Cancellation of AIM admission and litigation updat (1067J)

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RNS Number : 1067J

Astaire Group Plc

24 June 2011

Astaire Group plc

Settlement of litigation

Proposed cancellation of admission of Astaire Shares to AIM

Evolve Capital PLC's intentions for Astaire Group PLC

24 June 2011

Astaire Group plc ("Astaire" or the "Company") announces that its wholly owned subsidiary, Corporate Synergy Holdings Limited ("CSH") has today reached a settlement with Izodia PLC in relation to litigation brought by Izodia plc against both it and Edward Vandyk, a former chief executive of both Astaire and CSH.

Astaire also announces that a general meeting (the "General Meeting") will be convened to consider the cancellation of the admission of ordinary shares of 0.1p each in Astaire ("Shares") to trading on AIM.

This announcement also contains important information about the Board's implementation of Astaire's investing policy and Evolve Capital PLC's possible intentions for Astaire. Evolve Capital PLC ("Evolve") is Astaire's controlling shareholder (holding approximately 53.61% of Astaire's issued share capital).

Astaire intends to release its results for the year ended 31 December 2010 on 28 June 2011.

Settlement of litigation

A claim was made by Izodia PLC in May 2010 against two subsidiaries of Astaire (Corporate Synergy Holdings Limited and Astaire Securities PLC) and Edward Vandyk. This claim was for approximately GBP3.9 million (plus interest) and has been strongly resisted since that time. In October 2010 Izodia agreed to drop any claims against Astaire Securities PLC in exchange for a payment of GBP37,000, which facilitated the sale of Astaire Securities PLC. Today Izodia PLC has agreed to drop all claims against CSH and Mr Vandyk. Under the terms of the settlement, under which no party admitted any liability and the details of which are subject to a confidentiality clause, CSH has paid a GBP500,000 contribution to Izodia's legal costs. To date CSH has funded the litigation in excess of the sum of GBP800,000 for defence counsel's fees. CSH expects to recover a substantial proportion of these fees from insurers (but not the GBP500,000 contribution to Izodia's legal costs). The Board believes that this is the best available result in the circumstances, in the context of the alternative being an expensive and very protracted continuation of litigation, the outcome of which is necessarily subject to a degree of uncertainty notwithstanding the Board's belief in the strength of the defence.

Cancellation of admission to trading on AIM

At a meeting of the Board held yesterday, the Board resolved to notify the London Stock Exchange pursuant to Rule 41 of the AIM Rules of its intention to cancel the admission of Shares from trading on AIM ("the Cancellation"), subject to the passing of the special resolution at the General Meeting. If Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Shares will be 3 August 2011 and the effective date of cancellation will be 4 August 2011.

The Shares have been admitted to trading on AIM since 30 July 2002 and in light of the completion of the sale of the Group's main operating businesses, the Board has undertaken a review of the benefits of the Shares continuing to be traded on AIM and has recognised the following key factors:

-- the costs and administrative burden associated with maintaining admission to AIM. The Board estimates that the annual costs of maintaining the admission are approximately GBP100,000;

-- the management time and the legal and regulatory burden associated with maintaining the Company's admission to AIM is now disproportionate to the benefit to the Company; and

-- the Company, like many other quoted AIM companies of its size, suffers from a lack of liquidity for its Shares and, in practical terms, a small free float and market capitalisation, which reduces trading demand.

Following careful consideration, the Board believe that it is in the best interests of the Company and Shareholders to seek the Cancellation at the earliest opportunity. The Company has therefore separately notified the London Stock Exchange of its preferred date for the cancellation of the admission of the Shares to trading on AIM, being 4 August 2011.

The Board is aware that the Cancellation will restrict the ability of Shareholders to realise their shareholdings, as there will be no market facility for dealing in the Shares and no price will be publicly quoted for the Shares. The Board are aware that Shareholders may still wish to acquire or dispose of Shares and accordingly have arranged with Dowgate Capital Stockbrokers Limited ("Dowgate") that Dowgate will endeavour to provide a dealing facility in Ordinary Shares on a matched bargain basis following the Cancellation.

The Company will no longer be subject to the AIM Rules after the Cancellation and, accordingly, it will not be required to retain a nominated adviser or to comply with the requirements of AIM in relation to annual accounts, half-yearly reports, the disclosure of price-sensitive information and retaining a restricted investing policy.

Astaire has entered into a controlling shareholder agreement with Evolve which provides that, conditional on the Cancellation taking place on or before 31 August 2011, Evolve will continue to support the presence of at least one independent director on the Astaire Board and will seek the consent of such independent director(s) for any transaction involving Astaire in which Evolve has an interest (other than as a Shareholder) for so long as Evolve continues to hold over 50 per cent. of Astaire's issued share capital

Shareholders should note that following the Cancellation, the Company will remain subject to the City Code on Takeovers and Mergers (the "Takeover Code") for a period of 10 years from the effective date of cancellation of the admission of the Shares to trading on AIM (expected to be 4 August 2011). Accordingly, shareholders will continue to receive the protections afforded by the Takeover Code in the event that an offer is made to shareholders to acquire their Shares.

Investing policy

Following the Cancellation, the Board intends to continue implement the investing policy set out in the circular dated 11 February 2011. This is to continue to hold its present investments until they can be realised, acquiring additional investments (apart from liquid securities of predominantly debt instruments, such as gilts) only when contractually required to do so or in order to obtain value for any warrants and options which are "in the money" (i.e. capable of being exercised to buy securities at prices which give Astaire a profit on disposal).

The process of realisation is expected to continue for some time, due to limited liquidity in the underlying investments. As stated in the circular of 11 February 2011, the Board do not propose to run an accelerated or "fire sale" disposal programme as this is not believed to be in the best interests of all Shareholders.

Evolve's intentions for Astaire

The Board of Astaire stated in the circular dated 11 February 2011 that it would consider steps to return cash to shareholders (which would involve some form of capital restructuring requiring the approval of Evolve, which holds approximately 54% of Astaire's issued share capital).

The Board of Astaire has recently been informed that Evolve may hold the view that Astaire should become a more active investing company and that Evolve may wish to appoint individuals to the Board of Astaire to implement such a strategy. Were such a strategy to be implemented it would mean that rather than seeking shareholder approval for returning any excess cash to shareholders, as previously proposed, the Company would instead be seeking to invest the cash that it currently holds, and any amounts realised from its present investments, into as yet unspecified investment opportunities with a view to increasing the value of the Company's assets for the ultimate benefit of all of its Shareholders. Evolve is expected to make an announcement on this matter today, following which the Astaire board will consider Evolve's position with its advisers.

Enquiries:

Astaire Group Plc

Tel: 020 7492 4757

Chris Roberts, Finance Director

Fairfax I.S. PLC

Nominated Adviser/Broker

Tel: 020 7598 5368

David Floyd, Katy Birkin

This information is provided by RNS

The company news service from the London Stock Exchange

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