RNS Number : 3643Z
Urban Exposure PLC
21 May 2021
 

21 May 2021

 

Urban Exposure Plc ("the Company")

 

Proposed cancellation of admission of ordinary shares to trading on AIM, solvent members' voluntary liquidation and Notice of General Meeting

Further to the Company's announcement of 20 April 2021, the Company announces details of the proposed cancellation of the admission of its ordinary shares (the "Shares") to trading on AIM and proposed liquidation.

In accordance with the AIM Rules for Companies (the "AIM Rules"), the Company (together with its subsidiaries, the "Group") hereby notifies the proposed cancellation of the admission of its Shares to trading on AIM (the "Cancellation") and the proposed implementation of a solvent members' voluntary liquidation of the Company (the "Liquidation"), subject in each case to shareholder approval at a general meeting to be held at 10.00 a.m. at the offices of Hogan Lovells International LLP, Atlantic House, 50 Holborn Viaduct, London EC1A 2FG on 22 June 2021 (the "General Meeting"). If the Cancellation Resolution is passed, the expected date of the Cancellation will be 23 June 2021.

The Cancellation is being sought because the commencement of the Liquidation will render the Company inappropriate for admission to trading on AIM. The Liquidation Resolutions to be proposed at the General Meeting are conditional upon the passing of the Cancellation Resolution. However, the Cancellation Resolution is not conditional upon the Liquidation Resolutions being approved.

If the Cancellation Resolution is approved, there will be no formal market mechanism enabling Shareholders to trade their Shares on AIM or any other recognised market or trading facility. In addition, Shareholders will no longer be afforded the protections given by the AIM Rules. If Shareholders wish to buy or sell Shares on AIM, they should do so prior to the Cancellation becoming effective.

It is the Company's intention to cancel the CREST facility following the passing of the Cancellation Resolution and arrangements will be made to send share certificates to those Shareholders (at their risk) currently using CREST. The Shares will remain capable of being transferred in paper form until the Liquidation is completed, however, such transfer will be permitted only in the absolute discretion of the Liquidators. Shareholders should not expect to be able to transfer their Shares following the Canecllation.

General Meeting arrangements

If the measures set out in the UK Government's roadmap to lifting COVID-19 restrictions in England are implemented as currently expected, physical attendance at the General Meeting should be possible as usual. However, given the uncertainty surrounding the COVID-19 situation, the Company urges Shareholders to vote by proxy and to appoint the chairman of the meeting as their proxy for that purpose. The Company will continue to monitor developments, including any regulatory changes in relation to COVID-19. If it becomes necessary or appropriate to revise the arrangements for the General Meeting, further announcements will be made and information will be made available on our website at www.urbanexposureplc.com.

Publication of Circular

An explanatory circular (the "Circular") containing a Notice of General Meeting will shortly be posted to Shareholders providing further details of the Cancellation and the Liquidation and setting out the reasons for which the Cancellation and the Liquidation are being proposed.

A copy of the Circular will shortly be available on the Company's website www.urbanexposureplc.com.

Recommendation

The Board of Directors consider that the Liquidation and the Cancellation are in the best interests of Shareholders as a whole, and unanimously recommend that Shareholders vote in favour of the Cancellation Resolution and each of the Liquidation Resolutions to be proposed at at the General Meeting (together, the Resolutions").

The Board intends to vote in favour of each of the Resolutions in respect of their respective direct and indirect shareholdings in the Company which, in aggregate, amount to 75,000 Shares, representing 0.01 per cent. of the issued share capital of the Company on a fully diluted basis.

Defined terms in this announcement have the meanings given to them in the Circular, unless otherwise defined herein.

Background to, and reasons for, the Cancellation and the Liquidation

 

Further to the Company's announcement on 20 April 2021, in light of the continued progress made in realising the Group's loan portfolio and the ongoing costs of remaining as an AIM listed company, the Board believes it is now in the best interests of Shareholders to appoint liquidators to implement the Liquidation and to cancel the admission of the Company's Shares to AIM by way of the Cancellation. Since 5 May 2020, the Company has been focused solely on completing an orderly wind-down of its assets and operations in order to maximise the return of capital to its Shareholders. In December 2020, the Company returned approximately £65 million to Shareholders via an own-share tender offer at a price of 75 pence per Share. Since then, despite the continuation of the COVID-19 pandemic, the Company has continued to make significant progress in liquidating the Group's remaining loan book.

