RNS Number:1766Q
Hurlingham PLC
14 March 2008
Hurlingham PLC (the "Company")
14 March 2008
RELATED PARTY TRANSACTION SUBJECT TO GENERAL MEETINGS
* Board resignations
* Raising of fresh capital by the issue of 800,000 Ordinary Shares at
75p per share
* Proposed sale of Bettagrade which owns the Perth Hotel to Thistle
Perth LLP and Thistle Investments S.A.
* Acquisition of 'A' Shares by the Company
This announcement outlines details of the proposed re-structuring of Hurlingham.
This will involve the Retiring Directors, as detailed below resigning from the
Board, Hurlingham selling Bettagrade, which owns the Perth Hotel, Hurlingham
raising fresh equity capital and Hurlingham acquiring all its 'A' Shares.
Andrew Blurton and David Low, Directors, have demonstrated their commitment to
the Company by participating in the proposed fundraising and subscribing,
subject to the passing of the Resolution detailed below in the Chairman's
letter, to be considered at the Second General Meeting, for a total of 200,000
New Ordinary shares, representing 25 per cent. of the New Ordinary Shares, in
addition to their existing shareholdings in the Company totalling 161,000
Ordinary Shares.
The following is the text of Andrew Blurton's, today appointed Non-Executive
Chairman of the Company, letter to shareholders which outlines the transaction
in further detail, which forms part of a circular that will be posted to
shareholders today. The entire document will be available on the Company's
website today.
HURLINGHAM Plc
(Incorporated and registered in England and Wales number 2451413)
Directors
Andrew Francis Blurton (Non-Executive Chairman) Registered Office
Charles Edward John Llewellyn 90 Babbacombe Road
Charles Pettingell Bromley
Maurice Vincent Taylor Kent BR1 3LS
David James St. Clair Low
14 March 2008
To the holders of Ordinary Shares and the holders of 'A' Shares and, for
information purposes only, to the holders of options under the Company's share
option scheme.
Dear Shareholder,
Board resignations, raising of fresh capital by the issue of 800,000 Ordinary
Shares at 75p per share, proposed sale of the issued share capital of
Bettagrade, which owns the Perth Hotel, to Thistle Perth LLP and Thistle
Investments S.A. and acquisition of 'A' Shares by the Company
Background
The original objectives of Hurlingham at its formation in 1989 were to invest in
residential property. This has been broadened over the years, and where
appropriate with Shareholder approval, to encompass hotel development and
management, hotel marketing and airline travel, as set out in its annual
accounts over the intervening years. The Group has not realised the level of
profits anticipated at the outset from these operations and, other than the
ownership and management of the Perth Hotel, they have since either been
realised for cash or closed.
Since March 2006, the Group's principal business has been the Perth Hotel.
Whilst that has been profitable, it is not considered to be capable of
generating the profits needed to pay Hurlingham's administrative expenses and,
without the financial resources to develop further hotels, your Board concluded
that it should dispose of Bettagrade, which owns the Perth Hotel and seek to
develop more profitable opportunities. At the same time, the existing Executive
Board, being Charles Llewellyn, Charles Pettingell and Maurice Taylor, who are
all in their 60's, consider, subject to approval of all resolutions contained in
the Notices of the First and Second General Meeting, that it would be
appropriate for them to retire from the Board.
The Remaining Directors of Hurlingham are David Low and myself. David, is aged
49 and is an experienced broker. I am 53 and an experienced Chartered Accountant
of many years standing, with a proven track record as the Finance Director of a
number of listed companies over the last 20 years. David Low and I joined the
Board in December 2005 and June 2004 respectively, and have brought significant
financial and corporate expertise to the Group.
The purpose of this document therefore is to provide Shareholders with
information to enable them to consider and if thought fit, to approve, a
proposed re-structuring of Hurlingham. This will involve the Retiring Directors
resigning from the Board, Hurlingham selling Bettagrade, which owns the Perth
Hotel, Hurlingham raising fresh equity capital and Hurlingham acquiring all its
'A' Shares. David Low and I, being the Remaining Directors, have demonstrated
our commitment to the Company by participating in the proposed fundraising and
subscribing, subject to the passing of Resolution 1 to be considered at the
Second General Meeting, for a total of 200,000 New Ordinary shares, representing
25 per cent. of the New Ordinary Shares, in addition to our existing
shareholdings in the Company totalling 161,000 Ordinary Shares.
