2 October 2014
Elektron Technology plc
(AIM: EKT, "Elektron" or "the Company" or the "Group")
Derivative Claim - Update
In its 2014 Annual Report the Company disclosed derivative litigation with a shareholder Mr B. Bridge, who holds at the date of this announcement 1.83 % of the Company's ordinary shares. For convenience, this disclosure is repeated in Appendix 1.
As announced on 23 June 2014, the Court had listed Mr Bridge's application for permission to continue the claim, for a one day hearing on 1 October 2014.
Despite yesterday's hearing being listed six months in advance, Mr Bridge only formally appointed legal advisors to represent him on 11 September 2014, less than three weeks before the hearing. He also indicated an intention to reformulate the claim to address perceived deficiencies in it. As a consequence much of yesterday's hearing was devoted to considering a request by Mr Bridge to adjourn the hearing.
The resulting judgment was:
1. Permission to continue a claim against Tony Harris and Ric Piper was refused (pursuant to s. 261(2) Companies Act 2006) on the basis that Mr Bridge had failed to establish a case against them that they could be required to answer. Mr Bridge was ordered to pay both Tony Harris and Ric Piper's specific costs;
2. The hearing of the application for permission to continue the claim against the remaining directors was not considered, but adjourned to a later date. In the meantime the proceedings will be stayed to 30 November 2014 to enable the parties to consider alternative dispute resolution;
3. Mr Bridge to serve draft amended particulars of claim by 19 December 2014, seeking the consent of the Company and the directors to admit the same;
4. A directions hearing to be listed in the week commencing 26 January 2015 in the High Court in London;
5. The wasted costs of the Company and the directors in preparing for and attending yesterday's hearing be paid by Mr Bridge, to be assessed if not agreed, as the court was satisfied that Mr Bridge's late appointment of legal advisors was tactical, and his stance in seeking an adjournment disingenuous and opportunistic;
6. Mr Bridge to make interim payments in the sums of £5,000 plus VAT in respect of the directors' costs and £5,000 in respect of the Company's costs within 28 days;
7. All other costs reserved to be addressed at the adjourned substantive hearing of Mr Bridge's application for permission to continue the claim against Keith Daley, John Wilson, Noah Franklin and Simon Acland.
Further updates will be provided in due course.
Appendix 1 - Potential litigation
As disclosed in the 2014 Annual Report on page 16.
A shareholder, Mr B Bridge, has issued proceedings under The Companies Act 2006 (the 'Act') in the Liverpool District Registry of the High Court seeking permission to pursue a derivative claim against certain directors of the Company, (namely Keith Daley, Tony Harris, Ric Piper and John Wilson) and certain former directors (namely Noah Franklin and Simon Acland), collectively the 'Directors'.
The Act provides a means by which an individual shareholder of a company may bring proceedings in respect of a claim which vests in, and in which a remedy is sought on behalf of, the Company. This is known as a derivative claim.
Where a shareholder seeks to bring a derivative claim, the Act imposes a filtering process by which the claim can only be continued if the Court grants permission. The shareholder must make the Company a defendant to the proceedings for the purpose of the permission stage and Mr Bridge has done this.
The Court has listed Mr Bridge's permission application for a one day hearing on 1 October 2014. If the claim is continued it would be expected to come to Court in 2015 or 2016.
The Company has instructed solicitors and counsel to advise and represent it. It should be noted that, although a party to the proceedings at this time, the Company will only have a limited, neutral role and that the permission hearing will be conducted principally between Mr Bridge and the Directors. The Court is obliged to refuse permission for a derivative action to proceed if a person acting under a general duty to promote the success of the company would not seek to continue the claim.
The Company has received professional advice that, on the evidence, the Court is at the moment more likely to refuse, than to grant, permission. This advice is subject to on-going review.
In summary, Mr Bridge is alleging various breaches of duty by the Directors, including dishonesty, 'a reckless acquisition spree', illegal share price manipulation and the implementation of unfair bonus and share schemes without proper shareholder approval.
The Directors refute the allegations made by Mr Bridge and have instructed their own solicitors and counsel.
Enquiries:
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Elektron Technology www.elektron-technology.com |
+44 (0) 1223 371 000 |
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Andy Weatherstone - Chief Finance Officer Martin Reeves - Company Secretary |
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finnCap (Nominated Adviser, Financial Adviser and Broker) |
+44 (0)20 7220 0500 |
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Ed Frisby/Ben Thompson (Corporate Finance) |
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Malar Velaigam (Corporate Broking) |
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Instinctif Partners |
+44 (0)20 7457 2020 |
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Adrian Duffield/Kay Larsen |
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Notes to Editors
Elektron conceives designs and markets innovative engineered products and services for businesses at its technology hub in Cambridge. It has a multi skilled team of engineers and product line specialists focused on the opportunities created by disruptive global trends in the following areas:
· New waves of "aware" business applications: Internet of Things
· Demand for ubiquitous power and data: Connectivity Solutions
· Growth in high precision manufacture: Nano-positioning
· Healthcare for the ageing population: Ophthalmology
· Connected customer experiences and service delivery: E-Commerce and E-Service
In addition it owns a portfolio of well-established products and brands which provide customer access and feedback.
Elektron Technology is headquartered in Cambridge and its shares are admitted to trading on the AIM market of the London Stock Exchange.