Investment group Eurovestech is set to return a pile of cash to shareholders and then delist from AIM.
A number of the company's major shareholders have questioned the benefits of retaining a listing on AIM given the cash rich company has no plans in the foreseeable future to raise fresh capital.
The company's AIM listing costs more than £125,000 a year, or roughly one-eighth of the company's annualised costs. Being a publicly quoted company also brings with it extra administrative burdens, so the directors have opted to take the company private.
Assuming the motion to delist the company is approved by shareholders, those stakeholders who retain their shares after the delisting will be able to sell them - or, for that matter, buy more - through a matched bargain facility offered by London Matched Markets, although it is likely that liquidity and bid-offer spreads will not be as good as on AIM. That probably accounts for the reason why the shares fell by three-eighths of a penny to 8p in the morning trading session.
Under the AIM Rules, it is a requirement that the delisting must be approved by not less than three-quarter of the votes cast at a general meeting.
To soften the blow of the end of the company's stint as a publicly quoted company Eurovestech is planning to return cash to shareholders through the issue of "E" shares to shareholders, each of which will come with the right to a dividend of 1.32p, to be treated as income for tax purposes.
Shareholders will receive one E share for each ordinary share currently held. Cenkos Securities will offer to buy these shares at 1.32p each, to be treated as capital gains for tax purposes. Thus, shareholders can either opt to sell the shares for 1.32p each or keep them and receive a dividend on each of 1.32p.
Following payment of the "E" share dividend, the "E" shares will convert to deferred shares having very limited rights. In other words, the "E" shares have merely been created to give the opportunity for shareholders to recognise the return of cash as either income or capital. The return of cash is not conditional upon the approval of the delisting and vice versa.
The return of cash is the latest in a series of disbursements to shareholders: the company returned 2.18p per share in April 2010, and 4p per share in October 2011. Had this money been retained, net asset value per share (NAV) as at June 30th would have been 23.3p per share, versus a NAV of 5p when the company listed on AIM in March 2000.
The company's cash resources have just been augmented by the sale of a 40% stake in wholly owned subsidiary Knowledge Support Systems for £7.2m to Invesco Asset Management, a 30.97% shareholder in Eurovestech.
The sale will boost Eurovestech's cash reserves to around £9.0m. The planned return of cash of 1.32p per share will soak up around £4.4m of that cash pile.
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