In the light of these proposals, I was appointed the new Non-Executive Chairman
of Hurlingham at a meeting of the Board held earlier today.
The financial information relating to Hurlingham in this document has been
prepared by reference to the Interim Accounts as these are the latest published
financial information for the Group. On the assumption that the resolutions
proposed at the First General Meeting are passed, the Board envisages
despatching audited financial statements of the Company for the year ended 30
September 2007, to Shareholders by 31 March 2008.
Bettagrade
Hurlingham's wholly owned subsidiary Bettagrade was formed in September 1997, to
develop branded budget hotels. The Perth Hotel, was constructed on a site
acquired in October 1998, as an 81 bed Express by Holiday Inn hotel and was
officially opened in September 1999. On 7 November 1997, Charles Llewellyn,
Charles Pettingell and Maurice Taylor subscribed cash totalling �87,500 for
43.75 per cent. of the issued ordinary share capital of Bettagrade. These shares
were sold to Hurlingham on 11 June 2001 for �100,560 satisfied by the issue of
74,619 ordinary shares in Hurlingham and cash of �9,150 as referred to in the
Circular to Shareholders dated 11 June 2001, as a result of which Bettagrade
became a wholly owned subsidiary of Hurlingham.
The Group has continued to own the Perth Hotel as a budget (non full-service)
hotel and it has been operated since that date, pursuant to the Management
Agreement, by Chardon Management. Over the years, the Perth Hotel has performed
adequately.
The Management Agreement runs until 30 April 2009 and has provided continuity of
management over this period. A termination fee of �110,000 plus the latest
year's management fee would become payable by the Group if the Management
Agreement was terminated prior to that date. Maurice Taylor has procured that if
the sale of the issued share capital of Bettagrade to Thistle Perth and Thistle
Investments occurs as envisaged in this document, Chardon Management will not
charge this termination fee to the Group.
The Perth Hotel was independently valued at 14 March 2008 by Colliers Robert
Barry, Chartered Surveyors, as a fully equipped operational entity having regard
to its trading potential, at �4.5 million. Their valuation report is set out in
Part II of this document. Costs of the Sale, including the fees payable to the
valuers and the costs associated with the other matters referred to in this
document, (excluding payments proposed to be made to the Retiring Directors that
are referred to in the section below entitled 'Proposed termination of
contractual arrangements with Retiring Directors') are estimated to amount to
approximately �180,000, which will be paid by the Group at Completion.
Proposed sale of Bettagrade
Hurlingham has agreed terms, subject to Shareholders' approval, to sell the
entire issued share capital of Bettagrade, which owns the Perth Hotel, to
Thistle Perth and Thistle Investments. The Sale is proposed to be effected by
means of the sale of the entire issued share capital of Bettagrade at a price
equivalent to the net asset value of Bettagrade at Completion. This is estimated
to amount to �2,300,000 at the date of this document. The net asset value
reflects bank indebtedness in Bettagrade amounting to approximately �1,730,000
and other liabilities of Bettagrade at that date of approximately �144,000. The
total of such liabilities of approximately �1,874,000 will pass out of the Group
at Completion under the Sale Agreement. This proposed transaction effectively
values the Perth Hotel at �4.5 million, being the existing use value at which
the hotel has been valued by Colliers Robert Barry, Chartered Surveyors at the
date of this document. Their valuation report is set out in Part II of this
document.
The Directors have previously offered the Perth Hotel for sale and following
extensive marketing by Bettagrade's property agents, Colliers Robert Barry, the
highest offer received was �4,500,000. A sale of the hotel rather than the
issued capital of Bettagrade would have resulted in adverse financial
consequences for the Group principally in terms of additional costs payable on
the disposal and the continuing costs associated with operating Bettagrade. It
would also have resulted in the payment to Chardon Management of the termination
fee of not less than �110,000 referred to above. In these circumstances, the
Directors concluded that a sale of the issued share capital of Bettagrade to
Thistle Perth and Thistle Investments at an effective price for the hotel of
�4.5 million, which does not result in these adverse financial consequences for
the Group or the payment of any termination fee, was more beneficial for
Shareholders.
