
the year ended 31 December 2006, two new investments were made with a combined
value of £1,014,611. Notwithstanding these investments, the Board was made
aware that Shareholders representing a substantial percentage of the Company's
share capital wanted to see the Company realise its investments at the earliest
opportunity and return cash to Shareholders in the fastest and most cost
effective way.
The Board had not anticipated receiving notice that it should consider putting
the Company into voluntary liquidation, however after due and careful
consideration of these proposals the Board has resolved to put the Proposals to
Shareholders and has also resolved to recommend that Shareholders vote in favour
of the Proposals on the basis that the recent performance of certain investments
in the Company's portfolio (as referred to in the preceeding paragraph) taken
with the large amount of cash that is the Portfolio's composition (as mentioned
later in this letter), would allow a substantial return of cash to Shareholders
in the short and medium term if the Proposals are approved at the EGM.
Under the Proposals the Company would be wound up by means of a members'
voluntary liquidation in accordance with its Articles. In accordance with
section 86 of the Insolvency Act 1986 the Proposals require the consent of
Shareholders passing a resolution in general meeting. Provided all of the
Resolutions are passed, the winding up of the Company would become effective
immediately upon the passing of the first resolution put to the EGM. Further
details of the EGM are contained below and in the Notice, which is set out at
the end of this Document.
The Voluntary Liquidation is conditional upon the passing of the Resolutions set
out in the Notice of Extraordinary General Meeting at the end of this Document.
A voluntary liquidation can only take place if the Company is solvent and the
Directors confirm that they have made a full investigation of the Company's
assets and liabilities and sworn a declaration of solvency.
In a Voluntary Liquidation the powers of the Directors cease and the Liquidators
assume responsibility for the Company's affairs. Liquidators deal with the
realisation of assets, the agreement and settling of liabilities and the
distribution of the Company's surplus assets to the Shareholders, as and when
funds permit.
The Board will be proposing that Gareth Rutt Morris and Simon Peter Bower of RSM
Robson Rhodes LLP be appointed as Liquidators of the Company with immediate
effect upon the passing of the Resolutions.
After payment of all known liabilities, the Proposed Liquidators have indicated
that an amount sufficient to meet all the unknown liabilities of the Company
will be required to be retained by the Company, likely to be not less than
£100,000, however the final amount cannot as yet be determined.
The Proposed Liquidators have also indicated that they anticipate being in a
position to distribute part of the Company's assets arising from the liquidation
to Shareholders on or around 20 July 2007, assuming that the Voluntary
Liquidation is approved at the EGM on 20 June 2007. The remainder of the
Company's assets, if any, would be distributed after paying the costs of the
Company's liquidation and settling all other liabilities of the Company.
The precise timing of any further distribution would depend upon the Liquidators
establishing that the Company has no outstanding liabilities.
The Board has been notified that the Liquidators would hope to make a first
interim distribution within one month of their appointment, being on or around
20 July 2007. The amount of this distribution will be equal to the Company's
cash resources at that time less all known liabilities (including any
liquidation costs remaining unpaid) and the retention for unknown liabilities.
Based on the information currently available, the Board estimates this first
distribution to be approximately £3,134,500.
The total distribution would be equal to the net asset value less legal and
advisory costs and the Termination Fee subject to any realised investment
values. The unaudited net asset value at close of business on 18 May 2007 (being
the latest date of calculation of the net asset value) was £14,947,226, and if
this net asset value was used as the base position, this would give an estimated
distribution per Ordinary Share of approximately 24p, with an estimated first
distribution per Ordinary Share of approximately 5p.
Given the final distribution will be calculated at a future date after the
initial distribution proposed at on or around 20 July 2007, it is difficult at
this stage to estimate the final position. Actual payments to Shareholders will
depend, inter alia, on movements in the Company's net assets from 18 May 2007
and the date that such assets are realised and on whether any unforeseen
liabilities arise as well as the actual realised values of the investment
portfolio. Most of the portfolio represent smaller-cap companies based in the
USA.
One of the largest liabilities will be a termination payment to Garrison, as a
result of the early termination of the Investment Management Agreement in the
event that the Resolutions are passed.