As at 30 April 2021, being the latest practicable date prior to the date of this Circular, the Group had a cash balance of £31.3 million, and a loan and investment receivables balance of £22.5 million. After considering a range of options, the Directors have concluded that the most appropriate method of returning value to Shareholders is through the Liquidation and the Cancellation.

The Board is seeking the approval of Shareholders to enter into the Liquidation at the present time because it believes that the costs of continuing to operate as an AIM listed company, including the requirement to produce public audited accounts, now outweigh the benefits of doing so and would reduce the cash available for distribution to Shareholders. Shareholders should be aware that, if the Resolutions are passed at the General Meeting, the Company will not publish an annual report and audited financial statements for the financial year ending 31 December 2020.

As announced on 20 April 2021, the Board estimates that returns to Shareholders via the Liquidation should be within a range of 72 pence to 75 pence per Share.

The Initial Distribution

Taking into account the Company's current cash balances, and following preliminary discussions with the Liquidators, the Board currently expects that (based on certain assumptions set out in more detail in the Circular and below) an Initial Distribution equal to approximately 31.6 pence per Share should be made to those Shareholders appearing on the share register as at the record date for the Initial Distribution within 10 business days of the Company entering into Liquidation. Shareholders should note that the precise timing and amount of any such Initial Distribution is a matter for the Liquidators and will depend upon the circumstances of the Company at the time.

Subsequent distributions

It is anticipated that, subject to the continued review of the Company's financial position by the Liquidators, and the circumstances prevailing at the relevant time, there will be further distributions to Shareholders subsequent to the Initial Distribution, if, as and when the Group realises its remaining portfolio of loans. It is currently expected that the Liquidation of the Company will be completed, and the final distribution to Shareholders (if any) will be made, within twelve months of the date on which the Liquidators are appointed. However, the final distribution will not be made until the Liquidators have completed their statutory duties to seek out, adjudicate and pay creditors' claims and HMRC has confirmed its agreement to the Company's tax returns and that it has no objection to the closure of the Liquidation. There can be no guarantee that the Liquidation process will not be delayed.

The Board currently estimates that the total value returned to Shareholders via distributions made subsequent to the Initial Distribution will be within a range of approximately 40 pence to 43 pence per Share, making total distributions of between 72 pence to 75 pence per Share. It should be noted, however, that these figures represent the Company's best estimate on the basis of information currently available to it, and there can be no guarantee of the size of any subsequent distributions or that any such distributions will be made. The precise timing and amount of any subsequent distributions will be a matter for the Liquidators and will depend on the financial condition of the Company at the relevant time.

Shareholders should note that the Board's estimate of the total returns to Shareholders via the Liquidation and, in particular, the estimated amounts and timing of any distributions to Shareholders made subsequent to the Initial Distribution, are subject to the outcome of a number of matters currently affecting the Company. The outcome and speed of resolution of these matters, which are summarised below, will determine the precise timing and amount of capital that can be returned to Shareholders subsequent to the Initial Distribution:

·      The Company anticipates that it will be required to utilise all of its legal rights to recover the full amount due to it under one of its remaining loans. The loan has an outstanding balance of £10.7 million (as at 30 April 2021).

·      An early release is being sought by the Company from its lease obligations in relation to its office space, with the current contractual release date being November 2023.

·      The Company is continuing in its claim for damages against Honeycomb Holdings Limited for breach of contract in relation to the share purchase agreement dated 10 March 2020 (the "SPA"). In addition, the Company intends to seek relief from other entities within or connected to the Pollen Street Capital group, including Honeycomb Investment Trust plc, Pollen Street Capital Limited and Pollen Street Capital Holdings Limited, for procuring or inducing the breach by Honeycomb Holdings Limited of the SPA.

·      Two subsidiaries of the Company have received a letter before claim from a defaulting borrower regarding a purported breach of loan documentation by the Company in relation to that borrower. External legal counsel has advised that the claim is entirely without merit and the Company intends to robustly defend its position.

Prior to making the Initial Distribution, the Liquidators will retain from the Company's cash balances an amount required to cover these and the Company's other known and contingent liabilities, the VAT inclusive costs of the Liquidation and an additional retention for known contingencies (the "Liquidation Fund"). The Liquidators will not make any subsequent distributions unless they are satisfied that sufficient cash has been retained to provide for the actual and contingent liabilities of the Company at the relevant time, and the final distribution (if any) will not be paid until the Liquidators are satisfied that all actual and contingent liabilities of the Company have been discharged.