Under the proposed Sale Agreement, the sale price for all the issued shares in
Bettagrade which is estimated to amount to �2,300,000, will be receivable by the
Group at Completion, with a subsequent adjustment in respect of the exact
current assets and current liabilities of Bettagrade at Completion. After the
costs of approximately �180,000 (excluding payments proposed to be made to the
Retiring Directors that are referred to in the section below entitled 'Proposed
termination of contractual arrangements with Retiring Directors') and the
repayment of bank debt in Hurlingham secured on the Perth Hotel, the Sale is
expected to result in the transfer of liabilities out of the Group of �1,874,000
and the receipt of net proceeds by the Group of �1,740,000. Additional details
relating to the Sale Agreement are set out in paragraph 6(d) of Part V of this
document. Bettagrade has 500,000 5% preference shares of �1 each in issue, of
which 170,000 will be acquired by Thistle Perth under the Sale Agreement,
conditional on approval by Shareholders of both resolutions at the First General
Meeting. �330,000 of the acquisition value of Bettagrade will be discharged by
Hurlingham swapping the balance of 330,000 5% preference shares of �1 each in
Bettagrade, for the 100 'A' Shares that Thistle Investments owns at the date of
this document, conditional on approval by Shareholders of the resolutions in the
Notice of the First General Meeting.
Provision will be made in the completion accounts of Bettagrade and will thus
ultimately be incurred by the Group, in respect of payments to personal pension
funds of the Resigning Directors, as to �60,000 to each of Charles Llewellyn and
Charles Pettingell and as to �45,000 to Maurice Taylor. These pension payments
amounting to �165,000 in aggregate will be liabilities of Bettagrade and will
thus reduce the consideration receivable by Hurlingham from Thistle Perth at
Completion. Similarly, provision will be made in the completion accounts of
Bettagrade and will thus ultimately be incurred by the Group, in respect of
payments of compensation for loss of office from the board of Bettagrade in
respect of each of Charles Llewellyn, Charles Pettingell and Maurice Taylor as
to �30,000 for each such Retiring Director. These provisions for compensation
for loss of office amounting to �90,000 in aggregate will be liabilities of
Bettagrade and will thus reduce the consideration receivable by Hurlingham from
Thistle Perth at Completion. These amounts proposed to be provided in the
completion accounts of Bettagrade, totalling �255,000, have all been reflected
in the calculation of the amount receivable by Hurlingham under the Sale
Agreement referred to in the previous paragraph of this Part I.
Your attention is also drawn to the pro forma statement of net assets of
Hurlingham set out in Part IV of this document, which demonstrates the
approximate financial result of the Sale by reference to the consolidated
balance sheet of the Group included in the Interim Accounts.
Thistle Perth is a limited liability partnership associated with Maurice Taylor
a Director of Hurlingham, as an adult member of Maurice Taylor's family is a
member of Thistle Perth. Accordingly, the transaction requires the approval of
Shareholders, and this will be considered in the first resolution at the First
General Meeting. The proposed sale of Bettagrade is also conditional on the
approval by Shareholders of the second resolution to be considered at the First
General Meeting relating to the proposed termination of contractual arrangements
with the Retiring Directors. Landsbanki has advised the Board of Hurlingham that
it considers the terms of the Sale Agreement to be fair and reasonable.
The approval of the Sale Agreement is the subject of resolution 1 to be proposed
at the First General Meeting.
Use of proceeds from sale of Bettagrade
The business plan of the Remaining Directors involves Hurlingham seeking to
acquire a new business or merging with another operation within the next twelve
months, which is capable of delivering Shareholder value in the years ahead.
Where appropriate, and in accordance with the AIM Rules for companies, requests
by Hurlingham for approval by Shareholders of such transactions will be sent to
Shareholders at the time of any such proposal and prior to any such transactions
being unconditionally entered into.
Subscription for New Ordinary Shares
The cost of restructuring the Group in the manner set out in this document is
estimated by the Board to amount to approximately �180,000 as referred to above.
This figure excludes payments proposed to be made to the Retiring Directors that
are referred to in the section below entitled 'Proposed termination of
contractual arrangements with Retiring Directors'. In order for the Company to
cover these costs and to provide working capital to the Company, the Remaining
Directors and certain other persons have conditionally agreed to subscribe in
cash for 800,000 New Ordinary Shares to be issued at their nominal value of 75p
per share, raising gross proceeds for the Company of �600,000. The arrangements
relating to this fund raising are set out in the Subscription Agreement, further
details of which are set out in paragraph 6(e) of Part V of this document.