The liability of the Company under this agreement is a payment to Garrison of a
termination fee equivalent to an amount calculated by the aggregate fees paid or
payable to Garrison under the Investment Management Agreement in the year
preceeding such termination multiplied by the number of years from the date of
such termination to the fourth anniversary of the Listing of the Company, being
7 October 2004. As at 30 April 2007, being the date of the last set of
unaudited management account, the Termination Fee calculated in accordance with
the terms of the Investment Management Agreement is £358,077.
If the Company should be wound up, under the terms of its Articles the holders
of the Redeemable Preference Shares shall be entitled to, prior and in
preference to any distribution of any of the assets of the Company to holders of
Ordinary Shares, an amount equal to the par value of the Redeemable Preference
Shares. There are currently 500,000 of partly paid Redeemable Preference Shares
of 10p each in issue, which are partly paid and have a value of £12,500.
In the event that the Resolutions to be proposed at the EGM are not passed, then
the winding up of the Company will not proceed. In those circumstances, the
Board has resolved to continue managing the Company as an investment trust on
the same basis as it is currently managed.
Composition of the Portfolio
As at 18 May 2007 (the last date of calculation of the Portfolio prior to the
publication of this Document) approximately 26% of the Company's Portfolio is
held in cash and 74% is held in equities.
Legal and Advisory Costs
The legal and advisory costs in connection with the Proposals are expected to
amount to approximately £110,450 (inclusive of VAT).
The Directors
The payment of directors' fees to the Directors by the Company will cease when
the Liquidators are appointed and the directors shall be entitled to payment for
loss of office in accordance with their contractual terms of office as follows:
Robin Bolton £2,500
Louis Cooper £2,500 plus VAT
Colin John Lumley £8,750 plus VAT
Desmond Charles Anthony Magrath £3,750
Christopher Harwood Bernard Mills £2,500 plus VAT
TOTAL £20,000 (plus VAT where applicable)
Arrangements with the Manager and the Company Secretary
Assuming the Proposals proceed, both Garrison and the Company Secretary's
appointments respectively, will be terminated with effect from the date that the
Company goes into Voluntary Liquidation. The Company will be liable to pay to
Garrison a termination fee in respect of the termination of the Investment
Management Agreement, as referred to above in this letter.
There is no compensation for loss of office in respect of the Company Secretary.
Significant Changes
The only significant changes since the release of the 2006 Report and Accounts
has been: (a) the continued loss of value of the investment held in Consolidated
Energy and Technology Group, Inc, which between 1 January 2007 and 18 May 2007
has seen a fall of over £1,900,000 (further details are set out in Part 2
Section 9); and (b) the appreciation in the value of the investment held in
Commercial Group Properties Plc, which between 21 February and 18 May 2007, saw
an increase in value of over £680,000.
The unaudited net asset position at the close of business on 18 May 2007 (being
the latest date of calculation of the net asset value) was £14,947,226 and
accordingly the unaudited net asset value per Ordinary Share as was reported as
24p.
Taxation
The information below, which is intended as a general guide and which relates
only to United Kingdom taxation, is applicable only to Shareholders who are
resident or ordinarily resident in the United Kingdom for tax purposes or who
are carrying on a trade in the United Kingdom through a branch or agency (or in
the case of a corporate Shareholder, a permanent establishment) with which their
investment is connected and who hold their Shares beneficially as an investment;
it does not apply to certain classes of persons such as securities dealers. This
information is based on existing United Kingdom law and HM Revenue and Customs
practice and is subject to subsequent changes therein and does not constitute
legal or tax advice.
Any Shareholders who are in doubt as to their tax position or who are not
resident in the United Kingdom or who are subject to taxation in any
jurisdiction other than the United Kingdom should consult their own independent
professional advisers immediately.
Depending on their individual circumstances, Shareholders who are resident, or
in the case of individuals, ordinarily resident, in the United Kingdom for
taxation purposes may realise an allowable loss where the consideration received
by such Shareholders in respect of their shareholding in the Company is less
than the base cost of their Shares. However, it is possible that a gain may
arise where the proceeds received in respect of the shareholding are in excess
of the base cost of that shareholding.
In the situation where a Shareholder has already made a successful claim to HM
Revenue and Customs that his shareholding was of negligible value, the
Shareholder will have been deemed to have sold and immediately reacquired the
shareholding for a consideration equal to the value specified in that claim.
Therefore, under these circumstances a Shareholder may be subject to capital
gains tax (or in the case of a corporate Shareholder, corporation tax on
chargeable gains) in respect of any gain arising, being the excess of
consideration received in respect of his shareholding over the value specified
in the claim.
