MBK Millbrook Scnce

RNS Number:1888B
Millbrook Scientific InstrumentsPLC
31 July 2007


      Millbrook Scientific Instruments plc ("Millbrook" or the "Company")

                                 Notice of EGM

The Company wishes to announce that a circular has today been sent to
shareholders, providing details of a proposed fundraising, share capital
reorganisation and a notice of Extraordinary General Meeting.

A letter to shareholders from Non-Executive Chairman Stephen Blank is contained
in the circular and is reproduced as follows.

The statement from my predecessor, Peter Stefanini, dated 25 June 2007, issued
with the preliminary announcement, referred to our need to manage cash extremely
carefully during the year. At the end of June, with orders awaiting shipment,
the Board considered it had sufficient funds to manage through the three month
period to the end of September during which those orders would be fulfilled but
before the related payments were received. After that the Company's cash
requirement was expected to be well within current banking facilities provided
to the Company.

Subsequently, on 10 July 2007, we were advised that a MiniSIMS ToF instrument
shipped on 26 June 2007 had been damaged in transit and was returned to
Blackburn for evaluation and examination by insurers. This took place on 25 July
2007. Its return to the UK clearly put at risk a substantial receipt in the
critical three months identified by my predecessor. We advised the bank what our
additional funding requirement might be taking this into account and the bank
have conducted a review using independent accountants. The review was completed
last week.

Following the review the bank indicated that it would not be prepared to
increase our existing overdraft facility but would consider renewing or
replacing it if the additional requirement could be provided by way of the Loan
Note Instrument. The Board has received an offer in principle to provide a
substantial part of the Fundraising from YFM, the Company's largest single
shareholder.

The Board has taken other actions to reduce the Company's immediate working
capital requirements.

However, it is clear that, without securing investment of at least #200,000, the
ability of the Company to continue trading will be brought into question.

Pursuant to the Loan Note Instrument the Company will receive funding of up to
#250,000 in return for issuing Warrants of an equivalent amount. As a condition
of the bank's continuing support for the Company, additional Warrants up to
#80,000 value may be issued to the bank.

The terms of the appointment of Stephen Blank as Non-Executive Chairman of the
Company include fees of #17,500 pa. In addition the Board (excluding Mr Blank)
has approved the award to Stephen Blank of 2,000,000 Incentive Warrants at an
exercise price of 3.125p per share. This arrangement is subject to Shareholder
approval. The Board (excluding Mr Blank) took the view that this incentive
package was essential in securing the services of Mr Blank as Chairman.

The Board is also of the opinion that it is important that key members of the
executive team are appropriately incentivised. It is therefore its intention to
review the share option arrangements in the Company in order to give effect to
this objective. In doing so it will ensure that at no time shall the total
number of Incentive Warrants and share options exceed 15% of the issued share
capital of the Company (currently equivalent to 8,048,612 shares) and will aim
to reduce this percentage over time. Shareholders will be aware that the Company
has in existence Financial Arranger Warrants totalling 3,258,000 with an
exercise price of 10p.

The Board would emphasise that they have not revised their trading expectations
in respect of this financial year and remain as convinced of the potential of
the business as ever.

The Capital Reorganisation

The Company's share price is currently trading at less that the nominal value of
an Ordinary Share. Accordingly, in order for the Company to successfully
complete the Fundraising, the Directors consider that the nominal value of each
ordinary share in the capital of the Company needs to be reduced to 1p.

In light of the above, it is proposed at Resolution 2 that each Ordinary Share
be converted into one New Ordinary Share and one Deferred Share. The rights
attaching to the Deferred Shares are set out at Resolution 4 and it should be
noted that no application will be made for the Deferred Shares to be admitted to
trading on AIM or on any other recognised investment exchange.

The reorganisation of the Company's share capital in this way will not of itself
affect the value of your shareholding, as can be seen from the worked example
below:

Ordinary Shares held prior to Capital Reorganisation                    1000

Current market price per Ordinary Share                                   3p

Current value of shareholding                                            #30

Number of New Ordinary Shares held following Capital Reorganisation     1000

Market price per New Ordinary Share immediately following 
Capital Reorganisation                                                    3p

Value of New Ordinary shareholding                                       #30

No of Deferred Shares held following Capital Reorganisation             1000

Market price of Deferred shareholding immediately following 
Capital Reorganisation                                                  #nil

In addition, following the Capital Reorganisation the above shareholder will
hold 1,000 Deferred Shares. By effecting the reorganisation in this way the
Company's authorised share capital remains the same. In the example above, the
1,000 shares held today each have a nominal value of 5p giving a total nominal
value for the holding of #50. The New Ordinary Shares have a nominal value of 1p
(#10 in aggregate) which when added to the aggregate nominal value of the
Deferred Shares (#40) means that the nominal value of the holding remains at
#50.

Resolutions

A notice convening the EGM to be held at the offices of the Company at Blackburn
Technology Centre, Challenge Way, Blackburn, Lancashire, BB1 5QB at 10.00 am on
Friday 24 August 2007 is set out at the end of this document. At the EGM, the
following Resolutions will be proposed:
          
     (a)  an ordinary resolution to sub-divide each Ordinary Share into one 
          New Ordinary Share and one Deferred Share;
          
     (b)  an ordinary resolution to authorise the Directors to allot relevant
          securities (as defined in section 80 of the Act), inter alia, for the 
          purposes of the Fundraising;

     (c)  a special resolution to allow the Directors, subject to the limits set 
          out in that resolution, to issue New Ordinary Shares for cash on a 
          non-pre-emptive basis, including a specific authority to allot New 
          Ordinary Shares under the Fundraising; and

     (d)  a special resolution to amend the Company's articles of association to
          include details of the rights attaching to the Deferred Shares.

The Fundraising is conditional upon, inter alia, the passing of the Resolutions.

Action to be taken

A Form of Proxy is enclosed for use at the EGM. Whether or not you intend to be
present at the meeting you are requested to complete, sign and return the Form
of Proxy to the Company at Blackburn Technology Centre, Challenge Way,
Blackburn, Lancashire, BB1 5QB as soon as possible but in any event so as to
arrive not later than 10.00 am on Wednesday 22 August 2007. The completion and
return of a Form of Proxy will not preclude you from attending the meeting and
voting in person should you subsequently wish to do so.

Recommendation

The Directors will continue to negotiate with potential funders and endeavour to
secure terms for the Fundraising that are fair and reasonable and in the best
interests of the Company and its shareholders. Shareholders will be appraised of
further key developments up until the EGM. However, it will be clear to
Shareholders that it is very important that the proposed fundraising and the
associated financial restructuring is undertaken and accordingly the Directors
unanimously recommend the Shareholders to vote in favour of the Resolutions as
they intend to do in respect of their own beneficial holdings of 3,432,333
Existing Ordinary Shares representing 6.02 per cent. of the Existing Ordinary
Shares.

Stephen M Blank MSc, MA (Oxon), FCA Director
31 July 2007

                                    - Ends -
For further information:
Millbrook Scientific Instruments plc
Stephen M Blank                                        Tel: +44 (0) 1254 699 606
s.m.blank@millbrook-instruments.com                www.millbrook-instruments.com
-----------------------------------                -----------------------------

Seymour Pierce Limited
David Newton, Corporate Finance                        Tel: +44 (0) 20 7107 8000
david.newton@seymourpierce.com                             www.seymourpierce.com
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