Subject to Shareholder approval, the New Ordinary Shares would be subscribed
under the Subscription Agreement by the Subscribers. The Board considers that
the cost of implementing a rights issue compared to the cost incurred under the
proposed subscription arrangements would be unnecessarily high and also
significantly less certain in ensuring that Hurlingham receives the funds
proposed under these arrangements. Accordingly, the Board has proposed that the
New Ordinary Shares are not offered to Shareholders by means of a rights issue
or similar pro rata entitlement. The Board has received advice from Landsbanki
in respect of these subscription proposals.
The proposed subscription for New Ordinary Shares is conditional on the approval
by Shareholders of both resolutions proposed to be considered at the First
General Meeting. The arrangements relating to the Subscription Agreement are the
subject of resolution 1 to be proposed at the Second General Meeting.
Acquisition of 'A' Shares by the Company
At the date of this document, Thistle Investments owns all the 'A' Shares in
issue. As set out in the Annual Accounts of the Company, and in accordance with
the Articles of Association of the Company, the holders of the 'A' Shares are
entitled to enhanced voting and dividend rights in Hurlingham. The rights
attaching to the 'A' Shares entitle the holders to 15 per cent. of the voting
rights at any meeting of Shareholders. The Articles of Association of Hurlingham
also entitle the holders of the 'A' Shares to receive a total of 15 per cent. of
any dividends and 15 per cent. of the surplus assets in a winding up. The
remaining 85 per cent. is attributable to the holders of the Ordinary Shares,
pro rata to their respective holdings of Ordinary Shares.
The Remaining Directors consider that it is necessary for Hurlingham to acquire
and cancel the 'A' Shares, in order that its issued share capital consists of
one class of shares, namely the Ordinary Shares. In this way, there will be
clear transparency of ownership and rights between Shareholders and a clear
indication of market value by reference to Hurlingham's Ordinary Share price.
This will also mean that the percentage interest of Shareholders after any
future issues of share capital, will not be diluted by the 15 per cent. current
entitlement in such issues by the existing 'A' Shareholders. This will also make
the acquisition of a new business or any merger with another company more
practical and beneficial for Hurlingham and its Shareholders.
Under the terms of the Sale Agreement, Thistle Investments has agreed to swap
the 100 'A' Shares that it owns for 330,000 5% preference shares of �1 each in
Bettagrade. This agreement is conditional upon approval by Shareholders of both
resolutions in the Notice of the First General Meeting. Hurlingham will cancel
all its 'A' Shares after their acquisition from Thistle Investments.
David Low and I, having been so advised by Landsbanki, consider that the
arrangements for the proposed acquisition by Hurlingham of its 'A' Shares are
fair and reasonable. In arriving at our decision, David Low and I as independent
Directors have taken into account issues such as the terms of issue of the 'A'
Shares, their proportionate interest in the capital of the Company and their
potentially dilutive impact on future fund raisings or issues of shares by the
Company.
Landsbanki has advised the Board of Hurlingham that it considers the terms of
the proposed acquisition of the 'A' Shares to be fair and reasonable.
The proposed acquisition of 'A' Shares by the Company for cancellation is
conditional on the approval by Shareholders of both resolutions proposed to be
considered at the First General Meeting.
Board of Directors
Hurlingham was formed in December 1989 as a company permitting certain
Shareholders to avail themselves of the beneficial tax treatment for their
investments in the Company under the Business Expansion Scheme. During that
period the Board has created liquidity for the original Shareholders by
obtaining admission for the Company's Ordinary Shares to be traded on AIM and
has created value by investing in the budget hotel sector. Unfortunately, the
Group has also suffered a number of unforeseen setbacks, including the
withdrawal of its original budget hotel funding programme, and by the 9/11
disaster in the United States which effectively destroyed the Group's American
hotel marketing business.