For Shareholders who are individuals, taper relief, and for Shareholders within
the charge to United Kingdom corporation tax, indexation allowance, may reduce a
chargeable gain but will not create or increase an allowable loss. The
availability and rate of taper relief will depend on the period of ownership of
the Shares and whether the Shares are held as business assets or non-business
assets. Any Shareholder who is in doubt as to their tax position or requires
more detailed information than the general outline above should consult his
independent professional adviser immediately.
No stamp duty or stamp duty reserve tax should be payable by the Company in
connection with the Proposals.
Dealings, Settlement and Cancellation of the Listings
Application will be made to the UK Listing Authority for the suspension of
dealings in the Ordinary Shares of the Company from 7.30 am on 20 June 2007.
The share register of the Company will be closed and Ordinary Shares will be
disabled from CREST at 5.00 pm on 19 June 2007. The last day for dealings in
Ordinary Shares on the Official List for normal account settlement will
accordingly be 13 June 2007. After 13 June 2007, dealings should be for cash
settlement only and will be registered in the normal way if the transfer,
accompanied by documents of title, is received by the Registrar by 5.00 pm on 19
June 2007. Transfers received after that time will be returned to the persons
lodging them. If the Proposals are approved at the EGM the original holder will
receive any proceeds to be distributed as a result of the implementation of the
Proposals.
Application will be made to the UK Listing Authority to cancel the Listing of
the Ordinary Shares from the Official List which is expected to take effect from
the commencement of business on the next Business Day following the passing of
the Resolutions, expected to be with effect from 8.00am on 21 June 2007.
Overseas Shareholders
Persons who are citizens or nationals of, or resident in, jurisdictions outside
the United Kingdom or custodians, nominees or trustees for citizens, nationals
or residents of jurisdictions outside the United Kingdom may be prohibited, or
affected, by the laws of the relevant overseas jurisdiction in respect of their
full participation in the Proposals.
Overseas Shareholders should inform themselves about, and observe, any
applicable or legal regulatory requirements. If you are in any doubt about your
position, you should consult your professional adviser in the relevant
territory.
Notice of Extraordinary General Meeting
The Proposals require the approval of Shareholders. Accordingly, there is set
out at the end of this Document the Notice convening the Extraordinary General
Meeting to be held at 10.30am on 20 June 2007. At the EGM, a special resolution
will be proposed, inter alia, for the members' voluntary winding up of the
Company, to appoint the Proposed Liquidators and fix their remuneration. An
extraordinary resolution will be proposed to authorise the Liquidators to divide
and distribute among the members of the Company all or part of the assets of the
Company in specie or in kind in such proportions as among the members of the
Company as they may decide and to sanction the use of powers set out in Part I
of Schedule 4 of the Insolvency Act.
The special resolution for the members' voluntary liquidation is conditional on
the passing of Resolutions 2.1, 2.2, 2.3, 2.4, 3.1 and 3.2 (as set out in the
Notice), which are the resolutions to appoint the Liquidator and, inter alia, to
allow the Liquidator to carry out his duties.
An ordinary resolution requires the approval of a majority of the votes cast and
a special and an extraordinary resolution require the approval of a majority of
three quarters of the votes cast to be passed.
Action to be taken
Shareholders will find enclosed a Form of Proxy for use in connection with the
Extraordinary General Meeting.
Whether or not you intend to be present at the Extraordinary General Meeting you
are requested to complete and return the Form of Proxy sent to you as soon as
possible and, in any event, to be received by Share Registrars not later than
10.30 am on 13 June 2007 in respect of the Extraordinary General Meeting.
The completion and return of the Form of Proxy will not preclude Shareholders
from attending the Extraordinary General Meeting should they wish to do so.
The return of a completed form of proxy will not prevent a Shareholder from
attending the Extraordinary General Meeting and voting in person if the
Shareholder wishes to do so.
Recommendation
The Board considers the Proposals set out in this Document to be fair and
reasonable and for the reasons stated in this letter consider the Proposals to
be in the best interests of Shareholders as a whole.
Accordingly the Board recommends that Shareholders vote in favour of the
Resolutions to be proposed at the Extraordinary General Meeting.
The Board will be send out a copy of the circular to Shareholders by post today.
For further information please contact:
Colin Lumley
Administrative Director
0207 569 0044
25 May 2007
END
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