The Liquidation

Shareholders will be able to realise their investment in the Company through the Liquidation, which is conditional upon Shareholder approval of the Liquidation Resolutions which, in turn, are conditional upon Shareholder approval of the Cancellation Resolution. If the Liquidation Resolutions are passed, the Company intends that Geoffrey Paul Rowley and David Frederick Shambrook, both of FRP Advisory Trading Limited, should be appointed as the joint liquidators of the Company and the other remaining members of the Group (the "Liquidators"). Upon the appointment of the Liquidators, all powers of the Board will cease (except so far as the Shareholders or the Liquidators sanction their continuance) and the Liquidators will be responsible for the affairs of the Company until it is wound up.

The Liquidators will retain the services of the Company's Chief Executive Officer, Sam Dobbyn, its Chief Operating Officer, Robert Pritchard and its Chief Risk Officer, Michael McMahon until the wind-down and realisation of the Company's loan book is substantially complete. The Company's Registrar, Equiniti, will be retained by the Company during the liquidation period until the final distribution has been paid.

The Board has agreed that the Liquidators will be remunerated by reference to the time properly incurred by them and their staff in attending to matters prior to and during the winding-up of the Company. The Liquidators' fees in respect of the liquidation of the Group will be fixed at £120,000 (exclusive of VAT and disbursements), any increase to which would require further approval from Shareholders. The Board estimates that the total costs and expenses of the Liquidation will amount to approximately £790,000. This figure includes the fees of the Liquidators and those of the Company's advisers in connection with the Liquidation, as well as the salaries to be paid to retained staff in respect of the services to be provided by them.

Following their appointment at the General Meeting, the Liquidators will take control of the Company, take custody of all of the Company's assets, invite creditors to submit particulars of debt and consider and settle each liability of the Company. Within approximately 10 business days of being appointed, having discharged or reserved for the liabilities and satisfied or reserved for all the creditors of the Company, the Liquidators have indicated that they intend to make an initial cash distribution to Shareholders (the "Initial Distribution") equal to approximately 31.6 pence per Share. The expected timing and amount of the Initial Distribution are based on the following assumptions:

·      the Group has aggregate cash balances of £27.5 million immediately following the appointment of the Liquidators;

 

·      the number of Shares in issue at the time of the Initial Distribution (excluding Shares held in treasury) is 72,155,955; and

 

·      the Liquidation Fund set aside by the Liquidators in respect of, amongst other things, the Company's known and contingent liabilities and the VAT inclusive costs of the Liquidation is equal to £4.72 million.

Before the Initial Distribution and each subsequent distribution (if any) can be made to Shareholders, the Liquidators must be satisfied that either all liabilities of the Company have been settled, or that sufficient cash has been retained to discharge or provide for all of the Company's actual and contingent liabilities.

Once the Liquidators are satisfied that all actual and contingent liabilities of the Company have been settled, any surplus will be distributed to the Shareholders at the Liquidators' discretion as a final distribution. Any such final distribution is expected to be made at the conclusion of the Liquidation and, once this is completed, the Company will be dissolved. The precise timing and amount of the final distribution is uncertain, and the Liquidators' remuneration and any expenses will be deducted prior to any final distribution to Shareholders.

A copy of the proposed final account must be sent to the Shareholders, giving a minimum of eight weeks' notice of the date upon which the Liquidators intend to deliver the final account to the Registrar of Companies. Once finalised, the final account will be sent to the Shareholders and to the Registrar of Companies within 14 days of the date of the final account. The Company will be dissolved on expiry of three months following the filing of the final account with the Registrar of Companies.

The Cancellation

As the commencement of the Liquidation will render the Company inappropriate for admission to trading on AIM, the Directors propose to seek cancellation of the Shares from trading at the General Meeting.

Rule 41 of the AIM Rules for Companies requires an AIM company that wishes to cancel admission of its securities to trading on AIM to notify such intended cancellation to the public and separately to inform the London Stock Exchange of its preferred cancellation date. AIM Rule 41 also requires that, unless the London Stock Exchange otherwise agrees, such cancellation must be conditional upon the consent of not less than 75 per cent. of votes cast by the Shareholders, given in a general meeting.

The Shares will be suspended from trading at 7.30 a.m. on 22 June 2021 in advance of the General Meeting. Subject to Shareholder approval at the General Meeting, it is expected that the admission of the Shares to trading on AIM will be cancelled with effect from 7.00 a.m. on 23 June 2021, following the appointment of the Liquidators at the General Meeting.