With the sale of the issued share capital of Bettagrade to Thistle Perth and
Thistle Investments, all of the business activities which have been developed by
the Group up to the present time will either have been realised for cash or
closed. As the business plan of the Remaining Directors calls for it to acquire
or merge with another business which may require different skills, Charles
Llewellyn, Charles Pettingell and Maurice Taylor consider that it is an
appropriate time for them to retire from the Board. However, both David Low and
I are remaining as Directors and earlier today I was appointed Non-Executive
Chairman of the Company as successor to Charles Llewellyn. I am confident that
the Company will be well managed and capable of growth under our leadership. In
addition, we have confirmed that it is our intention to appoint further
appropriate and qualified Directors to the Board at the time of securing a new
business opportunity for the Company. In the meantime, Charles Llewellyn,
Charles Pettingell and Maurice Taylor have all confirmed that they will remain
available to assist the Company on an ad hoc basis if required.
Charles Pettingell has advised the Company that, subject to the approval of
Shareholders of all resolutions proposed to be considered at the First and
Second General Meetings, he wishes to sell the 119,236 Ordinary Shares he holds
in the Company. Accordingly, conditional arrangements have been made to place
these shares after completion of the matters referred to in this document.
Proposed termination of contractual arrangements with Retiring Directors
Each of Charles Llewellyn, Charles Pettingell and Maurice Taylor entered into
service contracts with the Company prior to it joining AIM in April 1996.
Further details relating to these contracts with the Company are set out in
paragraph 4 of Part V of this document.
Since the Group has no central office, certain day to day administration and
financial supervision of the Group has been carried out through the private
offices of each of the Retiring Directors. The Company has paid a total of
�37,800 per annum to businesses associated with the three Retiring Directors in
respect of these services, and this has been fully disclosed in the Annual
Accounts of the Company. No charges have been made to the Group by David Low or
me for the administration and financial supervision services we have provided to
the Group since we joined the Board in 2005 and 2004 respectively.
All Directors of the Company have been involved in the discussions and
negotiations leading up to the proposals relating to the proposed termination of
contractual arrangements with the Retiring Directors contained in this document.
David Low and I as the independent Directors have conducted negotiations with
Charles Llewellyn, Charles Pettingell and Maurice Taylor with regard to the
termination of their service contracts. In addition, it is also proposed that
the arrangements for administration of the Group, previously carried out by
their private offices on behalf of the Group, will be terminated, subject to the
passing of all resolutions proposed at the First and Second General Meetings.
Whilst the costs previously incurred of �37,800 per annum will now no longer
arise, the Company will incur office costs directly. It is anticipated by the
Remaining Directors that these new arrangements will result in some saving of
total administration costs on an annual basis.
On the assumption that both resolutions proposed at the First General Meeting
are passed, and prior to the departure of the Retiring Directors from the board
of Bettagrade, accrual for payments to be made by Bettagrade will be included in
the completion accounts of Bettagrade of �60,000 in respect of each of Charles
Llewellyn and Charles Pettingell and �45,000 in respect of Maurice Taylor, to be
made to their personal pension plans. In addition, accrual for payment of
compensation for loss of office from the board of Bettagrade in respect of the
Retiring Directors will be included in the completion accounts of Bettagrade
amounting to �30,000 for each of the three Retiring Directors.
On conclusion of the Second General Meeting, and on the assumption that both
resolutions proposed at the first General Meeting are passed, each Retiring
Director will enter into a compromise agreement in agreed terms with Hurlingham.
These will confirm termination of the service contracts referred to above,
without payment of compensation for loss of office in respect of their
employment with Hurlingham. Further details of these arrangements are set out in
paragraph 4 of Part V of this document. I would like to thank the Retiring
Directors for their efforts in promoting the Company over the years that they
have been Directors.
Copies of the proposed compromise agreements with the Retiring Directors are
available for inspection by Shareholders at the registered office of the
Company, 90 Babbacombe Road, Bromley, Kent BR1 3LS, from the date of this
document to the conclusion of the Second General Meeting.
David Low and I, as independent Directors representing the Company in these
negotiations, having been so advised by Landsbanki in accordance with the AIM
Rules for companies, consider the proposed arrangements with each of the
Retiring Directors are fair and reasonable.
The proposed termination of contractual arrangements with the Retiring Directors
is the subject of resolution 2 proposed to be considered at the First General
Meeting and is conditional on the approval by Shareholders of the first
resolution relating to the Sale Agreement, proposed to be considered at the
First General Meeting.
Summary of proposed accruals in respect of Retiring Directors
The aggregate sums proposed to be accrued as a liability in the completion
accounts of Bettagrade in respect of amounts payable to the Retiring Directors
referred to above, in the event that the foregoing proposals are approved, will
be as follows:-
Charles Charles Maurice
Llewellyn Pettingell Taylor
� � �
Accrual for pension
payments in Bettagrade 60,000 60,000 45,000
Accrual for compensation
in payments in Bettagrade 30,000 30,000 30,000
90,000 90,000 75,000
Net assets of the Group
At 31 March 2007, the Group had a negative balance on its profit and loss
account reserve of �1,145,000 as set out in the Interim Accounts, and equity
shareholders' funds attributable to Ordinary Shareholders of �1,776,000, being
84p per Ordinary Share. At the same date, Equity shareholders' funds
attributable to holders of the 'A' Shares totalled �313,350, or �3,133.50 per '
A' Share. As a result of the subscription of the New Ordinary Shares referred to
above, the Company will have received gross proceeds of �600,000.
The net effect of the issue of the New Ordinary Shares and the acquisition by
Hurlingham of its 'A' Shares, is that the nominal value of its issued share
capital should increase by �599,925 as a result of the matters referred to in
this document. Consequent on the other matters referred to in this document, the
net assets of the Company are expected to decrease by approximately �228,000
from �2,089,000 to �1,861,000 as set out in Part IV of this document. However,
all such net assets will thereafter accrue to Ordinary Shareholders and there
will be no dilution in respect of the 'A' Shares. The pro-forma balance sheet of
the Group at 31 March 2007 set out in Part IV of this document, sets out the
approximate position of the Group before and after the matters referred to in
this document by reference to the Interim Accounts. This shows equity
shareholders' funds per Ordinary Share of �1,776,000, amounting to 84p per share
before these proposals, and net assets of �1,861,000 and equity shareholders'
funds per Ordinary Share of 64p after completion of these Proposals.
Current activities, future business strategy and marketability of Ordinary
Shares
Since the Company's withdrawal from the travel businesses during the year ended
30 September 2007, the losses previously incurred by these subsidiaries have
been halted. In addition, the property from which the travel division traded has
been sold successfully for �100,000 and a net gain of �37,000 has been realised
over its carrying value. The Perth Hotel traded in line with expectations for
the financial year ended 30 September 2007 and has continued to do so to the
date of this document. Notwithstanding this, the income from the Perth Hotel is
not sufficient to cover the central costs of the Company. Following the proposed
restructuring, the Company's principal source of income will be interest
generated on its cash deposit. After settling current liabilities estimated at
�242,000 and collecting debtors of �16,000, this cash deposit is estimated to
amount to �1,861,000 at completion. Based on current interest rates, this is
expected to produce interest of approximately �90,000 on an annual basis.
However, this will not commence to be earned until completion of these
transactions in April 2008. In addition, following the resignation of the
Retiring Directors, administration costs will be reduced and it is hoped by the
Remaining Directors that administration costs in future will be predominantly
covered by income from the Company's cash reserves pending acquisition of a new
business.
Looking forward, the Remaining Directors anticipate appraising a number of
alternative business opportunities for the Company. It is envisaged this is
likely to involve the acquisition by Hurlingham of another business, whose
activities are likely to be different from those previously undertaken by the
Company. Any such acquisition will involve a circular being sent to Shareholders
setting out the proposed terms of the acquisition, providing financial details
relating thereto and inviting Shareholders to consider and if thought fit,
approve the proposals prior to the acquisition of any such company or business
by the Company.
Consideration of the alternative of winding up the Company
After Completion, the Board expects Hurlingham will have net assets of
approximately �1,861,000, the majority of which will be in cash. The quotation
of Hurlingham's Ordinary Shares on AIM is expected to continue, subject to
acquisition of a new business within no more than twelve months from Completion.
The Remaining Directors are confident that there will be sufficient business
opportunities available to Hurlingham to enable it to acquire a new business in
the future. However, if Hurlingham has not acquired a new business within twelve
months from the date of disposal of Bettagrade, its Ordinary Shares are likely
to be delisted from AIM. This will result in Shareholders being unable to sell
their Ordinary Shares on a recognised share exchange. The Ordinary Shares may
therefore become less marketable than at present until a new business has been
conditionally acquired, the acquisition has been approved by Shareholders and
the Ordinary Shares relisted on AIM or any other recognised stock exchange.