Under the AIM Rules, cancellation requires the expiration of a period of not less than 20 clear business days from the date on which notice of the intended cancellation is given to the London Stock Exchange. The Company has notified the London Stock Exchange of the proposed cancellation and of the proposed Cancellation date of 23 June 2021.

Upon cancellation of the Shares to trading on AIM, Liberum will cease to be the Company's nominated adviser and broker and the Company will no longer be required to comply with the AIM Rules.

Inter-conditionality of the Resolutions

The Cancellation Resolution is not conditional upon the Liquidation Resolutions being approved. If Shareholders approve the Cancellation Resolution but do not approve the Liquidation Resolutions, the admission of the Shares to trading on AIM would be cancelled with effect from 23 June 2021, but the Company would not enter into Liquidation. In such circumstances, the Company would continue its operations until other proposals can be put forward and approved, but, amongst other things:

·      the Initial Distribution would not be paid to Shareholders;

·      there would no longer be a formal market mechanism for Shareholders to trade in the Shares, and no price would be publicly quoted for the Shares. The liquidity and marketability of the Shares would be very limited and the value of the Shares may be consequently adversely affected; and

·      Shareholders would no longer be afforded the protections given by the AIM Rules such as the requirement to be notified of certain events, including substantial transactions, financing transactions, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals.

The Liquidation Resolutions are conditional upon the Cancellation Resolution being passed. If the Cancellation Resolution is not passed at the General Meeting the Liquidation Resolutions cannot pass. In these circumstances:

·      the Shares would not be cancelled from trading on AIM and the Company would not enter into Liquidation; and

·      the Company would continue in operation until alternative proposals could be put forward and approved by Shareholders, but the increased cost base of operating as an AIM listed company would reduce the cash available for distribution to Shareholders. The Company estimates that, if the Liquidation Resolutions are not passed and the Company maintains its listing on AIM, its operating expenses would be equal to approximately £200,000 per month.

EXPECTED TIMETABLE OF EVENTS

Latest time and date for receipt of Form of Proxy for the General Meeting

10.00 a.m. on 18 June 2021

Record date in respect of the General Meeting

6.30 p.m. on 18 June 2021

Expected last day for dealings in the Shares on AIM

21 June 2021

Record Date for participation in the Initial Distribution

6.30 p.m. on 21 June 2021

Suspension of the Shares from trading on AIM

7.30 a.m. on 22 June 2021

General Meeting and appointment of Liquidators

10.00 a.m. on 22 June 2021

Expected time and date of the Cancellation of admission of the Shares to trading on AIM

7.00 a.m. on 23 June 2021

Anticipated date for Initial Distribution to Shareholders*

By 6 July 2021

Anticipated date for distribution of any remaining cash surplus to Shareholders*

By July 2022

* actual date to be determined by Liquidators

The dates set out in the expected timetable may be adjusted by the Company in which event details of the new dates will be notified to Shareholders via an announcement made by the Company through a regulatory information service.

General Meeting

The completion of the Cancellation and the Liquidation requires the approval of Shareholders.

A notice convening a general meeting of the Company for 10.00 a.m. on 22 June 2021 at the offices of Hogan Lovells International LLP, Atlantic House, 50 Holborn Viaduct, London EC1A 2FG, at which the Cancellation Resolution and the Liquidation Resolutions will be proposed, together with the Circular, will be despatched to Shareholders shortly.

The Cancellation Resolution is a special resolution, which require three-quarters of the votes cast in person or by proxy on a show of hands or a poll to be in favour.

The Liquidation Resolutions include special resolutions to wind up the Company voluntarily and to authorise the Liquidators (once they have been appointed) to divide and distribute the Company's assets amongst the Shareholders, and ordinary resolutions to appoint and appropriately authorise the Liquidators as joint liquidators of the Company and to approve their remuneration and recovery of disbursements. The ordinary resolutions require a simple majority of the votes cast in person or by proxy on a show of hands or a poll to be in favour and the special resolutions require three-quarters of the votes cast in person or by proxy on a show of hands or a poll to be in favour.

The quorum for the General Meeting is two Shareholders present in person or by proxy.

Enquiries:

Urban Exposure plc                                                                 Tel: +44(0)207 408 0022

Graham Warner, Chairman

Sam Dobbyn, Chief Executive Officer

 

Liberum (NOMAD and Broker)                                             Tel: +44(0)203 100 2000

Neil Patel

Gillian Martin

Richard Bootle

UrbanExposure@liberum.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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