The Directors have also considered an alternative to the proposals set out in
this document, namely of pursuing a voluntary winding up of the Company and its
subsidiaries. After careful assessment, the Directors consider that the likely
distribution to Shareholders in such a scenario, after costs and based on the
Interim Accounts, is estimated to amount to approximately 48p per Ordinary Share
and �1,792 per 'A' Share. This would represent a poor return for original
investors in the Ordinary Shares and result in the loss of prospective BES
capital gains tax exemption on any future appreciation. In these circumstances,
the Directors consider that the restructuring and rationalisation set out in
this document provides a prospectively more valuable alternative for Ordinary
Shareholders. In addition, the Remaining Directors believe that they will be
able to introduce suitable business opportunities to the Company which will
produce a more satisfactory return on the Ordinary Shares in the future than
would be offered by a winding up of the Company.
Corporation Tax
The Directors believe that under existing tax legislation, any taxation
liability affecting the Group arising from the Sale Agreement referred to in
this document during the year ending 30 September 2008, is not expected to
exceed �40,000. This is included in the calculation of the pro forma statement
of net assets of the Group in Part IV of this document.
Further information
Your attention is drawn to Parts II to V of this document which include
additional information relating to the Group.
First and Second General Meetings of the Company
The Company's most recent year end was 30 September 2007 and the financial
statements relating thereto have been prepared. However, due to the cash
realisation arising from these proposals, the finalisation of those financial
statements is contingent on the passing of the resolutions referred to in this
document that will be considered at the First General Meeting. Such ordinary
resolutions require 14 days clear notice and accordingly the First General
Meeting, notice for which is set out on pages 26 and 27 of this document, has
been convened to be held on 31 March 2008. On the assumption that the
resolutions proposed at the First General Meeting are passed, completion of the
Sale Agreement is proposed to take place on 31 March 2008 and the financial
statements of Hurlingham for the year ended 30 September 2007 will be finalised
and despatched to Shareholders on 31 March 2008. Thereafter, the Second General
Meeting, which includes a special resolution which requires 21 days clear
notice, notice for which is set out on pages 28 and 29 of this document, will be
held the following week on 7 April 2008. By holding two general meetings in this
manner, the matters to be considered at the First General Meeting, on the
assumption that they are passed, will enable the financial statements of the
Company for the year ended 30 September 2007 to be despatched to Shareholders
prior to the deadline for submission of those financial statements to
Shareholders under the AIM Rules for companies, being the close of trading on
AIM on 31 March 2008.
First General Meeting
The First General Meeting of the Company is to be held at 19 Cavendish Square,
London W1A 2AW, on 31 March 2008, commencing at 11.00 a.m. The notice for this
meeting is set out on pages 26 and 27 of this document. At the First General
Meeting, the following resolutions dealing with matters referred to in this
document will be proposed:
Resolution 1, an ordinary resolution to approve the sale of the whole of the
issued share capital of Bettagrade, which owns the Perth Hotel, to Thistle Perth
and Thistle Investments, in the manner referred to in this document. Maurice
Taylor is considered to be interested in the outcome of this resolution and,
accordingly, he and all Shareholders associated with him have undertaken not to
vote on this resolution.
Resolution 2, an ordinary resolution to approve accrual for compensation for
loss of office in Bettagrade to be included in the completion accounts of
Bettagrade of �30,000 each for Charles Llewellyn, Charles Pettingell and Maurice
Taylor and to approve accrual in the completion accounts of Bettagrade of
�60,000 to the personal pension schemes of Charles Llewellyn and Charles
Pettingell and of �45,000 to the personal pension scheme of Maurice Taylor.
Charles Llewellyn, Charles Pettingell and Maurice Taylor are considered to be
interested in the outcome of this resolution and accordingly they and all
Shareholders associated with them have undertaken not to vote on this
resolution.
Second General Meeting
The Second General Meeting of the Company will also be held at 19 Cavendish
Square, London W1A 2AW, on 7 April 2008, commencing at 11.00 a.m. The notice for
this meeting is set out on pages 28 and 29 of this document. At the Second
General Meeting, the following resolution dealing with matters referred to in
this document will be proposed:
Resolution 1, a special resolution to approve the subscription of Ordinary
Shares. This resolution is subject to the passing of both resolutions proposed
at the First General Meeting. David Low and I are considered to be interested in
the outcome of this resolution and accordingly we and all Shareholders
associated with us have undertaken not to vote on this resolution.
Action to be taken
A White Form of proxy for use in connection with the First General Meeting and a
Green Form of Proxy for use at the Second General Meeting are enclosed. Whether
or not you intend to be present at the General Meetings, you are asked to
complete and return both Forms of Proxy in accordance with the instructions
printed thereon as soon as possible and, in any event, so that they are received
not later than 48 hours before the time of each General Meeting. Completion and
return of the Form of Proxy will not preclude you from attending either or both
General Meeting and voting in person if you wish.
Recommendations and independent advice
First General Meeting
Resolution 1
The Board, excluding Maurice Taylor who is deemed to be interested in the Sale,
who have been so advised by Landsbanki, consider the proposal to sell the whole
of the issued share capital of Bettagrade, which owns the Perth Hotel, to
Thistle Perth and Thistle Investments, referred to in Resolution 1 of the First
General Meeting on the terms set out in this document to be fair and reasonable
and in the best interests of Shareholders as a whole, and unanimously recommend
Shareholders to vote in favour of the resolution to be proposed at the First
General Meeting. In providing its advice to the Independent Directors,
Landsbanki has taken account of their commercial assessments.
Maurice Taylor is considered to be interested in the outcome of the Resolution 1
of the First General Meeting and accordingly he and all Shareholders associated
with him will not vote on this resolution. The other Directors and persons
connected with them have provided irrevocable undertakings to vote in favour of
Resolution 1 of the First General Meeting in respect of their shareholdings,
amounting to 407,077 Ordinary Shares, representing approximately 16.4 per cent.
of the Diluted Voting Rights of the Company.
Resolution 2
The Remaining Directors who have been so advised by Landsbanki, consider the
proposals relating to the accrual for compensation for loss of office in
Bettagrade and pension contributions to be paid by Bettagrade, in the completion
accounts of Bettagrade in respect of the Retiring Directors as referred to in
Resolution 2 of the First General Meeting, to be fair and reasonable and in the
best interests of Shareholders as a whole and unanimously recommend Shareholders
to vote in favour of the resolution to be proposed at the First General Meeting.
In providing its advice to the Directors, Landsbanki has taken account of their
commercial assessments.
None of the Retiring Directors will vote on this resolution. The other Directors
and persons connected with them have provided irrevocable undertakings to vote
in favour of Resolution 2 of the First General Meeting in respect of their
shareholdings, amounting to 161,000 Ordinary Shares, representing approximately
6.5 per cent. of the Diluted Voting Rights of the Company.
Second General Meeting
Resolution 1
Charles Llewellyn, Charles Pettingell and Maurice Taylor, who have been so
advised by Landsbanki, consider the proposals relating to the subscription of
New Ordinary Shares referred to in Resolution 1 of the Second General Meeting to
be fair and reasonable and in the best interests of Shareholders as a whole and
unanimously recommend Shareholders to vote in favour of resolution 1 to be
proposed at the Second General Meeting. In providing its advice to the
Directors, Landsbanki has taken account of their commercial assessments.
David Low and I, who are proposed to be subscribers in the Subscription
Agreement are considered to be interested in the outcome of Resolution 1 of the
Second General Meeting and accordingly we and all Shareholders associated with
us will not vote on this resolution. The other Directors and persons connected
with them have provided irrevocable undertakings to vote in favour of Resolution
1 of the Second General Meeting in respect of their shareholdings, amounting to
355,673 Ordinary Shares, representing approximately 14.7 per cent. of the
Diluted Voting Rights of the Company.
Yours faithfully
Andrew Blurton
Non-Executive Chairman
The Directors having consulted with its Nominated Adviser Landsbanki Securities
(UK) are of the opinion that the terms of the transactions are fair and
reasonable insofar as its shareholders are concerned.
There is no further information required to be disclosed under Schedule Four of
the AIM Rules for Companies.
Enquiries:
Hurlingham PLC Tel: 020 7706 2121
Andrew Blurton
Landsbanki Securities (UK) Tel: 020 7426 9000
Jeff Keating
Fred Walsh
Sebastian Jones
END.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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